Chapman Law Firm Co. v. United States

67 Fed. Cl. 188, 2005 U.S. Claims LEXIS 242, 2005 WL 1983752
United States Court of Federal Claims·Decided August 5, 2005·No. No. 05-750C·Published·Cited by 12 cases

Opinion

OPINION DENYING PRELIMINARY INJUNCTION

FIRESTONE, Judge.

This post-award bid protest is before the court on the motion of Chapman Law Firm Co. (“Chapman” or “plaintiff’) to preliminarily enjoin performance of a government contract pending a decision by the Government Accountability Office (“GAO”) on the merits of its protest before that body. Specifically, the plaintiff asks the court to enjoin the Department of Housing and Urban Development (“HUD” or the “government”) from continuing to override the automatic stay of performance normally issued after a timely [189]*189bid protest pursuant to the Competition in Contracting Act of 1984, 31 U.S.C. § 3553(c)(1), (d)(3)(c) (2000) (“CICA”). The plaintiff contends that HUD’s decision to override the stay at issue was based on HUD’s own failure to plan and manage the underlying procurement and, as such, is not rational. The government responds that HUD’s override of the automatic stay was in the best interests of the United States and was therefore within the discretion of the agency to authorize. For the reasons that follow, the court agrees with the government and DENIES the plaintiffs motion.

BACKGROUND

The following facts are not in dispute unless otherwise noted. On April 19, 2005, HUD awarded a contract to Greenleaf Construction Company (“Greenleaf’) for Management and Marketing (“M & M”) services in connection with properties owned by HUD in the region of the United States known as the “P2 region,” which includes properties in Ohio and Michigan. The services to be provided by the awardee included the following: monitoring mortgagee compliance with HUD’s property conveyance requirements; managing single family homes owned by, or in the custody of, HUD; marketing HUD’s single family homes for sale; and overseeing both the sale of these HUD properties and all related closing activities. The award of the P2 contract to Greenleaf prompted a protest by the plaintiff before the GAO on May 2, 2005. After the filing of this protest, and based in part on comments received from the Small Business Administration (“SBA”), HUD elected to terminate the award of the contract awarded to Greenleaf and the plaintiffs protest was dismissed.

Greenleaf then protested the termination of its P2 contract in the United States Court of Federal Claims. That ease is currently pending before Judge Bruggink, another Judge of this court. Judge Bruggink set a schedule for the parties to brief the issues in that case and ordered HUD not to make a final award of the contract until August 31, 2005. However, because Chapman was the only other contractor that bid on the P2 contract, it is anticipated that if Greenleaf does not prevail in its bid protest, then Chapman will receive the award of the P2 contract, pending a determination that it is responsible to perform the contract.

The incumbent contractor for the P2 region is Michaelson, Connor and Boul, Inc. (“MCB”), which has been providing M & M services since 1999. When the award to Greenleaf was cancelled, HUD awarded a bridge contract to MCB for four months with two four-month option periods. The contract with MCB will ensure that HUD is provided M & M services until Judge Bruggink’s decision in the underlying protest and the final award of the P2 contract.

Chapman protested the award of the MCB bridge contract before the GAO. Under procurement regulations, if a contract award is protested before the GAO, either the government is obligated to automatically stay the performance of the protested contract or it is required to make a written determination that inter alia, an override of the automatic stay is “in the best interests of the United States.” 48 C.F.R. 33.104(e)(2) (2000). HUD neither stayed performance of the contract nor immediately issued a written determination that it was in the best interests of the United States to override the automatic stay. Rather, the government continued accepting performance of the bridge contract by MCB without a written finding.

The present action was filed on July 13, 2005. In its complaint and motion for a preliminary injunction, the plaintiff contended that the failure of HUD either to stay contract performance or to make a written determination that an override was in the best interests of the United States should be set aside as not in accordance with law. After the plaintiff filed its motion on July 13, 2005, HUD issued a written determination that the override of the automatic stay is in the “best interest[s] of the United States.” In support of this determination, Frank Slezak, Director of Field Contracting Operations, Head of the Contracting Activity, made the following findings:

Failure to manage M & M properties, for even one day, could result in financial harm to the Department as a result of physical damage to its housing assets. [190]*190Vandalism and/or damage from elements could result in a reduction in the sales price of the property and a decreased return to the FHA mortgage insurance fund.... Absent a responsible M & M contractor monitoring the management, marketing and sales aspects these services, the Department will incur a loss of $127,000 per day or $3M per month. Additionally, 1,652 of the properties in P2 are currently under contract for sale. Without contract support to complete these sale transactions, contract purchasers risk losing their loan commitments, being left without homes to move into and may have a cause of action against the government for breach of contract. Finally, HUD acquires more than 600 new properties each month in P2. The impact on local communities would be devastating if HUD did not have a contractor to secure, clean and maintain these vacant properties.

Determination and Findings of the Head of the Contracting Activity to Override the Automatic Stay of Performance (“Determination and Findings”) at 2.

Based on these findings, the Director determined that “it is in the best interest[s] of the United States to override the automatic stay of performance under the contract, so that the incumbent contractor may continue to supply M & M services for the benefit of the Government.” Determination and Findings at 3.

In light of the fact that HUD had now made a best interests determination, at the initial status conference on the plaintiffs case the court granted the plaintiff leave to amend its motion and complaint to address the merits of HUD’s best interests determination. The plaintiff filed its amended complaint and motion on July 18, 2005, which the government and the intervenor, MCB, opposed in briefs submitted shortly thereafter.1 Argument on the motion was heard on July 29, 2005.

DISCUSSION

This court has jurisdiction under the Tucker Act to hear objections to an override of an automatic stay of performance pursuant to the CICA. 28 U.S.C. § 1491(b)(1) (2000); RAMCOR Servs. Group, Inc. v. United States, 185 F.3d 1286, 1289 (Fed.Cir.1999).

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Chapman Law Firm Co. v. United States, 67 Fed. Cl. 188, 2005 U.S. Claims LEXIS 242, 2005 WL 1983752 (uscfc 2005).

67 Fed. Cl. 188 (Chapman Law Firm Co. v. United States) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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