B-181366, OCT 9, 1974

B-181366: Oct 9, 1974

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WHEN REPROCUREMENT IS FOR ACCOUNT OF DEFAULTED CONTRACTOR. STATUTES GOVERNING PROCUREMENTS BY GOVERNMENT ARE NOT APPLICABLE. QUESTIONS CONCERNING PROCUREMENT POLICY AND REGULATIONS ARE NOT PROPERLY FOR CONSIDERATION. 2. ASBCA DETERMINATION OF "SIMILARITY" OF UNITS UNDER DEFAULTED CONTRACT AND REPURCHASE SOLICITATION INVOLVES FINDING OF FACT WHICH IS FINAL AND CONCLUSIVE IF IT MEETS STANDARDS OF REVIEW OF WUNDERLICH ACT (41 U.S.C. 321-322) AND. WAS AWARDED CONTRACT DSA120- 72-C-3566 FOR THE FURNISHING OF 260 LABORATORY TABLES. A NOTICE OF DEFAULT TERMINATION IN THE FORM OF A FINAL DECISION OF THE CONTRACTING OFFICER WAS ISSUED TO D-W. THE APPEAL IS PENDING BEFORE THE ARMED SERVICES BOARD OF CONTRACT APPEALS (ASBCA).

B-181366, OCT 9, 1974

1. WHEN REPROCUREMENT IS FOR ACCOUNT OF DEFAULTED CONTRACTOR, STATUTES GOVERNING PROCUREMENTS BY GOVERNMENT ARE NOT APPLICABLE, THEREFORE, QUESTIONS CONCERNING PROCUREMENT POLICY AND REGULATIONS ARE NOT PROPERLY FOR CONSIDERATION. 2. DEFAULTED CONTRACTOR HAS NO STANDING TO BE CONSIDERED FOR AWARD ON REPURCHASE ACTION, AS AWARD AT INCREASED PRICE WOULD BE TANTAMOUNT TO MODIFICATION OF DEFAULTED CONTRACT WITHOUT ANY CONSIDERATION THEREFOR TO GOVERNMENT. 3. ASBCA DETERMINATION OF "SIMILARITY" OF UNITS UNDER DEFAULTED CONTRACT AND REPURCHASE SOLICITATION INVOLVES FINDING OF FACT WHICH IS FINAL AND CONCLUSIVE IF IT MEETS STANDARDS OF REVIEW OF WUNDERLICH ACT (41 U.S.C. 321-322) AND, THEREFORE, DECISION AS TO SIMILARITY BY GAO WOULD BE PREMATURE AND UNWARRANTED.

DECATUR-WAYNE, INC.:

ON JUNE 16, 1972, DECATUR-WAYNE, INC. (D-W), WAS AWARDED CONTRACT DSA120- 72-C-3566 FOR THE FURNISHING OF 260 LABORATORY TABLES, FSN 6530 710-0210. HOWEVER, ON JANUARY 2, 1974, A NOTICE OF DEFAULT TERMINATION IN THE FORM OF A FINAL DECISION OF THE CONTRACTING OFFICER WAS ISSUED TO D-W, CITING FAILURE TO COMPLY WITH THE CONTRACT DELIVERY SCHEDULE AS THE BASIS FOR THE TERMINATION. BY LETTER DATED JANUARY 17, 1974, D-W APPEALED FROM THE CONTRACTING OFFICER'S DECISION. THE APPEAL IS PENDING BEFORE THE ARMED SERVICES BOARD OF CONTRACT APPEALS (ASBCA).

INVITATION FOR BIDS (IFB) DSA120-74-B-2244 WAS ISSUED ON FEBRUARY 13, 1974, BY THE DEFENSE SUPPLY AGENCY (DSA) AS A REPURCHASE AGAINST THE DEFAULTED CONTRACT. FOUR BIDS, INCLUDING THAT OF D-W, WERE RECEIVED. D-W WAS LOW AT A UNIT PRICE OF $120. ALTHOUGH A PREAWARD SURVEY PERFORMED ON D-W RESULTED IN A POSITIVE RECOMMENDATION OF AWARD, THE CONTRACTING OFFICER, ON APRIL 4, ADVISED D-W THAT ITS BID PRICE OF $120 WAS NOT ACCEPTABLE SINCE THE PROCUREMENT REPRESENTED A REPURCHASE AGAINST D-W'S DEFAULTED CONTRACT. THE CONTRACTING OFFICER EXPLAINED THAT THE GOVERNMENT COULD NOT AWARD THE CONTRACT TO THE DEFAULTED CONTRACTOR AT A REPURCHASE PRICE EXCEEDING THE PRICE OF THE TERMINATED CONTRACT.

BY LETTER DATED APRIL 10, 1974, D-W PROTESTED ANY AWARD UNDER THE SUBJECT IFB TO ANY FIRM OTHER THAN D-W AT ITS BID PRICE OF $120 PER UNIT. IT WAS D-W'S POSITION THAT THE REVISED PURCHASE DESCRIPTION APPLICABLE TO THE INSTANT IFB HAD CHANGED THE TECHNICAL REQUIREMENTS TO SUCH AN EXTENT THAT THE SUPPLIES DESCRIBED COULD NOT BE CONSIDERED SIMILAR TO THOSE CALLED FOR IN THE DEFAULTED CONTRACT. THEREFORE, D-W CONTENDS THE IFB WAS NOT A REPURCHASE WITHIN THE MEANING OF THE DEFAULT CLAUSE OF THE TERMINATED CONTRACT AND, THEREFORE, THE $120 BID PRICE COULD PROPERLY BE ACCEPTED BY THE GOVERNMENT.

BY LETTER DATED MAY 17, 1974, THE CONTRACTING OFFICER RESPONDED TO D W'S PROTEST BY ASSERTING THAT THE SUPPLIES IN QUESTION WERE IN FACT SIMILAR TO THOSE COVERED BY THE DEFAULTED CONTRACT AND DENIED THE PROTEST. D-W WAS ALSO INFORMED THAT AWARD HAD BEEN MADE ON MAY 15 TO BRENNER METAL PRODUCTS, INC. (BRENNER), FOR THE REPURCHASE. THIS NOTICE OF AWARD RESULTED IN D-W FILING A PROTEST WITH OUR OFFICE ON MAY 29, 1974.

ON MAY 22, THE CONTRACTING OFFICER MADE A WRITTEN DEMAND ON D-W FOR THE EXCESS REPURCHASE COSTS RESULTING FROM THE AWARD TO BRENNER. BY LETTER DATED JUNE 15, 1974, D-W APPEALED FROM THE ASSESSMENT OF EXCESS REPURCHASE COSTS, AND THIS APPEAL, ALSO, IS PENDING BEFORE THE ASBCA. BY THE LATTER APPEAL, THE ISSUE OF THE SIMILARITY BETWEEN THE SUPPLIES IN THE DEFAULTED CONTRACT AND THE REPURCHASE CONTRACT HAS BEEN PLACED BEFORE THE BOARD.

D-W'S PROTEST TO OUR OFFICE CONSISTS ESSENTIALLY OF THE FOLLOWING ISSUES:

1. THE ARMED SERVICES PROCUREMENT REGULATION PROHIBITS THE GOVERNMENT FROM INFLICTING FINANCIAL HARDSHIP ON A CONTRACTOR WHERE IT CAN BE AVOIDED.

2. THAT D-W, AS THE LOW BIDDER AT $120, IS ENTITLED TO BE CONSIDERED FOR AWARD AS THE ITEMS IN QUESTION ARE NOT SIMILAR TO THOSE UNDER THE DEFAULTED CONTRACT.

IN B-171659, NOVEMBER 15, 1971, OUR OFFICE RECOGNIZED THAT WHERE, AS HERE, A PROCUREMENT IS FOR THE ACCOUNT OF THE DEFAULTED CONTRACTOR THE STATUTES GOVERNING PROCUREMENTS BY THE GOVERNMENT ARE NOT APPLICABLE. THEREFORE, WE CANNOT RAISE ANY QUESTIONS WITH REGARD TO D-W'S CONTENTION THAT THE GOVERNMENT ACTED CONTRARY TO SOUND PROCUREMENT POLICY OR APPLICABLE PROCUREMENT REGULATIONS. SEE ALSO B-178885, NOVEMBER 23, 1973.

FURTHER, OUR OFFICE HAS HELD THAT WHERE A DEFAULTED CONTRACTOR SUBMITS A BID FOR A REPURCHASE CONTRACT AT A PRICE HIGHER THAN THE PRICE FOR WHICH HE WAS BOUND UNDER THE DEFAULTED CONTRACT, THE BID SHOULD NOT BE ACCEPTED. ACCEPTANCE OF SUCH A BID WOULD BE TANTAMOUNT TO A MODIFICATION OF THE DEFAULTED CONTRACT TO PROVIDE FOR AN INCREASE IN THE CONTRACT PRICE WITHOUT ANY CONSIDERATION THEREFOR TO THE GOVERNMENT. SEE MATTER OF AEROSPACE AMERICA, INC., B-181553, AUGUST 29, 1974, 54 COMP. GEN. ; 27 COMP. GEN. 343 (1947); B-165884, MAY 28, 1969. THUS, IF THE IFB UNDER WHICH THE CONTRACT WAS AWARDED TO BRENNER WAS A REPURCHASE OF THE DEFAULTED CONTRACT, D-W'S BID THEREUNDER WAS PROPERLY NOT CONSIDERED. THEREFORE, WHETHER THE ITEM CALLED FOR UNDER BRENNER'S CONTRACT IS THE "SAME AS OR SIMILAR" TO THAT CALLED FOR UNDER THE DEFAULTED CONTRACT IS THE DETERMINATIVE ISSUE.

AS STATED ABOVE, D-W HAS APPEALED THE DEFAULT TERMINATION OF CONTRACT NO. DSA120-72-C-3566 AND THE ASSESSMENT OF EXCESS REPROCUREMENT COSTS, AND THE APPEAL IS PENDING BEFORE THE ASBCA. THE DEFAULT CLAUSE OF THE D-W CONTRACT PROVIDES THAT IN THE EVENT OF A TERMINATION FOR DEFAULT THE GOVERNMENT MAY PROCURE SUPPLIES "SIMILAR" TO THOSE SO TERMINATED AND THE CONTRACTOR SHALL BE LIABLE FOR ANY EXCESS COSTS FOR SUCH "SIMILAR" SUPPLIES. THEREFORE, ON THE QUESTION OF D-W'S LIABILITY FOR EXCESS COSTS, IT WILL BE NECESSARY FOR THE BOARD TO DETERMINE WHETHER THE SUPPLIES CALLED FOR UNDER BRENNER'S CONTRACT ARE "SIMILAR" TO THOSE CALLED FOR UNDER D-W'S DEFAULTED CONTRACT. THE DETERMINATION OF SIMILARITY BY THE BOARD INVOLVES A FINDING OF FACT WHICH IS FINAL AND CONCLUSIVE IF IT MEETS THE STANDARD OF REVIEW OF THE WUNDERLICH ACT, 41 U.S.C. 321-322.

SINCE THE DETERMINATIVE ISSUE IN BOTH THE APPEAL BEFORE THE BOARD AND THE PROTEST BEFORE OUR OFFICE IS THE QUESTION OF SIMILARITY, AND IN VIEW OF THE FINALITY WHICH ATTACHES TO BOARD DETERMINATIONS OF FACTUAL ISSUES, WE BELIEVE THAT ANY DECISION BY OUR OFFICE AT THIS TIME WOULD BE PREMATURE AND UNWARRANTED. SEE B-171659, SUPRA. IN THE CIRCUMSTANCES, WE CANNOT OBJECT TO THE CONTRACTING OFFICER'S REJECTION OF THE D-W BID AND WE SEE NO BASIS FOR DISTURBING THE AWARD TO BRENNER.