Bidder's Refusal To Be Subject to Cost Accounting Standards Specified in Solicitation

The protester objected to the agency's determination that its offer was unacceptable because it refused to be subject to the cost accounting standards provision contained in the solicitation, contending that it was exempt from the provision. Catalog or market price exemption from the requirements of the Cost Accounting Standards Act is a mandatory exemption rather than discretionary with the contracting agency. Therefore, the cost accounting standards requirement should not be imposed on a contractor whenever such an exemption is determined to exist. A negotiated price may be based on adequate price competition and at the same time be qualified for exemption from the cost accounting standards requirements as catalog or market price. Since the low offerer claimed such exemption, the exemption should not have been denied solely because adequate price competition was obtained by the agency. The agency should review the claim and, if a basis for exemption existed, consideration should be given to termination for convenience of the contract awarded to the second low offerer and the award of terminated quantities to the low offerer.