Link: GAO Opinion
Agency: General Services Administration
Disposition: Protest denied.
Protest that the solicitation for Federal Supply Schedule (FSS) contract is defective because it includes a standard contract cancellation clause set forth in General Services Administration (GSA) Federal Acquisition Regulation Supplement § 552.238-73, is denied where the protester has not shown that the clause exceeds the authority of the GSA in establishing FSS contracts, or otherwise conflicts with statute or regulation.
General Counsel P.C. Highlight:
ASA argues that GSAR sect. 552.237-73 violates FAR sections 8.4, 12.403, 49.000 and 52.212-4 as well as the spirit of the FAR. ASA argues that the clause is unfair because it allegedly expands GSA’s rights beyond a standard termination for convenience clause. ASA also maintains that the clause eliminates a contractor’s ability to seek damages for breach of contract if the agency cancels a schedule contract without cause. GSA responds that the cancellation clause does not conflict with the FAR, and its use is required by the GSA Acquisition Manual. GAO states that an agency head, or his designee, has the authority to approve deviations from particular requirements of the FAR, including exempting the agency from a particular provision. As required, the cancellation clause here was promulgated by GSA through the notice and comment rulemaking process. Although agency FAR Supplements generally may not conflict or be inconsistent with FAR content, FAR sect. 1.304(b)(2), GAO disagrees with the protester’s claim that the cancellation clause conflicts with any of the specified provisions of the FAR. To the extent that the protester is arguing that the cancellation clause deprives it of rights to which it is entitled, the question of whether the GSA may cancel a contract for no reason, or for a bad faith reason, under the cancellation clause must ultimately be decided by other forums on specific facts. GAO does not have jurisdiction over matters of contract administration. On the other hand, while challenges to the legal sufficiency of a solicitation are not often raised in this forum, GAO has considered, and will consider, a protester’s timely claim that a solicitation anticipates award of a contractual instrument that is legally insufficient in some way. For example, GAO will sustain a protest against the terms of a cancellation clause where it purports to deny a contractor under an indefinite quantity contract the benefit of the minimum guarantee.
Here, however, the solicitation specifically recognizes the government’s obligation to honor the minimum guarantee in the event of a cancellation by the government. The protester has shown no other basis to question the GSA’s use of the cancellation clause in this RFP issued under the FSS program. The protest is denied.