McLeod Group, LLC v. United States

NOTE: This disposition is nonprecedential.

United States Court of Appeals
for the Federal Circuit
______________________

MCLEOD GROUP, LLC,
Plaintiff-Appellant

v.

UNITED STATES,
Defendant-Appellee
______________________

2020-1389
______________________

Appeal from the United States Court of Federal Claims
in No. 1:18-cv-00628-LKG, Judge Lydia Kay Griggsby.
______________________

Decided: December 17, 2020
______________________

R
ICHARD P. RECTOR, DLA Piper LLP (US), Washington,
DC, argued for plaintiff-appellant. Also represented by
THOMAS EDWARD DALEY, DAWN STERN; JOSHUA B. DUVALL,
Matross Edwards, LLC, Washington, DC.

SONIA W. MURPHY, Commercial Litigation Branch,
Civil Division, United States Department of Justice, Wash-
ington, DC, argued for defendant-appellee. Also repre-
sented by J
EFFREY B. CLARK, ROBERT EDWARD KIRSCHMAN,
JR., PATRICIA M. MCCARTHY.
______________________
Case: 20-1389 Document: 29 Page: 1 Filed: 12/17/2020

MCLEOD GROUP, LLC v. UNITED STATES
2

Before NEWMAN, LOURIE, and CHEN, Circuit Judges.
LOURIE, Circuit Judge.
McLeod Group, LLC (“McLeod”) appeals from a deci-
sion of the United States Court of Federal Claims (the
“Claims Court”) dismissing Counts I, II, and V of McLeod’s
complaint for lack of subject matter jurisdiction. See
McLeod Grp., LLC v. United States, 142 Fed. Cl. 558
(2019). The court held that a blanket purchase agreement
(“BPA”) between McLeod and the United States Depart-
ment of Homeland Security (“DHS”) was not a binding con-
tract subject to appellate jurisdiction under the Tucker Act,
28 U.S.C. § 1491(a). For the reasons below, we affirm.
B
ACKGROUND
On September 29, 2011, DHS awarded a BPA to
McLeod to, inter alia, provide DHS with management con-
sulting services and to evaluate and recommend improve-
ments in organizational structure, mission, and
organization of core lines of business. The BPA states that
the agreement “does not obligate any funds” and that “Task
Orders will be placed against this BPA by DHS” for partic-
ular services. J.A. 84; J.A. 86. There is no dispute in this
case that the task orders issued pursuant to the BPA, as
opposed to the BPA itself, are contractual agreements. The
BPA also states that the agreement is “not a contract” with
the government. J.A. 86.
DHS issued seven task orders to McLeod under the
BPA, during the period of September 30, 2011 through
September 11, 2014. On October 4, 2016, McLeod submit-
ted a certified claim to the DHS contracting officer alleging,
inter alia, that DHS failed to execute its contractual re-
sponsibilities under the BPA in a good-faith and trusted
manner, and that the agency acted in bad faith by not is-
suing additional within-scope task orders to McLeod. The
Case: 20-1389 Document: 29 Page: 2 Filed: 12/17/2020

MCLEOD GROUP, LLC v. UNITED STATES
3
DHS contracting officer denied McLeod’s claim on May 3,
2017 for failure to articulate a proper basis for the claim.
McLeod filed a complaint in the Claims Court on
May 2, 2018, alleging that various DHS offices and officers
breached their contractual obligations, acted in bad faith,
and abused their discretion in the performance and admin-
istration of McLeod’s BPA and task orders. On August 31,
2018, DHS filed a partial motion to dismiss Counts I, II,
and V (the “BPA claims”) of McLeod’s complaint for lack of
subject matter jurisdiction. The court granted the govern-
ment’s motion on April 4, 2019. It held that it did not pos-
sess jurisdiction to consider the BPA claims because
McLeod failed to “establish that the BPA itself is a con-
tract” with the government “that can be relied upon to es-
tablish [subject matter] jurisdiction in this case.” McLeod
Grp., LLC v. United States, 142 Fed. Cl. 558, 563–65
(2019). After reviewing the complaint and the BPA, the
court found that there is an “absence of mutuality of con-
sideration in the BPA” and that the BPA language shows
that the parties did not intend for the BPA to be a contract.
J.A. 13–14. On October 30, 2019, McLeod filed an unop-
posed motion for entry of partial final judgment with re-
spect to the BPA claims, which the Claims Court granted
on November 14, 2019. McLeod timely filed a notice of ap-
peal on January 13, 2020.
D
ISCUSSION
We review de novo the decision of the Court of Federal
Claims to dismiss for lack of subject matter jurisdiction
pursuant to Rule 12(b)(1) of the Rules of the United States
Court of Federal Claims. RadioShack Corp. v. United
States, 566 F.3d 1358, 1360 (Fed. Cir. 2009). Under the
Tucker Act, the Claims Court has “jurisdiction to render
judgment upon any claim against the United States
founded . . . upon any express or implied contract with the
United States[.]” 28 U.S.C. § 1491(a)(1). The Tucker Act
also gives the court jurisdiction over claims or disputes
Case: 20-1389 Document: 29 Page: 3 Filed: 12/17/2020

MCLEOD GROUP, LLC v. UNITED STATES
4
arising under the Contract Disputes Act. See id.
§ 1491(a)(2); 41 U.S.C. § 7104(b)(1); see also Crewzers Fire
Crew Transp., Inc. v. United States, 741 F.3d 1380, 1382
n.1 (Fed. Cir. 2014). “The party invoking jurisdiction has
the burden to show compliance with the Tucker Act.”
Trauma Serv. Grp. v. United States, 104 F.3d 1321, 1324
(Fed. Cir. 1997) (citing Reynolds v. Army & Air Force Exch.
Serv., 846 F.2d 746, 748 (Fed. Cir. 1988)). “To invoke the
Court of Federal Claims’s jurisdiction under the Tucker
Act, a contractor must first show that its claims arose out
of a valid contract with the United States.” Crewzers, 741
F.3d at 1382.
A contract with the government requires (1) mutuality
of intent, (2) consideration, (3) an unambiguous offer and
acceptance, and (4) actual authority on the part of the gov-
ernment’s representative to bind the government in con-
tract. See Kam-Almaz v. United States, 682 F.3d 1364,
1368 (Fed. Cir. 2012); Night Vision Corp. v. United States,
469 F.3d 1369, 1375 (Fed. Cir. 2006). A failure of any of
these requirements precludes the existence of a valid con-
tract. Thus, an “absence of mutuality of obligation leads to
the conclusion that the parties lacked the requisite contrac-
tual intent.” Modern Sys. Tech. Corp. v. United States, 979
F.2d 200, 206 (Fed. Cir. 1992). Agreement language plac-
ing no obligation on a contractor to accept an order from
the government “cannot provide the consideration neces-
sary to create a binding contract.” Crewzers, 741 F.3d at
1383. This court has held that BPAs that do not impose
any binding obligations on the parties are not contracts.
See id. at 1384.
McLeod argues that the Claims Court erred by apply-
ing a heightened pleading standard that required McLeod
to establish the existence of a contract rather than merely
a non-frivolous allegation of a contract with the govern-
ment. Appellant’s Br. 12. McLeod argues that jurisdiction
is not defeated by the possibility that the averments might
Case: 20-1389 Document: 29 Page: 4 Filed: 12/17/2020

MCLEOD GROUP, LLC v. UNITED STATES
5
fail to state a cause of action on which petitioners could ac-
tually recover, and the normal disposition would be to dis-
miss the complaint for failure to state a claim, rather than
for want of jurisdiction. Id. at 14. McLeod asserts that
when the existence of the contract turns on questions of
fact and the terms of the contract in dispute, the Court of
Federal Claims must first take jurisdiction before deciding
contract term meanings. Id. According to McLeod, if dis-
missal is warranted because the alleged contract does not
exist, the proper basis for such a dismissal is failure to
state a claim upon which relief can be granted. Id. McLeod
asserts that it made a non-frivolous allegation that the
BPA is a binding contract; thus, the Claims Court has ju-
risdiction over the BPA claims and dismissal was unwar-
ranted.
McLeod alleges that the BPA includes all the required
elements of a binding contract. Regarding mutuality of in-
tent, McLeod asserts that the issuance and performance of
seven task orders pursuant to the BPA support McLeod’s
allegation that the BPA is a mutually acknowledged and
binding agreement between the parties. Appellant’s Br.
19. With regard to whether the BPA lacks consideration,
McLeod asserts that it credibly alleged that both McLeod
and DHS provided valuable consideration. McLeod argues
that DHS provided consideration by promising that
McLeod would be afforded the opportunity to bid on all
available opportunities under the BPA. Appellant’s Br.
26–27. McLeod argues that various BPA provisions impose
obligations on McLeod that relate independently to the
BPA, including that McLeod “shall be required” to “[a]ttend
a post-award kickoff meeting.” J.A. 92; Appellant’s Br. 26.
The government responds that the Claims Court ap-
plied the proper pleading standard by requiring McLeod to
demonstrate the existence of a valid contract in order to
invoke the court’s subject matter jurisdiction. The govern-
ment argues that the court properly required McLeod to
Case: 20-1389 Document: 29 Page: 5 Filed: 12/17/2020

MCLEOD GROUP, LLC v. UNITED STATES
6
allege facts that would establish that the BPA is a contract,
a showing that McLeod could not make, given precedent
holding that a BPA like McLeod’s is not a contract. Appel-
lee’s Br. 14. According to the government, the court
properly found that McLeod did not meet that burden by
failing to show at least mutuality of intent and considera-
tion. Id. at 19. The government thus contends that the
Court of Federal Claims properly dismissed the BPA
claims for lack of subject matter jurisdiction. Id. at 9.
We agree with the government, and the Claims Court,
that McLeod failed to present a non-frivolous allegation
that the BPA at issue here is a binding contract. To invoke
the Claims Court’s jurisdiction under the Tucker Act and
the Contract Disputes Act, a contractor must show that its
claims arose out of a valid contract with the United States.
See 28 U.S.C. § 1491(a)(1); 28 U.S.C. § 1491(a)(2);
Crewzers, 741 F.3d at 1382. The Claims Court may dismiss
a claim for lack of subject matter jurisdiction if the plaintiff
fails to present a non-frivolous allegation that the underly-
ing contract exists. See id. If an agreement is plainly not
a contract on its face, then the agreement is insufficient to
establish subject matter jurisdiction in the Claims Court
under the Tucker Act. On its face, McLeod’s BPA lacks
both mutuality of intent and mutuality of consideration.
First, we note that our previous decision in Crewzers
essentially controls this case. With regard to the BPA in
Crewzers, similar to McLeod’s BPA, the government in that
case was not required under the terms of the BPAs to place
any orders with the contractor. Crewzers, 741 F.3d at 1383.
Likewise, the contractor was free to not accept any orders.
Id. The BPAs at issue in Crewzers “reflect[ed] illusory
promises that do not impose obligations on either party.”
Id. at 1382–83. Thus, this case is essentially indistinguish-
able from Crewzers.
Case: 20-1389 Document: 29 Page: 6 Filed: 12/17/2020

MCLEOD GROUP, LLC v. UNITED STATES
7
Further, and contrary to McLeod’s allegations, the BPA
here lacks mutuality of intent. The BPA explicitly states
that the agreement is “not a contract” with the govern-
ment. J.A. 86. The issuance of task orders pursuant to the
BPA, while themselves presumably contracts, does not
transform the BPA into a contract. The Claims Court
found McLeod’s reasoning on this issue not persuasive, and
we agree. See J.A. 15. The absence of mutuality of obliga-
tion, as indicated infra, also supports a conclusion that the
parties lacked the requisite contractual intent. We there-
fore conclude that, with regard to the BPA itself, McLeod
failed to plausibly allege a mutual intent to contract with
the government.
We also agree with the government that the BPA also
lacks mutual consideration. For example, McLeod did not
identify any performance obligation placed on the govern-
ment under the BPA, financial or otherwise. The BPA
states that the agreement “does not obligate any funds,”
J.A. 84, which pretty much negates the idea of a contract.
And we agree with the Claims Court that the BPA did not
require the government to place any task orders. See J.A.
14. The ability of the government to offer McLeod an op-
portunity to accept task orders as set forth in the BPA is
not consideration. Regarding McLeod’s alleged obligations
under the BPA, most of the alleged obligations McLeod
identified are pursuant to task orders as provided for by
the BPA terms. The sole requirement for McLeod to attend
a post-award kickoff meeting does not in itself create suffi-
cient mutual consideration in this case, where the alleged
contract would require real performance as opposed to
merely attending a meeting.
The BPA provides that the performance obligations
will be specified in the task orders issued pursuant to the
BPA. See, e.g., J.A. 84 (“Delivery”); J.A. 86 (“Task Orders”);
J.A. 87 (“Place of Performance”). The BPA provides “the
ordering procedures” for “services ordered under this BPA.”
Case: 20-1389 Document: 29 Page: 7 Filed: 12/17/2020

MCLEOD GROUP, LLC v. UNITED STATES
8
J.A. 89; J.A. 84. The task orders would presumably consti-
tute contracts while the BPA does not. An agreement like
the BPA at issue in this case is not binding upon the gov-
ernment where no funds are obligated and the parties fail
to plausibly allege that any other provision provides mu-
tual consideration necessary to create a binding contract.
See Modern Sys., 979 F.2d at 204 (citing Gavin, Govern-
ment Requirements Contracts, 5 Pub. Cont. L.J. 243, 246
(1972)) (“Usually the parties merely arrange to do business
when the government places an order at the unit price
named in the [BPA]. In such an agreement, there is noth-
ing in writing which requires the government to take any
ascertainable quantity or amount.”).
C
ONCLUSION
We have considered McLeod’s remaining arguments
but find them unpersuasive. For the reasons stated above,
we affirm the decision of the Claims Court.
AFFIRMED
Case: 20-1389 Document: 29 Page: 8 Filed: 12/17/2020