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CITY & COUNTY OF SAN FRANCISCO v. UNITED STATES

January 22, 1996

CITY AND COUNTY OF SAN FRANCISCO, Plaintiff,
v.
UNITED STATES OF AMERICA, et al., Defendants.



The opinion of the court was delivered by: WALKER

 On October 1, 1994, the Presidio was transferred from the United States Department of Defense to the National Park Service ("NPS"). Prior to the transfer, the United States Department of the Army owned 80% of the electrical distribution in the Presidio, which consists of a 4kV primary electrical line and associated secondary lines. Defendant Pacific Gas and Electric ("PG&E") owned 20% of this system and was responsible for providing electric service to the Presidio under a General Services Administration ("GSA") public utilities contract.

 In preparation for the Presidio transfer, in 1990 and 1991 NPS hired PG&E to assess the status of the Presidio electric system. On September 28, 1990, NPS modified PG&E's GSA contract to require a broad range of engineering studies and design work for the Presidio electric system. Under this modification, PG&E completed a "Revised Preliminary Engineering Study of the Electrical Facilities for the Presidio," which outlined in detail the changes to the existing electrical system necessary to upgrade the system facilities to PG&E's standards. On September 26, 1991, NPS again modified PG&E's GSA contract, this time to require PG&E to perform further detailed design review and to produce estimates for upgrading the electric system. Under this modification, PG&E completed a Final Engineering study which recommended that the Presidio electric system be upgraded to 12kV.

 After receiving PG&E's Final Engineering Study, NPS decided to award both the job of replacing the Presidio's electric system and the job of providing future utility services to the Presidio through competitive procurement. On July 5, 1994, NPS issued a Request For Proposals ("RFP") for replacing, servicing, owning and providing electrical services to the Presidio. The solicitation was for a ten-year contract which would call for the provision of electrical service to the Presidio and the installation of a new 12kV electric system. The RFP was for a cost reimbursement contract and provided that submissions proposing firm fixed price contracts would not be considered. The RFP also required that all bidders either obtain or be exempt from obtaining a San Francisco franchise license.

 Plaintiff submitted its bid proposal to NPS on August 8, 1994. On September 29, 1994, NPS notified plaintiff that PG&E had been awarded the contract. Plaintiff protested the award to the General Accounting Office ("GAO"), claiming that the award was illegal because: (1) federal regulations prohibited the award of the contract to PG&E because PG&E has an organizational conflict of interest; (2) PG&E's bid was "inherently suspect;" (3) NPS did not fairly and impartially evaluate plaintiff's bid; (4) PG&E did not obtain a certificate of public convenience and necessity from the California Public Utilities Commission; and (5) NPS incorrectly evaluated plaintiff's energy conservation abilities. GAO dismissed the protest on February 15, 1995.

 After plaintiff learned that the contract has been awarded to PG&E, it began a review of PG&E's franchises to provide gas and electric service in San Francisco. On March 2, 1995, plaintiff notified PG&E that PG&E owed further payments to plaintiff for the use of plaintiff's streets to deliver gas and electricity to the Presidio. On April 27, 1995, plaintiff further notified PG&E that PG&E in fact has no legal authority to provide electric service to the Presidio.

 Plaintiff commenced the instant action against the United States and PG&E on May 24, 1995. Plaintiff challenges the award to PG&E on the grounds that (1) PG&E does not have a franchise to distribute gas or electricity to the Presidio, (2) PG&E improperly submitted a fixed-price bid, (3) PG&E had an organizational conflict of interest concerning the RFP, and (4) NPS' cost and technical criteria were arbitrary, capricious, and an abuse of discretion. On the same day, PG&E filed an action in San Francisco Superior Court *fn1" seeking a declaration that it has a valid franchise to distribute power to the Presidio and that plaintiff is estopped from collecting certain franchise fees under that franchise. Whether PG&E has a franchise to deliver electricity to the Presidio is thus an issue in both the instant action and the state court action.

 Now before the court is PG&E's motion to sever or, in the alternative, bifurcate the issue of the scope of PG&E's franchise issue pending the outcome of the state court action. For the reasons discussed below, the court DENIES PG&E's motion.

 I

 The court is given jurisdiction over this action by 28 USC § 1331 and by § 10 of the Administrative Procedures Act, 5 USC § 702, which waives the sovereign immunity of the United States in suits seeking judicial review of agency actions where judicial review has not been expressly authorized by statute. See Parola v. Weinberger, 848 F.2d 956, 958 (9th Cir. 1988). Plaintiff is asking the court to review GAO's dismissal of plaintiff's protest of NPS' award of the Presidio contract to PG&E. Such review is governed by 5 USC § 706(2)(a), which provides that the court shall hold unlawful and set aside agency actions found to be "arbitrary, capricious, and abuse of discretion, or otherwise not in accordance with law."

 It is well established that judicial review of the legality of procurement contracts is proper. See, for example, Parola, 848 F.2d at 959; Armstrong & Armstrong, Inc. v. United States, 514 F.2d 402 (9th Cir. 1975). Moreover, a court may enjoin the performance of a government contract if the award was the result of procedures not comporting with the law. Parola, 848 F.2d at 959. Thus the court clearly has jurisdiction to review GAO's decision and to afford plaintiff the relief it has requested. The question currently before the court is whether it should stay its exercise of that jurisdiction pending the outcome of the state court action initiated by PG&E to determine its right to deliver electricity to the Presidio. For the reasons set forth below, the court concludes that it lacks the authority to stay the instant case pending the outcome of the sate court action.

 II

 In the instant action, plaintiff seeks, among other relief, both a declaration that PG&E lacks a San Francisco franchise license to deliver electricity to the Presidio and an injunction restraining PG&E from submitting a bid in future RFPs for delivery of electricity to the Presidio because PG&E lacks such a franchise. Similarly, the action filed in state court by PG&E seeks a declaration of PG&E's right regarding delivery of electricity to the Presidio. There thus is substantial factual overlap between the issues currently before the court and the issues currently ...


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