Electro-Methods, Inc. v. United States

31 Cont. Cas. Fed. 71,583, 3 Cl. Ct. 500, 1983 U.S. Claims LEXIS 1608
CourtUnited States Court of Claims
DecidedOctober 3, 1983
DocketNo. 582-83C
StatusPublished
Cited by15 cases

This text of 31 Cont. Cas. Fed. 71,583 (Electro-Methods, Inc. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Electro-Methods, Inc. v. United States, 31 Cont. Cas. Fed. 71,583, 3 Cl. Ct. 500, 1983 U.S. Claims LEXIS 1608 (cc 1983).

Opinion

OPINION

HARKINS, Judge:

Plaintiff’s complaint, filed September 19, 1983, sought injunctive and declaratory relief to prevent award of contracts for jet engine spare parts on the ground that it had been unlawfully suspended under Defense Acquisition Regulation (DAR) § 1— 606 procedures. At the hearing on September 20,1983, on the motion for a temporary restraining order, defendant agreed to defer action on outstanding solicitations until September 29,1983, and a briefing schedule was established. No ruling was required on plaintiff’s motion for a temporary restraining order. Plaintiff on September 23, 1983, renewed its motion for a preliminary injunction, and moved for summary judgment. On September 27, 1983, defendant filed a motion to dismiss or in the alternative a motion for summary judgment. These motions were heard on September 29, 1983.

At the conclusion of argument, the parties were told that, in view of the need for prompt action to avoid procurement prob[502]*502lems presented by the end of a fiscal year, an order would be entered on September 29, 1983, to dispose of the pending motions and state the ultimate findings on the legal and factual matters involved. The order to be followed by a detailed opinion. The order was filed, at 4:30 p.m. September 29, 1983.

PACTS

Electro-Methods, Inc. (EMI) manufactures and sells parts for jet aircraft engines. It started business in 1965, and initially was solely a supplier of jet engine parts for Pratt and Whitney Aircraft, Inc. (P & W), now a subsidiary of United Technologies, Inc. (UTI). In the early 1970’s, EMI started to obtain prime contracts from the United States military services for military jet engine spare parts, and by 1982, such prime contracts accounted for 78 percent ($21 million) of EMI’s total sales volume ($27 million). In 1982, EMI’s volume of business with P & W amounted to $3,050,000, of which about $1,200,000 was for military jet engine spare parts.

EMI produces spare parts for the F-100 jet aircraft engine program. The F-100 engine powers the F-15 and F-16 fighter aircraft used by the Air Force, NATO countries and other allies of the United States. P & W is the original manufacturer of the F-100 engine; it is in competition with EMI for contracts for the sale to the Air Force of F-100 engine spare parts.

The president and owner of EMI is Alfred T. Stanger.

On June 8, 1983, the United States District Court for the District of Connecticut issued a search warrant based on an affidavit signed by FBI special agent Brian W. O’Keefe (O’Keefe affidavit). The warrant authorized search of EMI’s premises and the seizure of a variety of property, including P & W blueprints, P & W pricing data, and documentation related to plaintiff’s own pricing data. The warrant recited that this property was to be seized as evidence of the crimes of mail fraud (18 U.S.C. § 1341), wire fraud (18 U.S.C. § 1343), conspiracy to defraud the United States (18 U.S.C. § 371), and false statements to a department or agency of the United States (18 U.S.C. § 1001).

On June 9, 1983, the United States District Court for the Southern District of Florida issued a search warrant based on an affidavit by FBI special agent James Cava-naugh, III. The warrant authorized the FBI to search the home of Richard I. Horowitz, a P & W employee, to seize a small personal computer and ancillary equipment, as well as financial and corporate records of a corporation, Sandrich, Inc. The property was to be seized as instrumentalities used in violation of 18 U.S.C. §§ 1343, 371 and 1001.

The O’Keefe affidavit contained 32 pages that describes an FBI investigation which began in late 1982 when the FBI received the results of an investigation which had been conducted by United Technologies Internal Security (UTIS), the investigative arm of UTI. The UTIS investigation involved dealings between Leonard Burke, a P & W employee in the purchasing department and John Kimatis, an employee of EMI, relative to transmittal of P & W drawings, specifications, and pricing information for P & W engine parts. The FBI obtained a court order to place a pen register on Burke’s telephone at P & W and obtained grand jury subpoenas for telephone toll records of numerous individuals related to the investigation. The United States Attorney’s office also obtained court orders that give specific UTIS employees access to materials obtained pursuant to grand jury subpoena. The FBI concluded that there was probable cause to believe EMI had obtained blueprints and pricing data from P & W, and then bid against P & W in response to Air Force solicitations. The O’Keefe affidavit set forth several specific examples.

The Cavanaugh affidavit states that since December 19, 1982, one of Cavanaugh’s assignments had been to investigate the involvement of Richard I. Horowitz in connection with the theft of “pricing” information from P & W, and the sale of that information to P & W competitors. The affidavit states that Horowitz was inter[503]*503viewed in Hartford, Connecticut, on June 8, 1983, by FBI special agent O’Keefe and James M. O’Neil of UTIS. During this interview, according to the affidavit, Horowitz stated that, for the past 3 years, he had taken pricing information obtained in his employment as Pricing Supervisor at P & W in West Palm Beach, Florida, and had transmitted this information to Alfred T. Stanger in Windsor, Connecticut. In the interview, Horowitz also is said to have stated during this time he received payment from Stanger’s company in excess of $40,-000 per year, in the form of checks made payable to a company called Sandrich, Inc., created by Horowitz in Florida. In the interview, Horowitz also is said to have stated that for the past year he had transmitted pricing information from West Palm Beach to Connecticut by means of a small personal computer which he had received from Stanger. On June 9,1983, Cavanaugh met Horowitz at the P & W airfield when Horowitz returned from Connecticut. Horowitz at first agreed to turn over the computer, but on arrival at the home, Horowitz withdrew consent for the FBI agents to enter the home, or to remove the computer.

The FBI search warrants were executed on June 8, 1983, in Connecticut and June 9, 1983, in Florida. The grand jury investigation is pending.

The Air Force learned of the search warrants by means of a letter dated June 21, 1983, from B.H. Aircraft, Co., Inc., a competitor of plaintiff. B.H. Aircraft previously had complained about, and recommended suspension proceedings against, Turbo-Tech, Inc., another company in which Stan-ger was a principle, and the June 21, 1983, letter stated that the O’Keefe affidavit substantiated its earlier charges. Thereafter, the Air Force Debarment and Suspension Board (Board) contacted the FBI office in Hartford, Connecticut and obtained copies of the Affidavits.

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Bluebook (online)
31 Cont. Cas. Fed. 71,583, 3 Cl. Ct. 500, 1983 U.S. Claims LEXIS 1608, Counsel Stack Legal Research, https://law.counselstack.com/opinion/electro-methods-inc-v-united-states-cc-1983.