Court Opinion

ID: 4014864
Source: CourtListenerOpinion
Date Created: 2016-07-12 15:01:27.755674+00
Date Added: 2024-06-11T14:29:35.746588
License: Public Domain

United States Court of Appeals
      for the Federal Circuit
                  ______________________

     COAST PROFESSIONAL, INC., NATIONAL
      RECOVERIES, INC., PIONEER CREDIT
              RECOVERY, INC.,
                   Plaintiffs

     ENTERPRISE RECOVERY SYSTEMS, INC.,
              Plaintiff-Appellant

                              v.

   UNITED STATES, FINANCIAL MANAGEMENT
      SYSTEMS, INC., ACCOUNT CONTROL
             TECHNOLOGY, INC.,
    CONTINENTAL SERVICE GROUP, INC., GC
       SERVICES LIMITED PARTNERSHIP
              Defendants-Appellees

         WINDHAM PROFESSIONALS, INC.,
                    Defendant
              ______________________

                        2015-5077
                  ______________________

    Appeal from the United States Court of Federal
Claims in Nos. 1:15-cv-00207-FMA, 1:15-cv-00242-FMA,
1:15-cv-00249-FMA, 1:15-cv-00265-FMA, Senior Judge
Francis M. Allegra.
          ------------------------------------------------------
2                           COAST PROFESSIONAL, INC.   v. US

      COAST PROFESSIONAL, INC., NATIONAL
    RECOVERIES, INC., ENTERPRISE RECOVERY
                 SYSTEMS, INC.,
                    Plaintiffs

       PIONEER CREDIT RECOVERY, INC.,
               Plaintiff-Appellant

                           v.

    UNITED STATES, FINANCIAL MANAGEMENT
       SYSTEMS, INC., ACCOUNT CONTROL
    TECHNOLOGY, INC., CONTINENTAL SERVICE
       GROUP, INC., GC SERVICES LIMITED
                PARTNERSHIP,
               Defendants-Appellees

        WINDHAM PROFESSIONALS, INC.,
                   Defendant
             ______________________

                      2015-5101
                ______________________

    Appeal from the United States Court of Federal
Claims in Nos. 1:15-cv-00207-FMA, 1:15-cv-00242-FMA,
1:15-cv-00249-FMA, 1:15-cv-00265-FMA, Senior Judge
Francis M. Allegra.
                 ______________________

                Decided: July 12, 2016
                ______________________

   ROBERT J. SNECKENBERG, Crowell & Moring, LLP,
Washington, DC, argued for plaintiff-appellant Enterprise
Recovery Systems, Inc. in 2015-5077. Also represented by
DANIEL RUBEN FORMAN, JAMES G. PEYSTER.
COAST PROFESSIONAL, INC.   v. US                        3

    JONATHAN DAVID SHAFFER, Smith, Pachter, McWhort-
er, PLC, Tysons Corner, VA, argued for plaintiff-appellant
Pioneer Credit Recovery, Inc. in 2015-5101. Also repre-
sented by MARY PAT BUCKENMEYER, NICHOLAS J. SURACE.

    MICHAEL D. SNYDER, Commercial Litigation Branch,
Civil Division, United States Department of Justice,
Washington, DC, argued for defendant-appellee United
States. Also represented by JANA MOSES, REGINALD T.
BLADES, JR., ROBERT E. KIRSCHMAN, JR., BENJAMIN C.
MIZER; JOHN K. DIPAOLO, JOSE OTERO, United States
Department of Education, Washington, DC.

     JEREMY CHARLES MARWELL, Vinson & Elkins LLP,
Washington, DC, argued for defendants-appellees Finan-
cial Management Systems, Inc., Account Control Technol-
ogy, Inc., Continental Service Group, Inc., GC Services
Limited Partnership.      Defendant-appellee Financial
Management Systems, Inc. also represented by DAVID R.
JOHNSON, JASON ALAN LEVINE.

    BENJAMIN G. CHEW, Manatt Phelps & Phillips, Wash-
ington, DC, for defendant-appellee Account Control Tech-
nology, Inc. Also represented by RORY EDWARD ADAMS.

   EDWARD H. MEYERS, Stein Mitchell Muse Cipollone &
Beato LLP, Washington, DC, for defendant-appellee
Continental Service Group, Inc. Also represented by
REBECCA ANZIDEI.

   STEPHEN E. RUSCUS, Morgan, Lewis & Bockius LLP,
Washington, DC, for defendant-appellee GC Services
Limited Partnership. Also represented by ARNOLD
BRADLEY FAGG.
              ______________________

  Before MOORE, REYNA, and WALLACH, Circuit Judges.
4                           COAST PROFESSIONAL, INC.   v. US

MOORE, Circuit Judge.
    Pioneer Credit Recovery, Inc. (“Pioneer”) and Enter-
prise Recovery Systems, Inc. (“Enterprise”) separately
appeal from a decision by the Court of Federal Claims
dismissing their claims against the government for lack of
jurisdiction. We vacate and remand.
                      BACKGROUND
    Since 1981, the Department of Education (“Educa-
tion”) has contracted with private collection agencies for
services related to resolving defaulted student loans
through the General Services Administration (“GSA”)
Federal Supply Schedule for Financial and Business
Solutions. See 48 C.F.R. (Federal Acquisition Regulation
(“FAR”)) Subpart 8.4. “The Federal Supply Schedule
program is directed and managed by GSA and provides
Federal agencies (see 8.004) with a simplified process for
obtaining commercial supplies and services at prices
associated with volume buying.” FAR 8.402. The GSA
Federal Supply Schedule contracts at issue are indefinite
delivery, indefinite quantity contracts with the govern-
ment. This type of contract allows agencies like Educa-
tion to order supplies and services in a streamlined
process because the contractors are pre-approved and
must publish their pricing and terms for each type of
supply or service (called a “Special Item Number”). See
FAR 8.402(a), (b). Orders placed against GSA Schedule
contracts are “considered to be issued using full and open
competition” even though they are not subject to FAR
Part 15, which prescribes procedures for most negotiated
contracts. FAR 8.404(a).
    In 2008, Education issued a Request for Quotations
(“RFQ”) for debt collection services under Special Item
Number 520-4 seeking to issue Task Orders to contractors
under the existing GSA Schedule contract. The RFQ
contained a detailed Statement of Work explaining the
required activities and standards applicable to collection
COAST PROFESSIONAL, INC.   v. US                         5

on defaulted student loans and detailed how the contrac-
tors would be evaluated. The RFQ also explained that the
Task Order would include a base term and options periods
but that the total term of performance under the RFQ
would not exceed 60 months:
        The ordering period for the task orders will
        be from the date of award through March 31,
        2011, and an additional option period of up
        to 24 months. The total ordering period will
        not exceed 60 months from the date of the
        task order award. This is not a multiyear
        contract as defined in FAR Sub part 17.1.
J.A. 1017. 1
    Pioneer, Enterprise, and various other agencies hold-
ing GSA Schedule contracts with Education submitted
proposals. In 2009, Education awarded identical Task
Orders pursuant to the RFQ to Pioneer, Enterprise, and
twenty other contractors. The Task Orders contained all
of the standard contract details and material terms—
price, duration, obligations, and various other clauses as
set forth in the RFQ—though some of those terms
changed from the RFQ.
    The parties agree that the Task Orders contain a base
term and that Section H.1 of each Task Order sets forth
an Option that permits the government to unilaterally
extend the term of the Task Order pursuant to that option
up to 24 months for a total ordering period (base term +
optional extensions) that does not exceed 60 months:

    1   Unless otherwise specified, all citations to the
parties’ briefs and the J.A. refer to the materials in Case
No. 2015-5101.
6                           COAST PROFESSIONAL, INC.   v. US

      H.1 FAR 52.217-9, Option to Extend the
      Term of the Task Order (March 2000)
      Tailored
       (a) The Government may extend the term of
      this Task Order . . .
       (b) If the Government exercises this option,
      the extended Task Order shall be considered
      to include this option clause.
        (c) The total duration of the first Ordering
      Period of performance of this Task Order, in-
      cluding the exercise of any optional Ordering
      Periods under this clause, shall not exceed
      60 months from the date of contract award,
      excluding any award term(s) earned.
       (d) The Government may, at its discretion,
      exercise option periods of up to 24 months,
      provided that the total Task Order period of
      performance does not exceed 60 months from
      the date of the award.
J.A. 1419. This option in the Task Order parallels the
FAR which it expressly cites. It is undisputed that if the
government exercises an option under H.1 to extend the
Task Order, no new Task Order is issued. See J.A. 1419.
Section “H.3 FAR 52.217-8 Option to Extend Services”
similarly permits the government to unilaterally require
continued performance under the Task Order for up to
6 additional months. This extension provision likewise
parrots the language of the FAR which it expressly cites.
Education exercised its options under Sections H.1 and
H.3 for both Pioneer and Enterprise, unilaterally extend-
ing their 2009 Task Orders to February 21, 2015 and
April 21, 2015, respectively.
   Each Task Order also included a clause entitled “H.4
Award Term Extension,” which provided that the contrac-
COAST PROFESSIONAL, INC.   v. US                          7

tor could earn award-term extensions in addition to the
base period and any options exercised pursuant to Sec-
tions H.1 and H.3:
       the Contractor may earn performance exten-
       sions (hereinafter called “award terms”),
       based upon the quality of performance dur-
       ing the evaluation periods. If the Contractor
       has an average [Contractor Performance and
       Continuous Surveillance (“CPCS”)] rating of
       75 2 or greater over the life of the Task Order,
       or the last 12 CPCS periods (whichever is
       shorter), the Government may[] award the
       Contractor an award-term extension in ac-
       cordance with the terms of this clause in
       recognition of the Contractor’s excellent or
       better quality performance.
J.A. 1419–20.    Section H.4 also specified that “[a]ny
award term extensions awarded under this clause will be
executed in the form of a new Task Order issued by the
Contracting Officer under the Contractor’s then current
GSA schedule contract.” J.A. 1420.
    In December 2014, Education began secretly auditing
the contractors based on recommendations by the Gov-
ernment Accountability Office for improved oversight.
Reviewers from Education listened to roughly one hun-
dred phone calls that each contractor made to defaulted
borrowers and counted the number of times the contractor
violated consumer protection laws. Education then calcu-

   2   In 2011, Pioneer’s and Enterprise’s 2009 Task Or-
ders were each modified via a “Modification of Contract”
document to change the requisite CPCS score in H.4 from
75 to 85. The modification to the Pioneer Task Order
required Pioneer’s signature, but the modification to the
Enterprise Task Order did not.
8                            COAST PROFESSIONAL, INC.   v. US

lated an “error rate” for each contractor based on the
number of phone calls containing at least one violation.
Based on their error rates, Education decided not to issue
award-term Task Orders to Pioneer or Enterprise even
though they scored “excellent or better” under the CPCS
system.
    On February 20, 2015, Education notified Pioneer and
Enterprise of its decision not to issue award-term Task
Orders to them. One day later, Education notified five
other contractors (collectively, “the competitors”) that it
intended to issue award-term Task Orders to them for a
period not to exceed a specified number of months. These
letters, titled Notification of Award Term Extension and
each signed by the Contracting Officer, expressly stated:
“If the contract is extended pursuant to H.4, it will be
accomplished via a contracting action, which will specifi-
cally identify all of the terms and conditions.” J.A. 2107
(emphasis added).
    In March 2015, Pioneer and Enterprise filed suit
against the government in the Court of Federal Claims,
based on, inter alia, Education’s proposed issuance of
award-term extensions under H.4 to the competitors. The
complaints alleged that the Court of Federal Claims had
jurisdiction over the claims under the Tucker Act, 28
U.S.C. § 1491(b)(1). The competitors intervened as de-
fendants and they, along with the government, argued
that the Court of Federal Claims lacked subject matter
jurisdiction. The Court of Federal Claims dismissed the
complaints. Pioneer and Enterprise appeal. We have
jurisdiction under 28 U.S.C. § 1295(a)(3).
                       DISCUSSION
    We review the Court of Federal Claims’ dismissal for
lack of subject matter jurisdiction de novo. Distributed
Sols. v. United States, 539 F.3d 1340, 1343 (Fed. Cir.
2008). We review its factual findings for clear error. Id.
We review its interpretation of contracts without defer-
COAST PROFESSIONAL, INC.   v. US                          9

ence, giving unambiguous contract terms their plain and
ordinary meaning. Precision Pine & Timber, Inc. v.
United States, 596 F.3d 817, 824 (Fed. Cir. 2010). We
review questions of statutory interpretation without
deference. Res-Care, Inc. v. United States, 735 F.3d 1384,
1387 (Fed. Cir. 2013).
    Under the Tucker Act, as amended, the Court of Fed-
eral Claims has bid protest jurisdiction over “action[s] by
an interested party objecting to a solicitation by a Federal
agency for bids or proposals for a proposed contract or to a
proposed award or the award of a contract or any alleged
violation of statute or regulation in connection with a
procurement or a proposed procurement.” 28 U.S.C.
§ 1491(b)(1). 3 We conclude that the proposed issuance of
award-term extensions under H.4 to the five contractors
to permit them to continue offering debt collection ser-
vices under the GSA Schedule contract constitutes “a
proposed award or the award of a contract” pursuant to
§ 1491 and thus the Court of Federal Claims has jurisdic-
tion over the bid protest. The government’s decision to

   3    We have previously interpreted “an interested
party” under § 1491(b)(1) as “an actual or prospective
bidder or offeror whose direct economic interest would be
affected by the award of the contract or by failure to
award the contract,” based on the definition provided in
the Competition and Contracting Act (“CICA”), 31 U.S.C.
§§ 3551–56. CGI Fed., Inc. v. United States, 779 F.3d
1346, 1348 (Fed. Cir. 2015). And we have interpreted “in
connection with a procurement or proposed procurement”
as “involv[ing] a connection with any stage of the federal
contracting acquisition process, including the process for
determining a need for property or services,” based on the
definition provided in the statute governing the Office of
Federal Procurement Policy, now 41 U.S.C. § 111. Dis-
tributed Sols., 539 F.3d at 1346.
10                           COAST PROFESSIONAL, INC.   v. US

issue new Task Orders to contractors under the GSA
Schedule contract falls within the plain language of
§ 1491.
    There is no dispute that the award-term extension
under H.4 requires the government to issue a new Task
Order for the extension of debt collection services for the
competitors. The Supreme Court recently held that
issuance of a new Task Order against a GSA Federal
Supply Schedule contract constitutes an award of a con-
tract. See Kingdomware Techs., Inc. v. United States,
No. 14-916, 2016 WL 3317563, at *8–9 (U.S. June 16,
2016). It is thus a protestable event under § 1491(b).
Data Mgmt. Servs. JV v. United States, 78 Fed. Cl. 366,
371 (2007) (“The court’s protest jurisdiction extends to
protests of task or delivery orders placed against a GSA
schedule contract.”); IDEA Int’l, Inc. v. United States, 74
Fed. Cl. 129, 135–37 (2006) (holding that the Court of
Federal Claims has jurisdiction over protests relating to
issuance of Task Orders under GSA Federal Supply
Schedule contracts). 4

     4  The Data Management and IDEA decisions dis-
tinguish task and delivery orders issued pursuant to The
Federal Acquisition and Streamlining Act (“FASA”) of
1994, Pub. L. No. 103-355, 108 Stat. 3243, in which pro-
tests are expressly prohibited from task and delivery
orders pursuant to a GSA Federal Supply Schedule con-
tract where no similar prohibition exists. Compare Data
Mgmt., 78 Fed. Cl. at 371 n.4 and IDEA, 74 Fed. Cl. at
135–37 with SRA Int’l, Inc. v. United States, 766 F.3d
1409, 1413 (Fed. Cir. 2014) (holding the Court of Federal
Claims lacked subject-matter jurisdiction over a protest to
a task order issued pursuant to a Government-Wide
Acquisition Contract, not a Federal Supply Schedule); see
also John Cibinic, Jr., Ralph C. Nash, Jr. & Christopher
R. Yukins, Formation of Government Contracts 1171–72
COAST PROFESSIONAL, INC.   v. US                        11

    In this case, however, the Court of Federal Claims
concluded that these proposed new Task Orders (for the
award-term extensions) should not be considered “the
award of a contract.” It acknowledged that the award-
term extensions would be issued as new Task Orders, but
concluded that treating them as such for purposes of bid
protest jurisdiction would “elevate[] form over substance.”
Coast Prof’l, Inc. v. United States, 120 Fed. Cl. 727, 734
(2015). It held that “the award-term extensions added
more work to the existing contract only in the context of
those task order provisions-but nothing more.” Id.
     On appeal, the government defends the Court of Fed-
eral Claims’ decision arguing that using a new Task
Order is a “mere formality.” Gov’t Br. 30. The govern-
ment reasons that because the new Task Order will be
subject to the same terms and conditions as the old Task
Order, it should not be considered a new contract. The
government argues that instead, the award-term exten-
sion issued in a new Task Order should be considered an
option. Gov’t Br. 27–30. And the government argues that
it is well-settled that an agency’s decision whether to
exercise an option is a matter of contract administration
which can only be challenged under the Contract Disputes
Act (“CDA”). Gov’t Br. 20–26. On this latter point, the
government is correct. If a contractor wishes to contest
an agency’s decision regarding exercising an option under
the contract, such a challenge is a matter of contract
administration governed by the CDA. See Jones Automa-
tion, Inc. v. United States, 92 Fed. Cl. 368, 371–72 (2010)
(failure to exercise an option is a matter of contract ad-
ministration outside the court’s bid protest jurisdiction);
Gov’t Tech. Serv., LLC v. United States, 90 Fed. Cl. 522,

(4th ed. 2011). We agree that Task Orders issued pursu-
ant to a GSA Federal Supply Schedule are actions over
which the Court of Federal Claims has jurisdiction.
12                           COAST PROFESSIONAL, INC.   v. US

526 (2009) (failure to exercise an option is governed by the
CDA and is not a bid protest).
    We cannot agree however that the award-term exten-
sion issued in the form of a new Task Order is properly
treated as an option governed by the CDA. Even when a
new Task Order contracts for the same work previously
performed by the same contractor under the GSA Sched-
ule contract, this new Task Order is the award of a new
contract. Although the government recognizes that new
rounds of Task Orders under the same GSA Schedule
contract amount to a new procurement, it attempts to
distinguish the award-term extension at issue from “the
next round of PCA Task Orders” by arguing the award-
term extensions are not the subject of a separate pro-
curement. Gov’t Br. 30 n.8. But H.4 expressly anticipates
that the Task Orders issued for the award-term exten-
sions will issue concurrently with Task Orders issued
pursuant to additional rounds of procurement beyond the
60 months permitted under the 2009 Task Orders. “It is
the Government’s intent to time any award-term exten-
sion so that the extension period will coincide with the
award date of the next round of Task Orders.” J.A. 1419.
That the government has preselected some of the contrac-
tors who will receive the new Task Orders through the
award-term extension clause does not nullify the contrac-
tual effect of these Task Orders. Each new round of Task
Orders under a GSA Schedule contract is a “proposed
award or the award of a contract” falling under the plain
language of § 1491. See Data Mgmt. Servs. JV, 78 Fed.
Cl. at 371; IDEA Int’l, Inc., 74 Fed. Cl. at 135–37.
    The government asks us to deviate from the estab-
lished rule that new Task Orders are new contracts, and
instead conclude that new Task Orders resulting from
award-term extensions are “akin to options.” Gov’t Br. 27.
We do not agree that the award-term extension at issue in
H.4, which requires a new Task Order to be issued, should
be treated like an option. The FAR expressly defines an
COAST PROFESSIONAL, INC.   v. US                        13

Option: “Option means the unilateral right in a contract
by which, for a specified time, the Government may elect
to purchase additional supplies or services called for by
the contract, or may elect to extend the term of the con-
tract.” 48 C.F.R. § 2.101 (definition of Option). Unlike an
option, the award-term extensions cannot be issued
unilaterally by the government. Instead, the award-term
extensions can issue only if, inter alia, “[t]he contractor
accepts the Government’s target pricing and terms.”
J.A. 1419. Section H.4 specifies that the government
“target prices for the current PCA Task Orders will apply
to the award-term extension,” so it is anticipated that the
same pricing will apply; however, the contractor has the
right to accept or reject the award-term extension. This is
the opposite of a unilateral right.
    The government points us to FAR 17.2, which governs
the use and exercise of options. Gov’t Br. 28. The gov-
ernment is correct that like an option, which requires
written notice to a contractor, H.4 requires the govern-
ment to give written notice of its intent to extend. See
FAR 17.207(a). And like an option, the award-term
extension is conditioned on the availability of funds and
the requirement that the award will fulfill a government
need. See FAR 17.207(c). All of these conditions exist for
all new contracts to be issued: there must be government
funds, the new Task Order must fulfill a government
need, and it must be in writing.
    Precedent counsels against treating Section H.4 as an
option because the contract in fact has two separate
options clauses already. The 2009 Task Orders contained
two other provisions, H.1 and H.3, which are expressly
called options. J.A. 1419. The appearance of the term
“option” in only some of the provisions that extend the
duration of the 2009 Task Orders indicates that the
parties did not intend to treat “option” and “extension” as
synonymous. See, e.g., Diamond Coating Techs., LLC v.
Hyundai Motor Am., Nos. 2015-1844, -1861, 2016 WL
14                           COAST PROFESSIONAL, INC.   v. US

2865704, at *3 (Fed. Cir. May 17, 2016) (explaining that a
contract’s use of a term in some provisions, but not others,
reflects the parties’ intent to limit the term in question).
And as stated above, the substance of Section H.4 is
different from provisions that meet the definition of
“option” under the FAR. Compare J.A. 1419–20, with
FAR 2.101 (defining “option” as, inter alia, a provision
that the government may invoke unilaterally).
    The government has not convinced us that we ought
to deviate from the definitions and conditions in the FAR
to conclude that the new Task Orders which would issue
pursuant to an award-term extension ought to be treated
as options rather than new contracts. We will not deviate
from the definition in the FAR of option to contort these
new Task Orders into “mere formalities” in this case.
    Section 1491 gives the Court of Federal Claims juris-
diction over “the award or proposed award of a contract.”
We conclude that issuance of a new Task Order pursuant
to a GSA Federal Supply Schedule contract constitutes
the award of a contract and is thus an action over which
the Court of Federal Claims has jurisdiction. We see no
reason to create an exception when the new Task Orders
arise from an award-term extension.
                       CONCLUSION
    Because we conclude that the Court of Federal Claims
erred in concluding that the award-term Task Orders
were not new Task Orders for purposes of § 1491(b)(1), we
vacate and remand for further proceedings consistent
with this opinion.
             VACATED AND REMANDED
                          COSTS
     Costs to Pioneer and Enterprise.