Protest of Failure To Take Corrective Action in Erroneous Contract Award

A firm protested the Army's award of a contract to another firm for engineering and laboratory services. As a result of an error made by Army personnel, the contract was awarded to the firm even though it was not the low bidder. The Army advised the protester, which was actually the low bidder, of the error and asked it to extend the acceptance period of its offer. The Army later notified the protester that it would not be in the best interest of the Government to terminate the contract and award it to the protester. At issue here is whether the contracting officer's determination not to terminate the contract and award it to the protester was proper. GAO found that: (1) the contracting officer was in error both with respect to the need for approval to make a new contract award and in his concern with the need for a new appropriation bill, yet there was no evidence that any action was taken to verify these concerns; (2) there was no evidence that the likely termination costs in the first few weeks of the contract would have substantially exceeded the difference between the the protester's and the awardee's offers. Therefore, the Army's justification for its failure to take corrective action lacked a reasonable basis. Regarding whether corrective action should be taken, GAO found that: (1) the Army's estimate of termination costs was questionable, and (2) any inconvenience of terminating the contract and awarding it to the protester could have been minimized by effective management. Accordingly, GAO recommended that the awardee's contract be terminated for convenience on the ending date of the current work order and that the contract be awarded to the protester effective with the next work order.