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COMMERCIAL DRAPERY CONTRS., INC. v. UNITED STATES

February 11, 1997

COMMERCIAL DRAPERY CONTRACTORS, INC., et al., Plaintiffs,
v.
UNITED STATES OF AMERICA, et al., Defendants.


JAMES ROBERTSON, United States District Judge


The opinion of the court was delivered by: ROBERTSON

Plaintiffs, manufacturers and suppliers of commercial draperies, sue to enjoin the cancellation of two current contracts with the government. Oral argument on their motion for preliminary injunction and defendants' motion to dismiss was presented on January 17, 1997. At that time, the parties agreed that the contract cancellation would be stayed until February 17, 1997. For the reasons discussed below, defendants' motion to dismiss must be granted.

 Facts

 Plaintiffs, Commercial Drapery Contractors (CDC) and Milford Acquisition Corp., provide draperies and related items to the government under two four-year Multiple Awards Schedule contracts that allow for purchases on an "as needed basis." The contracts are scheduled to expire in 1999. On June 11, 1996, CDC and its owner, Jeffrey Goldstein, were indicted in the United States District Court for the District of Maryland for misconduct concerning two prior government contracts.

 On July 8, 1996, CDC made a written submission to GSA addressing the impact of the indictment. CDC representatives met with GSA on July 9, 1996, to discuss the written submission. On July 23, 1996, GSA issued a notice of suspension to CDC and Milford. The suspension was to operate with regard to new contracts. That suspension, which GSA declined to revoke, was not appealed.

 On November 29, 1996, GSA gave written notice that it would cancel its two ongoing Multiple Award Schedule contracts with CDC and Milford. The notice invoked cancellation clause I-FSS-690-B, present in both contracts: "Resultant contracts may be cancelled in whole or part by either party upon 30 days written notice." A memorandum placed in the file by GSA contracting official Gormley indicated that the decision to cancel was made after considering (1) that CDC and Goldstein were under indictment; (2) that they were suspended from new contracts; (3) that other agencies were continuing to place orders despite the suspension; (4) that the U.S. Attorney believed continuation of the contracts jeopardized the criminal investigation; and (5) that there were indications that CDC and Goldstein considered the suspension to be a farce.

 In this case, GSA has identified another factor supporting the cancellation -- the agency's belief that the ongoing MAS contracts were based upon the same fraudulent pricing scheme that was the subject of the criminal indictment. GSA concedes, however, that information giving rise to this belief was not known by the contracting official at the time the contract was cancelled.

 Analysis

 1. Scope of Review

 Plaintiffs' claims that GSA's actions were "arbitrary and capricious" and contrary to federal regulations and statutes are brought under the Administrative Procedure Act, 5 U.S.C. § 706(2)(A), and must be evaluated against the administrative record. See Environmental Defense Fund, Inc. v. Costle, 211 U.S. App. D.C. 313, 657 F.2d 275, 284 (D.C. Cir. 1981); Abel Converting, Inc. v. United States, 679 F. Supp. 1133, 1139 (D.D.C. 1988). The authority to examine plaintiffs' due process claims is independent of the APA, see Rydeen v. Quigg, 748 F. Supp. 900, 905-06 (D.D.C. 1990), aff'd, 937 F.2d 623 (Fed. Cir. 1991), cert. denied, 502 U.S. 1075, 117 L. Ed. 2d 138, 112 S. Ct. 974 (1992), and such an examination requires an independent assessment of the facts and the law. Id.

 2. Merits of Plaintiffs' Claims

 Plaintiffs' claims that GSA acted in violation of the Small Business Act, 15 U.S.C. § 637(b)(7), and the Competition in Contracting Act, 41 U.S.C. § 253b(c) & (d)(2), will be dismissed. The provisions of both statutes upon which plaintiffs rely only apply when a company is being considered for a contract award. They are inapplicable to ...


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