B-247627, May 27, 1992

B-247627, May 27, 1992

PROCUREMENT - Noncompetitive Negotiation - Use - Justification - Urgent needs DIGEST: Agency properly restricted reprocurement to sole source, excluding protester, where out-of-stock ham slices were urgently needed, and agency reasonably determined that protester's furnishing of nonconforming ham slices under existing contract (which necessitated the reprocurement) indicated that protester currently could not satisfy the requirement. Samuel Huttenbauer, Jr. for the protester. Michael Trovarelli, Esq., Defense Logistics Agency, for the agency. John M. Melody, Esq., and David Ashen, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision.

E. Huttenbauer & Son, Inc.:

E. Huttenbauer & Son, Inc. protests its exclusion from the competition under request for proposals (RFP) No. DLA13H-92-R-8929, issued by the Defense Logistics Agency (DLA) for 93,696 cans of ham slices, part of the tray pack rations program for feeding troops in the field.

We deny the protest.

DLA issued the RFP on a sole-source basis to Vanee Foods, Inc. based on its determination, reflected in a Justification for Other than Full and Open Competition, that only Vanee could timely furnish conforming items, which were urgently needed because the ham slices were completely out-of- stock. This out-of-stock situation existed because DLA had previously found that items (115,420 of 280,160 cans) furnished by Huttenbauer under the contract (No. DLA13H-91-C-0580) originally awarded for this requirement were nonconforming due to excessive fat content.

Invoking the terms of the warranty clause in the contract /1/, DLA had instructed Huttenbauer to take back the items and return the contract payment. DLA then proceeded to fill its immediate needs by means of this sole-source award to Vanee, excluding Huttenbauer from the procurement on the ground that the difficulties under its contract indicated that the firm could not timely furnish conforming goods. /2/ This protest followed.

Huttenbauer first argues that excluding it from the reprocurement constitutes an improper prejudgment of the validity of the rejection of the cans, in disregard of Huttenbauer's right to appeal the rejection. find no merit to this argument. Huttenbauer does not explain, nor is it otherwise apparent, how the agency's actions with respect to the reprocurement limit Huttenbauer's right under the Contract Disputes Act of 1978, 41 U.S.C. Secs. 601-613 (1988), to appeal the rejection of its items.

Huttenbauer also contends that it was improper to exclude it from the reprocurement because it is in fact currently capable of timely meeting DLA's requirement for ham slices, as demonstrated by DLA's acceptance of 164,740 cans (out of the total of 280,160 cans) under its contract with no problems.

Since a reprocurement is for the account of a defaulted contractor, the statutes and regulations governing regular federal procurements are not strictly applicable. We review protests concerning reprocurements only to determine whether the agency acted reasonably under the circumstances. See Tango Constr., Inc.; Neal & Co., Inc., 71 Comp.Gen. 55 (1991), 91-2 CPD Para. 425 (reprocurement for the account of the contractor under the inspection clause); Adaptive Concepts, Inc., B-243304, June 25, 1991, 91-1 CPD Para. 605. In this regard, an agency may use other than competitive procedures to procure goods where the agency's requirements can only be satisfied by one responsible source or are of such an unusual and compelling urgency that the government would be seriously injured if the agency were not permitted to limit the number of sources from which it seeks bids or proposals. Pacific Dry Dock & Repair Co., B-237611.2; B-237751, Mar. 19, 1990, 90-1 CPD Para. 302; Tecom Indus., Inc., B-236371, Dec. 5, 1989, 89-2 CPD Para. 516, aff'd, B-236371.2, Feb. 13, 1990, 90-1 CPD Para. 185.

We find that the agency's decision to limit the procurement to Vanee was reasonable under this standard. First, the agency has shown that the requirement was urgent. DLA reports that the ham slices are "an essential stock item ... pre-positioned as a war reserve item." According to the agency, the ham slices are necessary to assure menu variety, and thereby "to provide well-balanced meals with nutritional value to ... troop issue customers." They were in fact used to feed the armed forces during the Persian Gulf War. Furthermore, the ham slices were entirely out-of-stock due to the unacceptability of the Huttenbauer items.

Second, we think the agency reasonably concluded that the protester could not be relied upon to meet the requirement immediately. Huttenbauer had demonstrated in the performance of its current contract an inability to comply uniformly with the fat content limitation in the specifications; a large portion of the cans of ham slices it furnished were deficient for this reason. Further, Huttenbauer had not proposed to implement corrective measures to eliminate the cause of the deficiency. (Indeed, the record shows that Huttenbauer still has neither conceded that a deficiency exists nor acknowledged liability under the warranty clause; it argues instead that the initial acceptance of the items as conforming, made by United States Department of Agriculture inspectors, should be controlling with respect to DLA.) Under these circumstances, it was reasonable for DLA to conclude that Huttenbauer had not corrected the problem that caused the deficiencies, and thus would be unable to timely and consistently provide conforming ham slices. Accordingly, it was reasonable for the agency to proceed with a sole-source award to Vanee, the only firm in a position to make timely delivery of conforming items.

The protest is denied.

/1/ Under this provision, entitled "Warranty of Supplies JAN 1987 DPSC," the contractor warrants that the delivered items will be free from defects and conform to the contract requirements for 6 months after receipt of the supplies, "notwithstanding inspection and acceptance by the Government"

/2/ Section (c)(2)(v) of the warranty clause provides as one remedy that, after notifying the contractor of the violation of the warranty, the agency may:

"Return or hold for contractor's account the delivered items, whereupon the contractor shall repay the contract price paid therefor. In such event, the Government may reprocure similar supplies upon such terms and in such manner as the Contracting Officer may deem appropriate, and charge to the Contractor the additional cost occasioned the Government thereby."