The opinion of the court was delivered by: SUZANNE CONLON, District Judge
MEMORANDUM OPINION AND ORDER
Flamingo Industries (USA) Ltd. and Arthur Wah (collectively, "Flamingo")
bring this bid protest action against the United States Postal Service under
28 U.S.C. § 1491(b)(1) arising out of the Postal Service's 1997 and 1998
solicitation for bids to manufacture mail sacks.*fn1 Flamingo claims the
bid solicitations and 1997 contract awards violated the Postal
Service's purchasing manual and various federal statutes. The
Postal Service moves for summary judgment on the administrative record.
In a bid protest action, the court's review is limited to the
administrative record before the agency at the time of the
challenged procurement decision. Neals Janitorial Service v.
United States Dep't of the Navy, 1998 U.S. Dist. LEXIS 465, at *
8 (N.D. Ill. Jan. 6, 1998). The Postal Service filed the administrative record and a statement of undisputed
facts with references to the administrative record. Flamingo
failed to respond to the Postal Service's statement of facts as
required by Local Rule 56.1. Flamingo's failure to respond does
not have the usual effect under Local Rule 56.1 because the court
must limit its review to the administrative record. See Davis v.
Shalala, 1995 U.S. Dist. LEXIS 1419, at **1-2 (N.D. Ill. Jan.
31, 1995). The court must independently examine the
administrative record to determine whether the Postal Service's
challenged procurement decisions were arbitrary, capricious, an
abuse of discretion or otherwise not in accordance with law. See
WIT Assoc. v. United States, 62 Fed. Cl. 657, 660
(2004).*fn2 Unless otherwise noted, the following facts are
derived from the administrative record.
Flamingo is an Asian-American small business with an office in
Elk Grove Village, Illinois. Arthur Wah is Flamingo's president
and owner. In the past, Flamingo has supplied mail sacks to the
Postal Service. AR Ex. 3, p. 2.*fn3 In March and May 1997,
the Postal Service's Mail Transport Equipment ("MTE") office
requested additional mail sacks because "sack inventories [had]
reached a critical state." AR Ex. 1, 2. MTE's request stated
"[i]f we are to have a successful peak mailing season this year,
it is imperative we have these shipments begin 9/97." Id. In
June 1997, the procurement office prepared a plan to purchase the
requested mail sacks. AR Ex. 3. The plan listed Flamingo as a past supplier of mail carrier bags. Id. at p. 2.
The plan stated that "proposals will be evaluated for ability to
ramp up to meet Sept 97 delivery requirements, past performance,
and experience with same or similar production items in similar
quantities. Pricing will be secondary to delivery capability."
Id. at p. 5.
On June 11, 1997, the Postal Service issued a solicitation for
polyprophylene mail sacks. AR Ex. 4. Several pages of the 1997
solicitation appear to be missing from the administrative record.
For example, the table of contents appears incomplete and the
section addressing evaluation and award factors appears to be
missing. The procurement department evaluated seven offers from
six different bidders in response to the 1997 solicitation. AR
Ex. 7. Two of the suppliers, General Bag Corporation and the
Osterneck Company, submitted offers to manufacture the bags in
Mexico. AR Ex. 8, at p. 5-6. The contracting officer added 6% to
the Mexican proposals. AR Ex. 8. The Mexican proposals were still
lower than the domestic proposals even after the 6% price
adjustment was made. AR Ex. 7, 8. The contracts were awarded to
General Bag and Osterneck. AR Ex. 8. The contracting officer's
evaluation and contract award determinations were reviewed and
approved by a team leader and the manager of operational
In September 1997, the Postal Service declared Flamingo to be
in partial breach of its contract to provide mail carrier bags.
AR Ex. 14. The Postal Service modified General Bag's contract to
include some of the bags it had purchased from Flamingo. Id.
The Postal Service saved $20,000 as a result of the modification.
II. The Limited Competition Solicitation
In September 1997, the procurement department issued a
procurement plan for additional mail sacks to "support mailer
demands and replenish inventories." AR Ex. 15. Flamingo was identified as a prior supplier of the bags. Id. at p. 1. The
plan stated that "MTE has indicated that available mail sack
inventories have reached a critical state. In order to have a
successful peak mailing season, it is imperative that delivery of
these mail sacks begin in October 1997." Id. at p. 2. The plan
stated further that "[l]imited competition will be utilized to
meet the October 1997 delivery requirement as requested by MTE
for this requirement. Proposals will be requested from the two
current contractors . . . (General Bag Corporation and The
Osterneck Company)." Id. at p. 4. As to Flamingo, the plan
stated "[d]ue to performance problems . . . Flamingo Industries
was not included in this process." Id. The plan was reviewed
and approved by the contracting officer's team leader and the
manager of operational equipment. Id. at p. 8. The plan
requested a waiver of the requirement to publicize the
solicitation due to an emergency. Id. at p. 7. The manager of
"HQ Purchasing" approved the wavier. Id. at p. 8. Osterneck was
awarded the business and its July 1997 contract was modified to
include the additional bags. AR Ex. 16.
III. The 1998 Solicitation
On December 24, 1998, the Postal Service issued a solicitation
for bids on additional mail sacks. AR Ex. 21. Certain portions of
the 1998 solicitation appear to be missing from the
administrative record. For example, the 1998 solicitation refers
to attached drawings and specifications. Id. at p. 8. The
administrative record does not contain the referenced drawings
and specifications. However, Exhibit 24 contains a drawing and
specifications from the 1998 solicitation. The specifications
require the top edge of the mail bags to be selvedge. AR Ex. 24,
Att. 3. A selvedge edge is woven like the cuff of a dress shirt.
AR Ex. 37, p. 2. Flamingo and some other domestic producers do
not have the flat weave equipment to create a selvedge edge.
Flamingo uses a circular weave to create a heat cut edge. AR Ex.
24, 32. The 1998 specification required the contract to be awarded on
the basis of initial proposals received and without discussions.
Id. at p. 42. It listed several evaluation factors. Although
price was paramount, the contracting officer was required to
consider each bidder's documented quality control system, plant,
facilities and personnel resources, financial resources to
support continued production, and acceptable record of past
performance. Id. at p. 47. A best value determination was to be
made considering all these factors. Id.
The 1998 specification contained a preference for domestic
Under this provision, a 6%
"proposal evaluation preference will be given to domestic-source
end products. . . ." A domestic-source end product is an
unmanufactured end product mined or produced in the United States
or an end product manufactured in the United States; the cost of
components produced or manufactured in the United States must
exceed 50% of the cost of all its components. AR Ex. 21, p. 28.
This provision also states:
The contractor agrees that there will be delivered
under this contract only domestic-source end
products, except end products:
(1) That the Postal Service determines are not mined,
produced, or manufactured in the United States in
sufficient and reasonably available commercial
quantities and of a satisfactory quality;
(2) For which the vice president of Purchasing and
Materials determines that domestic preference is
inconsistent with the interest of the Postal Service;
(3) For which the vice president of Purchasing and
Materials determines the cost to the Postal Service
to be unreasonable.
AR Ex. 21, p. 28. The 1998 solicitation required the contractor
to submit a "Buy American Certificate." Id. at p. 46. The 1998 solicitation provided that the maximum period of
performance for the contract was through March 31, 2002. Id. at
p. 5. There is no evidence a contract has yet been awarded. Under
the protest procedures in the Postal Service's procurement
manual, the Postal Service delays awarding a contract pending a
bid protest. § 3.6.5 of the purchasing manual.
IV. The Purchasing Manual
The Postal Service publishes and maintains a purchasing manual
that contains the Postal Service's purchasing policies. Some
sections of the purchasing manual are included in the
administrative record as part of the 1997 and 1998 solicitations.
AR Ex. 4, 21. However, other relevant sections of the purchasing
manual are referred to, but are not included as part of the
administrative record. The 1997 and 1998 solicitations were both
governed by the January 1997 purchasing manual. See, e.g., AR
Ex. 4, p. 24, Ex. 21, p. 23. The court reviewed the relevant
sections of the 1997 purchasing manual on the Postal Service's
The January 1997 purchasing manual contains policies that apply
to "all purchases of supplies, or services that involve the
furnishing of supplies. Deviations may be authorized by the VP,
Purchasing and Materials." § 1.7.12.b of the purchasing manual.
The purchasing manual contains the following Buy American policy,
which is at the heart of this dispute:
1.7.12 Buy American Policy
1.7.12.a Policy. Postal Service policy is to give
preference to domestic-source products and materials
when purchasing supplies and services. This policy
is based on the Buy American Act
(41 U.S.C. 10a-d). . . .
* * * 2. Definitions
(a) End Products. Articles, materials and supplies to
be purchased for Postal Service use.
(b) Components. Articles, materials and supplies
directly incorporated in end products.
(c) Domestic Source End Products. An unmanufactured
end product mined or produced in the United States or
an end product manufactured in the United States, if
the cost of its components mined, produced, or
manufactured in the United States exceeds 50 percent
of the cost of all its components. . . .
(d) Foreign End Product. An end product other than a
domestic-source end product.
(e) Domestic Proposal. A proposed price for a
domestic-source end product, including transportation
(f) Foreign Proposal. A proposed price for a
foreign-end product, including transportation to
destination and duty. . . .
3. Requirement. Only domestic-source end products
may be purchased, except when the VP, Purchasing and
Materials determines that:
(a) The articles, materials or supplies are of a
class or kind not mined, produced or manufactured in
the United States in sufficient and reasonable
available commercial quantities or satisfactory
quality . . .; or
(b) Purchases of domestic-source end products would
be inconsistent with the interest of the Postal
Service, or that its cost would be unreasonable, as
when the price comparison procedures described in
1.7.12.b.5 result in the purchase of a foreign end
4. Proposal Evaluation
(a) If award is to be based solely on price, the
procedures discussed in 1.7.12.b.5 are used for price
(b) If performance evaluation factors will have a
significant weight in proposal evaluation,
domestic-source end products receive a preference in
the case of closely ranked proposals, but no price
comparison should be made.
5. Price Comparison. Each foreign price proposal
must be adjusted for purposes of evaluation by adding
to the foreign proposal (inclusive of duty) a factor
of six percent of that proposal. If a tie results
between a foreign proposal and a domestic proposal,
the domestic proposal must be selected for award.
When more than one line item is involved, the six
percent evaluation factor is applied on an
item-by-item basis. . . .
6. Solicitation Provision. Solicitations must include
Provision 1-4, Buy American Certificate Supplies.
7. Clause. Contracts must include Clause 1-9,
Preference for Domestic Supplies. (Emphasis added). Other relevant sections in the purchasing
1.7.1.a Purchases valued at more than $10,000 (the
competitive threshold) must be made on the basis of
adequate competition whenever appropriate. Adequate
competition means the solicitation and participation
of a sufficient number of qualified suppliers to
ensure that the required quality and quantity of
goods and services is obtained when needed, and that
the price is fair and reasonable.
1.7.1.b Contracting officers, supported by such
assistance as is necessary, must determine that
adequate competition has been obtained in any
instance in which it is required. In making that
determination, contracting officers must act with
reasoned discretion, taking into account both the
business requirements of the particular purchase and
the Postal Service's general interest in identifying
new suppliers and in providing opportunities for its
1.7.2 Best Value
It is the policy of the Postal Service to award all
of its contracts to the supplier offering the best
value to the Postal Service. The best value depends
on the item being purchased, and is determined by the
comparative analysis of proposals in accordance with
the evaluation criteria of the solicitation and the
business judgment of the contracting officer, with
the assistance of the purchasing team. In
establishing and evaluating best value criteria,
contracting officers and purchase teams make
trade-offs among such matters as past performance,
supplier capability, price, quality, life-cycle
costs, risk, delivery terms and warranty terms.
3.2.1.a General. It is the policy of the Postal
Service to establish and maintain a strong,
competitive supplier base that reflects the diversity
of the American supplier community. The Postal
Service focuses on the entire business community for
quality supplies and services that meet or exceed
operational needs. . . .
3.2.1.b Supplier Diversity. Supplier Diversity is the
proactive business process that seeks to provide
suppliers with equal access to purchasing
opportunities. It promotes supplier participation
reflective of the American supplier community and
encourages economic development. . . .
Postal Service supply ...