[Protest of Navy Determination That It Could More Cost Effectively Perform Requirement In-House]

A firm protested a Navy determination that transportation operations could be performed at a lower cost in-house, contending that an additional $500,000 should have been added to the in-house overhead estimate. The protester also disagreed with the Navy's estimate that seven positions contributed one-half of their time to accomplish the required work, contending that since the workers would be idle 50 percent of the time if the function was converted to a contractor, the Navy's management was inefficient. The Navy had concluded that none of the positions could be eliminated and, therefore, excluded the cost of the positions from its study since there would be no overhead costs. GAO has held that: (1) whether work should be performed in-house or converted to contract is a matter for the executive branch and not within the protest function except where a bidder protests that its bid has been arbitrarily rejected; and (2) the projection of personnel changes resulting from a conversion is a judgmental matter. GAO declined to consider the protester's allegation that the agency's cost comparison was faulty since it failed to raise the objections in its appeal to the contracting agency. Accordingly, the protest was denied in part and dismissed in part.