Klinge Corp. v. United States

83 Fed. Cl. 773, 2008 U.S. Claims LEXIS 286, 2008 WL 4447063
United States Court of Federal Claims·Decided September 12, 2008·No. No. 08-551C·Published·Cited by 7 cases

Opinion

OPINION

BRUGGINK, Judge.

This action is brought pursuant to the court’s bid protest jurisdiction. Plaintiff, Klinge Corporation (“Klinge”), alleges that the United States, acting through the Marine Corps Systems Command (“the agency”), has acted arbitrarily, capriciously, and in violation of law, in soliciting quotations under the General Services Administration Federal Supply Schedule (“GSA FSS” or “FSS”) for the delivery of “Large Field Refrigeration Systems” (“LFRSs”). A related procurement has been before the court previously. In an earlier bid protest with the same party [774]*774alignments, plaintiff successfully protested an award to Intervenor, Sea Box, Inc. (“Sea Box”) under a Request For Proposals (“RFP”) for an indefinite delivery, indefinite quantity (“IDIQ”) contract for between 10 and 3002 LFRSs. See Klinge Corp. v. United States, 82 Fed.Cl. 127 (2008) (“Klinge I”). We held that Sea Box could not receive the award because the agency’s failure to disqualify it for non-compliance with the Trade Agreements Act (“TAA”), 19 U.S.C. §§ 2501 et seq. (2000), was arbitrary and not in accordance with law. Klinge I, 82 Fed.Cl. at 137-38.

Although Klinge was next in line to receive the award, the agency did not offer the contract to it. Instead, without formally cancel-ling the RFP, the agency decided to procure 150 LFRSs through a Request For Quotations (“RFQ”) for a task order under the GSA FSS. Plaintiff now has filed this follow-on bid protest to enjoin award under the RFQ, claiming primarily that the agency intentionally thwarted our prior ruling in an effort to steer the contract to Sea Box. It also argues that the agency’s conduct amounts to a de facto cancellation and that this is arbitrary and irrational conduct. On August 1, 2008, we entered a preliminary injunction, enjoining award of the task order until the court had been better informed of the agency’s rationale for not making the purchase through the original RFP. Although Klinge is not a bidder under the task order, we agreed that it would have standing not only to challenge the apparent cancellation, but also to challenge the task order award because of what appeared to be a link to the prior procurement.

We have reviewed the administrative record in this second procurement, as supplemented by a memorandum from the contracting officer (“CO”). Oral argument on the plaintiffs request for permanent injunctive relief was held on September 8, 2008. For reasons set out below we conclude that, while there was prejudicial error in the agency’s de facto cancellation of the first procurement, the error does not implicate the integrity of the present procurement and hence does not warrant injunctive relief. At most, it can be said that there is a causal connection between the first and second procurements-the RFQ probably would not have been issued but for the mistake in not pursuing the RFP. Yet, injunctive relief is extraordinary relief, and we conclude that the mistakes made in connection with the first procurement occurred in good faith and that cancelling the RFQ is unwarranted. Instead, we award bid preparation costs to plaintiff.

BACKGROUND

The RFQ under the FSS is somewhat different from the RFP. Instead of an indefinite quantity, the present RFQ is for a definite, one-time quantity of 150 LFRSs, although “[i]f additional items are required in subsequent years, this process will be repeated.” (Administrative Record (“ARII”) at 2.) The original RFP had eight CLINs. The first was for the LFRS itself, the second was for a spare refrigeration unit (“RU”), and the third was for spare parts.3 The present RFQ only calls for the LFRSs themselves. The critical performance factors for the LFRS are virtually identical, although one is deleted. The agency no longer requires the refrigeration unit to cool to 32°F in less than 45 minutes and to 0°F in less than one hour.

At the time the agency initially did a market survey in 2006, it could not do a purchase from the FSS because the LFRS was not offered by anyone on the schedule. At some point after Klinge began to protest the procurement, the schedule was modified and more than one company (but not Klinge) was qualified to furnish LFRSs. Klinge thus is not qualified under the GSA FSS; Sea Box, and apparently at least one other company, [775]*775are. In addition, in the interim, Sea Box has apparently solved its TAA problem by agreeing to move assembly of the LFRS from China to New Jersey. Sea Box and at least one other contractor responded to the RFQ, and the agency is poised to make an award. In short, the RFP has, de facto, been can-celled, and half of the maximum number of LFRSs under the original RFQ will be obtained through a task order for which Klinge is ineligible to compete.

When we directed the agency to file an administrative record with respect to the new RFQ, we cautioned that it should include materials “associated with the IDIQ contract but originating after the court’s prior injunction.” When the record was filed, it contained no reference at all to the old RFP and thus it included no rationale for not making an award to plaintiff and no rationale for using the device of a supply schedule task order for obtaining LFRSs. We conducted a status conference on August 18, 2008, at which counsel for the government suggested that we should infer from the differences between the RFP and the RFQ that the agency must have had good reason not to make the award under the RFP. In addition, he indicated his understanding that the agency took the position that Klinge was ineligible under the RFP, because its proposal was also not compliant with the TAA.

Neither of the latter rationales appears in the administrative record and we are unwilling to make unsupported assumptions. Nevertheless, plaintiff’s counsel did not oppose defendant’s offer to have the CO explain in writing why he elected to treat Klinge as non-compliant and instead chose to use the vehicle of a task order under the FSS.

In his memorandum for the record, filed on August 22, 2008, the CO begins by explaining that, after the court’s ruling in Klinge I, he assumed that he had to reexamine Klinge’s compliance with the TAA, and, in light of the court’s analysis, do so based on Klinge’s original proposal. (“August Memo”) Although the memorandum does not explicitly say so, apparently the CO believed that CLIN 0003 of Klinge’s original proposal was not compliant with the TAA. (“[I]f Klinge’s proposal did not propose compliant spare parts under CLIN 0003,1 could not award to them.” August Memo.) In addition, and, again, by inference only from the fact that he did not award to Klinge, the CO apparently believed that Klinge would have been compliant only if the CO could take into account what he viewed as modifications Klinge made to its proposal during the protest. (Klinge views these as clarifications rather than modifications, about which more below.)

In addition, the CO states that it “could have been theoretically possible to revive the solicitation, open another round of discussions—specifically addressing the TAA compliance issue—and then request the Second Final Proposal Revisions.” August Memo. He elected not to do this, he explains, because more than a year had elapsed since the original solicitation was issued. He thus viewed it as prudent to conduct another market search.

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Klinge Corp. v. United States, 83 Fed. Cl. 773, 2008 U.S. Claims LEXIS 286, 2008 WL 4447063 (uscfc 2008).

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