Request for Reconsideration

The Environmental Protection Agency (EPA) requested reconsideration of a GAO decision which involved a contract awarded for various items of automatic data processing equipment. The prior decision held that EPA had improperly included two items in the request for proposals for which there was no reasonable expectation of competition. GAO recommended that the contract be terminated and that sole-source negotiations be commenced with the awardee for two subsections of the contract and that two subsections be recompeted in a separate procurement. GAO contended that EPA misinterpreted its prior decision. GAO held that by commingling sole-source items with competitive items and permitting multiple-award discounts, EPA had precluded competition on two subsections. In effect it awarded sole-source contracts for the two others under the guise of competition. The awardee could have lowered its prices on the first two items to meet the competition and make up for it on the other two without concern as to competition or the need to justify its prices to the agency. Cost and pricing data had not been obtained. The GAO recommendation for corrective action was aimed at EPA curing the defect in the procurement. As much of the software was proprietary to the awardee, there was no new evidence submitted by EPA to present a basis that a reasonable expectation of competition existed. The fact that the most costly of all items was a sole-source item was enough to taint the procurement in view of the allowability of multiple-award discounts in the request for proposals which commingled sole-source and competitive items. The agency contended that competition existed, the discounts offered by the awardee were substantial, and the awardee's prices were reasonable. The agency questioned the recommended termination of the contract, as termination without a replacement contractor ready to perform would adversely impact on the computer center operations. To ensure continuity of the service, the recommendation was modified so that the contract might continue during the recompetition and sole-source negotiations. If the successful offerer is other than the present contractor, the contract should be terminated when performance is imminent. Cost and pricing data should be obtained and EPA should investigate thoroughly whether competition exists. The prior decision was affirmed, and the recommendation was modified in part.