Claim for Relief Against the United States for Losses Arising Out of the Denial of Contracts
Highlights
Space Systems Laboratories, Inc. filed a protest concerning the award of a contract by the Army, and the protest was denied. After receipt of additional information from the Army and a reconsideration, GAO concluded that Space Systems was correct and should have been awarded the contract. Due to the extent to which the contract had already been performed, it was not in the best interest of the Government to recommend that the contract be canceled and the balance awarded to Space Systems. However, GAO did inform the Secretary of Defense that corrective action had not been recommended due to the procuring agency's negligence in furnishing promptly complete and accurate information needed to resolve this matter while it was still practical to take action. Proposed legislation would provide compensation to Space Systems for lost profits. GAO has consistently held that there is no legal basis for recovery of lost profits, even if the claimant has been wrongfully denied a contract. Claims for bid preparation costs are considered, unless otherwise barred. Although the passage of any private relief is a matter of policy for determination by Congress, GAO does not believe that the factual circumstances presented in this case warrant extending preferential treatment to Space Systems over others in similar sitiations. Consequently, GAO does not favor the enactment of this legislation.