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The U.S. Government Accountability Office (GAO) has recommended that the U.S. Navy reevaluate its $214 million contract award for the management and operation of its emergency ship salvage material system and global hazardous spill response program. The decision follows the partial sustenance of a bid protest filed by Owl International Inc.

In its April 25, 2025 ruling, the GAO concluded that the Navy failed to assess the realism of professional employee compensation proposals when awarding the contract to PCCI Inc. The protest, filed by Owl International Inc., was partly sustained as the GAO found the Navy’s evaluation process did not comply with Federal Acquisition Regulation (FAR) requirements.

The Navy argued that its September 2023 request for proposals (RFP) did not require an evaluation of professional compensation proposals. However, the GAO disagreed, pointing out that the RFP incorporated a FAR provision (52.222-46) that mandates such an evaluation. The GAO emphasized that this analysis is critical to ensuring that contractors can attract and retain the necessary skilled professionals to deliver quality services under the contract.

GAO's Findings:

• The Navy did not assess the professional compensation proposals submitted by PCCI and Owl International, nor did it evaluate whether these proposals were lower than the incumbent's compensation.

• The failure to conduct this required analysis led the GAO to sustain Owl International's protest.

• The GAO recommended that the Navy reassess the proposals in accordance with the FAR provision, with the possibility of rejecting any proposals found to be unrealistically low.

While the GAO denied other protest grounds, including Owl International’s concerns about PCCI’s financial condition and the Navy’s evaluation of various proposal aspects, the decision has major implications for the contract award process.

Recommendations:

• The GAO urged the Navy to make a new source selection determination after reassessing the proposals, considering the necessary professional compensation analysis.

• Should PCCI not be selected for the award, the GAO recommended that the Navy terminate the award to PCCI and issue a new award, if appropriate.

• The GAO also recommended that the Navy reimburse Owl International for its protest costs.

Representatives from the involved parties were not immediately available for comment.