The government’s motion to dismiss a breach of contract claim is granted, where the commercial bills of lading entered into by the government and plaintiff did not give rise to a contract governable by the Contract Disputes Act, but rather agreements recognizable under the Interstate Commerce Act. The court also held that it lacked jurisdiction to consider the plaintiff’s complaint about its disqualification from providing transportation services to the agency, explaining that neither the FAR nor agency regulations on suspension and debarment are money-mandating regulations. The court also rejected other claims as time-barred, explaining that the plaintiff was not required to pursue agency-level administrative remedies before bringing its case before the court, and therefore the claim started to accrue well before those administrative matters were settled.
Tyrone Allen sued the Department of Defense on behalf of his company, X3 Logistics LLC, seeking damages for breach of its contract for freight forwarder/broker and transportation services.
The Military Surface Deployment and Distribution Command utilized X3’s services from 2008 to 2010, but placed the vendor in non-use status after receiving complaints about its services. After completing various administrative procedures, SDDC decided to disqualify X3 from the transportation services provider program on October 20, 2010 for two years. More than five years later, on February 4, 2016, the plaintiff submitted a claim to a SDDC contracting officer, seeking payment for an alleged breach of contract arising from the disqualification decision. The claim was denied and this action followed.
In this action before the court, X3 argued that two of its claims are cognizable under the Contract Disputes Act and that SDDC violated a federal acquisition regulation when it disqualified X3 from the TSP program. X3 argued the commercial bills of lading issued by SDCC for shipment orders constituted contracts between it and the government. According to the plaintiff, the government breached those contracts when it disqualified X3 from the program and breached its duty of good faith and fair dealing when SDDC personnel advised other government installations about X3’s disqualification. Finally, X3 argued SDCC violated FAR provisions on disbarment when it disqualified X3 for allegedly punitive reasons.
In response, the government argued that X3’s breach of contract claims were not cognizable under the CDA. The government argued that in such circumstances, the plaintiff can only state a breach claim or regulatory violation based on government actions taken in 2010, when X3 was disqualified from the TSP program. Because the plaintiff filed this action in 2017—more than six years after the date of the alleged breach or FAR violation—the government argued the case is time-barred.
In the alternative, the government argued that X3 failed to state a claim for breach of contract because participation in the TSP program does not create any contract rights and because the FAR’s disbarment requirements do not apply to disqualification decisions by SDDC. Finally, the government argued that the court lacked jurisdiction to consider the plaintiff’s argument of regulatory violations, because the allegedly violated regulations are not money-mandating.
First, the court agreed that X3’s commercial bills of lading were not contracts regulated by the Contract Disputes Act. The court also found the agency’s decision to disqualify X3 as an approved TSP was not an action governable under the CDA. The court explained that the CDA does not cover all contracts, but regulates only those procurement contracts that have a buyer-seller relationship and an expenditure of government funds. The courts have generally declined to expand this definition to cover contacts that do not arise from an “acquisitive” relationship and the expenditure of appropriated funds.
While the government can contract for transportation services, not all transportation contracts are governed by the CDA. Commercial bills of lading, such as the type in dispute here, are not covered by the CDA, but by the Interstate Commerce Act. Because the only contract X3 claimed was the CBLs, the court found the claims were not governed by the CDA and therefore it lacked jurisdiction over any dispute. Similarly, the court rejected the plaintiff’s claim that its disqualification from the TSP program was regulated by the CDA, explaining that neither the approval or removal of X3 as a qualified TSP involved a procurement contract.
The court also agreed that X3’s other claims were barred by the statute of limitations, precluding it from taking jurisdiction under the Tucker Act to consider X3’s claims as traditional breach of contract claims. SDCC disqualified X3 from the TSP program in March 2010, but X3 did not file its complaint until March 31, 2017. X3 argued the claim did not accrue until 2016, after the government rendered a final decision on its CDA contract claim. Similarly, X3 argued that its breach claim based on its disqualification from the TSP program did not accrue until May 2, 2012, when its administrative appeal was denied.
The government argued that X3’s decision to pursue administrative remedies to challenge its disqualification from the TSP program did not extend the statute of limitations. The court agreed, noting that X3 was not required to pursue an administrative challenge before bringing its claim to the court.
Finally, the court agreed that it lacked jurisdiction to hear X3’s allegations of regulatory violations, finding that neither the FAR provisions governing suspension and debarment nor the SDDC suspension rules are not money-mandating regulations. The Tucker Act confers jurisdiction only when a claim is based on a Constitutional provision, statute, or regulation that is money-mandating. For example, such regulations would require the government to make a payment, prescribe the precise amount that must be paid; and provide clear standards for paying money to recipients. The court found the suspension and debarment language relied upon by X3 contained no such language compelling the government to make any payments.
Further, disqualification, debarment, and suspension decisions have been expressly described as “administrative actions” that do not give rise to money damages. While federal district courts have jurisdiction to review debarment and suspension decisions under the Administrative Procedure Act, the ABA does not mandate money damages. Similarly, the court found that SDCC’s suspension rules are not money-mandating regulations.
Tyrone Allen d/b/a X3 Logistics LLC is represented by Joseph Blake Fellows. The government is represented by Alexander Orlando Canizares, Civil Division, Department of Justice, with whom were Chad A. Readler, Acting Assistant Attorney General, Robert E. Kirshman, Jr., Director, and Reginald T. Blades, Jr., Assistant Director. John E. Swords, General Litigation Branch of U.S. Army Legal Services Agency, of counsel.
