Court Opinion

ID: 9492191
Source: CourtListenerOpinion
Date Created: 2023-08-05 14:34:23.439882+00
Date Added: 2024-06-11T17:55:09.865989
License: Public Domain

RADER, Circuit Judge,
concurring in the result, in which MAYER, Chief Judge, and LOURIE, Circuit Judge, join.
Because § 8118 of the Defense Appropriations Act does not apply to this contract, I concur. Section 8118 provides in relevant part:
None of the funds provided for the Department of Defense in this Act may be obligated or expended for fixed-price-type contracts in excess of $10,000,000 for the -development of a major system or subsystem....
(emphasis added). This particular section of the U.S.Code does not supply a definition of “major system.” However, § 2302(5) of title, 10 of the United States Code, which relates to government procurement contracts generally, defines “major system:”
The term “major system” means a combination of elements that will function together to produce the capabilities required to fulfill a mission need.... A system shall be considered a major system if (A) the Department of Defense is responsible for the system and the total expenditures for research, development, test and evaluation for the system are estimated to be more than $75,000,000 ... or (C) the system is designated a “major system” by the head of the agency responsible for the system.
Therefore, the term “major system” refers to systems either with estimated' costs above $75,000,000 or systems “designated a ‘major system’ by the head of the agency responsible for the system.” See 10 U.S.C. § 2802(5) (1986). Shortly after enactment of § 8118, both the Department of Defense and the Navy incorporated this statutory definition into their interpretation of that section. As the agency charged with interpretation and application of the statute, the Department of Defense’s reasonable interpretation of § 8118 deserves deference. See Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 844, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984).
The Department of Defense and Navy’s interpretation alone gives meaning to all of the words in the statute. Both the Court *1378of Federal Claims’ interpretation and this court’s interpretation in this opinion would render the “major system or subsystem” language superfluous and would invoke § 8118 for any fixed-price contract in excess of $10,000,000. This court chooses that course on the reasoning that the agency’s interpretation “rewrite[s] § 8118 to replace the statutory threshold of $10,000,-000 with that of $75,000,000.” This reasoning, however, discounts the statute’s alternative method of categorizing a project as a “major system,” namely, designation by the head of the agency. Thus, a project beneath the $75,000,000 threshold of 10 U.S.C. § 2302(5) could nonetheless qualify as a “major system” upon designation by the head of the agency.
This court’s opinion discounts the reasonable reconciliations of the $10,000,000 contract amount requirement with the “major system” classification requirement. Under the agency’s reasonable interpretation, the $10,000,000 contract amount requirement serves as a floor for invoking § 8118 in contracts involving a project designated as a “major system” by the department head. Furthermore, the $10,-000,000 contract amount requirement does not lose its meaning for systems whose estimated costs exceed $75,000,000. Development of a major system typically requires multiple contracts with multiple developers. In these cases, the $10,000,000 requirement serves as a floor for application of § 8118 to each contract involved in the development of that “major system.” Similarly, the $10,000,000 trigger amount excludes from § 8118 any subsystem contracts within a major system which do not satisfy this threshold amount. For these reasons, the $10,000,000 threshold continues to govern in conjunction with the $75,-000,000 threshold for a “major system.” In sum, these dual thresholds work together and provide a reasonable explanation for the agency’s interpretation of these statutes. Because reasonable, the agency’s interpretation deserves deference.
Even without deference to the Departments of Defense and Navy, their proposed interpretation of § 8118 alone gives meaning to all the statute’s terms and should therefore govern this court’s resolution. As noted above, this is the only interpretation which supplies meaning to all of the terms of the statute. Specifically, this is the only interpretation which gives meaning to the term “major system” as well as the $10,000,000 contract amount requirement.
Finally, I read the term “subsystem” in § 8118 as linked to “major system” by its context within the statute. Although neither 10 U.S.C. § 2302(5), nor the interpretations of § 8118 proffered by the Department of the Defense or the Navy address the definition of “subsystem,” the statute itself ties the definition of this term to the term “major system.” In essence, this interpretation would apply § 8118 to “major systems and subsystems of major systems.” This reading preserves the statute’s “major system or subsystem” requirement rather than expanding application of § 8118 to all fixed-price-type contracts exceeding $10,000,-000.
Furthermore, to my eyes, this appeal does not present the question of whether this Reduced Diameter Array is a “subsystem” of a “major system.” Although AT & T asserted below that the Reduced Diameter Array subsystem was a part of SUR-TASS, and that SURTASS was a major system according to the requirements of 10 U.S.C. § 2302(5), by consent of the parties before the Court of Federal Claims, that issue is not a subject of the certified appeal. For these reasons, I would not apply § 8118 to the Reduced Diameter Array contract at issue in this appeal.