THIS OPINION WAS INITIALLY ISSUED UNDER PROTECTIVE ORDER AND IS BEING RELEASED TO THE PUBLIC IN ITS ENTIRETY ON AUGUST 18, 1994 ____________________________________________________ DISMISSED FOR LACK OF JURISDICTION: August 4, 1994 ____________________________________________________ GSBCA 11864-C(11532-P) PRC, INC., Protester, v. DEPARTMENT OF THE AIR FORCE, Respondent. John S. Pachter, Arthur I. Leaderman, and Jonathan D. Shaffer of Smith, Pachter, McWhorter & D'Ambrosio, Vienna, Virginia, and Gary B. Carson, PRC, Inc., McLean, Virginia, counsel for Protester. Clarence D. Long, III, Joseph M. McDade, Joseph M. Goldstein, and Keith Davis, Office of the General Counsel, Department of the Air Force, Washington, DC, counsel for Respondent. Before Board Judges HYATT, WILLIAMS, and DeGRAFF.[foot #] 1 WILLIAMS, Board Judge. Background Network Solutions, Inc. (NSI) and PRC, Inc. (PRC) protested on multiple grounds the Department of the Air Force's (Air Force's) award of the local area networks for systems engineering installation and integration (LAN SEII) contract to Electronic ----------- FOOTNOTE BEGINS --------- [foot #] 1 Board Judge Vincent A. LaBella, who was on the panel in this case, died on April 11, 1994. A random selection from the remaining judges resulted in his replacement by Board Judge Robert W. Parker. Due to an extended absence, Judge Parker was replaced by Board Judge Martha H. DeGraff, also via a random selection. ----------- FOOTNOTE ENDS ----------- Data Systems Corporation (EDS).[foot #] 2 The Board granted the protests on April 30, 1992, finding that: (1) the Air Force had performed an erroneous cost/technical tradeoff analysis, (2) EDS had an unfair competitive advantage by virtue of its prior performance of a LAN installation similar to a "sample task" which was part of the evaluation, and (3) PRC was wrongly downgraded for proposing products from General Services Administration (GSA) schedule contracts, when such products were acceptable and PRC could not use Air Force requirements contracts available to other offerors due to its inability to obtain alleged proprietary information. Network Solutions, Inc. v. Department of the Air Force, GSBCA 11498-P, et al., 92-3 BCA 25,083, 1992 BPD 131, vacated sub nom. Electronic Data Systems Corp. v. Rice, 988 F.2d 128 (Fed. Cir. 1992) (table) (text in Westlaw, 1992 WL 436547). In granting the protests, we revised the Air Force's delegation of procurement authority as follows: [T]he Air Force shall revise its solicitation to incorporate a neutral sample task, refrain from downgrading offerors who, due to unavailability of alleged proprietary information were unable to use Air Force requirements contracts, and proceed to evaluate offerors and make award in accord with statute and regulation. The Air Force may, in resoliciting, waive the organizational conflict of interest rules in FAR 9.5, if such can be justified under FAR 9.503. Finally, the Air Force may acquire the government's LAN SEII requirements in any manner, consistent with statute, regulation, and its DPA. Network Solutions, Inc., 92-3 BCA at 125,049, 1992 BPD 131, at 55. On June 1, 1992, PRC filed a motion for reimbursement of costs incurred in protesting the LAN SEII procurement. PRC claimed protest costs in the amount of $321,410.45, and proposal preparation costs of $201,895.45. Protester PRC Inc.'s Memorandum in Support of its Motion for Award of Protest and Proposal Preparation Costs at 5, 8. PRC supplemented its requests during the cost case, claiming total protest and proposal preparation costs of $547,592.42. Protester PRC's Third Supplemental Statement of Protest and Proposal Preparation Costs, Exhibit C. On August 28, 1992, EDS appealed the Board's decision granting the protests of NSI and PRC to the United States Court ----------- FOOTNOTE BEGINS --------- [foot #] 2 NSI and PRC filed their protests on October 7 and October 18, 1991, respectively. NSI intervened in PRC's protest, and EDS intervened in both protests. By order dated October 23, 1991, the Board consolidated the protests. ----------- FOOTNOTE ENDS ----------- of Appeals for the Federal Circuit (Federal Circuit).[foot #] 3 PRC intervened in the appeal. On September 14, 1992, the Air Force canceled the LAN SEII procurement by announcement in the Commerce Business Daily (CBD). The CBD announcement indicated that the project had been "redefined and incorporated into the ULANA [Unified Local Area Network Architecture] II acquisition" which had "been delayed due to a rebaselining of requirements and specifications." Air Force's Brief on Applicability of the Federal Circuit's Vacatur Order on Protesters' Pending Motions for Costs, Attachment, PRC's Petition for Rehearing at 3-4. On October 16, 1992, PRC, an intervenor in the appeal, moved to dismiss EDS' appeal as moot, arguing that, due to the cancellation, neither EDS nor any other offeror would receive award of the LAN SEII contract. PRC further argued that while the appeal was moot, the NSI and PRC cost cases remained "alive" before this Board. The Federal Circuit found that the appeal was moot, and ruled in an unpublished order on December 2, 1992, that "[u]nder [United States v.] Munsingwear[, Inc.], 340 U.S. [36] at 39 [(1950)], the proper disposition of this appeal is vacatur of the Board's decision and remand with a direction to dismiss [PRC's] complaint."[foot #] 4 Electronic Data Systems Corp. v. Rice, No. 92-1151, 1992 WL 436547 (Fed. Cir. Dec. 2, 1992). The order further stated: (1) PRC's motion to dismiss is denied. (2) [PRC's] motion for leave to file a reply is granted. (3) The GSBCA's April 30, 1992 decision in GSBCA Nos. 11498-P and 11523-P is vacated. The case is remanded to the GSBCA with directions to dismiss [PRC's] complaint. (4) Each side shall bear its own costs. Id. On December 28, 1992, PRC filed a "Petition for Rehearing to Clarify the Court's December 2, 1992 Order, and Suggestion of Rehearing en Banc" (PRC's Petition for Rehearing). Specifically, PRC requested that the appellate court clarify its December 2, 1992, order by adding the following footnote: "This Order is not to be taken as affecting the right of Protesters PRC Inc. and ----------- FOOTNOTE BEGINS --------- [foot #] 3 The Board informed the parties that it could not act on the cost motion while the appeal was pending. Conference Memorandum at 2 (Sept. 22, 1992). [foot #] 4 This order directed the Board to dismiss "EDS' complaint," but by order dated December 15, 1992, the Court corrected this clerical error and directed dismissal of "PRC's complaint." ----------- FOOTNOTE ENDS ----------- Network Solutions, Inc. to recover protest and proposal costs as prevailing parties under the Brooks Act, 40 U.S.C. 759." PRC's Petition for Rehearing at 2. PRC pointed out that EDS' appeal did not address PRC's or NSI's entitlement to recover legal fees or proposal costs. Id. In the alternative, PRC sought a rehearing en banc. In its Suggestion for Rehearing En Banc, PRC requested that the Court of Appeals address "the following precedent setting question of exceptional importance": Whether vacatur of a decision sustaining a bid protest by the General Services Administration Board of Contract Appeals, based on lack of a case or controversy due to mootness of the appeal arising after the date of the Board's decision, could be misconstrued to deny the successful protester its right to recover protest and proposal costs under the Brooks Act, 40 U.S.C. 759. Petition for Rehearing at 11. By order dated January 21, 1993, the Court of Appeals summarily denied PRC's petition for rehearing to clarify the order, stating: Upon consideration of PRC's petition for rehearing of the court's December 2, 1992, order IT IS ORDERED THAT : PRC's petition for rehearing is denied. Electronic Data Systems Corp. v. Rice, No. 92-1511 (Fed. Cir. Jan. 21, 1993). On February 2, 1993, the Court denied PRC's suggestion for rehearing en banc, stating: A suggestion for rehearing in banc having been filed by the INTERVENOR, UPON CONSIDERATION THEREOF, it is ORDERED that the suggestion for rehearing in banc be, and the same hereby is, DECLINED. Electronic Data Systems v. Rice, No. 92-1511 (Fed. Cir. Feb. 2, 1993). Upon remand, we dismissed the protests of PRC and NSI. Network Solutions, Inc. v. Department of the Air Force, GSBCA 11498-P-REM, et al., 1993 BPD 45 (Feb. 10, 1993). Discussion This cost case arises in an unusual posture. PRC requests that the Board award costs from the permanent indefinite judgment fund. 40 U.S.C. 759(f)(5)(C); 31 U.S.C. 1304. However, the Board's underlying decision granting the protests was vacated by the Court of Appeals for the Federal Circuit, as a result of the Circuit's determination that the appellate case was moot. We are thus confronted with the novel question whether the Board may award costs when the underlying decision granting the protest has been vacated.[foot #] 5 PRC argues that the appellate court's vacatur order did not deprive it of prevailing party status which it attained when the Board canceled the Air Force's award of the LAN SEII contract to EDS. Protester PRC Inc.'s Brief Regarding Applicability of the Federal Circuit's Vacatur Order on Protester's Pending Motion for Costs and in Support of PRC's Motion for the Award of Costs (PRC's Brief on Vacatur) at 1. PRC claims that vacatur does not defeat cost motions under other federal fee-shifting statutes if the party substantially prevails in its litigation against the Government. Id. at 5. Further, PRC argues that the Brooks Act authorizes the Board to award attorney fees to a prevailing party where the underlying protest is vacated. Id. at 6-7. The Air Force vigorously opposes PRC's request for costs, arguing that the Circuit's vacatur order and its ruling on PRC's petition for rehearing prevents this Board from awarding costs[foot #] 6 and that construction of other fee- shifting statutes is not helpful. Air Force's Brief on Applicability of the Federal Circuit's Vacatur Order on Protester's Pending Motions for Costs at 4 (Air Force's Brief on Vacatur). Because we may award costs only after we find a violation of law, regulation, or a delegation of procurement authority, and ----------- FOOTNOTE BEGINS --------- [foot #] 5 This is a companion case to Network _______ Solutions, Inc. v. Department of the Air Force, GSBCA 11863- __________________________________________________ C(11498-P). The Board dismissed NSI's cost case for lack of jurisdiction on July 27, 1994. [foot #] 6 The Air Force contends that the Federal Circuit had considered and rejected PRC's arguments regarding its pending cost motion because PRC had presented them in its petition for rehearing, and that these arguments are, therefore, settled under the doctrine of res judicata. Air Force's Brief on Vacatur at 4. Although we agree that the Circuit's vacatur order and rulings on PRC's petition for rehearing prevent us from entertaining PRC's cost case, we conclude the doctrine of res judicata is inapplicable because the issue of costs was never adjudicated. Sea-Land Services, Inc. v. Gaudet, 414 U.S. 574, ___________________________________ 578-79 (1974). ----------- FOOTNOTE ENDS ----------- the Circuit's vacatur rendered our finding of such violation in this protest a nullity, we conclude that we lack a necessary predicate for awarding costs. Therefore, we dismiss PRC's cost case for lack of jurisdiction. The Circuit's Vacatur of the Board's Decision Prevents the Board from Awarding Costs Upon determining that EDS' appeal was moot, our appellate authority relied upon United States v. Munsingwear, Inc., 340 U.S. 36 (1950), in vacating this Board's decision granting the protests of NSI and PRC. The Court stated: Given the Air Force's announcement that the LAN SEII procurement has been incorporated into a future acquisition, we agree with PRC that EDS' appeal is moot. Under Munsingwear, 340 U.S. at 39, the proper disposition of this appeal is vacatur of the Board's decision and remand with a direction to dismiss [PRC's] complaint. Electronic Data Systems Corp. v. Rice, 1992 WL 436547 (emphasis added). The Court in Munsingwear held that when a civil case becomes moot pending an appellate tribunal's decision on the merits, the "standard disposition" is to "vacate the judgment below and remand with a direction to dismiss." 340 U.S. at 38 n.1. The Court explained: That procedure clears the path for future relitigation of the issues between the parties and eliminates a judgment, review of which was prevented through happenstance. . . . . Our supervisory power over the judgments of the lower federal courts . . . is commonly utilized in precisely this situation to prevent a judgment, unreviewable because of mootness, from spawning any legal consequences. Id. at 40-41 (emphasis added). In its order vacating our decision, the Federal Circuit expressly recognized that PRC had argued that the Board's decision "should be undisturbed to protect the right of PRC and [NSI] . . . promptly to obtain reimbursement of legal fees and expenses to which they are entitled under the Brooks Act." Electronic Data Systems Corp. v. Rice, 1992 WL 436547. Nevertheless, the Court's vacatur order made no mention that the parties could pursue their cost cases. Rather, when formally asked to clarify its order to acknowledge protesters' right to pursue fees, our appellate authority declined to do so without elaboration. The Federal Circuit thus did not qualify its vacatur order as PRC requested and as other courts have done, but instead directed this Board to dismiss protesters' complaints. See, e.g., Crowell v. Mader, 444 U.S. 505 (1980) ("[W]e direct that the judgment of the District Court be vacated without prejudice to such further proceedings in the District Court as may be appropriate.") (citation omitted). PRC cites Crowell v. Mader in support of its position because the Supreme Court there recognized that the entire case had not been mooted, but only the issues raised on appeal, and expressly stated that the appellees might wish to apply for attorneys' fees in the District Court. The Court amended its vacatur order to permit such further proceedings in the District Court. Here, PRC requested that the Circuit clarify its vacatur order in much the same way, but the Circuit declined. Electronic Data Systems Corp. v. Rice, No. 92-1511 (Fed. Cir. Jan. 21, 1993); PRC's Petition for Rehearing at 5-6. Because the Circuit declined to apply Crowell and qualify its vacatur order, it would be inappropriate for this Board to read such a qualification into the Circuit's order. In the alternative, the Federal Circuit might have dismissed the appeal without vacating the Board's judgment. See, e.g., Constagny, Brooks & Smith v. National Labor Relations Board, 851 F.2d 839, 842 (6th Cir. 1988) ("It would be particularly inappropriate to vacate the district court's order . . . in light of appellee's motion for attorney's fees pending before the district court, disposition of which joins in issue Constagny's success in pursuing the action . . . in the trial court."); cf. Williams v. Alioto, 625 F.2d 845, 848 (9th Cir. 1980) ("We dismissed only the appeal as moot in our prior decision, not the entire action. Appellees were therefore free to apply for attorneys' fees in the district court.") (citing Crowell v. Mader), cert. denied, 450 U.S. 1012 (1981). Indeed, our appellate authority recently recognized that although vacatur of a judgment is the general rule in this Circuit when a case becomes moot on appeal, vacatur is not automatic under all circumstances. U.S. Philips Corp. v. Windmere Corp., 971 F.2d 728, 731 (Fed. Cir. 1992), cert. granted, 113 S. Ct. 1249, cert. dismissed as improvidently granted sub. nom. Izumi v. U.S. Philips Corp., 114 S. Ct. 425 (1993), reh'g denied, 114 S. Ct. 904 (1994). The Federal Circuit stated: This court has held that vacatur of the judgment at trial is appropriate when settlement moots the action on appeal. Federal Data Corp. v. SMS Data Products Group, Inc., 819 F.2d 277, 280 (Fed. Cir. 1987); Smith Int'l, Inc. v. Hughes Tool Co.; 839 F.2d 663, 664, 5 USPQ2d 1686, 1687 (Fed.Cir. 1988). Authority is found in United States v. Munsingwear, Inc., 340 U.S. 36, 39-40, 71 S.Ct. 104, 106-107, 95 L.Ed. 36 (1950) and Duke Power Co. v. Greenwood County, 299 U.S. 259, 267, 57 S.Ct. 202, 205, 81 L.Ed. 178 (1936), which provide that judgments should in general be vacated when the case becomes moot. Id. While the Court of Appeals in U.S. Philips concluded that vacatur was appropriate there, where the settlement included all parties to the appeal and all claims had become entirely moot, the Court reiterated: "Although in the Federal Circuit vacatur is the general rule, we do not hold that vacatur must always be granted whatever the circumstances." U.S. Philips, 971 F.2d at 731. Here, having considered the circumstances, the Court decided that vacatur was warranted. As the United States Court of Appeals for the District of Columbia has recognized: "[t]o 'vacate' . . . means 'to annul, to cancel or rescind; to declare, to make, or to render, void; to defeat, to deprive of force; to make of no authority or validity; to set aside.'" Action on Smoking and Health v. Civil Aeronautics Board, 713 F.2d 795, 797 (D.C. Cir. 1983) (citations omitted). The rights of the parties are left as though no judgment had been entered.[foot #] 7 Although we recognize that the Federal Circuit has not reviewed the underlying protest decision on the merits and vacated it due to an affirmative disagreement with our decision, we believe that the Court's vacatur has the effect of stripping the decision of its precedential effect and that it prevents the opinion of the lower tribunal from being the law of the case. County of Los Angeles v. Davis, 440 U.S. 625, 634, 646 n.10 (1979). Because the Federal Circuit did not qualify its vacatur of our decision and directed the Board to dismiss the protest, we are left with no statutory basis for awarding costs. ----------- FOOTNOTE BEGINS --------- [foot #] 7 As one commentator has recognized: The Supreme Court appears to have adopted a relatively simple approach to the treatment of decisions moot on appeal. As a general rule, judgments in such cases are vacated and the cases are remanded for dismissal, at least when requested by a party. Through this disposition, a lower court's decision is purged of all its legal consequences, including collateral estoppel, res judicata, law of the case and stare decisis. A. F. Greenbaum, Mootness on Appeal in Federal Courts: A ______________________________________________ Reexamination of the Consequences of Appellate Disposition, ----------- FOOTNOTE BEGINS --------- 17 U.C. Davis L. Rev. 7, 101 (1983). ----------- FOOTNOTE ENDS ----------- The Brooks Act provides in pertinent part: (B) If the board determines that a challenged agency action violates a statute or regulation or the conditions of any delegation of procurement authority issued pursuant to this section, the board may suspend, revoke, or revise the procurement authority of the Administrator or the Administrator's delegation of procurement authority applicable to the challenged procurement. (C) Whenever the board makes such a determination, it may, in accordance with section 1304 of title 31, further declare an appropriate interested party to be entitled to the costs of- (i) filing and pursuing the protest, including reasonable attorney's fees, and (ii) bid and proposal preparation. 40 U.S.C. 759(f)(5)(B), (C) (1988). Thus, under the plain language of the Act, the Board must find a violation as a necessary predicate to awarding a protester recovery of costs. International Data Products Corp. v. Department of Justice, GSBCA 10403-C(10302-P), 93-2 BCA 25,606, at 127,466, 1992 BPD 328, at 5. Should the Board Award Fees to PRC under the "Prevailing Party" Case Law? PRC cites cases applying other statutes which conclude that tribunals may award attorney fees to a prevailing party even if the underlying judgment is vacated. PRC's Brief on Vacatur at 8- 12. PRC contends that the term "appropriate interested party" in the Brooks Act means a "prevailing party," which is a party that receives "some benefit" from its protest. PRC's Brief on Vacatur at 6; 40 U.S.C. 759(f)(5)(C). However, the Brooks Act does not speak in terms of a "prevailing party," but empowers us to award costs only if we find a violation of statute, regulation, or a delegation of procurement authority. Looking to cases construing other federal statutes is neither appropriate nor necessary here. Our inquiry here is not an attempt to cipher the meaning of an ambiguous statutory provision or to determine how best to exercise our discretion in awarding fees. Rather, we are addressing a threshold jurisdictional issue, i.e., our authority to award any fees, a matter squarely and singularly answered by the Brooks Act. Because the Brooks Act clearly requires that the Board's determination of a violation is a prerequisite to a recovery of costs, "there is no room for the argument of [protester] drawn from other [statutes]." Greenport Basin & Construction Co. v. United States, 260 U.S. 512, 516 (1923). In Sterling Federal Systems, Inc. v. Goldin, the Court recognized that the Board's cost-shifting authority is derived from the Brooks Act alone and that the limits of the Board's authority to award costs in protest proceedings should be construed entirely apart from provisions prescribing the fee-shifting authority for federal courts. 16 F.3d 1177, 1184 (Fed. Cir. 1994).[foot #] 8 Further, the "prevailing party" cases cited by PRC construe a statute which, unlike the Brooks Act, expressly authorizes awarding costs to a "prevailing party." The fee-shifting provision of 42 U.S.C. 1988 states: "In any action or proceeding to enforce a provision of sections 1981, 1981a, 1982, 1983, 1985, and 1986 of this title, . . . the court, in its discretion, may allow the prevailing party other than the United States, a reasonable attorney's fee as part of the costs." 42 U.S.C.A. 1988(b) (West Supp. 1994) (emphasis added). Section 1988 thus does not require a violation of statute or regulation as a prerequisite to a fee award. As the Supreme Court has recognized: "[n]othing in the language of 1988 conditions the District Court's power to award fees . . . on a judicial determination that the plaintiff's rights have been violated." Maher v. Gagne, 448 U.S. 122, 129 (1980). The Brooks Act, however, expressly conditions an award of costs on a determination of an agency violation by the Board. 40 U.S.C. 759(f)(5)(C). Even if one were to look to the "prevailing party" cases construing other federal statutes, they would not be controlling here because, as noted above, by virtue of the Federal Circuit's vacatur, there no longer is a protest case in which any party prevailed. Because PRC's status as a "prevailing party" is derived from a Board decision which has become a nullity, the decision is of no legal consequence and cannot form a basis for awarding costs from the judgment fund. In sum, vacatur of our underlying decision eradicated the legal predicate on which this tribunal could authorize an award of costs in this case. We lack the authority to enter an order awarding costs based upon our merits decision, because that decision has been vacated by the Court of Appeals. ----------- FOOTNOTE BEGINS --------- [foot #] 8 The Sterling Court referred to the Brooks Act ________ as the Competition in Contracting Act. The portion of the Brooks Act which entrusts authority to this Board was added by the Competition in Contracting Act of 1984, Pub. L. No. 98-369, 98 Stat. 1175. ----------- FOOTNOTE ENDS ----------- Decision Protester's motion for the award of costs is DISMISSED FOR LACK OF JURISDICTION. MARY ELLEN COSTER WILLIAMS Board Judge I concur: ____________________________ MARTHA H. DeGRAFF Board Judge HYATT, Board Judge, dissenting The majority holds that because the decision on the merits of this protest was vacated by the Federal Circuit, we lack the necessary predicate for awarding protest costs. I respectfully dissent for the reasons stated in the dissent accompanying the companion cost case, Network Solutions, Inc. v. Department of the Air Force, GSBCA 11863-C(11498-P) (July 27, 1994). Regardless of the Federal Circuit's vacatur of our decision, PRC can demonstrate that it succeeded on a significant issue in the protest and that it achieved the benefit sought in bringing suit. The Air Force terminated the contract with EDS and canceled the procurement only after and as a direct result of the Board's decision on the merits of the protests. Although our decision was vacated, the Air Force continued to act consistently with that decision. Because the protests caused the Air Force to change its course of action and materially altered the parties' legal relationship in a manner consistent with the intent of Congress in enacting the fee shifting statute, I would find that PRC is an appropriate interested party eligible to recover its costs. _____________________________ CATHERINE B. HYATT Board Judge