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DIVERCO, INC. v. CHENEY

August 10, 1990

DIVERCO, INC., Plaintiff,
v.
RICHARD B. CHENEY, Secretary of Defense, Defendant


John Garrett Penn, United States District Judge.


The opinion of the court was delivered by: PENN

JOHN GARRETT PENN, UNITED STATES DISTRICT JUDGE

 I.

 On August 1, 1990, plaintiff filed this disappointed bidder suit, in which it alleges that the Defense Logistics Agency ("DLA") awarded a government contract to a nonresponsive offeror in violation of statutory requirements. This case comes before the Court on the Motion for a Preliminary Injunction filed by the plaintiff Diverco, Inc. ("Diverco") on August 1, 1990. Diverco seeks an order enjoining defendant Richard Cheney, the Secretary of Defense, both from undertaking any action to permit continued performance of the challenged contractor and from making another award of the contract to anyone other than Diverco prior to a final decision on the pending protest filed before the Comptroller General. The Court heard oral argument on the motion on August 8, 1990. After careful consideration of the motion, the opposition thereto and the entire record in this case, the Court concludes that the motion should be denied.

 II.

 On or about December 7, 1989, the Defense Logistics Agency, Defense Construction Supply Center ("DSCS") issued solicitation DLA 700-90-R-0437. The Solicitation sought proposals for the supply of a total of 2,452 gearshaft spurs for use in combat support vehicles. The Solicitation included Clause I81, "Required Sources for Forging and Welded Shipboard Anchor Chain Items (AUG 1985)," Defense Acquisition Regulation Supplement ["DFARS"] section 252.208-7005, which requires the forgings acquired by the federal government be manufactured in the United States. The gear shaft spurs to be acquired include forgings which are covered by Clause I81.

 On February 23, 1990, the contract was awarded to Metalcastello. On March 5, 1990, Diverco filed a protest with the contracting officer. Diverco therein argued that Metalcastello intended to provide only non-domestic forgings in response to the Solicitation and requested that the contracting officer cure the failure to require delivery of domestic forgings as specified in the Solicitation and required by law. This protest was denied.

 DCSC subsequently attempted to obtain confirmation from Metalcastello that the gearshafts would be manufactured with from domestic forgings. Metalcastello responded that the gearshafts could be made from foreign forgings because they were not to be used on combat support vehicles. DSCS then confirmed with the United States Army Tank-Automotive Command that the gearshafts being procured were to be used on combat support vehicles.

 On August 1, 1990, Diverco filed this suit and a protest with the General Accounting Office ("GAO").

 Counsel for defendant represented to the Court at oral argument that to remedy Metalcastello's failure to supply domestic forgings, DSCS issued a stop work order on the contract on August 8, 1990. DSCS has further stated its intent to amend the Solicitation by deleting the I81 clause requiring domestic forgings, *fn1" to provide another round of negotiations at which time the contractors will submit new offers based on the amended solicitation, and to award a new contract if warranted based upon the best offer.

 III.

 In the instant motion, plaintiff requests an order preliminarily enjoining the defendant from continuing performance on the contract until a decision is issued by the GAO on its protest. In order to be entitled to injunctive relief, the moving party must establish that it is likely to prevail on the merits, that it will suffer irreparable injury if injunctive relief is denied, that the other parties will not suffer substantial injury if injunctive relief is granted, and that the granting of injunctive relief is in the public interest. Washington Metropolitan Area Transit Authority v. Holiday Tours, Inc., 182 U.S. App. D.C. 220, 222, 559 F.2d 841, 843 (1977) (hereinafter WMATA v. Holiday Tours). The district court has broad discretion in balancing these factors. Foundation on Economic Trends v. Heckler, 244 U.S. App. D.C. 122, 756 F.2d 143, 157 (D.C. Cir. 1985). As the court explained in WMATA v. Holiday Tours, "The necessary 'level' or 'degree' of possibility of success will vary according to the court's assessment of the other factors." 559 F.2d at 843. Thus, even if a plaintiff has not made a particularly strong showing of likelihood of success on the merits, a court may, in the proper exercise of its discretion, grant temporary injunctive relief if the plaintiff demonstrates that the other three equitable factors weigh in his favor.

 After careful consideration of the motion, the Court concludes for the following reasons that the motion should not be granted. First, the Court will briefly address the likelihood of whether Diverco will prevail on the merits. "The court's role in reviewing agency contract decisions is limited to determining whether the agency acted in accord with applicable statutes and regulations and had a rational basis for its decisions." Delta Data Systems Corp. v. Webster, 240 U.S. App. D.C. 182, 744 F.2d 197, 204 (D.C. Cir. 1984) (citations omitted). Diverco contends that DCSC awarded the contract to Metalcastello for gearshafts made from foreign forgings in violation of the Solicitation and applicable regulations. Diverco further argues that Metalcastello has always intended to use production facilities in Italy and to manufacture the required forgings in Italy in spite of the clear requirement of federal law and Clause I81 that only domestic forgings be supplied. By contrast, defendant maintains that it did not illegally award the contract to Metalcastello because in accepting Metalcastello's proposal, it did not accept a proposal which failed to conform with all of the material requirements of the Solicitation. In defendant's view, Metalcastello's ...


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