Armstrong & Armstrong, Inc. v. United States

• Decision Date: 03 January 1973
• Docket Number: Civ. No. 2780.
• Citation: 356 F. Supp. 514
• Court: U.S. District Court — District of Washington
• Parties: ARMSTRONG & ARMSTRONG, INC., Plaintiff, v. UNITED STATES of America, acting By and Through Rogers C. B. MORTON, Secretary of the Department of the Interior, and the United States Department of the Interior, Defendants.

356 F. Supp. 514

ARMSTRONG & ARMSTRONG, INC., Plaintiff, v. UNITED STATES of America, acting By and Through Rogers C. B. MORTON, Secretary of the Department of the Interior, and the United States Department of the Interior, Defendants.

Civ. No. 2780.

United States District Court, E. D. Washington.

January 3, 1973.

COPYRIGHT MATERIAL OMITTED

Ferguson & Burdell by Donald McL. Davidson, and William B. Moore, Seattle, Wash., for plaintiff.

Dean C. Smith, U. S. Atty., and Robert M. Sweeney, Asst. U. S. Atty., for defendants.

OPINION

POWELL, District Judge.

This is a civil action by Armstrong & Armstrong, Inc. against the United States of America and Rogers C. B. Morton as Secretary of the Interior. The agency alleged to be responsible for the damages claimed by the plaintiff is the Bureau of Reclamation, a sub-agency of the Department of the Interior. The plaintiff was determined to be an unsuccessful bidder on a government contract for construction work described by the invitation to bid as:

"Lake Chelan Pumping Plant Discharge Line and Regulating Tank, Manson Unit, Washington Chelan Division, Chief Joseph Dam Project."

The plaintiff claims that Bureau of Reclamation officials acted negligently, arbitrarily and capriciously in denying the award of this contract to the plaintiff. Damages of $9,414.13 are alleged to have been sustained by the plaintiff in bid preparation costs and $142,000.00 in loss of profits.

Admitted Facts

The following facts are admitted in the Pretrial Order. The plaintiff is and was a responsible contractor, capable of performing the work involved in this project. The invitation to bid was issued prior to July 15, 1971. The invitation provided for opening of bids in Manson, Washington, at 2:00 p. m., July 15, 1971.

The bid invitation required bidders to quote on 82 items. Some of the items required lump sum bids. Most of the items required a per unit item bid. The schedule for bids required a statement of the total amount bid in addition to the unit price bid for non-lump sum bid items. The total amount shown for items bid on a per unit basis was a product of the unit price multiplied by the quantity of material specified on the schedule for bids.¹ The invitation also provided that the totals computed for each item bid on a per unit basis and the total bid for lump sum items be added to arrive at the total amount bid for the entire contract.

When the bids were opened, plaintiff was the apparent low bidder at $1,415,757.55. The Bureau of Reclamation Contracting Officer's authorized representative rechecked all the bids. Errors were discovered in four bids. There were no errors in the plaintiff's bid.

There were three errors noted in the next lowest bid which was submitted by Bovee & Crail. An arithmetic error in the extension of unit prices for items 3 and 82 lowered their bid by $340.00. After correcting these two items, it appeared that there was a discrepancy between the total bid submitted for the entire project and the arithmetic total of the 82 items. The correct arithmetic total was $5,000.00 lower. Using the changed figures the Bovee & Crail bid could be reduced to $1,413,027.00 which would displace the low bid of the plaintiff.

The Bureau's local officer informed Bovee & Crail that they had made an arithmetic error in their bid and that they were now the apparent low bidder. (TR. p. 65)

The plaintiff timely protested the proposed award to Bovee & Crail and appealed a contrary ruling to the Comptroller General. On November 17, 1971 the Comptroller General announced his decision upholding the contracting officer.

On November 15, 1971 the plaintiff secured a temporary restraining order preventing award of the contract. On November 23, 1971 this Court held a hearing, received evidence and heard argument on plaintiff's motion for a preliminary injunction. The motion was denied and the injunction lifted. Plaintiff then amended its complaint. The pretrial order sets out the contentions of the parties.

Issues for Determination

The issues to be decided are:

1. Does plaintiff have standing to sue and thus challenge the award of the bid to another bidder?

2. Is plaintiff's claim in tort or contract, and if the latter is this Court's jurisdiction limited to $10,000.00 under the Tucker Act?

3. Was the third error in the Bovee & Crail bid a mistake in addition and correctible or was it an ambiguous error?

4. Was the Government acting within the procurement regulations in directing Bovee & Crail to correct its bid and thus displace the low bid of plaintiff?

5. If plaintiff can recover, what is the amount of its damages?

Standing

To maintain this action in the federal district court, plaintiff must first establish its standing. The question of whether a frustrated bidder on a Government contract has sufficient standing to press a judicial review of administrative action has not been specifically answered in this Circuit. See Hi-Ridge Lumber Co. v. United States, 443 F.2d 452, 457 (9th Cir. 1971).

I find, after reviewing Barlow v. Collins, 397 U.S. 159, 90 S.Ct. 832, 25 L. Ed.2d 192 (1970); Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L. Ed.2d 184 (1970); Perkins v. Lukens Steel, 310 U.S. 113, 60 S.Ct. 869, 84 L. Ed. 1108 (1940); Ballerina Pen Co. v. Kunzig, 140 U.S.App.D.C. 98, 433 F.2d 1204 (1970); cert. denied, sub nom., National Industries for Blind v. Ballerina Pen Co., 401 U.S. 950, 91 S.Ct. 1186, 28 L.Ed.2d 234 (1971), and Scanwell Laboratories Inc. v. Shaffer, 137 U.S. App.D.C. 371, 424 F.2d 859 (1970), that in cases requesting equitable or declaratory relief in the federal courts certain requirements must be met to establish standing.

With the understanding that the question of standing is to be resolved without considering the merits of a case, Flast v. Cohen, 392 U.S. 83, 99-100, 88 S.Ct. 1942, 20 L.Ed.2d 947 (1968), it would appear that the plaintiff must show first, an actual injury in fact to insure that his interest is sufficiently adverse. Second, it must be alleged that the agency has acted arbitrarily, capriciously or in excess of its statutory authority resulting in injury to an interest of the plaintiff that is at least arguably one protected or regulated by the law in question. Finally, the plaintiff must demonstrate that there is no clear, convincing indication from Congress that judicial review is to be withheld in his particular case.

Because Armstrong & Armstrong primarily seeks damages at law rather than general equitable relief, and because, as is more fully explained below, the Administrative Procedure Act 5 U.S.C.A. § 701 et seq. does not afford an independent jurisdictional basis for this Court to entertain these claims, I find the test for standing employed by the Court of Claims instructive on the issue of standing in this case.

In actions for damages allegedly incurred because of arbitrary or capricious or otherwise unlawful acts or omissions by administrative agency procurement officials the Court of Claims has evolved a rule that applies to all procurement situations. That is, each request for offers to contract with the federal government have as an implied condition that each offer received will be fairly and honestly considered. When a prima facie case of arbitrariness or capriciousness has been established, a claimant will be allowed to present non-frivolous claims. See Continental Business Enterprises v. United States, Ct.Cl., 452 F.2d 1016 (1971); Keco Industries, Inc. v. United States, 428 F.2d 1233, 192 Ct.Cl. 773 (1970); Heyer Products Co. v. United States, 140 F.Supp. 409, 135 Ct.Cl. 63 (1956); 177 F.Supp. 251, 147 Ct.Cl. 256 (1959).

The essence of this case is a claim for damages, alternatively under the Federal Tort Claims Act, or under the Tucker Act. Accordingly, the caution displayed and urged in granting pre-procurement equitable or declaratory relief in M. Steinthal & Co. v. Seamans, 147 U.S.App.D.C. 221, 455 F.2d 1289 (1971) and other cases in that Circuit limiting the application of Scanwell Laboratories, supra, such as Blackhawk Heating and Plumbing Co. v. Driver, 140 U.S.App.D.C. 31, 433 F.2d 1137, 1141 (1970); A. G. Schoonmaker Co., Inc. v. Resor, 144 U.S.App.D.C. 250, 445 F.2d 726 (1971), and Wheelabrator Corporation v. Chafee, 147 U.S.App.D.C. 238, 455 F.2d 1306 (1971), though sound and deserving of thorough consideration, are not really apposite here. I conclude that the plaintiff has sufficiently demonstrated his interest and injury to satisfy the requirements of standing under the tests outlined above.

Nature of Claims Asserted

The plaintiff contends that under the invitation to bid and the applicable federal regulations the first two errors in the Bovee & Crail bid were of the type that could be properly corrected. They were ascertainable from the face of the bid, and neither error, nor the total of both errors, operated to displace a low bidder.

However, as to the third error—the discrepancy between the sum stated as the total bid and the correct arithmetic total of the 82 items constituting that sum—the plaintiff argues that an ambiguity was presented as to whether the correct sum of the parts was the intended bid, or the total sum actually stated, or neither. This ambiguity, it is claimed, could not be resolved from the face of the bid without resort to extrinsic evidence.

To the counter-argument that the natural conclusion to be gleaned from the face of the bid was that the bidder intended the arithmetically correct bid, plaintiff answers that assuming the "natural conclusion" is to allow unscrupulous contractors to submit two bids and claim the highest low bid as the intended bid.

The ambiguity in this bid is further compounded because of the possibility that any combination of use of an unintended unit price, or an unintended omission or inclusion of an integer or a decimal in a lump sum bid item, which was not apparent or obvious per se, could...