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A.G. SCHOONMAKER CO. v. RESOR

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA


September 24, 1970

A.G. SCHOONMAKER CO., Inc., Plaintiff, and Bogue Electric Manufacturing Co., Intervenor,
v.
Stanley R. RESOR et al., Defendants

Waddy, District Judge.

The opinion of the court was delivered by: WADDY

FINDINGS OF FACT AND CONCLUSIONS OF LAW

WADDY, District Judge.

 On June 11, 1970, A.G. Schoonmaker Co., Inc. ("Plaintiff" hereinafter) instituted this action on a claim that Defendant public officials had acted arbitrarily, capriciously and unlawfully in respect to the purported cancellation of Invitation for Bids DAAK 02-70-B-1225 ("Army Invitation" hereinafter), and issuing and purporting to act on Invitation for Bids DAAK 02-70-B-3125 ("New Army Invitation" hereinafter), seeking declaratory and injunctive relief in essence prohibiting the award of any contract to anyone other than Plaintiff and requiring that a contract be issued under the Army Invitation to Plaintiff.

 On June 12, 1970, this Court issued a Temporary Restraining Order enjoining the opening of bids on June 15; and on June 26, 1970, upon Findings of Fact and Conclusions of Law entered on that date, issued an Order and Preliminary Injunction restraining the opening of bids and the award of a contract under the New Army Invitation pending the determination of this cause.

 On July 2, 1970, Bogue Electric Manufacturing Company ("Intervenor" hereinafter) filed a Motion for Leave to Intervene as a plaintiff and, by order of August 5, 1970, was permitted to intervene and to file a Complaint in this action. This Complaint seeks substantially the same relief sought by Plaintiff but claims that Intervenor, rather than Plaintiff, is entitled to be awarded a contract under the Army Invitation.

 The trial of this cause commenced on August 20, 1970, pursuant to this Court's Order of June 26, 1970, expediting these proceedings, and concluded on August 21. All parties adduced testimony through witnesses and the authenticity and admissibility of a substantial portion of the documentary evidence introduced at the trial was stipulated. The parties also stipulated as to the authenticity of other documents at the outset of trial which were subsequently admitted into evidence by the Court.

 Upon consideration of all of the evidence, the stipulations of the parties and the arguments and memoranda of counsel for the parties, the Court makes the following:

 FINDINGS OF FACT

 1. Plaintiff is a corporation with its principal place of business in the State of California.

 2. Defendant Stanley R. Resor is Secretary of the Army and is authorized to conduct all of the affairs of the Department of the Army, including those of the United States Army Mobility Equipment Research and Development Center, Fort Belvoir, Virginia ("Army" hereinafter). Defendant Melvin R. Laird is Secretary of Defense and exercises direction, authority and control over the Department of Defense. Defendant Staats is Comptroller General of the United States and is charged with the control and direction of the General Accounting Office.

 3. Intervenor is a corporation with its principal place of business in the State of New Jersey. Approximately ninety percent of its business is with the Government. Mr. William Guttenberg is its President and has been employed by Intervenor for twenty-six years.

 4. In 1968, the Department of Defense developed a program for the standardization of 15 KW through 200 KW engine-driven generator sets for the Armed Services. The Department of Defense assigned responsibility for the procurement of 15 KW and 30 KW generator sets (the "Generator Sets" hereinafter) to the Army and responsibility for the procurement of 100 KW and 200 KW sets to the Department of the Air Force ("Air Force" hereinafter).

 5. This program was and is administered by the Department of Defense Project Manager -- Mobile Electric Power. The Project Manager for the program is Col. J.J. Rochefort, Jr. Mr. Bart Bingham is, and at all times pertinent hereto was, the chief of the procurement branch of the Project Manager's Office. Mr. Bingham has, and at all times pertinent hereto had, responsibility for planning the procurement of the standardized generator sets with jurisdiction over both the Army and Air Force Invitations.

 6. On February 18, 1969, the Army issued Solicitation No. DAAK 02-69-R-2200, constituting the first step of a two-step, formally advertised, multi-year procurement of the Generator Sets, to Plaintiff, Intervenor and numerous other companies. Plaintiff and Intervenor devoted substantial time and effort and incurred substantial expense in developing technical proposals for the production of the Generator Sets in response to the Solicitation, and, after their respective technical proposals had been accepted by the Army, devoted substantial time and effort and incurred substantial expense in developing their respective bids in response to the Army Invitation.

 7. In response to the said Solicitation, the Army received technical proposals from Intervenor, Libby Welding Company, Inc. ("Libby" hereinafter) and two other companies, as well as Plaintiff. The technical proposals of Plaintiff, Intervenor and Libby, but not those of the two other companies, were found acceptable.

 8. On or about December 19, 1969, the Army issued the Army Invitation (DAAK-: 02-70-B-1225) to Plaintiff, Intervenor and Libby, as the second step of the aforesaid two-step procurement. The Army Invitation called for the production and delivery of both Pre-Production Models (for testing) and Production Models of the Generator Sets. The first unit of each of the four Pre-Production Models was required to be delivered 300 days after award of a contract and the remaining Pre-Production Models 420 days after award. The first 92 Production Models were required to be delivered 712 days after award and the balance of the Production Models over a period of approximately three to five years. The Invitation also required certain materials and components ancillary to the Pre-Production Models, data items and, in addition, possible additional Production Models to be purchased at the option of the Army. The Army Invitation provided that bids would be opened on February 27, 1970. After their respective technical proposals had been accepted by the Army, both Plaintiff and Intervenor devoted substantial time and effort and incurred substantial expense in developing their respective bids in response to the Army Invitation.

 9. The Army Invitation provided separate and distinct pricing spaces for the Pre-Production and the Production Models of like Generator Sets. It also contained an express "NOTE", instructing bidders to include certain items of cost in the price of the Pre-Production Models only and not in the price of the Production Models. Although the Pre-Production and Production Models bear the same "MEP" and "FSN" numbers, the Army Invitation contains different descriptions for the Pre-Production Models than the Production Models; provides that only the Pre-Production Models are to be equipped with certain testing equipment, including regulator-exciter systems, slip rings and brush assemblies; and different rules governing how they are to be built. Mr. Edward Prada, Chief of the Testing and Evaluation Division of the Army and Program Manager for the Army's generator set program, acknowledged that the Pre-Production Models are different in some ways from Production Models of the Generator Sets.

 10. On January 6, 1970, the Army held a conference of bidders "for the purpose of clarification of any and all questions regarding any contractual aspect" of the Army Invitation. Prior to the conference bidders were informed that "* * * Bidders must submit their questions in writing to arrive preferably COB 31 Dec 69 but shall arrive NLT 0900 5 Jan 70. Any changes resulting from questions and answers at this briefing that materially effect this solicitation, will be incorporated in writing into this IFB prior to the closing date of the IFB." Representatives of Plaintiff, Intervenor, Libby, the Army and the Department of Defense were present. None of the representatives raised any question concerning the pricing requirements under the Army Invitation. Nothing was said or done during this conference which indicated that the Army believed or desired that the prices for the Pre-Production and the Production Models be identical or that it would consider different prices for the Pre-Production and Production Models to be non-responsive to the Army Invitation. No changes resulting from questions and answers submitted to the conference were incorporated in writing into the IFB.

 11. On January 30, 1970, the Air Force issued Invitation for Bids F 04606-70-B-0162 ("Air Force Invitation" hereinafter). The Air Force Invitation called for specified quantities of 100 and 200 KW generator sets, including Pre-Production and Production Models. Unlike the Army Invitation, the Air Force Invitation made no provision for the insertion of different prices for the Pre-Production and Production Models of like generator sets.

 12. On February 5 and 6, 1970, Intervenor and Plaintiff submitted written questions to the Air Force to be answered at a conference of bidders to be held by the Air Force on February 10, 1970, in connection with the Air Force Invitation. One of the questions Plaintiff submitted was as follows: "Where do we put the price for first article generator sets? We request separate line items for first article costs be established for uniform DOD procurements. Reference: DAAK-: 2-70-1225 Correction DAAK 02-1225", which was the Army Invitation. Intervenor submitted the following similar question: It would appear that more equitable proposals could be prepared by the bidders if the pre-production equipment were separate contract items." By requesting separate line items in the Air Force Invitation, Plaintiff and Intervenor were requesting that bidders be given an opportunity to price Air Force pre-production models (first articles) differently than production models so that pre-production costs could be recaptured earlier in the contract period; and the import of these questions was plain to persons familiar with the contractual aspects of invitations for bids, including Mr. Bingham.

 13. On February 9, 1970, the day preceding the Air Force Conference, Mr. Bingham and representatives of the Air Force developed answers to the questions submitted by bidders, including the questions submitted by Plaintiff and Intervenor.

 14. The Air Force bidders conference on February 10, 1970, was attended by representatives of four bidders including Plaintiff and Intervenor. The Army was represented by Messrs. Prada and Clarence Guthrie and the Department of Defense was represented by Mr. Bingham, and Messrs. Frank Perka, James Gale and Joseph Sullivan. Mr. Bingham was seated at the head table alongside of Jack Metz, the Air Force Contracting Officer. Mr. Daniels, representing Plaintiff, sat next to Mr. Guttenberg at the far end of the table. At the outset of the conference, representatives of bidders were requested to identify themselves. Messrs. Daniels and Caldwell indicated they were present on behalf of Plaintiff. The Department of Defense, the Army and Intervenor knew that Plaintiff was represented at the conference and that Mr. Daniels participated in the conference on behalf of Plaintiff.

 15. During the course of the Air Force conference, the questions and answers referred to in Findings of Fact Nos. 12 and 13 were read by the Air Force. Mr. Daniels indicated that the former of these questions had been submitted by Plaintiff and he attempted unsuccessfully to persuade the Air Force to alter its Invitation so as to permit separate and different prices for the Pre-Production Models as distinct from the Production Models as the Army was permitting. The Air Force Contracting Officer represented that the Armed Services Procurement Regulations (ASPR) precluded the Air Force from pricing the units differently. Plaintiff also asked other questions and made statements indicating that it read and was acting upon the Army Invitation as permitting different prices for the Pre-Production and the Production Models of like Generator Sets. At no time did the Army, the Department of Defense or Intervenor indicate that any of them read or was acting upon the Army Invitation differently than Plaintiff and statements were made after consultation between Mr. Bingham, representing the Department of Defense, and Air Force Contracting Officer Metz which indicated that the Army and the Air Force differed in their interpretations of the Armed Services Procurement Regulations and the method of issuing Invitations for Bids.

 16. Written minutes of the Air Force bidders conference, including the question of Plaintiff and Intervenor, were distributed by the Air Force to all attendees a few days following the conference. Plaintiff received its copy on February 20, 1970; Intervenor, on February 24, 1970; and a copy of the minutes were attached to a report on the conference, dated February 19, 1970, submitted to Col. Rochefort. A copy was also sent to the Army prior to February 27, 1970, and the Army contracting officer and the Air Force contracting officer discussed Plaintiff's "interpretation and potential bid on the Army IFB, at length." (P. Ex. 13, p. 3).

 17. Armed Services Procurement Regulation 2-208(c), reiterated in Paragraph 3 of the Invitation, provides that "any information given to a prospective bidder concerning an invitation shall be furnished promptly to all other prospective bidders, as an amendment to the invitation * * * if such information is necessary to the bidders in submitting bids * * *." ASPR 2-211(b) provides that "Such personnel shall not furnish any information to a potential supplier which alone or together with other information may afford him an advantage over others." ASPR 3.504.2 provides that "All prospective offerors shall be furnished identical information in connection with the proposed procurement."

  18. On February 16, 1970, in a telephone conversation initiated by Intervenor, the Army in effect advised Bogue that the Army would interpret the Invitation as requiring identical prices for the Pre-Production and the Production Models of like Generator Sets and Bogue complained that this would constitute a hardship to it. "During this telephone conversation, Mr. Guttenberg also stated that this question has come up at an Air Force bidder's conference * * * on 10 February 1970." On February 18, 1970, in response to a telegram from Intervenor, the Army stated in a telegram to Bogue that "IT IS NECESSARY THAT PRICING FOR LIKE ITEMS/IDENTIFIED BY FSN/BE THE SAME." The Army had the telephone conversation only with Intervenor. Notwithstanding the ASPR mentioned in Finding of Fact No. 17, the Army did not communicate this information to Plaintiff or to Libby. Nor did the Army incorporate this information into a written amendment to the Invitation.

 19. The Court finds that on February 16, 1970, and at all times pertinent thereafter, the Army, the Department of Defense and Intervenor knew that Plaintiff was interpreting the Army Invitation as permitting different prices for Pre-Production Models and Production Models of like Generator sets. Nevertheless, at no time was Plaintiff advised or put on notice that the Army and Department of Defense interpreted the Army Invitation as requiring that identical prices be bid for the Pre-Production and Production Models of like Generator Sets.

 20. Plaintiff submitted a bid in response to the Army Invitation in which there were different prices for the Pre-Production and the Production Models of like Generator Sets.

 21. On February 27, 1970, the Army opened the bids which had been submitted in response to the Invitation by Plaintiff, Intervenor and Libby. Plaintiff was represented by Mr. James Blackaller, Jr. and Intervenor was represented by Mr. Guttenberg and two other persons. The bid submitted by Libby was read first; the bid submitted by Plaintiff was read second and the bid submitted by Intervenor was read last. During the reading of Plaintiff's bid, Mr. Guttenberg stated that Plaintiff's bid was non-responsive to the Army Invitation. After all bids had been read, Mr. Guttenberg advised the Army that he believed that Plaintiff's bid was non-responsive and inquired what the Army proposed to do. The Army advised that it would evaluate the situation. Thereafter, Mr. Guttenberg stated to Mr. Blackaller that Plaintiff "was the apparent low bidder but that it wasn't over yet." 22. Based upon the evaluation formula set forth in the Invitation, the evaluated bids submitted in response to the Invitation were as follows: Plaintiff $31,705,988.00 Intervenor 32,275,784.00 Libby 39,704,470.47

19700924

© 1992-2004 VersusLaw Inc.



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