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GSE DYNAMICS, INC. v. "JOHN DOE"

September 24, 1974

GSE DYNAMICS, INC., Plaintiff,
v.
"JOHN DOE", true name unknown to plaintiff, person intended being COMMANDING OFFICER, UNITED STATES ARMY MISSILE COMMAND, REDSTONE ARSENAL, ALABAMA and L. F. PARIS, PROCURING CONTRACTING OFFICER, UNITED STATES ARMY MISSILE COMMAND, REDSTONE ARSENAL, ALABAMA and PETER J. BRENNAN, Secretary of Labor, United States Department of Labor, Washington, D.C., Defendants


Platt, J.


The opinion of the court was delivered by: PLATT

Memorandum of Decision and Order

PLATT, J.

 By an Order to Show Cause with a summons and complaint and affidavits annexed plaintiff seeks a preliminary injunction restraining cancellation of a Request for Proposal (RFP) under which plaintiff is a bidder for a Department of Defense contract to manufacture some 50 Roller Tracks, an essential and integral machine part of the NIKE-Hercules Missile Radar System.

 In addition to such relief, the Order to Show Cause asks for an order directing the defendant Brennan to render a decision on the administrative appeal of the plaintiff from the decision of the defendant Contracting Officer, Paris, that plaintiff is not a manufacturer within the Walsh-Healey Public Contracts Act and directing said Contracting Officer to make an award of a contract pursuant to the said Request for Proposal to the plaintiff.

 In the underlying action plaintiff seeks a judgment directing the defendant Contracting Officer to award the proposed contract to the plaintiff; directing the defendant Department of Labor to withhold or cancel any decision declaring plaintiff not a "manufacturer" under the Walsh-Healey Public Contracts Act; directing the Department of Labor to deliver copies and to disclose to plaintiff all documentation received from the Contracting Officer and Army Material Command not already contained in the Contracting Officer's administrative record and that plaintiff have a suitable period thereafter in which to answer, contravert or otherwise submit evidence relating thereto, and that the defendants be enjoined from cancelling the aforesaid RFP or awarding the requirements described therein to any other company.

 Plaintiff maintains that unless the preliminary injunction is issued by this Court the defendant Contracting Officer would be in a position to cancel the Request for a Proposal (RFP) and that thereafter the plaintiff would have no standing to contest the Department of Labor's decision because all of its rights are dependent upon its status as a bidder.

 The Order to Show Cause originally came on before Judge Edward R. Neaher who denied plaintiff's request for a temporary restraining order when the Assistant United States Attorney representing the defendants apparently agreed that the RFP would not be cancelled pending a final decision by the Wage and Hour Division Administrator of the Department of Labor and a possible appeal to the Secretary of the Department of Labor. Such agreement allegedly expired on September 9th when the motion came on to be heard and a hearing on some of the issues was ordered by this Court. Such hearing not having been concluded on September 9th, this Court directed that there be an interim stay of any cancellation of the RFP pending the conclusion of such hearing and determination by this Court.

 At the hearing held on September 9, 12 and 20, testimony was taken from Messrs. Daniel J. Shybunko and Anthony Osmeloski, president and vice president, respectively, of the plaintiff, of Mr. Robert H. Brown, lead system engineer of the U.S. Army Missile Command, and of Major William M. Whitten III, labor advisor to the Department of the Army, and several exhibits were marked in evidence. The government also filed affidavits in opposition to plaintiff's motion papers.

 The Facts

 On or about June 28, 1973 the United States Army Missile Command at Redstone Arsenal issued a Request for Proposal (the "RFP") for 50 roller tracks which, as indicated above, are an essential and integral machine part of the NIKE-Hercules Missile Radar System.

 In accordance with normal Army procedures and regulations, a team of technical experts of the Defense Supply Agency of the Defense Contract Administration Services Department (DCASD), one of whom was the aforesaid Mr. Brown, made an on-site visit to the plaintiff's plant on October 25, 1973 to determine its qualifications as a manufacturer within the meaning of the Walsh-Healey Act and ASPR 12-603.1.

 These experts found (and indeed it does not appear to be disputed) that the plaintiff was not an established manufacturer of roller tracks. The experts further found that "equipment to produce the item does not exist at bidder's facility, that it does not have the capability to make certain necessary drill fixtures, or to manufacture the bid item, which is a product of a machine shop" and hence it did not "meet the requirements of a bidder newly entering the manufacturing of roller tracks of the type bid upon". (Slepian Report 30 October 1973.) Accordingly, the DCASD determined that the plaintiff was not qualified as a manufacturer within the meaning of the Walsh-Healey Public Contracts Act and ASPR 12-603.1. (id.)

 At or about the same time, pursuant to 15 U.S.C. ยง 637(b)(7), the Small Business Administration made its own investigation and concluded that the plaintiff was "competent as to capacity and credit, to perform the proposed" contract. (SBA Letter dated December 10, 1973). Plaintiff's attorney argued during the hearings that such determination was "conclusive" and "binding" on the Contracting Officer but conceded on the oral argument at the conclusion thereof (and also in one of his briefs) that even after such a determination such Contracting Officer had the right to cancel the RFP. Thus for the purposes of this motion, the Small Business Administration's determination would not appear to be significant.

 In the meanwhile, in or about such time the defendant Contracting Officer reached a decision that the plaintiff did qualify as a manufacturer pursuant to the Walsh-Healey Act. (Contracting Officer's statement dated March 28, 1974, para. 10).

 On or about February 1, 1974, however, the Legal Officer of the defendant Contracting Officer apparently received a letter from the Labor Department which caused him to re-evaluate his prior decision and on February 8, 1974 he wrote the plaintiff a letter stating in pertinent part that:

 
"Your firm is not an established manufacturer of the particular goods or goods of the general character sought by the Government, nor have you made necessary prior arrangements for space, equipment and personnel to perform the ...

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