Board of Contract Appeals General Services Administration Washington, D.C. 20405 _________________________________________ MOTION FOR SUMMARY RELIEF GRANTED: April 26, 2000 _________________________________________ GSBCA 15139 SPRINT COMMUNICATIONS COMPANY, L.P., Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. David S. Cohen and John J. O'Brien of Cohen Mohr, Washington, DC; and George J. Affe and Anthony L. Cogswell of Sprint Communications Company, L.P., Herndon, VA, counsel for Appellant. John E. Cornell, Michael J. Ettner, and Michael D. Tully, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges BORWICK, NEILL, and DeGRAFF. NEILL, Board Judge. Sprint Communications Company, L.P. (Sprint) and the General Services Administration (GSA) are in disagreement over payment of charges included on invoices submitted to GSA under Sprint s Federal Telecommunications System (FTS) 2000 contract. The charges are said to represent contributions Sprint made to the Universal Service Fund (USF) during 1998.[foot #] 1 The fund has traditionally been used to assist with the cost of ----------- FOOTNOTE BEGINS --------- [foot #] 1 Appellant advises us that it seeks recovery of USF contributions for calendar year 1998 only. The contract at issue here is said to have expired on December 31, 1998. For a subsequent "Bridge Contract" as well as for a recently awarded FTS2001 contract, Sprint states that GSA has agreed that USF contributions are proper charges. Appellant's Memorandum in Support of its Motion for Summary Relief at 2. ----------- FOOTNOTE ENDS ----------- 2 providing basic telephone service to rural communities and low- income users. More recently it has been designated to help schools, libraries, and eligible health care facilities obtain leading-edge telecommunication services. By letter dated August 25, 1998, Sprint submitted a certified claim for $486,110.76 (later corrected to $1,486,110.76 by a resubmission received by GSA on August 31, 1998). The amount represents USF charges included in Sprint s invoices from the start of 1998 up to and including July 1998 (June usage). In the absence of a contracting officer s decision expressly denying this claim, Sprint on October 20, 1999, filed this appeal from a deemed denial of the claim. The complaint filed by Sprint in this case contains two counts. Count I alleges breach of contract based on the Government s alleged failure to adjust the contract price to reflect this USF charge pursuant to an applicable contract provision dealing with after-imposed federal, state, and local taxes. Count II asserts that the charge must be paid because it is included in a Federal Communications Commission (FCC) tariff covering the FTS2000 contract. Appellant contends that under the filed rate doctrine, it is required to charge -- and GSA must pay -- this charge because it is contained in the applicable tariff. Sprint has submitted a motion for summary relief on this second count. Quantum and all issues relating to count I are not addressed in the motion. For the reasons stated below, we grant the motion. Uncontested Facts Pursuant to Board Rule 108(g)(2), the parties have filed statements of uncontested facts relating to appellant s motion for summary relief. They are in agreement with regard to the following. 1. On December 7, 1988, the GSA awarded contract no. GS00K89AHD0008 to AT&T Communications, Inc. (AT&T) and contract no. GS00K89AHD0009 (the contract) to Sprint. These two ten-year contracts are commonly known as the Federal Telecommunications System 2000 contracts or "FTS2000" contracts. Under its FTS2000 contract, Sprint provides long-distance telephone services to GSA, its customer. 2. The contract incorporates by reference Federal Acquisition Regulation (FAR) clauses 52.243.1, Changes-Fixed Price (Apr. 84), and 52.233.1, Disputes (Apr. 84). 3. The contract also incorporates, as general provision I.39, FAR clause 52.229-4, Federal, State, and Local Taxes (Noncompetitive Contract) (Apr. 84). 3 4. During the period in which the FTS2000 contract was negotiated and awarded, only AT&T (as the "dominant carrier") was required by the FCC to file tariffs. Other, non-dominant, carriers were subject to "permissive" tariffing regulations. FCC filings by those carriers were discretionary or "permissive." 5. On November 13, 1992, the Court of Appeals for the District of Columbia Circuit issued decision number 92- 1053[foot #] 2 in American Telephone & Telegraph Co. v. FCC, 978 F.2d 727 (D.C. Cir. 1992). The decision struck down the FCC s "permissive" tariffing rules as violations of the Communications Act of 1934.[foot #] 3 As a result of this decision, on or about March 3, 1995, Sprint filed a tariff at the FCC that covered the services provided under its FTS2000 contract. 6. On May 8, 1997, the FCC issued Order No. 97-157. 12 FCC Rcd 8776 (1997). Paragraph 829 of the order states: Under our recovery mechanism, carriers will be permitted, but not required, to pass through their contributions [to support universal service] to their interstate access and interexchange customers. We note that if some carriers (e.g. IXCs [interexchange carriers]) decide to recover their contribution costs from their customers, the carriers may not shift more than an equitable share of their contributions to any customer or group of customers. As discussed below in section XIII.F, we also have determined that the interstate contributions will constitute the substantial cause that would provide a public interest justification for filing federal tariff changes or making contract adjustments. Id. at 9199 (footnotes omitted). 7. Paragraph 851 of the same FCC Order No. 97-157 states in pertinent part: Although we do not mandate that carriers recover contributions in a particular manner, we note that ----------- FOOTNOTE BEGINS --------- [foot #] 2 Although the parties appear to have agreed that the docket number for this case is 92-1033, the official reporter states that it is 92-1053. [foot #] 3 While the parties appear to have stipulated that the act in question is the "Telecommunications Act of 1934," the act referred to in the decision is the Communications Act of 1934 (hereinafter the "Communications Act"). American Telephone & ______________________ Telegraph, 978 F.2d at 729. _________ ----------- FOOTNOTE ENDS ----------- 4 carriers are permitted to pass through their contribution requirements to all of their customers of interstate services in an equitable and nondiscriminatory fashion. Furthermore, we find that universal service contributions constitute a sufficient public interest rationale to justify contract adjustments. . . . By assessing a new contribution requirement, we create an expense or cost of doing business that was not anticipated at the time the contracts were signed. Thus we find that it would serve the public interest to allow telecommunications carriers and providers to make changes to existing contracts for service in order to adjust for this new cost of doing business. 12 FCC Rcd at 9209 (footnotes omitted). 8. On November 6, 1997, Sprint notified Ida Ustad, GSA's Associate Administrator, Office of Acquisition Policy, and Eleanor Spector, the Department of Defense's Director for Defense Procurement, that beginning January 1, 1998, it was prepared to reflect the new USF charges, imposed pursuant to provisions in the Telecommunications Act of 1996, in its invoices under various Government contracts. 9. In the letters to Ms. Ustad and Ms. Spector, Sprint maintained that FAR clause 52.229-4, the federal, state, and local taxes provision, was one of the bases for entitlement. Sprint also maintained that it was entitled to payment under the filed rate doctrine. 10. On or about December 31, 1997, Sprint filed a revision to page 10.1 of its FCC Tariff No. 4, "Specialized Common Carrier Service " for FTS2000 services. The revision, effective January 1, 1998, incorporated a Carrier Universal Service Charge (CUSC) of 4.9%. 11. Sprint has tendered invoices to GSA containing the CUSC. GSA has not paid the amounts denominated as CUSC. 12. The contract contains the following special provision at clause H.18, "Special Tariff Requirements": a. GSA will accept for evaluation and award under this RFP [Request for Proposals] only those offers which result in a firm fixed price contract for the ten-year term. b. GSA will consider without penalty in the evaluation and for award under this RFP any of the following options as constituting a firm fixed price offer: 5 1. A non-tariffed firm fixed price contract offer for the ten-year term; 2. A firm fixed price tariff offer for the ten-year term; or 3. A firm fixed price contract offer based in part upon a firm fixed price tariff(s) for the ten-year term. c. If an offeror elects to structure its offer to conform to either b.2 or b.3 above, i.e., submits an offer which is a firm fixed price tariff or based on a firm fixed price tariff(s) (hereinafter referred to as the fixed price tariff), the fixed price tariff must satisfy the following criteria and be submitted in draft form at the time of initial proposals: 1. Any fixed price tariff must be a ten-year fixed term tariff with fixed rates, and that tariff must be filed with the Federal Communications Commission (FCC) within 30 working days of award. The final tariff(s) shall be submitted to GSA for review and coordination as soon as available, but prior to submission to the FCC. 2. The fixed price tariff must include an express waiver of the right of the offeror or its subcontractor for the tariffed services to initiate tariff increases, except as provided in Section H.10, the Economic Price Adjustment Clause. 3. The fixed price tariff must establish separate accounting procedures as required by the FCC, and must provide that potential losses are at the risk of the tariffed provider and will be absorbed by its stockholders, not the Government. 4. The fixed price tariff must provide for the right of the Government to terminate the contract for convenience on a no-cost basis if the fixed price tariff is increased, and the tariff increase causes a contract price increase to the Government. 5. The offeror or its subcontractor for the tariffed services agrees to act in good faith and use its best efforts to defend the fixed price tariff and oppose any increase in the 6 fixed price tariff, at no additional cost to the Government. d. Any offer submitted by an offeror must be firm fixed price as defined above and cannot allow for the pass through of any tariff increase except as provided for in Section H.10, the Economic Price Adjustment Clause. 13. Neither FCC Tariff No. 4 nor any subsequent revisions to that tariff include any of the language specified in Section H.18 of the contract. 14. When Sprint filed FCC Tariff No. 4 in March 1995, it did so without GSA s permission and without providing prior notice to GSA. In addition to the specific facts contained in the statements of uncontested facts filed by the parties in accordance with Board Rule 108(g)(2), we note the following additional facts on which the parties do not appear to be in any disagreement. 15. By letter dated December 3, 1997, the contracting officer advised Sprint that it had recently come to his attention that Sprint filed with the FCC a tariff for FTS2000 service. He explained that in reviewing the tariff he had found two serious flaws that required immediate attention. The first was that the tariff omitted twenty-seven FAR clauses found in the contract. The second was that the tariff failed to include language expressing the specific safeguard required by paragraph "c" of contract requirement H.18. The letter states: "I understand Sprint's current status is a tariffed provider. Therefore, your FTS 2000 tariff must satisfy the requirements found at paragraph c." The contracting officer directed Sprint to file, at the FCC, revisions reflecting corrections of these errors no later than December 16, 1997. Appellant's Memorandum in Support of its Motion for Summary Relief, Exhibit 3. 16. By letter dated December 23, 1997, Sprint replied to the contracting officer's letter of December 3. This reply assured GSA that the omission of the FAR clauses from Sprint's tariff filing regarding FTS2000 was inadvertent and would be rectified as soon as possible. As to the application of paragraph "c" of clause H-18, however, Sprint contended that this paragraph did not apply since its offer was neither structured nor submitted under b.2 (a firm price tariff) or b.3 (based on a firm fixed price tariff). Further, Sprint explained that its filing of a tariff after award of its FTS2000 contract was to comply with the requirements of the Communications Act, as interpreted by judicial decisions five years after award of the contract, and not to comply with clause H-18 of that contract. 7 Appellant's Memorandum in Support of its Motion for Summary Relief, Exhibit 4. Discussion Resolving a dispute on a motion for summary relief is appropriate where no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Olympus Corp. v. United States , 98 F.3d 1314, 1316 (Fed. Cir. 1996); Copeland Enterprises, Inc. v. CNV, Inc., 945 F.2d 1563, 1565-66 (Fed. Cir. 1991); Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 1390 (Fed. Cir. 1987); Armco, Inc. v. Cyclops Corp., 791 F.2d 147, 149 (Fed. Cir. 1986). As already noted, count II of Sprint's complaint raises the issue of whether the filed rate doctrine is applicable to appellant's claim for payment of the USF charges contained in contract invoices covering services rendered during 1998. This issue readily lends itself to resolution under the Board's summary relief provisions. Sprint contends that it is entitled to payment as a matter of law and there is no apparent dispute between the parties on any material facts. Historical Background In examining the issue presented here for resolution through a motion for summary relief, it is important to view the relevant events in their historical context. In 1988, when Sprint s FTS2000 contract was negotiated and awarded, the parties were operating in what they apparently considered to be a deregulated environment so far as filed tariffs were concerned. They have both agreed that, at the time, only AT&T, as the dominant carrier, was required by the FCC to file tariffs and that Sprint, as a non-dominant carrier, was subject to the non-tariffing regulations under which the filing of tariffs was discretionary or "permissive." Understandably, in such an environment, GSA had advised offerors that it would accept for evaluation and award under the FTS2000 RFP only an offer which would result in a firm fixed price contract for the ten-year term. Accordingly, Sprint offered non-tariffed firm fixed prices for the ten-year term. Nevertheless, even at that time there was already trouble on the horizon. In 1985, the FCC, as part of its long-evolving Competitive Carrier rulemaking, had issued a directive captioned the Sixth Report and Order.[foot #] 4 This directive ----------- FOOTNOTE BEGINS --------- [foot #] 4 Policy and Rules Concerning Rates for ______________________________________________ Competitive Common Carrier Services and Facilities Authorization ----------- FOOTNOTE BEGINS --------- (continued...) ----------- FOOTNOTE ENDS ----------- 8 required all non-dominant common carriers of interstate telephone service to cancel any tariffs they might have on file with the FCC within six months of the effective date of the order. The directive also declared that, for the future, the FCC would not accept tariff filings from non-dominant carriers. MCI Telecommunications Corporation (MCI) challenged the Sixth Report and Order and argued that the FCC lacked the statutory authority to prohibit common carriers such as itself from filing tariffs. On July 9, 1985, the United States Court of Appeals for the District of Columbia Circuit vacated the Sixth Report. MCI Telecommunications Corp. v. FCC, 765 F.2d 1186 (D.C. Cir. 1985). In its decision, the court of appeals agreed with MCI that the FCC lacked the authority to prohibit non-dominant common carriers from filing tariffs. Referring to section 203(a) of the Communications Act of 1934, 47 U.S.C. 203(a) (1982), the court noted that, by statute, "every" such carrier "shall" file.[foot #] 5 In so ruling, the Court rejected the Commission s argument that section 203(b)(2) gave it the express authority to exempt carriers from tariff filing requirements ----------- FOOTNOTE BEGINS --------- [foot #] 4 (...continued) Therefor: Sixth Report and Order, 99 F.C.C. 2d 1020 (1985) (Sixth ________________________________ _____ Report). Competitive Carrier rulemaking orders prior to the ______ ____________________ Sixth Report were: Notice of Inquiry and Proposed Rulemaking, 77 _____________ _________________________________________ F.C.C.2d 308 (1979); First Report and Order, 85 F.C.C.2d 1 ________________________ (1980); Further Notice of Proposed Rulemaking, 84 F.C.C.2d 445 ______________________________________ (1981); Second Report and Order, 91 F.C.C.2d 59 (1982), __________________________ reconsideration denied, 93 F.C.C.2d 54 (1983); Further Notice of _______________________ _________________ Proposed Rulemaking, 47 Fed. Reg. 17,308 (1982); Third Further ____________________ _____________ Notice of Proposed Rulemaking, 48 Fed. Reg. 28,292 (1983); Third _____________________________ _____ Report and Order, 48 Fed. Reg. 46,791 (1983); Fourth Report and ________________ _________________ Order, 95 F.C.C.2d 554 (1983) (Fourth Report); Fourth Further _____ _______________ Notice of Proposed Rulemaking; 49 Fed. Reg. 11,856 (1984); Fifth ______________________________ _____ Report and Order, 98 F.C.C.2d 1191 (1984). ________________ [foot #] 5 The pertinent portion of the statute as it then read, and still reads today, states: Every common carrier, except connecting carriers, shall, within such reasonable time as the Commission shall designate, file with the commission and print and keep open for public inspection schedules showing all charges for itself and its connecting carriers . . . and showing the classifications, practices, and regulations affecting such charges. 47 U.S.C. 203(a) (1994). ----------- FOOTNOTE ENDS ----------- 9 where appropriate.[foot #] 6 The court concluded that this authority to "modify" requirements of the act did not extend to the "wholesale abandonment or elimination of a requirement." MCI, 765 F.2d at 1192. Although the court s comments regarding the FCC s exemption authority under section 203(b)(2) of the Communications Act were directed specifically at the Commission s mandatory detariffing policy as enunciated in the Sixth Report and Order, it was not without implications for the Commission s permissive detariffing policy which had been introduced earlier. Nevertheless, the practice of discretionary filing was permitted to continue and, as we have already noted, was still in effect at the time GSA issued its FTS2000 solicitation and when Sprint s FTS2000 contract was negotiated and awarded in 1988. In August 1989, however, AT&T filed a complaint, pursuant to the third-party complaint provisions of the Communications Act (47 U.S.C. 208), which alleged that MCI s collection of unfiled rates violated section 203 of the Act. MCI replied that, as a non-dominant carrier, under the FCC s Fourth Report and Order, it was not obliged to file tariffs. AT&T retorted that this report, to the extent that it established a substantive rule, was in excess of the Commission s statutory authority. The case languished before the Commission for almost two and a half years. Eventually, the FCC ruled that its Fourth Report and Order was a substantive rule with which MCI was in compliance. It, therefore, dismissed AT&T s complaint but, in doing so, failed to address AT&T s contention that the rule was ultra vires. 7 FCC Rcd 807 (1992). AT&T petitioned for review of the FCC s dismissal of its suit. The Court of Appeals for the District of Columbia Circuit granted the petition and, in June 1994, issued a decision reversing the Commission s dismissal and remanding the case to ----------- FOOTNOTE BEGINS --------- [foot #] 6 At the time of the court s decision, this section read: The Commission may, in its discretion and for good cause shown modify any requirement made by or under the authority of this section either in particular instances or by general order applicable to special circumstances or conditions except that the Commission may not require the notice period . . . [for tariff changes] to be more than ninety days. 47 U.S.C. 203(b)(2) (1982). To date, this provision remains basically the same except that the notice period referred to has since been changed to 120 days. See 47 U.S.C. 203(b)(2) ___ (1994). ----------- FOOTNOTE ENDS ----------- 10 the FCC. In its decision, the court severely criticized the Commission for failing to address the authority issue raised by AT&T and resolved that issue itself. It concluded that, based upon what it had already said in its decision regarding mandatory detariffing, the permissive detariffing policy of the Commission s Fourth Report and Order was likewise indefensible. The court wrote: Whether detariffing is made mandatory, as in the Sixth Report, or simply permissive, as in the Fourth Report, carriers are, in either event, relieved of the obligation to file tariffs under section 203(a). That step exceeds the limited authority granted the Commission in section 203(b) to "modify" requirements of the Act. American Telephone & Telegraph, 978 F.2d at 736. The FCC s response to this decision of the court of appeals was to issue a report and order from a rulemaking proceeding it had begun earlier in response to AT&T s complaint. In re Tariff Filing Requirements for Interstate Common Carriers, 7 FCC Rcd 8072 (1992). In this report and order, the Commission once more argued (notwithstanding rejection of this argument by the court of appeals on two separate occasions) that, given its authority under section 203(b) of the Communications Act to modify requirements of that Act, its authorization of the detariffing policy was not beyond its authority. AT&T sought summary reversal of the Commission s order. The court of appeals granted AT&T s motion and, in an unpublished per curiam order, wrote that its decision in American Telephone & Telegraph, 978 F.2d 727, conclusively determined that the FCC s authorization of permissive detariffing violated section 203(a) of the Communications Act. MCI and the United States (together with the FCC) sought review by the United States Supreme Court of the court of appeals' decision. The Supreme Court granted their petitions but affirmed the decision of the court of appeals. In doing so, the Supreme Court likewise rejected the Commission's argument that it had the power to authorize detariffing by virtue of section 203(b) of the Communications Act. The Court concluded that this authority of the Commission to "modify" rate filing requirements simply could not be read as justifying such a fundamental revision of the Communications Act. In referring to FCC's detariffing effort, the Court wrote: What we have here, in reality, is a fundamental revision of the statute, changing it from a scheme of rate regulation in long-distance common-carrier communications to a scheme of rate regulation only where effective competition does not exist. That may 11 be a good idea, but it was not the idea Congress enacted into law in 1934. MCI Telecommunications Corp. v. American Telephone & Telegraph Co., 512 U.S. 218, 231-32 (1994).[foot #] 7 Did Sprint's FTS2000 Contract Rates Become Tariff Rates? When viewed in the light of this decision of the Supreme Court, the "deregulated" environment in which GSA and Sprint may have thought they were operating at the time of contract award in 1988 was, in fact, evanescent. The decision put both parties on notice that the FCC did not have the authority to exempt carriers from the requirements of the Communications Act. For purposes of our discussion here, two provisions of this Act are particularly pertinent. The first is that already seen in section 203(a), which requires carriers to file their rates with the FCC.[foot #] 8 The second is that appearing in 203(c), which prohibits carriers from charging or collecting as compensation an amount which is greater or less or different from rates shown in their filed schedules then in effect.[foot #] 9 ----------- FOOTNOTE BEGINS --------- [foot #] 7 This decision contains a helpful summary of events leading up to this ruling of the Supreme Court. For this portion of our discussion, we have borrowed liberally from it. [foot #] 8 See note 5. ___ [foot #] 9 This provision of the Communications Act reads: No carrier, unless otherwise provided by or under authority of this chapter, shall engage or participate in such communication unless schedules have been filed and published in accordance with the provisions of this chapter and with the regulations made thereunder; and no carrier shall (1) charge, demand, collect, or receive a greater or less or different compensation for such communication, or for any service in connection therewith, between the points named in any such schedule than the charges specified in the schedule then in effect, or (2) refund or remit by any means or device any portion of the charges specified, or (3) extend to any person any privileges or facilities in such communication, or employ or enforce any classifications, regulations, or practices affecting such charges, except as specified in such schedule. 47 U.S.C. 203(c) (1994). ----------- FOOTNOTE ENDS ----------- 12 In apparent recognition of its obligations under the Communications Act, Sprint, on or about March 3, 1995, filed a tariff at the FCC that covered the services provided under the FTS2000 contract. The parties agree that this was done as a result of the court of appeals decision of November 13, 1992, which struck down the FCC's permissive tariffing rules as violations of the Communications Act of 1934. It was, of course, the rationale of this decision of November 13th which the Supreme Court examined when it affirmed a subsequent order of the court of appeals based upon it in MCI, 512 U.S. 218, shortly before Sprint decided to file in March 1995 its contract price schedules with the FCC. The parties agree that Sprint s filing with the FCC was made without GSA s permission and without prior notice to GSA. They likewise agree that neither this filed tariff, nor any subsequent revisions of it, included any of the language specified in clause H.18 of the contract. The Government was certainly aware that Sprint's filing of the fixed price contract rates could pose a threat to the stability of a long-term contract with Sprint. Prior to issuing the FTS2000 solicitation, GSA had wrestled with the problem of how to stabilize the rates of its long-term telecommunications contracts and render them immune to subsequent change by tariff adjustments called for by either the carrier or the FCC. In an effort to resolve this problem, GSA attempted to secure a declaratory ruling from the FCC that any contemplated FTS2000 contract would involve non-common carrier services and, therefore, would be outside the scope of the Communications Act. See General Services Administration Petition for Declaratory Ruling Regarding FTS2000 Service, Memorandum Opinion and Order, 2 FCC Rcd 5072 (1987). The declaratory ruling was denied on the ground that the issues presented were not sufficiently concrete to permit a decision as to how the Commission's regulatory authority might be implicated. Id. at 5075. Nevertheless, the memorandum opinion and order denying the request reads: GSA states that it is seeking a determination that the proposed FTS 2000 service is non-common carrier service to ensure that the Government will enjoy enforceable contract rights and can depend upon the stability of rates for the FTS 2000. GSA observes that tariffs for a telecommunications service that is deemed to be common carriage supersede inconsistent contract terms. Thus if FTS 2000 were determined to be common carriage, rates for the service could be increased, either by the carrier or by this Commission, notwithstanding the fact that the carrier had agreed by contract not to increase its rates. Id. at 5072 (footnote omitted). 13 Following the denial of GSA's request for a declaratory ruling, GSA addressed the problem of rate stability in an alternative fashion. The result of its efforts can be seen in clause H.18. See Uncontested Fact 12. As one can see from a review of clause H.18, the approach ultimately used by GSA in the FTS2000 solicitation was to invite only firm fixed priced offers. Firm fixed tariffed offers as well as non-tariffed offers were permitted but, in the event an offeror proposed a tariffed rate or one based in part on a tariff, the tariff was to contain various safeguards including a commitment on the carrier's part to act in good faith and use its best efforts to defend the fixed price tariff and oppose any increases. Since the rates which Sprint offered and which the Government ultimately accepted were thought to be non-tariffed, the requirements in clause H.18 for safeguards in a filed tariff were of no apparent relevance at the time. The Supreme Court's MCI decision and Sprint's consequent filing of its FTS2000 contract rates with the FCC in 1995 obviously gave rise to some concern on the part of GSA over the stability of rates in its FTS2000 contract with Sprint. Just when GSA became aware of Sprint's filing is uncertain. What is clear, however, is that by December 1997, the contracting officer was aware of Sprint's filing with the FCC and had reviewed the tariff. At that time he acknowledged that Sprint was a tariffed provider but demanded that certain changes be made in the tariff. Notwithstanding the contracting officer's demand, Sprint refused to include in its filed tariff the safeguards called for in paragraph "c" of clause H.18. Sprint insisted that the paragraph did not apply to its original offer since that offer was not tariffed. Sprint further contended that its subsequent filing of contract rates was to ensure compliance with the Communications Act, not the requirements of clause H.18. Although obviously dissatisfied with Sprint's filed tariff, GSA has not to our knowledge ever challenged it before the FCC. On December 31, 1997, Sprint filed a revision to its FTS2000 tariff. The parties have agreed that the revision, effective January 1, 1998, incorporated a Carrier Universal Service Charge of 4.9%. Under FCC regulations, tariff filings by non-dominant carriers such as Sprint are considered prima facie lawful and will not be suspended by the FCC unless a petition requesting suspension is filed. 47 CFR 1.773(a)(ii) (1998). We are aware of no such petition ever being filed by GSA. In briefing the motion for summary judgment which is before us, GSA insists that the current contract rates are those originally negotiated by the parties and did not become the tariff rates filed by Sprint with the FCC in 1995 and later amended by Sprint in 1997. GSA sees the negotiated contract rates as fixed, distinct from the tariffed rates, and wholly 14 independent of FCC oversight. Counsel writes: "GSA has a contract that does not require Government intervention before the FCC to protect its terms." Respondent's First Reply at n. 10.[foot #] 10 We find GSA's position to be untenable. We believe instead that the actual contract rates have, by operation of law, become the tariffed rates. This conclusion is based firstly on the fact that the Supreme Court has confirmed that the filing requirements of the Communications Act are applicable to non-dominant carriers such as Sprint and secondly on the fact that Sprint, following the Supreme Court's ruling, did, in fact, file its FTS2000 contract rates, thus bringing its contract with GSA into compliance with the Communications Act and placing it within the purview of the FCC's review authority. In 1997, the GSA contracting officer acknowledged in writing that Sprint was now a tariffed provider but insisted on certain changes being made in the carrier's FTS2000 tariff. Now, however, in contrast with that position and a position taken before the FCC in 1987, GSA argues that its FTS contract is not subject to the Communications Act. We reject this argument for reasons explained in detail later in this decision and remain, therefore, of the opinion that the current contract rates are those contained in Sprint's FTS tariff. Having arrived at this conclusion, we must consider now the nature of the filed rate doctrine and whether it is applicable to this case. The Filed Rate Doctrine The century-old "filed rate" or "filed tariff" doctrine has its origins in the Interstate Commerce Act. The basic contours of the doctrine were described in 1915 by the Supreme Court as follows: ----------- FOOTNOTE BEGINS --------- [foot #] 10 Several briefs have been submitted in conjunction with this motion for summary relief. The first submission was Appellant's Memorandum in Support of its Motion for Summary Relief. The second submission was respondent's opposition, which was filed on December 3, 1999. On December 20, 1999, appellant filled a reply to this opposition. On January 24, 2000, GSA filed comments regarding Sprint's submission of December 20. Sprint was authorized to reply to these comments and did so on February 14. For ease of reference in this discussion we will refer to the various submissions as follows: (1) Appellant's Memorandum in Support of its Motion for Summary Relief, (2) Respondent's First Reply, (3) Appellant's First Reply, (4) Respondent's Second Reply, and (5) Appellant's Second Reply. ----------- FOOTNOTE ENDS ----------- 15 Under the Interstate Commerce Act, the rate of the carrier duly filed is the only lawful charge. Deviation from it is not permitted upon any pretext. Shippers and travelers are charged with notice of it and they as well as the carrier must abide by it, unless it is found by the Commission to be unreasonable. Ignorance or misquotation of rates is not an excuse for paying or charging either less or more than the rate filed. This rule is undeniably strict as it obviously may work hardship in some cases, but it embodies the policy which has been adopted by Congress in the regulation of interstate commerce in order to prevent unjust discrimination. Louisville & Nashville Railroad v. Maxwell, 237 U.S. 94, 97 (1915); see also Maislin Industries v. Primary Steel, Inc., 497 U.S. 116, 126-27 (1990). Two principles are said to stand behind the strict enforcement of filed rates pursuant to the filed rate doctrine. The first is, of course, to prevent carriers from engaging in price discrimination. The second is to preserve the exclusive role of the appropriate regulatory agency in determining the reasonableness of such rates by not having courts become enmeshed in the rate making process. Arkansas Louisiana Gas Co. v. Hall, 453 U.S. 571, 577 (1981); Montana-Dakota Utilities Co. v. Northwestern Public Service Co., 341 U.S. 246, 251 (1951); Keogh v. Chicago & North Western Railroad, 260 U.S. 156, 163-64 (1922). A logical corollary of the filed rate doctrine, therefore, is that the rights as defined by a tariff cannot be varied or enlarged either by contract or tort of the carrier. "Unless and until suspended or set aside, this rate is made, for all purposes, the legal rate, as between carrier and shipper." Keogh, 260 U.S. at 163. Under the filed rate doctrine, therefore, a regulated entity is forbidden to charge rates for its services other than those properly filed with the appropriate federal regulatory authority. Over the years the doctrine has been extended across the spectrum of regulated utilities. Arkansas Louisiana Gas, 453 U.S. at 577. Because section 203(c) of the Communications Act of 1934 is similar in nature to the provision in the Interstate Commerce Act which gave rise to the filed rate doctrine, the doctrine has been held to be applicable to the Communications Act as well.[foot #] 11 American Telephone & Telegraph Co. v. Central Office Telephone, Inc., 524 U.S. 214, 222 (1998); MCI, ----------- FOOTNOTE BEGINS --------- [foot #] 11 The text of this particular provision is that which we have already set out at note 9. ----------- FOOTNOTE ENDS ----------- 16 512 U.S. at 229-31; American Broadcasting Cos. v. FCC, 643 F.2d 818 (D.C. Cir. 1980). Is The Filed Rate Doctrine Applicable To This Case? In opposing Sprint's motion for summary relief, GSA makes several arguments against application of the filed rate doctrine in this case. We consider each in turn. We start with GSA s contention that we are without jurisdiction to resolve the matter before us in this motion for summary relief. According to GSA, the Congressional waiver of sovereign immunity in the Contract Disputes Act (CDA) applies only to matters "relative to the contract" and does not encompass extra-contractual matters that the parties have agreed to exclude. The CDA provides: Each agency board [of contract appeals] shall have jurisdiction to decide any appeal from a decision of a contracting officer (1) relative to a contract made by its agency, and (2) relative to a contract made by any other agency when such agency or the Administrator [of Federal Procurement Policy] has designated the agency board to decide the appeal. In exercising this jurisdiction, the agency board is authorized to grant any relief that would be available to a litigant asserting a contract claim in the United States Court of Federal Claims. 41 U.S.C. 607(d) (1994). GSA s argument is premised upon a distinction it insists upon making between Sprint s tariff and the original contract prices. GSA writes: The Board lacks jurisdiction over tariff issues except insofar as the contract may have adopted those tariff provisions as constituting part of the contract. . . . . GSA has not agreed to be bound by tariff provisions in the FTS2000 contract. Unlike other government contract cases before boards or courts where the relationship of contracts and tariffs may have been considered, FTS2000 does not in any manner adopt the Sprint tariff as part of the contract. In fact, GSA exercised enormous care to explicitly exclude the tariff from the contract. Sprint agreed to that exclusion. Therefore, the tariff 17 on which Sprint relies is entirely exogenous to the contract. Respondent s Second Reply at 10-11. Whatever may have been the intent of the parties on entering this contract originally, any assumption that the contract rates could be detariffed was without legal basis. The Supreme Court s MCI decision made clear that the requirements of the Communications Act for both filing of rates and billing at those filed rates were applicable. As a result of that decision, Sprint filed its contract rates in 1995. GSA contends that we lack jurisdiction over tariff issues except insofar as the contract may have adopted those tariff provisions as constituting part of the contract. We disagree. We believe that the belated tariffing of the rates in Sprint's FTS2000 contract has produced, in effect, the same result. While the parties may not have agreed originally to adopt tariff provisions as part of their contract, the Supreme Court s decision in MCI, 512 U.S. 218, and Sprint's consequent filing of its contract rates has led to the original contract rates becoming tariff provisions.[foot #] 12 On December 31, 1997, Sprint unilaterally revised its tariff to include a carrier universal service charge and, as required by section 203(c) of the Communications Act, reflected this tariff change in subsequent contract invoices. GSA has refused to pay these charges, thus giving rise to a dispute between the parties. This dispute is obviously one arising "relative to a contract." The issue before us is whether Sprint's tariff, as revised in December 1997, controlled as to contract billing rates following that revision. The effect of a tariff change on this critical aspect of contract administration has now become a matter of dispute between the parties to the contract. We readily acknowledge that, in resolving this dispute, we must not involve ourselves with the issue of whether Sprint's change in its tariff rates meets the "just and reasonable" requirement of ----------- FOOTNOTE BEGINS --------- [foot #] 12 Accordingly, we disagree with GSA that case law involving contracts which incorporated tariff provisions from the start is inapplicable to the present case. Once the contract rates became tariffed, albeit after award, we see no significant difference in the situation presented in this case and that encountered in other cases where the tariff provisions have been part of the contract from the start. ----------- FOOTNOTE ENDS ----------- 18 section 201(b) of the Communications Act.[foot #] 13 Under section 205(a) of the Act, this is an issue falling within the jurisdiction of the FCC[foot #] 14 and one in which tribunals asked to enforce a tariff rate do not become involved. Nevertheless, our lack of authority to determine whether Sprint's tariff revision is "just and reasonable" does not put this contract dispute out of our jurisdictional reach. Rather, it suggests that the course to be followed is precisely that outlined under the filed rate doctrine, namely, to insist upon compliance with the official filed tariff, as revised, without becoming enmeshed in the issue of whether that tariff is "just and reasonable." Section 607(d) of the CDA, as originally enacted, authorized boards of contact appeals to grant any relief that would be available to a litigant asserting a contract claim in the United States Court of Claims. 41 U.S.C. 607(d) (Supp. III 1979). ----------- FOOTNOTE BEGINS --------- [foot #] 13 Section 201(b) states in part: All charges, practices, classifications and regulations for and in connection with such communication service, shall be just and reasonable, and any such charge, practice, classification or regulation that is unjust or unreasonable is declared to be unlawful: Provided, ________ That communications by wire or radio subject to this chapter may be classified into day, night, repeated, unrepeated, letter, commercial, press, Government, and such other classes as the Commission may decide to be just and reasonable, and different charges may be made for the different classes of communications . . . . 47 U.S.C. 201(b) (1994). [foot #] 14 This section states in part: Whenever, after full opportunity for hearing, upon a complaint or under an order for investigation and hearing made by the Commission on its own initiative, the Commission shall be of opinion that any charge, classification, regulation, or practice of any carrier or carriers is or will be in violation of any of the provisions of this chapter, the Commission is authorized and empowered to determine and prescribe what will be the just and reasonable charge or the maximum or minimum, or maximum and minimum, charge or charges to be thereafter observed, and what classification, regulation, or practice is or will be just, fair, and reasonable . . . . 47 U.S.C. 205(a) (1994). ----------- FOOTNOTE ENDS ----------- 19 Pursuant to provisions in the Federal Courts Administration Act of 1992, reference to the Court of Claims was later amended to read "Court of Federal Claims." 28 U.S.C. 171 note (1994). The United States Court of Claims (whose decisions rendered prior to October 1, 1982, are recognized by our appellate authority as binding[foot #] 15) on several occasions exercised jurisdiction over cases involving disputes concerning the application of tariffs to Government contracts. E.g., Emery Air Freight Corp. v. United States, 449 F.2d 1255 (Ct. Cl. 1974); Northwest Airlines, Inc. v. United States, 444 F.2d 1097 (Ct. Cl. 1971); Great Northern Railway Co. v. United States, 352 F.2d 375 (Ct. Cl. 1965); Slick Airways, Inc. v. United States, 292 F.2d 515 (Ct. Cl. 1961); Western Union Telegraph Co. v. United States, 115 Ct. Cl. 195 (1950). We, therefore, see no reason why a dispute of this nature, which relates to an agency contract, is not within our CDA jurisdiction. GSA further contends that we are without jurisdiction to resolve this case because the CDA expressly provides that a board s jurisdiction does not extend to a claim or dispute "for penalties or forfeitures prescribed by statute or regulation which another Federal agency is specifically authorized to administer, settle or determine." 41 U.S.C. 605(a) (1994). We fail to see the applicability of this provision to the dispute before us. This is not a dispute over penalties or forfeitures and, as we have expressly noted above, it in no way involves the issue of whether Sprint's tariff, as amended, is "just and reasonable." Rather, we seek here to resolve solely the dispute between the parties over whether payment of contract invoices should be made pursuant to what the contractor contends is the applicable tariff. GSA next argues that the filed rate doctrine cannot be applied in this case because there is a question of just how Sprint's revised tariff should be interpreted. The revised tariff, properly interpreted, according to the Government, does not allow Sprint's carrier universal service charge to be passed through in the FTS2000 contract unless it is a tax. See Respondent's First Reply at 2-5. This argument of the Government is based upon the fact that the parties originally agreed to non- tariffed, fixed prices subject to change only in accordance with contract provisions such as that permitting the pass-through of after-imposed taxes. According to GSA, by revising the tariff to provide for the pass-through of a carrier universal service charge, Sprint has rendered numerous price stability provisions of the tariff meaningless. GSA suggests, therefore, that the revision should not be read as having the effect intended. ----------- FOOTNOTE BEGINS --------- [foot #] 15 See South Corp. v. United States, 690 F.2d 1368, ___ ____________________________ 1369 (Fed. Cir. 1982) (en banc). ----------- FOOTNOTE ENDS ----------- 20 We find the argument unpersuasive. It may well be that the original agreement between Sprint and GSA envisioned long-term fixed prices subject to adjustment in only a limited number of situations, such as the imposition of new taxes after award. It may also be that, when the contract rate schedules were filed in March 1995, certain provisions of the tariff reflected this intent. Nevertheless, the change introduced into the tariff on December 31, 1997, established an additional exception and one obviously not contemplated in the original agreement. In the absence of a successful challenge to and rejection of Sprint's amendment, the tariff, as revised, must now, as is always the case, be read as a whole. United States v. Associated Air Transport, Inc., 275 F.2d at 835. The parties agree that Sprint's revision of December 31, 1997, incorporated a carrier universal service charge of 4.9%. This addition hardly renders the tariff unintelligible when read as a whole. The real difficulty here is that GSA continues to see its contract prices as something wholly distinct from Sprint's filed tariff. As we have already noted, however, this contention conflicts with requirements of the Communications Act. In accordance with the Act, Sprint's non-tariffed contract rates, once filed in 1995, became tariffed. Any subsequent attempt on the part of the contractor to change these tariff rates was, therefore, subject to FCC review. We view GSA's current argument that Sprint's revised tariff is in need of interpretation before it can be applied as nothing more than a belated objection to the revision itself. A third argument offered by GSA against the application of the filed rate doctrine is that it simply cannot be applied to Government contracts. GSA s argument runs as follows: The filed rate doctrine is a relic of a bygone era. It is now preserved for application to commercial contracts largely through the arcane legal artifices endemic within [the] telecommunications industry. However, no public policy rationale justifies expansion of the doctrine to government contracts, especially in light of the fact that no court or board decision requires application of the doctrine, and that to do so would restrict sovereign immunity without statutory warrant. Respondent's First Reply at 13. We are not convinced that application of the filed rate doctrine to Government contracts would constitute an unwarranted restriction of sovereign immunity. Through the Tucker Act, the United States has broadly waived sovereign immunity for acts "founded either upon the Constitution, or any Act of Congress, or any regulation of an executive department, or upon any express or 21 implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort . . . ." 28 U.S.C. 1346(a)(2), 1491(a)(1) (1994). Respondent has not referred us to any section of the Tucker Act indicating that the United States retains sovereign immunity with respect to contracts in regulated industries where federal law requires prices to be set by tariff. Admittedly, our jurisdiction as a board of contract appeals does not derive from the Tucker Act. Nevertheless, as already seen, section 607(d) of the CDA provided that, as to CDA claims, our authority to grant relief is coextensive with that of the United States Court of Claims and now reads that it is coextensive with that of the United States Court of Federal Claims. A contract claim redressable under the Tucker Act, therefore, should be equally redressable under the CDA. Furthermore, as we have also already noted, the Court of Claims on several occasions exercised jurisdiction over cases involving disputes concerning the application of tariffs to Government contracts. GSA suggests that these cases should not be looked upon as precedent since they involve, for the most part, contracts for transportation services and do not follow the same statutory and regulatory scheme as that used for the FTS2000 contracts. Respondent's Second Submission at 33-35. Nevertheless, for purposes of determining whether application of the filed rate doctrine constitutes an unwarranted intrusion on the Government s sovereign immunity, we do not find the distinction relevant. In the alternative, GSA appears to argue that, even aside from considerations regarding sovereign immunity, as raised in the preceding argument, a restrictive statute such as the Communications Act does not apply to the Federal Government because there is no express statement that it does. The argument is puzzling for two reasons. First, it represents a conspicuous change in position on the part of GSA. As we have noted, in 1987, GSA sought a declaratory ruling from the FCC that the FTS contracts would not involve common carrier service since otherwise the contracts would obviously be subject to the Communications Act. Secondly, GSA's contention that the Communications Act does not apply to the Federal Government conflicts with provisions in contract clause H.18. The clause makes express mention of firm fixed price tariff offers or offers based on firm fixed price tariff(s). It speaks of the right of the offeror or its subcontractor for tariffed services to initiate tariff increases. Further, it refers to the submission of tariffs to the FCC and likewise requires that such tariffs provide for the right of the Government to terminate the contract for convenience on a no-cost basis if the fixed price tariff is increased and the tariff 22 increase causes a contract price increase to the Government. See Uncontested Fact 12. Sprint of course did not originally offer a tariffed price or one based on tariff. Nevertheless, these provisions, as they appeared originally in the FTS2000 RFP, certainly indicate that GSA was prepared to consider tariffed rates and recognized at the time it issued the FTS2000 RFP that if tariffed rates were offered and then changed after award, the Government, pursuant to the filed rate doctrine, might well be obliged to pay them unless it chose to exercise its rights under the termination for convenience clause. Certainly provisions such as these would appear to evince recognition on the part of GSA that it is subject to the Communications Act. GSA having thought that provision of telecommunications services to the Government is subject to the Communications Act does not mean, of course, that the Act actually applies to the Government. An examination of the statute, however, shows that it does in fact apply. The Act is far from silent regarding Government coverage. Section 201(b)[foot #] 16 expressly provides that, under the Act, certain communications may be classified into various classes as the FCC may deem "just and reasonable." Among these classes is one referring to the Government. Furthermore, section 210(b) permits common carriers to provide free service to the Government "in connection with the preparation for national defense: Provided, That such free service may be rendered only in accordance with such rules and regulations as the Commission may prescribe therefor."[foot #] 17 Finally, 47 U.S.C. 15 reserves to the FCC, under provisions of the Communications Act of 1934, the authority "to prescribe charges, classifications, regulations, and practices including priorities applicable to Government communications." In the event the Government is subject to the Communications Act, GSA pursues an alternative line of argument claiming that the filed rate doctrine is not mandated by the Communications Act itself, but rather is a doctrine merely of judicial origin which has proved useful in resolving conflicts between tariffs filed under the Communications Act and commercial contracts. Where there is a similar conflict between tariffs and Government ----------- FOOTNOTE BEGINS --------- [foot #] 16 See note 13. ___ [foot #] 17 We have in the past noted that it is well settled that where there is an express exception such as this, the exception comprises the only limitation on the operation of the statute and no other exceptions will be implied. Electronic __________ Genie, Inc., GSBCA 10571-P, 90-3 BCA 23,045, at 115,702 (citing ___________ Andrus v. Glover Construction Co., 446 U.S. 608 (1980); Israel ___________________________________ ______ British Bank (London) Ltd. v. Federal Deposit Insurance Co., 536 ----------- FOOTNOTE BEGINS --------- F.2d 509 (2d Cir.), cert. denied, 429 U.S. 978 (1976)). ____________ ----------- FOOTNOTE ENDS ----------- 23 contracts, GSA sees nothing in the Communications Act which imperatively requires that a revised tariff should supersede a rate previously agreed to in contract. Respondent's Second Submission at 15. In an environment where carriers are permitted to modify their tariffs unilaterally, GSA sees several problems associated with the application of the filed rate doctrine to Government contracts. First, if a carrier can escape its contractual obligations simply by modifying its tariff, this renders any contract it may have previously entered into with the Government illusory. This, in turn, is said to frustrate the purpose of a panoply of Government procurement statutes and regulations which are applicable to such contracts. In addition, according to GSA, this frustrates the very statute authorizing GSA to enter into long-term utility contracts. Granted, there is no mention of the filed rate doctrine, as such, in the Communications Act. Nevertheless, as we have already seen, the doctrine sprang from provisions in the Interstate Commerce Act and from similar provisions in other statutes such as section 203(c) of the Communications Act, which precludes a carrier from charging anything but its filed rate for the particular service in question. As the Supreme Court has explained, "[T]he rate of the carrier duly filed is the only lawful charge. Deviation from it is not permitted upon any pretext." Louisville & Nashville Railroad, 237 U.S. at 97. Further, according to the Court, "The rights of the parties as defined by a tariff cannot be varied or enlarged by either contract or tort of the carrier." Keogh, 260 U.S. at 163. In a case such as this, where Sprint's contract rates have been eventually filed as a tariff pursuant to the Communications Act and that tariff has been modified subsequently, albeit unilaterally, by the carrier, we can find no basis for concluding that either Sprint or GSA is free to disregard section 203(c) of the Communications Act and thus the application of the filed rate doctrine. Neither do we agree that application of the filed rate doctrine to Government contracts necessarily leads to illusory contracts. Contracting in a regulated environment inevitably involves some degree of Government involvement in the relationship between a carrier and its customer. Nevertheless, to the extent that this occurs, the contracts in question need not be dismissed as nullities. In two cases already cited and decided by the former United States Court of Claims, while upholding applicable filed tariff rates which conflicted with contract rates, the Court nonetheless did not view the contracts in question as illusory. Rather, it concluded each time that "[t]he contract provisions are controlling unless they are inconsistent with the statute or the tariff, in which case they 24 must bow." Slick, 292 F.2d at 520; accord Northwest Airlines, 444 F.2d at 1110 (reaffirming the rule in Slick). GSA apparently is of the opinion that where a tariff reflects a long-term agreement between the carrier and its customer, the FCC will permit the carrier to change that tariff unilaterally for any cause whatsoever. This is incorrect. In 1987 when GSA sought a declarative ruling from the FCC that the FTS procurement was outside the scope of the Communications Act, one argument it presented in support of its petition was that if FTS2000 services were deemed to be common carrier services, the fixed rates of a long-term contract could still be subject to increase either on the part of the carrier or the Commission itself. In denying the request, the FCC reminded GSA that existing policies should provide GSA with a reasonable degree of protection from rate increases during the term of a long-term contract, since it is the practice of the Commission to require a carrier seeking unilaterally to make carrier-initiated modifications to demonstrate that it has "substantial cause" to do so. GSA's Petition for Declaratory Relief, Memorandum Opinion and Order, 2 FCC Rcd at 5072, 5075; see also Respondent's 2nd Reply at 24-25 (quoting from Policy and Rules Concerning the Interstate, Interexchange Marketplace, Second Report and Order, 11 FCC Rcd 20730, 20762 (1996) (unilateral changes that alter material terms and conditions of long-term arrangements are reasonable only if justified by "substantial cause")); High-Tech Furnace Systems, Inc. v. Sprint Communications Co., L.P., Memorandum Opinion and Order, 14 FCC Rcd 8040, 8045 (dictum) (explaining that to date the Commission has applied the substantial cause test to revisions made to individually negotiated contract tariffs filed by both dominant and non- dominant carriers). The FCC's use of the substantial cause standard has been upheld by the Court of Appeals for the District of Columbia Circuit. Showtime Networks, Inc. v. FCC, 932 F.2d 1 (D.C. Cir. 1991). In short, the FCC can and does on occasion reject a unilateral tariff filing which derogates from contract terms. E.g., RCA American Communications, Inc., 86 F.C.C. 2d 1197 (1981), further explained on remand, 94 F.C.C. 2d 1338 (1983). Another example can be found in a case cited to us by GSA, namely Bell Telephone Co. of Pennsylvania v. FCC, 503 F.2d 1250, 1280 (3rd Cir. 1974), cert. denied, 422 U.S. 1026 (1975). GSA suggests that another reason why it should be exempt from the requirement of section 203(c) of the Communications Act is that the enforcement of terms differing from those agreed to by contract frustrates the purpose of a comprehensive system of Government procurement statutes and regulations. We disagree. Tariff rates differing from original contract terms are sometimes enforced in Government procurements carried out in a regulated environment. If this statement were not true, we would have no 25 cases involving the application of the filed rate doctrine to Government contracts. Yet, such cases do exist and insistence by the courts and boards of contract appeals that the Government adhere to the official tariff when different from a previously agreed contract rate has not been viewed as contrary to procurement statutes or regulations. E.g., Emery Air Freight Corp., 449 F.2d 1255; Northwest Airlines, Inc., 444 F.2d 1097; Slick Airways, Inc., 292 F.2d 515; United States v. Associated Air Transport, Inc., 275 F.2d 827, 835 (5th Cir. 1960); Western Union Telegraph Co. v. United States, 115 Ct. Cl. 195 (1950); ITT Communications Services, Inc., GSBCA 8793, 90-2 BCA 22,679; Saturn Airways Inc., ASBCA 17214, et al., 76-1 BCA 11,839. Another reason offered by GSA for not complying with the requirement of section 203(c) of the Communications Act that carrier charges be based solely upon the existing tariff, is that this frustrates the GSA's statutory authority under 40 U.S.C. 481(a)(1), (3) (1994) to contract for utilities on a long-term basis.[foot #] 18 Respondent's Second Reply at 22. Respondent suggests that because this authorization was given by Congress several years after passage of the Communications Act, the Communications Act should be disregarded in preference to this provision of the Federal Property and Administrative Services Act of 1949 as the latest expression of legislative will. Respondent's Second Reply at 19-20. We are not prepared to rule out the application to GSA of section 203(c) of the Communications Act simply because of a subsequent authorization of the same agency to enter into long- term utility contracts. Rather, we attempt first to reconcile the two statutes if reasonably possible. "The courts are not at liberty to pick and choose among Congressional enactments, and when two statutes are capable of co-existence, it is the duty of the courts, absent a clearly expressed Congressional intention to the contrary, to regard each as effective." Morton v. Mancari, 417 U.S. 535, 551 (1974). In the present case, we see no real conflict between the authorization to procure utilities on a long-term basis and section 203(c) of the Communications Act. Whatever the respective benefits may be for GSA to contract for utilities in a non-regulated versus a regulated environment, the fact is that, for the present, the agency can and does operate in a regulated environment. Existing procurement regulations clearly recognize this in the area of electrical, gas, and water utilities. 48 CFR pt. 41 (1999) (FAR pt. 41). ----------- FOOTNOTE BEGINS --------- [foot #] 18 GSA, citing Matter of GSA Procurement of __________________________________ Equipment Under 40 U.S.C. 481(a)(3), 62 Comp. Gen. 569 (1983), ____________________________________ contends that this authority to procure utility services encompasses telecommunications service as well. Respondent's Second Reply at 22. ----------- FOOTNOTE ENDS ----------- 26 Even in the area of telecommunications procurements, as we have already discussed, evolving case law eventually demonstrated that the degree of regulation for carriers under the Communications Act should have been greater than some believed it to be at the time Sprint's FTS2000 contract was awarded.[foot #] 19 In the absence of any apparent Congressional intent that we should do otherwise, we, therefore, interpret GSA's statutory authorization to enter into long-term utility contracts as an authorization to do so in accordance with all applicable statutes and regulations -- the Communications Act included. GSA also suggests that application of the filed rate doctrine in this particular case is inappropriate since elimination of the USF charge from contract invoices would not be discriminatory with regard to other customers of Sprint. GSA argues that the Government is not seeking to avoid tariff changes related to services acquired under tariffs that affect multiple customers. It further points out that the Communications Act explicitly recognizes the right of carriers to discriminate in favor of the Federal Government. See Respondent's First Submission at 13. The parties are obviously in disagreement as to whether exemption of GSA from payment of the carrier universal service charge would be discriminatory. The FCC's Order No. 97-157 expressly provides that if some carriers decide to recover their contribution costs from their customers, "the carriers may not shift more than an equitable share of their contributions to any customer or group of customers." Uncontested Fact 6. Counsel for Sprint argue that such inequities will occur if GSA's customers are held to be exempt from the carrier's universal service charge for the period of 1998 because Department of Defense customers have paid the charge and GSA's own customers, under the subsequent Bridge and FTS2001 contracts, have paid the charge. Appellant's First Reply at 24. Disagreement of the parties on the question of discrimination inevitably takes us into factual issues which we do not consider material to the motion before us. Instead, we ----------- FOOTNOTE BEGINS --------- [foot #] 19 Respondent calls our attention to the fact that revisions of the Communications Act, through the Telecommunications Act of 1996, have prompted the FCC to issue an order which should lead to deregulation regarding the type of service at issue in the FTS2000 contracts. Respondent's Second Submission n. 12. Nevertheless, as respondent admits, this order has been stayed for nearly three years pending review of the matter by the Court of Appeals for the District of Columbia Circuit. The fact remains, therefore, that in the area of telecommunications procurements, the Government continues to operate in a regulated environment. ----------- FOOTNOTE ENDS ----------- 27 reject respondent's argument that the filed rate doctrine should not be applied in the alleged absence of discrimination because it ignores the second principle standing behind strict enforcement of the doctrine. As we have seen, the doctrine is strictly enforced not merely to prevent carriers from engaging in price discrimination but also to preserve the exclusive role of the appropriate regulatory agency in determining the reasonableness of the applicable rate. Consequently, even if we were to conclude that exemption of GSA from payment of Sprint's universal service charge for 1998 is not discriminatory, application of the filed rate doctrine would still, in our opinion, be of critical importance in view of this second principle traditionally seen as supporting its strict enforcement. A final argument raised by GSA in opposition to our application of the filed rate doctrine in this case is that applying the doctrine would be inequitable. Counsel write: Whether one argues equitable estoppel, promissory estoppel or detrimental reliance under the Restatement, Second Contracts 90, the plain facts attest to the fact that GSA awarded this contract to Sprint relying upon its non-tariffed firm fixed price offer. Now, years later, Sprint seeks to substitute in place of its firm fixed price offer a tariff based offer which would and could not have been accepted at time of original contract award. Notions of equity surely prohibit changing the nature of the contract obligations after award and performance of more than half of the contract. Respondent's First Reply at 15-16. Whatever the merits of such an argument may be, it is not for our consideration here. Rather, we view it as germane to the issue of whether Sprint's rates, as amended, are "just and reasonable" -- a matter falling within the exclusive domain of the FCC. Accordingly, the argument does not bear on our application of the filed rate doctrine in this case. The law is clear. "[E]quitable considerations may not serve to justify failure of carrier to collect, or retention by shipper of, any part of lawful tariff charges. Pittsburgh, C. C. & St. L. R. Co. v. Fink, [250 U.S. 577 (1919)]; New York Cent. & H.R.R. Co. v. York & Whitney Co.[, 256 U.S. 406 (1921)]." Baldwin v. Scott County Milling Co., 307 U.S. 478, 485 (1939); see also Maislin Industries, 497 U.S. at 127 (the statute creating strict filed rate requirements forbids equitable defenses to collection of the filed tariff). The reason for this prohibition against employing estoppel to defeat a tariff is obvious. If tariffs could be thus defeated, the entire regulatory scheme would be undermined and the way thrown open to preferential and discriminatory treatment 28 of customers. A carrier could simply represent to a favorite customer that it would give that customer a better rate or some other form of preference. Thereafter, assuming reasonable reliance on the part of the customer, a case could be made to estop the carrier from denying the very preference the regulatory scheme seeks to abolish. Associated Air Transport, Inc., 275 F.2d at 837-38. Conclusion It is interesting to note that, in the instant case, GSA has not sought FCC review of Sprint's unilateral change in its FTS2000 tariff to include a carrier universal service charge. Perhaps this is because GSA anticipates that the change would be found by the FCC to be justified by substantial cause in view of what the FCC has already stated in Order No. 97-157. The order reads: Under our recovery mechanism, carriers will be permitted, but not required, to pass through their contributions to their interstate access and interexchange customers. . . . [W]e also have determined that the interstate contributions will constitute the substantial cause that would provide a public interest justification for filing federal tariff changes or making contract adjustments. Uncontested Fact 6. It is no secret, however, that respondent disagrees with this position of the FCC and believes instead that Sprint's attempt to recover USF charges is a "brazen gambit." Respondent's Second Reply at 27. Notwithstanding the language in Order No. 97-157, GSA tells us that the FCC itself reported to Congress as early as May 1998 that reductions in local access charges obviated the need to raise rates to recover the universal service charge. Id. at 28. Nevertheless, these considerations, troubling and unresolved as they may be, can have no bearing on the decision we make here. Rather, as the equitable considerations discussed earlier, they relate to the issue of whether Sprint's amended rate is "just and reasonable" -- a matter exclusively within the jurisdiction of the FCC and one which, under the filed rate doctrine, is not to be addressed by a tribunal such as ours which is tasked only with determining whether that tariff is applicable to the contract to which this dispute relates. Likewise troubling is the seeming disregard of the primacy of contract law in permitting Sprint to modify, through a unilateral filing, filed contract rates previously agreed to with GSA. Understandably, the Government argues that the original 29 contract rates agreed to by the parties and not a unilateral change in Sprint's filed tariff should control the outcome of this case. While we reject GSA's contention that its FTS2000 contract with Sprint is not subject to the Communications Act, we find nothing in the Act itself which authorizes Sprint to modify unilaterally the contract rates which it has filed with the FCC. See MCI Telecommunications Corp. v. FCC, 665 F.2d 1300, 1302 (D.C. Cir. 1981); Bell Telephone Co. of Pennsylvania, 503 F.2d at 1280. Why then should we not look upon Sprint's unilateral amendment of its filed tariff in December 1997 as a mere nullity and insist instead on application of the filed tariff rates which in fact correspond to those of the contract itself? This would, of course, appear to be in keeping with the "Sierra-Mobile" doctrine enunciated by the United States Supreme Court. Under that doctrine, in a regulatory regime that permits the relationship between parties to be established by private contract, a utility may not alter a material term of the parties' agreement without the customer's consent simply by filing a unilateral tariff amendment. Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348, 352-53 (1956); United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332, 338-40 (1956). The doctrine has, in fact, been applied both by the FCC and the courts to telecommunications agreements between carriers where such agreements have not authorized such unilateral amendment. See Bell System Tariff Offerings, 46 F.C.C. 2d 413, 432 (1974); Bell Telephone Co. of Pennsylvania, 503 F.2d at 1275-82; MCI Telecommunications Corp. v. FCC, 665 F.2d at 1302- 03 (D.C. Cir. 1981). A relatively recent United States district court decision has gone so far as to extend application of the doctrine to contracts, such as in this case, between a carrier and customer. See Global Access Limited v. AT&T Corp., 978 F. Supp. 1068, 1073 (S.D. Fla. 1997). Nevertheless, in the instant case, we find the Sierra-Mobile doctrine to be of no benefit to GSA. The doctrine admits one notable exception. Although a utility may be without the power to change filed contract rates through a subsequent unilateral filing, the contract still remains subject to the reviewing authority of the regulatory agency, which may permit modification when deemed necessary in the public interest. United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. at 344; see also Cable & Wireless P.L.C. v. FCC, 166 F.3d 1224, 1231 (D.C. Cir. 1999); Western Union Telegraph Co. v. FCC, 815 F.2d 1495, 1501 n.2 (D.C. Cir. 1987) (recognizing the FCC's authority to modify contracts when necessary in the public interest). In the case of the pass-through of USF contributions as authorized in FCC Order No. 97-157, the FCC opened the way for a carrier's unilateral adjustment of filed contract rates by making the requisite determination that the amendment is necessary in 30 the public interest -- thus taking the matter out of our hands even if we were of a mind to apply the Sierra-Mobile doctrine to a contract such as that which Sprint has with GSA. The order states: "Furthermore, we find that universal service contributions constitute a sufficient public interest rationale to justify contract adjustments." See Uncontested Fact 7. That the Commission was fully aware of the implications of such a finding vis-a-vis the Sierra-Mobile doctrine is confirmed in a footnote to that specific finding, which reads: See United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956) (finding that gas companies cannot change contract prices at will but the Federal Power Commission can authorize rate increases if it finds contract rates to conflict with the public interest). 12 FCC Rcd 9209 n.2132 (1997). In the face of this finding by the FCC, therefore, and GSA's failure to file a petition requesting suspension of Sprint's unilateral filing of December 31, 1997, we accept that filing as prima facie lawful pursuant to 47 CFR 1.773(a)(ii). The Supreme Court has recognized that the filed rate doctrine may seem harsh in some circumstances. American Telephone & Telegraph, 524 U.S. at 223. Nevertheless, it is well established that the doctrine applies to the Communications Act, id. at 222, and there is ample precedent regarding its application to Government contracts. E.g., Emery Air Freight, 449 F.2d 1255; Northwest Airlines, 444 F.2d 1097; Great Northern Railway, 352 F.2d 375; Slick Airways, 292 F.2d 515; Western Union, 115 Ct. Cl. 195. We have ourselves applied the doctrine in deciding disputes involving GSA contracts subject to the Communications Act. E.g., ITT Communications Services, Inc., GSBCA 8793, 90-2 BCA 22,679. One simply cannot ignore the rule of law that a tariff, as long as it is in effect, must be treated as though it has the force of law. Pennsylvania Railroad Co. v. International Coal Mining Co., 230 U.S. 184, 197 (1913); Fax Telecommunicaciones Inc. v. AT&T Corp., 138 F.3d 479, 488 (2nd Cir. 1998); Marcus v. AT&T Corp., 138 F.3d 46, 55-56 (2nd Cir. 1998); Cahnmann v. Sprint Corp., 133 F.3d 484, 488-89 (7th Cir. 1998); American Telephone & Telegraph Co. v. City of New York, 83 F.3d 549, 552 (2nd Cir. 1996); MCI Telecommunications Corp. v. Teleconcepts, Inc., 71 F.3d 1086, 1095 (3d Cir. 1995); MCI Telecommunications Corp. v. Graham, 7 F.3d 477, 479 (6th Cir. 1993); MCI Telecommunications Corp. v. Garden State Investment Corp., 981 F.2d 385, 387 (8th Cir. 1992); Cincinnati, New Orleans & Texas Pacific Railway Co. v. Chesapeake and Ohio Railway Co., 441 F.2d 483, 488 (4th Cir. 1971); Carter v. American Telephone & Telegraph Co., 365 F.2d 486, 496 (5th Cir. 1966). 31 Accordingly, in the absence of any successful challenge to Sprint's amendment of its FTS2000 tariff to provide for the pass- through of a carrier universal service charge, the revised tariff stands. Under section 203(c) of the Communications Act, Sprint's tariff, as amended, and only that tariff, must serve as the basis for contract billings and payments. GSA has failed to convince us that either Sprint or GSA is exempt from this fundamental requirement of the Communications Act. We, therefore, conclude that, as a matter of law and in accordance with the well established filed rate doctrine, Sprint is entitled to payment of contract invoices based upon the tariff in effect at the time the services in question were rendered. Decision This appeal is GRANTED as to entitlement. Further proceedings regarding the issue of quantum will be the subject of a separate order to be issued shortly by the Board. ______________________ EDWIN B. NEILL Board Judge I concur: ______________________ ANTHONY S. BORWICK Board Judge DeGRAFF, Board Judge, Concurring. I write separately because although I arrive at the same destination as do the other two members of the panel, I take a slightly different route. We have jurisdiction to entertain this appeal because the FTS2000 contract is an express contract for the procurement of services and Sprint appealed here after submitting a claim to the contracting officer and receiving a deemed denial of that claim. 41 U.S.C. 602, 603, 607 (1994). In exercising our jurisdiction, we are called upon to determine the mutual obligations of the parties to a contract that contained fixed rates for a ten-year period. One of the facts that we must take into account when we make our determination is the statement contained in FCC Order No. 97-157 that the universal service fund contributions constitute the public interest justification for 32 making contract adjustments. Uncontested Facts 6, 7. According to the order, the FCC made this statement pursuant to its authority, recognized by the Sierra-Mobile line of cases, to permit carriers to abrogate existing contracts by filing tariffs that are inconsistent with the contracts. Our jurisdiction does not permit us to override either the FCC's order or its acceptance for filing of Sprint's tariff amendment. GSA is bound to pay Sprint according to its tariff rates, as amended to include the universal service fund contributions. Sprint chose to take advantage of FCC Order No. 97-157 by amending its tariff to include these charges, and Sprint's actions effectively nullified the fixed rates set out in the parties' contract. If GSA disagrees with the FCC's determination "that universal service contributions constitute a sufficient public interest rationale to justify contract adjustments," FCC Order No. 97-157, or if it doubts that Sprint's tariff rates are "just and reasonable," 47 U.S.C. 201(b), it is free to ask the appropriate forum to resolve these issues. If GSA does not ask for and secure a favorable ruling in the proper forum, however, we are bound to accept the FCC's determination set out in its Order No. 97-157 and to recognize the effectiveness of the actions taken by Sprint in accordance with that order. ________________________ MARTHA H. DeGRAFF Board Judge