B-186332, OCTOBER 1, 1976

B-186332, OCTOBER 1, 1976

AWARD OF TOTAL SMALL BUSINESS SET-ASIDE AIR FORCE LAUNDRY SERVICE PROCUREMENT TO ARMY FACILITY ON BASIS OF GOVERNMENT COST ANALYSIS, WHICH IS OF DOUBTFUL VALIDITY, IS DETRIMENTAL TO PROCUREMENT SYSTEM, BUT LEGAL. SEPARATE LETTER TO SECRETARY REQUESTING REVIEW OF COST ANALYSIS BEFORE EXERCISE OF OPTION.

SERVICE IS BASIC, INC.:

SERVICE IS BASIC, INC. (SERVICE), PROTESTS THE DECISION OF THE DEPARTMENT OF THE AIR FORCE, MCGUIRE AIR FORCE BASE, TO AWARD A LAUNDRY SERVICE CONTRACT TO THE DEPARTMENT OF THE ARMY, FORT DIX, NEW JERSEY.

INVITATION FOR BIDS (IFB) F28609-76-0-9045 WAS ISSUED BY MCGUIRE AS A TOTAL SMALL BUSINESS SET-ASIDE. THE IFB CONTAINED A NOTICE TO BIDDERS AS FOLLOWS:

"BIDDERS ARE PLACED ON NOTICE THAT THIS SOLICITATION IS SUBJECT TO GOVERNMENT COST ANALYSIS TO DETERMINE THE ECONOMICAL FEASIBILITY OF ACCOMPLISHING THE SPECIFIED WORKLOAD IN SERVICE OR BY CONTRACT. THE GOVERNMENT'S IN SERVICE COST ESTIMATE WILL BE MADE AVAILABLE AT THE SOLICITATION OPENING. THE LOWEST RESPONSIVE AND RESPONSIBLE BIDDER SUBMITTING A BID WHICH WILL RESULT IN TOTAL CONTRACT COSTS LOWER THAN THE GOVERNMENT'S COST ESTIMATE FOR IN SERVICE OPERATION WILL RECEIVE THE AWARD IF OTHERWISE APPROPRIATE."

INFORMATION TO THIS EFFECT WAS ALSO COMMUNICATED AT A PREBID CONFERENCE ATTENDED BY SERVICE.

FORT DIX SUBMITTED THE LOW BID OF $84,499. WEINSTOCK LAUNDRY WAS NEXT LOW AT $102,905.75, AND SERVICE WAS THIRD LOW AT $105,341.95.

SERVICE PROTESTS THE DECISION THAT ACCEPTANCE OF THE FORT DIX BID WAS MOST ADVANTAGEOUS TO THE GOVERNMENT FROM A COST STANDPOINT SINCE THE BID WAS UNREALISTICALLY LOW. SERVICE HAS SUBMITTED AN ANALYSIS ATTACKING THE REALISM OF THE FORT DIX BID AS WELL AS THE COST ANALYSIS PERFORMED BY MCGUIRE. FURTHERMORE, SERVICE FEELS THAT FORT DIX HAD AN UNFAIR COMPETITIVE ADVANTAGE BY COMPETING ON A TOTAL SMALL BUSINESS SET ASIDE. LASTLY, SERVICE STATES THAT, WHILE BIDDERS WERE CAUTIONED THAT BIDS WOULD BE COMPARED TO A GOVERNMENT BID, BIDDERS WERE NOT MADE AWARE THAT FORT DIX HAD RECEIVED A WAIVER FROM THE CONTROLLING ARMY REGULATION WHICH REQUIRES THE ADDITION OF A 10-PERCENT OVERHEAD FACTOR TO A BID. INASMUCH AS WEINSTOCK LAUNDRY WITHDREW ITS BID, SERVICE REQUESTS AWARD.

THE AIR FORCE HAS INFORMED US THAT AN INTERIM CONTRACT HAS BEEN CONSUMMATED WITH FORT DIX TO PROVIDE SERVICE DURING THE PENDENCY OF THE PROTEST. A 3-MONTH CONTRACT WITH A 9-MONTH OPTION HAS BEEN AGREED TO ON THE SAME TERMS CONTAINED IN THE FORT DIX BID. THE AIR FORCE HAS STATED THAT THE GOVERNMENT CONDUCTED A COST ANALYSIS OF THE FORT DIX BID IN CONFORMITY WITH OFFICE OF MANAGEMENT AND BUDGET (OMB) CIRCULAR A 76, AS IMPLEMENTED BY AIR FORCE REGULATION 26-12, CONCERNING FACTORS TO BE CONSIDERED WHEN DECIDING WHETHER A PROCUREMENT SHOULD BE CONTRACTED OUT OR PERFORMED IN-HOUSE. AIR FORCE MAINTAINS THAT THE RESULTS OF THE COST ANALYSIS SHOW THAT THE FORT DIX BID WAS THE MOST ADVANTAGEOUS BID RECEIVED. MOREOVER, THE AIR FORCE ASSERTS THAT MATTERS PERTAINING TO OMB CIRCULAR A-76 CONCERN POLICY QUESTIONS OF THE EXECUTIVE BRANCH OF GOVERNMENT AND ARE NOT REVIEWABLE BY OUR OFFICE.

WE HAVE ALWAYS REGARDED THE DIRECTIVES CONTAINED IN OMB CIRCULAR A 76 AS MATTERS OF EXECUTIVE POLICY WHICH ARE NOT WITHIN THE DECISION FUNCTIONS OF THE GENERAL ACCOUNTING OFFICE. AMERICAN TELEPHONE AND TELEGRAPH COMPANY, B-179285, FEBRUARY 14, 1974, 74-1 CPD 72. HOWEVER, IN OUR OPINION, SERVICE'S ANALYSIS OF THE GOVERNMENT COST ANALYSIS CASTS DOUBT UPON THE COST REALISM OF THE FORT DIX BID. CONSEQUENTLY, THERE IS DOUBT WHETHER THE FORT DIX BID IS IN FACT THE LOWEST IN TERMS OF TOTAL COST TO THE GOVERNMENT. NOTWITHSTANDING THIS, EVEN UPON THE BASIS OF AN ADMITTEDLY ERRONEOUS COST ANALYSIS, BY AN AGENCY FOLLOWING A SMALL BUSINESS SET- ASIDE, WHICH, IN TURN, CAUSED DOUBT WHETHER THE DECISION TO DO CERTAIN WORK IN-HOUSE WAS PROPER, OUR OFFICE CAN PROVIDE NO REMEDY. KAHOE ENTERPRISES INCORPORATED, B-183866, JUNE 17, 1976, 76-1 CPD 389.

WE VIEW SUCH AN ERRONEOUS ANALYSIS AS DETRIMENTAL TO THE PROCUREMENT SYSTEM, ALBEIT LEGAL. BECAUSE OF THE DOUBT CAST BY SERVICE'S ANALYSIS, BY SEPARATE LETTER OF TODAY, WE ARE ADVISING THE SECRETARY OF THE AIR FORCE OF OUR VIEWS AND REQUESTING A FURTHER ANALYSIS IN LIGHT OF SERVICE'S COMMENTS BEFORE THE OPTION IS EXERCISED.

THE PROTEST IS DENIED.