HORNE BROTHERS, INC. v. Laird, Civ. A. No. 289-72.

• Decision Date: 13 April 1972
• Docket Number: Civ. A. No. 289-72.
• Parties: HORNE BROTHERS, INC., Plaintiff, v. Melvin R. LAIRD et al., Defendants.
• Court: U.S. District Court — District of Columbia

342 F. Supp. 703

HORNE BROTHERS, INC., Plaintiff, v. Melvin R. LAIRD et al., Defendants.

Civ. A. No. 289-72.

United States District Court, District of Columbia.

April 13, 1972.

Robert H. Turtle, Washington, D. C., for plaintiff.

Joseph M. Hannon, Chief of the Civil Div., United States Atty.'s Office for the District of Columbia, and Roger Werdig, Asst. U. S. Atty., Washington, D. C., for defendants.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

AUBREY E. ROBINSON, Jr., District Judge.

On February 15, 1972, Horne Brothers, Inc. (hereinafter referred to as "Horne"), instituted this action on its claim which is, in essence, that the Defendant, John H. Chafee, the Secretary of the Navy (hereinafter referred to as "Defendant" or "the Navy"), had acted arbitrarily, capriciously, in violation of law and without rational foundation, under regulations promulgated under the authority of Defendant, Melvin R. Laird, Secretary of Defense (hereinafter referred to as "Defendant Laird" or "the Department of Defense"), in the conduct of a procurement pursuant to an Invitation and Bid N62678-72-B-0048 (hereinafter referred to as the "IFB"), in refusing to award the contract for work under the IFB to Horne, and instead awarding the contract under the IFB to Metro Machine Corporation (hereinafter referred to as "Metro"). In addition to its Complaint, Horne filed Motions for Temporary Restraining Order and for Preliminary Injunction, and Memoranda in support of the said Motions, seeking an injunction against any further action to effectuate or implement the award of the contract or the direction to proceed with work under the contract by the Defendants to Metro, pending the decision of the General Accounting Office (hereinafter referred to as "GAO") on Horne's Protest against the award of the Contract and pending Navy action in accordance with the GAO decision; the Complaint was verified by Mr. Floyd O. Culp, Jr., President of Horne, and signed by counsel, and was submitted with Exhibits A, B and C attached.

A hearing on the Motion for Temporary Restraining Order was set for February 16, 1972. On February 16, 1972, the Plaintiff filed a Supplemental Memorandum of Points and Authorities in support of its Application for Temporary Restraining Order and Motion for Preliminary Injunction, with Exhibits A and B thereto. On February 16, 1972, counsel for Horne and for Defendants were heard in open Court on the Motion for Temporary Restraining Order. Counsel for the Defendants introduced Exhibits 1, 2 and 3, which were entered into the record.

On February 17, 1972, the Court entered an Order denying Horne's application for a temporary restraining order. Horne moved for an Injunction Pending an Appeal from the Court's Order Denying the Temporary Restraining Order. The Court denied Horne's Motion for an Injunction Pending Appeal from the Order Denying the Temporary Restraining Order.

On February 28, 1972, the Defendants filed an Opposition to Horne's Motion for Preliminary Injunction.

On March 2, 1972, Horne filed an application for an Oral Hearing on its Motion for Preliminary Injunction, an Affidavit of Robert H. Turtle, and an Affidavit of Herbert V. Kelly, with Exhibits thereto.

On March 8, 1972, Horne filed a Supplemental Memorandum of Points and Authorities in Support of its Motion for Preliminary Injunction, with Exhibits A and B, and an affidavit of Floyd O. Culp, Jr., and Philip R. Mayhew, dated March 3, 1972.

FINDINGS OF FACT

1. Plaintiff Horne is a corporation operating under the laws of the Commonwealth of Virginia and having its principal place of business in Newport News, Virginia.

2. Defendant Melvin R. Laird is the Secretary of Defense, with authority over activities of the Department of Defense, including procurement matters and the promulgation of the Armed Services Procurement Regulation. Defendant John H. Chafee is the Secretary of the Navy, with authority over activities of the Department of the Navy, including procurement matters.

3. In early December of 1971, the Navy issued the IFB and sent a copy to Horne. (Verified Complaint, para. 4.)

4. Subsequently, on or about December 21, 1971, Horne received a letter dated December 14, 1971, from the Navy. That letter consisted of three paragraphs as follows:

"Based upon an investigation conducted by the Naval Investigative Service, this Command has substantial reason to believe that for a period of years including 1971, representatives of Horne Brothers, Inc. have been giving gratuities and favors to Naval personnel assigned to official contractual or inspection duties in relation to your company. These inducements or irregularities are considered to indicate a lack of business integrity and to bring into serious question the present responsibility of your company as a Government contractor. Accordingly, a decision has been made to place Horne Brothers, Inc., on the Joint Consolidated List of Debarred, Ineligible and Suspended Contractors, in a suspended status.

"This suspension is for a temporary period, pending the completion of the investigation and such legal proceedings which may ensue. It is effective throughout the Department of Defense. During the course thereof, bids and proposals will not be solicited from you and, if received, will be considered and awards made only if it is determined by the Secretary or his authorized representative to be in the best interest of the Government.

"The foregoing action has been taken by virtue of the authority of the Secretary of the Navy and in accordance with the procedures of Section 1, Part 6 of the Armed Services Procurement Regulation, two copies of which are enclosed." (Verified Complaint, para. 5, and Exhibit A thereto.)

5. Immediately upon receipt of the Navy's letter dated December 14, 1971, Horne protested the suspension to the United States Navy through its Senator William B. Spong, Jr., and its Congressman Thomas N. Downing. (Kelly Affidavit, para. 2.)

6. At the time and place set for the bid opening, to-wit, 9:00 o'clock a. m. on January 5, 1972, three bids on Lot II of the IFB were opened and were ranked in the following reverse numerical order: $1,639,914 bid by Horne; $1,749,000 bid by Metro; and $2,316,935 bid by Norfolk Shipbuilding & Drydock Company. (Verified Complaint, para. 6.)

7. In a two-paragraph letter dated January 7, 1972, the Contracting Officer on the IFB wrote to Horne as follows:

"By Chief Naval Material letter dated 14 December 1971 you were advised that Horne Brothers, Inc., has been placed on the Joint Consolidated List of Debarred, Ineligible, and Suspended Contractors, in a suspended status. You were further advised that during the course of the suspension, which is for a temporary period pending the completion of the investigation and such legal proceedings which may ensue, bids and proposals `will not be solicited from you and, if received, will be considered and awards made only if it is determined by the Secretary or his authorized representative to be in the best interest of the Government.'

"Horne Brothers, Inc., on 5 January 1972, submitted an unsolicited amended bid in response to IFB No. N62678-72-B-0048. This is to advise that it has not been determined to be in the best interest of the Government to consider your bid. Accordingly, your bid has been rejected and will not be considered for award under the above mentioned IFB." (Defendants' TRO Exhibit 3.)

The date of receipt of that letter by Horne is not apparent from the record.

8. On January 12, 1972, with or without knowledge of the letter dated January 7, 1972, Horne's President and counsel met with Mr. Hugh Witt, Special Assistant to the Assistant Secretary of the Navy, Mr. Hart T. Mankin, General Counsel, U. S. Navy, and Albert C. Kornblum, Assistant to the General Counsel, U. S. Navy, to discuss the suspension of Horne and to request that a contract be awarded to Horne under the IFB as being in the best interest of the Government. (Verified Complaint, para. 7; Kelly Affidavit, para. 3.) An extensive presentation was made at the meeting and a memorandum of facts as well as an extensive list of commendations from Navy Commanders recommending Horne Brothers as a ship repairer were filed at that meeting. (Kelly Affidavit, paras. 4 and 5, and attachments thereto.)

9. Horne, through its Washington counsel, undertook a series of telephone conversations with the Special Assistant to the Assistant Secretary, Mr. Hugh Witt, on January 18, 20, 21, 24, 28, and February 4, 8 and 9, 1972, directed toward obtaining a Secretary of the Navy determination that Horne's participation as a prime or subcontractor in the work called for under the IFB would be in the best interest of the Government, and at the same time requesting a full evidentiary hearing on the allegations underlying Horne's suspension. (Verified Complaint, Exhibit B; Affidavit of Robert H. Turtle, paras. 5 and 6.)

10. On February 11, 1972, Horne filed a protest with the GAO, protesting the award of the contract under the IFB to any other bidder. (Affidavit of Robert H. Turtle, para. 8.)

11. By letter dated February 12, 1972, hand-carried to the office of Mr. Hugh Witt on that date, counsel for Horne summarized certain of the previous telephone conversations and closed with a reiteration of a request for a hearing under the gratuities regulations as found in the Armed Services Procurement Regulation, Appendix D. (Affidavit of Robert H. Turtle, para. 9; Verified Complaint, Exhibit B.)

12. On February 14, 1972, Mr. Hugh Witt informed Horne's counsel that it was the decision of the Secretary of the Navy that Horne would not be allowed to participate in the work called for in the IFB, either as a prime contractor or as a subcontractor, and that no hearing would be held by the Navy on the issue of the grounds for Horne's suspension. (Affidavit of Robert H. Turtle, para. 10.)

13. A Special Grand Jury was called into session in November 1971 in the Eastern...