B-218234.4, MAY 22, 1985, OFFICE OF GENERAL COUNSEL

B-218234.4, MAY 22, 1985, OFFICE OF GENERAL COUNSEL

PRECIS-UNAVAILABLE

THE HONORABLE JOHN W. WARNER: UNITED STATES SENATE

DEAR SENATOR WARNER:

THIS RESPONDS TO YOUR LETTER OF APRIL 22, 1985, BY WHICH YOU FORWARD A LETTER TO YOU FROM MR. DOMENIC PAOLUCCI, PRESIDENT, SANTA FE CORPORATION, ALEXANDRIA, VIRGINIA. YOU REQUEST OUR COMMENTS ON MR. PAOLUCCI'S EXPRESSION OF DISSATISFACTION WITH OUR DECISION IN SANTA FE CORP., B-218234.2, MAR. 27, 1985, 64 COMP.GEN. ---, 85-1 CPD PARA. 361.

IN THAT DECISION, WE DISMISSED SANTA FE'S PROTEST TO THIS OFFICE BECAUSE THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA (CIVIL ACTION NO. 85-0599, FEB. 22, 1985) HAD DISMISSED WITH PREJUDICE THE FIRM'S JOINT SUIT WITH NKF ENGINEERING ASSOCIATES, INC., SEEKING INJUNCTIVE RELIEF TO PREVENT THE DEPARTMENT OF THE NAVY FROM IMPLEMENTING AN AWARD TO ALLIED DEFENSE INDUSTRIES UNDER SOLICITATION NO. N00033-84-R-0110. THE MAIN GROUND OF THE SUIT WAS THE ALLEGATION THAT THE SMALL BUSINESS ADMINISTRATION (SBA) HAD IMPROPERLY DETERMINED THAT ALLIED DEFENSE INDUSTRIES WAS ELIGIBLE AS A SMALL BUSINESS CONCERN TO RECEIVE THE AWARD. IN DISMISSING THE SUIT WITH PREJUDICE, THE COURT CONCLUDED THAT THE PLAINTIFFS HAD FAILED TO SHOW ANY WRONGFUL ACT BY THE GOVERNMENT.

MR. PAOLUCCI ASSERTS THAT THE COURT'S RULING ONLY SERVED TO ADJUDICATE THE ISSUE PERTAINING TO ALLIED DEFENSE INDUSTRIES' ELIGIBILITY AS A SMALL BUSINESS CONCERN, AND, THEREFORE, THAT THE ISSUE CONCERNING THE AWARD OF THE CONTRACT TO A HIGHER-PRICED OFFEROR, AS RAISED IN THE PROTEST, HAS NEVER BEEN CONSIDERED BY A PROPER FORUM. IN THIS REGARD, MR. PAOLUCCI CONTENDS THAT NEITHER THE SBA NOR THE DISTRICT COURT HAD "COGNIZANCE" (I.E., JURISDICTION) OVER THE COST ISSUE. MR. PAOLUCCI IMPLIES THAT THIS OFFICE MUST NOW REVIEW THE MATTER UNDER OUR BID PROTEST FUNCTION.

WE DO NOT DISPUTE MR. PAOLUCCI'S CONTENTION THAT THE SBA COULD NOT DECIDE THE COST ISSUE.

HOWEVER, WE DO NOT UNDERSTAND THE ASSERTION THAT THE DISTRICT COURT LACKED JURISDICTION OVER THE COST ISSUE, AS THE DISTRICT OF COLUMBIA CIRCUIT ITSELF FIRST ENUNCIATED THE NOW GENERALLY-ACCEPTED DOCTRINE THAT FEDERAL DISTRICT COURTS HAVE EQUITABLE JURISDICTION OVER POST AWARD SUITS FOR INJUNCTIVE RELIEF BROUGHT BY DISAPPOINTED BIDDERS, WHICH IS CLEARLY THE SITUATION HERE. SEE SCANWELL LABORATORIES, INC. V. SHAFFER, 424, F.2D 859 (D.C. CIR. 1970). SIGNIFICANTLY, WE NOTE THAT THE MEMORANDUM OF AUTHORITIES FILED BY SANTA FE AND NKF IN SUPPORT OF THEIR MOTION FOR INJUNCTIVE RELIEF EXPRESSLY CITED THE SCANWELL CASE AS THE BASIS FOR THE COURT'S JURISDICTION IN THE MATTER, AND, CONTRARY TO MR. PAOLUCCI'S POSITION, WE FAIL TO SEE WHY THE COST ISSUE COULD NOT HAVE BEEN CONSIDERED IF IT HAD BEEN PROPERLY BROUGHT BEFORE THE COURT.

AS WE EMPHASIZED IN OUR MARCH 27 DECISION, THE CONSISTENT HOLDING OF THIS OFFICE HAS BEEN THAT A DISMISSAL WITH PREJUDICE BY A COURT OF COMPETENT JURISDICTION CONSTITUTES A FINAL ADJUDICATION ON THE MERITS OF A COMPLAINT, WHICH IS CONCLUSIVE NOT ONLY TO THE ISSUES DECIDED BY THE COURT, BUT ALSO AS TO ALL ISSUES THAT MIGHT HAVE BEEN DECIDED. SINCE THE ISSUE OF THE NAVY'S AWARD OF THE CONTRACT TO A HIGHER-PRICED OFFEROR COULD HAVE BEEN EXPRESSLY RAISED IN THE COMPLAINT, BUT WAS NOT, THE COURT'S DISMISSAL WITH PREJUDICE OPERATED AS A FULL ADJUDICATION ON THE MERITS OF THE ISSUES PRESENTED IN SANTA FE'S PROTEST, THUS PRECLUDING ANY FURTHER REVIEW BY THIS OFFICE.

WE HAVE RECENTLY AFFIRMED OUR MARCH 27 DECISION BY OUR DECISION IN NKF ENGINEERING ASSOCIATES, INC.-- REQUEST FOR RECONSIDERATION, B-218234.3, MAY 3, 1985, 85-1 CPD PARA. ---, AND WE ENCLOSE A COPY THEREOF FOR YOUR INFORMATION AND CONVENIENCE.

WE TRUST THAT OUR COMMENTS IN THIS MATTER WILL BE HELPFUL IN RESPONDING TO MR. PAOLUCCI'S CONCERNS.