the question whether competition for some aircraft, even allowing all the time LGC would require for kit preparation and validation, could not have been pursued had defendant commenced work on competitive options when it first determined to procure SLEP for the C-130 fleet.
The Court is scarcely in a position itself to estimate, by any measure, potential savings through competition. But no expertise is required to see that if defendant in 1979 had carried out its duty under the procurement law to pursue all competitive possibilities, then even LGC's inevitably self-serving version of a "fiscally prudent" competition of SLEP could have been conducted under NAVAIR's present induction timetable. Defendant has never disclosed to the Court when it was first able to identify SLEP for the C-130 as a long-term procurement requirement; but even assuming the need was not apparent before 1979, when this litigation began, careful attention to the requirements of the procurement law would have permitted competition for at least a dozen aircraft according to kit production schedules LGC and NAVAIR have themselves developed. See Aero Corp. v. Department of the Navy, 540 F. Supp. 180 (D.D.C. 1982), slip op. at 55. If, as is likely, the Navy recognized its SLEP requirements much earlier, it might well have been able to complete the entire procurement consistently with the three criteria it has established, including national-defense considerations.
Time has now severely limited the possibilities for competition of the C-130 fleet designated for SLEP. Even accepting GAO's shorter time estimates for kit preparation and validation,
only a few aircraft could be inducted into SLEP following competition. Only if the Court directed competition without use of kits, or ordered defendant temporarily to suspend SLEP inductions while kits were prepared, could the possibilities for SLEP competition that existed in 1979 and earlier years be restored today. To do the former would overturn technical judgments of NAVAIR that are entitled to deference here; to direct the latter would interfere with national-defense determinations by responsible military authorities. The Court will do neither.
According to defendant's cost estimates derived from LGC sources, to conduct a kit-assisted competition today would cost approximately $64 million dollars.
Those figures may, however, have been based upon evaluation of the 1981 ECP and defendant's unjustifiable preference for full "mil-spec" kits; the precise derivation of the estimate is uncertain. At an earlier stage of this procurement, the Court would be obliged to require further explanation of defendant's calculations. But, even if defendant has overstated the costs of kit-assisted competition, it is apparent now that the fixed costs of preparing for competition of the remaining fleet could probably not be recovered from the savings gained from competition of the dwindling number of aircraft available for competitive procurement. Moreover, the additional time required for NAVAIR to perfect accurate cost-benefit estimates would reduce further the group of planes over which the fixed costs of kit preparation could be spread.
The Court's duty under these circumstances is clear. The Court has already found a substantial likelihood that it will conclude defendant has violated the procurement law and proceeded with an irrational procurement policy that has seriously injured the public interest in efficient and prudent government purchasing, and that has also substantially injured the business interests of Aero Corporation. But the public interest in 1982 will not be served by redirection of the SLEP procurement for the aircraft remaining in defendant's fleet of 49 covered by the present overhaul program. Under the rule of M. Steinthal & Co. v. Seamans, 147 U.S. App. D.C. 221, 233, 455 F.2d 1289, 1301 (1971), even an unlawful procurement cannot be enjoined when "overriding public interest considerations" dictate that it go forward. Plaintiff, and the public, have suffered from defendant's failure to identify and to disclose its need for SLEP procurement in time to permit competition; by defendant's efforts in 1979 and 1980 to avoid GAO and judicial review of its early and irrational sole-source procurement decisions;
by its failure to pursue competitive options even after the Court had directed it to do so; and by its extraordinary deference to the sole-source contractor (the entity least interested in competition) in performing defendant's own fiscal evaluative responsibilities. But none of that harm can be redressed now, in the context of this procurement for the designated 49 aircraft. Without accepting defendant's Report as any justification for any phase of this sole-source procurement, the Court concludes that no preliminary injunctive relief affecting the remaining sole-source contracts for the fleet of 49 aircraft should issue.
The determination that the Court should issue no further affirmative injunction affecting the course of the C-130 SLEP procurement for the designated fleet of 49 aircraft, does not, however, terminate the Court's responsibility. Plaintiff has filed motions for an Order holding defendant in contempt of prior Orders of the Court, and seeks attorneys' fees to compensate it for defendant's alleged misconduct in the course of this litigation. Moreover, plaintiff may be entitled to a declaratory judgment that the decisions of defendant precluding it from competition for these SLEP contracts were unlawful. Cf. Simpson Electric Co. v. Seamans, 317 F. Supp. 684, 688 (D.D.C. 1970). Defendant has never filed responsive papers stating a defense to the claim for attorneys' fees, and the Court has before it neither a motion for summary judgment nor pretrial briefs that would permit final adjudication of plaintiff's claims.
Pending final disposition of the case, the fact that the Court cannot now alter the course of an apparently unlawful procurement does not relieve it of the obligation to determine whether plaintiff is entitled to some other form of interlocutory affirmative relief. A proximate cause of plaintiff's injury in this case was defendant's failure to notify all interested parties in a timely manner of its intention to award SLEP contracts in 1979 on a sole-source basis. That failure circumscribed the ability of the Court and GAO to provide timely relief from an apparently unlawful course of conduct that, once begun, could not be halted or even delayed without even greater injury to the public interest. Plaintiff's injury could have been reduced had it been able to invoke judicial and administrative remedies more promptly and without interference from defendant; instead, defendant's tactics in the early stages of this SLEP procurement evaded GAO and judicial review. See Aero Corp. v. Department of the Navy, 493 F. Supp. 558, 568-69 (D.D.C. 1980).
If defendant did not willfully intend to exclude plaintiff from pursuit of the administrative or judicial remedies contemplated by statute, the Court must conclude that defendant simply did not understand its obligations under the procurement law and the Scanwell10 doctrine of judicial review. This conclusion is confirmed, of course, by defendant's continuing misconstruction of its even more basic obligation to compete its contracts whenever competition is feasible. In the May 13, 1982 Report, for example, defendant claims that there is no "mandate" for competition. "The preference for competition," defendant states in its Report, "is a statutory preference rather than a mandate; that preference does not or should not override national defense commitments." Defendant's Report to the Court (filed May 13, 1982) at 18. No court, before or after Scanwell, has ever suggested that 10 U.S.C. § 2304(g) requires competition if competition would adversely affect the public interest in general, or national defense commitments in particular. Defendant in this case has never been prepared to argue, nor could it, that "national defense commitments" required it in 1979 and earlier to procure SLEP for all 49 aircraft on a sole-source basis, or to take steps limiting, if not foreclosing, the opportunity of GAO and the courts effectively to review its decisions to procure SLEP on a sole-source basis. At bottom, defendant's statement in the Report therefore can mean only one thing: if defendant is correct, then the relevant procurement statute and regulations are not law at all, but are merely precatory advice from Congress and the Secretary of Defense to the procurement officer.
As demonstrated in the February 18 memorandum and in the GAO opinions, neither the statutes nor the regulations are as precatory as defendant has assumed. The Court has already discussed fully the statutory framework that has controlled negotiated procurements since 1962. See Aero Corp. v. Department of the Navy, 540 F. Supp. 180 (D.D.C. 1982), slip op. at 42-47. The statutes and regulations give more than a "preference" to competition. As Congressman Hebert observed at the time the Armed Services Procurement Act was amended in 1962 to add section 2304(g), Congress intended "to assure that the competitive mechanism will not be used in part but in the fullest and that the American public and the taxpayer himself will ultimately benefit by this method of operation." 108 Cong. Rec. 1970 (June 7, 1962). See also Aero Corp. v. Department of the Navy, 540 F. Supp. 180, 204 (D.D.C. 1982). Regulations applicable to this procurement promulgated since 1962 placed defendant under additional obligations to evaluate the legitimacy and need for every sole-source procurement and, if possible, to shift a procurement from sole-source to competition. See DAR para. 3-101(d); Aero Corp. v. Department of the Navy, 540 F. Supp. 180 (D.D.C. 1982), slip op. at 53-57. These Congressional and regulatory determinations that military procurements should be competed embody more than a "preference" for competition.
Decisions like those made by defendant in this case regarding the "feasibility" and "fiscal prudence" of competition are reviewable under the standards created by the statute and regulations. Aero Corp. v. Department of the Navy, 540 F. Supp. 180 (D.D.C. 1982), slip op. at 36-37. The obligation of defendant to permit the review contemplated by Congress, in this Court and before GAO, thus follows from the duties to pursue competition created by the statute and regulations. Nevertheless, defendant's whole course of dealing with plaintiff in this case suggests that it deems its duty to facilitate GAO and judicial review to be no stronger than the statutory "preference" it perceives in the substantive procurement law. See, e.g., Aero Corp. v. Department of the Navy, supra, 493 F. Supp. at 562-66. Indeed, defendant's serious misconstruction of its duty to pursue competition is the only plausible explanation for its early delay of GAO and judicial review, and the inadequacies of its subsequent efforts to reach the critical judgments it has been required to make regarding competition.
Already defendant's neglect of its obligations to permit GAO and judicial review has injured plaintiff. As the former SDLM contractor for the C-130 aircraft scheduled for SLEP, Aero has lost not only the opportunity to compete for SLEP, but also the possibility of performing SDLM for these aircraft at any time in the near future, inasmuch as SLEP of an aircraft removes any short-term need for SDLM. See Aero Corp. v. Department of the Navy, supra, 493 F. Supp. at 562. If, pending final adjudication of defendant's duty to restrict its sole-source maintenance procurements, defendant continues to neglect its concomitant obligation to permit review of other maintenance contracting decisions, plaintiff, positioned as it is in the aircraft maintenance industry, will probably suffer further harm to its business interests.
Pending disposition of whatever claim plaintiff now has to a declaratory judgment and other relief, the Court will accordingly direct defendant to show cause on or before July 26, 1982 why this Court should not require defendant to notify plaintiff (and, if defendant chooses, the public) of any intention it forms to procure substantial SLEP or SDLM service for any other aircraft or group of aircraft operated by NAVAIR. The Order would require defendant to give its notice of an intention to procure substantial SLEP or SDLM service as early in the planning process as is possible; the intention to procure SLEP for the first group of C-130 aircraft might, for example, have been announced earlier than it was. See Aero Corp. v. Department of the Navy, supra, 493 F. Supp. at 562. This device would reduce the threat that defendant, through its serious misunderstanding of its duties to pursue competition for contracts of this nature, will further preclude plaintiff from seeking relief and correction of unlawful procurement decisions, either before GAO or in the courts.
Upon consideration of plaintiff's Motion for Order Requiring Compliance with Prior Order, defendant's Opposition thereto, the defendant's Report of May 13, 1982 and the entire record, it is this 8th day of July 1982 hereby
ORDERED, ADJUDGED, and DECREED: that plaintiff's Motion for Order Requiring Compliance with Prior Order is denied without prejudice to any claim plaintiff may have for sanctions on account of defendant's alleged violation of this Court's Order of February 18, 1982, or for attorneys' fees; and it is further
ORDERED, ADJUDGED and DECREED: that defendant shall, on or before July 26, show cause why this Court should not enter an interlocutory order requiring defendant to give plaintiff advance notice of any intention it forms to contract to procure any substantial SLEP or SDLM service for aircraft or group of aircraft operated by NAVAIR; and it is further
ORDERED: that a status call will be held on July 26, 1982, at 9:30 a.m., to schedule further motions, pretrial proceedings, or, if necessary, a trial on the merits of plaintiff's claims for declaratory relief, a contempt judgment, sanctions and attorneys' fees.