
DATE: Saturday, August 30, 1997             TAG: 9708300793
SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER 

DATELINE: NORFOLK                           LENGTH:   74 lines

JUDGE UPHOLDS NAVY'S RIGHT TO DENY CONTRACT

A federal judge on Friday denied Marine Hydraulics International's attempt to block the award of a Navy ship repair contract worth up to $6.7 million to Moon Engineering Co. Inc.

The decision means the amphibious transport ship Nashville will arrive Tuesday in Moon's Portsmouth shipyard. The job will sustain Moon's 200-plus employees through the end of the year.

In denying the request for a preliminary injunction, however, Judge Henry C. Morgan said his sympathies lie with MHI.

MHI sued the Navy two weeks ago, after its bid to repair the Nashville was disqualified. The Navy disqualified MHI's bid because, under Navy specifications, the warship would have to pass too close to a drawbridge en route to the small Norfolk shipyard.

After disqualifying MHI, which was the low bidder by more than $1 million, the Navy awarded the job to Moon.

At issue was a Navy standard that says a ship must have 17.5 feet clear on each side between a fixed object, such as a bridge, and the vessel's extreme beam, or its widest point.

The judge could have blocked the contract award if he had found the application of that standard to be arbitrary or capricious.

Morgan did not; however, he did suggest that the standard may be unreasonable.

``The government has a habit of adopting unreasonable positions and defending them to the death,'' Morgan said.

In this case it was clear that, by ordinary maritime practice, the Nashville could have cleared the railroad bridge, Morgan said. However, the Navy is not bound by maritime industry custom, he said.

Nor are the Navy's standards arbitrary and capricious just because they don't conform to maritime industry practice, Morgan said.

``I share the plaintiff's frustration,'' Morgan said. ``I don't think this matter was handled correctly.''

Morgan suggested that the Navy should have told MHI before it went through the bid process that it had no intention of letting the Nashville sail to MHI's shipyard.

MHI President Robert S. Walker said: ``I'm disappointed in the way the government has handled this. They could have been much more above board.''

MHI has been laying off workers since it lost the contract. It currently employs a little more than 100 workers, down from its usual 250. Walker said he expects to win some work soon to replace the Nashville contract.

``You very seldom win with the government,'' Walker said. ``I think the judge gave the government a good tongue-lashing.''

Neither the U.S. attorney representing the Navy nor representatives of Moon could not be reached for comment. ILLUSTRATION: Graphic

THE SITUATION

A federal judge on Friday denied Marine Hydraulics International's

attempt to block the award of a Navy ship repair contract worth up

to $6.7 million to Moon Engineering Co. Inc. MHI sued the Navy two

weeks ago after its bid to repair the Nashville was disqualified

because the ship would have to pass too close to a drawbridge en

route to the small Norfolk shipyard.

WHAT IS AT ISSUE

At issue was a Navy standard that says a ship must have 17.5 feet

clear on each side between a fixed object, such as a bridge, and