Free Motion for Leave to File - District Court of Federal Claims - federal

Case 1:02-cv-00466-LB

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS SUNOCO, INC. And PUERTO RICO SUN OIL COMPANY, Plaintiffs, v. THE UNITED STATES, Defendant. ) ) ) ) ) ) ) ) ) ) ) ) )

No. 02-466C (Judge Block)

PLAINTIFFS' MOTION FOR LEAVE TO FILE A SUPPLEMENTAL BRIEF Plaintiffs, Sunoco, Inc. and Puerto Rico Sun Oil Company (collectively "Sunoco"), respectfully seek leave to file a Supplemental Brief in response to DESC's Motion to Dismiss. Sunoco seeks leave to file a Supplemental Brief for the limited purpose of bringing to the Court's attention DESC's startling reversal of the position it advances here in another similarly situated military fuels case. With respect to Sunoco's claim in Count I that DESC's match price auction of contracts to small businesses violates the Office of Federal Procurement Policy Act ("OFPPA"), DESC previously asserted in its Reply here that its match price auction is "consistent with the FAR" and, therefore, its auction is legal. DESC's Reply to Sunoco's Opp'n to DESC's Mot. to Dismiss at 25. Recently, however, in Gary-Williams Energy Company v. United States, No. 03-2106C (Fed. Cl.), DESC submitted a sworn declaration from one of its contracting officers, Mr. John Walker, stating that DESC's match price auction in fact violates the requirements of the FAR. See DESC's Mot. to Dismiss at Def. App. 6 (March 3, 2006) (filed in Gary-Williams Energy Company v. United States, No. 03-2106C (Fed. Cl.)). Because DESC's concession in Gary-Williams undermines its defense of its auction here, Sunoco seeks leave to file a Supplemental Brief to bring DESC's concession and reversal of position to the Court's attention.

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For the foregoing reasons, Sunoco respectfully requests that its Motion for Leave to File a Supplemental Brief be granted. s/J. Keith Burt J. Keith Burt Mayer, Brown, Rowe & Maw LLP 1909 K Street, N.W. Washington, D.C. 20006 (202) 263-3208 (Phone) (202) 263-5208 (Fax) Attorneys for Plaintiffs, Sunoco., Inc. and Puerto Rico Sun Oil Company Of Counsel: Gary A. Winters Mayer, Brown, Rowe & Maw LLP 1909 K Street, N.W. Washington, DC 20006 March 20, 2006

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS SUNOCO, INC. And PUERTO RICO SUN OIL COMPANY, Plaintiffs, v. THE UNITED STATES, Defendant. ) ) ) ) ) ) ) ) ) ) ) ) )

No. 02-466C (Judge Block)

PLAINTIFFS' SUPPLEMENTAL BRIEF Plaintiffs, Sunoco, Inc. and Puerto Rico Sun Oil Company (collectively "Sunoco"), respectfully submit this Supplemental Brief. I. DESC IS NOT ENTITLED TO JUDGMENT AS A MATTER OF LAW ON SUNOCO'S CLAIMS THAT DESC ILLEGALLY AUCTIONED THE AWARD OF MILITARY FUEL CONTRACTS In its Opposition to DESC's Motion to Dismiss, Sunoco establishes that DESC's auction of fuel contracts to small businesses violates the Office of Federal Procurement Policy Act ("OFPPA"). Sunoco explains that DESC's practice of offering contracts to small businesses willing to match the lowest bid price, or adjusted bid price, of a large business violates OFPPA's express prohibition on the disclosure of "contractor bid or proposal information or source selection information before the award of a Federal agency procurement contract." 41 U.S.C. § 423(a)(1) (emphasis added); see Sunoco's Opp'n to DESC's Mot. to Dismiss at 52-59. In its Reply in support of its Motion to Dismiss, DESC asserts that its match price auction of contracts to small businesses complies with OFPPA because its auction is "consistent with the FAR." DESC's Reply to Sunoco's Opp'n to DESC's Mot. to Dismiss at 25. In its original motion, DESC similarly asserts that, in auctioning fuel contracts, it "followed the FAR provisions" and that its "procedures are consistent with

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applicable procurement and small business laws and regulations." DESC's Mot. to Dismiss at 32-33. DESC relied for these assertions on, inter alia, the declaration of one of its contracting officers, Mr. John Walker, who stated that DESC's match price auction operated "in substantially the same manner" as the procedures in the FAR. DESC's Mot. to Dismiss at Def. Supp. App. 2. In what can only be described as a startling, if not troubling, reversal of position, Mr. Walker recently submitted a contrary declaration in the similarly situated military fuels case of Gary-Williams Energy Company v. United States, No. 03-2106C (Fed. Cl.). In Gary-Williams, Mr. Walker states that DESC's match price auction violates the requirements of the FAR. Specifically, Mr. Walker explains that DESC offered "match price" contracts to small businesses before awarding contracts to large businesses and then offered any set aside quantities not awarded at the match price to large businesses: The difference between the standard FAR and DFARS set aside clauses and procedures and the set aside clauses and procedures in DESC bulk acquisitions was that DESC's set aside quantities were offered to small businesses and small, disadvantaged businesses before award of the basic quantities. If no small or small, disadvantaged business offeror accepted the set aside quantities at the offered price, i.e., there was a set aside "failure," the set aside quantities would be added back to the basic quantities and awarded to the low offeror. See Declaration of John Walker at 6-7, DESC's Mot. to Dismiss at Def. App. 6 (March 3, 2006) (filed in Gary-Williams Energy Company v. United States, No. 03-2106C (Fed. Cl.)) (attached as Exhibit 1 to this Supplemental Brief) (emphasis added). In contrast, Mr. Walker explains that the FAR requires that "match price" contracts not be offered to small businesses until after contracts are awarded to large businesses and that any set aside quantities not awarded at the match price be re-solicited in a new acquisition: The standard FAR and DFARS procedures provide that set aside quantities are offered after the basic quantities are awarded. Under the standard FAR and DFARS procedures, if there is a set aside failure, the quantities are not awarded under the basic acquisition, but are re-solicited under a new acquisition.

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Id. at 6-7 (emphasis added). These departures from the FAR's requirements that Mr. Walker concedes in his declaration in Gary-Williams are exactly the violations of the FAR's requirements that Sunoco alleges in its Opposition to DESC's Motion to Dismiss and that DESC denies in its Reply. Compare Sunoco's Opp'n to DESC's Mot. to Dismiss at 55-59 with DESC's Reply to Sunoco's Opp'n to DESC's Mot. to Dismiss at 25. Consistent with Sunoco's position here, GAO has similarly recognized DESC's departure from the FAR when DESC auctions contracts to small businesses. B-230556, 1988 WL 227932 (Sep. 6, 1988). GAO states: For partial set-asides, FAR 19.502(3)(c) requires that the contracting officer must first award the non-set-aside portion using normal contracting procedures. . . . If a set-aside acquisition is not awarded, the supplies or services for which no award was made is recompeted. FAR 19.507(a). The D[E]SC procedures differ from the FAR procedures in two substantial respects . . . The second difference is that in the event of set-aside failures, the set-aside portion is not recompeted. Under the D[E]SC procedures both large and small firms are required to submit offers on total quantities just as if there was no set-aside. In this way, in the event a set-aside acquisition cannot be filled, other offers can be considered. 1988 WL 227932 at 3 (emphasis added; some internal paragraphing omitted).1 This distinction between awarding contracts to large businesses first and only then awarding "match price" contracts to small businesses is fundamental to compliance with OFPPA. Once contracts are awarded to large businesses, the procurement is at an end for them. Accordingly, the subsequent disclosure of their bid prices does not run afoul of the OFPPA's prohibition on disclosure of pricing information "before the award . . . to which the information relates." 41 U.S.C. § 423(a)(1). Furthermore, awarding contracts to large businesses first (and re-soliciting any unawarded set aside volumes) precludes the In its opinion, GAO reviewed DESC procurements that took place prior to the enactment of the provisions of OFPPA relevant here. Accordingly, the GAO opinion has no bearing on whether DESC's procurements comply with OFPPA.
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perverse result whereby a large business is forced to bid lower in order to discourage small businesses from accepting the "match price," with the result that the volumes remain available for award to the large business. See Sunoco's Opp'n to DESC's Mot. to Dismiss at 58. DESC apparently would assert that it has a FAR deviation authorizing its departure from the FAR and somehow its violation of OFPPA. See Ex. 1 at 7 (making the bare assertion that DESC "had deviations authorizing the use of its clauses and procedures"). However, DESC may not use a deviation to authorize the very conduct OFPPA prohibits. See generally Gardner v. Brown, 5 F.3d 1456 (Fed. Cir. 1993). The entire focus of OFPPA is to "prohibit contractors . . . from soliciting or receiving bidding or other sensitive information about their competitors during the procurement" and to "limit greatly the number of people given access to procurement sensitive information." H. Rep. No. 100-911 at 18. Permitting the disclosure of competitors' procurementsensitive information to essentially all small businesses during an on-going competition eviscerates this purpose. Moreover, DESC has not proffered its alleged deviation, has not established that its alleged deviation authorizes the specific departures at issue here and not others,2 has not established that its alleged deviation was published in the Federal Register for public comments, and, a fortiori, has not established that any public comments properly were considered as part of the decision to grant its alleged deviation. See generally La Gloria Oil and Gas Company v. United States, 56 Fed. Cl. 211, 217-24 (2003) (addressing requirements for a FAR deviation); Sunoco, Inc. v. United States, 59 Fed. Cl. 390, 395-96 (2004) (same). Whatever DESC may seek to do with its alleged deviation, without a vastly larger showing, it profits DESC nothing here. Id.

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See B-230556, 1988 WL 227932 at 3 (noting that DESC departs from the FAR by not paying small businesses "`the highest unit prices(s)' paid under the FAR").

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In conclusion, DESC's admission that its match price auction does not comply with the requirements of the FAR bars even the vestige of a defense to Sunoco's claims that DESC's auction violates OFPPA. Accordingly, and as more fully set forth in Sunoco's Opposition to DESC's Motion to Dismiss, DESC is not entitled to judgment as a matter of law on Sunoco's claim that DESC illegally auctioned the award of military fuel contracts. s/J. Keith Burt J. Keith Burt Mayer, Brown, Rowe & Maw LLP 1909 K Street, N.W. Washington, D.C. 20006 (202) 263-3208 (Phone) (202) 263-5208 (Fax) Attorneys for Plaintiffs, Sunoco., Inc. and Puerto Rico Sun Oil Company Of Counsel: Gary A. Winters Mayer, Brown, Rowe & Maw LLP 1909 K Street, N.W. Washington, DC 20006 March 20, 2006

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