UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
FREEDOM GRAPHIC SYSTEMS, INC. )
)
Plaintiff, )
)
v. ) Civil Action No. 91-0023
)
UNITED STATES OF AMERICA )
)
Defendant. )
__________________________________)
MEMORANDUM OPINION
Freedom Graphic Systems, Inc., a disappointed bidder, sought and
received a temporary restraining order on January 9, 1991,
enjoining defendant from proceeding with a contract. The matter
is now before the Court on plaintiff's motion for a preliminary
injunction. Plaintiff submitted a sealed bid in response to
defendant United States Government Printing Office's ("GPO")
Invitation for Bid ("IBF"). The GPO awarded the contract to
another bidder, Fry Communications. Plaintiff argues that its
price was the most reasonable in light of the solicitation
specifications and asks the Court to preliminary enjoin defendant
from allowing any performance of work on the contract until this
action is resolved on the merits.
FINDING OF FACT
1. On October 12, 1990, the GPO issued an IFB seeking bids on
GPO Procurement Jacket 276-220/221, titled "Application for
Social Security Card" and "Application for Social Security
Number."
2. The October 12, 1990, IFB specified a strong preference for
recovered materials and provided offerors the opportunity to
submit bids to print the applications on either recycled paper or
virgin paper.
3. Defendant received six bids on the contract and only
plaintiff submitted a bid to utilize recycled paper.
4. On October 30, 1990, plaintiff filed a pre-award protest
letter with the United States General Accounting Office ("GAO").
The GAO dismissed the protest letter as premature, noting that
the contracting officer had not yet made a determination on the
reasonableness of plaintiff's bid.
5. On December 18, 1990, defendant awarded the contract to Fry
Communications.
6. Plaintiff filed a second protest letter on December 18, 1990,
and the GPO was given until January 28, 1991, to respond to it.
7. The contract awarded on December 18, 1990, would have been
completed on or about February 1, 1991, approximately 30-45 days
from the date it was awarded, and only a few days after the GPO
response deadline.
8. On January 7, 1991, plaintiff filed a disappointed bidder
suit along with a motion for a temporary restraining order.
Judge John Garrett Penn granted the temporary restraining order
on January 9, 1991.
9. On January 11, 1991, plaintiff filed its motion for a
preliminary injunction and a hearing was held thereon on January
22.
10. At the hearing, the Court heard evidence from plaintiff's
witness, Mr. Tony Allighen, a marketing manager for Freedom
Graphic Systems, Inc. Among other things, Mr. Allighen
identified eight (8) exhibits that plaintiff later sought to move
into evidence. The Court took plaintiff's motion under
advisement after objection by the United States as to the
documents' admissibility.
11. Mr. Allighen also testified that if the contract were
awarded to Freedom Graphic, plaintiff could commence work by
February 1, 1991, and begin delivering materials to the Social
Security Administration ("SSA") by February 8, 1991.
12. The United States presented uncontroverted testimony from
John Dyer, SSA Acting Deputy Commissioner for Finance Assessment
and Management, that SSA has an urgent need for the applications
that are the subject of this contract. Mr. Dyer testified that
some SSA field offices have already exhausted their supply of
English version forms, and that several other offices will
exhaust their supplies by February 1, 1991. Similarly, Mr. Dyer
testified that field offices will exhaust their current stock of
Spanish version forms by early February 1991.
13. the United States also presented uncontroverted testimony
from Anthony Valentine, a GPO Procurement Analyst, that for one-
time bids and term contracts between July 1989, and July 1990,
there has been a net difference of less than a one percent
increase in the cost of recycled paper over the cost of virgin
paper.
14. Plaintiff submitted a recycled paper bid of $402,312.64.
Fry Communications, the winning bidder, submitted a virgin paper
bid of $376,797.00. There is a difference of over twenty-five
thousand dollars between the plaintiff's bid and the winning bid.
15. Admission into evidence of exhibits one through eight will
be denied as they are irrelevant to the issue currently before
the Court.
DISCUSSION
First, the Court addresses the admissibility of the exhibits
plaintiff offers as evidence in this case. Plaintiff offers
several documents in an effort to show that because the GPO
rejected its allegedly reasonable bid utilizing recycled paper,
plaintiff is likely to succeed on the merits. The documents
include proof of a successful past bid using recycled paper, an
abstract showing that plaintiff's successful past bid utilizing
recycled paper was higher than other bids using virgin paper,
invoices and quotations showing the prices of recycled paper and
virgin paper for the instant contract, and an analysis by
plaintiff's marketing manager showing the cost differential
between recycled and virgin paper in the instant unsuccessful bid
and in the past successful bid.
Plaintiff argues that because defendant did not apply objective
standards when determining the reasonableness of plaintiff's
recycled paper bid, it improperly found the bid to be
unreasonable. Defendant argues that GPO has no objective
standards to apply because Congress did not create objective
standards with regard to price and that these documents are
irrelevant to the matter at bar because they are not indicative
of industry standards. After considering the parties' arguments
and reviewing the documents themselves, the Court concludes that
plaintiff's exhibits, number on (1) through eight (8), are
irrelevant for the purpose of determining the issue at hand,
namely the validity of the contracting officers' decision to
select Fry Communications' bid over Freedom Graphic's bid.
In order to prevail on its motion for preliminary injunction,
plaintiff must demonstrate that (1) it has a substantial
likelihood of succeeding on the merits, (2) it will suffer
irreparable harm if the injunction is not granted, (3) other
interested parties will not suffer substantial harm if the
injunction is granted, and (4) the public interest will be
furthered by the injunction. See Sea Containers Ltd. v. Stena
AB, 890 F.2d 1205, 1208 (D.C. Cir. 1989) citing Foundation on
Economic Trends v. Heckler, 756 F.2d 143, 151 (D.C. Cir. 1985);
Washington Metropolitan Area Transit Comm'n v. Holiday Tours,
Inc., 559 F.2d 841, 843 (D.C. Cir. 1977).
The Court finds that plaintiff has not demonstrated a substantial
likelihood of success on the merits. Plaintiff bases its
argument on the premise that the cost of recycled paper is
greater than the cost of virgin paper, thus making recycled paper
bids "reasonable" even where they are higher than bids utilizing
virgin paper.
The Resource Conservation and Recovery Act ("RCRA") requires
federal procuring agencies to use recycled materials for the
instant contract unless, among other things, recycled materials
"are only available at an unreasonable price." 42 U.S.C. ยง
6962(c)(1)(C) (1988). The Court of Appeals for the District of
Columbia has held that the RCRA does not require agencies to pay
more for recycled paper. See National Recycling Coalition, Inc.
v. Reilly, 884 F.2d 1431, 1434 - 35 (D.C. Cir. 1989). The Court
of Appeals' conclusion is based on the interpretation of the
agency administering RCRA, the Environmental Protection Agency
("EPA"). The EPA states that "[e]ach procuring agency may decide
whether or not a 'reasonable price' includes a price preference.
RCRA Section 6002 does not provide explicit authority to the EPA
to authorize or recommend payment of a price preference or to
create a set-aside. Therefore, unless an agency has an
independent authority to provide a price preference or to create
a set-aside, EPA believes that a price is 'unreasonable' if it is
greater than the price of a competing product made of virgin
material." 53 Fed. Reg. 23,559 (1988). Plaintiff has shown
neither that GPO has established a price preference nor that it
has the authority to establish such a preference. The Court
concludes that plaintiff has not shown a substantial likelihood
that it will succeed on the merits.
The Court also concludes that plaintiff has failed to demonstrate
that it will suffer irreparable harm if the defendant is not
preliminary enjoined. Plaintiff may lose the opportunity to reap
the profits from this contract because the contract will likely
be completed before this matter is resolved. The Court notes,
however, that while plaintiff's possible loss of profits may
constitute harm, it clearly does not constitute irreparable harm.
Plaintiff may recoup costs for filing and pursuing the protest,
including attorney's fees, and the costs for bid and proposal
preparation, should it prevail on the merits. 4 C.F.R. 21.6(d)
(1990).
The Court further notes that defendant will suffer substantial
harm if the Applications for Social Security Numbers and Social
Security Cards are not printed and distributed to SSA field
offices in a timely manner. The Court concludes that plaintiff
has not shown that the potential harm it may suffer without a
preliminary injunction is irreparable. In balancing the
equities, the plaintiff has also failed to demonstrate that its
potential harm is greater than defendant's more certain harm.
CONCLUSION
In summary, the Court concludes that plaintiff has not
demonstrated a substantial likelihood of success on the merits,
has not shown that it will suffer irreparable harm, and has not
demonstrated that balancing of the equities tips
the scale in favor of granting a preliminary injunction.
Therefore, plaintiff's motion for a preliminary injunction must
be denied. An Order consistent with this Memorandum Opinion has
issued.
NORMA HOLLOWAY JOHNSON
UNITED STATES DISTRICT JUDGE
Dated: January 25, 1991