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LIBBY WELDING CO. v. UNITED STATES

December 19, 1977

LIBBY WELDING COMPANY, INC., Plaintiff,
v.
UNITED STATES OF AMERICA, Defendant, and JOHN R. HOLLINGSWORTH CO., Defendant-Intervenor



The opinion of the court was delivered by: GASCH

 In this action, plaintiff Libby Welding Company ("Libby") seeks injunctive relief setting aside the award of a multi-year contract for the production of diesel generators for the Army. On February 28, 1977, plaintiff's request for a temporary restraining order was denied, and on the next day the government awarded the contract to John R. Hollingsworth Company ("Hollingsworth"). The United States is defendant in this action, and Hollingsworth has intervened as a defendant. Pursuant to Rule 65(a)(2), Federal Rules of Civil Procedure, the Court consolidated the hearing of plaintiff's application for a preliminary injunction with the decision on the merits. Presently before the Court are the parties' cross-motions for summary judgment. For the reasons set forth below, the Court concludes that defendant's and intervenor-defendant's motions for summary judgment should be granted and that plaintiff's motion should be denied.

 FACTUAL BACKGROUND

 The material facts are not in dispute. On April 16, 1976, the Defense General Supply Center issued Invitation for Bids DSA 400-76-B-3610 ("IFB-3610"). The IFB was for the procurement of three varieties of generator sets. Alternative bids were requested; Bid A covered a single-year procurement and Bid B covered a three-year procurement. The original IFB included items 0001-0078, comprising 401 units for the single-year procurement. *fn1" Specific destinations were listed for most of these items. *fn2" The solicitation also designated the quantity of units to be furnished during the second and third years of the multi-year procurement, *fn3" but it did not include line itemizations specifying destinations for these units or providing other detailed information regarding them. The IFB did include, however, a provision for the evaluation of transportation costs for the multi-year procurement. *fn4" The parties strongly dispute the proper interpretation of this provision.

 On June 3, 1976, the IFB was amended to add line items 0079-0115. Items 0079-0082 were additions to the first-year procurement, while items 0083-0115 listed 1053 units for the entire three-year procurement. *fn5" Itemized destinations were not provided in the amendment for 1006 of the 1053 units constituting the multi-year procurement. *fn6"

 The amendment to the IFB also changed the basis for evaluating preservation, packaging, and packing ("PPP") costs. The original solicitation, incorporating section 2(c) of Standard Form 33A, provided that "the unit price for each unit offered . .. shall include packing unless otherwise specified." *fn7" As amended, however, Section G of the IFB stated that the unit price for PPP would be "in addition to the unit price specified for the generator set." *fn8" Moreover, all of the items included in the single-year procurement were specified for either Level A/A or Level Bì PPP. None of the items for the second and third years of the multi-year procurement were given PPP specifications. The June 3 amendment did include a clause, inserted between the amendments to Section E of the IFB and the amendments to Section G, which declared that "all clauses applicable to items 0001-0082 are also applicable to items 0083-0115." *fn9" The parties disagree about what effect this clause had on the evaluation of PPP costs for the latter two years of the multi-year contract.

 Finally, the IFB provided that first article approval and initial production testing would be prerequisites to acceptance of production units by the Government. *fn10" The Government reserved the option of waiving first article testing for "those offerors offering a product which has been previously furnished and has been accepted by the Government." *fn11" The solicitation permitted bidders seeking such a waiver to indicate any price reductions resulting from a waiver of the testing.

 On June 21, 1976, the bids were opened and Libby and Hollingsworth were the low bidders on a unit price basis. Following the evaluation of additional costs, including transportation and PPP costs, the contracting officer determined that Hollingsworth was the low bidder on the multi-year contract. *fn12" On June 29, 1976, Libby protested to the General Accounting Office ("GAO") the proposed award to Hollingsworth. Libby raised essentially the same contentions presented in this action, and the GAO denied Libby's protest on February 25, 1977. *fn13" Following award of the contract to Hollingsworth on February 28, 1977, Libby brought this action seeking injunctive relief setting aside the award.

 MERITS

 In this action, plaintiff Libby sues as a disappointed bidder, seeking to overturn a government contract award allegedly based on prejudicial illegalities in the procurement process. Plaintiff clearly has standing to bring such a suit. Scanwell Laboratories, Inc. v. Shaffer, 137 U.S. App. D.C. 371, 424 F.2d 859 (1970). To prevail in its effort to have the Court overturn the contract award, plaintiff has the burden of showing

 
either that (1) the procurement official's decisions on matters committed primarily to his own discretion had no rational basis, or (2) the procurement procedure involved a clear and prejudicial violation of applicable statutes or regulations.

 Kentron Hawaii, Ltd. v. Warner, 156 U.S. App. D.C. 274, 480 F.2d 1166, 1169 (1973). In its review, the Court should respect the wide discretion given by procurement regulations to contracting officers in their evaluation of bids and applications of regulations. M. Steinthal & Co. v. Seamans, 147 U.S. App. D.C. 221, 455 F.2d 1289, 1301 (1971). Moreover, in a case such as the one at bar, the Court should give considerable deference to the conclusions of the GAO regarding a particular procurement matter. Wheelabrator Corp. v. Chafee, 147 U.S. App. D.C. 238, 455 F.2d 1306, 1316-17 (1971). Of course, a decision by the GAO is not binding on the Court. M. Steinthal & Co. v. Seamans, supra, 455 F.2d at 1305.

 Plaintiff urges that the contracting officer's evaluation of transportation and PPP costs was illegal and prejudicially caused plaintiff to be displaced as the lowest responsible bidder. Plaintiff also claims that the inclusion of the first article waiver clause was prejudicially illegal; and that even if its inclusion was legal, the contracting officer's decision denying plaintiff first article waiver was without any rational basis. *fn14" Upon consideration of the applicable laws and regulations and the entire record herein, the Court ...


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