[Protest of Navy Contract Award]

A firm protested a Navy contract award, contending that the Navy improperly eliminated it from competition by refusing to grant it a waiver of first article testing, which it claimed resulted in an improper sole-source award, and objecting to a first article waiver granted to the awardee. The protester also contended that it had expended $50,000 based upon a notice that it had received the award and sought these costs plus proposal preparation costs. Because of the urgency of the procurement, the Navy conducted negotiations only with firms which it believed were previous producers eligible for waiver of first article testing. The Navy initially determined the protester to be the awardee; however, prior to final award, the protester's eligibility was challenged because it had not undergone the tests which permit waiver of first article testing. The Navy then determined that the protester's product had not been adequately tested. Since the awardee was the only supplier for which first article testing was waived, award was made to that firm. GAO has held that it is the contracting agency's responsibility to determine its actual needs and determine the type and amount of testing necessary to ensure product compliance with specifications. Therefore, GAO will not question an agency's decision to waive first article testing unless the waiver is clearly shown to be arbitrary or capricious. The Government may waive first article testing for a producer that has previously furnished acceptable supplies similar to those required. GAO found that the protester failed to show that the Navy's decision to waive testing requirements for the awardee or its determination not to accept the protester's prior performance for waiver purposes were unreasonable. In addition, GAO found the Navy's decision to issue a sole-source award to be reasonable under the circumstances. The protester's claim for expenses incurred in anticipation of the contract performance should be pursued under the Contract Disputes Act. However, because the protest was without merit, the protester's claim for proposal preparation costs was denied. Accordingly, the protest and claims were denied.