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10/23/75 Scanwell Laboratories, Inc v. David D. Thomas

October 23, 1975





Appeal from the United States District Court for the District of Columbia (D.C. Civil Action 508-69). 1975.CDC.212


Leventhal and Robinson, Circuit Judges, and Davis,* Judge, United States Court of Claims. Opinion for the Court filed by Judge Davis.


This is the latest round in a government bid protest which has been in the courts since 1969 when the Federal Aviation Administration awarded, over the objection of plaintiff-appellant Scanwell Laboratories, Inc. (Scanwell), a contract to the Airborne Instrument Laboratory , a division of defendant Cutler-Hammer, Inc., to construct and install ten Instrument Landing Systems . Plaintiff's original complaint asked that the court declare the award to AIL illegal, set it aside, and enjoin AIL from working on the contract. The District Court dismissed the suit on the ground that a disappointed bidder lacked standing to protest in court the award of the contract to another. This court reversed, finding that Scanwell had standing to bring the suit. Scanwell Laboratories, Inc. v. Shaffer, 137 U.S.App.D.C. 371, 424 F.2d 859 (1970). However, no injunction was issued by the District Court on remand, and AIL proceeded to complete work on the contract. The defendants (the Government and Cutler-Hammer) then moved to dismiss the complaint as moot (on the ground that by then the contract had been performed). This was denied by the District Court but Scanwell was granted permission to file an amended complaint. The new complaint alleged that the federal defendants had acted tortiously and in violation of an implied contract in improperly awarding the contract to AIL and that Cutler-Hammer had received the contract through unfair competition and in violation of the Sherman Act, and asked for damages against both defendants. The District Court has transferred the contract claim against the federal defendants to the Court of Claims, 28 U.S.C. 1406(c), and on plaintiff's own motion has dismissed the antitrust count against Cutler-Hammer. *fn1 Neither of these actions has been appealed. Instead, the case is before us again on review of the lower court's dismissal of the tort claims against both the Government *fn2 and Cutler-Hammer for failure to state a claim on which relief can be granted. *fn3 I.

Only a brief recapitulation of the facts is needed. In early 1969, in response to a number of air disasters, the Federal Aviation Administration sought quickly to equip ten small airports with systems to automatically guide a plane from 200 feet away along a predetermined path to a landing strip. Each system consisted of 4 separate and distinct parts -- the glide slope, the localizer and two markers. The invitation for bids stated that time was of the essence, that bids were to be opened fifteen days after the IFB was issued, and the systems were to be delivered starting 210 days after the execution of the contract. In order to assure that working systems would be delivered on time, the IFB stated:

To be responsive to this request, the contractor shall submit evidence that an identical equipment complement as that proposed for this procurement has previously been installed in at least one location and has achieved at least Category I performance as certified by an FAA Flight Check (or another ICAO country's flight inspection). IFB's were sent to both Scanwell and AIL (as well as others), and both

bid on the contract.

There were four bidders: one failed to include a flight check at all and the bid was determined to be unresponsive; two -- Scanwell and IT&T -- submitted flight checks literally within the terms of the IFB; and AIL offered evidence that it had received certification of all parts of the system, but at two different locations. AIL was the low bidder at $65,720 per system, with Scanwell second at $92,497 (per system).

When the FAA announced that it would consider AIL's bid and award the contract to that company, Scanwell filed protests with both the FAA and the General Accounting Office, stating that the IFB clearly required certification of the entire system at one location and that procurement regulations forbade waiver of that requirement. Upon denial of the protest to the FAA, Scanwell filed its original complaint in the district court. While the appeal of the dismissal of the original action was pending, and after the contract had been awarded, GAO also denied the protest, holding that it was unclear whether the IFB certification requirements were really directed to responsiveness of the bid, rather than responsibility of the bidder (as to which FAA discretion was more substantial),4 that no bidder had been prejudiced by the vagueness, and the award to AIL could stand.

Plaintiff's claim against the Government is based on the theory that the AIL bid, with its dual location certification, was not responsive to the IFB, and therefore that the FAA violated its procurement regulations in

The purpose and interaction of these regulations and theories have been discussed fully in our prior opinion, and we do not depart at all from our decision, stated there, that they create a duty on the part of government procurement officials which runs to bidders as well as to the public. 424 F.2d at 864-65. It is quite possible that Scanwell's interpretation of the IFB and the regulations is correct, and that the FAA abused its discretion in interpreting them improperly. However, monetary recovery against the Government is not, as plaintiff suggests, an automatic consequence of the existence of these factors.

Scanwell alleges that "The action of FAA in waiving the explicit requirements of the bid and in accepting the AIL bid and awarding said illegal contract to AIL constituted wrongful arbitrary and capricious misconduct, and not in accordance with law." Later documents, coupled with a jurisdictional allegation that the action comes within 28 U.S.C. ยง 1346(b) (the Federal Tort Claims Act), inform us that the pleadings now before us are meant to state a tort. But the problem is whether this part of the complaint has set forth a claim as to which the United States has consented to be sued under the Tort Claims Act. If the claim falls outside the Act completely or within one of the exceptions-to-liability embodied in the statute, the District Court was of course entirely correct in dismissing the action.

It is therefore initially appropriate to touch upon the question whether Scanwell's complaint can properly sound in tort at all. The Court of Claims, in considering actions by disappointed bidders for bid preparation costs, has decided that such suits are founded in an implied contract between the Government and its bidders under which the Government agrees to consider each bid fairly and honestly in return for the bidder's submission of an eligible bid. See Heyer Products Co. v. United States, 140 F. Supp. 409, 412-13, 135 Ct.Cl. 63, 69 (1956); Keco Industries, Inc. v. United States, 428 F.2d 1233, 1237, 192 Ct.Cl. 773, 780 (1970); McCarty Corp. v. United States, 499 F.2d 633, 637, 204 Ct.Cl. 768, 775 (1974).6 This conclusion has also been reached by the Ninth Circuit in the recent case of Armstrong & Armstrong, Inc. v. United States, 514 F.2d 402, 403 (9th Cir. 1975), where the court awarded bid preparation damages of $9,414 under the court's Tucker Act jurisdiction, and denied recovery under the Tort Claims Act. On the other hand, one district court which considered the issue, as well ...

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