Protest of Contract Award on Sole-Source Basis

B-200986: Jul 7, 1981

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A firm protested the sole-source award of a contract issued by the U.S. Army Corps of Engineers. The contract was for furnishing cathodic protection for fuel oil pipes and for installing above ground fuel tanks for 211 housing units. The protester was the prime contractor for the design and construction of the housing units. It subcontracted the underground heating system to the awardee. In October 1979, the Corps discovered several leaks throughout the heating system. A dispute arose between the Corps and the protester over whether the protester was required to make repairs and provide a protective system for the underground pipes. The Corps never terminated the protester's contract for default but instead chose to effect repairs under a sole-source contract with the awardee. The sole-source contract was based on the following grounds: (1) the awardee had installed the original system and was familiar with the entire system; (2) the awardee had willingly performed all repairs; (3) the awardee could begin performance immediately; and (4) the repairs had to be done quickly due to impending cold weather and because a State agency had cited the Army housing complex for oil pollution and demanded that repairs be made before the heating system was used again. The protester contended that the Corps should not have awarded the contract on a sole-source basis because no emergency existed. Regulations state that agency decisions to procure on a sole-source basis must be adequately justified. GAO found that the record did not support the Corps decision to make a sole-source contract award. Familiarity with the system and an urgency basis are not legally adequate justifications for a sole-source award; therefore, the protest was sustained.