Rapides Regional Medical Center v. Secretary, Department of Veterans' Affairs , 974 F.2d 565 ( 1992 )

UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_______________________
No. 91-5097
_______________________
RAPIDES REGIONAL MEDICAL CENTER,
Plaintiff, Intervenor-Defendant-Appellee,
versus
SECRETARY, DEPARTMENT OF VETERANS' AFFAIRS,
Defendant, Intervenor-Defendant-Appellant,
and
ST. FRANCES CABRINI HOSPITAL,
Movant, Intervenor-Plaintiff-Appellant.
_________________________________________________________________
Appeals from the United States District Court
for the Western District of Louisiana
_________________________________________________________________
(September 24, 1992)
Before GOLDBERG, JONES, and DeMOSS, Circuit Judges.
EDITH H. JONES, Circuit Judge:
The centerpiece of this dispute is a dual energy linear
accelerator, a sophisticated radiation therapy device used on
cancer patients. Two hospitals in Rapides Parish, Louisiana -- one
private, the other operated by the Department of Veterans Affairs
(VA) -- entered into a "sharing agreement" for the acquisition and
joint use of such an accelerator. Under the agreement, the
Alexandria Veterans Affairs Medical Center (VAMC) would procure the
accelerator, with nearby St. Francis Cabrini Hospital (Cabrini)
donating one-half the cost of the machine to the VAMC.1 The VAMC-
owned accelerator would then be housed at Cabrini and available for
use by both institutions. Shortly before negotiations over the
sharing agreements had been completed, neighboring Rapides Regional
Medical Center (Rapides) got wind of the deal and sought to block
it. Rapides, which operates two linear accelerators of its own,
and which currently provides accelerator and related services to
the VAMC,2 charged that the sharing agreement violated the
Competition in Contracting Act of 1984 (CICA), 41 U.S.C. § 251 et.
seq., because it was never subjected to public bidding. After an
administrative appeal dismissed as untimely by the Comptroller
General,3 Rapides won a permanent injunction against the sharing
agreement in district court. Rapides Regional Medical Center v.
Derwinski, 783 F. Supp. 1006 (W.D. La. 1991). Both the VA and
1
The VAMC-Cabrini agreement consisted of: (1) a Letter of Intent
between the VAMC and Cabrini; (2) a Memorandum of Understanding between the
two facilities ("MOU"), requiring Cabrini to donate one-half the cost of the
accelerator -- approximately $750,000 -- to the VAMC in exchange for housing
and operating it at Cabrini; (3) a proposed sharing agreement, governing the
joint use of the accelerator and providing for Cabrini to render certain
related services to VAMC and its patients; and (4) a cost analysis for the
accelerator.
2
From March 1985 to the period relevant to this lawsuit, the VAMC
contracted with Rapides for radiation therapy using Rapides' accelerator. In
late 1989, VA officials, apparently concerned that Rapides was charging too
much for the use of its accelerator and related services, began exploring
possible alternatives. When the VA learned that Cabrini was planning to
acquire its own accelerator, it entered into negotiations for a possible
sharing agreement, culminating in the signing of the MOU in August 1990.
Rapides estimates that its contract with the VA accounts for twenty percent
(20%) of its total revenue from radiation therapy services.
3
Rapides Regional Medical Center, No. B-242601, 91-1 C.P.D. ¶ 159
(Feb. 12, 1991), reconsideration denied, Rapides Regional Medical Center --
Reconsideration, No. B-242601.2, 91-1 C.P.D. ¶ 614 (June 28, 1991).
2
Cabrini, which had intervened in those proceedings, appealed the
district court's decision, and we granted expedited review.
I.
STATUTORY BACKGROUND
Before discussing the merits of this case, it may be
helpful to trace its statutory contours. Rapides asserts that the
Competition in Contracting Act governs this action. Appellee
alleges, and the district court agreed, that the VAMC-Cabrini
sharing agreement violates CICA's general requirement that federal
procurement contracts be awarded competitively.4 CICA responded to
Congressional findings that many federal procurement contracts were
4
CICA provides in relevant part:
(1) Except as provided in subsection (b), (c), and (g) of
this section and except in the case of procurement procedures
otherwise expressly authorized by statute, an executive agency in
conducting a procurement for property or services --
(A) shall obtain full and open competition through
the use of competitive procedures. . . and
(B) shall use the competitive procedure or
combination of competitive procedures that is best suited
under the circumstances of the procurement.
(2) In determining the competitive procedures appropriate
under the circumstance, an executive agency--
(A) shall solicit sealed bids if--
(i) time permits the solicitation, submission,
and evaluation of sealed bids;
(ii) the award will be made on the basis of
price and other price-related factors;
(iii) it is not necessary to conduct discussions
with the responding sources about their bids; and
(iv) there is a reasonable expectation of
receiving more than one sealed bid; and
(B) shall request competitive proposals if sealed
bids are not appropriate under clause (A).
41 U.S.C. § 253(a).
3
awarded on a sole-source basis, resulting in widespread
inefficiencies and wasteful government spending. According to its
drafters, the Act's objectives were "to establish a statutory
preference for the use of competitive procedures in awarding
federal contracts for property or services, to impose restrictions
on the awarding of noncompetitive contracts, and to permit federal
agencies to use the competitive method most conducive to the
conditions of the contract." S. Rep. No. 50, 98th Cong., 2d Sess.,
reprinted in 1984 U.S. Code Cong. & Admin. News 2174, 2180.
The VA does not contend that its sharing agreement with
Cabrini falls within any of the seven enumerated exceptions to CICA
that permit sole-source procurement.5 However, both Cabrini and
the VA would find refuge in the savings clause to § 253(a)(1),
which exempts from CICA "procurement procedures otherwise expressly
authorized by statute." As asserted proof of this authority,
appellants cite 38 U.S.C. § 8153, empowering the VA to enter into
5
On appeal, Cabrini attempts to avail itself of the exception
provided by § 253(b)(1)(A), which provides:
(b) exclusion of particular source; restriction of solicitation
to small business concerns
(1) An executive agency may provide for the procurement of property or
services covered by this section using competitive procedures but
excluding a particular source in order to establish or maintain any
alternative source or sources of supply for that property or service if
the agency head determines that to do so--
(A) would increase or maintain competition and would
likely result in reduced overall costs for such procurement, or
for any anticipated procurement, of such property or services[.]
By its own terms, however, subsection (b)(1)(A) applies only to agencies that
are already "using competitive procedures." The VA stipulated before the
district court that it did not use competitive procedures when it entered into
the sharing agreement with Cabrini. In any event, Cabrini raises this
argument for the first time on appeal, and we will not consider it here.
4
sharing agreements for the acquisition and joint use of advanced
medical technology.6
Congress initially authorized the sharing program set
forth in § 8153 "for the exchange of use (or under certain
conditions the mutual use) of specialized medical facilities
between Veterans' Administration hospitals and other public and
private hospitals or medical schools in a medical community." S.
Rep. No. 1727, 89th Cong., 2d Sess., reprinted in 1966 U.S. Code
6
Section 8153 provides:
(a) To secure certain specialized medical resources which
otherwise might not be feasibly available or to effectively
utilize certain other medical resources, the Secretary may, when
the Secretary determines it to be in the best interest of the
prevailing standards of the Department medical care program, make
arrangements, by contract or other form of agreement, as set forth
in clauses (1) and (2) below between Department health-care
facilities and other health-care facilities (including organ
banks, blood banks, or similar institutions), research centers, or
medical schools:
(1) for the mutual use, or exchange of use, of
specialized medical resources when such an agreement will
obviate the need for a similar resource to be provided in a
Department health care facility; or
(2) for the mutual use, of specialized medical
resources in a Department health care facility, which have
been justified on the basis of veterans' care, but which are
not utilized to their maximum effective capacity.
(b) Arrangements entered into under this section shall
provide for reciprocal reimbursement based on a methodology that
provides appropriate flexibility to the heads of the facilities
concerned to establish an appropriate reimbursement rate after
taking into account local conditions and needs and the actual
costs of the providing facility of the resource involved. Any
proceeds to the Government received therefrom shall be credited to
the applicable Department medical appropriation and to funds that
have been allotted to the facility that furnished the resource
involved.
. . .
(e) The Secretary shall submit to the Congress not more
than 60 days after the end of each fiscal year a report on the
activities carried out under this section.
5
Cong. & Admin. News 4210, 4219-20. In 1985, after CICA's
enactment, Congress expanded the sharing program to other medical
facilities, appropriating up to $10 million for a pilot program in
which VA facilities would purchase advanced medical equipment so
long as non-federal sources agreed to finance at least fifty
percent (50%) of the acquisition costs. Conf. Rep. No. 363, 99th
Cong., 1st Sess. 22 (Nov. 8, 1985). According to the Senate
Appropriations Committee:
The purpose of this funding is to help the VA to acquire
costly, advanced state-of-the-art medical equipment more
easily and to provide a means of using that equipment to
maximum effectiveness by encouraging long-term sharing
with community institutions. . . . The Committee
recognizes that there are limits to what medical
communities and the Federal Government can individually
accomplish, but believes that this proposed arrangement
will provide VA beneficiaries and the VA medical centers
and community medical institutions with access to
prohibitively expensive major medical equipment which
would otherwise not be available to either.
S. Rep. No. 99-129, 99th Cong., 1st Sess. 82, 88-89 (Aug. 28,
1985).7
Shortly after Congress began funding the sharing program,
the Veterans Administration (predecessor to the Department of
Veterans Affairs) promulgated interim rules to implement CICA. See
51 Fed. Reg. 23065-73 (June 25, 1986). Significantly, the VA
stipulated that "[s]haring contracts negotiated under 38 U.S.C.
§ 5053 are approved for other than full and open competition." Id.
7
Congress authorized the expanded sharing program, which is
officially known as the Advanced Technology Medical Equipment Acquisition and
Sharing Program, in 1990. See Pub. L. 101-366, Title II, § 202 (b), Aug. 15,
1990, 104 Stat. 438. However, the above-cited Conference Report, see Conf.
Rep. No. 363, id., indicates that Congress began funding the sharing program
as early as 1985 -- nearly five years before it was formally authorized.
6
at 23066.8 The VA explained that its "[j]ustification and approval
procedures for proposed noncompetitive acquisitions . . . are
critical in effectively implementing the CICA and will provide the
basis for compiling the VA annual report to Congress." Id. at
23065. The VA's interim rules were finalized and implemented in
1987. See 52 Fed. Reg. 28559, 28560 (July 31, 1987).9
To summarize: Congress first adopted the VA sharing
program in 1966. The program as enacted did not address
competitive procurement procedures. Congress enacted CICA in 1984,
creating a statutory presumption in favor of competition "except in
the case of procurement procedures . . . expressly authorized by
statute." The following year, Congress expanded the sharing
program by appropriating funds to finance the acquisition and joint
use of advanced medical equipment along the lines of the VAMC-
Cabrini agreement. In response, the VA in 1987 implemented
regulations providing that despite CICA's enactment, the sharing
program did not require full and open competition. Finally,
Congress amended the sharing program in 1990 at what is now § 8153,
expanding the existing program substantially but making no mention
of CICA.
Against this statutory backdrop, the district court
permanently enjoined the VAMC-Cabrini agreement after holding that
8
38 U.S.C. § 5053 was later recodified as § 8153. See Pub. L. 102-
40, Title IV, § 402(b)(1), May 7, 1991, 105 Stat. 238. As earlier noted, the
1990 program set forth in what is now § 8153 is an expansion of the original
VA sharing program, first enacted in 1966 as § 5053.
9
See also 48 C.F.R. 806.302-5(b) (1991).
7
Congress did not explicitly exempt the sharing program from CICA
when it amended § 8153 in 1990. While acknowledging the VA
regulation set forth at 48 C.F.R. 806.302-5(b), which exempts the
sharing program from CICA, the court noted:
48 C.F.R. 806.302-5(b) . . . antedates [sic]
the rather precise statutory language of
"otherwise expressly authorized by statute" as
founded in 41 U.S.C. § 253(a). Congress said
that the public bid law can be circumvented by
express language contained in a statute. The
regulation from the Veterans Administration is
not a statute. Congress created the measuring
stick and retained the power to delete public
bid law requirements from contracts for goods
and services. The VA is powerless to change
the clear procedure set by Congress.
783 F. Supp. at 1008. The district court did not address the pre-
CICA legislative history of § 8153, nor did it review the 1985
appropriations legislation expanding the existing sharing program
to private hospitals.
Cabrini and the VA argue that Congress never intended the
Competition in Contracting Act to apply to a sharing program that
has been on the books since 1966. The program is either exempted
from the Act by § 8153, they contend, or falls outside CICA because
sharing agreements do not involve the "procurement" of equipment.
Appellants also challenge Rapides' standing to sue. We address
these arguments in reverse order.
II.
STANDING
Cabrini and the VA first contend that the district court
erred in failing to enter a specific finding that Rapides has
standing to bring this lawsuit. They insist on a remand or, in the
8
alternative, a ruling that as a matter of law Rapides lacks
standing to sue. Appellants acknowledge that disappointed bidders
have prudential standing under the Administrative Procedure Act to
challenge agency violations of federal procurement requirements.
See Scanwell Laboratories, Inc. v. Shaffer, 424 F.2d 859, 873 (D.C.
Cir. 1970); Hayes International Corp. v. McLucas, 509 F.2d 247, 257
(5th Cir.), cert. denied, 423 U.S. 864, 96 S. Ct. 123, 46 L. Ed. 2d
92 (1975) (adopting Scanwell). They maintain, however, that
Rapides lacks standing because it is neither an actual nor a
prospective bidder on the VA's plan to acquire a linear
accelerator.10 Establishing prudential standing to challenge a
government contracting decision requires: (1) an allegation of
injury in fact; (2) a claim that CICA was "arguably" intended to
prevent the agency's action; and (3) the absence of Congressional
intent to withhold judicial review. Contractors Engineers
International, Inc. v. Dept. of Veterans Affairs, 947 F.2d 1298,
1300 n.9 (5th Cir. 1991); Gull Airborne Instruments, Inc. v.
10
The disappointed bidder requirement stems from the familiar "zone
of interests" test mandated by the Administrative Procedure Act. The APA
waives the sovereign immunity to which government agencies would otherwise be
entitled for all persons "adversely affected or aggrieved by agency action
within the meaning of a relevant statute. . . ." 5 U.S.C. § 702. In its
complaint, Rapides premised jurisdiction on 28 U.S.C. § 1331 (federal question
jurisdiction) and 31 U.S.C. § 3556 (permitting "any interested party" to
challenge alleged violations of federal procurement law). The VA suggests
that Rapides erred by failing to tie jurisdiction in this case directly to the
APA. But as the VA candidly admits elsewhere in its brief, "it does not
matter whether the suit is thought of as an APA action or an action brought
directly under CICA, so long as it is clear that the plaintiff must be an
actual or prospective bidder in order to have standing." See, e.g., Waste
Management of North America v. Weinberger, 862 F.2d 1393, 1397-98 (9th Cir.
1988); and MCI Telecommunications Corp. v. United States, 878 F.2d 362, 365
(Fed. Cir. 1989). Neither the VA nor Cabrini challenges Rapides'
constitutional standing to bring this action. See generally Scanwell
Laboratories, 424 F.2d at 871-73.
9
Weinberger, 694 F.2d 838 (D.C. Cir. 1982) (citing Control Data
Corp. v. Baldridge,11 655 F.2d 283, 288-89 (D.C. Cir.), cert.
denied, 454 U.S. 881, 102 S. Ct. 363, 70 L. Ed. 2d 190 (1981)). We
are convinced that "[s]atisfaction of the first factor is clear
from the preceding discussion, and there is no clear and convincing
Congressional intent to withhold judicial review." Abel
Converting, Inc. v. United States, 679 F. Supp. 1133, 1137 (D.D.C.
1988). As for the second requirement, assuming that the sharing
agreement was covered by CICA, that statute supplies its own
answer:
'Interested party', with respect to a contract
or proposed contract . . . means an actual or
prospective bidder or offeror whose direct
economic interest would be affected by the
award of the contract or by failure to award
the contract[.]
31 U.S.C. § 3551(2) (emphasis added).
Thus, to object to the award of a contract allegedly
covered by CICA, Rapides must demonstrate that it was an actual or
prospective bidder or offeror on the sharing agreement. Because
Rapides was not an actual bidder, the prudential standing issue
turns on its claimed status as a prospective bidder. Appellants
insist that the district court never addressed this issue,
asserting that Rapides would not have bid on the sharing agreement
had it been given the opportunity to do so. This is unpersuasive.
Implicit in the district court's holding that Rapides was denied
11
Baldridge has since been questioned by Clarke v. Securities
Industry Ass'n., 479 U.S. 388, 107 S. Ct. 750, 93 L. Ed. 2d 757 (1987), on
grounds that are not relevant here.
10
the opportunity to participate in the sharing agreement is the
recognition that Rapides would have done so if given the chance.
There is sufficient evidence in the record that Rapides stood ready
and willing to participate in the sharing program had it been
offered the opportunity to do so. In suggesting otherwise,
appellants ignore not only the specific allegations in Rapides'
verified complaint, but the affidavit of its president, James T.
Montgomery, who stated that "[h]ad Rapides Regional been given the
opportunity, Rapides Regional would have submitted a proposal to
VAMC in connection with consideration of submissions under the 1990
Advanced Medical Equipment Share Acquisition Program. . . ."12
While appellants point to some evidence that might be interpreted
as disproving Rapides' intent to participate in the sharing
agreement with the VAMC if offered the chance, the district court's
implied factfinding is not clearly erroneous. Anderson v. Bessemer
City, 470 U.S. 564, 573, 105 S. Ct. 1504, 1511, 84 L. Ed. 2d 518
(1985). Had the district court been convinced that Rapides' real
motive was to block the VA-Cabrini deal rather than to make a
competing offer, it would have had to deny standing, because
Rapides would not then be an actual or prospective bidder. This
12
Admittedly, Rapides sought to block the VAMC-Cabrini agreement
after it had been executed, writing letters to Members of Congress and others
asserting that the new linear accelerator was duplicative and unnecessary.
But this last-ditch lobbying effort does not controvert Rapides' contention
that it would have bid on the sharing agreement at the outset, before the
negotiations were a fait accompli.
11
conclusion was not compelled by the evidence, and we decline to
overturn the court's finding.13
III.
PROCUREMENT
Appellants next confront CICA directly by arguing that
the shared acquisition of specialized medical resources14 for mutual
use under § 8153 is not a "procurement" within the meaning of
CICA,15 but more closely resembles a lease or sale of government
property. The VA cites several decisions of the Comptroller
General to this effect.16 In particular, the VA directs this
13
We need not and do not here decide that any prospective or actual
bidder necessarily has standing to challenge a government procurement decision
arguably governed by CICA. Compare Waste Management of N. America v.
Weinberger, 862 F.2d 1393, 1397-98 (9th Cir. 1988). Affirmance of the
district court is based on Rapides' evidence that it could and would
participate in the program if offered the opportunity and that its self-
interest dictated such a decision because of its previous arrangement to
supply other radiation therapy services to the VA. Cabrini also argues that
Rapides waived its claim by failing to file a timely protest with the
Comptroller General, the federal official charged with hearing bid protests at
the administrative level. This argument wrongly assumes that the Comptroller
General has exclusive jurisdiction to hear CICA protests. In fact, the
statute expressly provides otherwise. See 31 U.S.C. § 3556 (stating that
administrative remedies under CICA are non-exclusive).
14
As defined by 38 U.S.C. § 8152(2):
The term "specialized medical resources" means medical
resources (whether equipment, space, or personnel)
which, because of cost, limited availability, or
unusual nature, are either unique in the medical
community or are subject to maximum utilization only
through mutual use.
15
CICA applies only to an executive agency conducting a "procurement
for property or services." 41 U.S.C. § 253(a)(1).
16
See Jefferson Bank & Trust, No. B-228563, 87-2 C.P.D. ¶ 390 (Oct.
23, 1987) (government agency's leasing of government-owned office space is not
a procurement and therefore subject to CICA); Crystal Cruises, Inc., No. B-
238347, 90-1 C.P.D. ¶ 141 (Feb. 1, 1990) (government award of a concession
permit allowing a shipping company to operate within a national park is a
license to enter government property, not a procurement of property or
services under CICA); and Columbia Communications Corp., No. B-236904, 89-2
12
court's attention to Surface Alloys Corp., B-222703, 86-2 C.P.D.
¶ 7 (June 25, 1986). That case involved a controversy not unlike
this one. The U.S. Navy purchased a complicated piece of equipment
known as an ion implanter and leased it to a private company that
was performing research and development under a Navy contract.
Another company protested this action, arguing that it gave the
Navy's contractor an unfair competitive advantage. The Comptroller
C.P.D. ¶ 242 (Sept. 18, 1989) (NASA did not procure property or services
within the meaning of CICA by permitting private contractor to use government
satellite).
The degree of deference to be paid to decisions of the Comptroller
General is a matter of some dispute. According to one treatise:
There is an increasing tendency on the part of United
States district courts and United States Circuit
Courts of Appeal to refer bid protest cases to the
General Accounting Office because of that agency's
"special competence and experience." This tendency is
not followed in the United States Claims Court, which
is the most prestigious court in the area of
government contracting. It would seem that the United
States Court of Appeals for the District of Columbia
Circuit is of the view that a decision of the General
Accounting Office may not be reversed unless it is
"arbitrary and capricious," Steinthal & Co., Inc. v.
Seamans, 455 F.2d 1289 (D.C. Cir. 1971). However, the
majority of district courts are of the opinion that
the decisions of the Comptroller General are advisory
only and are not binding upon the court.
McBride & Touhey, 1A GOVERNMENT CONTRACTS at § 7.10. Appellants urge us to
afford Chevron deference to Comptroller General decisions interpreting
statutes entrusted to the GAO by Congress. See Chevron U.S.A., Inc. v.
Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S. Ct. 2778, 81
L. Ed. 2d 694 (1984). Even our pre-Chevron decisions indicate that "[w]hen
actions of procurement officials have been expressly validated by considered
decision of the GAO or are in compliance with a reasonably consistent pattern
of GAO determinations, the court should be extremely reluctant to overturn
such decisions." Kinnett Dairies, Inc. v. J.C. Farrow, 580 F.2d 1260, 1272
(5th Cir. 1978). See also J.H. Rutter Rex. Mfg. Co., Inc. v. United States,
706 F.2d 702, 711 (5th Cir.), cert. denied, 464 U.S. 1008, 104 S. Ct. 526, 78
L. Ed. 2d 709 (1983) ("[D]ecisions of the Comptroller General are entitled to
special deference given the complexities and intricacies of government
purchasing decisions.").
13
General dismissed the protest, holding that the lease was not a
procurement under CICA.
While the district court in this case did not define
"procurement" for purposes of CICA, its holding rests on the tacit
assumption that a procurement has taken place. The question thus
remains: Did the VA "procure" goods or services from Cabrini and
in so doing run afoul of CICA?
For the answer, one must first examine the Memorandum of
Understanding between Cabrini and the VAMC. It outlines several
stages for the acquisition and mutual use of the linear
accelerator: (1) the actual purchase of the accelerator by the VA
from the manufacturer; (2) a financing arrangement whereby Cabrini
will donate one-half of the accelerator's cost to the VA;17 and
(3) the joint use of the machine by the VA and Cabrini under the
terms of the sharing agreement to be negotiated at a later date.18
The VA emphasizes that the accelerator was purchased from the
manufacturer using competitive procurement procedures, whereas the
financing and shared use of the VA-owned accelerator is akin to a
17
Such donations are authorized at 38 U.S.C. § 8303. The amount of
the donation at issue in this case (fifty percent of the purchase price of the
accelerator) is consistent with the pilot program established by Congress.
See Conf. Rep. No. 363, 99th Cong. 1st Sess. at 22.
18
VA's brief takes pains to observe that "there is as yet
no agreement to procure such services [from Cabrini]. If the VA
contracts for such services from Cabrini, that would be a
procurement, and Rapides might well have standing to challenge
it." VA contends, however, that under § 8153, such a transaction
would still not be subject to CICA.
14
lease or sale of government property.19 For its part, Rapides
argues that the transaction must be viewed as an integrated whole:
the shared acquisition of property (the linear accelerator) as well
as services (including Cabrini's facilities, personnel and other
specialized medical services). To bolster its argument, Rapides
cites Motor Coach Industries, Inc. v. Dole, 725 F.2d 958 (4th Cir.
1984) and Yosemite Park v. United States, 582 F.2d 552 (Ct. Cl.
1978).
In Motor Coach Industries, the Fourth Circuit held that
a trust formed by the Federal Aviation Administration to fund
ground transportation improvements at Dulles International Airport
was public in character, so that CICA applied to all such
improvements financed by that trust. To fund the trust, the FAA
agreed to waive air carrier fees at Dulles provided that the
airlines deposited equivalent funds in the trust. After analyzing
the trust's purpose, the court declared it to be a disguised
"purchasing agent" created to circumvent normal appropriation
channels and the federal procurement process. Id. at 968. While
Rapides insists that the VA-Cabrini sharing agreement is also an
"end-run" around the procurement requirements of CICA, id., Motor
Coach Industries is plainly distinguishable. Unlike the FAA trust,
the circumstances surrounding the sharing program do not suggest
any attempt to evade statutory purchase requirements. The question
19
Cabrini takes a slightly different position: that the VA's
procurement of the linear accelerator "has not been challenged" so that CICA
applies -- if at all -- solely to that portion of the MOU by which Cabrini is
to provide accelerator-related services to VA clients.
15
here is whether the sharing agreement expressly permitted by § 8153
was for that reason not required to comply with CICA. Further, the
VAMC-Cabrini agreement does not resemble the concession contract at
issue in Yosemite Park. The National Park Service contracted
directly for transportation equipment and services under the guise
of a "concession" agreement conferring federal tax breaks on the
contractor. In holding that the contractor was bound by federal
procurement laws, the court rejected the NPS's efforts to evade
those requirements by labeling what was in fact "the purchase of
services" as a "concession." 582 F.2d at 558-59. The common
thread in both cases, absent here, is an arrangement by the federal
government to pay money or confer other benefits in exchange for
goods and services. Under the MOU, and under § 8153, the VA
received a donation of money from Cabrini in exchange for the
shared use of a linear accelerator purchased and owned by the VAMC.
Rapides nonetheless insists that the definition of
"procurement" under CICA is broad enough to encompass the VAMC-
Cabrini sharing agreement. What is at stake here, Rapides insists,
is no less than "a sole-source joint purchase and shared use
agreement that falls squarely within the statutory definition of
procurement." And there lies the rub: Rapides pins its hopes on
a statutory definition of "procurement" that is inapplicable to
CICA. Specifically, Rapides cites 41 U.S.C. § 403, which provides
in relevant part:
As used in this chapter --
16
(2) the term "procurement" includes all
stages of the process of acquiring property or
services, beginning with the process of
determining a need for property or services
and ending with contract completion and
closeout[.]
(Emphasis added.) The crucial phrase in this passage, "As used in
this chapter," means that § 403(2) applies exclusively to Chapter
7 of Title 41. Chapter 7, The Office of Federal Procurement Policy
Act, 41 U.S.C. § 401 et. seq., establishes the Office of Federal
Procurement Policy within the Office of Management and Budget "to
provide overall direction of procurement policies, regulations,
procedures, and forms for executive agencies in accordance with
applicable laws." 41 U.S.C. § 402(b). In contrast, the full and
open procurement requirements of CICA § 253(a) are set forth in
Chapter 4. It stands to reason that the definition of procurement
for purposes of Chapter 7, which establishes an agency in the
executive branch whose mission is to oversee federal procurement
policy, is considerably broader than the definition of procurement
subject to the particularized bidding and negotiation requirements
specified by CICA. Indeed, had Congress wanted the definition of
procurement articulated in Chapter 7 to apply to Chapter 4, it
could have done so in express terms.20
20
See, e.g., 41 U.S.C. § 253(g)(5) (Supp. 1992) (providing that
"[i]n this subsection, the term 'small purchase threshold' has the meaning
given such term in section 403(11) of this title"). Rapides' reliance on
Hayes v. U.S. Postal Service, 859 F.2d 354 (5th Cir. 1988), is similarly
misplaced. Hayes interpreted the definition of "procurement of services"
under the Contract Disputes Act, 41 U.S.C. § 601 et. seq., rather than CICA.
Id. at 355-56. Hayes also deals with a "procurement" of suggestions by the
government from its employees.
17
If anything, Congress' efforts to define "procurement"
for purposes of the Office of Federal Procurement Policy Act
suggest that the meaning of this term differs elsewhere in Title
41. CICA itself does not define procurement. Nor, for that
matter, does the Federal Acquisition Regulations System (FAR), of
which 48 C.F.R. 806.302-5(b) -- the VA's rules exempting the
sharing program from CICA -- is a part.21 However, there can be
little doubt that the word procurement is widely understood, by
lawyers and laymen alike, to denote the process by which the
government pays money or confers other benefits in order to obtain
goods and services from the private sector. Black's Law Dictionary
defines "procurement contract" as "[a] government contract with a
manufacturer or supplier of goods or machinery or services under
the terms of which a sale or service is made to the government."
BLACK'S LAW DICTIONARY 1208 (6th ed. 1991). Rapides does not
dispute that the VA procured the linear accelerator from a private
manufacturer, in a procurement process that complied with CICA.
What Rapides fails to explain is why an agreement over future
access to government-owned property, albeit property purchased
partly with a private donation from Cabrini, justifies expanding
the definition of "procurement" beyond its generally understood
meaning. Rapides tries to sidestep the issue by asserting that it
would have given a larger donation to the VAMC to purchase the
accelerator, although the district court made no findings on this
point. But this does not change the fact that the VA never
21
See 48 C.F.R. 2.101 et. seq. (defining terms used by the FAR).
18
intended to procure the accelerator from either Cabrini or Rapides.
To repeat, the classic procurement involves the government's paying
money or conferring other benefits in return for the acquisition or
use of private property or services. This is decidedly unlike the
agreement at issue here in which the VA has received money from a
private hospital and used it to purchase a linear accelerator from
the manufacturer, in exchange for letting that hospital share its
use.
IV.
EXPRESS AUTHORIZATION
Finally, even assuming that the VAMC-Cabrini sharing
agreement is a "procurement" for purposes of CICA, we are persuaded
that 38 U.S.C. § 8153, which authorizes the VA to enter into such
arrangements, is a procurement procedure "expressly authorized by
statute" within the meaning of CICA § 253(a)(1) and therefore is
not subject to the Act's full and open competition requirements.
As has been already noted, Congress originally enacted
what is now § 8153 in 1966, nearly two decades before the passage
of the Competition in Contracting Act. In 1985, the year after
CICA's enactment, Congress expanded the sharing program by
appropriating up to $10 million for a pilot program to facilitate
sharing agreements like the one later negotiated between Cabrini
and the VAMC. Congress evidently saw no reason to revisit § 8153
19
after CICA's enactment because the sharing program had historically
been operated on a sole-source basis.22
Moreover, the language of § 8153 is inconsistent with the
district court's conclusion that the VA's sharing arrangements must
be achieved competitively. For instance, § 8153(b) provides that
reimbursement for the shared use of equipment must be based "on a
methodology that provides appropriate flexibility to the heads of
the facilities concerned," taking into account "local conditions
and needs and the actual cost to the providing facility of the
resource involved." This bears little resemblance to competitive
bidding procedures in which the participating government agency
attempts to ensure a steady supply and minimize its costs without
taking into account added considerations affecting private
contractors. Further, § 8153(e) directs the Secretary of Veterans
Affairs to notify Congress annually "on the activities carried out
under this section." The reporting requirement, which permits
Congress to monitor sharing arrangements such as that between
Rapides and the VAMC, would suggest that Congress sought to ensure
fairness and efficiency in such unique arrangements by means other
than competitive bidding.
We also disagree with the district court as to the proper
role of 48 C.F.R. 806.302-5(b), which provides that "[s]haring
contracts negotiated under [§ 8153] are approved for other than
22
The sharing program as enacted by Congress was not subject to
competitive procurement requirements. The Comptroller General later
recognized the VA's authority under what was then § 5053 to approve such
sharing arrangements on a non-competitive basis. See Veterans Admin. No., No.
B-115559.2, 81-2 C.P.C. ¶ 369 (Nov. 2, 1981).
20
full and open competition." Admittedly, this regulation, which was
implemented after CICA's enactment, "is not a statute." 783
F. Supp. at 1008. But while the district court correctly observed
that this regulation was promulgated after the enactment of CICA,
the court erred by implying that the VA was attempting to
circumvent Congressional intent by exempting the sharing program
from § 253(a)(1). On the contrary, the VA regulation was
implementing Congress' post-CICA appropriations legislation that
expanded funding for the sharing program so long as non-federal
sources agreed to finance at least 50 percent of the cost of
acquiring advanced medical equipment.23 We therefore can discern
no valid reason why 806.302-5(b) should not be controlling.24
Rapides is certainly correct that "[t]he VA cannot unilaterally
exempt itself from the Congressional mandate of the CICA," but such
is not the case here. That Congress did not specifically exempt
the sharing program from CICA in 1990, when it amended what was
then § 5053, is not especially surprising given that Congress had
created and maintained that program by means other than full and
open procurement. Congress retained for itself the "measuring
stick," 783 F. Supp. 1008, by which to evaluate the success of the
sharing program now recodified at § 8153: annual reports from the
23
See Conf. Rep. No. 363, 99th Cong., 1st Sess. at 22; and S. Rep.
No. 99-129, 99th Cong., 1st Sess. at 88-89.
24
Nor are we alone in reaching this conclusion. The Comptroller
General determined in this dispute that § 8153 sharing arrangements are not
subject to the full and open competition requirements of CICA. See Rapides
Regional Medical Center -- Reconsideration, No. B-242601.2, 91-1 C.P.D. ¶ 614
(June 28, 1991). The district court's opinion does not refer to this
decision, and it is therefore unclear what, if any, deference it paid to the
GAO's analysis and considered judgment.
21
VA tracking activities under the program. Section 8153(e), which
reflects Congress' willingness to exercise its oversight function,
belies the district court's claim that the VA was attempting to
circumvent Congressional priorities by promulgating 806.302-5(b).
In view of the plain language of § 8153, its pre-CICA
legislative history, and the 1985 appropriations legislation
expanding the existing sharing program (and which 48 C.F.R.
806.302-5(b) was intended to implement), it must be concluded that
the VA's sharing program is expressly authorized by statute within
the meaning of CICA § 253(a)(1) and therefore does not trigger the
Act's full and open competition requirements.
V.
CONCLUSION
For all the foregoing reasons, we REVERSE the district
court's decision. The permanent injunction barring the VAMC-
Cabrini Memorandum of Understanding is VACATED.
22