Link: GAO Opinion
Agency: Defense Logistics Agency
Disposition: Protest denied.
Keywords: Sole-Source, industrial mobilization
General Counsel P.C. Highlight: The GAO will not disturb a sole source set aside for maintaining the industrial base unless the agency has abused its discretion.
Outdoor Venture Corporation (OVC) protests the award of a contract for lightweight maintenance enclosures (LMEs) by the Defense Logistics Agency (DLA), on a sole-source basis. The sole-source award was justified under 10 U.S.C. sect. 2304(c)(3) (2006), which provides for award of a contract to a particular source to maintain the source for a national emergency or to achieve industrial mobilization. GAO denies the protest.
OVC asserts that it was unreasonable for the agency not to have considered OVC for this contract award. GAO states that agencies have authority to conduct procurements using other than full and open competition and may properly award sole-source contracts to a particular concern for purposes of establishing or maintaining industrial mobilization base sources of supply. Where a military agency makes a sole-source award for purposes of maintaining a particular supplier of an item, concern for maximizing competition is secondary to the agency’s industrial mobilization needs. Decisions as to which producers should be included in the mobilization base, and which restrictions are required to meet the needs of industrial mobilization, involve complex judgments that must be left to the discretion of the military agencies. GAO will question those decisions only if the evidence convincingly shows that the agency has abused its discretion.
OVC does not challenge the awardee’s participation in the relevant industrial base or assert that the agency’s analysis of the awardee’s current minimum sustaining rate (MSR) and business condition is unreasonable or incorrect. More importantly, although OVC contends that it also would benefit from the award of a contract, it nonetheless concedes that it is producing at its MSR production capacity. The record establishes that the awardee may cease its operations which, the agency has determined, would seriously jeopardize the industrial base for MIL-SPEC tents. The record also shows that the agency gave specific consideration to whether OVC required additional work in order to maintain its production capability and concluded that it had adequate work at this time to maintain its MSR. GAO concludes that the agency reasonably exercised its discretion in making award to another offeror and in deciding not to make award to OVC. The protest is denied.