Title R.A. Glancy & Sons, Inc. v. United States
Date 1999
By Alito
Subject Misc
Contents
Page 1
LEXSEE 180 F3D 553
R.A. GLANCY & SONS, INC., Appellant, v. UNITED STATES OF AMERICA, DEPARTMENT OF VETERANS AFFAIRS v. POERIO, INC., Intervenor-Appellee
No. 99-3188
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
180 F.3d 553; 1999 U.S. App. LEXIS 13871
May 27, 1999, Argued
June 24, 1999, Filed
PRIOR HISTORY: **1 ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA. (Civil Action No. 99-219). District Judge: The Honorable Donald J. Lee.
DISPOSITION: Affirmed.
LexisNexis(R) Headnotes
COUNSEL: MEYER, UNKOVIC & SCOTT, LLP, JAMES R. MALL (ARGUED), Pittsburgh, PA, Counsel for Appellant, R.A. Glancy & Sons, Inc.
DEPARTMENT OF JUSTICE, DOUGLAS HALLIARD-DREIMEIER (ARGUED), ANTHONY J. STEINMEYER, Washington, D.C., Counsel for Appellee, United States of America, Department of Veterans Affairs.
ECKERT SEAMANS CHERIN & MELLOTT, LLC, JOEL L. LENNEN (ARGUED), DENNIS L. VERALDI, KEITH L. BAKER, Pittsburgh, PA, Counsel for Appellee-Intervenor, Poerio, Inc.
JUDGES: Before: GREENBERG and ALITO, Circuit
Judges, and DOWD, Senior District Judge. *
* The Honorable David D. Dowd, Jr., United States District Judge for the Northern District of Ohio, sit- ting by designation.
OPINIONBY: ALITO
OPINION:
*554 OPINION OF THE COURT
ALITO, Circuit Judge:
R.A. Glancy & Sons, Inc. ("Glancy"), a losing bidder
for a government contract, appeals the District Court's de- nial of a request for preliminary injunctive relief. That re- quest sought an order enjoining the successful bidder from working on the project **2 and reinstating Glancy's pu- tatively successful bid. Because Glancy did not establish that it was likely to succeed on the merits or that the balance of equities favored the issuance of a preliminary injunction, we affirm the District Court's decision.
I.
On June 1, 1998, the Department of Veterans Affairs
("VA") issued an invitation for bids ("IFB") to renovate the VA *555 Medical Center in Pittsburgh. The IFB asked for bids on:
ITEM I: GENERAL CONSTRUCTION ITEM II: ASBESTOS ABATEMENT ALTERNATE NO. 1
ALTERNATE NO. 2
ALTERNATE NO. 3
UNIT PRICE OF MINE GROUTING
(J.A. 190a). The three alternates under Item II were listed as minor additions to or deletions from the IFB's as- bestos abatement requirements. (J.A. 193-94). The IFB's performance requirements, set forth in § 01010 of the IFB, elaborated on the work to be performed:
ITEM I. GENERAL CONSTRUCTION: Work includes general new construction, al- terations, walks, grading, paving, drainage, mechanical and electrical work, elevators, necessary removal of existing structures and construction and certain other items.
180 F.3d 553, *555; 1999 U.S. App. LEXIS 13871, **2
Page 2
ITEM II. ASBESTOS ABATEMENT: Work includes abatement of asbestos in **3 the area of the work as well as in other se- lected areas, including the work described in ALTERNATE 2 below.
(J.A. 193). Alternate 2 requested a break-out price for remediating asbestos-containing floor tiles on the third floor of the building. The IFB form provided separate lines for each bid item and each alternate line; it con- tained no explicit indication that Item II was a subset of Item I. (J.A. 188).
On July 1, 1998, the VA issued a clarifying amend- ment to the IFB, which read:
Although the VA has asked for the price of the Asbestos Abatement work to be listed separately (ITEM II - ASBESTOS ABATEMENT under item 10 of SF 1442) on the bid form, all asbestos abatement work is included in a single prime contract that will be the responsibility of the General Contractor.
(J.A. 202).
The VA unsealed the bids on July 15, 1998. The VA determined the lowest bidder by aggregating the bids for Items I & II to reach a total cost for the project. Pursuant to this calculation, Poerio Inc. ("Poerio"), the Appellee, was the lowest bidder, with a bid of $11,401,500. Glancy was the sixth lowest bidder.
Glancy and another bidder, the Massaro Company
("Massaro"), informed **4 the VA that they had under- stood the IFB to have required that total costs be included in Item I. According to that understanding, both Glancy and Massaro contended that the figure for Item I included the costs of Item II and that Item II was merely a break- out of Item I. (J.A. 213-14). Even under this understand- ing of the IFB, however, Glancy was the second lowest bidder after Massaro.
Pursuant to Massaro and Glancy's protest, the VA ex- amined the bidding materials, noted that the IFB did not contain customary language indicating that the contract would be awarded based on the aggregate of all bid items, and determined that the IFB was ambiguous. (J.A. 261-
62). Based on this conclusion, the VA decided to open a second round of bidding. Massaro, the lowest bidder according to its interpretation of the IFB, and Poerio, the lowest bidder according to its interpretation of the IFB, each filed a protest with the Comptroller General under the Competition in Contracting Act, 31 U.S.C. §§
3551-56 (1994), contending that the IFB unambiguously supported their interpretation. The VA submitted briefing in defense of its position that the IFB was ambiguous and therefore should have been canceled. **5 (J.A.
163-68). The VA admitted that the "only interpretation of the IFB together with its specifications at the time the solicitation was issued, was that each bid item was to be priced separately." (J.A. 166). The VA contended, however, that "the addition of the clarification *556 language in Amendment No. 2 created an ambiguity that can be interpreted in two ways. It can be interpreted to re- quire, as Poerio did, that bids be presented separately for general construction (Bid Item I) and for asbestos abate- ment (Bid Item II) or it can be interpreted to require, as did both Massaro and Glancy, that Bid Item I contain the bid for all work including asbestos." (J.A. 166).
While the protest was pending before the Comptroller General, the VA conducted a second round of bidding, and in this round Glancy was the lowest bidder. (J.A. 197). Because the protest was pending, however, the VA did not award the contract to Glancy.
The Comptroller General ultimately sustained Poerio's interpretation of the IFB as the only reasonable one and rejected the VA's assertion that the IFB was am- biguous. The Comptroller General stated:
First, the cover page of the solicitation
(Standard **6 Form 1442) identifies two separate bid items for the acquisition, "gen- eral construction" and "asbestos abatement." Each of the two bid items is identified on that page as a free-standing item for acqui- sition by the agency -- specifically, there is no indication that one of the two identi- fied bid items is encompassed by the other. Second, the IFB's performance requirements
. . . expressly define "general construction" and "asbestos abatement" as distinct, sepa- rable work efforts; again, each bid item de- scription follows the separate title and item number associated with each of the two sepa- rate work categories. The stated item I (gen- eral construction) simply does not encom- pass the separately stated item II special- ized work requirements in the area of as- bestos abatement. Third, the bid schedule it- self clearly separates the two bid items: there is one space for the bidder's price for the gen- eral construction work, and a separate space for the price for the asbestos abatement work. Finally amendment No. 2 that one prime con- tract would be awarded, to include both the
180 F.3d 553, *556; 1999 U.S. App. LEXIS 13871, **6
Page 3
item I and item II work requirements, simply does not provide any reasonable basis for a bidder to conclude that its item II **7 price should be included in its item I price.
(Comptroller General Op. at 4). After noting that bid- ders who perceived an ambiguity should have requested a clarification from the VA before submitting their bids, the Comptroller General concluded that the VA lacked a compelling reason for cancelling the first solicitation, and the Comptroller General recommended that Poerio be granted the contract pursuant to the first solicitation. (Id. at 5). After receiving the Comptroller General's opinion, the VA informed the bidders that it was reactivating the first round of bidding, and it then awarded the contract to Poerio.
Glancy brought this action in the District Court. Glancy asked the Court to declare that the VA's deci- sion was arbitrary and capricious and that Glancy was the low bidder and was entitled to the contract. Glancy also requested, among other things, injunctive relief ordering the VA not to award the contract to any other parties. At Glancy's request, the District Court issued a tempo- rary restraining order on February 24, 1999. (J.A. 3). The District Court scheduled a hearing on whether a prelim- inary injunction should issue, and this hearing was held before a Magistrate **8 Judge on March 3, 1999. On March 5, 1999, the Magistrate Judge issued her Report and Recommendation, concluding that Glancy had not shown that it was likely to succeed on the merits of its challenge to the VA's decision or that it would suffer ir- reparable injury in the absence of preliminary injunctive relief. The Magistrate Judge, accordingly, recommended that the request for a preliminary injunction be denied. The District Court adopted the Magistrate Judge's recom- mendations, found that granting a preliminary injunction would not be in the public interest because of the de- lays that such relief would cause in needed renovations to
*557 the hospital, and denied the motion for a prelimi- nary injunction. This expedited appeal followed.
II.
The District Court's denial of a preliminary injunction is reviewed for abuse of discretion. Cleary v. Waldman,
167 F.3d 801, 804 (3d Cir. 1999). The District Court did not abuse its discretion, and we therefore affirm.
Under 28 U.S.C. § 1491(b)(4) (1994), n1 the VA's decision is subject to review under the standards set forth in the Administrative Procedures Act, 5 U.S.C. § 706
(1994), and thus Glancy could not prevail in this case without **9 showing that the VA's decision was "arbi- trary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706 (1994). Applying
this standard in prior procurement cases, we have ob- served that "judicial intervention in procurement disputes necessarily results in delay and the expenditure of funds on behalf of all parties, usually without measurable bene- fit to the public," Sea-Land Serv., Inc. v. Brown, 600 F.2d
429, 434 (3d Cir. 1979), and we have held that discretion to award injunctive relief in such cases "is restricted to circumstances where the governmental agency's action is illegal or irrational." Coco Bros. v. Pierce, 741 F.2d 675,
679 (3d Cir. 1984); see also Sea-Land, 600 F.2d at 434
(only where agency action has "no rational basis" or upon a showing of "clear illegality" may federal court enjoin government procurement decision).
n1 The jurisdiction of the District Court rested exclusively on 28 U.S.C. § 1491(b). Although Glancy's complaint involved 28 U.S.C.
§ 1346(a)(2), Glancy subsequently disavowed any reliance on that provision.
**10
Further, while irrationality or illegality is a necessary condition to the issuance of an injunction in the gov- ernment procurement context, "even when that showing has been made, prudent judicial discretion may still refuse declaratory or injunctive relief because of overriding pub- lic interests." Sea-Land, 600 F.2d at 434; see also Coco,
741 F.2d at 680; Princeton Combustion Research Lab., Inc. v. McCarthy, 674 F.2d 1016, 1021-22 (3d Cir. 1982); Allis-Chalmers Corp. v. Friedkin, 635 F.2d 248, 253 (3d Cir. 1980). Thus, in determining whether injunctive relief is proper, a court must also weigh "the practical con- siderations of efficient government operation; the public interest in avoiding excessive costs; and the bidders' en- titlement to fair treatment through agency adherence to statutes and regulations." Sea-Land, 600 F.2d at 434. Finally, where as here the Comptroller General has made a recommendation that the procuring officer fol- lows, that recommendation must be taken into account in reviewing the Executive's decision. In the Competition in Contracting Act ("CICA"), 31 U.S.C. §§ 3551-56 (1994), Congress strengthened the Comptroller General's role in the government **11 procurement process. Honeywell, Inc. v. United States, 870 F.2d 644, 648 (Fed. Cir. 1989). We have noted that while the CICA does not "compel procuring agencies to obey the recommendation of the Comptroller General," n2 its effect "is to compel pro- curement officials to make purchase decisions in light of what the Comptroller General recommends the gov- ernment do in that case." Ameron v. United States Army Corps of Eng'rs, 809 F.2d 979, 986 (3d Cir. 1986); see Honeywell, 870 F.2d at 648 (in light of CICA, "a procure- ment agency's decision to follow the Comptroller *558
180 F.3d 553, *558; 1999 U.S. App. LEXIS 13871, **11
Page 4
General's recommendation, even though that recommen- dation differed from the contracting officer's initial deci- sion, is proper unless the Comptroller General's decision itself was irrational").
n2 In Ameron v. United States Army Corps of Eng'rs, 809 F.2d 979 (3d Cir. 1986), the govern- ment argued unsuccessfully that the CICA is uncon- stitutional insofar as it authorizes the Comptroller General to shorten or lengthen the stay of the execu- tion of a contract that automatically occurs when a bid protest is filed with the Comptroller General. However, the government did not challenge the Comptroller General's authority to investigate pro- curement decisions or to make recommendations on the basis of his investigation. See 809 F.2d at
988.
**12
Applying these standards, n3 we can discern no abuse of discretion in the District Court's determination that Glancy is unlikely to succeed on the merits. The GAO first noted that, under applicable law, only a compelling reason will justify reopening a closed bidding process.
(Comptroller General's Op. at 3). The reason for this is to discourage "auction type" bidding at which a disap- pointed bidder, armed with knowledge of the prior bids, artificially lowers its bid in order to win the contract. Chemung County v. Dole, 781 F.2d 963, 972 (2d Cir.
1986). While an ambiguity in a bid solicitation can be a sufficiently compelling reason to reopen the bidding process, the Comptroller General concluded in this case that the IFB was not "susceptible to more than one rea- sonable interpretation when read in the context of the solicitation as a whole." (Comptroller General Op. at 3)
(emphasis added). This decision is rational for the rea- sons identified by the Comptroller General -- the IFB contained two separate items upon which bidders were to submit bids, separate lines were provided for the bids on these items, and the clarifying amendment's admonition that one prime contract **13 would be awarded was not
a reasonable basis upon which to base a conclusion that Item II was a break-out of Item I. Mindful that courts are not to substitute their judgment for that of the Executive, we agree with the District Court's assessment of the merits and with its conclusion that preliminary injunctive relief was inappropriate.
n3 Glancy's attempt to distinguish Sea-Land, Princeton Combustion and Coco is unavailing. Glancy argues that these cases do not apply because they did not involve sealed bids (as here) or did not involve a situation where the procuring agency re- versed itself on the basis of the GAO's recommen- dation. These are distinctions without significance in this context. In any event, Glancy does not even attempt to distinguish Honeywell, a case squarely on point, and that clearly supports the deferential standard of judicial review the District Court em- ployed.
The District Court's alternate basis for denying re- lief -- that the delays associated with bringing in a new general **14 contractor if preliminary injunctive re- lief were granted would not be in the public interest be- cause it would further delay the renovation of a vital liver transplant center -- is based on factual findings amply supported by the record. (Supp. Findings of Fact P 2 et seq.). We agree with the District Court that the equities here do not lie with Glancy, especially in light of the fact that even under its understanding of the first solicitation, Glancy was not the low bidder. (See Gov't Br. at 40-
41 ("Glancy's claimed interest in fair procurement proce- dures rings hollow. Glancy was not the low bidder in the initial round of bidding even under its own reading of the original solicitation.").)
III.
Accordingly, we affirm the District Court's March 10,
1999, Order denying Glancy's motion for preliminary in- junctive relief.
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