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Tyler Construction Group v. United States

June 25, 2009

TYLER CONSTRUCTION GROUP, PLAINTIFF-APPELLANT,
v.
UNITED STATES, DEFENDANT-APPELLEE.



Appeal from the United States Court of Federal Claims in 08-CV-094, Senior Judge John P. Wiese.

The opinion of the court was delivered by: Friedman, Circuit Judge.

Published opinion

Before MAYER, FRIEDMAN, and RADER, Circuit Judges.

The principal issue is whether the United States Army Corps of Engineers ("the Corps") was authorized to use so-called Indefinite Deliver/Indefinite Quantity Contracts (known as "IDIQ contracts") for the design and construction of military buildings (barracks and related structures) in an eight-state area in the southeastern United States. As the name implies, those contracts did not state the number of such structures to be built or the dates for construction, but did specify the total dollar range the construction would involve. The Court of Federal Claims held that the Corps was authorized to use those contracts for this procurement, and we affirm.

I.

A. This litigation stems from what the Corps described, in the language of the Court of Federal Claims' opinion, as "part of a fundamental change in military construction strategy designed to transform the United States Army into a more modular, expeditionary, and effective fighting force." Tyler Constr. Group v. United States, 83 Fed. Cl. 94, 95 (2008). The underlying facts, as stated in that opinion, are largely undisputed.

The Corps stated that "its primary objective is to meet the Department of the Army's time, cost, quality, and standardization targets and goals while providing new facilities for our soldiers and their families-an undertaking requiring a minimum of 20% reduction in cost and a minimum of 30% reduction in time to occupancy." Id. at 95-96 (internal quotation marks omitted). To accomplish that objective, the Corps: initiated a market research program in 2005 to acquaint members of the construction industry with the Army's upcoming needs and to gain the industry's perspective on how best to execute a construction program of the magnitude contemplated. The program included sponsorship of a nationwide forum, four regional forums, and a specialized forum with representatives of the prefabricated/pre-engineered/modular construction industry, as well as the implementation of an internet-based research questionnaire. Through these efforts, the Corps identified an industry consensus that the successful execution of its construction program would require an emphasis on standardization and economies of scale. Based on this conclusion, the Corps decided to pursue a flexible acquisition strategy "composed of primarily local and regional contracts with a possibility of national contracts, in order to execute an estimated $40 Billion dollar Military Construction . . . Program."

Id. at 96.

In 2007, the Corps issued a solicitation seeking proposals for the construction. The amended solicitation provided for a negotiated one-year multiple award task order contract, with two additional one-year options, a minimum $10,000 guarantee for the first year, and a total estimated contract amount of $301 million. The Corps estimated that the value of the initial task order under the contract would be between $25 million and $100 million.

The solicitation described in general terms the facilities to be constructed under the initial task order. It included a 252-page statement of work outlining in detail the other types of facilities to be built. "The statement of work does not indicate where these facilities are to be built; it does, however, inform offerors that the facilities will be required primarily at Fort Benning, Georgia."

The solicitation contemplated a two-phase proposal process in which two or more contractors would be selected. In the first phase, the Corps would evaluate the performance capabilities of the prospective contractors based on specified criteria. In the second phase, the contractors would submit proposals for the initial task order. Those to whom contracts were awarded would "become the only competitors for the negotiation and award of all subsequent task orders, subject only to the limitation that a contractor is not . . . obligated to honor a task order of less than $14 million, a task order in excess of $47.5 million, or any order involving a combination of items in excess of $95 million." Id. at 96

B. The appellant, Tyler Construction Group ("Tyler"), which described itself in its complaint as "a small business general contractor," did not submit any proposal in response to the solicitation. Instead, it filed the present suit in the Court of Federal Claims seeking injunctive and declaratory relief against the solicitation. It challenged the Corps' use of IDIQ contracts for this procurement on various grounds, including the claims that such use was not authorized by the Federal Acquisition Regulation ("FAR") and that it violated statutory and regulatory provisions that favor and protect small businesses.

On the parties' cross-motions for judgment on the administrative record, the Court of Federal Claims granted the government's motion and dismissed the suit. Tyler Constr. Group, 83 Fed. Cl. at 95. After that decision, the Corps selected three firms to whom it awarded contracts.

The court rejected Tyler's contention that the FAR does not authorize the use of IDIQ contracts for a major construction project. Tyler stated that such contracts "have historically been used for the procurement of essentially identical 'supplies or services' for which there is a recurring need at a single installation or within a small geographic area." Tyler argued that FAR § 16.501-2(a), 48 C.F.R. § 16.501-2(a), "which identifies an IDIQ contract as a contract used 'to acquire supplies and/or services when the exact times and/or exact quantities of future deliveries are not known at the time of contract award,'" does not cover "construction" because the latter is not a "service." It pointed to other provisions of the FAR that parenthetically inserted, after "goods and services," the term "(including construction)." The government countered by citing still other FAR provisions that stated, after "goods and services," "(excluding construction)."

Noting that there is "no law, statute, or regulation that prohibits the use of an IDIQ contract for the procurement of construction services," the Court of Federal Claims concluded that "the various provisions of the FAR offer little insight into whether 'construction' is included in or excluded from 'supplies or services.'" Tyler Constr. Group., 83 Fed. Cl. at 99. The court ruled that FAR ยง 1.102(d)-providing procurement officials with the authority to use innovative approaches to satisfy the government's procurement needs so long as such approaches are not otherwise addressed in the FAR or prohibited by law-governs the instant procurement. We find that the solicitation represents the sort of innovation ...


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