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WESTINGHOUSE ELEC. CORP. v. UNITED STATES DEPT. OF

June 30, 1995

WESTINGHOUSE ELECTRIC CORPORATION, Plaintiff,
v.
UNITED STATES DEPARTMENT OF THE NAVY and JOHN B. DALTON, Secretary of the Navy, Defendants, and LOCKHEED MARTIN CORPORATION, Intervenor.



The opinion of the court was delivered by: LANCASTER

 Gary L. Lancaster

 District Judge

 June 30, 1995

 Plaintiff, Westinghouse Electric Corporation, seeks a declaratory judgment and injunctive relief in connection with a Navy procurement contract. Westinghouse has standing to bring this suit.

 Westinghouse alleges that it is the sole producer and supplier to the Navy of a sophisticated anti-submarine warfare combat system ("SQQ-89"). Westinghouse contends that it won the right to be the sole-source for the system in 1992 after a down select competition between it and the General Electric Corporation. Westinghouse alleges that the Secretary of the Navy now intends to conduct, in violation of the Competition In Contracting Act, 10 U.S.C. ยง 2304, a limited competition between Westinghouse and General Electric's corporate successor, Lockheed Martin Corporation, for the Navy's future requirements for this system.

 Westinghouse further contends that the Secretary made certain statements at the time of the down select competition that were justifiably understood by Westinghouse as indicating that the winner of the competition would be awarded all future contracts for this system on a non-competitive sole-source basis. According to Westinghouse, because it relied on these statements to its detriment, the Secretary is now equitably estopped from awarding the contract on any other basis. Westinghouse seeks an order requiring the Secretary to negotiate with it for any further system requirements on a sole-source basis.

 Before the court are the parties' cross-motions for summary judgment. For the reasons that follow, the court finds that there are no genuine disputes of any material fact, and the Secretary is entitled to judgment as a matter of law.

 I. BACKGROUND

 The court assumes that the parties are familiar with the general background, allegations, and defenses in this complex litigation, and the court will not discuss them at length here. The undisputed facts material to the motion, however, are as follows:

 The Surface Ship Anti-Submarine Warfare Combat System is used on various classes of Navy ships and detects, tracks, and classifies targets; controls weapon settings; and coordinates information with the ships' combat direction system. The Navy contracted with General Electric on a sole-source basis for the first such system in fiscal year 1988 (FY88) and again in FY89.

 At the same time, the Navy established what is called a "leader/follower" program for this system. Under such a program, in order to ensure a reliable supply, the Secretary transferred technology from the leader source, General Electric, to a follower source, who would serve as a second supplier. In 1987, Westinghouse was selected competitively as the follower source. The first dual source competition between General Electric and Westinghouse was held in 1990; Westinghouse won the FY90 award and General Electric won the FY91 award.

 Subsequently, the Navy reevaluated its dual source system and concluded that it was costly and inefficient. As a result, the Navy decided that instead of a dual source system, the "successful offeror for the [FY92] production requirements [would] become the sole producer, system engineering and design agent contractor for the AN/SQQ-89CV program." A.R. Tab 21 at 125. Ultimately, the Navy solicited bids on the system from Westinghouse and General Electric, reiterating that "this competition will result in a downselect decision for the AN/SQQ-89(v) program. The successful offeror will become the sole producer, system engineering and design agent contractor for the AN/SQQ-89(v) program." A.R. Tab 38 at 266.

 The Navy awarded Westinghouse the FY92 contract. At that time, both Westinghouse and the Navy expected that Westinghouse would be the sole producer of the system for the life of the program. Westinghouse contends and the record supports a finding that relying on the fact that it was bidding for the life of the program, Westinghouse arranged long-term low-priced contracts with suppliers and bid a lower price.

 When General Electric lost the down select competition the Navy assumed that it would no longer be in a position to bid on the system in the future. Subsequently, however, Martin Marietta purchased the General Electric Aerospace business unit involved in the system program. After Lockheed merged with Martin Marietta, the company advised the Secretary that it was interested in and had the ability to compete for the system contract. As a result, the Navy decided to renew limited competitive bids between Lockheed and Westinghouse for the system, and on May 16, 1995, the Navy published a formal notice of ...


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