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TEAC AMERICA, INC. v. UNITED STATES DEPT. OF THE N

February 3, 1995

TEAC AMERICA, INC., Plaintiff,
v.
UNITED STATES DEPARTMENT OF THE NAVY and NAVAL AIR SYSTEMS COMMAND, CORPORATION, Defendants.



The opinion of the court was delivered by: PAUL L. FRIEDMAN

 This is a disappointed bidder case challenging the award of a contract to Precision Echo, Inc., by the United States Department of the Navy and Naval Air Systems Command ("NAVAIR"). The disappointed bidder, TEAC America, Inc., seeks declaratory and injunctive relief to enjoin the Navy and NAVAIR from proceeding with performance of the contract on the ground that the contract award to Precision was in violation of laws, regulations and policies relating to government procurement and the competitive bidding process.

 The defendants issued a solicitation or request for proposal ("RFP") for Cockpit Video Recording System ("CVRS") Videotape recorders to be installed in F/A-18 Aircraft. These CVRS recorders are used during F/A-18 flights to help record Head-Up Display information, cockpit digital data indicators, reconnaissance information, and the actions of aircraft such as ground attack engagements and aerial combat. Both Precision and TEAC submitted proposals in response to the RFP outlining the "ruggedized" designs of their respective CVRS recorders. On December 16, 1994, the contract was awarded to Precision, and the following week TEAC filed a timely bid protest with the General Accounting Office. The filing of the protest triggered an automatic stay of the performance of the CVRS contract pending disposition of the protest. See 31 U.S.C. § 3553(d)(1); 48 C.F.R. § 33.104(c); 4 C.F.R. § 21.4(b).

 On January 6, 1995, defendants provided TEAC with notice that it was in the "best interest" of the United States to override the stay and proceed with performance of the contract with Precision, a lawful decision for the defendants to have made. 31 U.S.C. § 3553(d)(2)(A)(i); 4 C.F.R. § 21.4(b)(1). TEAC thereupon promptly brought this action and sought a temporary restraining order and preliminary injunction. After a brief hearing, the Court concluded that it was unnecessary to consider the motion for temporary restraining order but set an expedited briefing and argument schedule on plaintiff's motion for preliminary injunction. In the meantime, the Court requested the General Accounting Office to "continue to consider this matter and to reach its determination as to the merits of plaintiff's protest as expeditiously as possible." *fn1"

 On January 27, 1995, the Court heard lengthy argument on plaintiff's motion for preliminary injunction from counsel for plaintiff, counsel for defendants and counsel for Precision, which had been granted leave to intervene.

 I. ANALYTICAL FRAMEWORK

 In determining whether a preliminary injunction should be granted, the moving party must demonstrate that it is likely to prevail on the merits, that it will suffer irreparable injury absent the granting of injunctive relief, that the issuance of an injunction will not cause substantial harm to other persons interested in the proceedings, and that the issuance of an injunction is in the public interest (or at least is not adverse to the public interest). Washington Metropolitan Area Transit Comm'n. v. Holiday Tours, Inc., 182 U.S. App. D.C. 220, 559 F.2d 841, 843 (D.C. Cir. 1977); Express One Int'l, Inc. v. U.S. Postal Service, 814 F. Supp. 87, 88 (D.D.C. 1992). When the other three factors strongly favor interim relief, a court may grant injunctive relief where movant has made out a "substantial case" on the merits rather than having demonstrated a likelihood of success; the necessary level or degree of possibility of success will vary according to the court's assessment of the other factors. Washington Metropolitan Area Transit Comm'n. v. Holiday Tours, Inc., 559 F.2d at 843.

 In a disappointed bidder case, the ultimate issue on the merits is whether there is a rational basis for the decision made by the contracting agency and whether it acted lawfully. A court may not set aside a federal agency procurement decision if the decision is in "substantial compliance with applicable law and baseline substantive rationality." Elcon Enterprises, Inc. v. WMATA, 298 U.S. App. D.C. 197, 977 F.2d 1472, 1478-79 (D.C. Cir. 1992), quoting Kentron Hawaii, Ltd. v. Warner, 156 U.S. App. D.C. 274, 480 F.2d 1166, 1169 (D.C. Cir. 1973). Thus, on a motion for preliminary injunction, the Court must determine whether the disappointed bidder is likely to prevail in demonstrating that the agency's procurement decision had no rational basis or was the result of a process that involved a "clear and prejudicial violation of applicable statutes or regulations." Elcon Enterprises, Inc. v. WMATA, 977 F.2d at 1478. See also Delta Data Systems Corp. v. Webster, 240 U.S. App. D.C. 182, 744 F.2d 197, 203 (D.C. Cir. 1984).

 The Navy responds by attacking the fundamental premise of TEAC's argument, maintaining that Precision did not propose to supply a "recycled home video cassette recorder." Rather, according to the Navy, both Precision and TEAC submitted proposals outlining "ruggedized" designs of their respective CVRS recorders, although Precision's design incorporated an off-the-shelf tape transport into its ruggedized design. The Navy maintains that this was "a technical, common-sense approach" that was permitted under the terms of the RFP. Furthermore, the Navy argues that both proposals were carefully reviewed for merit by Navy evaluators who measured the proposals against criteria set forth in the solicitation and concluded on the basis of technical merit, price and other relevant criteria that Precision's proposal was superior to TEAC's. In sum, the Navy says that it acted rationally in awarding the CVRS recorder and playback contract to Precision.

 The Navy also maintains that TEAC has not and cannot demonstrate that it will suffer irreparable harm if it must await the GAO's promised May 5, 1995, decision on its pending protest, while both the government and the public will be harmed if the Court grants the injunction and orders any delay in the production schedule.

 II. LIKELIHOOD OF SUCCESS ON THE MERITS

 TEAC argues first and foremost that Precision's proposal failed to comply with the mandatory minimum requirements of the RFP and therefore that Precision was ineligible for the award of the contract. In its brief, the government responds to virtually all of TEAC's specific arguments with citations to the Administrative Record. At oral argument counsel for Precision provided a seriatim response to nearly every item in dispute. The Court need not review each argument and each response and will not paraphrase or quote from the portions of the Administrative Record that have been designated as "Confidential" and filed under seal pursuant to protective order, portions which include confidential proprietary information from Precision and TEAC, as well as national security and source selection sensitive information of the government's. The Court will summarize the most central of plaintiff's arguments and its findings with respect to them.

 TEAC asserts that Precision's CVRS recorder violates the RFP's request for a "non-developmental item" because it has not previously been produced or tested. The short answer to TEAC's argument is that the RFP clearly permits proposals that incorporate existing components from several different products (Admin. Record 1147); Precision represented that its CVRS recorder is a new design incorporating existing features from several products. Admin. Record 565. While the RFP prohibits post-award development (Admin. Record 1147), Precision's recorder had been developed prior to the contract award. Precision and the Navy both provided evidence that Precision had successfully "ruggedized" off-the-shelf commercial products before and that Precision's CVRS recorder incorporates design features of a ...


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