B-178701(1), FEB 22, 1974

B-178701(1): Feb 22, 1974

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THAT SMALL BUSINESS SET- ASIDE FOOD SERVICE CONTRACT AWARDED TO INELIGIBLE BIDDER BE TERMINATED FOR THE CONVENIENCE OF GOVERNMENT IS SUSTAINED NOTWITHSTANDING CONTRACTING AGENCY POSITION THAT IT WOULD REQUIRE 153 DAYS FOR REPROCUREMENT. 000 SINCE PRACTICALITIES ATTENDANT TO TERMINATION WERE CONSIDERED IN ARRIVING AT RECOMMENDATION AND BECAUSE TERMINATION IS NECESSARY TO MAINTAIN INTEGRITY OF COMPETITIVE SYSTEM. THIS RECOMMENDATION WAS PREDICATED ON THE CONCLUSION THAT DYNETERIA WAS INELIGIBLE FOR AWARD AS A SMALL BUSINESS CONCERN AND THE PROCEDURES FOLLOWED IN MAKING THE AWARD WERE IN DEROGATION OF THE AUTHORITY OF SBA TO MAKE SIZE DETERMINATIONS CONCLUSIVE ON THE EXECUTIVE DEPARTMENT. ADVICE OF THE ACTION TAKEN ON OUR RECOMMENDATION WAS REQUESTED.

B-178701(1), FEB 22, 1974

RECOMMENDATION IN B-178701, DECEMBER 28, 1973, THAT SMALL BUSINESS SET- ASIDE FOOD SERVICE CONTRACT AWARDED TO INELIGIBLE BIDDER BE TERMINATED FOR THE CONVENIENCE OF GOVERNMENT IS SUSTAINED NOTWITHSTANDING CONTRACTING AGENCY POSITION THAT IT WOULD REQUIRE 153 DAYS FOR REPROCUREMENT, LEAVING ONLY 2 1/2 MONTHS OF PERFORMANCE, AND TERMINATION COSTS WOULD BE BETWEEN $70,000 AND $175,000 SINCE PRACTICALITIES ATTENDANT TO TERMINATION WERE CONSIDERED IN ARRIVING AT RECOMMENDATION AND BECAUSE TERMINATION IS NECESSARY TO MAINTAIN INTEGRITY OF COMPETITIVE SYSTEM.

TO DYNETERIA, INC.:

OUR DECISION 53 COMP. GEN. (B-178701, DECEMBER 28, 1973), RECOMMENDED THAT THE FOOD SERVICE CONTRACT AWARDED TO DYNETERIA, INC. (DYNETERIA) BY LOWRY AIR FORCE BASE UNDER TOTAL SMALL BUSINESS SET ASIDE INVITATION FOR BIDS F05600-73-B-0387 BE TERMINATED FOR THE CONVENIENCE OF THE GOVERNMENT. THIS RECOMMENDATION WAS PREDICATED ON THE CONCLUSION THAT DYNETERIA WAS INELIGIBLE FOR AWARD AS A SMALL BUSINESS CONCERN AND THE PROCEDURES FOLLOWED IN MAKING THE AWARD WERE IN DEROGATION OF THE AUTHORITY OF SBA TO MAKE SIZE DETERMINATIONS CONCLUSIVE ON THE EXECUTIVE DEPARTMENT. ADVICE OF THE ACTION TAKEN ON OUR RECOMMENDATION WAS REQUESTED.

BY LETTER LGPM DATED JANUARY 14, 1974, THE CHIEF, CONTRACT MANAGEMENT DIVISION, DIRECTORATE, PROCUREMENT POLICY, PROPOSED TO CONTINUE PERFORMANCE UNDER THE PRESENT CONTRACT UNTIL COMPLETION, AND SOLICIT ON THE BASIS OF A ONE-YEAR CONTRACT COMMENCING SEPTEMBER 1, 1974, WITH TWO ONE-YEAR OPTIONS. IF NOT TERMINATED, THE PRESENT CONTRACT, EXCLUSIVE OF OPTIONS, WILL EXPIRE ON AUGUST 31, 1974. CITING A 153 DAY PROCUREMENT SCHEDULE, IT IS CONTENDED THAT A NEW CONTRACT COULD NOT BE AWARDED UNTIL MID-JUNE, TERMINATING ONLY APPROXIMATELY 2 1/2 MONTHS OF PERFORMANCE. TERMINATION COSTS ARE ESTIMATED BETWEEN $70,000 AND $175,000. FURTHER, THE LETTER NOTED THAT DYNETERIA HAS FILED WITH OUR OFFICE A REQUEST FOR RECONSIDERATION OF THE DECEMBER 28 DECISION ON THE BASIS THAT IT IS IN ERROR IN FACT AND LAW AND HAS REQUESTED THAT OUR OFFICE NOTIFY THE AIR FORCE TO SUSPEND ACTION ON OUR RECOMMENDATION. BY SEPARATE DECISION OF TODAY WE ARE AFFIRMING THE DECISION OF DECEMBER 28, 1973, THAT THE CONTRACTING OFFICER HAD NO AUTHORITY TO DISREGARD THE REGIONAL SBA DIRECTOR'S ADVERSE SIZE DETERMINATION IN MAKING AN EXIGENCY AWARD TO DYNETERIA.

OUR COMMENTS ON THE PROPOSAL HAVE BEEN REQUESTED. WHEN OUR DECISION WAS ISSUED WE WERE AWARE THAT SOME TIME WOULD BE REQUIRED TO RESOLICIT THE PROCUREMENT. THE 153 DAYS ESTIMATED FOR RESOLICITATION IS SUPPORTED BY EVIDENCE THAT FOUR OTHER FULL FOOD SERVICE PROCUREMENTS WITHIN THE LAST 2 YEARS CONSUMED 153, 177, 178 AND 238 DAYS (AN AVERAGE OF 186 DAYS). SINCE THE SMALL BUSINESS ACT, 15 U.S.C. 631, AND IMPLEMENTING REGULATIONS WERE THWARTED BY THE AWARD TO AN INELIGIBLE BIDDER, WE EXPECTED THAT THE AIR FORCE WOULD COOPERATE BY MAKING EVERY EFFORT TO IMMEDIATELY EXPEDITE THE RESOLICITATION. WE BELIEVE, IN VIEW OF THE SERIOUS DEFICIENCY NOTED IN THE ORIGINAL PROCUREMENT, THAT STEPS CAN AND SHOULD BE TAKEN TO ACCELERATE THE SCHEDULE FOR THE RESOLICITATION BY EVERY MEANS POSSIBLE. WHILE THE GOVERNMENT MAY HAVE TO INCUR TERMINATION COSTS AS A RESULT OF THE IMPROPER AWARD, WE BELIEVE TERMINATION ACTION IN THIS CASE IS NECESSARY TO MAINTAIN CONFIDENCE IN THE INTEGRITY OF THE COMPETITIVE BID SYSTEM. WHERE, AS HERE, WE CONCLUDE THAT A CONTRACT HAS BEEN IMPROPERLY AWARDED, WE HAVE ALWAYS TAKEN INTO CONSIDERATION CERTAIN FACTORS - GOOD FAITH OF THE PARTIES, URGENCY OF THE PROCUREMENT AND EXTENT OF PERFORMANCE - IN DECIDING WHETHER THE AWARD SHOULD BE DISTURBED. WE CONSIDERED THOSE FACTORS IN ARRIVING AT OUR EARLIER DECISION. UPON RECONSIDERATION, WE FIND NO BASIS TO CHANGE OUR POSITION IN THIS REGARD.

THIS DECISION AND THE PENDING REQUEST FOR RECONSIDERATION IN NO WAY AFFECT THE DEPARTMENT'S OBLIGATION TO REPORT PURSUANT TO THE LEGISLATIVE REORGANIZATION ACT OF 1970, 31 U.S.C. 1176, ON THE BASIS OF OUR DECISION OF DECEMBER 28, 1973.