B-170230, JAN 28, 1971

B-170230, JAN 28, 1971

BID PROTEST - TERMINATION OF CONTRACT IN GOVERNMENT INTEREST DENIAL OF PROTEST OF FOREST LAWN MEMORIAL CHAPEL, INC., AGAINST THE TERMINATION OF A CONTRACT FOR MORTUARY SERVICES AND AWARD OF AN ADVERTISED CONTRACT ISSUED BY DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE TO ANCHORAGE FUNERAL CHAPEL, INC. UPON PROTEST OF ANCHORAGE AGAINST THE AWARD OF THE CONTRACT TO FOREST LAWN, PROTESTANT HERE, IT WAS DETERMINED THAT EVEN IF ANCHORAGE'S BID ON ITEM 7 OF "$8,050 (CATHOLIC MASS - $45.00)" WAS INTERPRETED SO THAT THE PARENTHETICAL REMARK WOULD BE CONSIDERED AN ADDITION, THE BID WAS STILL LOW. THEREFORE, THE AWARD TO PROTESTANT WAS UNAUTHORIZED AND THE PROCUREMENT AGENCY PROPERLY INVOKED THE TERMINATION FOR CONVENIENCE CLAUSE OF THE CONTRACT TO RECTIFY THE ERRONEOUS AWARD.

TO FOREST LAWN MEMORIAL CHAPEL, INC.:

FURTHER REFERENCE IS MADE TO YOUR TELEFAX DATED SEPTEMBER 1, 1970, PROTESTING THE TERMINATION OF CONTRACT NO. HSM 76-71-99 WHICH WAS AWARDED TO YOUR FIRM BY THE ALASKA NATIVE MEDICAL CENTER, PUBLIC HEALTH SERVICE, HEALTH SERVICES AND MENTAL HEALTH ADMINISTRATION, DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, ANCHORAGE, ALASKA.

THE CONTRACT WAS AWARDED UNDER SOLICITATION NO. HSM 76-SOL-35-70, COVERING MORTUARY SERVICES FOR THE PERIOD JULY 1, 1970, THROUGH JUNE 30, 1971. ITEM 7 OF THE SOLICITATION REQUESTED UNIT PRICE BIDS FOR 43 ESTIMATED "CHAPEL AND/OR GRAVESIDE SERVICES INCLUDING SERVICES OF PRIEST, MINISTER OR RABBI AND ORGANIST."

THREE BIDS WERE RECEIVED AND WERE OPENED ON JUNE 25, 1970, IN THE FOLLOWING AGGREGATE AMOUNTS COVERING THE EIGHT ITEMS OF THE SOLICITATION:

ANCHORAGE FUNERAL CHAPEL, INC. $ 8,050

EVERGREEN MEMORIAL CHAPEL, INC. 8,673

FOREST LAWN MEMORIAL CHAPEL, INC. 11,085

THE LOW BIDDER INSERTED THE WORD "INCLUDED" IN THE UNIT PRICE COLUMN OF ITEM 7 AND ADDED THE WORDS "(CATHOLIC MASS - $45.00)" AFTER THE ITEM DESCRIPTION, QUOTED ABOVE.

THE RECORD INDICATES THAT ON JUNE 29, 1970, THE CONTRACTING OFFICER TELEPHONED MR. GORDON GREENE OF ANCHORAGE IN AN ATTEMPT TO CLARIFY THE CORPORATION'S LOW BID. AS A RESULT OF THIS CONVERSATION, IT WAS THE CONTRACTING OFFICER'S UNDERSTANDING THAT THE $45 FOR A CATHOLIC MASS WOULD BE AN "ADDITION." HE THEREFORE DETERMINED THAT THE LOW BIDDER HAD QUALIFIED ITS BID AS TO ITEM 7 AND WAS THEREFORE NONRESPONSIVE TO THE TERMS OF THE SOLICITATION.

THE SECOND LOW OFFEROR, EVERGREEN, BY LETTER STATED, WITH RESPECT TO ITS BID ON ITEM 7, THAT THERE WOULD BE A $45 CHARGE FOR CATHOLIC AND/OR RUSSIAN ORTHODOX SERVICES, AND ITS BID WAS ALSO DETERMINED TO BE NONRESPONSIVE. YOUR FIRM, ALTHOUGH HIGH BIDDER, WAS DETERMINED TO BE THE ONLY RESPONSIVE BIDDER UNDER THE SOLICITATION AND THE CONTRACT WAS AWARDED TO YOU ON JUNE 29, 1970.

ON JULY 1, 1970, AS CONFIRMED BY LETTER OF JULY 6, MR. GREENE OF ANCHORAGE CONTACTED THE CONTRACTING OFFICER TO PROTEST THE AWARD OF THE CONTRACT TO YOUR FIRM. HE STATED THAT ITS BID ON ITEM 7 HAD BEEN MISINTERPRETED IN THAT THE STATEMENT "CATHOLIC MASS - $45.00" WAS FOR INFORMATION PURPOSES ONLY AND WAS NOT TO BE REGARDED AS AN ADDITIONAL CHARGE TO THE GOVERNMENT. THE PROTEST PROMPTED A FULL REVIEW OF THE CIRCUMSTANCES OF THE AWARD AND, EVENTUALLY, IT WAS ADMINISTRATIVELY DETERMINED TO TERMINATE YOUR CONTRACT FOR THE CONVENIENCE OF THE GOVERNMENT. THE CIRCUMSTANCES WHICH LED TO THE TERMINATION OF YOUR CONTRACT ARE REPORTED BY THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE AS FOLLOWS:

"UPON REVIEW OF THE FILE IT WAS DETERMINED THAT ALL THREE BIDDERS WERE RESPONSIVE TO THE TERMS OF THE SOLICITATION. HOWEVER, TWO OF THE THREE BIDDERS ADDED EXPLANATORY INFORMATION TO ITEM 7, PERTAINING TO RELIGIOUS SERVICES, AS FOLLOWS: THE ANCHORAGE FUNERAL CHAPEL, INC. INSERTED THE WORDS, 'CATHOLIC MASS - $45.00, AND EVERGREEN MEMORIAL CHAPEL, INC. REFERENCED A CHARGE OF $45.00 FOR EITHER CATHOLIC OR RUSSIAN ORTHODOX SERVICES, BY SUBMITTAL OF A LETTER.

"IF THE REFERENCED CHARGES ARE CONSIDERED TO BE ADDITIONAL CHARGES FOR PURPOSES OF BID EVALUATION (ESTIMATED QUANTITY 43 X $45.00 $1,935) THE FOLLOWING RESULT IS PRODUCED:

ANCHORAGE FUNERAL CHAPEL, INC. $ 8,050

EVERGREEN MEMORIAL CHAPEL, INC. 8,673

FOREST LAWN MEMORIAL CHAPEL, INC. 11,085

"IN VIEW OF THE FOREGOING, THE AWARD TO FOREST LAWN MEMORIAL CHAPEL WAS IMPROPER, AND IT WAS DETERMINED TO BE IN THE BEST INTERESTS OF THE GOVERNMENT THAT THE CONTRACT BE TERMINATED AND THE REQUIREMENT RESOLICITED UNDER REVISED SPECIFICATIONS WITH SUB-ITEMS TO COVER CATHOLIC, PROTESTANT, RUSSIAN ORTHODOX, AND OTHER RELIGIOUS SERVICES."

BY LETTER OF AUGUST 24, 1970, THE CONTRACTING OFFICER ADVISED YOUR FIRM THAT THE PROTEST OF THE ANCHORAGE FUNERAL CHAPEL, INC., HAD BEEN UPHELD AND THAT YOUR CONTRACT HAD BEEN TERMINATED FOR THE CONVENIENCE OF THE GOVERNMENT.

FROM THE FOREGOING, IT WILL BE SEEN THAT EVEN WITH THE ADDITION OF THE $45 CHARGE TO THE AGGREGATE BID PRICES OF THE TWO LOW BIDDERS, THEIR RELATIVE STANDINGS ARE NOT AFFECTED. HENCE, SINCE ANCHORAGE'S BID WAS, IN FACT, THE LOWEST BID RECEIVED AND SINCE BOTH THE LAW (41 U.S.C. 253(B)) AND THE REGULATIONS (FPR SEC. 1-2.407-1) CONTEMPLATE AWARD TO THE LOWEST RESPONSIVE BIDDER, THE AWARD TO YOUR FIRM WAS UNAUTHORIZED. IN SUCH CIRCUMSTANCES, THE PROCUREMENT AGENCY PROPERLY COULD INVOKE THE TERMINATION FOR CONVENIENCE CLAUSE OF YOUR CONTRACT TO RECTIFY THE ERRONEOUS AWARD.

IT HAS LONG BEEN RECOGNIZED BY THE COURTS AND BY OUR OFFICE THAT THE AUTHORITY TO ENTER INTO A GOVERNMENT CONTRACT INCLUDES AUTHORITY TO TERMINATE IT WHEN TO DO SO WOULD BE IN THE PUBLIC INTEREST AND TO MAKE A BINDING AGREEMENT WITH THE CONTRACTOR IN FULL AND FINAL SETTLEMENT OF HIS TERMINATION CLAIM. SEE 44 COMP. GEN. 466 (1965); UNITED STATES V CORLISS STEAM-ENGINE COMPANY, 91 U.S. 321 (1875). IN THIS REGARD, 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. SEE PART 1-8 OF THE FEDERAL PROCUREMENT REGULATIONS (FPR) FOR THE POLICIES AND PROCEDURES APPLICABLE TO THE TERMINATION OF CONTRACTS FOR THE CONVENIENCE OF THE GOVERNMENT.

ACCORDINGLY, YOUR PROTEST IS DENIED.