Protest of Navy Contract Award

B-199924,B-199925: May 6, 1981

Additional Materials:


Office of Public Affairs
(202) 512-4800

A firm protested a decision by a Naval Supply Center to exercise options in two cost-type contracts. The protester had proposed that, if a new competition were held, it would guarantee to offer the same services at a lower price than the awardee. Before the award, the Navy evaluated both the base and option-year prices offered by the protester and the awardee, the only competitors. The Navy exercised the options by modifications of the contracts. The protester contended that this violated applicable regulations and was not in the best interest of the government, as the Navy ignored a potential savings of more than $60,000. The circumstances under which an agency may exercise an option rather than conduct a new competition require, among other things, a determination that exercise of the option is the most advantageous method of fulfilling the government's needs. GAO will not object to such a determination unless applicable regulations were not followed or the determination was unreasonable. In this case, the contracting officer reported that the decision was based on his contention that: a disruption of services would be inimical to the interests of the government, the option year prices were reasonable, the contractor's performance had been satisfactory, there was inadequate time for a new procurement, and the lower costs proposed by the protester were impossible to ascertain in a cost-type contract. Continuity of services is clearly a legitimate basis for a decision to take an option, as is an incumbent contractor's satisfactory performance. The protester did not show that the contracting officer's conclusion about the adequacy of time for resolicitation was erroneous. GAO agreed with the agency. An agency is not required to lose the benefit of an option with the attendant disruption in services which would occur merely because a competing firm guarantees a minimal saving. Such a guarantee may well be illusory in cost reimbursement contracts, since the government is obligated to reimburse the contractor for all direct labor hours expended in the performance of a time and materials contract. The contracting officer acted within his discretion and relied upon legitimate considerations in reaching his decision. The protest was denied.

Oct 29, 2020

Oct 28, 2020

Oct 27, 2020

  • Silver Investments, Inc.
    We dismiss the protest as untimely because it was filed more than 10 days after the protester knew, or should have known, the basis for its protest.

Looking for more? Browse all our products here