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ACME OF PRECISION SURGICAL CO. v. WEINBERGER

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA


February 7, 1984

ACME OF PRECISION SURGICAL CO., INC. t/a A & P Surgical Co., Inc., Columbia Surgical Instrument, Inc.
v.
Caspar W. WEINBERGER, Secretary of Defense, Admiral Eugene A. Grinstead, General L. A. Brooks, Col. Neil Bischoff, Lt. Col. James Ostrander, William Di Lauro, Surgical Instrument Co. of America, American Medical Instrument Corporation, Marbex, Inc. and Joseph Bak, Joseph Calabro

The opinion of the court was delivered by: HANNUM

MEMORANDUM AND ORDER

 HANNUM, District Judge.

 Plaintiffs filed this action for injunctive and declaratory relief challenging certain solicitations issued by The Defense Personnel Support Center ("DPSC") for surgical instruments. Plaintiffs assert that these surgical instruments, end items which were articles of specialty metals, were awarded or were going to be awarded to other bidders in violation of statutory law, namely the Department of Defense Appropriations Act, Pub.L. No. 97-114, § 723, 95 Stat. 1565 (1981), the Joint Resolution making continuing appropriations for fiscal year 1983, P.L. No. 97-276, 96 Stat. 1186 (1982), and the Joint Resolution making further continuing appropriations for fiscal year 1983, P.L. No. 97-377, 96 Stat. 1830 (1982).

 The gravamen of plaintiffs' contentions is that DPSC's reliance on Defense Acquisition Regulation 6-302, 32 C.F.R. § 6-302 (1982) in making its procurement decisions is contrary to the so-called "Buy American" provisions of the appropriations act and the subsequent joint resolutions. Specifically, plaintiff bidders contend that the "Buy American" provisions require that all articles of "specialty metals" purchased by "appropriated funds" must be manufactured entirely in the United States, and not just " melted " in the United States as is permitted in Defense Acquisition Regulation 6-302.

 The parties have agreed to the consolidation of the hearing on plaintiffs' motion for preliminary injunctive relief with the trial on the merits pursuant to F.R.CIV.P. 65(a)(2), and have filed a comprehensive stipulation of facts to that end. See Docket Entry No. 37. Presently pending before the Court are the following motions: (1) Government Defendants' Motion To Dismiss Or, In The Alternative, To Transfer; (2) Motion Of Defendant Surgical Instrument Co. Of America To Dismiss, Or In The Alternative, To Transfer; (3) Plaintiffs' Motion For Preliminary Injunction And Summary Judgment; (4) Cross-Motions For Partial Summary Judgment; (5) Motion Of Defendant Marbex, Inc. To Compel Discovery; (6) Motion Of Defendant Surgical Instrument Co. Of America To Waive Retention Of Local Counsel; (7) Motion Of Defendant Marbex, Inc. For Second Extension Of Time.

  I. FACTUAL BACKGROUND

 Because the parties stipulated to "the trial of the action on the merits [being] advanced and consolidated with the hearing of the application [for a preliminary injunction]" pursuant to F.R.CIV.P. 65(a)(2), the Court makes the following findings of fact (F.R.CIV.P. 52), all of which are undisputed (see Docket Entry No. 37):

 1. The Plaintiff, Acme of Precision Surgical Co. t/a A & P Surgical Instrument Co., Inc. ("A & P") is a New Jersey corporation with its principal place of business located at 485 South 21st Street, Irvington, NJ 07111; the Plaintiff Columbia Surgical Instrument, Inc. ("Columbia") is a New York corporation with its principal place of business located at 118 Sanford Street, Brooklyn, NY 11205.

 2. The Plaintiffs are manufacturers of surgical instruments of various types, including the surgical instruments which were being procured by the various solicitations described hereinafter. The Plaintiffs are both small businesses as defined in the Small Business Act, 15 U.S.C. 632, and its implementing regulations, 13 C.F.R. § 121.3 et seq.

 3. Each of the individual Defendants is an officer or employee of the United States, or an agency thereof, acting in his official capacity or under color of legal authority. This is not an action concerning real property.

 4. The Defendant Caspar W. Weinberger is the Secretary of Defense and is charged with the responsibility of all services, components, agencies, units, and personnel of the Department of Defense ("DOD").

 5. The Defendant Admiral Eugene A. Grinstead is the Director of the Defense Logistics Agency ("DLA"), which is an agency of DOD, and is charged with the responsibility for all components, agencies, units and personnel of DLA.

 6. The Defendant General L. A. Brooks is the Commander of the Defense Personnel Support Center, 2800 South 20th Street, Philadelphia, Pennsylvania ("DPSC"), which is a field activity of DLA, and is charged with the responsibility for all components, units, and personnel of DPSC.

 7. The Defendant Col. Neil Bischoff is the Director of the Medical Directorate of DPSC ("DPSC, Medical") and is charged with the responsibility for all components, units and personnel of DPSC responsible for the procurement of medical items.

 8. The Defendant Lieutenant Colonel James Ostrander is the Branch Chief, Central Contracts Branch Medical Directorate DPSC, and supervises procurement personnel of the Central Contracts Branch DPSC including its contracting officers.

 9. The Defendant William Di Lauro and Joseph Bak and Joseph Calabro *fn1" are the contracting officers with DPSC Medical on those certain solicitations more fully described below and are specifically charged with the responsibility for all acts and omissions taken in connection with the said solicitations.

 10. The Defendant Surgical Instrument Corporation of America ("Sicoa") is a Delaware Corporation with its principal place of business located at 469 Jane Street, Ft. Lee, New Jersey 07024; the Defendant Marbex, Inc. ("Marbex") is an Ohio corporation with its principal place of business located at Room 627, National Bank Bldg., Portsmouth, Ohio 45652; the Defendant American Medical Instrument Corporation ("Amico") is a New York corporation with its principal place of business located at 133-14 39th Avenue, Flushing, New York 11354, and is a subsidiary of Vernitron Corporation.

 11. The Defendants identified above in Paragraph 10 are dealers and furnishers of surgical instruments and are known hereinafter also as the "Corporate Defendants."

  12. For the purpose of the Cross-Motions for Partial Summary Judgment only, the Defendants agree and stipulate that the operations of the Plaintiff A & P and the Plaintiff Columbia are generally referred to as finishing shops. The Plaintiffs purchase the basic specialty steel and subcontract a forging shop where the steel is melted at high temperatures and drop-forged into the shape of the desired surgical instrument. The forgings are then sent to the Plaintiffs' respective shops where they are milled, machined, ground, assembled, polished and then heat treated and passivated and made ready for inspection and acceptance by the Government. The Defendants further agree and stipulate that the Plaintiffs, by affidavit, aver that the entire manufacturing procedure from making of the basic specialty metal to manufacturing of the end item is performed entirely in the United States.

 13. For the purpose of the Cross-Motions for Partial Summary Judgment only, the Plaintiffs agree and stipulate that in all of the following solicitations the Corporate Defendants have purchased the basic specialty steel in the United States, which steel has been melted in the United States into a specialty metal mill product; the Corporate Defendants then ship the basic specialty steel overseas to either England, West Germany, or Pakistan where the end items are manufactured; the manufactured end items are then shipped back to the United States for inspection and acceptance by the Food and Drug Administration or DLA depot personnel.

 14. The end items being procured under all the following solicitations are surgical instruments composed entirely or substantially of stainless steel, a specialty metal as defined in DAR 6-301, and as such are considered specialty metals within Clause I42. *fn2"

 15. a) On or about May 27, 1982, DPSC, Medical formally advertised and issued Solicitation No. DLA120-82-B-1866 ("B-1866") inviting competitive bids from qualified offerors, with a bid opening date of June 27, 1982. The end items being procured under B-1866 were 22,752 ea.; Scissors, Bandage, Angular, 7 1/4" (NSN6515-00-935-7138).

 b) Several companies including the Plaintiff A & P and the Defendant Sicoa, submitted timely bids. The Defendant Sicoa was considered low bidder at a price of $67,118.40; the Plaintiff A & P bid a price of $88,732.00. No contract has been awarded to date.

 16. a) On or about April 19, 1982, DPSC Medical issued Solicitation No. DLA120-82-R-1660 ("R-1660") as a negotiated procurement, inviting competitive proposals from qualified sources, with a closing date of May 19, 1982. The end items being procured under R-1660 were 796 ea., Scissors, Oral Surgical, Dean, Angular, 6 3/4" Type II (NSN 6520-00-555-1150).

 b) Several companies, including the Plaintiff A & P, submitted timely proposals. E. Miltenberg, Inc. was considered the low bidder, and awarded contract No. DLA120-82-C-5553 on June 18, 1982, at a price of $9,789.76; the Plaintiff A & P bid a price of $11,144.00. E. Miltenberg manufactured the end items entirely overseas.

 17. a) On or about April 7, 1982, DPSC, Medical formally advertised and issued Solicitation No. DLA120-82-B-1599 ("B-1599") inviting competitive bids from qualified offerors, with a bid opening date of May 6, 1982. The end items, among others, being procured under B-1599 (a joint procurement for DOD and the Veterans Administration) were various types of forceps, including 6,624 ea. (est.) (for DOD) and 5,000 ea. (est.) (for VA) Forceps, Hemostatic, Straight, Ranken, 6 1/4" (NSN 6515-00-334-7100); 32,040 ea. (est.) (for DOD) and 12,000 ea. (est.) (for VA) Forceps, Hemostatic, Curved, Kelly, 5 1/2", Type II (NSN 6515-00-334-3800); 22,320 ea. (est.) (for DOD and 15,000 ea. (est.) (for VA) Forceps, Hemostatic, Straight, Kelly, 5 1/2", Type I (NSN 6525-00-334-6800); 15,000 ea. (est.) (for DOD) and 4,500 ea. (est.) (for VA) Forceps, Towel, Backhaus, 3 1/2" (NSN 6515-00-320-4590); and 13,000 ea. (est.) (for DOD) Forceps, Towels, Backhaus, 5 1/4" (NSN 6515-00-320-4600).

 b) Several companies including the Plaintiff Columbia and the Defendants Sicoa and Amico, submitted timely bids. The Defendant Sicoa was considered the low bidder as to certain end items at a price of $465,615.16; the Defendant Amico was considered the low bidder as to certain end items at a price of $88,830.00; the Plaintiff Columbia bid a price of $745,840.00 on all end items. No contract has been awarded to date.

 18. a) On or about August 9, 1982, DPSC, Medical issued Solicitation No. DLA120-82-R-2227 ("R-2227") as a negotiated procurement requesting competitive proposals from qualified sources, with a closing date of November 30, 1982. The end items being procured under R-2227, among others, were 5,472 ea. Forceps, Towel, Backhaus, 3 1/2" (NSN 6515-00-320-4590).

 b) Two companies, including the Plaintiff Columbia and the Defendant Sicoa, submitted proposals. No contract has been awarded to date.

 19. a) On or about September 23, 1982, DPSC, Medical, issued Solicitation No. DLA120-82-R-2324 ("R-2324") as a negotiated procurement requesting competitive proposals from qualified sources, with a closing date of November 24, 1982. The end items being procured under R-2324 were 34,560 ea. Forceps, Hemostatic, Straight, Kelly, 5 1/2", Type I (NSN 6515-00-334-6800).

 b) Several companies, including the Plaintiff Columbia and the Defendants Sicoa and Amico, submitted timely proposals. The Defendant Sicoa was awarded contract No. $151,718.40; the plaintiff Columbia bid a price of $196,992.00. The aforesaid contract price is being considered for termination for the convenience of the government.

 20. a) On or about September 30, 1982, DPSC, Medical issued Solicitation No. DLA120-82-R-0046 as a negotiated procurement requesting competitive proposals from qualified sources, with a closing date of November 24, 1982. The end items being procured were 19,800 ea. Forceps, Hemostatic, Curved, Kelly, 5 1/2", Type II (NSN 6515-00-334-3800).

 b) Several companies, including the Plaintiff Columbia and the Defendant Sicoa and Medical Devices of Fall River, Inc. ("Medical Devices") submitted timely proposals. The Defendant Sicoa was awarded contract No. DLA120-83-C-4319 on January 28, 1983 for a contract price of $21,124.80 (4,320 ea.); Medical Devices was awarded contract No. DLA120-83-C-4381 on February 8, 1983 for a contract price of $51,084.00 (15,480 ea.); the Plaintiff Columbia bid a price of $134,040.00 on the end items.

 21. a) On or about November 19, 1982, DPSC, Medical formally advertised and issued Solicitation No. DLA120-83-B-0273 ("B-0273"), inviting competitive bids from competitive offerors, with a bid opening date of December 21, 1982. The end items being procured, among others, under B-0273 were 2,016 ea. Forceps, Hemostatic, Half-Curved, Mixter, 7 1/2" (NSN 6515-00-065-3181).

 b) Several companies, including the Plaintiff Columbia and the Defendant Amico, submitted timely bids. The Defendant Amico was considered the low bidder at a price of $15,926.40; the Plaintiff Columbia bid a price of $22,000.00. No contract has been awarded to date.

  22. a) On or about September 24, 1982, DPSC, Medical formally advertised and issued Solicitation No. DLA120-83-B-0002 ("B-0002") inviting competitive bids from qualified offerors, with a bid opening date of November 22, 1982. The end items being procured under B-0002 were 10,080 ea. Forceps, Hemostatic, Straight, Kelly, 5 1/2" Type I (NSN 6515-00-334-6800).

 b) Several companies, including the Plaintiff Columbia and the Defendant Amico, submitted timely bids. The Defendant Amico was awarded contract No. DLA120-83-C-4238 on March 7, 1983 at a contract price of $45,460.80; the Plaintiff Columbia bid a price of $53,323.20.

 23. a) On or about September 24, 1982, DPSC Medical formally advertised and issued Solicitation No. DLA120-83-B-2466 ("B-2466"), inviting competitive bids from qualified offerors, with a bid opening date of November 24, 1982. The end items being procured under B-2466 were 1,728 ea. Forceps, Hemostatic, Curved, May-Carmalt, 8" (NSN 6515-00-334-4100).

 b) Several companies, including the Plaintiff Columbia and the Defendant Amico, submitted timely bids. The Defendant Amico was awarded contract No. DLA120-83-C-4281 on February 8, 1983 at a contract price of $15,310.80; the Plaintiff Columbia bid a price of $16,000.00.

 24. a) On or about November 26, 1982, DPSC, Medical formally advertised and issued Solicitation No. DLA120-83-B-0308 ("B-0308"), inviting competitive bids from qualified offerors, with a bid opening date of December 28, 1982. The end items being procured under B-0308 were 3,456 ea. Holder, Suture, Needle, Hegar-Mayo (NSN 651-00-299-8737).

 b) Several companies, including the Plaintiff Columbia and the Defendant Amico, submitted timely bids. The Defendant Amico was considered low bidder at a price of $30,896.64; the Plaintiff Columbia bid a price of approximately $32,000.00. No contract has been awarded to date.

 25. a) On or about November 12, 1982, DPSC, Medical formally advertised and issued Solicitation No. DLA120-83-B-0088 ("B-0088") inviting competitive bids from qualified offerors, with a bid opening date of December 14, 1982. The end items being procured under B-0088 were 16,992 ea. Forceps, Hemostatic, Curved, Rochester -- Pean, 6 1/4" (NSW 6515-00-33-4300).

 b) Several companies, including the Plaintiff Columbia and the Defendant Sicoa, submitted timely bids. The Defendant Sicoa was awarded contract No. DLA120-83-C-4198 on February 1, 1983 at a contract price of $103,481.28.

 26. a) On or about November 15, 1982, DPSC, Medical formally advertised and issued Solicitation No. DLA120-83-B-0107 ("B-0107"), inviting competitive bids from qualified offerors, with a bid opening date of December 15, 1982. The end items being procured under B-0107 were 18,360 ea. Forceps, Hemostatic, Curved, Kelly, 5 1/2" Type II (NSN 6515-00-334-3800).

 b) Several companies, including the Plaintiff Columbia and the Defendant Sicoa, submitted timely bids. The Defendant Sicoa was awarded contract No. DLA120-83-C-4297 on February 7, 1983 at a contract price of $80,600.40; the Plaintiff Columbia bid a price of $96,390.00.

 27. The Terms and conditions of the above solicitations and the contracts awarded, or to be awarded, thereunder included inter alia, Clause I42, "Preference for Domestic Specialty Metals" (Jan. 1982), *fn3" or an amended version thereof, Clause I42, "Preference for Domestic Specialty Metals" (Oct. 1982). *fn4" This clause is required for inclusion by DAR 7-104.93(b).

 28. DAR 6-300 et seq., and the relevant contract and solicitations clauses found in DAR 7-104.93(b), are intended to implement congressional policy found in the annual Department of Defense Appropriations Act concerning restrictions on the availability of appropriated funds for the procurement of foreign source articles of certain specified commodities, including specialty metals.

 29. The Department of Defense Appropriation Act, 1982, P.L. No. 97-114, 95 Stat. 1565 (1981) appropriated monies for military functions administered by DOD, for the fiscal year ending September 30, 1982.

 30. The 1982 Appropriations Act contained a so-called "Buy American" provision, which is more fully discussed below.

 31. On or about October 2, 1982, the Joint Resolution making continuing appropriations for fiscal year 1983, P.L. No. 97-276, 96 Stat. 1186, appropriated monies for military functions pending passage of the regular DOD appropriation act for fiscal year 1983.

 32. Section 101(c) of the October Joint Resolution contained a "Buy American" clause, which is more fully discussed below.

 33. On or about December 21, 1982, the Joint Resolution making further continuing appropriations for fiscal year 1983, P.L. No. 97-377, 96 Stat. 1830, made further appropriations for military functions for fiscal year 1983 by adopting at section 101(c) the text of the proposed Department of Defense Appropriation Act, 1983.

 34. The December Joint Resolution contains the identical language of the Buy American provision found in the October Joint Resolution, except that "hand or measuring tools" are added.

 35. All of the above solicitations and contracts awarded, or to be awarded, thereunder, are funded from appropriated monies pursuant to the 1982 Appropriations Act, the October Joint Resolution, and the December Joint Resolution.

 36. The end items involved in the above solicitations are not "weapons or weapons systems."

 37. The Plaintiffs protested to the U.S. Comptroller General ("GAO") the award of contracts under the above solicitations to any entity other than the Plaintiffs. The GAO denied the protests of the Plaintiffs on March 16, 1983. There are no procedures to appeal this decision by the GAO.

 II. JURISDICTION

 Preliminarily, the Court must resolve the jurisdiction question raised in the Government Defendants' Motion To Dismiss, Or In The Alternative, To Transfer, and the Motion Of Defendant Surgical Instrument Co. Of America To Dismiss, Or In The Alternative, To Transfer. From the outset of this litigation, it was agreed by the parties herein that the award status of the solicitations encompassed by this action is as follows: Solicitation No. Award Status 1. DLA120-82-B-1866 unawarded 2. -82-R-1660 awarded 6/18/82 3. -82-B-1599 unawarded 4. -83-B-0541 unawarded 5. -82-R-2227 unawarded 6. -82-R-2324 awarded 2/8/83 7. -82-R-0046 awarded 1/28/83; 2/8/83 8. -83-B-0273 unawarded 9. -83-B-0002 awarded 3/7/83 10. -83-B-2466 awarded 2/8/83 11. -83-B-0308 unawarded 12. -83-B-0088 awarded 12/14/82 13. -83-B-0107 awarded 2/1/83

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