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May 5, 1990

UNITED STATES OF AMERICA Defense Mapping Agency, Defendant

John Garrett Penn, United States District Judge.

The opinion of the court was delivered by: PENN


 The plaintiff filed this action on April 20, 1990, in which it alleges that the Defense Mapping Agency (DMA) "wrongfully deprived plaintiff of a small business 'set aside'" Government contract to which it is entitled. The case came before the Court on April 23, 1990, for a hearing on plaintiff's Application for a Temporary Restraining Order. Subsequent to the hearing the Court denied the Application. See Memorandum Order filed on April 27, 1990. The case is now before the Court on the plaintiff's Motion for a Preliminary Injunction.


 Briefly, the facts alleged in the complaint are as follows: "On or about February 13, 1990, DMA issued Request for Proposals D.M.A. 600-90-R0032 (the RFP) to be submitted by March 13, 1990, to furnish 39 devices known as Power Conditioning Systems for use in computer rooms, together with related start-up services, operator/maintenance training and documentation, and 23 additional power conditioning systems at DMA's option. The RFP provided that the procurement was a 100 percent small business set aside, meaning that only entities with not more than 500 employees and otherwise qualifying as small businesses within the meaning of the Federal Acquisition Regulations and SBA Regulations were eligible to submit proposals and receive a contract award." Complaint, par. 4. Section 15.1001(b)(2), 48 C.F.R. § 15.1001(b)(2), of the Federal Acquisition Regulations (FARs) prohibits the award of a contract set aside for small businesses unless the contracting officer informs each unsuccessful offeror of the name and location of the apparent successful offeror. Complaint, par. 5. Plaintiff alleges that the regulations provide that if the contracting officer receives a protest concerning the small business qualifications of the apparent successful bidder, then the contracting officer may not award the contract until the Small Business Administration (SBA) has acted upon the protest or until expiration of ten days following SBA's receipt of the protest. These requirements are to enable unsuccessful offerors to challenge the small business qualification of the apparent successful bidder as a means of preventing contract awards to the bidder if the SBA determines that such bidder does not qualify as a small business. Id. Plaintiff also complains about a contemporaneous subcontract to furnish 13 power conditional systems to Eurostyle.

 Plaintiff asserts that on February 26, 1990, approximately two weeks prior to the deadline for submitting proposals, representatives of the plaintiff attended a preproposal conference relating to the RFP during which DMA confirmed orally and in writing that only entities qualifying as small businesses would be eligible for the contract award. Complaint, par. 6. Plaintiff and five other offerors submitted proposals in response to the RFP on March 13, 1990 and three days thereafter, on or about March 16, 1990, DMA awarded the contract to furnish the 39 power conditioning systems to EPE Technologies, Inc. (EPE). Complaint, par. 7. Plaintiff states that at no time prior to awarding the contract did DMA inform plaintiff that DMA intended to award the contract to EPE or make a determination that it was not required to inform plaintiff because of the urgency of the procurement requirement necessitated contract award without delay. The parties apparently agree, that at the time the RFP was issued, DMA did not anticipate awarding the contract to the successful offeror until on or about May 1, 1990. Id.

 On March 20, 1990, the plaintiff protested the qualification of EPE as a small business. By decision dated April 5, 1990, the SBA determined that as of March 8, 1990, the date on which EPE certified that it was a small business, that it was in fact "a large business and was not eligible to bid on this procurement." Complaint, par. 8 and Complaint, Exhibit B at 2. DMA represents that it was advised of SBA's decision on April 10, 1990.

 On or about April 13, 1990, DMA informed plaintiff that it would not terminate the contract awarded to EPE notwithstanding the fact that plaintiff had not been informed of DMA's intent to award the contract prior to doing so and notwithstanding the SBA's determination that EPE was ineligible to submit a proposal in response to the RFP. Complaint, par. 9. On April 17, 1990, plaintiff filed with the General Accounting Office (GAO) a protest of DMA's award of the contract to EPE, requesting GAO to determine that the award was unlawful and to recommend termination of the contract. GAO has established an expedited schedule for the determination of plaintiff's protest and has advised plaintiff it may expect a final determination prior to the end of May 1990.

 In its motion, the plaintiff requests a preliminary injunction "directing the United States, acting by and through the Director of the Defense Mapping Agency, [to] direct EPE Technologies, Inc. to forthwith, and until a decision is made by the General Accounting Office with respect to plaintiff's protest dated April 13, 1990, suspend all contract performance resulting from the Request for Proposals DMA-600-90-R0032 and the contemporaneous subcontract to furnish 13 power conditioning systems to Eurostyle."

 Defendant concedes that the Contracting Officer in this case failed to give preaward notice to the unsuccessful offerors, including the plaintiff, pursuant to FAR, 48 C.F.R. § 15.1001(b)(2), but argues that the notification requirement was properly waived in this case because the Contracting Officer made a determination of urgency prior to awarding the contract to EPE, and that this determination was later reduced to writing. The Contracting Officer states that the due date for proposals was March 13, 1990 and that the technical evaluations commenced on March 14. Late in the afternoon of March 15, 1990, "[she] was informed by senior management that it appeared all DoD funds for obligation under contracts would be frozen on or about Monday, 19 March 1990. [She] was requested by Senior DMA management to make every effort to award this power conditioner contract prior to the imposition of the freeze." Alcott Affidavit-C, *fn1" signed April 23, 1990, at par. 3. She states that the evaluation of the proposals was completed on either March 15 or 16, and that "[she] determined that two offerors (EPE Technologies, Inc. and United Power) were in the competitive range (of the five originally submitted)." Id. Based upon the "Greatest Value Scoring" (GVS), she "determined that there was no need for discussions and found EPE to be the successful offeror." Id.

 The Contracting Officer then considered whether the facts and circumstances justified waiving the notice to unsuccessful offerors. She considered "the urgency of the need, the GVS scores of the offers, the imminent spending freeze, and the fact that there was only one reasonably priced offer left in the competitive range." Id., par. 4. She checked to satisfy herself that EPE was, in fact, a small business. Id. On March 16, she determined that the "urgency of the procurement precluded providing the required notice." Id., par. 5. She awarded the contract to EPE on that day. Id. On March 19, a Monday, she prepared a signed written waiver and completed a signed memorandum detailing the rationale for waiving the preaward notice. Id. She executed a final version of the waiver memorandum on April 13, 1990. Id.

 The Contracting Officer received the SBA determination on or about April 10, 1990. Alcott Affidavit-B, par. 5. She then considered whether she should terminate the EPE contract and award the contract to the plaintiff. Id., par. 6. She states that she decided to allow the award to stand. First, she felt that the procurement was "extremely time sensitive and is in support of the DPS (Digital Production System). Id., par. 9. Second, she concluded that the plaintiff's price was unreasonable. Id., par. 10. She noted that the EPE evaluated price is $ 1,510,730, while the plaintiff's evaluated price is $ 2,061,248, a difference of over $ 550,000. Id. She observed that: "This is an extremely large price differential and one that I cannot justify, using the cost/price analysis tools available to me." Id. She noted that she cannot award on a small business set aside if the price exceeds the fair market price, and thus, taking into consideration the urgency of having the project completed and the time necessary to begin the process again, she concluded, a termination of the EPE contract would ...

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