Propriety of Reinstating Cancelled Contract

The Director of Administrative Services, Forest Service, requested an advance decision as to the propriety of reinstating a canceled contract and amending its terms to compensate a contractor for escalation in labor and material costs since the contract's cancellation. Work on this road construction program was halted due to winter conditions in 1979. Prior to resumption of work by the contractor, Mt. St. Helens erupted in its vicinity and the project was closed for safety reasons by executive order. At that time, the contract was canceled as impossible to perform. On September 10, 1980, the project site was removed from the no-entry area and the Forest Service would like to reinstate the contract for completion of the project in 1981. GAO noted that approximately 1 year will have elapsed between the cancellation notice and the beginning of the new work. With the passage of such a substantial period of time, GAO does not believe that the agency can reasonably assure itself of obtaining the lowest possible price by reinstating the contract with an escalation provision with the incumbent contractor rather than competitively procuring its requirements. Accordingly, the remaining requirements for the roads should be competitively procured.