Columbian Rope Co. v. West, Togo D.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 14, 1998 Decided May 19, 1998

No. 97-5154

Columbian Rope Company,

Appellant

v.

Togo D. West, Jr., Secretary of the Army, et al.,

Appellees

Appeal from the United States District Court

for the District of Columbia

(No. 96cv01827)

Douglas L. Patin argued the cause and filed the briefs for
appellant.

Glenn P. Harris, Trial Attorney, U.S. Small Business
Administration, argued the cause for appellees, with whom
Wilma A. Lewis, U.S. Attorney, Mark E. Nagle, R. Craig
Lawrence and Wyneva Johnson, Assistant U.S. Attorneys,
were on the brief.

Before: Silberman, Henderson and Rogers, Circuit
Judges.

Opinion for the Court filed by Circuit Judge Rogers.

Rogers, Circuit Judge: Columbian Rope Company appeals
from the grant of summary judgment rejecting its challenge
to the Small Business Administration's decision that a rival
bidder was eligible under the Small Business Act for a
government contract. Because the contract has been fully
performed and its options have expired, we dismiss the appeal
as moot.

I.

The Small Business Act ("the Act"), 15 U.S.C. ss 631-657
(1994), directs federal agencies to reserve some government
contracts for small businesses, with "[t]he Government-wide
goal for participation by small business concerns ... estab-
lished at not less than 20 percent of the total value of all
prime contract awards for each fiscal year." Id. s 644(g)(1);
see id. s 644(a). A business can qualify as a "small business
concern" under the Act only if it is "independently owned and
operated" and "not dominant in its field of operation." Id.
s 632(a)(1). The Small Business Administration ("SBA") has
authority to establish criteria to determine whether individual
businesses qualify as small businesses and to apply those
criteria in individual cases. See id. ss 632(a)(2)(A), 637(b)(6).

One statutory rule and one regulatory rule regarding busi-
nesses' eligibility under the Act are at issue. Both rules are
designed to ensure that small businesses actually perform a
significant part of the work required by government contracts
that they win. See, e.g., Size Appeal of Nuclear Research
Corp., S.B.A. No. 2828 (1988); cf. Iconco v. Jensen Construc-
tion Co., 622 F.2d 1291, 1298 (8th Cir. 1980) ("If a contract set
aside for small businesses has been performed by a concern
that is not small, the intent of Congress has not been ad-
vanced."). First, under the "50% Rule," a business cannot
qualify as a small business concern for purposes of a contract

for procurement of supplies unless it agrees that it "will
perform work for at least 50 percent of the cost of manufac-
turing the supplies (not including the cost of materials)." 15
U.S.C. s 644(o)(1)(B). Second, through application of the
"Manufacturer Rule," SBA decides whether a particular busi-
ness qualifies as the manufacturer of the end product that is
the subject of the contract.1 If a business does not satisfy
both the 50% Rule and the Manufacturer Rule, it cannot
receive a contract for the manufacture of supplies reserved
for small business concerns under the Act.

On June 9, 1994, the Department of the Army invited the
submission of bids for a contract for rope assemblies to be
used in connection with helicopter airlift operations. The
Army reserved this contract for small business concerns
under the Act. Columbian Rope Company ("Columbian") and
Ocean Products Research ("Ocean Products") submitted bids,
and the Army awarded the contract to Ocean Products.
Columbian formally protested the award of the contract,
challenging both whether Ocean Products would do a good
job and its eligibility as a small business in light of its
subcontracting of a significant portion of the work to a large
company, American Manufacturing. The SBA Regional Of-
fice denied the protest and Columbian appealed to the SBA
Office of Hearings and Appeals ("Hearings and Appeals"),
which ruled that the protest was moot. However, after
Columbian filed suit in the district court, the parties entered

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1 At the time of the events in question, the Manufacturer Rule
read:

The following factors are evaluated in determining whether a
concern is the manufacturer for the procurement:

(i) The proportion of total value in the end item added by the
efforts of the concern, excluding costs of overhead, testing,
quality control, and profit; and

(ii) The importance of the elements added by the concern to
the function of the end item, regardless of their relative value.

13 C.F.R. s 121.906(b)(2) (1995). SBA revised its regulations in
January 1996; the Manufacturer Rule can be found in its current
form at 13 C.F.R. s 121.406(b) (1997).

a stipulated order of dismissal, without prejudice, that Hear-
ings and Appeals would decide the merits of Columbian's
protest.

On November 22, 1995, Hearings and Appeals adopted the
Regional Office's finding that Ocean Products "manufactures
a substantial part of the end product" and thus satisfied the
Manufacturer Rule. Because there was insufficient evidence
in the record on the cost of manufacturing actually performed
by Ocean Products relative to the cost of manufacturing
subcontracted to American Manufacturing, Hearings and Ap-
peals concluded that it could not determine whether Ocean
Products met the 50% Rule and thus remanded that issue to
the Regional Office for further investigation. On remand,
after receiving additional information from Ocean Products on
costs, the Regional Office reaffirmed that Ocean Products
satisfied the 50% Rule. Columbian appealed again and, after
reviewing the cost data that had been submitted, requested
that Hearings and Appeals issue a subpoena for additional
cost information from Ocean Products and hold an evidentiary
hearing. Hearings and Appeals did neither, and on June 6,
1996, issued its second decision, this time upholding the
Regional Office's determination that Ocean Products satisfied
the 50% Rule.

Having lost its administrative appeal, Columbian filed a
complaint in the district court asserting that the SBA deci-
sions of November 22, 1995, and June 6, 1996, violated the
Administrative Procedure Act.2 Furthermore, Columbian
maintained that SBA violated due process by ruling without
conducting a hearing or issuing a subpoena for further cost
data from Ocean Products. Columbian sought a permanent
injunction enjoining the Army from ordering any more rope
under the contract from Ocean Products and a declaratory
judgment that Ocean Products is not a qualified small busi-
ness manufacturer under the terms of the solicitation, that
the contract award was invalid and should be terminated for
convenience, and that the SBA Regional Office's and Hear-

__________
2 Columbian sued the Secretary of the Army, the Army con-
tracting officer, the Administrator of SBA, and the Acting Area
Director of the SBA.

ings and Appeals's decisions were arbitrary and capricious,
violated due process, and were not in accordance with law.
The district court granted summary judgment to the govern-
ment on May 20, 1997, and Columbian filed an appeal on June
13, 1997. On October 11, 1997, all the options on the contract
expired, and thus there can be no further performance under
this particular contract.

II.

On appeal, Columbian contends that the record did not
support SBA's determination that Ocean met the 50% Rule,
that SBA failed to follow its own regulations in concluding
that Ocean satisfied the Manufacturer Rule, and that the
procedures by which SBA denied Columbian's protest violat-
ed due process. The threshold issue, however, is whether
this court lacks jurisdiction because the appeal is moot.

Article III of the Constitution restricts federal court juris-
diction to "actual, ongoing controversies." Honig v. Doe, 484
U.S. 305, 317 (1988). "[A]n actual controversy must be extant
at all stages of review, not merely at the time the complaint is
filed." Arizonans for Official English v. Arizona, 117 S. Ct.
1055, 1068 (1997) (quoting Preiser v. Newkirk, 422 U.S. 395,
401 (1975)) (internal quotation marks omitted). Thus, "[e]ven
where litigation poses a live controversy when filed, the
[mootness] doctrine requires a federal court to refrain from
deciding it if 'events have so transpired that the decision will
neither presently affect the parties' rights nor have a more-
than-speculative chance of affecting them in the future.' "
Clarke v. United States, 915 F.2d 699, 701 (D.C. Cir. 1990) (en
banc) (quoting Transwestern Pipeline Co. v. FERC, 897 F.2d
570, 575 (D.C. Cir. 1990)).

The work under the contract at issue has been completed,
and all the options to extend the contract have expired.
Columbian would not receive any cognizable benefit if the
court granted the requested relief: neither injunctive relief
preventing the government from making any further orders
on the contract nor declaratory relief on the legality of the
contract would affect the parties in any meaningful way

because the contract has been fully performed. The sole
possible exception is Columbian's request for a declaratory
judgment that "Ocean Products is not a qualified small busi-
ness manufacturer under the terms of the solicitation, SBA's
regulations and applicable law." As Columbian notes, the
original Army solicitation upon which the contract was based
still exists, and the Army or some other agency could rely
upon it to issue another solicitation for bids. Columbian does
not explain, however, how this court could possibly declare
that Ocean Products will never qualify for a contract under
the solicitation: even if Columbian is right that SBA mistak-
enly determined on this record that Ocean Products satisfied
the 50% Rule and the Manufacturer Rule, application of these
rules depends on facts that change over time. Although the
court could declare that the particular size determination in
question was not supported by the record, that issue is moot.
A judicial determination on this record of Ocean Products's
small business eligibility to bid on the rope assembly contract
would not affect its ability to win either a future rope
assembly contract on this solicitation or a contract based on a
different solicitation.3 The expiration of the contract has
made Columbian's requests for relief meaningless; thus, this
court cannot address the merits of the appeal unless some
exception to mootness applies.

The only possibly applicable exception is that for issues
that are capable of repetition yet evading review, see, e.g.,
Honig, 484 U.S. at 317-20, but this exception cannot render
Columbian's case justiciable. The exception applies when "(1)
the challenged action was in its duration too short to be fully
litigated prior to its cessation or expiration, and (2) there was
a reasonable expectation that the same complaining party
would be subjected to the same action again." Murphy v.
Hunt, 455 U.S. 478, 482 (1982) (per curiam) (quoting Wein-
stein v. Bradford, 423 U.S. 147, 149 (1975)) (internal quotation

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3 The potential of declaratory relief alone cannot save an action
from mootness if the object of the suit is not "some ongoing
underlying policy, but ... an isolated agency action." City of
Houston v. Department of Housing & Urban Dev., 24 F.3d 1421,
1429 (D.C. Cir. 1994).

marks omitted); see also Clarke, 915 F.2d at 704. Even
assuming that the length of a contract based on the Army
solicitation might be too short to allow an effective challenge
to the award of that contract, there is no "reasonable expecta-
tion" that Columbian will suffer this same injury. Columbian
maintains that it may have to compete with Ocean Products
in the future for contracts based on the same military specifi-
cation, and thus that it may suffer once more if SBA again
determines that Ocean Products qualifies as a small business
concern. However, any determination made by this court
regarding Ocean Products's size would only apply to the
completed contract. The record does not indicate whether
the government will again seek to purchase more rope assem-
blies for helicopter airlift operations under the same specifica-
tions. That possibility is therefore too speculative an interest
upon which to base Article III jurisdiction.4 See Clarke, 915
F.2d at 701-03. There is no "reasonable expectation" that
Columbian will suffer again in a similar way and, hence, no
jurisdictional basis for this court to issue a decision on the
merits.

III.

When a case has become moot during the pendency of
appeal "due to circumstances unattributable to any of the
parties," the standard practice is to vacate the decision of the
district court. U.S. Bancorp Mortgage Co. v. Bonner Mall
Partnership, 513 U.S. 18, 23, 25 n.3 (1994) (quoting Karcher
v. May, 484 U.S. 72, 83 (1987)) (internal quotation marks
omitted); see Arizonans for Official English, 117 S. Ct. at
1071; United States v. Munsingwear, Inc., 340 U.S. 36, 39 &
n.2 (1950); Clarke, 915 F.2d at 706. Otherwise, the party
who lost in the district court, who cannot gain direct review

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4 Columbian's request for a remand for Columbian to introduce
evidence regarding the likelihood of repetition is not appropriate.
If the issues are capable of repetition, that very fact would counsel
against any need for remand in order to allow this case to continue:
if the issues recur, Columbian will have the opportunity then to
develop the record as it pleases; if not, Columbian has no need for a
remand.

on appeal because of mootness, might be precluded from
relitigating the issues in a future proceeding. See Munsing-
wear, 340 U.S. at 39-40. Similarly, a court declining to
review an agency order on the ground of intervening moot-
ness should vacate that order, at least when the mootness is a
result of happenstance. See, e.g., A.L. Mechling Barge Lines,
Inc. v. United States, 368 U.S. 324, 329 (1961); American
Family Life Assurance Co. of Columbus v. FCC, 129 F.3d
625, 630-31 (D.C. Cir. 1997). Because the instant case has
become moot due to the expiration of the contract, vacatur is
appropriate, and, as ordered, meets Columbian's concerns
regarding the possible preclusive effect of the district court
judgment and SBA decisions.5

__________
5 Columbian has not requested vacatur inasmuch as its position
is that the appeal is not moot in light of the possible preclusive
effects of the district court and SBA decisions. While the Supreme
Court confirmed in U.S. Bancorp that vacatur is an equitable
remedy, see U.S. Bancorp, 513 U.S. at 25; see also National Black
Police Ass'n v. District of Columbia, 108 F.3d 346, 354 (D.C. Cir.
1997), it did not thereby undo the established precedential backdrop
of Munsingwear, in which the Supreme Court affirmed that vacatur
is "the duty of the appellate court" when a case has become moot
through happenstance while appeal was pending. Munsingwear,
340 U.S. at 40 (quoting Duke Power Co. v. Greenwood County, 299
U.S. 259, 267 (1936)) (internal quotation marks omitted); see also
Ramallo v. Reno, 114 F.3d 1210, 1214 (D.C. Cir. 1997); American
Library Ass'n v. Barr, 956 F.2d 1178, 1186-87 (D.C. Cir. 1992).
Pursuant to that duty, this court should order vacatur "sua sponte
to preserve the rights of the parties." Weaver v. United Mine
Workers of America, 492 F.2d 580, 587 n.36 (D.C. Cir. 1973).

Furthermore, Columbian errs when it contends that the court
lacks authority to vacate the SBA decision. See, e.g., Anderson v.
Morgan, 263 F.2d 903, 904 (D.C. Cir. 1959) (per curiam); cf.
Arizonans for Official English, 117 S. Ct. at 1072 ("[V]acatur down
the line is the equitable solution."). Columbian's position makes no
sense: if the district court has the authority to vacate the SBA's
order, which Columbian does not dispute, and this court has the
authority both to vacate the district court's order and to "remand

Accordingly, we dismiss the appeal as moot, vacate the
judgment and order of the district court, and remand the case
to the district court with instructions to dismiss the complaint
and vacate the SBA decisions of November 22, 1995, and June
6, 1996.

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the cause and direct the entry of such appropriate judgment,
decree, or order, or require such further proceedings to be had as
may be just under the circumstances," 28 U.S.C. s 2106, another
proposition undisputed by Columbian, simple addition dictates that
this court can direct the district court to vacate the agency orders
on review.