Elmendorf Support Services Joint Venture v. United States

105 Fed. Cl. 203, 2012 U.S. Claims LEXIS 651, 2012 WL 2367035
CourtUnited States Court of Federal Claims
DecidedJune 22, 2012
DocketNo. 12-346C
StatusPublished
Cited by14 cases

This text of 105 Fed. Cl. 203 (Elmendorf Support Services Joint Venture v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Elmendorf Support Services Joint Venture v. United States, 105 Fed. Cl. 203, 2012 U.S. Claims LEXIS 651, 2012 WL 2367035 (uscfc 2012).

Opinion

OPINION

BRUGGINK, Judge.

This is an action brought pursuant to the court’s bid protest jurisdiction. Plaintiff, the incumbent contractor to provide base supply services at Joint Base Elmendorf-Richard-son Air Force Base, Alaska, asks the court to enjoin the Air Force from performing these services in-house. Although option years remain on the contract, the Air Force has notified plaintiff that when the latest option expires on June 29, 2012, the contract will not be renewed. Pending are plaintiffs motion for a preliminary injunction and defendant’s motion to dismiss under Rule 12(b)(1) and (6) of the Rules of the United. States Court of Federal Claims (“RCFC”). Defendant contends that the court’s subject matter jurisdiction does not extend to challenges to in-sourcing contract services, and that, in any event, even an incumbent contractor lacks standing to challenge an in-sourcing decision.

We heard oral argument on June 15, 2012, and ruled from the bench, denying both the motion to dismiss and the motion for preliminary injunction. For the reasons we explain below, the court possesses jurisdiction and plaintiff has the requisite standing, but the [206]*206balance of hardships weighs against issuing the preliminary injunction.

BACKGROUND1

Elmendorf Support Services Joint Venture (“ESS”) currently provides base supply services to the Air Force at Joint Base Elmendorf-Richardson Air Force Base, Alaska (“JBER”). The contract became effective on October 1, 2005. The purpose was to provide general supply services, inventory control, customer and training services, contingency planning, and other support at JBER. The contract provided for one base year and nine option years, with the final option year ending on September 30, 2015. Plaintiff is currently in the sixth option year.

In March 2010, the Air Force conducted a “DTM-COMPARE”2 cost comparison between plaintiff performing those services and performance by government civilian employees. The cost comparison was done in response to a statutory requirement that the Department of Defense ensure that consideration be given to whether civilian employees can be utilized to perform functions being performed by outside contractors.3 The analysis demonstrated that performance by government civilian employees would be more cost-effective, saving the Air Force $5.4 million or 18 percent over a five-year period. On February 2, 2011, the Air Force notified plaintiff both verbally and in writing of its intent to in-souree the contract services at the end of the sixth option year, September 30, 2012, rather than exercise an additional option year.

The Air Force encountered budget difficulties in implementing the decision to move to in-house performance, however. In his declaration, Vincent E. Gasaway, the Chief of Manpower, Organization and Resources Division, states that the Air Force implemented a hiring freeze, which adversely affected the ability to hire the required 93 civilian employees to assume the base supply function.

The Air Force thus temporarily suspended in-sourcing in June 2011. Due to the lack of budgeted funds in the fiscal year 2012 budget, moreover, the parties entered into a bilateral contract modification on September 29,2011, that shortened the sixth option period so that it will end on June 29, 2012, instead of September 30, 2012. It also created a new three-month option period ending on September 29, 2012. This allowed the Air Force to use remaining fiscal year 2011 funds for the new nine-month extension.

The temporary suspension of in-sourcing ended in October 2011. Plaintiff was notified of this fact. The hiring freeze was also lifted in late 2011, although the Air Force predicted it would not be able to hire the required number of employees by the end of the new option period (June 29, 2012). Thus, the Air Force “determined that military manpower would be used temporarily to reduce mission risk during the transition.” Gasaway Decl. ¶ 5. According to Mr. Gasaway, the DTM-COMPARE model determined that using 74 military personnel would not exceed the cost of the contract.

The Air Force has begun hiring civilian personnel for the transition, although it is currently using a mix of military and civilian personnel to perform the services during the transition period. It has “committed to expedite all actions associated with this hiring action and complete the transition to an all civilian workforce as quickly as possible.” Gasaway Decl. ¶ 5.

On February 3, 2012, the Air Force notified plaintiff that it was unlikely to exercise the remaining options and predicted that the contract would end by its own terms on June 29, 2012. The Air Force also requested that [207]*207plaintiff prepare a comprehensive transition plan. Shortly thereafter, plaintiff requested that the Ah’ Force reconsider the in-sourcing decision. On May 30, 2012, the Air Force notified plaintiff by letter that it was not exercising the three-month option period running from June 30, 2012 through September 29, 2012, and thus the contract would end on June 29,2012.

DISCUSSION

Plaintiff filed its complaint on June 1,2012. The gravamen is that, although the Air Force completed a DTM-COMPARE cost analysis using civilian employees, it never conducted one assuming military personnel. According to plaintiff, “in-sourcing the [s]er-viees to a military workforce is likely to involve costs above and beyond those associated with in-sourcing the [services to a government civilian workforce.” Compl. ¶ 22. Plaintiff also asserts that performance of those services by a military workforce is likely to be more costly than “performance of the [s]ervices by a private contractor such as [plaintiff].” Compl. ¶ 23. In addition to the cost consideration, plaintiff asserts that performance of the services by military personnel would “pose safety and mission risks.” Compl. ¶ 24. Plaintiff thus argues that the in-sourcing of the contract services lacks a rational basis, is arbitrary and capricious, and violates 10 U.S.C. § 129a and 10 U.S.C. § 2463 (West Supp.2012), which concern force management and the use of civilian personnel in the performance of Department of Defense (“DoD”) functions.

10 U.S.C. § 129a(e) provides that if the DoD seeks to transfer performance of services from contractors to civilian employees, it must comply with 10 U.S.C. § 2463. Section 2463, in turn, provides in relevant part:

[I]n determining whether a function should be converted to performance by Department of Defense civilian employees, the Secretary of Defense shall—
(A)develop methodology for determining costs based on the guidance outlined in the Directive-Type Memorandum 09-007 entitled ‘Estimating and Comparing the Full Costs of Civilian and Military Manpower and Contractor Support’ or any successor guidance for the determination of costs when costs are the sole basis for the determination;

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105 Fed. Cl. 203, 2012 U.S. Claims LEXIS 651, 2012 WL 2367035, Counsel Stack Legal Research, https://law.counselstack.com/opinion/elmendorf-support-services-joint-venture-v-united-states-uscfc-2012.