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October 16, 1996

H & F ENTERPRISES, LTD., Plaintiff,
UNITED STATES OF AMERICA, et al., Defendant.

The opinion of the court was delivered by: SULLIVAN


 The Department of Veterans Affairs ("VA") regional office in Waco, Texas, currently occupies 87,111 square feet of office space in a facility owned by the plaintiff H&F Enterprises ("H&F"). The lease with H&F for use of this facility was entered into in 1964 and was due to expire on July 31, 1995. *fn1"

 In the spring of 1991, the defendant General Services Administration ("GSA") began its initial review of the Waco VA office space needs and determined that extensive renovation and expansion of the thirty-year-old building currently used by the VA regional office would be required to meet the VA's future office needs. In October 1991, GSA inquired into the Waco VA Office's continuing space requirements and also met with Waco city officials to discuss the procurement and the availability of a city-owned site in the centralized community business area ("CBA"). *fn2"

 On January 31, 1992, Waco VA Director Alonzo Poteet sent their recommendations to the VA Central Office in Washington, D.C., requesting that potential locations be within "the downtown Waco district." Prior to receipt of the VA's official requirements, GSA encouraged the VA central office to request as large a delineated area as possible in order to maximize competition. On March 10, 1992, the VA central office submitted to GSA a formal request for 95,000 (later amended to 116,500) square feet within "Metropolitan Waco." The H&F site was included in this official delineated area.

 GSA published an advertisement in the Waco Tribune-Herald advertising for potential sites. Nine sites were submitted to GSA for consideration in response to its advertisement. GSA conducted a market survey of the sites which revealed that only five of the sites were potentially capable of meeting the VA's needs. The five sites consisted of plaintiff's facility, located outside of the CBA, and four parcels of property, located in the CBA, where a new building would need to be constructed. Plaintiff's facility, while potentially capable of meeting VA's needs, would require extensive and expensive renovations and remodeling to bring the space up to meet current health, fire and safety regulations, including handicap accessibility.

 On June 22, 1992, GSA Real Estate Division Director Leonard Murphy had discussions with VA Regional Director Poteet as well as officials from the VA central office. During the meeting, GSA discussed Executive Order ("E.O.") 12072 and advised VA that in selecting a site for the VA facility, first consideration must be given to the CBA of Waco unless the VA had a mission-related justification for a location outside of the CBA. Mr. Poteet stated that VA's regional office could operate in the CBA.

 On September 29, 1992, Mr. Murphy and Betty King, GSA Contracting Officer, then met with the new VA Regional Office Director, Lois High, on September 29, 1992. GSA again informed the VA that E.O. 12072 required first consideration of the CBA unless the VA could provide a "mission-related" justification for a non-CBA site. No VA officials gave any reason as to why the Waco VA office could not be located within the CBA.

 On October 8, 1992, Lois High wrote to GSA expressing her concerns that competitive procedures be used and that GSA be more responsive to the VA regional office's needs. Mr. Murphy responded on October 21, 1992, that the VA facility would be located on a site selected by GSA in the Waco CBA, the construction and lease-back of which would be competitively bid out. J.C. Snead, H&F Managing Director, was notified by a letter dated November 4, 1992 that GSA planned to pursue a lease construction project on a site within the CBA. On December 8, 1992, H&F submitted a formal protest to the General Accounting Office ("GAO").

 On January 13, 1993, GSA Assistant Regional Administrator Earl Eschbacher, Jr. wrote to H&F stating that no final decision had been made, that its facility had not been excluded from the bid process and that all previous correspondence suggesting otherwise should be disregarded. On January 15, 1993, the GAO dismissed H&F's protest as premature.

 In a letter dated January 25, 1993, GSA informed the VA that it had decided to select a CBA site for the new VA regional office. Plaintiff was informed of this decision on March 4, 1993. On March 10, 1993, H&F filed a second protest with the GAO. In a July 13, 1993 decision, GAO denied plaintiff's protest finding that GSA's decision to limit consideration of sites to the CBA was proper and reasonable. Matter of H&F Enter., B-251581.2, July 13, 1993, 93-2 C.D. P 16, 1993 WL 274032 (C.G.).

 In June 1993, and again in August 1995, an environmental assessment was conducted. Following additional consultations with Waco city officials and the VA, the CBA was redefined to avoid sites within the city's floodplain.

 On August 10, 1995, GSA issued a solicitation for offers to construct and lease back a building where the successful bidder would purchase the property owned by the First Baptist Church, which is located within the CBA, construct a building and lease the space to GSA. In September 1995, H&F filed suit in this Court for declaratory and injunctive relief, alleging that GSA violated the Administrative Procedure Act ("APA").


 A. Motion for Summary Judgment

 Summary judgment should be granted pursuant to Fed. R. Civ. P. 56 only if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). In ruling upon a motion for summary judgment, the Court must view the evidence in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986); Bayer v. United States Dep't of Treasury, 294 U.S. App. D.C. 44, 956 F.2d 330, 333 (D.C. Cir. 1992). Likewise, in ruling on cross-motions for summary judgment, the court shall grant summary judgment only if one of the moving parties is entitled to judgment as a matter of law upon material facts that are not genuinely disputed. Rhoads v. McFerran, 517 F.2d 66, 67 (2d Cir. 1975). The cross-motions for summary judgment pending before the Court present no genuinely disputed material facts that would preclude summary judgment.

 B. Review of Agency Action

 The standard of review is whether the agency action was "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law." 5 U.S.C. § 706(2)(A) (1989). This standard requires plaintiff to demonstrate that the agency action "had no rational basis" or "involved a clear and prejudicial violation of applicable statutes or regulations." ...

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