Protest Against IFB Provisions

B-195117,B-195206,B-195206.2,B-195206.3,B-195206.4: Nov 6, 1979

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Eight firms protested 26 invitations for bids (IFB) issued by the General Services Administration (GSA) for indefinite requirements, time and materials contracts for the maintenance and repair of adding machines and calculators. The firms protested the solicitation provisions requiring parts to be billed to the Government at the contractor's cost, that the solicitations were improperly defined as negotiated while they were formally advertised, and that the annual maintenance rates were too low to permit a profit to be made, thereby restricting competition. The recordkeeping requirements of the solicitation were also protested. All of the IFBs contained provisions requiring the contractor to bill the Government for replacement parts at the contractor's cost. GSA argued that this was not only in accordance with Federal Procurement Regulations, but was in the best interest of the Government because past audits disclosed that the Government had often been overcharged for parts on time and materials contracts. GAO agreed with GSA and found that GSA was justified in requiring parts to be charged at cost. According to figures provided by GSA on the number of bidders responding to the solicitations, GAO found that the ceiling rates provided in the solicitations as the annual maintenance fee per machine were not so low as to unduly restrict competition. GSA stated that the IFB provisions requiring contractors to maintain records for both Government and commercial work were instituted as a result of audit findings concerning overcharging for parts and labor on time and materials contracts. The recordkeeping was necessary so that the charges for Government work could be adequately verified with reference to charges for comparable commercial work. GAO found nothing improper in the recordkeeping requirements, especially in the light of the dangers inherent in time and materials contracts and the findings of the GSA and GAO audits. There was nothing in the record to support the allegation that the contracts were defined by GSA as negotiated. Accordingly, the protests were denied.

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