[Protest of Rejection of Offer Under Multiple Award Supply Schedule Contracts]

B-215579: Dec 26, 1984

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A firm protested a General Services Administration (GSA) rejection of its offer under a negotiated solicitation for multiple-award Federal Supply Schedule contracts. In order to evaluate offers from regular dealers, such as the protester, GSA requires the dealer to disclose the discount it receives from the manufacturer to determine whether the prices negotiated are fair and reasonable. After reviewing the protester's offer, the contracting officer found an excessive price mark up and rejected its bid. The protester argued that it had successfully offered the government the same discount in the past and that its processing costs precluded offering any higher discount. Further, it argued that its offer was as favorable as any discount offered to its most favored customer. GAO found that a GSA acceptance of a similar discount in the past had no relevance to the evaluation of the present offer. GAO has held that a determination concerning price reasonableness is a matter of contract administration which GAO will not question unless the determination is unreasonable or there is a showing of bad faith or fraud. GAO found that the protester failed to show that GSA imposed an arbitrary or capricious limit on the percentage of profit which the offerer could receive. Furthermore, GAO found no basis to substitute its judgment for that of the Administrator of GSA in determining the agency's policy regarding acceptable discount levels. Since GAO had no basis upon which to sustain the protest, the protest was denied.

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