[Decision Concerning Claim for Reimbursement for Expenses in Conformance With Army Letter of Intent]

The Army requested a decision on whether it should reimburse a research and development firm for purchases it made under a letter agreement. The Army advised that it: (1) issued a letter agreement, with a firm fixed-priced contract to follow, to the claimant to purchase certain equipment; (2) orally advised the claimant to purchase this equipment before receiving the contract in order to meet the project delivery schedule; (3) later determined that the procurement should not be a sole-source award and became concerned about possible improper conduct on the claimant's part; and (4) cancelled the requirement. GAO held that the Army's letter of intent to contract with the claimant constituted a binding agreement to pay for acquisition of the items specified in the letter agreement. Accordingly, the claim was allowed.