Emery Worldwide Airlines, Inc. v. United States

49 Fed. Cl. 211, 2001 U.S. Claims LEXIS 43, 2001 WL 292190
United States Court of Federal Claims·Decided March 26, 2001·No. No. 01-13C·Published·Cited by 42 cases

Opinion

OPINION

MILLER, Judge.

This pre-award bid protest is before the court after argument on cross-motions for summary judgment. Emery Worldwide Airlines, Inc. (“plaintiff’), seeks to enjoin the non-competitive award of a contract by the United States Postal Service (the “USPS”) to Federal Express Corporation (“intervenor”). Recently, the USPS awarded, on a sole-source basis, a seven-year contract valued at $6.36 billion to intervenor for air transportation network services to deliver the USPS’s Express, Priority, and First Class mail. This contract is unprecedented not only for its dollar value, but also because it contemplates a shared-network arrangement between the USPS and intervenor. Plaintiff excepts to the USPS’s determination that it was neither feasible nor appropriate to meet its needs through a competitive award. Citing statutes and the USPS’s own regulations, plaintiff condemns the failure to give required notice of the contemplated sole-source award, which allegedly undercut an equitable distribution of mail among carriers or an equitable procurement. Contriving to justify an award to intervenor, the USPS, according to plaintiff, commissioned an analysis with the predetermined objective of rationalizing an award to intervenor. Plaintiff charges that the analysis upon which the USPS relied unlawfully and irrationally eliminated plaintiff from contention based on inaccurate or dated information. Most significantly, plaintiff derides the USPS for using public sources of information, rather than directly seeking it from plaintiff.

The court rules that, although the USPS clearly violated an applicable procurement regulation that mandated a specific form of pre-award notice, the elimination of plaintiff [214]*214from consideration early in the evaluation process was neither unlawful nor irrational, so that plaintiff did not have a substantial chance of obtaining an award and therefore suffered no prejudice. As a result, this sole-source procurement survives plaintiffs challenges.

FACTS

1. Parties

The following facts are drawn from the administrative record, as supplemented. Plaintiff is an air transportation provider and has performed under various USPS air transportation network service contracts since 1989. Intervenor is one of the nation’s largest providers of overnight express mail delivery. The USPS is an independent establishment of the executive branch of the Government of the United States. See 39 U.S.C. § 201 (1994). Under its current Air National Network (“ANET”) contract and other USPS contracts for transportation of mail, plaintiff provides a fleet of 35 dedicated aircraft. The term “dedicated aircraft” refers to aircraft that are used exclusively for the transportation of the USPS’s mail. The current contract with the USPS commenced on January 10, 1994, and is due to expire on January 10, 2004, with an option to extend the term of the contract for an additional ten years.

The USPS currently uses a system of dedicated networks to deliver Express, Priority, and First Class mail. An airplane in a “dedicated” network contains space that is used exclusively for this mail. The system of dedicated networks was developed piecemeal, with the result that different carriers operate different parts of the network. For example, plaintiff is the exclusive air transportation provider for the ANET contract and the Priority Mail Processing Centers. The other parts of the current system include the Western Network, operated by Kitty Hawk Air Cargo, and the Daytime Network, operated by a group of five different small carriers. Some First Class mail is also carried on commercial aircraft, which are referred to as ASYS aircraft.

The USPS assessed that the dedicated networks were inefficient, expensive, and somewhat unreliable. The cost of dedicated networks was projected to increase in future years, and the networks lacked a cohesive tracking system. The USPS also recognized that the ASYS aircraft delivered only 60% on-time performance because some passenger airline routes have changed and because mail is not readily transferred at commercial air hubs. To alleviate these problems, the USPS sought a single national provider of air transportation.

2. Nature of dispute

On September 7, 2000, Postmaster General William Henderson held a press conference on the topic of “FedEx Strategic Alliance Discussions.” See Transcript of Postmaster General William Henderson Telecon News Conference dated Sept. 7, 2000, at 1 (“Henderson Tr.”). One of the purposes of the conference was to discuss stories that had been “reported in the media,” Henderson Tr. at 6, about a possible agreement between the USPS and intervenor for the transportation of mail. Postmaster Henderson answered questions on a variety of topics, including the broad parameters of a possible agreement with intervenor, id. at 6-7; existing contracts with other air transportation carriers, id. at 9; antitrust issues, id. at 10; union concerns, id. at 13; and recent losses incurred by the USPS, id. at 18. When asked if it was fail’ to say that the potential agreement with intervenor “goes far beyond any of the cooperative ventures you’ve got with the other air carriers,” Postmaster Henderson replied, “Yes.” Id. at 12. The following exchange also occurred:

[QUESTION]: “ ... Why would you be allowed to negotiate directly with FedEx over carrying [packages currently carried under other contracts], where it has normally moved in the past under contracts that were put out for bid?”

[Postmaster Henderson]: Well, it would be under a strategic alliance and we wouldn’t take over the whole network in one fell swoop.... And, you know, the strategic alliance, there’s no one else that would qualify for all of this. But we haven’t done [215]*215that yet. [I]t depends on what kind of efficiencies we can gather from Federal Express.

Id. at 20. Reporters from national publications such as The Wall Street Journal, The Washington Post, and CNNFN.com, among others, participated in the press conference.

The USPS requested, by letter dated October 17, 2000, that plaintiff provide an estimate of termination for convenience costs. On December 4, 2000, plaintiffs President and Chief Operating Officer Kent T. Scott wrote to A. Keith Strange, Vice President Purchasing and Materials for the USPS. Mr. Scott noted that the USPS was in discussions with intervenor for the “air carriage of Express and Priority Mail, and possibly other mail.” Mr. Scott expressed plaintiffs interest in participating “in such discussions as a potential supplier.” The USPS eventually met with plaintiff on December 14, 2000, and discussed future air transportation needs. On December 18, 2000, Mr. Scott wrote to J. Dwight Young, Manager Transportation Purchasing for the USPS, requesting certain specific information for use in preparing a proposal to respond to those needs. On December 24, 2000, Mr. Young e-mailed plaintiff stating that “[although we are not actively seeking a proposal from Emery, given our long standing business relationship I am providing the information you have requested.” Mr.

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Emery Worldwide Airlines, Inc. v. United States, 49 Fed. Cl. 211, 2001 U.S. Claims LEXIS 43, 2001 WL 292190 (uscfc 2001).

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