Army Lacked Basis for a Sole-Source Contract Extension

A Disabled Veteran-Owned Small Business Concern (SDVOSBC) set aside contract for chemical toilet services was awarded to DAV where it was subsequently revealed DAV did not quality as a SDBOSBC. The SBA noted its regulations may but do not require a termination or suspension of the contract so it decided to allow DAV to continue performance for the base year but stated it would not exercise the first option year. However, the Army changed its mind when it prepared a justification of a four month sole-source extension stating it did not have another contract in place for the services. MCS filed a protest stating the Army should have issued a solicitation in which it would be able to compete. The GAO clarified though it would not consider challenges to exercise an extension due to matters of contract administration it would consider protests alleging that a decision to exercise an option instead of conducting a new procurement.

The GAO noted though it acknowledged the absence of another contract made for an “unusual and compelling urgency” to make the extension but concluded the urgency was caused by the Army’s failure to plan for this procurement in advance and hence ruled the Army improperly extended the contract on a sole source basis (Major Contracting Services Inc., GAO B-40172).

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