A private contractor triumphed in a recent decision by the Comptroller General over whether work at a Navy facility in Pearl Harbor, Hawaii should remain in-house or be contracted out.
Trajen Inc., of College Station, Texas, challenged a decision which would have kept the work in-house at the Pearl Harbor Defense Fuel Support Point. Trajen bid against Navy employees under Office of Management and Budget Circular A-76 public-private competition rules. Trajen said the cost comparison made between the two bids was calculated incorrectly. The Comptroller General agreed that by adjusting four incorrect calculations, Trajen's cost would have been $160,094 lower than the DLA employees' bid.
Trajen accused the Navy team of brushing off a requirement in the contract to have a staff member perform minor spot painting of pumps, valves, and more. According to the request for proposal, the spot painting would require about 2/3 of a full-time equivalent job, or 1,172 hours a year.
The painting duties were included in the Navy calculation as part of a wage-grade 2 employee's responsibilities, which consist primarily of housekeeping chores. But the WG-2 job description doesn't include painting, the decision said, suggesting that another person would have to perform that work. As a result, the government's cost was increased by $121,446.
The cost-comparison was incorrect for a few other reasons, the decision said. Circular A-76 requires that the money private contractors would have to pay in taxes be subtracted from the contractor's costs, to keep things fair. To do this, the appeal authority that reviews the cost comparison must apply a tax rate provided by the IRS based on the type of industry involved.
In this case a 0.03 percent rate for "petroleum and petroleum products" in the "wholesale trade" industry was applied. But since the work being provided is in the services industry, it should have been taxed on a 0.05 percent rate, Trajen argued. The adjustment resulted in a $20,950 reduction in the contractor's costs.
Trajen also successfully challenged the calculation of its one-time conversion costs, which include relocation and health benefits. The adjustments reduced Trajen's costs by more than $100,000.
"Since contract performance by Trajen appears more economical than in-house performance, we conclude that Trajen should have been determined the winner of the appeal authority's cost comparison," the decision concluded.
Editor's Note
An earlier version of this story incorrectly identified the Pearl Harbor Defense Fuel Support Point as a Defense Logistics Agency facility. It is a Navy facility. The Defense Logistics Agency issued the request for proposals to contract for these services and performed the initial cost comparison.
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