B-173703, FEB 7, 1972, 51 COMP GEN 481

B-173703: Feb 7, 1972

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CONTRACTS - AWARDS - CANCELLATION - TERMINATION FOR CONVENIENCE IN LIEU THE CANCELLATION OF A CONTRACT AWARD BECAUSE OF THE CONTRACTING OFFICER'S FAILURE TO HOLD DISCUSSIONS WITH ALL OFFERORS WITHIN A COMPETITIVE RANGE AFTER HOLDING DISCUSSIONS WITH ONE OFFEROR SHOULD BE CONVERTED TO A TERMINATION FOR CONVENIENCE SINCE THE CONTRACTING OFFICER DID NOT LACK AUTHORITY TO MAKE THE AWARD AND THERE IS NO INDICATION IN THE RECORD THAT EITHER THE OFFEROR OR THE PROCUREMENT ACTIVITY CONTRACTED OTHER THAN IN GOOD FAITH OR WITH ANY INTENT TO DEPRIVE OTHER OFFERORS OF AN EQUAL OPPORTUNITY TO COMPETE AND. THE CONTRACT AWARDED WAS NOT VOID AB INITIO. THE CANCELLATION OF A CONTRACT IS DESIRABLE. 1972: ENCLOSED IS A COPY OF OUR DECISION OF TODAY TO MR.

B-173703, FEB 7, 1972, 51 COMP GEN 481

CONTRACTS - AWARDS - CANCELLATION - TERMINATION FOR CONVENIENCE IN LIEU THE CANCELLATION OF A CONTRACT AWARD BECAUSE OF THE CONTRACTING OFFICER'S FAILURE TO HOLD DISCUSSIONS WITH ALL OFFERORS WITHIN A COMPETITIVE RANGE AFTER HOLDING DISCUSSIONS WITH ONE OFFEROR SHOULD BE CONVERTED TO A TERMINATION FOR CONVENIENCE SINCE THE CONTRACTING OFFICER DID NOT LACK AUTHORITY TO MAKE THE AWARD AND THERE IS NO INDICATION IN THE RECORD THAT EITHER THE OFFEROR OR THE PROCUREMENT ACTIVITY CONTRACTED OTHER THAN IN GOOD FAITH OR WITH ANY INTENT TO DEPRIVE OTHER OFFERORS OF AN EQUAL OPPORTUNITY TO COMPETE AND, CONSEQUENTLY, THE CONTRACT AWARDED WAS NOT VOID AB INITIO. THE CANCELLATION OF A CONTRACT IS DESIRABLE, BUT FOR THE URGENCY OF THE PROCUREMENT, THE COSTS THAT WOULD BE CHARGEABLE AGAINST THE GOVERNMENT, OR SIMILAR CIRCUMSTANCES RELATING TO THE BEST INTERESTS OF THE GOVERNMENT WHEN A TERMINATION FOR CONVENIENCE WOULD EITHER BE TOO EXPENSIVE OR NOT IN THE GOVERNMENT'S BEST INTEREST.

TO THE DIRECTOR, DEFENSE SUPPLY AGENCY, FEBRUARY 7, 1972:

ENCLOSED IS A COPY OF OUR DECISION OF TODAY TO MR. MURRAY SCHAFFER, ATTORNEY FOR MECHANICAL EQUIPMENT CO., INC. (MECO), CONCERNING THE PROTEST AGAINST THE CANCELLATION OF MECO'S CONTRACT DSA700-71-C-9173, AWARDED BY THE DEFENSE CONSTRUCTION SUPPLY CENTER, COLUMBUS, OHIO. THE PROTEST WAS THE SUBJECT OF REPORTS, YOUR REFERENCE DSAH-G, DATED AUGUST 27 AND NOVEMBER 23, 1971, FROM THE ASSISTANT COUNSEL.

WE AGREE THAT THE FAILURE TO HOLD DISCUSSIONS WITH ALL OFFERORS WITHIN A COMPETITIVE RANGE AFTER HOLDING DISCUSSIONS WITH ONE OFFEROR SO SITUATED WAS AN IMPROPRIETY WHICH MIGHT REQUIRE TERMINATION OF THE RESULTING CONTRACT. GRANTING, ARGUENDO, THE NECESSITY OF SUCH ACTION IN THE INSTANT CASE, WE DO NOT BELIEVE THAT THE CIRCUMSTANCES WARRANT TERMINATION OF MECO'S CONTRACT ON A BASIS OTHER THAN FOR THE CONVENIENCE OF THE GOVERNMENT.

THERE IS NO INDICATION IN THE RECORD THAT EITHER MECO OR THE PROCUREMENT ACTIVITY CONTRACTED OTHER THAN IN GOOD FAITH OR WITH ANY INTENT TO DEPRIVE OTHER OFFERORS OF AN EQUAL OPPORTUNITY TO COMPETE. IN A FORMALLY ADVERTISED PROCUREMENT, A SHOWING OF GOOD FAITH HAS BEEN A BASIS FOR A RECOMMENDATION BY OUR OFFICE THAT A CONTRACT SHOULD BE TERMINATED FOR CONVENIENCE EVEN THOUGH IT WAS AWARDED TO OTHER THAN THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER. SEE 51 COMP. GEN. 293 (1971). PERCEIVE OF NO REASON WHY THE RESULT HERE SHOULD BE ANY DIFFERENT.

WE HAVE, OF COURSE, CONSIDERED WHAT ACTION WAS REQUIRED WHERE AWARD HAD BEEN MADE SUBSEQUENT TO DISCUSSIONS WITH ONE BUT NOT ALL OFFERORS WITHIN A COMPETITIVE RANGE. SEE 49 COMP. GEN. 625 (1970); 49 ID. 402 (1969); 48 ID. 663 (1969); 46 ID. 191 (1966). IN EACH OF THESE DECISIONS, WE CONCLUDED THAT BUT FOR URGENCY, COSTS CHARGEABLE AGAINST THE GOVERNMENT, OR SIMILAR CIRCUMSTANCES RELATING TO THE BEST INTERESTS OF THE GOVERNMENT, CANCELLATION WAS DESIRABLE. THESE DECISIONS RECOGNIZE THE EXISTENCE OF BINDING CONTRACTS AND THAT TERMINATION FOR CONVENIENCE WOULD EITHER BE TOO EXPENSIVE OR NOT OTHERWISE IN THE GOVERNMENT'S BEST INTERESTS.

THEREFORE, ALTHOUGH THE PROCUREMENT ACTIVITY'S FAILURE TO HOLD DISCUSSIONS WITH ALL OFFERORS CONSTITUTED AN IRREGULARITY IN THE PROCUREMENT WHICH AFFECTS THE PROPRIETY OF THE CONTRACT AWARDED, WE DO NOT BELIEVE THAT THE CONTRACTING OFFICER LACKED AUTHORITY TO MAKE THE AWARD IN THE FIRST INSTANCE. CONSEQUENTLY, THE CONTRACT IN QUESTION WAS NOT VOID AB INITIO AND WE THEREFORE VIEW THE CANCELLATION AS ERRONEOUS. THAT BEING THE CASE, THE CANCELLATION SHOULD BE CONVERTED TO A TERMINATION FOR CONVENIENCE. SEE JOHN REINER & COMPANY V. UNITED STATES, 325 F.2D 438, 163 CT. CL. 381, CERTIORARI DENIED 377 U.S. 931 (1964), AND WARREN BROTHERS ROADS COMPANY V. UNITED STATES, 355 F.2D 612, 173 CT. CL. 714. YOUR ADVICE AS TO THE ACTION TAKEN IN THIS MATTER WOULD BE APPRECIATED.

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