Source: https://law.justia.com/cases/federal/appellate-courts/F2/877/883/270138/
Timestamp: 2019-12-06 03:53:08
Document Index: 63728612

Matched Legal Cases: ['§ 2305', '§ 2301', '§ 3551', '§ 3554', '§ 3554', '§ 2305', '§ 2305']

Shoals American Industries, Inc., Plaintiff-appellee, v. the United States, Defendant-appellant,j.d. Bertolini Industries, Ltd., Intervenor-defendant-appellant, 877 F.2d 883 (11th Cir. 1989) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Eleventh Circuit › 1989 › Shoals American Industries, Inc., Plaintiff-appellee, v. the United States, Defendant-appellant,j.d....
Shoals American Industries, Inc., Plaintiff-appellee, v. the United States, Defendant-appellant,j.d. Bertolini Industries, Ltd., Intervenor-defendant-appellant, 877 F.2d 883 (11th Cir. 1989)
US Court of Appeals for the Eleventh Circuit - 877 F.2d 883 (11th Cir. 1989) July 17, 1989
Judith Bartnoff, Patton, Boggs & Blow Washington, D.C., for J.D. bertolini.
William W. Goodrich, Jr., Kathryn T. Harris, and Arent, Fox, Kintner, Plotkin & Kahn, Vienna, Va., for plaintiff-appellee.
(b) (1) The head of an agency shall evaluate sealed bids and competitive proposals based solely on the factors specified in the solicitation.
After publishing the IFB but prior to the opening of the bids, the Navy amended the solicitation in several respects. This dispute concerns Amendment No. 3, which increased the number of TRICON containers specified in Contract Line Number 0003 ("CLIN 3") by 21--from 314 to 335. Amendment No. 3, with a revised bidding schedule reflecting the increased quantity attached, was sent to prospective bidders on February 10, 1988.
Although Shoals' bid acknowledged receipt of Amendment No. 3, the bid was submitted on the original bid form--not on the revised form that accompanied Amendment 3 and reflected the requirement of 335 containers specified in CLIN 3. Thus, on its face, Shoals' bid appeared to offer to provide only 314 CLIN 3 units at a price of $3,214.17 each.
Bertolini, whose bid of $9,443,486--approximately $480,000 more than Shoals'--was the apparent second lowest, protested the proposed award, arguing to the Contracting Officer that Shoals' bid did not conform to the IFB. Bertolini contended that the bid neither made an offer to provide nor stated a price for the additional 21 TRICON containers required by Amendment No. 3. The Contracting Officer denied Bertolini's protest, concluding that Shoals' bid conformed to the IFB, because it acknowledged receipt of Amendment 3 and because Shoals' failure to include a price for the increased quantity was a "minor informality" that should be waived.
Unsatisfied, Bertolini renewed its arguments in a protest to the General Accounting Office (GAO). After soliciting a response from the Navy, the GAO agreed with Bertolini that Shoals' bid did not conform to the IFB. The GAO concluded that Shoals' acknowledgment of Amendment No. 3 did not bring the bid into conformity with the IFB, as it was impossible to determine from the bid itself whether Shoals was offering the additional 21 units and, if so, at what unit price. J.D. Bertolini Indus., Inc., B-231598, Sept. 14, 1988, 88-2 CPD p 245. Thus, the GAO recommended that the Navy reject Shoals' bid.
The amended complaint asserts that Shoals' bid conformed to the IFB and that, consequently, the Navy's decision to award the contract to Bertolini is contrary to the mandate of 10 U.S.C. § 2305(b), supra. The complaint prayed for an injunction to prevent the United States from performing or making any payments to Bertolini under the contract, a declaration that Shoals was entitled to the contract as the responsive low bidder, attorneys' fees and such other relief the court deemed appropriate.1 In support of its prayer for relief, Shoals argued to the district court that its bid conformed to the IFB notwithstanding its use of the superseded bid form, because (1) use of the superseded form was a waivable "minor informality" or "minor irregularity" within the meaning of 48 C.F.R. 14.405,2 and (2) use of the old form was waivable as an "apparent clerical error" within the meaning of 48 C.F.R. 14.406-2.3
The district court agreed with Shoals and entered an order declaring "that Shoals American Industries, Inc., is entitled to the contract award as the low responsive bidder, subject to the customary and usual evaluations of responsibility and the other post-award checks normally required" and enjoining the United States and Bertolini from proceeding with performance of the contract.4 Shoals American Indus., Inc. v. United States, No. 88-AR-5434-NW (N.D. Ala. Oct. 11, 1988). This appeal followed.
This practice was modified by the Competition in Contracting Act of 1984 (CICA), Pub. L. No. 98-369, 98 Stat. 1175, which amended, inter alia, the Armed Services Procurement Act of 1947, 10 U.S.C. §§ 2301 et seq. (governing procurement by the Department of Defense, the Coast Guard, and the National Aeronautics and Space Administration). The final subtitle of CICA establishes a "Procurement Protest System," which authorizes the Comptroller General to entertain objections to agency procurement decisions and requires the agency to stay the award or performance of the contract pending his decision. 31 U.S.C. §§ 3551-3556.
Under CICA, " [i]f the Comptroller General determines that the solicitation, proposed award, or award does not comply with a statute or regulation," he must recommend that the agency take corrective action by awarding the contract to the protester, issuing a new solicitation, terminating the contract, or "implement [ing] such other recommendations as the Comptroller General determines to be necessary in order to promote compliance with procurement statutes and regulations." 31 U.S.C.A. Sec. 3554(b) (1) (West Supp.1989). The agency must report to the Comptroller General if it has not fully implemented those recommendations within 60 days. 31 U.S.C. § 3554(e) (1). Although the Comptroller General may not insist that the agency comply with his recommendations, he may award a prevailing protester its bid-preparation costs, as well as attorneys' fees and costs incurred in pursuing the protest. 31 U.S.C. § 3554(c) (1). Such an award must be paid by the agency "out of funds available ... for the procurement of property and services." 31 U.S.C.A. Sec. 3554(c) (2) (West Supp.1989).
In this case, the GAO determined that Shoals' bid was unresponsive because it failed to make an unequivocal offer to provide the exact items called for in the IFB. Shoals' acknowledgment of the amendment increasing the quantity of CLIN 3, GAO asserted, was insufficient to constitute a bid for the additional quantity, because it was not possible to determine, from the bid itself, whether Shoals was offering the additional 21 containers and, if so, what the unit price for the additional containers was intended to be. Further, noting that pricing omissions may be waived if "the items added by an amendment are divisible from the solicitation's overall requirements, are de minimis as to total cost, and clearly would not affect the competitive standing of the bidders," GAO determined that a waiver of the defect was not warranted in this case. GAO concluded that " [t]he defect in Shoals' bid ... involves a price omission for an additional quantity of an item which is an integral part of the overall contract requirements" and that, consequently, "Shoals' failure to comply with the solicitation's amended quantity terms represents a material deviation from an essential requirement."
5 U.S.C.A. Sec. 706 (West 1977). Citing this court's decision in Choctaw Mfg. Co., Inc. v. United States, 761 F.2d 609, 616 (11th Cir. 1985), the court stated that, in order to prevail under section 706, "a disappointed bidder must show either (1) that the decision of the procurement official had no rational basis, or (2) that the decision involved a clear and prejudicial violation of applicable statutes or regulations."
Shoals' claim--that the decision to award the contract to Bertolini involved "a clear and prejudicial violation" of 10 U.S.C. § 2305--goes to the second prong of the Choctaw analysis. Accordingly, the district court "recognize [d] that Shoals ... bears a heavy burden, inasmuch as considerable deference should be given to agency interpretations of their governing regulatory schemes." Mem. op. at 4 (citing Udall v. Tallman, 380 U.S. 1, 16, 85 S. Ct. 792, 801, 13 L. Ed. 2d 616 (1965)). Despite this recognition, however, the district court stated:
Mem. op. at 4-5.5 Thus, it appears that the district court decided that no deference was due the GAO's decision in this case, and, indeed, the court's opinion demonstrates that none was given.
Bertolini and the United States ask this court to reverse the district court's holding that Shoals' was the lowest bid conforming to the IFB and to lift the injunction barring the government and Bertolini from performing the contract. Although they agree--as does Shoals--that the district court was correct to conclude that this case is governed by the second prong of the Choctaw analysis, appellants assert that the district court misapplied the Choctaw standard. Specifically, they contend that the district court erred by failing to accord under Choctaw the proper deference to the Navy's (and GAO's) interpretation of 10 U.S.C. § 2305 and its implementing regulations. Accordingly, appellants do not ask us to interpret and apply section 2305 and its implementing regulations--rather, they ask us simply to reverse the district court's failure to defer to the interpretation of those standards which led the Navy to conclude that Shoals' bid did not conform to the IFB.
Although neither the GAO nor the Navy carries carte blanche with regard to section 2305, we agree with much of what appellants assert. The Supreme Court has held repeatedly that courts should respect an executive-branch agency's reasonable interpretation of statutes and regulations the agency is charged with administering. Thus, in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984), the Supreme Court stated:
"has been consistently followed ... whenever decision as to the meaning or reach of a statute has involved reconciling conflicting policies, and a full understanding of the force of the statutory policy in the given situation has depended upon more that ordinary knowledge respecting the matters subjected to agency regulations...."
467 U.S. at 844-45, 104 S. Ct. at 2782-83 (quoting United States v. Shimer, 367 U.S. 374, 382, 81 S. Ct. 1554, 1560, 6 L. Ed. 2d 908 (1961)) (remaining citations omitted). Such deference is particularly appropriate in the procurement area, as there is a "strong public interest in avoiding disruptions in procurement, and for withholding judicial interjection unless it clearly appears that the case calls for an assertion of an overriding public interest...." Hayes Int'l Corp. v. McLucas, 509 F.2d 247, 258 (5th Cir.) (emphasis added) (quoting M. Steinthal & Co. v. Seamans, 455 F.2d 1289, 1300 (D.C. Cir. 1971)), cert. denied, 423 U.S. 864, 96 S. Ct. 123, 46 L. Ed. 2d 92 (1975).6 Indeed, it is our recognition that "judges are ill-equipped to settle the delicate questions involved in procurement decisions, where long and complex factual histories, subtle economic factors and the need for expeditious buying decisions require assessments 'better left to the expertise of an executive agency,' " Kinnett Dairies, Inc. v. Farrow, 580 F.2d 1260, 1271 (5th Cir. 1978) (quoting Hayes, 509 F.2d at 258), that underlies our rule that, in order to prevail under the second prong of the Choctaw analysis, an unsuccessful bidder must show that the procurement decision "involved a clear and prejudicial violation of applicable statutes or regulations." 761 F.2d at 616 (quoting Kinnett Dairies, 580 F.2d at 1271) (emphasis added).
In this case, the district court failed to accord sufficient weight to GAO's interpretation of section 2305's requirement that a bid "conform [ ] to the solicitation." Although the district court's ultimate conclusion that Shoals' bid conformed to the IFB is reasonable, the GAO's conclusion, which rests upon a slightly different policy emphasis, also is eminently reasonable.
Shoals also filed a motion for a temporary restraining order, which the district court denied on September 30, 1988
Although the Navy's rationale for abandoning its prior position with respect to the conformity of Shoals' bid and awarding the contract to Bertolini is not in the record, the district court--with the apparent agreement of the parties--evaluated the Navy's decision by reference to the rationale of the GAO's recommendation. We do the same
The Eleventh Circuit, in the en banc decision in Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981), adopted as binding precedent decisions of the former Fifth Circuit rendered prior to October 1, 1981