B-157863, DEC. 6, 1965

B-157863: Dec 6, 1965

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PRIOR TO THE BID OPENING YOU ADVISED GSA THAT THERE WAS ONLY ONE SMALL BUSINESS MANUFACTURING SOURCE FOR THIS EQUIPMENT. BIDS WERE OPENED. THERE WERE FOUR BIDDERS: CHART BIDDER PER UNIT HEIN-WERNER CORPORATION $ 87.95 BLACKHAWK MANUFACTURING CORPORATION $ 89.40 BAILEY MOTOR EQUIPMENT COMPANY $113.53 R AND O TOOL COMPANY $136.50 ONLY HEIN-WERNER AND R AND O TOOL COMPANY ARE SMALL BUSINESS CONCERNS. THE PRICE YOU BID IS SO CLOSE TO THAT OF THE LOW BIDDER THAT YOU HAVE CREATED THE APPEARANCE OF A SITUATION IN WHICH YOU DID IN FACT SUBMIT A COMPETITIVE PRICE WHICH WOULD NOT HAVE BEEN THE LOW BID IN THE ABSENCE OF THE SMALL BUSINESS SET-ASIDE. A PROCUREMENT SHOULD NOT BE SET ASIDE EXCLUSIVELY FOR SMALL BUSINESS UNLESS THERE IS A REASONABLE EXPECTATION THAT ADEQUATE COMPETITION WILL BE OBTAINED.

B-157863, DEC. 6, 1965

TO BLACKHAWK MANUFACTURING COMPANY:

THIS REFERS TO YOUR LETTERS OF OCTOBER 15 AND NOVEMBER 8, 1965, PROTESTING AGAINST AN AWARD TO HEIN-WERNER CORPORATION UNDER INVITATION FOR BIDS NO. KC-D-F-51660, ISSUED BY THE GENERAL SERVICES ADMINISTRATION, FEDERAL SUPPLY SERVICE, KANSAS CITY, MISSOURI, ON SEPTEMBER 24, 1965.

THE INVITATION PROVIDED FOR A 100 PERCENT SMALL BUSINESS SET-ASIDE FOR 180 HYDRAULIC JACK KITS, HAND. PRIOR TO THE BID OPENING YOU ADVISED GSA THAT THERE WAS ONLY ONE SMALL BUSINESS MANUFACTURING SOURCE FOR THIS EQUIPMENT, NAMELY, HEIN-WERNER CORPORATION. GSA NEVERTHELESS DECIDED TO CONTINUE THE SET-ASIDE, AND BIDS WERE OPENED, AS SCHEDULED, ON OCTOBER 14, 1965. THERE WERE FOUR BIDDERS:

CHART

BIDDER PER UNIT

HEIN-WERNER CORPORATION $ 87.95

BLACKHAWK MANUFACTURING CORPORATION $ 89.40

BAILEY MOTOR EQUIPMENT COMPANY $113.53

R AND O TOOL COMPANY $136.50

ONLY HEIN-WERNER AND R AND O TOOL COMPANY ARE SMALL BUSINESS CONCERNS. YOU REPORT THAT R AND O TOOL BID ON HEIN-WERNER EQUIPMENT AND BAILEY BID ON YOUR EQUIPMENT. GSA STATES THAT ALTHOUGH IT DOES NOT CONTEMPLATE RESTRICTING THIS ITEM TO SMALL BUSINESS CONCERNS IN FUTURE PROCUREMENTS, IT BELIEVES THAT HEIN-WERNER HAS SUBMITTED A REASONABLE LOW BID WHICH SHOULD BE ACCEPTED.

YOU SAY THAT RATHER THAN BID A COMPETITIVE OR EVEN AN UNREALISTICALLY LOW PRICE, YOU BID A HIGHER PRICE THINKING THAT THE SMALL BUSINESS RESTRICTION WOULD BE REMOVED PRIOR TO BID OPENING AND THAT YOU WOULD BE IN A POSITION TO MODIFY YOUR BID. WE CANNOT AGREE WITH THE LOGIC OF THIS REASONING. THE PRICE YOU BID IS SO CLOSE TO THAT OF THE LOW BIDDER THAT YOU HAVE CREATED THE APPEARANCE OF A SITUATION IN WHICH YOU DID IN FACT SUBMIT A COMPETITIVE PRICE WHICH WOULD NOT HAVE BEEN THE LOW BID IN THE ABSENCE OF THE SMALL BUSINESS SET-ASIDE.

A PROCUREMENT SHOULD NOT BE SET ASIDE EXCLUSIVELY FOR SMALL BUSINESS UNLESS THERE IS A REASONABLE EXPECTATION THAT ADEQUATE COMPETITION WILL BE OBTAINED. FPR 1-1.706-5. IT NOW APPEARS THAT THERE IS INADEQUATE SMALL BUSINESS COMPETITION. YOUR FIRM BELIEVED BEFORE BID OPENING THAT ADEQUATE SMALL BUSINESS COMPETITION WOULD NOT BE RECEIVED. WE CANNOT SAY, HOWEVER, THAT IT WAS UNREASONABLE TO EXPECT COMPETITION FROM SMALL BUSINESS AT THE TIME THE SET-ASIDE WAS INITIATED. THIS WAS THE FIRST PROCUREMENT OF THIS ITEM BY THE GSA PURCHASING OFFICE IN KANSAS CITY. THE SMALL BUSINESS ADMINISTRATION REQUESTED THE SET ASIDE. THE GSA OFFICIALS DECIDED THAT SMALL BUSINESS COMPETITION PROBABLY COULD BE OBTAINED IF THE PROCUREMENT WERE FULLY PUBLICIZED. ACCORDINGLY, A GSA-SBA JOINT SET-ASIDE DETERMINATION WAS MADE ON SEPTEMBER 22, 1965.

YOU CONTEND THAT THE SET-ASIDE SHOULD NOW BE WITHDRAWN. FPR 1 1.706-3 (B) PROVIDES THAT A SMALL BUSINESS SET-ASIDE SHOULD BE WITHDRAWN PRIOR TO AWARD WHERE THE CONTRACTING OFFICER CONSIDERS THAT PROCUREMENT OF THE SET- ASIDE PORTION FROM A SMALL BUSINESS CONCERN WOULD BE DETRIMENTAL TO THE PUBLIC INTEREST, E.G., BECAUSE OF UNREASONABLE PRICE. FPR 1-1.706 (B). ON THREE PRIOR PROCUREMENTS, YOU OBTAINED AWARDS FOR SIX UNITS AT $97.81, FOR 12 UNITS AT $94.81, AND FOR ONE UNIT AT $162.50. THERE IS NO RECENT GOVERNMENT AWARD INVOLVING A QUANTITY COMPARABLE TO 180 UNITS. THE CONTRACTING OFFICER BELIEVES THAT THE LOW BID IS REASONABLE. WE HAVE NO BASIS TO DISPUTE HIS JUDGMENT. AN INVITATION SHOULD NOT BE CANCELLED AFTER BIDS HAVE BEEN EXPOSED EXCEPT FOR COGENT REASON. 43 COMP. GEN. 533, 538. WE SEE NO COGENT REASON FOR CANCELLING.