[Protest of DLA Solicitation for Food Services]

A firm protested a Defense Logistics Agency (DLA) solicitation for full service food distribution support, contending that the requirements for disclosure of profit and freight costs related to the interorganizational transfers of food items were contrary to customary practice in the food distribution industry. GAO held that DLA: (1) failed to meet its obligation to conduct appropriate market research to show that the challenged terms were consistent with customary commercial practices; (2) violated the requirement to conduct appropriate market research prior to tailoring the regulatory provision; and (3) improperly tailored the standard commercial item provision without obtaining the requisite waiver to do so. Accordingly, the protest was sustained, and GAO recommended that DLA: (1) remove the challenged disclosure provisions and request new proposals or confirm through appropriate market research that the provisions are consistent with customary commercial practice or obtain a waiver; and (2) reimburse the protester for its protest costs.