Protest of Proposal Rejection in Response to IRS Solicitation

B-205422: Dec 11, 1981

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A firm protested the rejection of its proposal in response to an Internal Revenue Service (IRS) solicitation and the subsequent IRS decision to withdraw its requirement for specification analysis and hardware evaluation for a system from the Small Business Administration (SBA) section 8(a) program. The protester complained that its proposal was rejected on the basis of benchmark tests of equipment from its proposed subcontractor for the IRS requirements. The protester asserted that notice of its rejection was furnished to SBA rather than to it and that benchmark testing was a matter of responsiveness which IRS should have attempted to negotiate with it. The protester contended that IRS was estopped to deny the existence of a contract with it and that IRS had not conducted negotiations with the protester, as it was authorized to do by SBA, in accordance with procurement procedures. Due to the broad discretion afforded SBA and contracting agencies under the Small Business Act and implementing regulations, GAO review of action under the program is generally limited to determining whether the regulations were followed and whether there has been fraud or bad faith on the part of Government officials. Because the protester had nether alleged nor shown conduct of this nature, GAO would not review the IRS decision to withdraw its requirement from the program. GAO believed that, under these circumstances, the protester's remedies with respect to its contention that the Government was estopped to deny the existence of a contract on the basis of the parties' conduct should be pursued under the Contract Disputes Act of 1978. Accordingly, the protest was dismissed.