B-171636, JAN 17, 1972

B-171636, JAN 17, 1972

BID PROTEST - NONRESPONSIBILITY - DEFAULT TERMINATION DECISION DENYING THE PROTEST OF COMPUTRONICS, INC., AGAINST THE AWARD OF A CONTRACT TO ASC SYSTEMS CORPORATION UNDER AN IFB ISSUED BY THE U.S. NAVY AVIATION SUPPLY OFFICE. SINCE PROTESTANT'S APPEAL OF THE DEFAULT TERMINATION TO THE ARMED SERVICES BOARD OF CONTRACT APPEALS SEEMS TO INVOLVE SUBSTANTIAL ISSUES OF FACT, ANY DECISION REGARDING THESE MATTERS BY THE COMP. GEN. WOULD, AT THIS TIME, BE PREMATURE. ACCORDINGLY, THE PROTEST MUST BE DENIED.

TO WALTER J. MALYSZEK:

REFERENCE IS MADE TO YOUR TELEGRAM OF NOVEMBER 12, 1971, AND SUBSEQUENT CORRESPONDENCE REGARDING THE PROTEST OF COMPUTRONICS, INCORPORATED, AGAINST AWARD OF A CONTRACT TO ASC SYSTEMS CORPORATION BY THE UNITED STATES NAVY AVIATION SUPPLY OFFICE UNDER INVITATION FOR BIDS NO. N00383-71 -B-0215.

IN YOUR BRIEF SENT TO US ON NOVEMBER 23, 1971, YOU INDICATE THAT COMPUTRONICS WAS ORIGINALLY AWARDED A CONTRACT UNDER THIS IFB, BUT THAT THE CONTRACT WAS TERMINATED FOR DEFAULT AND THEREAFTER AN AWARD WAS MADE TO ASC. THE MAJOR PORTION OF YOUR BRIEF CONSISTS OF ALLEGATIONS CONCERNING THE EVENTS LEADING UP TO THE DEFAULT DETERMINATION; THE ONLY STATEMENT IN IT CONCERNING YOUR PROTEST IS THAT THE "TERMINATED CONTRACT WAS AWARDED TO ASC SYSTEMS WITHOUT THE BENEFIT OF COMPETITIVE QUOTING, AND AT A PRICE IN EXCESS OF COMPUTRONICS PRICE FOR THE SAME UNIT."

THE AWARD MADE TO ASC WAS FOR A REPURCHASE CONTRACT FOLLOWING COMPUTRONICS' DEFAULT. SINCE THIS TYPE OF PURCHASE IS MADE FOR THE ACCOUNT OF THE DEFAULTED CONTRACTOR, THE STATUTORY REQUIREMENT THAT CONTRACTS BE LET AFTER COMPETITIVE BIDDING IS NOT APPLICABLE. B 165884, MAY 28, 1969. IN THAT CASE WE NOTED THAT THE COURTS, THE ASBCA, AND THE COMPTROLLER GENERAL HAVE HELD THAT, IN REPROCUREMENT SITUATIONS, A DEFAULTED CONTRACTOR MAY BE CONSIDERED NOT RESPONSIBLE FOR THE NEW CONTRACT, THAT THE DEFAULTED CONTRACTOR MAY BE DISREGARDED AS A SOURCE OF SUPPLY, AND THAT THE REPURCHASE MAY BE CONFINED TO NEGOTIATING WITH THE PARTIES ORIGINALLY SOLICITED. THEREFORE, IT IS CLEAR THAT THE CONTRACTING OFFICER WAS NOT OBLIGATED EITHER TO ENGAGE IN COMPETITIVE ADVERTISING OR TO CONSIDER COMPUTRONICS FOR THE REPURCHASE AWARD. AS TO YOUR CLAIM THAT THE REPROCUREMENT WAS AT A HIGHER PRICE THAN OFFERED BY COMPUTRONICS, THIS IS A FREQUENT RESULT OF DEFAULT TERMINATIONS FOLLOWED BY REPROCUREMENTS, AND IT IS RECOGNIZED THAT, AS THE CONTRACT PROVIDES, THE DEFAULTED CONTRACTOR MAY BE LIABLE FOR EXCESS COSTS INCURRED BY THE GOVERNMENT IN REPROCURING.

IN YOUR LETTER OF DECEMBER 17, 1971, HOWEVER, YOU ASK THAT WE DECIDE THAT THE CONTRACTING OFFICER ACTED WITHOUT AUTHORITY AND ILLEGALLY IN DEFAULTING YOUR CLIENT AND THEREFORE, THAT, HIS ACTIONS ARE VOID AND OF NO EFFECT. YOU BASE THIS CLAIM UPON AN INTERPRETATION OF THE CONTRACT CLAUSE RELATING TO FIRST ARTICLE TESTING, WHICH STATES:

"IF THE CONTRACTOR FAILS TO DELIVER ANY FIRST ARTICLE APPROVAL TEST REPORT WITHIN THE TIME OR TIMES SPECIFIED, OR IF THE CONTRACTING OFFICER DISAPPROVES ANY FIRST ARTICLE, THE CONTRACTOR SHALL BE DEEMED TO HAVE FAILED TO MAKE DELIVERY WITHIN THE MEANING OF THE 'DEFAULT CLAUSE' OF THIS CONTRACT."

THE CONTRACTING OFFICER DEFAULTED COMPUTRONICS BECAUSE IT HAD "FAILED TO PROCURE THE MATERIAL FOR AND HAD FAILED TO COMMENCE THE PRODUCTION OF THE REQUIRED FIRST ARTICLE UNITS AND THAT SUCH FAILURE CONSTITUTED A FAILURE TO MAKE PROGRESS, WHICH WAS ENDANGERING PERFORMANCE OF THE CONTRACT IN ACCORDANCE WITH ITS TERMS." YOU CLAIM THAT THE CONTRACTING OFFICER'S ACTION WAS ILLEGAL BECAUSE IT WAS NOT PERMITTED BY THE ABOVE QUOTED CONTRACTUAL PROVISION UNTIL THE FIRST ARTICLE TEST REPORT WAS DUE.

WE NOTE THAT YOU HAVE APPEALED THE DEFAULT TERMINATION TO THE ASBCA. YOUR INITIAL BRIEF FILED WITH THE BOARD, YOU ASK FOR A CHANGE OF THE DEFAULT TERMINATION TO A TERMINATION FOR CONVENIENCE. IN YOUR SUPPLEMENTAL BRIEF FILED WITH ASBCA YOU RAISE THE ISSUE OF ILLEGAL ACTION ON THE PART OF THE CONTRACTING OFFICER, AND YOU ASK THE BOARD TO DECLARE SUCH ACTION VOID.

SINCE THIS IS A MATTER ARISING UNDER THE CONTRACT WHICH APPEARS TO INVOLVE SUBSTANTIAL ISSUES OF FACT, WE BELIEVE THAT THE MATTER IS PROPERLY BEFORE THE BOARD AND ANY DECISION BY OUR OFFICE DEALING WITH THE SAME ISSUES OF FACT WOULD BE PREMATURE. SEE B-171659, NOVEMBER 15, 1971. ACCORDINGLY, YOUR PROTEST IS DENIED.