Ashland Sales and Service Company/Macon Garment Inc., a Joint Venture
B-400466: Oct 23, 2008
- Full Report:
Ashland Sales and Service Company/Macon Garment Inc., a Joint Venture, (AM-JV) protests the decision of the Defense Logistics Agency, Defense Supply Center Philadelphia (DSCP), to award a contract to Zacbac Apparel, LLC under solicitation No. SPM1C1-07-R-0209, a Historically Underutilized Business Zone (HUBZone) set-aside for men's long-sleeved Air Force shirts.
We deny the protest.
B-400466, Ashland Sales and Service Company/Macon Garment Inc., a Joint Venture, October 23, 2008
DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective Order. This redacted version has been approved for public release.
Protest that set-aside for Historically Underutilized Business Zone concerns should have been withdrawn because prices received were unreasonably high is denied where the contracting officer properly relied on multiple relevant factors to determine that the awardee's price was reasonable.
Ashland Sales and Service Company/Macon Garment Inc., a Joint Venture, (AM-JV) protests the decision of the Defense Logistics Agency, Defense Supply Center Philadelphia (
In coordination with the Small Business Administration,
Under the HUBZone set-aside solicitation,
FAR sect. 19.1305 states that in order to set aside an acquisition for HUBZone small businesses the contracting officer must have a reasonable expectation that offers will be received from two or more HUBZone small businesses and that award will be made at a fair market price. If the contracting officer sets the acquisition aside but receives no acceptable offers, the HUBZone set-aside must be withdrawn. FAR sect. 19.1305(d). The determination of price reasonableness in a set-aside is a matter within the discretion of the contracting offer and will not be disturbed unless it is unreasonable. A. Hirsh, Inc., B-271829,
In view of the congressional policy favoring small businesses, our Office has stated that contracts may be awarded under small business set-aside procedures to small business firms at premium prices, so long as those prices are not unreasonable. Vitronics, Inc., B-237249,
AM-JV asserts that under the circumstances presented in this case, Zacbac's price was unreasonable. AM-JV specifically emphasizes that Zacbac's price was over 30 percent higher than that offered by AM-JV (itself a small business), that the item being produced is a mass production item that does not require research or development, and that there are no special reasons why production in a HUBZone should be any more expensive than production in AM-JV's facilities. AM-JV also points to previous decisions by our Office in which we have upheld a contracting officer's decision to cancel a set-aside when the small business' price was less than 30 percent higher than that of an ineligible business. American Imaging Servs.,B-238969, B-238971,
We note, however, that our Office also has upheld a contracting officer's decision to proceed with a set-aside where the small business' price has been as much as 51 percent higher than that of an ineligible large business. Browning-Ferris
Here, the record indicates that the contracting officer conducted a thorough price analysis of Zacbac's offer. This price analysis explicitly made a comparison between Zacbac's price and the price offered by AM-JV on the small business set-aside, and noted the 30.7 percent price differential. Agency Report, Tab 5, at 6. The price analysis also considered that there was adequate price competition in the HUBZone set-aside solicitation in the form of offers from five different HUBZone firms, three of which were included in the competitive range; during discussions, all three firms were advised to review their proposed prices.
Based on our review of the record, we cannot conclude that the contracting officer's conclusion was unreasonable. That all offers received in response to the HUBZone set-aside solicitation were higher in price than the offer submitted by the protester on the prior solicitation can reasonably be interpreted (as the contracting officer did) to indicate that the difference in volume between the two solicitations had a material impact on price. In light of that factor, we find the contracting officer's decision to discount the differential between solicitations in determining reasonable price, relying on the price competition achieved on the particular solicitation at issue, to be unobjectionable.
The protest is denied.
Gary L. Kepplinger
 Both solicitations provided for a best value source selection procedure under which all evaluation factors other than price, when combined, were significantly more important than price. HUBZone Solicitation at 65.
 The protester also asserts that the agency failed to properly publicize the award notice, which prevented AM-JV from filing a protest within 10 days of award.AM-JV argues that this action in effect violated the statutory stay provisions of the Competition in Contracting Act of 1984(CICA).Issues regarding whether an agency is complying with the CICA stay requirements are not subject to review by our Office.Systalex Corp., B-400109, July 17, 2008, 2008 CPD para. 148 at 6; Grot Inc.,B-276979, Aug. 14, 1997, 97-2 CPD para. 50 at 3 n.1.