Marketing & Management Information, Inc. v. United States

57 Fed. Cl. 665, 2003 U.S. Claims LEXIS 245, 2003 WL 22389872
CourtUnited States Court of Federal Claims
DecidedAugust 25, 2003
DocketNo. 99-194C
StatusPublished
Cited by7 cases

This text of 57 Fed. Cl. 665 (Marketing & Management Information, Inc. 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
Marketing & Management Information, Inc. v. United States, 57 Fed. Cl. 665, 2003 U.S. Claims LEXIS 245, 2003 WL 22389872 (uscfc 2003).

Opinion

OPINION

BRUGGINK, Judge.

This ease arises out of a 1995 request by the government for proposals to purchase and process scanner data collected by military commissaries. A contract was awarded by the Defense Commissary Agency (“DCA”) to plaintiff, Marketing and Management Information, Inc. (“MMI”) on October 26,1995. It is the termination of that contract which is in dispute. The case raises novel questions concerning the interpretation and application of the now-repealed Brooks Automatic Data Processing Act, Pub.L. No. 89-306, 79 Stat. 1127 (codified at 40 U.S.C. § 759, repealed effective August 7,1989) (“Brooks Act”).

Pending are cross-motions for partial summary judgment on two alternative defenses: whether plaintiffs contract was subject to the Brooks Act (in which event it might be void ah initio), and whether the government’s termination for convenience was authorized under the contract. Oral argument was held on June 12, 2003. For reasons set out below, we conclude that the contract was not subject to the Brooks Act and that the contract did not authorize termination for convenience.

BACKGROUND

DCA is an agency of the Department of the Defense, created in 1990 to oversee the operation of commissaries for military personnel, their families and other authorized persons. 32 C.F.R. § 383a.l (1995). DCA receives funds from three distinct sources: a commissary operating account annually funded by Congress, a commissary resale stock account generated from the resale of groceries, and a commissary trust revolving fund generated from a five percent surcharge on sales. 32 C.F.R. § 383a.8(e). Included with the commissary trust revolving funds are monies received as a result of equipment salvage, discounts earned from distribution centers, and receipts from the sale of data on product movement.

DCA commissaries are outfitted with scanners which are capable of collecting the type of data referred to in 10 U.S.C. § 2487(a)(2) (2002): [667]*667Information contained in the computerized business systems of commissary stores or the Defense Commissary Agency that is collected through or in connection with the use of electronic scanners in commissary stores, including the following information:

(i) Data relating to sales of goods or services.
(ii) Demographic information on customers.
(iii) Any other information pertaining to commissary transactions and operations.

Collectively, this information is known as “product movement data.” DCA is authorized to sell such information through competitive procedures. 10 U.S.C. § 2487(b)(1). Revenue generated by the sale of product movement data is credited to DCA’s commissary trust revolving fund. 10 U.S.C. § 2487(d). MMI and the Ah* Force had a previous contract, awarded in October 1989, for the processing of this raw scanner data. The last option year was to end on December 31,1995.

DCA issued request for proposal (“RFP”) DCA01-94-R-0068 on June 1, 1995 for a sales contract pursuant to which DCA would release product movement sales data from its commissaries to the contractor in exchange for a share in the revenue generated by sale of that information and for “Analytical Support Services for Category Management.” The RFP, therefore, contemplated no money flowing from the agency to the contractor.

Category management was defined by the RFP as “a process that involves managing product categories as strategic business units and customizing them on a store by store basis.” Analytical support services necessary for category management were defined by the RFP as “output reports, [and] a capability for DCA to electronically transfer and manipulate data, and recommendations to develop and improve category management and merchandising strategies.” Category management, then, amounted to a process for analyzing product movement data to determine which products most efficiently and accurately met consumer preferences.

The RFP provided for award to a single contractor, who would have the right to process product movement data from the commissaries operated by DCA. The RFP called for a base term of three years with two option years at the election of DCA. DCA’s belief that the contract would not involve the expenditure of any appropriated funds was communicated to bidders: “THIS CONTRACT DOES NOT INVOLVE THE EXPENDITURE OF ANY FUNDS APPROPRIATED BY THE U.S. CONGRESS.” The contractor was to bear the cost of acquiring the product movement data, which the contractor would then manipulate at its own expense to provide analytical support services for category management to DCA

The RFP included a stop work order provision:

The Contracting Officer may, at any time, by written order to the Contractors, require the Contractor to stop all, or any part, of the work called for under this contract for a period of 90 days after the order is delivered to the work order issued under this clause. Upon receipt of the order, the Contractor shall immediately comply with its terms and take all reasonable steps to minimize the incurrence of costs allocable to the work covered by the order during the period of work stoppage. Within a period of 90 days after a stop-work is delivered to the Contractor, or within an extension of that period to which the parties shall have agreed, the Contracting Officer shall either—
(1) cancel the stop-work order, or
(2) terminate the work covered by the order as provided in the Default, or the Termination for Convenience of the Government, clause of this contract.

(emphasis supplied). Despite the reference in the last paragraph, there was no termination for convenience clause in either the final RFP or the contract with plaintiff.

The omission of the termination for convenience clause was not accidental. A preproposal conference was held on July 10, 1995. Attendees were informed that the contract would not contain a termination for convenience clause, although it would contain [668]*668the standard default clause. The attendees were also apprised that there were no current regulations covering a contract of this type, namely, one in which no funds, appropriated or otherwise, were expended by the agency. DCA explained that the RFP contemplated a “sale exchange contract,” which is not a type “specifically referenced in the federal acquisition regulations.” (July 10, 1995 pre-proposal conference transcript).

MMI submitted a proposal to DCA in August 1995. A.C. Nielsen Company (“Nielsen”), Information Resources, Inc. (“IRI”) and Management Science Associates, Inc. (“MSA”) also submitted proposals. MMI’s proposal offered, in consideration for DCA product movement data, to provide category management support services at no cost and to pay the agency at least 15% of MMI’s gross proceeds from selling the product movement data. MMI proposed a guaranteed payment to DCA of $6.659 million over the three year base term. DCA awarded the contract to MMI on October 26,1995.

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Bluebook (online)
57 Fed. Cl. 665, 2003 U.S. Claims LEXIS 245, 2003 WL 22389872, Counsel Stack Legal Research, https://law.counselstack.com/opinion/marketing-management-information-inc-v-united-states-uscfc-2003.