Sun Ship, Inc. v. Hidalgo, Civ. A. No. 79-2734.

• Decision Date: 13 February 1980
• Docket Number: Civ. A. No. 79-2734.
• Citation: 484 F. Supp. 1356
• Parties: SUN SHIP, INC., Plaintiff, and General Dynamics Corporation, Quincy Shipbuilding Division, Intervenor-Plaintiff, v. Edward HIDALGO et al., Defendants, and National Steel and Shipbuilding Co., Intervenor-Defendant.
• Court: U.S. District Court — District of Columbia

484 F. Supp. 1356

SUN SHIP, INC., Plaintiff and General Dynamics Corporation, Quincy Shipbuilding Division, Intervenor-Plaintiff, v. Edward HIDALGO et al., Defendants and National Steel and Shipbuilding Co., Intervenor-Defendant.

Civ. A. No. 79-2734.

United States District Court, District of Columbia.

February 13, 1980.

Gerald P. Norton, Gilbert E. Geldon, Murray J. Belman, Pepper, Hamilton & Scheetz, Inc., Washington, D. C., for plaintiff, Sun Ship, Inc.

Herbert L. Fenster, E. Sanderson Hoe, Harvey G. Sherzer, Sellers, Conner & Cuneo, Washington, D. C., for intervenor-plaintiff, General Dynamics Corp., Quincy Shipbuilding Div.

Carl S. Rauh, U. S. Atty., Royce C. Lamberth, Asst. U. S. Atty., Mark N. Mutterperl, Dept. of Justice, Civ. Div., Kenneth Raisler, Asst. U. S. Atty., Washington, D. C., for government defendants; Allan Freidson, Edward Houry, Naval Sea Systems Command, Washington, D. C., of counsel.

Michael L. Burack, John H. Pickering, David M. Becker, Seth A. Davidson, Marie N. Doland, Wilmer & Pickering, Washington, D. C., for intervenor-defendant, National Steel and Shipbuilding Co.

MEMORANDUM OPINION

CHARLES R. RICHEY, District Judge.

This case is before the Court on defendants' and intervenor-defendant's joint motion for summary judgment and plaintiff's and intervenor-plaintiff's oppositions thereto. Since there is no genuine dispute as to facts material to the resolution of the claims raised by the plaintiffs,¹ summary judgment is appropriate. For the reasons more fully set forth below, the Court grants summary judgment to defendants² and dismisses this action.

This action was commenced by Sun Ship,³ and later joined in by QSD,⁴ to enjoin performance of a Navy contract to design and construct an ocean-going vessel which has a target cost in excess of $100 million. This ship, designated the "T-ARC 7", is to be used for retrieving, repairing and deploying cable along the ocean floor.

On October 17, 1979, after hearing argument of the parties,⁵ the Court denied plaintiff Sun Ship's motion for a temporary restraining order. A hearing on plaintiffs' motion for a preliminary injunction was held on November 9, 1979, at which time the Court heard from all parties. In a memorandum opinion issued November 20, 1979, the Court denied plaintiffs' motion.

Plaintiffs have presented various challenges to the Navy's conduct throughout the several stages of the evaluation process involved in the T-ARC 7 procurement. Specifically, plaintiffs claim that the Navy unlawfully and irrationally awarded the contract for the detailed design and construction of the T-ARC 7 to NASSCO in violation of the Armed Services Procurement Act of 1947, as amended, 10 U.S.C. § 2301 et seq., and Defense Acquisition Regulations ("DAR") promulgated thereunder, 32 C.F.R. § 1 et seq.

The Court will first set forth the appropriate standard of review of a procurement decision by a Government agency and then proceed to consider plaintiffs' challenges in the approximate order in which they are alleged to have occurred.

I. THE APPROPRIATE STANDARD OF REVIEW.

A reviewing court may not overturn a procurement decision by a Government agency unless the party challenging the decision overcomes the "heavy burden of showing either (1) the procurement official's decision on matters committed primarily to his own discretion had no rational basis, or (2) the procurement procedure involved a clear and prejudicial violation of applicable statutes or regulations." Kentron Hawaii, Ltd. v. Warner, 156 U.S.App. D.C. 274, 277, 480 F.2d 1166, 1169 (D.C. Cir. 1973) (footnote omitted); See also, M. Steinthal & Co. v. Seamans, 147 U.S.App. D.C. 221, 455 F.2d 1289 (D.C. Cir. 1971). In conducting its review, the Court's inquiry:

. . . must fully take into account the discretion that is typically accorded officials in the procurement agencies by statutes and regulations. Such discretion extends not only to the evaluation of bids submitted in response to a solicitation but also to determination by the agency with respect to the application of technical, and often esoteric, regulations to the complicated circumstances of individual procurements.

M. Steinthal & Co., supra 147 U.S.App.D.C. at 233, 455 F.2d at 1301. Furthermore, in the field of government procurement "the courts must be sedulous to heed the admonition that their authority to vacate and enjoin action that is illegal must be exercised with restraint less the courts fall into the error of supposing that they may revise `action simply because they happen to think it ill-considered, or to represent the less appealing alternative solution available.'" Id. 147 U.S.App.D.C. at 230-31, 455 F.2d at 1298-99 (citation omitted).

Finally, even in instances where the aggrieved bidder demonstrates that there was no rational basis for the agency's decision, a reviewing court, in the exercise of sound judicial discretion and in light of overriding public interest considerations, may properly refuse to grant declaratory or injunctive relief. Id. 147 U.S.App.D.C. at 233, 455 F.2d at 1301.

II. CONSIDERATIONS OF NATIONAL DEFENSE.

Defendants contend that considerations of national defense preclude the relief sought by plaintiffs in this action. The Navy has consistently argued that timely completion of the T-ARC 7 is vital to the defense interests of the United States. This "overriding public interest consideration," the defendants contend, by itself compels 1) upholding the award of the T-ARC 7 contract, and 2) granting summary judgment in defendants' favor. The Court agrees with defendants' first contention but disagrees with their second.

The T-ARC 7, when completed, is to be used for retrieving, repairing and deploying cable along the ocean floor. This cable is part of a major Naval intelligence-gathering network which is clearly essential to the national defense.

The Navy's existing cable ships are more than thirty years old and do not have the capability to perform the functions envisioned for the T-ARC 7. Due to the inadequacy of the Navy's present cable ships and the T-ARC 7's projected role in aid of monitoring continued improvement in the operational capabilities of potential opposing naval forces, the Navy has concluded that it is essential to the national defense that the T-ARC 7 be placed in service when projected.

The hearings on appropriations for the T-ARC 7 highlight the importance of the vessel to the national defense. Vice Admiral James H. Doyle, Jr., Deputy Chief of Naval Operations for Surface Warfare, told the House Committee on Armed Services: "The systems of underwater surveillance and communications which the Navy maintains for both the Navy and Air Force require four cable repair ships to insure system operability in the face of cable breaks imposed by fishing trawler equipment or natural causes in far-flung areas of the world." Hearings on Military Posture and H.R. 10929 Department of Defense Authorization for Appropriations for Fiscal Year 1979 before the House Committee on Armed Services, 95th Cong., 2d Sess., Part 4, at 202 (1978) ("Hearings"). In addition, Admiral Doyle stated that "the new cable repair ship is vital to maintaining and improving the undersea surveillance capability which is a prerequisite to effective anti-submarine warfare." Hearings at 369. Rear Admiral Bruce Kenner, III, Director of Ship Acquisitions Division, Office of the Chief of Naval Operations, testified that the T-ARC 7 is "extremely important to our continued ability to control the seas to the extent necessary to support our forces overseas." Hearings at 1039. Finally, Congressman Bennett, Chairman of the Seapower and Strategic and Critical Materials Subcommittee of the House Armed Services Committee, noted that "in a year of austere funding for naval shipbuilding by the administration, the Secretary of the Navy has among his highest priorities the procurement of the T-ARC and T-AGOS ships." Hearings at 1008.

In support of its contention, defendants rely on the affidavit, filed January 14, 1980, of Edward Hidalgo, Secretary of the Navy. Secretary of the Navy Hidalgo has occupied that office since October 24, 1979. Prior to that date, Secretary Hidalgo held the office of Assistant Secretary of the Navy (Manpower, Reserve Affairs and Logistics) from April 25, 1977, to October 24, 1979.

In his affidavit, Secretary Hidalgo has certified to the Court that the delay caused by overturning the award of the T-ARC 7 contract to NASSCO would "have a significant adverse impact on the national security of the United States." Moreover, the Secretary states that "the importance of the T-ARC 7's mission — and thus the need for prompt acquisition — has been dramatically heightened by recent international developments."

The Court concludes that timely completion of the T-ARC 7 is an "overriding public interest consideration" which compels upholding the award of the contract to NASSCO. M. Steinthal & Co. v. Seamans, supra 147 U.S.App.D.C. at 233, 455 F.2d at 1301; Pace Co. v. Resor, 453 F.2d 890, 891 (6th Cir. 1971) (per curiam), cert. denied, 405 U.S. 974, 92 S.Ct. 1192, 31 L.Ed.2d 248 (1972). See also, Curran v. Laird, 136 U.S.App.D.C. 280, 287, 420 F.2d 122, 129 (D.C.Cir.1969). It is not within the province of the Court to determine exactly where the interests of the national defense lie. Such a determination, by its very nature, is not judicial, but within the executive and legislative spheres. Rather, the Court accepts the determination of the highest official of the Navy, Secretary Hidalgo. The Secretary has certified to the Court, based in part on classified information, that it is "vital to the national defense that the Navy not be required to terminate its present contract with National Steel . . ." The Court has no reason to question the veracity, good faith or expertise of Secretary Hidalgo in this sensitive area. Accordingly, the Court finds that considerations of national defense preclude the...