Varicon Intern. v. Office of Personnel Management, Civil Action No. 96-1124 RMU.

• Decision Date: 08 July 1996
• Docket Number: Civil Action No. 96-1124 RMU.
• Citation: 934 F. Supp. 440
• Parties: VARICON INTERNATIONAL, et al., Plaintiffs, v. OFFICE OF PERSONNEL MANAGEMENT, et al., Defendants.
• Court: U.S. District Court — District of Columbia

934 F. Supp. 440

VARICON INTERNATIONAL, et al., Plaintiffs, v. OFFICE OF PERSONNEL MANAGEMENT, et al., Defendants.

Civil Action No. 96-1124 RMU.

United States District Court, District of Columbia.

July 8, 1996.

Richard Donald Lieberman, John Randolph MacPherson, Sullivan & Worcester, Washington, DC, James Scott Phillips, Arlington, VA, for Varicon International, Inc., MVM, Inc.

Rudolph Contreras, U.S. Attorney's Office, Washington, DC, for Office of Personnel Management, James B. King.

MEMORANDUM OPINION

URBINA, District Judge.

Denying Plaintiffs' Motion for a Preliminary Injunction

This matter comes before the court upon plaintiffs' motion for a preliminary injunction; defendants' opposition; and plaintiffs' reply. The court concludes that plaintiffs' motion shall be denied because plaintiffs have failed to demonstrate that they have a substantial likelihood of success on the merits; that they will be irreparably harmed; that the balance of harms favors the issuance of an injunction; or that the public interest will be furthered if the court were to grant injunctive relief.

BACKGROUND

The Investigations Service of the Office of Personnel Management ("OPM") is responsible for conducting background investigations of executive branch applicants and employees for security clearance purposes. In 1994, OPM conducted thirty-eight percent of the total personnel background investigations undertaken that year. Most of the remaining investigations were conducted by the particular executive agency making the personnel decision, pursuant to delegation agreements with OPM or the agency's independent statutory authority. Approximately five point seven percent of the investigations in 1994 were contracted out to private investigation services, including plaintiffs in this action.

In December 1994, OPM began developing plans to privatize its Investigation Service. By June 1995, OPM had implemented a privatization plan whereby an employee-owned company was created with which OPM would contract to perform the background investigations previously performed by the Investigations Service of OPM. As part of the privatization plan, the new company, U.S. Investigations Services ("USIS"), was to offer employment to all OPM personnel who would be displaced by the privatization plan.

On September 18, 1995, OPM Director James B. King issued a Determination and Finding ("D & F"), which determined that it was in the "public interest" to award, without full and open competition, an exclusive procurement contract for investigative and related services to USIS for a period of three years, with two additional one-year options. This D & F was issued pursuant to 41 U.S.C. § 253(c)(7) and § 6.301-7 of the Federal Acquisition Regulations.

On April 12, 1996, OPM signed an exclusive procurement contract with USIS. On May 1, 1996, OPM issued reduction in force notices to approximately 700 of its Investigations Service employees, notifying them of discharge effective July 6, 1996.

On May 2, 1996, pursuant to its contract with OPM, USIS extended written job offers to each OPM Investigations Service employee who had received a reduction in force notice. Over ninety percent of the outgoing OPM employees accepted USIS's employment offer. OPM plans to issue a notice to proceed under its contract with USIS to be effective July 7, 1996.

Plaintiffs Varicon International, Inc. ("Varicon") and MVM, Inc. ("MVM") are both corporations which provide various security services, including background investigations, to the United States government and the private sector. The plaintiffs have filed a motion for preliminary injunction to enjoin OPM from proceeding on its contract with USIS.

ANALYSIS

In order to succeed on a motion for a preliminary injunction, a movant must demonstrate: (1) a substantial likelihood of success on the merits; (2) that irreparable injury will result in the absence of the requested relief; (3) other interested parties will not suffer substantial harm if the injunction is granted; and (4) that the public interest favors entry of a preliminary injunction. WMATC v. Holiday Tours, Inc., 559 F.2d 841, 843 (D.C.Cir.1977); Sea Containers, Ltd. v. Stena AB, 890 F.2d 1205, 1208 (D.C.Cir. 1989). A preliminary injunction is not granted as a matter of right. Eli Lilly and Co. v. Premo Pharmaceutical Labs., 630 F.2d 120, 136 (3d Cir.1980), cert. denied, 449 U.S. 1014, 101 S.Ct. 573, 66 L.Ed.2d 473 (1980). Injunctive relief is an extraordinary remedy and must be sparingly granted. Dorfmann v. Boozer, 414 F.2d 1168 (D.C.Cir.1969).

A district court is to balance the four factors. Grigsby Brandford & Co., Inc. v. U.S., 869 F.Supp. 984, 1003 (D.D.C.1994). Consequently, although a "particularly strong likelihood of success on the merits" may entitle a movant to relief upon "a relatively slight showing of irreparable injury," some showing of irreparable injury is always required, "since `the basis for injunctive relief in the federal courts has always been irreparable harm.'" CityFed Fin. Corp. v. OTS, 58 F.3d 738, 747 (D.C.Cir.1995) (quoting Sampson v. Murray, 415 U.S. 61, 88, 94 S.Ct. 937, 951, 39 L.Ed.2d 166 (1974)). Likewise, a court may accept a showing that the movant has a "substantial case on the merits" instead of the probability of success on the merits that is ordinarily required, but only when all of "the other three factors strongly favor interim relief." Holiday Tours, Inc., 559 F.2d at 843.

I. Likelihood of Success on the Merits

The court determines that the plaintiffs have failed to demonstrate a likelihood of success on the merits of their claim that the OPM's decision to issue a sole source contract to USIS is arbitrary, capricious or contrary to law for two reasons. First, the plaintiffs have not demonstrated a likelihood of success in proving that the OPM Director's decision is subject to judicial review. Second, assuming the Director's decision is reviewable by this court, the plaintiffs have not demonstrated a likelihood of success in showing that the Director's decision lacks a reasonable basis or that it is not in accordance with applicable law. The court further determines that Executive Order 10450 appears to provide the necessary legal basis for OPM's regulations that require agencies to obtain authority from it in order to perform or contract for the completion of background investigations, and therefore, the plaintiffs have failed to demonstrate a likelihood of success on this issue. Finally, the court concludes that the plaintiffs have failed to demonstrate a likelihood of success in showing that the USIS was established in violation of the Government Corporation Act.

A. OPM's Decision to Issue a Sole Source Contract to USIS

1. Reviewability of the Director of OPM's Decision under the Administrative Procedure Act

"The Administrative Procedure Act establishes a `presumption of judicial review' at the behest of those adversely affected by agency action." Kreis v. Secretary of the Air Force, 866 F.2d 1508, 1513 (D.C.Cir.1989) (citing, Abbott Laboratories v. Gardner, 387 U.S. 136, 140, 87 S.Ct. 1507, 1511, 18 L.Ed.2d 681 (1967)). One exception to the presumption of judicial reviewability is if the "agency action is committed to agency discretion by law." 5 U.S.C. § 701(a)(2). The Supreme Court has noted that "under § 701(a)(2), even when Congress has not affirmatively precluded judicial oversight, `review is not to be had if the statute is drawn so that a court would have no meaningful standard against which to judge the agency's exercise of discretion.'" Webster v. Doe, 486 U.S. 592, 599-600, 108 S.Ct. 2047, 2052, 100 L.Ed.2d 632 (1988) (citing Heckler v. Chaney, 470 U.S. 821, 830, 105 S.Ct. 1649, 1655, 84 L.Ed.2d 714 (1985)).

Both the Competition in Contracting Act of 1984 ("CICA") and the Federal Acquisition Regulation ("FAR") provide that the head of an executive agency may use procurement procedures other than competitive procedures if the head of the agency "determines that it is necessary in the public interest to use procedures other than competitive procedures in the particular procurement concerned." 41 U.S.C. § 253(c)(7); FAR 6.3027. This provision is commonly known as the "public interest exception." The defendants argue that the public interest exception provides the Director of OPM with absolute discretion to award a procurement contract on a non-competitive basis if he determines it to be in the public's best interest. The defendants further contend that as the statute provides no standards against which the court may judge whether the Director of OPM properly determined that "it is necessary in the public interest," his decision to award USIS a sole source contract is not subject to judicial review.

In Webster v. Doe, the Supreme Court determined that the statutory provision authorizing the Director of the Central Intelligence Agency to terminate an agency employee whenever he "shall deem such termination necessary or advisable in the interests of the United States" grants the Director unreviewable discretion. Webster, 486 U.S. at 600, 108 S.Ct. at 2052 (interpreting 50 U.S.C. § 403(c)). In reaching its conclusion, the Court noted that the statutory provision allowed for termination of an employee whenever the Director "shall deem such termination necessary ... not simply when the dismissal is necessary or advisable to those interests." Webster, 486 U.S. at 600, 108 S.Ct. at 2052 (emphasis added). The court finds the language in the public interest exception to be linguistically similar to the language in the statutory provision examined by the Supreme Court in Webster v. Doe.

As in Webster, the statutory provision at issue here "fairly exudes deference" to the Director of OPM. Webster, 486 U.S. at 600, 108 S.Ct. at 2052. The public interest exception allows the Director of OPM to award a contract on a non-competitive basis if he "determines that it is necessary in the public interest."...