The opinion of the court was delivered by: WEINFELD
This is an action by Self-Powered Lighting, Ltd. ("Self-Powered"), a New York corporation engaged in the manufacture of armaments and military equipment against the United States and various officers of the U. S. Army Armament Materiel Readiness Command (the "Army") for a declaratory judgment that a contract entered into on July 31, 1979 between the Army and Saunders-Roe Developments, Ltd. ("Saunders Ltd.") is void, and enjoining payments thereunder.
Jurisdiction is alleged under (1) the Administrative Procedure Act
and violations are charged of (2) the Armed Services Procurement Act;
(3) the Buy American Act;
and (4) various defense acquisition regulations.
Plaintiff was an unsuccessful bidder on the above-named contract. The complaint alleges various irregularities in the process used by the Army to solicit bids for the contract; that the winning bid was unresponsive to the terms of the solicitation, and thus, that the decision to award the contract to Saunders Ltd. was an arbitrary, capricious, and unreasonable action by the Army; and that the award to a foreign corporation unlicensed in the United States to handle the hazardous nuclear materials called for in the contract, and not subject to other federal regulatory provisions and the federal labor laws, violates federal law.
On December 14, 1979 plaintiff moved to enjoin payments by the government to Saunders Ltd. pending final determination of the contract's legality. The government cross-moved for summary judgment. After hearing the parties, the Court denied preliminary relief because plaintiff had failed to prove either "possible irreparable harm" or "a balance of hardships tipping decidedly in (its) favor."
The Court reserved decision on the government's summary judgment motion pending administrative review of plaintiff's protest by the Office of the Comptroller General of the United States (the "Comptroller"), which has jurisdiction under the Bid Protest procedures to review the agency action at issue here and to render a non-binding determination.
In an opinion dated March 13, 1980 the Comptroller denied plaintiff's protest and concluded that the Award to Saunders Ltd. was in accordance with requisite administrative procedures and did not violate applicable procurement statutes or regulations.
Upon an independent consideration of the legal and factual issues the Court reaches the same conclusion.
Although plaintiff's response pursuant to Local Rule 9(g) alleged no fewer than twenty-two controverted issues of fact, in its latest submission, plaintiff concedes "there do( ) not seem to be any issues of fact now that both parties have submitted voluminous papers and exhibits." We take this statement as an admission that the matter is properly before the Court for summary judgment.
Thus is appears the parties are in accord that the matter is ripe for summary judgment disposition.
The undisputed facts indicate that on July 20, 1978, the Army mailed a Request for Proposal, or solicitation, to fifteen American firms, including the plaintiff and the Minnesota Mining and Manufacturing Company ("3M"), in which it solicited bids for 82,750 front sight-post assemblies for use on the M16/M16A1 rifle. Previously, all past procurements for low-light post assemblies had been awarded to 3M, which was the only known manufacturer of promethium, the radioactive material in such low-light sights. After the solicitations had been issued, the Army decided, for safety reasons, to use in the sights tritium, a radioactive gas which disperses if accidently released, rather than promethium, a radioactive liquid which contaminates the rifle user and environs if the sight is damaged. Either type of sight affords a rifleman so equipped the ability to sight and shoot at night. Accordingly, the request for proposals required that the sights contain a spherical-ended luminescent bead containing tritium, a nuclear by-product; this required that offerors be licensed by the Nuclear Regulatory Commission to handle such materials. Offerors intending to use government-furnished property were required to submit written permission from the contracting officer having jurisdiction over the property. The solicitation did not contain a "notice of potential foreign source competition."
Prior to the issuance of the solicitation, the Army had determined, pursuant to an exception to the Armed Forces Procurements Act,
to conduct the procurement by negotiation, rather than formal advertising. Pursuant to the Act, the contracting officer charged with obtaining the procurement had determined on June 9, 1978 that it was "impracticable to obtain competition by formal advertising," since the only known manufacturer of the requisite nuclear materials was 3M, which, as already noted, in the past had been awarded all similar procurement contracts for low-light, front sight-post assemblies. The contracting officer reasoned that "in the event that only one proposal was received, the best interests of the government would be served by having the ability to obtain cost and pricing data and negotiate (the) price." That course of action would not be possible if the procurement had been obtained through formal advertising. The negotiation procedure permits great flexibility. To protect the government's interest, the contracting officer determined that the solicitation would be "unrestricted," and that "any interested company" would be allowed to participate in it.
Ultimately, a total of 47 solicitations were issued by the Army. Five proposals were received by the date set for receipt of proposals. Plaintiff's offer was the lowest of these. The offer of Saunders Ltd., a United Kingdom corporation, was second low and was accompanied by an engineering change proposal seeking approval for the provision of flat-ended rather than spherical-ended beads. Saunders Ltd."s initial proposal also indicated that it intended to use government-furnished equipment, but did not include the required written permission to do so.
By letter dated September 18, 1979, the Army asked plaintiff to confirm its bid, which was substantially lower than those of its competitors to which it responded by increasing its unit price by almost fifty percent, raising it above Saunders Ltd."s offer. However, although Saunders' offer was then the lowest, its bid could not be considered because its initial proposal did not include the written permission for use of government-furnished equipment. As a result, plaintiff up to that point remained the low offeror eligible for award.
Thereafter, negotiations were reopened and best and final offers were requested from each offeror on November 22, 1979. Although Self-Powered remained the low, eligible offeror, action to award the contract to it was deferred because Saunders Ltd. had been asked to submit its best and final offer without being advised of its ineligibility for award by reason of its proposed use of government equipment. Consequently, the contracting officer determined to hold a new round of best and final offers. All offerors were advised that the Request for Proposal requirements with respect to government-furnished property had to be strictly complied with, and that the tritium beta lights could have either spherical ends, as originally specified, or flat ends, as the result of acceptance of Saunders Ltd."s engineering change proposal. In the final round, Saunders Ltd."s new best and final offer displaced that of Self-Powered as the low, eligible bid. The contracting officer verified the authority of the signer of Saunders' offer to commit the company to a contract, and awarded the contract to Saunders Ltd. Performance has already commenced, although payment has not yet been made.
In its motion for summary judgment, the government contends that Self-Powered lacks standing to present the claims alleged herein; that the Court lacks subject matter jurisdiction over the action; that the plaintiff failed to join Saunders Ltd., an indispensable party; and that in any event, the claims should be rejected on the merits. We turn now to the first and last of these contentions.
The government's initial contention is that Self-Powered has no standing as an unsuccessful bidder to challenge the award. There is substantial support for this contention. More than a decade ago, in Edelman v. Federal Housing Administration,