Continental Business Enterprises, Inc. v. United States, 160-69.

• Decision Date: 10 December 1971
• Docket Number: No. 160-69.,160-69.
• Citation: 452 F.2d 1016
• Parties: CONTINENTAL BUSINESS ENTERPRISES, INC., v. The UNITED STATES.
• Court: U.S. Claims Court

452 F.2d 1016 (1971)

CONTINENTAL BUSINESS ENTERPRISES, INC., v. The UNITED STATES.

No. 160-69.

United States Court of Claims.

December 10, 1971.

David Fromson, Garden City, N. Y., attorney of record, for plaintiff.

Michael J. Rubin, Washington, D. C., with whom was Asst. Atty. Gen. L. Patrick Gray, III, for defendant.

Before COWEN, Chief Judge, and LARAMORE, DURFEE, DAVIS, COLLINS, SKELTON, and NICHOLS, Judges.

ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

COWEN, Chief Judge.

This case comes before the court on defendant's motion for summary judgment. Plaintiff, Continental Business Enterprises, Inc. (CBE), is seeking to recover the amount it expended in preparing a procurement proposal which it contends was not fairly and honestly considered. We must determine whether there are factual disputes which raise a sufficient inference of arbitrary and capricious action by the Government to warrant a trial on the merits. Keco Indus., Inc. v. United States, 428 F.2d 1233, 192 Ct.Cl. 773 (1970). We have concluded, on the basis of the record before us, that the defendant is not entitled to summary judgment and that the case should be remanded to the trial commissioner.

On February 21, 1968, the Department of the Air Force issued an advance synopsis of its plan to procure a weighing scales system for the Air Force Flight Test Center at Edwards Air Force Base, California. The system was to be used to measure and record the weight supported by the main landing gear of the C-5A aircraft. A formal Request for Proposals was subsequently issued on March 22, 1968.

The contract contemplated that the successful proposer would design the system as well as fabricate and install it. For that reason, the Government employed performance rather than design specifications. The Request for Proposals also included general provisions applicable to fixed-price research and development contracts. This combination resulted in numerous questions from prospective proposers, and on April 19, 1968, the Government held a pre-proposal conference to discuss the technical aspects of the system. Thirteen firms attended, including CBE. Each paragraph of the specifications was discussed in detail, and no change was made in the specifications, because all technical questions were answered.

The RFP provided that each proposal would first be evaluated on the basis of its technical sufficiency, without regard to price. If a proposal was found to be technically unacceptable, the Government reserved the right to reject it without further discussion. Paragraph nine of the RFP provided :

You are cautioned to carefully review all items, conditions and specifications of this Request for Proposals prior to submission of your proposal. Your proposal should be complete in all details, since evaluation of the proposal will determine whether further consideration will be given to it and whether negotiations will be conducted with you prior to making an award. At his option, the Contracting Officer may consider your original proposal as final without extending the privilege of revising the quotation or conducting any negotiations with any offeror. The term "negotiation" does not imply that an opportunity automatically exists to submit revisions to your original proposal at will, nor does it imply that the submission of such revisions on a unilateral basis will be considered in the Air Force evaluation process.

Several proposals were submitted. Each was evaluated by a team of Air Force engineers, which determined that only the proposal of Railweight, Inc., was technically acceptable. The evaluation team rejected CBE's proposal because it displayed "a poor engineering approach," which the evaluators described as follows:

The CBE proposal does not show an acceptable approach to the problem of safety as presented in paragraph 6.4.1 and 6.4.2 on page CBE-12. This is totally unsatisfactory from a safety standpoint since the requirements clearly state that the readout console will be located beneath the fuel laden wing of the C-5A, and that a static discharge could cause an explosion when in a fuel-air environment. The CBE proposal does not give any consideration for temperature stabilization of the electronics equipment and does not shown sic how the performance criteria of TR 7.1, 7.2, and 7.3 will be met when the weighing system is subjected to the environmental conditions given in TR 6.3.1 and TR 6.3.2. The CBE qualification test plan as required by Special Instructions 3-0 is unacceptable because it offers the Air Force no assurance that the electronics equipment can operate safely prior to delivery to the AFFTC.¹

In accordance with the conclusions of the evaluation team, the contracting officer on May 21, 1968, issued notices of unacceptable proposals to the six rejected firms. Apparently before receipt of this notice, CBE's representatives went to Edwards Air Force Base on their own initiative for the express purpose of negotiating a contract for the weighing scales system. Upon their arrival, the contracting officer informed them that the CBE proposal had been rejected and that no negotiations were contemplated. However, he decided to have the project engineer explain the reasons for the unacceptability of the proposal. In meetings held May 22 and 23, 1968, the contracting officer and the project engineer gave the representatives of CBE a detailed explanation as to why the proposal was considered unacceptable.

The contracting officer notified CBE on May 24, 1968, that he was reaffirming his decision to reject its proposal. CBE immediately announced its intention to protest the award, and a formal protest was filed on May 28. Pending resolution of the protest by the General Accounting Office, the contracting officer postponed awarding the contract to Railweight. However, in August, he informed GAO that he could not further postpone the award because any additional delay would prejudice the entire C-5A program. He subsequently awarded the contract to Railweight on August 21, 1968, at a negotiated price of $205,400.

The protests filed by CBE and two other bidders were considered by the Staff Judge Advocate of the Department of the Air Force. In an opinion of July 1, 1968, he recommended that headquarters technical personnel review the unsuccessful proposals and give an opinion as to whether any of such proposals was so technically inferior as to preclude further negotiations. His opinion stated in part as follows :

3. In the recent IBM case (47 Comp. Gen. 29), the Comptroller General said, "When the application of a mandatory benchmark test requirement results . . . in leaving one proposer, and its price is, initially at least, substantially in excess of the price of another proposer we believe the spirit and intent of 10 U.S.C. 2304(g) would not be served without further discussion to determine whether the other proposal can be improved to meet the benchmark requirement." The facts of the instant case bear striking similarities to the IBM case. In both cases, several contractors submitted proposals, but only one was found to be technically acceptable. Also, in both cases, there was a very considerable difference in price between the sole acceptable proposal (high) and nonacceptable proposals. It is also noteworthy that the technical evaluations in the file, although appearing to be very thorough, nevertheless frequently reach adverse conclusions predicated merely on the failure of the proposers to furnish certain information, and this, on occasion at least, despite the fact that there was no express requirement in the RFP for same. Pl. Ex. 1

Such a review was made and the Comptroller was advised that the CBE proposal failed to provide "for temperature stabilization of the electronics and to show that the electronic equipment could operate safely prior to delivery."

The Comptroller General issued a decision on the protest on November 13, 1968. 48 Comp.Gen. 314 (1968).² CBE's principal contention there, as here, was that its proposal was technically acceptable and that the contracting officer therefore violated a statutory duty to negotiate,³ especially since its price proposal was far less than Railweight's.⁴ The Comptroller General declined to rule on the technical acceptability of the proposal, however, stating that the resolution of the question required technical judgments beyond the expertise of the General Accounting Office, and that the contracting officer's decision was a discretionary one. Id. at 317-18. The Comptroller's opinion did state that the contracting officer used "poor procurement procedures" because "the RFP failed to state known design requirements with sufficient particularity and also failed to include information concerning evaluation weights and standards." Id. at 319-20. Finally, the Comptroller General held that paragraph nine of the RFP, quoted above, in which the contracting officer reserved the right to deny any proposer the opportunity to negotiate, violated 10 U.S.C. § 2304(g) and Section 3-805 of the Armed Services Procurement Regulations. Defendant strenuously contests the legal basis of this conclusion, asserting that the contracting officer had a statutory right to employ such a provision in the RFP, and to refuse to negotiate with any offeror. Defendant also contends that, in any event, the contracting officer was not required to negotiate with CBE because its proposal was technically unacceptable.

In Heyer Prod. Co. v. United States, 140 F.Supp. 409, 135 Ct.Cl. 63 (1956), this court held that it is an implied condition of every request for offers that each of them will be fairly and honestly considered. In Keco Indus., Inc. v. United States, 428 F.2d 1233, 192 Ct. Cl. 773 (1970), we held that the Heyer rule extended to all procurement situations, and that an aggrieved bidder who makes out a prima facie case of arbitrary and capricious action by the Government is entitled to a trial to prove the merits of his...