ROBERT E. DERECKTOR, ETC. v. Goldschmidt
| Decision Date | 17 June 1981 |
| Docket Number | Civ. A. No. 80-0445. |
| Citation | 516 F. Supp. 1085 |
| Parties | ROBERT E. DERECKTOR OF RHODE ISLAND, INC., et al., Plaintiffs, and Marine Power & Equipment Company Inc., Intervenor, v. Neil E. GOLDSCHMIDT, et al., Defendants, and Tacoma Boatbuilding Co., Intervenor. |
| Court | U.S. District Court — District of Rhode Island |
Philip W. Noel, Coffey, McGovern, Noel & Novogroski, Providence, R. I., for plaintiffs.
Mark Evens, Dept. of Justice, Washington, D. C., for Neil E. Goldschmidt, et al.
Harry W. Asquith, Providence, R. I., for Tacoma Boatbuilding Co.
Cary Coen, John A. Murphy, Providence, R. I., and Philip H. Harris, Washington, D. C., for Marine Power & Equipment Co., Inc.
The issue in this action is the validity of an award to Plaintiffs, Robert E. Derecktor of Rhode Island, Inc. and Rhode Island Ship Builders, Inc., hereinafter Plaintiff, by Defendant Coast Guard of a contract to construct nine 270 foot, 1700 ton medium endurance cutters and to provide spare parts at a bid price of $349,000,000.00.
Plaintiff brought the action because the Coast Guard initially determined both it as the lowest bidder and Intervenor Marine Power as the second lowest bidder to be nonresponsive bidders and awarded the contract to Intervenor Tacoma Boatbuilding, the third lowest bidder for a price of $391,882,517 on August 28, 1980. By Opinion in Robert E. Derecktor of Rhode Island, Inc. v. Goldschmidt, 506 F.Supp. 1059 (D.R.I.1980), this Court declared the Coast Guard's determination of nonresponsiveness to be invalid, and, on January 15, 1981, the Coast Guard awarded the contract to Plaintiff. Intervenors Marine Power and Tacoma hereinafter sometimes Intervenors now contend that award to Plaintiff is invalid, is contrary to procurement regulations and that Plaintiff is not a responsible bidder.
Plaintiff, Robert E. Derecktor of Rhode Island, Inc., is a Rhode Island corporation and is the sublessee of a lease from the United States Navy to the State of Rhode Island of land and facilities located on Narragansett Bay in the State of Rhode Island. The land and facilities were formerly used as a part of the United States Navy Base, Newport, Rhode Island, to support activities of the Atlantic Fleet and, upon withdrawal of most of the Navy ships from Newport, the land and facilities were determined to be surplus to the Navy's present needs. The lease with options is for a total term of thirty years from January 1, 1979, and may be terminated by the Navy in the event of a National Emergency. Options to renew are nullified if the Navy determines that renewal is not in the interest of national defense. Plaintiff is presently conducting a small shipbuilding and repair facility on the property. The use under the lease and sublease is limited to shipbuilding and activities in support of other marine industries. Plaintiff Rhode Island Shipbuilders, Inc. is an inactive corporation initially formed to conduct joint ventures in marine activities. All of the stock of both corporations is owned by Robert E. Derecktor. Derecktor also owns and operates a small shipbuilding facility through a New York corporation at Mamaroneck, New York, and is the owner of substantial stock in a corporation which operates a small shipyard and repair facility located in Fort Lauderdale, Florida.
Intervenor Marine Power & Equipment Company, Inc., is a corporation which operates a shipyard located at Seattle in the State of Washington. Intervenor Tacoma Boatbuilding Co. is a corporation which also operates a shipyard in the State of Washington. It is presently building four cutters of the same type involved in the procurement which is the subject of this action. The four cutters being constructed by Tacoma are referred to as Class A cutters and those nine cutters involved in this action are referred to as Class B cutters.
Defendant Coast Guard requested bids to construct much needed cutters to replace outmoded vessels presently in use, to be opened in June, 1980. Six bids were submitted. The bids were:
Derecktor $349,530,719
Marine $380,854,103
Tacoma $391,882,517
Avondale Shipyards, Inc. $407,496,208
Alabama Dry Dock & Shipbuilding Co. $417,752,891
Bath Iron Works Corporation $427,037,689
When the Coast Guard determined the Derecktor bid to be responsive, it was then necessary in accord with procurement regulations to determine if Derecktor was also a responsible bidder. 41 C.F.R. § 1-2.407-2. A preaward survey team was appointed by the contracting officer. Captain James E. Grabb was appointed Chairman, and the other members were Captain H. E. Fallon, Commander J. D. Vitkauskas, Lieutenant Commander J. W. Hall, Lieutenant A. S. Gracewski, Chief Warrant Officer C. W. Meyer, Mr. C. R. Singman and Ms. S. L. Hoglind.
Captain Grabb is a graduate of the Coast Guard Academy and earned a Masters Degree in Naval Architecture and Marine Engineering from Massachusetts Institute of Technology, and a professional degree in Naval Engineering. He completed a course in quality assurance at Ohio State University and courses in quality assurance in naval shipyards, management of defense acquisition and advanced defense acquisition management. His practical experience included two summers as a participant in programs at the Boston Navy Yard and the Bethlehem Steel Shipyard at Quincy, Massachusetts, while a student at the Massachusetts Institute of Technology; three years in charge of repair, maintenance and alteration of all Coast vessels in the Fifth Coast Guard District; service as Commanding Officer, Resident Inspection Office, Lorraine, Ohio, which included contract administration and inspection for the construction of seven medium endurance cutters at a commercial shipyard; responsibility for the design of Polar class icebreakers, and he was Chief of the Procurement Division, Coast Guard Headquarters from 1976 to 1979. In 1979, he became Chief of the Major Acquisitions Staff and has the responsibility to oversee the planning, development and execution of acquisition projects for the ships that the Coast Guard buys. He had not served on a preaward survey team before. As Chief of the Procurement Division for three years he reviewed all preaward surveys that the Coast Guard performed during that period and his approval was required before a contract could be awarded.
Captain Fallon is a 1957 graduate of the Coast Guard Academy with a Masters Degree in Naval Architecture from the University of Michigan. He is currently Chief of the Naval Engineering Division, responsible for the design, construction and repair of all Coast Guard ships. He has served as Manager of ships inventory control point and as a Project Manager of the Coast Guard Yard and as Project Manager for Polar class icebreaker design and construction.
Lieutenant Commander Hall, the electronics representative, had been involved with the electronics of the 270 foot medium endurance cutters for a number of years. Commander Vitkauskas had from ten to fourteen years experience overseeing the safety aspects of commercial vessels and was chief of the shipbuilding branch at Coast Guard Headquarters. Lieutenant Gracewski is a graduate of Massachusetts Institute of Technology and Project Officer of the 270 foot medium endurance Class A cutters under construction by Tacoma. Chief Warrant Officer Meyer had a seagoing background and was assigned to the Quality Assurance Division of the Coast Guard. Charles Singman was a contract negotiator and was involved in the preparation of the Invitation For Bid. Ms. Hoglind was a cost price analyst who had been employed by the Coast Guard for six months at the time of the survey, and who had prior experience at the defense contract administration service.
Except for Chief Warrant Officer Meyer and Ms. Hoglind, each of the other members of the team was involved in the supervision of construction of four Class A cutters by Tacoma.
The survey team first met on June 11, 1980. Captain Fallon testified that it started with "a negative attitude." In addition to an Appointment Letter, the team was given copies of Federal Procurement Regulations, Defense Acquisition Regulations, a portion of Department of Transportation Regulations and a Department of Defense preaward survey form number 1524, Appendix K to the Defense Acquisition Regulations (DAR) and Navy Regulations referred to as SACAM. The team understood that it was to comply with the Federal Procurement Regulations and that the other regulations and the Form 1524 were given to them for guidance only. The purpose of the survey was to determine whether or not Plaintiff could obtain the necessary resources to construct the cutters, in view of the fact that it had not previously performed a contract of this magnitude, did not have either personnel or facilities necessary to perform the contract and because it had but recently acquired the use of a site in Coddington Cove, on the west shore of Aquidneck Island, upon property which had become surplus from the United States Naval Base, Newport, Rhode Island.
The team forwarded a telegraphic request to Plaintiff of the information it would require for the survey and arrived at the site on Monday, June 16. The survey information was obtained over a period of five days, and the team returned to Washington, D. C. on Friday, June 21. In general, the survey team investigated the Plaintiff's ability to obtain plant facilities and equipment, personnel and financing for the performance of the contract. The specific categories studied were Production Capability, Plant Facilities and Equipment, Financial Capability, Purchasing and Subcontracting, Accounting System, Quality Assurance Capability, Transportation, Plant Safety, Security, Labor Resource, Performance Record, Ability to Meet Required Schedule and Management.
In sum, the survey award...
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