Reilly's Wholesale Produce v. United States

73 Fed. Cl. 705, 2006 U.S. Claims LEXIS 324, 2006 WL 3094096
CourtUnited States Court of Federal Claims
DecidedOctober 13, 2006
DocketNo. 06-668C
StatusPublished
Cited by72 cases

This text of 73 Fed. Cl. 705 (Reilly's Wholesale Produce v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Reilly's Wholesale Produce v. United States, 73 Fed. Cl. 705, 2006 U.S. Claims LEXIS 324, 2006 WL 3094096 (uscfc 2006).

Opinion

[706]*706OPINION AND ORDER

ALLEGRA, Judge.

This contract ease is before the court on plaintiffs motion for a preliminary injunction. After careful consideration of the briefs filed by the parties, as well as the oral argument, and for the reasons discussed below, the court hereby GRANTS plaintiffs motion for preliminary injunction.

1. FACTS2

The Defense Commissary Agency (DeCA) operates commissaries for the United States military and is an agency of the Department of Defense (DoD). The Department of Defense Supply Center-Philadelphia (DSCP) is a DoD sub-agency of the Defense Logistics Agency (DLA). Prior to October of 2006, DSCP facilitated the purchase of fresh fruits and vegetables3 for DeCA military commissaries worldwide. One of the suppliers that it used for this purpose was plaintiff, Reilly’s Wholesale Produce, Inc. (RWPI or plaintiff). In late 2005, however, after discussions and research, the DoD announced that DeCA would be responsible for contracting directly with vendors to procure produce for its commissaries. The transition was to take place over a 9-month period, with a target completion date of October 1, 2006. The transition plan involves downsizing DSCP’s field buying operation and dividing parts of the world into six service areas (the continental United States, Hawaii, Alaska, Puerto Rico, Iceland, and Cuba). Contracts have been awarded for five of these areas,

On March 20, 2006, DeCA issued a Solicitation (HDEC02-06-R-0005) for the procurement of fresh produce for Area 3 (the Northeast). On August 22, 2006, DeCA awarded Four Seasons Produce Inc. (Four Seasons) the contract (HDEC02-06-D-0013) for Area 3, Groups 1 and 2. That contract is for a base term of two years, beginning on September 22, 2006, with two twelve-month option periods that may be exercised by the contracting officer. On August 25, 2006, plaintiff was notified of this award, via email. On September 1, 2006, one of the offerors that did not receive this award, Philadelphia Produce Market Wholesalers (Philadelphia Produce), filed a protest of the contract with the Government Accountability Office (GAO). It challenged the award to Four Seasons based on an alleged conflict of interest derived from the latter firm’s use of a consultant who is a former high-level DeCA employee. On September 5, 2006, RWPI filed its own protest with the GAO, alleging essentially the same conflict of interest claim and arguing, in addition, that: (i) the agency’s evaluation of plaintiffs proposal was flawed; and (ii) the agency’s best value analysis was based on an unreasonable evaluation of plaintiffs technical proposal. Pursuant to the automatic stay provisions of 31 U.S.C. § 3553(d), on September 5, 2006, DeCA notified Four Seasons that the contract was suspended and that it was required to cease performance pursuant to FAR § 33.104(c)(1). Although performance of the contract was thereby stayed, DeCA participated in a training session with Four Seasons that was scheduled for September 6-7, 2006.

On September 6, 2006, DeCA contacted the top two offerors on the original contract, Four Seasons and Military Produce Group (MPG), to assess their interest in performing an interim contract, under which fresh produce would be delivered for approximately 120 days. DeCA did not contact any of the other original offerors, including plaintiff. On September 6, 2006, Four Seasons responded that it was interested in the interim contract, and would perform under the same terms as its initial offer. That same day, MPG expressed its interest in the interim contract, but did not indicate whether it would be willing to perform on the same terms as its initial offer.

On September 7, 2006, DeCA sent a letter to GAO indicating that it did not anticipate overriding the automatic stay, but was exploring the option of awarding an interim contract. The letter recites that “DeCA has contacted DSC-P to determine whether they, [707]*707in light of their current status, would be able to continue to support DeCA at the required levels of service. DSCP responded that because they are downsizing they cannot adequately support DeCA’s requirement beyond October 1, 2006.” A memorandum authored by the Chief of the Resale Contracting Division of DeCA, also dated September 7, 2006, summarizes a conversation with DSCP and indicates that “after considering the status of their agency’s transition to their new operational business model, and considering the number of their field buying personnel that are already listed on Priority Placement listings, and considering the number of e-mails that they’re currently receiving each day expressing concerns about the drop-off in the level of services we’re receiving,” DSCP felt it could not support DeCA after October 1, 2006. This memorandum further indicates that DeCA would continue to move toward establishing an interim contract and specifically refers to Four Seasons as being the provider. On September 11, 2006, MPG reiterated that it would be willing to perform the interim contract, this time indicating that it was prepared to do so on the same terms and conditions as its initial offer.

On September 11, 2006, the Head of the Contracting Activity at DeCA signed a Justification Review Document approving the use of other than full competition for the award of the interim contract, invoking, for this purpose, his authority under 10 U.S.C. § 2304(c)(2) and FAR § 6.302-2 (Unusual and Compelling Urgency). This document states that providing fresh produce is vital to the agency and that there is “no alternative” to provide these necessities “but to contract for the products/services via an interim contract for four months (120 calendar days).” Noting time constraints on developing other options, the document justified the award of the interim contract to Four Seasons stating, “[gjiven the urgency of the requirement, and the lack of sufficient time to conduct another solicitation in time to meet the drop-off of current service support from DSC-P, DeCA will award this interim contract to [Four Seasons] for the same services as were advertised in the original solicitation.” On September 12, 2006, DeCA awarded the interim contract to Four Seasons. This contract is for a period of 120 days, beginning on September 12, 2006, with two 30 day options to be used at DeCA’s discretion.

On September 13, 2006, RWPI, which was not aware of the interim contract award, notified DeCA that it and other suppliers were ready to provide fresh produce under their preexisting contracts with DSCP. On September 14, 2006, DeCA notified GAO and RWPI that it had awarded an interim contract (HDEC02-06-D-0017) to Four Seasons two days prior. In that letter, DeCA indicated that it could not justify an override of the automatic stay when the option to award an interim contract existed, asserting:

A decision to override the automatic CICA stay provisions is a very serious matter and requires a determination that the interests of the United States, not just the agency involved, will be significantly affected. The Agency did not believe it could justify that determination since it had another alternative, which is to award an interim contract.

RWPI was never contacted by DeCA to inquire into its ability to continue its performance under its preexisting relationship with DSCP.

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73 Fed. Cl. 705, 2006 U.S. Claims LEXIS 324, 2006 WL 3094096, Counsel Stack Legal Research, https://law.counselstack.com/opinion/reillys-wholesale-produce-v-united-states-uscfc-2006.