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CESSNA AIRCRAFT CO. v. BROWN

June 9, 1978

CESSNA AIRCRAFT COMPANY, Plaintiff,
v.
HAROLD BROWN, et al., Defendants, BEECH AIRCRAFT CORPORATION, Intervenor-Defendant



The opinion of the court was delivered by: OBERDORFER

 Cessna Aircraft Company (Cessna) has sued Harold Brown, Secretary of Defense, and Graham Claytor, Secretary of the Navy (official defendants) to have this Court declare illegal and enjoin their further performance of a December 29, 1977 contract between the Department of the Navy and Beech Aircraft Corporation (Beech). The disputed contract is for the purchase by the Navy of turboprop light utility transport airplanes (CTX aircraft) manufactured by Beech. Cessna complains because the Navy let the contract to Beech without formally advertising it or otherwise affording Cessna an opportunity to compete for the business. Beech has intervened as a defendant to protect its interest in the outstanding contract.

 The action, filed February 21, 1978, is now before the Court on cross-motions for summary judgment. The Court has carefully considered the pleadings and the excellent briefs and arguments by all counsel and has examined the supporting affidavits, documentary evidence, and legislative materials. The key issues framed by these submissions are (1) Cessna's standing, (2) whether Cessna's complaint is barred by laches, and (3) whether the official defendants' failure to advertise formally or otherwise permit competition for the contract violated the Armed Services Procurement Act, 10 U.S.C. ยง 2301 et seq., which requires such advertising or competition unless infeasible or impracticable. *fn1"

 For reasons more fully developed in Findings and Conclusions below the Court holds that: There are no genuine issues of fact material to a decision on Cessna's standing and the merits. Cessna has standing. The defendants have not met their burden of showing Cessna's action is barred by laches. On the merits, however, Cessna has failed to persuade the Court that the official defendants acted without a rational basis or committed any "clear and prejudicial violation of applicable statutes." See Kentron Hawaii, Ltd. v. Warner, 156 U.S. App. D.C. 274, 480 F.2d 1166, 1169 (1973). Accordingly, the Court will grant defendants' motions for summary judgment and deny plaintiff's similar motion.

 I. Findings of Fact

 The material undisputed facts are as follows:

 The Department of Defense proposed budget for 1978 included a request for funds for use by the Department of the Navy to purchase 22 turboprop light utility transport airplanes. In 1977 hearings on that request before the Armed Services Committees of the House of Representatives and of the Senate, Navy representatives described the CTX aircraft as one currently sold by five manufacturers, including Cessna and Beech. The Navy representatives advised those committees that they intended to purchase the CTX by a competitive purchase procedure.

 At the time of these hearings, the Departments of the Army and of the Air Force had purchased and were using as their turboprop light utility aircraft a product manufactured by Beech (Beech C-12). The Army and the Air Force had contracted for the purchase of the Beech product after an effort to permit competition by Cessna and others. See Cessna Aircraft Company-Beech Aircraft Corporation, 54 Comp. Gen. 97 (1974), 74-2 Comp. Gen. Proc. Dec. para. 91.

 At the 1977 hearings Congressional committee members asked Navy representatives why the Navy did not plan to buy the aircraft already in use by the Army and the Air Force. Navy representatives responded that the Navy required planes with slightly different performance features, that the advantages of purchasing planes already in use by the Army and the Air Force were not as significant as might appear because the planes were to be fully maintained by the supplier, and that the market had changed since the Army and the Air Force purchases so that open competition would serve the public interest.

  On April 7, 1977 the House Armed Services Committee recommended against funding the Navy's CTX program "until the Navy is further along in defining the requirement and more specifics on the type of aircraft to be purchased have been determined." *fn2" The House adopted the Committee recommendation and did not include funds for the Navy CTX in the version of the 1978 Authorization Act which it initially approved.

 On April 27, 1977 Senator John C. Stennis, Chairman of the Senate Armed Services Committee, wrote to Secretary Claytor about the funding of the CTX program. The Senator's letter stated that his Committee "has reconsidered the entire CTX program and has voted to recommend approval of $21.6 million, specifically for procurement of a commercial, off-the-shelf, turboprop aircraft which is common with the Army and Air Force." Senator Stennis' letter continued:

 
If the Committee recommendation is accepted by the Senate, the entire matter will be in conference since the House rejected all funding for the CTX program.
 
In order for continued support of the program, your position on the CTX program must be clear. I am, therefore, requesting your personal written assurance that the Navy supports and will follow the program recommended for authorization by this Committee.

 On June 7, 1977 Secretary Claytor responded to Senator Stennis:

 
As you know, the Navy has needed a replacement for the existing administrative support aircraft for several years. The need is becoming more acute as the current aircraft are inefficient and will soon reach the end of their planned service lives. . . .
 
Please be assured that the Navy plans to utilize the funds appropriated to procure the latest version of the commercial, off-the-shelf aircraft presently operated by the Army and Air Force.

 Thereafter the Senate Armed Services Committee recommended authorization for the appropriation of funds for the purchase by the Navy of CTX aircraft "which is common with the Army/Air Force light utility transport." *fn3" The report of the House-Senate Conference Committee, however, approved $21.6 million "for an off-the-shelf, turboprop, light utility transport aircraft" without mention of whether it should be in common with the plane purchased by the Army and Air Force. *fn4"

 When the Conference Report was submitted to the full Senate for approval, four Senators, including the two plaintiffs in the recent related action of Metzenbaum v. Brown, 448 F. Supp. 538 (D.D.C. 1978), engaged in a colloquy about the meaning of the Conference Committee Report with respect to the procurement of the CTX. Senator Metzenbaum, who was not a member of the Conference Committee, asked Senator Stennis, who was a member, if the Conference Committee had intended that the Navy CTX be procured by competitive bidding. Senator Stennis replied affirmatively that the CTX procurement was "wide open to be competitive" and was to be "an open bid for any manufacturer who can meet these requirements." Senators Tower and Goldwater, who were also on the Committee, concurred. *fn5"

 The Authorization Act was passed by Congress, signed by the President, and became effective on July 30, 1977. It provides:

 
Funds are hereby authorized to be appropriated during the fiscal year 1978 for the use of the Armed Forces of the United States for procurement of aircraft . . . and other ...

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