Protest of Navy Procurement Procedures

B-198681: Oct 14, 1980

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A firm protested the procurement procedures used by the Navy in awarding an order to another firm under a basic ordering agreement (BOA). The protester asserted that the Navy failed to allow it to compete for the required items. The Navy decided to procure the items on a sole-source basis from the awardee because the equipment had to be compatible with existing equipment from the awardee. The awardee's proposal contained a 36-week delivery period which was unacceptable to the requiring activity. As a result of inquiries by the requiring activity, the protester was requested to submit a proposal. No date for submission of the proposal was provided or discussed. The awardee modified its delivery schedule to 22 weeks, and award was made to it. The protester's proposal was received 4 days later and contained a delivery schedule of 16 weeks at a price considerably lower than the awardee's. Asserting that its proposal was specifically requested by the requiring activity, the protester contended that it had previously supplied the identical items to the Navy for use on similar vessels where the items performed properly without requiring modification. The Navy contended that the awardee was the only known supplier of the items which met its requirements at the time the sole-source determination was made. With reference to the use of a BOA, GAO has held that: if an alternate source offers the same item being procured under a BOA, free and open competition requires the Government to include the source in the competition to obtain maximum competition consistent with the Government's actual needs. In this case, the Navy apparently conducted formal negotiations with the protester which were at variance with the fundamental principles of Federal negotiated procurement, since it denied offerors the opportunity to be fully informed of the Government's requirements in order to compete on a common basis. GAO held that the BOA was improperly used in a manner which restricted competition. The protest was sustained, but since the order under the BOA was completed, no remedial action was possible.