Cleveland Assets, LLC v. United States

United States Court of Appeals
for the Federal Circuit
______________________
CLEVELAND ASSETS, LLC,
Plaintiff-Appellant
v.
UNITED STATES,
Defendant-Appellee
______________________
2017-2113
______________________
Appeal from the United States Court of Federal
Claims in No. 1:17-cv-00277-EDK, Judge Elaine Kaplan.
______________________
ON PETITION FOR PANEL REHEARING AND
REHEARING EN BANC
______________________
STUART TURNER, Arnorld & Porter Kaye Scholer, LLP,
Washington, DC, filed a combined petition for panel
rehearing and rehearing en banc for plaintiff-appellant.
Also represented by NATHANIEL EDWARD CASTELLANO.
KARA WESTERCAMP, Commercial Litigation Branch,
Civil Division, United States Department of Justice,
Washington, DC, filed a response to the petition for
defendant-appellee. Also represented by CHAD A.
READLER, ROBERT E. KIRSCHMAN, JR., DEBORAH A. BYNUM.
______________________
2 CLEVELAND ASSETS, LLC v. UNITED STATES
Before PROST, Chief Judge, NEWMAN, LOURIE, DYK,
MOORE, O’MALLEY, REYNA, WALLACH, TARANTO, CHEN,
HUGHES, and STOLL, Circuit Judges.
WALLACH, Circuit Judge, with whom NEWMAN, Circuit
Judge, joins, dissents from the denial of rehearing en
banc.
PER CURIAM.
ORDER
Appellant Cleveland Assets, LLC, filed a combined
petition for panel rehearing and rehearing en banc. A
response to the petition was invited by the court and filed
by appellee United States. The petition was first referred
to the panel that heard the appeal, and thereafter the
petition for rehearing en banc was referred to the circuit
judges who are in regular active service. A poll was
requested, taken, and failed.
Upon consideration thereof,
IT IS ORDERED THAT:
The petition for panel rehearing is denied.
The petition for rehearing en banc is denied.
The mandate of the court will issue on August 9,
2018.
FOR THE COURT
August 2, 2018 /s/ Peter R. Marksteiner
Date Peter R. Marksteiner
Clerk of Court
United States Court of Appeals
for the Federal Circuit
______________________
CLEVELAND ASSETS, LLC,
Plaintiff-Appellant
v.
UNITED STATES,
Defendant-Appellee
______________________
2017-2113
______________________
Appeal from the United States Court of Federal
Claims in No. 1:17-cv-00277-EDK, Judge Elaine Kaplan.
______________________
WALLACH, Circuit Judge, with whom NEWMAN, Circuit
Judge, joins, dissenting from the denial of the petition for
rehearing en banc.
The panel holds that “the plain language of 28 U.S.C.
§ 1491(b)(1) [(2012)] expressly precludes [the Court of
Federal Claims’] jurisdiction over Count II of” Appellant
Cleveland Assets, LLC’s (“Cleveland Assets”) complaint,
Cleveland Assets, LLC v. United States, 883 F.3d 1378,
1381 (Fed. Cir. 2018), which alleges that a request for
lease proposals (“RLP”) issued by the General Services
Administration (“GSA”) violates 40 U.S.C. § 3307 (2012),
see J.A. 72–73 (Count II). Although § 1491(b)(1) broadly
confers the Court of Federal Claims with jurisdiction over
“any alleged violation of statute or regulation in connec-
tion with a procurement or a proposed procurement,” 28
U.S.C. § 1491(b)(1) (emphasis added), the panel improper-
2 CLEVELAND ASSETS, LLC v. UNITED STATES
ly narrows the Court of Federal Claims’ § 1491(b)(1) bid
protest jurisdiction to alleged violations of “procurement
statute[s],” Cleveland Assets, 883 F.3d at 1382. Under the
proper interpretation of § 1491(b)(1), I believe the Court of
Federal Claims possessed jurisdiction over Cleveland
Assets’ Complaint because Cleveland Assets alleges a
violation of a statute, i.e., § 3307, in connection with a
procurement or proposed procurement, i.e., either Cleve-
land Assets’ lease agreement or the RLP. Therefore, I
respectfully dissent from the denial of the petition for
rehearing en banc.
DISCUSSION
I. Section 1491(b)(1) Confers a Broad Grant of Jurisdic-
tion
Our precedent is clear that § 1491(b)(1) should be in-
terpreted broadly. Pursuant to the Tucker Act, the Court
of Federal Claims has bid protest jurisdiction to adjudi-
cate “an action by an interested party objecting to a
solicitation by a Federal agency for bids or proposals for a
proposed contract or to a proposed award or the award of
a contract or any alleged violation of statute or regulation
in connection with a procurement or a proposed procure-
ment.” 28 U.S.C. § 1491(b)(1) (emphases added). 1 In
1 The panel also fails to explain why Cleveland As-
sets’ protest of the RLP would not qualify as “an ac-
tion . . . objecting to a solicitation by a Federal agency,” 28
U.S.C. § 1491(b)(1), which is a separate ground for estab-
lishing bid protest jurisdiction, see Sys. Application &
Techs., Inc. v. United States, 691 F.3d 1374, 1381 (Fed.
Cir. 2012) (holding that the Court of Federal Claims had
jurisdiction under § 1491(b)(1) because “[the plaintiff]’s
complaint specifically challenged the [agency]’s an-
nounced decision to amend or revise the solicitation—an
unambiguous objection ‘to a solicitation’” under
CLEVELAND ASSETS, LLC v. UNITED STATES 3
RAMCOR Services Group, Inc. v. United States, we ex-
plained that “[t]he operative phrase ‘in connection with’ is
very sweeping in scope,” 185 F.3d 1286, 1289 (Fed. Cir.
1999), and, in Distributed Solutions, Inc. v. United States,
we adopted the definition of “procurement” in 41 U.S.C.
§ 403(2) (2006), 2 thereby broadly defining “procurement”
to “include[] all stages of the process of acquiring property
or services, beginning with the process for determining a
need for property or services and ending with contract
completion and closeout,” 539 F.3d 1340, 1345 (Fed. Cir.
2008) (emphasis, internal quotation marks, and citation
omitted). Indeed, we repeatedly have reaffirmed the
breadth of § 1491(b)(1) and held that the Court of Federal
Claims possessed bid protest jurisdiction over protestors’
claims. See, e.g., Diaz v. United States, 853 F.3d 1355,
1358 (Fed. Cir. 2017) (stating that “[t]he phrase ‘in con-
nection with’ is ‘very sweeping in scope’ and ‘includes all
stages of the process of acquiring property or services,
§ 1491(b)(1) and that the plaintiff’s objections to alleged
violations of a statute and regulations provided “another
basis for jurisdiction” (citation omitted)). Nevertheless,
because the panel’s opinion and Cleveland Assets’ petition
for rehearing en banc both focus on an “alleged violation
of statute or regulation in connection with a procurement
or proposed procurement,” I limit my analysis to the
panel’s application of that language.
2 Section 403(2) was enacted as an amendment to
the Office of Federal Procurement Policy Act (“Policy
Act”), Pub. L. No. 93-400, 88 Stat. 796 (1974) (codified as
amended in scattered sections of 41 U.S.C.). See Office of
Federal Procurement Policy Act Amendments of 1979,
Pub. L. No. 96-83, § 3, 93 Stat. 648, 649. This definition
has been recodified at 41 U.S.C. § 111 (2012). See An Act
to Enact Certain Laws Relating to Public Contracts as
Title 41, United States Code, “Public Contracts,” Pub L.
No. 111-350, § 3, 124 Stat. 3677, 3681 (2011).
4 CLEVELAND ASSETS, LLC v. UNITED STATES
beginning with the process for determining a need for
property or services and ending with contract completion
and closeout’” and finding jurisdiction under § 1491(b)(1)
(quoting Distributed Sols., 539 F.3d at 1345)); Coast
Prof’l, Inc. v. United States, 828 F.3d 1349, 1354 & n.3
(Fed. Cir. 2016) (similar); Palladian Partners, Inc. v.
United States, 783 F.3d 1243, 1252–54 (Fed. Cir. 2015)
(similar); Sys. Application & Techs., 691 F.3d at 1380–82
(similar). 3 As such, to establish jurisdiction under
§ 1491(b)(1), a protestor need only make “[a] non-frivolous
allegation of a statutory or regulatory violation in connec-
tion with a procurement or proposed procurement.”
Distributed Sols., 539 F.3d at 1345 n.1.
II. The Panel Improperly Limits § 1491(b)(1) to Alleged
Violations of “Procurement Statutes”
Instead of applying this prior precedent, the panel
improperly narrows § 1491(b)(1) by requiring Cleveland
Assets to allege a violation of a “procurement statute.”
Cleveland Assets, 883 F.3d at 1382. While leasing a
building from Cleveland Assets to house the Federal
3 We recently recognized the broad scope of
§ 1491(b)(1) but held that the Court of Federal Claims did
not possess jurisdiction on the narrow grounds that the
relevant order was not a procurement because it did not
“begin the process for determining a need for property or
services” and “simply formalized the [agency]’s decision.”
AgustaWestland N. Am., Inc. v. United States, 880 F.3d
1326, 1331 (Fed. Cir. 2018) (internal quotation marks and
citation omitted); see id. at 1330 (recognizing that “pro-
curement” encompasses “all stages of the process of ac-
quiring property or services” (internal quotation marks
and citation omitted)). Here, unlike in AgustaWestland,
the GSA has “initiated a procurement” by issuing the
RLP. Id. at 1330 (internal quotation marks and citation
omitted); see Cleveland Assets, 883 F.3d at 1380.
CLEVELAND ASSETS, LLC v. UNITED STATES 5
Bureau of Investigation’s (“FBI”) Cleveland office, the
GSA issued the RLP, seeking to lease another building to
house the FBI’s Cleveland office. Id. at 1379. Cleveland
Assets filed a bid protest suit in the Court of Federal
Claims, alleging that “the RLP [wa]s unlawful because it
exceed[ed] the scope of GSA’s authority to solicit offers
under . . . § 3307.” Id. at 1380; see J.A. 72. Instead of
assessing whether Cleveland Assets’ Complaint contains
“[a] non-frivolous allegation of a statutory or regulatory
violation in connection with a procurement or proposed
procurement,” Distributed Sols., 539 F.3d at 1345 n.1, the
panel concludes that “[t]he only statute alleged to be
violated by Cleveland Assets in Count II is . . . § 3307, an
appropriation, not a procurement, statute,” Cleveland
Assets, 883 F.3d at 1381. Not only does the panel fail to
identify any authority requiring a plaintiff to assert a
violation of a “procurement statute,” id. at 1382, 4 such a
4 The panel does not cite RAMCOR or any other
precedent supporting its interpretation. See generally
Cleveland Assets, 883 F.3d 1378. To the extent the panel
could arguably rely upon RAMCOR, which assessed
whether the “statute has a connection to a procurement
proposal,” 185 F.3d at 1289 (emphasis added), our recent
precedent has focused on whether the agency’s action or
the protest have a connection to a procurement or pro-
posed procurement, see Palladian Partners, 783 F.3d at
1254 (stating that § 1491(b)(1) “authorizes the Court of
Federal Claims to review an action ‘in connection with a
procurement or a proposed procurement’” and holding
that, “[b]ecause [the agency]’s . . . determination and the
contracting officer’s amendment to the solicitation are
actions ‘in connection with a proposed procure-
ment,’ . . . they are within the scope of jurisdiction grant-
ed under the Tucker Act” (emphases added) (internal
quotation marks and citation omitted)); Distributed Sols.,
6 CLEVELAND ASSETS, LLC v. UNITED STATES
requirement would conflict with the plain language of
§ 1491(b)(1), which places no limitations on the type of
statute alleged to have been violated. Instead,
§ 1491(b)(1) broadly encompasses “any alleged violation of
statute . . . in connection with a procurement or a pro-
posed procurement.” 28 U.S.C. § 1491(b)(1) (emphases
added).
539 F.3d at 1345, 1346 (stating that “[t]he only issue is
whether the contractors’ protest is ‘in connection with a
procurement or proposed procurement’” and holding that
the Court of Federal Claims had jurisdiction under
§ 1491(b)(1) because “the [G]overnment at least initiated
a procurement[] or initiated ‘the process for determining a
need’ for acquisition and assistance solutions” (emphasis
added)). If these cases are in conflict, we should resolve
that conflict through rehearing en banc. However, even if
RAMCOR dictates that we focus only on the statute’s
connection to a procurement or proposed procurement, my
conclusion would not change. Section 3307 is “in connec-
tion with a procurement or proposed procurement” be-
cause it governs the process of obtaining appropriations to
lease property for agencies. See 40 U.S.C. § 3307(a)(2)
(requiring Congressional committee approval for “[a]n
appropriation to lease any space at an average annual
rental in excess of $1,500,000 for use for public purpos-
es”), (b) (setting forth the information that must be con-
tained in a prospectus to obtain approval under
§ 3307(a)). This falls within the definition of “procure-
ment” under § 1491(b)(1), i.e., “all stages of the process of
acquiring property or services, beginning with the process
for determining a need for property or services and ending
with contract completion and closeout.” Distributed Sols.,
539 F.3d at 1345 (emphasis, internal quotation marks,
and citation omitted).
CLEVELAND ASSETS, LLC v. UNITED STATES 7
III. Cleveland Assets’ Complaint Includes a Non-Frivolous
Allegation of a Statutory Violation in Connection with a
Procurement or Proposed Procurement
Under the proper interpretation of § 1491(b)(1), Cleve-
land Assets raised “[a] non-frivolous allegation” that the
GSA violated “a statut[e],” i.e., § 3307, “in connection with
a procurement or proposed procurement,” i.e., either
Cleveland Assets’ lease agreement with the GSA or the
RLP, Distributed Sols., 539 F.3d at 1345 n.1; see J.A. 72
(alleging, in Cleveland Assets’ Complaint, that “[t]he RLP
is contrary to law” because it “adds five new categories of
space to the lease which were not authorized” in violation
of § 3307), 73 (alleging “the RLP contains requirements
that were not [congressionally] authorized” and is there-
fore “contrary to law”). 5 Here, the RLP would qualify as a
“proposed procurement” under § 1491(b)(1). See, e.g.,
Distributed Sols., 539 F.3d at 1346 (holding that an
agency’s request for information was a “proposed pro-
curement” sufficient to establish jurisdiction under
§ 1491(b)(1)). Moreover, the GSA currently leases a
building from Cleveland Assets, Cleveland Assets, 883
F.3d at 1379, and we have recognized that an agency’s
lease of property from a lessor may qualify as a “procure-
ment,” 6 see Forman v. United States, 767 F.2d 875, 879
5 This language in the Complaint directly ties the
violation of § 3307’s authorization requirements to the
procurement, such that the panel’s stated concern about
an overextension of jurisdiction appears overblown. See
Cleveland Assets, 883 F.3d at 1381 (“If plaintiffs could
allege any statutory or regulatory violation tangentially
related to a government procurement, § 1491(b)(1) juris-
diction risks expanding far beyond the procurement
context.”).
6 In contrast, when the agency leases government-
owned property to a lessee, the lease is not a procure-
8 CLEVELAND ASSETS, LLC v. UNITED STATES
(Fed. Cir. 1985) (holding that “newly-created lease agree-
ments . . . fall within the purview of [the Policy Act]”); see
also Bonneville Assocs. v. United States, 43 F.3d 649, 653
(Fed. Cir. 1994) (“A ‘procurement’ is an acquisition by
purchase, lease, or barter, of property or services for the
direct benefit or use of the [F]ederal [G]overment.” (em-
phasis added) (citation omitted)). 7 The panel fails to
provide any reason explaining either why Forman and
Bonneville would not apply here or why the GSA’s lease of
Cleveland Assets’ building or the RLP would not qualify
as a procurement or proposed procurement under
§ 1491(b)(1), and I am aware of none. Thus, I would
conclude that the Court of Federal Claims had jurisdiction
to consider Count II of the Complaint.
ment. See Res. Conservation Grp., LLC v. United States,
597 F.3d 1238, 1244 (Fed. Cir. 2010) (“The process in-
volved in soliciting lessees for government-owned proper-
ty cannot be characterized as a ‘process of acquiring
property or services’ [under § 403(2) and, thus, under
§ 1491(b)(1)].”).
7 Forman and Bonneville interpreted provisions of
the Contract Disputes Act of 1978 (“CDA”), Pub. L. No.
95-563, 92 Stat. 2383 (codified as amended in 41 U.S.C.
§§ 7101–7109). See Bonneville, 43 F.3d at 652–55; For-
man, 767 F.2d at 878–79. However, Forman analogized
the CDA to the Policy Act, from which we adopted the
definition of “procurement” under § 1491(b)(1), see Dis-
tributed Sols., 539 F.3d at 1345, and explained that,
“[b]ecause the phrases in the two statutes are almost
identical and because they focus on the same object—
Government procurement—we assume for the purposes of
this appeal that Congress intended the phrase to have the
same meaning in the [CDA] as it had in the earlier Policy
Act,” Forman, 767 F.2d at 878 (citation omitted).
CLEVELAND ASSETS, LLC v. UNITED STATES 9
CONCLUSION
Instead of applying our precedent that broadly inter-
prets § 1491(b)(1) as requiring only “[a] non-frivolous
allegation of a statutory or regulatory violation in connec-
tion with a procurement or proposed procurement,” Dis-
tributed Sols., 539 F.3d at 1345 n.1, the panel improperly
narrows the Court of Federal Claims’ § 1491(b)(1) bid
protest jurisdiction to alleged violations of “procurement
statute[s],” Cleveland Assets, 883 F.3d at 1382. Therefore,
I believe that this case raises a question of exceptional
importance, and that rehearing en banc is necessary to
maintain uniformity with our prior precedent. For these
reasons, I respectfully dissent from the court’s denial of
the petition for rehearing en banc.