Sodexho Management, Inc.

A firm protested the Department of the Navy's determination, pursuant to Office of Management and Budget Circular A-76, that it would be more economical to perform various community support services in-house at the Pensacola Naval Regional Complex in Pensacola, Florida, rather than contract for these services, contending that the Navy improperly used nonappropriated fund instrumentality (NAFI) employees to constitute the overwhelming majority of the labor force in its "most efficient organization" (MEO). GAO held that while the A-76 guidance does not explicitly prohibit the use of NAFI employees in an MEO and may, in fact, be read to permit at least limited use of NAFI employees, where, as here, the level playing field promised by the A-76 guidance is tilted toward the in-house plan in a way that could not be reasonably anticipated by a commercial offerer based upon the A-76 guidance and the solicitation, Navy deprived the commercial offerer of the ability to make an intelligent business judgement concerning whether, and how, to compete. Accordingly, the protest was sustained, and GAO recommended that the protester be reimbursed (1)the costs of preparing its proposal to participate in this competition, and (2) its costs of filing and pursuing the protest, including reasonable attorney's fees.