CBCA 5448

DISMISSED: January 26, 2017 CBCA 5448 TRANBEN, LTD., Appellant, v. DEPARTMENT OF TRANSPORTATION, Respondent. Paul W. Bowen and Thomas S. Miller of K&L Gates LLP, Seattle, WA; and Stuart B. Nibley and Amy M. Conant of K&L Gates LLP, Washington, DC, counsel for Appellant. Bonnie Angermann, Office of General Counsel, Department of Transportation, Washington, DC, counsel for Respondent. Before Board Judges VERGILIO, O’ROURKE, and CHADWICK. CHADWICK, Board Judge. TranBen, Ltd. timely appealed from the denial of its certified claim alleging that the Department of Transportation (DOT) violated the implied covenant of good faith and fair dealing under an indefinite delivery/indefinite quantity (IDIQ) contract, or constructively changed the contract. TranBen supplied paper vouchers with which DOT distributed tax-free mass transit subsidies to federal employees in the Washington, D.C., region. TranBen alleges, among other things, that DOT misled the Internal Revenue Service (IRS) about the availability of paper vouchers in order to obtain IRS guidance that DOT could issue transit subsidies on debit cards instead of vouchers without rendering the benefits taxable. As a result, TranBen says, DOT ordered fewer vouchers than TranBen reasonably anticipated. Before discovery, DOT filed alternative motions to dismiss for failure to state a claim and for summary relief. We grant the motion to dismiss the appeal because, even if TranBen proved all of the facts it has alleged, DOT’s CBCA 5448 2 alleged misstatements to the IRS did not modify the contract terms and were too far removed from DOT’s express contractual duties to support a breach claim. Background In light of our disposition, we base this summary on the allegations of TranBen’s 243-paragraph complaint, the complaint’s thirty-two exhibits, and applicable law. DOT’s answer admits most of TranBen’s allegations—including that paper vouchers were “readily available”—but denies that DOT misled anyone in connection with the transition from vouchers to debit cards. DOT’s statement of uncontested facts in support of its motion for summary relief does not directly controvert TranBen’s core allegations.1 I. Transit Benefits Federal agencies in the national capital region must offer their employees tax-free “qualified transportation fringe benefits” to subsidize the employees’ use of mass transit to commute. Exec. Order 13150, § 1, 65 Fed. Reg. 24,613, 24,613 (Apr. 21, 2000); see 26 U.S.C. § 132(a)(5), (f) (2012). DOT distributes transit benefits for itself and other agencies through its Office of Transportation Services (TRANServe). The tax code favors providing the benefits in the form of “transit passes” (defined as “pass[es], token[s], farecard[s], voucher[s], or similar item[s]”). 26 U.S.C. § 132(f)(1)(B), (5)(A)(1). A “cash reimbursement” for transit costs qualifies as nontaxable “only if a voucher or similar item which may be exchanged only for a transit pass is not readily available for direct distribution by the employer to the employee.” Id. § 132(f)(3) (emphasis added). From the inception of the federal transit benefit program until 2011, DOT issued transit benefits using paper vouchers, paper farecards, or, where available, smart cards usable only for local mass transit. 1 For example, DOT states that it “has never alleged that TranBen’s vouchers are not compliant with IRS regulations,” but this overlooks the statutory issue discussed below. DOT also denies in conclusory terms that it “ma[d]e misrepresentations to IRS about whether TranBen’s vouchers were readily available,” but DOT does not say what it did tell the IRS, or even whether it now thinks the vouchers were readily available. We allowed TranBen to defer responding to DOT’s motion for summary relief until after we ruled on the motion to dismiss, but we do not need to see TranBen’s response to see that these facts, among others, are genuinely disputed, even if ultimately not material. CBCA 5448 3 II. The Contract and the Alleged Breach or Change DOT awarded TranBen the contract at issue in September 2009. It was an IDIQ vehicle for paper vouchers negotiable as payments to selected transit providers, with a minimum guaranteed order of $1,000,000.