Algese 2 S.C.A.R.L. v. United States
128 Fed. Cl. 7
Fed. Cl.2016Background
- Algese 2 sued to challenge the Navy’s award of a contract for air terminal/ground handling services at Naval Station Rota, Spain to Louis Berger Aircraft Services (LBAS), alleging misrepresentation and concealment of parent-company corruption/fraud.
- On March 4, 2016 the Court initially found for Algese and set aside the award; the Government moved for reconsideration and the Court vacated its judgment and remanded to the Navy for further consideration.
- The Navy reviewed ~2,500 pages of new material and affirmed its responsibility determination for LBAS; the Court deferred to that remand determination and lifted the permanent injunction on July 21, 2016.
- Algese appealed to the Federal Circuit and moved in this Court (RCFC 62(c)) for a stay of judgment pending appeal; the Government and LBAS opposed the stay.
- The Court applied the four-factor injunction test (likelihood of success, irreparable harm, balance of harms, public interest) and found Algese failed to show likelihood of success or irreparable harm; harms to government and public interest (national security/functioning of Rota) weighed against a stay.
- Because the bridge contract for Rota had expired and not been renewed, the Court concluded an injunction would risk disruption to vital military operations and impose substantial procurement costs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Court must defer to the Navy’s responsibility determination on remand when that determination conflicts with the Court’s prior findings | Algese: Court should not defer because the Navy’s remand findings directly contradict the Court’s March 4 factual/legal conclusions | Gov: Remand produced new evidence; agency determinations get wide deference and the Court may uphold a rational administrative decision | Held: Court applied rational review, found the Navy’s remand explanation reasonable, and Algese did not show a strong/substantial likelihood of success on this issue |
| Whether LBAS’s affiliates’ misconduct was relevant to LBAS’s responsibility | Algese: Affiliate misconduct shows systemic ethics failures that should affect LBAS’s responsibility | Gov: Affiliate misconduct is irrelevant unless the affiliate will have meaningful involvement in the contract; Navy found no adverse record for LBAS itself | Held: Court deferred to Navy’s relevance determination; Algese failed to show a substantial case on this point |
| Whether dismissal of Count III (unequal treatment based on comparison to Sigonella procurement) was improper | Algese: Can show unequal/discriminatory discussions without reviewing Sigonella; Sigonella shows abnormal favorable treatment to LBAS | Gov: Claim depends on Sigonella facts not before the Court; FAR permits unequal discussions | Held: Dismissal proper—Algese’s claim requires review of outside procurement and thus fails jurisdictionally; FAR allows differing discussions |
| Whether injunctive relief (stay) pending appeal is warranted given irreparable harm, balance of harms, and public interest | Algese: Loss of contract opportunity and prior finding of irreparable harm justify a stay | Gov: No bridge contract exists; injunction would disrupt Rota operations, impose costs, and threaten national security; public interest favors continuous service | Held: Algese failed to show irreparable harm or likelihood of success; balance of harms and public interest (national security, continuous operations) weigh strongly against a stay; motion denied |
Key Cases Cited
- Standard Havens Prods., Inc. v. Gencor Indus., Inc., 897 F.2d 511 (Fed. Cir. 1990) (sets four-factor standard for injunctions pending appeal)
- Hilton v. Braunskill, 481 U.S. 770 (1987) (outlines factors and flexibility for granting stays/injunctions pending appeal)
- Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) (arbitrary and capricious standard for agency action review)
- Centech Grp., Inc. v. United States, 554 F.3d 1029 (Fed. Cir. 2009) (APA §706 review and standards for setting aside agency action)
- Bender Shipbuilding & Repair Co. v. United States, 297 F.3d 1358 (Fed. Cir. 2002) (recognizes wide deference to agency responsibility determinations)
- Exxon Corp. v. United States, 931 F.2d 874 (Fed. Cir. 1991) (vacated judgments lack preclusive effect; remand permits reconsideration)
- Glenn Defense Marine (Asia), PTE Ltd. v. United States, 720 F.3d 901 (Fed. Cir. 2013) (agency determinations of relevance owed deference)