Garufi v. U.S.

• Citation: 238 F.3d 1324
• Parties: (Fed. Cir. 2000) IMPRESA CONSTRUZIONI GEOM. DOMENICO GARUFI, Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee. 99-5137 DECIDED:
• Decision Date: 03 January 2001
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Page 1324

238 F.3d 1324 (Fed. Cir. 2000)

IMPRESA CONSTRUZIONI GEOM. DOMENICO GARUFI, Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee.

99-5137

United States Court of Appeals for the Federal Circuit

DECIDED: January 3, 2001

Appealed from: United States Court of Federal Claims Judge Emily C. Hewitt

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

Sam Zalman Gdanski, of Suffern, New York, argued for plaintiff-appellant.

Franklin E. White, Jr., Trial Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, DC, argued for defendant-appellee. With him on the brief were David W. Ogden, Assistant Attorney General; David M. Cohen, Director; and Mark A. Melnick, Assistant Director. Of counsel on the brief was Vicki E. O'Keefe, Attorney, Naval Facilities Engineering Command, Department of the Navy, of Washington, DC. Of counsel were Kenneth M. Dintzer, Trial Attorney; Michael Duclos, Trial Attorney; Jeanne E. Davidson, Deputy Director; and Katherine M. Kelly, Trial Attorney, Department of Justice, of Washington, DC.

Before NEWMAN, LINN, and DYK, Circuit Judges.

DYK, Circuit Judge.

This case presents an issue that has not been fully addressed by this court -- the standard for reviewing decisions of contracting officers under the Administrative Dispute Resolution Act of 1996 ("ADRA"), Pub. L. No. 104-320, § 12, 110 Stat. 3870, 3874-75 (1996). We hold that the appellant has standing to challenge the contracting officer's responsibility determination. Applying the standards of the ADRA, we find that a substantial question has been raised concerning the rationality of the contracting officer's responsibility determination. We therefore reverse and remand the case to the Court of Federal Claims to allow a limited deposition of the contracting officer concerning the basis for the responsibility determination so that the Court of Federal Claims can properly review the responsibility determination using the standards established by the ADRA. In other respects, we affirm.

I

This case involves a contract for maintenance, groundskeeping, janitorial, and other services, to be performed at the United States Naval Air Station in Sigonella, Italy. The appellant, Impresa Construzioni Geom. Domenico Garufi ("Garufi"), an unsuccessful bidder, challenged the award of the contract to Joint Venture Conserv ("JVC"). The background of this controversy is as follows:

On August 28, 1998, the Navy issued a Request for Proposals ("RFP") for the services contract at the Sigonella base. Four offerors responded to the solicitation, including Garufi and JVC. JVC is a joint venture composed of three companies: Lara Srl ("Lara"), Impredil Construzioni Srl ("Impredil"), and Coop. Bosco Etneo arl ("Bosco"). It appears that Lara and Impredil had previously performed similar contracts at the Sigonella base. Also, these two companies (Lara and Impredil), at least previously, were controlled by Carmelo La Mastra, while Bosco was controlled by Carmelo La Mastra's brother-in-law, Alfio Bosco.

In a 1997 proceeding, an Italian court, the Court of Catania Third Penal Division, found that Carmelo La Mastra had engaged in bid rigging and was involved in a Mafia organization in connection with previous contracts at the Sigonella base, apparently in the early 1990's. The Italian court found that Carmelo had been involved in intimidating a competitor into withdrawing from a bid for a contract at the Sigonella base, and that "probably in connection with that [same] bid the owner of another firm . . . was killed." The Italian proceeding was also directed against Salvatore La Mastra and Alfio Bosco, the son and brother-in-law of Carmelo La Mastra. The court found that the seizure of property levied against Carmelo "La Mastra's children" and Bosco "appears to be legitimate" in light of "the free availability of immovable properties and societies registered fictitiously under the name of people close to him" and that such past and future transfers of property "may facilitate the consummation of other similar crimes or may make worse the consequences of the crimes already consummated." As a result of these findings the Court of Catania, in December 1997, placed Lara, Impredil, and Bosco under a receivership run by a legal administrator. The receivership papers gave the legal administrator authority to perform "all the necessary or opportune lawful acts for the management and administration" of the companies.

Shortly thereafter, also in December 1997, Lara and Impredil, with the approval of the legal administrator, conferred signatory power on Salvatore La Mastra, Carmelo La Mastra's son, to negotiate contract changes and sign modifications for various contracts at the Sigonella base.

Furthermore, in May 1998, also after the receivership had been established, Impredil filed registration papers at the Chamber of Commerce, Industry, Handicraft and Agriculture of Catania specifically listing Carmelo La Mastra as a "Company Officer" with the title of "Technical Manager appointed on 25 Jan. 1998" and as a "company signatory" of Impredil. The term "Technical Manager" is not defined in the document nor does the document disclose the job description or amount of control that a technical manager has over the company.

In June 1998, Carmelo La Mastra was indicted by the Anti-Mafia District Office in Catania for his involvement in a "Mafia-type association" and for involvement in bid-rigging at the Sigonella base. The record does not disclose the outcome of that proceeding.

All of the events described in the preceding four paragraphs occurred before the 1998 RFP involved here. The RFP for the Sigonella contract, issued on August 28, 1998, stated that the contract would be awarded to the offeror who submitted the proposal that represented the best value to the government. On September 15, 1998, Lara, Impredil, and Bosco formed JVC as a temporary joint venture for the purpose of making a joint bid in response to the RFP. Lara was named as the prime contractor (lead manager) of the joint venture in the September 15, 1998, papers. The joint venture was formed under the supervision of the legal administrator appointed by the Italian court in the December 1997 proceeding. On the same date, JVC filed papers granting the legal administrator "authority to represent and run the aforementioned joint venture with the fullest powers as needed in connection with such appointment, without any limitations or exceptions . . . ." ¹

Garufi and JVC submitted proposals, along with two other offerors. Despite the receivership proceeding and the 1998 indictment of Carmelo La Mastra, JVC certified in its proposal that during the three-year period preceding its offer, neither it nor its principals had been convicted or had a civil judgment against them for certain offenses including "commission of a fraud or a criminal offense in connection with obtaining, attempting to obtain, or performing a public . . . contract" and were not presently indicted for such offenses.

Upon initial evaluation by a technical board and a price board, one of the competitors was eliminated from the competitive range by the contracting officer, leaving appellant Garufi, JVC, and one other bidder. After issuance of several reports, and numerous letters and meetings between Garufi and the boards, Garufi revised its proposal. The contracting officer then eliminated Garufi from the competitive range "based on the determination of the [technical board] that its revised technical proposals was [sic] rated UNACCEPTABLE overall" and "that a complete rewrite would be required to make the [proposal] acceptable." Moreover, the contracting officer stated that it was concerned "that [Garufi] may either not fully understand the complete solicitation requirements or be placing itself at an increased performance risk by its proposed prices being 25% below the [government estimate]." The contracting officer also eliminated the other remaining bidder, leaving JVC as the sole remaining bidder in the competitive range.

Under the Federal Acquisition Regulation ("FAR") the contract could not be awarded to JVC unless JVC was found to be "responsible," including a finding of "a satisfactory record of integrity and business ethics." 48 C.F.R. § 9.104-1(d). ²

On March 5, 1999, the contracting officer signed a responsibility determination, noting that JVC had "a satisfactory record of performance, integrity, and business ethics" and is "otherwise qualified and eligible to receive an award under applicable laws and regulations." The contracting officer therefore awarded the contract to JVC on March 5, 1999.

Garufi filed several protests with the General Accounting Office ("GAO"), challenging the Navy's elimination of Garufi from the competitive range and the grant of the contract to JVC. The GAO issued a final decision on June 17, 1999, denying Garufi's protests.

On June 28, 1999, Garufi filed a bid protest suit in the United States Court of Federal Claims pursuant to 28 U.S.C. § 1491(b)(1), which grants the Court of Federal Claims jurisdiction over bid protest actions against the government. ³Garufi sought,inter alia, to have the court determine: (1) that the contracting officer's decision to award the contract to JVC was arbitrary and capricious based on an allegedly improper evaluation and elimination of Garufi from the competitive range; and (2) that the contracting officer made an arbitrary and capricious responsibility determination with respect to JVC. Garufi raised two grounds for challenging the responsibility determination: (1) that JVC lacked the satisfactory record of integrity and business ethics required by the regulations due to the alleged involvement of Carmelo La Mastra; and (2) that JVC lied on the certification concerning debarment and civil and criminal proceedings. Garufi asked the court to direct the agency to reevaluate both Garufi and JVC, or alternately,...