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| 1 minute read

Protest POV: GAO Demands Clarity on Professional Compensation

On April 25, 2025, the U.S. Government Accountability Office (“GAO”) partially sustained Owl International Inc.’s (“Owl International”) protest of a $214 million award to PCCI Inc. (“PCCI”) for management of the Navy’s emergency ship-salvage material system and global hazardous-spill response program. The incumbent contractor, Global PCCI JV, was a joint venture 51% owned by Owl International and 49% owned by PCCI. Although GAO rejected challenges to PCCI’s responsibility and the Navy’s evaluation of several technical elements, it agreed that the agency violated Federal Acquisition Regulation (FAR) 52.222-46 by skipping the required realism review of each offeror’s professional compensation plan and by failing to compare PCCI’s proposed compensation with the incumbent’s.

The Navy tried to sidestep the requirement, asserting that the solicitation’s focus on price reasonableness and balance “obviously” signaled that professional compensation would not be evaluated. But GAO was unmoved, noting that the solicitation expressly incorporated FAR 52.222-46, which unambiguously mandates an analysis of recruiting and retention impact, its realism, and consistency with the overall compensation scheme—benchmarked against the incumbent’s rates.  In sustaining the protest, GAO recommended that the Navy reopen the competition, obtain the information needed to conduct a proper FAR 52.222-46 assessment, and perform a new source-selection decision.  GAO further recommended that, if PCCI is not selected for an award under this new determination, the Navy should terminate the award to PCCI for convenience and reimburse Owl International for its protest costs.

POV: FAR 52.222-46 is not optional when it is (or should be, under FAR 22.1103) expressly incorporated into the solicitation. When an agency forgoes the mandated realism check on professional compensation—especially where the incumbent’s rates provide a ready benchmark—an offeror left holding the short straw has a strong basis to protest.  Agencies must request the salary and fringe-benefit details needed to perform the analysis.  Anything less invites exactly what happened here: a sustained protest, a source selection do-over, and potential termination of the improperly awarded contract.

Tags

government contracts, bid protests