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MARINE TRANSP. LINES, INC. v. LEHMAN

November 20, 1985

MARINE TRANSPORT LINES, INC., Plaintiff,
v.
JOHN F. LEHMAN, et al., Defendants, SEAFARERS INTERNATIONAL UNION OF NORTH AMERICA, ATLANTIC GULF LAKES AND INLAND WATERS DISTRICT, AFL-CIO, Intervenor-Defendant



The opinion of the court was delivered by: PARKER

 Barrington D. Parker, District Judge:

 This case presents a controversy between a disappointed bidder and the federal government arising during the course of procurement negotiations. Litigation of this nature is filed with some frequency in this District Court. As is true in many such cases, the legal issues presented are involved and serious.

 INTRODUCTION

 The plaintiff Marine Transport Lines, Inc. ("Marine Transport" or "MTL") brings this action against the Secretary of the Navy and the Commander of the Military Sealift Command ("Sealift Command" or "MSC") seeking to establish and to enforce its right to a procurement contract for the operation of twelve oceanographic vessels. The plaintiff charges that it negotiated and entered into a lawful and binding agreement with the Sealift Command but that now the government refuses to pursue the necessary steps to implement the agreement, refuses to execute required contract documents, and intends and has taken steps to reopen the entire procurement efforts. Marine Transport seeks preliminary and permanent injunctive relief, prohibiting the government from taking any action to avoid or set aside the contract award or to solicit new offers for the operation of the vessels; a declaratory judgment that they have a contract with the Sealift Command, and a writ of mandamus requiring the government to execute the contract. The plaintiff claims that the defendants have violated applicable procurement law and regulations, that their actions are arbitrary and capricious and violate provisions of the Administrative Procedure Act, 5 U.S.C. § 551 et seq.

 Marine Transport commenced this proceeding in the United States District Court for the District of New Jersey on October 4, 1985. Later, on application of the government, the proceeding was transferred to this District because of an earlier-filed case pending in this Court, involving similar and related factual and legal issues, Seafarers International Union of North America, etc., AFL-CIO ("SIU") v. Donnelly, et al., C.A. No. 85-2423 (filed July 29, 1985). See infra, p. 5. Following transfer, SIU was granted leave to intervene as party defendant in this proceeding.

 On November 8, 1985, the Court scheduled and considered argument on the plaintiff's motion for a preliminary injunction. A motion of the government for summary judgment was also at issue and argued. The parties agreed that there were no disputed material facts, that only legal issues remained for resolution, and that the stage was thus set and it was appropriate to render a final ruling on the merits.

 On November 12, 1985, the Court entered an order denying the plaintiff's application for a preliminary injunction and granting the government's motion for summary judgment. In accordance with that Order, this Memorandum Opinion explains the reasons for the Court's ruling.

 BACKGROUND

 The essential, material and undisputed facts are briefly stated. In March 1984, the Military Sealift Command, a division of the Department of the Navy, issued a Request for Proposal ("RFP") seeking bids from private commercial contractors for the operation and maintenance of twelve oceanographic vessels. The ships were owned by the Navy and were used to support oceanographic research projects conducted by the Naval Oceanographic Office. In prior years the vessels were manned and operated by civil service personnel -- mariners -- employed by the Navy.

 The RFP procedure was governed by a directive of the Office of Management and Budget ("OMB"), Circular A-76. The Circular required the Navy to prepare a cost estimate for operations of the ships by civil service mariners. Interested private contractors could also submit bid proposals. A cost comparison would then determine the most economical method for operation of the ships, either by in-house performance through the Navy or by contracting-out to private companies.

 In issuing the RFP, the Sealift Command made no determination and did not require that it be subject to the provisions of the Service Contract Act of 1965 ("SCA" or "Act"), 41 U.S.C. §§ 351 et seq. The solicitation did not require the winning bidder to pay wages and fringe benefits in accordance with the Act. Nor did the RFP include any of the provisions of the Federal Acquisition Regulations ("FAR"), 48 C.F.R. Chapter 1, provisions which are required in solicitations subject to the Service Contract Act.

 Initial offers in response to the RFP were received by the Sealift Command in January 1985. The plaintiff was one of several companies submitting an offer. After receiving offers in response to the bidding process and pursuant to 48 C.F.R. § 15.609, the contracting officer for the Sealift Command established a "competitive range," which included all offerors having a reasonable chance of winning the contract. Three of the initial offers, including the plaintiff's, were considered to be within the competitive range. Conferences were then held with the three offerors pursuant to 48 C.F.R. § 15.610, and their "best and final" offers were requested, pursuant to 48 C.F.R. § 15.611. Those offers were received on April 15, 1985. The offers of the private commercial contractors were then compared with the cost of continued operation of the oceanographic vessels by the government. Following the comparison, it was determined that the plaintiff had submitted the lowest-priced proposal, as compared both with those submitted by the other private competitors and with the government proposal.

 In accordance with Circular A-76, plaintiff's price proposal covering the contract term for each vessel was made available for public review. However, their proposed ship manning concept, the wages it planned to pay its employees and other details of their offer, were not revealed publicly. On May 9, 1985, MSC's Contracting Officer notified all original offerors that

 
As the cost comparison establishes that the cost of contract performance is less than the cost of Government performance it has been tentatively decided to award a contract to Marine Transport Lines, Inc. This tentative decision is subject to an administrative appeals procedure . . . based on requirements of OMB Circular A-76 and currently applicable commercial activities (CA) program guidance promulgated by the Chief of Naval Operations.

 (Emphasis added). The deadline for the filing of an appeal was June 3, 1985; fourteen appeals were filed. Copies of the appeals were made available to all directly affected parties. One appeal alleged that the Service ...


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