LOUIS F. OBERDORFER, UNITED STATES DISTRICT JUDGE
The February 1, 1986 contract vas to "remain in force for 29 months . . . and thereafter until terminated." MSC Contract No. N0003386C8503. On March 31, 1988, the contracting officer advised plaintiff that "[t]here appears to be potential competition for service in the Seattle/Adak trade." Letter from George Rieber to Samson Tug & Barge. He
consider[ed] it desirable to provide service to Adak under a contract for a definite period rather than contract for a [sic] indefinite basis. Accordingly, this letter is considered as notice of termination of service upon expiration of this contract period [June 30, 1988]. It is intended that MSC will issue an RFP for such service in the near future.
Id. Thereafter, in late June 1988, the contracting officer, faced with a virtual ultimatum from Alaska Tug to contract with it before either the Small Business Administration ("SBA") or the Government Accounting Office ("GAO") could rule on Alaska Tug's status as a small business, with the alternative of extending the contract with plaintiff, refused to extend the contract with plaintiff and committed to a new contract with Alaska Tug. For the reasons stated in the August 10, 1988 Memorandum, those decisions and actions will probably be determined to be null and void.
Defendant argues that the issue of relief is complicated by the March 31, 1988 termination of the Samson-MSC contract. It argues that the parties cannot now re-enter a terminated contract. The argument, however, is overly formalistic and cannot defeat plaintiff's motion for a preliminary injunction. Even at the preliminary injunction stage, it is highly probable that the government's termination of the contract will be held to be unlawful. The contracting officer should not have awarded the Adak contract to Alaska Tug until the SBA had made its size determination. At the time when this decision was made, the Samson contract was still in force and was, by its own terms, extendable beyond its June 30, 1988 expiration date. Thus, the "flip side" of the government's decision to award the Alaska Tug contract was a decision to refuse to extend the Samson contract, which is also highly likely to be held to be arbitrary and capricious. If the government had properly deferred the Alaska Tug contract until the SBA, and possibly the GAO, had ruled, the SBA's decision disqualifying Alaska Tug would, for ought that appears, have required extension of the Samson contract in order to avoid any disruption of the Adak shipments. Cf. Universal Shipping Co., Inc. v. United States, 652 F. Supp. 668, 670 (D.D.C. 1987).
Hence, in order to award relief that will maintain the status quo and place the parties in approximately the positions they occupied before the decisions that are likely to be found unlawful, the Samson contract should be extended -- at least until the contracting officer can establish a new, fair means of awarding the Adak contract in accordance with all applicable rules and regulations, including the Small Business Act -- as it would have been had the government not acted in a manner likely to be found to be unlawful. There is sound precedent for such relief. See id., 652 F. Supp. at 676.
Date: August 12, 1988
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