[Protests Against Army Contract Award for Construction Work]

Three firms protested an Army Corps of Engineers contract award for housing construction, contending that the award was improper because: (1) the average annual cost in the awardee's initial proposal exceeded the solicitation's cost ceiling; (2) the Army rejected one protester's initial proposal as nonresponsive because of an interest rate contingency; (3) the Army used inflation rates which prejudiced them; and (4) since the cost of the awardee's proposal exceeded each of theirs, it was not in the best interest of the government. GAO held that: (1) a protester has the burden of showing that an agency's method for calculating interest rates was unreasonable; and (2) in negotiated procurements, there is no requirement to award a contract on the basis of lowest price or cost to the government unless the solicitation so specifies. GAO found that: (1) even if the solicitation stated that the Army would not consider proposals in excess of the cost ceiling, it would be unreasonable to apply the cost ceiling to initial proposals; (2) the awardee's proposed costs in its best and final offer were less than specified in the solicitation; and (3) since the nonresponsive firm sent in a revised best and final offer which deleted the interest rate contingency, the matter was rendered academic. Accordingly, the protests were dismissed in part and denied in part.