Gull Airborne Instruments, Inc. v. Weinberger

• Decision Date: 30 November 1982
• Docket Number: No. 81-2285,81-2285
• Citation: 694 F.2d 838,224 U.S.App.D.C. 272
• Parties: , 30 Cont.Cas.Fed. (CCH) 70,538 GULL AIRBORNE INSTRUMENTS, INC., Appellant, v. Caspar W. WEINBERGER, Secretary of Defense of the U.S.A., et al.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 838

694 F.2d 838

224 U.S.App.D.C. 272, 30 Cont.Cas.Fed. (CCH) 70,538

GULL AIRBORNE INSTRUMENTS, INC., Appellant, v. Caspar W. WEINBERGER, Secretary of Defense of the U.S.A., et al.

No. 81-2285.

United States Court of Appeals, District of Columbia Circuit.

Argued Sept. 10, 1982.

Decided Nov. 30, 1982.

Robert A. Witti, Washington, D.C., with whom F. Trowbridge Vom Baur, Washington, D.C., was on the brief, for appellant.

Michael J. Ryan, Asst. U.S. Atty., Washington, D.C., with whom Stanley S. Harris, U.S. Atty., and Royce C. Lamberth, R. Craig Lawrence and Cheryl M. Long, Asst. U.S. Attys., Washington, D.C., were on the brief, for appellees.

Before ROBINSON, Chief Judge, and WRIGHT and WALD, Circuit Judges.

Opinion for the Court filed by Circuit Judge WALD.

WALD, Circuit Judge:

In October 1977 the United States Navy granted a contract to Consolidated Airborne Systems, Inc. (CAS), for the procurement of certain fuel quantity test sets and data. Following several attempts to obtain administrative relief, appellant, Gull Airborne Instruments, Inc. (Gull), the second low bidder on the contract, filed suit in federal district court, alleging that both the Navy's award and its administration of the contract were illegal and asking that further performance be enjoined. The district court dismissed the case, finding that Gull had standing to protest the contract's award (although not its administration), but that its request for injunctive relief was barred by the equitable doctrine of laches. We agree with the district court regarding both Gull's standing to challenge the award of the contract and its lack of standing to challenge subsequent administration of the contract. We conclude, however, that laches does not bar Gull's claim on the contract's award. Nevertheless, we find another possible bar to reaching the merits of the case. The government has recently informed this court that the contract has been fully performed and paid for. We therefore remand to the district court for a factual determination as to whether Gull is barred from receiving the relief it has requested because of mootness.

I. BACKGROUND

In September 1976 the U.S. Navy's Aviation Supply Office (ASO) invited bids for "capacitance-type, tank-unit, fuel quantity test sets and data." Bids were opened in January 1977. Of the three that had been entered, CAS' was the low bid on the contract and Gull's was the second low bid.

In February 1977 Gull filed a preaward protest with the procuring agency, ASO, alleging that CAS had no existing designs that could meet the contract's specifications and that the delivery schedule provided insufficient time for CAS to develop a new design. In April 1977 Gull filed a similar preaward protest with the General Accounting Office (GAO), citing the same allegations and pointing out that ASO's contracting officer had relied on the imminent CAS merger with Bendix Corporation as the basis for finding CAS financially responsible.

Bendix notified the ASO on April 26, 1977, that it had purchased all the assets, open contracts, and proposal commitments of CAS and guaranteed performance of the Navy's contract if awarded to CAS. On October 31, 1977, the contracting officer determined that the equipment involved in the contract was urgently needed and awarded the contract to CAS. ¹

On November 7, 1977, the GAO denied Gull's April protest, finding that an award could properly be made to CAS. Gull promptly requested the GAO to reconsider. In March 1978 the GAO affirmed its prior decision. In neither case did the GAO conduct an independent investigation; it relied instead on CAS' preaward assurances to the Navy that it could perform the contract as written. In the same month the Navy accepted novation of the contract with Bendix.

Under the contract Bendix was to make its first delivery in April 1978. It failed to do so. A year later, in April 1979, Gull made Freedom of Information Act (FOIA) requests for notes of or any correspondence relating to a June 1978 meeting between the Navy and Bendix. The FOIA documents were received in May 1979 and allegedly indicated that Bendix (as well as CAS) could not comply with either the contract's specifications or its delivery schedule. In July 1979 Gull wrote the Navy's contracting officer, pointing out that CAS' misrepresentations had prompted the contract award and that nonperformance of the contract had directly resulted from these misrepresentations. It therefore requested the officer to terminate the contract for default. The contracting officer once again rejected Gull's protest. In December 1979 Gull renewed its GAO protest, claiming that the contract was void or voidable and that its maladministration had changed it to a new and different procurement. The GAO denied the protest in August 1980.

Gull filed suit in the district court in February 1981, protesting both the award and the administration of the contract and seeking a permanent injunction directing the Navy to terminate the contract. In June 1981 the Navy moved to dismiss the case on the grounds that Gull lacked standing to sue and that the action was barred by laches. The district court granted the Navy's motion in October 1981, finding that Gull had standing to challenge the award (not the maladministration) of the contract, but that laches barred the court from hearing the case.

II. ANALYSIS

A. Standing

Gull contends here that it is entitled, as an injured party, to seek review of both the contract award to CAS and the Navy's subsequent administration of the contract as actions in violation of the regulations governing the issuance and administration of government contracts. ² We agree with the district court that Gull has standing to contest the award of the contract but not its administration.

Section 702 of the APA gives a right to judicial review to any person "adversely affected or aggrieved by agency action within the meaning of a relevant statute." Control Data Corp. v. Baldrige, 655 F.2d 283, 288-89 (D.C.Cir.), cert. denied, 454 U.S. 881, 102 S.Ct. 363, 70 L.Ed.2d 190 (1981), sets out a three-part test for standing to obtain review of administrative action: (1) the complainant must allege injury in fact; (2) the complainant must assert that arbitrary or capricious agency action injured an interest arguably within the zone of interests to be protected or regulated by the statute or constitutional guarantee in question; and (3) there must be no "clear and convincing" indication of a legislative intent to withhold judicial review. See also Simon v. Eastern Kentucky Welfare Rights Organization, 426 U.S. 26, 38, 96 S.Ct. 1917, 1924, 48 L.Ed.2d 450 (1976); Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 153, 90 S.Ct. 827, 829, 25 L.Ed.2d 184 (1970); Howes Leather Co. v. Carmen, 680 F.2d 818, 820 (D.C.Cir.1982) (per curiam).

Gull contends that it has standing under Sec. 702 as a disappointed bidder on the Navy's contract to protest both its award to CAS and its subsequent maladministration. We agree with both Gull and the district court that disappointed bidders have standing to challenge the failure of an administering agency to follow the applicable statutes and regulations regarding contract awards. See M. Steinthal & Co. v. Seamans, 455 F.2d 1289 (D.C.Cir.1971); Scanwell Laboratories, Inc. v. Shaffer, 424 F.2d 859 (D.C.Cir.1970); Airco, Inc. v. Energy Research and Development Administration, 528 F.2d 1294 (7th Cir.1975) (per curiam); Armstrong & Armstrong, Inc. v. United States, 514 F.2d 402 (9th Cir.1975) (per curiam); Hayes International Corp. v. McLucas, 509 F.2d 247 (5th Cir.), cert. denied, 423 U.S. 864, 96 S.Ct. 123, 46 L.Ed.2d 92 (1975); Wilke, Inc. v. Department of the Army, 485 F.2d 180 (4th Cir.1973); Merriam v. Kunzig, 476 F.2d 1233 (3d Cir.), cert. denied, 414 U.S. 911, 94 S.Ct. 233, 38 L.Ed.2d 149 (1973).

Gull also contends that it has standing to seek review of the Navy's alleged maladministration of the contract. To be accorded such standing, Gull must satisfy the Control Data test. We agree with the government and the district court that it has been unable to do so.

The first two parts of the test require that the complainant allege injury to an interest arguably within a statute's or regulation's zone of interests. Here, Gull alleges that it suffered economic loss from the illegal entry of a government-funded competitor into its own line of business. It also alleges that it suffered economic loss because it was denied an opportunity to bid on reprocurement of the contract. The government, on the other hand, argues that the only economic injury Gull suffered was the original failure to win the contract. Once a contract is in place, it contends, disappointed bidders on the contract revert to the status of ordinary citizens who have no generalized standing to object to government actions. In addition, the government argues, any economic loss sustained through denial of an opportunity to Gull to bid on the reprocurement is conjectural since Gull may not have been the low bidder on that second contract. ³

Even were we to assume, however, that the Navy's award of the contract to CAS, its novation of the contract to Bendix, and its decision to extend the contractual delivery date conferred cognizable injury on Gull by illegally allowing CAS and Bendix to become its competitors and by preventing Gull from bidding on the reprocurement of the contract, that injury alone would be insufficient to confer standing on Gull to contest the administration of the contract. Gull must also demonstrate that the regulatory or statutory requirements it seeks to enforce were intended to protect it against such competitive injury. See Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184; Hardin v. Kentucky Utilities Co., 390 U.S. 1, 88 S.Ct. 651, 19 L.Ed.2d 787 (1968).

Unlike the regulations governing the...