Crown Healthcare Laundry Services, Inc.

Crown Healthcare Laundry Services, Inc. BNUMBER: B-270827; B-270827.2 DATE: April 30, 1996 TITLE: Crown Healthcare Laundry Services, Inc. ********************************************************************** Matter of:Crown Healthcare Laundry Services, Inc. File: B-270827; B-270827.2 Date:April 30, 1996 Jesse W. Rigby, Esq., Clark, Partington, Hart, Larry, Bond, Stackhouse & Stone, for the protester. Gregory H. Petkoff, Esq., and Kirkland D. Foster, Esq., Department of the Air Force, for the agency. Peter A. Iannicelli, Esq., and Michael R. Golden, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST Protest that the Air Force improperly conducted a cost comparison between the Department of Veterans Affair's (VA) and the protester's offers to do laundry services to justify the Air Force's decision to convert laundry services contract to performance by the VA under interagency sharing agreement is denied where the protest fails to show that the Air Force's methodology was unreasonable or inconsistent with Office of Management and Budget Circular No. A-76. DECISION Crown Healthcare Laundry Services, Inc. (Crown) protests the Air Force's decision to have the Department of Veterans Affairs (VA) perform laundry services for Keesler Air Force Base (Keesler), as solicited under invitation for bids (IFB) No. F22600-95-B-0030, rather than to continue to contract with Crown for those services. The Air Force decision to have the VA do the work was based upon an Office of Management and Budget (OMB) Circular No. A-76 comparison of the estimated cost of VA performance with Crown's bid price. Crown contends that the cost comparison was flawed for various reasons discussed below.[1] We deny the protest. Issued on February 6, 1995, the IFB solicited bids for performing laundry services[2] for Keesler for a basic contract period of 1 year with options for 3 additional years. The IFB indicated that an A-76 cost comparison study would be conducted and included a performance work statement (PWS) to be used in formulating bids and the government cost estimate. The VA provided its cost information to the Air Force along with an interagency sharing agreement[3] indicating its willingness to provide laundry services to Keesler; the Air Force used the VA's cost data to formulate the in-house cost estimate. For purposes of this A-76 cost comparison, the VA was considered the in-house bid. Two bids were received from commercial bidders. The low-priced commercial bid was withdrawn based upon its containing a mistake, leaving only Crown's bid and the VA's estimate in contention. Based upon its cost comparison, the Air Force determined that it would be cheaper to have the work performed in-house by the VA than to continue to have Crown perform the work.[4] After the agency provided the cost comparison study to Crown, Crown appealed the decision to have the VA perform the contract, alleging several errors in the way the VA's costs were calculated. On August 14, 1995, Keesler's administrative appeal review team denied Crown's appeal, finding that the cost comparison was accurate and complete. Crown filed a second administrative appeal which was denied by the Air Force on December 12. Shortly thereafter, Crown filed the first of two protests in our Office.[5] The protester contends that the Air Force's cost comparison was flawed because the Air Force relied upon VA cost estimates that underrepresented the actual costs of having the VA do the work. The protester states that the VA's cost estimate was based upon doing less work than was described in the PWS upon which Crown based its bid. Crown also argues that the VA underestimated the weight of the laundry to be cleaned, thereby understating the actual costs of in-house performance. Crown further contends that the Air Force erred because it added the agency's costs of administering a contract with Crown to Crown's bid but did not add the cost of administering its contract with the VA to the VA's cost estimate. OMB Circular No. A-76 describes the executive branch's policy on the operation of commercial activities that are incidental to performance of government functions. It outlines procedures for determining whether commercial activities should be operated under contract by private enterprise or in-house using government facilities and personnel. Generally, such decisions are matters of executive branch policy that our Office declines to review. However, we will review A-76 decisions resulting from an agency's issuance of a competitive solicitation for the purpose of comparing the cost of private and governmental operation of the commercial activity to determine whether the comparison was faulty or misleading. See United Media Corp., B-259425.2, June 22, 1995, 95-1 CPD para. 289; Tecom, Inc., B-253740.3, July 7, 1994, 94-2 CPD para. 11.