Cleveland Assets, LLC v. United States
132 Fed. Cl. 264
| Fed. Cl. | 2017Background
- GSA sought proposals (RLP No. 6OH0241) for a 20-year, fully-serviced FBI single-tenant lease in downtown Cleveland; prospectus Congress approved in 2011 capped maximum rent at $26/rsf (escalating thereafter).
- GSA’s prospectus and rental cap were informed by a 2009 appraisal, internal analyses (including collaboration with OMB), and market database reports (CoStar, Reis, CBRE). A staff appraisal supported a prospective gross range higher than $26 but GSA’s analysis produced $26 as a feasible cap.
- RLP (issued Dec. 7, 2016) required specific space, 175 structured parking spaces (cost included in rent), detailed technical/security requirements, and stated offers exceeding the prospectus cap would not be awarded.
- Cleveland Assets (current lessor and offeror) sued pre-award alleging: ambiguous/unfair communications (Count I); violation of 40 U.S.C. § 3307 because RLP includes items not in the prospectus (Count II); and that the $26/rsf cap is unreasonably low, restricts competition, and shifts risk to contractors (Counts III–IV).
- Court proceedings: Cleveland Assets moved for judgment on the administrative record and to supplement the record with a third-party appraiser report; the government cross-moved. The Court heard argument and considered the administrative record.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to challenge alleged unfair/unequal pre-proposal communications (Count I) | GSA gave clarifications to other offerors and failed to amend RLP; that favored competitors and harmed Cleveland Assets | Cleveland Assets received the specific clarification in at least one instance; it did not show it was competitively harmed by the communications | No standing; Count I dismissed for lack of jurisdiction |
| Standing to challenge compliance with 40 U.S.C. § 3307 (Count II) | RLP solicits structures not described in Congress-approved prospectus; agency exceeded statutory authority, harming current lessor | § 3307 protects congressional appropriations oversight, not contractor interests; Tucker Act does not negate prudential zone-of-interests requirement | No standing under zone-of-interests; Count II dismissed without prejudice |
| Motion to supplement administrative record with an expert appraisal | Extra-record appraisal shows $26 cap unreasonable and addresses market methodology gaps | Supplementation unnecessary; review should be on the record; extra-record evidence would convert review into de novo | Denied; extra-record evidence not necessary for effective judicial review |
| Validity of $26/rsf rental cap—unduly restrictive, shifts risk, deletes technical factors (Counts III–IV) | $26 is unreasonably low; methodology flawed; cannot meet RLP requirements at that rate; competition and technical evaluation effectively nullified | GSA performed appraisals, market analyses, updated data, and reasonably set $26 cap; agency discretion to set price ceiling and protect the public fisc; multiple offers were received so competition was viable | Denied relief; court found GSA’s cap rational and within discretion; Counts III–IV denied and government’s motion granted |
Key Cases Cited
- Bennett v. Spear, 520 U.S. 154 (1997) (explains prudential ‘‘zone of interests’’ standing test and when statutory language negates it)
- Sys. Application & Techs., Inc. v. United States, 691 F.3d 1374 (2012) (defines "interested party" standing in bid protests under Tucker Act)
- Weeks Marine, Inc. v. United States, 575 F.3d 1352 (2009) (explains competitive injury required for standing in pre-award protests)
- Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374 (2009) (limits supplementation of administrative record; review based on agency record)
- Bannum, Inc. v. United States, 404 F.3d 1346 (2005) (standard for RCFC 52.1 review of administrative record)
- Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324 (2001) (agency must provide coherent, reasonable explanation of its exercise of discretion)