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NEW YORK TEL. CO. v. SECRETARY OF THE ARMY

September 26, 1986

New York Telephone Company, Plaintiff,
v.
The Secretary of the Army, et al., Defendants



The opinion of the court was delivered by: GESELL

GERALD A. GESELL, United States District Judge.

 MEMORANDUM

 Plaintiff by its complaint attacks the legality of an Army procurement for telecommunications equipment and its subsequent maintenance required at Fort Drum, New York. The Army has decided to purchase the equipment and provide for maintenance of this and other equipment separately. However, plaintiff is required under its tariffs to lease and maintain its equipment. Thus it is excluded from participating in the Army's solicitation of bids for this part of a larger Fort Drum equipment procurement. Plaintiff claims federal procurement statutes and regulations designed to encourage competition require the Army to allow it to bid on a lease basis and to defer its decision between purchase and lease until receipt of all bids.

 The issues tendered are legal, not factual, and accordingly with consent of the parties, plaintiff's motion for preliminary injunction and the defendants' opposition, which were fully briefed and argued, are treated as final submissions on the merits pursuant to Fed. R. Civ. P. 65(a)(2). The Court has jurisdiction under the Scanwell doctrine.

 Facts

 In the past, Fort Drum has served as a relatively minor Army outpost. The Army has decided to increase dramatically the mission of Fort Drum by expanding it to serve as headquarters for the Tenth Light Infantry Division (also referred to as the Tenth Mountain Division), a specialized group of infantry troops. Accordingly, the Army is currently constructing over 100 facilities to house, train and support the new troops, who will be billeted there commencing in September 1987. The Army's construction plan calls for periodic solicitation of private bids for installation of a variety of electronic equipment, including data processing, visual information, telecommunications, printing and other hardware as the various elements of the expanded mission are developed and phased into place.

 The Army has also made plans for the operation and maintenance support required for the equipment involved in the project. Pursuant to the Commercial Activities (CA) program established by OMB Circular A-76, the Army is required to solicit bids for these services from the commercial sector to determine whether private sources are more efficient than government. To date, the Army has assessed CA operation and maintenance costs for each type of equipment considered in isolation. It has recently decided to explore the economies of scale and elimination of redundancy that might obtain from combining the CA operation and maintenance responsibility for all electronic and related equipment in a single management entity. To this end it has established the Information Mission Area ("IMA") program to study the advantages of issuing a single solicitation for such services. The IMA program is part of the Army's larger plan for a consolidated information system, articulated in its Information Management Program. *fn1" The Fort Drum project will accept the IMA program as developed and will serve as a model for future similar projects. Operation and maintenance responsibilities will be combined for developing the Fort's Information System Facility. *fn2"

 On March 22, 1986, the Army issued solicitation number DACA51-86-R-0015, inviting submission of bids for the installation of telecommunications equipment and a FM fire alarm system for Fort Drum. This solicitation announced an intent to purchase the telecommunications equipment involved. *fn3" Plaintiff, the Bell Operating Company providing local telephone service in New York, challenged this determination in a bid protest filed with the General Accounting Office (GAO) on April 3, 1986. Stating that it wished to provide the needed equipment but that under its tariff regulations it could do so only if the Army would accept a lease and allow it to maintain the equipment, it asserted that the Army's failure to consider a lease-maintenance arrangement violates certain procurement statutes and regulations designed to promote competition. The parties entered into negotiations during which plaintiff, on the Army's request, withdrew its GAO protest to facilitate informal settlement, but none eventuated.

 During the negotiations, the Army conducted a comprehensive review of the legal strictures governing the solicitation and of the requirements for the Fort Drum facilities. *fn4" It concluded that the proposed lease arrangement would directly conflict with the IMA program's objective of combining operation and maintenance responsibilities under single central management. It was also concerned that amendment would delay the high-priority September 1987 stationing date. *fn5" Accordingly, it decided not to amend the Fort Drum solicitation. *fn6"

 Standing

 The Army argues that plaintiff lacks standing. Plaintiff has standing to challenge the Army's allegedly anticompetitive solicitation plan if it establishes: 1) that it has suffered injury in fact; 2) that the injury is one arguably within the zone of interests protected by the applicable statutes and regulations; and 3) that the statutes in question do not reflect a clear and convincing intent to preclude review. See, e.g., Gull Airborne Instruments, Inc. v. Weinberger, 224 U.S. App. D.C. 272, 694 F.2d 838, 841 (D.C. Cir. 1982); Control Data Corp. v. Baldrige, 210 U.S. App. D.C. 170, 655 F.2d 283, 288-89 (D.C. Cir. 1981), cert. denied, 454 U.S. 881, 70 L. Ed. 2d 190, 102 S. Ct. 363 (1981); Scanwell Laboratories, Inc. v. Shaffer, 137 U.S. App. D.C. 371, 424 F.2d 859, 861-73 (D.C. Cir. 1970). Plaintiff has satisfied this test.

 Injury in fact is plainly present. Plaintiff is fully qualified to provide the needed equipment. *fn7" It is precluded from bidding on the solicitation: the Army wishes only to buy equipment, and applicable tariff regulations require plaintiff to lease and maintain any equipment it provides. *fn8" If the Army is forced to accept lease-maintenance bids for the solicitation, plaintiff will be allowed to bid and its injury will be fully redressed. See Control Data, supra, at 289; Rubber Millers, Inc. v. United States, 596 F. Supp. 210, 212 (D.D.C. 1984). The right to bid for a government contract is an important one, see, e.g., Choctaw Manufacturing Co. v. United States, 761 F.2d 609, 616 (11th Cir. 1985); General Electric Co. v. Seamans, 340 F. Supp. 636 (D.D.C. 1972) -- certainly more substantial than the "identifiable trifle" sufficient for standing. Public Citizen v. Lockheed Aircraft Corp., 184 U.S. App. D.C. 133, 565 F.2d 708, 714 (D.C. Cir. 1977). Plaintiff's alleged injury also falls within the protection of the statutes and regulations it suggests are applicable. The requirements they impose are designed to promote participation of available bidders in procurement. The Army concedes plaintiff meets the third condition in that the statutes involved suggest no intent to preclude judicial review. *fn9"

 Applicable Law

 Plaintiff submits three arguments for invalidating the Army's solicitation. First, it argues that the solicitation violates the Armed Services Procurement Act of 1949, as revised ("ASPA"), 10 U.S.C.A. §§ 2301 et seq. (1983 & Supp. 1986), and subordinate requirements of the Federal Acquisition Regulation ("FAR"), 48 C.F.R. Chapter 1 (1985). Second, it argues that the solicitation violates established Department of Defense ("DoD") Policy requiring the Army to consider to the maximum extent possible all offerors of telecommunications resources. Finally, it argues that the plan violates requirements for telecommunications procurement imposed by the Federal Information Resources Management Regulation ("FIRMR"), 41 C.F.R. Part 201 (1985). This Court, in reviewing the Army's decision, "is limited to determining whether the agency acted in accord with applicable statutes and regulations and had a ...


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