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NATIONAL MARITIME UNION v. COMMANDER

March 27, 1986

NATIONAL MARITIME UNION OF AMERICA, AFL-CIO, et al., Plaintiffs,
v.
COMMANDER, MILITARY SEALIFT COMMAND, et al., Defendants



The opinion of the court was delivered by: PARKER

 Barrington D. Parker, Senior District Judge:

 This proceeding, the third in a series of three cases dealing with the same government contract solicitation, presents a challenge to the award of a contract to operate twelve oceanographic vessels owned by defendant Military Sealift Command ("Sealift Command" or "MSC"). Plaintiffs assert that the award of the contract violated applicable provisions of the Service Contract Act of 1965 ("SCA" or "Act"), 41 U.S.C. §§ 351 et seq. (1982). The SCA establishes basic labor standards governing the award and performance of government contracts for services in excess of $2,500 where the principal purpose of the contract is to furnish services to the government through use of service employees. Plaintiffs also contend that the procedures followed after the award was made violated federal and agency procurement regulations.

 Plaintiffs filed with their complaint a motion for preliminary injunction. Subsequently, all parties moved for summary judgment. For the reasons set forth below, the Court denies plaintiffs' motion for preliminary injunction as well as their motion for summary judgment. Defendants' motions for summary judgment are granted and the complaint is dismissed.

 INTRODUCTION

 Plaintiffs in this proceeding are three unions. Plaintiff National Maritime Union of North America, AFL-CIO ("NMU") represents unlicensed seamen on nine of the twelve ships. *fn1" Plaintiffs District No. 1 - Pacific Coast District, MEBA, AFL-CIO ("District 1") and District No. 3 - Radio Officers' Union, MEBA, AFL-CIO ("ROU") represent licensed seamen on all twelve vessels. In addition, all three unions currently represent seamen employed by Marine Transport Lines ("Marine Transport" or "MTL"), the disappointed bidder on the contract at issue here. *fn2" Also named as a defendant along with Sealift Command is Lavino Shipping Company ("Lavino"), the winning bidder on the contract. *fn3" The relationships among the parties, as well as the background of this litigation, will be further explained below.

 Plaintiff unions assert three separate interests in an effort to overturn or at least suspend the procurement at issue. First, claiming to represent the interests of future Lavino employees, plaintiffs seek recission of the award as illegal insofar as it does not comply with the SCA. They contend that, because the contract did not contain a wage determination prepared by the Department of Labor ("Labor" or "DOL") specifying the minimum level of wages to be paid, the contract award was invalid. Second, plaintiffs assert that performance of the contract must at least be suspended for a period of time during which civil service mariners ("CIVMARS") currently manning the ships and represented by plaintiffs could appeal the decision to contract-out the operation of the vessels to private employers. Finally, plaintiffs seek a declaration that temporary as well as permanent CIVMARS are entitled to a right of first refusal of employment with Lavino or any other winning bidder.

 BACKGROUND

 As mentioned previously, the matter presently before the Court is the third in a series of suits directed at the contract for operation of the twelve Sealift Command vessels. The decision to let the contract in the first instance was the result of compliance with Office of Management and Budget ("OMB") Circular A-76, which mandates that, when feasible, services that can be more cheaply performed by the private sector than in-house should be contracted-out to the lowest bidder. Implementing regulations provide that affected parties may appeal the results of the cost comparison procedure established by the Circular. Accordingly, on March 15, 1984, the Sealift Command issued a Request for Proposal ("RFP") seeking bids on the contract to be compared with the government's cost estimate. Initial offers were received on or about February 1, 1985, after which a "competitive range" was established that included Lavino, Marine Transport and one other bidder. Best and final offers were received on April 15, 1985, on the basis of which a tentative award was made to Marine Transport. Pursuant to the Navy's administrative appeal procedure, cost comparison appeals were filed by various parties interested in the procurement; all were denied on July 18, 1985. Because the original RFP did not require compliance with the provisions of the SCA, the Seafarers International Union ("SIU"), which represents unlicensed seamen on three of the twelve vessels, *fn4" filed suit *fn5" in this Court on July 29 to enjoin performance of the contract.

 Subsequent to the filing of SIU's complaint, Labor notified Sealift Command that the Act did in fact apply to the solicitation and that corrective action needed to be taken. On August 9, 1985, representatives of the Departments of Justice, Labor, and the Navy met, at which time the Justice Department announced that the official government position was that the SCA applied to solicitations such as the one at issue. Accordingly, on August 16, MSC amended the solicitation (Amendment 0018), rescinding the tentative award to Marine Transport and requesting that new best and final offers be received after the completion of an SCA wage determination by the Labor Department. *fn6"

 The wage determination that was to be incorporated into the RFP was requested from the Labor Department on August 28, 1985. At that time and again on September 30, the Sealift Command and the Department of the Navy advised Labor of the need to prepare a wage determination that reflected the current downward trend in wages being paid to seamen by the private sector. On October 4, after it was apparent that such a wage determination could not be prepared within 60 days of its request as required by the applicable regulations, *fn7" Military Sealift issued an additional amendment to the RFP (Amendment 0019). That amendment, together with subsequent amendments, set a date for the submission of revised best and final offers and provided that the successful bidder would be required to pay SCA wages, in accordance with the wage determination to be issued, retroactive to the date of the contract award.

 On the same day that Amendment 0019 was issued, Marine Transport filed suit in the District for New Jersey to enjoin resolicitation of the contract. On October 22, that proceeding, on the government's motion, was transferred to this District. *fn8" On November 20, *fn9" this Court granted defendants' motion for summary judgment and the proceeding was dismissed. Thereafter, the resolicitation proceeded apace, culminating in the award to Lavino on December 12, 1985.

 As of the date of the award to Lavino, no wage determination had been announced by DOL. In addition, Sealift Command announced that there would be no new cost comparison appeals period and that only permanent CIVMARS would be entitled to exercise their rights of first refusal. Claiming that these alleged deficiencies were fatal and illegal, the plaintiffs, on January 14, 1986, filed this suit to set aside the procurement.

 STANDARD OF REVIEW

 Before turning to the merits of plaintiffs' case, it would be well to note the standard to be observed by the Court in gauging the propriety of defendants' conduct and what burden plaintiffs must meet in order to prevail. Our Circuit Court has made it clear that in government contracts disputes, the disappointed bidder who challenges a procurement decision

 
bear[s] a heavy burden of showing either that (1) the procurement official's decisions on matters committed primarily to his own discretion had no rational basis, or (2) 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). A review of the contracting agency's conduct, on the other hand, should be undertaken bearing in mind two considerations that militate against overturning a government procurement. First, "the strong public interest in avoiding disruptions in procurement" must be outweighed by "an overriding public interest 'in having agencies follow the regulations which control government contracting '" before judicial intervention in the process is warranted. M. Steinthal & Co. v. Seamans, 147 U.S. App. D.C. 221, 455 F.2d 1289, 1300 (D.C. Cir. 1971) (quoting Scanwell Laboratories, Inc. v. Shaffer, 137 U.S. App. D.C. 371, 424 F.2d 859, 864 (D.C. Cir. 1970)). Second, the Court must be cognizant of its institutional limitations in a situation in which it "is at one and the same time confronted with a number of technical procurement statutes and regulations, contract provisions and specifications, and asked to determine expeditiously whether the procurement should proceed." Id. at 1301. Those considerations, which govern the scope of review in cases brought by disappointed ...


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