B-203108(2), JUN 8, 1981, OFFICE OF GENERAL COUNSEL

B-203108(2): Jun 8, 1981

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MARSH THE SECRETARY OF THE ARMY: ENCLOSED IS A COPY OF OUR DECISION DISMISSING A PROTEST WHICH CHALLENGES THE ARMY'S DECISION NOT TO AWARD A CONTRACT UNDER SECTION 8(A) OF THE SMALL BUSINESS ACT BECAUSE OF AN ALLEGEDLY DEFECTIVE EVALUATION OF THE RELATIVE COST OF HAVING THE WORK PERFORMED IN-HOUSE AS OPPOSED TO CONTRACTING OUT. WE ARE CONCERNED ABOUT THE ARMY'S ATTEMPT TO MAKE A COST COMPARISON UNDER OMB CIRCULAR A-76 ON THE BASIS OF A SECTION 8(A) AWARD. SECTION 8(A) CONTRACT AWARDS ARE OFTEN AT PRICES HIGHER THAN WOULD BE OBTAINED THROUGH UNRESTRICTED COMPETITION.

B-203108(2), JUN 8, 1981, OFFICE OF GENERAL COUNSEL

PRECIS-UNAVAILABLE

JOHN O. MARSH THE SECRETARY OF THE ARMY:

ENCLOSED IS A COPY OF OUR DECISION DISMISSING A PROTEST WHICH CHALLENGES THE ARMY'S DECISION NOT TO AWARD A CONTRACT UNDER SECTION 8(A) OF THE SMALL BUSINESS ACT BECAUSE OF AN ALLEGEDLY DEFECTIVE EVALUATION OF THE RELATIVE COST OF HAVING THE WORK PERFORMED IN-HOUSE AS OPPOSED TO CONTRACTING OUT.

ALTHOUGH WE DISMISS THE PROTEST, WE ARE CONCERNED ABOUT THE ARMY'S ATTEMPT TO MAKE A COST COMPARISON UNDER OMB CIRCULAR A-76 ON THE BASIS OF A SECTION 8(A) AWARD. AS YOU KNOW, SECTION 8(A) CONTRACT AWARDS ARE OFTEN AT PRICES HIGHER THAN WOULD BE OBTAINED THROUGH UNRESTRICTED COMPETITION. WE QUESTION WHETHER A VALID IN-HOUSE/CONTRACTING OUT COST COMPARISON AS ENVISIONED BY THE CIRCULAR CAN BE MADE ON THE BASIS OF BIDS OR PROPOSALS ONLY FROM 8(A) FIRMS. WE SUGGEST YOU OBTAIN CLARIFICATION ON THIS POINT FROM THE OFFICE OF MANAGEMENT AND BUDGET.

PLEASE ADVISE US WITH RESPECT TO THE ULTIMATE RESOLUTION OF THIS MATTER.