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INFORMATION SYS. & NETWORKS CORP. v. UNITED STATES

June 11, 1997

INFORMATION SYSTEMS & NETWORKS CORP., Plaintiff,
v.
THE UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, et al., Defendants.



The opinion of the court was delivered by: LAMBERTH

 On December 18, 1996, plaintiff Information Systems & Networks Corporation ("ISN"), a Maryland corporation with facilities in North Carolina engaged in creating and managing business systems, filed suit against the government *fn1" , seeking entry of both preliminary and permanent injunctions against the defendants to enjoin them from refusing to extend an option contract and from awarding a new contract for the provision of certain goods and services to intervenor OAO Corporation ("OAO") and its subcontractor Technology Planning & Management Corporation ("TPMC"). Count I of the complaint alleged violations of the Competition in Contracting Act, and Count II alleged violations of the Administrative Procedure Act.

 A preliminary injunction hearing was held before this court on January 15, 1997, at which time the court denied plaintiff's motion. Subsequently, plaintiff filed a related complaint, Civil Action 97-187. Subsumed into this action were Counts I and II of the first complaint, but a Bivens action against certain government employees has also been included. *fn2" For purposes of this opinion, the court deals exclusively with the terminology of the second action. That is, the first claim of plaintiff's second complaint alleges a Bivens action, the second claim alleges violations of the APA and federal statutes surrounding termination of ISN's contract as a result of the government's failure to exercise an option renewal, and the third claim of the complaint alleges violations of the APA and federal statutes in connection with the failure of ISN to be included in a competition for another contract. Plaintiff has sought relief under these claims and has also asked for reconsideration of its preliminary injunction motion. The complaints have been consolidated by order of February 4, 1997.

 The government and the intervenor each have motions to dismiss and motions for summary judgment on each complaint. Upon consideration of these motions, the court will dismiss counts I and II of Civil Action No. 96-2802, and dismiss plaintiff's first and third claims from Civil Action No. 97-187. The second claim, the wrongful termination of contract claim, will be transferred to the Court of Federal Claims.

 BACKGROUND

 The National Institute of Environmental Health Sciences ("NIEHS") operates a research facility in Raleigh, North Carolina. On December 1, 1993, it awarded a contract to ISN for the procurement of Federal Information Processing ("FIP") supplies. Comp. at 5. The contract allows NIEHS to issue task orders for items of an indefinite delivery/indefinite quantity. Id. Under this contract, ISN had a base contract consisting of the 1994 calendar year, with four renewable options. At time of the award, the contract price, including the use of all four options, was $ 19,000,000. Id. at 6.

 The government exercised its first option at the end of 1994, extending the contract to December 31, 1995, and on December 22, 1995, the government exercised a second option, set to expire on December 31, 1996. Despite preliminary notice that another option would be exercised *fn3" , on December 10, 1996, ISN was given notice that its third option period would not be taken by the government. The failure to exercise an additional option forms the basis for the second claim of plaintiff's complaint. ISN argues that this decision was made contrary to the Competition in Contracting Act ("CICA"), 41 U.S.C. § 253(b)(1)(1994) -- the result of cronyism by a government contracting official -- and ISN therefore seeks to force the government to exercise the option. The third claim of ISN's complaint deals with the government's efforts to obtain the items the contract with ISN would have supplied, and the government's alleged blacklist of ISN to keep it from competition for that new contract.

 NIEHS operates a special program called the Chief Information Officer's Solutions and Partners ("CIOSP") program. Comp. at 5. CIOSP employs multi-year ID/IQ contracts utilizing cost-plus fixed fee, cost-plus award fee, time and materials, and firm fixed price task orders to provide information technology operation support and other services to the National Institutes of Health. Id. This program, authorized by the Federal Acquisition Streamlining Act of 1994 ("FASA") and codified at 41 U.S.C.A. § 253 h (West Supp. 1996), allows for the issuance of ID/IQ "task orders" by the NIEH to its 20 prime contractors. Def.'s Mem. of Points and Auth. in Supp. of its Mot. to Dis. Pl.'s Comp. at 23. To fulfill these task orders, should they be awarded, prime contractors are "teamed" with smaller subcontractors. Unisys was a prime contractor under the CIOSP program, and Unisys was teamed with ISN -- which acted as a subcontractor. OAO, the intervenor in this case, is also a CIOSP prime contractor, and is teamed with TMPC.

 ISN, in addition to the government's refusal to extend its contract, has also alleged that the COTR involved in determining which contractor to use for a task order which would take the place of the non-renewed ISN option, "blacklisted" ISN from consideration, violating the Administrative Procedures Act ("APA"). That task order contract instead went to OAO and its subcontractor TMPC. ISN alleges that the contracting officers in the government who were instrumental in making the determinations to end the ISN contract and award the task order to OAO did so in a manner which unlawfully deprived ISN of its civil rights.

 The defendants have vehemently challenged the jurisdiction of this court to decide the termination of contract issue. As to plaintiff's complaint alleging wrongdoing in the failure to allow ISN an opportunity to compete in a bid, defendants have challenged ISN's standing as a subcontractor to complain of this competition which was directed at prime contractors -- especially in light of the fact that ISN's prime contractor, Unisys, did not even compete for the task order in question. And, with respect to the Bivens claim, defendants argue that such an action is precluded by Congressionally provided remedies.

 DISCUSSION

 I. Termination of Contract

 The government and the intervenor have moved to dismiss the second claim of plaintiff's complaint for lack of subject matter jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(1).

 Defendants, as federal agencies, are immune from suit unless the government has expressly waived that immunity. Transohio Sav. Bank v. Direct, Office of Thrift Supervision, 296 U.S. App. D.C. 231, 967 F.2d 598, 606 (D.C. Cir. 1992). Statutes waiving this sovereign immunity then determine the scope of the jurisdiction of the courts to hear such suits or to provide relief. A & S Council Oil Co. v. Lader, 312 U.S. App. D.C. 270, 56 F.3d 234, 238 (D.C. Cir. 1995). The government and OAO argue that the government's decision whether or not to exercise the third option is essentially a contractual issue, governed by the Contract Disputes Act ("CDA"), 41 U.S.C. § 601-13 and the Tucker Act, 28 U.S.C. §§ 1341(a)(2). These laws place the exclusive jurisdiction to hear contract disputes with the Court of Federal Claims, explicitly depriving federal district courts from hearing such cases, when the amount in controversy, as here, exceeds $ 10,000. Sharp v. Weinberger, 255 U.S. App. D.C. 90, 798 F.2d 1521, 1523 (D.C. Cir. 1986).

 As a result, defendants argue that this court is without jurisdiction to hear a breach of contract claim involving the federal government, and this, they say, is in reality a breach of contract claim to be heard, if at all, in the Court of Federal Claims.

 ISN argues this is not a contract action, but is rather an issue of whether the government followed its own regulations for the continuation or termination of a contract. According to plaintiff, the situation which led up to the government's failure to exercise its third option to renew resulted in a termination contrary to the agency's own rules.

 According to ISN, Diane Crawford, the CO for federal information processing resources for NIEHS, had the sole decision of whether or not to extend ISN's contract under the applicable procurement regulations, 48 C.F.R. §§ 17.207 *fn4" ; 43.102 *fn5" ; Pl.'s Opp. to Defs.' and Interv. Mots. to Dis. at 3. However, as plaintiff alleges in its renewed motion for a preliminary injunction and in its opposition to the motions to dismiss, it was through the scheming of the COTR, Jimmy Washington, that he managed to circumvent those procurement regulations by excising Crawford from the award process. Thus, Washington was to take work away from ISN and give it to a buddy at TMPC: OAO's teaming partner. ISN agrees that appeals from CO decisions on breach of contract claims by federal contractors are properly brought in the Court of Federal Claims or boards of contract appeals. Pl.'s Opp. to Defs.' and Interv. Mots. to Dis., at 6. But plaintiff characterizes its suit in this manner: "ISN's suit is not an appeal from a contracting officer's decision; this is an appeal that the CO be allowed to make a decision." [Emphasis in original] Id. The proper characterization of this action will therefore determine whether or not there is proper jurisdiction in this court. The court finds there is not.

 In Ingersoll-Rand Co. v. United States, 250 U.S. App. D.C. 412, 780 F.2d 74 (D.C. Cir. 1985), the D.C. Circuit dealt with the question of when jurisdiction is appropriate in federal district courts as opposed to the court of claims or appeals boards in contract dispute or contract dispute-type cases, such as this. Ingersoll-Rand, relying on Megapulse, Inc. v. Lewis, 217 U.S. App. D.C. 397, 672 F.2d 959 (D.C. Cir. 1982), held that to determine whether a plaintiff must avail himself of the Court of Federal Claims or whether he may have access to federal district courts depends on two basic factors: the source of the rights at stake, and the nature ...


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