Cessna never sought an opinion from the General Accounting Office about the Navy-Beech purchase contract for CTX aircraft.
An affidavit by Harold J. Hart, Jr., filed here on behalf of the Navy, states inter alia that it is estimated that the cost to the Navy of operating the planes which the CTX aircraft are to replace is $12,000 per day more than the cost of operating the Beech C-12; that due to provisions in the Beech contract adjusting the price in accordance with changes in certain economic indicators, each day of delay increases the cost of the CTX program by $14,000; that delay in the replacement of the aircraft now in use increases the safety hazard to Navy personnel; and that were it necessary for the Navy to stop work on the Beech contract for more than 90 days, the Navy would be exposed to a breach of contract action or would have to terminate the contract at an estimated cost of $2,000,000.
An April 19, 1978 affidavit by E. C. Nikkel, Beech vice president for aerospace programs, states that Beech has invested 800 hours of engineering work, 500 hours of production planning, and 375 hours of production scheduling, and that Beech has issued binding purchase orders for the engines, propellers, electrical motors and landing gear assemblies for 22 planes, commenced preparation of a written logistic support plan, released shop orders for fabrication of in-house parts, and reserved factory production line positions for 22 aircraft.
The Navy requires that "all aircraft are to possess FAA Type and Airworthiness Certifications at the time proposals are submitted." As the result of an accident involving a Cessna plane, the airworthiness certificates for the planes which Cessna would sell the Navy if it were awarded a contract to supply CTX aircraft were suspended from November 18, 1977, until February 23, 1978.
For many years Cessna has been engaged in the business of manufacturing and selling aircraft. In 1974 Cessna unsuccessfully protested to the General Accounting Office (GAO) the Army/Air Force award to Beech of contracts to supply their equivalent of CTX aircraft. The GAO identified delay in Cessna's protest as one reason for its denial of Cessna's challenge. Cessna Aircraft Company-Beech Aircraft Corporation, 54 Comp. Gen. 97 (1974), 74-2 Comp. Gen. Proc. Dec. para. 91.
II. Conclusions of Law
This Court has jurisdiction under 28 U.S.C. § 1331 over an action by Cessna, an airplane manufacturer and would-be CTX supplier, to declare illegal and to enjoin performance of a contract between the Navy and Cessna's competitor entered without formal advertising allegedly in violation of the Armed Services Procurement Act, 10 U.S.C. § 2031 et seq. Scanwell Laboratories, Inc. v. Shaffer, 137 U.S. App. D.C. 371, 424 F.2d 859 (1970). Cessna has standing because of its interest in supplying these CTX planes to the Navy. That standing was not eliminated by the temporary impairment of Cessna's ability to bid for the 22 plane contract as a result of FAA suspension of the certificates of airworthiness of the planes for which Cessna hoped to sell.
Neither of the defendants has alleged or proved that threat of irreparable injury which would support a defense of laches. They have not alleged that a decision holding the contract illegal and enjoining its performance would prevent procurement of the CTX aircraft in the time necessary for Navy operational purposes. Beech has failed to show irreversible commitments of funds or other resources in reliance on the contract sufficient to offset the damage to the public interest which would result from condoning a contract let illegally without formal advertising or other competition required by the Armed Services Procurement Act.
The decision of the official defendants to purchase the Army/Air Force plane and that competitive bidding was impracticable was made formally in two stages. Secretary Claytor decided for the Navy to purchase and use the plane previously purchased and in use by the Army and the Air Force. When the Navy requested the Army to contract on the Navy's behalf for the planes, the Army made a Determination and Finding that formal advertising was "impractical."
According to the affidavit of Secretary Claytor, in the course of making his decision he concluded that Congress intended that the Navy purchase the plane in use by the Army and Air Force. He, thereafter, made the decision to procure the Army/Air Force plane entirely on the Navy's operational needs and the expressions of Congressional guidance. In addition to the evidence of Congressional intent, Secretary Claytor considered Navy operational needs, sound business judgment, the known performance of the Army/Air Force plane, and most importantly, the fact that the Navy purchase of the Army/Air Force plane would allow the Navy to share the contractor support already established for the Army and the Air Force. As explained, and undisputed, Navy use of the Army/Air Force plane would enable the Navy to use the contractor support and service in place at Army/Air Force bases worldwide. Purchase of any other plane would limit Navy access to that support.
Once the Navy decided to purchase the Army/Air Force plane, Beech was the only source of the services and supplies. The Army determination followed, therefore, that it was impractical to obtain competition by formal advertising for the supplies and service requested by the Navy.
This Court's review of the legislative history of the Authorization Act and the Appropriation Act for the Navy's 1978 budget leads to the conclusion, contrary to Secretary Claytor's, that Congress as a body did not decide that the Navy was required to purchase the plane previously purchased and used by the Army and the Air Force. Both the Authorization Act and the Appropriation Act are silent on the subject. The only document evidencing any decision by Congress as a body is the House-Senate Conference Report on the 1978 Authorization.
That document neither directs nor purports to direct Navy purchase of the Army/Air Force plane. Further, that report contains no mention of advertising, competition, or the Armed Services Procurement Act.
Defendants cite numerous other congressional statements by committees and individuals regarding the authorization and appropriation of funds for the Navy CTX. It is apparent that none of these statements, separately or in combination, had the legal effect of either directing the Navy to purchase the Army/Air Force plane or suspending the duty of the official defendants to advertise formally or otherwise permit competition if it were feasible or practicable to do so. The official defendants were therefore not entitled to base their decision to procure the plane used by the Army and Air Force without formal advertising or competition upon anything said or done in Congress. If the official decision to dispense with formal advertising and competition was valid, it was valid because the Navy had discretion to require the common plane.
The record shows that the official defendants relied for their decision to buy the Army/Air Force plane upon at least one legally sufficient consideration: the ability to have the Navy planes serviced at the existing worldwide Army and Air Force bases. This was a reasonable ground for the decision. The law requires no more. See Aul Instruments, Inc., 77-1 Comp. Gen. Proc. Dec. para. 461 (B-186854; June 29, 1977); The Lawyers Co-Operative Publishing Co., 77-1 Comp. Gen. Proc. Dec. para. 432 (B-188799; June 15, 1977). See also, as to the authority of decisions of the Comptroller General, Wheelabrator Corp. v. Chafee, 147 U.S. App. D.C. 238, 455 F.2d 1306, 1316 (1971). It is therefore unnecessary to consider or decide the hypothetical question of whether the official defendants would have reached the same conclusion if Congress had been completely silent on the subject or if they had not misread the decision of Congress.
No statute or regulation cited by either party or discovered by the Court requires, or even suggests, that a formal finding is a necessary predicate to a valid military selection decision of the kind at issue here. See Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 417-421, 28 L. Ed. 2d 136, 91 S. Ct. 814 (1971). Secretary Claytor's litigation affidavit recapitulated his statements contemporaneous to his decision. See Id. at 419. Those statements unambiguously recorded his decision and a sufficient reason for it. The Secretary's contemporaneous statements furnish an adequate basis for the limited judicial review authorized in a military procurement case like this. Assuming the Navy's selection of the Beech plane was permissible, the Determinations and Findings prepared by the Army comply with the formal requirements of 10 U.S.C. § 2310(b) that such a Determination and Finding "clearly and convincingly establish . . . that formal advertising would not have been feasible and practicable."
This was a military procurement. The official defendants' decision, as it related to the use of Army/Air Force support, had a significant military operational ingredient. This Court's review of procurement decisions generally should be quite restrained. See M. Steinthal v. Seamans, 455 F.2d at 1301-03. All the reasons for that restraint compound in a review of a military procurement decision of the nature and dimension of this one. As the Senate Armed Services Committee said when it reported on the provision in the Armed Services Procurement Act which permits officials to dispense with formal advertising determined to be impracticable:
In approving this section the committee is aware that there has been a long line of strict interpretations placed upon contracts or purchases made where agencies felt it was impracticable to secure competition. . . . However, this section is intended to place the maximum responsibility for decisions as to when it is impracticable to secure competition in the hands of the agency concerned. The experiences of the war and contracts negotiated since the war in the fields of stevedoring, ship repairs, chartering of vessels, where prices are set by law or regulations, or where there is a single source of supply, have shown clearly that the competitive-bid advertising method is not only frequently impracticable but does not always operate to the best interests of the Government. It is, therefore, intended that this section should be construed liberally and that the review of these contracts should be confined to the validity and legality of the action taken and should not extend to reversal of bona fide determinations of impracticability where any reasonable ground for such determination exists.13 (Emphasis added.)
The determination by the official defendants that the Navy should buy and use the Army/Air Force plane and that formal advertising was impracticable was not "a clear and prejudicial violation" of the Armed Services Procurement Act. See Kentron Hawaii, Ltd. v. Warner, 480 F.2d at 1169. Accordingly, the defendants' motions for summary judgment will be granted, the plaintiff's motion will be denied, and judgment will be separately entered for defendants.
ORDER AND JUDGMENT
Upon consideration of affidavits, documentary evidence, briefs, and arguments submitted by counsel for all parties, and for reasons stated in an accompanying Memorandum of Findings and Conclusions, it is this 8th day of June 1978, hereby
ORDERED, ADJUDGED, and DECREED: That plaintiff's Motion for Summary Judgment is DENIED, and it is
FURTHER ORDERED, ADJUDGED, and DECREED: That defendants' Motions for Judgment are GRANTED, and it is
FURTHER ORDERED: That JUDGMENT is hereby entered for the DEFENDANTS.