forth the procurement history of each deficiency. Id.
On June 27, 1983, the SSA informed the contracting officer by memorandum that, after reviewing the TERP and SSRB reports, the SSA concurred with their findings. A.R., Tab 33. The SSA's memorandum stated that NASSCO's Best and Final technical proposal met the minimum requirements of the COR and that Prudential-Maryland's Best and Final technical proposal did not meet the minimum requirements of the COR. Id. The SSA's memorandum also stated, however, that in order to ensure that the SSA considered all available information concerning any possible need to conduct further discussions with the offerors, the SSA authorized the contracting officer to open the price proposals of both offerors, after which the SSA would determine whether further discussions would be reasonably likely to make the currently unacceptable Prudential-Maryland proposal acceptable at a lower overall price to the Government. Id.
Both Prudential-Maryland's and NASSCO's price proposals were opened on June 27, 1983. Prudential-Maryland's price was $357 million. NASSCO's price was $344,797,816. A.R., Tab 34. On this basis, the SSA determined that there was no reason for further discussions or another round of Best and Final proposals and declared "NASSCO the winner of this competition." A.R., Tab 35.
The Award of the Phase II Contract
On June 27, 1983, the Acting Commander of NAVSEA sent a memorandum to the Assistant Secretary of the Navy for Shipbuilding and Logistics ("the Assistant Secretary") requesting final approval to proceed with the award of the Phase II contract to NASSCO. A.R., Tab 37. Also on June 27, NAVSEA prepared a Business Clearance Memorandum specifying NASSCO as the contractor. A.R., Tab 38.
The Chief of Naval Material sent a memorandum to the Assistant Secretary endorsing NAVSEA's request for approval to proceed with the award of the Phase II contract, and on June 29, 1983, the Principal Deputy, Assistant Secretary of the Navy approved the award of the Phase II contract to NASSCO. A.R., Tab 37.
NASSCO and the Navy signed the Phase II contract on June 29, 1983. A.R., Tab 39.
On June 28, 1983, the Navy and NASSCO entered into communications concerning the purchase price NASSCO had planned to pay Apex for the tankers that were to be converted into hospital ships. As a result of those communications, the Navy and NASSCO entered into Modification P00001, effective June 29, 1983, the same day the contract was awarded to NASSCO. Id. at Modification P00001. Under Modification P00001, NASSCO was obligated to exert its "best efforts to acquire the vessels from Apex for an acquisition cost of less than $30 million per vessel." Id. NASSCO further agreed that if the vessels were acquired for a cost of less than $30 million, the contract price would be reduced accordingly. Id. No actual reduction in the cost of the Apex vessels, however, was required. See id.
The communications regarding Modification P00001 and the execution of Modification P00001 occurred after evaluation of the proposals and the selection of NASSCO for award by the SSA and the signing of the Business Clearance Memorandum by officials of Navy Materials ("NAVMAT"). See, e.g., Defendants' Motion for Summary Judgment, Kevin J. O'Neill Affidavit at para. 8 ("O'Neill Affidavit").
Modification P00001 does not provide for substitution of vessels by NASSCO. A.R., Tab 39, at Modification P00001; O'Neill Affidavit at para. 11. Further, agreement to the terms of Modification P00001 by NASSCO was not a condition for award of the contract. O'Neill Affidavit at paras. 13, 14, 15.
The contracting officer, as stated in the Business Clearance Memorandum, determined certified cost and pricing data were not required because adequate price competition existed and the NASSCO price was fair and reasonable. A.R., Tab 38 at 8.
Even though the acquisition cost of the hospital ship was such that the Secretary of Defense could have designated the hospital ship acquisition a "major system" acquisition, he designated the hospital ship acquisition as Acquisition Category II ("ACAT II") as defined in OPNAV Instruction 500042A and, therefore, was not designated as a "major system." Defendants' Motion for Summary Judgment, Exhibit 1, Acquisition Plan 302-82 at para. 12 (March 1983).
Conclusions of Law
This matter comes to the Court on the parties' cross-motions for summary judgment. Under Rule 56(c) of the Federal Rules of Civil Procedure a court may grant summary judgment
if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
Fed. R. Civ. P. 56(c). In the present case, the Navy has filed an extensive administrative record which details its needs and the selection process for the T-AH(X) hospital ship acquisition. The administrative record was further supplemented by deposition testimony and discovery documents.
The standard of review in a disappointed-bidder case is quite limited. In order to prevail in this form of action, a losing bidder must demonstrate that agency's decision "on matters committed primarily to [its] own discretion had no rational basis or [that] the procurement procedure involved a clear and prejudicial violation of applicable statutes or regulations." Kentron Hawaii, Ltd. v. Warner, 156 U.S. App. D.C. 274, 480 F.2d 1166, 1169 (D.C. Cir. 1973) (footnotes omitted). So long as there is a reasonable basis for an agency's action in matters involving procurement, "the court should stay its hand even though it might, as an original proposition, have reached a different conclusion as to the proper administration and application of the procurement regulations." M. Steinthal & Co. v. Seamans, 147 U.S. App. D.C. 221, 455 F.2d 1289, 1301 (D.C. Cir. 1971). As stated in Seamans, in reviewing challenges to Government procurement, a court must
fully take into account the discretion that is typically accorded officials in the procurement agencies by statutes and regulations. Such discretion extends not only to the evaluation of bids submitted in response to a solicitation but also to determination by the agency with respect to the application of technical, and often esoteric, regulations to the complicated circumstances of individual procurements.