B-181455, JAN 30, 1975

B-181455: Jan 30, 1975

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QUESTION WHETHER CONTRACTING OFFICER REPROCURED IN MANNER REASONABLY CALCULATED TO MITIGATE DAMAGES EVEN THOUGH LOW OFFER OF DEFAULTED CONTRACTOR ON REPROCUREMENT WAS NOT ACCEPTED IS FOR CONSIDERATION BY GENERAL SERVICES BOARD OF CONTRACT APPEALS AS ISSUE FOR RESOLUTION UNDER DISPUTES CLAUSE OF DEFAULTED CONTRACT NOTWITHSTANDING "WITHDRAWN" STATUS OF CONTRACTOR'S APPEAL OF DEFAULT ACTION BEFORE BOARD. 2. GAO GAVE LIMITED REVIEW TO PROTESTS OF DEFAULTED CONTRACTORS ALLEGING THAT THEY WERE IMPROPERLY DENIED AWARD OF REPROCUREMENT CONTRACTS. IT IS CLEAR THAT IN LIGHT OF COURT'S DECISION (NAMELY: THERE IS NOT ANOTHER TIER OF ADMINISTRATIVE REVIEW FOR COMPLAINTS RESOLVABLE UNDER DISPUTES CLAUSE) PROTESTS ARE NO LONGER FOR CONSIDERATION.

B-181455, JAN 30, 1975

1. QUESTION WHETHER CONTRACTING OFFICER REPROCURED IN MANNER REASONABLY CALCULATED TO MITIGATE DAMAGES EVEN THOUGH LOW OFFER OF DEFAULTED CONTRACTOR ON REPROCUREMENT WAS NOT ACCEPTED IS FOR CONSIDERATION BY GENERAL SERVICES BOARD OF CONTRACT APPEALS AS ISSUE FOR RESOLUTION UNDER DISPUTES CLAUSE OF DEFAULTED CONTRACT NOTWITHSTANDING "WITHDRAWN" STATUS OF CONTRACTOR'S APPEAL OF DEFAULT ACTION BEFORE BOARD. 2. ALTHOUGH PRIOR TO DECISION OF SUPREME COURT IN S&E CONTRACTORS, INC. V. UNITED STATES, 406 U.S. 1 (1972), GAO GAVE LIMITED REVIEW TO PROTESTS OF DEFAULTED CONTRACTORS ALLEGING THAT THEY WERE IMPROPERLY DENIED AWARD OF REPROCUREMENT CONTRACTS, IT IS CLEAR THAT IN LIGHT OF COURT'S DECISION (NAMELY: THERE IS NOT ANOTHER TIER OF ADMINISTRATIVE REVIEW FOR COMPLAINTS RESOLVABLE UNDER DISPUTES CLAUSE) PROTESTS ARE NO LONGER FOR CONSIDERATION.

INTERNATIONAL HARVESTER COMPANY:

ON MAY 25, 1973, INTERNATIONAL HARVESTER COMPANY (INTERNATIONAL) WAS AWARDED GENERAL SERVICES ADMINISTRATION (GSA) CONTRACT NO. GS-00S-22370 FOR 118 HEAVY TRUCK TRACTORS AT A PRICE OF $1,570,449.87. ARTICLE 11, DEFAULT, OF THE GENERAL PROVISIONS (STANDARD FORM 32 - NOVEMBER 1969 ED.) OF THE SUBJECT CONTRACT PROVIDED, AS PERTINENT:

"(A) THE GOVERNMENT MAY *** TERMINATE *** THIS CONTRACT ***

(II) IF THE CONTRACTOR FAILS TO PERFORM ANY OF THE OTHER PROVISIONS OF THIS CONTRACT ***

"(B) IN THE EVENT THE GOVERNMENT TERMINATES THIS CONTRACT *** AS PROVIDED IN PARAGRAPH (A) *** THE GOVERNMENT MAY PROCURE, UPON SUCH TERMS AND IN SUCH MANNER AS THE CONTRACTING OFFICER MAY DEEM APPROPRIATE, SUPPLIES OR SERVICES SIMILAR TO THOSE SO TERMINATED, AND THE CONTRACTOR SHALL BE LIABLE TO THE GOVERNMENT FOR ANY EXCESS COSTS FOR SUCH SIMILAR SUPPLIES OR SERVICES ***."

THE CONTRACT ALSO CONTAINED THE STANDARD DISPUTES CLAUSE WHICH PROVIDES FOR CONTRACTING AGENCY RESOLUTION OF ANY DISPUTE CONCERNING A QUESTION OF FACT ARISING UNDER THE CONTRACT BY INITIAL DECISION OF THE CONTRACTING OFFICER AND, IF APPEAL IS MADE, BY FINAL DECISION OF THE GENERAL SERVICES BOARD OF CONTRACT APPEALS (GSBCA).

BY LETTER DATED FEBRUARY 6, 1974, THE CONTRACTING OFFICER TERMINATED INTERNATIONAL'S CONTRACT FOR DEFAULT UNDER PARAGRAPH (A)(II) OF THE DEFAULT CLAUSE. THE LETTER ADVISED THE COMPANY THAT THE TRUCKS WOULD BE PROCURED ELSEWHERE AND THAT INTERNATIONAL WOULD BE HELD LIABLE FOR ANY EXCESS COSTS OCCASIONED BY THE REPURCHASE.

INTERNATIONAL SUBSEQUENTLY FILED AN APPEAL AGAINST THE TERMINATION ACTION BEFORE THE GSBCA. THE APPEAL WAS SUBSEQUENTLY WITHDRAWN SUBJECT TO REINSTATEMENT WITHOUT PREJUDICE.

ON FEBRUARY 15, 1974, GSA ISSUED NEGOTIATED SOLICITATION FPMH-H3 58781-N- 3-26-74 FOR REPROCUREMENT OF THE 118 TRUCKS IN QUESTION. GSA EXPLAINS THAT:

"SINCE INTERNATIONAL HARVESTER WAS ON THE AUTOMATED MAILING LIST OF POTENTIAL OFFERORS, A REQUEST FOR PROPOSAL FOR THE REPROCUREMENT WAS FORWARDED TO IT BY MAIL."

THREE PROPOSALS, INCLUDING OFFERS FROM INTERNATIONAL AND MACK TRUCKS, INC., WERE RECEIVED ON MARCH 26, 1974. INTERNATIONAL'S OFFER (APPROXIMATELY $1,512,000), IN GSA'S VIEW, CONTAINED A "NUMBER OF EXCEPTIONS TO THE SPECIFICATION REQUIREMENTS."

THE CONTRACTING OFFICER DISCUSSED THE EXCEPTIONS WITH INTERNATIONAL. GSA'S REPORT STATES THAT THE CONTRACTING OFFICE "PRESSED" INTERNATIONAL FOR INFORMATION WHICH WOULD AFFIRMATIVELY DEMONSTRATE THAT THE COMPANY HAD THE "CAPACITY, TENACITY AND PERSEVERANCE WHICH IT HAD APPARENTLY LACKED DURING THE PRIOR PERFORMANCE OF ITS CONTRACT FOR THESE SAME ITEMS."

FINALLY CONCLUDING THAT INTERNATIONAL HAD NOT FURNISHED SUFFICIENT INFORMATION, AND TAKING INTO CONSIDERATION THE COMPANY'S PRIOR DEFAULT, THE CONTRACTING OFFICER DETERMINED THAT INTERNATIONAL "DID NOT QUALIFY UNDER FPR SEC. 1-1.1203-1(C) AS A RESPONSIBLE OFFEROR." CONSEQUENTLY, ON MAY 30, 1974, GSA AWARDED THE REPROCUREMENT CONTRACT TO MACK TRUCKS AT A CONTRACT PRICE EXCEEDING $2,000,000. UNDER THE PROVISIONS OF THE DEFAULT CLAUSE IN INTERNATIONAL'S TERMINATED CONTRACT, IT IS POTENTIALLY LIABLE FOR EXCESS REPROCUREMENT COSTS.

INTERNATIONAL QUESTIONS THE SOUNDNESS OF GSA'S DETERMINATIONS THAT INTERNATIONAL WAS NONRESPONSIBLE AND THAT INTERNATIONAL'S LOW OFFER COULD THEREFORE BE EXCLUDED FROM CONSIDERATION FOR AWARD.

WE HAVE 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. MATTER OF AEROSPACE AMERICA, INC., B- 181553, AUGUST 29, 1974, 54 COMP. GEN. .

FURTHER, THE DETERMINATION NOT TO ACCEPT INTERNATIONAL'S LOW OFFER MUST BE VIEWED AS ONE ASPECT OF THE "MANNER" (AS THAT WORD IS USED IN THE DEFAULT CLAUSE) IN WHICH THE CONTRACTING OFFICER CONDUCTED THE REPROCUREMENT.

THE GSBCA HAS HELD THAT THE QUESTION WHETHER THE CONTRACTING OFFICER REPROCURED IN A "MANNER" REASONABLY CALCULATED TO MITIGATE DAMAGES EVEN THOUGH THE LOW BID OF THE DEFAULTED CONTRACTOR ON THE REPROCUREMENT WAS NOT ACCEPTED IS FOR ITS CONSIDERATION IN OTHERWISE DECIDING THE PROPRIETY OF A DEFAULT AND THE ASSESSMENT OF EXCESS REPROCUREMENT COSTS. SEE APPEAL OF FRANK & WARREN, INC., GSBCA NO. 2214, MARCH 22, 1967, AFFIRMED APRIL 14, 1967.

THEREFORE, THE QUESTION WHETHER THE CONTRACTING OFFICER ACTED IN A REASONABLE "MANNER" IN NOT ACCEPTING INTERNATIONAL'S LOW OFFER FOR THE AWARD OF THE REPROCUREMENT CONTRACT HERE MUST BE VIEWED AS AN ISSUE FOR RESOLUTION UNDER THE DISPUTES CLAUSE OF INTERNATIONAL'S CONTRACT, NOTWITHSTANDING THE "WITHDRAWN" STATUS OF INTERNATIONAL'S APPEAL BEFORE THE GSBCA.

ALTHOUGH PRIOR TO THE DECISION OF THE SUPREME COURT IN S&E CONTRACTORS, INC. V. UNITED STATES, 406 U.S. 1 (1972), WE GAVE LIMITED REVIEW, OR IMPLIED THAT WE WOULD GIVE LIMITED REVIEW, TO PROTESTS OF DEFAULTED CONTRACTORS SIMILAR TO THAT MADE BY INTERNATIONAL HERE (SEE, FOR EXAMPLE, B-165884, MAY 28, 1969; B-171659, NOVEMBER 15, 1971), IT IS CLEAR THAT IN LIGHT OF THE COURT'S HOLDING (NAMELY: THERE IS NOT ANOTHER TIER OF ADMINISTRATIVE REVIEW FOR COMPLAINTS RESOLVABLE UNDER THE DISPUTES CLAUSE) THESE PROTESTS ARE NO LONGER FOR OUR CONSIDERATION. SEE, B-178885, NOVEMBER 23, 1973.

CONSEQUENTLY, WE MUST DECLINE TO DECIDE THE ISSUES IN CONTROVERSY.