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SAN DIEGO BEV. & KUP v. UNITED STATES

February 2, 1998

SAN DIEGO BEVERAGE & KUP, Plaintiff,
v.
UNITED STATES OF AMERICA, UNITED STATES DEPARTMENT OF DEFENSE, DEFENSE LOGISTICS AGENCY, DEFENSE PERSONNEL SUPPORT CENTER, and Intervenor DISPENSER JUICE, Defendant.



The opinion of the court was delivered by: MILLER

 Plaintiff San Diego Beverage & Kup ("SDBK") seeks an order enjoining the continued performance of a federal contract awarded to Dispenser Juice Inc. ("Dispenser Juice") pending final resolution of a bid protest filed by SDBK with the General Accounting Office ("GOA"). The United States of America, United States Department of Defense, Defense Logistics Agency, and Defense Personnel Support Center (collectively "Federal Defendants") oppose Plaintiff's application for a temporary restraining order ("TRO") as does intervenor Dispenser Juice. On January 28, 1998, the court heard SDBK's motion for a TRO. Jackson Chen and Nancy O. Dix appeared on behalf of SDBK, John Scherling on behalf of the Federal Defendants, and Richard Opper on behalf of intervenor Dispenser Juice. Having carefully considered the papers submitted, the record before the court, the oral arguments of counsel, and the applicable authority, the court finds that SDBK has not demonstrated a fair chance of success on the merits nor has SDBK demonstrated a significant threat of irreparable injury. Accordingly, the court denies Plaintiff's application for a TRO.

 On July 11, 1997, Defense Personnel Support Center ("DPSC") issued a Request For Proposal ("RFP") for the provision of beverages for the Eighth U.S. Army at various locations in Korea. From approximately June 1997 until the award of the contract, Dispenser Juice supplied juice and coffee to the troops in Korea on an individual purchase order basis. (Celeste Decl. P3). The lead time for delivery of the juice and coffee to Korea is approximately 45 days. (Celeste Decl. P5).

 On December 5, 1997, DPSC awarded a contract to Dispenser Juice for the supply of Bag-In-The-Box juices, coffee and tea. The fixed price contract was for a base period of one year, with a one year option. Given the efficiencies connected with a long term fixed price contract, the prices paid by DPSC were approximately 9% lower than the prices associated with individual purchase orders. (Celeste Decl. P4).

 SDBK, one of three bidders for the contract, protested the award to Dispenser Juice and, on December 16, 1997, DPSC provided a debriefing to SDBK wherein it discussed the rationale for the award to Dispenser Juice. Based upon this debriefing, SDBK alleges that DPSC erred in both its price analysis and in its findings concerning the factors which led to the selection of Dispenser Juice. On December 19, 1997, SDBK filed a bid protest with the General Accounting Office ("GAO") alleging that DPSC's evaluation was flawed and asked the GAO to either recommend to DPSC that the contract be awarded to SDBK or, alternatively, that DPSC re-evaluate the bid proposals. (Dix Decl. P5). Pursuant to the Competition in Contract Act ("CICA") and the Federal Acquisition Streamlining Act ("FASA"), 31 U.S.C. § 3553, DPSC was required to suspend performance on the contract unless it made a determination that "urgent and compelling circumstances significantly affecting interests of the United States will not permit waiting for the General Accounting Office's decision." Upon evaluation of SDBK's request, DPSC concluded

 
Bag-In-The Box juice for Korea is urgently requested because it is the only juice that can be used to serve troops in the dining facilities. As this is clearly a qualify of life issue, delays in production would cause requisition to go unfilled and can not[sic] be tolerated. Because Korea keeps a small safety level, and transit time being 20-25 days, delays in production will cause the dining facilities to have no BIB juices or coffee on line in the mess halls.

 (Dix Decl., Exh. B).

 Upon learning that DPSC decided to override the CICA stay and to authorize continue performance of the contract, SDBK commenced the present action.

 DISCUSSION

 A. Legal Standards

 Preliminary injunctive relief is available if the party meets one of two tests: "(1) a combination of probable success and the possibility of irreparable harm, or (2) serious questions are raised and the balance of hardship tips in its favor." Arcamuzi v. Continental Air Lines, Inc., 819 F.2d 935, 937 (9th Cir. 1987). "These two formulations represent two points on a sliding scale in which the required degree of irreparable harm increases as the probability of success decreases." Id. Under both formulations however, the party must demonstrate a "fair chance of success on the merits" and a "significant threat of irreparable injury." Id. Further, if a case implicates the public interest, the district court must also consider this factor. Caribbean Marine Services Co., v. Baldridge, 844 F.2d 668, 674 (9th Cir. 1988).

 The parties agree that the standard of review used to evaluate the propriety of a federal agency's decision is the arbitrary and capricious standard as set forth in the Administrative Procedures Act. See 5 U.S.C. § 706. Such deference to administrative proceedings "is particularly appropriate in the procurement area, as there is a 'strong public interest in avoiding disruptions in procurement and for withholding judicial interjection unless it clearly appears that the case calls for an assertion of overriding public interest....'" Shoals ...


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