Army’s Market Research On Commercial Waste Contractors Is “Garbage” And Solicitation Is “Thrown Out”

Garbage in, garbage out. That was essentially the U.S. Government Accountability Office’s (“GAO”) opinion of the Army’s market research in a commercial items procurement for solid waste management services when sustaining a contractor’s pre-award protest in Red River Waste Solutions, LP, B-411760.2 (Jan. 20, 2016).

Red River Waste Solutions, LP (“RRWS”) was the incumbent solid waste management services contractor at Fort Polk, LA. In May 2015, the Army issued a solicitation for a new solid waste management services contract. The new solicitation differed from RRWS’s existing contract in that the contract line item numbers (“CLINs”) for contractor overhead costs were eliminated and the solicitation required offerors to submit fixed prices, on a per-ton basis, for solid waste collection and disposal, instead of pricing based on a monthly rate.

RRWS filed a pre-award protest in July 2015 asserting that the “solicitation’s requirements for fixed prices on a per-ton basis were inconsistent with commercial practice, and that the solicitation’s estimated quantities for the various CLINs were overstated.” The Army took corrective action, made some minor changes to the solicitation, and re-issued the solicitation. In October 2015 RRWS again filed a timely pre-award protest challenging the Army’s per-ton pricing provisions in the solicitation as inconsistent with customary commercial practice.

RRWS and the Army agreed that the solid waste management services at issue here were “commercial items” Procurement for commercial items is generally governed by FAR Part 12, and requires “market research.” “FAR § 10.002(b) requires market research by the acquiring agency to address, among other things, customary practice regarding the provision of the commercial items.” The Army’s “market research”, however, consisted of only three flawed items. First, Fort Polk reviewed other Army refuse contracts and no commercial contracts. The GAO found that “the agency’s reliance here on other government refuse contracts does not provide a reasonable basis for its determination that the pricing provisions in this solicitation reflect customary commercial practice.” Second, the Army requested feedback from industry in a Sources Sought Notice (“SSN”). The responses to the SSN, however, overwhelming explained that price per ton was not customary commercial practice. And, finally, the Army contacted a single trash company near Fort Drum in Upstate New York. But, the Administrative Record did not disclose “any particular commercial refuse contract to which the New York trash company was a party.”

Based on the foregoing, the GAO rejected the Army’s contention “that its market research provides a reasonable basis for determining that the price-per-ton provisions in this solicitation are consistent with customary commercial practice. Accordingly, the protest is sustained, based on the agency’s failure to reasonably support that determination.”