Curtiss-Wright Corporation v. McLucas

• Decision Date: 14 September 1973
• Docket Number: Civ. A. No. 807-73.
• Citation: 364 F. Supp. 750
• Parties: CURTISS-WRIGHT CORPORATION, Plaintiff, v. John L. McLUCAS, Acting Secretary of the Air Force, Defendant.
• Court: U.S. District Court — District of New Jersey

364 F. Supp. 750

CURTISS-WRIGHT CORPORATION, Plaintiff, v. John L. McLUCAS, Acting Secretary of the Air Force, Defendant.

Civ. A. No. 807-73.

United States District Court, D. New Jersey.

September 14, 1973.

Meyner & Wiley, by Robert B. Meyner, Newark, N. J., Sellers, Conner & Cuneo (Washington Bar), by David V. Anthony, William H. Butterfield, Washington, D. C., for plaintiff.

Herbert J. Stern, U. S. Atty., by Marc L. Dembling, Asst. U. S. Atty., Major General James S. Cheney, Judge Advocate General, Dept. of the Air Force, by Captain Ronald Holden, Washington, D. C., for defendant.

OPINION

COOLAHAN, District Judge:

This is an action for declaratory and injunctive relief with regard to an Air Force procurement contract for the overhaul, repair and rebuilding of jet engines. The plaintiff, a nationally known manufacturer of aircraft, brings this action against the Acting Secretary of the Air Force in his representative capacity as the person ultimately responsible for the enforcement of the laws and regulations applicable to procurement by the United States Air Force. Plaintiff contends that the contract at issue was illegally awarded to a competing bidder, the Southwest Airmotive Company, in violation of specified provisions of the Armed Services Procurement Act of 1947, 10 U.S.C. § 2304 et seq., the Armed Services Procurement Regulations (ASPR) codified in 32 C.F. R. Subchapter A, Parts 1-30, the Service Contract Act of 1965, as amended, 41 U.S.C. § 351 et seq. as well as the regulations promulgated by the Secretary of Labor thereunder and codified in 29 C. F.R. Part 4. Plaintiff alleges federal question and mandamus jurisdiction, 28 U.S.C. §§ 1331, 1361, and also jurisdiction under the Administrative Procedure Act, 5 U.S.C. § 702, to review the adverse action of an agency by which plaintiff is aggrieved.

This matter comes to the Court upon an order to show cause why the defendant Secretary should not be preliminarily enjoined from proceeding upon the Air Force contract with Southwest Airmotive Company. At the time of the return date of the order to show cause, neither party proffered testimony. The Court therefore relies upon the briefs, exhibits, and affidavits submitted to date as well as the oral argument given at the hearing on the order to show cause. No interim restraints have been granted by the Court.

It appears that on or about November 22, 1972 the Department of the Air Force, acting through the Oklahoma City Air Materiel Area (OCAMA) at the Tinker Air Force Base, issued a Letter Request for Proposals (LRFP) No. F34601-73-R-6000. The LRFP solicited bids from interested and qualified offerors for the overhaul and repair of J-57 series engines used in the Air Force's KC-135 worldwide air tanker fleet. The successful bidder was to be awarded a one-year contract to commence in April 1973, with an option open to the Air Force to continue the contract for an additional two years at the fixed contract price and for still another two years after certain price adjustments. Thus, the successful bidder had potentially a contract for overhaul and repair of jet engines spanning five years at a value estimated by plaintiff at approximately $75,000,000. For the past six years prior to the issuance of the LRFP, plaintiff had been the incumbent contractor for the Air Force on the jet engine overhaul and repair contract then being rebid. Plaintiff's prior contract with the Air Force, which includes engine repair and overhaul of aircraft other than the KC-135 air tanker, will conclude in March 1974. Of all those companies solicited by the Air Force, six responded with offers. On or about April 17, 1973 the Air Force awarded contract No. F34601-73-D-1444 to the Southwest Airmotive Company.

Unquestionably, the solicitation and award of this contract was governed by the Armed Services Procurement Act of 1947, as amended, 10 U.S.C. § 2301 et seq. This statute sets forth the rules applicable to procurement bidding and authorizes the Department of Defense to issue regulations applicable to its various contracting agencies and subentities. These regulations, known collectively as the Armed Services Procurement Regulations (ASPR), are codified in 32 C.F. R. Parts 1-30 and have the full force and binding effect of law.

Contracts falling within the Armed Services Procurement Act and its attendant regulations may also be subject to the requirements of the Service Contract Act of 1965 if the contract price exceeds $2,500 and the "principal purpose" of the contract is to "furnish services in the United States through the use of service employees." 41 U.S.C. § 351. Saving for later a discussion of the applicability of the Act, a key issue at hand, plaintiff claims numerous substantive violations of the Act. It is conceded by the defendant Acting Secretary of the Air Force that neither the LRFP or the accepted bid of Southwest Airmotive contained various statements required by the Service Contract Act, 41 U.S.C. § 351(a)(1)-(5) relating to wages and fringe benefits to be paid the contractor's employees as well as the safety of working conditions.

Plaintiff claims that the failure to include the statements mandated by the Service Contract Act is also in clear violation of the Armed Services Procurement Act, 10 U.S.C. § 2305(b), which invalidates an invitation for bids and subsequent award if the invitation does not contain "the necessary descriptive language and attachments." Plaintiff further cites the ASPR, 32 C.F.R. § 1-403, which prohibits the award of a contract unless "all applicable requirements of law" have been met.

Plaintiff advances a second theory for invalidating the Air Force award to Southwest Airmotive. It alleges that Air Force LRFP No. F34601-73-R-6000 notified all potential bidders that the repair and overhaul services being solicited were vital to national defense and "so critical" that strict compliance with the LRFP's requirements would be demanded. Plaintiff concludes from the reports submitted by an Air Force Post Award Orientation Team that Southwest Airmotive was deficient in eight of nine contract prerequisites even after it had been awarded the contract. Additionally, it is alleged that Southwest was unable to certify as required by the LRFP that it had satisfactorily completed a jet engine overhaul and maintenance contract comparable in complexity and quantity to the J-57 engines covered by the LRFP. Plaintiff therefore asserts that the award to Southwest was illegal and in derogation of the ASPR, 32 C.F. R. §§ 2.301, 2.404-2(a), which require bids to conform in all material respects with the invitation for bids and the rejection of any nonconforming bid.¹

In essence, plaintiff claims that Southwest Airmotive's deficiencies in technology, physical plant and managerial capacity left it far short of the minimal Air Force LRFP requirements, and that Southwest was awarded the contract only because it had outbid plaintiff by some $9 million.

On the basis of the legal deficiencies alleged in its complaint, plaintiff seeks a declaration by the Court that the Air Force contract with Southwest Airmotive No. F34601-73-D-1444 be declared illegal. Plaintiff further seeks to enjoin the defendant Acting Secretary, his employees, officers, attorneys and agents preliminarily and permanently from taking any action pursuant to or in furtherance of said contract or from committing or obligating funds of the United States for work by Southwest Airmotive. Before looking to the merits of the two arguments advanced by plaintiff,² the Court must address itself to two jurisdictional defenses interposed by the defendant Acting Secretary.

I. STANDING TO SUE

Preliminarily, the Acting Secretary moves to dismiss this complaint and vacate the order to show cause on the ground that plaintiff has no standing to sue. He relies upon a line of cases beginning with Perkins v. Lukens Steel Co., 310 U.S. 113, 60 S.Ct. 869, 84 L.Ed. 1108 (1940). In that case the Supreme Court held that prospective bidders desirous of selling supplies or services to the Government do not have a direct legal interest in the government procurement process and, therefore, have no standing to enforce the responsibility of officials of the executive branch acting pursuant to statutes or regulations or to represent, as in that case, the public interest in the Secretary of Labor's compliance with the Public Contracts Act of 1936. Speaking for the Court, Mr. Justice Black said:

Courts should not, where Congress has not done so, subject purchasing agencies of the Government to the delays necessarily incident to judicial scrutiny at the instance of potential sellers, which would be contrary to traditional governmental practice and would create a new concept of judicial controversies. A like restraint applied to purchasing by private business would be widely condemned as an intolerable business handicap. It is, as both Congress and the courts have always recognized, essential to the even and expeditious functioning of Government that the administration of the purchasing machinery be unhampered.

* * * * * *

Our decision that the complaining companies lack standing to sue does not rest upon a mere formality. We rest it upon reasons deeply rooted in the constitutional divisions of authority in our system of Government and the impropriety of judicial interpretations of law at the instance of those who show no more than a mere possible injury to the public.

310 U.S. at 130, 132, 60 S.Ct. at 878, 879. The Perkins doctrine has its genesis in earlier Supreme Court holdings, some of which held that a party to a contract cannot rely upon an official's breach of statutory duty as a basis for voiding a contractual obligation with the Government. American Smelting & Refining Co. v. United States, 259 U.S. 75, 42 S.Ct. 420, 66 L.Ed. 833 (1922); United States v. New York & Porto Rico S.S. Co., 239 U.S. 88, 36 S.Ct. 41, 60 L. Ed. 161 (1915); United States ex rel....