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J.G.B. ENTERPRISES v. UNITED STATES

April 12, 1996

J.G.B. ENTERPRISES, INC., Plaintiff,
v.
THE UNITED STATES OF AMERICA, THE UNITED STATES ARMY AVIATION AND TROOP COMMAND, THE UNITED STATES SMALL BUSINESS ADMINISTRATION, and ALPINE INDUSTRIES, Defendants.



The opinion of the court was delivered by: POOLER

 Plaintiff J.G.B. Enterprises, Inc. ("JGB") and defendants United States, United States Army Aviation and Troop Command ("ATCOM"), and United States Small Business Administration ("SBA") cross-moved for summary judgment in this government contracts action. In the alternative, JGB opposed the government's summary judgment motion. Because there is no material issue of fact regarding the government's reasonable award of the disputed contract, I grant the government's motion for summary judgment and dismiss JGB's complaint. *fn1"

 BACKGROUND

 Based on the parties' submissions, ATCOM determined that Alpine was the apparent low bidder, with a bid of $ 181,608, and JGB was the next lowest bidder with a bid of $ 225,890. Uptain Decl. P 4. At ATCOM's request, Alpine verified its bid amount. Id. Ex. 5. On July 15, 1994, the contracting officer for ATCOM, Howard Uptain, requested a pre-award survey, which is an investigation into Alpine's ability to successfully complete the contract. Id. P 7. ATCOM relied on a pre-award survey conducted by ATCOM's Production Management Division on July 8, 1994, in connection with another contract. Id. PP 9-10 & Ex. 7. The resulting survey dated July 19, 1994, found that Alpine met all production and technical requirements for the contract except that Alpine was "nonresponsible" with respect to its accounting system because the system did not permit the use of progress payments. Id. Ex. 7, at 15. JGB contends that ATCOM's pre-award survey was merely cursory.

 Uptain informed Alpine of ATCOM's determination by letter dated August 2, 1994. Uptain Decl. Ex. 8. By letter dated August 11, 1994, Uptain referred the issue concerning Alpine's accounting system to the SBA because "the contractor was notified of the [ATCOM] Contracting Officer's Determination of Nonresponsibility and the contractor has requested a determination of responsibility be made by the Small Business Administration." Id. Ex. 9.

 ATCOM's referral to the SBA is an administrative appeal. See 48 C.F.R. § 219.602-1 (1994); 48 C.F.R. § 19.602-1(1994); 13 C.F.R. § 125.5(d)(1995). The SBA is authorized to conduct its own review of the small business and issue it a "certificate of competency" if the SBA is satisfied that the small business is a responsible bidder. 13 C.F.R. § 125.5(d) & (e). If a certificate of competency issues, then "contracting officers are directed to award a contract without requiring the firm to meet any other requirement with respect to responsibility and eligibility." Id. § 125.5(j). See generally Ulstein Maritime, Ltd. v. United States, 833 F.2d 1052, 1054 (1st Cir. 1987) (explaining conclusive effect of certificate of competency review).

 In a report dated August 29, 1994, an industrial specialist working for the SBA concluded that "Alpine Industries has all the technical and financial capabilities to perform" the water system contract. Koppel Decl. of 4/26/95, Attach., at 4. In addition to reviewing and approving Alpine's new accounting system, the SBA industrial specialist reviewed and approved Alpine's technical capabilities, plant, facilities and equipment, material availability, quality control, and production and performance capability with respect to the water system contract. The SBA investigation included a survey visit to Alpine's manufacturing facilities in Alpine, Utah, although the SBA's loan officer did not visit the site. Id. At a meeting on September 6, 1994, a regional committee of the SBA reviewed the industrial specialist's investigation and concluded that Alpine was qualified to perform the ATCOM contract. The committee unanimously issued a certificate of competency to Alpine. Id.

 ATCOM denied both of JGB's pre-award protests by letter dated September 23, 1994. Bernhardt Aff. Ex. 7. In the letter, ATCOM stated that it was required to award the contract to Alpine once the SBA had issued a certificate of competency in favor of Alpine. Citing 15 U.S.C. § 637(b)(7)(c), ATCOM stated that "this certification by the SBA is conclusive (regarding both responsibility and Walsh-Healy [sic]), and the agency is required to award the contract to the small business concern without requiring it to meet any other requirement of responsibility or eligibility.'" Id.

 ATCOM awarded the water distribution system contract to Alpine on September 26, 1994. Uptain Decl. Ex. 1; see also Bernhardt Aff. Ex. 8. Delivery of the systems initially was due on July 24, 1995, but the parties extended the deadline to August 24, 1995. Durrant Aff. of 4/26/95, P 12; see also Bernhardt Aff. P 42.

 On October 11, 1994, JGB received a request for price quotations from a company working as a subcontractor to Alpine under the ATCOM contract. Bernhardt Aff. P 26. JGB contends that the information it gleaned from this request as well as from its additional investigations revealed that Alpine did not understand the ATCOM contract requirements because it was ordering parts and supplies in quantities too low to fulfil the contract. In addition, JGB contends that its investigation revealed that Alpine would not meet the contract delivery deadline. Plaintiff articulated its concerns in a post-award Walsh-Healey protest that it submitted to ATCOM on November 4, 1994. Id. Ex. 10. ATCOM never responded to the protest, which the government admits never was processed. Uptain Decl. P 20.

 Consequently, plaintiff commenced this action in federal court on February 3, 1995. In its complaint, JGB sought a declaration that the SBA's certificate of competency issued to Alpine was invalid, an injunction ordering ATCOM to ignore the certificate of competency and set aside the contract with Alpine, an order directing ATCOM to award the contract to JGB, and, in the alternative, an award of bid preparation costs, lost profits and attorney's fees. JGB moved for a preliminary injunction against defendants, which I denied from the bench on May 1, 1995, after hearing oral argument. As part of my decision, I held that JGB raised sufficiently serious questions going to the merits to make them a fair ground for litigation, but I specifically declined to hold that JGB had shown a likelihood of success on the merits. Dkt. No. 28, Dec. of 5/1/95, at 12. The government next moved for summary judgment, and JGB both opposed the motion and cross-moved for summary judgment relief on its behalf. *fn3" Oral argument took place on July 17, 1995.

 I. Summary judgment standard

 Summary judgment shall enter if, when viewing the evidence in the light most favorable to the nonmovant, the court determines that there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451, 456, 119 L. Ed. 2d 265, 112 S. Ct. 2072 (1992). A party seeking summary judgment must demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). If the movant satisfies this initial burden, then the burden shifts to the nonmovant to proffer evidence demonstrating that a trial is required because a disputed issue of fact exists. Weg v. Macchiarola, 995 F.2d 15, 18 (2d Cir. 1993). The nonmovant must do more than present evidence that is merely colorable, conclusory, or speculative and must present "concrete evidence from which a reasonable juror could return a verdict in his favor...." Anderson v. Liberty Lobby, Inc., 477 ...


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