B-168992, OCT. 1, 1970

B-168992: Oct 1, 1970

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THE RESTRICTION OF THE REPLACEMENT CONTRACT TO ONE CONCERN IN VIEW OF LIMITED TIME AVAILABLE AND THE TIME GIVEN THE TERMINATED CONTRACTOR TO IMPROVE IS NOT AN ABUSE OF ADMINISTRATIVE DISCRETION. HENCE TERMINATION ACTION AND REPROCUREMENT ARE PROPER ACTIONS. GRACE: REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 5. L-70-41 WAS AWARDED TO CSMC ON OCTOBER 13. CSMC WAS SELECTED FROM A NUMBER OF COMPETITORS. IT WAS CHOSEN IN PREFERENCE TO ONE OF ITS COMPETITORS. THE DEPARTMENT OF LABOR ADVISED CMSC THAT IT WAS EXERCISING ITS RIGHTS UNDER THE TERMINATION-FOR-CONVENIENCE CLAUSE. WHICH TERMINATION WAS MADE EFFECTIVE AS OF NOON. IN YOUR PROTEST YOU ALLEGE THAT THE CONTRACTING OFFICER'S ACTION IN TERMINATING THE CONTRACT WAS IN EXCESS OF HIS AUTHORITY.

B-168992, OCT. 1, 1970

BID PROTEST -- TERMINATION FOR CONVENIENCE DENIAL OF PROTEST AGAINST TERMINATION FOR CONVENIENCE OF CMSC'S CONTRACT FOR FURNISHING INFORMATION UNDER THE JOB BANK PROGRAM AND AWARD BY DEPARTMENT OF LABOR OF COMPUTING AND SOFTWARE, INC., ON NONCOMPETITIVE BASIS. ALTHOUGH RECORD OF CONTRACTOR DEFICIENCIES SUPPORTS TERMINATION FOR DEFAULT, THE ACCOMPLISHED TERMINATION FOR CONVENIENCE WOULD REST ON SAME SUBSTANTIAL AND SOUND BASIS. THE RESTRICTION OF THE REPLACEMENT CONTRACT TO ONE CONCERN IN VIEW OF LIMITED TIME AVAILABLE AND THE TIME GIVEN THE TERMINATED CONTRACTOR TO IMPROVE IS NOT AN ABUSE OF ADMINISTRATIVE DISCRETION. HENCE TERMINATION ACTION AND REPROCUREMENT ARE PROPER ACTIONS.

TO MILTON C. GRACE:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 5, 1970, PROTESTING, ON BEHALF OF COMPUTER MANAGEMENT & SERVICES CORPORATION (CMSC), AGAINST THE TERMINATION BY THE DEPARTMENT OF LABOR OF CONTRACT NO. L-70-41 FOR THE CONVENIENCE OF THE GOVERNMENT AND THE DEPARTMENT'S NONCOMPETITIVE SELECTION OF A SUCCESSOR CONTRACTOR. WE ALSO REFER TO UNDATED BRIEFS, RECEIVED BY US ON FEBRUARY 9 AND SEPTEMBER 1, 1970, SUBMITTED BY YOU IN SUPPORT OF THE PROTEST.

CONTRACT NO. L-70-41 WAS AWARDED TO CSMC ON OCTOBER 13, 1969, AFTER COMPETITIVE NEGOTIATION UNDER THE AUTHORITY OF 41 U.S.C. 252(C)(10). CSMC WAS SELECTED FROM A NUMBER OF COMPETITORS. IT WAS CHOSEN IN PREFERENCE TO ONE OF ITS COMPETITORS, COMPUTING AND SOFTWARE, INC. (C&S), SOLELY ON THE BASIS OF PRICE, TECHNICAL EVALUATION HAVING SHOWN CMSC AND C&S EQUAL WITH RESPECT TO ALL OTHER EVALUATION FACTORS. BY LETTER DATED JANUARY 27, 1970, THE DEPARTMENT OF LABOR ADVISED CMSC THAT IT WAS EXERCISING ITS RIGHTS UNDER THE TERMINATION-FOR-CONVENIENCE CLAUSE, WHICH TERMINATION WAS MADE EFFECTIVE AS OF NOON, JANUARY 30, 1970.

IN YOUR PROTEST YOU ALLEGE THAT THE CONTRACTING OFFICER'S ACTION IN TERMINATING THE CONTRACT WAS IN EXCESS OF HIS AUTHORITY, BECAUSE SUCH ACTION MAY BE TAKEN ONLY WHERE IT IS IN THE BEST INTEREST OF THE GOVERNMENT.

IN CONSIDERING THIS ASPECT OF YOUR PROTEST, WE MUST KEEP IN MIND ONE FUNDAMENTAL PRINCIPLE APPLICABLE TO THE NATURE OF THE REVIEW TO BE ACCORDED SUCH TERMINATIONS: THE CONTRACTING OFFICER IS VESTED WITH VERY BROAD DISCRETION TO DECIDE WHEN A TERMINATION FOR CONVENIENCE IS IN THE GOVERNMENT'S BEST INTERESTS. IN THE CASE OF JOHN REINER & COMPANY V UNITED STATES, 163 CT. CL. 381 (1963), THE COURT DESCRIBED AT PAGE 392 THE GOVERNMENT'S RIGHT TO TERMINATE FOR CONVENIENCE AS BEING "FAR-REACHING." IN DISCUSSING THE MEANING OF THE WORDS "IN THE BEST INTERESTS OF THE GOVERNMENT," THE COURT MADE THE FOLLOWING REMARKS AT PAGE 390:

" *** THE BROAD REACH OF THAT PHRASE COMPREHENDS TERMINATION IN A HOST OF VARIABLE AND UNSPECIFIED SITUATIONS CALLING (IN THE CONTRACTING OFFICER'S VIEW) FOR THE ENDING OF THE AGREEMENT; THE ARTICLE IS NOT RESTRICTED, AS PLAINTIFF CONTENDS, TO A DECREASE IN THE NEED FOR THE ITEM PURCHASED. UNDER SUCH AN ALL-INCLUSIVE CLAUSE, THE GOVERNMENT HAS THE RIGHT TO TERMINATE 'AT WILL' (DAVIS SEWING MACH. CO. V UNITED STATES, 60 CT. CL. 201, 217 (1925), AFF'D, 273 U.S. 324 (1927); LIBRACH V UNITED STATES, 147 CT. CL. 605, 611 (1959)), AND IN THE ABSENCE OF BAD FAITH OR CLEAR ABUSE OF DISCRETION THE CONTRACTING OFFICER'S ELECTION TO TERMINATE IS CONCLUSIVE. SEE LINE CONSTR. CO. V UNITED STATES, 109 CT. CL. 154, 187 (1947)."

IN ADDITION, IT SHOULD BE NOTED THAT THE COURT OF CLAIMS APPLIES THE RULE THAT:

" *** IN THE ABSENCE OF CLEAR EVIDENCE TO THE CONTRARY, IT MUST BE PRESUMED THAT THE PUBLIC OFFICIALS INVOLVED IN THE TERMINATION OF THE PLAINTIFFS' CONTRACT WERE ACTING CONSCIENTIOUSLY IN THE DISCHARGE OF THEIR DUTIES WHEN THE CONTRACT WAS TERMINATED FOR THE CONVENIENCE OF THE GOVERNMENT." JERRY LIBRACH AND SOL CUTLER V UNITED STATES, 147 CT. CL. 605 (1959), AT PAGE 612.

IN THIS VEIN, WE HELD IN B-168624, JANUARY 5, 1970, THAT:

" *** THE DETERMINATION WHETHER A CONTRACT SHOULD BE TERMINATED FOR THE CONVENIENCE OF THE GOVERNMENT IS A MATTER OF ADMINISTRATIVE DECISION WHICH DOES NOT REST WITH OUR OFFICE. SEE 47 COMP. GEN. 1 (1967), AND CASES CITED. *** "

WE HAVE REVIEWED THE ENTIRE RECORD IN LIGHT OF THE ABOVE PRINCIPLES, AND ON THE BASIS OF THE REVIEW WE HAVE CONCLUDED THAT THE ACTION OF THE DEPARTMENT OF LABOR IN TERMINATING CMSC'S CONTRACT FOR CONVENIENCE IS UNOBJECTIONABLE. SOME OF THE PARTICULAR REASONS WHICH PROMPTED THE TERMINATION WILL BE MENTIONED IN THE COURSE OF OUR DISCUSSION OF YOUR SECOND CONTENTION.

ON JANUARY 26, 1970, THE CONTRACTING OFFICER EXECUTED A "FINDINGS AND DETERMINATION UNDER SECTION 302(C)(2) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949." ONE OF THE FINDINGS WAS THAT:

"THE SERVICES ARE URGENTLY NEEDED BY JANUARY 27, 1970, IN ORDER NOT TO BREAK DOWN THE CONTINUITY OF THE DAILY 'JOB BANK' BOOK CIRCULATION." WAS ALSO RECITED THEREIN THAT CMSC'S CONTRACT WAS BEING TERMINATED FOR CONVENIENCE DUE TO ITS INABILITY TO PERFORM THE WORK. THE CONTRACTING OFFICER DETERMINED THAT FORMAL ADVERTISING WOULD NOT BE A PRACTICAL METHOD OF EFFECTING THE REPROCUREMENT AND THAT NEGOTIATION WAS THEREFORE JUSTIFIED.

THE FEBRUARY 20, 1970, REPORT OF THE DEPARTMENT OF LABOR COMMENTS UPON THE NECESSITY TO NEGOTIATE A CONTRACT:

" *** IF THE PROJECT WERE NOT IMMEDIATELY CONTINUED WITH A SUCCESSOR CONTRACTOR, CONSIDERABLE GOVERNMENT INVESTMENT IN MONEY, TIME, AND EFFORT TO SHOW THE FEASIBILITY OF A JOB BANK PROGRAM IN THE METROPOLITAN WASHINGTON, D. C. AREA MAY VERY WELL HAVE GONE FOR NAUGHT."

THE JOB BANK PROGRAM IS DESIGNED TO PROVIDE PUBLIC EMPLOYMENT OFFICES WITH A LIST OF JOB OPPORTUNITIES AT THE BEGINNING OF EACH WORKDAY. THE LIST IS INTENDED TO BE CURRENT AS OF THE CLOSE OF BUSINESS ON THE PREVIOUS WORKDAY. THE SUCCESS OF THE PROGRAM DEPENDS ON THE SPEED AND ACCURACY WITH WHICH CURRENT EMPLOYMENT INFORMATION IS COLLECTED, PROCESSED, AND DISTRIBUTED.

WITHIN A FEW WEEKS OF THE DATE WHEN CMSC COMMANCED PERFORMANCE UNDER ITS OCTOBER 13, 1969, CONTRACT, THE LABOR DEPARTMENT BECAME AWARE THAT CMSC WAS HAVING DIFFICULTY MEETING ITS COMMITMENT IN TERMS OF BOTH THE PROMPTNESS AND THE ACCURACY REQUIRED TO MAKE THE PROGRAM WORK PROPERLY. WE ARE ADVISED THAT THE DEFICIENCIES IN CMSC'S PERFORMANCE MAY BE ATTRIBUTABLE TO SOME EXTENT TO AN INCREASE IN THE VOLUME OF WORK BEYOND THAT ORIGINALLY ANTICIPATED.

IT APPEARS THAT THE DEPARTMENT OF LABOR PROVIDED CONSIDERABLE ASSISTANCE AND SUPPORT IN AN ATTEMPT TO PREVENT THE PROGRAM'S FRUSTRATION. THE SPECIFIC DEFICIENCIES IN CMSC'S PERFORMANCE AND THE ITEMS OF ASSISTANCE FURNISHED BY THE GOVERNMENT ARE SET FORTH IN THE DEPARTMENTAL REPORT. HOWEVER, IT SEEMS THAT CMSC'S PERFORMANCE WAS NOT IMPROVED SUFFICIENTLY TO ASSURE PROPER IMPLEMENTATION OF THE JOB BANK PROGRAM IN THE WASHINGTON, D. C., AREA. THEREFORE, IN THE WORDS OF THE REPORT:

"IN THE FACE OF CONTINUED POOR PERFORMANCE, NOTWITHSTANDING THE LIBERAL USE OF GOVERNMENT RESOURCES TO HELP THE CONTRACTOR WITH THE PERFORMANCE OF THE CONTRACT, IT BECAME NECESSARY TO INFORM THE CONTRACTOR IN A LETTER DATED JANUARY 8, 1970, THAT THE DEPARTMENT WAS GIVING CONSIDERATION TO TERMINATING THE CONTRACT FOR DEFAULT." IN THAT LETTER, CMSC WAS ALSO REQUESTED TO FURNISH TO THE CONTRACTING OFFICER, WITHIN 7 DAYS OF RECEIPT OF THE LETTER, ANY EXPLANATION FOR ITS FAILURE TO PERFORM.

FOR REASONS WHICH ARE ADEQUATELY SET FORTH IN THE ADMINISTRATIVE REPORT, A COPY OF WHICH WAS FURNISHED TO YOU IN THE LATTER PART OF FEBRUARY 1970, THE CMSC CONTRACT WAS NOT TERMINATED FOR DEFAULT AS WAS CONTEMPLATED IN THE EARLY PART OF JANUARY, BUT WAS IN FACT TERMINATED FOR CONVENIENCE. THERE IS NO SHOWING THAT CMSC'S PERFORMANCE IMPROVED MATERIALLY, OR FOR THAT MATTER IMPROVED AT ALL, BETWEEN JANUARY 8 AND 27. SINCE THE INADEQUACY OF CMSC'S PERFORMANCE WAS SUCH AS WOULD PROMPT THE DEPARTMENT OF LABOR TO GIVE SERIOUS CONSIDERATION TO A TERMINATION FOR DEFAULT, THE TERMINATION FOR CONVENIENCE WOULD APPEAR TO REST ON A BASIS WHICH IS CLEARLY SUBSTANTIAL AND SOUND.

YOUR OBJECTION TO THE NONCOMPETITIVE SELECTION OF C&S AS SUCCESSOR CONTRACTOR IS BASED UPON TWO ASSERTIONS. THE FIRST CONTENTION IS THAT THERE WAS NO "PUBLIC EXIGENCY," WITHIN THE MEANING OF 41 U.S.C. 252(C)(2), WHICH WOULD SERVE AS AUTHORITY TO EFFECT PROCUREMENT BY NEGOTIATION. SECOND, YOU ALLEGE THAT EVEN IF NEGOTIATION WERE PROPER, THE FAILURE TO SECURE COMPETITION WHEN IT WAS KNOWN TO BE AVAILABLE WAS IMPROPER.

WE CANNOT AGREE THAT THE SITUATION CONFRONTING THE DEPARTMENT OF LABOR IN LATE JANUARY 1970 WAS NOT SUCH AS WOULD REQUIRE AN EXPEDITIOUS CONTRACT AWARD. IN THE DEPARTMENT'S JUDGMENT, CONTINUED PERFORMANCE BY CMSC WOULD HAVE SEVERELY JEOPARDIZED THE JOB BANK PROGRAM. THE HIATUS IN PERFORMANCE INCIDENT UPON TERMINATION OF CMSC'S CONTRACT AND A CONCURRENT FORMAL SOLICITATION OF BIDS WOULD HAVE PLACED THE PROGRAM IN AT LEAST EQUALLY SERIOUS STRAITS. IT DOES NOT APPEAR TO US THAT THE TERM "PUBLIC EXIGENCY" SHOULD BE CONSTRUED IN SUCH A WAY AS WOULD PRECLUDE THE DEPARTMENT FROM AVOIDING A HIGHLY UNDESIRABLE RESULT BY MEANS OF A PROMPTLY AWARDED REPLACEMENT CONTRACT. IT SHOULD ALSO BE OBSERVED THAT THE CAUSE OF THE NECESSITOUS SITUATION WITH WHICH THE DEPARTMENT HAD TO CONTEND WAS NOT GOVERNMENTAL INACTION IN THE MATTER, BUT CMSC'S INADEQUATE CONTRACTUAL PERFORMANCE WHICH WAS APPARENTLY INCAPABLE OF SUFFICIENT IMPROVEMENT DESPITE REPEATED INFUSIONS OF GOVERNMENTAL ASSISTANCE. ACCORDINGLY, WE CANNOT CONCLUDE THAT IT WAS IMPROPER TO UTILIZE NEGOTIATION AUTHORITY UNDER THE PUBLIC EXIGENCY EXCEPTION.

CONCERNING THE LABOR DEPARTMENT'S FAILURE TO SECURE COMPETITION PRIOR TO AWARDING A CONTRACT TO C&S, WE HAVE HELD ON NUMEROUS OCCASIONS THAT WHEN NEGOTIATION IS UNDERTAKEN UNDER THE PUBLIC EXIGENCY EXCEPTION, A CONTRACTING OFFICER MAY, WITHIN A BROAD RANGE OF DISCRETION, PROPERLY LIMIT THE NEGOTIATION TO A SINGLE SOURCE OF SUPPLY. FOR EXAMPLE, IN 44 COMP. GEN. 590 (1965), WE STATED AT PAGE 593:

"WHILE THE APPLICABLE STATUTE (10 U.S.C. 2304(G)) REQUIRES THAT EVEN WHERE AUTHORITY EXISTS TO NEGOTIATE PROCUREMENTS, PROPOSALS SHALL BE SOLICITED FROM THE MAXIMUM NUMBER OF QUALIFIED SOURCES CONSISTENT WITH THE NATURE AND REQUIREMENTS OF THE SUPPLIES OR SERVICES TO BE PROCURED, THE 'PUBLIC EXIGENCY' JUSTIFICATION FOR NEGOTIATION IMBUES THE CONTRACTING OFFICER WITH A CONSIDERABLE RANGE OF DISCRETION IN DETERMINING THE EXTENT OF NEGOTIATION CONSISTENT WITH THE EXIGENCY OF THE SITUATION. IN THE ABSENCE OF EVIDENCE INDICATING AN ARBITRARY OR CAPRICIOUS EXERCISE OF THE DISCRETION PERMITTED, OUR OFFICE IS NOT REQUIRED TO OBJECT THERETO." FOR MORE RECENT DECISIONS TO THE SAME EFFECT, SEE B-166886, AUGUST 7, 1969, AND B-169042, JUNE 16, 1970.

UPON REVIEWING THE RECORD, NOTING ESPECIALLY THE LIMITED TIME AVAILABLE TO THE LABOR DEPARTMENT TO EFFECT REPROCUREMENT, WE ARE NOT PERSUADED THAT THE RESTRICTION OF THE PROCUREMENT TO ONE CONCERN CONSTITUTES AN ABUSE OF ADMINISTRATIVE DISCRETION.

FOR THE FOREGOING REASONS, YOUR PROTEST MUST BE DENIED.