oversight

Decisions of the Comptroller General of the United States, Volume 69, April 1990

Published by the Government Accountability Office on 1990-04-01.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

             United States General Accounting Office

GAO          Office of General Counsel



April 1990   Decisions of the
             Comptroller General
             of the United States
             Volume 69
             Pages 359-432
Current GAO Officials


Comptroller General of the United States
Charles A. Bowsher
Deputy Comptroller General of the United States
Vacant
Special Assistant to the Comptroller General
Milton J. Socolar
General Counsel
James F. Hinchman
Deputy General Counsel
Vacant
Senior Associate General Counsels
Seymour Efros
Robert P. Murphy
Richard R. Pierson
Henry R. Wray
Associate General Counsels
Barry R. Bedrick
Ronald Berger
Robert L. Higgins
Joan M. Hollenbach (Acting)
Robert H. Hunter
Gary L. Kepplinger
Robert Strong
Kathleen E. Wannisky




Page i
Contents


Preface                                     iii

Table of Decision Numbers                    v

List of Claimants, etc.                     vi

Tables of Statutes, etc.                   vii

Decisions of the Comptroller General       vii

Index                                  Index-1




Page ii
Preface


This pamphlet is one in a series of monthly pamphlets which will be consolidat-
ed on an annual basis and entitled Decisions of the Comptroller General of the
United States. The annual volumes have been published since the establishment
of the General Accounting Office by the Budget and Accounting Act, 1921. Deci-
sions are rendered to heads of departments and establishments and to disburs-
ing and certifying officers pursuant to 31 U.S.C. 3529 (formerly 31 U.S.C. 74 and
82d). Decisions in connection with claims are issued in accordance with 31
U.S.C. 3702 (formerly 31 U.S.C. 71). In addition, decisions on the validity of con-
tract awards, pursuant to the Competition In Contracting Act (31 U.S.C.
3554(eX2) (Supp. III) (1985)), are rendered to interested parties.

The decisions included in this pamphlet are presented in full text. Criteria ap-
plied in selecting decisions for publication include whether the decision repre-
sents the first time certain issues are considered by the Comptroller General
when the issues are likely to be of widespread interest to the government or the
private sector, whether the decision modifies, clarifies, or overrules the findings
of prior published decisions, and whether the decision otherwise deals with a
significant issue of continuing interest on which there has been no published
decision for a period of years.

All decisions contained in this pamphlet are available in advance through the
circulation of individual decision copies. Each pamphlet includes an index-digest
and citation tables. The annual bound volume includes a cumulative index-
digest and citation tables.

To further assist in the research of matters coming within the jurisdiction of
the General Accounting Office, ten consolidated indexes to the published vol-
umes have been compiled to date, the first being entitled "Index to the Pub-
lished Decisions of the Accounting Officers of the United States, 1894-1929," the
second and subsequent indexes being entitled "Index of the Published Decision
of the Comptroller" and "Index Digest-Published Decisions of the Comptroller
General of the United States," respectively. The second volume covered the
period from July 1, 1929, through June 30, 1940. Subsequent volumes have been
published at five-year intervals, the commencing date being October 1 (since
1976) to correspond with the fiscal year of the federal government.


Page iii
Preface




Decisions appearing in this pamphlet and the annual bound volume should be
cited by volume, page number, and date, e.g., 67 Comp. Gen. 10 (1987). Decisions
of the Comptroller General that do not appear in the published pamphlets or
volumes should be cited by the appropriate file number and date, e.g., B-230777,
September 30, 1986.

Procurement law decisions issued since January 1, 1974 and Civilian Personnel
Law decisions, whether or not included in these pamphlets, are also available
from commercial computer timesharing services.

To further assist in research of Comptroller General decisions, the Office of the
General Counsel at the General Accounting Office maintains a telephone re-
search service at (202) 275-5028.




 Page iv
Table of Decision Numbers

                                        Page                                             Page
                                                                                         374
B-229373, B-232443, April 4, 1990 385 B-237965, April 3, 1990
                                  407 B-237987, April 3, 1990                            379
B-230318, April 18, 1990
                                  421 B-238010.2, April 5, 1990                          387
B-230580.5, April 26, 1990
                                  424 B-238027, April 5, 1990                            392
B-233397, April 27, 1990
                                  414 B-238090, April 5, 1990                            395
B-234476, April 23, 1990
B-237567, April 13, 1990          401 B-238106, B-238257, April 27,
                                  364 1990                                               426
B-237716.2, April 3, 1990
                                  368 B-238162, April 13, 1990                           403
B-237865, April 3, 1990
                                  359 B-238216, April 5, 1990                            398
B-237938, April 2, 1990
                                  418 B-238290, April 20, 1990                           410
B-237955.2, April 24, 1990




 Cite Decisions as 69 Comp. Gen.-
                                                                    to those in the permanent
 Uniform pagination. The page numbers in the pamphlet are identical
 bound volume.
 Page v
List of Claimants, etc.

                                 Page                                     Page
Accudyne Corporation             380    Marine Corps, United States       408
American Mobilphone Paging,             Navy, Dept. of                    385
Inc.                             392    Research Management
Baxter Healthcare Corporation    421    Corporation                       369
Bay Tankers, Inc.                404    Robinson, Ida Faye                415
Bond, Alpheus L.                 402    Sanchez Porter's Company          427
Brown, Benjamin                  385    Schacht, John R.                  385
Cotton, Major Norris G.          408    Southern California Engineering
Defense Logistics Agency         415    Co., Inc.                         388
Federal Highway Administration   402    Starr Systems                     418
Fiber-Lam, Inc.                  365    Stockbridge, James R.             424
Hardie-Tynes Manufacturing              Technical Management Services
Company                          359    Company                           399
Interior, Dept. of               424    Transportation, Dept. of          402
Kato Corporation                 374    US Rentals                        395
                                        Victor Graphics, Inc.             411




Page vi
    i




l   l
Tables of Statutes, etc.

United States Statutes
For use only as supplement to U.S. Code citations
                              Page                                  Page                                      Page
1935, ch. 812, 49 Stat. 967    484   1937, ch. 382, 50 Stat. 307     484   1951, ch. 821, § 22(b), 65 Stat.
                                                                           687                                 484




United States Code
See also U.S. Statutes at Large
                              Page                                  Page                                      Page
5 U.S.C. § 5596                470   31   U.S.C.   § 3702(b)(1)      456   45 U.S.C.    §§ 215-228             484
29 U.S.C. § 633a               470   41   U.S.C.   §253(a)(1)(A)     458   45 U.S.C.    §§ 228a-228z-1         484
31 U.S.C. §71a(1)              456   41   U.S.C.   §259(b)(3)        458   45 U.S.C.    §228e(k)(2)            484
31 U.S.C. § 3553               450   41   U.S.C.   § 259(c)          458   45 U.S.C.    §§ 231-231u            484
31 U.S.C. § 3553(d)            443   41   U.S.C.   §403(7)           458   45 U.S.C.    §231f(c)(2)            483
31 U.S.C. § 3702(b)            455   42   U.S.C.   § 2000e           470   45 U.S.C.    § 231q                 484




Published Decisions of the Comptrollers General
                              Page                                  Page                                      Page
5 Comp. Gen. 1058              456   64   Comp.    Gen.   155        455   68   Comp.   Gen.   206             476
18 Comp. Gen. 84               456   64   Comp.    Gen.   279        443   68   Comp.   Gen.   300             434
24 Comp. Gen. 9                456   64   Comp.    Gen.   349        470   68   Comp.   Gen.   400             435
25 Comp. Gen. 670              456   66   Comp.    Gen.   289        449   68   Comp.   Gen.   559             434
51 Comp. Gen. 595              480   66   Comp.    Gen.   289        466   68   Comp.   Gen.   681             455
55 Comp. Gen. 469              480   67   Comp.    Gen.   442        436   69   Comp.   Gen.   30              450
57 Comp. Gen. 675              487   67   Comp.    Gen.   467        456   69   Comp.   Gen.   122             435
62 Comp. Gen. 80               456   68   Comp.    Gen.   69         481   69   Comp.   Gen.   170             482
62 Comp. Gen. 239              471   68   Comp.    Gen.   206        454   69   Comp.   Gen.   214             445
                                                                           69   Comp.   Gen.   421             453




Decisions of the Court
                              Page                                  Page                                      Page
Copeland v. Marshall, 641            Hensley v. Eckerhar 461 U.S.          Investment Co. Institute v.
F.2d 880                       471   424                             471   Camp, 401 U.S. 617                  487

Page vii
Tables of Statutes, etc.




                              Page                                  Page                                  Page
Kennedy v. Whitehurst 690            Palmer v General Services             United Power Corp. v. United
F.2d 951                       471   Administration, 787 F.2d 300    471   States, Civil Action No. 90-
Locom Cotp., GSBCA 9101-C            Udall v. Tallman, 380 U.S. 1    487   0931                           477
(8951-P), 88-3 BCA 1 20,902    438




Page viii
Civilian Personnel

Compensation
* Overtime
* * Eligibility
* * * Travel time
Two Navy employees are not entitled to overtime or compensatory time for time spent in travel
outside normal work hours to ships in response to messages requesting technical assistance to cor-
rect equipment breakdowns. The employees have not presented sufficient evidence or documenta-
tion which would indicate that travel was of an immediate official necessity and to an event that
was unscheduled and administratively uncontrollable so as to permit payment under 5 U.S.C. § 5542
(1988). The burden of proof is upon the claimants to establish the liability of the United States and
the claimant's right to payment.
                                                                                                  385

Relocation
* Residence transaction expenses
* * Reimbursement
* *UEligibility
Employee was transferred from Columbus to Dayton and then back to Columbus within 1 year. She
sold her Columbus residence within 1 year from effective date of first transfer and prior to official
notice of retransfer. Subsequent transfer does not extinguish the right to reimbursement created by
the initial transfer. Employee is entitled to reimbursement of residence sale expenses incident to
initial transfer to Dayton. Further, employee is entitled to residence purchase expenses incident to
the retransfer to Columbus.
                                                                                                 414
* Temporary quarters
* * Actual subsistence expenses
E * E Reimbursement
* M RU Eligibility
A transferred employee claimed temporary quarters subsistence expenses for herself for 4 days
when inclement weather prevented her from returning to her residence at old duty station which
she had not vacated in order to allow daughter to complete school session. Her claim is disallowed
since she had not vacated her old residence as required by the Federal Travel Regulations before
temporary quarters expenses may be reimbursed.
                                                                                                 414
* Temporary quarters
E * Determination
* * * Criteria
Employee whose old and new residences were in Columbus occupied temporary quarters for 30 days
in connection with successive transfers. She acquired a new permanent residence but was unable to
occupy new residence immediately because of a holdover provision allowing the sellers to remain in
possession. Paragraph C13006 of the Joint Travel Regulations, volume 2 (FTR para. 2-5.2h), which
Index-l                                                                             (69 Comp. Gen.)
Civilian Personnel




generally prohibits payment of TQSE for short distance transfers, is not a bar to payment since this
provision was not intended to apply to situations where the old residence sale is under one transfer
order and the new residence purchase is under another order as the timing of the sale and purchase
are no longer within the employee's control.
                                                                                                414
* Travel expenses
* * Privately-owned vehicles
* * * Mileage
* Travel expenses
* * Reimbursement
E * * Eligibility
An employee, permanently transferred to the place where he was on a temporary duty assignment,
returned to his old duty station by privately owned vehicle to retrieve stored household goods. The
employee is entitled to en route per diem and mileage expenses for the round-trip since relocation
travel by privately owned vehicle is deemed advantageous to the government under the Federal
Travel Regulations, para. 2-2.3a.
                                                                                                424

Travel
* Temporary duty
* * Return travel
* U * Administrative discretion
A construction employee who is required to perform long periods of temporary duty away from his
official station and does not maintain a permanent residence at his official station may be reim-
bursed for the expenses of periodic, authorized return travel for nonworkdays to his permanent resi-
dence, not to exceed the constructive cost of travel to his official station.
                                                                                                401




Index-2                                                                            (69 Comp. Gen.)
Military Personnel


Pay
* Variable housing allowances
*E Amount determination
A member who is entitled to Basic Allowance for Quarters (BAQ) at the with-dependent rate, based
on his payment of child support, and who is also entitled to a Variable Housing Allowance (VHA),
may not receive VHA at the higher with-dependent rate solely by reason of a separation agreement
that also awards "primary custody" of dependent children to the former spouse, but with "tempo-
rary" and "physical" "secondary custody" to the member at other times. However, the member is
entitled to VHA at the with-dependent rate where he can demonstrate that he had actual physical
custody of the children for periods in excess of 3 months. The computation of such VHA should take
into consideration only the member's direct housing costs and not the costs incurred by the former
spouse.
                                                                                               407




Index-3                                                                           (69 Comp. Gen.)
Miscellaneous Topics


Environment/Energy/Natural Resources
* Environmental protection
* * Recycled materials
SMEUse
* H U E Cost increase
Award to lowest bidder offering to comply with mandatory solicitation requirement for 50 percent
waste paper content, even though there was lower bid not meeting requirement, is consistent with
Resource Conservation and Recovery Act of 1976 and Environmental Protection Agency implement-
ing Guideline; although narrative accompanying Guideline indicates EPA's view that higher price
for paper meeting minimum waste paper content requirement is unreasonable, neither statute nor
Guideline prohibits paying such a premium.
                                                                                             410




Index-4                                                                        (69 Comp. Gen.)
Procurement

Bid Protests
* Agency-level protests
* * Information adequacy
The fact that, under an agency's protest regulations, an agency-level protest may be untimely or the
protester may lack interested party status, does not provide a basis for questioning the agency's
subsequent determination to undertake corrective action based on information presented in connec-
tion with the protest.
                                                                                                  399
* GAO procedures
* * Protest timeliness
* * * Apparent solicitation improprieties
Protester's objection to the use of negotiated rather than sealed bid procedures is untimely when
filed after award rather than prior to the closing date for receipt of proposals.
                                                                                                  365

Competitive Negotiation
* Contracting officer duties
ME Information evaluation
* * * Fairness
While contracting officer, acting in good faith, may ordinarily rely on information provided by
transportation rate specialists in calculating transportation costs on fo.b. origin offers, he may not
automatically do so if it leads to an improper or unreasonable evaluation of the offered prices.
                                                                                                  364
* Multiple offers
* * Acceptance
* * * Propriety
Multiple offers from commonly owned and/or controlled companies may be accepted unless the ac-
ceptance of such offers is prejudicial to the interests of the government or other offerors.
                                                                                                  364
* Offers
* * Competitive ranges
* * * Exclusion
*    E UO Evaluation errors
Under request for proposals calling for award to low technically acceptable offerors, agency determi-
nation that protester's proposal was outside of the competitive range was improper where agency
determination was based on proposal's relative technical ranking, without consideration of price,
and consequently agency violated Federal Acquisition Regulation § 15.609(a) (FAC 84-16) in estab-
lishing the competitive range.
                                                                                                  403

Index-5                                                                              (69 Comp. Gen.)
Procurement




* Offers
* * Evaluation
* * * Cost estimates
Contention that where solicitation contemplates award of a fixed-price, time and materials contract
and requires the submission of cost and pricing data, agency must perform a cost analysis, is denied
where adequate price competition was obtained, permitting agency to waive further submission of
such cost data and perform a price analysis in lieu of a cost analysis.
                                                                                                  368
* Offers
* * Evaluation
* * * Options
*E K E Prices
Where solicitation provided that offers would be evaluated for award "by adding the total price for
all options to the total price for the basic requirement," contracting agency reasonably included in
the evaluation the prices for option quantities of artillery fuzes that were not included in the basic
requirement.
                                                                                                  379
*  Offers
* * Evaluation
* U*    Personnel
Where none of the personnel required to perform the statement of work were "professional employ-
ees" as defined in the Federal Acquisition Regulation (FAR), contracting officer was not required to
evaluate proposed professional employee compensation as specified in the standard FAR clause re-
garding evaluation of such compensation.
                                                                                                  368
* Offers
* * Evaluation
* UK Technical acceptability
Where evaluation under technical evaluation criteria for proposed facilities and production ap-
proach was based on detailed information in proposal and in-plant survey, protester's disagreement
with agency determination that awardee's approach was acceptable does not establish that the de-
termination was unreasonable.
                                                                                               379




Index-6                                                                              (69 Comp. Gen.)
Procurement




* Offers
* * Evaluation errors
OEM Non-prejudicial allegation
Even though evaluation of transportation costs on fo.b. origin supply solicitation appears unreason-
able, protest against the evaluation is denied, where the protester would not be in line for award,
even assuming the application of its own transportation calculations.
                                                                                                     364
* Offers
* * Prices
* * * Rent
*EKE Government property
 In calculating imputed rental evaluation factor to be added to offeror's price to account for rent-free
 use of government-furnished property, agency reasonably relied upon period of use entered by of-
 feror in evaluation clause, rather than authorized period of use on delivery schedule, where solicita-
 tion provided for evaluation based on period entered by offeror and where offeror would be required
 to pay rent if its use exceeded entered period.
                                                                                                    379
* Offers
* * Risks
E * * Pricing
Fact that original equipment manufacturer (OEM), the only source of necessary spare parts, is in
position to influence competition by imposing restrictions upon spare parts availability does not
render procurement defective where (1) the restrictions appear reasonable and have not been ap-
plied to prevent any particular firm from purchasing the parts and (2) the only alternative procure-
ment method would be a sole-source award to the OEM, but record does not support conclusion that
OEM is only acceptable source. Ability to obtain parts is matter of firm's ability to develop business
relationship with OEM, a matter outside the General Accounting Office's purview.
                                                                                                    418
* Offers
* E Submission time periods
ONE Time restrictions
* * * U Propriety
Where the protester effectively was permitted 2 hours to submit an offer due to the agency's un-
justified failure to provide reasonable time to solicit offers, the protester was improperly deprived of
an opportunity to compete.
                                                                                                    427



Index-7                                                                                (69 Comp. Gen.)
Procurement




* Unbalanced offers
* * Materiality
* * * Determination
M E E K Criteria
Awardee's offer of base and option quantities is not subject to rejection as materially unbalanced
where there is no showing that the offer is unbalanced or that the award will not result in lowest
ultimate cost to government.
                                                                                               380

Contract Management
* Contract administration
E * Contract terms
* * E Compliance
* E RU GAO review
Whether awardee actually complies with its contractual obligations is a matter of contract adminis-
tration that is not reviewable under General Accounting Office's bid protest function.
                                                                                                  369
* Contract administration
E * Convenience termination
* * E Competitive system integrity
Where timely size protest is filed after small business-small purchase set-aside award and awardee
does not contest Small Business Administration finding that it is other than a small business, intent
of Small Business Act and integrity of competitive system is served by terminating the contract and,
if otherwise appropriate, making award to only small business quoter.
                                                                                                  392

Contractor Qualification
* Responsibility
E * Contracting officer findings
E E* Affirmative determination
* K E N GAO review
General Accounting Office will not review a protest of an affirmative determination of responsibil-
ity absent a showing that it may have been made fraudulently or in bad faith, or that definitive
responsibility criteria set out in the solicitation were not met.
                                                                                               368



Index-8                                                                             (69 Comp. Gen.)
Procurement




* Responsibility
* * Contracting officer findings
E * * Negative determination
* E K E GAO review
Protester properly was found nonresponsible where it failed to provide sufficient information to
permit finding that individual sureties on its bid bond were acceptable and the record shows the
contracting officer's nonresponsibility determination was reasonable.
                                                                                                 387
* Responsibility
E * Contracting officer findings
* * * Negative determination
*-E-   Prior contract performance
* Responsibility criteria
* * Organizational experience
Agency may properly consider manufacturing experience of parent corporation in finding that
awardee subsidiary corporation met definitive responsibility criterion (5-year manufacturing experi-
ence requirement), where bid stated that product would be manufactured at parent corporation's
facilities.
                                                                                                 359

Noncompetitive Negotiation
* Use
* * Justification
* * * Urgent needs
Protest is sustained where the agency, using noncompetitive procedures to award contract extension
on a sole-source basis, fails to establish that the time constraints imposed by urgency prevented the
agency from soliciting offers from other potential sources including the protester.
                                                                                                 426

Sealed Bidding
* Bid guarantees
E * Sureties
* * M Acceptability
Even though an individual surety may have been accepted by a contracting agency, another agency
is not required to accept the surety where it reasonably finds the surety to be unacceptable based on
information submitted to it.
                                                                                                 388
Index-9                                                                             (69 Comp. Gen.)
Procurement




 * Bids
* * Acceptance time periods
* * * Expiration
 Where contracting officer deliberately allowed bid acceptance period to expire without making
 award in order to effect cancellation of solicitation which she had determined was warranted, Gen-
 eral Accounting Office will review propriety of the decision to cancel.
                                                                                                 395
* Bids
* * Responsiveness
* * * Determination criteria
 Where the identity of the bidder is clear from the bid as submitted and there is no indication that
 the bidder will not perform in accordance with the requirements of the solicitation, the bid is re-
 sponsive.
                                                                                                 359
* Bids
* * Responsiveness
* * * Terms
* E U M Deviation
 Protester's bid for printing paper was properly rejected as nonresponsive where solicitation as a
whole required bidders to agree to furnish paper with 50 percent waste paper content, and protest-
er's bid offered zero percent content.
                                                                                                 410
* Contract awards
* * Propriety
* * * Recycled materials
* E K E Cost increase
Award to lowest bidder offering to comply with mandatory solicitation requirement for 50 percent
waste paper content, even though there was lower bid not meeting requirement, is consistent with
Resource Conservation and Recovery Act of 1976 and Environmental Protection Agency implement-
ing Guideline; although narrative accompanying Guideline indicates EPA's view that higher price
for paper meeting minimum waste paper content requirement is unreasonable, neither statute nor
Guideline prohibits paying such a premium.
                                                                                                 410
* Invitations for bids
* * Cancellation
*E E Justification
 Contracting agency lacked compelling reason to cancel invitation for bids (IFB) for rental of con-
 struction equipment where apparent inconsistency between IFB provisions-which described certain
 requirements in terms of hourly and daily rates, but called for pricing on the basis of daily and
Index-lO                                                                           (69 Comp. Gen.)
Procurement




weekly unit rates-did not prejudice any bidder, all bidders understood that daily and weekly unit
pricing was required, they provided such pricing which was evaluated on a common basis, and an
award under the IFB would meet the agency's actual needs.
                                                                                                395
* Invitations for bids
* * Cancellation
* U U Justification
Where contracting officer deliberately allowed bid acceptance period to expire without making
award in order to effect cancellation of solicitation which she had determined was warranted, Gen-
eral Accounting Office will review propriety of the decision to cancel.
                                                                                                395

Socio-Economic Policies
* Preferred products/services
ON American Indians
Determination of Bureau of Indian Affairs that joint venture comprised of Indian-owned concern
and concern not Indian-owned does not qualify as a 51 percent Buy Indian Act concern, as required
by the solicitation, is not unreasonable where, although the Indian firm controls 51 percent of the
joint venture, only 55 percent of the Indian firm is owned by Indians and the aggregate total of
Indian ownership of the joint venture therefore amounts to only 28 percent.
                                                                                                398
* Small business set-asides
E NUse
*     U
      * Procedural defects
Agency decision not to set aside procurement for small disadvantaged business (SDB) concerns is
unreasonable where agency made no effort to ascertain SDB interest and capabilities and it appears
that the agency reasonably should have expected to obtain offers from at least two responsible SDBs
and make award at a price not exceeding the fair market price by more than 10 percent.
                                                                                                374
*   Small businesses
*   * Size status
*   * * Self-certification
* U E U Good faith
Contracting officer properly accepted, at face value, the awardee's self-certification that it was a
small business, in the absence of information that reasonably impeached the awardee's certification.
                                                                                                364



Index-l                                                                            (69 Comp. Gen.)
Procurement




Special Procurement Methods/Categories
* Federal supply schedule
* * Multiple/aggregate awards
* * * Price reasonableness
Finding of price unreasonableness under multiple-award Federal Supply Schedule solicitation was
reasonable where proposal did not offer either most favored customer pricing-prices equal to or
lower than lowest commercial prices-when evaluated on a product-by-product basis or lowest net
price available to the government.
                                                                                             421

Specifications
* Minimum needs standards
* * Competitive restrictions
* * * Justification
* 0 0U Sufficiency
Solicitation requirement that offerors complete original equipment manufacturer's (OEM's) mainte-
nance training prior to preaward survey is unobjectionable where OEM, the only source of accepta-
ble spare parts, will make parts available only to firms with training and there would be risk of
delay in contract performance if training was not completed prior to award.
                                                                                             418




Index-12                                                                         (69 Comp. Gen.)
Compiled in the Office of the General Counsel
Legal Publications and Writing Resources Section
April 1990

B-237938, April 2, 1990
Procurement
Sealed Bidding
* Bids
* * Responsiveness
* * S Determination criteria
Where the identity of the bidder is clear from the bid as submitted and there is no indication that
the bidder will not perform in accordance with the requirements of the solicitation, the bid is re-
sponsive.

Procurement
Contractor Qualification
* Responsibility
* * Contracting officer findings
* * S Negative determination
* N D R Prior contract performance
Procurement
Contractor Qualification
* Responsibility criteria
SO Organizational experience
Agency may properly consider manufacturing experience of parent corporation in finding that
awardee subsidiary corporation met definitive responsibility criterion (5-year manufacturing experi-
ence requirement), where bid stated that product would be manufactured at parent corporation's
facilities.

Matter of: Hardie-Tynes Manufacturing Company

L. Stephen Quatannens, Esq., Gardner, Carton & Douglas, for the protester.

Douglas K. Olson, Esq., Kilcullen, Wilson and Kilcullen, for IMPSA-International, Inc., an interest-
ed party.

Justin P. Patterson, Esq., Department of the Interior, for the agency.

Mary G. Curcio, Esq., Peter A. lannicelli, Esq., and Christine S. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

Page 359
                                                                                    (69 Comp. Gen.)
Hardie-Tynes Manufacturing Company protests the award of a contract for flow
gates under invitation for bids (IFB) No. 9-SI-30-07760/DS-7800, to IMPSA
International, Inc. (IMPSA-International), by the Bureau of Reclamation, De-
partment of the Interior. Hardie-Tynes alleges that IMPSA-International sub-
mitted a nonresponsive bid and is a nonresponsible bidder.
We deny the protest.
Issued on July 28, 1989, the IFB solicited bids to design, furnish and deliver flow
gates for the Roosevelt Dam, Salt River Project, Arizona, and the Hoover Dam,
Boulder Canyon Project, Arizona-Nevada. Section L-22 of the IFB provided:
The bidder shall have experience in the manufacture of high-head slide gates and hydraulic hoists
and in this respect shall have had equipment of similar complexity to that required by this
solicitation/specifications in satisfactory operation for not less than 5 years.
At bid opening on September 28, the Bureau received six bids; IMPSA-Interna-
tional submitted the low bid of $3,430,012, and Hardie-Tynes submitted the
second-low bid of $4,730,976. IMPSA-International, a Pennsylvania corporation
with no manufacturing facility, stated in its bid that the gates would be manu-
factured in Argentina at the manufacturing facilities of its parent corporation,
Industrias Metalurgicas Pescarmona S.A. (IMPSA-Argentina).
On October 5, Hardie-Tynes protested to the Bureau that IMPSA-International
was ineligible for award because the firm did not meet the 5-year manufactur-
ing experience requirement set out in section L-22 and was not a manufacturer
for purposes of the Walsh-Healey Public Contracts Act. 41 U.S.C. §§ 35-45 (1982
and Supp. V 1987). The Bureau initially agreed that IMPSA-International was
ineligible for award because it was not a manufacturer under the Act. Subse-
quently, IMPSA-International submitted three corporate documents (a power of
attorney and agency agreement, a special power of attorney, and a document
entitled "unanimous written consent of sole shareholder in lieu of annual meet-
ing") to show that IMPSA-International represented IMPSA-Argentina and was
authorized to bind IMPSA-Argentina in contracts for projects in the United
States. The Bureau then determined that, because the equipment would be
manufactured in Argentina and shipped directly to the United States govern-
ment installations, the Walsh-Healey Public Contracts Act was not applicable.
On November 27, the Bureau awarded the contract to IMPSA-International.
Hardie-Tynes filed its protest with our Office on December 1.
Hardie-Tynes first alleges that the bid submitted by IMPSA-International is
nonresponsive because it does not contain an unequivocal commitment to per-
form the contract. Specifically, Hardie-Tynes argues that, because IMPSA-Inter-
national relied on the manufacturing experience of IMPSA-Argentina, it could
have chosen to avoid the contract by not disclosing its relationship with IMPSA-
Argentina. Hardie-Tynes also argues that the bid is nonresponsive because it is
ambiguous as to whether IMPSA-International or IMPSA-Argentina is the bid-
ding party, and, therefore, it is not clear which firm is obligated to perform the
contract.

Page 360                                                                         (69 Comp. Gen.)
The test for responsiveness is whether a bid as submitted represents an un-
equivocal commitment to provide the requested supplies or services at a firm,
ftxed-price. Unless something on the face of the bid either limits, reduces or
modifies the obligation of the prospective contractor to perform in accordance
with the terms of the solicitation, the bid is responsive. Haz-Tad, Inc., et al., 68
Comp. Gen. 92 (1988), 88-2 CPD 1! 486. The determination as to whether a bid is
responsive must be based solely on the bid documents as they appear at the
time of bid opening. Id.
Here, the bid was submitted in the name of IMPSA-International and there was'
nothing on its face to indicate that IMPSA-International would not perform in
accordance with the terms of the solicitation. Consequently, the bid as submit-
ted was responsive. In examining the responsiveness of the bid, it would have
been improper for the contracting officer to have relied on post-bid opening sub-
missions concerning whether IMPSA-International met the solicitation require-
ment for manufacturing experience since, as explained below, that requirement
relates to responsibility and has no bearing on the responsiveness of the bid.
Insofar as Hardie-Tynes is arguing that the bid is ambiguous as to whether
IMPSA-International or IMPSA-Argentina is the bidding party, it is clear from
the bid itself that IMPSA-International was the bidder and that, even though
the flow gates will be manufactured by IMPSA-Argentina, IMPSA-International
is obligated to supply the flow gates to the government under the contract.
Furthermore, we find unpersuasive Hardie-Tynes' argument that IMPSA-Inter-
national could have chosen not to disclose its corporate affiliation with IMPSA-
Argentina in order to avoid being awarded the contract. IMPSA-International's
bid clearly disclosed the only critical relationship between the two firms-that
is, that IMPSA-Argentina would be doing the actual manufacturing for IMPSA-
International, which had agreed to furnish the gates to the government. Theo-
retically, any bidder could attempt to be found nonresponsible by not cooperat-
ing with contracting officials who ask for relevant financial or corporate docu-
ments during the course of a responsibility determination. However, here,
IMPSA-International cooperated fully by furnishing the corporate documents
and, once found responsible and awarded the contract, was bound to perform
the work.
Hardie-Tynes also protests that IMPSA-International, a Pennsylvania corpora-
tion with approximately 12 employees and no manufacturing facilities, is not a
responsible bidder because it does not meet the manufacturing experience re-
quirement of the IFB. Hardie-Tynes contends that while IMPSA-Argentina, the
parent corporation, is a manufacturing company, IMPSA-International cannot
rely on the experience of IMPSA-Argentina to meet the 5-year manufacturing
experience requirement. To support this position Hardie-Tynes cites Federal Ac-
quisition Regulation (FAR) § 9.104-3(d), which provides that affiliated concerns
are normally considered separate entities in determining whether a contractor
meets applicable standards for responsibility. Hardie-Tynes also argues that
while the experience of a nonbidding entity can be used to determine the re-
sponsibility of a bidding party in appropriate circumstances, the bid must first

Page 361                                                             (69 Comp. Gen.)
establish that the nonbidding entity whose experience is being relied upon is
committed to perform the contract. Hardie-Tynes contends that the corporate
documents submitted by IMPSA-International do not establish that IMPSA-Ar-
gentina made any commitment to manufacture flow gates for IMPSA-Interna-
tional when IMPSA-International acts in its own name; thus, HardieTynes
argues that the documents provide no basis for the Bureau to rely upon the ex-
perience of IMPSA-Argentina to find IMPSA-International responsible.
The Bureau agrees that IMPSA-International alone does not meet the experi-
ence requirement. The Bureau argues, however, that IMPSA-International prop-
erly may satisfy the 5-year experience requirement based on the manufacturing
experience of its parent corporation, IMPSA-Argentina. According to the
Bureau, it determined from the documents submitted by IMPSA-International-
the unanimous written consent of sole shareholder in lieu of annual meeting,
the special power of attorney, and the power of attorney and agency agree-
ment-that IMPSA-Argentina was bound to manufacture the flow gates which
IMPSA-International agreed to provide under the contract.
The Bureau further argues that the FAR does not prohibit using a parent cor-
poration's experience to determine that a subsidiary corporation is responsible.
In this connection, the Bureau cites FAR § 9.104-1, which provides in part that
to be responsible, a prospective contractor must have the necessary experience
or the ability to obtain it, and the necessary production facilities or the ability
to obtain them. The Bureau concludes that it properly found IMPSA-Interna-
tional responsible based on the experience of IMPSA-Argentina, because the
corporate documents provided to the Bureau by IMPSA-International clearly
showed that IMPSA-International had the ability to obtain both the required
manufacturing experience and facilities from the parent corporation.
Our Office does not generally review affirmative responsibility determinations
since a contracting agency's determination that a particular bidder or offeror is
responsible is based in large measure on subjective judgments. Tama Kensetsu
Co., Ltd., and Nippon Hodo, B-233118, Feb. 8, 1989, 89-1 CPD 1 128. One excep-
tion to this rule is where a solicitation contains definitive responsibility criteria,
which are specific and objective standards established by an agency to measure
a bidder's or an offeror's ability to perform the contract. Id. A solicitation re-
quirement that the prospective contractor have a specified number of years of
experience in a particular area is a definitive responsibility criterion. DJ
Enters., Inc., B-233410, Jan. 23, 1989, 89-1 CPD ¶ 59. Where an allegation is
made that definitive responsibility criteria have not been satisfied, the scope of
our review is limited to ascertaining whether sufficient evidence of compliance
has been submitted from which the contracting officer reasonably could con-
clude that the criteria have been met. Id
In the present case the parties agree that IMPSA-International does not meet
the experience requirement on its own, nor is there any dispute that IMPSA-
Argentina does meet the experience requirement. The issue for resolution thus
is whether IMPSA-International properly may be found responsible by consider-
ing the manufacturing experience of IMPSA-Argentina.

Page 362                                                               (69 Comp. Gen.)
The experience of a technically qualified subcontractor may be used to satisfy
definitive responsibility criteria relating to experience for a prime contractor-
bidder. Tama Kensetgu Co., Ltd., and Nippon Hodo, B-233118, supra; Allen-Sher-
man-Hoff Co., B-231552, Aug. 4, 1988, 88-2 CPD 11 116; BBC Brown Boveri, Inc.,
B-227903, Sept. 28, 1987, 87-2 CPD 1 309. We see little difference in this situa-
tion, where a subsidiary corporation is relying on its parent corporation to per-
form the work in question. See Unison Transformer Servs., Inc., 68 Comp. Gen.
74 (1988), 88-2 CPD ¶ 471 (in performing a technical evaluation under a negoti-
ated procurement, the procuring agency may consider the experience of a
parent company where the offeror's subsidiary company represents that the re-
sources of the parent company will be available to it). Accordingly, as IMPSA-
International represented in its bid that the manufacturing would be performed
by IMPSA-Argentina at the facilities in Argentina, we believe the Bureau prop-
erly considered IMPSA-Argentina's experience in determining that IMPSA-
International met the experience requirement.
In reaching this conclusion, we note that, contrary to Hardie-Tynes' position,
evidence of a firm commitment from the subcontractor to the prime contractor
is not a prerequisite to considering the subcontractor's experience in determin-
ing that the prime contractor is responsible. See Allen-Sherman-Hoff Co.,
B-231552, supra, Contra Costa Elec., Inc.-Reconsideration, B-200660.2, May 19,
1981, 81-1 CPD ff 381. Nevertheless, from IMPSA-International's bid and the
corporate documents submitted to the Bureau, it is clear that IMPSA-Argentina
was committed to IMPSA-International to manufacture the flow gates. The
power of attorney and agency agreement, and the unanimous written consent of
the sole shareholder in lieu of an annual meeting, give IMPSA-International
the power to do all things necessary, and to execute all agreements and docu-
ments in the name of IMPSA-Argentina which JMPSA-International deems nec-
essary or advisable, in order to submit bids for projects in the United States. In
addition, the special power of attorney gives IMPSA-International's president
the power to sign contracts of any kind on behalf of IMPSA-Argentina. Thus,
IMPSA-International had the authority to commit IMPSA-Argentina to manu-
facture the flow gates, and, in fact, indicated its intention to do so by specifying
in its bid that the flow gates would be manufactured by its parent.
Finally, we do not agree that FAR § 9.104-3(d) precludes a contracting agency
from considering the experience of a parent corporation to find a subsidiary cor-
poration responsible. While the provision does state that affiliated concerns are
normally considered separate entities in determining whether the firm that is
to perform meets the applicable standards of responsibility, it does not provide
that a contracting agency may never rely on an affiliate to find a prospective
contractor responsible. In our view, the provision would preclude using an affili-
ate's experience simply because it was an affiliate. However, where, as here, the
bidder represents that the parent-affiliate will be performing the contract, we
think the affiliate's experience properly may be considered. See FAR
§ 9.104-3(b), which recognizes that a contractor may be found responsible
through its own resources or those of a subcontractor or by otherwise demon-
strating that it has the ability to obtain the needed resources.

Page 363                                                             (69 Comp. Gen.)
The protest is denied.



B-237716.2, April 3, 1990
Procurement
Competitive Negotiation
* Contracting officer duties
E * Information evaluation
* E* Fairness
While contracting officer, acting in good faith, may ordinarily rely on information provided by
transportation rate specialists in calculating transportation costs on f.o.b. origin offers, he may not
automatically do so if it leads to an improper or unreasonable evaluation of the offered prices.

Procurement
Competitive Negotiation
* Offers
* * Evaluation errors
SOE Non-prejudicial allegation
Even though evaluation of transportation costs on fo.b. origin supply solicitation appears unreason-
able, protest against the evaluation is denied, where the protester would not be in line for award,
even assuming the application of its own transportation calculations.

Procurement
Socio-Economic Policies
* Small businesses
E * Size status
E * * Self-certification
E*- N Good faith
Contracting officer properly accepted, at face value, the awardee's self-certification that it was a
small business, in the absence of information that reasonably impeached the awardee's certification.

Procurement
Competitive Negotiation
* Multiple offers
* * Acceptance
* E * Propriety
Multiple offers from commonly owned and/or controlled companies may be accepted unless the ac-
ceptance of such offers is prejudicial to the interests of the government or other offerors.




Page 364                                                                             (69 Comp. Gen.)
Procurement
Bid Protests
* GAO procedures
*E Protest timeliness
* * * Apparent solicitation improprieties
Protester's objection to the use of negotiated rather than sealed bid procedures is untimely when
filed after award rather than prior to the closing date for receipt of proposals.

Matter of: Fiber-Lam, Inc.

Gordon Ayotte, for the protester.
Edward J. Korte, Esq., Office of Command Counsel, U.S. Army Materiel Command, for the agency.
Kathleen A. Gilhooly, Esq., and James A. Spangenberg, Esq., Office of the General Counsel, GAO,
participated in the preparation of the decision.


Fiber-Lam, Inc., protests the award of a contract to The Great Divide Defense
Products under request for proposals (RFP) No. DAAA09-89-R-0773, issued by
the U.S. Army Armament, Munitions and Chemical Command (AMCCOM) for a
quantity of silhouette targets. Fiber-Lam contends that the Army's evaluation
of transportation costs was in error, that the awardee's joint venture agreement
did not meet the RFP's small business set-aside requirements, that the awardee
and another offeror are commonly owned and should not have been allowed to
submit separate offers, and that the procurement should have been conducted
under sealed bid rather than negotiated procedures.
We deny the protest in part and dismiss it in part.
The RFP invited offers on the basis of both f.o.b. origin and f.o.b. destination,
and provided that the government would award on the basis the contracting of-
ficer determined to be most advantageous to the government. The RFP further
advised that transportation evaluation of offer(s) would be based on the f.o.b.
origin prices plus government transportation costs from delivery point(s) to the
destination(s) named, and that freight rates used in the evaluation would be
those furnished by the Commander, Eastern Area, Military Traffic Management
Command, Military Ocean Terminal, Bayonne, New Jersey.
Eleven offers were received by the July 7, 1989, closing date. Great Divide sub-
mitted the low f.o.b. origin offer of $534,658 and Fiber-Lam the next low offer of
$566,040.10.1 The Procurement Traffic Branch of AMCCOM computed transpor-
tation costs for the five low offerors, including Fiber-Lam and Great Divide,
using transportation rates furnished by the Military Traffic Management Com-
mand (MTMC). This transportation evaluation showed $3,813.29 in transporta-
tion costs for Great Divide and $2,874 for Fiber-Lam. Based on this evaluation,
' Great Divide's fo.b. destination offer was also the lowest received.


Page 365                                                                        (69 Comp. Gen.)
the contracting officer determined the f.o.b. origin offer submitted by Great
Divide was the most advantageous and awarded that firm the contract on Octo-
ber 18, 1989.
Fiber-Lam contends that the Army's evaluation of transportation costs is obvi-
ously in error, since the government freight rates used in the computation are
substantially lower than the rates quoted to Fiber-Lam by commercial carriers.
A contracting officer, acting in good faith, has a right to rely on the information
provided by transportation rate specialists. Pyrotechnics Indus., Inc., B-221886,
June 2, 1986, 86-1 CPD 11 505; Applied Optic Kinetics, Ltd., B-212332, Feb. 7,
1984, 84-1 CPD 1 150. However, the contracting officer may not automatically
rely upon such information if it leads to an improper or unreasonable evalua-
tion of the offered prices. See Isometrics, Inc., B-219057.3, Jan. 2, 1986, 86-1 CPD
1 2.
In the present case, it does appear that the transportation costs are unrealisti-
cally low given the quantity of the silhouette targets and multiple locations to
which they are to be delivered. Moreover, the record does not indicate the basis
for MTMC's rates or whether this information was properly used by the con-
tracting officer in calculating the transportation costs. Nor is there any indica-
tion these calculations were confirmed, even after they were questioned in the
protest. Compare Pyrotechnics Indus., Inc., B-221886, supra.
By Fiber-Lam's calculations, Fiber-Lam's transportation costs should be $14,850
less than Great Divide's transportation costs.2 Inasmuch as Great Divide's f.o.b.
origin offer is $31,382.10 less than Fiber-Lam's f.o.b. origin offer, it is apparent
that Fiber-Lam is not prejudiced, even assuming the transportation costs were
miscalculated. See Donaldson Co., Inc., B-236795, Dec. 4, 1989, 89-2 CPD 1 514.
Therefore, we deny this protest basis.
Fiber-Lam next contends that a "board manufacturer in Michigan" backed the
awardee in "a joint venture situation," and asks for the name of the board man-
ufacturer and whether the joint venture is eligible for the small business set-
aside.
An offeror's eligibility for a small business set-aside involves a matter of its size
status, which our Office generally will not review. Bid Protest Regulations, 4
C.F.R. § 21.3(mX2) (1989). The Small Business Administration (SBA) has conclu-
sive statutory authority to determine matters of small business size status of
federal procurements. See 15 U.S.C. § 637(bX6) (1988). However, our Office will
consider whether an offeror's self-certification that it is a small business should
have been challenged by the contracting officer on a particular procurement.
Robertson and Penn, Inc., d/b/a Nat'l Serv. Co., 65 Comp. Gen. 874 (1986), 86-2
CPD E 350. In this respect, although a contracting officer generally may accept,
at face value, an offeror's self-certification, the contracting officer should refer
the matter to the SBA if he has information prior to award that reasonably im-
2 Based on commercial quotes, Fiber-Lam states its transportation costs would be $43,050 while Great Divide's
costs are $57,900.


Page 366                                                                                   (69 Comp. Gen.)
peaches the certification. Creativision, Inc., 66 Comp. Gen. 585 (1987), 87-2 CPD
ff 78.
The record here indicates that the contracting officer requested a pre-award
survey of the awardee, reviewed the survey's section on the awardee's financial
arrangements and saw no indication of any improper joint venture or other ar-
rangement which would indicate that the awardee's small business certification
was incorrect. On the contrary, information in the survey tended to confirm
that the awardee was indeed small. Given the absence of information that
would reasonably impeach Great Divide's self-certification, the contracting offi-
cer properly accepted Great Divide's small business certification as correct on
its face.
Fiber-Lam also questions whether the awardee and another offeror, Great
Divide Mfg., which are owned by essentially the same parties, should be allowed
to submit separate offers on the same procurement. Fiber-Lam contends that it
is not in the best interest of the government to allow submission of separate
offers if it is possible for the lower priced offeror to withdraw its offer if the
related higher priced offeror is next low.
The Army responds that it sees no prejudice to the government or other bidders
in this instance, noting that the second corporation was formed "to qualify the
company for 8(a) set-aside opportunities in the hope that more business can be
generated." The Army states that the item being procured has not been nomi-
nated for consideration under the 8(a) program.
Multiple bidding, that is, the submission of bids on the same requirement by
more than one commonly owned or commonly controlled company, or the same
entity, is not objectionable where it does not give those bidders an unfair advan-
tage and is thus not prejudicial to the interests of the government or other bid-
ders. Atlantic Richfield Co., 61 Comp. Gen. 121 (1981), 81-2 CPD 1453 (prejudice
found where awardee was to be selected by lottery, because the submission of
multiple bids unfairly increased chance for award). We have found no prejudice
from multiple bidding by two divisions of the same company where award was
based on the lowest bid and all offerors had the same opportunity to submit the
lowest bid. See Pioneer Recovery Sys., Inc., B-214700; B-214878, Nov. 13, 1984,
84-2 CPD I 520. The situation here is analogous to that in the Pioneer case since
award here was made to the offeror submitting the lowest evaluated price, and
all offerors had the same opportunity to submit the lowest offer. We see little
potential for prejudice to the government from related offerors withdrawing
lower priced offers on an RFP, as is speculated by the protester, since prices
under an RFP are not publicly disclosed before award. Indeed, in this case, if
Great Divide had withdrawn its offer, Fiber-Lam would have been the low of-
feror.
In its comments on the agency report, Fiber-Lam questions whether the award-
ee had an opportunity to submit a best and final offer or whether it submitted
its offer before the RFP closing date. Our review of the record indicates that

Page 367                                                            (69 Comp. Gen.)
award was made to Great Divide on the basis of its initial offer submitted by
the RFP closing date.
Finally, Fiber-Lam's protest allegation concerning the use of negotiated rather
than sealed bid procurements relates to an apparent solicitation impropriety
which, under our Bid Protest Regulations, 4 C.F.R. § 21.2(aXl), must be filed
prior to the closing date for the receipt of initial proposals. Benju Corp.,
B-228571, Nov. 4, 1987, 87-2 CPD 1 445. Since Fiber-Lam did not protest until
after award, this aspect of its protest is untimely and will not be considered.
The protest is denied in part and dismissed in part.



B-237865, April 3, 1990
Procurement
Competitive Negotiation
* Offers
* * Evaluation
* * * Cost estimates
Contention that where solicitation contemplates award of a fixed-price, time and materials contract
and requires the submission of cost and pricing data, agency must perform a cost analysis, is denied
where adequate price competition was obtained, permitting agency to waive further submission of
such cost data and perform a price analysis in lieu of a cost analysis.

Procurement
Competitive Negotiation
* Offers
* * Evaluation
* * * Personnel
Where none of the personnel required to perform the statement of work were "professional employ-
ees" as defined in the Federal Acquisition Regulation (FAR), contracting officer was not required to
evaluate proposed professional employee compensation as specified in the standard FAR clause re-
garding evaluation of such compensation.

Procurement
Contractor Qualification
* Responsibility
* * Contracting officer findings
* * * Affirmative determination
* H U E GAO review
General Accounting Office will not review a protest of an affirmative determination of responsibil-
ity absent a showing that it may have been made fraudulently or in bad faith, or that definitive
responsibility criteria set out in the solicitation were not met.


Page 368                                                                           (69 Comp. Gen.)
Procurement
Contract Management
* Contract administration
* * Contract terms
* * * Compliance
* * E* GAO review
Whether awardee actually complies with its contractual obligations is a matter of contract adminis-
tration that is not reviewable under General Accounting Office's bid protest function.

Matter of: Research Management Corporation

Donald P. Young, Esq., Saul, Ewing, Remick & Saul, for the protester.
Lori S. Chofnas, Esq., Office of the General Counsel, Department of the Navy, for the agency.
Aldo A. Benejam, Esq., Ralph 0. White, Esq., and Christine S. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.


Research Management Corporation (RMC) protests the award of a contract to
George G. Sharp, Inc., under request for proposals (RFP) No.
N00140-89-R-1901, issued by the Navy as a total small business set-aside, for
engineering and technical advisor services in support of the Habitability Self-
Help Program. RMC, the incumbent contractor, contends that the Navy improp-
erly failed to conduct a cost analysis of all offers as required by the applicable
regulations and the RFP; failed to follow the evaluation criteria stated in the
RFP; and failed to evaluate proposed compensation for professional employees
in accordance with applicable regulations. RMC alleges that if the Navy had
evaluated offers properly, it would have concluded that RMC was the lowest re-
alistically-priced, acceptable offeror.
We deny the protest.
The Navy issued the RFP on March 29, 1989, for a 1-year base period with four
1-year options. The RFP sought offers for an indefinite quantity, time and mate-
rials contract, with fixed hourly labor rates, under which tasks would be re-
quired by delivery orders. The estimated level of effort for this project was
243,000 hours during the base year and each of the option years. Offerors re-
sponding to the RFP were directed to submit their technical and price proposals
separately, with the price proposals showing "all elements of cost and such
other cost data as .. . considered appropriate to support your [technical] propos-
al." Each offeror was also required to submit cost and pricing data with its pro-
posal on a standard form (SF) 1411, "Contract Pricing Proposal Cover Sheet."
Three offerors responded to the RFP: Commercial Building Services, Inc. (CBS),
Sharp and RMC. The Navy initially found only RMC's proposal technically ac-
ceptable, but concluded that the proposals submitted by Sharp and CBS could
be made acceptable after discussions. Thus, the Navy held written and oral dis-

Page 369                                                                           (69 Comp. Gen.)
cussions only with CBS and Sharp, since there were no technical issues requir-
ing discussions with RMC. After discussions, all three offerors were found tech-
nically acceptable and remained in the competitive range.
By letters dated October 18, the contracting officer requested best and final
offers (BAFOs) from all three offerors. Each offeror was directed to review all
aspects of its price proposal, including profit, in light of the competitive nature
of the acquisition. Each offeror was also reminded that award would be made to
the lowest priced, technically acceptable offeror, as explained in the RFP. The
contracting officer also directed offerors to potentially questionable costs in
their initial price proposals, and advised each of possible pricing mistakes.
BAFOs were received on October 25. Sharp's final price was $28,150,377, while
CBS's was $28,943,218 and RMC's was $30,765,426. After receiving notification
from the Navy advising that Sharp was the apparent successful offeror, RMC
protested to this Office.'
RMC protests that the Navy improperly failed to perform a cost analysis of all
offers before awarding a contract, in violation of the RFP and applicable regula-
tions. According to RMC, since the RFP required submission of cost and pricing
data; contemplated award of a time and materials type contract; and required
that proposed costs be consistent with the offeror's proposed technical approach,
the Navy was required to conduct a cost analysis. RMC argues that as a result
of the Navy's failure to conduct a cost analysis, the Navy did not realize that
RMC had submitted the lowest realistic price.
The Navy responds that while the RFP required the submission of cost and pric-
ing data, a cost analysis was not required because the range of offered prices
comprised adequate price competition within the meaning of FAR § 15.804-3(b).
The Navy also argues that, contrary to the protester's characterization of the
solicitation, the time and materials contract contemplated by the RFP is a
fixed-price contract rather than a cost reimbursement type contract because of-
ferors were required to commit to firm labor, overhead and profit rates, and, as
a result, the contractor bore the risk of increases in labor or overhead costs.
Further, the Navy argues that nothing in the solicitation advised offerors that
proposals would be subjected to a cost analysis.
As noted above, the RFP required offerors to submit cost and pricing data on SF
1411, "Contract Pricing Proposal Cover Sheet." Submission of such cost data is
mandated by the Truth in Negotiations Act, 10 U.S.C. § 2306a (1988), for all ne-
gotiated contracts in excess of $100,000, except in certain circumstances. The
Act specifically exempts contracts awarded with "adequate price competition"
' The Navy informed our Office on December 28, 1989, that it would proceed with award to Sharp, notwithstand-
ing the protest, pursuant to Federal Acquisition Regulation (FAR) I 33.104(b). RMC objects to the Navy's determi-
nation and finding of urgent and compelling circumstances. However, where an agency makes a determination to
award a contract while a protest is pending, the agency's only obligation is to inform our Office of that decision, as
the Navy has done here. See 31 U.S.C. § 3553(dX2) (Supp. V 1987); FAR I 33.104(b). There is no requirement that a
protester be allowed to rebut the agency's finding nor do we review such a determination. See, eg., The Taylor
Group B-234294, May 9, 1989, 89-1 CPD ¶1436.

Page 370                                                                                          (69 Comp. Gen.)
from the requirement to submit such data. See 10 U.S.C. § 2306a(bXlXA); FAR
§ 15.804-3(b).
RMC correctly asserts that a contracting officer must perform a cost analysis
when cost or pricing data are required under the Act. FAR § 15.805-1(b). When
cost or pricing data are not required, the contracting officer must perform a
price analysis to ensure that the overall price offered is fair and reasonable. Id.
Guidelines for performing a price analysis are set forth at FAR § 15.805-2, al-
though the FAR permits a contracting officer to use whatever price analysis he
deems appropriate to ensure fair and reasonable prices.
As a preliminary matter, we note that the contracting officer conducted a price
analysis in this procurement, consisting of comparing each offeror's price with
current and historical cost data.2 These cost data included information found in
recent audit reports prepared by the Defense Contract Audit Agency (DCAA),
the cost and pricing information submitted by each offeror, and historical data
available to the Navy from previous contracts. Using this information, the con-
tracting officer developed estimated prices for each offeror, and compared the
estimate to the offeror's price to confirm that each offeror fully understood the
RFP's requirements. The contracting officer also evaluated the proposals for
pricing mistakes. Further, despite RMC's assertions to the contrary, the con-
tracting officer performed a price analysis both before and after submission of
BAFOs. Based on these price analyses and a comparison of the offerors' prices,
the contracting officer determined that the prices offered were reasonable, and
that Sharp was the lowest-priced offeror. See FAR § 15.805-2.
With respect to RMC's assertion that the contracting officer was required to
perform a more detailed cost analysis because the RFP required submission of
cost or pricing data, there is simply no requirement that a cost analysis be per-
formed in every instance where an RFP requires offerors to submit cost data.
See Contract Servs., Inc., B-232689, Jan. 23, 1989, 89-1 CPD 1 54. As explained
above, the Truth in Negotiations Act does not require submission of cost or pric-
ing data where adequate price competition is achieved, and, when cost or pric-
ing data are not required by the Act, there is no requirement for a cost analysis.
FAR §§ 15.804-3(a), 15.805-1(b). Thus, we agree that since three offerors submit-
ted proposals in response to this solicitation, which provided for award "to the
low priced responsible offeror whose offer has been deemed technically accepta-
ble," adequate price competition was obtained and the agency was not obligated
to perform a cost analysis.
RMC next asserts that the Navy was required to perform a cost analysis be-
cause the RFP contemplated award of a time and materials contract. According
to RMC, a cost analysis is required because a time and materials contract is a
2 Each cost proposal listed the offeror's fully burdened, fixed hourly labor rates for estimated levels of effort for
each of seven labor categories. Also, each proposal provided any burden rates to be applied to fixed annual
amounts for travel/subsistence ($1 million) and special materials ($75,000), furnished in the RFP for evaluation
purposes. These fully-burdened fixed hourly rates multiplied by the estimated level of effort for each labor catego-
ry, combined with the offeror's burdened travel/subsistence and special materials costs, provided the basis for de-
termining the price of each proposal.

Page 371                                                                                         (69 Comp. Gen.)
cost-type contract providing the government little protection from contractor
cost overruns. RMC also argues that a time and materials contract is more like
a cost-type contract than a fixed-price contract because the government is gen-
erally obligated to reimburse the contractor for all direct labor hours expended
in the performance of the contract.
The time and materials contract here has elements of both fixed-price and cost-
type contracts. The contract price is fixed to the extent that offerors were re-
quired to propose fixed labor and burden rates for each of the seven labor cate-
gories involved in performance; on the other hand, the number of hours each
offeror will require to perform the necessary services may vary depending on
the tasks involved in each work order and the contractor's efficiency at per-
forming that task. Thus, while we do not agree that a full-blown cost analysis is
required whenever an agency uses a time and materials contract, in our view,
contracting agencies should conduct a review of the proposals adequate to
ensure that the proposed prices are reasonable and that the government will
obtain the lowest overall cost.3
Here, we find that the price analysis performed by the Navy addressed the
fixed-price portions of the contract, and that sufficient additional analysis was
performed to protect the government's interest with respect to the one uncer-
tain area of the contract price that could vary from one offeror to another-ie.,
the capabilities, and hence efficiency, of the personnel proposed by the contrac-
tor for performance. Specifically, the Navy's independent Technical Evaluation
Committee (TEC) reviewed the qualifications and work experience of each offer-
or's proposed personnel according to the criteria in the solicitation to ensure
that they were acceptable. In addition, the contract provides for notification and
prior approval by the Navy of any key personnel proposed to be substituted
during the performance of the contract. In our view, the TEC evaluation and
the contract provisions regarding substitution of key personnel, together with
the fixed-price rates for all labor, provide the government with the protection
necessary to ensure that the contract price will not be unreasonable.4
Finally, we do not agree with RMC's assertion that the RFP itself anticipates
that all offers will be subject to a cost analysis. Paragraph M31 of the RFP
states, in relevant part:

3 In support of its position, RMC cites our decision in Cerberonics, Inc., B-199924, B-199925, May 6, 1981, 81-1 CPD
1 351. In Cerberonics, we upheld an sgency's decision to exercise options in both a cost-type contract and an indefi-
nite quantity time and materials contract, even though the protester offered to perform the work at a lower cost.
We observed that Cerberonics' promise to provide the agency a minimal savings-$35,000 on a contract estimated
to cost more than $1 million-did not require the contracting officer to refrain from exercising a valid option be.
cause time and materials type contracts do not encourage effective cost control and require constant government
surveillance. Our description of time and materials contracts in that decision simply does not create a requirement
that contracting officers perform a full-blown cost analysis whenever an agency uses such a contract.
4 RMC also argues that a cost analysis should have been performed because paragraph L23 of the RFP incorpo.
rates the entire FAR and DFARS as if listed in their entirety in the contract, including DFARS § 215.805-70(a),
which states that a cost realism analysis may be appropriate in certain circumstances even when adequate price
competition exists. The provision cited by RMC, on its face, makes such analysis a matter of discretion.


Page 372                                                                                         (69 Comp. Gen.)
Costs which are supported in the price proposal must be reconcilable to the personnel and methodol-
ogy defined in the technical proposal or the overall proposal may be removed from the competitive
range.
This provision, putting offerors on notice that proposed costs must be linked to
performance, does not state that a cost analysis will be performed and does not
create a requirement in addition to the requirement for a price analysis found
in the regulations and performed by the contracting officer. Thus, none of
RMC's arguments shows that the Navy erred in not performing a cost analysis
on offers submitted in response to this solicitation.
RMC also protests that the contracting officer failed to evaluate each offeror's
proposed compensation of professional employees consistent with the require-
ments of the solicitation and applicable regulations. RMC correctly notes that
the RFP incorporates FAR § 52.222-46, "Evaluation of Compensation for Profes-
sional Employees." RMC argues that both the program manager and the assist-
ant program manager positions required by the RFP must be filled by profes-
sional employees, and that RMC relied to its detriment on that RFP provision
by proposing significantly higher hourly labor rates than did Sharp. RMC also
implies that Sharp's lower hourly labor rates for these positions reflect its mis-
understanding of the requirements of the RFP, and its failure to appreciate the
importance of employing qualified personnel to fill these key positions.
The Navy responds that even though the RFP included the FAR clause regard-
ing professional employee compensation, no professional employees were re-
quired to perform the work under this RFP, and hence the clause was inapplica-
ble. The Navy argues that amendment No. 0004 to the RFP removed the solici-
tation's college education requirement for the two highest-ranking employees
under this RFP-the program manager and the assistant program manager.
Thus, according to the Navy, after release of amendment No. 0004 none of the
labor categories in this procurement required a degree above a high school di-
ploma, and no professional employees were required within the meaning of the
professional employee clause.
Contracting officers are required to include the clause at FAR § 52.222-46,
"Evaluation of Compensation for Professional Employees," in "solicitations for
negotiated service contracts when the contract amount is expected to exceed
$250,000 and the service to be provided will require meaningful numbers of pro-
fessional employees." FAR § 22.1103 [Italic added]. The FAR defines a "profes-
sional employee" as ". . . any person meeting the definition of 'employee em-
ployed in a bona fide . . . professional capacity' given in 29 CFR 541." FAR
§ 22.1102. The FAR further explains that professional employees are those
"having a recognized status based upon acquiring professional knowledge
through prolonged study," and cites several examples of such professions. Id.
The purpose of a review of compensation for professional employees under FAR
§ 52.222-46 is to evaluate whether offerors will obtain and keep the quality of
professional services needed for adequate contract performance, and to evaluate
whether offerors understand the nature of the work to be performed. See MAR,
Inc., B-215798, Jan. 30, 1985, 85-1 CPD II 121.

Page 373                                                                          (69 Comp. Gen.)
Based on the facts here, we concur with the Navy's assessment that none of the
employees required to perform the work at issue were professional employees-
for purposes of the evaluation of professional compensation clause. RMC fails to
explain convincingly why these employees fall within the scope of a clause writ-
ten to apply to persons who have completed a period of prolonged study, when
there is no requirement that these employees have a college education provided
they have significant work experience. Further, RMC fails to show that the two
program manager positions fit within the other definitions found in the FAR, or
the additional guidance set forth at 29 C.F.R. § 541.3 (1989).
In addition, even assuming that the personnel required under the RFP, as
amended, are "professional employees," as RMC argues, we find no support in
the record for RMC's bare assertion that Sharp's lower compensation rates will
not provide the Navy with the quality of personnel required under the RFP, or
that Sharp did not fully understand the nature of the work to be performed.
Finally, RMC also questions whether Sharp can or will devote the resources
necessary to successful performance of the contract. These allegations relate to
the contracting officer's affirmative determination of Sharp's responsibility,
which our Office will not review absent a showing that the determination may
have been made fraudulently or in bad faith, or that definitive responsibility
criteria in the solicitation were not met. 4 C.F.R. § 21.3(fX5). No such showing
has been made here. Further, whether Sharp will comply with its contractual
obligations is a matter of contract administration that is not reviewable under
our bid protest function. 4 C.F.R. § 21.3(mXl).
The protest is denied.



B-237965, April 3, 1990
Procurement
Socio-Economic Policies
* Small business set-asides
EUUse
* * * Procedural defects
Agency decision not to set aside procurement for small disadvantaged business (SDB) concerns is
unreasonable where agency made no effort to ascertain SDB interest and capabilities and it appears
that the agency reasonably should have expected to obtain offers from at least two responsible SDBs
and make award at a price not exceeding the fair market price by more than 10 percent.

Matter of: Kato Corporation

Karl Dix, Jr., Esq., Smith, Currie & Hancock, for the protester.
Millard F. Pippin, Office of the Assistant Secretary, Department of the Air Force, for the agency.

Page 374                                                                          (69 Comp. Gen.)
David Ashen, Eaq. and John M. Melody, Esq., Office of the General Counsel, GAO, participated in
the preparation of the decision.


Kato Corporation protests the Department of the Air Force's decision to issue
invitation for bids (IFB) No. F32604-89-B-0038, for maintenance of family hous-
ing at Minot Air Force Base in North Dakota, on an unrestricted basis. Kato
contends that under Department of Defense (DOD) Federal Acquisition Regula-
tion Supplement (DFARS) § 219.502-72(a), the agency was required to issue the
solicitation as a small disadvantaged business (SDB) set-aside.
We sustain the protest.
SDB set-asides serve a purpose similar to small business set-asides by ensuring
equitable opportunities for SDB participation in government acquisitions. This
special category of small business set-asides was established to implement sec-
tion 1207 of the National Defense Authorization Act for Fiscal Year 1987, Pub.
L. No. 99-661, 100 Stat. 3816, 3973 (1986), which also established a goal of
awarding SDBs five percent of the dollar value of DOD contracts, beginning in
fiscal year 1987. Commercial Energies, Inc., B-237879, July 12, 1989, 89-2 CPD
¶40.
Family housing maintenance services at Minot Air Force Base have previously
been procured by means of small business set-asides. The most recent contract,
for a base period of December 30, 1988 to September 30, 1989, plus option years,
was awarded to Kato, which had represented itself to be an SDB. However, on
April 27, 1989, the Small Business Administration (SBA) determined Kato to be
other than small due to its affiliation with Emerald Maintenance, Inc., and
DESCO, Inc., with which it had entered into a joint venture to compete for the
family housing maintenance contract at Grand Forks Air Force Base in North
Dakota. The Air Force reports that this determination was a factor in the agen-
cy's subsequent decision not to exercise the options under Kato's contract. Ac-
cordingly, in a June 6 synopsis in the Commerce Business Daily, the agency pub-
licized a small business set-aside procurement for the Minot Air Force Base
services in issue.
Subsequently, on August 28, the SBA determined that Kato was not affiliated
with Emerald or DESCO, and therefore recertified Kato as a small business.'
According to Kato, it furnished this information to the contracting office at
Minot Air Force Base in an August 31 letter requesting that its option be exer-
cised.
However, as a result of the Small Business Competitiveness Demonstration Pro-
gram Act of 1988, Pub. L. No. 100-656, 102 Stat. 3889, 3892 (1988), contracting
officials determined that family housing maintenance services, including those
lNotwithstanding the recertification, the SBA ultimately ruled on Kato's previously filed appeal of the April 27
determination, holding on September 21 that Kato had not shown that the SBA was in error in finding Kato to
have been other than small as of April 27. Again, however, at this juncture the SBA had recertified Kato as small
(as of August 28), so this decision on appeal really had no practical effect.

Page 375                                                                                      (69 Comp. Gen.)
at Minot, should not be set aside for small business, but instead should be pro-
cured on an unrestricted basis. In this regard, the Act designates four industry
groups, including construction (which encompasses base housing maintenance),
for which acquisitions are not to be considered for small business set-asides
unless otherwise required. Id. §§ 713 and 717; Federal Acquisition Regulation
§ 19.102; DFARS § 219.1070-1; see WM. Marable, Inc., B-234987 et al., May 3,
1989, 89-1 CPD ¶425. Since the Act now precluded the setting aside of the
Minot procurement for small businesses, the Air Force synopsized the procure-
ment anew, on September 8, advising offerors that the procurement would be
conducted on an unrestricted basis. On September 26, the agency issued the so-
licitation. Kato filed this protest prior to the bid opening, contending that the
procurement should have been included under the DOD SDB set-aside program.
The regulations implementing the DOD SDB program, set forth in the DFARS,
part 219, provide that a procurement shall be set aside for exclusive SDB par-
ticipation if the contracting officer determines that there is a reasonable expec-
tation that: (1) offers will be obtained from at least two responsible SDB con-
cerns, and (2) award will be made at a price not exceeding the fair market price
by more than 10 percent. DFARS § 219.502-72(a). The regulations also provide
that the contracting officer should presume that these requirements are met if
the acquisition history shows that: (1) within the past 12-month period a respon-
sive offer from at least one responsible SDB concern was within 10 percent of
the award price on a previous procurement of similar supplies or services, and
(2) the contracting officer has reason to know (from the activity's relevant solici-
tation mailing list, response to presolicitation notices, or other sufficient factual
information) that there is at least one other responsible SDB source of similar
supplies or services. DFARS § 219.502-72(c).
Kato contends that, under the DFARS, the contracting officer was required to
set aside this procurement for SDBs because there was a reasonable expectation
that offers would be obtained from at least two responsible SDB concerns. In
this regard, Kato points to the August 28 SBA determination that Kato was not
affiliated with Emerald or DESCO and the subsequent recertification of Kato as
a small business, and also notes that the agency's bidders mailing list for this
solicitation includes approximately 24 firms, not including Kato, which were
designated "SD" for small disadvantaged business.
The Air Force concedes in its report that the Small Business Competitiveness
Demonstration Program Act does not preclude the use of SDB set-asides when
the designated industries are involved, as the contracting officer initially deter-
mined.2 The Air Force seems to argue preliminarily, however, that regulations
2We agree with the Air Force's position. The Small Business Competitiveness Demonstration Program Act ex-
pressly provides that the requirement for unrestricted competition does not apply to procurements "set-aside pur-
suant to ... section 1207 of the National Defense Authorization Act for Fiscal Year 1987," section 713(a), while
DOD's implementing regulations provide that acquisitions in the designated industry groups "shall continue to be
considered . .. for small disadvantaged business set-asides." DFARS § 219 .1070-1(a). It follows from these provi-
sions that the Small Business Competitiveness Demonstration Program Act did not relieve the agency of the obli-
gation to procure services or supplies by means of an SDB set-aside where otherwise required by statute or regula-
tion.


Page 376                                                                                       (69 Comp. Gen.)
implementing the Act-stating that acquisitions shall be "considered . . . for"
SDB set-asides (see footnote 2, above)-confer discretion upon the agency in this
regard. Thus, it apparently is the agency's position that there is never a re-
quirement to set aside a particular procurement for SDBs; the contracting offi-
cer need only "consider" the possibility of an SDB set-aside where the condi-
tions specified in the DFARS exist.
We do not agree. The language in question appears only in regulations imple-
menting the Small Business Competitiveness Demonstration Program Act.
DFARS § 219.1079-1(a). This provision in no way purports to reduce the require-
ment for SDB set-asides under the circumstances specified under DFARS
§ 219.502-72(a), i.e., where offers from two responsible SDB concerns are expect-
ed and the agency expects a contract within 10 percent of the fair market price.
Indeed, the Air Force's view would seem to be inconsistent with section 601 of
Public Law 100-656 (the statute which includes the Small Business Competitive-
ness Demonstration Program Act), which amended the Small Business Act to
require contracting officials to "increase, insofar as possible, the number" of
procurements under the SDB set-aside program. We therefore think it is clear
that this provision was intended merely to clarify that the prohibition on the
use of small business set-asides in the designated industry groups did not also
amount to a prohibition on the use of SDB set-asides; it was not intended to
alter the SDB program.
The Air Force primarily argues that the circumstances specified in DFARS
§ 219.502-72(a) as warranting an SDB set-aside did not exist here, since the con-
tracting officer was unaware of any SDBs "with the necessary experience to
handle a contract of this magnitude." The agency does not dispute Kato's abili-
ty to perform, but points to the April 27 SBA determination, upheld on appeal
on September 21, that Kato was other than small, and concludes that Kato was
not an eligible SDB. The Air Force further notes that only one of the 13 bids
received under the fiscal year 1989 solicitation was submitted by an SDB (we
presume the agency is referring to a firm other than Kato).
Applying the DFARS standard, we find that contracting officials should reason-
ably have expected that offers would be obtained from at least two responsible
SDB concerns, and that award would be made at a price not exceeding the fair
market price by more than 10 percent. First, we think it is clear that contract-
ing officials should have been aware that Kato, the incumbent contractor, was a
potential SDB source for this procurement. In this regard, we note that the Air
Force (1) has not disputed Kato's assertion that it informed contracting officials
at Minot of the August SBA recertification of Kato as a small business; (2) has
not questioned Kato's self-certification in its prior bid that Kato itself, in the
absence of affiliation, is an SDB; and (3) has not argued that Kato, the incum-
bent contractor, was other than a responsible concern.
Second, we find that contracting officials reasonably should have expected to
obtain additional offers from other responsible SDB concerns. Although the Air
Force claims it was unaware of any additional potential SDB sources, it has
failed to explain why it did not consider the numerous SDB concerns on its own

Page 377                                                            (69 Comp. Gen.)
mailing list to be qualified potential sources. (Indeed, the agency does not even
address this point.) In fact, the record contains no evidence that contracting offi-
cials even attempted to contact any of the approximately 24 SDBs on the mail-
ing list to ascertain their interest in, and qualifications for, this procurement.
Nor is there any indication that contracting officials had otherwise concluded
all of the listed SDBs were uninterested in competing. Five of the listed small
SDB concerns have submitted affidavits to us stating they were interested in
competing if the procurement were set aside for SDBs; four of these firms state
that they have satisfactorily performed housing maintenance services similar in
scope to those solicited here. We conclude from these affidavits that a number
of SDB firms may have been both interested and responsible sources.
In the analogous situation of determining whether a small business set-aside is
required (FAR § 19.502-2 requires such set-asides where the agency determines
that offers will be obtained from at least two responsible small business con-
cerns and that award will be made at a reasonable price), a contracting office
must undertake reasonable efforts to ascertain whether it is likely that the
agency will receive offers from at least two small business concerns with the
capability to perform the work. It therefore is unreasonable for an agency to
issue a solicitation on an unrestricted basis where the determination not to set
the procurement aside was based on outdated or incomplete information. See
 The Taylor Group, Inc., B-235205, Aug. 11, 1989, 89-2 CPD 1 129.
We believe the same rule should apply under the SDB program regulations.
Certainly, having reason to know that the incumbent contractor was an SDB
concern, which had received award for the same services in the last year, the
agency could not, as it apparently did here, simply dismiss the possibility of ob-
taining at least one additional offer from a responsible bidder among the 24
SDBs on its mailing list without undertaking some investigation of the potential
sources. See generally DFARS § 219.502-72(c).
We conclude that the Air Force failed to consider the apparent potential for
SDB participation in the procurement. As the agency also never determined,
and has presented no evidence suggesting, that acceptable prices would not be
received if the procurement were set aside, we find unreasonable the determina-
tion to issue the solicitation on an unrestricted basis.
The protest is sustained.
By separate letter to the Secretary, we are recommending that the procurement
be set aside for SDB concerns unless adequate investigation clearly demon-
strates that no responsible, potential source in addition to Kato is likely to
3 We recognize that DFARS § 219.502-72(bXl) provides that a total 9DB set-aside shall not be conducted where, as
here, the product or service has been previously acquired successfully on the basis of a small business set-aside.
However, in the Small Business Competitiveness Demonstration Program Act of 1988, Congress determined that
small business concerns in the industry group at issue do not need special protection; furthermore it indicated that
the consequent mandate for unrestricted competition remains subject to the implementation of the policy in favor
of SDB set-asides. Sections 713 and 717. Since a small business set-aside is no longer appropriate, we do not believe
the fact that the base housing maintenance services had previously been procured on the basis of a small business
set-aside invokes the subsection (bXl) exception to the general requirement for the contracting officer to consider
an SDB set-aside here.


Page 378                                                                                         (69 Comp. Gen.)
submit an offer that would result in award at a price not exceeding the fair
market price by more than 10 percent. In addition, we find that Kato is entitled
to be reimbursed its protest costs. 4 C.F.R. § 21.6(dXl) (1989); see Falcon Carriers,
Inc., 68 Comp. Gen. 206 (1989), 89-1 CPD E 96.



B-237987, April 3, 1990
Procurement
Competitive Negotiation
* Offers
E * Evaluation
E * * Options
 M E E K Prices
Where solicitation provided that offers would be evaluated for award "by adding the total price for
all options to the total price for the basic requirement," contracting agency reasonably included in
the evaluation the prices for option quantities of artillery fuzes that were not included in the basic
requirement.

Procurement
Competitive Negotiation
* Offers
* * Prices
*K *Rent
* U M E Government property
In calculating imputed rental evaluation factor to be added to offeror's price to account for rent-free
use of government-furnished property, agency reasonably relied upon period of use entered by of-
feror in evaluation clause, rather than authorized period of use on delivery schedule, where solicita-
tion provided for evaluation based on period entered by offeror and where offeror would be required
to pay rent if its use exceeded entered period.

Procurement
Competitive Negotiation
* Offers
E M Evaluation
E * * Technical acceptability
Where evaluation under technical evaluation criteria for proposed facilities and production ap-
proach was based on detailed information in proposal and in-plant survey, protester's disagreement
with agency determination that awardee's approach was acceptable does not establish that the de-
termination was unreasonable.




Page 379                                                                              (69 Comp. Gen.)
Procurement
Competitive Negotiation
* Unbalanced offers
* * Materiality
* * * Determination
* E K E Criteria
Awardee's offer of base and option quantities is not subject to rejection as materially unbalanced
where there is no showing that the offer is unbalanced or that the award will not result in lowest
ultimate cost to government.

Matter of: Accudyne Corporation

Lanny J. Davis, Esq., and Joseph S. Mahaley, Esq., Patton, Boggs, & Blow, for the protester.
Steven S. Diamond, Esq., and Justin M. Dempsey, Esq., Arnold & Porter, for the interested party,
Bulova Systems & Instruments Corporation.
Jerry L. Dodd, Esq., for the interested party, Honeywell, Inc.
Judith A. Sukol, Esq., and Robert J. Panise, Esq., Department of the Army, for the agency.
David Ashen, Esq., and John M. Melody, Esq., Office of the General Counsel, GAO, participated in
the preparation of the decision.


Accudyne Corporation protests the U.S. Army Materiel Command's (AMC's)
award of contracts to Honeywell, Inc., and Bulova Systems & Instruments Cor-
poration, under request for proposals (RFP) No. DAAA21-89-R-0014, for M762
and M767 artillery electronic time fuzes. Accudyne contends that it would be
the low offeror in line for award had proposal prices been properly evaluated.
We deny the protest.
The solicitation advised that the agency intended to award two fixed-price, in-
centive-type contracts to the two lowest-priced, technically-acceptable offerors in
order to establish a competitive mobilization base for production of the fuzes. In
addition to basic quantities of 76,000 and 85,000 M762 fuzes, Option II under the
solicitation provided for purchase of additional, optional stepladder quantities of
100,000-150,000 M762 fuzes, 150,001-200,000 M762 fuzes, 200,001-250,000 M762
fuzes, 250,001-317,000 M762 fuzes, 10,000-40,000 M767 fuzes, and 40,001-61,000
M767 fuzes. The solicitation incorporated by reference Federal Acquisition Reg-
ulation (FAR) § 52.217-5, which provides that offers will be evaluated for pur-
poses of award "by adding the total price for all options to the total price for
the basic requirement"; as amended, the solicitation further specified that the
agency would determine the low price by evaluating the extended prices for the
basic requirements "plus that combination of Option II prices that result in the
lowest prices to the U.S. Government." In addition, for purposes of equalizing
the competitive advantage resulting from rent-free use of government-furnished

Page 380                                                                            (69 Comp. Gen.)
property (GFP), proposed rent-free use of GFP would be evaluated by adding to
the offer an imputed rental factor, calculated pursuant to FAR § 52.245-9.
Eleven proposals were received in response to the solicitation; AMC found eight
of the proposals technically acceptable and requested the submission of best and
final offers (BAFOs). After examining the prices for various combinations of the
basic and option quantities, the contracting officer determined that the lowest
cost to the government would result from awarding Honeywell a contract for
the basic requirement of 85,000 M762 fuses (plus options for a possible addition-
al 317,000 M762 fuses and 61,000 M767 fuzes), and awarding Bulova a contract
for the basic requirement of 76,000 M762 fuzes (plus options for a possible addi-
tional 317,000 M762 fuzes and 61,000 M767 fuses). Honeywell's price for the
basic requirement and option quantities included in its contract totaled
$34,804,308; the agency determined that $19,369 should be added to this total,
for evaluation purposes, as an imputed rental factor accounting for Honeywell's
proposed use of GFP. Honeywell's resulting evaluated price of $34,823,677 was
$1,778,435 lower than Accudyne's price of $36,602,112. Bulova's price for the
basic requirement of 76,000 M762 fuzes plus the option quantities included in its
contract totaled $34,794,409; the agency determined that $22,115 should be
added to this total for evaluation purposes as the imputed GFP rental factor.
Bulova's resulting evaluated price of $34,816,524 was $1,128,946 lower than Ac-
cudyne's price of $35,945,470.
Accudyne first contends that AMC improperly included the prices for the M767
option quantities in the evaluation. Accudyne interprets the language of the in-
corporated FAR § 52.217-5 clause, that prices would be evaluated "by adding
the total price for all options to the total price for the basic requirement," as
limiting the evaluation to the price for all options for the basic requirement. In
other words, since the basic requirement here consisted only of M762 fuzes, Ac-
cudyne maintains that only the option quantities of the M762 fuze should be
considered in the evaluation.
We disagree. When a dispute exists as to the actual meaning of a solicitation
provision, we will resolve the matter by reading the solicitation as a whole and
in a manner that gives effect to all provisions of the solicitation; to be reasona-
ble, an interpretation must be consistent with such a reading. See Aerojet Ord-
nance Co., B-235178, July 19, 1989, 89-2 CPD 1! 62. As discussed above, the solici-
tation here provided that the agency would award contracts for both the basic
and the Option II quantities, the latter of which included option quantities of
the M767 fuze, and that it would determine the low price by evaluating the
price for the basic requirement and the most favorable "combination of Option
II prices," that is, prices for the M762 and M767 option quantities. Likewise, the
incorporated FAR § 52.217-5 clause by its terms mandates considering in the
evaluation the "total price for all options." (Italic added.) We conclude that the
RFP clearly provided for evaluation of the M767 option quantities; Accudyne's
contrary interpretation is inconsistent with the RFP and therefore is unreason-
able.

Page 381                                                             (69 Comp. Gen.)
Accudyne next challenges the calculation of the imputed rental factor to be
added to Honeywell's and Bulova's proposals to account for their proposed use
of GFP. Accudyne notes that under one combination of basic and option quanti-
ties-the 76,000 unit basic requirement for M762 fuzes and the 10,000-40,000
unit M767 option-Bulova's price exclusive of the imputed rental factor was
only $85,557 lower than Accudyne's price for an equivalent quantity, while
under another combination of basic and option quantities-the 85,000 unit basic
requirement for M762 fuzes, the 250,001-317,000 unit M762 option and the
10,000-40,000 unit M767 option-Honeywell's price was only $1,562,081 lower
than Accudyne's for a similar quantity. Accudyne argues that, properly calcu-
lated, the imputed rental factor could total in excess of $100,000 for Bulova and
$1.7 million for Honeywell, and therefore exceed the price differences between
those proposals and Accudyne's proposal.
We find no merit to Accudyne's position. The solicitation generally provided for
the imputed rental factor to be computed as follows: (acquisition cost) multiplied
by (monthly rental rate) multiplied by (production period in months) multiplied
by (pro rata share of the GFE allocable to this contract), divided by (the quanti-
ty of units to be procured), so as to yield a constant per unit evaluation factor.
Accudyne's calculations resulting in a higher rental factor are incorrect in two
respects. First, its formula uses a production period based on the maximum de-
livery schedule permitted under the contract, 38 months, rather than the 13
month period used by the agency; Accudyne's calculation increases the numera-
tor and thus results in a higher evaluation factor.
However, the 38 month figure used by Accudyne is inconsistent with the solici-
tation. Clause M3(b) of the RFP provided that "the months that will be used for
the purpose of this evaluation [of the imputed rental factor] will be the period
computed in months set forth by the offeror: --       Months," with the contrac-
tor liable to pay rent for any use exceeding this period. Honeywell and Bulova
entered 13 months in the space provided, and AMC evaluated their proposal on
this basis. As this evaluation approach was consistent with the RFP, it was
proper; by the same token, using 38 months as the production period would
have been improper, since it would be contrary to the specific RFP terms. See
NI Indus., Inc., B-218019, Apr. 2, 1985, 85-1 CPD 1 383.
Accudyne argues that the 13 month entries should not have been used in the
evaluation because they were inconsistent with Honeywell's request elsewhere
for permission to use the GFP for 25 months and Bulova's request elsewhere to
use the GFP for 38 months. Honeywell and Bulova, however, explain that a
longer period of authorization was required to assure that the period of actual
use would fall within the period of authorized use. In any case, even where a
proposal requests a different period of authorization for use of GFP, the time
period actually set forth by offerors in the relevant clause (here, M3(b)) is con-
trolling where the solicitation indicates the evaluation will be based on that
entry. NI Indus., Inc., B-218019, supra.
Accudyne's higher rental factor also is improperly inflated by the fact that the
firm calculates the per unit factor by dividing the numerator by the basic re-

Page 382                                                            (69 Comp. Gen.)
quirement quantity but then, in determining the total evaluation factor, multi-
plies the per unit factor by the basic quantity plus all option quantities. We find
no basis for using two different quantities in calculating the total rental factor.
Under the formula set forth in the RFP, the numerator essentially represents
the total rental factor. To obtain a per unit factor, the RFP provides for divid-
ing the numerator by the quantity being procured; it follows that, to change the
resulting per unit factor back into a total evaluation factor, the per unit factor
should simply be multiplied by the same quantity previously divided into the
numerator. By instead using a higher number in this second operation, Accu-
dyne's approach results in a total factor greater than the product of the per
unit factor multiplied by the total quantity, and therefore is incorrect.
Accudyne challenges the agency's calculation of the rental factor on other
grounds but, in view of our findings above, we need not address these remaining
objections; even if Accudyne were correct, the magnitude of the resulting correc-
tions would not be sufficient to displace Honeywell or Bulova.
Accudyne also questions the evaluation of technical proposals and other aspects
of the cost proposals. First, Accudyne maintains that the agency failed to con-
sider Honeywell's proposed facility and approach to production, and the credi-
bility of its proposed costs, which the RFP stated would be evaluated in deter-
mining acceptability. According to Accudyne, Honeywell significantly underesti-
mated and misrepresented the amount of government-furnished factory space it
would need in production and that the agency improperly relied on Honeywell's
estimate.
An agency's technical proposal evaluation and cost realism analysis will be
deemed proper unless shown to be unreasonable or inconsistent with the solici-
tation's evaluation scheme. See Bellsouth Gov't Sys. Inc., B-231822.3, Mar. 28,
 1989, 89-1 CPD ¶313; Science Applications Int'l Corp., B-232548, B-232548.2,
Jan. 23, 1989, 89-1 CPD 152. Accudyne has not made this showing.
Honeywell described in detail in its proposal the layout and organization of its
proposed production line. The government's preaward survey team examined
the government-owned facility Honeywell proposed to use and specifically found
"all aspects of the plant facilities ... adequate"; further, after reviewing Honey-
well's proposed plan to modify the space, the team found that Honeywell pos-
sessed the technical capability to perform. Based on Honeywell's proposal and
the in-plant survey, the contracting officer determined that Honeywell had pro-
posed adequate production facilities and an acceptable technical approach. Al-
though Accudyne and Bulova appear to have proposed more space for their pro-
duction facilities, the agency maintains that each production line is unique and
must, as was done here, be evaluated on the basis of its particular characteris-
tics. We find this explanation rational, and conclude that the agency adequately
reviewed Honeywell's proposed production line (the details of which are un-
known to Accudyne), and thus properly found it to be acceptable. Accudyne's
mere disagreement with the agency's judgment does not establish that the eval-
uation was unreasonable. See Unisys Corp., B-232634, Jan. 25, 1989, 89-1 CPD
175.
Page 383                                                             (69 Comp. Gen.)
Accudyne alleges that AMC's evaluation of Bulova's proposal failed to take into
consideration Bulova's probable place of performance. The protester speculates
that Bulova, which acquired ownership of Hamilton Technology, Inc., another
offeror, after submission of initial offers and prior to submission of BAFOi, in
fact intends to perform at Hamilton facilities rather than at the Bulova plant
listed in its proposal. According to the agency, however, Bulova has reaffirmed
its intention to perform at the Bulova facility specified in its proposal and Bulo-
va's proposal therefore was properly evaluated on this basis. Accudyne has fur-
nished no evidence in support of its allegation, and its speculation provides no
basis for questioning the evaluation in this regard. See Creative Sys. Electronics,
Inc., B-235388.2, Aug. 24, 1989, 89-2 CPD ¶ 175.
Accudyne further alleges that Bulova's proposal should have been rejected for
unbalanced pricing. The solicitation incorporated by reference FAR
§ 52.217-5(b), which provides that the government may reject an offer if it is
materially unbalanced as to prices for the basic requirement and the option
quantities. Accudyne maintains that unbalancing is demonstrated by the fact
that Bulova offered the same unit price for the 10,000-40,000 unit option quanti-
ty of M767 fuzes as it did for the 200,001-250,000 unit quantity of M762 fuzes.
According to the protester, this demonstrates that Bulova must have failed to
include in its M767 price testing and other developmental costs for the M767
fuze, and instead may have "front loaded" its offer by building these costs into
its price for the basic (M762) requirement.
Bulova's proposal is not unbalanced. First, nothing in the record supports the
premise of Accudyne's that the prices of the two quantities of fuzes should be
markedly different. AMC reports that, in fact, no additional testing and devel-
opment costs should be necessary for the M767 fuze; both fuzes "are nearly
identical" with respect to work required of the contractor, both fuzes can be
made on the same production line at the same time, and the costs for each
should be "about the same." Furthermore, Bulova's pricing is similar to both
Honeywell's and Accudyne's pricing; all three offerors appear to have included
costs of initial production in their prices for the basic requirement and to have
taken advantage of economies of scale in pricing the option quantities. Accu-
dyne's unit price for the maximum stepladder option quantity of M762 fuzes is
64 percent of its price for the basic 85,000 unit quantity, while Honeywell's unit
price for the higher option quantity is 59 percent and Bulova's unit price is 57
percent of their respective unit prices for the basic requirement.
An offer is materially unbalanced only where there is a reasonable doubt that
award to the offeror will result in the lowest ultimate cost to the government.
See Paccar Defense Sys., B-232530.2, Jan. 3, 1989, 89-1 CPD 11 1. No such doubt
has been shown here. Although Bulova's and Honeywell's evaluated prices
become low only upon exercise of the first option quantity, AMC reports that it
expects to exercise the options. Accudyne has not alleged or shown otherwise.
Robertson & Penn, Inc., B-234082, Apr. 10, 1989, 89-1 CPD 11 365.
The protest is denied.

Page 384                                                             (69 Comp. Gen.)
B-229373, B-232443, April 4, 1990
Civilian Personnel
Compensation
* Overtime
* * Eligibility
* * * Travel time
Two Navy employees are not entitled to overtime or compensatory time for time spent in travel
outside normal work hours to ships in response to messages requesting technical assistance to cor-
rect equipment breakdowns. The employees have not presented sufficient evidence or documenta-
tion which would indicate that travel was of an immediate official necessity and to an event that
was unscheduled and administratively uncontrollable so as to permit payment under 5 U.S.C. § 5542
(1988). The burden of proof is upon the claimants to establish the liability of the United States and
the claimant's right to payment.

Matter of: Benjamin Brown .and John R. Schacht-Claim for Overtime
Travel during Nonduty Hours

This decision is in response to a request from the Commander, Navy Regional
Finance Center, Washington, D.C.' The issue presented is whether two Navy
employees are entitled to overtime compensation or compensatory time for time
spent in travel outside of normal work hours. We hold that the two employees
may not be paid overtime or compensatory time for time spent in travel outside
of normal work hours since they have not presented sufficient evidence to show
that the conditions which would warrant payment have been met.

Background
Mr. Benjamin Brown and Mr. John R. Schacht are both employed as Electronic
Technicians with the U.S. Atlantic Fleet in Norfolk, Virginia. Their claims
arose as the result of travel they performed to various ships in response to casu-
alty report messages which the employees have characterized as urgent requests
for technical assistance to correct equipment breakdowns.
Mr. Brown's claim involves five temporary duty assignments he performed be-
tween April 1981 and March 1984. Mr. Schacht's claim involves one trip he took
in May 1984. Both employees claim that the emergency nature of their work
required them to travel at once outside of their normal duty hours, and equip-
ment failure is an example of an administratively uncontrollable event which
would permit payment of overtime compensation for travel under the provisions
of 5 U.S.C. § 5542 (1988).
With the exception of one trip taken by Mr. Brown to Holy Loch, Scotland, on
June 25, 1982, neither the employee or the Navy have furnished any informa-
tion as to when the message request for assistance was first received so that a
correlation between the date of the request and the employee's actual travel
' Navy References: Code 431(YHW), 7240(BXS). Cl. Vou. 189308, 3 July 84; 189310m 24 Aug. 84.

Page 385                                                                                       (69 Comp. Gen.)
time can be made. Further, outside of the employees' statement that the travel
was of an emergency nature, there is no documentation or other evidence to
this effect, such as statements from supervisors directing the employees to leave
at once. The Navy has not commented on whether or not the travel could have
been scheduled during the employees' work hours.

Opinion
Time spent in a travel status is not hours of employment unless it occurs within
regularly scheduled work hours or, if outside those hours, unless it meets the
requirements of 5 U.S.C. § 5542(bX2XB) (1988). The statutory provision in ques-
tion here is the one which permits overtime if the travel results from an event
which could not be scheduled or controlled administratively.
This statutory authority has been interpreted to require the satisfaction of two
conditions. First, the event requiring off-duty travel must be administratively
uncontrollable, Dr. L. Friedman, 65 Comp. Gen. 772 (1986). Secondly, there must
exist an immediate official necessity occasioned by the unscheduled and admin-
istratively uncontrollable event. John B. Schepman, et al., 60 Comp. Gen. 681
(1981). Thus, in 49 Comp. Gen. 209 (1969), we held that travel on a nonworkday
to repair gun mounts on a ship was not due to a sudden emergency and schedul-
ing was under administrative control where the damage occurred over a period
of time. See also Aimee A. Stover, B-229067, Nov. 29, 1988, where her travel to a
port prior to a ship's arrival was held not compensable as overtime since ade-
quate notice of the arrival was available. Cf Gary A. Pace, 68 Comp. Gen. 229
(1989).
In the present case, neither Mr. Brown nor Mr. Schacht has presented sufficient
documentation or evidence which would indicate that there was an immediate
official necessity for the travel occasioned by an administratively uncontrollable
event. In fact, Mr. Brown's itinerary for his trip to Holy Loch, Scotland, in 1982
is the only example of his travel which shows the date of a message request for
equipment assistance and the corresponding date of his travel, and it indicates a
9-day delay in travel. These facts do not support a finding of an immediate offi-
cial necessity since there was ample time to administratively schedule the
travel.
We also note that Mr. Brown seems to be claiming travel overtime for August
12, 1981, on the basis that a military flight was not available, he had to take a
commercial flight, and such event could not be administratively controlled. This
is an erroneous interpretation of the basis for travel overtime since the "event"
is the original cause of the overtime and not events occurring in the course of
travel such as an unavailable flight. Eunita Davis, B-231800, Feb. 3, 1989.
Claims presented to this Office are settled based on the written record, with the
burden placed on the claimant to establish the liability of the United States and
the claimant's right to payment. 4 C.F.R. § 31.7 (1989). Accordingly, in the ab-
sence of further documentation in support of Mr. Brown's and Mr. Schacht's

Page 386                                                            (69 Comp. Gen.)
claims showing their entitlement to travel overtime, their claims are denied.
Christopher Hahin, B-233389, June 23, 1989; Louis R. Crooke, B-229193, Dec. 11,
1987.
Mr. Brown was covered by the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201
et seq. (1982), for a brief period of time, and we have held that where FLSA pro-
vides an employee with a greater pay benefit than that to which he is entitled
under 5 U.S.C. § 5542, the employee is entitled to the FLSA benefit. Dian Es-
trada, 60 Comp. Gen. 434 (1981). Generally, a nonexempt employee is entitled to
FLSA overtime under the circumstances presented when an employee travels as
a passenger on nonworkdays outside of the workweek during hours which corre-
spond to his/her regular working hours. Mary Joyce Lynch and Darlene I.
Drozd, 61 Comp. Gen. 115 (1981); 5 C.F.R. § 551.422(aX4) (1988). Hence, Mr.
Brown is entitled to FLSA overtime pay if his travel complies with that stand-
ard.
The Navy also reports that Mr. Brown was paid overtime for time traveled on
his return trip home and that this payment may have been in error. The Navy
is correct in its view since prior to an amendment to the statutory authority in
5 U.S.C. § 5542 in 1984 the employee's return travel also had to be to an event
that was administratively uncontrollable. Daniel L. Hubbel, et al., 68 Comp.
Gen. 29 (1988). If the amount of the erroneous overpayment is less than $500 it
may be considered for waiver by the head of the agency or his designee in ac-
cordance with 5 U.S.C. § 5584(aX2XA). If the overpayment is more than $500 it
may be forwarded to this Office in accordance with our standard procedures, 4
C.F.R. part 92 (1989).



B-238010.2, April 5, 1990
Procurement
Contractor Qualification
* Responsibility
*E Contracting officer findings
* * * Negative determination
* U EU GAO review
Protester properly was found nonresponsible where it failed to provide sufficient information to
permit finding that individual sureties on its bid bond were acceptable and the record shows the
contracting officer's nonresponsibility determination was reasonable.




Page 387                                                                        (69 Comp. Gen.)
Procurement
Sealed Bidding
* Bid guarantees
E * Sureties
* * * Acceptability
Even though an individual surety may have been accepted by a contracting agency, another agency
is not required to accept the surety where it reasonably finds the surety to be unacceptable based on
information submitted to it.

Matter of: Southern California Engineering Co., Inc.

Phillip W. Akwa, for the protester.
Vasio Gianulias, Esq., Office of the General Counsel, Department of the Navy, for the agency.
Aldo A. Benejam, Esq., and Christine S. Melody, Esq., Office of the General Counsel, GAO, partici-
pated in the preparation of the decision.


Southern California Engineering Co., Inc., protests the rejection of its bid under
invitation for bids (IFB) No. N62474-88-B-4268, issued by the Department of
the Navy for a no break power system at the Pacific Missile Test Center, Point
Mugu, California. The Navy rejected Southern's bid because its individual bid
bond sureties were found nonresponsible.
We deny the protest.
The IFB required bidders to submit a bid bond in an amount equal to 20 percent
of the bid price. In the event the required bid bond named individuals as sure-
ties rather than a corporation, two or more responsible sureties were required
to execute the bid bond, and the bidder was required to provide a completed
standard form (SF) 28, Affidavit of Individual Surety, setting forth financial in-
formation for each individual. The SF 28 includes a Certificate of Sufficiency
that must be executed by specified bank officers or government officials.
Six bids were received by bid opening on August 17, 1989. Southern submitted
the apparent low bid of $2,826,000. In response to the requirements of the IFB,
Southern submitted a bid bond guaranteed by two individual sureties, Virginia
Rachal and Forrest E. Watson, whose fully-executed Certificates of Sufficiency
accompanied each SF 28.
On her SF 28, Rachal indicated her net worth as $39,019,800; her primary asset
consisted of $54,295,600 in securities in Amistad, Inc., a closely-held corporation.
Watson indicated his net worth as $17,156,830, and listed $20,504,594 in an oil
and gas lease as his primary asset. Watson also listed $120,214 in current assets;
$458,333 in corporate stock; $250,000 for a gemstone collection; $107,165 in mar-
ketable securities; $255,000 in personal property; $88,000 in an annuity; and
$647,000 in real estate. Each individual surety's Certificate of Sufficiency was

Page 388                                                                            (69 Comp. Gen.)
 signed by Jerry Leahy, Vice-President of the Metropolitan Security Bank, Ltd.
 The SF 28s stated that Metropolitan is domiciled in the British West Indies.
 Each surety also provided a document identified as an unaudited "Accountant's
 Review Report," prepared by certified public accountants in Dallas, Texas. The
 reports noted that "[all information included in this report is the representa-
 tion of [the surety]," and that the review was "substantially less in scope than
 an examination in accordance with generally accepted auditing standards." Ra-
 chal's report was missing at least one page which was never produced, despite
 repeated requests from the contracting officer. Attached to Rachal's report was
 an unaudited balance sheet of Amistad stating that the company is engaged in
 "the ownership and development to the highest and best use," of an 8,690 acre
 ranch in Texas. Amistad's balance sheet listed total assets as $950,100, primari-
 ly consisting of land allegedly valued at $947,000.
 Because Southern provided insufficient documentation supporting the value of
 the assets claimed, and the contracting officer had questions concerning the
 value of the land and its ownership by Amistad, the contracting officer request-
 ed further evidence of the sureties' net worths. By telecopier letter the agency
 requested acceptable supporting documentation, including (1) a complete de-
 scription of real property offered, supported by proof of title, and a certified ap-
 praisal or tax assessment; (2) certified balance sheets and income statements
with signed opinions for each individual surety; (3) independent certified ap-
praisal of the net value of property offered; (4) a copy of the latest federal and
state income tax returns for each surety; and (5) signed balance sheets or
income statements with an opinion for each individual surety signed by a certi-
fied public accountant. The contracting officer specifically requested Southern
to provide evidence of the value of the stocks claimed by the individual sureties.
In response to the contracting officer's request, Southern provided: (1) copies of
the sureties' 1988 federal income tax returns, reporting joint incomes with their
respective spouses; (2) unexercised, expired, private party agreements to pur-
chase some of the stock held by the sureties; (3) an unsigned letter from the
sureties' broker; (4) copies of stock certificates showing ownership of one half of
Aquila, Inc., by Rachal; (5) a deed dated 1971 conveying land to Aquila, Inc.; (6)
a title opinion dated 1971 concerning this land; (7) receipts for property taxes
for Amistad, which presumably reflected the taxable value, not the appraised
value, of the land; (8) articles of amendment dated 1975 changing Aquila's name
to Amistad; and (9) minutes of a special meeting of the board of directors of
Metropolitan, allegedly held at its offices in Caracas, Venezuela, on April 1,
1988, where Jeremiah "Jerry" Leahy was appointed vice president of Metropoli-
tan.
A subsequent investigation revealed that the telephone number listed for Met-
ropolitan had been disconnected and the local telephone directory had no listing
for Leahy or Metropolitan. The Texas Department of Banking informed the con-
tracting officer that Metropolitan was not registered to do business in Texas.
Accordingly, the contracting officer determined that Leahy was unqualified to

Page 389                                                              (69 Comp. Gen.)
sign the certificates of sufficiency and that Metropolitan was an unacceptable
financial institution.
As proof of the value of Amistad's land, Southern submitted unidentified, un-
signed, hand-written tables which purport to record water elevation, reservoir
elevation,'and well depth, from various bodies of water with monthly readings
from 1968 to 1985, presumably demonstrating the amount of water located
under and near Amistad's land. Despite repeated requests by the contracting of-
ficer, Southern provided no verifiable evidence of the market value of Amistad
stock. Rather, Southern submitted, without any substantive explanation, copies
of the Texas Code Annotated, apparently to substantiate its position that Amis-
tad had legal rights to the underground water.
After reviewing the additional information Southern provided, the contracting
officer determined that Southern had provided insufficient and unverifiable evi-
dence of the market value of Amistad's stock, and unsubstantiated proof of the
value of the land Amistad listed in its balance sheet as its primary asset. Fur-
ther, the contracting officer determined that Southern provided no credible evi-
dence that Rachal's ownership interest in Amistad was valued at even $475,050,
or that Rachal owned other assets or securities valued at the $54,295,600 she
claimed on her SF 28. Without further documentation of the value of the
claimed assets, the contracting officer concluded that Rachal had an insufficient
net worth to cover the penal amount of the bond and, therefore, rejected South-
ern's bid for lack of an adequate bid guarantee.
Southern challenges the rejection of its bid, contending that its individual sure-
ties showed net worths far in excess of the penal amounts of the bonds; that the
Navy failed to adequately investigate the sureties' net worth; that its sureties
have been accepted by other government agencies; and that the contracting offi-
cer ignored Southern's successful performance on prior government contracts
and the cost savings to the government from accepting its bid.
The question of the acceptability of a surety is a factor in determining the re-
sponsibility of the bidder and may be established at any time prior to contract
award. Labco Constr., Inc., B-232986 et al., Feb. 9, 1989, 89-1 CPD 1 135. In re-
viewing a bidder's responsibility, the contracting officer has broad discretion
and absent bad faith or the lack of any reasonable basis for his determination,
the contracting officer may decide what specific financial qualifications to con-
sider in determining responsibility. Id. It is the sureties' obligation to provide
the contracting officer with sufficient information to clearly establish their re-
sponsibility; that is, that they have sufficient financial resources to meet their
bond obligations. Hirt Co., B-230864, June 23, 1988, 88-1 CPD 11 605.
As a preliminary matter, the issues raised in this protest concerning Rachal,
Amistad, Leahy, and Metropolitan are identical to those recently resolved in
Southern California Eng'g Co., Inc., B-234515.2, Aug. 21, 1989, 89-2 CPD 1 156,
which also involved the reasonableness of a contracting officer's rejection of
Southern as nonresponsible based on the unacceptability of Rachal as one of its
individual sureties. Here, Southern submitted virtually identical documents in

Page 390                                                            (69 Comp. Gen.)
support of Rachal's claimed assets, and relies upon the same arguments consid-
ered in the previous decision, in which we found that the agency reasonably de-
termined that the protester failed to provide sufficient information to permit a
finding that its individual sureties were acceptable. Since the issues raised in
this protest arise from identical factual circumstances, and involve essentially
the same parties, we see no basis for reaching a different result here.
As for Watson, Southern's other surety, the contracting officer determined that
based on the documents provided the value of the "energy lease" listed as Wat-
son's principal asset could not be determined and was highly speculative. In
support of Watson's energy lease, Southern submitted three assignments of oil
and gas leases for which Watson paid $21. Two of the assignments were for only
part of the net revenue interest in the lease, and the third lease assignment
transferred title without warranty, for $1. There was no evidence of the current
market value of the third lease. The only evidence of the value of the leases was
an uncertified feasibility report dated February 1982, indicating that the gross
value was only $2,280,000, not the $20,504,594 Watson claimed, and cautioned
that further study was needed. There was no independent certified appraisal of
the current net value of the claimed leases as the contracting officer requested,
and no evidence that any oil or gas was currently produced, so the liquidity of
the assets in the event of default was questionable.
With regard to the second largest asset listed, real property valued at $647,000,
Watson failed to provide proof of ownership or a certified appraisal of the prop-
erty as requested. Watson also listed $458,333 in corporate stock and $107,165 in
"marketable securities." The stock was not publicly traded, however, and
Watson provided no evidence of its fair market value. The "securities" were not
identified, and Watson provided no evidence of their existence, ownership or
market value. Further, Watson provided no credible evidence of the ownership
or value of the gemstone collection; failed to provide evidence of the existence,
ownership or value of the unidentified "current assets"; and failed to offer proof
of the annuity. Consequently, the contracting officer had ample reason to ques-
tion the accuracy and validity of the representations Watson made on his SF 28.
Once the accuracy of the sureties' representations reasonably has been called
into question, the agency is justified in rejecting the sureties, notwithstanding
the adequacy of other assets. Hughes & Hughes, B-235723, Sept. 6, 1989, 89-2
CPD J218. This reflects the great reliance an agency is entitled to place on the
accuracy, thoroughness, and verity of surety financial information provided for
government procurements. See Farinha Enters., Inc., 68 Comp. Gen. 666 (1989),
90-1 CPD E 262.
In our view, the contracting officer reasonably determined that unexplained in-
consistencies in the supportable values between the assets listed and claimed
net worths, and questions regarding the ownership and existence of the assets
claimed, called into question the sureties' integrity and the credibility of their
representations, thereby diminishing the likelihood that the sureties' financial
guarantee would be enforceable. This determination provided a proper basis for
rejecting both individual sureties. Id. In this regard, Southern's unsupported as-

Page 391                                                            (69 Comp. Gen.)
sertion that "six contracting officers" have accepted bids guaranteed by South-
ern's two sureties does not show that the Navy's action in this case was unrea-
sonable, particularly in light of the substantial evidence in the record support-
ing the contracting officer's determination that the sureties were unacceptable.
See Southern California Eng'g Co., Inc., B-234515.2, supra.
With regard to Southern's assertion that the Navy rejected its sureties without
adequate investigation, we have held that a contracting officer may rely on the
initial and subsequently furnished information regarding net worth submitted
by a surety, without further conducting an independent investigation. See
KASDT Corp., B-235620, Aug. 21, 1989, 89-2 CPD 1 162. Nevertheless, in this
case the contracting officer went well beyond the documents submitted in at-
tempting to determine the responsibility of each surety. In addition to examin-
ing the unaudited financial reports and balance sheets, the contracting officer
requested specific documentary evidence in support of the claimed assets, which
Southern failed to produce. Additionally, the contracting officer contacted the
Texas Department of Banking to verify the legal status of Metropolitan, and to
confirm Leahy's position as an officer qualified to sign the certificates of suffi-
ciency.
Finally, Southern argues that in deciding to reject its bid, the Navy ignored
Southern's successful performance on prior contracts and the fact that its bid
was $614,000 less than the next low bid. To be accepted, a bid must include ac-
ceptable sureties; once the sureties properly are found unacceptable, the bid
must be rejected. See Federal Acquisition Regulation §§ 28.101-4, 28.203(c).
Thus, Southern's prior performance and any potential cost savings provide no
basis for accepting Southern's otherwise unacceptable bid.
The protest is denied.



B-238027, April 5, 1990
Procurement
Contract Management
* Contract administration
* * Convenience termination
*E * Competitive system integrity
Where timely size protest is filed after small business-small purchase set-aside award and awardee
does not contest Small Business Administration finding that it is other than a small business, intent
of Small Business Act and integrity of competitive system is served by terminating the contract and,
if otherwise appropriate, making award to only small business quoter.

Matter of: American Mobilphone Paging, Inc.

Eileen R. Picture, for the protester.

Page 392                                                                            (69 Comp. Gen.)
Craig R. Schmauder, Esq., Army Corps of Engineers, for the agency.

James Vickers, Esq., and John Brosnan, Esq., Office of the General Counsel, GAO, participated in
the preparation of the decision.


American Mobilphone Paging, Inc., protests the award of a purchase order to
MobileComm by the United States Army Corps of Engineers, Mobile District,
for the rental of 30 Motorola BPR 2,000 Display Pagers. American asserts that
MobileComm is not a small business and therefore is not eligible for award.
We sustain the protest.
Request for quotations No. DACW01-90-T-0033, a small business-small pur-
chase set-aside, was issued on October 23, 1989. The low quotation was received
from MobileComm at $14.75 per month per pager. American and A-Plus Com-
munications, Inc., each quoted $15.50 per pager per month. While American cer-
tified itself as a small business, both MobileComm and A-Plus failed to complete
the certification in their quotes. The contracting officer contacted both firms
concerning their status and both firms responded by letters stating that they
had less than $3.5 million in annual average receipts. Based on these letters,
the contracting officer determined they qualified as small businesses. On No-
vember 16, MobileComm lowered its quote to $13.75 per month. The Corps
awarded it the purchase order on November 16. Notice of the award was given
to the other firms on November 20.
On November 22, American protested the size status of MobileComm to the con-
tracting officer, who forwarded the matter to the Small Business Administra-
tion (SBA) on November 29. On January 4, 1990, SBA found MobileComm to be
other than a small business.
The Corps did not disturb the award to MobileComm because the size protest
was filed after the award had been made. According to the Corps, under Federal
Acquisition Regulation (FAR) § 19.302(j) SBA's size determination has prospec-
tive application but does not affect the award.
American argues that while it did not file its written protest prior to award it
did speak with the agency contract specialist before the closing date and advised
her that MobileComm had improperly certified itself as a small business previ-
ously and if it did so again American would challenge the certification. Ameri-
can contends that this, along with the awardee's failure to initially certify its
small business status, should have alerted the contracting officer to question
MobileComm's size and to have filed his own size protest as permitted by FAR
§ 19.302(b).1
A contracting officer may rely on an offeror's self-certification that it is a small
business unless he has information prior to award that would reasonably im-
I In its protest to our Office, dated December 11, American also protested the size status of A-Plus. The contract-
ing officer forwarded this protest to the SBA. On February 2, 1990, the SBA also found A-Plus to be other than a
small business.


Page 393                                                                                        (69 Comp. Gen.)
peach the certificate. American's statement that it would challenge Mobile-
Comm's status if that firm submitted an offer, without any evidence supporting
its position that MobileComm was not a small business, did not constitute such
information. As we said in Robertson and Penn, Inc., d/b/a National Serv. Co.,
65 Comp. Gen. 874 (1986), 86-2 CPD 11 350, a contracting officer is not required
to question an offeror's size status solely on the basis of a competitor's bare as-
sertion. Moreover, the fact that the certification in question was not completed
did not impose such an obligation on the contracting officer since a failure to
complete the small business size status certification is regarded as only a minor
informality that can be corrected even under the strict rules governing sealed
bidding. See, e.g., Gracon Corp., B-224344, July 7, 1986, 86-2 CPD 1 41.
Nonetheless, we do not think the award made to MobileComm should be al-
lowed to stand. We recognize that FAR § 19.302(j) treats size status protests re-
ceived after award of a contract as having no applicability to that contract. We
have pointed out, however, that an agency should consider terminating an
award for convenience if, pursuant to a timely size protest, the contractor is
found to be a large business, see Conversational Voice Technologies Corp.,
B-224255, Feb. 17, 1987, 87-1 CPD E 169; Solon Automated Servs., Inc., B-198670,
Nov. 18, 1980, 80-2 CPD 11 365, and in certain cases we have found termination
to be appropriate. See R.E. Brown Co., Inc., B-193672, Aug. 29, 1979, 79-2 CPD
11164; see also Superior Asphalt Concrete Co., B-184337, Dec. 5, 1975, 75-2 CPD
11 372.
We think this is such a case. First, although American filed its size status pro-
test after award, it could not have done otherwise because under the small pur-
chase procedures which govern this procurement there is no requirement that
the agency issue a preaward notice to unsuccessful vendors and none was issued
here.2 See FAR §§ 13.106(bX9) and 15.1001(b). Because the size protest was filed
within 5 days of American's receiving notice from the Corps of the award to
MobileComm, it was timely under SBA's size status regulations. 13 C.F.R.
§ 121.9(a) (1989); see also FAR § 19.302(d). SBA's regulations, specifying that a
protest received "after the time limits set forth herein shall not apply to the
procurement .         .   . in question," envision that the results of a timely size status
protest will apply to the procurement in question. Id. Second, in the size status
proceeding before SBA, MobileComm chose not to defend its status but, accord-
ing to the SBA, simply informed SBA that it "would not qualify as a small busi-
ness concern."
Under the circumstances, we think that it would be inconsistent with the integ-
rity of the competitive procurement system and the intent of the Small Busi-
ness Act, which requires small purchases to be awarded in most cases to a small
business, to permit MobileComm, which under the terms of the RFQ was ineligi-
ble for award, to continue to perform. We therefore are recommending that Mo-
bileComm's contract be terminated for convenience and the award for the re-
2 American asserts that its size status protest was filed prior to the actual award of the purchase order and should
have been considered a pre-award protest. However, MobileComm signed and accepted the order on November 16.
The protest was filed on November 22. We therefore find no merit to this assertion.


Page 394                                                                                        (69 Comp. Gen.)
mainder of the requirement be made to American if that firm is otherwise eligi-
ble. American is also entitled to its costs of filing and pursuing the protest. Bid
Protest Regulations, 4 C.F.R. § 21.6(dXl) (1989).
The protest is sustained.



B-238090, April 5, 1990
Procurement
Sealed Bidding
* Bids
*E Acceptance time periods
* * * Expiration
Procurement
Sealed Bidding
* Invitations for bids
* * Cancellation
* * * Justification
Where contracting officer deliberately allowed bid acceptance period to expire without making
award in order to effect cancellation of solicitation which she had determined was warranted, Gen-
eral Accounting Office will review propriety of the decision to cancel.

Procurement
Sealed Bidding
* Invitations for bids
* * Cancellation
* E * Justification
Contracting agency lacked compelling reason to cancel invitation for bids (IFB) for rental of con-
struction equipment where apparent inconsistency between IFB provisions-which described certain
requirements in terms of hourly and daily rates, but called for pricing on the basis of daily and
weekly unit rates-did not prejudice any bidder, all bidders understood that daily and weekly unit
pricing was required, they provided such pricing which was evaluated on a common basis, and an
award under the IFB would meet the agency's actual needs.

Matter of: US Rentals

Harlen Owens, and Robert L. Leslie, Esq., Mchnerney & Dillon, for the protester.
Vasio Gianulias, Esq., Department of the Navy, for the agency.
Anne B. Perry, Esq., Paul Lieberman, Esq., and John F. Mitchell, Esq., Office of the General Coun-
sel, GAO, participated in the preparation of the decision.


Page 395                                                                           (69 Comp. Gen.)
US Rentals protests the cancellation of invitation for bids (IFB) No.
N62474-89-B-6189, issued by the Department of the Navy for the rental of vari-
ous items of construction equipment. The protester contends that the Navy
lacked a compelling reason to cancel the IFB.
We sustain the protest.
The solicitation, issued July 5, 1989, identified 29 contract line items (CLINs) for
various pieces of construction equipment. Bidders were to enter their prices for
each CLIN on a schedule which was printed on a standard continuation sheet
form. The typical bidding format appeared as follows, as exemplified by the
CLINs relating to dump trucks:

ITEM NO.             (DESCRIPTION OF)    ESTIMATED       UNIT       UNIT       AMOUNT
                     SUPPLIES/SERVICES    QUANTITY                 PRICE
0010                 TRUCK, DUMP 5 YD
                     UP TO 7 YD
0010AA               DAILY RATE              15            DY        $     $
0010AB               WEEKLY RATE              3            WK        $     $
0010AC               MONTHLY RATE             2            MO        $     $

Under this format, the rate units in the item description-"daily," "weekly,"
and "monthly"-parallel those further to the right and in the pricing sched-
ule-"DY," "WK," and "MO". CLIN Nos. 13 through 15, however, for three dif-
ferent sizes of pavement-cutting saws, had a different format, as exemplified by
CLIN No. 13:

ITEM NO.             (DESCRIPTION OF)    ESTIMATED       UNIT       UNIT       AMOUNT
                     SUPPLIES/SERVICES    QUANTITY                 PRICE
0013                 WALK BEHIND
                     CONCRETE/ASPHALT
                     SAW
0013AA               HOURLY RATE             20            DY        $     $
0013AB               DAILY RATE               3            WK        $     $

Here, the rate units in the item description did not parallel those to their right
in the pricing schedule.
Three bids were received by the amended bid opening date of September 21. US
Rentals was the apparent low bidder. After bids were opened, the second low
bidder, Big 4 Rents Inc. complained to the agency about the discrepancy in
CLIN Nos. 13 through 15 between the item description of hourly and daily rates
and the request for prices in units of daily and weekly rates. In a letter dated
October 10, Big 4 contended that the bids of US Rentals and DTR Rentals, the
third low bidder, should be rejected as nonresponsive as they did not include
hourly rates in addition to the daily and weekly rates. As a result of Big 4's
letter, the contracting officer reviewed the bids and in a letter dated November
14, requested approval from the Commander, Western Division, Naval Facilities

Page 396                                                              (69 Comp. Gen.)
Engineering Command, to reject all bids and cancel the solicitation. No action
on the request was taken. The protester, after numerous inquiries to the con-
tracting officer and other agency officials, commencing on October 20, 1989, was
notified on December 5 that the agency was not going to award a contract
under this solicitation, but rather, the requirement would probably be filled
under another solicitation. On December 19, US Rentals filed this protest in our
Office.
The agency argues that we should dismiss this protest on the grounds that the
bids expired on November 20, and US Rentals' protest filed more than 10 work-
ing days after that date is untimely. The agency points out that the contracting
officer did not request an extension because she intended to cancel the solicita-
tion, and contends that US Rentals was either obligated to extend its bid accept-
ance period prior to November 20, or to protest within 10 days after that date
had passed without a contract award, since the basis for protest was then
known to US Rentals.
We do not believe that dismissal is warranted in these circumstances. US Rent-
als filed its protest in our Office 10 working days after it was initially notified
that the agency was not going to award the contract, which is the actual basis
of its protest. The record clearly demonstrates that US Rentals had previously
diligently pursued this matter not only with the contracting officer but also
with her superiors, and states that it was told that extenuating circumstances,
namely an earthquake in the San Francisco area, had delayed matters. We also
note that the protester states, and the agency does not deny, that agency con-
tracting officials instructed US Rentals that it could not protest until after the
bid acceptance period had expired, and after that time led the protester to be-
lieve that the agency was considering requesting an extension. Moreover, the
agency concedes that the contracting officer's failure to request extensions of
the bid acceptance period from the bidders was the deliberate result of her deci-
sion, 4 working days prior to the expiration of bids, to cancel the solicitation.
Under these circumstances, the agency used the bid acceptance period expira-
tion as a vehicle for cancellation, and we will view the matter as a cancellation,
despite the lack of a finally ratified formal determination to cancel.
While the Navy argues that since bids have expired there is no possibility of
award, we disagree. A bidder may extend its acceptance period, and thus revive
its bid, where it offered the acceptance period required by the IFB, and has not
expressly or impliedly declined a request to extend its bid, and revival of the bid
would not compromise the integrity of the competitive bidding process. V&Z
Heating Corp., B-224725, Oct. 20, 1986, 86-2 CPD 11 472; TCA Reservations, Inc.,
B-218615, Aug. 31, 1985, 85-2 CPD 1I 163. Further, the reinstatement of an im-
properly canceled procurement and the revival of bids which expired after can-
cellation is an appropriate method of avoiding an unfair bidding situation since
bids have been made public. ADAK Communications Sys., Inc., B-222546, July
24, 1986, 86-2 CPD 11 103. Since nothing in the record indicates that revival of
US Rentals' bid would be improper under this standard, we will consider the
protest on its merits.

Page 397                                                             (69 Comp. Gen.)
Although a contracting officer has broad discretion to cancel an IFB, there must
be a compelling reason to do so after bid opening, because of the potential ad-
verse impact of cancellation on the competitive bidding system after prices have
been exposed. See Federal Acquisition Regulation (FAR) § 14.404-1(aXl); Pacific
Coast Utilities Serv., Inc., B-220394, Feb. 11, 1986, 86-1 CPD V150. The fact that
a solicitation is defective in some way does not justify cancellation after bid
opening if award under the IFB would meet the government's actual needs and
there is no showing of prejudice to other bidders. Id.
The Navy contends that its examination of the bids and the solicitation demon-
strate that there was some confusion as to what rates were to be bid for CLIN
Nos. 0013, 0014, and 0015. Specifically, the protester ignored mention of a
hourly rate description under CLIN No. 0013, and inserted "none" next to the
hourly rate description for CLIN Nos. 0014 and 0015. Big 4 entered hourly rates
for each item but also entered much lower daily and weekly unit rates, which
formed the basis for the agency's evaluation of its price. DTR corrected the
terms "hourly" to "daily" and "daily" to "weekly" and stated that there was a
1 day minimum. Despite the "hourly" and "daily" notations in the item descrip-
tion column, each offeror correctly filled in all of the price information that the
IFB required and which the agency needed to evaluate its bid on a common
basis. Essentially, the only effect of the possible ambiguity was that one bidder
inserted certain higher hourly prices that were not necessary, and these prices
were properly disregarded by the agency. There is no question that the agency
can satisfy its actual needs under this IFB, and no bidder was prejudiced by the
solicitation language. Accordingly, we find that the agency did not have a com-
pelling reason to cancel the solicitation.
The protest is sustained.
By separate letter of today, to the Secretary of the Navy, we are recommending
that the IFB be reinstated and the award be made to US Rentals as the low
bidder, if that firm's bid is otherwise responsive and the firm is determined re-
sponsible. US Rentals is also entitled to its costs of filing and pursuing the pro-
test, including attorneys' fees. 4 C.F.R. § 21.6(dXl) (1989).



B-238216, April 5, 1990
Procurement
Socio-Economic Policies
* Preferred products/services
* * American Indians
Determination of Bureau of Indian Affairs that joint venture comprised of Indian-owned concern
and concern not Indian-owned does not qualify as a 51 percent Buy Indian Act concern, as required
by the solicitation, is not unreasonable where, although the Indian firm controls 51 percent of the
joint venture, only 55 percent of the Indian firm is owned by Indians and the aggregate total of
Indian ownership of the joint venture therefore amounts to only 28 percent.

Page 398                                                                          (69 Comp. Gen.)
Procurement
Bid Protests
* Agency-level protests
ON Information adequacy
The fact that, under an agency's protest regulations, an agency-level protest may be untimely or the
protester may lack interested party status, does not provide a basis for questioning the agency's
subsequent determination to undertake corrective action based on information presented in connec-
tion with the protest.

Matter of: Technical Management Services Company

Karl Johnson, Esq., for the protester.
Daniel S. Press, Esq., Van Ness, Feldman & Curtis, for the interested party, American Indian Coun-
cil of Architects and Engineers.
Sherry Kinland Kaswell, Esq., Department of the Interior, for the agency.
David Ashen, Esq., and John M. Melody, Esq., Office of the General Counsel, GAO, participated in
the preparation of the decision.


Technical Management Services Company (TMS), protests the decision of the
Bureau of Indian Affairs (BIA), Department of the Interior, not to negotiate an
architect-engineer (A-E) contract with a joint venture comprised of TMS and
Burns, Peters, Long and Waters, Inc. (BPLW), under solicitation No. BIA-89-06,
for design and engineering services for the Pine Ridge High School, on the Pine
Ridge Reservation in South Dakota. TMS challenges the agency's determination
that TMS does not qualify as a 51 percent "Buy Indian" concern as required by
the solicitation, which was set aside for such concerns pursuant to the Buy
Indian Act, 25 U.S.C. § 47 (1982).
We deny the protest.
The solicitation was synopsized in the Commerce Business Daily (CBD) on April
12, 1989, pursuant to the selection procedures set forth in the Brooks Act, 40
U.S.C. §§ 541-544 (1982), which governs the procurement of A-E services, and in
the implementing regulations at Federal Acquisition Regulation (FAR)
§§ 36.00-36.09. Generally, under these procedures, an A-E evaluation board set
up by the agency evaluates the A-E performance data and statements of qualifi-
cations already on file, as well as those submitted in response to the required
public announcement of the particular project, and selects at least three firms
for discussions. The board recommends to the selection official no fewer than
the three firms deemed most highly qualified. Negotiations then are held with
the firm ranked first. If the agency is unable to agree with that firm as to a fair
and reasonable fee, negotiations are terminated and the second-ranked firm is
invited to submit its proposed fee, and so on. See generally FAR subpart 36.6.

Page 399                                                                           (69 Comp. Gen.)
Twenty firms responded to the CBD announcement for the proposed project, the
 qualifications of the firms were evaluated pursuant to the A-E procedures, and
by June 19 BIA had selected three firms as most qualified, with the
TMS/BPLW joint venture ranked first. BIA commenced negotiations with the
joint venture to determine a reasonable fee, and the joint venture met twice
with the Pine Ridge School Board concerning the project. On October 30, howev-
er, the American Indian Council of Architects and Engineers (AICAE) filed a
 protest with the contracting officer challenging the joint venture's eligibility as
 a Buy Indian concern.
 In its protest, AICAE pointed out that while the joint venture agreement allo-
 cated TMS 51 percent of the management of the joint venture, TMS was only 55
 percent Indian-owned and there was no indication of any Indian ownership of
 BPLW. AICAE questioned whether this satisfied the eligibility requirement set
 forth in the solicitation and in the BIA Manual (incorporated by reference into
 the solicitation), that the A-E concern be "51 percent Indian-owned." On Decem-
 ber 18, the contracting officer determined that the TMS/BPLW joint venture
 did not qualify as a 51 percent Indian-owned firm and therefore was ineligible
 for award.
 TMS challenges BIA's interpretation of what constitutes an eligible Buy Indian
 concern. BIA has explained that, with respect to joint ventures, it considers the
 ownership of the enterprise as a whole, and not merely the ownership of the
 individual parties to the concern. Since TMS is only 55 percent Indian-owned
and holds only a 51 percent interest in the joint venture, the agency views the
total Indian ownership of the joint venture as a whole as amounting to only 28
 percent, that is, 55 percent of TMS' 51 percent share in the joint venture.
TMS, on the other hand, argues that since TMS controls 51 percent of the joint
venture and TMS itself is Indian-owned-in that its majority owner is an
Indian-the joint venture should be considered Indian-owned. In other words,
TMS' position, in effect, is that Indian-managed and -controlled firms automati-
cally should qualify as eligible Buy Indian Act concerns. TMS maintains that
this interpretation of the Buy Indian Act requirement is consistent with the in-
terpretation of other agencies, which have awarded contracts to the
TMS/BPLW joint venture.
We find nothing improper in BIA's approach to implementing the Act. While
management and control are proper considerations in determining a firm's eli-
gibility to participate in Buy Indian Act procurements, nothing in the Act pre-
cludes the agency from considering other, additional criteria in determining eli-
gibility.I BIA's more restrictive Indian ownership definition assures that the
economic opportunities and benefits available under the Act will accrue princi-
pally to those firms with the greatest Indian involvement, both with respect to
management and profits. Consequently, while the Indian participants in the
I In this regard, BIA's proposed regulations for implementing the Buy Indian Act, 53 Fed. Reg. 24,738-24,747
(1988) (to be codified at 48 C.F.R. §§ 1452 and 1480), require not only that one or more of the Indian owners be
involved in the daily business management of the enterprise, but also that a majority of earnings accrue to the
Indians owning 51 percent of the enterprise. 53 Fed. Reg. 24,741.


Page 400                                                                                     (69 Comp. Gen.)
TMS/BPLW joint venture may be precluded from benefitting under the set-
aside here due to BIA's policy, this result flows from a policy aimed at benefit-
ting Indians to the maximum extent possible through the limited number of
contract awards available. By making benefits available to firms with much less
Indian ownership, TMS' less restrictive interpretation could facilitate the use of
"front" companies and, thus, the award of contracts under Indian set-asides
that would principally benefit non-Indian firms or individuals. BIA's policy
tending to avoid this result is reasonable. This being the case, it is irrelevant
that other agencies may have used different methods of calculating the percent-
age of Indian ownership for purposes of determining Indian set-aside eligibility.
See Northwest Piping, Inc., B-232644, Jan. 23, 1989, 89-1 CPD 11 53.
TMS asserts that under the draft agency protest regulations proposed but not
yet adopted by BIA: (1) AICAE's agency-level protest was untimely; (2) AICAE
lacked interested party status to file a protest; (3) the contracting officer im-
properly failed to refer the protest to higher-level officials; and (4) the contract-
ing officer failed to provide TMS with proper notice of the basis for sustaining
the agency-level protest. TMS argues that these purported deficiencies in the
protest and in the agency's handling of the protest requires our Office to re-
verse the determination of ineligibility.
This argument is without merit. Our review of a protest is directed solely to-
wards consideration of whether the complained of agency action was reasonable;
where we find the agency acted properly, the event that prompted the agency's
action is irrelevant. We already have found that BIA properly determined the
TMS/BPLW joint venture to be other than a Buy Indian firm and thus ineligi-
ble for award. It is of no import that this determination followed AICAE's alleg-
edly unacceptable agency protest. See generally Amarillo Aircraft Sales &
Serus., Inc., B-214225, Sept. 10, 1984, 84-2 CPD T269.
The protest is denied.



B-237567, April 13, 1990
Civilian Personnel
Travel
* Temporary duty
E * Return travel
* * * Administrative discretion
A construction employee who is required to perform long periods of temporary duty away from his
official station and does not maintain a permanent residence at his official station may be reim-
bursed for the expenses of periodic, authorized return travel for nonworkdays to his permanent resi-
dence, not to exceed the constructive cost of travel to his official station.



Page 401                                                                           (69 Comp. Gen.)
Matter of: Alpheus L. Bonde-Extended Temporary Duty-Authorized
Return Travel

A decision is requested on the propriety of paying a claim for authorized return
travel during extended temporary duty to a "voting/family" residence which is
not within commuting distance of the employee's official station.' We conclude
that the claim may be paid on a constructive cost basis.

Background
A division of the Federal Highway Administration has a number of engineering
employees who are on extended temporary duty on a continuing basis for most
of the year. Since they rarely report for duty at their official station in Vancou-
ver, Washington, most of them do not maintain a residence within the commut-
ing distance of Vancouver. Instead, these employees maintain their residences
throughout the region, in Oregon, Washington, Idaho, Montana, or Alaska. One
of these employees, Mr. Alpheus L. Bonde, while on extended temporary duty in
Alaska, traveled to visit his family at the family residence in Calder, Idaho, and
claimed reimbursement for per diem en route and travel expenses.
We are urged to authorize payment, generally, on the basis of our decision, 55
Comp. Gen. 1291 (1976) (B-130082), where we held that it would be proper,
under prescribed circumstances, to pay for authorized or required return travel
to an official station or place of abode for weekends and other nonworkdays.
Diana J. Bell, B-200856, Aug. 13, 1981.

Opinion
We have held in a line of cases that it would be improper to pay for travel on
weekends and other nonworkdays to places other than the employee's official
station or place of abode.2 Under the Federal Travel Regulations, Calder, Idaho,
was not Mr. Bonde's "place of abode," that is, "the place from which the em-
ployee commutes daily to the official station."3 Mr. Bonde's case however, is
materially different from most employees in that he is an itinerant employee on
substantial and continuous temporary duty, and he does not have a need to
commute daily to his official station. Mr. Bonde's circumstances, therefore, are
analogous to those in John D. Rotz, B-186266, Aug. 10, 1976, where we con-
strued "place of abode" as including an itinerant employee's residence even
though it was not located within normal commuting distance of the official sta-
tion.
  The request was made by the certifying officer, Federal Highway Administration, U.S. Department of Transpor-
tation, Western Direct Federal Division, Vancouver, Washington, reference RAD-17.42; File: 100 #5145L
2 See e.g. Michael K. Vessey, B-214886, July 3, 1984; James R. Curry, B-208791, Jan. 24, 1983; Jeffiey Israel,
B-209763, Mar. 21, 1983; Sara S. Ivey, -200262, Jan. 6, 1982; Diana J. Bell, B-200856, Aug. 3, 1981.
s Federal Travel Regulations, para. 1-711, incorp. by ref, 41 C.F.R. § 101-7.003 (1988).


Page 402                                                                                    (69 Comp. Gen.)
In Rotz, the employee performed travel away from his official station on a sub-
stantial and continuous basis and routinely returned to spend nonworkdays
with his family, located at his permanent residence roughly 200 miles from his
official station. In that case, we authorized reimbursement of transportation
and en route per diem expenses, not to exceed the expenses of remaining at the
temporary duty station, under the "voluntary" return regulation, now Federal
Travel Regulations, para. 1-7.llb(4). Although that regulation is controlled by
the restrictive definition of place of abode, we concluded, based on a consider-
ation of the regulation's development and our decisions, 53 Comp. Gen. 313
(1973) and 29 Comp. Gen. 533 (1950), that the definition could be construed as
including an itinerant employee's residence, even though it was not located
within normal commuting distance of the official station. We reasoned that the
principal consideration for authorizing voluntary return travel at no additional
cost to the government was the objective of minimizing disruption of the em-
ployee's family life, under circumstances where the employee, from a practical
standpoint, did not have an opportunity to establish a residence within commut-
ing distance of the official station.
The same objective clearly would be served by reimbursing Mr. Bonde's travel
expenses to the extent of the constructive cost of returning to his official sta-
tion. Such reimbursement would not result in any additional cost to the govern-
ment since the agency may authorize return travel to the official station.
Under the circumstances and conditions described by the agency here, we will
not object to the payment of Mr. Bonde's claim or similar claims, if otherwise
proper, for a temporary period, provided the agency conducts a cost analysis
complying with FTR, para. 1-7.11(bX3) and 55 Comp. Gen. 1291, supra. See
Thomas Anderson, B-200601, July 31, 1981, and Federal Home Loan Bank
Board, B-202544, Aug. 31, 1981.



B-238162, April 13, 1990
Procurement
Competitive Negotiation
* Offers
*E Competitive ranges
* * * Exclusion
N*    *EEvaluation errors
Under request for proposals calling for award to low technically acceptable offerors, agency determi-
nation that protester's proposal was outside of the competitive range was improper where agency
determination was based on proposal's relative technical ranking, without consideration of price,
and consequently agency violated Federal Acquisition Regulation § 15.609(a) (FAC 84-16) in estab-
lishing the competitive range.

Matter of: Bay Tankers, Inc.


Page 403                                                                            (69 Comp. Gen.)
William A. Shook, Esq., Preston, Gates, Ellis, Rouvelas & Meeds, for the protester.

Charles E. Purcell for P&C Marine Engineering, Inc.; Paul Sa for S&S Shipping, Inc.; and Richard
F. Smith for Marine Carriers (USA), Inc., interested parties.

Ernest Hawkins, Maritime Administration, for the agency.

C. Douglas McArthur, Esq., Andrew T. Pogany, Esq., and Michael R. Golden, Esq., Office of the Gen-
eral Counsel, GAO, participated in the preparation of the decision.


Bay Tankers, Inc., protests the exclusion of its technical proposal from the com-
petitive range under request for proposals (RFP) No. DTMA91-89-R-90016,
issued by the Maritime Administration, for services of ship managers for ele-
ments of the Ready Reserve Fleet, to insure their activation within assigned
readiness periods. The protester contends that the agency improperly deter-
mined that its proposal was unacceptable.
We sustain the protest.
The agency issued the solicitation on April 12, 1989, for services of ship manag-
ers to operate and maintain 20 ships, in 7 groups, for 5 years; the solicitation
provided for multiple awards by vessel groups, up to a maximum of 12 ships per
awardee, with 1 group of 2 ships reserved for the Small Business Administra-
tion's 8(a) program. The solicitation requested a per diem rate for each vessel
for full operational status, maintenance status and activation, and provided for
award to the lowest priced offerors judged technically and managerially accept-
able.
The solicitation provided further that the agency would evaluate and assign nu-
merical scores to technical and management proposals, with technical factors
worth one-third more than management factors. Although the RFP essentially
provided for award on the basis of price to the low technically acceptable offer-
ors, it stated that to be eligible for award the combined point scores for techni-
cal and management proposals must be equal to or greater than the point score
set as minimally technically acceptable by the agency (without consideration of
price). I
Offerors submitted proposals on May 31, and a team of four evaluators assigned
point scores to the proposals, in accordance with information requested in sec-
tion L of the RFP. The evaluation team added the point scores and divided
them by four to produce an average technical score and provided a list of aver-
age technical scores to the contracting officer. The list ranked 21 offerors in
order of technical merit based on their technical scores without regard to price.
The contracting officer reviewed the average technical scores, which ranged
from a low of 280 points (out of 760 possible) to a high of 699 points. She found
that there was a gap of 13 technical points between the average scores of the
lThe RFP did not include any numerical technical weights and did not contain any minimally technically accept-
able point score.


Page 404                                                                                    (69 Comp. Gen.)
thirteenth-ranked offer (461 points) and the protester's fourteenth-ranked offer
(448 points). The contracting officer found that this gap between 461 and 448
points was the lowest naturally occurring cutoff that would retain enough offer-
ors to allow competition, since 13 offerors received scores of 461 points or
higher, and eight received scores of 448 points or lower. Although the agency
had received price proposals, it did not consider them in making its determina-
tion of competitive range, since it determined that proposals that had received a
score of less than 461 points were technically unacceptable.2
At the end of August, the contracting officer sent letters to all offerors deter-
mined to be technically unacceptable, advising them of her determination that
their proposals were outside the competitive range. During October and Novem-
ber, the agency conducted negotiations with offerors in the competitive range,
and the agency requested offerors to submit best and final offers (BAFO) by De-
cember 29.
On December 14, the protester contacted the agency to inquire about the status
of its proposal; on that date the agency advised the protester that its proposal
had been eliminated from the competitive range as technically unacceptable.3
This protest followed.
The protester contends that the agency evaluated its offer in a manner that was
unreasonable and inconsistent with the solicitation's requirements. The protest-
er argues essentially that the statement of work in the instant solicitation is
nearly identical to that in an earlier solicitation, RFP No.
DTMA98-87-R-70001, and that the protester's technical proposal found unac-
ceptable is also nearly identical to that submitted in response to the earlier pro-
posal which was found acceptable. The protester states that any deficiencies
noted by the agency in the protester's current proposal also appeared in the
proposal that was earlier found to be acceptable. The protester believes that
this constitutes evidence that the agency's determination, that its proposal was
unacceptable and outside of the competitive range, was arbitrary and unreason-
able.
The agency acknowledges that in 1986, it found the protester technically accept-
able, but explains that the higher scores received by other proposals meant that
although the protester received substantially the same score as in 1986, its rela-
tive ranking fell below the competitive range for the instant procurement. The
agency argues that its increased experience in ship management contracts has
prompted it to look for more depth and range in proposals, to assure itself of a
contractor's understanding of requirements before making an award. The
agency believes that the higher score received by other offerors reflects their
2 The agency notes, for example, that the protester's offer "was weak in comparison with the approach taken by
other, higher rated offerors." These other offerors, according to the agency, "demonstrated more awareness of the
range and depth of the requirements."
3 The agency sent the protester a letter dated August 29, advising Bay Tankers of its elimination from the com-
petitive range. The protester denies receiving the letter, which was not sent to its current address, notes that
lengthy evaluation periods are common in ship management solicitations, and states that until the agency request-
ed BAFYs from the other offerors on December 11, it had no reason to believe that its proposal was not in the
competitive range. Under these circumstances, we find that the protest was timely filed.


Page 405                                                                                      (69 Comp. Gen.)
greater awareness of the range and depth of requirements, while the lower
score received by the protester indicates its lack of understanding of the re-
quirements and the effort needed for performance.
Federal Acquisition Regulation (FAR) § 15.609(a) requires that the competitive
range be determined on the basis of cost or price and other factors that were
stated in the solicitation and consist of all proposals that have a reasonable
chance of being selected for award, including deficient proposals that are rea-
sonably susceptible of being made acceptable through discussions. See Hummer
Assocs., B-236702, Jan. 4, 1990, 90-1 CPD 1 12. In reviewing a competitive range
determination, we do not reevaluate technical proposals; instead, we examine
the agency's evaluation to ensure that it was reasonable and in accord with the
evaluation criteria. Rainbow Tech., Inc., B-232589, Jan. 24, 1989, 89-1 CPD 166.
Here, we think that the agency's competitive range determination was seriously
flawed.
First, despite the fact that price was the ultimate determining factor for award
and that FAR § 15.609(a) (FAC 84-16) requires the consideration of price in the
determination of the competitive range for proposals that have a reasonable
chance of being selected for award, the agency ignored price in its determina-
tion of the competitive range. The record shows that while the protester's pro-
posal was ranked fourteenth technically, it was the low offeror for at least four
vessel groups by a substantial margin. Thus, in establishing the cutoff of 461
technical points (a score approximately 2 percent greater than the protester's),
the agency ignored the fact that many of the 13 higher technically rated firms
had prices 50 percent higher than the protester's price and that the protester,
on the basis of price, was potentially in line for award at substantial savings to
the government.
Second, while the agency ostensibly eliminated the protester because it was
"technically unacceptable," the record shows that by "unacceptable," the
agency meant no more than that the protester received a technical score that
was low relative to other offerors. For example, the contracting officer terms a
"flagrant mistake" the protester's plan to drydock vessels during activation,
which, she argues, creates a high risk of not meeting the 5-day activation sched-
ule. The agency also contends that the protester's proposal for sea trials did not
meet the minimum requirements of the solicitation.
Our review of the evaluators' score sheets shows, however, that these deficien-
cies contributed very little to the rejection of the protester's proposal. Some
evaluators disliked the protester's plan to place vessels in drydock, but none of
them rated the proposal less than "good" with respect to that aspect of the pro-
posal. Furthermore, the agency now concedes that the protester's proposed plan
for sea trials represented a "positive approach."
The record also shows that three of four evaluators gave the protester a score
above the cutoff, and two of them rated the protester higher overall than the
lowest scored proposal included in the negotiations. Of the total scores awarded
by the four evaluators for all technical and management criteria, the protester

Page 406                                                            (69 Comp. Gen.)
received 81 percent "good" or "very good" scores, and 95 percent "fair," "good,"
or "very good" scores. Indeed, our review of the competitive range determina-
tion shows that an offeror who received a uniform rating of "good" would score
456 points, below the cutoff for technical acceptability. We therefore find that
the cutoff was based on an impermissible comparative evaluation of proposals
in contravention of the solicitation terms which specifically called for award to
the low technically acceptable offerors without a relative evaluation of propos-
als. In this regard, it is improper, in a negotiated procurement, to exclude an
offeror from the competitive range solely on the basis of technical consider-
ations (without considering price) where the proposal is merely technically infe-
rior in relation to other proposals, though not unacceptable by itself. See HCA
Gov't Servs., Inc., B-224434, Nov. 25, 1986, 86-2 CPD 1 611.
In short, in making its competitive range determination, the contracting officer
essentially determined that proposals with technical scores less than 2 percent
greater than the protester's had a better chance for award although their prices
were more than 50 percent higher. The record before us demonstrates that with
a slight improvement through discussions in its technical score, the protester
would in fact have been in line for several of the awards contemplated. We
therefore find that the exclusion of Bay Tankers' proposal from the competitive
range without consideration of its price proposal was improper. See Howard
Finley Corp., 66 Comp. Gen. 545 (1987), 87-2 CPD 11 4.
We are therefore recommending by letter of today to the Secretary of Transpor-
tation that the agency reopen discussions with the protester, for the purpose of
resolving any uncertainties or weaknesses in the proposal of Bay Tankers that
preclude that proposal from being found acceptable for award, and request an-
other round of BAFOs all competitive range offerors. We award the protester its
costs of pursuing this protest including attorneys' fees; the protester should
submit its claim for costs directly to the Maritime Administration. 4 C.F.R.
§ 21.6(d) (1989).
The protest is sustained.



B-230318, April 18, 1990
Military Personnel
Pay
* Variable housing allowances
* * Amount determination
A member who is entitled to Basic Allowance for Quarters (BAQ) at the with-dependent rate, based
on his payment of child support, and who is also entitled to a Variable Housing Allowance (VHA),
may not receive VHA at the higher with-dependent rate solely by reason of a separation agreement
that also awards "primary custody" of dependent children to the former spouse, but with "tempo-
rary" and "physical" "secondary custody" to the member at other times. However, the member is
entitled to VHA at the with-dependent rate where he can demonstrate that he had actual physical
custody of the children for periods in excess of 3 months. The computation of such VHA should take

Page 407                                                                         (69 Comp. Gen.)
into consideration only the member's direct housing costs and not the costs incurred by the former
spouse.


Matter of: Major Norris G. Cotton-Variable Housing Allowance

A United States Marine Corps Disbursing Officer requests an advance decision
on whether a member otherwise eligible to receive Variable Housing Allowance
(VHA) may receive it at the with-dependent rate (VHA-W) based on his children
who for most of the year are in his former wife's custody.'
As explained below, the member cannot receive VHA-W for the entire year;
however, he may receive it for all periods in which he has actual physical custo-
dy for continuous periods in excess of 3 months.

Background
On February 5, 1986, Major Cotton and his wife entered into a personal separa-
tion agreement which states that his wife has "primary custody" of the couple's
three children and Major Cotton has "liberal visitation," as well as "temporary"
and "physical" "secondary custody" for all nonschool periods, plus at least 3
days a month during the school year. The agreement also provides that Major
Cotton is required to pay $300 child support per month per child, which he indi-
cates he pays 12 months per year. A decree of divorce was entered on May 18,
1987, but the court did not modify any of the provisions of the separation agree-
ment relating to custody. Major Cotton is not assigned government quarters and
is entitled to basic allowance for quarters (BAQ) and VHA.
The Disbursing Officer raises questions concerning Major Cotton's entitlement
to VHA-W under the circumstances described above subsequent to his May 18,
1987 divorce, and the housing costs to be considered in computing such entitle-
ment, if any.
A member entitled to BAQ is also entitled to VHA whenever permanently as-
signed to duty in an area of the United States which is a high housing cost area
with respect to the member. 37 U.S.C. § 403a(aXl), and the Joint Federal Travel
Regulations (JFTR), para. U8000-1. However, such a member with a permanent
duty station in the United States, who is not assigned government quarters and
who is authorized BAQ at the with-dependent rate solely because he or she is
paying child support, is entitled to VHA only at the without-dependent rate. 37
U.S.C. § 403a(aX4), 2 and JFTR para. U8011-B. We are called upon here to de-

, This request was submitted by L. T. Mullin, Head, Disbursing Division, ComptroUer Department, Marine Corps
Development and Education Center, Quantico, Virginia, through the Per Diem, Travel and Transportation Allow-
ance Committee which assigned it Control No. 88-5.
a The Defense Authorization Act, 1985, Pub. L. No. 98-525, § 602(dXl), 98 Stat. 2492, 2534 (1984), added 37 U.S.C.
§ 403a as a separate codification of the VHA. This section also added limitations on receiving VHA when a mem-
ber's entitlement is based on BAQ at the with-dependent rate solely due to court ordered dependent support. This
limitation was amended by the Department of Defense Authorization Act, 1986, Pub. L. No. 99-145, § 602(a), 99
Stat. 583, 636 (1985), to provide that a member may be paid VHA only at the without-dependent rate whenever
                                                           Continued


Page 408                                                                                       (69 Comp. Gen.)
termine whether Major Cotton's entitlement to BAQ at the with-dependent rate
is based "solely" on his payment of child support which would preclude him
from receiving VHA at the with-dependent rate.
Major Cotton argues that his entitlement to BAQ at the with-dependent rate is
not based solely on payment of child support. Instead, he indicates, he shares
physical and financial custody of his children with his former wife and main-
tains a residence sufficient to accommodate them when they stay with him.

Analysis
In Major Garry R. Scott and Captain Christopher Bonwich, 64 Comp. Gen. 224
(1985), circumstances somewhat similar to those in the present case were dis-
cussed. In that decision, one member (Bonwich) claimed BAQ at the with-de-
pendent rate and VHA-W on the basis that he had extended visitation rights (4
months a year) with his natural child. He resided in private quarters, and
during the periods when he exercised extended visitation, he did not pay child
support to the former spouse who had custody of the child during the rest of the
year. We held that, while the member could not receive BAQ at the with-de-
pendent rate during the period of time that the child's mother had actual custo-
dy, since the child lived with her in government quarters, he was entitled to
both BAQ and VHA at with-dependent rates when the child actually resided
with him for more than a short visit. We further held that more than a short
visit was a period in excess of 3 months, absent any regulation to the contrary.3
Accordingly, VHA-W entitlement exists when a dependent child resides in the
private quarters of a member otherwise entitled to VHA at the without-depend-
ent rate for periods in excess of 3 months.
In our opinion the same rationale applied in 64 Comp. Gen. 224, supra, ought to
be applied to Major Cotton's case. On that basis he would be entitled to VHA-W
upon a demonstration that his child or children actually lived with him in a
nontemporary status, that is, for a continuous period in excess of 3 months. For
other time periods his entitlement to BAQ at the with-dependent rate must be
considered as based solely on his payment of child support. See Department of
Defense Military Pay and Allowances Entitlements Manual, para. 30236d; and
42 Comp. Gen. 642 (1963), and cases cited therein. The fact that he maintains a
residence sufficient to accommodate his children would not entitle him to VHA-
W when the children are in the custody of his former wife or visiting him for
short periods.
We do not have sufficient information available to determine how long the chil-
dren actually reside with Major Cotton; however, it appears that generally they
do not remain with him for periods in excess of 3 months except possibly during
the school recess in the summer months. The Disbursing Officer should obtain
entitlement is premised solely on the payment of any child support, not just court ordered child support. See also
H.R. Rep. No. 81, 99th Cong., 1st Sess. 217 (1985).
3 The fact that in that case the member paid child support pursuant to court decree and Major Cotton is paying it
pursuant to an agreement, makes no difference. See, footnote 2.


Page 409                                                                                       (69 Comp. Gen.)
further information from Major Cotton in that regard and determine his entitle-
ment accordingly.
The Disbursing Officer also asks whether the former wife's housing costs should
be taken into consideration in computing Major Cotton's VHA-W. In this regard
computation of his VHA-W entitlement, if any, should be based only on the
costs for his own residence, not costs related to his former wife's residence. Al-
though a substantial portion of the child support payments presumably are used
by her to cover housing costs for the children, those are her direct costs and not
direct costs of housing to Major Cotton for which VHA is intended to reimburse
him. See JFTR para. U8002-F.



B-238290, April 20, 1990
Procurement
Sealed Bidding
* Bids
* * Responsiveness
E * E Terms
* EK E Deviation
Protester's bid for printing paper was properly rejected as nonresponsive where solicitation as a
whole required bidders to agree to furnish paper with 50 percent waste paper content, and protest-
er's bid offered zero percent content.

Miscellaneous Topics
Environment/Energy/Natural Resources
* Environmental protection
* * Recycled materials
EKEUse
E*E-- Cost increase
Procurement
Sealed Bidding
* Contract awards
* * Propriety
E * E Recycled materials
       N Cost increase
    ER K
Award to lowest bidder offering to comply with mandatory solicitation requirement for 50 percent
waste paper content, even though there was lower bid not meeting requirement, is consistent with
Resource Conservation and Recovery Act of 1976 and Environmental Protection Agency implement-
ing Guideline; although narrative accompanying Guideline indicates EPA's view that higher price
for paper meeting minimum waste paper content requirement is unreasonable, neither statute nor
Guideline prohibits paying such a premium.

Matter of: Victor Graphics, Inc.


Page 410                                                                         (69 Comp. Gen.)
Paul G. Dembling, Esq., and Dennis A. Adelson, Esq., Schnader, Harrison, Segal & Lewis, for the
protester.

Stuart M. Foss, Esq., Office of the General Counsel, U.S. Government Printing Office, for the
agency.

David Ashen, Esq., and John M. Melody, Esq., Office of the General Counsel, GAO, participated in
the preparation of the decision.


Victor Graphics, Inc., protests the award of a contract to United Book Press,
Inc., under invitation for bids (IFB) No. C264-S, issued by the United States
Government Printing Office (GPO) for the printing of the "Index Medicus," a
publication of the National Institutes of Health. Victor challenges the rejection
of its bid as nonresponsive to a solicitation requirement that the paper products
to be furnished contain a minimum of 50 percent waste paper (i.e.,
recovered/recycled materials).
We deny the protest.
The solicitation, issued on October 17, 1989, included a clause in the bid sched-
ule that required bidders to "certify that the paper supplied under any contract
resulting from this solicitation, will meet or exceed the minimum percentage of
recovered materials below"; the clause went on to specify a minimum 50 per-
cent waste paper content and provided a space for the offeror to indicate its pro-
posed percentage. Elsewhere, the bid schedule advised that offerors "failing to
certify to the minimum percentage content shall be determined nonresponsive."
At bid opening on November 14, two of the three bidders certified compliance
with the waste paper requirement by entering a figure of 50 percent on their
bid schedules; Victor, on the other hand, specified in its bid schedule a figure of
zero percent waste paper content. Accordingly, although Victor's bid was low, it
was rejected as nonresponsive. Upon learning of the ensuing award to United,
Victor filed an agency-level protest. When that protest was denied, Victor filed
this protest with our Office.
While acknowledging that the awardee was able to obtain paper with 50 percent
waste paper content, Victor maintains it was advised by several suppliers that
such paper was not readily available within the specified delivery schedule.
Victor argues that its bid nevertheless was responsive to the solicitation based
on the following provision from section 1 of the solicitation:
WASTE PAPER CONTENT: In the performance of any contract resulting from this solicitation, the
use of waste paper to the maximum extent possible is required, provided that such waste paper con-
tent meets the performance standards (contracting officer to state standards or delete the proviso).
Offerors who can not certify to the minimum content standards are requested to provide, for infor-
mation purposes, the percentage of waste paper content that is available to them.
Victor interprets this provision as permitting bidders to offer paper with less
than 50 percent waste paper content where paper with a higher content is not
readily available. Victor also contends that GPO's insistence on 50 percent
waste paper here is a departure from its past practice of awarding to firms cer-

Page 411                                                                           (69 Comp. Gen.)
tifying less than the minimum specified waste paper content; Victor states that
it has been the contractor for this project for 6 years, notwithstanding that it
has always certified that it will provide paper with a zero percent waste paper
content.
Victor's interpretation of the waste paper content requirement, and its conclu-
sion that its bid was responsive, are untenable. When a dispute exists as to the
actual meaning of a solicitation provision, we will resolve the matter by reading
the solicitation as a whole and in a manner that gives effect to all provisions of
the solicitation; to be reasonable an interpretation must be consistent with such
a reading. See Aerojet Ordnance Co., B-235718, July 19, 1989, 89-2 CPD I 62.
Although, we agree that section 1, when read by itself, did not establish a firm
50 percent waste paper content requirement, the solicitation read as a whole,
giving effect to all provisions, did establish such a firm requirement. The bid
schedule itself expressly required offerors to certify to a minimum 50 percent
waste paper content, and explicitly warned that bids failing to certify to the
minimum would be determined nonresponsive. Reading section 1 in light of this
mandatory language, we think the only reasonable reading of section 1 is that
bidders were required to use waste paper "to the maximum extent possible,"
with a minimum of 50 percent waste paper. Section 1 did not state that firms
unable to meet the requirement would be deemed responsive, which would have
been inconsistent with the express language to the contrary in the bid schedule;
rather, section 1 merely "requested" noncompliant firms to indicate the per-
centage waste paper content they could offer "for information purposes." Pre-
sumably, GPO would use this information in determining to what extent the 50
percent requirement should be used in the future.
As for the agency's alleged past practices, the first page of the solicitation in-
structed bidders to pay special attention to areas which differed from the prede-
cessor contract, and specifically referred to the provisions governing the use of
recovered materials. (In any case, an agency's past practice is not a basis for
questioning its application of otherwise correct procurement procedures. Gener-
al Elec. Co., B-228191, Dec. 14, 1987, 87-2 CPD 11 585.)
Victor also contends that the agency's enforcement of the 50 percent minimum
waste paper content requirement violates procurement provisions of the Re-
source Conservation and Recovery Act of 1976 (RCRA), 42 U.S.C. § 6962 (1982),
and the Environmental Protection Agency's (EPA) implementing regulations,
"Guideline for Federal Procurement of Paper and Paper Products Containing
Recovered Materials," 40 C.F.R. part 250 (1989). As Victor notes, the RCRA re-
quires agencies to procure paper with the "highest percentage of recovered ma-
terials practicable," 42 U.S.C. § 6962(cXl), but excepts from this requirement
items "only available at an unreasonable price," 42 U.S.C. § 6962(cX1XC). The
Guideline recommends a minimum 50 percent recovered materials content for
most paper, but conditions this recommendation upon availability at a reasona-
ble price. 40 C.F.R. § 250.21(bX4). In the explanation published in the Federal
Register along with the EPA Guideline, the EPA indicates that it believes the
price of an item containing recovered materials is unreasonable if it is greater

Page 412                                                            (69 Comp. Gen.)
than the price of a competing product made of virgin material. 53 Fed. Reg.
23,559 (1988). Victor argues that because United's price for a 50 percent waste
paper product was 11.5 percent higher than Victor's price for 100 percent virgin
paper, it was unreasonable and should have led to rejection of the bid and
award to Victor based on its low price.
GPO was not required to reject United's bid as unreasonably priced. First, once
an agency has reasonably determined to include a minimum waste paper con-
tent requirement in a solicitation, the RCRA does not preclude the agency from
accepting a bid responsive to the waste paper requirement merely because a bid
nonresponsive to the content requirement may be priced lower. The section of
the RCRA cited by Victor concerning unreasonable price (42 U.S.C. § 6962(c) )
establishes only a permissive exception to the general requirement for items
composed of the highest percentage of recovered materials practicable; it does
not prohibit award at a higher price to a firm agreeing to meet the waste paper
requirement.
Further, EPA itself recognizes in the implementing Guideline that the Guide-
line is "only advisory in nature," and is intended "to assist procuring agencies
in complying with the requirements of ... the RCRA." 40 C.F.R. § 250.1(a). Ac-
cording to the agency, "each procuring agency may decide whether a 'reasona-
ble price' includes a price preference." 53 Fed. Reg. 23,559. EPA recognized that
the relative prices of paper products made with virgin or recovered fibers would
probably fluctuate in both directions, and concluded that the reasonable price
provision of the RCRA, 42 U.S.C. § 6962(cX1XC), means that "there is no project-
ed or observed long-term or average increase over the price of comparable items
that do not contain recovered materials." (Italic added.) Id. In other words, as
interpreted by the EPA itself, the RCRA provisions concerning availability at a
reasonable price do not preclude award to a bidder offering to meet the content
requirement at a price higher than the price for paper not meeting the require-
ment.'
Although Federal Acquisition Regulation § 14.407-2 requires a contracting offi-
cer to make a determination of price reasonableness before awarding a contract,
in view of the solicitation requirement for immediate delivery and the statutory
policy in favor of procuring products with recovered materials (42 U.S.C. § 6962),
we find no basis for objecting to payment of an 11.5 percent premium for paper
with recovered materials as unreasonable. See generally Picker Int'l, Inc.,
B-232430, Dec. 12, 1988, 88-2 CPD E 583.
 ' Victor cites the decision in National Recycing Coalition, Inc. v. Reilly, 884 F.2d 1431 (D.C. Cir. 1989), as holding
that EPA's interpretation of the unreasonable price provision in the RCRA is binding on GPO here. That decision
is consistent with our conclusions here. The court found that it was unclear what Congress intended by the phrase
"unreasonable price," and that EPA's interpretation expressed in the narrative accompanying its Guidelines-
that a price is unreasonable if it exceeds the price of a competing product made of virgin material-was "permissi-
ble" and "consistent with the [RCRA's] overall purpose." Id at 1437. The court did not hold that agencies are
precluded by the RCRA from paying a premium for products with recovered materials; rather, it described the
requirements of the statute in permissive terms, stating that the RCRA "provides that a procuring agency is not
required to purchase products containing reclaimed materials if it determines that such items are only available at
an unreasonable price." (Italic added.) Id. at 1434. Indeed, the court noted that the EPA itself had argued that its
Guideline consists merely of recommendations that "the procuring agencies are free to accept or disregard."

Page 413                                                                                           (69 Comp. Gen.)
Victor also asserts that because the EPA Guideline merely recommends, but
does not require, a minimum 50 percent waste paper content standard, the
agency's decision to enforce the requirement improperly restricts competition,
as evidenced by the fact that only three firms submitted bids. As the solicitation
clearly required a 50 percent minimum waste paper content, Victor's argument
essentially challenges the terms of the solicitation, and as such is untimely. 4
C.F.R. § 21.1(aXl) (1989). In any case, agencies may require a specific wastepaper
content as a means of implementing the recommendation of the EPA Guideline.
See American Management Enters., Inc., B-238134, supra.
The protest is denied.



B-234476, April 23, 1990
Civilian Personnel
Relocation
* Residence transaction expenses
* * Reimbursement
* * * Eligibility
Employee was transferred from Columbus to Dayton and then back to Columbus within 1 year. She
sold her Columbus residence within 1 year from effective date of first transfer and prior to official
notice of retransfer. Subsequent transfer does not extinguish the right to reimbursement created by
the initial transfer. Employee is entitled to reimbursement of residence sale expenses incident to
initial transfer to Dayton. Further, employee is entitled to residence purchase expenses incident to
the retransfer to Columbus.

Civilian Personnel
Relocation
* Temporary quarters
* * Actual subsistence expenses
E * E Reimbursement
* U-Eligibility
    E
A transferred employee claimed temporary quarters subsistence expenses for herself for 4 days
when inclement weather prevented her from returning to her residence at old duty station which
she had not vacated in order to allow daughter to complete school session. Her claim is disallowed
since she had not vacated her old residence as required by the Federal Travel Regulations before
temporary quarters expenses may be reimbursed.

Civilian Personnel
Relocation
* Temporary quarters
E * Determination
* E * Criteria
Employee whose old and new residences were in Columbus occupied temporary quarters for 30 days
in connection with successive transfers. She acquired a new permanent residence but was unable to
occupy new residence immediately because of a holdover provision allowing the sellers to remain in

Page 414                                                                            (69 Comp. Gen.)
possession. Paragraph C13006 of the Joint Travel Regulations, volume 2 (FIR para. 2-5.2h), which
generally prohibits payment of TQSE for short distance transfers, is not a bar to payment since this
provision was not intended to apply to situations where the old residence sale is under one transfer
order and the new residence purchase is under another order as the timing of the sale and purchase
are no longer within the employee's control.

Matter of: Ida Faye Robinson-Relocation Expenses-Retransfer to
Former Duty Station Within One Year

The Acting Chief, Accounting and Finance Division, Office of Comptroller, De-
fense Logistics Agency (DLA), forwards a request for advance decision, concern-
ing the claim of Ms. Ida Faye Robinson for relocation expenses incurred inci-
dent to two permanent changes of station. As stated below, we hold that the
employee may be reimbursed for certain of these expenses.

Background
Ms. Robinson, an employee of the Defense Logistics Agency Finance Center, Co-
lumbus, Ohio, was authorized a permanent change of station (PCS) from Colum-
bus to the Defense Electronics Supply Center, Dayton, Ohio, with a reporting
date of January 24, 1988. Ms. Robinson commuted from her Columbus area resi-
dence to Dayton in order to facilitate her daughter's completion of the school
session. However, Ms. Robinson had to use temporary housing on 4 days during
her commuting period because of inclement weather. On June 5, 1988, Ms. Rob-
inson entered into a sales contract on her Columbus residence. The sale was
closed on July 8, 1988, and she vacated the premises on July 23, 1988.
In the meantime, by letter dated June 16, 1988, the Director, DLA notified all
employees of DLA's intention to consolidate central payment operations in Co-
lumbus over the next 3 years. This letter advised affected employees that they
would have the opportunity to transfer to the central site, but it was not a spe-
cific notice for any employee. In consideration of this notice and other informal
information concerning a possible reassignment back to Columbus, Ms. Robin-
son signed an agreement on July 13 to purchase a new house in Columbus con-
tingent upon her receiving written notification of her reassignment back to Co-
lumbus.
On July 22, 1988, Ms. Robinson was formally notified that she had been selected
for a position in Columbus, with a reporting date of August 8, 1988. She accept-
ed the position and on July 25, 1988, a PCS order was issued transferring Ms.
Robinson back to Columbus and authorizing real estate expenses, 60 days tem-
porary quarters subsistence expenses (TQSE), and shipment and 90 days tempo-
rary storage of household goods. On July 25, 1988, Ms. Robinson finalized the
contract for the purchase of a house in Columbus with a closing date of August
11, 1988. However, due to a holdover provision in the contract of sale allowing
the sellers to remain in possession until August 22, 1988, the new residence was
not available for occupancy until that time. Ms. Robinson moved out of her old

Page 415                                                                           (69 Comp. Gen.)
residence and placed her household goods in storage on July 23, 1988. She
stayed in temporary quarters from July 23 to August 22, 1988, when she moved
into her new residence.
Because the two sets of orders were issued within 1 year and because of the
close proximity of the two duty stations, DLA has requested clarification as to
what expenses are allowable.

Opinion

Authorization of Relocation Expenses
The DLA notes that paragraph C4100-3 of volume 2 of the Joint Travel Regula-
tions (May 1, 1988), implementing 5 U.S.C. § 5724a, states that a transfer at gov-
ernment expense is not authorized within 12 months of the employee's most
recent PCS unless the order-issuing official certifies that the proposed transfer
is in the interest of the government, an equally qualified employee is not avail-
able within the commuting area of the component concerned, and the losing
component agrees to the transfer. The record shows that these regulatory re-
quirements were met and that the proper certifications were made. Therefore,
payment of allowable relocation expenses for Ms. Robinson's transfer from
Dayton back to Columbus is authorized.

Real Estate Expenses
The statutory provisions governing reimbursement of residence transaction ex-
penses of transferred employees are contained in 5 U.S.C. § 5724a (1982). The
DLA refers to our decision in Warren L. Shipp, 59 Comp. Gen. 502 (1980), as a
basis for questioning payment of real estate expenses. The Shipp case held that
once an employee is notified of a transfer back to a former duty station, the
government's obligation to reimburse real estate expenses is limited to those al-
ready incurred or those which cannot be avoided. We do not perceive any con-
flict between the reimbursement to Ms. Robinson for her real estate expenses
and the holding in Shipp. As indicated above, Ms. Robinson entered into a con-
tract to sell her house in Columbus on June 5, 1988, and settled on July 8. She
did not receive any official notice upon which she could rely of a transfer back
to Columbus until July 22, 2 weeks later. Thus, the rule in Shipp does not limit
the government's obligation to reimburse real estate expenses to Ms. Robinson.

TQSE During January and February 1988
The regulations pertaining to temporary quarters subsistence expenses are con-
tained in chapter 2, part 5 of the Federal Travel Regulations (FTR) (Supp. 10,
March 13, 1984), incorp. by ref., 41 C.F.R. § 101-7.003 (1984). "Temporary quar-
ters" is defined in FTR, para. 2-5.2c as "Lodging obtained from private or com-
mercial sources for the purpose of temporary occupancy after vacating the resi-
dence occupied when the transfer was authorized." (Italic added.)

Page 416                                                            (69 Comp. Gen.)
Ms. Robinson has claimed temporary quarters subsistence expenses for herself
for 4 days in January and February 1988 when inclement weather prevented
her from returning to her residence in Columbus. Since Ms. Robinson continued
to reside in the former residence during the period for which she claims TQSE,
she had not vacated the former residence as required by FTR, para. 2-5.2c,
quoted above. Therefore, reimbursement is denied for the 4 days in
January/February 1988. See Edward Carlin, 67 Comp. Gen. 544 (1988).

TQSE from July 23 to August 22, 1988
Ms. Robinson has also submitted a claim for the temporary quarters subsistence
expenses she incurred from July 23 to August 22, 1988, i.e., from the time she
was obligated to vacate her former residence until she had a legal right to pos-
session of her new residence.
The agency questions whether payment can be made for that period in light of 2
JTR para. C13006 (Sept. 1, 1986), which prohibits the payment of TQSE for short
distance transfers. Short distance transfers are those where the distance be-
tween the new residence and the old duty station is not more than 40 miles
greater than the distance between the old residence and the old duty station.
We do not believe that the cited JTR provision, which is based on FTR, para.
2-5.2h, was intended to apply to situations where the sale is under one PCS
order and the purchase is under another order. In those situations the timing of
the sale and purchase are no longer within the employee's control.
Here, Ms. Robinson contracted to sell her prior residence in Columbus under
the first PCS order transferring her to Dayton before she received the second
PCS order transferring her back to Columbus. The purchase of her new resi-
dence was then made pursuant to the second order. Therefore, we would not
object to payment of Ms. Robinson's claim for TQSE from July 23 to August 22,
1988.

Movement and Storage of Household Goods
We have not objected to the reimbursement of employees' moving expenses in a
number of cases involving relatively short distance transfers. For example, we
have held that the fact that an employee's new residence is located near the
former residence would not in itself preclude reimbursement of relocation ex-
penses, so long as the employee commutes daily to his new duty station from
the new residence. B-175822, June 14, 1972. Also, the fact that commuting time
or distance was not decreased would not necessarily prevent reimbursement of
expenses, if it could be otherwise determined that the employee's move was inci-
dent to his transfer. Gary A. Ward, 54 Comp. Gen. 751 (1975). In each particular
case, the agency involved is required to consider a variety of factors surround-
ing the relocation, and on the basis of all such information, determine whether
the relocation was truly incident to the employee's transfer. See Harvey
Knowles, 58 Comp. Gen. 319 (1979). The facts in this case support a finding that
the move was incident to Ms. Robinson's transfers.

Page 417                                                          (69 Comp. Gen.)
Conclusion
Accordingly, Ms. Robinson's real estate expenses and household goods expenses
may be reimbursed along with her temporary quarters subsistence expenses to
the extent outlined above.



B-237955.2, April 24, 1990
Procurement
Specifications
* Minimum needs standards
* * Competitive restrictions
* * * Justification
* d Md Sufficiency
Solicitation requirement that offerors complete original equipment manufacturer's (OEM's) mainte-
nance training prior to preaward survey is unobjectionable where OEM, the only source of accepta-
ble spare parts, will make parts available only to firms with training and there would be risk of
delay in contract performance if training was not completed prior to award.

Procurement
Competitive Negotiation
* Offers
* * Risks
* * * Pricing
Fact that original equipment manufacturer (OEM), the only source of necessary spare parts, is in
position to influence competition by imposing restrictions upon spare parts availability does not
render procurement defective where (1) the restrictions appear reasonable and have not been ap-
plied to prevent any particular firm from purchasing the parts and (2) the only alternative procure-
ment method would be a sole-source award to the OEM, but record does not support conclusion that
OEM is only acceptable source. Ability to obtain parts is matter of firm's ability to develop business
relationship with OEM, a matter outside the General Accounting Office's purview.

Matter of: Starr Systems

Thomas F. Richardson, Esq., Chambless, Higdon & Carson, for the protester.
Millard F. Pippin, Office of the Assistant Secretary of the Air Force, for the agency.
M. Penny Ahearn, Esq., and John M. Melody, Esq., Office of the General Counsel, GAO, participated
in the preparation of the decision.


Starr Systems protests a training requirement in request for proposals (RFP)
No. F09650-89-R-0196, issued by the Department of the Air Force for mainte-
nance of TEMPEST-certified microcomputers and peripheral equipment. Starr
complains that the provision is restrictive of competition.

Page 418                                                                                 (69 Comp. Gen.)
We deny the protest.
Zenith Data Systems manufactured the TEMPEST equipment (which is de-
signed to meet certain security standards for processing classified information)
and had been providing maintenance as well. In order to enhance competition,
the Air Force decided to allow entities other than Zenith to provide the mainte-
nance, which also encompasses acquisition of Zenith-approved spare parts. As
originally issued, the RFP required that the successful contractor be trained in
TEMPEST equipment repair and have 1 year of repair experience with the
equipment. However, following release of the solicitation, Zenith indicated that
its equipment training was a prerequisite for authorization to purchase its spare
parts. The Air Force then amended the solicitation to require that the success-
ful contractor, either directly or through a subcontractor, be Zenith-certified to
maintain TEMPEST equipment, prior to the preaward survey.
It is undisputed that Zenith spare parts are necessary to meet the agency's
maintenance needs, i.e., to assure that the equipment operates in a safe, effec-
tive, and dependable manner without compromising security standards critical
to processing classified information. The Air Force explains that because Zenith
is the original equipment manufacturer and the agency does not have any man-
ufacturing data, data rights to replacement parts, or access to maintenance
manuals, Zenith is the only source for spare parts and maintenance training for
the equipment here. Further, the Air Force determined that it would not be fea-
sible for it to buy repair parts directly from Zenith and provide them as govern-
ment-furnished material, because of a lack of sufficient TEMPEST-trained gov-
ernment personnel and storage facilities. It apparently was in light of this need
for Zenith parts that led the Air Force to agree to include the training require-
ment in the RFP.
Starr nevertheless contends that it already has sufficient experience with the
repair of TEMPEST equipment to qualify for award, and that the training re-
quirement therefore is unnecessary and restrictive of competition, and serves
only to allow Zenith to control the competition. Starr complains in this regard
that Zenith has shown an unwillingness to negotiate in good faith by refusing to
specify the exact terms and conditions it will impose as a prerequisite to agree-
ing to make the necessary spare parts available for purchase by the successful
contractor.
We find the training requirement legally unobjectionable. The training require-
ment was included in the RFP, not because the Air Force considered Zenith
training the only acceptable means of assuring proper performance but, as indi-
cated above, because Zenith considered its own training necessary to the proper
servicing of Zenith equipment and would not make its spare parts available for
purchase to firms without it. The requirement was included in the RFP only to
put prospective offerors on notice of a Zenith requirement that would have to be
met in order for a firm to obtain the parts necessary to perform. The Air
Force's legitimate requirement for Zenith spare parts is not rendered improper
by the fact that Starr and other firms may not be able to obtain them. See gen-
erally Target Financial Corp., B-228131, Nov. 23, 1987, 87-2 CPD M506.

Page 419                                                            (69 Comp. Gen.)
While Zenith does appear to be in a position to impose conditions on offerors,
and thereby to affect the competition, its position results solely from its status
as the sole available source of the spare parts, and not from any favoritism or
other improper action by the agency. As the government has no contractual re-
lationship with Zenith under which it can compel the firm to make its spare
parts available, the only alternative to conducting this procurement competi-
tively, subject to conditions insisted upon by Zenith, would be to make a sole-
source award to Zenith on the basis that it is the only firm capable of furnish-
ing the necessary parts. Competition in Contracting Act of 1984, 10 U.S.C.
§ 2304(cXl) (1988). Starr does not advocate this alternative and, moreover, there
is no basis for concluding that only Zenith is a viable source. While offerors will
be required to comply with the training requirement and other conditions,
Zenith has not indiscriminately refused to make parts available to any particu-
lar firm, and there is no indication that any conditions imposed are unreason-
able. For example, the training requirement appears to reflect Zenith's legiti-
mate interest in assuring that its equipment is maintained properly, in accord-
ance with its standards, and Zenith has made the training available on an on-
going basis since 1986. In addition, the Air Force has sought and received assur-
ances from Zenith that it will negotiate with prospective offerors in good faith
over spare parts availability.
Essentially, we think the situation here relates to Starr's and other firms' abili-
ties to develop a business relationship with a supplier; that is, it is Starr's re-
sponsibility to negotiate a parts purchase agreement with Zenith, the success of
which effort the government cannot guarantee. This generally is a matter be-
tween private parties and is not for consideration under our bid protest func-
tion. See Electro-Methods, Inc., B-215841, Mar. 11, 1985, 85-1 CPD 11 293; CS,
Inc., B-211900, Dec. 30, 1983, 83-2 CPD 11 44. Any uncertainty as to the ultimate
availability of spare parts amounts to a business risk that, under the circum-
stances here, all offerors must accept. See Sentinel Electronics, Inc., B-221914.2
et al., Aug. 7, 1986, 86-2 CPD 1166.
Starr argues that the Zenith training should not be required until after award,
so that only the successful offeror will have to incur the expense of the training.
However, the solicitation contemplated that performance would begin immedi-
ately after award, and an unacceptable risk of delay in performance could
result if the contractor lacked the necessary training at the time of award.




Page 420                                                            (69 Comp. Gen.)
B-230580.5, April 26, 1990
Procurement
Special Procurement Methods/Categories
* Federal supply schedule
ME Multiple/aggregate awards
M* * Price reasonableness
Finding of price unreasonableness under multiple-award Federal Supply Schedule solicitation was
reasonable where proposal did not offer either most favored customer pricing-prices equal to or
lower than lowest commercial prices-when evaluated on a product-by-product basis or lowest net
price available to the government.

Matter of: Baxter Healthcare Corporation

Justin D. Simon, Esq., Dickstein, Shapiro & Morin, for the protester.
E. L. Harper, Office of Acquisition and Materiel Management, Department of Veterans Affairs, for
the agency.
David Ashen, Esq., and John M. Melody, Esq., Office of General Counsel, GAO, participated in the
preparation of the decision.


Baxter Healthcare Corporation protests the Department of Veterans Affairs'
(VA) rejection of its proposal under request for proposals No. M2-Q1-88, a mul-
tiple award Federal Supply Schedule (FSS) solicitation for medical supplies.
Baxter challenges VA's determination that Baxter did not offer prices equal to
or lower than those offered its most favored customer (MFC), and the resulting
rejection of its proposal due to unreasonable pricing.
We deny the protest.
Under multiple award schedules, contracts are negotiated with more than one
supplier for delivery of commercial supplies and services that are comparable
and of the same generic type, at prices based on discounts from commercial
price lists. Federal Acquisition Regulation (FAR) § 38.102-2(a). Contracts are
awarded only after the contracting officer determines that the prices, terms and
conditions offered are fair and reasonable. FAR § 38.102-2(c). Generally, the de-
termination of price reasonableness is a matter of administrative discretion in-
volving the exercise of business judgment by the contracting officer; we will
question such a determination only where it is clearly unreasonable or there is
a showing of bad faith or fraud. See Sal Esparza, Inc., B-231097, Aug. 22, 1988,
88-2 CPD 11 168.
Although VA is authorized to award schedule contracts for certain medical
items, the FSS program is directed and managed by the General Services Ad-
ministration (GSA). FAR §§ 38.000 and 38.101(e). We thus consider an agency's
determination of price reasonableness to be proper when it meets the standards
established in GSA's Policy Statement on Multiple Award Schedule Procure-

Page 421                                                                        (69 Comp. Gen.)
             ment (Policy Statement),
            obtaining discounts            47 Fed. Reg. 50,242
                                                                     (1982),
            are equal to or better  from   offerors'   established catalogwhich established a goal of
            Reg. 50,244; see Credit    than   discount the offerors             or commercial prices
           f7 202. The Policy         Bureau    Inc. of Georgia, B-22089  extend      to their MFC. 47 that
           where   the discount Statement                                      0 , Feb. 27, 1986,
                                                                                                             Fed.
                                   offered thedoes      provide for awarding
                                                  government                                           86-1 CPD
           MFC's discount,                                        is not equal to FSS           contracts even
                               but only where                                           or getrta
          from those given to                        the government's                                          h
                                                                           terms and conditions
          volume of purchases the MFC, for instance, "where the                                           deiffe
                                    does not warrant                                 Government's overall
          The solicitation requested                      the best Price." 47
                                                                                   Fed. Reg. 50,244.
         equipment and supplies proposals for a 3 -year contract to furnish
         each SIN category              in  57 categoris or special                                    medical
                                                                             item numbers (SIN), with
         items. Baxter an encompassing a number of separate
         offers; Baxter's offer incumbent FSS contractor,                          but related
                                   covered only SINs D-19 and two other firms individual
        (cardiac output apparatus).                              (physiological                     submitted
          Baxters   sales                   After extended negotiations, monitors) and 26
        Agency (DCAA),and pricing data                                             including an audit
                              and the receipt conducted by the                                               of
        award to Baxter                             Of best and fia           Defense      Contract Audit
                            for three items under                         ofrs (AFOs)VAmd
                                                         SIN D-19final offe
       With respect to                                                               (B            VA made
                             the items Baxter
       DCAA      were published
       counts from     unable to discern              offered  under SIN D-26,
                                   price lists;a they
                                                   consistent Policy                     the agency and
      did not always receive                            determined that  by high
                                                                              Baxter of granting
                                    the highest discounts,                           quantity customers   dis
      tomers purchasing lesser                                  which
      type of catheter proposed       quantities                         often
                                                    than the governme't For       were granted to cus-
                                      under SIN D-26,                                   example for one
      had purchased 14,483                                  Baxter offered VA
     though it had granted       units)  only a 40 percent                             (which previously
                                   one commercial customer      discount from the
     47.5 percent discount and                                                            list price, even
     cent discount. VA                another customer purchasing   purchasing only 4,900
                            concluded that Baxter
                                                          was not offering
                                                                                 only           unitsunits
                                                                                               40      a5 a
    greater than the                                                            discounts equal to
    sponse to a subsequent discounts offered
                                                 its MpCs. VA did                                         or
    less. The agency subsequently agencyY-level   protest from Baxter,  reopen      negotiations in re-
    any of the seven                       advised Baxter that                but these
                          items                                      no award would proved            fruit-
    were not advantageous it offered under SIN D-26 because                                  be made for
   with our Office.B to the government.                                         its
                                                            Baxter thereupon offered discounts
   Baxter Primarily objects                                   a t r t e e p n filed this protest
                                                                                     f ed hi p o es
   sidering MPF status on that VA improperly evaluated its MFC
                                 a  productbyproduct        basis, rather than onPricing          by con-
  single MFC for an                                                                      the basis of a
  price for each item       entire   SIN. According to
                                                             the protester,
  discounts equal to is inconsistent with the Policy Statementrequiring an MFC
  vored "customer;" or greater than the discount                                    goal of obtaining
                          Baxter argues that                     offered   the    offeror's
 indicates that GSA                                 this reference to a                         most fa-
 for each item underintended to require only a single                         singular "customer"
 t e lowest price on a SIN. Baxter states that no commercial        MFC for each SIN,
                          every                                                                  not one
 er are negotiate                item,   and that its commercial                  customer receives
by-product basis. on the basis of a total package of                   sales to any one custom-
                      Baxter maintains                             products, not on
                                              that when prices                              a
                                                                    are evaluated on product-
Page 422                                                                                      the basis

                                                                                     (69 Comnp. Gen.)
of SIN-26 as a whole, it is clear that VA will receive favorable prices relative to
Baxter's commercial customers.
We find Baxter's position untenable. The Policy Statement does not mandate
evaluation of MFC pricing only on a SIN basis or preclude determination on a
product-by-product basis. In this regard, GSA's own interpretation and imple-
mentation of its Policy Statement, as set forth in its Federal Supply Service
Multiple Award Schedules Desk Guide, defines an MFC as "that customer or
class of customers which receives the best discount and/or price arrangement
on a given item from a supplier." (Italic added.) Desk Guide, section AA. The
Guide makes clear elsewhere that "item" refers to an individual product and
not to a SIN or category of products; the Guide states that "identical items are
those that are the same in all respects, including brand name, model number,
and technical characteristics." Desk Guide, section M.
Furthermore, as Baxter itself acknowledges, the solicitation provided that the
award decision may be made on a product-by-product basis, not a SIN basis. The
RFP (1) required the submission of catalogs or price lists and the listing of sales
and commercial discounts for specific, proposed products; (2) established a mini-
mum level of anticipated purchases as a precondition to award for any particu-
lar product; and (3) provided that the agency may make multiple awards for the
listed articles or services, but cautioned that it would award "only one contract
for each specific product" in the event of multiple offers of identical products.
In these circumstances, the agency properly based its determination of reasona-
ble pricing on a product-by-product review.
Moreover, even when evaluated on a SIN basis-that is, on the basis of the com-
bined price Baxter charges a particular commercial customer for all seven prod-
ucts it offered under SIN D-26-as Baxter asserts should have been done, it ap-
pears that Baxter was not consistently offering MFC pricing to the agency. For
example, Baxter offered one chain of hospitals a combined price lower than the
price it offered VA, even though the volume of sales to the chain (in number of
units) was lower than Baxter's volume of prior sales to VA for each of the seven
products. Specifically, for one product, Baxter charged the chain 47 percent less
than the prices it offered VA, even though prior sales of the product to VA (in
units) were 417 percent higher.
Baxter explains that apparent discrepancies in the prices it offered VA relative
to the prices offered its commercial customers merely reflect differing terms
and conditions; while a number of Baxter's commercial contracts include com-
mitments to purchase specified minimum quantities or a variety of products,
the VA solicitation provides that "no guarantee is given that any quantities will
be purchased under a contract." Given, however, that nothing in the record sug-
gests that the prior high level of VA sales will diminish, or that the solicitation
estimates of future sales are overstated, we think the agency reasonably deter-
mined that there were no materially different terms or conditions under Bax-
ter's commercial contract that warranted the significantly lower prices offered
some of those commercial customers, notwithstanding VA's significantly larger

Page 423                                                             (69 Comp. Gen.)
volume purchases. Thus, even if MFC pricing is considered on a SIN-basis, the,
agency reasonably concluded that the pricing offered VA was unreasonable.
Baxter claims VA improperly failed to determine whether, notwithstanding its
failure to offer MFC pricing, Baxter was offering the net low price to the gov-
ernment and therefore should have been placed on the schedule pursuant to an
instruction in the Policy Statement that "every effort should be made to include
products with the lowest net price on the schedule." 47 Fed. Reg. 50,248. Howev-
er, other offerors quoted lower prices for products comparable to six of the
seven products proposed by Baxter under SIN D-26. The agency therefore prop-
erly concluded that there were lower prices available in the competitive open
market, and properly excluded Baxter from the schedule.
Baxter also questions whether VA satisfied another Policy Statement provision
requiring that the contracting officer weigh the effect that the rejection of an
offer will have on meeting the government's needs. 47 Fed. Reg. 50,244. Howev-
er, it is clear from the foregoing that VA believes its needs will be met under
SIN-26 at prices lower than Baxter's.
The protest is denied.



B-233397, April 27, 1990
Civilian Personnel
Relocation
* Travel expenses
* * Privately-owned vehicles
E * E Mileage
Civilian Personnel
Relocation
* Travel expenses
E * Reimbursement
E E* Eligibility
An employee, permanently transferred to the place where he was on a temporary duty assignment,
returned to his old duty station by privately owned vehicle to retrieve stored household goods. The
employee is entitled to en route per diem and mileage expenses for the round-trip since relocation
travel by privately owned vehicle is deemed advantageous to the government under the Federal
Travel Regulations, para. 2-2.3a.

Matter of: James R. Stockbridge

Mr. Roy E. Morris, Certifying Officer, Office of Surface Mining (OSM), Depart-
ment of the Interior, requests a decision concerning the claim of Mr. James R.
Stockbridge, an OSM employee, for expenses incurred during a trip to his old
official duty station to make moving arrangements. For the following reasons
we hold that the employee is entitled to payment of mileage and per diem ex-

Page 424                                                                          (69 Comp. Gen.)
penses for the actual round-trip travel en route between the new and old duty
stations by privately owned vehicle without regard to the cost of travel by
common carrier.

Background
In late summer of 1988, Mr. Stockbridge was transferred from Redding, Califor-
nia to Washington, D.C. At the time of his transfer, Mr. Stockbridge was al-
ready in Washington on a temporary training detail with the Bureau of Indian
Affairs. Upon notice of his temporary duty assignment, Mr. Stockbridge stated
that he sold his residence in California, placed part of his household goods in
storage, and transferred his family to Washington, all at his own expense. After
arriving in Washington he then flew back to Redding at his own expense to re-
trieve his personal vehicle, the use of which the agency had approved at his
temporary duty station. Mr. Stockbridge's travel authorization for his tempo-
rary duty assignment included approval for round-trip travel via privately
owned vehicle. Accordingly, Mr. Stockbridge received payment for mileage and
per diem for his return trip to Washington.
After Mr. Stockbridge had been permanently assigned to Washington, the
agency issued a travel authorization to Mr. Stockbridge to allow him to return
to Redding to make final moving arrangements for his stored household goods.
The travel authorization did not indicate mode of travel, but included an esti-
mate for travel by common carrier and per diem expenses. Mr. Stockbridge
traveled by privately owned vehicle to Redding, retrieved his household goods in
storage, and returned to Washington.
On his travel voucher he claimed mileage and per diem costs for the trip. How-
ever, the agency certified payment only of the cost of round-trip common carrier
from Washington to Redding and taxi expenses. Mr. Stockbridge, on his reclaim
voucher, is claiming reimbursement for the difference between the mileage and
per diem costs he originally claimed and the amount certified for payment by
the agency.

Opinion
We have previously held that employees on temporary duty at a place which
has become their permanent duty station are entitled to the relocation expenses
authorized by 5 U.S.C. §§ 5724 and 5724a (1988). Further, such employees may
be reimbursed for round-trip travel expenses from the new permanent station to
the old permanent station for purposes of relocating their family or transport-
ing their household effects to the new duty station. See Dr. Tommye Cooper,
B-213742, Aug. 5, 1985; Steven F Kinsler, B-169392, Oct. 28, 1976; NOAA Ship
DISCOVERER, B-167022, July 12, 1976. The question we are presented with
here is whether an agency may restrict reimbursement for mileage and per
diem to the cost of travel by common carrier when an employee uses a privately
owned vehicle for such relocation travel.

Page 425                                                          (69 Comp. Gen.)
Paragraph 2-2.3a of the Federal Travel Regulations (FTR)l provides in perti-
nent part:
a. When an employee, with or without an immediate family, who is eligible for travel allowances
under 2-1.2 and 2-1.5, uses a privately owned automobile for permanent change of station travel,
that use is deemed to be advantageous to the government....
In Dominic D. D'Abate, 63 Comp. Gen. 2 (1983), we held that where the applica-
ble regulations prescribe that travel by a privately owned vehicle is deemed ad-
vantageous to the government, the employee is entitled to be reimbursed on
that basis despite a clause in his travel orders purporting to limit his reimburse-
ment to the cost of travel by common carrier. Therefore, FTR, para. 2-2.3a
clearly establishes use of a privately owned vehicle for permanent change of sta-
tion travel as being advantageous to the government and allows no discretion
by agency officials to conclude otherwise. See also Paul S Begnaud, B-214610,
Feb. 19, 1985.
In this case, Mr. Stockbridge's round-trip travel from Washington to Redding
for purposes of transporting his household effects constituted relocation travel
by privately owned vehicle. Thus, FTR, para. 2-2.3a governs reimbursement for
Mr. Stockbridge's use of his privately owned vehicle for that travel. According-
ly, Mr. Stockbridge's method of travel must be considered as advantageous to
the government, and the common carrier estimates on his travel order purport-
ing to limit his reimbursement are not controlling. See Dominic D. D'Abate, 63
Comp. Gen. at 3.
Mr. Stockbridge's reclaim voucher should be processed in accordance with the
above.



B-238106, B-238257, April 27, 1990
Procurement
Noncompetitive Negotiation
* Use
* * Justification
E *U Urgent needs
Protest is sustained where the agency, using noncompetitive procedures to award contract extension
on a sole-source basis, fails to establish that the time constraints imposed by urgency prevented the
agency from soliciting offers from other potential sources including the protester.




' (Supp. 1, Sept. 28,1981), incorp. by ref., 41 C.F.R. § 101-7.003 (1988).


Page 426                                                                            (69 Comp. Gen.)
Procurement
Competitive Negotiation
* Offers
* * Submission time periods
* * E Time restrictions
* EK E Propriety
Where the protester effectively was permitted 2 hours to submit an offer due to the agency's un-
justified failure to provide reasonable time to solicit offers, the protester was improperly deprived of
an opportunity to compete.

Matter of: Sanchez Porter's Company

Anthony L. Sanchez, for the protester.

Gary E. Wint, Esq., General Services Administration, for the agency.
Linda S. Lebowitz, Esq., and Michael R. Golden, Esq., Office of the General Counsel, GAO, partici-
pated in the preparation of the decision.


Sanchez Porter's Company, the incumbent contractor, protests that the General
Services Administration (GSA) improperly awarded two interim contracts and a
contract modification for janitorial and maintenance services at the United
States Customs House, a federal office facility in Denver, Colorado. Sanchez
generally alleges that GSA improperly excluded it from competing, and improp-
erly justified the award of these contracts on the basis of urgency.
As discussed in detail below, we agree with GSA that urgency justified exclud-
ing Sanchez from the competition for the first interim contract due to dissatis-
faction with the firm's recent performance. In the absence of exigent circum-
stances, however, agencies may not exclude a potential contractor because of
unsatisfactory prior performance unless the firm is found to be nonresponsible
under applicable regulations. Regarding the follow-on awards (a sole-source con-
tract extension and a second interim contract), the record does not support the
urgency determinations to exclude Sanchez. GSA had time available to solicit
offers and did not find the firm to be nonresponsible. Therefore, we sustain San-
chez's protests against the interim contract modification and the second interim
contract.
Pursuant to section 8(a) of the Small Business Act, 15 U.S.C. § 637(a) (1988), the
Small Business Administration (SBA) entered into a contract with GSA to pro-
vide custodial services at the Customs House and arranged for the performance
of this contract by letting a subcontract to Sanchez, a socially and economically
disadvantaged business. Sanchez provided these custodial services to GSA under
contract No. GS-07P-87-HTC-0074 (0074) for a basic term of 1 year, from July
1, 1988, to June 30, 1989. The contract provided for two 1-year options to be ex-
ercised at GSA's discretion. On April 7, 1989, GSA notified SBA that due to un-

Page 427                                                                              (69 Comp. Gen.)
satisfactory performance by Sanchez, GSA did not intend to exercise an option-
to extend Sanchez's contract beyond the June 30 basic term expiration date. At
GSA's request, SBA recommended E.C. Professional (ECP) as another qualified
8(a) contractor to provide the custodial services.
In April, GSA began negotiations with ECP under the 8(a) program for a 1-year
contract with options. By the time Sanchez's contract expired on June 30, GSA
and ECP had not reached an agreement under the 8(a) program because ECP
had not yet submitted a price for the basic requirement that GSA considered
reasonable. In order to prevent a lapse in the performance of services, which
could jeopardize the health, safety, and welfare of those using the facility and
possibly cause physical damage to the structure itself, GSA made an urgency
determination and requested ECP (because ECP was expected to become the
new 8(a) contractor in the immediate future) and Metropolitan Building Mainte-
nance (because Metropolitan was providing custodial services at two facilities
across the street from the Customs House facility) to submit prices for a 3-
month interim contract. GSA did not request Sanchez, the incumbent 8(a) con-
tractor, to submit prices for this interim contract due to its poor performance
during the preceding 12 months. Because ECP offered the lowest prices, on July
3, GSA entered into a 3-month interim contract with ECP, contract No.
GS-07P-89-JWC-0091 (-0091), for the period of July 3 through September 30.1
In August, negotiations between GSA and ECP under the 8(a) program were ter-
minated because agreement could not be reached on price. On September 4,
GSA withdrew the requirement from the 8(a) program after SBA failed to pro-
pose another qualified 8(a) contractor to provide the custodial services. In order
to continue receiving custodial services at the Customs House, on September 28,
1 working day before ECP's initial interim contract expired, GSA issued a modi-
fication, No. PS01, to ECP's interim contract based on urgency. This modifica-
tion extended ECP's contract term for another 3 months for the period of Octo-
ber 1 through December 31.
In October, pursuant to the Javits-Wagner-O'Day Act, 41 U.S.C. §§ 46-48(c)
(1982), GSA began negotiations with the National Industries for the Severely
Handicapped (NISH), a nonprofit agency. On November 28, GSA and NISH
reached an agreement for NISH to provide the custodial services beginning
March 1, 1990. Because NISH was not to begin performance until March 1, GSA
again needed to procure short-term custodial services for the period of January
1 through February 28. On December 28, 1 working day before the extension of
ECP's interim contract expired, GSA solicited offers from four firms, including
Sanchez. The deadline for receipt of offers was 12:00 noon, local time, on Decem-
ber 29. Three of the firms received the solicitation package on December 28 (and
submitted timely offers). Sanchez, because it had no telefacsimile machine, did
not receive its solicitation package, sent by overnight mail, until 2 hours before
the closing time on December 29. By a letter sent by commercial telefacsimile
machine, Sanchez notified GSA just before the closing time that basically, due
I This interim contract was not under the 8(a) program as the contract was directly between GSA and ECP, rather
than between SBA and GSA with a subcontract to ECP.


Page 428                                                                                    (69 Comp. Gen.)
to a lack of time to prepare its price, it was not submitting an offer. Instead,
Sanchez again requested that GSA exercise the option under its initial 8(a) con-
tract. On December 29, GSA awarded contract No. GS-07P-90-JWC-0026
(-0026) to Metropolitan Building Maintenance, the lowest priced offeror.
As a general rule, procurements must be conducted using competitive proce-
dures. 41 U.S.C. § 253(a) (Supp. IV 1986). An agency may use other than com-
petitive procedures where the agency's needs are of such an unusual and com-
pelling urgency that the government would be seriously injured if the agency
did not limit the number of sources from which bids or proposals are solicited.
41 U.S.C. § 253(cX2). When using other than competitive procedures based on
unusual and compelling urgency, the agency is required to request offers from
as many potential sources as is practicable under the circumstances. 41 U.S.C.
§ 253(e). We will object to the agency's determination to limit competition based
on unusual and compelling urgency where we find that the agency's decision
lacks a reasonable basis. Colbar, Inc., B-230754, June 13, 1988, 88-1 CPD I 562.

Interim Contract -0091
With respect to the award of the interim contract (-0091) to ECP for custodial
services for the period of July through September, Sanchez alleges that as the
incumbent 8(a) contractor, GSA improperly excluded it from the competition
based on an urgency determination.2 Under 41 U.S.C. § 253(cX2), an agency, in
urgent circumstances, may limit the competition to firms with satisfactory work
experience which it believes can promptly and properly perform the services.
See Industrial Refrigeration Serv. Corp., B-220091, Jan. 22, 1986, 86-1 CPD 1 67.
The agency is not required to solicit the incumbent if, in the agency's judgment,
there is doubt based on the incumbent's prior record of performance that the
firm can perform the services. Id. This is true whether or not the agency has
formally found the incumbent to be nonresponsible under FAR § 9.103(b) (FAC
84-18). Atlanta Investigations, B-227980; B-227981, July 30, 1987, 87-2 CPD
1121.
GSA reasonably limited competition for the interim contract in April 1989 be-
cause of its urgent need to obtain a contractor for the services. GSA knew that
it would not be exercising an option to extend Sanchez's 8(a) contract. GSA,
however, planned to maintain this requirement under the 8(a) program, and re-
quested SBA to recommend another qualified 8(a) contractor to provide the nec-
essary custodial services. Upon SBA's recommendation in April, GSA com-
s Sanchez challenges the decision of GSA not to extend the term of its 8(a) contract by exercising an option under
this contract, which Sanchez alleges could have saved the government more than $40,000 during the period from
July to December when ECP was providing the services under the interim contract and modification which ex-
tended the interim contract. The contracting agency's decision not to exercise an option is a matter of contract
administration. There is no obligation for the contracting agency to justify a decision not to exercise an option on
the basis of a cost comparison. The regulations only provide that the agency cannot exercise an option without
first determining that it is the most advantageous method of fulfilling the agency's needs, price and other factors
considered. Federal Acquisition Regulation (FAR) § 17.207(cX3) (FAC 84-49). Those who bid or offer on contracts
containing option provisions assume the risk that the agency might not exercise the option. Western States Man-
agement Servs., Inc., B-233576, Dec. 8, 1988, 88-2 CPD 11575; Arlington Public Schools, B-228518, Jan. 11, 1988,
88-1 CPD 1 16.


Page 429                                                                                        (69 Comp. Gen.)
menced negotiations with ECP under the 8(a) program with the apparent belief
that by the end of June, GSA and ECP would have reached an agreement under
the 8(a) program for ECP to begin providing custodial services. By the end of
June, when Sanchez's 8(a) contract expired, GSA and ECP had not reached an
agreement under the 8(a) program. At this point, GSA reasonably determined
that the operation of the government offices at the Customs House would be
jeopardized (specifically the health, safety, and welfare of those using the facili-
ty and the possibility of physical damage to the structure itself) if janitorial and
maintenance services were not performed. For this reason, we find GSA proper-
ly determined that exigent circumstances existed justifying other than competi-
tive procedures to procure the custodial services. 41 U.S.C. § 253(cX2), supra.
We cannot object to GSA's decision not to solicit an offer from Sanchez. GSA
determined that Sanchez's performance during the previous 12-month period
was unsatisfactory, as reflected by a number of contract administration prob-
lems and monthly payment deductions (which the record reveals were particu-
larly high during the last quarter of Sanchez's performance under its 8(a) con-
tract). Based on Sanchez's prior record of performance under its 8(a) contract,
GSA states it had no reason to believe that Sanchez could provide interim custo-
dial services which would be any better than the services it provided under its
8(a) contract. GSA limited the competition to ECP, with which it expected to
shortly complete negotiations for an 8(a) contract, and Metropolitan, the con-
tractor providing custodial services in two nearby buildings. Both of these firms
were prepared to immediately begin performance upon award of the interim
contract. Under these circumstances, we think GSA's decision to limit the com-
petition to two firms which could promptly and properly perform the work was
not objectionable. Industrial Refrigeration Serv. Corp. B-220091, supra.

Interim Contract Modification PS01
Sanchez challenges GSA's urgency determination as a basis for using other
than competitive procedures in issuing a modification to the interim contract,
thereby extending the period of ECP's performance for another 3 months from
October to December. We conclude that this modification was improper.
The record indicates that, in August, negotiations between GSA and ECP for an
8(a) contract ended, and on September 4, when SBA failed to recommend an-
other 8(a) contractor, GSA withdrew the requirement from the 8(a) program. Al-
though too late to issue a fully competitive solicitation, GSA knew at this time
that it had approximately 1 month before ECP's interim contract expired to so-
licit at least some sources for the follow-on contract for custodial services.3 On
September 28 (1 working day before ECP's interim contract expired), in order to
continue receiving the necessary janitorial and maintenance services after Sep-
3 An argument can be made that GSA knew in April, when it informed SBA that it did not intend to extend
Sanchez's 8(a) contract by exercising an option and, in any event, no later than June, when Sanchez's 8(a) contract
expired, that it would need to issue a solicitation for long-term custodial services. We believe that GSA, in good
faith, intended to keep this requirement under the 8(a) program by negotiating another 8(a) contract, and, for this
reason, believe GSA was justified in not conducting a competitive procurement at these particular times.


Page 430                                                                                        (69 Comp. Gen.)
tember 30, GSA, on the basis of urgency, issued a modification to ECP's interim
contract, extending it for another 3 months from October to December. We find
that GSA's explanation for the extension-that its leasing branch was under-
staffed-is not a reasonable basis for the extension without soliciting any other
sources. The record shows that approximately 1 month prior to the extension,
GSA was aware it would have a continued need for these services. While GSA's
use of the urgency exception to full and open competition to solicit these serv-
ices appears justified, we see no reason in the record for not requesting offers
from as many potential sources as was practicable given the time available to
solicit offers. See 41 U.S.C. § 253(e); AT&T Information Serv. Inc., 66 Comp. Gen.
58 (1986), 86-2 CPD 1 447. Unless GSA found Sanchez nonresponsible and thus
ineligible for award under FAR § 9.103(b), the firm was a potential source enti-
tled to the opportunity to compete. See, erg., Saxon Corp., B-237629, Feb. 26,
1990, 69 Comp. Gen. 303, 90-1 CPD E 230. We thus sustain this ground of pro-
test.

Interim Contract -0026
Sanchez also challenges GSA's award of the last short-term interim contract
(-0026) to Metropolitan for 2 months from January to February until NISH
would begin to provide custodial services in March. Sanchez basically argues
that it had insufficient time to prepare its offer and that the award violated
statutory requirements for full and open competitions
With respect to the award to Metropolitan, we find that GSA's award was im-
proper. The record indicates that GSA knew in October that it needed to have a
contractor in place to provide custodial services beginning in January. In Octo-
ber, GSA began negotiations with NISH and on November 28, GSA reached an
agreement with NISH to provide custodial services beginning March 1. There-
fore, on November 28, GSA knew it still had 1 month before the extension of
ECP's interim contract expired to award a short-term interim contract to a firm
to provide custodial services for the months of January and February. However,
GSA waited until December 28 (1 working day before the extension to ECP's
interim contract expired) to solicit offers from four firms, including Sanchez.
On December 29, GSA awarded a contract to Metropolitan, the lowest priced
offeror, so that custodial services would continue in January and February
(again, apparently based on urgency). However, the record reveals no reason,
other than staffing problems, for why GSA waited until 1 working day before
the extension of ECP's interim contract expired to solicit offers. While GSA ap-
pears to have had a legitimate urgency basis precluding full and open competi-
tion, the law, as stated previously, requires that the agency request offers from
4 GSA argues that this protest is untimely because it.concerns improprieties apparent in the solicitation which
should have been filed prior to the closing date under our Bid Protest Regulations. 4 C.F.R. § 21.2(aXl) (1989). How-
ever, we think the letter of December 29, 1989, from Sanchez filed prior to the closing time with GSA which com-
plains of the insufficient time allotted to prepare an offer and requests a "fair advantage to obtain this contract"
was intended as a protest. Although Sanchez states that the letter should be considered as its "formal bid," the
letter contains no offer and GSA did not consider this letter as containing an offer.


Page 431                                                                                         (69 Comp. Gen.)
as many potential sources as is practicable under the circumstances. GSA's un-
explained, and we think unjustified, decision to wait until the day before ECP's
extension was to expire to solicit offers deprived Sanchez, a firm GSA apparent-
ly now believed could perform the contract, of a reasonable opportunity to com-
pete. The record shows that Sanchez did not receive its solicitation package
until 2 hours before the deadline for receipt of offers. As a result of GSA's late
issuance of the solicitation, Sanchez did not have reasonable time to submit an
offer. We therefore sustain this ground of protest.
 Because the latter two interim contracts have already been performed, termina-
 tion of these contracts and resolicitation of these requirements is not an appro-
 priate remedy. Accordingly, we find that Sanchez is entitled to recover its pro-
 test costs. Bid Protest Regulations, 4 C.F.R. § 21.6(dXl).




 Page 432                                                            (69 Comp. Gen.)