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SAN ANTONIO GEN. MAINTENANCE v. ABNOR

November 16, 1987

SAN ANTONIO GENERAL MAINTENANCE, INC., et al., Plaintiffs,
v.
JAMES ABNOR, et al., Defendants


Joyce Hens Green, United States District Judge.


The opinion of the court was delivered by: GREEN

JOYCE HENS GREEN, UNITED STATES DISTRICT JUDGE.

 I. Background

 Section 8(a) of the Small Business Act of 1958, 15 U.S.C. § 637(a), established a special program designed to benefit "socially and economically disadvantaged" small business concerns. *fn1" In order to "foster business ownership" and "promote the competitive viability" of these firms, 15 U.S.C. § 631(e)(2), the Act authorizes the SBA to enter into procurement and construction contracts with any federal agency. The SBA then subcontracts with qualifying small businesses, which actually provide the services directly to the federal agency. See 15 U.S.C. § 637(a)(1). Contracts designated for the 8(a) program are therefore effectively withdrawn from the customary competitive bidding procedures generally applicable to federal procurements.

 Participation in the 8(a) program is not eternal, however. Mindful that "these contracts be a means to fostering competitive viability . . . and not an end in themselves," S. Rep. No. 974, 96th Cong., 2d Sess. 3 (1980), Congress amended the Act in 1980 and directed the SBA to establish a fixed period of time within which each 8(a) participant could remain within the program. See 15 U.S.C. § 636(j)(10)(A)(i). After reaching the end of its fixed-term the disadvantaged concern is "graduated" from the 8(a) program and expected to compete for government contracts on an equal footing with other non-disadvantaged firms.

 Plaintiff SAGM, a Texas corporation, and its president, plaintiff Pedro Molina, Jr., were accepted into the 8(a) program in 1976 and 1972, respectively, and were graduated in June 1985. In 1984, however, SBA awarded SAGM a one-year 8(a) contract, with two one-year extensions, to provide custodial services at the Kelly Air Force Base in San Antonio, Texas. Having graduated from the 8(a) program and with its contract due to expire on September 30, 1987, *fn2" SAGM initiated discussions with SBA representatives in early 1987 in order to assure that SAGM would be permitted to bid on the Kelly contract when it was released into the competitive procurement process. In June 1987, however, the SBA and the Air Force decided that the Kelly contract would remain within the 8(a) program and be awarded to another disadvantaged small business, Rite-Way Services, Inc. *fn3"

 SAGM filed this action on July 9, 1987. *fn4" In its complaint, it contends that the SBA maintained a general policy and practice allowing a graduating 8(a) firm to competitively bid on the next contract awarded for the same services after the 8(a) participant's fixed term had expired. Plaintiffs claim that the SBA's actions (1) violated the Administrative Procedure Act, 5 U.S.C. §§ 701 et seq., because the agency arbitrarily departed from its established practices without prior notice or an adequate explanation; and (2) contravened several SBA regulations governing the 8(a) procurement program. *fn5" In addition, the complaint asserts that the Air Force did not comply with Section 1207 of the National Defense Authorization Act of 1987, Pub. L. No. 99-661, 100 Stat. 3816, 3973-74, and its implementing regulations, by failing to synopsize and set-aside the Kelly contract for exclusive small disadvantaged business participation. *fn6" As relief, SAGM seeks (1) a preliminary and permanent injunction restraining defendants from awarding the Kelly contract to an 8(a) subcontractor and from denying SAGM the opportunity to bid competitively on it; (2) a declaratory judgment declaring that defendants' actions violated applicable laws and regulations; and (3) costs and attorney's fees. *fn7"

 Defendants have countered with a motion to dismiss or, in the alternative, for summary judgment. They first assert that, under the rationale announced in Heckler v. Chaney, 470 U.S. 821, 105 S. Ct. 1649, 84 L. Ed. 2d 714 (1985), the decisions of the SBA and the Air Force are committed to agency discretion and therefore unreviewable under section 701(a)(2) of the Administrative Procedure Act. Defendants also argue that this Court is precluded from issuing injunctive relief against the SBA because of an anti-injunction statute, 15 U.S.C. § 634(b)(1). On the merits, defendants assert that the SBA's general practice is embodied in the agency's Standard Operating Procedure (SOP) 80-05, not the regulations cited by plaintiffs. They contend that under SOP 80-05 the SBA's general policy is to retain 8(a) contracts whenever possible within the program; that, in selected instances, the agency can release such contracts for competitive bids; and that the SBA properly considered the factors set forth in SOP 80-05 in deciding that the Kelly custodial contract should be awarded once again on an 8(a) basis. Finally, defendants assert that section 1207 provides the Air Force with broad discretion -- which the Secretary properly exercised -- to determine whether to utilize 8(a) participants or other small businesses in meeting its set-aside goal under the statute.

 II. Threshold Issues

 A. Committed to Agency Discretion

 Defendants' Chaney syllogism, while deceptively simple in its logic, is legally flawed in a number of important respects. First, the major premise is valid as far as it goes but ignores the reasons supporting the Court's conclusion of unreviewability. In holding that the Food and Drug Administration's decision to institute enforcement proceedings was presumptively unreviewable under section 701(a)(2), the Court stressed three factors: (1) administrative concerns with allocating scarce agency resources; (2) the similarity between the enforcement proceeding and the prosecutor's indictment decision; and (3) the fact that refusals to act do not involve coercive power by the agency over the individual. Id. at 1656. Defendants have completely failed to demonstrate -- and the Court cannot discern -- any resemblance between a decision not to commence enforcement proceedings and the defendants' decision not to remove the Kelly contract from the 8(a) program. In light of the narrow holding in Chaney,8 the Court cannot conclude, based on defendants' assertions, that the usually strong presumption in favor of judicial review does not apply in this case. See Abbott Laboratories v. Gardner, 387 U.S. 136, 140-41, 18 L. Ed. 2d 681, 87 S. Ct. 1507 (1967); see also American Horse Protection Ass'n v. Lyng, 258 App. D.C. 397, 812 F.2d 1, 4 (D.C. Cir. 1987) (refusing to apply Chaney to agency's decision not to institute a rulemaking proceeding); Farmworker Justice Fund, Inc. v. Brock, 258 App. D.C. 271, 811 F.2d 613 (D.C. Cir. 1987) (decision not to promulgate rule reviewable to determine whether agency head relied on permissible grounds in reaching decision), vacated as moot, 817 F.2d 890 (D.C. Cir. 1987).

 Defendants' minor premise is similarly unacceptable. In Robbins v. Reagan, 250 App. D.C. 375, 780 F.2d 37 (D.C. Cir. 1985), our court of appeals examined the sources of "law" from which a court could draw standards to review agency action. In the absence of clear statutory guidelines, a court can attempt to (1) "discern from the statutory scheme a congressional intention to pursue a general goal"; and (2) examine "the promulgation of regulations or announcement of policies" to detect departures from the agency's stated position. Id. at 45. *fn9" Each of these sources exist in abundant supply in this case. First, the SBA Act itself sets forth specific goals for the 8(a) program, see 15 U.S.C. § 631(e)(2), and section 1207 also contains guidance for the Air Force in administering the SDB program. See § 1207(a) and (e). Plaintiffs claim that these goals are being subverted by defendants' failure to allow it to bid competitively on the Kelly contract and defendants have offered no reason, nor can one be perceived, why these goals should not apply to a decision to enter into or discontinue 8(a) contracts. Moreover, the SBA, through SOP 80-05, and the Air Force, through its interim regulations and the Taft Memorandum, have stated their general policies with respect to the contracting decisions challenged by SAGM. By defendants' own admission, therefore, the Court has ample material from which to discern a departure from those policies. See Motor Vehicle Manufacturers Ass'n v. State Farm Mutual Auto. Ins. Co., 463 U.S. 29, 40-44, 77 L. Ed. 2d 443, 103 S. Ct. 2856 (1983). With their major and minor premises in disarray, defendants' ultimate conclusion -- that the actions complained of in the complaint are unreviewable -- must also fall.

 B. Availability of Injunctive Relief Against the SBA

 Section 5(b)(1) of the Act, 15 U.S.C. § 634(b)(1), provides that "no attachment, injunction, garnishment, or other similar process, mesne or final, shall be issued against the Administrator or his property." Citing Expedient Services, Inc. v. Weaver, 614 F.2d 56 (5th Cir. 1980), Mar v. Kleppe, 520 F.2d 867 (10th Cir. 1975), and other cases, defendants contend that the injunctive relief sought by SAGM may not be awarded against the SBA. Plaintiffs have cited other authority -- including a decision of the court of appeals in Valley Forge Flag Co. v. Kleppe, 165 App. D.C. 182, 506 F.2d 243 (D.C. Cir. 1974) -- that appears to allow injunctive relief when the agency acts in excess of its statutory authority. It is unnecessary, however, to decide the interesting question of whether, and to what extent, section 634(b)(1) bars injunctive relief in this case because no comparable bar to injunctive relief exists with respect to the Air Force. Should this Court find in favor of plaintiffs on the merits, an injunction preventing the Air Force from entering into an 8(a) contract with SBA for the Kelly custodial services would, of course, preclude SBA from maintaining this procurement within the ...


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