MEMORANDUM OF DECISION ON MOTION TO STRIKE OF SEVER DEFENDANT'S COUNTERCLAIM
AURIGEMMA, J.
The plaintiff in this mortgage foreclosure action has moved to strike, or in the alternative, sever the counterclaims filed by the defendant, Holly M. Baron (the "defendant").
Allegations of the Complaint and Counterclaim
In the defendant's counterclaims she alleges that she participated in the mediation program pursuant to P.A. 08-17 and that pursuant to the mediation, the "parties agreed to settle the instant matter after the plaintiff agreed to modify the defendant's loan obligation," but the plaintiff failed to provide the defendant with the loan modification documents for her to sign. Counterclaim One alleges a breach of contract based on the plaintiff's refusal to modify the defendant's mortgage. Counterclaim Two alleges the breach of an implied contract to modify the mortgage and Counterclaim Three seeks specific performance of the alleged agreement to modify the defendant's mortgage.
In Counterclaim Four the defendant alleges that on or about February 20, 2009, agents of the plaintiff entered the defendant's premises without her permission and caused damage to her possessions. Counterclaim Five alleges that an agent of the plaintiff attempted to winterize the mortgaged premises on or about February 21, 2009 and did so negligently, causing damage to the premises. Counterclaim Six alleges that on or about February 20, 2009, agents of the plaintiff unlawfully removed space heaters and other items of personal property belonging to the defendant.
Discussion of the Law and Ruling
It is well established in Connecticut that defenses and CT Page 20707 counterclaims in a foreclosure action must relate to the making, validity, or enforcement of the mortgage note. Southbridge Associates, LLC v. Garofalo, 53 Conn.App. 11, 15, 728 A.2d 1114 (1999). Practice Book § 10-10 provides that a defendant may file a counterclaim against a plaintiff provided that "each such counterclaim . . . arises out of the transaction or one of the transactions which is the subject of the plaintiff's complaint."
The purposes underlying § 10-10 are "judicial economy, avoidance of multiplicity of litigation and avoidance of piecemeal disposition of what is essentially one action." Wallingford v. Glen Valley Associates, Inc., 190 Conn. 158, 161, 459 A.2d 525 (1983). In determining whether claims made in a complaint and counterclaim are essentially "one action," a court must consider whether a substantial duplication of effort would result if each claim was tried separately. Id.
Counterclaims One, Two and Three do not relate to the making, validity, or enforcement of the note or the mortgage which is the subject of the complaint. Instead, the counterclaims allege agreements by the plaintiff which post-dated the aforementioned note and which were wholly separate and distinct from the rights and obligations of the parties under the note and mortgage.
The counterclaims at their core pertain to the plaintiff's conduct after the execution of the note and mortgage at issue, and after the defendant's default. Such conduct has been held not to arise from the same transaction as the foreclosure complaint. JP Morgan Chase Bank v. Rodrigues, 109 Conn.App. 125, 134-35, 952 A.2d 56 (2008); Lyman v. Stevens, 123 Conn. 591, 598, A.2d (1937); Citicorp Mortgage, Inc. v. Ribera, 1995 Conn.Super. LEXIS 2627, at *5 (Pickett, J., September 21, 1995); Great Country Bank v. Kiely, 1995 Conn.Super. LEXIS 2921 (Curran, J., October 19, 1995).
The counterclaims must also be stricken on substantive grounds. A claim for breach of the contract to modify is not available in a foreclosure action where such claim is based on the lender's insistence upon asserting its legal rights under the loan documents. Southbridge Associates, LLC v. Garofalo, 53 Conn.App. 11, 15, 728 A.2d 1114 (1999).
The counterclaims refer to P.A. 08-17 (now Connecticut General Statutes §§ 49-31k et seq.). CT Page 20708 However, § 49-311 provides that "(7) None of the mortgagor's or mortgagee's rights in the foreclosure action shall be waived by the mortgagor's submission of a foreclosure mediation request form to the court." Section 49-31n provides that "6) In no event shall any determination issued by a mediator under this program form the basis of an appeal of any foreclosure judgment." Thus, it appears that the statute creating the Foreclosure Mediation Program did not intend to alter the common law that a mortgagee has no duty to modify a mortgage. Based on the foregoing, Counterclaims One, Two and Three are stricken.
Counterclaims Four and Six also fail to pertain to the making, validity or enforcement of the mortgage. They are, therefore, ordered severed from the Answer. The defendant may pursue these claims for damages to her personal property in a suit separate from the foreclosure action.
Counterclaim Five does relate to the enforcement of the mortgage and alleges damage to the mortgaged premises. If the plaintiff's agents caused damage to the mortgaged premises, it may be inequitable for the plaintiff to seek a deficiency judgment against the defendant to the extent that those agents caused a diminution in the value of mortgaged premises. Therefore, the Motion to Strike Counterclaim Five is denied.
CT Page 20709
the court because the Javits-Wagner-O'Day Act,
41 U.S.C. § 47(a)(2), lays out a specific procedure for how the AbilityOne Procurement List may be changed. Section 47(a)(2) provides, "The Committee [for Purchase From People Who Are Blind or Severely Disabled] may, by rule made in accordance with the requirements of [
5 U.S.C. § 553(b)-(e)], add to and remove from the procurement list commodities so produced and services so provided." The government argues that because additions to and deletions from the list made pursuant to
5 U.S.C. § 553 are subject to judicial review under the Administrative Procedure Act ("APA"), this court does not have jurisdiction to alter or affect such additions or deletions because it has no independent federal-question jurisdiction under
28 U.S.C. § 1331 to conduct such a review.
See Def.'s Post-Hearing Br. at 2 (citing
HLI Lordship Indus., Inc. v. Comm. for Purchase from the Blind and Other Severely Handicapped, 791 F.2d 1136, 1138 (4th Cir. 1986)).
The government thus asserts that the rulemaking provisions of the Javits-Wagner-O'Day Act in effect supersede and displace the statutory grant of authority to this court in
28 U.S.C. § 1491(b)(1).
28 U.S.C. § 1331 provides that: "District courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." An independent action for review under the APA of a rulemaking by the Committee would be premised on this federal question jurisdiction and would therefore be brought in a federal district court. See McGregor Printing Corp. v. Kemp, 20 F.3d 1188 (D.C. Cir. 1994) (addressing on appeal a district court's action in conducting such a review); Barrier Indus., Inc. v. Eckard, 584 F.2d 1074 (D.C. Cir. 1978) (same) (op. by Markey, C. J., Fed. Cir., sitting by designation).
For its argument that the rulemaking provisions of the Javits-Wagner-O'Day Act implicitly repeal the jurisdictional grant in the third prong of 28 U.S.C. § 1491(b)(1), the government relies on the canon of construction that "even where Congress has not expressly stated that statutory jurisdiction is `exclusive,' . . . a statute which vests jurisdiction in a particular court cuts off original jurisdiction in other courts in all cases covered by the statute." Telecommunications Research Action Ctr. v. Fed. Commc'ns Comm'n, 750 F.2d 70, 77 (D.C. Cir. 1984); see Def.'s Post-Hearing Br. at 3. The government invokes the canon of construction that "a precisely drawn, detailed statute pre-empts more general remedies." Def.'s Post-Hearing Br. at 3 (quoting Brown v. General Servs. Admin., 425 U.S. 820, 834 (1976)).
The government faces headwinds based upon the presumption against finding an implied repeal or displacement of a statute by another statute. See Tennessee Valley Auth. v. Hill, 437 U.S. 153, 189-90 (1978); Miccosukee Tribe of Indians of Florida v. United States Army Corps of Eng'rs, ___ F.3d ___, ___, 2010 WL 3581910, at *7 (11th Cir. 2010). "[I]f any interpretation permits both statutes to stand, the court must adopt that interpretation, `absent a clearly expressed congressional intention to the contrary.'" Miccosukee Tribe, ___ F.3d at ___, 2010 WL 358190, at *7 (quoting Garfield v. NDC Health Corp., 466 F.3d 1255, 1266 (11th Cir. 2006)). In Brown, for example, congressional hearings on the relevant statute revealed Congress' "unambiguous . . . perception" that no other remedy for racial discrimination among federal employees was available. 425 U.S. at 828. That perception demonstrated "the congressional intent . . . to [create] an exclusive, pre-emptive administrative and judicial scheme for the redress of federal employment discrimination." Id. at 829.
In this instance, it is not readily apparent that the rulemaking provisions of the Javits-Wagner-O'Day Act actually conflict with the protest authority embodied in the third prong of Section 1491(b)(1). Both could function equally well, so long as each kept to its own sphere of influence. The government's argument, however, seeks to expand the effect of the rulemaking provisions of the Javits-Wagner-O'Day Act to reach also judicial review of such rulemaking, which review jurisdictionally depends upon other general statutory provisions, viz., the federal-question jurisdictional statute and the APA. As Brown counsels, the court should not manufacture a conflict where one naturally and ordinarily should not exist. The court consequently declines to adopt the government's unduly expansive approach and concludes that there is no real conflict between the two statutes.
Even if the court were to find that a conflict between the statutes exists, which it does not, a question would arise which statute controls. Two canons of construction are usually invoked in such circumstances. The first canon posits that "the later-enacted statute controls to the extent it conflicts with the earlier-enacted statute." Miccosukee Tribe, ___ F.3d at ___, 2010 WL 3581910, at *7 (citing Nguyen v. United States, 556 F.3d 1244, 1252-53 (11th Cir. 2009)). A second canon provides that "a specific statutory provision trumps a general one." Id. The government's argument rests on the second canon.
In this instance, however, even assuming a conflict, Section 47(a)(2) of the Javits-Wagner-O'Day Act could not have been intended as an implied repeal of part of this court's jurisdiction under 28 U.S.C. § 1491(b)(1). Section 47(a)(2) was last amended in 1971, see Pub.L. No. 92-28, 85 Stat. 77, 79-82 (June. 23, 1971), over twenty-five years before this court was granted jurisdiction over the third category of bid protest actions via the enactment of the Administrative Dispute Resolution Act of 1996 ("ADRA"), Pub.L. No. 104-320, § 12, 110 Stat. 3870, 3874. Because Congress granted this court jurisdiction over the third category of bid protests well after the Javits-Wagner-O'Day was last amended, there could be no reason to construe 41 U.S.C. § 47(a)(2) as a limitation on the court's jurisdiction under 28 U.S.C. § 1491(b)(1). By enacting the rulemaking provisions of the Javits-Wagner-O'Day Act, Congress could not have intended to limit the scope of a statute that did not yet exist. Accordingly, this court finds that it has jurisdiction to consider this dispute without constraint as to any equitable remedy that might be appropriate if a contravention of law is proven.
B. Standing
The government raises a second procedural objection, arguing that Angelica lacks standing to challenge whether the Department violated its own guidelines for recommending and addressing placement of the procurement on the AbilityOne Procurement List. See Def.'s Resp. to Pl.'s Cross-Mot. ("Def.'s Resp.") at 5-6. Under the Department's New Guidelines, a procurement should not be placed on the AbilityOne list if there is a SDVO or VO small business available to fulfill the requirement at fair market prices. See AR 38-541 to 542. Because Angelica is neither a SDVOSB nor a VOSB, the government argues Angelica was not harmed by the contracting officer's failure to research and give priority to SDVOSBs and VOSBs regarding the laundry services procurement. Def.'s Resp. at 5-6.
Angelica maintains that it has standing to challenge the AbilityOne listing because there was a substantial chance that it would have been awarded a contract to cover the period between the end of its original contract and the beginning of a longer-term follow-on contract, whether or not the follow-on contract was awarded to a SDVOSB, a VOSB, or NISH through the AbilityOne Procurement List. See Hr'g Tr. 11:23-12:2, 44:5-44:12, 64:4-64:7 (Sept. 14, 2010). Angelica contends that Ms. Jones so delayed preparing for a follow-on contract that she could not have followed the Departmental guidelines and completed the process for awarding a new contract to a SDVOSB or VOSB, or for placing the item on the AbilityOne Procurement List, and developing a contract with NISH, before the contract extension under FAR § 52.217-8 expired. See Hr'g Tr. 16:16-17:1 (Sept. 14, 2010); Jones Dep. 7:7-9:7 (discussing the length of time necessary to complete a reprocurement).
Angelica's argument finds support in fact. The Department necessarily will require time beyond the six-month contract extension to arrange a follow-on contract. As of September 14, 2010, the Department was negotiating a gap-filling contract for laundry services after the extension expired on September 30, 2010. See Hr'g Tr. 44:5-44:12 (Sept. 14, 2010).
To establish standing in a bid protest action in this court, a petitioner must be an "interested party." 28 U.S.C. 1491(b)(1). Interested parties are "actual or prospective bidders or offerors whose direct economic interest would be affected by the award of the contract or by failure to award the contract." American Fed'n of Gov't Emps. v. United States, 258 F.3d 1294, 1302 (Fed. Cir. 2001); see also Distributed Solutions, 539 F.3d at 1344; Rex Serv. Corp. v. United States, 448 F.3d 1305, 1307 (Fed. Cir. 2006). To establish a direct economic interest as a putative prospective bidder, a plaintiff must prove that it had a "substantial chance" of being awarded the contract or a contract. Labatt Food Serv., Inc. v. United States, 577 F.3d 1375, 1378 (Fed. Cir. 2009); Weeks Marine Inc. v. United States, 575 F.3d 1352, 1359 (Fed. Cir. 2009); Rex Serv. Corp., 448 F.3d at 1308.
As the incumbent contractor performing satisfactory work and with resources already in place to meet the requirement, Angelica would have had a "substantial chance" of being awarded a contract of some duration, and it thus has a "direct economic interest" in the listing of the laundry services contract under the AbilityOne program. Accordingly, Angelica has standing to object to the Department's failure to follow its New Guidelines implementing the Veterans Benefits Act.
STANDARDS FOR DECISION
Under 28 U.S.C. § 1491(b)(4), this court's review of an agency's decision regarding a contractual solicitation or award is governed by the standards set forth in the APA, 5 U.S.C. § 706. Given this incorporation by reference, the court may set aside an agency contracting decision that is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law," 5 U.S.C. § 706(2)(A), subject to application of factors governing equitable relief. See PGBA, LLC v. United States, 389 F.3d 1219, 1224-28 (Fed. Cir. 2004). Judicial review is limited to determining whether the agency's "decision was based on a consideration of the relevant factors and whether there has been a clear error in judgment." Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971), abrogated in part by Califano v. Sanders, 430 U.S. 99, 105 (1977) (abrogating Overton Park to the extent it recognized the APA as an independent grant of subject matter jurisdiction).
Section 1491(b)(4) of Title 28 provides: "In any action under [ 28 U.S.C. § 1491(b)], the courts shall review the agency's decision pursuant to the standards set forth in section 706 of title 5."
An agency's decision will be upheld even if the court might have applied the procurement regulations in a different fashion had the court been in the agency's position. See Honeywell, Inc. v. United States, 870 F.2d 644, 648 (Fed. Cir. 1989) (quoting M. Steinthal Co. v. Seamans, 455 F.2d 1289, 1301 (D.C. Cir. 1971)); Lumetra v. United States, 84 Fed. Cl. 542, 549 (2008) ("[T]he court `will not second guess the minutiae of the procurement process in such matters as technical ratings and the timing of various steps in the procurement.'" (quoting E.W. Bliss Co. v. United States, 77 F.3d 445, 449 (Fed. Cir. 1996))). A court must not "substitute its judgment for that of the agency," Keeton Corrs., Inc. v. United States, 59 Fed. Cl. 753, 755 (2004) (quoting Overton Park, 401 U.S. at 416), and it may overturn an agency's decision only if "(1) the procurement official's decision lacked a rational basis; or (2) the procurement procedure involved a violation of regulation or procedure." Centech Group, Inc. v. United States, 554 F.3d 1029, 1037 (Fed. Cir. 2009) (quoting Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1332 (Fed. Cir. 2001)).
When a court reviews a challenge to agency action that is alleged to be arbitrary or capricious or an abuse of discretion, it is obliged to "determine whether the contracting agency provided a coherent and reasonable explanation of its exercise of discretion." Impresa Construzioni, 238 F.3d at 1332-33 (quotation marks and citations omitted). "[T]he disappointed bidder thus bears a heavy burden of showing that the award decision had no rational basis." Id. An agency's decision lacks a rational basis if the contracting officer "`entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.'" Keeton Corrs., 59 Fed. Cl. at 755 (quoting Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)). "When a challenge is brought on [a claimed contravention of law], the disappointed bidder must show a clear and prejudicial violation of applicable statutes or regulations." Impresa Construzioni, 238 F.3d at 1333 (quotation marks and citations omitted).
ANALYSIS A. FAR § 52.217-8
Angelica argues that the Department invoked FAR § 52.217-8 to extend its contract for an improper purpose, namely, to place the laundry services on the AbilityOne Procurement list. Pl.'s Resp. to Def.'s Cross-Mot. ("Pl.'s Resp.") at 4-6. The government responds that the purpose for the extension is irrelevant and that the extension was fully permissible under Angelica's contract. Hr'g Tr. 21:24 to 22:5 (Aug. 4, 2010).
Angelica's laundry services contract includes the Option to Extend Services clause, which appears in FAR § 52.217-8. See AR 1-57 (Contract No. V247P-2121). The clause provides: "The [g]overnment may require continued performance of any services within the limits and at the rates specified in the contract. . . . [T]he total extension of performance hereunder shall not exceed 6 months. The Contracting Officer may exercise the option by written notice to the Contractor within 30 days of contract expiration." FAR § 52.217-8; AR 1-57.
FAR § 37.111 addresses how the extension option may be used. It provides, "Award of contracts for recurring and continuing service requirements are often dlayed due to circumstances beyond the control of contracting offices. Examples of circumstances causing such delays are bid protests and alleged mistakes in bid. In order to avoid negotiation of short extensions to existing contracts, the contracting officer may include an option clause . . . in solicitations and contracts which will enable the [g]overnment to require continued performance of any services within the limits and at the rates specified in the contract." FAR § 37.111.
Angelica posits that the extension was not "delayed due to circumstances beyond the control of the contracting offices" because the delay in concluding a follow-on contract with NISH was due to the contracting officer's failure to begin the procurement process on time; Angelica argues that mandating a contract extension under FAR § 52.217-8 was therefore invalid. Pl.'s Resp. at 5. Although earlier in this dispute's proceedings Angelica argued that the contract extension had been made on the basis of a misrepresentation, Angelica has withdrawn its argument on that ground. See Pl.'s Resp. at 4; Pl.'s Cross-Mot at 4-5.
The government contends in response that FAR § 37.111 does not provide an exhaustive list of the appropriate reasons to exercise the extension option and that NISH's interest in providing laundry services did create "circumstances beyond the control of the contracting offices." Def.'s Cross-Mot. for Judgment ("Def.'s Cross-Mot.") at 9.
The plain language of FAR § 52.217-8 indicates that the government may unilaterally require a party to extend its performance of a contract. See FAR § 52.217-8 ("The [g]overnment may require continued performance. . . . The Contracting Officer may exercise the option by written notice. . . ."); see also Arko Exec. Servs. v. United States, 78 Fed. Cl. 420, 422 (2007) (describing a unilateral modification to exercise FAR § 52.217-8), aff'd, 553 F.3d 1375 (Fed. Cir. 2009). Had Angelica's contract been extended unilaterally, then Angelica might have had a good claim. However, the court need not decide whether the government invoked its power under FAR § 52.217-8 appropriately because Angelica accepted the contract extension.
Although Ms. Jones informed Angelica that their "contract [was] hereby extended for a period of performance through 30 September 2010," she further wrote that that a "bilateral modification . . . for this action will follow." AR 10-191. Angelica's representative, Jeff Hoffman, signed the modification agreement on March 26, 2010. AR 10-194. The contractual modification included neither a release of rights nor a reservation of rights, but a release was not necessary for Angelica to be bound by the agreement. See Kanag'Iq Const. Co. v. United States, 51 Fed. Cl. 38, 47 (2001) ("[T]he absence of an express provision regarding discharge does not preclude the finding of an accord." (citing Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 1391 n. 4 (Fed. Cir. 1987))). The intent of the parties governs, and the court must examine the totality of the circumstances to determine that intent. See Chesapeake Potomac Tel. Co. of Virginia v. United States, 654 F.2d 711, 716 (Ct. Cl. 1981). Angelica did not object to the contract extension when it was executed, and it has not proven that the government made any material misrepresentations in connection with the modification. It only second-guessed the wisdom of its agreement upon learning that it would not be able to compete for the follow-on laundry services contract. Effectively, Angelica has asked the court to set aside an otherwise valid bilateral contract. The court declines to do so. As a result, Angelica's claims based upon FAR § 52.217-8 are unavailing.
In contrast, when the plaintiff's contract in Arko Executive Services was extended unilaterally under FAR § 52.217-8, the plaintiff "informed the contracting officer that it would continue to provide . . . services, but would do so under protest." 78 Fed. Cl. at 422.
B. Veterans Benefits Act
Invoking the Veterans Benefit Act, Angelica contends that the Department "failed to adhere to law and its own regulations in proceeding with the transfer of the requirements currently performed by Angelica to the NISH/AbilityOne Procurement List." Pl.'s Cross-Mot. at 8. The government does not dispute that Ms. Jones failed to follow the Department's New Guidelines for addressing the competing contractual priorities found in the Veterans Benefits Act and the Javits-Wagner-O'Day Act. Rather, it urges the court to conclude Ms. Jones was not required to follow the New Guidelines because they were released several months after Ms. Jones had begun the laundry services procurement process. Hr'g Tr. 27:2-28:1, 29:5-29:14 (Sept. 14, 2010). The government further argues that the Ability One listing should not be voided because "[n]one of the procedures that the contracting officer . . . allegedly failed to satisfy are contained in the [Veterans Benefits Act]." Def.'s Resp. at 2. In short, the government argues that Ms. Jones was not obliged to follow the New Guidelines to the extent that they required action beyond that set forth in the Veterans Benefits Act and the VA Acquisition Regulations.
The government's first argument is defeated by the plain language of the New Guidelines. The guidelines announce that " [e]ffective immediately, all [Departmental] contracting officers . . . must follow the procedures set forth" "for gaining approval to request new requirements be placed on the AbilityOne Procurement List." AR 38-540 (emphasis added). No exception exempts placements that were being considered, but had not yet reached fruition, when the New Guidelines were issued on April 28, 2010. The New Guidelines specify that they reach back in time to apply to all procurement actions after January 7, 2010. See AR 38-541. Ms. Jones contemporaneously indicated her general awareness of the requirements of the New Guidelines in an e-mail she sent on February 4, 2010. See AR 22-279 (E-mail from Robin Jones to George Patterson (Feb. 4, 2010)) (citing VAAR 819.7004). Consequently, the government's timing argument has no persuasive force.
More complicated is the government's second argument, which in effect raises the general question of whether Ms. Jones' failure to follow the New Guidelines could be considered "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law" within the meaning of 5 U.S.C. § 706(2)(A). At issue is the relationship between the Veterans Benefits Act, 38 U.S.C. §§ 8127-28, and the Javits-Wagner-O'Day Act, 41 U.S.C. §§ 46- 48(c), and the degree of deference the court owes to the Department's New Guidelines.
The Veterans Benefits Act's goal is to "increase contracting opportunities for small business concerns owned and controlled by veterans and . . . by veterans with service-connected disabilities." 38 U.S.C. § 8127(a)(1). To that end, the Act directs the Secretary for Veterans Affairs to "maintain a database of small business concerns owned and controlled by veterans," 38 U.S.C. § 8127(f), and to establish goals for SDVOSB and VOSB participation in Departmental contracts and to empower the Department to use noncompetitive procedures to award contracts implementing the Act's priority preferences, valued under $5,000,000. 38 U.S.C. § 8127(a)-(c). The Act also allows the use of restricted competition if a contracting officer "has a reasonable expectation that two or more small business concerns owned and controlled by veterans will submit offers and that the award can be made at a fair and reasonable price that offers best value to the United States." 38 U.S.C. § 8127(d). The final regulations implementing the Veterans Benefits Act became effective on January 7, 2010. See 74 Fed. Reg. 64619-01 (Dec. 8, 2009). The New Guidelines in effect pick up where the regulations left off, because they provide mandatory procedures for Departmental contracting officers and procurement officials to explore whether SDVOSB and VOSB entities are potential suppliers, in which instances they are to be accorded first priority over that provided by the Javits-Wagner-O'Day Act.
Amendments to 38 U.S.C. § 8127(f) adopted by Pub.L. No. 111-275, § 104, 124 Stat. 2864, 2867 (Oct. 13, 2010), clarify the responsibilities of the Secretary in addressing and verifying applications for inclusion of small businesses owned or controlled by veterans on the database.
The Javits-Wagner-O'Day Act implements the government's policy of "increas[ing] employment and training opportunities for persons who are blind or have other severe disabilities through the purchase of commodities and services from qualified nonprofit agencies employing persons who are blind or have other severe disabilities." 41 C.F.R. § 51-1.1. The Javits-Wagner-O'Day Act created the Committee for Purchase From People Who Are Blind or Severely Disabled, 41 U.S.C. § 46, which establishes the AbilityOne Procurement List, 41 U.S.C. § 47, and the Act essentially requires that services and commodities on the list must be procured by governmental agencies from a qualified nonprofit agency employing the blind or severely disabled. 41 U.S.C. § 48; 41 C.F.R. § 51-1.2. To add new services to the AbilityOne Procurement List, one of the designated "central" nonprofit agencies, of which NISH is one, determines along with the relevant federal contracting activity the suitability of a proposed addition to the list. 41 C.F.R. § 51-3.2(c). The Committee then considers the nonprofit's proposal, 41 C.F.R. § 51-2.4(a)(2) to (a)(3), and allows for notice and comment. 41 U.S.C. § 47(a)(2); 41 C.F.R. § 51-2.3.
The recent changes to the VA Acquisition Regulations did "not impact items on the AbilityOne [P]rocurement [L]ist or items that may be added to the procurement list in the future." 74 Fed. Reg. at 64622. However, the Department's regulations issued under the Veterans Benefits Act are silent regarding whether the Department should give priority to SDVOSBs and VOSBs over adding new requirements to the AbilityOne Procurement List. The New Guidelines fill that lacuna. See AR 38-540 to 542. The New Guidelines required a contracting officer to take a sequential series of steps before recommending a new requirement for the AbilityOne Procurement List, including researching whether SDVOSBs or VOSBs were available to fulfill the requirement. See id. Because Ms. Jones did not adhere to the New Guidelines, but rather worked with NISH to recommend that the Committee phase the services Angelica had performed onto the AbilityOne Procurement List, she intentionally sidestepped required procedure.
The government argues that Ms. Jones' omissions do not violate the Veterans Benefits Act because the Department's New Guidelines do not have the force of law. Hr'g Tr. 26:23-27:1 (Sept. 14, 2010). The government is correct in part — the guidelines do not have the force of law. See Christensen v. Harris County, 529 U.S. 576, 587 (2000) ("Interpretations such as those in opinion letters — like interpretations contained in policy statements, agency manuals, and enforcement guidelines, all of which lack the force of law — do not warrant Chevron-style deference."). However, the inference that the government would have the court draw from that circumstance is not well taken. The court may not, akin to Ms. Jones, simply ignore the New Guidelines. Rather, the court must determine whether the New Guidelines are "entitled to respect" under Skidmore v. Swift Co., to the extent that they have the "power to persuade." 323 U.S. 134, 140 (1944).
The "limited form of deference" described in Skidmore considers "the thoroughness evident in [the agency's] consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it the power to persuade, if lacking the power to control." United States v. Mead Corp., 533 U.S. 218, 228 (2001) (citing Skidmore, 323 U.S. at 140); see also Cathedral Candle Co. v. U.S. Int'l Trade Comm'n, 400 F.3d 1352, 1366 (Fed. Cir. 2005) (Under Skidmore, a court must "defer to an agency interpretation of [a] statute that it administers if the agency has conducted a careful analysis of the statutory issue, if the agency's position has been consistent and reflects agency-wide policy, and if the agency's position constitutes a reasonable conclusion as to the proper construction of the statute, even if we might not have adopted that construction without the benefit of the agency's analysis."); Adde v. United States, ___ Fed. Cl. ___, ___, 2010 WL 3914707, *7 (Oct. 7, 2010) (same); Statesman II Apartments v. United States, 66 Fed. Cl. 608, 623 (2005) (same).
Skidmore deference is warranted here. The Department is responsible for implementing the Veterans Benefits Act; indeed, it is the only federal department or agency to which the Act's requirements apply. The Department's New Guidelines provide detailed instructions to "fill[] a space" between the Veterans Benefits Act and Javits-Wagner-O'Day Act and their accompanying regulations. Mead, 522 U.S. at 229 ("Congress would expect the agency to be able to speak with the force of law when it addresses ambiguity in [a] statute or fills a space in the enacted law."). The New Guidelines reflect agency-wide policy and do not conflict with the Veterans Benefits Act, the Javits-Wagner-O'Day Act, or the VA Acquisition Regulations.
Moreover, the Department's action in giving first priority to SDVO and VO small businesses is justified in light of the terms of the Veterans Benefits Act. It is a general maxim of statutory interpretation that a specific statute of specific intention takes precedence over a general statute, particularly when the specific statute was later enacted. See Morales v. Trans World Airlines, Inc., 504 U.S. 374, 384-85 (1992); NISH v. Rumsfeld, 348 F.3d 1263, 1272 (10th Cir. 2003); NISH v. Cohen, 247 F.3d 197, 205 (4th Cir. 2001). Indeed, in other cases raising questions of the priority accorded nonprofit businesses operating under the Javits-Wagner-O'Day Act compared to a priority granted businesses operating under other acts, the priority under the Javits-Wagner-O'Day Act has given way. See NISH v. Rumsfeld, 348 F.3d at 1272 (holding that the cafeteria-priority provision of the Randolph-Shephard Act, 20 U.S.C. §§ 107- 107f, has a higher priority for applicable procurements than that provided by the Javits-Wagner-O'Day Act); NISH v. Cohen, 247 F.3d at 204-06 (same). This case is no different. The Veterans Benefits Act is a specific mandate to the Department, and only to the Department, to grant first priority to SDVOSBs and VOSBs in the awarding of contracts. On the other hand, the Javits-Wagner-O'Day Act is a more general procurement statute. Were there a conflict between the two statutes, the more specific Veterans Benefits Act would control. See NISH v. Rumsfeld, 348 F.3d at 1272; NISH v. Cohen, 247 F.3d at 205. Where, as here, the statutes exist in tension, albeit not in direct conflict, the Department was entirely reasonable in concluding in its New Guidelines that the Veterans Benefits Act should have priority.
In giving Skidmore deference to the Department's New Guidelines, the court concludes that the contracting officer's actions in contravention of them lacked a rational basis and were arbitrary and capricious. There is no "coherent" or "reasonable explanation" for why Ms. Jones "entirely failed to consider" the New Guidelines. See Impresa Construzioni, 238 F.3d at 1332-33; Keeton Corrs., 59 Fed. Cl. at 755. Accordingly, the laundry services listing shall be elided from the AbilityOne Procurement List without prejudice against future placement.
C. Equitable Relief
As amended by the ADRA in 1996, the Tucker Act grants this court power to "award any relief" in a bid protest action "that the court considers proper, including declaratory and injunctive relief except that any monetary relief shall be limited to bid preparation and proposal costs." 28 U.S.C. § 1491(b)(2). The determination of whether injunctive relief is appropriate is left to the court's "equitable discretion." PGBA, 389 F.3d at 1225-26. In deciding whether an injunction should issue, the court should consider (1) whether the plaintiff has succeeded on the merits of the case, (2) whether the plaintiff will suffer irreparable harm if the court withholds injunctive relief, (3) whether the balance of hardships to the respective parties favors the grant of injunctive relief, and (4) whether it is in the public interest to grant injunctive relief. Id. at 1228-29.
To support an award of equitable relief, Angelica is also required to show that the Departmental contracting officer's actions were based on significant errors and that those errors were prejudicial to Angelica. See Bannum, 404 F.3d at 1351; Advanced Data Concepts, Inc. v. United States, 216 F.3d 1054, 1057 (Fed. Cir. 2000). As described earlier, Angelica has made this requisite showing.
Angelica has plainly succeeded on the merits and demonstrated that it will lose the ability to compete for a contract if the court withholds injunctive relief. The public also has a strong interest in preserving the integrity of the procurement process. See DGR Assocs., Inc. v. United States, 94 Fed. Cl. 189, 211 (2010); Hospital Klean of Texas, Inc. v. United States, 65 Fed. Cl. 618, 624 (2005). The court further finds that the balance of hardships favors an injunction. The parties have addressed this issue in terms of (1) the need for continuous provision of laundry services for the pertinent veterans hospitals, (2) the desirability of a prompt decision by the court to enable the Department to make an orderly provision for continuing laundry services, and (3) the fact that Angelica has maintained its staff and equipment to provide such services through extensions to its expiring contract. See Hr'g Tr. 6:5-6:10, 7:9-7:12 (Sept. 10, 2010); Hr'g Tr. 16:4-16:15 (Sept. 14, 2010). Because Angelica's infrastructure remains in place and able to provide critical laundry services to the pertinent veterans hospitals, issuing an injunction will not result in an interruption in services. Setting aside the AbilityOne placement will, therefore, not ineluctably result in a severe hardship for the veterans hospitals. The timeliness of this decision will allow the Department to arrange for the continuation of services without any hiatus. See Hr'g Tr 11:16-12:14 (Sept. 10, 2010).
Having considered each factor, the court finds that injunctive relief is warranted.
CONCLUSION
Angelica's Motion for Permanent Injunction and Cross-Motion for Judgment on the Administrative Record are GRANTED. The government's Cross-Motion for Judgment on the Administrative Record is DENIED. Pursuant to 28 U.S.C. § 1491(b)(2), the Committee's listing of laundry services for the six Departmental veterans' hospitals in the southeastern United States is set aside and rescinded. The Department is enjoined from proceeding with contracting with NISH for the pertinent laundry services under the listing that is being set aside. The Department and its contracting officers and officials are also enjoined to follow and implement the New Guidelines in any follow-on procurement, excepting only a temporary contract to provide services for an interim period during which the Veterans Benefits Act and the New Guidelines are being implemented.
The clerk shall issue final judgment in accord with this opinion. No costs.
It is so ORDERED.