169 F.3d 21 (D.C. Cir. 1999), 98-5265, DSE, Inc. v. United States

Docket Nº98-5265, 98-5368.
Citation169 F.3d 21
Party NameDSE, INC., d/b/a Dayron, Appellant/Cross-Appellee, v. UNITED STATES of America, et al., Appellees.
Case DateMarch 12, 1999
CourtUnited States Courts of Appeals, United States Court of Appeals (District of Columbia)

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169 F.3d 21 (D.C. Cir. 1999)

DSE, INC., d/b/a Dayron, Appellant/Cross-Appellee,

v.

UNITED STATES of America, et al., Appellees.

Nos. 98-5265, 98-5368.

United States Court of Appeals, District of Columbia Circuit

March 12, 1999

Argued Feb. 11, 1999.

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Appeals from the United States District Court for the District of Columbia (No. 98cv00620).

Kenneth A. Martin argued the cause and filed the briefs for appellant/cross-appellee.

Brian J. Sonfield, Assistant United States Attorney, argued the cause for the federal appellees. With him on the brief were Wilma A. Lewis, United States Attorney, Mark

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  1. Nagle and R. Craig Lawrence, Assistant United States Attorneys, Glenn P. Harris, Trial Attorney, United States Small Business Administration, and Ralph Avery, Litigation Attorney, United States Department of the Army.

    Michael R. Charness and John G. Horan were on the briefs for appellee/cross-appellant. Donald J. Kissinger, Jr. entered an appearance.

    Before: WALD, HENDERSON and GARLAND, Circuit Judges.

    Opinion for the Court filed by Circuit Judge WALD.

    WALD, Circuit Judge:

    Dae Shin Enterprises, Inc. ("DSE") brought a disappointed bidder action in the district court against the United States of America, seeking to enjoin performance of a procurement contract between the United States Army (the "Army") and the successful bidder, AMTEC Corporation ("AMTEC"). In support of its claim for injunctive relief, DSE alleged that a formal size determination of the Small Business Administration (the "SBA"), which found AMTEC to be "small" under its applicable regulations, was arbitrary and capricious in violation of the Administrative Procedure Act. See 5 U.S.C. § 706(2)(A). The district court granted a temporary restraining order and, after a series of evidentiary hearings, held that the SBA's actions were arbitrary and capricious. Accordingly, the district court granted a preliminary injunction and remanded the matter back to the SBA. In deliberating upon the appropriate injunction bond, the court took note of DSE's limited financial resources, the potential burden on the Army under its contract with AMTEC to provide compensation for any delay, and AMTEC's failure to provide sufficient documentation to the SBA. After balancing the prospective hardships, the court directed DSE to post a minimal bond and declared that AMTEC, who had intervened in the litigation and was deemed the party at fault, should not be entitled to compensation from the Army for any delay in the beginning of performance under the contract.

    On remand, the SBA again found AMTEC to be a small business entity. Thereafter, the district court issued an order which dissolved the preliminary injunction and upheld the SBA's size determination. All other aspects of its previous order, including its assessment of the bond amount, were left in place. DSE appeals from this decision, alleging that, in several different respects, the SBA failed to follow its own regulations and adjudicatory precedent. This unexplained departure, it claims, was arbitrary and capricious, requiring us to set aside the SBA's size determination and to suspend performance of the contract. AMTEC filed a cross-appeal, contending that the district court lacked the authority to issue its no compensation order as the Tucker Act, see 28 U.S.C. §§ 1346, 1491, grants exclusive jurisdiction to adjudicate monetary claims founded upon a federal procurement contract to the United States Court of Federal Claims. Because the SBA's size determination constituted a reasonable application of the agency's regulations and accords with its previous decisions, we agree with the district court that the SBA's action was not arbitrary and capricious and that dissolution of the preliminary injunction properly followed. As for the no compensation declaration, the record reveals that the court entered it in conjunction with setting the appropriate security, as required by Rule 65(c) of the Federal Rules of Civil Procedure, to accompany the preliminary injunction. We affirm the district court's interlocutory order dissolving the preliminary injunction, of which the bond formed an inextricable part, but decline to opine as to the effect this finding may have in some speculative action on the contract brought in the Court of Federal Claims.

    I. BACKGROUND

    On September 16, 1997, the Army issued a solicitation for bids to produce a detonation fuse styled as the M550 Escapement Assemblies, an essential component of its M-918 40 millimeter Projectile. The Army designated Solicitation No. DAAA09-97-R-0264 a total small business set-aside, and assigned it Standard Industrial Classification ("SIC") Code 3483. Under SBA regulations, a bidding

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    company can qualify as "small" for purposes of SIC Code 3483 if it has fewer than 1500 employees. See 13 C.F.R. § 121.201. The Army announced its intention to award the contract to AMTEC on January 21, 1998. Two days later DSE, a disappointed bidder next in line for the award and the incumbent producer, filed a protest with the contracting officer. Therein, it alleged that AMTEC did not qualify as a small business entity under SIC Code 3483, and that AMTEC's November 12, 1997 self-certification as small was erroneous. The Army contracting officer forwarded this challenge to the SBA's Office of Government Contracting Area Office (the "Area Office") for a formal size determination.

    The Area Office reached a decision on February 9, 1998 (the "First Size Determination"). Based on the information provided by AMTEC in response to the SBA's formal request, the Area Office determined that AMTEC and its affiliates had fewer than 1500 employees at the time of AMTEC's self-certification. The SBA notified the Army of its decision, and the contracting officer awarded the contract to AMTEC. After filing an unsuccessful protest with the General Accounting Office, DSE brought suit in the U.S. District Court for the District of Columbia against the United States seeking a temporary restraining order against performance of the contract, a preliminary and a permanent injunction, a determination that AMTEC was a large business entity, and award of the production contract. In this action, DSE maintained that the SBA's First Size Determination was arbitrary and capricious for failing to count the personnel of various alleged affiliates in assessing the total number of AMTEC employees. On March 12, 1998, the Army ordered AMTEC to stop performance on the contract pending the outcome of the litigation. AMTEC then moved to intervene pursuant to Rule 24 of the Federal Rules of Civil Procedure, and the district court granted its motion.

    When the Area Office became apprised that AMTEC may have had additional and undisclosed affiliates, it initiated another size protest. On April 16, 1998, the SBA concluded that AMTEC still qualified as a small business entity (the "Second Size Determination"). On April 23, 1998, after hearing oral argument, the district court granted a temporary restraining order and directed DSE to post a $5,000 bond. See 4/22/98 Transcript ("Tr.") at 94-103. Further evidentiary hearings followed, including extensive discussions as to the propriety of requiring DSE to post an additional bond. The court repeatedly expressed its view that DSE had performed a public service by coming forward, and that it would be unfair to saddle it with any additional monetary burden. In response, the government contended that any blame lay on AMTEC's shoulders, and that the Army needed protection against any future claims for the delay. See 4/30/98 Tr. at 95-111. On May 6, 1998, the court issued a preliminary injunction against performance on the contract, and ordered that "no compensation is due to AMTEC Corporation for any delay in the beginning of performance in the procurement contract because of the Court's finding that the delay in this matter is the fault of AMTEC's inadequate disclosures...." DSE, Inc. v. United States, 3 F.Supp.2d 1464 (D.D.C.1998) (order granting preliminary injunction) (the "No Compensation Order").

    In the memorandum opinion that accompanied the preliminary injunction, the district court found the SBA's Second Size Determination arbitrary and capricious and contrary to law, remanding the matter back to the SBA. The court based this conclusion on two separate grounds. First, it reasoned that the SBA "did not have all the necessary information before it when it made the determination." DSE, Inc. v. United States, 3 F.Supp.2d at 1470 (D.D.C.1998). Although the SBA relies heavily upon an applicant's voluntary disclosures when assessing size, AMTEC's President had testified that he was largely unfamiliar with both the SBA regulations governing affiliation and the extensive commercial holdings of those who owned AMTEC. The SBA itself had already concluded that the disclosures made in conjunction with the First Size Determination were inadequate. When AMTEC failed to divulge pertinent information concerning two asset acquisitions that it completed during the interlude between its self-certification

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    and receipt of the contract award, the court suspected that those underlying the Second Size Determination were equally insufficient.

    While the SBA had been unaware of AMTEC's acquisitions at the time of its Second Size Determination, the agency insisted in its testimony before the court that they were irrelevant. While SBA regulations give present effect to "agreements in principle" which exist as of the date of self-certification, SBA officials asserted that they lacked the authority to investigate events occurring after that date. Rejecting this contention, the district court concluded that agency regulations not only permitted but required it to examine these transactions. Finding that the SBA erred in failing to investigate whether AMTEC had agreements in principle to acquire these companies as of...

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    ...seeking judicial review of an agency action to demonstrate prejudice from any error. DSE, Inc. v. United States, 335 U.S.App. D.C. 105, 169 F.3d 21, 31 (D.C. Cir. 1999). Since Judge Chiechi finds that the taxpayers in Kemper advance nothing but frivolous arguments and groundless claims, I f......
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    ...the application of its general regulative doctrines to the specifics of this case has been reasonable." DSE, Inc. v. United States, 169 F.3d 21, 28 (D.C.Cir. 1999). In that context, it is axiomatic that "an agency must treat similar cases in a similar manner unless it can provide ......
  • Red River Service Corp. v. United States, 043004 uscc, 03-2747C
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    • April 30, 2004
    ...administrative decisions clearly lies with a United States District Court. See 15 U.S.C. § 634(b); see also DSE, Inc. v. United States, 169 F.3d 21, 27-28 (D.C. Cir. 1999) (holding that the district court's APA review of a SBA size decision was not entitled to deference, but that the agency......
  • Procedures and Standards for Declining Surety Immigration Bonds and Administrative Appeal Requirement for Breaches
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    ...(2d Cir. 1999) (noting that the Immigration and Nationality Act does not impose an exhaustion requirement); DSE, Inc. v. United States, 169 F.3d 21, 26-27 (D.C. Cir. 1999) (filing of appeal did not make agency decision inoperative); Young v. Reno, 114 F.3d 879, 881-82 (9th Cir. 1997) (by re......
  • Request a trial to view additional results
29 cases
  • 121 T.C. 8 (T.C. 2003), 11604-02L, Keene v. Commissioner of Internal Revenue
    • United States
    • Federal Cases United States Tax Court
    • July 8, 2003
    ...seeking judicial review of an agency action to demonstrate prejudice from any error. DSE, Inc. v. United States, 335 U.S.App. D.C. 105, 169 F.3d 21, 31 (D.C. Cir. 1999). Since Judge Chiechi finds that the taxpayers in Kemper advance nothing but frivolous arguments and groundless claims, I f......
  • 321 F.Supp.2d 24 (D.D.C. 2004), Civ. A.03-2522, American Civil Liberties Union v. United States Dept. of Justice
    • United States
    • Federal Cases United States District Courts District of Columbia
    • May 10, 2004
    ...the application of its general regulative doctrines to the specifics of this case has been reasonable." DSE, Inc. v. United States, 169 F.3d 21, 28 (D.C.Cir. 1999). In that context, it is axiomatic that "an agency must treat similar cases in a similar manner unless it can provide ......
  • Red River Service Corp. v. United States, 043004 uscc, 03-2747C
    • United States
    • April 30, 2004
    ...administrative decisions clearly lies with a United States District Court. See 15 U.S.C. § 634(b); see also DSE, Inc. v. United States, 169 F.3d 21, 27-28 (D.C. Cir. 1999) (holding that the district court's APA review of a SBA size decision was not entitled to deference, but that the agency......
  • Keene v. Commissioner of Internal Revenue, 070803 ustax, 11604-02L
    • United States
    • July 8, 2003
    ...burden is on the party seeking judicial review of an agency action to demonstrate prejudice from any error. DSE, Inc. v. United States, 169 F.3d 21, 31 (D.C. Cir. 1999). Since Judge Chiechi finds that the taxpayers in Kemper advance nothing but frivolous arguments and groundless claims, I f......
  • Request a trial to view additional results
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