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TEXTRON, INC. v. ADAMS

May 30, 1980

TEXTRON, INC., BELL HELICOPTER TEXTRON DIVISION, Plaintiff,
v.
Honorable Brock ADAMS, Secretary of Transportation, Admiral John B. Hayes, Commandant of the Coast Guard and Aerospatiale Helicopter Corporation, Defendants.



The opinion of the court was delivered by: GREEN

MEMORANDUM OPINION

This matter is before the Court on defendants' motion to dismiss, or in the alternative, for summary judgment. *fn1" Plaintiff, the Bell Helicopter Division of Textron, Inc. (BHT), filed this action in 1979 to seek the Court's review of alleged illegalities that occurred in the award by defendants, the Secretary of Transportation, and the Commandant of the United States Coast Guard (Coast Guard) of a government contract to intervenor-defendant, Aerospatiale Helicopter Corporation (AHC). *fn2"

 The plaintiff originally urged the Court to order the Coast Guard and AHC to suspend performance on this contract, which provides for the procurement, inter alia, of 90 "short range recovery (SRR) helicopters," and which has a total value of approximately $ 215 million. In light of the dispositive motions filed, the Court must determine whether to set aside the contract award which would, in turn, require the Coast Guard to reevaluate the offers submitted by AHC and BHT.

 BHT challenges the procurement award on three grounds:

 
First, the Coast Guard failed to comply, as required, with the Buy American Act in determining to award the contract to Aerospatiale. Second, contrary to procurement requirements, the procured helicopter differs substantially from the Aerospatiale helicopter that was flight tested by the Coast Guard. Third, the contract is invalid either because the price escalation provisions contemplate the use of domestic components, whereas Aerospatiale plans to use substantial foreign components, or because the contract's use of domestic price indices to apply to major foreign components is improper. *fn3"

 Based on a review of the voluminous record that exists, the authorities to which the Court's attention has been directed, oral arguments of the parties and the substantial performance on the contract, the defendants' motion for summary judgment will be granted.

 I. Background

 A discussion of the foundation of this action is essential to a fuller understanding of the case. By Solicitation No. CG-80513-A, dated March 17, 1978, the Coast Guard issued its contract solicitation or request for proposals (RFP) (hereinafter "The Solicitation") for a multi-year, fixed price contract for the procurement of the following: 90 SRR helicopters, only the first year quantity of which was to be funded and was to be ordered immediately; a reliability assurance warranty; training of maintenance personnel; training of instructor pilots; and services of contractor employees knowledgeable in the operation of the aircraft. Taken together according to the Solicitation, these items comprise the SRR Helicopter System. *fn4"

 The Coast Guard received three offers for the development of the replacement SRR Helicopter System. The companies that submitted offers and proposed SRR "candidates" were plaintiff BHT, which offered its model 222C helicopter; intervenor-defendant AHC, which offered its model SA 366, and Sikorsky (SIK) which offered its model S-76. The Sikorsky offer was later withdrawn, leaving AHC and BHT as the sole competitors for the contract.

 In the spring of 1979, both AHC and BHT submitted their "Best and Final Offers." These offers were then reviewed by a Source Evaluation Board (SEB) *fn5" which considered the technical and cost data relating to each offer, including data obtained from a flight evaluation program involving helicopters from which the offerors' SRR candidates were to be "directly derived," and upon a "Buy American Act" determination by the contracting officer.

 According to the Affidavit of Howard B. Thorsen, Captain, USCG and Chief, Aeronautical Engineering Division, Department of Transportation and Chairman of the Source Evaluation Board, three criteria were applied in the evaluation of the proposal submitted. Of greatest importance was technical/program suitability, which contained four subparts: a) mission capability; b) design quality; c) logistics support; and d) test, demonstration and qualification program. Second in importance was cost, including contract price and relative life cycle, and the third criterion was management. The Solicitation stated:

 
The responsible source selected for award will be chosen on the basis of its proposal being . . . most advantageous to the Government, price and other factors considered. Factors other than price alone will be given paramount consideration during the evaluation and source selection procedure. Thus, submission of the lowest fixed price proposal will not itself assure award. In addition, a proposal meeting minimum requirements with the lowest price may not be chosen for award if a higher price proposal contains significantly greater technical merit to justify the additional expenditure.

 When these evaluation factors were applied to the AHC and BHT offers, the SEB reported to the SSAC that the AHC offer was "significantly superior" to BHT's candidate on the sub-criteria of "mission capability" and "substantially superior" to BHT's candidate on the sub-criteria of "design quality." These two sub-criteria were the first and second most important elements of technical/program suitability, which itself was the most important principal criteria for evaluation, and were the only two sub-criteria to be evaluated on a "meet or better" basis.

 Dissatisfied with certain of the explanations it received, BHT filed a protest of the contract award with the Comptroller General *fn6" on June 22, 1979 and instituted the instant action on July 6, 1979. Subsequently, on December 21, 1979, the General Accounting Office (GAO) denied BHT's protest.

 It should be noted that BHT was presumably pleased with the Coast Guard's conduct up until the contract award was made, as reflected by a letter from BHT's president, J. F. Atkins to the Commandant of the Coast Guard:

 
The Coast Guard has conducted this competition in a very professional manner with great emphasis on fair competitive procedures.

 Thorsen Aff. P 28 and Ex. 14. BHT's Proposal Manager also acknowledged the integrity of the Coast Guard's contracting process:

 
Bell wishes to compliment the Coast Guard on the professional manner in which it has handled all dealings with Bell from the initial visit to an air station seven years ago through the tour of all air stations in the summer of "77, and the proposal competition. Regardless of the outcome rest assured that we will respect your decision and continue to support your operation.

 Thorsen Aff. P 29 and Ex. 15.

 II. Defendants' Motion to Dismiss

 Both the Coast Guard and AHC move to dismiss pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6) for lack of subject matter jurisdiction and failure to state a claim for relief, claiming that BHT lacks standing to bring this suit.

 Despite arguments to the contrary, BHT, as a disappointed bidder, does have standing. A line of cases decided since Scanwell Laboratories, Inc. v. Shaffer, 137 U.S.App.D.C. 371, 424 F.2d 859 (1970) acknowledge that one may, in addition to seeking GAO review pursuant to 4 C.F.R. § 20.10, challenge the award of a government contract. However, the narrow scope of judicial review is limited to those standards expressed in M. Steinthal & Co. v. Seamans, 147 U.S.App.D.C. 221, 455 F.2d 1289 (1971) and Wheelabrator Corp. v. Chafee, 147 U.S.App.D.C. 238, 455 F.2d 1306 (1971), namely, that the procurement official's decision on matters committed to his/her discretion had no rational basis or that the procedure was prejudicial and violated the applicable statutes and regulations. See Kentron Hawaii, Ltd. v. Warner, 156 U.S.App.D.C. 274, 480 F.2d 1166 (1973); Blackhawk Heating and Plumbing Co. v. Driver, 140 U.S.App.D.C. 31, 433 F.2d 1137 (1970). As Judge Harold Leventhal so eloquently stated in M. Steinthal & Co., 147 U.S.App.D.C. at 230-31, 455 F.2d at 1298-99:

 
The above discussion illuminates our concern with the responsibility of courts to consider the totality of the administrative process in their review of agency action. Such an approach would serve to ensure the requisite judicial deference to well-reasoned judgments of agency officials acting within the confines of their statutory delegated authority and their own agency regulations. In the field of government procurement the courts must be sedulous to heed the admonition that their authority to vacate and enjoin action that is illegal must be exercised with restraint less the courts fall into the error of supposing that they may ...

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