Protest of Procurement Procedures Used by Navy

B-198464: Apr 9, 1981

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A firm protested the procurement procedures used by the Navy in awarding an order for certain aircraft parts. The Navy concluded that only certain manufacturers possessed the requisite knowledge to perform the necessary work within the required timeframe. Accordingly, orders for certain parts were placed with only specific contractors and without formal advertising. The protester contended that it was capable of producing one of the parts and protested the Navy's sole-source procurement. The protester stated that the Navy solicited a bid from it and then refused to award it the order even though it submitted the low responsive offer. The Navy disqualified the protester as a supplier on the ground that it had not successfully produced the part in question on a continuous basis. It placed an order with another firm despite the fact that the awardee was unable to meet the Navy's specified delivery schedule. The Navy stated that it had placed the order because, at the time of the order, it was still unsure of the protester's ability to produce the part. It argued that its letter to the protester was merely for budgetary planning purposes and could not be characterized as a solicitation or request for quotation. GAO agreed that the letter did not amount to a solicitation or request for quotation. However, the procurement statutes and regulations require agencies to obtain maximum competition consistent with the services of items being procured. GAO has approved, with reservation, special agency procedures which limit competition where it is demonstrated that such limitation serves a bona fide need of the Government. The Navy's chief justification for placing the order with the awardee was the awardee's capability to produce parts which would be safe, reliable, and technically acceptable. This did not serve as a justification for the agency's failure to qualify a potential competitor. The Navy knew that the protester was a potential supplier at the time it submitted its proposal. Not instituting action to formally qualify the protester contravened Defense Acquisition Regulations. GAO concluded that the sole-source award of the order was improper. It recommended contract termination and a competition between the protester and awardee for the procurement.