GAO cites obscure law, overturns Air Force contract decision

A contractor won an appeal against the Air Force last week in a case that involved the unprecedented application of a federal statute governing procurement protests. The General Accounting Office sustained a protest filed by Imaging Systems Technology, a small Ohio-based engineering firm, against the Air Force. Imaging Systems alleged that the Air Force failed to conduct a realistic cost comparison on a logistics support contract awarded to in-house employees at Tinker Air Force base in Midwest City, Okla. The case is notable because GAO accepted Imaging System's argument that Air Force actions violated 10 U.S.C. 2462, a federal procurement statute, not Office of Management and Budget Circular A-76, which governs similar protests. "This is the first time that GAO has sustained a protest based on a violation of 10 U.S.C. 2462," said Daniel I. Gordon, associate general counsel at GAO. When a five-year, $2.1 million logistics support contract between Imaging Systems and the Air Force expired in 1999, the Air Force issued a request for new proposals. But agency officials later decided the work could be done by in-house employees and canceled the request. By that time, however, Imaging Systems and another contractor had already submitted proposals for the work. The Air Force did not open the proposals. The company claimed that the Air Force had not conducted a "realistic and fair" cost comparison between their unopened bid and that of the in-house employees, a violation of 10 U.S.C. 2462. The Air Force countered that GAO did not have jurisdiction in the matter and that it did conduct a fair cost comparison by comparing Imaging System's old contract with the department's cost estimate for the project. By law, GAO has jurisdiction to hear cases involving cancelled solicitations. GAO decided that it also has jurisdiction in a case where a solicitation is cancelled before it is opened. The agency further ruled that the cost comparison performed by the Air Force did not meet the "realistic and fair" threshold. Under GAO's ruling, the Air Force must conduct a new cost comparison before awarding the contract.
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