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Monday, May 26, 2014

Are concessions procurements?

I have previously written about the limits of procurement law in state law ABA Model Procurement Code context. Attorney Aron C. Beezely of the firm Bradley Arant Boult Cummings LLP writes of another limitation in the federal context on the Lexology site. Please read the whole article at the link below because I tend to cut, excerpt and paste and at times rearrange articles reference in this blog. 

The key in both cases would seem to be in defining procurement in the context of the relevant law.

Limited remedies for concession-contract protesters
In a pair of recent decisions, the U.S. Court of Federal Claims clarified the source of its jurisdiction over bid protest actions that involve pure concession contracts as well as the scope of potential relief available to concession-contract protesters. See Jordan Pond Company, LLC v. United States, Case No. 13-913 C (Apr. 8, 2014); Eco Tour Adventures, Inc. v. United States, 114 Fed. Cl. 6 (2013).

These cases make clear that the jurisdictional basis for bid protests involving pure concession contracts is Section 1491(a)(1) of the Tucker Act, which permits suits alleging breach of the government’s implied duty to fairly and honestly consider proposals, and not Section 1491(b)(1), which is the source of the court’s jurisdiction over challenges to traditional procurement contract competitions.

The identity of the statutory source of the court’s jurisdiction over concession-contract protests is significant because it dictates the scope of potential remedies available to protesters. Given that the court now has held twice that its jurisdiction over concession-contract protests arises under Section 1491(a)(1), and not Section 1491(b)(1), it would appear to be the case that concession-contract protesters generally are not entitled to declaratory or injunctive relief. Instead, concession-contract protesters generally will be limited to recovering bid preparation and proposal costs.

In Eco Tour, the court explained that Section 1491(b)(1) grants the court jurisdiction “to render judgment on an action by an interested party objecting to a solicitation by a Federal agency for bids or proposals for a proposed contract or to a proposed award or the award of a contract or any alleged violation of statute or regulation in connection with a procurement or a proposed procurement.”[3] Thus, whether the court has jurisdiction under Section 1491(b)(1) depends on whether the solicitation at issue involves a “procurement.”

The court in Eco Tour further explained that, although Section 1491(b) does not define the term “procurement,” the U.S. Court of Federal Claims has held in nonbid-protest contexts that concession contracts are not procurement contracts. Among the reasons that concession contracts technically are not procurement contracts, according to the court, is that under pure concession contracts, “the government does not make payments to the contractor in exchange for the provision of goods or services to the government; instead, concessioners pay the government a fee for the privilege of charging the public for services provided to the public.”

Regardless of whether or not the distinction between federal procurement contracts and federal concession contracts is fair, the reality is that this distinction has practical consequences for federal concession-contract protesters that bring suit at the court.
 As I mentioned in my Limits of Procurement Law post mentioned and linked-to above, under Guam's version of the ABA Model Code, procurement is defined as the acquisition of supplies, services or construction by the government and is subject to the procurement law when the acquisition is made under a contract involving the expenditure of public funds. Concessions are generally public conveniences operated for the public. The governmental role is typically as a facilitator only, without any significant direct benefit to the government of the thing acquired, nor any expense to the public purse.

An example of such a situation arose on Guam a few years back. The government owns land which was developed by the government to house a local market and gathering place. It has become quite popular, with tourists often visiting and a special "night market" being established to enhance the visitor industry. The government, in providing this service, is responsible for keeping health and safety order, and to minimize the vehicular traffic, selected one taxi company to exclusively service the market area. 

There were calls to open the selection process to the bidding system of the procurement regime, but the matter was resolved otherwise. However, to me, this was never an acquisition of anything by the government nor did it entail the expenditure of government funds, thus was not a procurement issue. It was simply a regulatory means of providing an amenity to the public that enhanced the government's social and educational benefits being bestowed on the public.

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