________________________________________
RECONSIDERATION DENIED: January 23, 1998
________________________________________
GSBCA 14057
TRAVEL CENTRE,
Appellant,
v.
GENERAL SERVICES ADMINISTRATION,
Respondent.
O. Kevin Vincent of Baker & Botts, Washington, DC, counsel
for Appellant.
Michael D. Tully, Office of General Counsel, General
Services Administration, Washington, DC, counsel for Respondent.
Before Board Judges PARKER, HYATT, and VERGILIO.
PARKER, Board Judge.
The General Services Administration (GSA) moves the Board to
reconsider its decision granting the appeal of Travel Centre. In
that decision, the Board held that GSA breached Travel Centre's
contract to provide travel services when it improperly terminated
the contract for the convenience of the Government. Use of the
termination for convenience clause was improper because, during
the procurement process, GSA had withheld from offerors crucial
information which showed that the estimates of potential business
provided in the solicitation -- estimates upon which offerors
were directed to base their proposals -- were vastly overstated.
Due to GSA's bad faith actions, the contract was doomed to
failure from the beginning. Travel Centre v. General Services
Administration, GSBCA 14057 (Nov. 26, 1997).
For the reasons discussed below, we deny GSA's motion to
reconsider the decision.
Background
In April 1995, GSA solicited offers to establish and operate
a travel management center for federal agencies located in the
New England area. The solicitation contemplated an indefinite
quantity, indefinite delivery type contract, with a minimum
guaranteed revenue of $100. The solicitation informed offerors
that the winning contractor would serve as the preferred source
for federal agencies requiring airline tickets, lodging, rental
vehicles, and other travel services for their employees. The
winning contractor would receive compensation in the form of
commissions from the airlines, car rental companies, etc., and
would rebate a percentage of those commissions to the Government.
Offerors were required to base their proposals on estimates of
expected business provided in the solicitation. Travel Centre,
slip op. at 1-3.
During the process of soliciting and evaluating offers for
the new contract, GSA received several notices from the incumbent
contractor, Dube Travel, informing GSA that its largest customer
group, made up of various Department of Defense (DoD)-related
agencies, had awarded its own travel services contract to another
contractor and would no longer be using the GSA contract.
Although the DoD-related business made up more than half of the
expected business for the State of Maine, GSA never informed
offerors of this important information -- information which
directly contradicted the estimates of expected business
contained in the solicitation upon which offerors had based their
proposals. GSA simply awarded a contract to Travel Centre for
the states of Maine and New Hampshire. When expected business
failed to materialize, Travel Centre was forced to close its
business. GSA then terminated the contract for default, changing
the termination to one for the convenience of the Government in
April 1997. Travel Centre at 3-4.
Travel Centre appealed GSA's termination for convenience,
arguing that, by inducing Travel Centre to enter into a contract
knowing that the estimate of the amount of business that could be
expected was vastly overstated, GSA had breached the contract.
Thus, Travel Centre argued, GSA's use of the termination for
convenience clause was improper. The Board agreed with Travel
Centre that the termination was improper, holding that GSA
withheld crucial information material to an offeror's decision
whether to submit a proposal at all and, if so, how to structure
it. Thus, whether GSA actually knew about this important
relevant information, or recklessly disregarded it (an
explanation which the Board did not find credible), by
withholding the information from offerors, GSA exhibited the "bad
faith" necessary to sustain a finding of breach of contract.
Travel Centre at 5-8.
Discussion
In moving the Board to reconsider its decision, GSA points
to the following alleged factual and legal errors:
1. GSA allegation: There is no evidence that DoD's notice
of termination to the incumbent contractor, Dube Travel, was ever
sent to GSA. Response: The decision did not say that it was
sent to GSA. The decision did say that GSA received numerous
reports of the termination, both before and after its occurrence,
directly from Dube Travel. Although these reports were received
during the process of procuring the services at issue in this
case, GSA never informed prospective offerors that the DoD
business would no longer be available.
2. GSA allegation: Because the numbers contained in the
solicitation regarding dollar volumes, numbers of customers, and
numbers of tickets issued contained errors such that the
information was self-contradictory, Travel Centre should have
brought this patent ambiguity to the attention of the contracting
officer for resolution prior to award, rather than relying on the
most favorable interpretation after award. Response: The Board
considered and rejected this argument, even though GSA failed to
raise it during the appeal. Offerors were told to base their
proposals on the following:
FY94 DATA: 4156 TICKETS
$1861,700 ANNUAL DOLLAR AMOUNT
(Sources: GSA Forms 3531 and current agency
customer list)
The solicitation also presented a table listing various agencies,
numbers of tickets, dollar amounts, etc. The table was presented
"for informational purposes only," and did not indicate the
source of the information contained therein. GSA and Travel
Centre stipulated that the table was not based on fiscal year
1994 historical data as was the above-quoted information upon
which offerors were to base their proposals. Thus, although the
table contained errors -- the individual entries did not add up
to the total listed dollar amount of $1,601,891 -- the table
itself did not create an ambiguity with respect to the fiscal
year 1994 data upon which offerors were to base their proposals.
More important, however, is the fact that the errors in the table
were not caused by the same information withheld by GSA to the
effect that approximately $993,000 in potential business could
never materialize. Thus, the problem would not, as GSA suggests,
have been "cleared up" by inquiring about mistakes in the
informational table prior to award.
3. GSA allegation: The majority decision imparts special
meaning to the phrase "preferred source" which, in essence, gives
no meaning to other contract provisions stating that the contract
is for an indefinite quantity. Response: The Board's
interpretation of the contract gives meaning to all of its terms.
The contract was, as GSA points out, for an indefinite quantity,
with a guaranteed minimum of only $100. The solicitation also
told offerors that the winning contractor would be the preferred
source for federal agencies in the geographical area. There is
no inconsistency between these two terms. The problem which GSA
fails to acknowledge is that, prior to awarding the contract to
Travel Centre, GSA was provided information that the winning
contractor would not be the preferred source for the major
federal agency group in the geographical area. GSA failed to
inform offerors of this fact. The fact that the solicitation was
for an indefinite quantity did not mean that the Government could
mislead offerors as to the amount of business which was possible.
As we pointed out in the decision, even in the case of an
indefinite quantity contract, the contractor does not accept the
risk that the Government has misled him as to the amount of
business which he might reasonably expect. In normal
circumstances, a contractor assumes that the Government has
prepared its estimate in good faith and accepts the risk that he
may not achieve the level of sales estimated. However, where the
Government knows or recklessly disregards information to the
effect that the contractor has no chance of achieving the
estimated quantity of sales, and fails to disclose that fact
prior to entering into the contract, the term "risk" is a
misnomer. The impossibility of reward for which the contractor
accepts the risks of an indefinite quantity contract is a
certainty known only to the Government. In this situation, we
cannot accept the Government's argument that the contractor
assumed this risk. Travel Centre at 8.
4. GSA allegation: The facts of the case show that there
was never a meeting of the minds as to the subject matter of the
contract. Thus, GSA argues, the proper remedy is rescission of
the contract based upon a mistake in bid, not based upon breach
of contract. Response: Again, although GSA never raised this
argument during the appeal, the Board considered the argument and
rejected it. There was no mistake in bid here. An offeror does
not make a legal mistake when he fails to incorporate in his
offer a contingency based upon the fact that the Government may
have misled him as to a crucial piece of information. If this
were the case, the Government would be forced to pay more for all
goods and services for which offers are solicited. Travel Centre
based its offer on the information contained in the solicitation
-- that the contract would be for an indefinite quantity and that
the winning contractor would be the preferred source for federal
agencies in the geographical areas. Failing to base its offer on
information held, but not disclosed, by GSA was not a mistake.
5. GSA allegation: The Board's holding of bad faith in
awarding the contract is "contrary to the precedent requiring not
mere bad contract formation, nor recklessness, but a specific
intent to harm the contractor." Response: This issue was
thoroughly briefed by the parties in the underlying appeal. As
discussed in detail in the Board's decision, we do not agree with
GSA's narrow view of the precedent established by the numerous
and, at times, conflicting cases in this area. After reading all
of the relevant cases, we remain of the opinion that, when a
Government procurement official has information in his possession
which materially impacts a pending procurement, and fails to
disclose that information to offerors, that official has not
exhibited the type of good faith dealing that people who do
business with the Government have a right to expect.
Decision
For the reason discussed above, respondent's motion for
reconsideration is DENIED.
_________________________
ROBERT W. PARKER
Board Judge
I concur:
__________________________
CATHERINE B. HYATT
Board Judge
VERGILIO, Board Judge, dissenting.
The agency seeks reconsideration based on its views of the
facts and the law which differ from those of the majority. I
would typically discourage and deny such a request for
reconsideration, which should not be used to reargue matters
already considered by the Board. However, in denying the motion,
the majority here makes assertions which I view to be unsupported
by its underlying opinion. Thus, while I find no basis to
reconsider my dissenting opinion, I would gladly join a member of
the majority to ensure that the facts, as found by the Board,
support the legal conclusions. However, a second vote is
lacking.
Various statements by the majority in denying this motion
merit comment. The majority has relied upon assumptions and
suppositions which are not supported by the findings of fact.
Rather than resolve disputes based upon assumptions not supported
by findings of fact, I believe that boards are to determine the
material facts from the record submitted and reach conclusions
based upon those facts. I do not here repeat what is in my
dissent in the underlying case; rather, I address some of the
assertions by the majority in response to particular allegations
by the agency.
As to the first General Services Administration (GSA)
allegation, the majority asserts that GSA never informed
prospective offerors that Department of Defense (DoD) business
would no longer be available. While it is true that GSA never so
informed prospective offerors, the findings do not demonstrate
that GSA officials were aware that DoD business would not be
available under the disputed contract. That is, the monthly
narratives provided by Dube Travel are not as informative as the
majority maintains. Dube may have no longer been doing the work
because it provided DoD a lesser value than the other contractor.
Nothing in the findings of fact demonstrate that DoD awarded a
requirements contract for a particular duration which would
affect the contract in this appeal, or that GSA procurement
personnel knew that a requirements contract had been awarded.
As to the majority's response to the second GSA allegation,
the majority continues to take out of the context of the
solicitation the phrase "Offerors shall base their offer[s] on
the above illustrated [fiscal year 1994] figures." The
solicitation explained the limited value of the fiscal year 1994
figures for the solicited contract with a base year of fiscal
year 1996. Also, the solicited contract would not be a
requirements contract, although the figures reflect usage of a
requirements contract. The language of sections B and H and the
figures in the table, which do not sum to the totals provided,
were sufficient to alert offerors as to the limited value of the
fiscal year 1994 figures. Moreover, the majority assumes
(without finding) that Travel Centre based its offers solely on
fiscal year 1994 figures; the majority concludes that such
reliance was reasonable. Further, while referencing facts
relating only to Maine, the majority concludes that the
termination for convenience of the entire contract was improper
and that GSA breached the contract. The findings do not suggest
any impropriety with respect to the New Hampshire portion of the
contract, which was awarded on a basis separate and apart from
the Maine portion, and could have been separately terminated for
convenience. Available relief differs under theories of breach
and termination for convenience.
As to the third GSA allegation, involving the phrase
"preferred source," the majority gives the term such weight as to
make this other than a typical indefinite delivery, indefinite
quantity (IDIQ) contract. Such an interpretation imparts special
meaning skewing the contract read as a whole. Further, the
majority opines that GSA was provided information that the
winning contractor would not be the preferred source for the
major federal agency group in the geographical area. As noted
above, concerning the first allegation by GSA, an existing award
of a contract of an unstated type for an unstated duration does
not demonstrate that Travel Centre would not be the preferred
source for the services at issue. Being a preferred source is
far less than a guarantee of business and suggests that agencies
may opt not to utilize such services.
In responding to the fourth allegation by GSA, the majority
states: "Travel Centre based its offer on the information
contained in the solicitation -- that the contract would be for
an indefinite quantity and that the winning contractor would be
the preferred source for federal agencies in the geographical
areas." The findings of fact do not indicate the bases for
Travel Centre's best and final offer. Any conclusions relating
thereto are, therefore, arbitrary. Travel Centre bears the
burden of demonstrating reasonable reliance and causation in
order to prevail on entitlement. Such fundamental prerequisites
to relief should not be assumed in favor of the moving party.
Regarding the fifth GSA allegation, the majority makes a
statement which merits particular comment. The majority states
that it remains of the opinion that "when a Government
procurement official has information in his possession which
materially impacts a pending procurement, and fails to disclose
that information to offerors, that official has not exhibited the
type of good faith dealing that people who do business with the
Government have a right to expect." What is propounded as a
proposition of law amounts to dictum because the underlying facts
have not been established. The findings do not identify any
individual who may have possessed the information and been
connected with this procurement. Moreover, even if an individual
learned that DoD had entered into a contract for travel services,
the facts and record do not demonstrate that the knowledge
included the type (requirements, mandatory, IDIQ, etc.) or
duration of the contract. Hence, there is no reason to impute
knowledge of an adverse affect upon the procurement at issue.
_________________________
JOSEPH A. VERGILIO
Board Judge