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October 17, 1980

The Honorable Rowland G. FREEMAN, III et al., Defendants

The opinion of the court was delivered by: GREEN


Before the Court is the plaintiff's motion for a preliminary injunction that would require the federal defendants to suspend activity on a contract being performed currently with Boeing Computer Services, Inc. ("Boeing"), the intervenor-defendant. Plaintiff, CompuServe Data Systems, Inc., ("CompuServe"), is a Delaware corporation with its principal places of business in Columbus, Ohio, and Washington, D.C. Defendant Rowland G. Freeman, III, Administrator of the General Services Administration ("GSA"), is also a defendant in this action. Other named defendants are the Department of the Army and its Secretary, Clifford L. Alexander, Jr. The latter three defendants are interchangeably referred to as federal defendants or the government.

 On September 15, 1980, the plaintiff's motion for a temporary restraining order was denied *fn1" when the court found that CompuServe would not suffer irreparable harm and that the balance of the equities favored the intervenor-defendant, the federal defendants, and, ultimately, the taxpayers. Based on a further assessment of plaintiff's arguments and exhibits, the responses of the defendants, and oral argument, plaintiff has not demonstrated its entitlement to this preliminary injunction.

 Plaintiff alleges a number of broad-based irregularities in the procurement process surrounding Request for Proposals CDPA-78-5 ("the RFP"), issued on November 16, 1978. The government issued that RFP on behalf of the Department of the Army, which sought to change and upgrade its computer system used to match up Army recruits with positions they might be interested in and to aid the Army in planning for future personnel needs. The plaintiff contends that the GSA changed the specifications required in the RFP toward the end of the procurement process-after the submission of best and final offers and after the completion of the Government Witnessed Benchmark ("the GWB"), where the procuring officials examine in person the system described in an offeror's proposal. The alleged changes concern the requirement for a Resource Consumption Routine ("the RCR"), the technical term for that part of a computer system that permits the user to audit the charges made for computer time used; the RCR calculates and displays to the user the time taken for the program to run and any other items for which charges are made. CompuServe claims that it submitted a proposal that met the terms of the RFP, only to be advised after the GWB that its proposed RCR was deficient. The GSA treated the offerors unequally, plaintiff declares, both because it did not permit CompuServe to amend its proposal to meet the allegedly newly imposed requirements and by its improper negotiations with Boeing after the submission of best and final offers.

 The plaintiff vigorously argues that it will be irreparably harmed without injunctive relief since the General Accounting Office ("GAO"), in acting on the protest filed by CompuServe, *fn2" may decide not to terminate the Boeing contract even though it finds that the procurement was illegal. CompuServe's fear is that as the performance of the contract continues uninterruptedly, this will enhance the possibility, as has previously occurred in some other cases, of the GAO agreeing with plaintiff's position that the Boeing contract procurement was illegal, but finding termination of the contract to be an inappropriate remedy because it had been substantially performed.

 CompuServe also claims that its contract was 33% less expensive to the government than the Boeing agreement, so the public interest lies with the smaller expenditure of the taxpayers' money for equal services. As to the interest of third parties, CompuServe's view is that because performance of the contract is in its infancy, Boeing would not suffer substantial harm from the injunction, and in any event, the total loss CompuServe would suffer as a result of the allegedly illegal contract award would outweigh the injury to Boeing of an early termination.

 The federal defendants maintain that the procurement process was legal and in accord with applicable regulations. Prior to the GWB, the government contends, the CompuServe proposal seemed to satisfy the RFP and its best and final offer was therefore deemed satisfactory. It was during and after the GWB, especially in the oral briefing immediately following the Benchmark, that the technical evaluators recognized the deficiencies in CompuServe's RCR. Contributing to its late discovery of CompuServe's problems, the government claims, was its decision to delay the required sharing of proprietary information by the offerors until the last possible part of the procurement process, to protect the offerors. Thus, the government contends that only oral discussions after the GWB and subsequent correspondence revealed severe deficiencies in CompuServe's RCR and that the inadequacies were directly related to the government's ability to audit the computer charges. The government declares it attempted to clarify in writing with CompuServe the problems in the RCR but CompuServe allegedly admitted then that it could not provide the audit capability that the government requested. After further deliberations, the GSA disqualified CompuServe and awarded the contract to Boeing. The government also avers that its communications with Boeing after the best and final offers were submitted were perfectly proper and concerned minor clarifications.

 The federal defendants refute plaintiff's claim of irreparable harm absent injunctive relief, arguing that the performance of this contract is not nearly so substantial as to cause the GAO to refuse to recommend termination were there a finding of illegality. Concerning the public interest, the government contends that conversion to the new contract will realize taxpayers' savings of $ 6,000 to $ 15,000 per day, the exact amount depending on how close to the RFP's estimates the Boeing computer usage comes. The government also posits that delay in the conversion from the incumbent contract would disrupt the draft registration program and cause harm to the party implementing the conversion, Systems Automation Corporation ("SAC"). The balance of equities, in the government's view, points toward maintenance of the status quo pending the GAO's resolution of the CompuServe protest; in other words, the Boeing contract should be performed on schedule.

 The intervenor-defendant Boeing suggests a factual pattern similar to that described by the federal defendants. Boeing focuses on areas of the dispute relevant to its interest. First, Boeing addresses the harm that it would suffer if this Court granted the requested relief. Boeing has already committed personnel to the contract, has sold $ 1,500 worth of computer time to the Army, and partly in reliance on the Army contract, has ordered a $ 1.3 million computer unit scheduled for delivery in November, 1980. Were this Court to order that performance cease on the contract, Boeing ponders that it may have to cancel that order and, should the contract be later reinstated, face a six to nine months delay for a reorder, a delay that would jeopardize the government's interests as well.

 Second, Boeing insists that the communications it had with the GSA after the submission of best and final offers were wholly proper. These communications, Boeing alleges, can be divided into two categories. The first concerned an attempt by Boeing to increase and adjust its price which the GSA denied. The second group of correspondence involved minor clarifications in the actual contract price, adjustments which Boeing claims were in accord with applicable procurement regulations.

 The plaintiff must satisfy four requirements for a preliminary injunction. It must demonstrate that there is a substantial likelihood that it will succeed on the merits, that it would suffer irreparable harm without injunctive relief, that no substantial harm would accrue to the interests of third parties and lastly, that an injunction would serve the public interest. Virginia Petroleum Jobbers Association v. Federal Power Commission, 104 U.S.App.D.C. 106, 259 F.2d 921 (1958). It if appears that there is compelling proof on the showing of irreparable harm, then the Court may award the requested relief even though its view on the merits of the dispute differs from the plaintiff's. See Washington Metropolitan Area Transit Commission v. Holiday Tours, Inc., 182 U.S.App.D.C. 220, 223-24, 559 F.2d 841, 843-44 (1977).

 I. Likelihood of Success on the Merits.

 The dispute over the merits in this case centers on two broad issues, whether the CompuServe proposal met the requirements of the RFP and whether GSA treated CompuServe unequally. The first of these issues concerns precisely the question whether CompuServe's RCR met the specific requirement of the RFP that the government be able to audit each specific variable used to calculate the computer charge. The second question to be resolved is whether GSA acted improperly either in communicating with Boeing after the ...

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