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NKF Engineering Inc. v. United States

November 5, 1986


Appealed from: U.S. Claims Court. Judge Wiese.

Rich and Baldwin, Circuit Judges, and Miller, Senior Circuit Judge. Miller, Senior Circuit Judge, concurring.


BALDWIN, Circuit Judge.

This is an appeal from an order of the United States Claims Court enjoining the government agency involved from awarding a contract to a contractor other than appellee NKF Engineering, Inc. ("NKF"). The order requires the injunction to remain in effect until the contracting officer ("CO") on remand either (1) reexamines NKF's original disqualification after ascertaining whether NKF's bid was tainted by inside information or (2) puts aside the offers received and calls for another round of best and final offers.

The United States ("government") appeals from the basic injunction and challenges the remand instructions. Cross-appellant NKF focuses its challenge on the order's remand, including its authorization for the CO (1) to disregard an earlier finding of the Court that inside information was not passed, (2) to elicit new offers, and (3) to disqualify NKF without prior referral to the Small Business Administration ("SBA").

We vacate that portion of the order enjoining the agency from awarding the contract to someone other than NKF. That in effect allows the agency to pursue its original award to Weidlinger Associates ("Weidlinger") and moots the government's challenge to the remand instructions as well as NKF's cross-appeal.


The factual part of this "Background" consists of Claims Court findings that are either uncontested or have not been shown by the parties to be clearly erroneous.

In March, 1983, the Naval Sea Systems Command ("NAVSEA") issued a Request For Proposals N00024-83-R-4175(Q) ("RFP 4175"). The request called for technical and cost proposals to provide engineering services in support of Navy ships and ship systems. It originated in a subgroup of NAVSEA identified "SEA 55X."

In May, 1983, five proposals were submitted, including those of NKF and Weidlinger, two small business concerns. The proposals were evaluated both technically and on the basis of cost. RFP 4175 was conducted by negotiation rather than by formal advertised bidding.

SEA 55X had as its deputy director a Mr. Yip Park -- a civilian employee of the Navy with approximately 30 years of experience in the field of weapons effects and ship survivability and protection. Mr. Park was designated the CO's Technical Representative ("COTR") for RFP 4175. In addition, he chaired the Contract Award Review Panel ("CARP"), the group charged with overseeing the contractor selection process. In those dual capacities, Mr. Park's responsibilities included development of the following matters pertaining to RFP 4175: the evaluation plan pursuant to which the offerors' initial technical proposals were to be evaluated, the government's estimates of the "labor mix"*fn1 and the range of costs it considered reasonable, and the technical vs. cost weighting formula. In his role as CARP chairman, Mr. Park learned the number of offerors who had chosen to participate in the procurement effort and their relative rankings following initial evaluation. Mr. Park knew that of the five offerors involved, two -- NKF and Weidlinger -- had received nearly identical rankings on their technical proposals but NKF was more than $2.5 million higher on cost.

In late August, 1984, roughly one year after the initial round of proposals had been received and evaluated by the government, Mr. Park contacted NKF and several other private companies concerning possible employment with them.*fn2

During the interviewing process, Mr. Amir (the president of NKF) asked Mr. Park to check with appropriate NAVSEA officials to verify that NKF's employment of Mr. Park would not create a conflict of interest. Although he in fact never checked, Mr. Park later informed Mr. Amir that he had received assurances from NAVSEA legal counsel. With that confirmation, Mr. Amir offered Mr. Park a non-exclusive consulting job, and they soon signed an employment agreement. At that time, neither Mr. Amir nor anyone else at NKF was aware that Mr. Park had involvement with RFP 4175 beyond having knowledge of its technical requirements as stated in the contract's "Scope of Work." Mr. Park nevertheless maintained his dual status as CARP chairman and COTR until his retirement from government service on September 30, 1984.*fn3

Some three months after Mr. Park began work with NKF, the contracting officer (Mr. Lloyd) requested (in January, 1985) the submission of best and final offers. Included as part of that request was an amendment to the solicitation, "Amendment 5," which revised the Statement of Work contemplated. Amendment 5 increased the importance of a particular low-cost technical area of the work statement, and necessarily decreased the relative importance of the high cost technical areas. NKF and Weidlinger viewed Amendment 5 as requiring a revision of their initial proposals.*fn4 Also included in the request for a best and final offer sent to NKF was an attachment in which the government identified aspects of NKF's initial cost proposal judged to be in need of reevaluation and improvement.

NKF re-costed its proposal, an effort that led to a price reduction from $16.7 million initially to $11.2 million -- a downward revision of approximately 33 percent -- and gave NKF the lowest cost proposal. The other offerors also reduced their final price, but none by more than 19 percent.

In the technical evaluations of the best and final offers, Weidlinger received the highest score; NKF was rated second. However, when the CARP met and applied its predetermined weighting formula to both the technical and cost criteria, NKF received the highest overall score. Accordingly, on ...

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