Propriety of GSA Contract Award

The General Services Administration (GSA) requested an advance decision on the propriety of an award. The procurement was a total labor surplus area set-aside. The invitation for bids (IFB) announced that bids were to be solicited from firms that would agree to perform substantially in labor surplus areas, meaning that the costs incurred on account of manufacturing, production, or appropriate services in labor surplus areas exceed 50 percent of the contract price. The IFB called for prices on 15 items; where delivery of an item to more than one destination was required, the IFB called for subitem prices corresponding to certain destinations. In addition, it divided the 15 items into 5 groups and disclosed how the award would be made in each group. The awardee submitted the low price on 23 subitems; however, it proposed to perform the work regarding 6 items in nonlabor surplus areas. The awardee contended that, since more than 50 percent of the contract price would be performed in a labor surplus area, it was entitled to award for all 23 subitems on which it submitted the low price. GSA questioned whether the awardee's view was contrary to the spirit and intent of the IFB labor surplus area provision. The method of award provision of the IFB states that award would be made as specified in the schedule of items in these ways: (1) when award in the aggregate is specified, the low aggregate bidder will be determined by multiplying the unit price submitted on each item by the estimated quantity specified and adding the resultant extension; and (2) when item-by-item award is specified, each item and each destination will be awarded separately. GAO held that the IFB contemplated the possibility of multiple awards and, since this procurement was a total labor surplus area set-aside, the 50-percent rule should be applied to each separate award. GAO did not believe that this conclusion was contrary to the spirit and intent of the IFB labor provision.