B-180381, MAY 3, 1974

B-180381, MAY 3, 1974

1. PROTEST AGAINST TERMINATION OF CONTRACT FOR CONVENIENCE OF GOVERNMENT MAY NOT BE CONSIDERED BY GAO SINCE QUESTION OF CONTRACT TERMINATION IS MATTER OF ADMINISTRATIVE DECISION WHICH DOES NOT REST WITH THIS OFFICE. 2.SECOND PROTESTER'S CLAIM THAT IT SHOULD RECEIVE AWARD, AFTER TERMINATION OF COMPETITOR'S CONTRACT, UNDER ORIGINAL SOLICITATION, AND THAT ARMY'S DECISION TO RESOLICIT PROPOSALS IS IMPROPER AND WOULD REPRESENT AUCTION IS DENIED, SINCE ORIGINAL SOLICITATION CONTAINED EVALUATION FACTOR NO LONGER CONSIDERED APPROPRIATE, ONE OFFEROR MAY HAVE BEEN EFFECTIVELY DISCOURAGED BY ARMY FROM LICENSING AN AMERICAN COMPANY WHICH COULD HAVE SUBMITTED A PROPOSAL, AND ARMY'S NEEDS HAVE BEEN REVISED WHICH MAY WELL HAVE EFFECT ON PRICES OFFERED.

TO E. WALTERS & COMPANY, INC.; DYNAMIT NOBEL A G; NICO PYROTECHNIK K G:

REQUEST FOR PROPOSALS (RFP) DAAA09-74-R-0017, ISSUED BY THE U.S. ARMY AMMUNITION PROCUREMENT AND SUPPLY AGENCY, JOLIET, ILLINOIS, SOLICITED OFFERS FOR A MORTAR TRAINING SYSTEM. PROPOSALS WERE RECEIVED FROM TWO GERMAN FIRMS, DYNAMIT NOBEL A G (DYNAMIT NOBEL) AND NICO PYROTECHNIK K G (NICO), AND FROM E. WALTERS & COMPANY, INC. (WALTERS), AN AMERICAN COMPANY. ON JANUARY 2, 1974, A CONTRACT WAS AWARDED TO DYNAMIT NOBEL. WALTERS AND NICO PROTESTED, CLAIMING THAT THE AWARD RESULTED FROM AN IMPROPER EVALUATION. ON JANUARY 25, 1974, THE DYNAMIT NOBEL CONTRACT WAS TERMINATED FOR THE CONVENIENCE OF THE GOVERNMENT, AND THE ARMY SUBSEQUENTLY ISSUED A NEW RFP. DYNAMIT NOBEL THEN PROTESTED AGAINST THE TERMINATION OF ITS CONTRACT, WHILE WALTERS, CLAIMING ITS ENTITLEMENT TO AN AWARD UNDER THE ORIGINAL RFP, OBJECTED TO THE ISSUANCE OF THE SECOND SOLICITATION.

WE ARE UNABLE TO CONSIDER DYNAMIT NOBEL'S PROTEST AGAINST THE ARMY'S DECISION TO TERMINATE ITS CONTRACT. IT HAS LONG BEEN RECOGNIZED THAT THE AUTHORITY TO ENTER INTO A GOVERNMENT CONTRACT INCLUDES THE AUTHORITY TO TERMINATE IT WHEN TO DO SO WOULD BE IN THE PUBLIC INTEREST. UNITED STATES V. CORLISS STEAM - ENGINE COMPANY, 91 U.S. 321 (1875); 44 COMP. GEN. 466 (1965). FURTHERMORE, "THE DETERMINATION WHETHER A CONTRACT SHOULD BE TERMINATED FOR THE CONVENIENCE OF THE GOVERNMENT IS A MATTER OF ADMINISTRATION DECISION WHICH DOES NOT REST WITH OUR OFFICE." 47 COMP. GEN. 1, 3 (1967); B-170230, JANUARY 28, 1971; B-167888, OCTOBER 27, 1969.

WALTERS CLAIMS THAT UNDER A PROPER EVALUATION CONDUCTED PURSUANT TO THE ORIGINAL RFP IT WOULD HAVE RECEIVED THE CONTRACT AND THEREFORE IS ENTITLED TO THAT CONTRACT NOW. IT FURTHER CLAIMS THAT THERE IS NO REASON FOR THE ISSUANCE OF A NEW RFP BECAUSE THE DEFECT IN THE ORIGINAL AWARD STEMMED FROM THE EVALUATION MADE BY THE GOVERNMENT AND NOT FROM ANYTHING INHERENT IN THE SOLICITATION. WALTERS ALSO ASSERTS THAT THE RESOLICITATION AMOUNTS TO AN AUCTION BECAUSE OTHER OFFERORS NOW KNOW WHAT WALTERS' LOW PRICE WAS UNDER THE INITIAL RFP.

THE ARMY REPORTS THAT THE NEW RFP, ALTHOUGH FOR THE SAME QUANTITY OF CARTRIDGES AND SABOTS AS WAS THE PRIOR SOLICITATION, CONTAINS SEVERAL CHANGES WHICH REPRESENT ADDITIONAL GOVERNMENT REQUIREMENTS. THE ARMY IDENTIFIES THE MOST SUBSTANTIAL CHANGES AS FOLLOWS:

"A. INCREASED INSPECTION REQUIREMENTS, INCLUDING FIRST ARTICLE APPROVAL TESTING OF BOTH INERT AND LOADED ASSEMBLIES; THE LATTER REQUIRING BOTH BALLISTICS AND SAFETY TESTS.

"B. AT THE GOVERNMENT'S OPTION, THE CONTRACTOR WILL BE REQUIRED TO DELIVER BALLISTIC TEST SAMPLE FROM ANY PRODUCTION LOT.

"C. DEFINITIVE PACKAGING AND PACKING REQUIREMENTS ARE SPECIFIED (SUBJECT RFP REQUIRED ONLY SAFE ARRIVAL AT DESTINATION).

"D. A DD FORM 1423 HAS BEEN ADDED (PREVIOUSLY THERE WERE NONE).

"E.AN ESCALATION PROVISION FOR LABOR AND MATERIALS HAS BEEN ADDED. WOULD PERMIT ESCALATION FOR THE THREE YEAR PERIOD.

"F. A STATEMENT CLEARLY INDICATING THE PERMISSIBILITY OF PROPOSALS FROM QUALIFIED LICENSEES OF FOREIGN LICENSORS HAS BEEN ADDED."

IN ADDITION, IT IS REPORTED THAT ONE OF THE ORIGINAL EVALUATION FACTORS HAS BEEN DELETED.

DYNAMIT NOBEL, IN ADDITION TO PROTESTING AGAINST THE TERMINATION OF ITS CONTRACT, ALSO OBJECTS TO ANY AWARD TO WALTERS UNDER THE ORIGINAL SOLICITATION, BECAUSE WALTERS SUBMITTED A PROPOSAL AS A SUB-LICENSEE OF NICO. DYNAMIT NOBEL ASSERTS THAT IT WAS KEPT FROM LICENSING ITS OWN U.S. COMPANY BY REPEATED ARMY ASSURANCES THAT THE ARMY WAS NOT INTERESTED IN A DOMESTIC SOURCE AND BY BEING TOLD BY THE ARMY NOT TO BE CONCERNED WHEN IT APPEARED THAT A NICO LICENSEE MIGHT SUBMIT A PROPOSAL.

THE ORIGINAL SOLICITATION PROVIDED THAT AN EVALUATION FACTOR REPRESENTING THE ESTIMATED COST TO MANUFACTURE AMMUNITION IN THE UNITED STATES WOULD BE ADDED TO THE UNIT PRICES PROPOSED BY OFFERORS. WALTERS CONTENDS THAT SINCE IT IS AN AMERICAN COMPANY, A PROPER EVALUATION WOULD PRECLUDE THE ADDITION OF THAT FACTOR TO ITS OFFERED PRICES. IT ALTERNATIVELY ARGUES THAT IF THE FACTOR IS TO BE APPLIED, THE SAME FACTOR MUST BE APPLIED TO ALL OFFERS. IN EITHER CASE, WALTERS CLAIMS THAT IT WOULD BE THE LOW OFFEROR. IT IS THIS FACTOR THAT HAS BEEN DELETED FROM THE SECOND SOLICITATION.

UNDER THESE CIRCUMSTANCES, WE THINK THAT THE RESOLICITATION IS NOT SUBJECT TO OBJECTION BY OUR OFFICE. THE ELIMINATION OF ONE OF THE ORIGINAL EVALUATION FACTORS SUGGESTS THAT THE ARMY NO LONGER CONSIDERS THAT FACTOR TO BE AN APPROPRIATE CONSIDERATION FOR EVALUATING OFFERS, YET UNDER THE INITIAL RFP SOUND PROCUREMENT POLICY WOULD REQUIRE THAT ANY AWARD BE MADE IN ACCORDANCE WITH ALL THE STATED EVALUATION FACTORS. COMP. GEN. 272 (1971). FURTHERMORE, IT APPEARS THAT CERTAIN PRICE ADVANTAGES MIGHT BE AVAILABLE TO AMERICAN COMPANIES AND THAT ONE OFFEROR MIGHT HAVE BEEN EFFECTIVELY DISCOURAGED BY THE GOVERNMENT FROM LICENSING AN AMERICAN COMPANY THAT COULD HAVE SUBMITTED A PROPOSAL, A MATTER TO WHICH ONE OF THE CHANGES IN THE SECOND RFP IS DIRECTED. FINALLY, THE OTHER CHANGES MADE IN THE REVISED SOLICITATION REPRESENT REVISED NEEDS OF THE ARMY AND MAY WELL HAVE SOME EFFECT ON THE PRICES OFFERED. THEREFORE, WE DO NOT BELIEVE THAT THE CASES WALTERS RELIES ON, WHICH HOLD THAT SOLICITATIONS SHOULD NOT BE CANCELLED AND READVERTISED AFTER BID OPENING WHEN AN AWARD UNDER THE SOLICITATION WOULD SERVE THE ACTUAL NEEDS OF THE GOVERNMENT, E.G. 49 COMP. GEN. 211 (1969); B-177165, JANUARY 31, 1973, ARE APPLICABLE HERE, OR THAT THE RESOLICITATION AMOUNTS TO THE AUCTION TECHNIQUES PROSCRIBED BY ASPR 3-805.3(C). ACCORDINGLY, WE CANNOT CONCLUDE THAT THE ARMY IS REQUIRED TO MAKE ANOTHER AWARD UNDER THE ORIGINAL SOLICITATION.

FOR THE FOREGOING REASONS, THE PROTESTS ARE DENIED.