Golden Eagle Refining Co. v. United States

31 Cont. Cas. Fed. 72,190, 4 Cl. Ct. 613, 1984 U.S. Claims LEXIS 1480
CourtUnited States Court of Claims
DecidedFebruary 22, 1984
DocketNo. 65-84C
StatusPublished
Cited by5 cases

This text of 31 Cont. Cas. Fed. 72,190 (Golden Eagle Refining Co. 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
Golden Eagle Refining Co. v. United States, 31 Cont. Cas. Fed. 72,190, 4 Cl. Ct. 613, 1984 U.S. Claims LEXIS 1480 (cc 1984).

Opinion

OPINION

LYDON, Judge:

On February 13, 1984, plaintiff filed a motion for a Temporary Restraining Order (TRO) and a motion for a Preliminary Injunction together with a complaint which sought a preliminary and permanent injunction restraining defendant, acting through the Defense Fuel Supply Center (DFSC), a primary level field activity of the Defense Logistics Agency (DLA), Department of Defense (DoD), from awarding any contracts for the supply of JP-4 jet fuel that was the subject of Contract DLA600-82-D0456 (hereinafter D-0456). The complaint, as an alternative, sought damages resulting from defendant’s alleged unlawful termination of D-0456.

Under D-0456, entered into on October 21,1981, plaintiff was to supply DFSC with JP-4 jet fuel for a 5-year period. On December 14,1983, DFSC terminated this con[615]*615tract. However, this contract was extended by agreement of the parties through the end of February 1984. Plaintiff contends that it is entitled to injunctive relief because the termination of D-0456, which had almost 3 more years to run, was illegal. It claims that subsequent to termination of D-0456, DFSC issued a Request for Proposals seeking a supplier or suppliers to replace plaintiff as supplier of JP-4 jet fuel. Plaintiff’s position, simply stated, is that the Request for Proposals and the proposed procurement is unlawful because plaintiff’s 5-year contract is still in full force and effect since it has never been lawfully terminated. Under such circumstances, plaintiff claims, it is entitled to injunctive relief, enjoining defendant, acting through DFSC, from awarding any new contracts for the supply of JP-4 jet fuel currently being supplied to DFSC by plaintiff pursuant to D-0456.

Upon the filing of the TRO, it was ascertained that DFSC would not award any further contracts relative to reprocurement of JP-4 jet fuel vis-a-vis the terminated contract (D-0456) until February 23, 1984. On February 17, 1984, a hearing on the TRO and related motion and pleading was held. At the time of this hearing, the parties had submitted briefs, supported by affidavits and documentation. The positions of the parties were fully discussed at this hearing.

For reasons which follow, it is concluded that plaintiff’s motions for injunctive relief should be denied. The court further concludes that it lacks jurisdiction to address the alleged illegal termination claim set forth in the complaint.

I.

DFSC is concerned with the worldwide procurement of refined petroleum products to satisfy DoD fuel requirements. DFSC met these fuel requirements by obtaining refined petroleum products from various suppliers. Plaintiff operates a single crude oil refinery in Carson, California. For over 24 years, plaintiff, and others, supplied JP-4, which is a military grade jet fuel, to the DoD. According to plaintiff its refinery has been engineered to produce primarily JP-4 jet fuel. Plaintiff avers that the government is the only consumer of JP-4 jet fuel.

On October 21, 1981, DFSC awarded plaintiff contract D-0456, accepting plaintiffs offer of September 8,1981, as amended on September 18,29, and 30, and October 1, 1981. This procurement involved, inter alia, the exchange of government-owned crude oil from the Naval Petroleum Reserves for JP-4 jet fuel. In other words, plaintiff was required to purchase crude oil from the government, which it would refine into JP-4 jet fuel and then resell the refined jet fuel to the government. To facilitate the evaluation of offers under this procurement, offerors such as plaintiff were requested to submit offer prices and volume for the JP-4 jet fuel portion only. Since the crude oil price was established by the solicitation as identical for all offerors, offered prices were not submitted for the crude oil.

The contract in issue was programed for 5 years, with plaintiff to supply approximately 106,898,500 gallons of JP-4 jet fuel per program year. The first ordering period ran from October 21,1981, to November 30, 1982; the second ordering period ran from December 1, 1982, to November 30, 1983; the third ordering period ran from December 1, 1983, to November 30, 1984; the fourth ordering period ran from December 1, 1984, to November 30, 1985; and the fifth ordering period ran from December 1, 1985, to November 30, 1986.

Contract D-0456 contained, by reference, a Disputes clause and a Termination For Convenience clause. The contract also contained a Price Review clause (E50.01) which provided as follows:

(a) If during any contract year either of the parties concludes that any current contract price for JP-4 is no longer equitable, either party may upon the anniversary of contract award, open good faith negotiations regarding a new contract price. Requests for price changes shall be made in writing, at least 45 days prior [616]*616to the beginning of the next contract year, and shall indicate the date upon which any proposed price change is to become effective. The request shall be accompanied by clear and convincing evidence demonstrating that such a change is warranted.
(b) If the parties cannot reach agreement on a price for JP-4 within 30 days of the anniversary of contract award, the contractor or the Government shall have the right to request in writing that the contract be terminated, at no cost to either party, two calendar months after the date of this written request. During these two months, unless notified by the Contracting Officer to the contrary, the Contractor is still obligated to accept delivery of crude oil and/or condensate in accordance with the contract terms and to deliver JP-4 in accordance with the contract terms. Deliveries made after the effective date of the proposed change and prior to the termination date, shall be paid for at the current prices escalated to date of delivery subject, however, to retroactive adjustment if a different price is agreed upon prior to terminating the contract.

On October 14, 1982, DFSC opened negotiations with plaintiff pursuant to the Price Review clause for the second year of the five year contract program. As a result of these negotiations, plaintiff’s price for JP jet fuel was reduced and a new price escalator formula was agreed to by the parties, effective December 9, 1982.

By wire dated September 15, 1983, which was more than 45 days prior to the start of the third year of the five year contract program, DFSC requested that price negotiations be opened. The September 15,1983, wire provided in pertinent part as follows:

6. Any agreed upon change shall become effective 01 Dec 83.
7. The changes in price and escalation provisions are requested because the prices paid for JP-4 during the subject contract’s second program year have consistently been outside DFSC’s west coast market range. Additional documentation for the requested price change will be provided during the course of negotiations.
8. Request submission of sales data and agreement to common escalator, Clause E19.33, by COB 26 Sep 83.

On September 21, 1983, plaintiff wired DFSC in pertinent part as follows:

Golden Eagle requests that the DFSC provide us with the formula for determining the “market range” for the west coast. We also ask that the DFSC tell us their price ideas. We are interested in settling this matter as soon as possible.

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Cite This Page — Counsel Stack

Bluebook (online)
31 Cont. Cas. Fed. 72,190, 4 Cl. Ct. 613, 1984 U.S. Claims LEXIS 1480, Counsel Stack Legal Research, https://law.counselstack.com/opinion/golden-eagle-refining-co-v-united-states-cc-1984.