DRS Precision Echo, Inc., B-284080; B-284080.2, February 14, 2000

DRS Precision Echo, Inc., B-284080; B-284080.2, February 14, 2000 TITLE: DRS Precision Echo, Inc., B-284080; B-284080.2, February 14, 2000 BNUMBER: B-284080; B-284080.2 DATE: February 14, 2000 ********************************************************************** DRS Precision Echo, Inc., B-284080; B-284080.2, February 14, 2000 Decision Matter of: DRS Precision Echo, Inc. File: B-284080; B-284080.2 Date: February 14, 2000 Kevin P. Connelly, Esq., Ronald L. Sigworth, Esq., John C. Lavorato, Esq., and Donald G. Featherstun, Esq., Seyfarth, Shaw, Fairweather & Geraldson, for the protester. Ronald K. Henry, Esq., and Larry J. Gusman, Esq., Kaye, Scholer, Fierman, Hays & Handler, for TEAC America, Inc., an intervenor. Stephen A. Elliott, Esq., for the Department of the Navy. Roger D. Waldron, Esq., and Christine Irwin, Esq., for the General Services Administration. Ralph O. White, Esq., and Christine S. Melody, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST Protest that agency purchase order was, in effect, an improper sole-source award is sustained where the record shows that the Federal Supply Schedule contract against which the agency attempted to place its order had expired, and no replacement contract was in place at the time of the order. DECISION DRS Precision Echo, Inc. protests the issuance of a purchase order by the Department of the Navy, to TEAC America, Inc. for 238 cockpit video recorder systems for use on F/A-18 aircraft. DRS argues that the order is an improper sole-source award because TEAC did not have a Federal Supply Schedule (FSS) contract with the General Services Administration (GSA) in effect at the time the Navy ordered the recorder systems. DRS also argues that, even if TEAC had an active FSS contract, the Navy did not follow applicable regulations in issuing the order, and that the regulations themselves--particularly Federal Acquisition Regulation (FAR) sect. 8.404--are inconsistent with applicable procurement statutes. We sustain the protest. On September 23, 1999, the Navy issued purchase order No. N00383-99-F-6019 to TEAC for 238 recorder systems, for a total price of $2,021,096. The Navy purchase order referenced a GSA FSS contract with TEAC, No. GS-24F-9034H, and attempted to place an order against that contract. In an agency-level protest, dated October 4, and in a subsequent protest to our Office, DRS argued that GSA's FSS contract with TEAC had expired and thus was not available for use by the Navy. The Navy denied DRS's agency-level protest, and in its report to our Office in response to the instant protest, argued that the GSA schedule contract was in place at the time the Navy placed its purchase order. On December 21, our Office received the protester's comments on the Navy's report, which further buttressed DRS's claims about TEAC's GSA schedule contract. One day later, by letter dated December 22, our Office sought a report on this matter from GSA. Our letter to GSA requesting a report explained that the record appeared to show that TEAC's FSS contract had expired before the Navy placed its purchase order. On January 19, our Office received GSA's report, which expressly conceded that when the Navy placed its order for recorder systems on September 23, there was no contract between the GSA and TEAC. GSA Report, Jan. 19, 2000, at 1. GSA's report explains that TEAC's initial FSS contract extended from August 21, 1998, until July 31, 1999, with one option to continue performance for an additional 5-year period. Id. at 2, and attach. 2. To exercise the option, the contracting officer was required to provide TEAC with written notice 10 months before expiration of the contract. Id., attach. 2. GSA further explains that it sent TEAC a letter dated November 17, 1998 (approximately 8 months prior to the expiration of TEAC's contract), and appended to the letter an unsigned bilateral modification to TEAC's contract (modification 950), which exercised GSA's option to extend performance from August 1, 1999 through July 31, 2004. Id. at 2. Although TEAC signed the modification on July 9, 1999, GSA's contracting officer did not sign the modification until December 2. Id., attach. 3, at 4. By letter dated February 1, 2000, the Navy also conceded that the GSA schedule contract had expired at the time it placed its order for video recorders. Without an FSS contract against which to place its order, the Navy, in effect, made an improper sole-source award. Anacomp, Inc., B-242029, Mar. 15, 1991, 91-1 CPD para. 291 at 2. Accordingly, we conclude that the Navy's actions here violated the Competition in Contracting Act (CICA), 10 U.S.C. sect.