Decision 

Matter of: Advanced Scientific Applications, Inc. 

File: B-400312.2 

Date: February 5, 2009 

Shahram Manighalam for the protester. 

Adele Ross Vine, Esq., General Services Administration, for the agency. 

Paul N. Wengert, Esq., and Ralph O. White, Esq., Office of the General Counsel, GAO, 

participated in the preparation of the decision. 

DIGEST 

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. 

DECISION 

Advanced Scientific Applications, Inc. (ASA), of Fullerton, California, a small 

business, protests the terms of request for proposals (RFP) No. FCIS-JB-980001-B, 

Refresh 21, by the General Services Administration (GSA). ASA argues that the RFP 

is defective because it includes a cancellation clause that, in the protester’s view, 

improperly allows either party to cancel the contract on 30 days notice for no 

reason. 

We deny the protest. 

BACKGROUND 

The RFP being challenged is “Refresh 21” of the solicitation for Schedule 70 of the 

Federal Supply Schedule (FSS), which is the general purpose information technology 

schedule.1

 GSA issued the “Refresh 21” RFP, the terms of which are at issue here, on 

 

(continued...) 

United States Government Accountability Office

Washington, DC 20548 

Comptroller General

of the United States

1

 As is typical for solicitations for FSS contracts, the RFP for Schedule 70 is 

perpetually open (or “standing”), although from time to time the GSA issues an 
June 13, 2007. ASA is seeking a Schedule 70 contract, so that it can provide 

electronic reverse auction services to federal agencies under the FSS program.2 

Three provisions of the solicitation are relevant to this protest. First, the RFP 

includes a tailored version of the clause at Federal Acquisition Regulation (FAR) 

§ 52.212-4, which the RFP stated was tailored pursuant to a FAR deviation. Since 

FSS contracts are indefinite-delivery/indefinite-quantity (ID/IQ) contracts under 

which orders may be placed by numerous federal agencies, the modification to FAR 

§ 52.212-4 explicitly states the authority of an ordering agency to terminate an order 

for the convenience of the government. Specifically, where the standard clause 

provides that the “contract” may be terminated for the convenience of the 

government by the contracting agency, the modified clause substitutes the words 

“order” and “ordering activity.” RFP at 22-23. 

Second, the RFP also contains the clause that is at the center of this protest; this 

clause provides both the GSA and the contractor with the authority to cancel the 

base FSS contract itself. RFP at 47. The cancellation clause provides as follows: 

C.35 CANCELLATION (GSAR 552.238-73) (SEP 1999) 

Either party may cancel this contract in whole or in part by providing 

written notice. The cancellation will take effect 30 calendar days after 

the other party receives the notice of cancellation. If the Contractor 

elects to cancel this contract, the Government will not reimburse the 

minimum guarantee. 

General Services Acquisition Regulation3

 (GSAR) § 552.238-73; see also GSAR 

§ 538.273(a)(4) (requiring the cancellation clause to be incorporated in all FSS 

solicitations and contracts).4 

 

(...continued) 

updated edition (known as a “refresh”) that, among other things, ensures that the 

RFP incorporates changes to law and regulation that have occurred since the 

previous “refresh” was issued. 

2

 The FSS program, directed and managed by the GSA, gives federal agencies a 

simplified process for obtaining commonly used commercial supplies and services. 

FAR § 8.402(a). 

3

 GSAR is the GSA supplement to the FAR, and is found at 48 C.F.R. Part 501. See

48 C.F.R. § 501.101 (2008). 

4

 We note for the record that the GSA, as a part of the process of updating and 

reorganizing GSAR Part 538, has proposed to “redistribute” GSAR § 538.273 to GSAR 

§ 538.1203(c)(49). 74 Fed. Reg. 4596, 4603, 4606, 4628 (daily ed. Jan. 25, 2009). 

Page 2 B-400312.2 
Third, the RFP includes a clause providing the minimum guaranteed quantity, and 

explaining its application in case of a cancellation, in relevant part, as follows: 

C.5 GUARANTEED MINIMUM (I-FAS-106) (JUL 2003) 

The minimum that the Government agrees to order during the period of 

this contract is $2,500. If the Contractor receives total orders for less 

than $2,500 during the term of the contract, the Government will pay 

the difference between the amount ordered and $2,500. . . . 

The guaranteed minimum applies only if the contract expires or 

contract cancellation is initiated by the Government. The guaranteed 

minimum does not apply if the contract is terminated for cause or if the 

contract is canceled at the request of the Contractor. 

RFP at 28. 

In the course of negotiating a contract with the GSA, ASA requested that the agency 

remove the cancellation clause. GSA denied that request, and this protest followed. 

DISCUSSION 

ASA argues that GSAR § 552.237-73 violates FAR §§ 8.4, 12.403, 49.000 and 52.212-4 

as well as the spirit of the FAR. Protest at 13. ASA argues that the clause is unfair 

because it allegedly expands GSA’s rights beyond a standard termination for 

convenience clause. Protester’s Comments at 11. 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. Id.; E-mail from Protester to GAO, 

Jan. 6, 2009, at 1. 

GSA responds that the cancellation clause does not conflict with the FAR, and its 

use is required by the GSA Acquisition Manual. Legal Memorandum at 3-4; 

Contracting Officer’s Statement at 3.5 

Although the protester argues that the cancellation clause directly conflicts with 

particular FAR clauses, we see no basis to sustain this protest. 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. FAR § 1.404; 

See, e.g., Telos Field Eng’g, B-257747, Nov. 3, 1994, 94-2 CPD ¶ 172 at 3-4 (agency 

properly deviated from FAR requirement to publicize solicitation requirement, even 

 

5

 In some sense, it appears that the cancellation clause is intended to restore to GSA 

some ability to terminate the base FSS contract, which is, at least, no longer explicit 

under the modified version of the termination for convenience clause at FAR 

§ 52.212-4, described above. 

Page 3 B-400312.2 
Page 4 B-400312.2 

though it also failed to obtain full and open competition required by statute). 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 § 1.304(b)(2), we disagree 

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. See, e.g., Commercial 

Drapery Contractors, Inc. v. United States, 967 F. Supp. 1, 4 (D.D.C. 1997), aff’d, 

133 F.3d 1, 6 (D.C.Cir. 1998) (reviewing and rejecting claim that cancellation of FSS 

contracts was improper, and finding no support for claim that GSA cancellation 

clause was an allegedly invalid FAR deviation). Our Office does not have jurisdiction 

over matters of contract administration. 4 C.F.R. § 21.5(a) (2008). 

On the other hand, while challenges to the legal sufficiency of a solicitation are not 

often raised in this forum, we have 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, we 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. Southwest Lab. of Okla., 

Inc., B-251778, May 5, 1993, 93-1 CPD ¶ 368 at 4 (protest sustained where 

cancellation clause converted agency failure to meet the minimum guarantee into a 

termination for convenience to avoid liability for 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. 

Gary L. Kepplinger 

General Counsel