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AMDAHL CORP. v. BALDRIGE

August 22, 1985

AMDAHL CORPORATION, Plaintiff,
v.
MALCOLM BALDRIGE, et al., Defendants



The opinion of the court was delivered by: PARKER

 The plaintiff, Amdahl Corporation, as a disappointed bidder, seeks declaratory and injunctive relief and damages, arising from the denial of an award of a subcontract. The prime contract involved a government procurement transaction. The defendants are the United States Department of Commerce ("DOC"), certain federal officials, and non-federal defendants, Planning Research Corporation ("PRC") and ViON Corporation ("ViON"). The defendants have filed a motion for summary judgment *fn1" on the grounds that the plaintiff does not have standing to sue and that, therefore, this Court lacks subject matter jurisdiction. *fn2" On March 27, 1985, the Court heard arguments from the parties on the motion. At that hearing the plaintiff requested, and the Court granted, limited discovery on the standing issue. On the completion of such discovery, the parties submitted additional memoranda of points and authorities. The matter has been fully briefed and considered. For the reasons stated below, the Court determines that the plaintiff lacks standing and that summary judgment should be granted in favor of the defendants.

 FACTS

 In April 1984, the Department of Commerce awarded a contract to defendant PRC for development and installation of an automated data processing system in the United States Patent and Trademark Office ("PTO"). The overall purpose of the contract was to provide automated data processing equipment and equipment maintenance services to the patent applications process. The requirements of the contract necessitated that the prime contractor, PRC, subcontract in some areas in order to fulfill its contractual obligations. On August 14, 1984, PRC issued a solicitation ("RFP") to acquire computer software and hardware. The subcontract was awarded to defendant ViON in December, 1984. *fn3" Amdahl submitted a proposal for the subcontract which was not accepted.

 Amdahl then filed a complaint to enjoin performance of the subcontract alleging that certain mandatory specifications dealing with software compatibility set forth in the RFP could not be met by ViON. The plaintiff alleges that the subcontract was awarded in a manner inconsistent with federal procurement regulations. *fn4"

 The original solicitation for the prime contract contains provisions which require that Federal Procurements Regulations be adhered to when the prime contractor subcontracted for components. Plaintiff's Opposition to Motion for Summary Judgment at Exhibits 2, 3. In its management plan submitted with its proposal for award of the prime contract, PRC agreed to abide by such Regulations in awarding subcontracts and such a provision was also included in the PRC contract. Non-federal Defendants' Statement of Material Facts, Exhibit 2 at II-5-6. Further, clause 8 of the prime contract contains a "Subcontracts" provision which tracks 41 C.F.R. § 1-7.202-8, setting forth requirements for advance notice of subcontracts and for written consent from the government to enter into the subcontracts. *fn5" Federal Defendants' Motion for Summary Judgment at Exhibit 12.

 After Amdahl learned of the award of the subcontractor to ViON, it submitted a Freedom of Information Act ("FOIA") request to PRC regarding the subcontract. PRC rejected the request on the grounds that the FOIA was inapplicable to a private corporation. In January, 1985, Amdahl filed a bid protest with the General Accounting Office (GAO). The GAO responded to the bid protest by raising concerns addressed infra slip op. at 7 relating to the propriety of reviewing a subcontract protest. At the time this action was filed, GAO had not completed its review or issued an opinion on the jurisdictional issue.

 ANALYSIS

 There is well established precedent in this Circuit that disappointed bidders, under certain circumstances, have standing to challenge the award of government contracts. See, e.g., Scanwell Laboratories, Inc., v. Shaffer, 137 U.S. App. D.C. 371, 424 F.2d 859 (D.C. Cir. 1970). However, certain jurisprudential requirements for standing have developed in all areas of the law, including challenges to government contracts. In Ballerina Pen Co. v. Kunzig, 140 U.S. App. D.C. 98, 433 F.2d 1204 (D.C. Cir. 1970), a three-part test to establish standing was set forth.

 
First, the party must allege that the challenged action has caused him injury in fact, in order to satisfy the Articled III requirement that he possess 'the personal stake and interest that impart the concrete adverseness' necessary to the existence of a case or controversy. The plaintiff must further allege that the agency has acted arbitrarily, capriciously, or in excess of its statutory authority, so as to injure an interest that 'is arguably within the zone of interests to be protected or regulated by the statute or constitutional guarantee in question. ' Finally, there must be no 'clear and convincing' indication of a legislative intent to withhold judicial review.

 Id. at 1207 (citing Barlow v. Collins, 397 U.S. 159, 25 L. Ed. 2d 192, 90 S. Ct. 832 (1970); Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 25 L. Ed. 2d 184, 90 S. Ct. 827 (1970); Scanwell, 424 F.2d at 869). See also Control Data Corp. v. Baldrige, 210 U.S. App. D.C. 170, 655 F.2d 283, 288 (D.C. Cir. 1981); cert. denied, 454 U.S. 881, 70 L. Ed. 2d 190, 102 S. Ct. 363 (1981).

 The question raised with regard to Amdahl's standing to bring this action focuses principally on the zone of interest test. The injury in fact prerequisite can be satisfactorily demonstrated by plaintiffs' status as a disappointed bidder. With a judicial determination that the subcontract award resulted from an arbitrary or capricious decision, the unsuccessful bidder has demonstrated a judicially redressable grievance, Simon v. Eastern Kentucky Welfare Rights Organization, 426 U.S. 26, 48 L. Ed. 2d 450, 96 S. Ct. 1917 (1976), despite the fact that it cannot demonstrate that it would have been awarded the contract absent the illegality. Scanwell, 424 F.2d at 864; Aero Corp. v. Dept. of Navy, 540 F. Supp. 180, 201-02 (D.D.C. 1982). In addition, defendants have not contended that there has been any legislative intent to foreclose judicial review of the type of subcontract award which is disputed by these parties.

 The zone of interest test involves an examination of the statutes alleged to have been violated in the procurement process to determine whether the plaintiff's interest is that which is sought to be protected by those regulations. See, e.g., Merriam v. Kunzig, 476 F.2d 1233, 1241-42 (3d Cir. 1973), (cert. denied sub nom. Gateway Center Corp. v. Merriam, 414 U.S. 911, 38 L. Ed. 2d 149, 94 S. Ct. 233 (1973)). Plaintiff alleges violations of various federal procurement regulations *fn6" enacted by the authority of the Federal Property and Administrative Services Act of 1941. 40 U.S.C. § 471 et seq. However, prior to an examination of the purpose to be effected, and thus the interests protected, by those regulations, the plaintiff must first face a unique standing problem attendant to its status as a subcontractor. See Rubber Millers, Inc. v. United States, 596 F. Supp. 210, 213 (D.D.C. 1984); Ingersoll Rand Co. v. United States, No. 84-0382, Memorandum at 4-6 (D.D.C. May 25, 1984).

 Perhaps the most comprehensive discussion of the factors utilized to determine whether a subcontractor has standing is the Comptroller General's opinion in Optimum Systems, Inc., 54 Comp. Gen. 767 (No. B-183039) (March 19, 1975). In that decision, it was determined that the General Accounting Office will only consider subcontract award protests in certain limited situations: (i) when the contractor acted as a purchasing agent of the government; (ii) where the government has caused or controlled the rejection or selection of a potential subcontractor; (iii) where agency bad faith or fraud in the approval of a subcontractor is demonstrated; (iv) where a contract was made "for" the government; or (v) where the agency is entitled to an advance decision. Id. at 773-74. The Court accepts the federal defendants' position that no argument has been advanced by the plaintiff which would invoke the third ...


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