B-169296, APR 28, 1971

B-169296: Apr 28, 1971

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WHERE THE "FLOATING SET ASIDE" WAS DISAPPROVED BECAUSE IT FAILED TO GIVE BIDDERS ADEQUATE ADVANCE NOTICE OF THE BASIS UPON WHICH THEIR BIDS WOULD BE EVALUATED. TO FLETCHER OIL AND REFINING COMPANY: REFERENCE IS MADE TO YOUR LETTER OF MARCH 9. SINCE IT WOULD APPEAR THAT YOU ARE SUGGESTING THE DEFENSE FUEL SUPPLY CENTER (DFSC) ADOPT A SYSTEM WHEREBY THE SET-ASIDES ARE ON A GEOGRAPHIC AREA BASIS. IN THAT DECISION WE PROHIBITED FUTURE USE OF THE "FLOATING SET ASIDE" PROCEDURE UTILIZED BY THE PROCURING AGENCY UNDER WHICH ONLY THE QUANTITY SET ASIDE FOR THE WHOLE NATION WAS KNOWN PRIOR TO BID OPENING. THE SPECIFIC QUANTITY TO BE SET ASIDE FOR SMALL BUSINESS CONCERNS AT PARTICULAR LOCATIONS WAS NOT DETERMINED UNTIL AFTER THE BIDS WERE OPENED.

B-169296, APR 28, 1971

BID PROTEST - SMALL BUSINESS SET ASIDE - INDIVIDUAL ITEM V AREA BASIS DENYING PROTEST OF FLETCHER OIL AND REFINING COMPANY AGAINST PROCEDURES USED BY DFSC IN ITS AWARD OF SMALL BUSINESS SET-ASIDE. PROTESTANT'S SUGGESTION THAT SET-ASIDES BE ESTABLISHED ON AN AREA RATHER THAN AN INDIVIDUAL ITEM BASIS MIGHT WELL BE CONTRARY TO THE DECISION 41 COMP. GEN. 306 (1961), WHERE THE "FLOATING SET ASIDE" WAS DISAPPROVED BECAUSE IT FAILED TO GIVE BIDDERS ADEQUATE ADVANCE NOTICE OF THE BASIS UPON WHICH THEIR BIDS WOULD BE EVALUATED.

TO FLETCHER OIL AND REFINING COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 9, 1970, AND TELEGRAM OF MARCH 16, 1970, PROTESTING AGAINST CERTAIN PROCEDURES ADOPTED BY THE DEFENSE FUEL SUPPLY CENTER IN ITS ADMINISTRATION OF THE PETROLEUM SMALL BUSINESS SET-ASIDE PROGRAM.

IN THE THIRD PARAGRAPH OF YOUR LETTER OF MARCH 9 YOU SUGGEST THAT THE PRESENT SYSTEM, WHICH ESTABLISHES SET-ASIDES ON AN INDIVIDUAL ITEM BASIS RATHER THAN ON AN AREA BASIS, MAY BE THE CAUSE OF THE SEVERE IMPACT ON MANY SMALL BUSINESS CONCERNS WHEN A BASE HAVING A LARGE SET ASIDE CLOSES DOWN. SINCE IT WOULD APPEAR THAT YOU ARE SUGGESTING THE DEFENSE FUEL SUPPLY CENTER (DFSC) ADOPT A SYSTEM WHEREBY THE SET-ASIDES ARE ON A GEOGRAPHIC AREA BASIS, WE MUST POINT OUT THAT SUCH A SYSTEM MIGHT WELL BE CONTRARY TO OUR DECISION PUBLISHED AT 41 COMP. GEN. 306 (1961). IN THAT DECISION WE PROHIBITED FUTURE USE OF THE "FLOATING SET ASIDE" PROCEDURE UTILIZED BY THE PROCURING AGENCY UNDER WHICH ONLY THE QUANTITY SET ASIDE FOR THE WHOLE NATION WAS KNOWN PRIOR TO BID OPENING; AND THE SPECIFIC QUANTITY TO BE SET ASIDE FOR SMALL BUSINESS CONCERNS AT PARTICULAR LOCATIONS WAS NOT DETERMINED UNTIL AFTER THE BIDS WERE OPENED. WE STATED THAT UNDER SUCH A PROCEDURE THE BIDDERS HAD NO ADVANCE NOTICE OF THE BASIS UPON WHICH THEIR BIDS WOULD BE EVALUATED, AND THEY THEREFORE WOULD BE UNABLE TO SUBMIT INTELLIGENT COMPETITIVE BIDS. DEPENDING, OF COURSE, TO A CERTAIN DEGREE ON THE SIZE OF THE GEOGRAPHIC AREA THAT YOU WOULD HAVE DFSC USE, IT WOULD APPEAR THAT ANY PROCEDURE WHICH ESTABLISHES SET-ASIDES ON A GEOGRAPHIC AREA BASIS WOULD HAVE THE SAME SHORTCOMINGS AS THE "FLOATING SET-ASIDE" SYSTEM. ADDITIONALLY, IT IS NOT APPARENT HOW ESTABLISHMENT OF SET-ASIDES ON A GEOGRAPHIC AREA BASIS WOULD EASE THE IMPACT OF POSSIBLE REDUCTIONS IN REQUIREMENTS PRIOR TO AWARD. WE AGREE WITH DFSC'S POSITION THAT IN THE FINAL ANALYSIS, SET-ASIDES MUST BE ESTABLISHED WITH REGARD TO THE LOCATIONS TO WHICH PRODUCTS OF SMALL BUSINESS REFINERS CAN BE MOVED OR DELIVERED ECONOMICALLY, AND THE ESTIMATED REQUIREMENTS OF PARTICULAR BASES MUST BE CONSIDERED. THEREFORE, EVEN IF SET-ASIDE QUANTITIES WERE NOT IDENTIFIED IN A SOLICITATION WITH THE REQUIREMENTS OF SPECIFIC BASES, REDUCTIONS OF REQUIREMENTS AT PARTICULAR BASES WOULD OF NECESSITY HAVE AN EQUAL EFFECT ON ANY AREA SET-ASIDE.

THE REMAINDER OF THE QUESTIONS RAISED IN YOUR LETTER AND TELEGRAM ARE ANSWERED IN OUR DECISION OF TODAY TO U.S. OIL AND REFINING COMPANY, B 168576(2), COPY ENCLOSED.

FOR THE REASONS SET OUT ABOVE, AND IN OUR DECISION OF TODAY TO U.S. OIL AND REFINING, YOUR PROTEST MUST BE DENIED.