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B-202137, APRIL 9, 1981, 60 COMP.GEN. 372

B-202137 Apr 09, 1981
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A-76 IS DISMISSED WHERE PROTESTER DID NOT EXHAUST AVAILABLE ADMINISTRATIVE APPEAL PROCESS. THIS DETERMINATION WAS MADE AS THE RESULT OF A COST COMPARISON WHICH WAS CONDUCTED UNDER THE GUIDANCE OF OFFICE OF MANAGEMENT AND BUDGET CIRCULAR NO. OUR OFFICE WILL REVIEW A-76 COST EVALUATIONS TO ASSURE THAT BIDDERS ARE NOT INDUCED TO PREPARE AND SUBMIT BIDS WHICH ARE THEN ARBITRARILY REJECTED BECAUSE OF AN ERRONEOUS COST EVALUATION. A RELATIVELY SPEEDY APPEAL PROCEDURE IS HAS BEEN EXHAUSTED. THE ADMINISTRATIVE DECISION IS NOT FINAL UNTIL THAT REVIEW PROCEDURE 81-1 CPD 101. WE WILL NOT CONSIDER THIS PROTEST CHALLENGING THE A-76 COST EVALUATION SINCE THE AVAILABLE ADMINISTRATIVE APPEAL PROCESS WAS NOT EXHAUSTED.

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B-202137, APRIL 9, 1981, 60 COMP.GEN. 372

GENERAL ACCOUNTING OFFICE - JURISDICTION - CONTRACTS - IN-HOUSE PERFORMANCE V. CONTRACTING OUT - COST COMPARISON - FINALITY OF ADMINISTRATIVE DECISION WHERE APPEAL PROCEDURE PROVIDED FOR PROTEST AGAINST PROPRIETY OF COST EVALUATION PERFORMED UNDER OFFICE OF MANAGEMENT AND BUDGET CIRCULAR NO. A-76 IS DISMISSED WHERE PROTESTER DID NOT EXHAUST AVAILABLE ADMINISTRATIVE APPEAL PROCESS.

MATTER OF: JAC MANAGEMENT, INC., APRIL 9, 1981:

JAC MANAGEMENT, INC. (JAC), PROTESTS THE DETERMINATION BY THE DEPARTMENT OF THE ARMY TO PERFORM LAUNDRY SERVICES IN-HOUSE RATHER THAN CONTRACTING THEM OUT UNDER SOLICITATION NO. DAKF57-81-B-0003. THIS DETERMINATION WAS MADE AS THE RESULT OF A COST COMPARISON WHICH WAS CONDUCTED UNDER THE GUIDANCE OF OFFICE OF MANAGEMENT AND BUDGET CIRCULAR NO. A-76 (A-76), AS IMPLEMENTED BY ARMY CIRCULAR 235-1 (FEBRUARY 1, 1980). BASED ON A COST COMPARISON BETWEEN THE GOVERNMENT'S IN-HOUSE ESTIMATE AND JAC'S LOW BID, THE ARMY DECIDED TO PERFORM THE SERVICES IN-HOUSE.

JAC ARGUES THAT THE ARMY IN-HOUSE COST ESTIMATE DID NOT INCLUDE ALL THE COSTS RELATED TO THE IN-HOUSE OPERATION AND THAT THE ARMY SHOULD COMPLY WITH A-76 REQUIREMENTS BEFORE MAKING A FINAL DETERMINATION ON WHETHER A CONTRACT AWARD SHOULD BE MADE.

OUR OFFICE WILL REVIEW A-76 COST EVALUATIONS TO ASSURE THAT BIDDERS ARE NOT INDUCED TO PREPARE AND SUBMIT BIDS WHICH ARE THEN ARBITRARILY REJECTED BECAUSE OF AN ERRONEOUS COST EVALUATION. CROWN LAUNDRY AND DRY CLEANERS, INC., B-194505, JULY 18, 1979, 79-2 CPD 38.

HOWEVER, WHERE, AS HERE, A RELATIVELY SPEEDY APPEAL PROCEDURE IS HAS BEEN EXHAUSTED. URBAN ENTERPRISES, B-201619, FEBRUARY 17, 1981, FORMALLY INCLUDED AS PART OF THE ADMINISTRATIVE DECISION MAKING PROCESS, THE ADMINISTRATIVE DECISION IS NOT FINAL UNTIL THAT REVIEW PROCEDURE 81-1 CPD 101. IN THIS CONNECTION, WE NOTE THAT AT BID OPENING ON JANUARY 30 (ATTENDED BY A REPRESENTATIVE OF JAC) AND BY FOLLOWUP TELEGRAMS, THE ARMY ADVISED ALL BIDDERS OF THE APPEAL PROCEDURE AND THAT THE FINAL CONTRACTING DECISION WOULD NOT BE MADE DURING THE PERIOD FROM FEBRUARY 3 TO FEBRUARY 9. APPARENTLY, HOWEVER, JAC ELECTED NOT TO FOLLOW THE ADMINISTRATIVE APPEALS PROCEDURE. THEREFORE, WE WILL NOT CONSIDER THIS PROTEST CHALLENGING THE A-76 COST EVALUATION SINCE THE AVAILABLE ADMINISTRATIVE APPEAL PROCESS WAS NOT EXHAUSTED. URBAN ENTERPRISES, SUPRA; DIRECT DELIVERY SYSTEMS, 59 COMP.GEN. 465(1980), 80-1 CPD 343.

JAC NOTES THAT THE ADMINISTRATIVE APPEAL PROCEDURE PROVIDED BY THE SOLICITATION FOR CHALLENGING THE COST COMPARISON RESULTS IS PERMISSIVE, NOT MANDATORY, I.E., "INTERESTED PARTIES MAY FILE * * * SPECIFIC OBJECTIONS * * * ." THEREFORE, JAC CONTENDS THAT IT WAS NOT REQUIRED TO EXHAUST ITS ADMINISTRATIVE REMEDY WITH THE AGENCY PRIOR TO FILING WITH G.A.O. HOWEVER, OUR DECISIONS IN DIRECT DELIVERY SYSTEMS, SUPRA, AND URBAN ENTERPRISES, SUPRA, ARE CLEAR IN THIS REGARD. WE HELD THAT:

WHERE, AS HERE, A RELATIVELY SPEEDY REVIEW PROCEDURE IS FORMALLY INCLUDED AS PART OF THE ADMINISTRATIVE DECISION-MAKING PROCESS, THE ADMINISTRATIVE DECISION IS NOT FINAL UNTIL THAT REVIEW PROCEDURE HAS BEEN EXHAUSTED.

FURTHERMORE, SANDERS COMPANY PLUMBING AND HEATING, 59 COMP.GEN. 243(1980), 80-1 CPD 99, CITED AS THE BASIS FOR THE ABOVE HOLDING, INVOLVED OUR DECISIONS NOT TO REVIEW A GRANT RELATED PROCUREMENT WHERE THE COMPLAINANT VOLUNTARILY DID NOT FIRST SEEK RESOLUTION OF ITS COMPLAINT THROUGH AN ESTABLISHED ENVIRONMENTAL PROTECTION AGENCY (EPA) PROTEST PROCESS WHICH WAS PART OF THE EPA GRANT ADMINISTRATION FUNCTION. THE EPA PROTEST PROCEDURES, 40 C.F.R. 35.939(1980), CONTAINED PERMISSIVE LANGUAGE SIMILAR TO THE LANGUAGE USED IN THIS SOLICITATION, I.E., "A PROTEST * * * MAY BE FILED."

THUS, THE FACT THAT THE ADMINISTRATIVE REVIEW IS NOT MANDATORY DOES NOT RELIEVE THE PROTESTER OF AN OBLIGATION UNDER OUR DECISIONS TO USE THE AGENCY PROCEDURE PRIOR TO SEEKING REVIEW BY OUR OFFICE.

ACCORDINGLY, THE PROTEST IS DISMISSED.

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