Flexfab, L.L.C. v. United States

424 F.3d 1254, 2005 U.S. App. LEXIS 20917, 2005 WL 2347854
CourtCourt of Appeals for the Federal Circuit
DecidedSeptember 27, 2005
Docket2005-5018
StatusPublished
Cited by174 cases

This text of 424 F.3d 1254 (Flexfab, L.L.C. v. United States) is published on Counsel Stack Legal Research, covering Court of Appeals for the Federal Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Flexfab, L.L.C. v. United States, 424 F.3d 1254, 2005 U.S. App. LEXIS 20917, 2005 WL 2347854 (Fed. Cir. 2005).

Opinion

CLEVENGER, Circuit Judge.

Plaintiff-appellant Flexfab, L.L.C. (“Flexfab”) appeals the ruling of the United States Court of Federal Claims on cross-motions for summary judgment that Flexfab was not an intended third-party beneficiary of a contract between Capital City Pipes, Inc. (“Capital City”), a now-insolvent contractor, and The Defense Logistics Agency, Defense Supply Center Columbus (“DSCC” or “government”), or in the alternative that Flexfab was not a direct party to an implied-in-fact contract with the government. See Flexfab, LLC v. United States, 62 Fed.Cl. 139 (2004). Because the record is absent evidence that a government agent with authority to contract on behalf of the government intended to benefit Flexfab in the contract between Capital City and DSCC, or to contract with Flexfab directly, we affirm.

I

Congress passed the Small Business Act of 1953, 15 U.S.C. §§ 631-651, to “aid, counsel, assist, and protect ... the interests of small-business concerns in order to preserve free competitive enterprise [and] to insure that a fair proportion of the total purchases and contracts or subcontracts for property and services for the Government ... be placed with small-business enterprises.” 15 U.S.C. § 631(a) (2000). In section 8(a) of the Act, 15 U.S.C. § 637(a), Congress delegated to the Small Business Administration (“SBA”) the authority to “enter into contracts with any procurement agency of the Federal Government to furnish required goods or services, and, in turn, to enter into subcontracts with small businesses for the performance of such contracts.” Fullilove v. Klutznick, 448 U.S. 448, 463, 100 S.Ct. 2758, 65 L.Ed.2d 902 (1980); see also 15 U.S.C. § 631(f)(2) (explaining the purposes of section 637(a)). In accordance with this statutory mandate, the SBA in 1968 developed a program “to assist eligible small disadvantaged business concerns compete in the American economy through business development.” 13 C.F.R. § 124.1 (2005). See generally 13 C.F.R. § 124.1-.603 (2005) (implementing section 8(a) programs). It is within the context of the SBA’s section 8(a) program that the present case arises.

A

Michael Taylor was one of five DSCC small business specialists responsible for reviewing government contract solicitations above $10,000 to determine whether the work solicited could be completed by an SBA-approved section 8(a) contractor. If the contract solicitation is placed in the section 8(a) program, bidding on the solicitation is generally limited to participating businesses — ie., those businesses “unconditionally owned and controlled by one or more socially and economically disadvantaged individuals who are of good character and citizens of the United States, and which demonstrate[ ] potential for success.” 13 C.F.R. § 124.101.

Prior to 1998, C & S Industrial Supply Co. (“C & S”) was DSCC’s section 8(a) *1257 program supplier of air-duct hose. In 1998, however, C & S “graduated” from the program. See id. § 124.2 (“A firm that completes its nine year term of participation in the 8(a) BD program is deemed to graduate from the program.”). Upon the recommendation of Henry Cook, Chief Executive Officer of C & S, Mr. Taylor arranged for the approval of Capital City to participate in the section 8(a) program. Capital City thereafter became DSCC’s new supplier of air-duct hose.

In 1999, Anita Luich, a DSCC pre-award contracting officer, contacted Capital City about the procurement of air-duct hose. Capital City in turn approached Flexfab about manufacturing the hose. Flexfab refused to deal directly with Capital City, however, and instead offered to supply hose to Capital City through C & S. Mr. Cook claims to have informed Mr. Taylor at this point that Flexfab would not enter into the proposed arrangement unless the government agreed to pay Flexfab directly through an escrow account. According to Mr. Cook, Mr. Taylor promised to contact Capital City to ensure that any contract provided for the means for payment requested by Flexfab. There is no evidence of record, however, that Mr. Taylor himself had authority to execute contracts on behalf of DSCC or that he communicated directly with an authorized contracting officer or any representative of an authorized contracting officer.

Ms. Luich ultimately prepared an initial draft of a section 8(a) program contract between Capital City and the government for the provision of air-duct hose. As originally drafted, the contract listed the following remittance address:

Capital City Pipes, Inc.
P.O. Box 12368
Tallahassee, FL 32317

By incorporating the provisions of 48 C.F.R. § 52.232-33, the contract also allowed for payment at the option of the government through an electronic fund transfer (“EFT”). See 48 C.F.R. § 52.232-33(a) (1998) (“Payments by the Government under this contract, including invoice and contract financing payments, may be made by check or [EFT] at the option of the Government.”). Capital City initially registered its own EFT information in DSCC’s Central Contractor Registration (“CCR”) database. Despite a modification to the remittance address in the contract, as discussed infra, Capital City never updated the CCR database with new EFT information. The incorporated regulation made it Capital City’s responsibility to do so. See id. § 52.232-33(c) (“In the event that the EFT information changes, the Contractor shall be responsible for providing the changed information to the designated payment office(s).”).

B

On June 23,1999, Capital City requested by letter that the remittance address listed in the contract be changed to:

Capital City Pipes, Inc
C/O ABA # 07200052
Old Kent Bank Corp Trust
P.O. Box 144
Grand Rapids, MI 49501-0144

The letter was incorporated into the contract. On June 29, 1999, DSCC formally awarded Contract No. SP0740-99-C-1004 to Capital City for payment in exchange for the supply of air-duct hose.

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Bluebook (online)
424 F.3d 1254, 2005 U.S. App. LEXIS 20917, 2005 WL 2347854, Counsel Stack Legal Research, https://law.counselstack.com/opinion/flexfab-llc-v-united-states-cafc-2005.