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MOUNT JOY CONSTR. CO. v. SCHRAMM

January 10, 1980

MOUNT JOY CONSTRUCTION CO., INC.
v.
Jack J. SCHRAMM, Regional Administrator, Environmental Protection Agency, Region III and Middletown Township, Delaware County Sewer Authority.



The opinion of the court was delivered by: TROUTMAN

MEMORANDUM AND ORDER

To defray costs in constructing a two million dollar sanitary sewer, pumping station and appurtenances in a portion of Middletown Township, Delaware County, Pennsylvania, the Environmental Protection Agency (EPA) awarded Middletown Township Sewer Authority (Authority) a construction grant totalling three-quarters of the estimated project cost in May 1977. Eight months later the Authority contracted with plaintiff Mount Joy Construction Company (Mount Joy) to build this sewage system. During the summer and fall of 1978 Mount Joy submitted a number of requests for change orders involving three claims for changes in routing of sewer lines and claims for replacing broken curbing and differing site conditions. The engineer hired by the Authority refused to approve the change orders. To trigger administrative review by the Regional Administrator of EPA, Mount Joy requested a written rejection, which the Authority issued April 12, 1979. Six days later Mount Joy appealed from the Authority's determination and characterized the appeal as a protest determination under 40 C.F.R. § 35.939(a). After conducting a hearing, in September the Regional Administrator ruled adversely to plaintiff and explained that

 
Mt. Joy demands payment from the Authority for work performed which it claims was outside the scope of the original contract. The protest and appeal procedure created by 40 C.F.R. § 35.939 is limited to disputes concerning procurement. 40 C.F.R. § 35.939(a). Contract performance, contract administration and other post award matters including those Mt. Joy has raised, do not fall within the scope of "procurement" except to the extent that they reflect on the propriety of the contract award process. Change orders are not covered under the procurement provisions of the subchapter and therefore are not protestable. (footnotes omitted and emphasis added)

 Plaintiff instituted this action for declaratory relief to determine that "procurement" as used in pertinent EPA regulations includes original acquisition of goods and services required by an original contract as well as subsequent change orders. Plaintiff also seeks a writ of mandamus directing the Regional Administrator to conduct further proceedings, or alternatively, ordering the Regional Administrator to resume review of plaintiff's protest filed with the Authority in accordance with its interpretation. The Authority then filed a motion to dismiss, which, construed as a motion for summary judgment, will be granted. *fn1"

 In pertinent part 40 C.F.R. § 35.939(a) provides that

 
(a) protest based upon an alleged violation of the procurement requirements of §§ 35.936 through 35.938-9 of this subpart may be filed against a grantee's procurement action by a party with an adversely affected direct financial interest. (emphasis added)

 In tandem therewith, § 35.936(a) elaborates:

 
§§ 35.936 through 35.939 set forth policies and minimum standards for procurement of architectural or engineering services as defined in § 35.937 and construction contracts as described in § 35.938 by grantees under all steps of grants for construction of treatment works . . . . Other procurement of goods and services shall be conducted in accordance with the provisions of Part 33 of this subchapter. (emphasis added)

 Interpretation of federal statutes usually requires analysis of Congressional intent, which courts traditionally divine first and primarily from the "plain language" of the statute. Andrus v. Allard, 444 U.S. 51, 56, 100 S. Ct. 318, 322, 62 L. Ed. 2d 210 (1979), United Steelworkers of America v. Weber, 443 U.S. 193, 202, 99 S. Ct. 2721, 2727, 61 L. Ed. 2d 480 (1979) (Rehnquist, J., dissenting), Tennessee Valley Authority v. Hill, 437 U.S. 153, 173, 98 S. Ct. 2279, 2291, 57 L. Ed. 2d 117 (1978), Bowles v. Seminole Rock Co., 325 U.S. 410, 414, 65 S. Ct. 1215, 1217, 89 L. Ed. 1700 (1945). Applying this methodology to interpretation of federal regulations, the clear or "plain language" of the regulations promulgated here by EPA and questioned by plaintiff support the conclusion reached by the Regional Administrator. § 35.939(j)(1) excludes "issues not arising under the procurement provisions of this subchapter". To be protestable the matter must arise under the procurement provisions of §§ 35.936 through 35.938-9. And the entire focus of these sections is upon the contract award, not contract administration, stage. For example, § 35.939(b) (1) requires a dissatisfied bidder to file a protest

 
as early as possible during the procurement process (for example, immediately after issuance of a solicitation for bids) to avoid unnecessary delay to the procurement process. A protest authorized by paragraph (d) of this section must be received by the grantee within one week after the basis for the protest is known or should have been known, whichever is earlier, (generally, in the case of formally advertised procurement, within one week after bid opening, if the basis for the protest is, or should have been known). (emphasis added).

 Repeated references to the "procurement process" and avoiding delay thereto anticipate that portion of the proceedings when EPA awards the initial grant.

 Moreover, when a complaining party files a protest, the grantee is initially responsible for resolving the dispute and must afford the complaining and other interested parties an opportunity to present arguments. The grantee must inform them of the procedure which the grantee expects to follow and to "obtain an appropriate extension of the period for acceptance of the bid and bond(s) of each interested party where applicable . . . ." All of this language in § 35.939 is directed toward and drafted in terms of a protest arising at the contractor selection stage. Nothing indicates that the protest procedure anticipated inclusion of disputes involving contract performance, contract administration or any other post-award matter.

 Agency construction of the regulation language also comports with the protest procedure purpose, avoiding discrimination and unfairness at the contractor selection stage. § 35.936-13 provides that

 
no specification for bids or statement of work in connection with such works shall be written in such a manner as to contain proprietary, exclusionary, or discriminatory ...

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