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PACIFIC FABRICATION v. UNITED STATES

July 5, 1989

PACIFIC FABRICATION, INC., Plaintiff,
v.
UNITED STATES OF AMERICA, et al., Defendants


John H. Pratt, United Sates District Judge.


The opinion of the court was delivered by: PRATT

JOHN H. PRATT, UNITED STATES DISTRICT JUDGE

 Plaintiff, a disappointed bidder, filed this action challenging the government's award of two contracts as arbitrary, capricious and an abuse of discretion, in violation of the Administrative Procedure Act. 5 U.S.C. ยง 706(2)(A), (D)(1982).

 Presently before the Court are several motions, including plaintiff's Motion for Summary Judgment and the federal defendants' *fn1" Motion to Affirm Contract Awards. For the reasons that follow, we deny plaintiff's motion and affirm the contract awards.

 Plaintiff, Pacific Fabrication, Inc., is a mobilization base contractor for the supply of canteen cups to the United States Government. The Defense Logistics Agency (DLA), an arm of the Department of Defense (DOD), is responsible for acquiring, storing and distributing supplies for the military services. DLA is assisted by the Defense Personnel Support Center (DPSC), which procures and manages military supplies, including canteen cups.

 In April 1985 DPSC issued a solicitation for the purchase of 596,700 canteen cups. This solicitation was divided equally into an unrestricted portion (bids for 298,350 cups open to both large and small businesses) and a restricted portion (bids for remaining 298,350 cups set aside for small businesses only). In May 1985, bids were opened on the unrestricted portion of the solicitation. *fn2" On October 8, 1985, a DPSC Contracting Officer awarded contract number DLA 100-86-C-4018 (First Contract) for the production of 298,350 canteen cups at a total price of $ 787,644 to S. Hanany Metal Craft (Hanany). The Contracting Officer found Hanany to be the lowest responsive and responsible bidder on the basis of Hanany's bid and amendment and a favorable pre-award survey. *fn3"

 Bids were opened under a second solicitation for $ 298,350 canteen cups in February 1986. *fn4" On July 10, 1986, another DPSC Contracting Officer awarded contract number DLA 100-86-C-4365 (Second Contract) for an additional 298,350 canteen cups to Hanany, finding it to be the lowest responsive and responsible bidder. The Contracting Officer's award was based upon Hanany's bid and amendment, letters and telegrams extending and clarifying its offer, and another favorable pre-award survey. Again, Pacific Fabrication was the next lowest responsive and responsible bidder.

 On March 10, 1986, this court granted a preliminary injunction with regard to the Second Contract, pending an investigation of the allegations made by plaintiff by the United States General Accounting Office (GAO). The GAO has now completed its investigation and issued its report. See Plaintiff's Exhibit A, "Army Procurement - Defense Logistics Agency's Administration of Contract for Canteen Cups" (GAO Report).

 Plaintiff has moved for summary judgment contending that there was no rational basis supporting the award of the Second Contract to Hanany. *fn5" Plaintiff points to several problems involving the government's administration of the First Contract and argues that the failure of the government to properly administer the First Contract precluded it from having any rational basis for awarding the Second Contract to Hanany. Plaintiff argues that Hanany was not a responsible offerer on the Second Contract solicitation because Hanany did not comply with all material requirements of the second solicitation.

 The federal defendants oppose plaintiff's motion and move this court to affirm the contract awards.

 II. Discussion

 The sole issue before this court is whether the award of the Second Contract to Hanany was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. Plaintiff bears the "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, Limited v. Warner, 156 U.S. App. D.C. 274, 480 F.2d 1166, 1169 (D.C. Cir. 1973).

 Pacific Fabrication contends that the government should have known that Hanany was not a responsible offeror on the Second Contract because the government knew that the place of performance cited on Hanany's bids inaccurately described the place where the work was actually to be performed. Although Hanany never sought or obtained formal approval of a change in the place of performance, it appears that the government was aware of the actual place of performance prior to awarding either of the contracts and that the pre-award survey findings were based upon knowledge of the actual place of performance. *fn6" Plaintiff relies heavily on the GAO Report, which plaintiff claims ...


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