B-164800, OCT. 4, 1968

B-164800, OCT. 4, 1968

TO NORTH AMERICAN EQUIPMENT CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JULY 3, 1968, ADDRESSED TO THE PURCHASING AND CONTRACTING OFFICE, FORT HOLABIRD, MARYLAND, AND TO YOUR LETTER OF SEPTEMBER 13, 1968, ADDRESSED TO THIS OFFICE, REQUESTING THAT ALL BIDS UNDER DEPARTMENT OF THE ARMY INVITATION FOR BIDS NO. DABB09- 68-B-0090 BE REJECTED AND A NEW SOLICITATION ISSUED ON THE GROUND THAT THE 100-PERCENT SMALL BUSINESS SET-ASIDE CONTAINED IN THE SOLICITATION IS UNDULY RESTRICTIVE OF COMPETITION.

ITEM 1 OF THE SUBJECT SOLICITATION WAS FOR THE PURCHASE AND INSTALLATION OF GRAVITY FLOW STORAGE RACKS AND ITEM 2 WAS FOR THE RELOCATION OF A CONVEYOR SYSTEM. THE SOLICITATION WAS ISSUED ON A 100 PERCENT SMALL BUSINESS SET-ASIDE BASIS AND THE AMENDED BID OPENING DATE WAS JUNE 27, 1968. FOUR BIDS WERE RECEIVED AT THAT TIME FROM SMALL BUSINESS CONCERNS, THREE OF WHICH QUOTED PRICES FOR THE STORAGE RACK PORTION OF THE SOLICITATION, THE SUBJECT OF YOUR PROTEST. AWARD OF ITEM 1 WAS MADE TO THE KINGSTON MANUFACTURING COMPANY ON JUNE 29, 1968, IN THE AMOUNT OF $147,856.90. AWARD OF ITEM 2 WAS MADE ON THE SAME DATE TO THE J. J. BRODERICK COMPANY, IN THE AMOUNT OF $35,649.

YOU COMPLAIN THAT THE STORAGE RACK SPECIFICATIONS LISTED IN THE SOLICITATION COULD BE MET ONLY BY YOUR COMPANY, A LARGE BUSINESS AND THEREFORE EXCLUDED FROM THIS PROCUREMENT, AND THE KINGSTON MANUFACTURING COMPANY, THE SUCCESSFUL BIDDER. YOU MAINTAIN THAT THE EXCLUSION OF LARGE BUSINESS BIDDERS IN EFFECT CREATED A MONOPOLY FOR KINGSTON MANUFACTURING COMPANY BECAUSE ANY BIDDERS OTHER THAN KINGSTON WOULD BE FORCED TO SUPPLY RACKS MANUFACTURED BY KINGSTON.

THE REPORT SUBMITTED TO OUR OFFICE BY THE DEPARTMENT OF THE ARMY STATES THAT BEFORE ISSUANCE OF THE SOLICITATION A REVIEW WAS CONDUCTED TO DETERMINE WHETHER THE INSTANT PROCUREMENT PROPERLY SHOULD BE SET ASIDE PARTIALLY OR ENTIRELY FOR SMALL BUSINESS PARTICIPATION. IT WAS DETERMINED THAT THE SPECIFICATIONS WERE WRITTEN SO THAT "MANY SMALL BUSINESSES CAN PROVIDE THESE RACKS" AND THAT OTHER PROCURING ACTIVITIES CUSTOMARILY PROCURE RACKS SUCH AS INVOLVED HERE BY TOTAL SMALL BUSINESS SET-ASIDES. FURTHER, THE "MATERIAL HANDLING ENGINEERING DIRECTORY AND HANDBOOK," AN ACCEPTED REFERENCE BOOK IN THE MATERIAL HANDLING FIELD, WAS CONSULTED AND WAS FOUND TO LIST 30 FIRMS UNDER THE CATEGORY OF GRAVITY FLOW RACKS. ACCORDINGLY, IT WAS DETERMINED THAT "THERE IS A SUFFICIENT NUMBER OF SMALL BUSINESSES TO PROVIDE ADEQUATE COMPETITION AT FAIR AND REASONABLE MARKET PRICES," AND THE PROCUREMENT WAS SET ASIDE EXCLUSIVELY FOR SMALL BUSINESS.

ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-706.5 (A) (1) STATES THAT TOTAL SMALL BUSINESS SET-ASIDES ARE PERMISSIBLE WHERE "THERE IS REASONABLE EXPECTATION THAT BIDS OR PROPOSALS WILL BE OBTAINED FROM A SUFFICIENT NUMBER OF RESPONSIBLE SMALL BUSINESS CONCERNS SO THAT AWARDS WILL BE MADE AT REASONABLE PRICES.' IN THIS REGARD OUR OFFICE HAS CONSISTENTLY HELD THAT THE DETERMINATION AS TO WHETHER OR NOT SUCH "REASONABLE EXPECTATION" EXISTS IS A MATTER WITHIN THE DISCRETION OF THE CONTRACTING OFFICIALS AND THAT OUR OFFICE WILL NOT SUBSTITUTE ITS JUDGMENT FOR THAT OF SUCH OFFICIALS ABSENT A CLEAR SHOWING OF ABUSE OF DISCRETION. SEE B-162440, NOVEMBER 14, 1967; 45 COMP. GEN. 228. SIMILARLY, THE FACT THAT LOWER PRICES MAY BE EXPECTED FROM LARGE BUSINESSES IS NOT A SIGNIFICANT FACTOR IN DETERMINING WHETHER A PROCUREMENT SHOULD BE SET ASIDE FOR SMALL BUSINESS PARTICIPATION. B 162440, NOVEMBER 14, 1967; 43 COMP. GEN. 497.

IN THE CASE AT HAND THERE IS NO INDICATION THAT THE PRICE QUOTED FOR ITEM 1 WAS UNREASONABLE. FURTHER, IN OUR OPINION, THE INFORMATION, SUMMARIZED ABOVE, ON WHICH THE CONTRACTING OFFICER BASED HIS DETERMINATION THAT THIS PROCUREMENT SHOULD BE SET ASIDE EXCLUSIVELY FOR SMALL BUSINESS REASONABLY INDICATED THAT SMALL BUSINESS BIDS SUFFICIENT IN NUMBER TO ASSURE A REASONABLE PRICE WOULD BE RECEIVED. WE THEREFORE CONCLUDE THAT SUCH DETERMINATION IS NOT SUBJECT TO QUESTION BY OUR OFFICE.