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VARICON INT'L v. OFFICE OF PERSONNEL MGMT.

July 8, 1996

VARICON INTERNATIONAL, ET AL., Plaintiffs,
v.
OFFICE OF PERSONNEL MANAGEMENT, ET AL., Defendants.



The opinion of the court was delivered by: URBINA

 Denying Plaintiffs' Motion for a Preliminary Injunction

 This matter comes before the court upon plaintiffs' motion for a preliminary injunction; defendants' opposition; and plaintiffs' reply. The court concludes that plaintiffs' motion shall be denied because plaintiffs have failed to demonstrate that they have a substantial likelihood of success on the merits; that they will be irreparably harmed; that the balance of harms favors the issuance of an injunction; or that the public interest will be furthered if the court were to grant injunctive relief.

 BACKGROUND

 In December 1994, OPM began developing plans to privatize its Investigation Service. By June 1995, OPM had implemented a privatization plan whereby an employee-owned company was created with which OPM would contract to perform the background investigations previously performed by the Investigations Service of OPM. As part of the privatization plan, the new company, U.S. Investigations Services ("USIS"), was to offer employment to all OPM personnel who would be displaced by the privatization plan.

 On September 18, 1995, OPM Director James B. King issued a Determination and Finding ("D&F"), which determined that it was in the "public interest" to award, without full and open competition, an exclusive procurement contract for investigative and related services to USIS for a period of three years, with two additional one-year options. This D& F was issued pursuant to 41 U.S.C. § 253(c)(7) and § 6.301-7 of the Federal Acquisition Regulations.

 On April 12, 1996, OPM signed an exclusive procurement contract with USIS. On May 1, 1996, OPM issued reduction in force notices to approximately 700 of its Investigations Service employees, notifying them of discharge effective July 6, 1996.

 On May 2, 1996, pursuant to its contract with OPM, USIS extended written job offers to each OPM Investigations Service employee who had received a reduction in force notice. Over ninety percent of the outgoing OPM employees accepted USIS's employment offer. OPM plans to issue a notice to proceed under its contract with USIS to be effective July 7, 1996.

 Plaintiffs Varicon International, Inc. ("Varicon") and MVM, Inc. ("MVM") are both corporations which provide various security services, including background investigations, to the United States government and the private sector. The plaintiffs have filed a motion for preliminary injunction to enjoin OPM from proceeding on its contract with USIS.

 ANALYSIS

 In order to succeed on a motion for a preliminary injunction, a movant must demonstrate: (1) a substantial likelihood of success on the merits; (2) that irreparable injury will result in the absence of the requested relief; (3) other interested parties will not suffer substantial harm if the injunction is granted; and (4) that the public interest favors entry of a preliminary injunction. WMATA v. Holiday Tours, Inc., 182 U.S. App. D.C. 220, 559 F.2d 841, 843 (D.C. Cir. 1977); Sea Containers, Ltd. v. Stena AB, 281 U.S. App. D.C. 400, 890 F.2d 1205, 1208 (D.C. Cir. 1989). A preliminary injunction is not granted as a matter of right. Eli Lilly and Co. v. Premo Pharmaceutical Labs., 630 F.2d 120, 136 (3d Cir. 1980), cert. denied, 449 U.S. 1014, 66 L. Ed. 2d 473, 101 S. Ct. 573, (1980). Injunctive relief is an extraordinary remedy and must be sparingly granted. Dorfmann v. Boozer, 134 U.S. App. D.C. 272, 414 F.2d 1168 (D.C. Cir. 1969).

 A district court is to balance the four factors. Grigsby Brandford & Co., Inc. v. U.S., 869 F. Supp. 984, 1003 (D.D.C. 1994). Consequently, although a "particularly strong likelihood of success on the merits" may entitle a movant to relief upon" a relatively slight showing of irreparable injury," some showing of irreparable injury is always required, "since 'the basis for injunctive relief in the federal courts has always been irreparable harm.'" Cityfed Fin. Corp. v. OTS, 313 U.S. App. D.C. 178, 58 F.3d 738, 747 (D.C. Cir. 1995) (quoting Sampson v. Murray, 415 U.S. 61, 88, 39 L. Ed. 2d 166, 94 S. Ct. 937 (1974)). Likewise, a court may accept a showing that the movant has a "substantial case on the merits" instead of the probability of success on the merits that is ordinarily required, but only when all of "the other three factors strongly favor interim relief." Holiday Tours, Inc., 559 F.2d at 843.

 The court determines that the plaintiffs have failed to demonstrate a likelihood of success on the merits of their claim that the OPM's decision to issue a sole source contract to USIS is arbitrary, capricious or contrary to law for two reasons. First, the plaintiffs have not demonstrated a likelihood of success in proving that the OPM Director's decision is subject to judicial review. Second, assuming the Director's decision is reviewable by this court, the plaintiffs have not demonstrated a likelihood of success in showing that the Director's decision lacks a reasonable basis or that it is not in accordance with applicable law. The court further determines that Executive Order 10450 appears to provide the necessary legal basis for OPM's regulations that require agencies to obtain authority from it in order to perform or contract for the completion of background investigations, and therefore, the plaintiffs have failed to demonstrate a likelihood of success on this issue. Finally, the court concludes that the plaintiffs have failed to demonstrate a likelihood of success in showing that the USIS was established in violation of the Government Corporation Act.

 A. OPM's Decision to Issue a Sole Source Contract to USIS

 1. Reviewability of the Director of OPM's Decision under the ...


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