bid package. The Final Report, issued on September 1, 1981, in purported fulfillment of defendant's commitment which was the justification for the Court's and GAO's forebearance, contained no reference to the on-site members' criticisms. It concluded, of course, that SLEP competition was not feasible.
Defendant argues that the dissenting team members ultimately signed the Final Report, and that the interim misgivings of a few members of the team prove nothing. C.R. 144. One of the record references that defendant cites to support this argument, however, indicates instead that the dissenters never gave their final approval to the Final Report, although they may have reviewed it. See C.R. 36, subsections 7, 8, 9. In Aero II, the Court invited defendant to address "the precise disposition of the [on-site team's] recommendations" in future filings. 540 F. Supp. at 211 n.51. Yet defendant still has not explained why the on-site team was given only a few days to prepare a competitive data package or how and why the dissent and criticisms were ultimately resolved the way they were. Cf. Board of Educ. v. Pico, 457 U.S. 853, 73 L. Ed. 2d 435, 102 S. Ct. 2799, 2812 (1982) ("disregard" of advice and rejection "without explanation" of review committee's recommendations may raise "suspicions regarding . . . motivations"). In fact, defendant has offered no evidence at all on the matter. Defendant's cavalier treatment of the on-site team and its failure to further address the issue is extraordinary in the context of this litigation. In light of this Court's March 1980 Order that defendant consider "in good faith" the possibility of limited SLEP competition, Captain Ferraro's sworn commitment enforced by the Court, and the delay occasioned by the Court's forebearance and reliance on that commitment, Admiral Seymour's unexplained treatment of his on-site team's documented disagreements and recommendations is evidence of bad faith too strong to be ignored, and demands assessment of attorney's fees. See West Coast Media, Inc., v. F.C.C., 695 F.2d 617, 620 (D.C.C.1982) ("discrepancy between . . . promise and . . . performance" relevant to good faith inquiry).
(2) "Shop-to-Ship" Parts. In its March 1980 Order, the Court directed defendant to "give Aero at least six months written notice of . . . the formation of practically irreversible plans to undertake further [non-competitive] SLEP procurement." Aero I, 493 F. Supp. at 570. Yet in May 1980, defendant belatedly informed plaintiff without any prior notice that, in order to meet Navy's SLEP induction schedule, certain SLEP parts were "currently being fabricated into a shop-to-ship configuration." C.R. 1, Ex. 3. These parts were to be used for SLEP of TACAMO C-130's that had not been included among the 20 C-130's whose noncompetitive SLEP procurement the Court had approved in Aero I. Yet Navy's letter to plaintiff stated that "whether these parts will be suitable for competition is presently unknown." Id. Defendant's entry into an irreversible yet potentially noncompetitive parts procurement, without advance notice, technically violated the March 1980 Order.
In addition, defendant failed to inform the Court of the parts procurement even after it had notified plaintiff; the Court did not learn of this "shop-to-ship" parts order or controversy until at least two weeks after defendant's decision was announced, when plaintiff sought relief from the Court. The Court still had under advisement plaintiff's claim and the GAO's advice that SLEP for the remaining aircraft might be competed. Following so closely on the heels of the decision in Aero I which explicitly found the Navy inattentive and mistaken regarding its statutory duty to compete, the failure of defendant to notify the Court of a potentially noncompetitive SLEP decision was also not good faith compliance with the Court's March 1980 Order.
(3) The August 1980 Order. To resolve the "shop-to-ship" parts controversy, the Court entered an Order on August 13, 1980, directing defendant to "expressly consider whether the configuration of parts . . . is a factor in determining if competition is possible," and report its conclusion to the Court. C.R. 12, at 4. Defendant did not report to the Court pursuant to this Order until December 16, 1980.
C.R. 28. This report announced defendant's conclusion that SLEP for the five remaining TACAMO aircraft could not be competed,
yet the report contained nothing in response to the Court's Order that defendant "expressly" consider the "shop-to-ship" parts configuration question.
At a hearing held December 19, 1980, defendant conceded that its evaluation of TACAMO SLEP competition had not addressed the parts configuration issue, C.R. 29 at 7-8, but maintained that, due to time constraints, that issue was not a "factor in determining if competition [was] possible" for the TACAMO aircraft specifically. See id. at 12. Defendant conceded, nevertheless, that this action could possibly handicap SLEP competition for other C-130 aircraft. See id. at 5. The August 13, 1980, Order and its context required the Navy to inform the Court whether or not experienced companies such as plaintiff's could use "shop-to-ship" parts in the event that SLEP competition required it. Defendant disregarded this directive and attempted to construe the Court's Order in a hypertechnical manner. Defendant did not request clarification of the August 1980 Order, however, and it is clear on its face. Defendant's failure to comply is again evidence of bad faith.
(4) The 1981 ECP. In August 1981, defendant ordered an ECP for competitive kits, which was ostensibly responsive to the Court's March 1980 Order and the GAO's June 5, 1981, opinion that SLEP competition might be possible if limited to experienced C-130 maintenance firms. See supra slip op. at p. 24. The ECP actually ordered by defendant in August 1981, however, assumed an industry-wide rather than a limited competition, a fact that was obscured by the confusion that defendant created with respect to its definition of "military specification" kits. See infra slip op. at pp. 56-57; Aero II, 540 F. Supp. at 189 n.16; C.R. 84 at 4-5. Both the Court and the GAO, at least since the March 1980 Order, have clearly and continually focused on the technical expertise relating to C-130 aircraft that experienced firms such as plaintiff possess and that the rest of the industry unfamiliar with the C-130 does not possess.
Competition among such expert firms using kits targeted at their level of experience was the express focus of the March 1980 Order. 493 F. Supp. at 565, 568, 570. The Navy's decision to order an industry-wide ECP after Aero I and the GAO's advice was not a simple mistake or misunderstanding. It represents a deliberate obfuscation and evasion of the terms of the Court's orders and GAO's advice that the Navy consider in good faith a limited competition and tailored kits.
(5) Contradictory Positions Concerning ECPs. Furthermore, once the industry-wide 1981 ECP decision was brought to the Court's attention, defendant argued that to alter its focus to an ECP for limited competition would require so much time and effort that SLEP competition would be precluded in any case. See C.R. 98, P 9; Aero II, 540 F. Supp. at 189 n.16; C.R. 98, P 9. Yet in May 1982, only eight months later, defendant indicated that a simple analysis of certain SLEP tasks was all that was required to evaluate the possibilities of limited competition. See C.R. 129. Thus, as the Court noted in Aero III, in September 1981 defendant either misinformed the Court as to what was required to evaluate the possibility of a limited competition, or it "needlessly retarded" the litigation. 549 F. Supp. at 43; see supra slip op. at pp. 29-30. Either conclusion evidences a lack of good faith efforts by defendant to pursue competitive options and bad faith towards plaintiff that resulted in the imposition upon plaintiff of the burden of extended litigation.
(6) The Response to the Preliminary Injunction. As noted above, the preliminary injunction directed defendant to "commence forthwith preparation of such an [ECP] and [AFC] as may be needed for C-130 SLEP . . . following competitive negotiation limited to [Lockheed] and experienced C-130 SDLM contractors." Aero II, 540 F. Supp. at 219. The Court noted in the Memorandum accompanying the preliminary injunction that this order would "direct defendant to begin engineering design for a kit-assisted competitive negotiation," id. at 185. At the conclusion of the Memorandum, the Court again noted that the accompanying Order "directs defendant to undertake engineering design," id. at 216, and stated that "defendant can best serve the public interest . . . by rapid development of engineering designs for kits to assist a limited competition." Id. at 214. These statements are not ambiguous. They directed defendant to do something, to begin "forthwith" whatever engineering process was required to conduct a limited competition.
Defendant did not follow this Order. It did not order or conduct any new engineering design; instead, three months later, after plaintiff reported the noncompliance to the Court, the Navy merely submitted a report positing that no new engineering was required to determine that limited SLEP competition was impossible. C.R. 129; see supra slip op. at pp. 27-28. This final action by defendant did not merely demonstrate bad faith; it "bordered on the contumacious." Red School House, Inc., v. Office of Economic Opportunity, 386 F. Supp. 1177, 1193 (D. Minn. 1974).
(7) Failure to Obtain Competitive Data. Although it set up the Monitoring Team at Lockheed pursuant to the March 1980 Order, defendant permitted Lockheed to perform SLEP on the first C-130's without collecting the type of records or reports that would have facilitated translation of SLEP data into kit form. Aero II, 540 F. Supp. at 189 n.17. When an initial procurement is "necessarily noncompetitive," however, DAR 3-101(d) requires defendant to take "steps to foster competitive conditions for subsequent procurements, particularly as to the availability of complete and accurate data " (emphasis supplied). The failure to compile such data is another of defendant's repeated acts of inattention, misconstruction, and noncompliance with regulations, the GAO's advice, and the Court's orders that reflect a failure to consider possibilities of limited competition in good faith.
(8) Reliance on Lockheed. Defendant's "stubborn refusal" to consider in good faith the costs and benefits of a competition limited to experienced C-130 SDLM firms, Aero III, 549 F. Supp. at 42, and defendant's excessive, and uncritical reliance on Lockheed, the prime C-130 SLEP competitor, for technical advice and expertise regarding SLEP are related factors indicating defendant's bad faith in the course of this litigation. Defendant's refusal to rationally calculate the costs and benefits of a limited SLEP competition has continually rested upon technical data and conclusions derived not by defendant but by Lockheed.
It is apparent, although not reassuring, that prior to Aero I the concept of a limited SLEP competition had never occurred to defendant, and its failure to consider it up to that point was the result of "inattention" to the statutory mandate to pursue competition whenever possible. See Aero I, 493 F. Supp. at 570. However in Aero I, the Court stressed that the possibility of a limited competition among experienced C-130 contractors should be examined. 493 F. Supp. at 568, 570. The GAO also made this concept the "lynchpin" of their recommendations. C.R. 84 at 5. Almost two years after the March 1980 Order, the Court informed defendant in Aero II that its efforts up to that point still did not constitute a rational consideration of limited competition, and specifically directed defendant to take steps "forthwith" to implement such a competition, until and unless a rational basis for refusing to do so could be demonstrated. 540 F. Supp. at 214, 219. The Court found that, despite the March 1980 Order, defendant had "never weighed the costs of . . . a limited competition against the savings that might be achieved through such a competitive procurement." Id. at 193, P 16.
Defendant's failure to consider a limited competition up to that point had largely been based upon advice from Lockheed, unevaluated by any independent source. For example, in late 1979, Lockheed's kit preparation time estimate changed from 46 to 60 or 64 months; defendant accepted that change with little apparent independent analysis, despite its alleged effect of foreclosing competition.
Lockheed was the first to suggest that experienced C-130 SDLM firms could not perform certain identical maintenance tasks in SLEP due to SLEP's "synergistic" character, C.R. A-12 at 8, and that the long lead times for SLEP parts effectively eliminated all potential competitors besides Lockheed. Id. at 12. Little or no evidence was offered to the Court to demonstrate that defendant ever independently tested the advice it received from Lockheed. Yet Lockheed was not a disinterested technical expert; it was a potential SLEP competitor, and its representatives made numerous filings with the GAO and observed the hearings in this case.
The final example of defendant's over-reliance on Lockheed appears in the Navy's May 1982 Report to the Court. C.R. 129. Defendant reported that it had decided not to commence engineering for competition for the remaining C-130 SLEP contracts, and it justified its decision not to compete almost entirely in reliance on Lockheed's advice. See supra slip op. at page 28; Aero III, 549 F. Supp. at 43. Plaintiff, conceded by defendant to be a qualified C-130 maintenance firm, has continually provided cogent criticisms of Lockheed's technical conclusions and judgments. Yet defendant has relied on Lockheed's contrary advice throughout this litigation, apparently without even attempting to locate or develop a disinterested third party for technical review. In light of Lockheed's obvious interested position, plaintiff's continual criticism of Lockheed's technical advice, and most importantly this Court's continued insistence that defendant, and not Lockheed, justify the Navy's noncompetitive decisions, defendant's continued and wholesale reliance on Lockheed for advice relevant to competition constitutes much more than simple inattention or naivete. It is another example of defendant's failure to pursue competition in good faith.
(9) The "Mil-Specs" Confusion. As has been suggested at various points, the meaning and significance of "military specifications" or "mil specs" has played an important role in this litigation.
Viewed as a whole and in context, the record permits no other finding than that defendant is responsible for any initial confusion regarding the meaning of "mil specs."
Subsequently, defendant has misstated the significance of the term, and has deliberately cultivated and depended upon the confusion to delay the litigation and consequently increase plaintiff's litigation costs. At bottom, defendant now relies on the confusion regarding "mil specs" to shield from view its failure to address the merits and to consider a limited SLEP competition using kits designed for experienced C-130 maintenance firms.
This obsfuscation carried on by defendant even into its most recent filings, see supra note 56, indicates bad faith that is unabated.
B. The Fee Award
A major factor in the Court's decision to make a bad faith attorney's fee award in this case is the fact that defendant has never requested clarification or reconsideration from this Court regarding its orders, nor appealed any of those orders to a higher court. Absent an appeal or requests for clarification or reconsideration, defendant is under a legal obligation to comply with the Court's orders, and the Court is entitled to demand such compliance. McComb v. Jacksonville Paper Co., 336 U.S. 187, 192, 93 L. Ed. 599, 69 S. Ct. 497 (1949). By choosing not to appeal or request clarification of previous orders, defendant acted at its peril, and cannot now claim that its actions were not "specifically enjoined" by the Court. United States v. Mine Workers, 330 U.S. 258, 303, 91 L. Ed. 884, 67 S. Ct. 677 (1947).
The presumed validity of unappealed orders and the requirement of compliance with them have a long tradition in the law. For example, the failure to appeal from a preliminary injunction generally bars a defendant from later contesting its validity or defending subsequent noncompliance by pleading disagreement with the original injunction.
Such a rationale may also underlie the Supreme Court's statement that "the absence of willfulness does not relieve from civil contempt" for noncompliance with court orders. McComb, supra, 336 U.S. at 191; accord NLRB v. Local 282, Int'l. Bro. of Teamsters, 428 F.2d 994, 1001 (2d Cir. 1970); 11 Wright & Miller, supra, § 2960 at 591-92. Similarly, in a case such as this where the passage of time effectively served to deny plaintiff relief, defendant cannot now assert misunderstanding of or disagreement with Orders from which it did not appeal as justification for imposing unnecessary litigation costs on plaintiff.
Of course, a party "should not be penalized for merely defending . . . a lawsuit," F.D. Rich Co., supra, 417 U.S. at 129, and "an award is not justified merely because the court found against a party on the facts." Lipsig, supra, 663 F.2d at 181 n.21 (citing Runyon v. McCrary, 427 U.S. 160, 183-84, 49 L. Ed. 2d 415, 96 S. Ct. 2586 (1976)). But this is not a case in which a party has merely "stubbornly contested the facts." Runyon v. McCrary, 427 U.S. 160, 183, 49 L. Ed. 2d 415, 96 S. Ct. 2586 (1976). Defendant has knowingly failed to follow legal requirements, reinforced by Court orders, that it consider competition in good faith. It has responded to Court orders in bad faith. Its failure to comply with the law, the GAO's advice, and the Court's orders in good faith, and the manner of its failure, fully justify an award of attorney's fees "unconnected with the merits of the case." Wright v. Jackson, 522 F.2d 955, 958 (4th Cir. 1975); accord Lipsig, supra, 663 F.2d at 182.
An award of fees is not foreclosed even if defendant's defense of its noncompetitive SLEP decision was originally non-frivolous and first posed as a result of an honest failure to appreciate its legal obligation to pursue competition of the SLEP procurement. See Lipsig, supra, 663 F.2d at 182. That failure should have been cured after the Court's decision in March 1980. The Court concludes that, viewing the defendant's actions as a whole during almost three years of litigation, the Navy, as opposed to government counsel that represented it before the Court, manifested the sort of bad faith that should be strongly sanctioned and deterred in future cases. See Copeland v. Martinez, 195 U.S. App. D.C. 399, 603 F.2d 981, 984 (D.C. Cir. 1979), cert. den., 444 U.S. 1044, 62 L. Ed. 2d 729, 100 S. Ct. 730 (1980) (purpose of bad faith award is "punitive" and to "deter abusive litigation in the future").
Our Court of Appeals has noted that bad faith fee awards "must be limited, however, to payment for work and expense attributable to bad-faith endeavors." Lipsig, supra, 663 F.2d at 181 n.21; accord Browning Debenture Holders' Committee v. DASA Corp., 560 F.2d 1078, 1089 (2d Cir. 1977). This is consonant with the punitive and the compensatory purpose of such an award. Lipsig, 663 F.2d at 181; see also Rowe, The Legal Theory of Attorney Fee Shifting: A Critical Overview, 1982 Duke L.J. 651, 660. The Court has concluded that defendant's bad faith did not reach sanctionable proportions until after the decision in Aero I was filed on March 4, 1980. Had defendant seriously begun at that time to evaluate in good faith the possibility of limited SLEP competition, using tailored kits, plaintiff likely would have had no cause or incentive for further litigation. But defendant's lack of good faith from that time forward has caused plaintiff unnecessary litigation expenses, not to mention the cost to the judicial system, the GAO, and the principle of competition.
Plaintiff should therefore submit a proposed Order together with appropriate affidavits and memoranda to support an award of reasonable attorney's fees and costs in this matter for the period from March 30, 1980, until the present. See National Assoc. of Concerned Veterans v. Secretary of Defense, 219 U.S. App. D.C. 94, 675 F.2d 1319 (D.C. Cir. 1982) (per curiam); Copeland v. Marshall, 205 U.S. App. D.C. 390, 641 F.2d 880 (D.C. Cir. 1980) (en banc).
Defendant will be permitted to comment on plaintiff's submission, see Lipsig, supra, 663 F.2d at 182 n.42; however, the Court will not permit the fee determination to develop beyond the "balanced, informed" proceeding contemplated by our Court of Appeals. National Assoc. of Concerned Veterans, supra, 675 F.2d at 1329.
An appropriate Order accompanies this Memorandum.
For the reasons stated in the accompanying Memorandum, it is this 15th day of February, 1983, hereby
ADJUDGED and DECLARED: that defendant has failed "in good faith to consider the feasibility of competitive procurement" for its Service Life Extension Program (SLEP) for certain C-130 aircraft in a rational or non-arbitrary manner, in violation of 10 U.S.C. § 2304(g), Defense Acquisition Regulation para. 3-101(d), recommendations of the General Accounting Office including opinions dated December 21, 1979, June 5, 1981, and September 9, 1981, and Orders of this Court including those entered on March 4, 1980, and February 18, 1982; and it is further
ORDERED: that defendant's Motion for Summary Judgment is DENIED; and it is further
ORDERED: that plaintiff's Motion for an Order to Show Cause Why Defendant Should Not be Held in Contempt is DENIED; and it is further
ORDERED: that plaintiff's Motion for Final Relief is GRANTED insofar as it seeks a notice injunction and award of attorney's fees against defendant; and it is further
ORDERED: that defendant shall publish a notice of any decision or recommendation made by its Acquisition Procurement Review Board or other decisionmaking authority to contract for procurement of SLEP service for any C-130 aircraft operated by defendant in the Commerce Business Daily, "Synopsis of U.S. Government Proposed Procurement Sales and Contract Awards" within 20 days of such decision or recommendation; and it is further
ADJUDGED and DECLARED: that, since at least March 4, 1980, defendant (but not the Department of Justice or the United States Attorney) conducted this litigation in furtherance of its violations of the statute, regulations, Court Orders and recommendations of the Acting Comptroller General, and (for this and other reasons detailed in the accompanying Memorandum) acted in bad faith, causing plaintiff to incur attorney's fees that it would not otherwise have incurred; and it is further
ADJUDGED and DECLARED: that plaintiff is entitled to an award of reasonable attorney's fees and costs from defendant for legal services rendered to it in connection with this litigation from March 5, 1980, through February 15, 1983; and it is further
ORDERED: that on or before February 28, 1983, plaintiff shall submit an appropriate application for judgment together with a proposed form of judgment (if it so desires) for the attorney's fees to which it claims to be entitled by this Order; and it is further
ORDERED: that on or before March 7, 1983, defendant shall file its comments, if any, on any attorney's fees application filed by plaintiff.