In a closely watched procurement dispute, the U.S. Government Accountability Office has sided with the Navy, rejecting a protest over a $195 million maintenance contract at a Nevada training facility and reinforcing the service’s discretion in weighing past performance.

The decision, issued Jan. 22 and made public Thursday, marks the latest chapter in the Navy $195M GAO Contract suit, a challenge brought by GKG Contractors LLC after losing out to Chugach Logistics and Facility Services JV LLC.

GAO Defers to Navy’s Evaluation

At the heart of the dispute was whether the Navy improperly overlooked allegedly negative past performance by Chugach when evaluating proposals.

The GAO concluded it did not.

“The evaluation of past performance, by its very nature, is subjective, and we will not substitute our judgment for reasonably based evaluation ratings,” the watchdog wrote. “An offeror's disagreement with an agency's evaluation judgments regarding past performance, by itself, does not demonstrate that such judgments are unreasonable.”

In other words, the GAO signaled that second-guessing an agency’s reasoned judgment is not its role — even when millions of taxpayer dollars hang in the balance.

What Counts as “Relevant”

The Navy determined that contracts cited by GKG as evidence of adverse performance were not relevant to the current procurement. According to the decision, Chugach did not include the alleged projects in its proposal, and the Navy independently concluded they did not meet the criteria set out in the Aug. 14, 2024, solicitation.

Under that request for proposals, a “relevant” prior contract had to involve work exceeding $10 million at a base complex.

“The record shows that the [evaluator] reviewed these contracts, and determined that they were of no value to her assessment because they were valued at less than $10 million and were therefore not relevant,” the GAO wrote.

Price vs. Performance

The competition centered on support services at Naval Air Station Fallon. Puerto Rico-based GKG submitted a proposal priced at $172.7 million. Alaska-based Chugach proposed $195.8 million — roughly 13% higher.

But evaluators found that price alone did not tell the whole story.

The GAO decision notes that the evaluator emphasized the “sheer volume” of advantageous features in Chugach’s proposal, describing them as delivering clear long-term value and operational benefits that justified the price gap.

Although GKG held a slightly stronger past performance record, the Navy credited Chugach with longer-tenured key personnel and broader corporate experience. Chugach also demonstrated experience with airfield facilities, wastewater maintenance and projects closely aligned in scope and complexity with the Fallon contract.

Ultimately, evaluators concluded that Chugach’s technical approach and operational strengths outweighed GKG’s lower bid and marginally better performance history.

Representation and Response

An attorney for GKG declined to comment. The Navy did not immediately respond to requests for comment Friday.

GAO attorneys Todd C. Culliton and Tania Calhoun participated in drafting the decision.

The Navy is represented in-house by Andrew Campos and Erin L. Hernandez.

GKG is represented by Adam A. Bartolanzo, Stephen P. Ramaley, Cash W. Carter and Samara A. Rahman of Miles & Stockbridge PC.

Chugach is represented by Aron C. Beezley, Patrick R. Quigley, Nathaniel J. Greeson, Eugene J. Benick, Winni Zhang, Elizabeth A. Brown, Jenna R. Mazzella and Gabrielle A. Sprio of Bradley Arant Boult Cummings LLP.

As the dust settles on the Navy $195M GAO Contract suit, the ruling underscores a familiar lesson in federal procurement: when agencies build a defensible record and follow their own rules, the watchdog is unlikely to steer the ship in a different direction.