Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

MARWAIS STEEL CO. v. DEPARTMENT OF THE AIR FORCE

September 30, 1994

MARWAIS STEEL COMPANY, Plaintiff
v.
DEPARTMENT OF THE AIR FORCE, et al., Defendants



The opinion of the court was delivered by: THOMAS F. HOGAN

 In this government procurement case, a disappointed bidder brings suit against the Air Force and the Department of Labor, and the successful bidder intervened as a defendant. The plaintiff challenges the agencies' actions surrounding the award of the contract, and requests injunctive and declaratory relief barring the Air Force from continuing contract performance with the successful bidder.

 Before the Court are the plaintiff's motion for preliminary injunction, the defendants' motions for dismissal or summary judgment on all five counts, and the plaintiff's motion for summary judgment on four of the five counts. For the reasons stated below, the defendants' motions for summary judgment are granted and all of the plaintiff's motions are denied.

 I. Background

 In February 1992, the Air Force published a Request for Proposals ("RFP") for the supply of between 359 and 758 revetment kits. *fn1" These kits are used to assemble double-layered walls to protect aircraft, vehicles, and other military equipment. Each kit consists of approximately 23 tons of corrugated steel panels and the pin fasteners and tools needed to assemble those panels into a wall. The kit also includes polyethylene film and wire screens to seal seams between panels. The RFP set a price of approximately $ 10 million for each set of 359 kits. The contract was set aside for a small business offeror, pursuant to Subpart 19.5 of the Federal Acquisition Regulations ("FAR").

 Among other offerors, Marwais Steel ("Marwais") and Engineered Air Systems ("EASI") submitted bids. EASI's bid involved the participation of a subcontractor, EPIC Metals Corporation ("EPIC"). In October and November of 1993, the Air Force conducted a preaward survey of EASI and EPIC's operations. The survey generated 10 documents totalling 55 pages and addressed EASI's and EPIC's ability to perform the contract. Also in October 1993, the Air Force obtained 5 pages of cost data from EASI describing the planned allocation of work on the contract between EASI and EPIC.

 On November 10, 1993, the Air Force notified Marwais that EASI was the "apparently successful bidder." On November 18, Marwais filed a size protest claiming that EASI was not qualified as a small business under the Small Business Act ("SBA") regulations. The next day, the Air Force forwarded Marwais' protest to a Regional Office of the Small Business Administration (also "SBA"), but did not include the 55-page result of the preaward survey or the five pages of cost data.

 On December 8, 1993, the SBA Regional Office determined that EASI was a small business. Within hours of receiving the SBA's determination, the Air Force awarded the contract to EASI.

 On December 15, 1993, Marwais appealed the SBA Regional Office determination to the Office of Hearings and Appeals ("SBA-OHA"), the administration's appellate body. On February 3, 1994, Marwais asked that the 55 pages of preaward survey Data and the 5 pages of cost data be submitted to either the SBA-OHA or the Regional Office. Before the Air Force responded to the request, the SBA-OHA remanded the size determination to the Regional Office because the initial determination lacked supporting evidence and explanation.

 On February 24, 1994, EASI requested that the SBA remand be dismissed as moot since the contract had been awarded. The SBA-OHA denied the request on March 10, stating that when a law clerk spoke with the Contracting Officer at the Air Force, "the Contracting Officer requested that the remand decision stand and that a new Size Determination be made." Plaintiff's Exhibit 4, p.4.

 During the week of March 7, 1994, the Air Force provided the SBA regional office with copies of the preaward survey and the cost data. On May 20, 1994, the Regional Office issued a new size determination, finding that EASI was not a small business. The basis for the new size determination was that EASI relied too heavily on EPIC, thus creating an "affiliation" requiring that the two companies be considered together for purposes of the size determination.

 On May 31 and June 2, 1994, EASI appealed this new size determination to the SBA-OHA.

 On July 11, 1994, the Air Force issued a determination to Marwais regarding the December-filed Walsh-Healey protest. The determination found that EASI was a manufacturer for purposes of the statute and regulations. Upon Marwais's appeal of this determination, the Department of Labor affirmed.

 Marwais requests a preliminary injunction prohibiting the Air Force from proceeding on the contract with EASI, a declaratory judgment stating that EASI is not a qualified small business nor a responsible prospective contractor for purposes of this procurement; a permanent injunction terminating the Air Force's contract with EASI and awarding it to Marwais, and a declaratory judgment overturning the Walsh-Healey determination.

 II. Standard of Review

 The Administrative Procedure Act ("APA") governs Marwais's action. Therefore, this Court can only set aside the actions of the Air Force or the Department of Labor if they are arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. 5 U.S.C. § 706(2)(A). To prevail, Marwais must meet 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 v. Warner, 156 U.S. App. D.C. 274, 480 F.2d 1166, 1169 (D.C. Cir. 1973).

 III. Count One

 Marwais claims that the Air Force improperly withheld the preaward survey and cost data from the SBA Regional Office at the time of the first size determination. It is easy to understand Marwais's distress over this omission, since the Regional Office eventually changed its position on EASI's size status when it received the data. However, as explained below, the Air Force was under no statutory or regulatory obligation to forward the data to the Regional Office, and thus Marwais's claim must fail.

 First, the cited cases do not involve SBA size determinations. Instead, they deal with SBA awards of Certificates of Competency (COCs), which state that an offeror is "responsible" within the meaning of the Federal Acquisition Regulations. FAR § 19.601 et seq. The SBA's authority to conduct size determinations is based on a different set of regulatory provisions. FAR § 19.301 et seq.

 The COC regulations impose a far heavier forwarding burden on the contracting officer than that imposed by the size determination regulations. In fact, the COC provisions explicitly require that preaward surveys, along with other enumerated items and "any other pertinent information" be forwarded in COC matters. FAR § 19.602-1(c)(2). By contrast, the regulation governing size determinations states only that the procuring agency must forward the "protest" itself. FAR § 19.302(c)(1). Therefore, Marwais cannot rely upon COC cases to define the responsibilities of the contracting officer in size determinations, since the two inquiries have distinct regulatory requirements.

 The SBA's own regulations, which are independent of the FAR, further defeat Marwais's claim. Those regulations list the pieces of information that a procuring agency must forward to the SBA for a size determination, and the list does not include preaward surveys or cost data. *fn2" In fact, the SBA regulations state that "the size determination shall be based primarily on facts and allegations supplied by the protestor and protested concern," suggesting that information provided by the procuring agency is not crucial. 13 C.F.R. § 121.1606(c). If the bidders do not provide sufficient information, the SBA "may make inquiries including requests to the [bidders] or other persons for additional specific information." Id. Presumably, the SBA could use this provision to request preaward surveys or cost data from the procuring agency. In any case, neither the FAR nor the SBA's own regulations impose a duty upon the contracting officer to forward preaward surveys or cost data. Discretion to develop the factual record is seated with the SBA itself, which can conduct its own fact-finding inquiries.

 It is true that a COC inquiry is broad and encompasses all issues that would be addressed in a size determination. FAR § 9.104-1(g) (requiring compliance with all applicable statutes, thereby including the Small Business Act). However, simply because the COC regulations require the submission of preaward surveys does not mean that a similar requirement applies to the narrower size inquiry. The language and structure of the regulations discussed above shows that the forwarding requirements imposed on the contracting officer in a COC determination should not be imported into a size determination.

 Even if the analogy to the COC provisions were somehow sound, there is a second reason why the cases Marwais cites are inapposite. They do not require the contracting officer to forward information about the bidders. Rather, three of the cases require procuring agencies to provide better information about the agencies' own contract specifications. See American Industrial Contractors, Inc., supra, (agency did not make clear that only some of eight bid alternatives would be awarded); COSTAR, supra, (agency did not state when bidders' quality assurance programs required to be operative); RBE, Inc., supra, (agency provided contradictory definitions of mandatory performance period). At most, these cases suggest that the agency must take great pains to forward all relevant information about its own role in the procurement -- the contract specifications -- to the SBA. There is no reason to extend the logic of these cases to require agencies to identify all relevant bidder information and forward it to the SBA, since the SBA's own regulations suggest that the key data should be provided by the bidders or requested by the SBA itself. 13 C.F.R. § 121.1606(c).

 In the other case that Marwais cites, Joanell, supra, the protestor alleged only that the SBA did not consider all of the information before it, and not that the procuring agency withheld information from the SBA. Since Joanell did not scrutinize the procuring agency's role at all, it provides even less support for Marwais's claim against the Air Force than the above three cases.

 B. Contracting Officer's duty to file own protest. Marwais's other argument that Air Force had a duty to submit the survey and cost data is based upon a decision of the Comptroller General stating that

 
if information is brought to the attention of the Contracting Officer . . . which reasonably would impeach the self-certification of the bidder, the Contracting Officer must file a direct protest with the SBA in order to assure that the self-certification process is not being abused.

 Keco Industries, Inc., 56 Comp. Gen. 878 (1977). This case is not sufficiently on point. In Keco, no disappointed bidder had filed a preaward size protest. Therefore, the contract was awarded without an SBA review of the successful bidder's self-certification. To remedy this situation, the Comptroller General required only that the contracting officer file a protest, and did not require that particular information be forwarded to the SBA.

 Here, by contrast, Marwais had filed a preaward protest, and the SBA therefore had an opportunity to use its powers of inquiry and acquire necessary information about EASI. The complete absence of review of self-certification that existed in Keco does not exist here. The SBA may have been less than thorough in soliciting information about EASI, but the Air Force did not violate any duty set forth by the Comptroller General, since it did not need to play the role of protestor of last resort required by the facts in Keco.

 Marwais cites other cases to support this argument, but in each one there was no valid preaward protest filed by a disappointed bidder. See Robertson and Penn, Inc., 65 Comp. Gen. 874 (1986) (bidder's protest untimely); Putnam Mills, 61 Comp. Gen. 667 (1982) (same); Foam-Flex, Inc., 62 Comp. Gen. 300 (1983) (bidder's protest insufficiently specific to be forwarded to SBA); Fiber-Lam, Inc., 69 Comp. Gen. 365 (1990) (bidder did not file preaward protest); Creativision, Inc., 66 Comp. Gen. 585 (1987) (same). Like Keco, these cases require only that the contracting officer step in and file a protest if one is not already before the SBA. Marwais ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.