B-194445 L/M, DEC 29, 1981, OFFICE OF GENERAL COUNSEL

B-194445 L/M, DEC 29, 1981, OFFICE OF GENERAL COUNSEL

DIGEST: SECTION 2310 DOES NOT PREVENT GAO OR THE COURTS FROM EXAMINING THE PROPRIETY OF A SOLE-SOURCE DECISION WHICH AGENCY HAS JUSTIFIED AS BASED ON LIMITED COMPETITION. FINALITY RULE IN SEC. 2310(A) DOES NOT APPLY TO DECISION TO NEGOTIATE A CONTRACT UNDER 10 U.S.C. SEC. 2304(A)(10); RULE IN SEC. 2310(B) APPLIES ONLY TO FINDING MADE IN ACCORD WITH THAT SECTION, AND CONCLUSION THAT ONLY ONE FIRM CAN "COMPETE" IS TANTAMOUNT TO A SEPARATE AND DISTINCT DECISION THAT 10 U.S.C. SEC. 2304(G) SHOULD NOT BE APPLIED.

LOUIS F. OBERDORFER, THE UNITED STATES DISTRICT COURT:

RE: AERO CORPORATION V. DEPARTMENT OF THE NAVY, CIVIL ACTION NO. 79-2944

YOUR MEMORANDUM AND ORDER FILED NOVEMBER 30, 1981 INVITES OUR COMMENT CONCERNING THE APPLICATION OF PROVISIONS OF TITLE 10, U.S.C. TO THIS CASE AS CONSTRUED IN WHEELABRATOR CORPORATION V. CHAFFEE, 455 F.2D 1306, 1311- 1312 (D.C.CIR. 1971). YOUR PARTICULAR CONCERN IS WITH THE FINALITY PROVISION OF 10 U.S.C. SEC. 2310(A) AND WITH THE RELATIONSHIP BETWEEN THAT SECTION AND SEC. 2304(A)(10).

SECTION 2304 DEALS WITH THE CIRCUMSTANCES PERMITTING NEGOTIATION OF CONTRACTS IN LIEU OF UTILIZING THE PREFERRED METHOD OF FORMAL ADVERTISING; SECTION 2304(A)(10) AUTHORIZES THE USE OF NEGOTIATION WHERE IT IS NOT PRACTICABLE TO OBTAIN COMPETITION BY FORMAL ADVERTISING. SECTION 2310(A) PROVIDES THAT DETERMINATIONS AND DECISIONS REQUIRED TO BE MADE BY AN AGENCY HEAD ARE FINAL.

EVEN WHEN PROCUREMENT BY NEGOTIATION IS PERMITTED, HOWEVER, THE LAW REQUIRES AGENCIES TO OBTAIN PROPOSALS FROM THE MAXIMUM NUMBER OF QUALIFIED SOURCES; SEE SECTION 2304(G).

THE FINALITY PROVISION OF SECTION 2310(A) HAS BEEN CONSTRUED TO APPLY ONLY TO THOSE DETERMINATIONS WHICH MAY NOT BE DELEGATED BY AN AGENCY HEAD. SEE THE COMMENTS OF CONGRESSMAN HEBERT, 108 CONG.REC. 9977 (JUNE 7, 1962), ALLUDED TO BY THE COURT IN WHEELABRATOR (FOOTNOTE 3, 455 F.2D 1311). UNDER 10 U.S.C. SEC. 2311, AN AGENCY HEAD MAY DELEGATE THE POWER TO MAKE DETERMINATIONS UNDER SECTIONS 2304(A)(10). FOR THAT REASON, THE FINALITY PROVISION OF SECTION 2310(A) DOES NOT APPLY TO DETERMINATIONS MADE UNDER SECTION 2304(A)(10). INSTEAD, THE PROVISIONS OF SECTION 2310(B) APPLY TO SUCH DETERMINATIONS.

SECTION 2310(B) ACCORDS FINALITY TO A FINDING WHICH IS RELIED UPON TO SUPPORT A DECISION TO NEGOTIATE, BUT DOES NOT EXTEND TO THE FURTHER DECISION TO PROCURE ON A NONCOMPETITIVE, SOLE-SOURCE BASIS. WE HAVE ALWAYS FELT FREE TO CHALLENGE A DECISION TO PROCURE FROM A SOLE SOURCE WHEN SUCH A DECISION HAS NOT BEEN ADEQUATELY JUSTIFIED. SEE, E.G., WINSLOW ASSOCIATES, B-178740, MAY 8, 1975, 75-1 CPD 283, COPY ENCLOSED. THIS IS CONSISTENT WITH THE APPARENT PURPOSE OF SECTION 2310(B) - WHICH IS INDICATED BY THE LAST SENTENCE OF THE SECTION - TO PREVENT LATER DISALLOWANCE BY GAO OF PAYMENTS MADE TO A CONTRACTOR SHOULD IT APPEAR THAT FORMAL ADVERTISING COULD HAVE BEEN USED. IT WAS NOT MEANT TO PRECLUDE CHALLENGES TO AN AGENCY'S FAILURE TO OBTAIN THE COMPETITION REQUIRED BY 10 U.S.C. 2304(G).

UNDERSTOOD IN THIS LIGHT, THE NAVY'S CONCLUSION THAT A CONTRACT FOR ADDITIONAL SLEP WORK SHOULD BE NEGOTIATED ONLY WITH LOCKHEED IN THIS INSTANCE IS BASED ON TWO DISTINCT DECISIONS: (1) A DECISION THAT SLEP SHOULD BE PROCURED THROUGH USE OF NEGOTIATED PROCUREMENT TECHNIQUES AND (2) A DECISION THAT ONLY LOCKHEED SHOULD PARTICIPATE. THE NAVY'S DECISIONS IN THIS REGARD MAY BOTH SPRING FROM A COMMON SET OF FACTS. THE SECOND OF ITS DECISIONS, HOWEVER, IS NOT MADE UNDER SEC. 2304(A) BUT RATHER IS AN ADDITIONAL CONCLUSION THAT, BECAUSE THE MAXIMUM NUMBER OF QUALIFIED SOURCES AVAILABLE IS ONE, IT WOULD BE FUTILE TO ATTEMPT TO COMPETE ITS REQUIREMENTS UNDER SEC. 2304(G).

IN SHORT, THE NAVY'S DECISIONS HERE WERE: (A) TO NEGOTIATE UNDER AUTHORITY OF SECTIONS 2304(A)(10) AND (B) TO PROCURE SOLELY FROM LOCKHEED DESPITE SECTION 2304(G). NEITHER IS THE SORT OF DECISION WHICH IS ACCORDED FINALITY UNDER SECTION 2310(A).