Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

BUFFALO CENT. TERMINAL, LTD. v. UNITED STATES

January 27, 1995

BUFFALO CENTRAL TERMINAL, LTD., Plaintiff,
v.
UNITED STATES OF AMERICA, DONALD EIGENDORFF, in his capacity as Contracting Officer, General Services Administration, LORRAINE AIVES, in her capacity as Contracting Officer, General Services Administration, Defendants.


LESLIE G. FOSCHIO, UNITED STATES MAGISTRATE JUDGE


The opinion of the court was delivered by: LESLIE G. FOSCHIO

REPORT and RECOMMENDATION

JURISDICTION

 This matter was referred to the undersigned by the Hon. William M. Skretny, on October 14, 1994, for the purpose of issuing a Report and Recommendation on Plaintiff's and Defendants' motions for summary judgment, dated February 22, 1994 and February 23, 1994, respectively.

 BACKGROUND

 Plaintiff filed its original complaint On December 19, 1990, asserting four claims for relief, alleging that Defendant United States of America, then identified as the General Services Administration ("GSA"), violated the Competition in Contracting Act of 1984 ("CICA"), 41 U.S.C. § 251 et seq., 41 U.S.C. § 414, and 40 U.S.C. § 601 et seq., the Public Buildings Cooperative Use Act of 1976, 40 U.S.C. § 601(a), the National Historic Preservation Act of 1966, 16 U.S.C. § 470, and Executive Order No. 12072, 3 C.F.R. 213, in awarding a lease for government space to a bidder other than Plaintiff. Plaintiff, the owner of real property known as the Buffalo Central Terminal, was an unsuccessful bidder in a government procurement process for rental space for offices of the Internal Revenue Service. In the original complaint, Plaintiff sought a preliminary injunction, however, such request was withdrawn by Plaintiff on January 9, 1991. Thereafter, Defendant GSA filed an answer on February 19, 1991.

 On February 22, 1994, plaintiff filed a motion for summary judgment. On February 23, 1994, Defendant filed a cross-motion for summary judgment.

 For the reasons as set forth below, Plaintiff's motion for summary judgment should be DENIED, and Defendant's cross-motion for summary judgment should also be DENIED.

 FACTS

 A manual entitled Source Selection Procedures, dated July 21, 1987 (the "Manual") is utilized by General Services Administration ("GSA") in the procurement process as a reference guide. *fn1" The Manual ensures compliance with applicable laws, regulations, and procedures in the procurement process, including the Competition in Contracting Act of 1984. According to the Manual, GSA is required to "ensure that the highest degree of clarity and precision is exercised in communicating the needs (of the Government) and soliciting proposals which best satisfy those needs." See Source Selection Procedures, at p. 30. As such, any Solicitation for Offers ("SFO") are required to clearly state the evaluation factors, including price and other significant factors that will be considered during the procurement process. If one factor is to have predominant consideration over other factors, this information should be disclosed to the offerors. See Source Selection Procedures, at p. 31. The same criteria are set forth in a GSA procedure manual entitled Acquisition of Leasehold Interests in Real Property ("Acquisition Guidelines"), dated June 22, 1981. In addition, only those factors listed in an SFO may be considered in the procurement process when evaluating offerors' proposals. See Acquisition Guidelines, at p. 15. However, Julie Karson, in-house counsel for GSA has indicated that the leasing handbook is "mostly outdated." See Affidavit in Response to Affidavit in Support of Plaintiff's Motion for Summary Judgment, dated December 9, 1994, at p. 2, P5.

 In the fall of 1988, the Internal Revenue Service ("IRS") submitted a request to GSA for approximately 65,000 square feet of office space in the Western New York area. The IRS indicated to GSA that its request for space should be located within a delineated area of Western New York which included the City of Buffalo, and portions of the Towns of Cheektowaga, West Seneca, and Tonawanda, all three adjacent suburbs of Buffalo. *fn2" Thereafter, in June, 1989, GSA placed an advertisement in the "Buffalo News," the Buffalo, New York newspaper, indicating that the IRS was planning to relocate its Taxpayer Assistance Service Unit of the Buffalo District Office, which serviced toll-free calls from taxpayers in the Northeast United States, and that it was seeking approximately 65,000 square feet of office space for that purpose.

 In October, 1989, two other individuals, William Scolnik and Vincent DiNapoli, approached GSA, through Defendant Aives, regarding their interest in bidding on the IRS lease. Both individuals had previously negotiated with GSA for approximately twenty other lease agreements, including three lease agreements with the IRS. Although, as of October, 1989, neither Scolnik nor DiNapoli owned any real property in the Buffalo area suitable for the IRS lease, on November 16, 1989, Scolnik, DiNapoli, and a realtor, met with Aives in order to survey potential sites for the IRS lease which Scolnik and DiNapoli would consider for purchase. One of the sites which the parties toured on that day was the Terminal tower building, even though Plaintiff had already acquired an option to purchase the property, and, therefore, it was unavailable for purchase by Scolnik or DiNapoli. According to Plaintiff, GSA informed Scolnik and DiNapoli at that time that it was not in favor of utilizing the Terminal property for the IRS lease. However, this fact was not communicated to Plaintiff, despite the fact that Plaintiff had already communicated its interest to GSA in using the Terminal building for its offer.

 On the same day, Scolnik, DiNapoli, Aives, and the realtor also toured another property, known as the Appletree Mall, located in Cheektowaga, New York. According to Plaintiff, GSA became interested in that location, causing Scolnik and DiNapoli to immediately acquire an option to purchase the Appletree Mall.

 On December 1, 1989, GSA issued an SFO for the IRS lease. The SFO provided all potential offerors with specific detailed information regarding GSA's requirements for the lease. The technical award factors established by GSA for this SFO, other than price, in descending order of importance, included physical characteristics of the property, such as character and quality of space, grounds, and approaches, landscaping, and decor of the main lobby; layout, compatibility with intended use, and consistency of development with state, regional, and local plans; time frame of delivery of space, public transportation facilities within one half mile of the property; and, eating facilities within one half mile of the property. See Plaintiff's Exhibit 1, at p. 6.

 Following issuance of the SFO, negotiation objectives for the IRS lease were developed by Defendant Lorraine Aives, and by Richard Favuzzi, a realty specialist. See Plaintiff's Exhibit 7B. These objectives established that GSA was seeking a location which conformed with the stated criteria in the SFO, that was responsive to the outlined award factors, that had the lowest possible reasonable base cost of services, and that had the lowest possible fair and reasonable rental rate, in consideration of a market range of between $ 21.75 and $ 26.75 per net usable square foot for fully serviced office space. See Plaintiff's Exhibit 7B. According to Aives, however, negotiation objectives were not usually in writing prior to the date of the actual lease award, but, rather, were placed in the file before the lease was signed by the government so that anyone who examined the file could see what the contracting officer's objectives were. See Plaintiff's Exhibit 8C, Deposition of Lorraine Aives, at p. 112.

 The award factor evaluation criteria was developed by Defendant Donald Eigendorff, with input from Richard Favuzzi, although the date it was authored is unclear, being sometime before or after May 1, 1990. See Plaintiff's Exhibit 2B, at p. 200, 203. The award factor evaluation criteria set forth the scores, from 1 (poor) to 5 (excellent), with which each award factor, as stated above, was evaluated. For example, it stated that, as to layout compatibility and local plans, that buildings providing space on a single floor plan would receive an excellent rating for that criteria, whereas a plan which provided for space on four floors would receive a poor rating. See Plaintiff's Exhibit 7A. The SFO also indicated that price was of equal importance to the combined score of the technical award factors. See Plaintiff's Exhibit 1, at p. 6. The physical characteristics and quality factor accounted for thirty percent of the technical award factors score, and the layout and compatability factor accounted for twenty-five percent of the technical award factors score. The delivery of space factor was weighted at twenty percent of the total technical score, transportation at fifteen percent, and eating facilities at ten percent.

 Following the issuance of the SFO, many initial bid proposals were received by GSA. One offer was submitted by Scolnik and DiNapoli, on December 18, 1989, offering the space on two floors of the Appletree Mall. See Plaintiff's Exhibit 12B, at p. 464. According to Plaintiff, Scolnik and DiNapoli were thereafter advised by GSA that a one-floor plan was preferable, although that preference was not made a part of the written solicitation for offers, and Plaintiff, submitting an offer using multiple floors, was unaware of that preference, having never been informed. Eigendorff, however, at his deposition, stated that, as four floors was the maximum allowable, while not stated, it was "implicit" in the SFO that less than four floors would be preferable. See Plaintiff's Exhibit 12B, at p. 240-241.

 Plaintiff submitted its offer for the IRS lease on January 18, 1990, offering the space in the five-story building at the Terminal to GSA, utilizing four out of the five floors of the building. Meanwhile, Scolnik and DiNapoli, in the form of a general partnership known as Woodfield Chapin Associates ("WCA"), submitted a revised offer of the space at the Appletree Mall, utilizing a one-floor format. Plaintiff's bid, the WCA bid, and two other bids, one from Uniland Development Company, and one from Benderson Development Company, both local developers, also for space located in suburbs of Buffalo, were ultimately considered to be responsive to the minimum requirements of the SFO, meriting further negotiation and consideration. According to Plaintiff, the initial offer from WCA was the highest bid as to price.

 Commencing in January, 1990, negotiations began between the WCA principals and representatives of GSA and the IRS. GSA also negotiated with Plaintiff, although representatives from the IRS were not present at those meetings. However, according to Plaintiff, although disputed by Defendants, during January, 1990, despite ongoing negotiations with at least two offerors, the IRS commenced preparations for relocation to the Appletree Mall facility, and had a floor-plan layout of the site prepared. Further, there was evidence that the Chief of the Space and Acquisition Staff of the IRS, Ronald Dukarm, considered two key sites for the lease to be either the Appletree Mall, or the former Goldome building at Main and Eggert Roads, in Amherst, New York, and requested that he be informed when offers for those locations were submitted. See Plaintiff's Exhibit 39. The talk among IRS staff regarding these two locations caused Dukarm to later remark that such discussions showed a "pre-selection for a $ 20 million contract," and that any public discussions regarding the lease procurement would be a "breech (sic) of disclosure," and should not be continued. See Plaintiff's Exhibit 40.

 Following negotiations between the four offerors and GSA, best and final offers were required to be submitted to GSA by March 30, 1990. See Plaintiff's Exhibit 25B at 82. Prior to the lease award, an award factor evaluation was conducted by Eigendorff and Favuzzi. See Plaintiff's Exhibit 10B, at p. 99. The evaluation was made from the offers, negotiation records, verbal discussions with the contracting offerors, and other documents, such as market surveys, along with conversations from some of the various building managers. See Plaintiff's Exhibit 10B, at p. 100-101, Exhibit 12B, at p. 229. Out of the four final offers, WCA and the Appletree Mall placed first, scoring 470 out of 500 possible points, while Plaintiff's scores placed the Terminal in last place, scoring 300 out of 500 possible points. See Plaintiff's Exhibit 9. Plaintiff, while not achieving a top score of "5" in any category, fared the worst in the category of "Layout," scoring a "1" or "poor" rating. Favuzzi acknowledged that, in evaluating the offers, it was the conclusion of the contracting officials that a one-floor open office layout was best suited for the IRS lease. See Plaintiff's Exhibit 10B, at p. 162. According to Plaintiff, the factor relating to layout, compatibility, and local plans, despite being weighted at twenty-five percent of the total technical score, was deemed, during the evaluation, to be the most important and controlling factor in the procurement, other than price, with the emphasis in the layout evaluation to be on a single-floor layout. See Affidavit of Mark J. Fuzak, dated February 22, 1994, at p. 26, P39. According to Plaintiff, except for WCA, the other offerors were unaware of the predominance of this factor, in violation of the procurement process policies, as the initial solicitation indicated that, as to floor space, the space was to be located on no more than four floor that were contiguous, with at least two of the four floors having a minimum of 20,000 usable square feet. See Affidavit of Mark J. Fuzak, at p. 26-28, PP39-40. See also Plaintiff's Exhibit A, "Unique Requirements." As to the other technical factors, the award factor evaluation revealed that GSA did not believe that plaintiff could deliver the Terminal ready for use within 120 days. See Plaintiff's Exhibit 9. Further, as to transportation and eating facilities, Plaintiff scored lower on these factors, allegedly based on GSA's erroneous belief that the Terminal building was positioned on an incline, causing hardship for any handicapped employees. See Plaintiff's Exhibit 9. However, as evidenced later, Eigendorff admitted that the Terminal building being offered for use was not located on an incline. See Plaintiff's Exhibit 18B, at p. 410-411.

 As to price, WCA's initial best and final offer was approximately $ 500,000 per year higher than that of Plaintiff, and, according to plaintiff, was also beyond the competitive range and market survey price range. See Affidavit of Mark J. Fuzak, Esq., at p. 60, P82; Plaintiff's Exhibit 30C, at p. 229. Defendant Eigendorff, on April 6, 1990, reopened negotiations. See Plaintiff's Exhibit 23B at p. 359. Defendant, however, states that Aives and WCA did not conduct extensive negotiations after March 30, 1990. See Response to Plaintiff's Statement of Undisputed Facts, dated December 9, 1994, at p. 3, P10. Nonetheless, WCA thereafter submitted a second best and final offer on April 23, 1990, which remained higher than Plaintiff's offer by approximately $ 130,000 per year in direct rental payments, plus extra costs of services and utilities. See Affidavit of Mark J. Fuzak, at p. 68, P94. Notwithstanding the higher price associated with the WCA offer, GSA, after consideration of all of the relevant factors, on May 1, 1990, recommended to the IRS that the lease be awarded to WCA. On May 2, 1990, the IRS accepted the GSA recommendation, and, on August 29, 1990, the lease was awarded to WCA.

 Prior to the signing of the lease, WCA encountered difficulty in obtaining financing to exercise its option on the Appletree Mall, and to commence and complete the required reconstruction necessary for the IRS lease. The GSA's Credit and Finance division determined that WCA had unsatisfactory financial capability. See Plaintiff's Exhibit 27. However, Eigendorff interceded with the GSA Credit and Finance division, sending further information and asking for a reevaluation. *fn3" See Plaintiff's Exhibit 27, Letter to Mr. Clay Gergick, dated July 2, 1990. The lease award was thereafter offered to WCA on the conditions that it provide evidence that WCA had extended their option to purchase the Appletree Mall, and that it provide an irrevocable letter of credit in the amount of $ 100,000 to the Government. See Plaintiff's Exhibit 27, Letter to Mr. Willard Scolnik, dated July 13, 1990. The lease award was for a period of ten years, with a five year option to renew, and the lease was worth approximately $ 26,000,000. In August, 1990, Jay Kaiser, a real estate developer in Stamford, Connecticut, who owned the Appletree Mall, joined WCA as a partner, through his company, Amcap, Inc., and contributed the land under which the Appletree Mall was located as an asset. See Plaintiff's Exhibit 28A, Affidavit of Jay Kaiser, dated March 4, 1992, at p. 4, P15. Further, Kaiser, the managing partner of Comal Associates, the owner of the building and improvements of the Appletree Mall, sublet the space required by GSA to WCA to enable WCA to perform the lease. See Affidavit of Jay Kaiser, at p. 4, P15.

 Plaintiff, upon learning of the lease award to WCA, filed a protest of the award with the General Accounting Office ("GAO") on the grounds that GSA had conducted a biased and predetermined award process, that WCA was not qualified to receive the award, that GSA violated Executive Order No. 12072 by not obtaining space within the City of Buffalo, and that GSA failed to provide Plaintiff with the historic preference. The protest was unsuccessful. On December 19, 1990, prior to the decision from the GAO, ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.