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DYNALANTIC CORP. v. UNITED STATES DOD

May 20, 1996

DYNALANTIC CORP., Plaintiff,
v.
UNITED STATES DEPARTMENT OF DEFENSE, UNITED STATES DEPARTMENT OF THE NAVY and UNITED STATES SMALL BUSINESS ADMINISTRATION, Defendants.



The opinion of the court was delivered by: SULLIVAN

 I. Introduction

 On December 15, 1996, Dynalantic, Inc. ("Dynalantic" or "plaintiff") commenced the present action against the Department of Defense, the Department of the Navy, and the Small Business Administration ("SBA") [hereinafter referred to aggregately as "defendants"], seeking declaratory relief and an injunction to restrain defendants from limiting their solicitation of bids for procurement of at least one helicopter training simulator to firms certified under the SBA's 8(a) program. Dynalantic challenges the constitutionality of relevant provisions of the Small Business Act and the implementing regulations that relate to the 8(a) program, as well as 10 U.S.C. § 2323(a), (e) and the corresponding regulations. *fn1" Plaintiff contends that the statutes and regulations violate the Fifth Amendment of the United States Constitution, as applied to the procurement at issue in this case. Further, plaintiff claims that the defendants' decision to restrict bids and to limit competition for the helicopter simulator contract to 8(a) participants violates the Administrative Procedures Act as well as its civil rights under 42 U.S.C. §§ 1981 and 2000d.

 Presently before the Court is plaintiff's motion for a preliminary injunction. Upon consideration of the pleadings, the applicable law, oral arguments of counsel, and the record herein, plaintiff's motion is DENIED for the following reasons.

 II. Factual Background

 Plaintiff is engaged in the business of providing training equipment to the military. Although plaintiff qualifies as a "small business" as that term is defined by the SBA, 15 U.S.C. § 631 et seq., it has neither applied, nor otherwise been certified, to participate in the 8(a) program.

 Defendant, the Department of the Navy ("the Navy"), is seeking to procure one mobile flight simulator, referred to as the UH-1N Aircrew Procedures Trainer ("APT"), with an option for a second under a contract that is not to exceed $ 8 million. The Navy and defendant, the Small Business Administration ("SBA"), have agreed that the APT procurement shall be opened only for competition to firms participating in the Section 8(a) program. Bids for the APT contract must be submitted by May 21, 1996. *fn2"

 III. SBA's Section 8(a) Program

 The 8(a) program's regulations, which implement the race-neutral language of the statute, accord members of certain racial groups with a presumption of social disadvantage. 13 C.F.R. § 124.105(b). This presumption, however, is rebuttable. Id. Members of racial groups that are not presumptively socially disadvantaged may establish their social disadvantage by presenting clear and convincing evidence. 13 C.F.R. § 124.105(c). Regardless of the manner in which an applicant may demonstrate his or her social disadvantage, the 8(a) program's economic disadvantage criteria excludes from entry into the program any individual whose net worth exceeds $ 250,000. 13 C.F.R. § 124.106 (a)(2)(i).

 A business that is certified for entry into the 8(a) program may participate in the program for a maximum period of nine years. 15 U.S.C. § 636(j)(10)(C); 13 C.F.R. § 124.111(a). However, a participant in the 8(a) program may be graduated from the program before the expiry of nine years if the business substantially achieves the goals set forth in its business plan. 13 C.F.R. § 124.208(a). Further, any individual will be deemed ineligible for continued participation in the program if that individual's personal net worth exceeds $ 750,000. 13 C.F.R. § 124.111(a)(2)(ii).

 IV. Plaintiff Lacks Standing To Challenge the Constitutionality of the Section 8(a) Program.

 It is a fundamental tenet of federal jurisdiction that "federal courts are under an independent obligation to examine their own jurisdiction" irrespective of whether any party raises a concern about a court's jurisdiction to resolve a case on the merits. FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 231, 107 L. Ed. 2d 603, 110 S. Ct. 596 (1990). The doctrine of standing serves "to identify those disputes which are appropriately resolved through the judicial process." Whitmore v. Arkansas, 495 U.S. 149, 155, 109 L. Ed. 2d 135, 110 S. Ct. 1717 (1990). Since standing implicates the very core of a federal court's power to consider the merits of a case, "standing can be raised at any point in a case proceeding and, as a jurisdictional matter, may be raised sua sponte, by the court." Steffan v. Perry, 309 U.S. App. D.C. 281, 41 F.3d 677, 697 n.20 (D.C. Cir. 1994) (en banc).

 For purposes of the case-or-controversy requirement of Article III, "the irreducible constitutional minimum of standing contains three elements." Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 119 L. Ed. 2d 351, 112 S. Ct. 2130 (1992). For jurisdictional purposes, a plaintiff must demonstrate: (1) an "injury in fact," which is an invasion of a legally protected interest that is "(a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical," id. (citations, footnote and internal quotation marks omitted); (2) a causal relationship between the injury and the challenged conduct, id.; and (3) that it is likely, as opposed to speculative, "that the injury will be redressed by a favorable decision." Id.3

 
"The issue whether Defendants set aside the contract under § 2323 or solely under the 8(a) program is, for purposes of this Motion, really a red herring. This is true because all agree that the APT procurement is set-aside for minority-owned 8(a) contractors to help achieve DoD's five percent goal, and no one has disputed the Navy's practice of setting aside every possible contract. Regardless of the precise statutory framework which the Defendants followed, therefore, Dynalantic is excluded from the APT competition because of the race of Dynalantic's owners."

 Plaintiff's Reply to the NAACP Legal Defense and Educational Fund's Brief at 3-4 [hereinafter, Plaintiff's Reply to the LDF's Brief]. Since plaintiff lacks standing to challenge the constitutionality of the Section 8(a) program as applied to the APT procurement, it also lacks standing to challenge the constitutionality of 10 U.S.C. § 2323 which -- as applied here -- merely provides that the Defense Department may utilize the 8(a) program in seeking to achieve its goal for contracting with socially and economically disadvantaged businesses.

 In its written submissions and oral presentation, Dynalantic repeatedly claims that the Section 8(a) program is a "race-based" program that excludes Dynalantic from competing for the APT procurement solely on the basis of race. *fn5" Plaintiff further maintains that as race is allegedly the "litmus test" under the 8(a) program, that any non-minority company -- even a non-minority-owned Fortune 500 company -- has standing to attack the 8(a) program. See Transcript of Preliminary Injunction Motion Hearing, April 18, 1996 at 11. Plaintiff's argument is not limited to attacking the presumption of social disadvantage that certain racial groups are accorded under the 8(a) program; Dynalantic claims that it is precluded from even applying to the 8(a) program.

 
"Qualifying under the 8(a) program's economic disadvantage test is not relevant to standing. Moreover, it is difficult to answer the question posed without first applying for admission ...

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