B-167131, JUL. 23, 1969

B-167131: Jul 23, 1969

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WHERE TWO DAYS AFTER ISSUANCE OF SOLICITATION INADVERTENLY RESTRICTED TO SMALL BUSINESS AN AMENDMENT WAS ISSUED DELETING THE SMALL BUSINESS SET- ASIDE ON BASIS THAT THERE WOULD BE ONLY LIMITED RESPONSE FROM SMALL BUSINESS CONCERNS AND THAT SUFFICIENT COMPETITION COULD NOT BE OBTAINED. INCORPORATED: FURTHER REFERENCE IS MADE TO YOUR LETTER OF MAY 28. THE SUBJECT SOLICITATION WAS ISSUED ON MAY 6. CONTAINED NOTICE THAT THE SOLICITATION OF BIDS WAS RESTRICTED TO SMALL BUSINESS CONCERNS. AN AMENDMENT WAS ISSUED REMOVING THE SMALL BUSINESS RESTRICTION. THE FOLLOWING BIDS WERE RECEIVED AND OPENED ON MAY 22. YOU HAVE AGREED TO CONTINUE SERVICES UNDER THE CURRENT CONTRACT AT THE CONTRACT RATE OF $1.

B-167131, JUL. 23, 1969

BID PROTEST - SMALL BUSINESS ADMINISTRATION SET-ASIDE DETERMINATION DECISION DENYING PROTEST OF JOHNSON AND SPEAKE, INC., SECOND LOW BIDDER, AGAINST DELETION OF SMALL BUSINESS SET-ASIDE IN SOLICITATION FOR TRASH COLLECTION AT FORT GEORGE G. MEADE AND AWARD TO SHAYNE BROS., INC. WHERE TWO DAYS AFTER ISSUANCE OF SOLICITATION INADVERTENLY RESTRICTED TO SMALL BUSINESS AN AMENDMENT WAS ISSUED DELETING THE SMALL BUSINESS SET- ASIDE ON BASIS THAT THERE WOULD BE ONLY LIMITED RESPONSE FROM SMALL BUSINESS CONCERNS AND THAT SUFFICIENT COMPETITION COULD NOT BE OBTAINED, THE DETERMINATION MAY NOT BE REGARDED AS EITHER ARBITRARY OR CAPRICIOUS.

TO JOHNSON AND SPEAKE, INCORPORATED:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MAY 28, 1969, WITH ENCLOSURE, PROTESTING THE DELETION OF THE SMALL BUSINESS SET-ASIDE PROVISION OF SOLICITATION NO. DABB05-69-B-0089. THE SOLICITATION CALLED FOR BIDS FOR THE COLLECTION OF REFUSE AND TRASH AT WHERRY HOUSING, FORT GEORGE G. MEADE, DURING THE PERIOD JULY 1, 1969, THROUGH JUNE 30, 1970.

THE SUBJECT SOLICITATION WAS ISSUED ON MAY 6, 1969, WITH A CLOSING DATE OF MAY 22, 1969, AND CONTAINED NOTICE THAT THE SOLICITATION OF BIDS WAS RESTRICTED TO SMALL BUSINESS CONCERNS. ON MAY 8, 1969, AN AMENDMENT WAS ISSUED REMOVING THE SMALL BUSINESS RESTRICTION. THE FOLLOWING BIDS WERE RECEIVED AND OPENED ON MAY 22, 1969:

BIDDERS BID PER MONTH

SHAYNE BROS., INCORPORATED $1,848

JOHNSON AND SPEAKE, INCORPORATED $2,320

SHIP SHAPE REFUSE REMOVAL $2,400

DIXIE TRASH $2,450

MODERN TRASHMOVAL, INCORPORATED $2,450

TIGER TRASH, INCORPORATED $2,465

BALDWIN TRASH COMPANY, INCORPORATED $2,500 SHAYNE BROS., INCORPORATED, HAS BEEN DETERMINED THE LOW RESPONSIVE AND RESPONSIBLE BIDDER. HOWEVER, AWARD HAS BEEN WITHHELD PENDING THE DECISION OF OUR OFFICE. IN THE MEANTIME, YOU HAVE AGREED TO CONTINUE SERVICES UNDER THE CURRENT CONTRACT AT THE CONTRACT RATE OF $1,522.50 PER MONTH.

YOU STATE THAT UPON RECEIPT OF THE AMENDMENT OF MAY 8, 1969, YOU COMPLAINED TO MR. KNIGHT OF THE SMALL BUSINESS ADMINISTRATION. MR. KNIGHT CONTACTED THE CONTRACTING OFFICER AND WAS ADVISED THAT THE SMALL BUSINESSS RESTRICTION HAD BEEN REMOVED BECAUSE ONLY TWO SMALL BUSINESS CONCERNS WERE KNOWN TO BE INTERESTED IN THE PROCUREMENT. IN YOUR LETTER OF MAY 22, 1969, TO THE CONTRACTING OFFICER YOU STATED THAT AT LEAST THE FOLLOWING SIX SMALL BUSINESS CONCERNS WERE INTERESTED IN BIDDING: JOHNSON AND SPEAKE; MODERN TRASHMOVAL; TIGER TRASH; SHIP SHAPE REFUSE REMOVAL; BALDWIN TRASH COMPANY; AND DIXIE TRASH. IN VIEW THEREOF, YOU CONTEND THAT THE FAILURE TO SET ASIDE THE PROCUREMENT INDICATES AN INTENTION TO SUBVERT AND NULLIFY THE POLICY OF THE CONGRESS, AS EXPRESSED IN THE SMALL BUSINESS ACT, 15 U.S.C. 631, TO ASSURE THAT A FAIR PROPORTION OF THE TOTAL PURCHASES AND CONTRACTS OF THE GOVERNMENT BE PLACED WITH SMALL BUSINESS CONCERNS. IN YOUR LETTER OF MAY 28, 1969, TO OUR OFFICE, YOU POINT TO THE BIDS RECEIVED FROM THE FIRMS LISTED IN YOUR LETTER OF THE 22ND AS PROOF OF YOUR CONTENTION THAT THERE WAS SUFFICIENT SMALL BUSINESS INTEREST TO HAVE JUSTIFIED A TOTAL SET-ASIDE. IN ADDITION, YOU CONTEND THAT TO PERMIT AN AWARD TO SHAYNE BROS. WOULD RESULT IN EVENTUAL ANNIHILATION OF SMALL BUSINESS CONCERNS BECAUSE "BIG" BUSINESS CAN BID AT A LOSS FOR THIS PURPOSE, AS APPEARS TO BE THE CASE HERE.

THE CONTRACTING OFFICER REPORTS THAT THE CONTRACT WHICH YOU NOW HOLD WAS AWARDED PURSUANT TO A SMALL BUSINESS SET-ASIDE. ALTHOUGH 20 FIRMS WERE SOLICITED FOR THAT CONTRACT, ONLY THREE BIDS WERE RECEIVED. THE LOW BIDDER, TIGER TRASH, INCORPORATED, WAS FOUND TO BE OTHER THAN SMALL BUSINESS AND YOU RECEIVED THE AWARD AS THE NEXT LOWEST ELIGIBLE BIDDER. IN VIEW OF THE LIMITED SMALL BUSINESS RESPONSE TO THAT SOLICITATION, AS WELL AS A GENERAL LESSENING OF SMALL BUSINESS RESPONSE TO REFUSE SERVICE PROCUREMENTS AT FORT MEADE, THE CONTRACTING OFFICER STATES THAT HE DID NOT INTEND TO RESTRICT THE PRESENT PROCUREMENT BECAUSE HE DID NOT FEEL THER WOULD BE SUFFICIENT COMPETITION TO ASSURE REASONABLE PRICES. HOWEVER, THE SUBJECT SOLICITATION INADVERTENTLY INCLUDED THE SET ASIDE PROVISION. WHEN THE MISTAKE WAS DISCOVERED, THE AMENDMENT WAS ISSUED.

THE CONTRACTING OFFICER ALSO REPORTS THAT ON MAY 16, 1969, HE WAS CONTACTED BY MR. KNIGHT, THE SBA REPRESENTATIVE, WHO FURNISHED HIM THE NAMES OF 16 FIRMS WHICH WERE REPORTED TO BE SMALL BUSINESS AND INTERESTED IN THE PROCUREMENT. HE CONTACTED NINE OF THESE FIRMS BY TELEPHONE AND ONLY TWO EXPRESSED AN INTEREST. HOWEVER,THEY DID NOT SUBMIT BIDS. SEVEN FIRMS, INCLUDING YOURS, WERE NOT CONTACTED FOR SEVERAL REASONS. TWO OF THESE FIRMS WERE ALREADY ON THE MAILING LIST; FOUR FIRMS HAD FAILED TO RESPOND TO PREVIOUS SOLICITATIONS; AND TIGER TRASH HAD BEEN DETERMINED INELIGIBLE AS A SMALL BUSINESS FOR THE CURRENT CONTRACT. HE CONCLUDED THAT THE FOREGOING INFORMATION AND INVESTIGATION DID NOT REQUIRE A CHANGE IN HIS PREVIOUS DETERMINATION THAT THE PROCUREMENT SHOULD NOT BE RESTRICTED.

FURTHERMORE, THE CONTRACTING OFFICER POINTS OUT THAT OF THE SEVEN BIDS RECEIVED, SHAYNE AND TIGER ARE APPARENTLY "BIG" BUSINESS. THE OTHER FIVE BIDDERS, INCLUDING YOUR FIRM, ARE APPARENTLY SMALL BUSINESS. HOWEVER, HE ALSO POINTS OUT THAT YOU STATED THAT YOU URGED THE OTHER FOUR SMALL BUSINESS CONCERNS TO SUBMIT BIDS. HE ALSO POINTS OUT THAT YOUR BID, WHICH IS APPROXIMATELY $800 PER MONTH OR 50 PERCENT ABOVE YOUR CURRENT CONTRACT PRICE, IS APPROXIMATELY 30 PERCENT ABOVE THE SHAYNE BROS. BID, ALTHOUGH THE LATTER IS $325.25 PER MONTH ABOVE THE CURRENT CONTRACT PRICE.

SECTION 15 OF THE SMALL BUSINESS ACT, 15 U.S.C. 644, PROVIDES THAT SMALL BUSINESS CONCERNS SHALL RECEIVE ANY AWARD OR CONTRACT OR ANY PART THEREOF AS TO WHICH IT IS DETERMINED TO BE IN THE INTEREST OF ASSURING THAT A FAIR PROPORTION OF THE TOTAL PURCHASES AND CONTRACTS FOR PROPERTY AND SERVICES FOR THE GOVERNMENT ARE PLACED WITH SMALL BUSINESS CONCERNS. UNDER SECTION 15 OF THE ACT, THE DETERMINATION AS TO WHETHER A PARTICULAR PROCUREMENT SHOULD BE SET ASIDE FOR SMALL BUSINESS IS ORDINARILY WITHIN THE JURISDICTION OF THE PROCURING AGENCY.

IN THIS REGARD, PARAGRAPHS 1-706.5 AND 1-706.3, RESPECTIVELY, OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) PROVIDE IN PART AS FOLLOWS:

"/A) (1) * * * THE ENTIRE AMOUNT OF AN INDIVIDUAL PROCUREMENT OR A CLASS OF PROCUREMENTS, INCLUDING BUT NOT LIMITED TO CONTRACTS FOR MAINTENANCE, REPAIR, AND CONSTRUCTION, SHALL BE SET ASIDE FOR EXCLUSIVE SMALL BUSINESS PARTICIPATION (SEE 1-701.1) IF THE CONTRACTING OFFICER DETERMINES THAT 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. TOTAL SET ASIDES SHALL NOT BE MADE UNLESS SUCH A REASONABLE EXPECTATION EXISTS. * * *

"/A) * * * IF, PRIOR TO AWARD OF A CONTRACT INVOLVING AN INDIVIDUAL OR CLASS SET-ASIDE, THE CONTRACTING OFFICER CONSIDERS THAT PROCUREMENT OF THE SET-ASIDE FROM A SMALL BUSINESS CONCERN WOULD BE DETRIMENTAL TO THE PUBLIC INTEREST (E.G., BECAUSE OF UNREASONABLE PRICE), HE MAY WITHDRAW A UNILATERAL OR JOINT SET-ASIDE DETERMINATION BY GIVING WRITTEN NOTICE TO THE SMALL BUSINESS SPECIALIST, * * *.'

OUR OFFICE HAS HELD THAT THE DETERMINATION AS TO WHETHER SUCH A REASONABLE EXPECTATION EXISTS IS WITHIN SOUND ADMINISTRATIVE DISCRETION AND WE WILL NOT SUBSTITUTE OUR JUDGMENT FOR THAT OF THE CONTRACTING OFFICER IN THE ABSENCE OF A CLEAR SHOWING OF ABUSE OF THE DISCRETION PERMITTED HIM. 45 COMP. GEN. 228. IN B-153264, APRIL 13, 1964, WE STATED THE STANDARD FOR UPSETTING A DECISION RELATIVE TO INCLUSION OF A SMALL BUSINESS SET-ASIDE AS BEING WHETHER OR NOT THERE IS "CONVINCING EVIDENCE OF ARBITRARY OR CAPRICIOUS ACTION.' IN THE PRESENT CASE, WE ARE UNABLE TO SAY THAT THE CONTRACTING OFFICER'S DETERMINATION THAT THERE WOULD NOT BE RECEIVED A SUFFICIENT NUMBER OF BIDS FROM SMALL BUSINESS CONCERNS TO ASSURE A REASONABLE PRICE TO THE GOVERNMENT WAS EITHER ARBITRARY OR CAPRICIOUS.

ACCORDINGLY, WE FIND NO LEGAL BASIS TO OBJECT TO THE PROPOSED AWARD TO SHAYNE BROS., INCORPORATED.