B-165124, NOV. 13, 1968

B-165124: Nov 13, 1968

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TO HUDSON AND CREYKE: REFERENCE IS MADE TO YOUR LETTERS OF SEPTEMBER 16 AND 18. THE INVITATION WAS ISSUED ON A 100 -PERCENT SMALL BUSINESS SET-ASIDE BASIS AND THE BID OPENING DATE WAS SEPTEMBER 5. SIX BIDS WERE RECEIVED FROM SMALL BUSINESS CONCERNS RANGING IN PRICE FROM $196.85 TO $229.90. THE LOW BID OF BOISE CASCADE WAS REJECTED AS NONRESPONSIVE UNDER THE REQUIREMENTS SET FORTH IN THE INVITATION PROVISION ENTITLED "NOTICE OF TOTAL SMALL BUSINESS SET-ASIDE.'. WAS AWARDED THE CONTRACT AS THE LOWEST RESPONSIVE BIDDER ON SEPTEMBER 19. YOU PROTEST AGAINST THE USE OF A 100-PERCENT SMALL BUSINESS SET ASIDE AND THE AWARD OF A CONTRACT TO A SMALL BUSINESS CONCERN BECAUSE BOISE CASCADE AND OTHER LARGE BUSINESS CONCERNS WERE IN A POSITION TO PROVIDE THE GOVERNMENT WITH MORE ECONOMICAL SUPPORT IN MANY AREAS FOR THE PURCHASE OF WOOD PRODUCTS AND THAT AWARDS OF CONTRACTS TO SMALL BUSINESS RESULT IN A CONSIDERABLE WASTE OF GOVERNMENT FUNDS.

B-165124, NOV. 13, 1968

TO HUDSON AND CREYKE:

REFERENCE IS MADE TO YOUR LETTERS OF SEPTEMBER 16 AND 18, 1968, WITH ENCLOSURE, PROTESTING ON BEHALF OF THE BOISE CASCADE CORPORATION THE USE OF A 100-PERCENT SMALL BUSINESS SET-ASIDE AND THE AWARD OF A CONTRACT TO ANY SMALL BUSINESS CONCERN UNDER INVITATION FOR BIDS NO. DSA720-69-B-0109, ISSUED BY THE PORTLAND REGIONAL PROCUREMENT SUB OFFICE, DEFENSE CONSTRUCTION SUPPLY CENTER, PORTLAND, OREGON.

THE SUBJECT INVITATION, ISSUED ON AUGUST 29, 1968, SOLICITED BIDS FOR THE FURNISHING OF 130,432 SQUARE FEET OF PLYWOOD, SOFTWOOD - TREATED, 1/2 INCH X 48 INCHES X 96 INCHES, B-C EXTERIOR. THE INVITATION WAS ISSUED ON A 100 -PERCENT SMALL BUSINESS SET-ASIDE BASIS AND THE BID OPENING DATE WAS SEPTEMBER 5, 1968. SIX BIDS WERE RECEIVED FROM SMALL BUSINESS CONCERNS RANGING IN PRICE FROM $196.85 TO $229.90, AND BOISE CASCADE -- A LARGE BUSINESS CONCERN -- SUBMITTED A BID IN THE AMOUNT OF $194.22 PER THOUSAND SQUARE FEET. THE LOW BID OF BOISE CASCADE WAS REJECTED AS NONRESPONSIVE UNDER THE REQUIREMENTS SET FORTH IN THE INVITATION PROVISION ENTITLED "NOTICE OF TOTAL SMALL BUSINESS SET-ASIDE.' AMERICAN TIMBER AND TRADING CO., INC., WAS AWARDED THE CONTRACT AS THE LOWEST RESPONSIVE BIDDER ON SEPTEMBER 19, 1968.

YOU PROTEST AGAINST THE USE OF A 100-PERCENT SMALL BUSINESS SET ASIDE AND THE AWARD OF A CONTRACT TO A SMALL BUSINESS CONCERN BECAUSE BOISE CASCADE AND OTHER LARGE BUSINESS CONCERNS WERE IN A POSITION TO PROVIDE THE GOVERNMENT WITH MORE ECONOMICAL SUPPORT IN MANY AREAS FOR THE PURCHASE OF WOOD PRODUCTS AND THAT AWARDS OF CONTRACTS TO SMALL BUSINESS RESULT IN A CONSIDERABLE WASTE OF GOVERNMENT FUNDS.

THE REPORT SUBMITTED TO OUR OFFICE BY THE DEFENSE SUPPLY AGENCY, WHICH REPORT WE FURNISHED TO YOU ON OCTOBER 17, 1968, FOR YOUR COMMENTS, STATES THAT SINCE THERE WAS A REASONABLE EXPECTATION THAT ADEQUATE COMPETITION WOULD BE OBTAINED FROM SMALL BUSINESS CONCERNS AT REASONABLE PRICES AND SINCE THE SMALL BUSINESS ADMINISTRATION HAD RULED THAT A LUMBER PRODUCT PRODUCED BY A SMALL BUSINESS CONCERN AND TREATED BY A LARGE BUSINESS CONCERN MAY BE ACCEPTED AS A SMALL BUSINESS PRODUCT, THE PROCUREMENT WAS SET ASIDE TOTALLY FOR SMALL BUSINESS CONCERNS UNDER PARAGRAPH 1-706.5 (A) (1) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR). THE NOTICE OF TOTAL SMALL BUSINESS SET ASIDE PROVIDED IN PERTINENT PART AS FOLLOWS (PARAGRAPH 8.101 OF THE INVITATION): "/A) RESTRICTION: BIDS OR PROPOSALS UNDER THIS PROCUREMENT ARE SOLICITED FROM SMALL BUSINESS CONCERNS ONLY AND THIS PROCUREMENT IS TO BE AWARDED ONLY TO ONE OR MORE SMALL BUSINESS CONCERNS. THIS ACTION IS BASED ON A DETERMINATION BY THE CONTRACTING OFFICER THAT IT IS IN THE INTEREST OF MAINTAINING OR MOBILIZING THE NATION'S FULL PRODUCTIVE CAPACITY, IN THE INTEREST OF WAR OR NATIONAL DEFENSE PROGRAMS, OR IN THE INTEREST OF ASSURING THAT A FAIR PROPORTION OF GOVERNMENT PROCUREMENT IS PLACED WITH SMALL BUSINESS CONCERNS. BIDS OR PROPOSALS RECEIVED FROM FIRMS WHICH ARE NOT SMALL BUSINESS CONCERNS SHALL BE CONSIDERED NONRESPONSIVE AND SHALL BE REJECTED.'

ASPR 1-706.5 (A) (1) PROVIDES 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-164800, OCTOBER 4, 1968; 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. 164800, SUPRA; 43 COMP. GEN. 497. IN THE CASE AT HAND, THERE IS NOTHING OF RECORD WHICH WOULD INDICATE THAT THE PRICE QUOTED BY AMERICAN TIMBER AND TRADING CO. WAS UNREASONABLE. ITS LOW RESPONSIVE BID PRICE CLOSELY APPROXIMATED THE INELIGIBLE BID PRICE OF $194.22 OFFERED BY BOISE CASCADE. MOREOVER, THE EVALUATION OF RESPONSIVE BIDS INDICATED THAT THE LOW BID OF $196.85 WAS FAIR AND REASONABLE SINCE ADEQUATE COMPETITION HAD BEEN OBTAINED FROM SMALL BUSINESS FIRMS AND SINCE THE RANGE OF OFFERS RECEIVED RELATED FAIRLY TO CURRENT MARKET CONDITIONS OF THE SUPPLIES INVOLVED. IN VIEW OF THE FOREGOING, WE CONCLUDE THAT THE DETERMINATION TO SET ASIDE THIS PROCUREMENT FOR ONLY SMALL BUSINESS PARTICIPATION AND THE AWARD MADE THEREUNDER ARE NOT SUBJECT TO QUESTION BY OUR OFFICE.