Kinnett Dairies, Inc. v. Farrow, O-R

CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)
Writing for the CourtRichard A. Gladstone, John F. Sherlock, William S. Glading, Mark F. Evens, Anthony J. Steinmeyer, Dept. of Justice, Washington, D. C., for Federal appellants; Before WISDOM, GOLDBERG and RUBIN; GOLDBERG; ALVIN B. RUBIN; An example of the application
Parties25 Cont.Cas.Fed. (CCH) 82,721, 3 Fed. R. Evid. Serv. 567 KINNETT DAIRIES, INC., Plaintiff-Appellee, v. J. C. FARROW, etc., et al., Defendants-Appellants, Flav-ich, Inc., Intervenor-Appellant.
Decision Date29 September 1978
Docket NumberO-R,No. 77-3374

Page 1260

580 F.2d 1260
25 Cont.Cas.Fed. (CCH) 82,721, 3 Fed. R.
Evid. Serv. 567
KINNETT DAIRIES, INC., Plaintiff-Appellee,
v.
J. C. FARROW, etc., et al., Defendants-Appellants,
Flav-O-Rich, Inc., Intervenor-Appellant.
No. 77-3374.
United States Court of Appeals,
Fifth Circuit.
Sept. 29, 1978.

Page 1262

Richard A. Gladstone, John F. Sherlock, William S. Glading, Mark F. Evens, Anthony J. Steinmeyer, Dept. of Justice, Washington, D. C., for Federal appellants, J. C. Farrow.

James E. Humes, Albert W. Stubbs, Columbus, Ga., for plaintiff-appellee.

Appeals from the United States District Court for the Middle District of Georgia.

Before WISDOM, GOLDBERG and RUBIN, Circuit Judges.

GOLDBERG, Circuit Judge:

This appeal from the grant of a preliminary injunction prohibiting performance of a government contract by a large business concern raises a series of issues relating to the regulations governing the set-aside of certain military procurements for bidding restricted to small business concerns. While the questions most directly placed before us are the proper interpretation of a procurement regulation and the permissibility of certain management techniques in procurement actions pursuant to that regulation, we are more fundamentally called upon to consider the proper scope for court involvement in the military procurement process and to determine how competing government policies may be harmonized. Our task is to effectuate, within the parameters of the regulatory command, the stated policy of insuring that a fair proportion of government purchases and contracts be placed with small business enterprises while simultaneously permitting the government to procure goods at reasonable and competitive prices, also a stated policy. This task is not a simple one; we are required to navigate through a tortuous record and a maze of interrelated regulations with neither a detailed roadmap nor a reliable compass. We begin with a review of the rather complex litigative history of the case now before us.

I.

The present suit arises from the solicitation and subsequent award of contracts for milk and ice cream to be supplied to Fort Benning, Georgia, for a period of six months commencing December 1, 1977. The solicitation, No. DLA 13H-78-B-0048 (hereinafter Solicitation 0048), was issued 1 on October 6, 1977, and invited bids on four designated groups of milk and ice cream products. This lawsuit chiefly concerns only two of the four groups, Group II (milk for resale by the post exchange and commissaries) and Group IV (ice cream for resale by the post exchange and commissaries). 2 Groups II, III, and IV were solicited on an unrestricted basis, meaning that any business, regardless of its size, could compete for the contracts. Group I was set-aside, or restricted, for exclusive participation

Page 1263

by small business concerns. 3 During the bid process, eight firms were solicited, of which five were small businesses. The DLA received three bids on Groups I, III, and IV and five bids on Group II.

Bids were opened on November 1, 1977. Kinnett Dairies, Inc. (Kinnett), a small business concern, submitted the low bids on Groups I and III, while Flav-O-Rich, Inc. (Flav-O-Rich), a large business, submitted the low bids on Groups II and IV. 4 Contracts were awarded to the low bidders on November 8, 1977.

Ten days after the contracts were awarded, 5 Kinnett initiated an action in federal district court challenging the basis of Solicitation 0048 with respect to Groups II and IV. Kinnett contended that bidding on these groups should have been limited to small business concerns and claimed that the government had acted arbitrarily, capriciously, and without legal foundation in failing to restrict the solicitation. Kinnett's complaint named the United States and various government officials as defendants and, requesting a temporary restraining order and preliminary and permanent injunctive relief, sought (1) to prohibit defendants "from awarding to and contracting with the successful low bidder, Flav-O-Rich, for the supply or delivery of any or all dairy products as required by Groups II and IV" of Solicitation 0048, (2) to vacate the determination that bids on Groups II and IV be solicited on an unrestricted basis, and (3) to order the award of Groups II and IV to the low small business bidder (Kinnett) on Solicitation 0048. Kinnett further sought to enjoin defendants from considering certain factors 6 in future procurement decisions under the Armed Services Procurement Regulations (ASPR), as well as declaratory and other relief.

The district court denied Kinnett's application for a temporary restraining order, noting that performance of the contract would not begin until December 1, but scheduled a hearing on the application for a preliminary injunction for November 28. A hearing was held on that date, at which time Flav-O-Rich was permitted to intervene in the action. At the conclusion of the hearing the court indicated its intention to enjoin the performance of the contract. The court entered its written Judgment the following day, restraining and enjoining the government defendants and intervenor Flav-O-Rich from performing the contracts identified as Groups II and IV of Solicitation 0048 or paying the contract price of said contracts, "pending the final hearing and determination of this case . . .." The district court filed accompanying findings of fact and conclusions of law, also on November 29, 1977. Both the government and Flav-O-Rich filed notices of appeal.

The district court denied motions to stay the issuance of its preliminary injunction.

Page 1264

On December 5, 1977, this court, per Judge Rubin, granted a stay of the injunction issued by the district court during the pendency of this appeal. The stay was expressly conditioned on Flav-O-Rich's execution of a bond designed to make Kinnett whole should Kinnett prevail on appeal. A bond for $100,000 was subsequently executed, and Flav-O-Rich has proceeded to perform on the contracts as awarded.

The instant appeal is from the district court's order granting a preliminary injunction on the ground that the government defendants "have misconstrued and misinterpreted" relevant procurement regulations and "have acted arbitrarily, capriciously and contrary to the true spirit and intent" of regulatory and statutory provisions. The underlying controversy between Kinnett and the government, however, is a continuing one, in which this case represents the third skirmish.

Prior to late 1976, solicitations for dairy products at Fort Benning had been conducted entirely on a set-aside basis for a number of years. All of Fort Benning's requirements during that period were supplied by Kinnett, a Columbus dairy located some eleven miles from the base. Beginning with Solicitation No. DSA 13H-76-B-8570 (hereinafter Solicitation 8570), issued on August 31, 1976, to cover the procurement period commencing December 1, 1976, bids were invited on an unrestricted basis for certain procurement groups. 7

Facing competition from large businesses for the Fort Benning procurement for the first time, Kinnett filed a protest with the General Accounting Office (GAO), pursuant to ASPR 2-407.8, 32 CFR § 2-407.8, contending that the invitation for bids should have been limited in its entirety to small businesses, as was the case with prior solicitations. While the protest was pending, the bids were opened, revealing low bids on Group I by Dempsey Brothers, a small business, on Group II by Flav-O-Rich, and on Groups III and IV by Kinnett. Although it was the low bidder in two of the categories, Kinnett filed an action in federal district court seeking to restrain and enjoin the United States from awarding the contracts. Kinnett Dairies, Inc. v. Greenberg, Civil Action No. 76-121-COL (M.D.Ga.) (hereinafter referred to as the Greenberg litigation).

On November 24, 1976, the district court granted Kinnett's motion for preliminary relief enjoining the United States from awarding the contract on Group II to Flav-O-Rich. The court's Order expressly provided that preliminary injunctive relief would continue in effect with respect to Group II "until further order of the Court after the Comptroller General has acted, or stated he will not act on the administrative appeal filed with him by Plaintiff in this matter . . .."

Several months later, the Comptroller General issued a decision denying Kinnett's protest in the administrative appeal. Kinnett Dairies, Inc., No. B-187501 (March 24, 1977). By that time, contracts on Solicitation 8570 had long since been awarded 8 and the procurement period had largely run its course. As a result of the district court's preliminary injunction, the low bidder on Group II, Flav-O-Rich, was precluded from

Page 1265

making anticipated sales of $758,085.46 to Fort Benning. 9

The second round in the Kinnett-government dispute erupted on April 4, 1977, with the issuance of Solicitation No. DSA 13H-77-B-8600 (hereinafter Solicitation 8600), which once again invited bids on Groups II, III, and IV on an unrestricted basis. Once again Kinnett went to court, 10 this time without the intermediate step of filing a protest with the GAO, and once again the district court enjoined the government from awarding any contract on the disputed competitions. It is worth noting that the court's Order of April 27, 1977, made no reference to the Comptroller General's decision of March 24, denying Kinnett's earlier protest. 11

In response to the court's decree, the government cancelled those provisions of Solicitation 8600 relating to Fort Benning's Group II requirements. Bids in the other groups of Solicitation 8600 were opened on May 10, 1977; Kinnett Dairies proved to be the successful low bidder and was awarded the contracts for Groups I, III and IV. Moreover, Kinnett again supplied Fort Benning with its Group II requirements under a non-competitive blanket purchase agreement.

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  • Choctaw Mfg. Co., Inc. v. U.S., No. 84-7485
    • United States
    • United States Courts of Appeals. United States Court of Appeals (11th Circuit)
    • May 7, 1985
    ...by statutes and regulations, such as those applicable in this case, meet this two-fold test. E.g. Kinnett Dairies, Inc. v. Farrow, 580 F.2d 1260, 1265-66 (5th Cir.1978); Merriam v. Kunzig, 476 F.2d 1233, 1242-43 (3d Cir.), cert. denied, 414 U.S. 911, 94 S.Ct. 233, 38 L.Ed.2d 149 (1973); Aer......
  • Cone Corp. v. Florida Dept. of Transp., No. 89-3694
    • United States
    • United States Courts of Appeals. United States Court of Appeals (11th Circuit)
    • January 8, 1991
    ...McLucas, 509 F.2d 247, 255 (5th Cir.), cert. denied, 423 U.S. 864, 96 S.Ct. 123, 46 L.Ed.2d 92 (1975)); Kinnett Dairies, Inc. v. Farrow, 580 F.2d 1260, 1265 (5th Cir.1978) ("It is by now well settled in this Circuit that unsuccessful bidders for government contracts may have standing to inv......
  • Avoyelles Sportsmen's League, Inc. v. Marsh, Nos. 79-2653
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • September 26, 1983
    ...interpretation, if the agency's interpretation is reasonable the court must respect it. Udall, supra; Kinnett Dairies, Inc. v. Farrow, 580 F.2d 1260, 1270 (5th A number of factors will influence the amount of deference due in a given case. These include: the degree of scientific or technica......
  • DISTRICT OF COLUMBIA v. GROUP INS. ADMIN., No. 92-CV-437
    • United States
    • District of Columbia Court of Appeals of Columbia District
    • October 28, 1993
    ...1572-75 (Fed.Cir. 1983); B.K. Instrument, Inc. v. United States, 715 F.2d 713, 717-23 (2d Cir. 1983); Kinnett Dairies, Inc. v. Farrow, 580 F.2d 1260, 1265-66 (5th Cir. 1978); Airco, Inc. v. Energy Research & Dev. Admin., 528 F.2d 1294, 1296 (7th Cir. 1975); Armstrong & Armstrong, Inc. v. Un......
  • Request a trial to view additional results
108 cases
  • Choctaw Mfg. Co., Inc. v. U.S., No. 84-7485
    • United States
    • United States Courts of Appeals. United States Court of Appeals (11th Circuit)
    • May 7, 1985
    ...by statutes and regulations, such as those applicable in this case, meet this two-fold test. E.g. Kinnett Dairies, Inc. v. Farrow, 580 F.2d 1260, 1265-66 (5th Cir.1978); Merriam v. Kunzig, 476 F.2d 1233, 1242-43 (3d Cir.), cert. denied, 414 U.S. 911, 94 S.Ct. 233, 38 L.Ed.2d 149 (1973); Aer......
  • Cone Corp. v. Florida Dept. of Transp., No. 89-3694
    • United States
    • United States Courts of Appeals. United States Court of Appeals (11th Circuit)
    • January 8, 1991
    ...McLucas, 509 F.2d 247, 255 (5th Cir.), cert. denied, 423 U.S. 864, 96 S.Ct. 123, 46 L.Ed.2d 92 (1975)); Kinnett Dairies, Inc. v. Farrow, 580 F.2d 1260, 1265 (5th Cir.1978) ("It is by now well settled in this Circuit that unsuccessful bidders for government contracts may have standing to inv......
  • Avoyelles Sportsmen's League, Inc. v. Marsh, Nos. 79-2653
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • September 26, 1983
    ...interpretation, if the agency's interpretation is reasonable the court must respect it. Udall, supra; Kinnett Dairies, Inc. v. Farrow, 580 F.2d 1260, 1270 (5th A number of factors will influence the amount of deference due in a given case. These include: the degree of scientific or technica......
  • DISTRICT OF COLUMBIA v. GROUP INS. ADMIN., No. 92-CV-437
    • United States
    • District of Columbia Court of Appeals of Columbia District
    • October 28, 1993
    ...1572-75 (Fed.Cir. 1983); B.K. Instrument, Inc. v. United States, 715 F.2d 713, 717-23 (2d Cir. 1983); Kinnett Dairies, Inc. v. Farrow, 580 F.2d 1260, 1265-66 (5th Cir. 1978); Airco, Inc. v. Energy Research & Dev. Admin., 528 F.2d 1294, 1296 (7th Cir. 1975); Armstrong & Armstrong, Inc. v. Un......
  • Request a trial to view additional results

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