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Two firms requested reconsideration of a decision which sustained one requester's protest of an Army contract award for the rental and maintenance of laundry equipment to the other requester. The contract was for a base period of 1 year and 2 option years. GAO had determined that the awardee's slightly lower 3-year bid price was mathematically unbalanced and that a reasonable doubt existed that its bid would ultimately provide the lowest cost to the Government. Although GAO found the award to be improper, it could not recommend termination of the contract but it did recommended that the Army exercise both of its options, if otherwise proper, to avoid paying the higher cost that would result from the unbalanced bid. The awardee contended that GAO erred in concluding that its bid was mathematically unbalanced by relying improperly on a previous decision and by assuming that prompt payment discounts would not be realized. In addition, the awardee contended that GAO relied on a misleading cost estimate submitted by the protester. GAO found that the awardee failed to demonstrate that the estimate was inaccurate and declined to consider evidence that was not submitted with the first protest. GAO also rejected the awardee's narrow reading of the decision upon which the previous decision had been based and stated that its decision was not inconsistent with Defense Acquisition Regulations or previous decisions concerning prompt payment discounts. The original protester contended that, contrary to the conclusions which GAO reached in its decision, the costs of terminating the contract were minimal and that the awardee would not realize a substantial windfall through termination. GAO found that the protester's analysis of the costs associated with termination for convenience was incorrect. GAO continued to believe that, under the unique circumstances of this case, termination for convenience was not in the best interest of the Government. Therefore, it was correct in making only a prospective recommendation. GAO concluded that neither the awardee nor the protester established that the prior decision was based on an error of fact or law. Therefore, the prior decision was affirmed.


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