B-168634, JUN. 5, 1970

B-168634, JUN. 5, 1970

CONTRACTS--TERMINATION--WITHDRAWAL AFTER READVERTISING PROCUREMENT DUE TO CONTRACT TERMINATION FOR DEFAULT FOR FAILURE TO EFFECT TIMELY DELIVERY AND PERFORM SATISFACTORY CONTRACT REQUIREMENTS TESTS, BIDDER'S PROTEST TO PROPOSAL TO WITHDRAW TERMINATION AND REQUIRE CONTRACTOR TO RETEST AT INCREASED CONTRACT PRICE AS IN BEST INTEREST OF GOVERNMENT, TIME AND COSTS CONSIDERED, IS DENIED. WHILE TESTING RESULTS MAY HAVE BEEN SATISFACTORY, SINCE TESTING DID NOT FOLLOW CONTRACT REQUIREMENTS NOR GOVERNMENT PERSONNEL PRESENT PROTEST TESTING PROCEDURE, IN INTEREST OF GOVERNMENT PROPOSAL IS APPROVED BUT SHOULD CONTRACTOR'S EQUIPMENT FAIL RESTESTING, AWARD WILL BE MADE ON READVERTISED PROCUREMENT.

TO RADIO CORPORATION OF AMERICA:

REFERENCE IS MADE TO YOUR TELEGRAM OF MAY 27, 1970, AND PRIOR CORRESPONDENCE, PROTESTING THE PROPOSED WITHDRAWAL OF THE TERMINATION FOR DEFAULT AND REINSTATEMENT OF DEPARTMENT OF THE ARMY CONTRACT DAAG08 69-C- 1531 WITH THE STANDARD ELECTRONICS CORPORATION FOR A TELEVISION TRANSMITTING SYSTEM.

THE CONTRACT WAS TERMINATED FOR DEFAULT ON THE BASES THAT THE CONTRACTOR FAILED TO EFFECT TIMELY DELIVERY; TO HAVE FCC-TYPE ACCEPTANCE; AND TO PERFORM SYSTEMS TEST BY OCTOBER 29, 1969, IN ACCORDANCE WITH THE REQUIREMENTS IN THE CONTRACT. THE CONTRACTOR APPEALED THE TERMINATION TO THE ARMED SERVICES BOARD OF CONTRACT APPEALS (ASBCA), WHICH APPEAL IS STILL PENDING. HOWEVER, THE CONTRACTING OFFICER'S SUPERIORS PROPOSE TO WITHDRAW THE TERMINATION AND TO REQUIRE CONTRACTOR RETESTING AT AN INCREASE IN THE CONTRACT PRICE PROVIDED THE CONTRACTOR WITHDRAWS ITS PENDING APPEAL. THE CONTRACTOR HAS INFORMALLY INDICATED THAT IT IS PREPARED TO AGREE WITH THE PROPOSAL.

HE ASSISTANT GENERAL COUNSEL, HEADQUARTERS UNITED STATES ARMY MATERIEL COMMAND, BELIEVES THAT EXECUTION OF THE FOREGOING PROPOSAL WOULD BE IN THE BEST INTERESTS OF THE GOVERNMENT, TIME AND COST CONSIDERED. WHETHER ADOPTION OF SUCH PROPOSAL WOULD BE IN THE BEST INTERESTS OF THE GOVERNMENT IS A MATTER RESERVED INITIALLY FOR THE DETERMINATION BY THE PROCUREMENT ACTIVITY. HOWEVER, IN THE PRESENT POSTURE OF THE CASE, THE QUESTION PRESENTED FOR OUR CONSIDERATION IS WHETHER ADEQUATE CONSIDERATION WOULD EXIST TO SUPPORT THE ADDITIONAL PAYMENT TO THE CONTRACTOR FOR RETESTING THE SYSTEM IN STRICT ACCORDANCE WITH THE CONTRACT REQUIREMENTS.

ALTHOUGH THE CONTRACTOR DID NOT TIMELY COMPLETE TESTING, BEFORE IT WAS DEFAULTED THE CONTRACTOR WAS ALLOWED TO CONTINUE TESTING TO COMPLETION. FURTHER, BEFORE RECEIPT OF THE TERMINATION NOTICE, IT FURNISHED TELEGRAPHIC ADVICE THAT IT EXPECTED TO RECEIVE FCC ACCEPTANCE SHORTLY. FORMAL FCC ACCEPTANCE FOLLOWED A FEW DAYS AFTER THE NOTICE OF TERMINATION WAS RECEIVED BY THE CONTRACTOR. ALSO, GOVERNMENT PERSONNEL PRESENT AT THE TESTING CONDUCTED BY THE CONTRACTOR REMAINED SILENT WHEN THEY OBSERVED THAT THE CONSULTING ENGINEERS WHO WERE PERFORMING THE TESTS FOR THE CONTRACTOR WERE NOT FOLLOWING TEST REQUIREMENTS.

ALTHOUGH THE TEST RESULTS MAY HAVE BEEN SATISFACTORY, IN THE ADMINISTRATIVE VIEW THE TESTING LEADING UP TO SUCH RESULTS APPARENTLY WAS NOT BASED UPON ALL THE CONTRACT REQUIREMENTS. MOREOVER, THE CONTRACTING OFFICER'S SUPERIORS APPARENTLY FELT THAT TO ASSURE CONTRACT COMPLIANCE RETESTING WAS NECESSARY. WHILE ORDINARILY A CONTRACTOR MIGHT HAVE TO BEAR THE COST OF RETESTING WHEN EQUIPMENT WAS NOT TESTED TO ORIGINAL REQUIREMENTS, IN THIS CASE THE SILENCE OF THE GOVERNMENT PERSONNEL OBSERVING THE TESTING BY THE CONTRACTOR MIGHT BE CONSIDERED AS IN THE NATURE OF A WAIVER OF THE RIGHT OF THE GOVERNMENT TO REQUIRE RETESTING AT THE CONTRACTOR'S EXPENSE. FURTHER, THE FAILURE OF THESE PERSONNEL TO TIMELY OBJECT TO THE CONTRACTOR'S METHOD OF TESTING MIGHT HAVE CONTRIBUTED TO THE NECESSITY FOR RETESTING. IN THESE CIRCUMSTANCES, WE FEEL THAT SUFFICIENT CONSIDERATION WOULD EXIST IF THE GOVERNMENT WERE TO REQUIRE RETESTING AT GOVERNMENT EXPENSE.

ALTHOUGH THE PROCUREMENT WAS OFFERED TO COMPETITION AFTER THE CONTRACT WAS TERMINATED AND IT APPEARS THAT RCA WOULD BE AWARDED THE REPLACEMENT CONTRACT IF THE DEFAULT TERMINATION WERE NOT WITHDRAWN, THE PROCUREMENT ACTIVITY IS NOT REQUIRED AS A MATTER OF LAW TO PROCEED WITH THE REPROCUREMENT IF IT IS SATISFIED THAT WITHDRAWAL OF THE TERMINATION WOULD BE IN THE BEST INTERESTS OF THE GOVERNMENT. IT IS OUR UNDERSTANDING THAT IF THE CONTRACTOR'S EQUIPMENT FAILS RETESTING, THE CONTRACTING AGENCY WOULD PROCEED TO MAKE AN AWARD TO RCA.

IT IS SUGGESTED THAT THE GOVERNMENT WOULD NOT SUFFER FINANCIALLY EVEN IF THE CONTRACT WERE TERMINATED FOR DEFAULT AND AWARD MADE TO RCA AT A SLIGHTLY HIGHER COST. HOWEVER, THERE MUST BE CONSIDERED THE POSSIBILITY THAT ASBCA MIGHT CONVERT THE DEFAULT TERMINATION TO A TERMINATION FOR CONVENIENCE OF THE GOVERNMENT. IN THAT EVENT THE REPLACED CONTRACTOR WOULD NOT BE LIABLE FOR THE EXCESS COSTS RESULTING FROM AN AWARD TO RCA.

WE RECOGNIZE THAT THIS MATTER IS NOT FREE FROM ALL DOUBT AND THAT A CASE COULD BE MADE FOR SUSTAINING THE GOVERNMENT'S RIGHTS TO RETESTING AT NO EXPENSE TO IT; HOWEVER, ON BALANCE, WE FEEL THAT THE INTERESTS OF THE GOVERNMENT REQUIRE THAT THE PROPOSAL ADVANCED ABOVE BE GIVEN EFFECT AS PROMPTLY AS POSSIBLE. IN REACHING THIS CONCLUSION WE RECOGNIZE THE INTEREST OF RCA IN THE UNCONSUMMATED REPORCUREMENT ACTION. AT THE SAME TIME, HOWEVER, WE MUST GIVE SUBSTANTIAL WEIGHT TO THE FACT THAT ANY REPROCUREMENT UNDER THE TERMS OF THE EXISTING CONTRACT WOULD HAVE TO BE EFFECTED FOR THE ACCOUNT OF A "DEFAULTED" CONTRACTOR. SEE PARAGRAPH 8 602.6 OF THE ARMED SERVICES PROCUREMENT REGULATION. IN VIEW THEREOF, THE RIGHTS AND INTERESTS OF THE GOVERNMENT WOULD APPEAR TO BE PARAMOUNT TO THOSE OF RCA UNDER THE UNCONSUMMATED REPROCUREMENT ACTION.