*3 on October and invited bids on four WISDOM, Before GOLDBERG and RU- designated groups of milk and ice cream BIN, Judges. Circuit products. This lawsuit chiefly concerns only two of groups, the four Group (milk II GOLDBERG, Judge: Circuit by post for resale exchange and com appeal This grant from the prelimi- of a missaries) Group (ice IV cream for re injunction nary prohibiting performance of post sale exchange and commissari large contract es).2 II, III, business Groups and IV were solicited concern raises a series of relating issues basis, on an unrestricted meaning regulations (cid:127) governing business, set-aside of regardless size, of its could com- I military procurements certain bidding pete for the contracts. Group I was set- restricted to small aside, business concerns. restricted, for exclusive participa- 1. Solicitation 0048 was issued Group the Defense (troop milk) 2. Contracts for I issue Support Personnel Logis- Group (troop Center the Defense cream) III issue ice were subse- Agency (DLA), part Department quently tics plaintiff, Dairies, awarded to Kinnett formerly Inc., Defense. DLA was dispute known as the and are not in here. Supply Agency (DSA). Defense (3) to basis, and unrestricted on an During solicited concerns.3 f-tion IVand Groups II award solicited, order eight firms process, the bid (Kinnett) on So bidder low businesses. five were small of which sought I, III, further Groups Kinnett three bids on 0048. DLA received licitation considering certain Group II. and five bids on enjoin and IV defendants decisions future factors6 opened Bids were on November Procurement the Armed Services under Dairies, (Kinnett), Inc. a small busi declaratory well as (ASPR), as Regulations concern, ness submitted the low bids on other relief. III, Groups Flav-O-Rich, I and while Inc. The district court appli- denied Kinnett’s (Flav-O-Rich), business, submitted order, restraining temporary cation for a the low bids on II and IV.4 Con of the contract noting performance tracts were awarded to the low bidders on *4 1, begin would not until December but November 1977. hearing application scheduled a on the for a days Ten after the contracts were awarde injunction preliminary for November 28. A d,5 Kinnett initiated an action in federal date, hearing was on that at which held challenging court the basis of Solici district permitted was to inter- time Flav-O-Rich Groups II and respect tation 0048 with vene in the action. At the conclusionof the bidding contended that on IV. Tilinnett hearing the court indicated its intention to have been limited to groups these should enjoin performance of the contract. concerns and claimed that small business Judgment The court entered its written government arbitrarily, capri had acted following day, restraining enjoining and ciously, legal and without foundation in government defendants and intervenor failing to restrict the solicitation. V^innett’s performing Flav-O-Rich from the contracts complaint named the United States and Groups II and IV of identified as Solicita- government various officials as defendants paying tion 0048 or the contract and, requesting a temporary restraining or contracts, “pending hearing said final preliminary permanent injunc der and and . and determination of this ease ..” relief, sought (1) prohibit tive defendants accompanying district court filed find- The awarding “from to and with the law, also on ings of fact and conclusions bidder, Flav-O-Rich, successful low for the Both the November 1977. supply delivery or or all dairy prod appeal. filed notices of and Flav-O-Rich required by Groups ucts as II IV” 0048, (2) to vacate the determi Solicitation The stay district court denied motions to Groups nation that bids on II and IV be the issuance preliminary injunction. of its Authority restricting protest concerning 3. invitations for bids 5. No Solicitation 0048 was businesses, (or solicitations) to small or invit- lodged with the offi- e., (/. permit- cer, Office, Accounting bids on unrestricted basis with the General ting awarding submission of bids interested business with the courts of con- regardless size), provided concerns their tracts. Act, by the Small Business 631 et U.S.C. § (1976), seq. and the Armed Services Procure- illegitimate allegedly factors 6. The enumerated Act, seq. (1976). ment 2301 et § U.S.C. complaint include: in Kinnett’s partici- (1) spread the bids of Price between low bidders and the value of their bids The concerns; pating were as follows: *These Group ment for IV hi II I values do not reflect prompt payment. Unrestricted Unrestricted Small Unrestricted Set-Aside Business Basis discounts available Low Bidder Flav-O-Rich Kinnett Flav-O-Rich Kinnett $702,157.80 887,749.10 106,407.43 Value 87,622.00 govern [*] plied solicitation. under concern to the (3) Geographic proximity of a small business concerns and small business con- cerns; and (2) Price spread conditions of a the terms and military between the bids of installation to be sup- court, (GAO), per Judge Accounting pursuant December Office
On General injunction Rubin, stay 2-407.8, granted 2-407.8, con- CFR § to ASPR during pend- tending court by the district issued the invitation for bids should stay expressly appeal. of this was ency have been limited in its entirety to small execution of a businesses, conditioned on Flav-O-Rich’s as was the case with prior solici- to make Kinnett whole designed bond tations. While protest was pending, A appeal. on bond prevail opened, Kinnett bids revealing should low bids executed, byI $100,000 subsequently Group Dempsey Brothers, a small busi- ness, on Group proceeded perform by Flav-O-Rich, has II and Flav-O-Rich III and IV by Kinnett. as awarded. Although on the contracts it was the low bidder in two of the categories, district appeal from the instant filed Kinnett an action in federal district preliminary injunc- granting order court’s seeking court to restrain enjoin ground tion on the United States from awarding the contracts. misin- defendants “have misconstrued and Dairies, Inc. Greenberg, Civil terpreted” regula- relevant Action No. (M.D.Ga.) (herein- 76-121-COL arbitrarily, acted capri- tions and “have after referred to as the Greenberg litiga- contrary to the ciously spirit true tion). regulatory statutory provi- intent” On November the district court underlying controversy sions. between \~The granted Kinnett’s motion for preliminary *5 however, government, Kinnett and the enjoining relief the United States from one, continuing repre- this case awarding the Group contract on II to Flav- sents the third I skirmish^ The O-Rich. court’s Order expressly pro- vided that preliminary injunctive relief 1976, dairy for solicitations to late Prior would continue in effect with respect conduct Benning had been at Fort products II Group “until further order of the Court for a number entirely on a set-aside ed Comptroller after the acted, General has Benning’s require Fort years. All of he will stated not act on the administrative by period supplied were during ments appeal filed by with him Plaintiff in this dairy located some Kinnett, a Columbus matter . ..” Beginning the base. miles from eleven later, Several months the Comptroller No. 13H-76-B-8570 DSA with Solicitation General issued a denying decision Kinnett’s 8570), on issued (hereinafter Solicitation in the protest appeal. administrative Kin- 31, 1976, procurement to cover the August Dairies, Inc., (March 24, nett No. B-187501 1976, 1, commencing bids December period 1977). By time, contracts on Solicita basis for unrestricted were invited on tion 8570 had long since been awarded8 and groups.7 procurement certain procurement period had largely run its Facing competition from businesses course. As a result of the district court’s Benning for the procurement preliminary injunction, for the Fort the low bidder on II, time, Flav-O-Rich, protest Group filed a with the was precluded first Kinnett from Group actually performed by initially I was was issued on an Kinnett 7. Solicitation 8570 groups pursuant to a for all four subcontract between unrestricted basis Kinnett and Group Dempsey. Group set-aside I for exclu- No later amended to contract was awarded on instead, participation. II; Benning’s requirements Both subse- sive small business Fort for solicitations, 0048, quent Nos. set- supplied 8600 and milk” were “resale under a non-com- Group petitive purchase agreement 1 invited bids on an unrestrict- performed aside blanket II, III, Groups Thus, and IV. ed basis for Benning’s Kinnett. all Fort milk requirements during period and ice cream 8. Contracts were awarded to Kinnett for supplied covered Solicitation 8570 Groups Dempsey Group III and IV I. Kinnett.
1265 decision to invite $758,085.46 government’s bids on sales anticipated making II, Groups III, an unrestricted basis for Benning.9 Fort 0048, 6, issued on IV of October Solicitation Kinnett-govern round second < The 1977, the events bringing then set in motion 4,1977, with April on erupted dispute jment appeal. before us on this case 13H- No. DSA of Solicitation the issuance 8600), Solicitation (hereinafter 77-B-8600 ¡which II, Groups on invited bids again once II. basis. Once unrestricted on an IV (III, must be re- preliminary questions Several court,10 time this went again Kinnett reaching the merits in this solved before filing a step of intermediate without barriers to our considera- case. Two initial again GAO, and once protest mootness, standing and appeal, tion of this enjoined court district surmounted. may quickly com disputed awarding any contract noting It is worth petitions. It now well settled no made April court’s Order bidders unsuccessful Circuit deci Comptroller General’s to the reference standing have government contracts earlier 24, denying March sion of review of deci judicial invoke protest.11 Corporation International v. Hayes sions. decree, (5th Cir.), court’s McLucas, 254-58 response 509 F.2d provisions of those denied, cancelled 46 423 U.S. S.Ct. cert. Benning’s relating to Fort (1975) (adopting approach L.Ed.2d 92 Bids in the other requirements. II Group pathbreak in its by the D.C. Circuit taken opened 8600 were groups Laboratories, of Solicitation Inc. ing decision in Scanwell proved to be 10,1977; Kinnett Dairies May Shaffer, 424 F.2d U.S.App.D.C. and was awarded low bidder the successful in each case is (1970)). question I, III and IV. contracts for passes bidder disappointed whether the Ben- Moreover, again supplied Fort demonstrating “injury in fact” twin tests of Group requirements II under with its ning “arguably within asserting an interest *6 purchase agree- blanket non-competitive a protected to be or of interests the zone ment. regulation in by the statute or regulated” Processing Data Association of question. court, 11,1977, the sua district August On Camp, Inc. v. 397 Organizations, Service Greenberg case sponte, dismissed 827, 830, 25 L.Ed.2d 90 S.Ct. U.S. rejecting the moot, noting specifically International, supra, 509 (1970); Hayes 184 rul- for “a definitive request government’s 254-56. We have no doubt F.2d at permanent for request Plaintiff’s ing on the requirements has satisfied these Kinnett of fu- possibility of the injunction because “injury in fact” is instant case. The this same nature” so litigation of ture Hayes In as that found sufficient same opportunity would have Furthermore, the interests Kin- ternational. ruling no on Accordingly, appeal. as a small business protect Kinnett seeks to injunctive re- permanent request nett’s clearly within the “zone interests” Greenberg case. are was ever made lief Greenberg proceedings party constituted a continua- 10. These to the was not 9. Flav-O-Rich Greenberg litigation. party, government, tion the earlier litigation. which was a The appeal the district court’s filed notice of voluntarily 24, dis- 1976 Order but parties vigorously November missed its whether 11. The contest 11, April prejudice” appeal “with appropriate court has accorded defer- district Comptroller 1977, shortly of the issuance after throughout decision this liti- ence to gation. GAO prior to the three weeks decision General’s proceedings regarding In the below period. procurement At the termination 0048, judge stated from the appeal, its dismissed bench, “Yes, time the had the benefit of the GAO we modify its taken no action court had district back in when the Court entered its order order Comp- response to the 24 Order November April of 1977.” protest. on the Kinnett action troller General’s 1266 Act, 15 of Texas v. International, the Small Business State Seatrain
protected
implementing S.A.,
seq.,
631 et
(5th
U.S.C.
contended
contention
even
the
responsible
interpretation
regulation
not
nor
of
bidders were
the
is correct
and
other
the expected
a sufficient number
factors
than
number
there was not
of
may
Be-
small business bidders
be
bidders.
con-
small business
potential
of
sidered,
the
reliance
gave con-
officer’s
instead
cause the
specified
certain
factors
this case was
and
whether
sideration
arbitrary
capricious.
expected,
could
be
competitive
not to
the decision
maintains
agreed
The district court
with both
III,
II,
violated the
and IV
Groups
set aside
interpretation
Kinnett’s
of
regulation
regulatory mandate.
and with Kinnett’s contention that
the con
argues
Kinnett also
tracting
officer’s consideration
of certain
Farrow,
contracting officer, J. C.
acted ar-
factors was
arbitrary
capricious. The
capriciously
bitrarily
in his decision to
adoption
court’s
of
position
was
specific
consider certain
relating
factors
findings
embodied
numerous
fact
of
argument
price. While this
is interwoven
conclusions of law.18
position regarding
with Kinnett’s basic
l-706.5(a)(l),
interpretation
of
we
ASPR
The critical
of
findings
fact
our
con
19
independent
can
20,
extract
thread of an
are Finding
sideration
to the effect
plaintiffs
special
of
must
18. The embodiments
be
contentions
examined with
care on con
many
points.
generally
were in
the
district
the most
instances rather literal ones.
troverted
Of
See
James v.
so-styled findings
Co.,
of
Fittings
310,
31
fact entered
Stockholm Valves &
559 F.2d
court,
25, including
(5th
1977)
denied,
least
several of
314 n.1
Cir.
cert.
434 U.S.
vigorously
findings,
1034,
767,
controverted
(1978).
98 S.Ct.
petition,
fact be reasonable
must
made must in
specifically
Before
addressing these
“adequate” or “suffi-
through
at
be arrived
issues,
important
it is
that we make clear
competition. Determinations under
cient”
scope
agency’s interpre
review an
l-706.5(a)(l) concerning
price
both
ASPR
application
regula
tation and
of its own
com-
We
adequate
and whether
tions.
are convinced that the general
reasonableness
to “reviewing
against
caution
courts
en-
reasonably
are,
expected
may
petition
grafting
proper
their own notions
proce
government, basically
busi-
view of
upon agencies
dures
entrusted with sub
the exercise of
judgments requiring
ness
by Congress”
stantive functions
or “improp
contracting
discretion
officer.
broad
erly intruding]
into the agency’s decision-
essentially
is
argument
congruent
This
process
.
making
.
Vermont Yan-
Comptroller
analysis adopted
kee
v.
Corp.
Nuclear Power
Re-
Natural
rejecting
protest
General
Council,
519,
sources Defense
435 U.S.
8570.
525,
98 S.Ct.
with the statutory requirements of Small Act Y. Business and the Armed Services Procurement Act.25 These controlling stat mind, With these in considerations utes simply require that a “fair proportion” we now examine the proper interpretation government purchases be l-706.5(a)(l).23 Regulatory contracts of ASPR inter placed with small must, Congress businesses. pretation course, begin left with the it to language regulation agencies implement issue. We this policy concede at the outset reading through regulations practices Kinnett’s of their regulation not intrinsically implau- own construction. hypothetical may clarify participation 23. A illustration if business bids on the small fruit, system, weapons price, issue at stake. Assume easy climate, of a the existence however in unreasonable inexpensive grow proper anticipated could be from two or more ship expensive long but responsible distances. small businesses. grown The fruit is and marketed in California solely As this note is intended for illustrative enterprise; single large grown a and of it is in Florida purposes, biting metaphor we eschew off a by multiplicity a marketed over wide area a descriptive interpretive of the bitter fruit of this responsible small business concerns. The tree. supply large percent- small Florida concerns a 24. We note that Kinnett also it concedes that age government procurement in needs suggested regulation has “never that the in portion country; indeed, many eastern question clarity.” Appellee’s is a model of Re- solicitations are set aside for their exclusive ply Brief at 8. participation. However, transportation California, a It is well rule established of construction grown costs make the fruit shall, ‘significance possible, very “that if expensive effect Florida California fruit marketed supplier. relative to the native every parte be accorded single large word’.” Ex Public Bank, theory, Under National 278 Kinnett’s as we U.S. under- S.Ct. it, (1928). stand a government’s officer L.Ed. 202 se- curing procurement military a interpretation independent bases Cali- accords full effect required pro- fornia be would to set clause; aside the regulation’s to the interpretation “so that” Kinnett’s participation curement for exclusive independent accords no such ef- growers, responsi- small Florida are who both fect. numerous, partici- ble and pation and to exclude from Nor, contrary argument, to Kinnett’s does California concern. The con- government’s interpretation strip the regulatory the first officer, tracting regulation under the as so in- meaning. clause of Even where terpreted, would be forbidden to consider the expect officer has reason to a prices likelihood anticipated reasonable could not be given small business will submit a bid aat growers. from the Florida price, regulation is not intended procurement particular Even where of a competition to insulate that bidder from all item, g., major system, weapons e. a from a no where there is from sufficient likelihood of bids economically small business would be ludi- of other small number busi- crous, although theoretically possible, under nesses. theory government might be 16, 17, supra. 25. See notes bound to set aside for exclusive regulation was designed claim to effectuate. The more narrow makes the implemented in a manner statutory acted command have that the defendants regula- implementing proportion” own is that a “fair contrary regulation to their strong there is say, placed procurements Needless tions. agencies ensuring that interest public enterprises. While mere sat- the threat But regulations. own obey their objective isfaction of would neither re- much less becomes interest public quire justify interpretation nor an claim that is no substantial where there regulation at war with the implementing the dictates alleged disserves disobedience explicit terms of that we think regulation, regulations the statutes noting that the in- government’s it worth Moreover, where implement. designed terpretation procurement regulation claim, and no evi- is no substantial there in quite has resulted substantial small busi- administrative dence, particular that a participation supplying government ness congressional poli- implementing practice dairy requirements products. for milk and way policy, serve that cy fails May The record reveals that between *13 an deference to great show courts should dairy, poultry, and October the and that chal- agency’s own determination bakery branch with which the contracting with “the intrica- lenged conforms practice officer, Farrow, Mr. is associated awarded regulatory comprehensive in a cies inherent percent seventy some of million in $125 supra, 446 scheme,” Campbell, M. Allen contract awards to small businesses. For- 265. F.2d at percent awards, those ty-four totalling that under current doubt We have little million, more than result $38 be authorized agency an would statutes suggestion set-aside actions. There is no requiring unambiguously regulations issue this is less than a “fair the record in de price consider contracting officers to indeed, testimony there is proportion”; for exclu to set aside bids ciding whether that this “is the best the record absolute long as as participation, business sive small approximately of the twelve branches gave small enter resulting contracts Supply in the Defense Personnel Center.” proportion” a “fair prises govern- else the merits of the Whatever instant case we read In the business. interpretation of the ment’s to ex permitting as officers key regulation regulation techniques imple- and its for It in such a manner. ercise their discretion menting that these facts regulation, would to bar an a court for anomalous would be suggest adequacy of the cur- seem ambiguous regulation agency applying satisfying the approach statutory rent practices when the certain permitting from mandate. readily agency allow court would especial is practices. This require the same B. where, here, Congress has itself as ly true dis preserve high degree chosen to a Moreover, the at here regulation issue is a enacting only agency by cretion merely single strand in broad fabric its leaving guideline and very policy broad pat- military procurement policy. the conscien application to elaboration fabric is unmistakable —it dem- tern agency.26 expertise of tious pervasive powerful concern onstrates buying supplies at reasonable and com- government’s interpreta- only Not is prices. It-makes little sense petitive 1.706-5(a)(l) per- within the tion of ÁSPR snip single court to out of that fabric De- Department of scope missible strand, ambiguous- it is simply because drafting regulation, discretion fense’s written, requiring it an ex- to read policies ly with the fully it consistent ment cation accompanying Act of 1947 note that the Armed Act, stressed, Senate need not as a Committee Services primary justifi- merely Procure- Report ment Sen.Rep.No. permit [1948] U.S.Code but discretion 571, July 16, encourage Cong.Serv. the exercise reprinted 1049-50. officer. judg- unique obsession with small busi- sion expressly governing treme and small business set- business, of small asides, ness for sake l-706.3(a), ASPR authority pro pricetag torpedoes. damn the vided for a set-aside determination to be withdrawn to award of a contract if example, 3-801.1 states For ASPR “the officer pro considers that policy Department It is the curement of the set-aside from a small busi supplies procure Defense to and services ness concern would be detrimental responsible at fair and sources rea- public (e. g., interest because of unreason prices calculated to result in sonable . price) able . (Emphasis adde lowest overall cost the Government. d).28 Thus solicitations set-aside for exclu provides ASPR 1-300.1 sive small participation may procurements, All whether formal ad- cancelled because of considerations. vertising by negotiation, shall be made This again strongly implies is a on a basis to the maximum legitimate factor that bemay considered by extent. practicable the contracting during officer his initial 1-304.1, 2-102.1(a), See also ASPR ASPR consideration of whether to set aside the 3-807.1.27 ASPR solicitation, a conclusion further reinforced course, recognize, While explicit terms of l-706.3(a): ASPR legislation Small Business Act and related Prior to issuing solicitations each individ- regulations favoring procurement governed ual aby class ^set- modify these more general requirements aside shall be carefully reviewed to en- the DLA procure goods “competitive any changes sure that in the magnitude prices,” market Ray see Baillie Trash Haul- of anticipated requirements, *14 specifica- Kleppe, supra, Inc. v. ing, F.2d at tions, delivery requirements, or competi- general regulations these more make it conditions, tive market since the initial price clear that is a central in consideration approval class set-aside are not of military procurement. coupled When with such material nature as to result explicit mention of prices” “reasonable probable payment of an unreasonable l-706.5(a)(l), in ASPR certainly this fact price by the Government suggests government’s that reading of (Emphasis added). regulation that as permitting consideration price is not unreasonable. If interpretation Kinnett’s of ASPR 1— 706.5(a)(1) regulation accepted, Examination of another pro- and it were clear mulgated the Department of Defense that no reasonable bids would be received if supports government’s further interpre- bidding were limited to small business bid- l-706.5(a)(l). provi- ders, tation of ASPR In a the officer would required go be suggesting that general provision officer con- 28. The more governing can- sidering may a set-aside determination draw cellation of opening invitations for bids after guidance policies implicit pro- provides in various that ASPR, explicitly pass visions of the do preservation integrity The of the of the com- regulations expressly applicable on whether petitive system bid dictates that after bids context, procurement procurement by g., one e. opened, have been award must be made to negotiation, mandatory have force or in effect responsible that bidder who submitted the procurement contexts, g., procurement other e. bid, responsive lowest unless there is a com- recognize formal advertisement. that We pelling reject reason to all bids and cancel denying protest the GAO decision Kinnett’s the invitation. suggest regulations be read to dis- 2-404.1(a). regulation ASPR The then lists the cussing adequacy competition specific allowing reasons negotiated procurement appli- context are opening officer to cancel bids after when such cable to set-aside determinations. All that provision action is quoted consistent with the decision, necessary however, for our is the de- provides listing above. This for cancellation policies termination that consideration of the acceptable when “all otherwise bids received underlying regulations arbitrary, those is not prices.” are at unreasonable ASPR 2-404.- capricious, lacking in rational l(b)(vi). setting and we so hold. GAO, “prices by the decisions setting aside through charade through ‘adequate’ be arrived bids, must solicitation, accepting small business Comptroller competition.” ‘sufficient’ opening after cancelling the solicitation argument prof accepted the thus again from scratch. General bids, starting then “price contracting officer that by the would fered period the farce procurement Each not of itself ensure that repetitive competition does reenacted, This ad infinitum. be process would entail a sub disruptive price, will be made at a reasonable award in terms of cost to the stantial of such com adequacy but rather that It is far more time and resources.29 wasted key is the factor . . .” The petition government’s inter to defer to the sensible Comptroller General’s determination l-706.5(a)(l), which is of ASPR pretation appears, conformity be with frame regulatory with the more consistent recognizing line of GAO decisions the “ade process general procurement work of the concept in the quate competition” context set-aside struc the small business and with set-asides.30 of small business language Certainly particular. ture in refers to “reasona regulation, which D. interpreta subject to such prices,” ble clear, already We believe it is for reasons tion. stated, argu- of Kinnett’s acceptance expectations have no inde- ment C. play in set-aside determina- pendent role appropri- to accord required also W'e are to consequences tions would lead inconsist- See the GAO. views of ate deference operation military the efficient ent with IV, protest supra. In Kinnett’s Section activities. procurement 8570, the regarding Solicitation the GAO opportunity policies recognize had full Comptroller General 1- in argument that ASPR Business Act are to some extent consider Small competi- might perceived 706.5(a)(1) not demand consistent what “does tendered, DLA, merely that primary supply but function of the prices be tive part take the armed small businesses needs of forces General inter Comptroller government’s cost.31 The bidding.” at minimum *15 provi- the concluded, following l-706.5(a)(l), review of carried to a of ASPR pretation regulations extreme, and employed by overzea- procurement could be of other sions Thus, received.) the ceptable two be reading bid will government’s of ASPR 1-706.- 29. The conjunc- applied regulations interpreted in 5(a)(1) structure a more sensible creates much contracting procurement bidding. is provide officer mechanism a flexible for set-aside tion allowed, required, at requirements not to consider indus- adaptable but of diverse determining stage whether set of the initial procurement needs. tries probable Where it is the solicitation. aside 30. Certain of these GAO decisions are dis- bidding result in will not that set-aside cussed infra at n.37. bids, may contracting acceptable officer basis under on an unrestricted bids invite noting that the It is worth draftsmen Where, l-706.5(a)(l). the other ASPR hand, Regulations Services Procurement Armed expects contracting to receive officer procure- incentive structures of aware that the competitive from bids number of a sufficient might greater responsive- evoke ment officers reasonably he is cer- so that businesses small to the needs considerations than ness acceptable a bid at reasona- receive an tain to Consequently, pro- of small businesses. price, the solicitation he can set aside ble input regulations provide set- into curement acceptable knowing is bid not re- if an by representa- decisions small aside backstop ceived, l-706.3(a) provides a ASPR tives, by employed Admin- the Small Business (Of permitting of the solicitation. cancellation in not without interest It is a matter istration. course, explicitly favoring policy award representa- small business context that the this opened, ASPR 2- contracts bids are see once officer Farrow’s tive concurred by 404.1(a), disruption and the caused cancella- II, III, to solicit bids determination resolicitation, may weigh against fre- tion and unrestricted, on an IV Solicitation 0048 procedure quent recourse to this unless the non-set-aside basis. reasonably is an ac- officer certain E. procurement lous officers undermine policies favoring business. nation’s small sum, govern- we conclude that however, does not mandate possibility, This 1-706.5(a)(1) interpretation ment’s of ASPR in this case. acceptance position of Kinnett’s critical accepted. must be We reiterate the procurement “shall be set aside clause: a First, implemented by statute participation exclusive small business procurement regulation itself mandates if the contracting officer deter- proportion” that a “fair con- mines that there is expectation reasonable placed tracts with small business. Here that offers will be obtained from a suffi- percent seventy value of cient responsible number of milk, dairy, poultry contracts concerns so that will awards be made at placed branch are with small un- businesses prices.” reasonable While we do con- regime der incorporating consideration tend that interpretation adequacy intrin- competition and likelihood of sically implausible or plain prices reasonable variance with in set-aside determina- regulation, tions. The the terms of the record neither contains do we no hint that this is less-than a fair proportion. believe that Kinnett’s reading required no have reason suspect that contracting by regulatory language. interpre- officers will not continue to implement policies urged by appellants, tation con- of the Small Business Act in making their tracting may officer consider both whether procurement decisions, and we have little ishe likely receive bids a sufficient doubt that the courts would look askance at number of responsible bidders and whether application regulation of a inconsistent with there is a reasonable expectation that the statutory mandate. bids received will result and reasonable price, is also consistent with Second, re- availability believe the regulatory language is, view, in our protests wilLexer- view GAO bid practical a far more and realistic construc- cise a on abuse of discretion over- check tion. It is also the adopted by Our review construction zealous officers. the contracting small officer and his agency GAO decisions business set- GAO, clear that the GAO ac- validated aside area makes to whom deference is cepts principle due. Accordingly, established we conclude that ASPR pay premium l-706.5(a)(l) permits the contracting officer to implement small businesses con- price to to exercise discretion on the factors gressional policy. in addition to the responsible number of expected businesses to bid. We turn Finally, we note that should these checks now to our second inquiry, whether ineffective, Department action prove contracting officer’s exercise of discretion Congress of Defense or the to further delin- in this case was arbitrary, capricious, and eate the bounds discretion in small busi- *16 without rational foundation. be unwelcome. ness set-asides would not Indeed, Congress if chooses to insulate VI. rigors from all the of com- small businesses large enterprises in the petition Our inquiry propriety second concerns the procurement setting, government the contracting whatever officer’s consideration of taxpayers, path open. to the the is factors, the cost particularly “price several the is not the task of this court. But that spread” concept,32 his determination that concept,” despite “price-spread solicitations, prior technique 32. The its cen- set-aside the com- trality litigation, beep pares among to this has not defined competing bids the small busi- particular precision applied with prior in the course of these nesses. When to unrestricted so- proceedings. licitations, Apparently technique technique compares the among focuses the bids periods compares competitors, small, on solicitation and the all the and to deter- price spread low bid received with other mine bids received dur- the between low (or low) the same in- solicitation determine the business bidder and the low next bid- case, tensity price price competition. applied spread der overall. In either with- When
1277 proc decision was the result of a considered compet- unlikely to result was a set-aside and though ess, arbitrary capricious rather than an prices. Even itive and contracting lacking any of- on intrinsic that choice based factors concluded we have in a set-aside deter- ques basis may consider rational ficer pn^relationship may l-706.5(a)(l), it under ASPR at issue. we reiter tions burden —and mination \The Kinnett, case, as contended heavy be it is a burden —is on still ate that com- concept “is a price spread “the plaintiff to show that and unreason- arbitrary, artificial pletely matters committed official’s decisions on determination, it basis” for able to his discretion had no rational primarily own and disprove anything, prove or not does Hawaii, 156 supra, Kentron ba sis. relationship any it “has no rational at F.2d at 1169. The U.S.App.D.C. question.” this case is still fur plaintiff burden on vali increased because the GAO has ther stress the outset again we Once and contracting officer’s decision dated As the of our review. nature deferential closely related situa process decision in a Scanwell observed D.C. Circuit tion. many areas “it is incontestable supra, contracting are left properly government . . .” discretion A.
to administrative
386, 424
at 874.
F.2d
U.S.App.D.C. at
contracting
Review
officer’s
opt
may
officers
While
decisionmaking process requires some fur
exercise
they are entitled to
illegally,
act
of the facts. Unfortunate
ther articulation
range
con-
of issues
upon a broad
discretion
findings of
rele
the district court’s
fact
ly,
including
fronting them,
“considerations
contracting officer’s considera
vant to the
skill, ability,
capacity,
judgment,
price,
be internal
fragmentary
tions are
in the selection
integrity”
finding that
inconsistent. The
the basis
ly
con-
will enter into
whom
for defendant’s determination
solicit
n.10, 386,
F.2d at
at 381
See id.
tracts.
II, III,
an
IV on
unrestricted
n.10, 874.
business bidders
basis was
the small
19) is,
responsible (Finding
as we
were not
us is not whether
question
NThe
before
noted,
supra,
already
note 19
com
have
see
solicit bids
''contracting
decision to
officer’s
record33
is
unsupported by the
wrong.
pletely
was right
an unrestricted
on
erroneous.
Rather,
clearly
whether
determine
must
opportu-
(six
margin
percent
Farrow then demonstrated a further
given percentage
in a
example
nity
rough
if
the first
industry)
for abuse
in the above
taken as a
indicator of
milk
among
giv-
competition
and the third bid-
bidders on
was a small business
effective
bidder
as one factor
en solicitation and
considered
a small
In the event
der was
business.
determining
aside,
com-
the likelihood of effective
first bid-
solicitation
set
100%
petition on future solicitations.
bid
be able
inflate his
der would
80-90%.
clearly
a situation
would not be
such
there
example
application
An
competition,
would
spread
testimony by
concept
provided
was
premium just
paying
so
unreasonable
government contracting officer,
J. C. Far-
service the contract.
small business could
row:
is,
put
in this case
The state
the record
the low bidder bid a
[I]f
hundred thousand
mildly,
hearing
it
unsettled. At
dollars,
size, well,
regardless
say
let’s
he is
injunction
preliminary
held
November
large, and the next bidder bid two hundred
Farrow,
1977, testimony
presented
J.
C.
thousand dollars and the third bidder bid two
officer,
dollars,
hundred
and five thousand
*17
Slee, Comptroller of
Richard C.
Flav-O-Rich’s
second and third are within two and a half
attacking many of the
percent
However,
Division.
In
they
Columbus
of each other.
were
unsupported
findings
percent
higher
court’s
of fact
one
district
hundred
than the low
record, appellants
bidder.
in
focus
The
evidence
the
cannot allow a situ-
testimony
presented
ation like
the
this to exist
in
at
the
it
the
and exhibits
fact
getting
hearing.
responding
price possi-
would not be
to these
lowest
November
^In
attacks,
deposi-
ble which
frequently
is one of the criteria under
Kinnett
refers
to
bidding system
government.
related
the earlier
tions and other materials
spread
The
court also
district
found that
between
prior
bids in
solicitation
contracting
periods
20)34
officer
considered the
(Finding
and Kinnett’s loea-
Kinnett,
litigation between the
and
We note that the
of
record
that case does not
casej
Greenberg
transcript
include a
proceedings
before
court,
During
places
opening
the district
course of Kinnett’s
state-
definite limits
ability
hearing,
comprehend fully
ment at the November 28
quested
re-
counsel
our
all that tran-
judicial
spired
the court “to take
notice of
on those occasions. Such material not
Greenberg]
in
and
being
record,
record
that case
asked the
cannot,
[
course,
in the
it
pro-
of
bring
particularly
clerk to
it into the courtroom
support
findings
vide record
in the instant
discovery depositions
which were extensive
case.
thorough
pleadings.”
Neither
argues
Finding
34. Kinnett
20 states that
government objected
Flav-O-Rich nor the
the unrestricted
solely
classification was based
court,
requestN”The
appar-
district
while
price spread
on the
and on no other factor.
ently
court,
ruling
open
not
on the motion in
disagree.
plain
of
terms
the district
Judgment
stated in its
it
written
had taken
finding (“The
court’s
aforesaid determination
judicial
parties
such
their
in
briefs
notice^
of Defendants
.
. was based on their
snipe
before this court continue to
an-
one
prior
periods
belief that in
bid
no small busi-
vigorous
other in
warfare both with
footnote
accepta-
ness bidders were within Defendants’
respect
propriety
judicial
to the
of such
notice
spread
..”)
ble
compel
.
.
do not
respect
in the first instance and with
to what
reading,
such a
which would be
encompassed
scope
inconsistent
was
of
district
Finding
with the
finding
thrust
judicial
fully
of
a
court’s
notice.
supported by
record,
Evidence,
that defendants
Rule 201 of the Federal Rules of
also
judicial
proximity
providing
adjudicative
considered Kinnett’s
Benning
for the
notice of
to Fort
facts,
judicial
as a
in
“shall
factor
their
states that a court
take
set-aside determination.
requested by party
supplied
judge
a
When the
causation,
notice if
district
desired to indicate sole
necessary
201(d).
perfectly
capable
information.”
Rule
he
doing
was
so.
requested
Referring
Finding
Here counsel for Kinnett
court
in
4 to
officer
judicial
take
notice of material in its own files
prior solicitation,
Farrow’s action on a
bring
prior
stated,
and asked the clerk to
the record of
court
“The aforesaid determination of
proceedings
Judge
into the courtroom. As
Contracting
solely
Officer Farrow was based
noted,
particularly
Weinstein has
apt
“Courts are
on his
conclusion
. .”
(1
to take notice of
in
material
court files.”
Furthermore,
meaning
if we attribute the
de-
Berger,
Weinstein &
Weinstein’s Evidence 48
Finding
sired
finding
(Supp.1977).)
would
contrary
have to be considered
We have held that it is not error “for a court
great weight
clearly
of record evidence and
judicial
proceedings
to take
notice of related
erroneous.
and records in cases before that court.” State
carefully
We have
examined all the record
of Florida Board of Trustees of the Internal
references, including
exhibits,
listed Kin-
Improvement
Charley Toppino
Trust Fund v.
supporting
reading
Finding
nett as
its
Inc.,
Sons,
(5th
514 F.2d
Cir.
clearly support
While these references
a find-
1975). See also Aloe Creme
Laboratories
ing
price spread
among
was
the factors
Co.,
(5th
1970) (per
Francine
curiam)
ject request judicial conversation stressed the role notice. percent price circumstances, spread of the six these we find no error in connection judicial with the district court’s notice of decision to materials solicit bids on an unre- prior proceedings. the court’s own stricted files Solicitation 8570. Accordingly, properly Savage we consider as Whatever before relevance the affidavit might all proceedings us materials entered in the record have had to earlier concern- Greenberg Civil Action No. 76-121-COL. we do not it believe can *18 contracting business- officer other small not to advantage over set-aside tional making 21) his in set-aside Groups (Finding solicitation for II-IV on Solic- es 0048. on Solicitation determination itation 8570. that Far- acknowledges contracting order evaluate the offi geographical price spread took the
row factors, cer’s of these use we must examine consideration with factors into proximity in somewhat more detail his articulated de govern- 0048. The respect to Solicitation process.35 cisional four other factors taken into lists ment also The record indicates that J. C. Farrow is of Farrow’s set-aside deter- part as account officer with the Defense Per- made district court no While the mination. - Support sonnel Philadelphia, Center these related to fac- findings specifically responsibility whose duties have included tors, clear and uncontroverted rec- there is milk, cream, for ice and dairy products con- were considered. We support they that ord Benning tracts Fort at since December matter, conclude, as a factual therefore 1976. reported Mr. Farrow to his officer considered each consideration the solicitations for Fort following making six factors in his Benning he had conducted extensive discus- determination: representatives sions industry with concept; 1) price-spread dairy with others familiar with the indus- 2) preceding procure- the fact that on the learned, try. among things, He other Benning Fort none of the ment for bids as a milk regulations, result from small was in a received businesses processors buy nearly raw milk at their Kinnett; range given prices geographical identical 1, 1977, 3) April govern- the fact price area. added this The elements supports dairy products for price ment transporta- arrive at a bid are the vendor’s 9%; by raised had been margin profit tion costs and his after ex- 4) knowledge of the fact although of these factors and penses. On (Dempsey another Broth- experience, his own Farrow determined ers, Inc.) successfully had on Group bid I competitive situation to that for a exist in a in November in Solicitation 8570 area, given geographical vendors’ offers performed pur- Kinnett had that contract percent six approximately be within should to a subcontract with Dempsey suant of one another. Bros.; 5) knowledge that there had been mind, no Farrow With this evaluated accepted or bid II Group award for a history dairy products past procurement year period; one dating to 1974 or Benning Fort back B-187501, period 6) during All solicitations report, the GAO issued earlier. 24, 1977, upheld March had set aside for exclusive busi- decision been evidence, adequate findings “Report relating basis for and Recom- serve as tered simply Contracting prepared There is no to Solicitation 0048. testi- mendation Officer” mony linking by allegedly protest the statements made Farrow connection with Kinnett’s Greenberg in Report, Branch connection with the Chief to the GAO Solicitation 8570. This process earlier solicitation to decision in- not admitted into evidence as such while during proceed- volved in Solicitation 0048. There is extensive November court testimony corroborating exhibit evidence ings, part Greenberg is a the record of the spread only indicating was one part case and made the record of this among several factors considered judicial pursuant case to the district court’s in their decision to so- defendants prior proceedings. notice of the 0048 on an licit II—IV of Solicitation involving Savage af- Unlike situation simply cannot basis. This record unrestricted fidavit, supra, specific see note 34 un- there support finding spread was the that the testimony in contradicted the record estab- 0048. considered in Solicitation sole factor considered Farrow with lish that factors respect following were Solicitation 8570 also con- culled several account sources, including contracting respect sidered with officer record deposition, testimony several factors. exhibits en- additional Farrow’s *19 respect to participation. troop With program. ness But he did not cream, ice and resale Farrow found believe premiums issue those to be unlimited. disparities between the offers com- He duty wide considered it his investigate to bidders, ranging up government small business to whether peting could receive sub- percent. stantially prices by permitting lower bid- ding basis, on an avoiding unrestricted thus milk, respect dispari- With resale payment to small premiums business of narrower, although were on two occa- ties considered unreasonable or unrealistic. spread between the low and sions Farrow felt it would be an abuse of discre- second bidder were on the order of 14 to 15 tion for the contracting officer to do other- percent. Disparities between the low and wise. troop second bidder on issue milk were all percent instances less than ten on Farrow scope considered the of his discre- percent. several occasions were less than 6V2 tion on set-aside determinations to be by defined l-706.5(a)(l) ASPR surprised by Apparently dispari the wide requirement of ASPR 1-300.1 that all pro- prices, ties between bid Farrow initiated curements shall be made on a competitive investigation further prac basis to practicable the maximum extent. Benning. Focusing tices Fort on the role He stated that he regula- understood these transportation expenses determining tions, interpreted as in a series of decisions bids, Kinnett, Farrow discovered that locat General, the Comptroller provide Benning, ed some eleven miles from Fort contracting officer with discretion to assess enjoyed a locational advantage ranging the existence of a expectation reasonable from 73 to several hundred miles over other receiving adequate prices from small busi- small business bidders. Kinnett won or ness concerns. He also made reference to performed all the contracts during perio cautioning GAO decisions in those Farrow concluded from this informa d.36 cases total where set-asides gener- had not tion that its proximity due to to Fort Ben anticipated ated the competition, future ning, Kinnett had a virtual lock procure set-aside ment, determinations should be e., carefully i. given the absence of mean considered. competition, ingful Kinnett in actuality had single become a source. Farrow concluded from investigations his the only realistic and This conclusion led Farrow to bids reconsider submitted on several categories policy applied the set-aside theretofore dairy procurements procurements at Fort Benning for Fort Benning. Far- those explained offered row that he Kinnett and that found himself unable there was no expectation reasonable provide adequate support adequate for findings compe- the reasonableness of tition from prices Kinnett’s small businesses in the future. continuing basis. While Without noting competition, that Kin- such there could be no prices nett’s government expectation were lower reasonable that Kinnett would prices paid by than commercial concerns in submit future bids at prices. He area, Farrow did not find prices therefore declined set aside solicitations consonant the government’s position II-IV for exclusive small busi- preferred as a customer in the milk participation. indus- ness try and believed could specific respect With to Solicitation substantially receive prices better from Farrow’s general analysis more was but- businesses, per- had not been tressed the favorable result of the GAO mitted to years. offer bids for several denying protest decision in Solici- Farrow recognized considered, tation 8570. Farrow also in his expects pay premium prices to and does determination not set aside Groups II-IV part support its for the of Solicitation impact of a recent Group Dempsey
36. The I of Solicitation 8570 was contract awarded to Brothers but performed by pursuant to a subcontract. B. percent increase nine *20 fact, due and the milk supports complexity, its Seen all the con in the injunctive decree court’s district decisionmaking tracting process officer’s bids on competitive that no Greenberg arbitrary, capricious, does not seem us or twelve for a received had been Group lacking II in a rational basis.37 The contract amount of rele- limiting past procurement the the officer considered period month the realities of bid solicitations in pricing patterns. history, a information vant recent compare though required, to not small business regard is reinforced Our conclusion large previous bids from bids and business con- by that the of the GAO determination the establishing competitions in “the process tracting and decision officer’s decision Brand, Inc.; acceptability”); Society range of 8570, involving many of these in Solicitation Inc., Manufacturing Company, Waldman No. considerations, arbi- were valid and not same 9, 1975), Comp.Gen. (October 55 B-184400 372 trary. in that decision The also stated GAO (upholding the refusal cancel a set-aside soli spread concept “would not that use citation, supporting contracting a officer’s improper.” appear to be percent premi a that five reasonable view Comptroller decision in General’s The contract); pay a um to for small business only appears protest to be the determi- B-184058, B-184065, 83593, B-1 B- Nos. price spread expressly validating the nation B-l84102(2), (November B-184117 However, concept. other deci- numerous 1975), Comp.Gen. affirming (noting and 55 475 issues, raising disputes related sions Supply Agency position of the Defense prices recognized that obtaina- both has GAO is a small business set-aside in- that when may large rele- business concerns be from ble volved, contracting still has officer of the reasonableness consideration vant to seriously duty to consider affirmative prices concept that a of “ade- bids and small business quate be at which an award can made. by price competition” differen- measured a small mere fact that business set-aside large be businesses can and small tials between does not mean that these firms involved regarding properly employed determinations point they to a where be subsidized should set-asides. completely competition insulated from are large from business firms to extent that Research, See, g., B- e. West Point No. prices being excessive unreasonable are 28, 1970), (April Comp.Gen. 49 contracting paid. upheld where the GAO officer’s 483). at Id. to withdraw small business set- decision explicitly many We wish to note basis, aside resolicit on an unrestricted just have arisen from chal- discussed decisions lenges allowing explicitly the officer to consider a determina- not to the initial set-aside “courtesy by bid” submitted a business. by but decisions officers tions that the GAO held Armed Service Procure- received, awards, have been or make after bids Regulations prior ment GAO decisions and order re- set-aside solicitations cancel reasonably expressing “cannot be construed as Thus, basis. un- on an unrestricted submittals the view that the amount the difference in protest re- in Kinnett’s like the GAO decision may properly such bids considered a not, they garding do determining factor the reasonableness of respect provide authority large, to initial Comp.Gen. small business bids.” 49 at 743. However, seewe no set-aside determinations. noting provisions While that the Small concluding factors sufficient to for basis Business Act authorize the award of contracts justify resub- a set-aside and the withdrawal prices higher to small businesses than those an unrestricted ba- a solicitation on mission of competition, obtainable unrestricted suddenly when con- lose their relevance sis concluding GAO found no valid tracting considering to set- whether officer is require the Act “was intended to the award of Judg- procurement. aside the next successive ing prices contracts to small business concerns at itself, neither in Kinnett from decision GAO considered unreasonable” Comptroller These de- does General. 742-43; Id. at also officers. see No. B-149889 important provide context cisions (November 2, 1962). The GAO held that the a in Kinnett and demonstrate GAO’s decision regulations “properly permit the withdrawal of recognition that administrative continued set-aside, based a on valid determination that evidencing adequacy compe- differentials prices bid received con- business in the small business be considered tition are Id. at 743. cerns unreasonable.” These and other GAO deci- context. set-aside Boog-Allen Research, profound Applied signal conviction See also No. sions basically 5, 1973), “[pjrice (November Comp.Gen. reasonableness GAO B-179085 (recognizing permitted, requiring judgment exercise of that officers are capricious industry, fortuitous behavior and Kinnett’s offi- regulated Taking all Benning.38 proximity to Fort cer. account, the con considerations into these Kinnett has introduced no expert testi II- tracting concluded officer mony challenging the judg factual so procurement must be IV of the instant predicates analysis mental for Farrow’s basis because licited on an unrestricted proper procurement practices dairy expectation was no reasonable there industry. disagrees While Kinnett with the bidding price would result if the contracting officer’s assessment of the ex small businesses. were restricted to *21 government price tent relevance of reg burden on Kinnett to demonstrate is in dairy industry, ulations the it did not contracting that the officer’s actions testimony introduce to expert substantiate arbitrary, capricious, lacking in a ra- argument that its Farrow’s consideration of find no basis in the record tional basis. We orders, marketing federal milk which con Kinnett has this concluding that carried cededly prescribe prices, minimum was arbi burden. trary or capricious. pro Nor did Kinnett present any to own Kinnett failed its expert testimony examining duce the rami at witnesses the November hear- price fications of spread concept the utilized conclusory the support allegations to by contracting the officer or challenging by complaint. The testi- advanced its sole the six percent figure selected an ap the mony relevant to Solicitation 0048 deci- proximate guideline competitive to condi sionmaking process was that of the con- dairy tions in the industry. gen officer, Farrow, tracting by J. C. called Nothing critique as an eralized of the possible Kinnett adverse witness. in misuses of testimony arbitrary price that demonstrates spread the concept39 simply is not by Applied broad discretion” the nations. officer. to a unrestricted solici- Manufacturing tation, Company; Century price spread Park Tool employed the could be B-185330, B-185331, Company, (April suggest degree Nos. competition B-185776 the between 16, 1976); Compa- see large also Falcon Rule competitors and small business and the ny; (November Corporation, Akron Rule No. B-187024 premium might size that result were a 1976). subsequent solicitation set aside for exclusive participation. Applied pri- small business to a being Kinnett seems that it believe is or solicitation which set was aside for small unfairly penalized proximity for its to Fort Ben- business, price spread would reveal little or ning argues proximity that factor nothing premium paid about size should “vanish” from this case because Flav-O- to insure award of a contract Benning is even Rich closer Fort than is concern, might to small business but be use- arguments misapprehend Kinnett. These suggesting degree competition ful proximity relevance of the factor. Kinnett is in among bidders, another factor disqualified participating no sense particular in a of clear relevance to the officer’s solicitation virtue its location. determination. significant compared isWhat is that to other spread note small solicitation, in this small businesses in a set-aside Kin- necessarily rigorous context nett, would advantage, indicate because of its locational is competition among Where, effectively source; small businesses. a sole other small busi- example, simply compete any meaning- one small business nesses ful expectation prices had cannot a determi- advantage competition, native petitors, such over its small sense. Absent business com- there no might of reasonable and business seek to obtain super-normal profits justification by bidding relatively high, and no basis for of the set- aside, businesses, located, knowing likely it that would still be wherever win permitted participate be must contract in view of an unre- the absence of effective bidding competition. process. bidding contrary stricted open Once the This be would to basis, government’s low, having on an unrestricted ad- locational interest in such a firm bid vantages play customary thereby sharing advantages their role in mar- of its low ketplace, government. as do all other economic factors. cost structure Exclusive price spread concept might reliance on the well appears depending counterproductive 39. It on the fashion in such circumstances. employed, price spread concept firms, it is which would reveal different sorts Low cost small business aware of such price spread, might of information of use well fear that if greater they low, or lesser relevance to set-aside determi- reflecting did bid their true economic proportion” a “fair procure a detailed ex- enough, without persuasive failings this concept’s businesses, ment for say amination we cannot carry heavy industry and in this its use the contracting officer is prevail required for burden improper.42 action. presented establishes evidence VII. was used here as a spread concept conclusion, we are analysis, not as a satisfied that for further starting point Significantly, incorrectly rule interpreted' of decision. neither mechanical in which con reveals instances the record procurement regulations its nor failed to set aside did solici tracting officer Farrow abide them in this case. The contracting partici for exclusive small tations discretionary officer’s determination to in- in excess of six despite price spreads pation vite II-IV on bids on an unrestrict- and at Benning other both Fort percent, based. rationally ed The district Further, the record estab installations40 court’s conclusion that the contracting offi- price spread that utilization of lishes cer’s determination was arbitrary capri- *22 guideline a in set-aside determi concept as rests cious on an incorrect perception of the nations, together with oth to be considered findings law and on of fact unsupported by his past procurement relevant factors to er the evidence adduced the hearing or the bidding, is expectations to of future tory or as developed. record The preliminary in- of partic the set-aside inconsistent with not junction entered the district court and for or with contracts small businesses ular stayed by order of this court must be govern percent of seventy award the vacated, and Flav-O-Rich exonerated from industry to in this contracts ment obligations its under the bond. businesses.41 have to the stage, We been called follow- that use of factual demonstration Absent rehearsals, attempt several to to harmo- and spread concept arbitrary is price soprano nize the of concern for small busi- particular in a without rational foundation pricing nesses the mezzo of reasonable with concept is that use of the inconsist- or government objective insuring procurements. for Kinnett statutory with the ent price spread sharing advantage 41. The costs record indicates and those costs milk, concept applied dairy, poul- gap government, is and between their bid with try procurements every enlarged, branch for for be at DPSC next lowest bid would and the increasing spread installation in some 41 states. price and the risk thus opening to future solicitations competitors urge on basis. an unrestricted 42. Both the and Kinnett us to counterproductive express validating can be avoided make an This result decision or invali- dating concept applied price spread concept only price spread the use of the if the caution, starting point for decisions. Kinnett further some a argues concept prove this does not or analysis rather a mechanical rule of than as disprove anything, “has no rational relation- emphasize that weak We wish to decision. ship any question,” completely to and “is a argument lies not its con- link in Kinnett’s arbitrary, artificial and for unreasonable basis” price dysfunc- spread be tention that government ap- a set-aside determination. arbitrary improperly applied, if but tional parently judicial approval seeks near-blanket improper failure to such in its demonstrate concept spread for use in set-aside application defendants foregoing analysis As the determinations. this case. clear, accept position not makes we need either application Contracting Farrow’s Officer case, and, to decide on record before this techniques spread at Fort other us, positions decline to adhere taken decision set-aside McPhearson resulted in a today only litigants. either decide predecessors had un- been a solicitation whose application that the officer’s Among large businesses elimi- restricted. price spread concept presented in the context participation from was Flav-O-Rich. nated arbitrary, capricious, this not case was partici- Among allowed the small businesses today pass We do without rational basis. not pate was Kinnett. potential applications concept all on bidding diverse situations. Flav-O-Rich, larger procure- have us toss bass enter- would stage officer, pit, reserving the prises into the ment judicial and on the federal Indeed, performance. soprano system. exclusive aspires reason to believe Kinnett there is “Regulations simple shall be as and clear solo, soprano companies a with sister rele- as possible,” the President has all instructed gated to a distant chorus. agencies. executive Executive Order opera our role in this milk But limit- Fed.Reg. March 12661. “They Congress composed ed one. has the libret- legislative goals shall achieve effectively to, and called on officers to efficiently. They impose shall not un- Congress might composed conduct. have necessary economy, burdens on the on indi- score, excluding expressly different viduals, public private organizations, hall, large companies except per- or on governments.” State and local This spectators, throwing haps as the costs order was issued after these regulations the taxpayer-patrons. of their exclusion on promulgated but its ap- admonition Congress Instead authored a more harmoni- plies regulations to the maze of already on composition, assuring sopranos ous Register. the Federal time proportion” spot- “fair before the It should not an insuperable problem lights granting but not to them both their the Department of Defense and other performance desired solo and exclusive ac- agencies executive regulations write cess box office. The conductor has conform to the Presidential mandate. Do- interpret composition chosen to ing so might even ease their own tasks and require composer provid- what the has not reduce own their burdens. ed, sought and has to realize a balanced *23 if medley. might Even we choose con- piece
duct differently we think it —and sounds rather way melodious this cer- —we tainly say cannot that the conductor’s inter- performance
pretation or are discordant. performance
It is time let resume.
The conductor cloaked with wide authori- Willie L. Mangum, MORROW and ty, performers Jerome should be reluctant Individually behalf
again invoke of all our intervention. As we listen others similarly situated, Plaintiffs-Appellants refrain, for the final we trust we shall not Cross-Appellees, be called for an encore. seem,
Let be be finale of emperor only is the DILLARD, O.W. Commissioner of Public emperor of ice cream.43 Safety Mississippi, al., et Defend- ants-Appellees pro- REVERSED REMANDED for Cross-Appellants. conformity ceedings opinion. with this No. 76-2882. RUBIN, B. Judge,
ALVIN Circuit Con- United States Court of Appeals, curring: Fifth Circuit. Concurring my in what brother Goldberg Sept. said, lament, only has I frequent- add so ly heeded, voiced and so infrequently con-
cerning obscurity regulations. federal
As a result of the failure of write they urge
officials to what they
meant, unnecessary placed burdens were Stevens, Emperor
43. W. of Ice Cream.