United States General Accounting Office

GAO Report to Congressional Committees

May 1998 PUBLIC-PRIVATE

COMPETITIONS

Review of Sacramento

Air Force Depot

Solicitation

GAO/OGC-98-48

GAO United States

General Accounting Office

Washington, D.C. 20548

B-279897 

May 4, 1998

The Honorable Strom Thurmond

Chairman

The Honorable Carl Levin

Ranking Minority Member

Committee on Armed Services

United States Senate

The Honorable Floyd Spence

Chairman

The Honorable Ike Skelton

Ranking Minority Member

Committee on National Security

House of Representatives

This report responds to one of several reporting requirements contained in

the National Defense Authorization Act for Fiscal Year 1998, Public Law

105-85, relating to the allocation of depot workloads currently performed

at the closing Sacramento and San Antonio Air Logistics Centers. Section

359 of the act, codified at 10 U.S.C. 2469a, requires us to review

solicitations issued for the workloads at Sacramento and San Antonio, and

to report within 45 days of the solicitations’ issuance on whether they

(1) are in compliance with applicable laws and regulations and (2) provide

a “substantially equal opportunity for public and private offerors to

compete for the contract without regard to the location at which the

workload is to be performed.”

On March 20, 1998, the Air Force issued a solicitation for the purpose of

conducting a public-private competition for various depot-level workloads

being performed at the Sacramento Air Logistics Center at McClellan Air

Force Base, California. As described in detail in appendix I, the solicitation

provides for a single award, for a period of up to 8 years, for the

performance of workloads for the KC-135 and A-10 aircraft and for

commodities, including hydraulics, instruments/electronics, electrical

accessories, and miscellaneous backshop work. This letter provides our

assessment of the solicitation as required by 10 U.S.C. 2469a.1

Background Several laws govern the solicitation and selection of offerors to perform

depot workloads. Section 2469a of title 10 of the United States Code

1

On March 30, the Air Force, San Antonio Air Logistics Center at Kelly Air Force Base, Texas, issued a

solicitation for the propulsion business area workloads being performed at San Antonio. We will be

issuing a report addressing the requirements of section 2469a with respect to that solicitation.

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B-279897 

provides for special procedures for public-private competitions at the

closing Sacramento and San Antonio depots. In particular, section 2469a

sets forth certain elements that must be reflected in the solicitation and

considered in making the selection of the source for the performance of

the workloads. These include requirements that all estimated savings and

costs to the Department of Defense (DOD) related to the award must be

considered, and that no offeror may be given preferential consideration

for, or be limited to, performing the work at a particular location.

In addition to 10 U.S.C. 2469a, there are a number of other laws that

generally apply to the outsourcing of government-performed depot

workloads. In particular, 10 U.S.C. 2469 provides for the use of

“competitive procedures for competitions among private and public sector

entities” whenever DOD contemplates changing the performance of public

depot workloads of $3 million or more to contractor performance.

Further, because the Air Force will use the competitive acquisition system

for the workload competitions, these competitions are subject to the

standards in 10 U.S.C. chapter 137 and the Federal Acquisition Regulation

to the extent they are consistent with 10 U.S.C. 2469a and the other

applicable provisions relating to the outsourcing of depot workloads and

conversions of DOD functions to private-sector performance.

As required by 10 U.S.C. 2469a, we reviewed the Sacramento solicitation in

the context of the applicable laws and regulations to determine whether it

(1) complies with those laws and regulations and (2) provides a

substantially equal opportunity for public and private offerors to compete

for the contract without regard to performance location. We did our

review based on the solicitation terms as of April 22 and, in addition, we

spoke to Air Force officials and considered concerns raised informally by

potential competitors. We recognize that the terms of the solicitation may

be amended and that the concerns raised may change until the time for

receipt of proposals and that a potential offeror may file a protest with our

Office or with the courts. If a protest is filed, factual information, issues

and arguments raised by the parties will be reviewed in the context of an

adversarial process; for that reason, the result of a protest may differ from

that of our current review.

The results of our review, described in detail in appendix I, are

summarized in the following sections.

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B-279897 

Review Results

Compliance With

Applicable Laws and

Regulations

Based on our review of the Sacramento solicitation and concerns raised

informally by potential offerors, we found that the Air Force has not, as of

April 22, provided a sufficient basis to show that soliciting the workloads

on a combined basis is necessary to satisfy its needs. Otherwise, we found

that the solicitation is in compliance with applicable laws, including the

provisions of 10 U.S.C. 2469a.2

The specific issues raised by potential offerors and our conclusions follow.

Solicitation of Combined

Workloads

One potential competitor has expressed concern about the inclusion in the

Sacramento solicitation of diverse workloads as a single requirement. The

potential competitor argues that the combination of workloads into one

requirement may eliminate potential sources that are capable of

performing some, but not all of the individual workloads, and thus is

unduly restrictive of competition.

Because the Air Force issued a solicitation combining multiple workloads,

it was required to issue a determination that the workloads could not as

logically and economically be performed without combination by

potentially qualified sources, accompanied by a supporting report.

(See 10 U.S.C. 2469a(e).) On December 19, 1997, DOD issued the required

determination. We reviewed this report and found that it did not provide

adequate information to support the determination.3

 Subsequently, the Air

Force provided additional supporting rationale for the workload

combination. We reviewed the Air Force’s rationale and found that it was

not well supported.4

Because a combination of requirements can restrict competition, the

acquisition laws require that a workload combination be reasonably

required to satisfy the agency’s needs, and not simply an outgrowth of the

2

In addition to reviewing specific compliance issues arising under 10 U.S.C. 2469a, such as the

treatment of overhead savings, and addressing the section 2469a provisions concerning performance

location, we reviewed the Sacramento solicitation to determine whether it includes the specific

elements required by section 2469a. All of the section 2469a requirements are specifically

acknowledged in the solicitation, and we found no basis to conclude that the solicitation deviates in

any material respect from the section 2469a requirements.

3

Public-Private Competitions: DOD’s Determination to Combine Depot Workloads Is Not Adequately

Supported (GAO/NSIAD-98-76, Jan. 20, 1998).

4

Public-Private Competitions: DOD’s Additional Support for Combining Workloads Contains

Weaknesses (GAO/NSIAD-98-143, Apr. 17, 1998).

Page 3 GAO/OGC-98-48 Public-Private Competitions
B-279897 

agency’s desire for administrative convenience or an unsupported claim

that economies will be achieved. Normally, we review the solicitation of

combined requirements in the context of a bid protest; in that context, the

agency has an opportunity to justify the combination by showing it is

reasonably related to its needs or that it may actually enhance

competition. The Air Force’s supporting rationale, which was prepared in

a different context, is not at this point sufficient to justify the workload

combination. However, the rationale for the combination contains some

elements—such as readiness concerns and potential competition

enhancements—that if supported could establish the reasonableness of

the combination under the acquisition laws.

Best-Value Selection Criteria The Sacramento solicitation provides that the award will be made to the

responsible offeror whose conforming proposal represents “the best value

to the Government.” Under the solicitation’s evaluation scheme, described

in detail in appendix I, it is possible that the entity selected—whether

public or private—may not be the competitor whose proposal is

determined to represent the lowest evaluated cost. A potential competitor

has questioned the Air Force’s authority to select a source that does not

represent the lowest total evaluated cost for performing the workloads.

We found nothing in 10 U.S.C. 2469a, the basic authority governing the

Sacramento competition, which limits the Air Force to a selection based

on low evaluated cost. However, while the Air Force is not required to use

any particular source selection method, it still must comply with

provisions that apply generally to conversions of functions to private

sector performance. For example, if the Sacramento competition results in

the selection of a private-sector source, the Air Force will have to comply

with 10 U.S.C. 2461(a)(2). This provision requires that whenever a

DOD-performed function is converted to performance by a contractor, DOD

must provide Congress with a cost comparison that shows that savings

will result.

Evaluation of Overhead Savings

for Other Workloads

A potential competitor has raised concerns about the solicitation’s method

for crediting an offeror with overhead savings it expects to achieve in its

other government work as a result of adding the competed workloads. In

essence, the solicitation requires more support for savings that are

proposed to be achieved in the later years of the performance period.5

 The

5

For example, the evaluation formula provides that the proposed first year savings, if determined to be

reasonable “will be allowed,” while second year savings if supportable will also be allowed, but

“discounted for risk.” The solicitation goes on to explain that proposed savings for 3 years and beyond

“may be allowed if clearly appropriate, but in any event will be considered under the best value

analysis.”

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potential competitor’s concern is that this methodology may not capture

an offeror’s projected overhead savings for the entire performance period.

We found that the solicitation establishes a reasonable method for

measuring estimated overhead savings consistent with the requirements of

10 U.S.C. 2469a. Under section 2469a, the source selection process for the

Sacramento workloads must take into account “the total estimated direct

and indirect savings (including overhead) that will be derived by the

Department of Defense.” This provision is sufficiently general to permit

the Air Force broad discretion to decide exactly how to measure estimated

overhead savings as those savings apply to a successful offeror’s other

government work. Considering that the performance period for the

Sacramento workloads could last for as long as 8 years, we believe it is

reasonable for the Air Force to require strong support for projected future

savings and to consider that such projections may well be less accurate for

the later portion of the performance period.

Performance Location As discussed earlier, 10 U.S.C. 2469a requires us to determine whether the

Sacramento solicitation provides a “substantially equal opportunity for

public and private offerors to compete for the contract without regard to

where the workload is to be performed.” In addition, under 

10 U.S.C. 2469a(d), a competitor must be allowed to perform at the

location of its choosing and a competitor is not to be given preferential

treatment for, or be limited to, performing the workload in place or at any

other single location.

We found nothing in the solicitation that designates a particular location,

such as the closing Sacramento depot, at which performance is required or

preferred. Nor do any of the solicitation evaluation criteria evidence a bias

toward any particular performance location.

Agency Comments We informally obtained comments on our analysis from representatives of

the Air Force. While the Air Force did not disagree with most of our

conclusions, it raised several points concerning our conclusion with

respect to the workload combination and provided specific suggestions,

which we have incorporated where appropriate. The Air Force’s

comments and our evaluation are presented in appendix II.

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Please contact John Brosnan, Assistant General Counsel, on

(202) 512-8177 if you or your staff have any questions concerning this

report.

Robert P. Murphy

General Counsel

Page 6 GAO/OGC-98-48 Public-Private Competitions
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Contents

Letter 1

Appendix I 

Review of Solicitation

for Sacramento Air

Logistics Center

Workloads

10

Applicable Legal Standards 11

Solicitation 14

Analysis of Solicitation 16

Appendix II 

Agency Comments

and Our Evaluation

27

Abbreviations

BRAC Base Closure and Realignment Commission

CCH Cost Comparability Handbook

DOD Deparment of Defense

FAR Federal Acquisition Regulation

RFP request for proposals

SSA Source Selection Authority

Page 8 GAO/OGC-98-48 Public-Private Competitions
Page 9 GAO/OGC-98-48 Public-Private Competitions
Appendix I 

Review of Solicitation for Sacramento Air

Logistics Center Workloads

On March 20, 1998, the Department of the Air Force, Sacramento Air

Logistics Center at McClellan Air Force Base, California, issued request for

proposals (RFP) No. F04606-98-0007 for the purpose of conducting a

public-private competition for various depot-level workloads being

performed at the closing Sacramento Air Logistics Center. An extensive

amendment to the solicitation was issued on March 30, which, among

other things, extended the due date for the receipt of proposals from

May 20 to June 19.

Section 359 of the National Defense Authorization Act for Fiscal Year 1998,

Public Law 105-85 (1998 Authorization Act) added section 2469a to title 10

of the United States Code, which provides for special procedures for

public-private competitions for the workloads at the closing Sacramento

and San Antonio Air Logistics Centers. Among other things, section 2469a

also requires that we review all solicitations issued for the workloads at

the two closing Air Logistics Centers and report to Congress within 

45 days of the solicitations’ issuance regarding whether the solicitations

(1) are in compliance with the provisions of section 2469a and “all

applicable provisions of law and regulations” and (2) provide a

“substantially equal opportunity for public and private offerors to compete

for the contract without regard to the location at which the workload is to

be performed.”

Our review is based on the solicitation terms as of April 22. In addition, we

spoke to Air Force officials and considered concerns raised informally by

potential competitors. We recognize that the terms of the solicitation may

be amended and the concerns raised may change until the time for receipt

of proposals. Further, a potential offeror may file a protest with our Office

pursuant to 31 U.S.C. 3551-3556, or with the courts, or may file an

objection to the solicitation with the Department of Defense (DOD) under

10 U.S.C. 2469a(h). If a protest is filed, factual information, issues and

arguments raised by the interested parties will be reviewed in the context

of an adversarial process. For that reason, the result of a protest may

differ from that of our current review.

Based on our review of the Sacramento solicitation and the applicable

laws and regulations, we conclude that the Air Force has not, as of

April 22, provided a sufficient basis to show that soliciting the workloads

on a combined basis is necessary to satisfy its needs. Otherwise, we

conclude that the solicitation is in compliance with applicable laws,

including the provisions of 10 U.S.C. 2469a, and that it provides a

substantially equal opportunity for offerors to compete without regard to

Page 10 GAO/OGC-98-48 Public-Private Competitions
Appendix I 

Review of Solicitation for Sacramento Air

Logistics Center Workloads

performance location. Whether the actual evaluation process and the final

selection meets these standards and the others prescribed by 

10 U.S.C. 2469a will be the subject of a separate review by our Office after

the award is made.1

The following sections describe the legal standards applicable to the

Sacramento RFP and our analysis of the RFP under those standards.

Applicable Legal

Standards

The basic authority for the Sacramento workload competition is 

10 U.S.C. 2469a, which provides procedures for public-private

competitions for the workloads of the closing Sacramento and San

Antonio Air Logistics Centers that are proposed to be outsourced after the

November 18, 1997, enactment of the 1998 Authorization Act.2

 Section

2469a sets forth a number of requirements that the Air Force must satisfy

in the solicitations it issues and the source selection process it uses, to

make awards for the specified workloads. Particularly, the solicitation and

the source selection process must: (1) permit both public and private

offerors to submit offers; (2) take into account the fair market value of any

land, plant, or equipment at a closed or realigned military installation that

is proposed to be used by a private offeror in the performance of the

workload; (3) take into account the total estimated direct and indirect

costs that will be incurred by DOD and the total estimated direct and

indirect savings (including overhead) that will be derived by DOD; (4) use

cost standards to determine the depreciation of facilities and equipment

that provide, to the maximum extent practicable, identical treatment to

public and private offerors; (5) permit any offeror, whether public or

private, to team with any other public or private entity to perform the

workload at any location or locations of their choosing; and (6) ensure

that no offeror may be given any preferential consideration for, or in any

1

10 U.S.C. 2469a(g) provides that within 45 days after any award is made, GAO is to review the

selection process and report to Congress on whether (1) the procedures provide a substantially equal

opportunity for offerors to compete without regard to performance location, (2) the procedures were

in compliance with all applicable laws and regulations, (3) appropriate consideration was given to

factors other than cost in the selection, and (4) the award resulted in the lowest total cost to DOD for

the performance of the workload.

2

The workload for the C-5 aircraft that had been performed at the San Antonio Air Logistics Center

was awarded in September 1997 to the Warner Robins Air Logistics Center as a result of a

public-private competition. That competition, which was the subject our report entitled Public-Private

Competitions: Processes Used for C-5 Aircraft Appear Reasonable (GAO/NSIAD-98-72, Jan. 20, 1998),

was not conducted under 10 U.S.C. 2469a as it was completed before the enactment of the provision.

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Appendix I 

Review of Solicitation for Sacramento Air

Logistics Center Workloads

way be limited to, performing the workload in place or at any other single

location.3

In addition to 10 U.S.C. 2469a, there are a number of other laws that are

generally applicable to the outsourcing of government-performed depot

workloads. One of the principal requirements is in 10 U.S.C. 2469, which

provides for the use of “competitive procedures for competitions among

private and public sector entities” when DOD contemplates changing the

performance of a depot workload, valued at $3 million or more, to

contractor performance. In addition, section 8039 of the Department of

Defense Appropriations Act for Fiscal Year 1998, Public Law 105-56,

authorizes public-private competitions for depot workloads as long as the

“successful bids” are certified to “include comparable estimates of all

direct and indirect costs for both public and private bids.” Both provisions

state that Office of Management and Budget Circular A-76 is not to apply

to the competitions. Other than the reference in section 8039 of the act to

the use of comparable estimates of all costs, neither provision prescribes

the elements that constitute a competition. Further, 10 U.S.C. 2470

provides that depot-level activities are eligible to compete for depot

workloads.4

There are other provisions that apply, generally, to conversions of DOD

functions to private-sector performance. For example, section 8014 of the

1998 DOD Appropriations Act requires that DOD certify its in-house estimate

to congressional committees before converting any activity performed by

more than 10 civilian employees to contractor performance; the provisions

3

In addition, 10 U.S.C. 2469a(e) provides that DOD may issue a solicitation for multiple workloads

under 10 U.S.C. 2469a only if DOD first determines that individual workloads cannot as logically and

economically be performed without combination by potentially qualified sources and submits a report

to Congress setting forth the reasons for the determination. The provision also requires GAO to review

and provide its views on the DOD report. DOD decided to issue RFPs, including the one here,

containing combined workloads and submitted the required determinations and reports on 

December 19, 1997. We reported on January 20, 1998, that the DOD reports did not support the

determination. Public-Private Competitions: DOD’s Determination to Combine Depot Workloads Is

Not Adequately Supported (GAO/NSIAD-98-76, Jan. 20, 1998). Under 10 U.S.C. 2469a(e) DOD must wait

60 days from the submission of its report to issue an RFP containing combined workloads. There is no

other restriction in subsection (e). The Air Force issued the Sacramento solicitation containing

multiple workloads on March 20. Subsequent to our January 20 report, the Air Force provided

additional supporting rationale for the combined workloads. As discussed in more detail later, we

reported that the additional rationale was not well supported. Public-Private Competitions: DOD’s

Additional Support for Combining Workloads Contains Weaknesses (GAO/NSIAD-98-143, Apr. 17,

1998).

4

We see nothing in the other applicable provisions governing the outsourcing of depot workloads that

is inconsistent with 10 U.S.C. 2469a. In fact, the use of comparable cost estimates and the participation

of DOD depot-level activities are provided for in 10 U.S.C. 2469a. Consequently, consistent with the

rule of statutory construction that statutes be construed harmoniously to give effect to all provisions

whenever possible, all of the above-cited provisions are effective and applicable to the Sacramento

competition. See Posadas v. National City Bank, 296 U.S. 503-504 (1936); 53 Comp. Gen. 853 (1974).

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Review of Solicitation for Sacramento Air

Logistics Center Workloads

of 10 U.S.C. 2461 require that whenever a DOD-performed function is

converted to performance by a contractor, DOD must provide to Congress a

cost comparison that shows that a savings will result. Under 10 U.S.C.

2462, DOD is generally required to contract with the private sector if a

source can provide the supply or service at a lower cost than DOD can and

to ensure that all costs considered are realistic and fair.5

The Air Force implements these outsourcing authorities through the Air

Force Materiel Command, Procedures for Depot Level Public-Private

Competition, December 20, 1996 (Depot Competition Procedures). The

procedures are supplemented by the Defense Depot Maintenance Council

Cost Comparability Handbook (CCH), including the January 28, 1998,

revision, the Air Force Materiel Command Guide to the Cost

Comparability Handbook and the SAF/AQ Public-Private Competition Cost

Procedures of February 21, 1998. Among other things, the procedures

provide for issuing a solicitation calling for offers from public and private

sector sources. They establish the criteria, including those listed in 10

U.S.C. 2469a, for deciding how the Air Force will select a source for the

performance of depot workloads from the private or public sector.

According to these procedures, a competitive solicitation is to be issued in

accordance with the applicable provisions of the Federal Acquisition

Regulation (FAR). The FAR sets forth uniform policies and procedures for

the competitive acquisition system used by all executive agencies and

implements the provisions of chapter 137 of title 10 of the United States

Code, which govern DOD acquisitions.

This use of the competitive acquisition system subjects a depot workload

competition to the applicable provisions of chapter 137 and the FAR to the

extent that they do not conflict with the public-private competition

statutes cited above. (Newport News Shipbuilding and Dry Dock

Company, B-221888, July 2, 1986, 86-2 CPD 23.) Further, aspects of a

competition that fall outside the competitive acquisition system’s

parameters as defined by chapter 137 and the FAR, such as the comparison

of public and private offers for the workloads from the two closing Air

Logistics Centers, are governed by 10 U.S.C. 2469a and the other statutes

applicable to public-private depot competitions as implemented by the Air

Force.

In general, the standards in chapter 137 and the FAR (1) require that a

solicitation clearly and unambiguously state what is required so that all

5

Again, these provisions do not conflict with the six 10 U.S.C. 2469a competition requirements listed

above and are also applicable to the Sacramento competition. See Posadas v. National City Bank, cited

above.

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Appendix I 

Review of Solicitation for Sacramento Air

Logistics Center Workloads

offerors can compete on an equal basis and (2) allow restrictive provisions

to be included only to the extent necessary to satisfy an agency’s needs.

Further, under these standards, an agency must follow the criteria

announced in the solicitation and exercise its judgment in a reasonable

manner in determining which of the competing offers is to be selected.

(Dimensions International/QSOFT, Inc. , B-270966.2, May 28, 1996, 96-1

CPD 257.)

Solicitation The RFP for the Sacramento workloads provides for the award of eight line

items representing various performance phases for each of the different

workloads to be competed. For example, line item no. 0001, among other

things, calls for offers on a cost-plus-award-fee basis6

 for the transition

period for the KC-135 aircraft, the A-10 aircraft, and for commodities,

including hydraulics, instruments/electronics, electrical accessories, and

non-routed backshop/manufacturing. Other line items provide for

firm-fixed priced offers for the performance of these various workloads,

including “over and above” work,7

 once the transition to the awardee is

completed, and for several miscellaneous work requirements. The RFP

provides for a transition period, which is to begin at the award and to end

by September 30, 1999, a 5-year basic performance period, and up to 3

additional years based upon the performance of the awardee. The line

items representing the work for the KC-135 aircraft and the A-10 aircraft

during the basic performance period are to be awarded on a multiyear

basis, with guaranteed minimum quantities, while the other workloads are

to be awarded on a requirements-type basis with no minimum quantity

guaranteed.8

According to the solicitation, the competition is to be conducted in

accordance with FAR 15.101, which sets forth the source selection

processes and techniques to be used in competitive negotiated

acquisitions, as well as the applicable Air Force and Air Force Materiel

Command supplements. Further, the solicitation provides that the Depot

6

Public sector offers are to be on a cost reimbursement basis. Public offerors will not be paid an award

fee.

7

“Over and above” work consists of work items that are not included in the basic work requirements

but are within the scope of the award and may be ordered on the basis of a fixed hourly rate.

8

The requirements type line items provide that the Air Force will order all the work specified under a

particular line item that it needs during the performance period. The estimated quantity provided in

the solicitation is for information only; it does not constitute an order obligation. See FAR 16.503. On

the other hand, under the multiyear line items, the Air Force is obligated to order the minimum

quantity or be subject to cancellation charges which represent costs incurred that would have been

amortized over the multiyear period plus a reasonable profit. See 10 U.S.C. 2306(g) and FAR part 17.

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Review of Solicitation for Sacramento Air

Logistics Center Workloads

Competition Procedures, the CCH and their updates are to govern the

selection.

The solicitation states that the award will be made to the offeror—either

public or private—who is deemed responsible in accordance with the FAR,

9

whose proposal conforms with the solicitation and is judged to represent

the best value to the government. According to the RFP, the Source

Selection Authority (SSA) will integrate the source selection team’s

assessments of the proposals under the criteria listed in the solicitation to

arrive at a best-value selection.

The evaluation criteria consist of criteria for transition and operations,

cost, and assessment. Transition is made up of three factors: (1) integrated

master plan, (2) personnel plan, and (3) integrated master schedule.

Operations consists of five factors representing the major workloads:

(1) KC-135 aircraft, (2) hydraulics, (3) instruments/electronics,

(4) electrical accessories, and (5) A-10 aircraft. The assessment criteria,

which will be used for measuring the extent to which a proposal meets the

transition, operations and cost criteria, is made up of two parts;

(1) understanding of/compliance with the solicitation requirements and

(2) soundness of approach.

Under the cost criteria, proposals will first be assessed for completeness,

realism and reasonableness.10 Then each offeror’s total proposed cost is to

be determined by calculating the various cost estimates, unit prices, and

hourly rates proposed for the different line items. Next, the offerors’ total

alternative cost is to be developed by factoring in the numerous

adjustments to public and private offerors’ total proposed cost in

accordance with the CCH and the RFP. Finally, the offerors’ total evaluated

cost is to be determined by adjusting the total alternative cost to reflect

the “dollarized impact of significant discriminators, to the extent that a

dollar value can be assigned to such discriminators, based on identified

proposal strengths, weaknesses and risks.”11

9

According to FAR subpart 9.1, a responsible prospective contractor is one that meets the standards in

FAR 9-104, which include having adequate financial resources, or the ability to obtain them, the ability

to comply with the performance schedule, a satisfactory performance record, and possession of the

necessary facilities and equipment or the ability to obtain them.

10Under FAR 15.404-1(d) a cost realism analysis is the process of reviewing and evaluating specific

elements of an offeror’s cost estimate to determine whether the proposed elements are realistic for the

work to be performed. According to FAR 15-404-1, reasonableness is to be assessed through an

analysis of either cost elements or of the overall price.

11“Dollarized impact” as we understand it, is the assignment of an estimated dollar value to the

assessment of the benefit or detriment to the Air Force that would result from the aspects of an

offeror’s technical proposal in the calculation of an offeror’s total evaluated cost.

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Review of Solicitation for Sacramento Air

Logistics Center Workloads

Further, the RFP evaluation scheme provides for the consideration of

general matters such as the results of pre-award surveys, site visits, and

“fair market value.” In addition, the proposals are to be the subject of two

risk assessments: proposal risk and performance risk. Proposal risk is to

measure the risk associated with an offeror’s proposed approach to

accomplishing the solicitation requirements relating to each of the three

transition area factors and each of the five operations area factors.

Performance risk is to assess, based on an offeror’s present and past

performance, the probability of the offeror successfully accomplishing the

proposed effort.

Finally, the RFP provides that an “integrated assessment of best value” is to

be conducted by the SSA in order to select the successful proposal. In this

assessment, the criteria for transition and operations areas and cost

criteria are to be equally important, while the general considerations are to

be “considered substantially less important than Cost, Transition, or

Operations.” According to the RFP, this assessment is also to include “as

appropriate” items listed in the solicitation as “Other Considerations.” This

category essentially reiterates five of the six requirements for the

competition listed in the 1998 Authorization Act.12

Analysis of

Solicitation

As noted previously, subsection (g) of 10 U.S.C. 2469a requires us to

review the solicitation issued by the Air Force for the Sacramento

workloads and to report to Congress on whether (1) it is in compliance

with the requirements of 10 U.S.C. 2469a and other applicable laws and

regulations and (2) it provides a substantially equal opportunity for all

offerors to compete without regard to the performance location. The

following are the results of our review.

Compliance With

Applicable Laws and

Regulations

As discussed previously, several statutes govern the solicitation and award

process for public-private competitions for the depot workloads of the

closing Sacramento and San Antonio Air Logistics Centers. In particular,

10 U.S.C. 2469a sets forth the elements that must be considered in making

the selection of the public or private source for the performance of the

workloads. Further, because the Air Force will use the competitive

acquisition system, the standards in chapter 137 of title 10 of the United

States Code and the FAR apply to the extent they are consistent with 

12The one requirement not listed in section M-903 of the RFP is the requirement that the cost standards

used to determine the depreciation of facilities and equipment provide, to the maximum extent

practicable, identical treatment to public and private offerors. This requirement is addressed in the

RFP at paragraph 6.1.5.6 of section L and paragraph 1.2b(6) of section M-901.

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10 U.S.C. 2469a and the other applicable provisions relating to the

outsourcing of depot workloads and to conversions of DOD functions to

private-sector performance. (See Newport News Shipbuilding and Dry

Dock Co., cited above.)

In addition to reviewing the solicitation, we have spoken to potential

competitors who have informally raised several specific concerns. The

major concerns,13 analyzed below, are that (1) the combination in the

solicitation of diverse workloads into one requirement may eliminate

sources that are capable of performing some, but not all of the individual

workloads, and thus, is unduly restrictive of competition; (2) the use of a

best-value selection process, which can result in the selection of a public

or private source that does not represent the lowest total evaluated cost, is

contrary to the laws applicable to the conversion of DOD functions to

private-sector performance; and (3) the solicitation evaluation scheme for

measuring the credit to be given for an offeror’s projected overhead

savings on its other government work as a result of adding the Sacramento

workloads will not reflect the impact of the savings for the entire

performance period.

Solicitation of Combined

Workloads

One potential competitor has expressed concern to us about the inclusion

in the Sacramento solicitation of diverse workloads as a single

requirement. The potential competitor argues that the consolidation of

dissimilar workloads such as the commodity and the aircraft work will

limit the number of offerors capable of competing, without achieving a

corresponding reduction in cost or efficiency, except possibly, in the case

of an offeror proposing to perform at the closing Sacramento location.

Since the Air Force issued an RFP combining multi-aircraft (KC-135 and

A-10) and multi-commodity workloads (hydraulics,

instruments/electronics, and electrical accessories), DOD was required to

issue a determination that the workloads could not as logically and

economically be performed without combination by potentially qualified

sources, accompanied by a supporting report. (See 10 U.S.C. 2469a(e).) On

December 19, 1997, DOD issued the required determination. In accordance

with 10 U.S.C. 2469a(e), we reviewed the DOD report and informed

13A number of other questions have been raised concerning various aspects of the solicitation, such as

the absence of an economic price adjustment clause and the lack of detail on how fair market value of

the closing Sacramento facility and equipment will be evaluated. While we have carefully considered

all of the matters raised during our review, these matters did not raise questions that, in our view,

impacted the solicitation’s compliance with 10 U.S.C. 2469a or other applicable laws and regulations so

we have not treated them as separate issues in our report.

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Congress on January 20, 1998, that we found that it did not provide

adequate information to support the determination.14

Subsequently, the Air Force provided additional rationale supporting the

determination to combine the workloads. Essentially, the Air Force

maintained that combining the Sacramento aircraft and commodity

workloads would create a large, relatively stable workload that would

enable potential competitors to take advantage of efficiencies from shared

personnel and facilities for all of the workloads and to achieve overhead

savings. In addition, the Air Force pointed out that a single award for

aircraft and commodities workloads would reduce the performance and

readiness risks inherent in managing multiple workload transitions and the

resulting sequential personnel reductions at the closing Sacramento depot.

According to the agency, the delay and administrative burden as well as

the additional costs of awarding and managing multiple contracts for each

of the workloads, in combination with the other factors mentioned above,

necessitated the solicitation of the combined workloads.

We also reported our views on the additional supporting rationale to the

Subcommittee on Readiness, Senate Committee on Armed Services and

the Subcommittee on Military Readiness, House Committee on National

Security.15 While we recognized that the Air Force had submitted

considerable additional information relevant to the determination to

solicit combined workloads and that the use of a solicitation for combined

workloads represented a management judgment based upon various

qualitative and quantitative factors that may well be appropriate, we

concluded that, for the purpose of the determination required by 

10 U.S.C. 2469a(e), the supporting information had significant weaknesses

in logic, assumptions, and data.

For the purpose of the current review, the issue is whether the

combination of the workloads in the Sacramento solicitation complies

with the laws governing the competitive acquisition system and applicable

provisions of 10 U.S.C. 2469a. The applicable statute governing DOD

acquisitions is 10 U.S.C. 2305(a)(1), which generally requires that

solicitations permit full and open competition, and contain restrictive

provisions and conditions only to the extent necessary to satisfy the

agency’s needs. Since consolidated acquisitions combine separate,

14Public-Private Competitions: DOD’s Determination to Combine Depot Workloads Is Not Adequately

Supported (GAO/NSIAD-98-76, Jan. 20, 1998).

15Public-Private Competitions:DOD’s Additional Support for Combining Depot Workloads Contains

Weaknesses (GAO/NSIAD-98-143, Apr. 17, 1998).

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multiple requirements into one award, they have the potential for

restricting competition by excluding potential competitors that can only

furnish a portion of the requirement. Consequently, the combination of

requirements must be reasonably required to satisfy the agency’s needs,

and not simply an outgrowth of the agency’s desire for administrative

convenience or an unsupported claim that economies will be achieved.

(See National Customer Eng’g, 72 Comp. Gen. 132 (1993), 93-1 CPD 225;

The Sequoia Group, Inc., B-252016, May 24, 1993, 93-1 CPD 405.)

Normally, we review the solicitation of combined requirements in the

context of a bid protest based upon the argument that the combination

unduly restricts competition. (See 31 U.S.C. 3551-3556.) In response to the

protest, the agency will usually attempt to justify the combined

requirements by showing that the combination is reasonably related to its

needs or that the combination may actually enhance, rather than inhibit,

competition. The Air Force’s rationale for the structure of the Sacramento

solicitation was prepared in a different context, in order to establish that it

was more logical and economical, than not, to combine the workloads,

and if a protest is filed the Air Force will have an opportunity to provide a

more detailed justification. As explained below, our assessment is that

although the rationale contains some elements that could be used to

support a combined requirement under the acquisition laws, it is not at

this point sufficient to justify the workload combination.

Several of the reasons cited by the Air Force for the combination of the

commodity and aircraft workloads pertain to matters related to hoped for

efficiencies. For example, the agency says that a single contractor will be

able to share personnel skills, fixed overhead-type functions (planning,

scheduling, materiel support, etc.) and backshops among the various

workloads.16 To the extent these projected efficiencies are based on the

assumption that all of the workloads will be performed at the closing

Sacramento location or some other single location that can accommodate

them, these efficiencies cannot be used to justify the workload

combination. The solicitation does not, and by law it cannot, require that

the workloads be performed in place at the Sacramento facility or at any

other location. In fact, 10 U.S.C. 2469a(d) provides that any offeror may

propose to perform at any location or locations it chooses and that no

offeror may be given preferential consideration, or be limited to,

performing the workloads in place or at any other single location. So, the

perceived benefits from the performance of the combined workloads at a

16While these factors may indeed represent potential efficiencies, the Air Force has not maintained that

they are related to technical requirements or risks inherent in performing these workloads or

represent performance methods that are needed to successfully accomplish the work.

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single location cannot serve as a justification for combining the workloads

in the solicitation.

On the other hand, the Air Force has cited factors such as the risk to

readiness and workload stability as reasons for combining the workloads

into a single award. According to the agency, the readiness risk is

associated with the management of separate transitions of the multiple

workloads and with the decreased efficiency of the workforce at the

closing depot due to multiple reduction-in force actions. Moreover, the Air

Force states these factors would be exacerbated by the Base Closure and

Realignment Commission (BRAC) decision requiring that the depot be

closed and the workloads transferred by July 2001. Elements such as these

do relate to the Air Force’s needs. A statement that identifies and fully

explains these concerns may support the solicitation of combined

requirements.17

In addition, the Air Force maintains that the workload combination will

promote competition by enhancing the workload’s overall stability. In this

regard, the combination mixes the stable aircraft work, that can be

competed with a guaranteed minimum quantity, with the less stable

commodity workloads that cannot be competed using a guaranteed

minimum. While the Air Force cited workload stability primarily as a

factor supporting greater efficiency, it also points out that the more stable

combined requirement will foster competition as it combines unattractive

workloads with more desirable work. In fact, Air Force officials expressed

doubts as to whether some of the workloads solicited separately would

generate any competition. In this context, the impact of workload stability

on competition, if backed by sufficient evidence, could also be a factor in

support of the workload combination. (See Canon U.S.A., Inc., B-232262,

Nov. 30, 1998, 88-2 CPD 538.)

Our bid protest decisions have held that in order to determine whether the

solicitation of combined requirements is unduly restrictive of competition

in a particular instance, the agency’s justifications must be balanced

against the possible restriction of competition represented by potential

competitors who maintain that they can perform only a portion of the

requirement. (See, for example, Phoenix Technical Services Corp.,

B-274694.2, Mar. 12, 1997, 97-2 CPD 142.) Here, there is a solicitation that

contains combined requirements, a potential competitor who says it can

17We have previously reported that there is no inherent reason that workload transfers should result in

readiness problems. However, they do need to be carefully managed. Depot Maintenance: Lessons

Learned From Transferring Alameda Naval Aviation Depot Engine Workloads (GAO/NSIAD-98-10BR,

Mar. 25, 1998).

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Review of Solicitation for Sacramento Air

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perform only part of the requirements and some Air Force justifications

for the workload combination, including readiness concerns and potential

competition enhancements, which, if supported, may establish the

reasonableness of combined requirements. Based on what is available at

this time, however, we cannot say that the Air Force has sufficiently

justified the solicitation of combined workloads as being reasonably

related to its needs as opposed to the desire to avoid management

difficulties that may accompany the movement of workloads at different

times to different locations. Nor has the agency sufficiently supported its

view that the workload combination will likely enhance competition. If a

protest is filed, the Air Force will have an opportunity to supply further

support to show that the Sacramento solicitation is not unduly restrictive

of competition. (See National Customer Eng’g, cited above.)18

Best-Value Selection

Criteria

As discussed previously, the Sacramento solicitation provides that the

award will be made to the responsible offeror whose conforming proposal

represents “the best value to the Government.” According to the

solicitation, the Air Force is to determine best value by integrating the

evaluations of the proposals under the specific criteria, including

transition and operations, cost criteria, assessment criteria, and general

considerations. Transition, operations, and cost are to be accorded equal

weight, while general considerations are to be substantially less important

than cost, transition, or operations. Under the RFP evaluation scheme, it is

possible that the entity selected—whether public or private—may not be

the competitor whose proposal is determined to represent the lowest total

evaluated cost.

A potential competitor has questioned the Air Force’s authority to select a

source that does not represent the lowest total evaluated cost for

performing the workloads. In this regard, the potential competitor has

suggested that 10 U.S.C. 2469a, the basic authority governing the

Sacramento competition, limits the Air Force to a selection based on low

evaluated cost. We find nothing in 10 U.S.C. 2469a that prescribes the use

of any particular evaluation method or requires that cost be the

determining factor in the selection of the successful offeror.

Subsection (d) of 10 U.S.C. 2469a sets forth requirements the Air Force

18As discussed later, we do not find, however, that the workload combination in the Sacramento

solicitation is necessarily inconsistent with the 10 U.S.C. 2469a(d) requirement that competitors be

permitted to perform at their chosen locations and not be given preferential treatment for performing

at any single location. While many of the factors cited by the Air Force in favor of combining the

workloads are related to projected efficiencies of performance at the closing Sacramento location,

they could well apply to other locations that can accommodate all of the workloads. Moreover, there is

no restriction as to performance location in the solicitation.

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Review of Solicitation for Sacramento Air

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must satisfy in the selection process. While they include a number of cost

elements that must be considered in the selection, such as depreciation,

noncost factors such as performance location are also specified.19 In view

of the mixture of cost and noncost elements and the lack of any specific

reference to a particular evaluation method, in our view the subsection (d)

requirements do not dictate that cost be the deciding factor in the

selection of a source for the Sacramento and San Antonio workloads.20

While the Air Force is not required to use any particular source selection

method, it still must comply with provisions that apply generally to the

conversion of functions to private-sector performance, particularly 

10 U.S.C. 2461. Section 2461(a)(2) requires that whenever a DOD-performed

function, such as the Sacramento workloads, are converted to

performance by a contractor, DOD must provide to Congress a cost

comparison which shows that savings will result. This provision would

apply if the Sacramento competition resulted in the selection of a

private-sector source. Similarly, the Air Force’s selection would have to

comply with 10 U.S.C. 2462, which requires that DOD procure the services it

needs from the private sector if a private source can provide that service

at a lower cost.21

Evaluation of Overhead

Savings for Other

Workloads

A potential competitor has raised concerns to us about the method

provided in the RFP for evaluating the overhead savings that may be

attributed to an offeror’s existing government work resulting from the

addition of the competed workloads. The concerns center on whether the

projected savings will be applied to the entire performance period for the

Sacramento workloads. For the following reasons, we conclude that the

RFP establishes a reasonable method for measuring the estimated overhead

savings that can be attributed to the addition of the competed workloads

to existing government work and that it complies with the relevant

provisions of 10 U.S.C. 2469a.

19The fact that a number of the requirements in subsection (d) concern elements of cost that must be

considered in the evaluation does not mean that the selection must be based only on cost. It does

mean, we think, that cost must be a significant factor in any selection. This would be the case under

the Sacramento RFP, as cost is weighted the same as each of the two major noncost or technical areas.

20This interpretation is consistent with subsection (g) of 10 U.S.C. 2469a, which provides for GAO

review of the awards made under the San Antonio and Sacramento competitions. In the reviews, we

are to consider whether “appropriate consideration was given to factors other than cost” in the

selection and, on the other hand, to report on whether the award “resulted in the lowest total cost to

the Department of Defense for the performance of the workload.”

21In addition, the Air Force would be required to certify to congressional committees the various cost

estimates in accordance with section 8039 of the 1998 Defense Appropriations Act and, if a private

sector source is selected, the Air Force would have to certify to congressional committees its

“in-house estimate” in accordance with section 8014 of the act.

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The solicitation states that an adjustment will be made to a public or

private offeror’s proposal for overhead savings to be realized for other

workloads. At the outset of the applicable provision, the solicitation

warns: “Due to uncertainty in forecasting long term overhead rates by both

public and private offerors, the ability to forecast associated out-year

savings significantly diminishes with time.” The RFP further explains that

the evaluation will emphasize an offeror’s analysis and documentation of

proposed management initiatives to ensure that the projected savings,

particularly those predicted for more than 24 months after award, will

occur. The evaluation formula provides that the proposed first year

savings, if determined to be reasonable “will be allowed,”22 while second

year savings if supportable will also be allowed, but “discounted for risk.”

The RFP goes on to explain that proposed savings for 3 years and beyond

“may be allowed if clearly appropriate, but in any event will be considered

under the best value analysis.”23

To help ensure that the proposed savings that are evaluated are realized by

the agency, the solicitation further provides that private offerors must

agree, after award, to negotiate appropriate government contract and

forward pricing rate reductions. A winning public offeror would similarly

be required to adjust the rates charged for the workloads that were the

subject of the evaluation credit.

We have no reason to question the Air Force’s method for evaluating

overhead savings. It seems reasonable for the agency to carefully evaluate

an offeror’s projected savings in terms of the information and analysis

provided to the agency during the evaluation process and to factor into

that evaluation the possibility that conditions could change over time so

that what may be achievable savings in the short term may be less so in

the longer term. Similarly, we have no basis to conclude that the RFP

evaluation process for the projected overhead savings on other workloads

is other than a reasonable implementation of the 10 U.S.C. 2469a(d)(2)(B)

requirement that the source selection process take into account “the total

estimated direct and indirect savings (including overhead) that will be

derived by the Department of Defense.” This provision is sufficiently

general to permit the agency broad discretion to decide exactly how to

measure “estimated” overhead savings as those savings apply to a

22As we understand it, the term “allowed” means that the amount of the projected savings that the

agency considers to be reasonable will be credited to the offeror in the determination of the offeror’s

total alternative cost.

23This part of the evaluation scheme provides for the consideration of out-year savings that are not

clearly supported by backup data, but which otherwise seem to be achievable, at least in part, as a

positive element in the noncost portion of the SSA’s integrated assessment of best value.

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successful offeror’s other government work. Considering that the

performance period for the Sacramento workloads could extend for as

long as 8 years, we believe it is a legitimate exercise of the agency’s

discretion to require strong support for projected future savings and to

consider that such projections may well be less accurate for the later

portion of the performance period.

Performance Location Subsection (g) of 10 U.S.C. 2469a provides that our report on a solicitation

for workloads from the closing depots is to include our view as to whether

the solicitation under review provides a “substantially equal opportunity

for public and private offerors to compete for the contract without regard

to the location at which the workload is to be performed.” In addition, 

10 U.S.C. 2469a(d), which lists the requirements for the source selection

process, provides that a public or private competitor must be permitted to

perform at the location of its choosing and a competitor is not to be given

preferential treatment for, or be limited to, performing the workload in

place or at any other single location.

We have found no provisions in the solicitation that designate a particular

location, such as the closing Sacramento depot, at which performance is

required or preferred. Nor do any of the solicitation evaluation criteria

evidence a bias towards any particular performance location.

Nonetheless, as discussed earlier, a potential competitor has expressed

the concern that the consolidation of workloads in a single solicitation, in

effect, would favor an offeror proposing to perform the work at the closing

Sacramento facility. The basis of this concern is that the commodity and

aircraft workloads have little technical relationship to each other and were

arguably combined only because they had been performed together at the

Sacramento depot.

As we understand the 10 U.S.C. 2469a provisions concerning performance

location, they are to prevent the Air Force from specifying a performance

location or from creating an advantage for a particular location for reasons

that are not reasonably related to performance or cost. In this regard, the

legislative history of 10 U.S.C. 2469a makes clear that the provision does

not prohibit offerors from selecting the best performance location and

receiving an evaluation credit for that location based upon legitimate

performance considerations. In fact, the statement of managers

accompanying the 1998 Authorization Act states that the agency “would be

expected to consider real differences among bidders in cost or capability

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to perform the work based on factors that would include the proposed

location or locations of the workloads.” (Conf. Rept. No. 105-340 on 

H.R. 1119, at 717 (1997).) While it may be that the closing Sacramento

depot would be an advantageous performance location for the combined

workloads, as stated earlier, other locations or combinations may also be

suitable. Thus, we cannot say that the workload combination, without a

corresponding location restriction in the solicitation, directly interferes

with an offeror’s right under 10 U.S.C. 2469a(d) to compete without regard

to performance location.

Compliance With Other

Applicable Provisions of 

10 U.S.C. 2469a

In addition to reviewing specific compliance issues arising under 

10 U.S.C. 2469a, such as the treatment of overhead savings, and addressing

the section 2469a provisions concerning performance location, we

reviewed the Sacramento solicitation to determine whether it otherwise

complies with the requirements of section 2469a.

As noted previously, 10 U.S.C. 2469a sets forth a number of requirements

that must be satisfied in the Sacramento solicitation and selection process.

Particularly, the solicitation and the source selection process must:

(1) permit both public and private offerors to submit offers; (2) take into

account the fair market value of any land, plant, or equipment at a closed

or realigned military installation that is proposed to be used by a private

offeror in the performance of the workload; (3) take into account the total

estimated direct and indirect costs that will be incurred by DOD and the

total estimated direct and indirect savings (including overhead) that will

be derived by DOD; (4) use cost standards to determine the depreciation of

facilities and equipment that provide, to the maximum extent practicable,

identical treatment to public and private offerors; (5) permit any offeror,

whether public or private, to team with any other public or private entity

to perform the workload at any location or locations of their choosing; and

(6) ensure that no offeror may be given any preferential consideration for,

or in any way be limited to, performing the workload in place or at any

single location. Section 2469a requires that all six of these conditions be

stated in the solicitation.

Reviewing the solicitation in the context of the 10 U.S.C. 2469a

requirements, we found that all of the requirements are specifically

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acknowledged in the solicitation.24 Further, we are unaware of other

provisions of the solicitation that are inconsistent with the 10 U.S.C. 2469a

requirements. Thus, we find no basis to conclude that the Sacramento

solicitation deviates in any material respect from the requirements of 

10 U.S.C. 2469a.

24Five of the six requirements are listed in section M-903 of the solicitation. The one requirement not

listed in this section is the requirement that cost standards used to determine the depreciation of

facilities and equipment provide, to the maximum extent practicable, identical treatment to public and

private offerors. This requirement is addressed in the solicitation at paragraph 6.1.5.6 of section L and

paragraph 1.2b(6) of section M-109, as well as in the SAF/AQ Public-Private Competition Cost

Procedures of Feb. 21, 1998.

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Appendix II 

Agency Comments and Our Evaluation

We informally obtained comments on our review from Air Force officials.

While they did not disagree with most of our conclusions, they had several

concerns with our conclusion that the Air Force had not, as of April 22,

1998, provided a sufficient basis to show that soliciting the various

workloads on a combined basis is necessary to satisfy the agency’s needs.

The Air Force’s concerns and our responses follow.

First, the Air Force requested that we make it clear that all of our

conclusions concerning the workload combination in the Sacramento

solicitation were based on the agency’s rationale in support of its

determination that it was more logical and economical, than not, to

combine the workloads. The Air Force states that it has not had the

opportunity to explain how the combination meets its needs and requests

that we remove any indications that the agency has not sufficiently

analyzed or justified the workload combination.

Our report indicates that the Air Force’s rationale for the workload

combination was prepared in the context of its mandated determination

that the combination was logical and economical, rather than in the

context of explaining how the combination is reasonably related to its

needs. Further, we say our review of the solicitation was conducted in a

different context than would be the case if a protest were filed and that the

result of a protest may be different. As far as the Air Force’s opportunity to

explain how the workload combination meets its needs, we had numerous

informal discussions with Air Force officials about the workload

combination in the context of this review of the solicitation. The Air Force

has provided explanations regarding the workload combination since

December 1997. While those explanations have been in a different context,

as we point out in our review, the explanations in a number of respects

discuss the workload combination in terms of the agency’s needs.

Second, the Air Force states that we are concerned that some of the

potential efficiencies cited by the Air Force in support of the workload

combination could arguably be realized only if the workload is performed

at a single location. The Air Force points out that the solicitation does not

require a particular performance location. We recognize this in our report.

Nevertheless, our point is that, in view of the statutory prohibition against

any location restriction in the solicitation, it is not appropriate to justify

the workload combination based upon performance at a single, as

opposed to multiple locations.

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Appendix II 

Agency Comments and Our Evaluation

Third, the Air Force says that it is not clear from our report whether the

concern raised by a potential competitor regarding the workload

combination was a general one based upon a possible restriction on

competition or was based upon the argument that the combination, in

effect, mandated performance at the closing Sacramento depot. The

concerns were based upon both points and we discuss each point in the

context it was raised.

Finally, the Air Force requests two specfic changes. First, the Air Force

requests that we recognize in this report, as we did in our report on the

agency’s additional rationale for the workload combination, that decisions

to combine requirements in a solicitation are a matter of agency judgment

and may prove to be appropriate. We have clarified our report to make this

point. Second, the Air Force requests that we state that its workload

combination is not well supported in terms of logic and economies rather

than not sufficient to show a reasonable relationship to its needs. We do

not agree. While we recognize that the Air Force’s rationale was prepared

in the context of its mandated determination, we conclude for the purpose

of this review that, as of April 22, the available information does provide a

sufficient basis to show that the combined workloads are necessary to

meet the agency’s needs.

We have incorporated additional changes suggested by the Air Force

where appropriate.

(709329) Page 28 GAO/OGC-98-48 Public-Private Competitions
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