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B-203159,B-204032 1 (1981-08-05)

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                     UNITED STATES GENERAL ACCOUNTING OFFICE
                     UWASHINGTON, D.C. 20548


OFFICE O GENERAL COUNSEL



         B-203159                               August 5, 1981
         B-204032

         The Honorable John H. Chafee

         United States Senate

         Dear Senator Chafee:

              By letter dated June 29, 1981, you requested that
         we respond to questions raised by Mr. Frederick Evans,
         Jr. concerning a protest filed by RHK Services under
         Invitation for Bids No. N62472-80-B-0433, issued by the
         Naval Facilities Engineering Command for fire protection
         services at the Naval Education and Training Center,
         Newport, Rhode Island.

               This procurement was conducted pursuant to a Com-
         mercial Industrial Type Activities program under Office
         of Management and Budget Circular A-76. Under this pro-
         gram the agency estimates the cost of performing the work
         in house-and the estimate is used in competition with bids
         from commercial firms. Award is made to a commercial bid-
         der only if the cost of performing the services by contract
         is less than performance in house. Mr. Evans is an employee
         of the Navy currently performing these fire protection serv-
         ices.

               RHK, a commercial firm submitting the low bid at the
          January 8 bid opening, filed a protest with our Office on
          February 13 alleging that (1) the IFB omitted vital infor-
          mation and instructions; (2) Government representatives
          were improperly interpreting a Navy instruction, and (3)
          the Government was deceptively presenting cost comparisons
          in order to make the protester's bid seem unreasonably low.

               In its report to our Office in response to the protest,
          the Navy indicated that it believed that RHK's bid, which
          was much lower than the other commercial bids and the
          Government in-house estimate, may have been the result of
          an error. In the course of attempting to verify RHK's bid,
          the Navy discovered that RHK had estimated the requirements



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