GAO upholds bundling protest

The Government Accountability Office sustained a protest from a small business that argued the Army Tank-Automotive and Armaments Command improperly bundled engineering and support services into one blanket purchase agreement.

Sigmatech Inc., a small business technology company in Huntsville, Ala., filed a protest with GAO after it learned that system engineering and technical assistance support services it had previously performed for the Army were going to be carried out by Sverdrup Technology Inc. under a $130 million, five-year blanket purchase agreement. The contract was arranged through a General Services Administration schedule.

When an agency decides to bundle requirements, which is defined as consolidating two or more procurements previously performed separately, it is required to conduct market research to prove that the action is necessary and justified. The Federal Acquisition Regulation includes strict rules on bundling, because it can reduce the opportunities for small businesses, which don't always have the resources to compete on large contracts.

Agencies also are required to explain their bundling plans to a representative from the Small Business Administration and to notify incumbent small businesses within 30 days of their decision to bundle.

GAO found that TACOM did not perform the required analysis or provide its plans to an SBA representative for review. The Army also delayed in informing Sigmatech of its plans, GAO found.

GAO recommended that the Army conduct the required analysis to determine whether or not bundling was justified or whether the services should continue to be contracted to small businesses. It also suggested that the Army submit any bundling plans to SBA for review. If the Army determines the services were improperly bundled, GAO said it recommends that the Army recompete the requirement among small businesses.

The Army argued that the protest was filed in an untimely manner and that Sigmatech was not an "interested party" and therefore could not protest the award. GAO dismissed both of those arguments. "The firm has the direct economic interest sufficient to protest this issue before our Office," GAO said.

The Army also argued that the FAR requirements related to bundling should not apply in this case, an assertion with which GAO disagreed.

Deborah Dutton, business manager at Sigmatech, said the company had no comment. She questioned where information related to the case had been released. GAO released the decision on its Web site Friday.

Neither the Army nor Sverdrup responded to requests for comment.