BNUMBER:  B-274944.4 
DATE:  July 15, 1997
TITLE: Department of the Navy--Modification of Remedy, B-274944.4,
July 15, 1997
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Matter of:Department of the Navy--Modification of Remedy

File:     B-274944.4

Date:July 15, 1997

John S. Pachter, Esq., and Jonathan D. Shaffer, Esq., Smith, Pachter, 
McWhorter & D'Ambrosio, P.L.C., for the protester.
Eric A. Lile, Esq., Kathy B. Cowley, Esq., and Brian F. Zeck, Esq., 
Department of the Navy, for the agency.
Behn Miller, Esq., and Christine S. Melody, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Where a contracting agency overrides a statutorily required stay of 
contract performance by executing a "best interests" justification, 
General Accounting Office must recommend corrective action without 
regard to any cost or disruption from terminating, recompeting, or 
reawarding the contract.  

DECISION

The Department of the Navy requests modification of the remedy that we 
recommended in Dynalantic Corp., B-274944.2, Feb. 25, 1997, 97-1 CPD  para.  
101, in which we sustained Dynalantic's protest against the award of a 
contract to Marine Safety International (MSI) under request for 
proposals (RFP) No. N00600-96-R-0749, issued by the Navy for ship 
handling simulation services.  

We deny the request.

In our decision, we found that the Navy had improperly excluded 
Dynalantic's proposal from the competitive range.  The solicitation 
called for the contractor to perform essentially four steps:  (1) 
construct a ship handling facility on government-owned property within 
9 months from contract award; (2) install and configure the simulator 
equipment and training stations; (3) provide all personnel and 
technical services necessary to run the ship handling simulator 
complex for a period of up to 10 years; and (4) "[u]pon completion or 
termination of the contract [be] responsible for the removal of the 
building and restoration of the grounds to original condition at no 
additional cost to the government."  In sustaining Dynalantic's 
protest, we recommended that the Navy reinstate Dynalantic's proposal 
in the competitive range, conduct discussions, and solicit best and 
final offers (BAFO).  In the event Dynalantic was selected for award, 
we recommended that the Navy allow MSI to complete its construction of 
the ship handling facility (which we understood to be nearly 
complete), and award the remainder of the procurement to Dynalantic.

The Navy requests modification of our recommendation on the ground 
that the recommendation is impracticable.  The Navy first argues that 
because the solicitation does not require the contractor to give the 
agency title to the ship handling facility, it will be difficult for 
the agency to obtain access to the facility for use by another 
contractor.  The Navy also states that if it awards the non-facility 
portion of this requirement to Dynalantic, it will be required to 
terminate MSI's current contract, which, under the above-referenced 
"termination" clause, will require MSI to remove the newly constructed 
facility, resulting in great expense and delay to the government.  In 
this regard, the Navy speculates that if Dynalantic is selected for 
award after the latest round of BAFOs, the total cost involved in 
terminating MSI's current contract; securing access to the constructed 
facility for the ship handling complex; and awarding the remaining 
portion of the ship handling services requirement to Dynalantic may be 
so high that the agency "may not be able to afford" to carry out our 
recommendation.  The Navy also asserts that any delay in procuring the 
simulator ship handling facility and associated services will 
"interfer[e] with, and perhaps foreclos[e] the ability of the Navy to 
meet its mission of the safe and effective operation of ships."

Under the Competition in Contracting Act of 1984 (CICA), as amended, 
if the procuring agency receives notice of a protest filed at this 
Office within 10 calendar days of the contract award, or 5 calendar 
days after the debriefing date, the agency generally is required to 
suspend contract performance while the protest is pending.  31 U.S.C.  sec.  
3553(d)(3)(A), (d)(4) (1994).  However, if an agency determines that 
notwithstanding the pending protest at our Office, performance of the 
contract is "in the best interests of the United States" or that 
"urgent and compelling circumstances that significantly affect 
interests of the United States will not permit waiting for the 
decision" of our Office on the protest, the agency may execute a 
written finding authorizing the awardee to proceed with contract 
performance and thereby override the CICA stay.  31 U.S.C.  sec.  
3553(d)(3)(C)(i).[1]

In this case, on November 14, 1996, shortly after Dynalantic's protest 
was filed, the Navy determined that it was in the best interests of 
the government to continue performance notwithstanding the protest and 
executed a written "best interests" override of the statutory stay on 
MSI's contract performance.  Where, as here, the head of a procuring 
activity decides, under 31 U.S.C.  sec.  3553(d)(3)(C)(i)(I), to continue 
performance of a protested contract based on a finding that to do so 
would be in the best interests of the government, CICA requires our 
Office to make our recommendation "without regard to any cost or 
disruption from terminating, recompeting, or reawarding the 
contract."[2]   31 U.S.C.  sec.  3554(b)(2); 4 C.F.R.  sec.  21.8(c); Price 
Waterhouse--Recon., B-220049.2, Apr. 7, 1986, 86-1 CPD  para.  333 at 7.  
Although the Navy contends that nothing in the statutory language 
precludes our Office from considering the impact of our recommendation 
on the Navy's mission, the Conference Report accompanying the 
statutory language makes it clear that assessing whether a corrective 
action recommendation will positively or negatively impact the 
procuring agency is not to be considered by our Office when fashioning 
a corrective action recommendation in the case of a "best interests" 
stay override:

     Before notifying the Comptroller General that continued 
     performance of a disputed contract is in the government's best 
     interest . . . the head of the procuring activity should consider 
     potential costs to the government from carrying out relief 
     measures as may be recommended by the Comptroller General if the 
     protest is subsequently sustained.  This is to insure that if the 
     Comptroller General sustains a protest, such forms of relief as 
     termination, recompetition, or re-award of the contract will be 
     fully considered for recommendation.  Agencies in the past have 
     resisted such recommendations on the grounds that the 
     government's best interest would not be served by relief measures 
     of this sort because of the added expenses involved.  This 
     provision is designed to preclude that argument in the future, 
     and thus to avoid prejudicing those relief measures in the 
     Comptroller General's review.  

H.R. Conf. Rep. No. 98-861, at 1436 (1984), reprinted in 1984 
U.S.C.C.A.N. 697, 2124.

As evidenced by the clear language of 31 U.S.C.  sec.  3554(b)(2) and its 
legislative history, neither the purported disruption to the Navy's 
mission nor the agency's unsubstantiated funding concerns[3] provide a 
basis for modifying our recommended corrective action in view of the 
Navy's decision to override the statutory stay of performance based on 
a "best interests" determination.[4]  Virginia Beach Air Conditioning 
Corp., 69 Comp. Gen. 178, 181 (1990), 90-1 CPD  para.  78 at 5. 

The request for modification of remedy is denied.

Comptroller General
of the United States

1. In addition to executing a written determination to override the 
stay, the agency is  required to notify our Office of the override 
finding.  31 U.S.C.  sec.  3553(d)(3)(C)(ii).

2. Alternatively, if the agency overrides the CICA stay based upon a 
written finding of urgent and compelling circumstances, CICA permits 
our Office to consider all circumstances--including cost and 
disruption to the government--in fashioning the appropriate remedy 
under a sustained protest.  See 31 U.S.C.  sec.  3554(b)(1); 4 C.F.R.  sec.  
21.8(b) (1997); Arthur Young & Co., B-216643, May 24, 1985, 85-1 CPD  para.  
598 at 7-8 (termination of awardee's contract not recommended where 
agency overrode the stay of contract performance on the basis of 
urgent and compelling circumstances, and the high cost of termination 
was out of proportion to any benefits received from termination).

3. Although the Navy has suggested that it "may not be able to afford" 
to make award to Dynalantic because of the costs associated with 
terminating MSI's contract, there is no basis in the record for 
concluding that this procurement involves unusually high termination 
or reprocurement costs.  Moreover, the Navy has made no attempt to 
quantify the costs involved or to show that the necessary funds are 
not available. Nor is there any reason to believe that, if termination 
of MSI's contract is appropriate after the reevaluation is performed, 
the Navy and MSI could not enter into good faith negotiations to 
resolve the issues relating to use of the facility.

4. During the protest, the Navy advised our Office and the parties 
that MSI's progress on the construction portion of the requirement was 
quite substantial.  In its request for modification, the Navy now 
asserts that our Office was mistaken in concluding that the facility's 
construction was "nearly complete."  Our review of the record shows 
that we reasonably concluded that the construction phase was near 
completion.  In any event, the stage of construction has no bearing on 
our basic recommendation that the Navy hold discussions; solicit new 
BAFOs; conduct a reevaluation; and, if Dynalantic is selected, award 
whatever portion of the contract remains unperformed.