the products of different small business concerns . . . and (2) awards will be made at fair market prices. Total set-asides shall not be made unless such a reasonable expectation exists.
48 C.F.R. § 19.502-2(a) (emphasis added). Only one small business company, Codar, could even marginally meet these requirements. This was because the Army was not fully convinced that Codar could meet the fair market price criteria. Attachment 8, Declaration of Charles W. Thompson, Defendants' Motion to Dismiss or in the Alternative for Summary Judgment; Memorandum for U.S. Small Business Administration (April 9, 1992), Defendants' Motion to Dismiss (authored by Mary McHale). No other small business including Solaris, the Genisco subsidiary was found to be a viable bidder. In this case, the defendants acted in accordance with the regulations.
The determination that Solaris was not a viable bidder for purposes of providing it with virtually an exclusive claim to the contract was fully justified. Army officials responsible for this procurement had information that there had been quality problems with the workstations purchased from Solaris for use in Operation Desert Storm. Administrative Record, 49-50. They also knew that Solaris failed to notify the Army of Sun Microsystems' offer to upgrade the Sun workstations that Solaris had modified. By the time the Army learned of the offer, it had expired, and the Army was forced to negotiate for special treatment from Sun in order to get the upgrade. Id. The contracting officer also had legitimate concerns about Solaris' financial condition based on stories published in the Los Angeles Times. Her conclusions from those stories were based largely on quotations given by Genisco company officials and by reports of earnings that Genisco released. See Attachment 9, Declaration of Charles W. Thompson, Defendants' Motion to Dismiss.
In a procurement like this, where swift and reliable delivery is essential, it was reasonable for the contracting officer to take this information into account.
The defendants had a reasonable basis for their decision not to set aside this procurement for small business. See Delta Data Systems Corporation v. Webster, 744 F.2d 197, 204 (D.C.Cir. 1984); Dynalectron v. United States, 659 F. Supp. 64, 68-69 (D.D.C. 1987). Their actions were neither arbitrary nor capricious. They adhered to the requirements of the applicable statutes and regulations, including the retirement that they consult with officials in the Small and Disadvantaged Business Utilization Office and the Small Business Administration. See 48 C.F.R. § 19.201(c)(8); 48 C.F.R. § 19.402(b)(c). Summary judgment will be granted in the defendants' favor.
In conclusion, the Court notes that the decision to make this procurement available for general bidding in no way prevents the plaintiff from bidding on this contract. Plaintiff will have the same opportunity to bid on the procurement as any other company. In fact, as one of the few companies that produces the hardware that the Army needs and as the only company that has already produced ruggedized workstations for the Army, the plaintiff should have a fair opportunity to compete for this contract even though it may be competing with larger companies. At this time, there is no legal basis for ordering the Army to set aside this procurement for small business.
An appropriate order accompanies this opinion.
United States District Court
ORDER - June 15, 1992, Filed
For the reasons stated in the foregoing opinion, it is this 9 day of June, 1992, hereby
ORDERED that plaintiff's motion for a preliminary injunction is denied; and it is
FURTHER ORDERED that defendants' motion for summary judgment is granted.
United States District Court