B-310357, Essan Metallix Corporation, December 7, 2007

B-310357 Dec 07, 2007 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights Essan Metallix Corporation protests the Department of the Army's failure to solicit it in the agency's reprocurement of British stainless steel tubes under solicitation No. W52H09-07-T-5765. We deny the protest. View Decision B-310357, Essan Metallix Corporation, December 7, 2007 DOCUMENT FOR PUBLIC RELEASE The decision issued on the date below was subject to a GAO Protective Order. This redacted version has been approved for public release. Decision Matter of: Essan Metallix Corporation File: B-310357 Date: December 7, 2007 Kevin M. Cox, Esq., and Nancy M. Camardo, Esq., Camardo Law Firm, P.C., for the protester. Jason P. Matechak, Esq., Gregory S. Jacobs, Esq., and Steven D. Tibbets, Esq., Reed Smith LLP, for Maher, Ltd., an intervenor. Major Walter R. Dukes, and Leslie A. Nepper, Esq., Department of the Army, for the agency. Eric M. Ransom and Christine S. Melody, Esq., Office of the General Counsel, GAO, participated in the preperation of the decision. DIGEST An agency may properly exclude a defaulted contractor from the competition for the reprocurement of the work remaining under the terminated contract. DECISION Essan Metallix Corporation protests the Department of the Army's failure to solicit it in the agency's reprocurement of British stainless steel tubes under solicitation No. W52H09-07-T-5765. We deny the protest. The protester here was the awardee of the previous contract for the requirement, awarded on August 31, 2005. The subject reprocurement began after the protester's contract was terminated for default[1] on January 16, 2007. Agency Report (AR), Tab 10m, Award Modification 6, at 1. This termination followed a nearly year-long delay in the procurement in which the protester failed in each of four attempts to manufacture tubes to meet its contract's first article test requirements. AR, at 1; Tab 10l, Award Modification 5, at 3. After the termination of the protester's contract, the agency contacted all other producers of the tubes known to the agency at the time--Maher, Ltd., Essan's subcontractor under the terminated contract, and BAE Systems, a previous manufacturer.[2] The agency then began reprocurement via a two-stage process in which offerors were required to prove their capability to produce acceptable tubes under a five-tube production –prove-out— contract before being considered for the actual production contract. BAE did not submit a timely offer that met the government's needs for the prove-out contract. Maher was issued a purchase order for the five-tube prove-out quantity on February 8, 2007, and its second delivery of tubes was found acceptable on July 31. The present solicitation was issued to Maher on August 7, and Maher was awarded the production contract on September 5. An award synopsis was posted on FedBizOpps the same day and Essan filed this protest on September 17. Essan asserts that it was improperly excluded from the competition for the reprocurement, that the reprocurement was for a different item than the terminated contract, and that Maher's proposed price in the reprocurement was unreasonable. Generally, the statutes and regulations governing federal procurements are not strictly applicable to reprocurements of defaulted requirements. Bluff Springs Paper Co., Ltd./R.D. Thompson Paper Prod. Co., Joint Venture, B-286797.3, Aug. 13, 2001, 2001 CPD para. 160 at 2. Under the standard provisions applicable to fixed-price contracts, FAR sections 49.402-6(b) and 52.249-8, an agency may use any terms and acquisition method deemed appropriate for repurchase of not more than the undelivered quantity for which the contract was terminated, but must obtain competition to the maximum extent practicable. In this case, because the terminated contract was for the acquisition of commercial items, FAR sect. 49.402-6 is only applicable as guidance, and only to the extent that it does not conflict with the specific procedures applicable to commercial item acquisitions. FAR sect. 12.403(a). As applicable here, for commercial item acquisitions, FAR sect. 12.403(c)(2) provides that the government's rights after a termination for default include all the remedies available to any buyer in the marketplace, and that the government's preferred remedy will be to acquire similar items from another contractor and to charge the defaulted contractor with any excess reprocurement costs. These FAR provisions allow the agency to purchase the needed supplies as expeditiously as possible while preserving the government's right to seek excess reprocurement costs from the defaulted contractor. In Montage, Inc., B-277923, B-277923.2, Dec. 29, 1997, 97-2 CPD para.