Request for Reconsideration

The Air Force requested reconsideration of a GAO decision which involved protests against an agency decision that a project would be operated at a lower cost to the Government through the continued use of Government personnel rather than awarding a contract based on proposals submitted by the two protesters. GAO had sustained the protests to the extent that the agency's comparison of in-house costs and the costs of contracting did not comply with agency policy and regulations which the solicitation established as the ground rule for determining whether to contract. Since it appeared that a proper cost comparison would have resulted in an award to one of the protesters, GAO had recommended that the agency consider having a new solicitation issued with a new cost comparison made on the basis of offers received. That comparison would form the basis for a new agency decision with respect to whether to contract the project. The Air Force contended that GAO misread the cost comparison guidelines and that the cost comparison and decision were consistent with it. When the cost comparison results in evaluations which are less than 1 percent in difference, the agency should support its decision with comprehensive data in which the basic elements are clearly identifiable and verifiable. The Air Force response only submitted the cost analysis worksheet and a considerable amount of raw material purporting to support the elements that went into the worksheet entries. Therefore, GAO was unable to conclude that the material reasonably supported the agency's statements. The agency reconsideration request took issue with the GAO reading of certain parts of the Air Force Manual. However, even under the Air Force's reading of the manual, the in-house estimate was understated in an amount reflecting escalation of costs for non-service employees for the second and third years of operation. Therefore, none of the documents submitted by the Air Force supported its interpretation of the cost comparison. Accordingly, GAO remained of the view that the Secretary should consider having a new solicitation issued with a new Government cost comparison made on the basis of the offers received in response. That comparison should follow the guidelines in Office of Management and Budget Circular A-76. Accordingly, the prior GAO decision was affirmed.