B-169478, MAY 14, 1970

B-169478: May 14, 1970

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IS DENIED SINCE DETERMINATION AS TO WHETHER PUBLIC INTEREST REQUIRES TERMINATION OF GOVERNMENT CONTRACT IS MATTER FOR ADMINISTRATIVE DISCRETION. GAO IS WITHOUT AUTHORITY TO REQUIRE REINSTATEMENT OF TERMINATED CONTRACT. TRUITT: REFERENCE IS MADE TO YOUR LETTER OF APRIL 2. THE BASIS FOR THE PROTEST IS THAT THE STAFF. TREATMENT AND FACILITIES OF THE HOSPITAL HATO TEJAS ARE SUPERIOR TO THOSE OF THE OTHER HOSPITAL AND THAT THE HOSPITAL HATO TEJAS IS THE LOWER COST CONTRACTOR. THE VETERANS ADMINISTRATION OPENED A NEW 688-BED REPLACEMENT GENERAL HOSPITAL WHICH CURRENTLY IS OPERATING 318 BEDS AND PLANS TO HAVE ALL THE HOSPITAL BEDS FULLY ACTIVATED BY SEPTEMBER 1970. INCLUDED IN THE TOTAL BED CAPACITY ARE 240 BEDS FOR PSYCHIATRIC PATIENTS.

B-169478, MAY 14, 1970

GENERAL ACCOUNTING OFFICE--JURISDICTION--CONTRACTS--DEFAULT OR TERMINATION HOSPITAL'S PROTEST OF TERMINATION OF GOVERNMENT CONTRACT OF VETERANS ADMINISTRATION FOR PSYCHIATRIC TREATMENT AND FACILITIES IN PUERTO RICO DUE TO OPENING OF LARGER VETERANS ADMINISTRATION HOSPITAL, AND DETERMINATION TO USE ONE OTHER PRIVATE FACILITY, IS DENIED SINCE DETERMINATION AS TO WHETHER PUBLIC INTEREST REQUIRES TERMINATION OF GOVERNMENT CONTRACT IS MATTER FOR ADMINISTRATIVE DISCRETION, THERE BEING NO STATUTES OR REGULATIONS PRESCRIBING FACTORS TO BE CONSIDERED IN DECIDING WHICH OF TWO CONTRACTS SHOULD BE TERMINATED WHEN PUBLIC INTEREST REQUIRES TERMINATION OF ONE. ACCORDINGLY, GAO IS WITHOUT AUTHORITY TO REQUIRE REINSTATEMENT OF TERMINATED CONTRACT. SEE 18 COMP. GEN. 826 (1939).

TO MESSRS. CARLETON A. HARKRADER AND STEPHEN M. TRUITT:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 2, 1970, PROTESTING THE TERMINATION BY THE VETERANS ADMINISTRATION OF CONTRACT V4055P-588 WITH HOSPITAL HATO TEJAS, INC; FOR PSYCHIATRIC TREATMENT AND FACILITIES IN PUERTO RICO, WHILE CONTINUING A CONTRACT FOR SIMILAR SERVICES WITH ANOTHER HOSPITAL.

THE BASIS FOR THE PROTEST IS THAT THE STAFF, TREATMENT AND FACILITIES OF THE HOSPITAL HATO TEJAS ARE SUPERIOR TO THOSE OF THE OTHER HOSPITAL AND THAT THE HOSPITAL HATO TEJAS IS THE LOWER COST CONTRACTOR.

THE VETERANS ADMINISTRATION HAS REPORTED ON THE MATTER AS HEREINAFTER SET FORTH. THE VETERANS ADMINISTRATION OPERATED A 200-BED GENERAL HOSPITAL IN SAN JUAN, PUERTO RICO, FOR A NUMBER OF YEARS AND SUPPLEMENTED THE SERVICES PROVIDED BY THE HOSPITAL THROUGH NEGOTIATED CONTRACTS ENTERED INTO WITH PRIVATE FACILITIES, INCLUDING THE HOSPITAL HATO TEJAS. IN NOVEMBER 1969, THE VETERANS ADMINISTRATION OPENED A NEW 688-BED REPLACEMENT GENERAL HOSPITAL WHICH CURRENTLY IS OPERATING 318 BEDS AND PLANS TO HAVE ALL THE HOSPITAL BEDS FULLY ACTIVATED BY SEPTEMBER 1970. INCLUDED IN THE TOTAL BED CAPACITY ARE 240 BEDS FOR PSYCHIATRIC PATIENTS.

THE ADMINISTRATION HAS REPORTED THAT OWNERS OF CONTRACT HOSPITALS IN PUERTO RICO HAVE KNOWN FOR AT LEAST 4 YEARS OF THE INTENTION TO DISCONTINUE THE CONTRACT HOSPITAL PROGRAM WITH THE ACTIVATION OF THE NEW HOSPITAL. FURTHER, THE DIRECTOR OF THE SAN JUAN VETERANS ADMINISTRATION CENTER MADE A PERSONAL VISIT TO EACH CONTRACT HOSPITAL DURING THE PERIOD JULY TO NOVEMBER 1969 AND NOTIFIED THE DIRECTOR OR ADMINISTRATOR OF EACH CONTRACT HOSPITAL THAT HE SHOULD NOT PLAN TO HAVE VETERANS ADMINISTRATION PATIENTS AFTER ACTIVATION OF THE BEDS IN THE NEW HOSPITAL.

IT IS REPORTED THAT IT IS THE JUDGMENT OF THE STAFF AND THE DIRECTOR OF THE SAN JUAN VETERANS ADMINISTRATION CENTER THAT THE SERVICES PREVIOUSLY PROVIDED BY THE HOSPITAL HATO TEJAS, INC; ARE NOT REQUIRED TO MEET THE NEEDS OF ELIGIBLE VETERANS IN PUERTO RICO AND THAT THE HOSPITAL PSYCHIATRIC SERVICES REQUIRED OVER AND ABOVE THOSE THAT ARE PRESENTLY PROVIDED BY THE NEW FACILITY CAN BEST BE OBTAINED ON AN INTERIM BASIS WITH THE HOSPITAL HATO REY, THE OTHER HOSPITAL REFERRED TO ABOVE. THAT DETERMINATION HAS BEEN REVIEWED AND CONCURRED IN BY THE VETERANS ADMINISTRATION DEPARTMENT OF MEDICINE AND SURGERY IN WASHINGTON.

CONTRACTS MAY BE TERMINATED BY THE GOVERNMENT WHEN IT IS DETERMINED TO BE IN THE PUBLIC INTEREST. IT IS A RULE OF LONG STANDING THAT THE DETERMINATION AS TO WHETHER THE PUBLIC INTEREST REQUIRES THE TERMINATION OF A CONTRACT IS A MATTER FOR ADMINISTRATIVE DECISION AND DOES NOT REST WITH THIS OFFICE. 18 COMP. GEN. 826 (1939). ALTHOUGH PROCUREMENT STATUTES AND REGULATIONS INDICATE WHAT CONSIDERATIONS ARE TO BE MADE IN SELECTING THE BIDDER FOR AN AWARD OF A CONTRACT, THERE ARE NO STATUTES OR REGULATIONS WHICH PRESCRIBE WHAT FACTORS ARE TO BE TAKEN INTO CONSIDERATION IN DECIDING WHICH OF TWO CONTRACTS PREVIOUSLY AWARDED IS TO BE TERMINATED WHEN THE PUBLIC INTEREST PRESENTLY REQUIRES THE TERMINATION OF AT LEAST ONE. SINCE THE AWARDING OF CONTRACTS IS PRESCRIBED BY STATUTE AND REGULATION, OUR OFFICE REVIEWS SUCH ACTIONS AND, WHEN THE FACTS INDICATE THAT THE AWARD IS CONTRARY TO STATUTE OR REGULATION, WE MAY DIRECT CANCELLATION OF THE CONTRACTS AWARDED. HOWEVER, SINCE, AS INDICATED ABOVE, THE TERMINATION OF GOVERNMENT CONTRACTS IN THE PUBLIC INTEREST IS A MATTER OF ADMINISTRATIVE DISCRETION AND NOT CONTROLLED BY STATUTE OR REGULATION, OUR OFFICE IS WITHOUT AUTHORITY TO REQUIRE THE REINSTATEMENT OF A TERMINATED CONTRACT.

SINCE THE VETERANS ADMINISTRATION HAS DETERMINED THAT THE INTERIM SERVICES CAN BEST BE OBTAINED FROM ANOTHER HOSPITAL AND THERE IS NO LEGAL BASIS FOR OBJECTION TO THAT DETERMINATION BY THIS OFFICE, THE PROTEST IS DENIED.