B-156325, AUG. 18, 1965

B-156325: Aug 18, 1965

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TO GALLANT INCORPORATED: REFERENCE IS MADE TO YOUR LETTER OF MARCH 12. THE INVITATION STATED THAT THE PROCUREMENT WAS TO BE MADE ON A TOTAL SET-ASIDE BASIS FOR SMALL BUSINESS CONCERNS. THREE BIDS WERE RECEIVED. 541.50) WAS THE LOWEST RECEIVED. WAS IN THE AMOUNT OF $64. IT APPEARS THAT YOU WERE BIDDING AS A REGULAR DEALER RATHER THAN AS A MANUFACTURER AND THAT YOU WERE. YOU DO NOT TAKE ANY ISSUE WITH THE FACT THAT YOU WERE CONSIDERED AS A LARGE BUSINESS CONCERN FOR THE PURPOSE OF THE PROCUREMENT BUT YOU CONTEND THAT THE SMALL BUSINESS SET-ASIDE SHOULD HAVE BEEN CANCELED SINCE YOU COULD HAVE FURNISHED THE SUPPLIES FOR CONSIDERABLY LESS MONEY THAN THE AMOUNT BEING PAID UNDER THE CONTRACT AWARDED TO BESELER.

B-156325, AUG. 18, 1965

TO GALLANT INCORPORATED:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 12, 1965, PROTESTING THE AWARD OF A CONTRACT UNDER INVITATION FOR BIDS NO. 33-657-65-145, ISSUED BY THE AERONAUTICAL SYSTEMS DIVISION, WRIGHT-PATTERSON AIR FORCE BASE, OHIO.

THE INVITATION SOLICITED BIDS--- TO BE OPENED ON JANUARY 6, 1965,--- FOR FURNISHING 271 OVERHEAD STILL PICTURE PROJECTORS WITH ATTACHMENTS AND DATA. THE INVITATION STATED THAT THE PROCUREMENT WAS TO BE MADE ON A TOTAL SET-ASIDE BASIS FOR SMALL BUSINESS CONCERNS. THREE BIDS WERE RECEIVED. YOUR BID OF $48,541.50 (CORRECT EXTENSION $50,541.50) WAS THE LOWEST RECEIVED. THE SECOND LOW BID (CHARLES BESELER CO.) WAS IN THE AMOUNT OF $64,227 LESS DISCOUNT OF 1/2 PERCENT - 20 DAYS OR $63,905.86 NET. IT APPEARS THAT YOU WERE BIDDING AS A REGULAR DEALER RATHER THAN AS A MANUFACTURER AND THAT YOU WERE, IN FACT, PROPOSING TO SUPPLY EQUIPMENT MANUFACTURED BY MINNESOTA MINING AND MANUFACTURING COMPANY IF AWARDED A CONTRACT.

IN YOUR LETTER OF MARCH 12, 1965, YOU DO NOT TAKE ANY ISSUE WITH THE FACT THAT YOU WERE CONSIDERED AS A LARGE BUSINESS CONCERN FOR THE PURPOSE OF THE PROCUREMENT BUT YOU CONTEND THAT THE SMALL BUSINESS SET-ASIDE SHOULD HAVE BEEN CANCELED SINCE YOU COULD HAVE FURNISHED THE SUPPLIES FOR CONSIDERABLY LESS MONEY THAN THE AMOUNT BEING PAID UNDER THE CONTRACT AWARDED TO BESELER, THE SECOND LOW BIDDER.

PARAGRAPH 1-706.5 OF THE ARMED SERVICES PROCUREMENT REGULATION PROVIDES THAT THE ENTIRE AMOUNT OF AN INDIVIDUAL PROCUREMENT OF SUPPLIES SHALL BE SET ASIDE FOR EXCLUSIVE SMALL BUSINESS PARTICIPATION IF THE CONTRACTING OFFICER DETERMINES THAT THERE IS A 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. SAID PARAGRAPH PROVIDES FURTHER THAT TOTAL SET-ASIDES SHALL NOT BE MADE UNLESS SUCH A REASONABLE EXPECTATION EXISTS.

IN THE REPORT OF THE ADMINISTRATIVE OFFICE DATED JULY 1, 1965, IT IS STATED THAT THE CONTRACTING OFFICER APPEARS TO HAVE BEEN FULLY JUSTIFIED IN REACHING A JOINT DECISION WITH THE LOCAL SMALL BUSINESS REPRESENTATIVE TO HAVE THE SUBJECT PROCUREMENT ISSUED UNDER A TOTAL SMALL BUSINESS SET- ASIDE. IT IS REPORTED THAT FROM 1956 UNTIL THE PRESENT TIME ONLY SMALL BUSINESS FIRMS HAD SUBMITTED BIDS FOR IDENTICAL OR CLOSELY SIMILAR EQUIPMENT. CONSIDERING THIS RECORD, IT APPEARS THAT THERE WAS A REASONABLE EXPECTATION THAT BIDS WOULD BE OBTAINED FROM A SUFFICIENT NUMBER OF SMALL BUSINESS FIRMS SO THAT AN AWARD COULD BE MADE AT REASONABLE PRICES.

IT MAY BE GRANTED THAT THE PRICE DIFFERENTIAL BETWEEN THE BESELER BID OF $237 PER UNIT AND YOUR BID OF $186.50 PER UNIT MIGHT APPEAR EXCESSIVE. HOWEVER, UNDER A FEDERAL SUPPLY SCHEDULE CONTRACT ENTERED INTO BY THE GENERAL SERVICES ADMINISTRATION (GSA) WITH BESELER FOR THE 12-MONTH PERIOD ENDING NOVEMBER 30, 1963, THE PRICE FOR THE UNIT INVOLVED IN THE INSTANT PROCUREMENT IS $282. THE PURCHASE OF THE UNITS IN THIS CASE COULD NOT HAVE BEEN MADE UNDER THIS GSA CONTRACT SINCE THE SCHEDULE PROHIBITS THE PLACING OF ANY ORDERS THEREUNDER WHICH ARE IN EXCESS OF $25,000.

WHILE IT MAY BE THAT A LOWER PRICE COULD HAVE BEEN OBTAINED IF THE INVITATION HAD NOT BEEN SET ASIDE FOR EXCLUSIVE PARTICIPATION BY SMALL BUSINESS, WE HAVE CONSISTENTLY POINTED OUT THAT THERE IS NO REQUIREMENT THAT PRICES OFFERED UNDER A SMALL BUSINESS SET-ASIDE BE EQUAL TO OR BETTER THAN PRICES WHICH MIGHT REASONABLY HAVE BEEN ANTICIPATED AS A RESULT OF UNRESTRICTED COMPETITION. 36 COMP. GEN. 744. AND OUR OFFICE HAS EVEN RECOGNIZED THAT IT MAY BE PROPER, IN SOME CASES, TO PAY PREMIUM PRICES TO BIDDERS FOR THE PURPOSE OF CARRYING OUT THE SMALL BUSINESS POLICY. COMP. GEN. 306. THE SET ASIDE OF THIS PROCUREMENT FOR SMALL BUSINESS APPEARS TO HAVE BEEN MADE WITHIN THE FRAMEWORK OF PERTINENT LAWS AND REGULATIONS ON A BASIS OF A DETERMINATION AUTHORIZED TO BE MADE BY THE CONTRACTING OFFICER AND THE SMALL BUSINESS ADMINISTRATION. SEE 15 U.S.C. 644.

THE PRICES OBTAINED IN THIS CASE APPEAR REASONABLE AND THUS THE DETERMINATION TO PROCURE THE INVOLVED SUPPLIES ON A SET-ASIDE FOR SMALL BUSINESS PRICES WAS FULLY JUSTIFIED. WE FIND NOTHING IN THE RECORD WHICH INDICATES THAT THE AWARD TO BESELER WAS IMPROPER AND YOUR PROTEST IS DENIED.