Keco Industries, Inc. v. United States

492 F.2d 1200, 30 A.L.R. Fed. 334, 203 Ct. Cl. 566, 1974 U.S. Ct. Cl. LEXIS 94
CourtUnited States Court of Claims
DecidedFebruary 20, 1974
DocketNo. 173-69
StatusPublished
Cited by299 cases

This text of 492 F.2d 1200 (Keco Industries, 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
Keco Industries, Inc. v. United States, 492 F.2d 1200, 30 A.L.R. Fed. 334, 203 Ct. Cl. 566, 1974 U.S. Ct. Cl. LEXIS 94 (cc 1974).

Opinion

Davis, Judge,

delivered the opinion of the court:

This suit by a disappointed bidder for the recovery of bid preparation costs comes to the court for the second time. Our earlier decision, Keco Industries, Inc. v. United States, 192 Ct. Cl. 773, 428 F. 2d 1238 (1970), held that the claimant had standing to sue and denied defendant’s motion for summary judgment, remanding the case to the trial division for fact-finding. A trial has been had, and plaintiff now takes exception to the findings and opinion of Trial Judge Mastín G. White and to his conclusion that plaintiff’s petition should be dismissed.1

The disputed procurement was for ground air conditioners, which are gasoline-powered cooling devices used to service military aircraft before flight. The Department of the Air Force, through the San Antonio Air Material Area (“SA AMA ”), originally issued an invitation for bids in early 1966, but cancelled the invitation when a briefing conference revealed confusion in the bidders’ minds about technical requirements. Later, a request for technical proposals was sent to a number of firms, as the first part of a two-step advertised procurement. Of the companies solicited, three replied, but only two submissions were found to be technically acceptable — the proposal of plaintiff Keco Industries, and that of Acme Industries. Acme’s proposal requested two departures from the specifications; both concerned the government-furnished equipment. One deviation was the use of V-belt (indirect) drive rather than direct drive to power the government-furnished compressor; the other was the use of a generator rather than a battery to power the cooling fan motor (the generator and battery were both components of the government-furnished engine). The Government acquiesced and timely amended the final specification to permit both design changes as authorized alternatives. Acme received the contract award after its bid, based on these alternatives, was found to be substantially lower than Keco’s.

During performance, Acme encountered difficulty in implementing the two specification deviations which it had [571]*571requested. Adaptation oí this particular compressor to Y-belt drive required a costly bearing assembly, and the 25 ampere generator accompanying the government-furnished engine could not provide sufficient power to drive the cooling fan motor (a 100 ampere alternator was needed). Both problems were solved by the Government’s issuance of formal change orders, sanctioning the required modifications and increasing the contract price.

Learning of these changes, plaintiff Keco filed a protest with the General Accounting Office, arguing that Acme should bear the cost of the modifications necessary to accommodate the specification changes which Acme itself had sought in its technical proposal. In his first decision (B-162538, August 15, 1968), the Comptroller General held for Acme on one of the items but agreed that Acme was financially responsible for the other alteration. However in January 1969 he reversed himself after Acme requested reconsideration. Briefly, the later opinion found that information in the hands of Air Force personnel “* * * was sufficient to require such personnel to question the feasibility of the Acme design shown in its technical proposal, and since the answer to the problem was readily available to the Air Force but not to Acme, such information may be considered as tantamount to actual knowledge.” On this theory, the Comptroller General withdrew his partial opposition to Air Force payment to Acme of the full costs of the change orders.

Plaintiff then brought suit in this court, asserting that the Government had acted arbitrarily and capriciously and breached its implied promise fairly and honestly to consider the Keco bid. The damages sought were bid preparation expenses and anticipatory profits. Defendant moved for summary judgment, urging that Keco lacked standing to bring suit, and that the pleadings did not present enough of a suggestion of arbitrary and capricious action to warrant a trial. As noted above, this motion was denied (except as to the claim for anticipatory profits), and trial was directed and held. The trial judge found that, at the time when the Government accepted Acme’s proposal, the former did not know that the proposal was unworkable and would have [572]*572to be changed. The judge also determined that the defendant’s action in awarding the contract to Acme did not amount to arbitrary or capricious action in regard to this plaintiff. We affirm and adopt these conclusions.

I.

It is clear, in the first place, that plaintiff did not prove that the pertinent Air Force officials had actual knowledge that Acme’s technical proposal would be unworkable without major changes.2 Plaintiff has shown us no reason why this trial finding as to actual knowledge should be disturbed. Indeed, had plaintiff launched a solid challenge to this finding, the court would be well within discretionary limits in refusing even to consider the argument, because plaintiff filed very sketchy and incomplete proposed findings before the trial judge, without citation to the record. See Hule 134 (d) (1) and (g); WRB Corp. v. United States, 183 Ct. Cl. 409, 417 (1968). In any case, the very most that can be said, on this record, is that the interested Air Force officials had access to data which, if they had considered it (which they did not), might well have raised questions about the technical feasibility of Acme’s proposal.

II.

Having reached this conclusion, the trial judge did not go further and decide whether the failure of the officials to search out and consult all the information available to them constituted a lack of due diligence. Kather, he assumed that such conduct on the part of the Government’s procurement people would not provide a basis for recovery of bid preparation expenses by Keco, since he found that in this instance [573]*573the Air Force’s decision, to permit Acme’s requested deviations was reasoned, even if incorrect or negligent.3

To test the correctness of this holding that simple negligence is not enough to ground recovery here, it will be helpful to start by surveying, generally, the several types of claims disappointed bidders may present, and the varying considerations pertinent to these different classes of demands for compensation. The proper treatment of the specific situation now before us follows, we think, from certain of the overall principles which should govern the various kinds of actions for monetary relief by rej ected bidders.

In the process of procurement 'by formal advertising, the awardee must ordinarily fulfill three main requirements: (1) his bid must be the one “most advantageous to the Government, price and other factors considered,” (2) he must be adjudged “responsible,” able and willing to perform the contract), and (3) his bid must be “responsive,” conform in all material respects to the invitation). ASPE §§ 2.103,2.407-1; FPK, §§ 1-2.103,1-2.407-4.4 In certain procurements, the awardee must clear another hurdle or two as well; he must show that he is a “small business” concern, or that performance will take place in a “labor surplus area,” etc. Conceivably, the Government may err in making any of the above determinations with respect to any bidder.

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492 F.2d 1200, 30 A.L.R. Fed. 334, 203 Ct. Cl. 566, 1974 U.S. Ct. Cl. LEXIS 94, Counsel Stack Legal Research, https://law.counselstack.com/opinion/keco-industries-inc-v-united-states-cc-1974.