GAO sides with contractors on three decisions

The Government Accountability Office released three decisions in favor of contractors in the past week. In each case, GAO determined that agencies had awarded contracts improperly.

Honeywell Technology Solutions, Inc. and Wyle Laboratories, Inc. protested an award by NASA for test operations services at two space centers. While evaluating the contracts, NASA increased the estimates of the number of employees needed to perform the work, which made the proposals more costly - in other words, the job became more expensive. Neither proposal won the bid.

While changing proposals to make them more realistic from the awarding agency's perspective is a common practice, in this case, GAO determined that NASA acted unreasonably. "The record before us…is inconsistent or incomplete to such an extent that we cannot find the agency's evaluation of proposals to be reasonable," GAO stated. The agency also said NASA failed to defend its actions at GAO's office.

While GAO's decision was made in September 2003, it was not made publicly available until Monday because NASA had decided to recompete the contract, and information contained in the decision was deemed proprietary until after the recompetition was complete.

Drexel L. Smith, senior vice president at Wyle Laboratories, said his company filed the protest because he felt the agency treated it unfairly. He said Wyle's proposal was creative, because it involved employing a small number of core employees and hiring temporary workers when there was a demand for them.

"We thought it was a clever approach," he said. "NASA didn't like that approach. They said, 'We want full-time guys.'"

GAO recommended that NASA reevaluate the proposals and make a new source selection. The agency did so, but did not change its original decision.

Smith said the fact that GAO sustained his protest was little consolation. "I spent a lot of money, time, effort and fees to [file the protest], and at the end of the day I didn't win the contract… Government just proved once against they can do what they want to do," he said. NASA is Wyle's largest single customer.

A spokeswoman for NASA said there were no further protests after NASA followed GAO's recommendation and reevaluated the proposals.

In the second decision, which also was released Monday, GAO determined that the Navy acted improperly by holding extended discussions with only one of the contractors that had submitted competitive bids. The decision was originally made in September 2004.

Gulf Copper Ship Repair Inc., which is based in Corpus Christi, Texas, argued that the Navy gave preferential treatment to one of its competitors. After issuing a request for proposals for maintenance and repair of mine countermeasures and coastal mine hunter class ships and receiving initial proposals, the Navy obtained additional information from one contractor, Anteon Corp., Gulf Copper said.

Federal acquisition regulations require agencies to talk with all competitive bidders that in the same competitive range if it talks to one. "The acid test for deciding whether discussions have been held is whether it can be said that an offeror was provided the opportunity to revise or modify its proposal," GAO stated. In this case, the agency found that such discussions did take place.

"In our view, this constituted conduct that improperly favored Anteon," GAO said.

A spokeswoman for Naval Sea Systems Command said the Navy canceled the solicitation and resolicited it in December 2004, which is what the GAO recommended.

In the third protest, Envirosolve LLC, a hazardous waste transporter and disposal company based in Tulsa, Okla., said the Justice Department's Drug Enforcement Administration did not competitively award contracts to clean up hazardous waste. GAO agreed and said DEA's use of blanket purchase agreements, in which agencies establish contracts for repeated buys, violated competition requirements.

Christie Logan, senior executive vice president and co-founder of Envirosolve, said the new request for proposal issued by DEA continues to pose a problem for her company, which bid on the contract and then received a letter that said its prices were too high. "We don't believe that's accurate," Logan said. She said Envirosolve will respond by July.

DEA did not respond to repeated requests for comment.

Sustained GAO bid protests are relatively uncommon. According to GAO statistics, 21 percent of bids were sustained in fiscal 2004.