Source: https://openjurist.org/674/f2d/325/bayou-state-security-services-inc-v-dravo-utility-constructors-inc
Timestamp: 2017-08-23 13:17:45
Document Index: 173203125

Matched Legal Cases: ['§ 21', '§ 702', '§ 2201', '§ 1331', '§ 1332', '§ 1361', '§ 1346', '§ 1']

674 F2d 325 Bayou State Security Services Inc v. Dravo Utility Constructors Inc | OpenJurist
674 F. 2d 325 - Bayou State Security Services Inc v. Dravo Utility Constructors Inc
674 F2d 325 Bayou State Security Services Inc v. Dravo Utility Constructors Inc
674 F.2d 325
29 Cont.Cas.Fed. (CCH) 82,472
BAYOU STATE SECURITY SERVICES, INC., Plaintiff-Appellant,
DRAVO UTILITY CONSTRUCTORS, INC., et al., Defendants-Appellees.
Joan Elaine Chauvin, Asst. U. S. Atty., New Orleans, La., I. Avrum Fingeret, U. S. Dept. of Energy, Washington, D. C., for U. S. Dept. of Energy.
The Request required that each bid contain a Contract Proposal, a Technical/Management Proposal, and a Cost Proposal. The Contract Proposal was to provide such information as the offeror's remittance address, financial statements, and Equal Employment Opportunity Policy. The Technical/Management Proposal was to focus on the offeror's qualifications in four areas, in descending order of importance: (1) training capability, (2) security management, (3) key personnel, project management and cost control, and personnel management; and (4) related corporate experience. DUCI indicated that it would assign a numerical score to each Technical/Management Proposal received. Finally, the Cost Proposal was to summarize expected labor and burden costs for each site, culminating in a total cost figure. The Request expressly noted that "(t)he Technical and Management Factors are generally each of higher importance than the Cost Factors."
DUCI selected Wackenhut. An intracompany memo written by DUCI's security director just prior to the decision suggests that Mason-Reguard's higher costs overbalanced its competitive technical score and that Bayou-Citadel's lower rating reflected concern at DUCI over the company's training and "overall" capabilities. Having made its choice, DUCI forwarded the Wackenhut proposal to the Department of Energy for approval, as required by their contract. DOE consented to the choice on August 3, and DUCI awarded the contract to Wackenhut the same day.
Bayou-Citadel immediately filed a protest with the United States General Accounting Office (GAO) pursuant to 4 C.F.R. § 21.1 et seq. (1981). On February 6, 1980, GAO dismissed the protest because it failed to describe any of the circumstances under which GAO considers protests by subcontractors.1 Bayou State Security Services, Inc., No. B-195675 (Comp. Gen. Feb. 6, 1980). Bayou-Citadel then brought this lawsuit against DUCI and the federal appellees, the U. S. Secretary of Energy and the U. S. Comptroller General, alleging federal jurisdiction under the Administrative Procedure Act, 5 U.S.C. § 702; the Declaratory Judgment Act, 28 U.S.C. §§ 2201-2202; 28 U.S.C. § 1331 (federal question); 28 U.S.C. § 1332 (diversity of citizenship with respect to DUCI); and 28 U.S.C. § 1361 (mandamus of U. S. government employee). The complaint asked for a declaratory judgment and a mandatory injunction ordering the defendants to award the contract to Bayou-Citadel. Alternatively, it prayed for $1,000,000.00 in actual damages based on proposal preparation costs, litigation costs, and lost profits, and in punitive damages.
The district court recognized jurisdiction over DUCI on diversity grounds and over the federal appellees because Bayou State might have alleged grounds for "some declaratory relief." As the court noted, it clearly lacked jurisdiction over the government defendants for any money damage claim based upon contract since the Tucker Act, 28 U.S.C. § 1346(a)(2), vests exclusive jurisdiction in the Court of Claims over civil actions that involve more than $10,000 and arise from an express or implied contract with the United States.2 After hearing the evidence, the district court concluded that Bayou-Citadel had failed to carry its burden of proving any facts that would entitle it to relief from any defendant. DUCI's request for bids had stated clearly that costs was only one consideration, the court reasoned; therefore, "DUCI had a right to evaluate anticipated performance as well as costs in making its determination as to who the sub-contractor would be." Finding that DUCI had done so "in good faith, using sound business judgment," the court entered a judgment dismissing the suit.
Bayou State3 objects on appeal that the district court erred in not measuring DUCI's conduct against federal procurement regulations, in interpreting the complaint to state an action based on contract, and in refusing to find bad faith in the defendants' actions. It even asserts a due process claim arising from administrative and judicial rejection of its protest. Having reviewed the full record, we conclude that all of these contentions lack merit. Primarily, we agree with the district court that Bayou State has failed to substantiate, under any pertinent legal standard, its charge that DUCI acted improperly in selecting a subcontractor.
The parties have contended at length over whether DUCI was bound to follow as its standards federal procurement regulations in choosing a subcontractor. Bayou State insists that the regulations apply, that DUCI failed to follow them, and that the district court erroneously evaluated DUCI's conduct under the less demanding standards of private contract law. We are not certain which standards the district court applied.4 We are certain, however, that it does not matter. Even under the stricter standards of governmental procurement, neither the terms of the Request for Proposals nor any of the federal regulations cited by appellant obligated DUCI to accept the lowest bidder.
Except where the cost-reimbursement type contracts are to be used ... a request for proposals may provide that after receipt of initial technical proposals, such proposals will be evaluated to determine those which are acceptable to the Government or which, after discussion, can be made acceptable, and upon submission of prices thereafter, award shall be made to that offeror of an acceptable proposal who is the low responsible offeror.
If after evaluation of the Technical and Business Management Proposal and Cost Proposal, two or more competing overall proposals are within the competitive range, evaluated cost may be the decising (sic) factor for seclection (sic), depending on whether the most overall proposal (excluding cost considerations) is determined to be worth the cost differential, if any.
41 C.F.R. § 1-3.805-1 (introductory paragraph) (emphasis added). Judicial expression of this sensible theme antedates even the current regulations. "Contracting officers of the Federal Government have the duty to select the contract most advantageous to the Government, and advantage is not measured exclusively in terms of price; it includes other factors such as judgment, skill, ability, capacity, and integrity." Friend v. Lee, 221 F.2d 96, 100 (D.C.Cir.1955). See also Scanwell Laboratories, Inc. v. Shaffer, 424 F.2d 859, 869 (D.C.Cir.1970).
We previously have indicated our agreement with the District of Columbia Circuit's opinions holding that disappointed bidders should face a rigorous standard in seeking judicial intervention into the procurement process. "Only when the court concludes that there has been a clear violation of duty by the procurement officials should it intervene in the procurement process and proceed to a determination of the controversy on the merits." Kinnett Dairies, Inc. v. Farrow, 580 F.2d 1260, 1271 (5th Cir. 1978) (quoting M. Steinthal & Co. v. Seamans, 455 F.2d 1289, 1303 (D.C.Cir.1971) and citing Scanwell, supra, 424 F.2d at 874). Consequently, we stated in Kinnett that those challenging the legality of procurement decisions
580 F.2d at 1271 quoting Kentron Hawaii Ltd. v. Warner, 480 F.2d 1166, 1169 (D.C.Cir.1973).
However, this hardly carries Bayou State's formidable burden of showing that the overall selection of Wackenhut lacked a rational basis. The DUCI memo conveys a general disquiet over the qualifications of Bayou State's training coordinator, whose experience, according to DUCI, was chiefly in the fields of grant preparation, public relations, rehabilitation counseling, and corrections rather than law enforcement or guard training. "Training capability" was, after all, the element of highest priority in the Technical/Management scoring. Moreover, the memo also recorded DUCI's "reasonable doubt" as to Bayou State's "overall ability" to manage situations requiring reliance on "corporate experience/resources."In sum, this court does not sit to ensure that the government or its contractors exercise perfect judgment in every procurement decision. "In the field of government procurement the courts must be sedulous to heed the admonition that their authority to vacate and enjoin action that is illegal must be exercised with restraint less (sic) the courts fall into the error of supposing that they may revise 'action simply because (they) happen to think it ill-considered, or to represent the less appealing alternative solution available.' " Steinthal, supra, 455 F.2d at 1298-99 quoting Calcutta East Coast of India and East Pakistan/USA Conference v. Federal Maritime Commission, 399 F.2d 994, 997 (D.C.Cir.1968). The competition between these bidders was sharp, the stakes high. Bayou State found itself edged out in the final round because DUCI believed that Wackenhut possessed greater experience worth the additional expense. DUCI's decision, based upon explicit and well-advertised criteria, was a rational one. As the court below observed, Bayou State's disappointment is understandable. It does not, however, justify relief from any of the federal appellees or DUCI. The judgment below is
The GAO will consider subcontractor protests only in the following limited circumstances: (1) where the prime contractor is acting as a purchasing agent of the government; (2) where the government's active or direct participation in the selection of the subcontractor has the net effect of rejecting or selecting a potential subcontractor, or significantly limiting subcontract sources; (3) where fraud or bad faith is shown in the government's approval of the subcontract award of proposed awards; (4) where the subcontract is "for" an agency of the government; or (5) where the questions concerning the award of subcontracts are submitted by federal officials who are entitled to advance decisions by GAO. Optimum Systems, Inc., 54 Comp. Gen. 767, 773-75 (1975)
With respect to circumstance (4), a subcontract is considered to be "for" the government when it is made by a prime contractor who operates and manages a government-owned facility. See, e.g., Lombard Corp. v. Resor, 321 F.Supp. 687 (D.D.C.1970), a case on which Bayou State relies heavily for its contention that DUCI made the security services contract "for" the Department of Energy. GAO's dismissal of Bayou State's protest represents, therefore, a finding the DUCI was not acting "for" the government in selecting a subcontractor and that Bayou State's quarrel with DUCI was a purely private one.
We normally would accord great weight to GAO's rejection of Bayou State's attempt to characterize DUCI as the government's alter ego. See, e.g., Wheelabrator Corp. v. Chafee, 455 F.2d 1306, 1313-17 (D.C.Cir.1971). As explained below, however, we may assume arguendo the correctness of Bayou State's position without altering the result in this case. Thus, we need not even review GAO's conclusions.
Bayou State argues that its claims are founded not on a contract, but on the right to a contract. The Court of Claims has held consistently, however, that lost profits calculated from a contract that never came into existence are not recoverable on any theory, and that disappointed bidders must confine their damages to proposal preparation costs. See, e.g., Keco Industries, Inc. v. United States, 428 F.2d 1233, 1240, 192 Ct.Cl. 773 (1970). Moreover, suits by disappointed bidders must inevitably find support in an "implied contract to fairly and honestly consider each plaintiffs' bid." Id. at 1236. Thus, jurisdiction over Bayou State's damage claims, whatever their merit, would have rested in the Court of Claims
Bayou State's partner in the joint venture, Citadel Security, Inc., has not appealed
The court below indicated only that "DUCI could choose any rational criteria for selection of a sub-contractor." As we explain below, this standard is consonant with the terms of both DUCI's Request for Proposals and the federal regulations claimed by Bayou State to govern DUCI's conduct