Resource Conservation Group, LLC v. United States

United States Court of Appeals for the Federal Circuit
2009-5091

RESOURCE CONSERVATION GROUP, LLC,

Plaintiff-Appellant,

v.

UNITED STATES,

Defendant-Appellee.

Warren K. Rich, Rich and Henderson, P.C., of Annapolis, Maryland, argued for
plaintiff-appellant. With him on the brief was Anthony G. Gorski.

Christopher A. Bowen, Trial Attorney, Commercial Litigation Branch, Civil
Division, United States Department of Justice, of Washington, DC, argued for
defendant-appellee. With him on the brief were Tony West, Assistant Attorney General,
Jeanne E. Davidson, Director, and Kirk T. Manhardt, Assistant Director. Of counsel on
the brief was Joshua D. Harvey, United States Department of the Navy, Naval Facilities
Engineering Command, of Washington, DC.

Appealed from: United States Court of Federal Claims

Judge Susan G. Braden
United States Court of Appeals for the Federal Circuit

2009-5091

RESOURCE CONSERVATION GROUP, LLC,

Plaintiff-Appellant,

v.

UNITED STATES,
Defendant-Appellee.

Appeal from the United States Court of Federal Claims in 08-CV-768, Judge Susan G.
Braden.

___________________________

DECIDED: March 1, 2010
___________________________

Before LOURIE, DYK, Circuit Judges, and KENDALL, * District Judge

DYK, Circuit Judge.

Resource Conservation Group (“RCG”) appeals from a final judgment of the

United States Court of Federal Claims dismissing RCG’s action for lack of subject

matter jurisdiction. Res. Conservation Group, LLC v. Dep’t of Navy, 86 Fed. Cl. 475,

486 (2009). We affirm in part, reverse in part, and remand.

BACKGROUND

In 1913, the Naval Academy purchased land in Gambrills, Maryland, for the

purpose of establishing and operating a dairy farm to provide milk to the Academy

*
Honorable Virginia M. Kendall, District Judge, United States District Court
for the Northern District of Illinois, sitting by designation.
because of concerns about the safety of the commercial milk supply. In the 1990's, the

Naval Academy determined that it would be cheaper to purchase milk commercially,

and that the commercial milk supply was safe. Consequently, Congress included a

provision in the Defense Authorization Act for Fiscal Year 1998 that provided that the

Navy was authorized to “terminate or reduce the dairy or other operations conducted at

the Naval Academy dairy farm located in Gambrills, Maryland,” but banned sale of the

property and required that its “rural and agricultural nature” be maintained. See

National Defense Authorization Act for Fiscal Year 1998, Pub. L. No. 105-85, § 2871,

111 Stat. 1629, 2015-16 (1997) (codified at 10 U.S.C. § 6976). 1

On November 28, 2005, the Navy issued a Request of Interest (“ROI”) for

proposals to lease the dairy farm property. On January 16, 2006, RCG responded with

an Expression of Interest. The Navy, after receiving the expressions of interest from

RCG and other interested parties, issued a Notice of Availability for Lease, and

requested that all bids be submitted by March 19, 2007.

On February 6, 2007, interested bidders toured the property. With the Navy’s

written permission, RCG entered the property a second time on February 27, 2007, to

survey and test the area for the presence of sand and gravel. The Navy understood

that RCG was entering the property for the purposes of testing for the presence of sand

1
The statute provided that “the real property containing the dairy
farm . . . may not be . . . transferred or otherwise disposed of by the Navy or any
Federal Agency . . . and . . . shall be maintained in its rural and agricultural nature.” 10
U.S.C. § 6976(a)(2). Furthermore, it provided that “[a]ny lease of property at the Naval
Academy dairy farm shall be subject to a condition that the lessee maintain the rural
and agricultural nature of the leased property.” 10 U.S.C. § 6976(b)(2).

2009-5091 2
and gravel. 2 RCG then prepared a site analysis, designed mining plans for the

property, and submitted a formal lease proposal prior to the March 19, 2007, deadline.

The proposal stated that RCG proposed to lease the property in order to mine it for

sand and gravel.

On April 30, 2007, a Navy Contracting Officer informed RCG that its proposal did

not fall within the scope of the solicitation, because disposal of real property was

prohibited. The contracting officer reasoned that embedded sand and gravel constitutes

real property pursuant to 41 C.F.R. § 102-71.20, 3 that mining of sand and gravel

constituted disposal of real property, and that 10 U.S.C. § 6976 did not authorize

“disposal” of real property. Accordingly, RCG’s proposal would not be considered. In a

later debriefing, the Navy asserted that it had no obligation during the pre-bid

preparatory process to advise RCG that its bid would be unauthorized and did not

qualify for review or evaluation.

RCG first filed a bid protest with the General Accounting Office (“GAO”). The

GAO is authorized to decide bid protests concerning an alleged violation of a

procurement statute or regulation. See 31 U.S.C. § 3552(a). The Competition in

Contracting Act of 1984, Pub. L. No. 98-369, § 2741, 98 Stat. 494, 1199-1203 (codified

2
See Transcript of Record at 9-11, Res. Conservation Group, 86 Fed. Cl.
475 (No. 08-768C).
3
The regulation defines real property for the purposes of the General
Services Administration’s real property policies to include “embedded gravel, sand, or
stone.” 41 C.F.R. § 102-71.20. Additionally, other relevant federal regulations also
appear to treat disposal of sand and gravel as disposal of real property. See, e.g., 32
C.F.R. § 644.501 (Department of Army regulation defining standing timber, embedded
gravel, sand, and stone as “real property”).

2009-5091 3
at 31 U.S.C. §§ 3551-56) defines a “protest” to include “a written objection by an

interested party to . . . [a] solicitation or other request by a Federal agency for offers for

a contract for the procurement of property or services,” “[t]he cancellation of such a

solicitation or other request,” “[a]n award or proposed award of such a contract,” or “[a]

termination or cancellation of an award of such a contract.” 31 U.S.C. § 3551(1). The

GAO dismissed RCG’s protest, concluding that “[a] solicitation of offers to lease

government-owned land is not a procurement of property or services by a federal

agency; thus it is not encompassed within our [Competition in Contracting Act of 1984]

bid protest authority.” Res. Conservation Group, LLC, B-310831 (Comp. Gen. Nov. 28,

2007).

On October 24, 2008, RCG filed suit in the Court of Federal Claims alleging

breach of an implied contract of fair and honest consideration, and violation of the

Administrative Procedure Act (“APA”), 5 U.S.C. § 706. RCG sought recovery of bid

preparation costs and fees in the amount of $500,000 for the breach of the implied

contract. It appears that RCG was not challenging the actual award of the contract, but

rather sought recovery for damages incurred due to the government’s failure to timely

apprise RCG that its interpretation of 10 U.S.C. § 6976 foreclosed RCG’s bid. 4

4
See Complaint at 5, Res. Conservation Group, 86 Fed. Cl. 475 (2009)
(No. 08-768C) (“The Navy breached the implied contract to judge honestly and fairly all
bids submitted in response to the solicitation by disqualifying RCG with information that
it knew or should have known, but failed to disclose to RCG, before RCG incurred the
expenses of composing and submitting the formal proposal.”).

2009-5091 4
Additionally, RCG alleged that the Navy misinterpreted 10 U.S.C. § 6976 in refusing to

consider its bid. 5

The Court of Federal Claims held that it lacked jurisdiction under 28 U.S.C. §

1491(b)(1) to adjudicate bid protests involving leases of land where the government is

the lessor, because such an action is not “in connection with a procurement or proposed

procurement.” Res. Conservation Group, 86 Fed. Cl. at 486. The court also held that

the enactment of 28 U.S.C. § 1491(b) by the Administrative Dispute Resolution Act

(“ADRA”), Pub.L. No. 104-320, § 12, 110 Stat. 3870, 3874-76 (1996), had impliedly

repealed the right to sue under an implied-in-fact contract pursuant to 28 U.S.C. §

1491(a)(1), the general Tucker Act jurisdictional provision. Res. Conservation Group,

86 Fed. Cl. at 484-85. With respect to RCG’s APA claim, the Court of Federal Claims

held that it lacked jurisdiction to review an agency decision under the APA (an issue not

raised on appeal). Id. at 487. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(3).

DISCUSSION

RCG argues that 28 U.S.C. § 1491(b) provides a jurisdictional basis for its claim.

RCG alternatively argues that review of bid protests under the implied-in-fact contract of

fair and honest consideration pursuant to 28 U.S.C. § 1491(a) survived the enactment

of the ADRA and that a breach of the implied-in-fact duty remains a viable theory of

recovery. We review decisions of the Court of Federal Claims regarding subject matter

jurisdiction de novo. See Taylor v. United States, 303 F.3d 1357, 1359 (Fed. Cir. 2002).

5
Complaint at 4, Res. Conservation Group, 86 Fed. Cl. 475 (2009) (No. 08-
768C) (“The Navy erroneously interpreted 10 U.S.C. § 6976 to mean that a leasehold to
a mining operation is outside its authority because ‘mining’ is the equivalent of the
‘disposal’ of property. Nothing in section 6976 states that the Dairy Farm could not be
leased to a mining operation.”).

2009-5091 5
 To assess these arguments, we begin by providing an overview of the legislative

history of section 1491(b).

I

Under the Tucker Act, the Court of Federal Claims has jurisdiction “to render

judgment upon any claim against the United States founded . . . upon any express or

implied contract with the United States.” 28 U.S.C. § 1491(a)(1). This jurisdictional

grant was construed, prior to the enactment of the ADRA, to authorize suits by

disappointed bidders challenging contract awards based on alleged improprieties in the

procurement process. See Southfork Sys., Inc. v. United States, 141 F.3d 1124, 1132

(Fed. Cir. 1998) (citing Cent. Ark. Maint., Inc. v. United States, 68 F.3d 1338, 1341 (Fed

Cir. 1995)). The jurisdictional basis for such suits was the alleged breach of “an implied

contract to have the involved bids fairly and honestly considered.” Id. (quoting United

States v. John C. Grimberg Co., 702 F.2d 1362, 1367 (Fed. Cir. 1983) (en banc)); see

Heyer Prods. Co. v. United States, 140 F.Supp. 409, 414-15 (Ct. Cl. 1956).

Following passage of the APA in 1946, the District of Columbia Circuit in

Scanwell Labs., Inc. v. Shaffer, 424 F.2d 859 (D.C. Cir. 1970), held that challenges to

awards of government contracts were reviewable in federal district courts pursuant to

the judicial review provisions of the APA. Id. at 869-75. 6 Thus, for a period both the

district courts and the Court of Claims exercised jurisdiction over bid protests on two

6
Prior to the enactment of the APA, federal courts were foreclosed from
hearing such actions under Perkins v. Lukens Steel Co., 310 U.S. 113, 126-27 (1940),
in which the Supreme Court held that disappointed bidders lacked standing to bring
such challenges in federal courts.

2009-5091 6
separate theories. 7 The legislative history of the ADRA indicates that the enactment

§ 1491(b)(1) was motivated by a concern with forum shopping and fragmentation of

government contract law. As the original sponsor of the jurisdictional provision (Senator

Cohen) stated, “It is my belief that having multiple judicial bodies review bid protests of

Federal contracts has resulted in forum shopping as litigants search for the most

favorable forum. Additionally, the resulting disparate bodies of law between the circuits

has created a situation where there is no national uniformity in resolving these

disputes.” See 142 Cong. Rec. S11848 (daily ed. Sept. 30, 1996) (statement of Sen.

Cohen).

The ADRA expanded the jurisdiction of the Court of Federal Claims to hear bid

protest cases, ultimately giving the court exclusive jurisdiction to review “the full range of

procurement protest cases previously subject to review in the federal district courts and

the Court of Federal Claims.” H.R. Rep. No. 104-841, at 10 (1996) (Conf. Rep.). 8 The

ADRA also directed the court to use the standards of review provided by the APA in

reviewing the bid protest suits. 28 U.S.C. § 1491(b)(4).

7
The scope of review by the Court of Claims, however, was limited. Before
1982, review “was narrow and an aggrieved party was typically limited to monetary
relief,” such as costs associated with undertaking the bidding process. See Emery
Worldwide Airlines, Inc. v. United States, 264 F.3d 1071, 1078 (Fed. Cir. 2001); Keco
Indus., Inc. v. United States, 492 F.2d 1200, 1203-04 (Ct. Cl. 1974).
8
For a period, the ADRA allowed “both federal district courts and the Court
of Federal Claims to hear ‘the full range of cases previously subject to review in either
system.’” Emery Worldwide Airlines, 264 F.3d at 1079 (quoting 142 Cong. Rec. S11849
(daily ed. Sept. 30, 1996) (statement of Sen. Levin)). However, a sunset provision
terminated the federal district courts’ jurisdiction in 2001, eventually channeling all
judicial review of procurement protests to the United States Court of Federal Claims.
See ADRA § 12(d), 110 Stat. at 3874-76.

2009-5091 7
 With this background in mind, we turn to the arguments raised by the parties in

this case.

II

We first consider whether RCG’s claim falls within the jurisdiction conferred by

section 1491(b)(1), the new jurisdictional provision enacted by the ADRA. We conclude

that the Court of Federal Claims correctly held that it does not.

Section 1491(b)(1) grants the Court of Federal Claims jurisdiction

to render judgment on an action 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) (emphasis added). Initially, we consider the meaning of the

phrase “in connection with a procurement or a proposed procurement.”

In construing statutory language, we look to dictionary definitions published at the

time that the statute was enacted. 9 At the time that the ADRA was enacted in 1996, the

definition of “procurement contract” was “[a] government contract with a manufacturer or

supplier of goods or machinery or services under the terms of which a sale or service is

made to the government.” Black’s Law Dictionary 1208 (6th ed. 1990). “Procure” was

defined as “to get possession of; obtain, acquire.” Webster’s Third New International

Dictionary 1809 (1993). These definitions of “procurement” and of “procure” signify the

9
See Carcieri v. Salazar, 129 S. Ct. 1058, 1064 (2009) (referring to Black’s
Law Dictionary and Webster’s New International Dictionary for definition of “now” at the
time that the Indian Reorganization Act was enacted); MCI Telecomm. Corp. v. Am. Tel.
& Tel. Co., 512 U.S. 218, 228 (1994) (referring to Webster’s New International
Dictionary and Webster’s Collegiate Dictionary for definition of “modify” at the time the
Communications Act was enacted).

2009-5091 8
act of obtaining or acquiring something, in the context of acquiring goods or services. It

strains the ordinary meaning of “procurement” to extend that definition to encompass a

situation in which it is the government that is seeking to lease its own property.

Moreover, although Congress did not define “procurement” in the Tucker Act, it

did define “procurement” in 41 U.S.C. § 403(2), related to the establishment of the

Office of Federal Procurement Policy, an office within the Office of Management and

Budget that plays a central role in shaping the policies and practices federal agencies

use to acquire goods and services. Section 403(2) states that procurement “includes all

stages of the process of acquiring property or services, beginning with the process for

determining a need for property or services and ending with contract completion and

closeout.” 41 U.S.C. § 403(2) (emphasis added). In Distributed Solutions, Inc. v.

United States, 539 F.3d 1340 (Fed. Cir. 2008), we concluded that the definition of

“procurement” in 41 U.S.C. § 403(2) should be utilized in determining the scope of

section 1491(b)(1), as the statutory provisions related to the establishment of the Office

of Federal Procurement Policy “give overall direction for federal procurement policies,

regulations, procedures, and forms.” 539 F.3d at 1345. The process involved in

soliciting lessees for government-owned property cannot be characterized as a “process

of acquiring property or services.” We note also that the GAO, in construing the

“procurement” language, concluded that “[a] solicitation of offers to lease government-

owned land is not a procurement of property or services by a federal agency; thus it is

not encompassed within our [Competition in Contracting Act of 1984] bid protest

authority.” Res. Conservation Group, B-310831 (Comp. Gen. Nov. 28, 2007).

2009-5091 9
 Additionally, there is no indication in the legislative history that the ADRA was

intended to deal with nonprocurement protests. Throughout the legislative history,

section 1491(b)(1) is described as applying to “procurement.” See, e.g., 142 Cong.

Rec. S6156 (daily ed. June 12, 1996) (statement of Sen. Cohen, original sponsor)

(“[This] amendment is designed to increase the efficiency of our procurement system by

consolidating jurisdiction over bid protest claims in the Court of Federal Claims.”

(emphasis added)); H.R. Rep. No. 104-841, at 10 (“This section consolidates federal

court jurisdiction for procurement protest cases in the Court of Federal Claims.”

(emphasis added)); 142 Cong. Rec. S11849 (daily ed. Sep. 30, 1996) (statement of

Sen. Levin) (“[T]he bill would address the . . . issue of judicial jurisdiction over

procurement protests.” (emphasis added)). The issue of nonprocurement bid protests is

mentioned nowhere in the legislative history. 10

The government agrees that the “procurement” language in the statute is limited

to the procurement of goods and services. But in an apparent effort to support its

10
The fact that as part of the ADRA Congress repealed former section
1491(a)(3), and enacted its substance as section 1491(b)(2), does not suggest that
Congress viewed section 1491(b)(1) as encompassing nonprocurement cases. Section
1491(a)(3) provided: “To afford complete relief on any contract claim brought before the
contract is awarded, the court shall have exclusive jurisdiction to grant declaratory
judgments and such equitable and extraordinary relief as it deems proper, including but
not limited to injunctive relief.” Federal Courts Improvement Act of 1982, Pub. L. No.
97-164, § 133, 96 Stat. 25, 39 (current version at 28 U.S.C. § 1491). While that section
was not on its face limited to procurement cases, the legislative history of that section
enacted in 1982 suggests that Congress intended it to apply only in the procurement
context. See Federal Courts Improvement Act of 1981, S. Rep. No. 97-275, at 23
(1981) (amendment described as “conferring jurisdiction upon the Claims Court to
award injunctive relief in the pre-award stage of the procurement process”); see
generally John C. Grimberg Co., 702 F.2d at 1372 (discussing legislative history of
section 1491(a)(3) and the court’s new jurisdiction “to award injunctive relief in the
preaward stage of the procurement process” (emphasis added)).

2009-5091 10
argument discussed below that section 1491(b)(1) provides the exclusive remedy for

both procurement and nonprocurement solicitations, the government argues that the

procurement limitation only applies to challenges to “statutes and regulations” and not to

challenges of “awards” and “solicitations.” It suggests that RCG could somehow secure

relief if RCG were “to object to either the award or the solicitation. Those are not

governed by ‘in connection with a procurement.’” Oral Arg. 13:23-13:30. This

convoluted argument makes no sense, and is based entirely on the theory of the last

antecedent, i.e., that the “procurement” language appears immediately after the “any

violation of statute or regulation” language. See, e.g., Anhydrides & Chems, Inc. v.

United States, 130 F.3d 1481, 1483 (Fed. Cir. 1997) (holding that referential and

qualifying words and phrases, where no contrary intention appears, refer solely to the

last antecedent, which consists of “the last word, phrase, or clause that can be made an

antecedent without impairing the meaning of the sentence”) (citations omitted). But we

have made clear that that doctrine provides only marginal assistance, and is overcome

by other factors showing a different meaning. Finisar Corp. v. DirecTV Group., Inc., 523

F.3d 1323, 1336 (Fed. Cir. 2008). Here it is clear, for the reasons described above, that

1491(b)(1) in its entirety is exclusively concerned with procurement solicitations and

contracts. Moreover, it is quite unlikely that Congress would have allowed the Court of

Federal Claims to exercise jurisdiction in nonprocurement bid protests in the case of a

challenge to an award, proposed award, or solicitation, but not in the case of a

challenge to a violation of a statute or regulation.

Thus, the Court of Federal Claims was correct in holding that relief under

1491(b)(1) is unavailable outside the procurement context.

2009-5091 11
 III

We next address whether the implied-in-fact contract jurisdiction under 28 U.S.C.

§ 1491(a)(1) that existed prior to 1996 survived the enactment of the ADRA, a question

that we had previously reserved in Emery Worldwide Airlines, 264 F.3d 1071, 1081 n.9

(Fed. Cir. 2001), and Impresa Construzioni Geom. Domenico Garufi v. United States,

238 F.3d 1324, 1332 n.6 (Fed. Cir. 2001). Contrary to the Court of Federal Claims, we

conclude that implied-in-fact contract jurisdiction does survive as to claims where the

new statute does not provide a remedy.

Before enactment of section 1491(b)(1), the Court of Federal Claims exercised

jurisdiction over solicitations for the sale of government property, just as it did in the

procurement area. 11 The new statute on its face does not repeal the earlier jurisdiction.

The government argues, however, that continuation of the implied-in-fact jurisdiction

would be inconsistent with the purposes of the ADRA, which clearly was designed to

place all bid protest challenges in a single court (after a sunset period) under a single

standard (the APA standard).

We agree that Congress intended the 1491(b)(1) jurisdiction to be exclusive

where 1491(b)(1) provided a remedy (in procurement cases). The legislative history

makes clear that the ADRA was meant to unify bid protest law in one court under one

standard. However, it seems quite unlikely that Congress would intend that statute to

11
See, e.g., Prineville Sawmill Co. v. United States, 859 F.2d 905, 909 (Fed.
Cir. 1988) (holding that the Claims Court had jurisdiction to review the Forest Service’s
actions in rejecting a responsive bid it received in connection with the sale of federally
owned timber, as an invitation for bids issued by the government carries “an implied
contractual obligation to fairly and honestly consider all responsive bids”); Monchamp
Corp. v. United States, 19 Cl. Ct. 797, 800-02 (1990) (deciding merits of case in which
plaintiff alleged that the Forest Service failed to consider its bid fairly).

2009-5091 12
deny a pre-existing remedy without providing a remedy under the new statute. See,

e.g., Davis v. Passman, 442 U.S. 228, 247 (1979) (holding that by enacting an

amendment to the Civil Rights Act of 1964 which protects federal employees from

discrimination, Congress did not intend to foreclose pre-existing alternative remedies

available to those expressly unprotected by the statute). Indeed, the Conference

Report to the ADRA provides:

It is the intention of the Managers to give the Court of Federal
Claims exclusive jurisdiction over the full range of procurement protest
cases previously subject to review in the federal district courts and the
Court of Federal Claims. This section is not intended to affect the
jurisdiction or standards applied by the Court of Federal Claims in any
other area of law.

H.R. Rep. No. 104-841, at 10 (emphases added). This passage confirms that Congress

did not intend to alter or restrict the Court of Federal Claims’ existing jurisdiction in

cases not covered by the new statute. Similarly, the repeal of district court jurisdiction

over bid protests in the ADRA made clear that the district court jurisdiction was repealed

only where the new jurisdiction was substituted. Section 12(d) of the Act provided that

“the jurisdiction of the district courts of the United States over the actions described in

section 1491(b)(1) of title 28, United States Code . . . shall terminate on January 1, 2001

unless extended by Congress.” ADRA § 12(d), 110 Stat. at 3874-76. 12 We conclude

that the court’s implied-in-fact jurisdiction over nonprocurement solicitations survived the

enactment of 1491(b)(1).

Admittedly, dividing jurisdiction between the Court of Federal Claims and the

district courts for nonprocurement bid protests may lead to similar problems that led to

2009-5091 13
the enactment of 1491(b)(1). However, if the statute is to be amended to solve this

problem, that amendment must be undertaken by Congress and not this court.

Finally, the government argues that we should affirm on the merits because its

construction of 10 U.S.C. § 6976 is correct. We decline to construe that statute for the

first time on appeal, but we note that even if the government’s construction were

correct, that would not necessarily defeat RCG’s claim. That claim is based in part on

the government’s alleged unfairness in failing to advise RCG early in the process of the

construction of section 6976 that made its proposed bid unacceptable. We express no

opinion on whether the government was obligated to inform potential bidders of the

perceived limitations imposed by 10 U.S.C. § 6976.

CONCLUSION

We conclude that the Court of Federal Claims did not have jurisdiction under 28

U.S.C. § 1491(b)(1), but had jurisdiction under section 1491(a)(1) because the implied-

in-fact contract jurisdiction in nonprocurement cases that existed prior to 1996 survived

the enactment of the ADRA.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED

COSTS

No costs.

12
Thus, a disappointed bidder in a nonprocurement case could also
theoretically bring its bid protest challenge in a federal district court, since the ADRA
only repealed jurisdiction over procurement cases.

2009-5091 14