Cleveland Assets, LLC v. United States , 883 F.3d 1378 ( 2018 )

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.
______________________
Decided: March 5, 2018
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STEVEN D. GORDON, Holland & Knight, LLP, Wash-
ington, DC, argued for plaintiff-appellant. Also repre-
sented by MARY BETH BOSCO, GORDON GRIFFIN, ROBERT C.
MACKICHAN, JR.; ELIZABETH JOCHUM, Tysons, VA.
KARA WESTERCAMP, Commercial Litigation Branch,
Civil Division, United States Department of Justice,
Washington, DC, argued for defendant-appellee. Also
represented by CHAD A. READLER, ROBERT E. KIRSCHMAN,
JR., DEBORAH A. BYNUM.
______________________
Before MOORE, HUGHES, and STOLL, Circuit Judges.
2 CLEVELAND ASSETS, LLC v. UNITED STATES
MOORE, Circuit Judge.
Cleveland Assets, LLC appeals the United States
Court of Federal Claims’ (“Claims Court”) order dismiss-
ing its pre-award bid protest claim and granting the
government’s motion for judgment on the administrative
record that General Services Administration’s choice of
maximum rental rate in its acquisition was not arbitrary
or capricious or lacking a rational basis. For the reasons
discussed below, we affirm.
BACKGROUND
The Federal Bureau of Investigation (“FBI”) is cur-
rently the sole tenant in a building in Cleveland, Ohio,
pursuant to a lease between Cleveland Assets and the
General Services Administration (“GSA”). The current
lease began on February 1, 2002, and was originally set to
expire on January 31, 2012. Due to delays in securing a
new lease, the existing lease with Cleveland Assets has
been extended multiple times. Pursuant to the terms of
the extensions, GSA has paid, and continues to pay,
Cleveland Assets a penalty rate of $44.72 per rentable
square foot (“PSF”) since the expiration of the original 10-
year period.
In accordance with 40 U.S.C. § 3307, GSA must seek
the approval of the Senate Committee on Environment
and Public Works and the House Committee on Transpor-
tation and Infrastructure before obligating funds on a
lease exceeding an amount published at GSA’s Annual
Prospectus Threshold. GSA Annual Prospectus Thresh-
olds, http://www.gsa.gov/annualprospectusthreshold. To
secure consideration for approval by the congressional
committees, GSA must send the congressional committees
a prospectus of the proposed facility, including a brief
description of the space and “an estimate of the maximum
cost to the Government.” 40 U.S.C. § 3307(b).
CLEVELAND ASSETS, LLC v. UNITED STATES 3
In 2009, GSA began preparing a congressional pro-
spectus for a new lease for the Cleveland FBI office. A
series of documents demonstrate GSA considered a range
of rental values for inclusion in its prospectus. A Novem-
ber 2009 appraisal report concluded that the total gross
rent for the type of facility sought by the FBI ranged from
$29.48 to $50.47 PSF. An unsigned, undated draft pro-
spectus prepared before 2010 but not approved by GSA,
along with a series of other undated and unsigned docu-
ments, estimated a maximum proposed rental rate of
$42.00 PSF. An undated document titled “Lease Project
Data Sheet - FY 2010 Program” projected a maximum
rental rate of $50.47 PSF. And a document titled “Analy-
sis of Replacement Lease Rental Rate” set forth an esti-
mated rental rate of $26.00 PSF.
On December 21, 2010, GSA approved a prospectus
with a maximum proposed rental rate of $26.00 PSF and
an escalation clause for inflation. 1 By the end of Septem-
ber 2011, both the United States Senate Committee on
Environment and Public Works and the United States
House of Representatives Committee on Transportation
and Infrastructure adopted resolutions approving the
prospectus at the $26.00 PSF rate.
On March 10, 2016, GSA issued a request for expres-
sions of interest in leasing a building for the FBI’s Cleve-
land office. GSA directly invited a subset of the responses
received, including Cleveland Assets, to submit proposals
to the subsequent Request for Lease Proposals
No. 6OH0241 (“RLP”), which was posted on December 7,
2016. The RLP stated that, in accordance with 40 U.S.C.
1 For ease of reference, we adopt the parties’ con-
vention of referring to the maximum rental rate of $26.00
PSF, acknowledging it has since escalated for inflation.
4 CLEVELAND ASSETS, LLC v. UNITED STATES
§ 3307, GSA would “only award a lease pursuant to this
RLP if the offered rental rate d[id] not exceed the Con-
gressionally-imposed rent limitation” of $26.00 PSF.
J.A. 1070. The RLP also indicated that negotiations may
be conducted, and “GSA will negotiate the rental price for
the initial term, any renewal periods, and any other
aspect of the offer as deemed necessary.” J.A. 1075. It
indicated any offeror “will be provided a reasonable
opportunity to submit revisions to their initial offer
including any cost or price, technical, or other revisions
that may result from the negotiations.” Id. The RLP
stated the lease “will be awarded to the responsible Offe-
ror whose offer will be most advantageous to the Govern-
ment,” considering a combination of factors including
technical quality, site characteristics, and the offeror’s
qualifications and past performance. Id. For a proposal
to be considered responsive, the RLP stated it must
include a proposed rental rate “under the prospectus
threshold.” J.A. 1077.
On February 28, 2017, the last day proposals under
the RLP could be submitted, Cleveland Assets filed the
suit underlying this appeal in the Claims Court. Relevant
to this appeal, Count II of Cleveland Assets’ complaint
asserted that the RLP is unlawful because it exceeds the
scope of GSA’s authority to solicit offers under 40 U.S.C.
§ 3307. In Counts III and IV of its complaint, Cleveland
Assets alleged that the rental cap of $26.00 PSF is unrea-
sonably low, imposes an undue restriction on competition,
and shifts all risk to the contractor, thereby negating the
technical factors.
The Claims Court dismissed Count II. The court not-
ed that “[i]t is unclear” whether Cleveland Assets’ allega-
tions were sufficient to establish its status as an
“interested party” for the purposes of 28 U.S.C. § 1491(b),
but “even assuming that such an injury has been alleged,”
it held Cleveland Assets failed to demonstrate that it was
CLEVELAND ASSETS, LLC v. UNITED STATES 5
within the zone of interests protected by 40 U.S.C. § 3307.
Cleveland Assets, LLC v. United States, 132 Fed. Cl. 264,
275 (2017). The Claims Court also granted judgment on
the administrative record in favor of the government on
Counts III and IV because it determined that GSA did not
abuse its discretion in selecting the $26.00 PSF rental
cap.
Cleveland Assets timely appeals. We have jurisdic-
tion under 28 U.S.C. § 1295(a)(3).
DISCUSSION
We review the Claims Court’s legal determinations de
novo and its factual findings for clear error. Palladian
Partners, Inc. v. United States, 783 F.3d 1243, 1252 (Fed.
Cir. 2015). We review the grant or denial of a judgment
on the administrative record without deference. Croman
Corp. v. United States, 724 F.3d 1357, 1363 (Fed. Cir.
2013).
Under the Tucker Act, the Claims Court has:
jurisdiction to render judgment on an action by an
interested party objecting to a solicitation by a
Federal agency for bids or proposals for a pro-
posed contract or to a proposed award or the
award of a contract or any alleged violation of
statute or regulation in connection with a pro-
curement or a proposed procurement.
28 U.S.C. § 1491(b)(1).
Cleveland Assets argues it has standing because it is
an “interested party” pursuant to 28 U.S.C. § 1491(b)(1)
and American Federation of Government Employees v.
United States, 258 F.3d 1294 (Fed. Cir. 2001). The gov-
ernment argues that Cleveland Assets does not fall within
the zone of interests of 40 U.S.C. § 3307 because the
purpose of that statute is to enable the legislative branch
to manage its appropriations. The government also
6 CLEVELAND ASSETS, LLC v. UNITED STATES
argues the jurisdictional reach of § 1491(b)(1) excludes the
type of challenge asserted by Cleveland Assets in
Count II.
While the Claims Court dismissed Count II on pru-
dential standing grounds, we need not reach that issue
because the plain language of 28 U.S.C. § 1491(b)(1)
expressly precludes Claims Court jurisdiction over Count
II of the complaint. Section 1491(b)(1) only confers juris-
diction over challenges to statutes or regulations “in
connection with a procurement or proposed procurement.”
28 U.S.C. § 1491(b)(1). It is a canon of statutory construc-
tion to “give effect, if possible, to every clause and word of
a statute.” United States v. Menasche, 348 U.S. 528, 538–
39 (1955) (internal quotation marks and citation omitted).
In accordance with that principle, we decline to read out
the meaning of “procurement” from the text of
§ 1491(b)(1) regarding the statutes and regulations that
an interested party may challenge.
We have previously interpreted § 1491(b) to extend
only to actions in which “the government at least initiated
a procurement, or initiated ‘the process for determining a
need’ for acquisition.” Distributed Sols., Inc. v. United
States, 539 F.3d 1340, 1346 (Fed. Cir. 2008). The phrase
“procurement” therefore limits the types of government
action that the Claims Court has jurisdiction to review
under § 1491(b). Id.; see also Res. Conservation Grp., LLC
v. United States, 597 F.3d 1238, 1245 (Fed. Cir. 2010)
(“[R]elief under 1491(b)(1) is unavailable outside the
procurement context.”). If plaintiffs could allege any
statutory or regulatory violation tangentially related to a
government procurement, § 1491(b)(1) jurisdiction risks
expanding far beyond the procurement context.
The only statute alleged to be violated by Cleveland
Assets in Count II is 40 U.S.C. § 3307, an appropriation,
not a procurement, statute. The plain text of § 3307
demonstrates that the statute is directed to “appropria-
CLEVELAND ASSETS, LLC v. UNITED STATES 7
tions [being] made only” pursuant to approval by the
specified congressional committees. 40 U.S.C. § 3307(a)
(emphasis added). While the word “procurement” is
nowhere to be found in the statute, “appropriation” is
used eight times.
The statutory structure confirms our plain language
reading of the statute. The structure of 40 U.S.C. § 3307directs GSA how to apply for an appropriation, but it says
nothing of how GSA must run its procurement once the
appropriation is made. For instance, the statute explains
what material must be included in the “prospectus of a
proposed project,” § 3307(b), the extent to which the
estimated maximum cost may be increased, § 3307(c),
when approval of a project may be rescinded, § 3307(d),
and limitations on leasing certain types of spaces,
§ 3307(g). Moreover, Chapter 33 of title 40, under which
§ 3307 exists, generally dictates requirements for GSA’s
construction, alteration, and lease of government build-
ings, such as ensuring compliance with building codes and
zoning laws. See, e.g., 40 U.S.C. § 3312. But none of the
surrounding statutory sections dictate GSA’s procurement
procedures for any such construction, alteration, or lease.
If we were to read § 3307 as a procurement statute,
every appropriations bill and rider would become a poten-
tial source of challenge for any interested party under 28
U.S.C. § 1491(b)(1). We therefore affirm the Claims
Court’s dismissal of Count II of Cleveland Assets’ com-
plaint.
We now turn to Cleveland Assets’ challenge of the
Claims Court’s judgment on the administrative record of
Counts III and IV in favor of the government. In a bid
protest case, an agency’s action must be set aside if it is
arbitrary, capricious, an abuse of discretion, or otherwise
not in accordance with law. Palladian Partners, 783 F.3d
at 1252. The arbitrary and capricious standard of review
is “highly deferential,” and procurement officials “have a
8 CLEVELAND ASSETS, LLC v. UNITED STATES
great deal of discretion” in their decisions, particularly
when, as here, “the contract is to be awarded to the bidder
or bidders that will provide the agency with the best
value.” Croman, 724 F.3d at 1363 (internal quotation
marks omitted).
We see no evidence that in deciding to use a $26.00
PSF rental cap in the RLP, “the procurement official’s
decision lacked a rational basis” or “the procurement
procedure involved a violation of regulation or procedure.”
Palladian Partners, 783 F.3d at 1252 (internal quotation
marks omitted). Cleveland Assets does not dispute that
one pre-solicitation and pre-prospectus document sup-
ported the $26.00 PSF figure ultimately included in the
prospectus and the RLP. “In the absence of clear evidence
to the contrary,” the presumption of regularity allows
courts to presume that “public officers have properly
discharged their official duties.” Butler v. Principi, 244
F.3d 1337, 1340 (Fed. Cir. 2001). A pre-solicitation docu-
ment supports the $26.00 PSF rental cap, thereby shifting
the burden to Cleveland Assets to put forth evidence that
the $26.00 PSF figure was based on improper procedure
or lacked a rational basis. Cleveland Assets points to no
such evidence on this record. The mere existence of other
documents supporting selection of an alternate rental cap
is not sufficient to show that the selection of a $26.00 PSF
was arbitrary and capricious. Under our highly deferen-
tial standard of review, we affirm the Claims Court’s
grant of judgment on the administrative record with
respect to Counts III and IV.
CONCLUSION
For the foregoing reasons, we affirm the Claims
Court’s dismissal of Cleveland Assets’ pre-award bid
protest allegation in Count II. We also affirm the Claims
Court’s judgment with respect to Counts III and IV.
AFFIRMED