Alfa Laval Separation, Inc. v. U.S.

• Decision Date: 07 May 1999
• Docket Number: No. 98-5087,98-5087
• Citation: 175 F.3d 1365
• Parties: ALFA LAVAL SEPARATION, INC., Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee, and Westfalia Separators, Inc., Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1365

175 F.3d 1365

ALFA LAVAL SEPARATION, INC., Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee, and Westfalia Separators, Inc., Defendant-Appellee.

No. 98-5087.

United States Court of Appeals, Federal Circuit.

May 7, 1999.

P. David Richardson, Sidley & Austin, of Washington, DC, argued for plaintiff-appellant. With him on the brief were Gary P. Quigley and Scott E. Erlich. Of counsel was Richard Larach.

Monica J. Palko, Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant-appellee, United States. On the brief were David M. Cohen, Director, and Kirk T. Manhardt, Assistant Director, and Deborah Y. Ho, Attorney.

L. James D'Agostino, Reed Smith Shaw & McClay, LLP, of Washington, DC, argued for defendant-appellee Westfalia Separators, Inc. With him on the brief were John M. Wood, James P. Hodges, Andrew J. Hungerman IV, and Jason P. Matechak.

Before MAYER, Chief Judge, RADER and GAJARSA, Circuit Judges.

MAYER, Chief Judge.

Alfa Laval Separation, Inc. ("Alfa Laval") appeals the judgment of the Court of Federal Claims, Alfa Laval Separation, Inc. v. United States, 40 Fed.Cl. 215 (1998), denying injunctive relief in its post-award bid protest against the Department of the Navy ("the Navy") and Westfalia Separators, Inc. ("Westfalia"). Because Alfa Laval has demonstrated a significant, prejudicial error in the procurement process, we reverse and remand.

Background

Alfa Laval has been the sole-source provider of centrifugal fuel oil purifiers to the Navy for over 20 years. After a 1996 maintenance inspection, Alfa Laval informed the Navy that certain purifiers on the Navy's DD963 class destroyers were beyond repair, and offered to supply updated models for a total cost of approximately $18.9 million, at a per-unit price of approximately $350,000. This price was lower than the $387,814.67 average unit price Alfa Laval had charged the Navy in its two most recent procurements of the purifiers. Nevertheless, the Navy decided to open the procurement to competitive bidding, issuing a Request for Proposals (RFP) that contained certain mandatory requirements with which an offeror had to comply in order to be deemed responsive. The requirements addressed shock, Type I and Type II vibration, airborne noise, and performance testing. Additionally, the RFP defined four "market acceptability criteria" to verify the offerors' experience in supplying reliable purifiers. The offeror was required to have: (1) produced the model being tendered or a generically similar model for at least ten years, (2) produced at least 300 generically similar or identical models, (3) produced at least 20 of the model being tendered, and (4) sold the item offered to the commercial market or to the government. The contract was to go to the lowest cost, technically acceptable proposal, as determined by a Navy technical evaluation panel.

Alfa Laval submitted three proposals ranging in price from $19.4 million to $23.6 million. Westfalia was the only other offeror submitting a proposal, at $13.7 million, a price about $5 million less than Alfa Laval's lowest proposal and $10 million less than Alfa Laval's highest proposal. Because Westfalia had not yet manufactured the exact purifier it proposed to supply, the evaluation panel granted Westfalia extensions under the RFP, allowing it to meet several of the testing requirements with extrapolated data from other purifiers it has manufactured. The panel lacked "a set of measurements ... demonstrating [Westfalia's] compliance with the solicitation's Type II [vibration] testing requirements." Alfa Laval, 40 Fed. Cl. at 232. The Navy nevertheless awarded the contract to Westfalia, and Alfa Laval filed a bid protest in the Court of Federal Claims, claiming that Westfalia's proposal did not comply with the RFP's mandatory requirements and market acceptability criteria.

After a three-day trial on the merits, the Court of Federal Claims entered judgment in favor of the government and Westfalia. The court found that the Navy violated the applicable procurement statute and regulation by awarding the contract to Westfalia, because Westfalia's proposal did not meet the Type II vibration testing requirement, but that the mistake was not sufficiently prejudicial to Alfa Laval to justify relief.

Discussion

Although we review legal conclusions of the Court of Federal Claims de novo, we disturb its factual findings only if they are "clearly erroneous." See Alger v. United States, 741 F.2d 391, 393 (Fed.Cir.1984).

To prevail in a bid protest, a protester must show a significant, prejudicial error in the procurement process. See Statistica, Inc. v. Christopher, 102 F.3d 1577, 1581 (Fed.Cir.1996); Data Gen. Corp. v. Johnson, 78 F.3d 1556, 1562 (Fed.Cir.1996). "To establish prejudice, a protester is not required to show that but for the alleged error, the protester would have been awarded the contract." Data General, 78 F.3d at 1562 (citation omitted). Rather, the protester must show "that there was a substantial chance it would have received the contract award but for that error." Statistica, 102 F.3d at 1582; see CACI, Inc.-Fed. v. United States, 719 F.2d 1567, 1574-75 (Fed.Cir.1983) (to establish competitive prejudice, protester must demonstrate that but for the alleged error, " 'there was a substantial chance that [it] would receive an award--that it was within the zone of active consideration' " (citation omitted)).

Westfalia and the government do not dispute that Westfalia's proposal was technically noncompliant in that it failed to comply with the Type II vibration test requirement. But this error was not insignificant. As ...