924 F.2d 1068 (D.C. Cir. 1990), 89-5122, Irvin Industries Canada, Ltd. v. U.S. Air Force

Docket Nº:89-5122.
Citation:924 F.2d 1068
Party Name:IRVIN INDUSTRIES CANADA, LTD., Appellant, v. UNITED STATES AIR FORCE, Appellee.
Case Date:January 23, 1990
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit
 
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924 F.2d 1068 (D.C. Cir. 1990)

IRVIN INDUSTRIES CANADA, LTD., Appellant,

v.

UNITED STATES AIR FORCE, Appellee.

No. 89-5122.

United States Court of Appeals, District of Columbia Circuit.

January 23, 1990

Argued Jan. 22, 1990.

Appeal from the United States District Court for the District of Columbia (Civil Action No. 88-3574).

Lanny J. Davis, for appellant. Richard M. Stalbach also entered an appearance, for appellant.

John C. Martin, Asst. U.S. Atty., with whom Jay B. Stephens, U.S. Atty., and John D. Bates and R. Craig Lawrence, Asst. U.S. Attys., were on the brief, for appellee.

Before EDWARDS, Circuit Judge, ROBINSON, Senior Circuit Judge, and REVERCOMB, [*] District Judge.

Opinion for the Court filed by Senior Circuit Judge SPOTTSWOOD W. ROBINSON, III.

SPOTTSWOOD W. ROBINSON, III, Senior Circuit Judge:

Irvin Industries Canada, Ltd., participated in competitive bidding for a contract to provide the United States Air Force with parachute releases. The Air Force awarded the contract to Scot, Incorporated, another bidder. Irvin protested unsuccessfully to the General Accounting Office and then sought relief in the District Court. After denying Irvin a preliminary injunction, the court granted summary judgment for the Air Force. Irvin challenged those rulings here, and we reversed and remanded with instructions to require the Air Force to afford all potential bidders an opportunity to submit new or amended proposals. 1 We stated that this opinion would follow.

I

In 1987, the Air Force issued to prospective offerors a letter request 2 for technical

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proposals respecting a parachute rip cord release meeting the exigencies of ejection from high-speed aircraft. 3 This would be a "device[ ] connected to the parachutes of US Air Force crewmembers which [is] designed to ensure the automatic opening of the parachute under emergency conditions such as when the crewmember is unconscious or disabled." 4

Procurement by federal executive agencies, including the military departments and defense agencies, is governed primarily by the Federal Acquisition Regulation, 5 which permits two-step sealed bidding 6 when specified conditions coexist. 7 Electing this methodology, the Air Force in its letter request invited prospective offerors to submit technical proposals containing all pertinent information save price. 8 The request stated that "[t]echnical evaluation of the proposals shall be performed by a team of engineering personnel, equipment specialists, and technicians," 9 and that

[t]he following factors will be evaluated:

  1. Technical

  2. Schedule

  3. Data

  4. Manufacturing Capability. 10

The request called specifically for a critical design review within 30 days after the date of the contract award, 11 and for delivery of

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first article test reports within 180 days after that date. 12 Offerors were admonished to heed all requirements. 13 In regard to step two, the request stated that "[c]ontractors with acceptable technical proposals will then be required to submit Pricing information...." 14 The scheme of the solicitation thus was to deal with non-price considerations in step one, and then "to have a price competition between technically acceptable offerors in step two." 15

Irvin and three others responded with technical proposals. Irvin submitted a modified version of an off-the-shelf product which it was supplying to air forces of other nations, 16 but it did not measure up to the Air Force's specifications. 17 Scot, which also lacked a suitable product, offered a design of a technically conforming parachute release, 18 but one requiring more time to develop than the terms of the solicitation allowed.

After conducting its technical evaluation, the Air Force deemed Scot's step-one proposal acceptable 19 and turned down the remaining three. 20 The Air Force acknowledged that Scot's proposal "does not meet the delivery requirements as specified," 21 but felt that "the high confidence of success due to technical acceptability outweighs the delayed availability of the units." 22 Irvin's technical proposal was rejected as nonresponsive to the specifications of the purchase description. 23

The Air Force had envisioned a firm fixed-price proposal as the end result of step two of the solicitation. 24 Although Scott did propose in that light, there was no meaningful price competition. 25 This consideration contributed to the Air Force's belief that it was "necessary to employ negotiation procedures to preclude excessive pricing." 26 What eventuated therefrom was the award to Scot, some seventeen months after the closing date for tender of technical proposals, of a contract deviating from the terms of the solicitation

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by allowance of 154 rather than 30 days for the critical design review 27 and 526 rather than 180 days for delivery of first article reports, 28 and by providing for payment on some line items on a cost-plus-fixed-fee basis. 29

Irvin protested to the General Accounting Office 30 that the Air Force erred in finding its proposal technically unacceptable and, alternatively, that the Air Force was estopped from making such a determination because, Irvin said, the Air Force had indicated its satisfaction with a design earlier submitted by Irvin as an unsolicited proposal. 31 The protest was denied on grounds that the Air Force was justified in turning Irvin's proposal down; 32 that Irvin's objections were untimely because "a protest relating to an alleged solicitation impropriety apparent on the face of the solicitation must be filed prior to the date for submission of offers;" 33 and that the record did not support Irvin's estoppel theory. 34

Irvin then brought an action in the District Court. 35 There Irvin reasserted its claims of improper rejection 36 and estoppel, 37 and assailed the Air Force's decision to award the contract to Scot. 38 Early on, Irvin moved for a preliminary injunction, 39 which the court refused to grant. 40 The court felt that the Air Force properly discarded Irvin's proposal as deficient and that Irvin was not justified in relying upon alleged pre-solicitation representations by Air Force personnel as to acceptability of the Irvin product. 41 Nor, in the court's view, did

the post-qualification concessions to Scot on terms of delivery and compensation constitute irregularities, at least of a magnitude to require that the award be set aside, even temporarily. The record explains rationally why cost and delivery terms had become negotiable: only one company was willing to supply the product the Air Force really wanted, and the Air Force consequently had no market to shop. The cost-plus arrangement thus became a cost-conscious alternative to the arbitrarily high fixed price that Scot, as a monopolist, could have commanded otherwise. 42

Thereafter, on cross-motions for summary judgment, 43 the court, for "essentially

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the reasons" persuading it to deny the preliminary injunction, ruled in favor of the Air Force. 44 It is from this disposition that Irvin appeals.

II

Irvin, as an offeror adversely affected by the Air Force's action, has standing to challenge the award of the contract to Scot. 45 To do so successfully, however, Irvin "bear[s] a heavy burden of showing either that (1) the procurement official's decisions on matters committed primarily to his own discretion had no rational basis, or (2) the procurement procedure involved clear and prejudicial violation of applicable statutes or regulations." 46 We find that Irvin has surmounted that hurdle.

The requirements to be satisfied by technical proposals respecting the parachute release were carefully detailed in documents accompanying the letter request communicated to prospective offerors. 47 Additionally, a pre-proposal conference was conducted by the Air Force to enable offerors to obtain answers to any questions they had about the acquisition process. 48 Hardly could the Air Force have done more to promote understanding of the demands to be met, yet, by the Air Force's assessment, Irvin's proposal did not comply with all of them. 49 Irvin was accordingly notified that its proposal was unacceptable and that it could not be revised. 50 Both the General Accounting Office 51 and the District Court 52 agreed with the Air Force, and Irvin now concedes the point. 53

The Federal Acquisition Regulation provides that "[a]ny proposal which modifies, or fails to conform to the essential requirements or specifications of, the request for technical proposals shall be considered nonresponsive and categorized as unacceptable," 54 and the contracting officer is directed to inform the offeror that no revision of the proposal will be entertained. 55 The principles demanding rejection of nonconforming proposals

rest upon and effectuate important public policies. "Rejection of irresponsive bids is necessary if the purposes of formal advertising are to be attained, that is, to give everyone an equal right to compete for Government business, to secure fair prices and to prevent fraud."

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The requirement that a bid be responsive is designed to avoid unfairness to other contractors who submitted a sealed bid on the understanding that they must comply with all of the specifications and conditions in the invitation for bids, and who could have made a better proposal if they imposed conditions upon or variances from the contractual terms the government has specified. The rule also avoids placing the contracting officer in the difficult position of having to balance the more favorable offer of the deviating bidder against the disadvantages to the government from the qualifications and conditions the bidder has added. 56

The prohibition on post-opening...

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