977 F.2d 1472 (D.C. Cir. 1992), 91-7106, Elcon Enterprises, Inc. v. Washington Metropolitan Area Transit Authority

Docket Nº91-7106, 91-7107 and 91-7122.
Citation977 F.2d 1472
Case DateOctober 30, 1992
CourtUnited States Courts of Appeals, Court of Appeals for the District of Columbia Circuit

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977 F.2d 1472 (D.C. Cir. 1992)







Schindler Elevator Corporation, et al.




Elevator Corporation, Appellant.

Nos. 91-7106, 91-7107 and 91-7122.

United States Court of Appeals, District of Columbia Circuit.

October 30, 1992

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Argued Sept. 22, 1992.

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Cross-appeals from the United States District Court for the District of Columbia, C.A. 89-03410.

Joseph F. Cunningham, Washington, D.C., for appellant Elcon Enterprises, Inc.

Gerard J. Stief, with whom Robert L. Polk, Gen. Counsel, Robert J. Kniaz, Deputy Gen. Counsel, and Francis R. Filiatreau, Jr., Asst. Gen. Counsel, Washington, D.C., were on the brief, for appellee/cross-appellant Washington Metropolitan Area Transit Authority.

V. Frederic Lyon, with whom Julie A. Quagliano, Washington, D.C., was on the brief, for appellee/cross-appellant Schindler Elevator Corp.

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Before: WALD, SILBERMAN, and SENTELLE, Circuit Judges.

Opinion for the Court filed by Circuit Judge SENTELLE.

SENTELLE, Circuit Judge:

In this case, we are called upon to decide whether or not the decision of the Washington Metropolitan Area Transit Authority ("WMATA") to award a system-wide escalator maintenance contract to Schindler Elevator Company ("Schindler") should be set aside. We must also decide whether it is proper to award a remedy to a disappointed bidder or proposer, in this case Elcon Enterprises Incorporated ("Elcon"), if the contract award is not irrational or in violation of applicable law. The District Court ruled that the award of the escalator maintenance contract was neither irrational nor in violation of applicable law but nonetheless granted Elcon limited equitable relief to remedy perceived "taint" in the process of awarding the contract. Elcon Enter., Inc. v. Washington Metro. Area Transit Auth., 770 F.Supp. 667 (D.D.C.1991). Although we agree that the contract award was not irrational or in violation of applicable law, we reverse in part because once the District Court reached that correct conclusion it lacked the authority to grant any remedy at all.


The material facts of record are as follows. WMATA was created by interstate compact between Maryland, Virginia, and the District of Columbia, duly approved by Congress, see D.C.Code § 1-2411 (1992 Repl.Vol.), to construct and operate a transit system, consisting of buses and subways, for the Washington, D.C. metropolitan area. From 1977 to 1983, Westinghouse Elevator Co., which became Schindler after a 1989 buy-out, 1 maintained and repaired escalators for WMATA's subway stations under successive sole source contracts with WMATA. In 1983 WMATA and Schindler entered into a two-year escalator maintenance contract, which they extended by mutual agreement until December 31, 1989. As the contract's expiration date was drawing near, WMATA, in April 1989, issued a Request for Proposal for Maintenance of Metrorail Escalators ("RFP").

According to the RFP, WMATA would utilize its "competitive negotiation" procedures throughout the process of awarding the escalator contract, which was worth more than $20 million over the three-year life of the contract. Proposals would be evaluated under the following criteria, which the RFP listed "in descending order of importance:" (1)"General Quality and Responsiveness of Proposal," (2) "Organization and Personnel," (3) "Previous Experience of Proposing Firm," and (4) "Disadvantaged Business Enterprise Participation" ("DBE"). The RFP further provided that "the contract shall be awarded to that proposer submitting the most favorable technical and business/cost proposal as determined through the evaluation process," assuming the requirements of the DBE program were met.

WMATA's DBE program, described in Appendix B to the RFP, aspired to achieving at least 36% participation by minorities or women in WMATA projects. The DBE requirement could be satisfied in two ways. First, the requirement was satisfied if the proposer itself was a DBE, defined as any company with at least 51% ownership and management by "one or more socially or economically disadvantaged individuals." RFP, at B-1. Second, the requirement was satisfied if the non-DBE proposer pledged to give at least 36% of the work under the contract to DBEs through subcontracting or joint ventures. Id. If a proposer could not satisfy the DBE requirement through either of these methods, it could request a full or partial waiver, but WMATA would grant a waiver only if it determined that the proposer had made good faith efforts to satisfy the DBE requirement. Because no proposal could "be considered responsive" unless it complied with the DBE requirement, the RFP required each proposal to evidence compliance by one of these two

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methods. Each proposal was required to include:

  1. [A] "Schedule of DBE Participation" and "Letter of Intent to Perform as Subcontractor" sufficient to meet the goals or portion of the goals set forth in this Appendix [Appendix B];


  2. A request for waiver of the goals or portion of the goals and reasons thereto as stipulated in Number 5 of Appendix B.

    RFP on Contract N-47886, at 12 (Apr. 6, 1989).

    Although three proposals were submitted for the escalator contract, only two, those of Elcon and Schindler, were in the competitive range. Elcon fulfilled the goal of 36% DBE participation whereas Schindler, which had only 2.2% DBE participation, submitted a waiver for the remaining 33.8%. WMATA's Technical Evaluation Team ("TET") reviewed the proposals and awarded Elcon's lower-cost proposal a perfect score of 50. Schindler came in a close second with a score of 49.2. A WMATA procurement official, finding it odd that Elcon could outscore Schindler given the latter's status as the incumbent on the contract and the former's limited experience in large-scale elevator maintenance, ordered the TET to re-score the proposals, giving greater weight to the proposers' experience. After doing so, the TET gave Schindler the higher score (76.77), as compared with Elcon's 74.66. WMATA then ordered submission of Best and Final Offers ("BAFO"), but the BAFOs resulted in no relative score change (Schindler received 85.7 points and Elcon received 83 points).

    Meanwhile, WMATA's Office of Civil Rights ("CIVR") had reviewed the proposals for compliance with the DBE requirement. CIVR found that Elcon had met the 36% goal and stated that an award to Elcon would be acceptable from its standpoint. However, CIVR found that Schindler "has not made a 'good faith effort' " to satisfy the DBE requirement, CIVR Recommendation at 1, notwithstanding the fact that Schindler's BAFO showed an increase in DBE participation from 2.2 to 2.6%. Accordingly, CIVR stated it "[could not] concur in the award of this contract to [Schindler], unless there is a demonstrated concerted effort to involve DBEs in a meaningful way in this procurement." Id.

    The scoring data and the CIVR's DBE evaluation were then passed on to the Technical/Business Cost Panel, which recommended that Schindler, having received the highest score, be awarded the escalator contract. The Contracting Officer disagreed with that recommendation, finding instead that the award should go to Elcon, as the lowest-cost proposer, since he viewed the proposals as "substantially equal technically." Both the Assistant General Manager and the Acting General Manager accepted the Contracting Officer's recommendation. They therefore recommended that WMATA's Board of Directors (the "Board"), which had the sole power to award contracts worth more than $100,000, award Elcon the contract.

    From the date of the recommendation to the Board, September 28, 1989, to the Board's meeting on October 5, 1989, Schindler had several ex parte communications with WMATA and the Board. The first was a telephone call from Schindler's Transit Manager, James Iannacone, to Harold Rose, a member of WMATA's Technical/Business Cost Panel. During that conversation, Iannacone incorrectly informed Rose that Schindler was called in to replace Elcon on the National Airport escalator contract because of Elcon's inability to handle the contract adequately. In fact, Schindler had taken over the Airport contract for reasons other than any shortcomings of Elcon's. The Contracting Authority at National Airport later informed WMATA that Elcon had performed "satisfactorily" and that there had been "no complaints of deficient performance." Schindler nonetheless repeated the allegation about Elcon in a second ex parte communication, a letter, dated October 4, 1989, to the Chairman of the Board. When the Board convened in Executive Session on October 5, 1989, Schindler further informed the Board that it would not sign another contract awarded

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    it until the Board had awarded the escalator contract and that it might challenge the constitutionality of WMATA's DBE program if the Board did not award it the escalator maintenance contract.

    At the October 5 meeting, the Board, faced with Schindler's threat to sue and allegations against Elcon, requested further guidance as to Elcon's ability to perform the contract and Schindler's efforts to comply with the DBE requirement. The next day, WMATA officials met with Elcon representatives to give them a chance to refute Schindler's claims about the National Airport contract and Elcon's inability to handle the escalator contract. After Elcon's presentation, the officials with whom it had met concluded that Elcon could handle the contract and that Schindler's allegations about the Airport...

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