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BAIRD CORP. v. MARSH

November 10, 1983

BAIRD CORPORATION, Plaintiff,
v.
JOHN O. MARSH, JR., Secretary of the Army, Defendant



The opinion of the court was delivered by: GESELL

 GESELL, District Judge

 This is a disappointed bidder case challenging award of a contract for the production of 543 AN/VVS-2(V)1A "night driver's viewers" to Numax Electronics, Inc. (Numax), a competitor of plaintiff Baird Corporation (Baird). At a hearing on October 25, 1983, plaintiff's application for a temporary restraining order was denied. After a further hearing and submission of briefs, this dispute is now before the Court on plaintiff's motion for a preliminary injunction pending review of the award by the General Accounting Office (GAO) and on defendant's motion to dismiss or for summary judgment. For the reasons set forth below, plaintiff's motion for a preliminary injunction must be granted.

 In August, 1983, the Army solicited bids for the contract in dispute by issuing Request for Proposals (RPF) No. DAAB07-83-R-E309 which, as amended, restricted solicitation to "contractors who will be eligible for First Article waiver at the time of award." Only Baird and one other company, Varo, Inc., were clearly eligible for first article waiver. Numax was undergoing first article testing on night viewers produced under a contract it received in February, 1983, and this testing was scheduled to be completed in mid-October.

 On September 9, before making its bid, Baird sent a letter to Ms. Alice Allen, the contracting officer, requesting clarification of the RFP and specifically raising the issue of Numax's eligibility to bid on the contract. On November 15 Ms. Allen replied, repeating the language quoted above and stating that "qualification must have been obtained under some other contract for the AN/VVS-2(V)1A." Ms. Allen's letter to Baird made no specific reference to Numax and did not in any way alter the terms of the RFP.

 On September 19 Baird, Varo, and Numax submitted bids on the contract. The bids were opened the same day and Numax was the low bidder, with Baird the next lowest bidder. On September 26, the contracting officer determined that Numax was eligible for first article waiver, and hence eligible to receive the contract, based on its satisfactory progress under the February contract and near completion of first article testing. The new contract was awarded to Numax on September 29. The next day Baird filed a timely protest with the GAO, which is still pending. First article testing was successfully completed on Numax's February contract in mid-October, and first article testing approval on the device was granted to Numax on October 24 for the first time.

 Baird attacks the contract award to Numax on the ground that Numax was not eligible for first article waiver on September 29, the date of the award. Baird argues that the only means of becoming eligible for first article waiver is by obtaining first article testing approval under a previous contract for the same item, which Numax did not receive until October 24. The Army, while conceding that this may be the "usual standard," contends that eligibility for first article waiver is not so restricted and that the determination may be made by the contracting officer prior to completion of testing based on "all relevant information."

 The Court is not unmindful of the admonition that "in the field of Government procurement . . . [its] authority to vacate and enjoin action that is illegal must be exercised with restraint." M. Steinthal & Co. v. Seamans, 147 U.S. App. D.C. 221, 455 F.2d 1289, 1298-99 (D.C. Cir. 1971). The GAO, with its "special competence" in the field of procurement, is the more proper forum for determining the merits of plaintiff's claim in the first instance. Wheelabrator Corp. v. Chafee, 147 U.S. App. D.C. 238, 455 F.2d 1306, 1316 (D.C. Cir. 1971). Where intervening events threaten to deny a meaningful opportunity for GAO review, however, a grant of preliminary relief may be appropriate.

 
The preliminary injunction by a court pending GAO determinations may provide a felicitous blending of remedies and mutual reinforcement of forums . . . . The preliminary injunction may be used to preserve the status quo . . . while securing for the court the benefit of the GAO's expertise. Where a court has warrant for issuing an injunction pending GAO determination it may be able to obviate the objection sometimes leveled at GAO's procedure, that the time required sometimes renders the matter moot prior to GAO's determination.

 Wheelabrator Corp., 455 F.2d at 1316.

 The factors to be weighed by the Court in considering a motion for preliminary injunction are well established, and include (1) the plaintiff's likelihood of success on the merits; (2) whether irreparable injury has been shown; (3) whether issuance of the injunction will "substantially harm" other parties interested in the proceedings; and (4) where the public interest lies. Virginia Petroleum Jobbers Ass'n v. FPC, 104 U.S. App. D.C. 106, 259 F.2d 921, 925 (D.C. Cir. 1958).

 On the record before the Court plaintiff has shown a significant likelihood of prevailing on the ultimate issue of whether Numax was eligible for first article waiver at the time of the contract award. Unquestionably, as the Army contends, it enjoys great discretion in procurement matters and this discretion "extends not only to the evaluation of bids submitted in response to a solicitation but also to determination by the [Army] with respect to the application of technical, and often esoteric, regulations to the complicated circumstances of individual procurements." Seamans, 455 F.2d at 1301. Deference to the Army's interpretation of when a bidder may be considered eligible for first article waiver, however, is inappropriate where it is demonstrated that the Army's position is contrary to established practice, contrary to the position previously taken by the same contracting officer, unauthorized by any regulation and apparently also contrary to prior rulings of the GAO.

 Plaintiff presented testimony from Mr. John Kowalczyk, a retired Army contracting officer who for many years had responsibility for procurement of night vision devices. Mr. Kowalczyk testified that eligibility for first article waiver was contingent on successful completion of all first article testing or acceptance of production goods, and that he was unaware of any instance of waiver being granted absent this qualification. Plaintiff also presented an affidavit submitted by Ms. Allen in a prior proceeding, in which she states that a previous solicitation for night vision driver's viewers "was restricted to the two firms which had successfully produced this item in the past and could therefore be granted a waiver of the First Article Test procedure. . ." [emphasis added]. Defendant did not produce Ms. Allen or otherwise explain this prior inconsistent view; nor did it offer evidence of any instance where first article waiver was granted absent prior attainment of first article approval on the same item.

 TM Systems, Inc., 81-2 Comp. Proc. Dec. P 464 (Comp. Gen. 1981), upon which defendant relies for the proposition that waiver of first article testing is committed to the discretion of the contracting officer, in fact supports plaintiff's position. Although TM Systems recognizes broad discretion to grant or deny first article waiver to a bidder eligible ...


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