LOUIS F. OBERDORFER, UNITED STATES DISTRICT JUDGE.
This matter is before the Court on plaintiff's motion for a preliminary injunction, which has been the subject of extensive briefs and oral argument.
Plaintiff, Samson Tug & Barge Company, Inc., is a corporation which, until July 1, 1988, engaged in the transportation of military cargoes between Seattle and Tacoma, Washington, and the U.S. Naval Station at Adak, Alaska, pursuant to a February 1, 1986 shipping contract with the Military Sealift Command ("MSC") of the U.S. Navy. MSC Contract No. N0003386C8503. That contract provided by its terms that it would remain in force until June 30, 1988, "and thereafter until terminated." Id. at 1. If the contract remained in force beyond June 30, 1988, the "TERMS AND CONDITIONS as of 30 June 1988 . . . apply." Id. On March 31, 1988, MSC notified Samson that the February 1, 1986 contract for service to Adak would be terminated in favor of a "contract for a definite period." Letter from George Rieber to Samson Tug & Barge dated March 31, 1988. The notice further stated that "in no way is this action intended to reflect dissatisfaction with your performance . . . on the contrary, your performance has been satisfactory." Id.
Meanwhile, on March 30, 1988, MSC issued a request for proposals for a new two-year contract for service to Adak, with bids set aside for small business (i.e. businesses that together with affiliates and joint ventures had fewer than 500 employees). Plaintiff, C.C.C. Georgia, Inc. ("C.C.C.") and Alaska Tug & Salvage, Inc. ("Alaska Tug") responded. On about May 13, 1988, MSC advised Samson that the Adak contract would be awarded to C.C.C. Samson protested, invoking a regulation that postponed any award of a contract set-aside for small businesses for 10 days to enable the Small Business Administration ("SBA") to make a size determination. 48 C.F.R. § 19.302(h)(1). Samson's protest of C.C.C.'s bid advised the contracting officer that Samson was in a position to carry on the Adak service until the size protest was resolved. However, on June 8, 1988, before the SBA acted or the protest was otherwise resolved, MSC advised Samson that C.C.C. had withdrawn its bid, and that MSC had decided to let the contract to Alaska Tug. In response, on that same day, Samson confirmed its willingness to continue on an interim basis. By letter dated June 14, 1988, Alaska Tug informed the contracting officer that it would not accept the Adak award until it received formal confirmation from MSC and SBA that its offer qualified on all scores, but that if its status was confirmed by June 24, it could begin receiving cargo on July 14, 1988.
There ensued a flurry of activity. On June 15, Samson made an oral protest that Alaska Tug was also ineligible for small business set-asides because it planned to perform the contract as a de facto joint venture with Sea-Land Service, Inc. and Crowley Transportation, Inc. On June 16, Samson confirmed its protest in writing and challenged other elements of the Alaska Tug bid. By letter dated June 16, Alaska Tug advised the contracting officer that it would have to know by June 22 whether the contract would be awarded. On June 17, Samson protested the award to the General Accounting Office ("GAO"). On that same day, after learning that SBA could not complete its size determination by June 22, MSC awarded the contract to Alaska Tug. On June 20, the SBA Regional Office notified MSC and Samson that it expected to complete its size determination by July 1, 1988. On June 23, Samson reiterated its willingness to extend its contract beyond June 30 and reminded MSC of its obligations under 31 U.S.C. § 3553(d). That section permits a contracting officer to allow performance of contract protested to GAO only if "the head of the procuring activity responsible for award of [the] contract" determines and reports to GAO:
(i) that performance of the contract is in the best interests of the United States; or
(ii) that urgent and compelling circumstances that significantly affect interests of the United States will not permit waiting for the decision of the Comptroller General concerning the protest.