C&E Servs., Inc. v. District of Columbia Water & Sewer Authority

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 11, 2002 Decided November 15, 2002

No. 01-7138

C&E Services, Inc. of Washington,
Appellant

v.

District of Columbia Water and Sewer Authority,
Appellee

Appeal from the United States District Court
for the District of Columbia
(No. 00cv01584)

Anthony Thompson argued the cause for appellant. With
him on the briefs was Lynn F. Kaufmann.

Frederick A. Douglas argued the cause for appellee. With
him on the brief were Henderson J. Brown, IV and Tanikia
M. Roberts. Curtis A. Boykin entered an appearance.

 Before: Sentelle, Randolph and Tatel, Circuit Judges.

Opinion for the Court filed by Circuit Judge Tatel.

Tatel, Circuit Judge: A disappointed bidder for a District
of Columbia government contract argues that the city's refus-
al to award it the contract violated the Due Process Clause of
the Fifth Amendment and the federal Service Contract Act.
Because D.C. law creates no entitlement to a contract before
it is formally awarded, we affirm the district court's dismissal
of the due process claim. And because we agree with the
district court that it lacked jurisdiction over the Service
Contract Act claim, we affirm its dismissal of that claim as
well.

I.

The District of Columbia Procurement Practices Act of
1985, D.C. Code Ann. s 2-301.01 et seq., identifies "competi-
tive sealed bidding" as the "preferred method" for District
agencies to award goods and services contracts. Id.
s 2-303.02(b). Such contracts "shall be awarded to the re-
sponsible and responsive bidder whose bid meets the require-
ments set forth in the [invitation for bids]" and to those who
submit "the lowest bid price or lowest evaluated bid price."
D.C. Mun. Regs. tit. 27, s 1541.1. Responsible and responsive
low bidders, however, are not assured of winning contracts,
for D.C. agencies may cancel the bidding process even after
bids have been opened if cancellation is in the "best interest
of the District government." D.C. Code Ann. s 2-303.07. Ex
post cancellations require agencies to provide "cogent or
compelling reasons to do so ... because of the potentially
serious adverse impact of cancellation on the integrity of the
competitive sealed bidding system after prices have been
exposed." Protest of Singleton Elec. Co., Inc., CAB No.
P-411, 1994 WL 780923 at 5 (D.C.C.A.B. Nov. 15, 1994).
Disappointed bidders may protest the award of a contract to
the District of Columbia Contract Appeals Board (CAB) and
then to the District of Columbia Superior Court. D.C. Code
Ann. ss 2-309.03(a)(1), 2-309.08; Francis v. Recycling Solu-

tions, Inc., 695 A.2d 63, 68-70 (D.C. 1997); Jones & Artis
Constr. Co. v. D.C. Contract Appeals Bd., 549 A.2d 315, 318
(D.C. 1988).

Appellee District of Columbia Water and Sewer Authority
(WASA) "oversee[s] water and sewer operations for the Dis-
trict and surrounding jurisdictions." D.C. Code Ann.
s 34-2201.01(4). Although WASA now has its own procure-
ment regulations, D.C. Mun. Regs. tit. 21, s 5300 et seq., the
Procurement Practices Act governed its activities at the
beginning of the events at issue in this case, D.C. Code Ann.
s 43-1687 (1996).

On July 25, 1999, WASA issued an invitation for bids to
maintain and repair certain instruments at its Blue Plains
Wastewater Treatment Plant. At that time, instrumentation
services were provided by J. Givoo Consultants, Inc. Appel-
lant C&E Services, Inc. of Washington, as well as Givoo,
submitted a bid to furnish the instrumentation services.
Viewed through the lens we employ when reviewing the
dismissal of a complaint pursuant to Federal Rule of Civil
Procedure 12(b)(6)--"we must accept as true all of the factual
allegations contained in the complaint," Swierkiewicz v. Sore-
ma, 534 U.S. 506, 508 n.1 (2002)--the following events then
occurred.

During the bidding process, WASA issued a "Clarification"
permitting prospective bidders to offer wages consistent with
the Service Contract Act, 41 U.S.C. s 351 et seq., which
applies to federal contractors who "furnish services," id.
s 351(b)(1), rather than (as the contract with Givoo had
required) the higher wages mandated by the Davis-Bacon
Act, 40 U.S.C. s 276a et seq., which applies to federal contrac-
tors who provide "construction, alteration, and/or repair, in-
cluding painting and decorating, of public buildings or public
works," id. s 276a(a). Am. Compl. p p 57, 59, 60. After bids
were opened, C&E "received a copy" of the agenda of
WASA's most recent board meeting, revealing that the agen-
cy planned to award the contract to Givoo. Id. p p 19-20.
Ten days later, C&E filed a protest of the "proposed award"
with the CAB. Id. p 25.

While C&E's protest was pending, WASA, acting pursuant
to its powers under the Procurement Practices Act, cancelled

the entire bidding process. Id. p 28. In its written justifica-
tion, WASA concluded that although C&E had "submitted the
lowest evaluated bid," cancellation "is in the best interest of
WASA" because "the specifications as written in the [invita-
tion for bids] were ambiguous and insufficient to cover
WASA's need." Id. p 29. WASA identified the "ambiguous
and insufficient" specifications, but mentioned no deficiencies
concerning wage requirements. Id. p p 33-37.

WASA then opened up a new bid process for the instru-
mentation contract that differed from the old process in two
ways. First, WASA solicited bids under its own procurement
regulations that, unlike the Procurement Practices Act, im-
pose no low-bidder rule. Id. p 42; D.C. Mun. Regs. tit. 21,
s 5323.2. Second, ten days before bids were due, WASA
required all bidders to match the Davis-Bacon-level compen-
sation that a pre-existing union contract obligated Givoo to
provide. Am. Compl. p p 51, 58, 59, 63.

Filing suit in the United States District Court for the
District of Columbia, C&E alleged that WASA, through "a
pattern and practice of wrongful manipulation of the public
procurement process by arbitrary and capricious acts," de-
prived it of property without due process of law in violation of
the Fifth Amendment. Id. p p 121, 126, 132, 138. C&E
sought an injunction awarding it the instrumentation contract,
damages for wrongfully awarding the contract and for bid
preparation, and attorneys' fees. Id. at 34-35. C&E also
requested a declaratory judgment that WASA's wage require-
ment violated the Service Contract Act. On WASA's Rule
12(b)(6) motion, the district court dismissed the entire com-
plaint, finding that (1) C & E failed to state a claim establish-
ing a property right in the instrumentation contract and (2)
the Declaratory Judgment Act does not authorize declaratory
relief under the Service Contract Act. C&E Servs., Inc. of
Wash. v. D.C. Water and Sewer Auth., No. 00-1584, mem. op.
at 9, 11 (D.D.C. May 21, 2001).

C&E appeals. We consider the district court's grant of the
motion to dismiss de novo, Weyrich v. New Republic, Inc.,

235 F.3d 617, 623 (D.C. Cir. 2001), keeping in mind "the
accepted rule that a complaint should not be dismissed for
failure to state a claim unless it appears beyond doubt that
the plaintiff can prove no set of facts in support of his claim
which would entitle him to relief," Conley v. Gibson, 355 U.S.
41, 45-46 (1957).

II.

We begin with C&E's claim that WASA deprived it of
property without due process of law. To determine whether
C&E has stated such a claim, "we first determine whether
... [it] has a property ... interest that triggers Fifth
Amendment due process protection." Reeve Aleutian Air-
ways, Inc. v. United States, 982 F.2d 594, 598 (D.C. Cir. 1993)
(citing Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532,
538-41 (1985)). "Property interests," the Supreme Court
held in Board of Regents of State Colleges v. Roth, 408 U.S.
564, 577 (1972), "are not created by the Constitution. Rather,
they are created and their dimensions are defined by existing
rules or understandings that stem from an independent
source such as state law--rules or understandings that secure
certain benefits and that support claims of entitlement to
those benefits." As Roth explains, "[t]o have a property
interest in a benefit, a person clearly must have more than an
abstract need or desire for it. He must have more than a
unilateral expectation of it. He must, instead, have a legiti-
mate claim of entitlement to it." Id.

C&E believes that D.C. law gives it "a legitimate claim of
entitlement" to the instrumentation contract because (1) the
Procurement Practices Act imposes a low-bidder rule and (2)
C&E "submitted the lowest evaluated bid," according to
WASA. This entitlement theory, however, ignores the Pro-
curement Practices Act provision permitting cancellation of
the bid process even after bid opening. D.C. Code Ann.
s 2-303.07. WASA's authority to cancel for "cogent or com-
pelling reasons" means that submitting the lowest bid does
not necessarily translate into winning the contract. Instead,
cancellation of the bidding hangs over bidders' heads until

contracts are actually awarded. Because the Constitution's
"procedural protection of property is a safeguard of the
security of interests that a person has already acquired in
specific benefits," Roth, 408 U.S. at 576 (emphasis added), a
Fifth Amendment-protected property interest arises only
upon award.

The D.C. Court of Appeals agrees with this result. In
Network Technical Services, Inc. v. District of Columbia
Data Co., 464 A.2d 133 (D.C. 1983), another disappointed
bidder challenged a D.C. agency's procurement decision. For
jurisdictional reasons that are irrelevant here, "the only issue
[before the court was] whether a specific statute or the
Constitution entitled [the bidder] to a hearing prior to the
award and execution of the contract." Id. at 135. Answering
no, the court explained that "no property interest exists prior
to execution." Id.

C&E alleges that WASA's cancellation of the bid process
and re-solicitation of bids under conditions favorable to Givoo
demonstrates that WASA's rationale for cancellation was
pretextual and therefore "arbitrary and capricious." Am.
Compl. p 121. This is irrelevant. Whether an agency vio-
lates a well-defined state law standard has no bearing on the
constitutional question of whether the expectations created by
state law rise to the level of a Fifth Amendment property
interest. We may assume that WASA offered no "cogent or
compelling" reason for cancellation in this instance, yet still
conclude that WASA's uncontested authority to cancel by
providing such a reason defeats C&E's claim of a legal
entitlement. Otherwise, every garden variety dispute regard-
ing the D.C. procurement process would become a federal
case.

Our conclusion that C&E lacks a sufficient property inter-
est to maintain its due process claim does not deprive the
company of a remedy. Under the Procurement Practices
Act, C&E may bring abuse of discretion claims before CAB
and, thereafter, before the D.C. Superior Court. We, of
course, express no opinion on whether, as WASA argues,
C&E has waived this right by dismissing its CAB protest,

allegedly in reliance on WASA's intentional misrepresentation
regarding the instrumentation contract's wage requirements.
Am. Compl. p 39. That is a question for the D.C. courts.

III.

Turning to C&E's request for a declaratory judgment that
WASA violated the Service Contract Act (SCA) by requiring
bidders to offer Davis-Bacon Act wages rather than SCA
wages, we begin with the well-established rule that the De-
claratory Judgment Act "is not an independent source of
federal jurisdiction." Schilling v. Rogers, 363 U.S. 666, 677
(1960) (citing Skelly Oil Co. v. Phillips Petroleum Co., 339
U.S. 667, 671 (1950)). Rather, "the availability of [declarato-
ry] relief presupposes the existence of a judicially remediable
right." Id. Thus, the Supreme Court held in Schilling that
federal courts may not declare a plaintiff's rights under a
federal statute that Congress intended to be enforced exclu-
sively through a judicially unreviewable administrative hear-
ing.

This case is nearly identical to Schilling. "[I]t is plain," we
have held, "that the SCA creates no private remedy" in the
federal courts. Danielsen v. Burnside-Ott Aviation Train-
ing Ctr., Inc., 941 F.2d 1220, 1228 (D.C. Cir. 1991). Instead,
disputes arising under the SCA must be resolved, in the first
instance, by "the statutory scheme for administrative relief
set forth by Congress in the SCA" and administered by the
Department of Labor. Id. at 1226. This case differs from
Schilling in only one respect: Under the SCA, the Depart-
ment of Labor's administrative determinations are judicially
reviewable. See, e.g., Ober United Travel Agency, Inc. v.
United States Dep't of Labor, 135 F.3d 822, 823 (D.C. Cir.
1998) (rejecting bidder's claim and affirming Department of
Labor's determination that the SCA applies to U.S. Air
Force-awarded travel management contracts). But the oper-
ative principle remains the same. A judicial declaration
telling WASA how to interpret the SCA would constitute an
end-run around Congress's clear intent that the Department
of Labor interpret and enforce the SCA in the first instance.

Schilling teaches that the Declaratory Judgment Act does not
authorize such a result. Cf. Block v. Cmty. Nutrition Inst.,
467 U.S. 340, 352-53 (1984) (Administrative Procedure Act
action impliedly precluded by federal statute intended to
foreclose private party enforcement); Middlesex County Sew-
erage Auth. v. Nat'l Sea Clammers Ass'n, 453 U.S. 1, 19-21
(1981) (section 1983 action impliedly precluded by federal
statute intended to foreclose private party enforcement).
Thus, plain language of the Declaratory Judgment Act not-
withstanding, we agree with the district court that it lacked
authority to adjudicate C&E's rights under the SCA except
pursuant to the Administrative Procedure Act following a
Department of Labor determination.

IV.

Because C&E has failed to state a claim under either the
due process clause or the Service Contract Act, we affirm in
all respects.

So ordered.