R.A. Glancy & Sons, Inc. v. United States, Department of Veterans Affairs

Opinions of the United
1999 Decisions States Court of Appeals
for the Third Circuit
6-24-1999
R A Glancey & Sons v. Dept Veteran Affairs
Precedential or Non-Precedential:
Docket 99-3188
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Recommended Citation
"R A Glancey & Sons v. Dept Veteran Affairs" (1999). 1999 Decisions. Paper 163.
http://digitalcommons.law.villanova.edu/thirdcircuit_1999/163
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Filed June 24, 1999
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 99-3188
R.A. GLANCY & SONS, INC.,
Appellant,
v.
UNITED STATES OF AMERICA,
DEPARTMENT OF VETERANS AFFAIRS
v.
POERIO, INC.
Intervenor-Appellee
ON APPEAL FROM THE
UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
(Civil Action No. 99-219)
District Judge: The Honorable Donald J. Lee
Argued: May 27, 1999
Before: GREENBERG and ALITO, Circuit Judges,
and DOWD, Senior District Judge.*
(Opinion Filed: June 24, 1999)
_________________________________________________________________
*The Honorable David D. Dowd, Jr., United States District Judge for the
Northern District of Ohio, sitting by designation.
MEYER, UNKOVIC & SCOTT, LLP
JAMES R. MALL (ARGUED)
1300 Oliver Building
Pittsburgh, PA 15222
Counsel for Appellant,
R.A. Glancy & Sons, Inc.
DEPARTMENT OF JUSTICE
DOUGLAS HALLIARD-DREIMEIER
(ARGUED)
ANTHONY J. STEINMEYER
Civil Division
Room 9113
Washington, D.C. 20530-0001
Counsel for Appellee,
United States of America, Department
of Veterans Affairs
ECKERT SEAMANS CHERIN &
MELLOTT, LLC
JOEL L. LENNEN (ARGUED)
DENNIS L. VERALDI
KEITH L. BAKER
44th Floor, 600 Grant Street
Pittsburgh, PA 15219
Counsel for Appellee-Intervenor,
Poerio, Inc.
OPINION OF THE COURT
ALITO, Circuit Judge:
R.A. Glancy & Sons, Inc. ("Glancy"), a losing bidder for a
government contract, appeals the District Court's denial of
a request for preliminary injunctive relief. That request
sought an order enjoining the successful bidder from
working on the project and reinstating Glancy's putatively
successful bid. Because Glancy did not establish that it
was likely to succeed on the merits or that the balance of
equities favored the issuance of a preliminary injunction,
we affirm the District Court's decision.
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I.
On June 1, 1998, the Department of Veterans Affairs
("VA") issued an invitation for bids ("IFB") to renovate the
VA Medical Center in Pittsburgh. The IFB asked for bids on:
ITEM I: GENERAL CONSTRUCTION
ITEM II: ASBESTOS ABATEMENT
ALTERNATE NO. 1
ALTERNATE NO. 2
ALTERNATE NO. 3
UNIT PRICE OF MINE GROUTING
(J.A. 190a). The three alternates under Item II were listed
as minor additions to or deletions from the IFB's asbestos
abatement requirements. (J.A. 193-94). The IFB's
performance requirements, set forth in S 01010 of the IFB,
elaborated on the work to be performed:
ITEM I. GENERAL CONSTRUCTION: Work includes
general new construction, alterations, walks, grading,
paving, drainage, mechanical and electrical work,
elevators, necessary removal of existing structures and
construction and certain other items.
ITEM II. ASBESTOS ABATEMENT: Work includes
abatement of asbestos in the area of the work as well
as in other selected areas, including the work
described in ALTERNATE 2 below.
(J.A. 193). Alternate 2 requested a break-out price for
remediating asbestos-containing floor tiles on the third floor
of the building. The IFB form provided separate lines for
each bid item and each alternate line; it contained no
explicit indication that Item II was a subset of Item I. (J.A.
188).
On July 1, 1998, the VA issued a clarifying amendment
to the IFB, which read:
Although the VA has asked for the price of the
Asbestos Abatement work to be listed separately (ITEM
II - ASBESTOS ABATEMENT under item 10 of SF 1442)
on the bid form, all asbestos abatement work is
included in a single prime contract that will be the
responsibility of the General Contractor.
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(J.A. 202).
The VA unsealed the bids on July 15, 1998. The VA
determined the lowest bidder by aggregating the bids for
Items I & II to reach a total cost for the project. Pursuant
to this calculation, Poerio Inc. ("Poerio"), the Appellee, was
the lowest bidder, with a bid of $11,401,500. Glancy was
the sixth lowest bidder.
Glancy and another bidder, the Massaro Company
("Massaro"), informed the VA that they had understood the
IFB to have required that total costs be included in Item I.
According to that understanding, both Glancy and Massaro
contended that the figure for Item I included the costs of
Item II and that Item II was merely a break-out of Item I.
(J.A. 213-14). Even under this understanding of the IFB,
however, Glancy was the second lowest bidder after
Massaro.
Pursuant to Massaro and Glancy's protest, the VA
examined the bidding materials, noted that the IFB did not
contain customary language indicating that the contract
would be awarded based on the aggregate of all bid items,
and determined that the IFB was ambiguous. (J.A. 261-62).
Based on this conclusion, the VA decided to open a second
round of bidding. Massaro, the lowest bidder according to
its interpretation of the IFB, and Poerio, the lowest bidder
according to its interpretation of the IFB, eachfiled a
protest with the Comptroller General under the Competition
in Contracting Act, 31 U.S.C. SS 3551-56 (1994),
contending that the IFB unambiguously supported their
interpretation. The VA submitted briefing in defense of its
position that the IFB was ambiguous and therefore should
have been canceled. (J.A. 163-68). The VA admitted that
the "only interpretation of the [IFB] together with [its
specifications] at the time the solicitation was issued, was
that each bid item was to be priced separately." (J.A. 166).
The VA contended, however, that "the addition of the
clarification language in Amendment No. 2 created an
ambiguity that can be interpreted in two ways. It can be
interpreted to require, as Poerio did, that bids be presented
separately for general construction (Bid Item I) and for
asbestos abatement (Bid Item II) or it can be interpreted to
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require, as did both Massaro and Glancy, that Bid Item I
contain the bid for all work including asbestos." (J.A. 166).
While the protest was pending before the Comptroller
General, the VA conducted a second round of bidding, and
in this round Glancy was the lowest bidder. (J.A. 197).
Because the protest was pending, however, the VA did not
award the contract to Glancy.
The Comptroller General ultimately sustained Poerio's
interpretation of the IFB as the only reasonable one and
rejected the VA's assertion that the IFB was ambiguous.
The Comptroller General stated:
First, the cover page of the solicitation (Standard Form
1442) identifies two separate bid items for the
acquisition, "general construction" and "asbestos
abatement." Each of the two bid items is identified on
that page as a free-standing item for acquisition by the
agency -- specifically, there is no indication that one of
the two identified bid items is encompassed by the
other. Second, the IFB's performance requirements . . .
expressly define "general construction" and"asbestos
abatement" as distinct, separable work efforts; again,
each bid item description follows the separate title and
item number associated with each of the two separate
work categories. The stated item I (general
construction) simply does not encompass the
separately stated item II specialized work requirements
in the area of asbestos abatement. Third, the bid
schedule itself clearly separates the two bid items:
there is one space for the bidder's price for the general
construction work, and a separate space for the price
for the asbestos abatement work. Finally amendment
No. 2 that one prime contract would be awarded, to
include both the item I and item II work requirements,
simply does not provide any reasonable basis for a
bidder to conclude that its item II price should be
included in its item I price.
(Comptroller General Op. at 4). After noting that bidders
who perceived an ambiguity should have requested a
clarification from the VA before submitting their bids, the
Comptroller General concluded that the VA lacked a
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compelling reason for cancelling the first solicitation, and
the Comptroller General recommended that Poerio be
granted the contract pursuant to the first solicitation. (Id.
at 5). After receiving the Comptroller General's opinion, the
VA informed the bidders that it was reactivating thefirst
round of bidding, and it then awarded the contract to
Poerio.
Glancy brought this action in the District Court. Glancy
asked the Court to declare that the VA's decision was
arbitrary and capricious and that Glancy was the low
bidder and was entitled to the contract. Glancy also
requested, among other things, injunctive relief ordering the
VA not to award the contract to any other parties. At
Glancy's request, the District Court issued a temporary
restraining order on February 24, 1999. (J.A. 3). The
District Court scheduled a hearing on whether a
preliminary injunction should issue, and this hearing was
held before a Magistrate Judge on March 3, 1999. On
March 5, 1999, the Magistrate Judge issued her Report and
Recommendation, concluding that Glancy had not shown
that it was likely to succeed on the merits of its challenge
to the VA's decision or that it would suffer irreparable
injury in the absence of preliminary injunctive relief. The
Magistrate Judge, accordingly, recommended that the
request for a preliminary injunction be denied. The District
Court adopted the Magistrate Judge's recommendations,
found that granting a preliminary injunction would not be
in the public interest because of the delays that such relief
would cause in needed renovations to the hospital, and
denied the motion for a preliminary injunction. This
expedited appeal followed.
II.
The District Court's denial of a preliminary injunction is
reviewed for abuse of discretion. Cleary v. Waldman, 167
F.3d 801, 804 (3d Cir. 1999). The District Court did not
abuse its discretion, and we therefore affirm.
Under 28 U.S.C. S 1491(b)(4) (1994),1 the VA's decision is
_________________________________________________________________
1. The jurisdiction of the District Court rested exclusively on 28 U.S.C.
S 1491(b). Although Glancy's complaint involved 28 U.S.C. S 1346(a)(2),
Glancy subsequently disavowed any reliance on that provision.
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subject to review under the standards set forth in the
Administrative Procedures Act, 5 U.S.C. S 706 (1994), and
thus Glancy could not prevail in this case without showing
that the VA's decision was "arbitrary, capricious, an abuse
of discretion, or otherwise not in accordance with law." 5
U.S.C. S 706 (1994). Applying this standard in prior
procurement cases, we have observed that "[j]udicial
intervention in procurement disputes necessarily results in
delay and the expenditure of funds on behalf of all parties,
usually without measurable benefit to the public," Sea-Land
Serv., Inc. v. Brown, 600 F.2d 429, 434 (3d Cir. 1979), and
we have held that discretion to award injunctive relief in
such cases "is restricted to circumstances where the
governmental agency's action is illegal or irrational." Coco
Bros. v. Pierce, 741 F.2d 675, 679 (3d Cir. 1984); see also
Sea-Land, 600 F.2d at 434 (only where agency action has
"no rational basis" or upon a showing of "clear illegality"
may federal court enjoin government procurement
decision).
Further, while irrationality or illegality is a necessary
condition to the issuance of an injunction in the
government procurement context, "[e]ven when that
showing has been made, prudent judicial discretion may
still refuse declaratory or injunctive relief because of
overriding public interests." Sea-Land, 600 F.2d at 434; see
also Coco, 741 F.2d at 680; Princeton Combustion Research
Lab., Inc. v. McCarthy, 674 F.2d 1016, 1021-22 (3d Cir.
1982); Allis-Chalmers Corp. v. Friedkin, 635 F.2d 248, 253
(3d Cir. 1980). Thus, in determining whether injunctive
relief is proper, a court must also weigh "the practical
considerations of efficient government operation; the public
interest in avoiding excessive costs; and the bidders'
entitlement to fair treatment through agency adherence to
statutes and regulations." Sea-Land, 600 F.2d at 434.
Finally, where as here the Comptroller General has made
a recommendation that the procuring officer follows, that
recommendation must be taken into account in reviewing
the Executive's decision. In the Competition in Contracting
Act ("CICA"), 31 U.S.C. SS 3551-56 (1994), Congress
strengthened the Comptroller General's role in the
government procurement process. Honeywell, Inc. v. United
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States, 870 F.2d 644, 648 (Fed. Cir. 1989). We have noted
that while the CICA does not "compel procuring agencies to
obey the recommendation of the Comptroller General,"2 its
effect "is to compel procurement officials to make purchase
decisions in light of what the Comptroller General
recommends the government do in that case." Ameron v.
United States Army Corps of Eng'rs, 809 F.2d 979, 986 (3d
Cir. 1986); see Honeywell, 870 F.2d at 648 (in light of
CICA, "a procurement agency's decision to follow the
Comptroller General's recommendation, even though that
recommendation differed from the contracting officer's
initial decision, [is] proper unless the Comptroller General's
decision itself was irrational").
Applying these standards,3 we can discern no abuse of
discretion in the District Court's determination that Glancy
is unlikely to succeed on the merits. The GAO first noted
that, under applicable law, only a compelling reason will
justify reopening a closed bidding process. (Comptroller
General's Op. at 3). The reason for this is to discourage
"auction type" bidding at which a disappointed bidder,
armed with knowledge of the prior bids, artificially lowers
its bid in order to win the contract. Chemung County v.
Dole, 781 F.2d 963, 972 (2d Cir. 1986). While an ambiguity
in a bid solicitation can be a sufficiently compelling reason
to reopen the bidding process, the Comptroller General
concluded in this case that the IFB was not "susceptible to
_________________________________________________________________
2. In Ameron v. United States Army Corps of Eng'rs, 809 F.2d 979 (3d
Cir. 1986), the government argued unsuccessfully that the CICA is
unconstitutional insofar as it authorizes the Comptroller General to
shorten or lengthen the stay of the execution of a contract that
automatically occurs when a bid protest is filed with the Comptroller
General. However, the government did not challenge the Comptroller
General's authority to investigate procurement decisions or to make
recommendations on the basis of his investigation. See 809 F.2d at 988.
3. Glancy's attempt to distinguish Sea-Land , Princeton Combustion and
Coco is unavailing. Glancy argues that these cases do not apply because
they did not involve sealed bids (as here) or did not involve a situation
where the procuring agency reversed itself on the basis of the GAO's
recommendation. These are distinctions without significance in this
context. In any event, Glancy does not even attempt to distinguish
Honeywell, a case squarely on point, and that clearly supports the
deferential standard of judicial review the District Court employed.
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more than one reasonable interpretation when read in the
context of the solicitation as a whole." (Comptroller General
Op. at 3) (emphasis added). This decision is rational for the
reasons identified by the Comptroller General-- the IFB
contained two separate items upon which bidders were to
submit bids, separate lines were provided for the bids on
these items, and the clarifying amendment's admonition
that one prime contract would be awarded was not a
reasonable basis upon which to base a conclusion that Item
II was a break-out of Item I. Mindful that courts are not to
substitute their judgment for that of the Executive, we
agree with the District Court's assessment of the merits
and with its conclusion that preliminary injunctive relief
was inappropriate.
The District Court's alternate basis for denying relief --
that the delays associated with bringing in a new general
contractor if preliminary injunctive relief were granted
would not be in the public interest because it would further
delay the renovation of a vital liver transplant center -- is
based on factual findings amply supported by the record.
(Supp. Findings of Fact P 2 et seq.). We agree with the
District Court that the equities here do not lie with Glancy,
especially in light of the fact that even under its
understanding of the first solicitation, Glancy was not the
low bidder. (See Gov't Br. at 40-41 ("Glancy's claimed
interest in fair procurement procedures rings hollow.
Glancy was not the low bidder in the initial round of
bidding even under its own reading of the original
solicitation.").)
III.
Accordingly, we affirm the District Court's March 10,
1999, Order denying Glancy's motion for preliminary
injunctive relief.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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