Lincoln Services, Ltd. v. United States

678 F.2d 157, 29 Cont. Cas. Fed. 82,506, 230 Ct. Cl. 416, 1982 U.S. Ct. Cl. LEXIS 214
United States Court of Claims·Decided April 21, 1982·No. No. 319-77·Published·Cited by 30 cases

Opinion

PER CURIAM:

This case comes before the court on the parties’ exceptions to the recommended decision of Trial Judge Kenneth R. Harkins, filed January 30, 1981, pursuant to Rule 134(h), having been submitted to the court on the briefs and oral argument of counsel. Upon consideration thereof, since the court agrees with the trial judge’s recommended decision with slight modifications, as hereinafter set forth,** it hereby adopts the decision as the basis for its judgment in this case. Therefore it is concluded that plaintiff is not entitled to recover and the petition is dismissed.

OPINION OF TRIAL JUDGE

HARKINS, Trial Judge:

Plaintiff was unsuccessful in an effort to obtain a contract from the Naval Facilities Engineering Command, Atlantic Division (NAVFAC-ATL), for the construction of 250 military family housing units at the United States Naval Station, Bermuda and now seeks to recover $150,000 assertedly expended in its proposal effort. Proposal preparation expenses are a cost of doing business that normally are "lost” when the effort to obtain the contract does not bear fruit. In an appropriate case, however, a losing competitor may recover the costs of preparing its unsuccessful proposal if it can establish that the Government’s consideration of the proposals submitted was arbitrary or capricious. The standards that permit a [418] disappointed competitor to recover proposal preparation expenses are high and the burden of proof is heavy.1

Plaintiff has failed to satisfy the standards that would permit recovery and its claim must be dismissed.

NAVFAC-ATL issued its request for proposals (RFP) for the Bermuda housing project on March 5, 1974. The RFP solicited proposals for a turnkey design and construction contract, in a project programmed to cost $8,650,000 for the 250 units, with a maximum price of $41,490 for the most expensive unit, and an average unit price not to exceed $34,600. Proposals were to be submitted by. May 16, 1974. The RFP specified that a NAVFAC instruction2 "Turnkey Procedures for Navy Housing Projects,” (Turnkey Manual) would apply to the procurement and to NAVFAC-ATL’s evaluation of the proposals.

Plaintiff and two other companies, Kemmons-Wilson Construction Company and J. R. Stevenson Corporation, submitted proposals, which in accordance with the Turnkey Manual, were assigned identifying code numbers to preserve anonymity. Kemmons-Wilson was assigned B-412, plaintiffs three proposals were B-413-A, B-413-B, and B-413-C, and J.R. Stevenson’s was B-420.

J. R. Stevenson’s proposal was found to be nonresponsive and that company thereafter withdrew from further participation. On May 30, 1974, the Selection Board considered proposals B-412 and B-413-A, -B, and -C and found each exceeded the $8,650,000 total project cost. One reason for the high costs was that both companies had included construction materials that exceeded the minimum criteria [419] in the specifications. All proposals were rejected by NAVFAC-ATL.

NAVFAC-ATL, in June 1974, returned the proposals to Kemmons-Wilson and to plaintiff, with the drawings marked up to indicate areas that needed clarification or revision. Specific features that were unacceptable to NAVFAC-ATL were identified. Plaintiff was notified that proposal B-413-B was no longer being considered and that additive features that plaintiff had submitted in its proposals were excluded from further consideration. Both companies were requested to review and resubmit their proposals by June 21, 1974, with cost reductions that conformed with the Federal Housing Administration (FHA) specifications that applied to the project.

When the modified proposals were resubmitted on June 21, NAVFAC-ATL learned that inadequate funding limits had forced both companies to downgrade the project below minimum acceptable standards. At the same time, the total project cost continued to be excessive. NAVFAC-ATL concluded that adequate housing could not be constructed with funds available, and on July 15,1974, notified both companies the resubmitted proposals were rejected.

In addition to its rejection of the June 21,1974, proposals, NAVFAC-ATL in its July 15, 1974, letter advised the competing companies that legislation had been requested for fiscal year 1975 that would authorize an average per unit expenditure for non-United States military housing of $40,000. If authorized, this would raise to $10 million the permissible expenditure for the Bermuda project. NAVFAC-ATL decided, in order to avoid readvertisement of the Bermuda project and to take advantage of the proposal effort already expended by the companies, to hold the project in abeyance and to make the award when additional funds were authorized, so that the project could provide the higher cost housing that originally had been proposed.

NAVFAC-ATL amended the RFP specification to provide reductions in scope that were acceptable.3 The companies [420] were requested to review the amended specifications and to adjust the content of their original May 16,1974, proposals. Changes in the original proposals resulting from the amended specifications were to be itemized and the proposals resubmitted by August 15, 1974. At plaintiffs request, the deadline was advanced to August 6,1974.

Kemmons-Wilson submitted its response (B-412) by letter dated July 31, 1974. This proposal was to construct a 250-unit project at a total cost of $10,243,558; certain deductible features were identified, which, if accepted, would reduce the total price to $9,457,980, with an average unit price of $37,831.92. These prices were reconfirmed by Kemmons-Wilson after NAVFAC-ATL pointed out areas of the B-412 proposal that needed clarification for compliance with specifications.

Plaintiffs response, received on August 6, 1974, resubmitted three alternate project schemes: B-413-A, -B, and -C.4 Each of the revised proposals provided that the total price would increase $500,000 if not accepted by NAVFAC-ATL by August 24, 1974. Plaintiffs prices in its alternate proposals were:

Base Price Adjusted for Deductions 18/6/741 18/6/741 Adjusted Price with escalation 1 After 8/26/741
B-413-A $ 9,270,000 $8,548,900 $9,048,900
B-413-B 10,153,000 9,371,900 9,871,900
B-413-C 9,800,000 9,250,000 9,750,000

[421] NAVFAC-ATL on August 15,1974, notified plaintiff that alternate B-413-B complied with the minimum technical requirements of the amended RFP specifications and that alternates B-413-A and B-413-C required scope and contract clarification in seven specifically identified features, one of which was that a 60-day extension of the bid bond was required. Plaintiff accepted all clarifications requested by NAVFAC-ATL at no change in prices proposed.

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Lincoln Services, Ltd. v. United States, 678 F.2d 157, 29 Cont. Cas. Fed. 82,506, 230 Ct. Cl. 416, 1982 U.S. Ct. Cl. LEXIS 214 (cc 1982).

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