Pemco Aeroplex, Inc., Aero Corporation, B-275587.9; B-

Pemco Aeroplex, Inc., Aero Corporation, B-275587.9; B- BNUMBER: B-275587.9; B-275587.10; B-275587.11; B-275587.12 DATE: June 29, 1998 TITLE: Pemco Aeroplex, Inc., Aero Corporation, B-275587.9; B- 275587.10; B-275587.11; B-275587.12, June 29, 1998 ********************************************************************** DOCUMENT FOR PUBLIC RELEASE The decision issued on the date below was subject to a GAO Protective Order. This redacted version has been approved for public release. Matter of:Pemco Aeroplex, Inc., Aero Corporation File: B-275587.9; B-275587.10; B-275587.11; B-275587.12 Date:June 29, 1998 Kevin P. Connelly, Esq., Seyfarth, Shaw, Fairweather & Geraldson, for Pemco Aeroplex, Inc.; and Thomas G. Jeter, Esq., Suzanne L. Karbarz, Esq., and Michael T. Janik, Esq., McKenna & Cuneo, for Aero Corporation, the protesters. John E. Lariccia, Esq., Gregory H. Petkoff, Esq., and Brad Adams, Esq., Department of the Air Force, for the agency. John Van Schaik, Esq., and Michael R. Golden, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST 1. The Competition in Contracting Act of 1984 (CICA) provides that the General Accounting Office (GAO) has protest jurisdiction to review objections to cancellations of solicitations and that GAO shall decide protests "concerning an alleged violation of a procurement statute or regulation." Since 10 U.S.C. sec. 2462 (1994) mandates that the Department of Defense (DOD) procure goods or services under specified circumstances, rather than supply them from an in-house source, it is a procurement statute. Under the circumstances, where a DOD agency issues a solicitation, receives and evaluates bids or proposals, and awards a contract, and then cancels the solicitation to take the work in-house, CICA grants GAO the authority to consider a protest that the agency did not comply with 10 U.S.C. sec. 2462. 2. In a negotiated procurement, the contracting officer is required to have a reasonable basis to cancel a solicitation. There could be no reasonable basis for cancelling a solicitation in order to bring work in-house if doing so violates 10 U.S.C. sec. 2462, which is a congressional mandate to allow private companies to provide goods and services to DOD unless the government can provide those goods and services at a lower cost. Thus, although DOD agencies historically have had broad discretion to manage resources and make decisions as to whether to contract out or perform work in-house, when 10 U.S.C. sec. 2462 applies, those decisions are required to be based on a determination of which source can provide a supply or service at the lower cost. 3. Although 10 U.S.C. sec. 2462 generally requires that decisions of DOD agencies as to whether to perform work in-house or to contract out are to be based upon a determination of which source can perform the work at the lower cost, section 2462 is subject to the proviso: "Except as otherwise provided by law." Where a DOD agency reasonably relies on the need to meet the requirements of 10 U.S.C.A. sec. 2466(a) (West Supp. 1998)--which limits the funds which DOD agencies can use to contract out for depot-level maintenance and repair work--as a basis for cancelling a solicitation, this statutory direction means that the requirements of section 2462 do not apply. DECISION Pemco Aeroplex, Inc. and Aero Corporation protest the cancellation of request for proposals (RFP) No. F09603-95-R-13032 issued by the Air Force for programmed depot-level maintenance (PDM) of the C-130 aircraft. Pemco and Aero also challenge the decision of the Air Force to perform the work covered by the RFP in-house at Warner Robins Air Logistics Center and Ogden Air Logistics Center. We deny the protests. BACKGROUND The RFP was issued in July 1996 and included C-130 PDM work in Europe, the continental United States, and the Pacific. After a contract for the continental United States work was awarded to Aero on April 15, 1997, Pemco protested the evaluation of proposals and the award to Aero. In response to that protest, the Air Force determined that the evaluation of the offerors' past performance appeared to be inadequate. As a result, the Air Force announced that it would revise the solicitation, conduct discussions, solicit best and final offers, reevaluate proposals, and make a new selection decision. On May 19, 1997, we dismissed Pemco's protest, since the Air Force's corrective action rendered the protest academic. The Air Force, however, did not complete this corrective action. The Air Force's Principal Deputy Assistant Secretary (Acquisition and Management) directed the agency to take the announced corrective action but also stated: "[I]n view of emerging changes in depot workloads[,] re-evaluate the C-130 PDM requirement." May 19, 1997 Letter at 1.