B-170837, MAR 8, 1971

B-170837: Mar 8, 1971

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THE SPECIFIC DECISION THAT NO PORTION OF THE PROCUREMENT BE SET ASIDE FOR AWARD TO SMALL BUSINESS OR LABOR SURPLUS AREA FIRMS WAS BASED ON THESE FACTS: THERE WAS ONLY ONE SMALL BUSINESS SUPPLIER. WHOSE BID PRICES UNDER THE MOST RECENT PROCUREMENT WERE EXCESSIVE. SINCE SUCH A DECISION IS WITHIN THE DISCRETION OF THE PROCURING AGENCY AND THE SMALL BUSINESS ADMINISTRATION. THE COMPTROLLER GENERAL WILL NOT QUESTION THE AWARD. INCORPORATED: FURTHER REFERENCE IS MADE TO YOUR LETTERS OF SEPTEMBER 17 AND OCTOBER 5. WHICH WAS ISSUED ON JUNE 12. WAS DRAWN TO INCLUDE A PRICING TABLE WITH INCREMENTS RANGING FROM 5. BIDDERS WERE TO SUBMIT BIDS ON THEIR MAXIMUM CAPABILITY WITHIN THESE RANGES AND ON ALL LESSER QUANTITY RANGES.

B-170837, MAR 8, 1971

BID PROTEST - SMALL BUSINESS - LABOR SURPLUS - SET ASIDE DENIAL OF PROTEST AGAINST THE FAILURE OF IFB ISSUED BY OGDEN AIR MATERIEL AREA TO PROVIDE FOR A SET ASIDE PORTION OF A PROCUREMENT FOR TOP AND BASE HEMISPHERES FOR BOMB BODIES FOR SMALL BUSINESS OR LABOR SURPLUS AREA FIRMS, AND AGAINST AWARD TO GIBBS DIE CASTING ALUMINUM CORP., AND HONEYWELL, INC. THE SPECIFIC DECISION THAT NO PORTION OF THE PROCUREMENT BE SET ASIDE FOR AWARD TO SMALL BUSINESS OR LABOR SURPLUS AREA FIRMS WAS BASED ON THESE FACTS: THERE WAS ONLY ONE SMALL BUSINESS SUPPLIER, PROTESTANT, WHOSE BID PRICES UNDER THE MOST RECENT PROCUREMENT WERE EXCESSIVE; UNCERTAINTY OF QUANTITY TO BE PROCURED; THE INCLUSION OF SUCH A PROVISION WOULD IMPEDE THE PROCUREMENT; AND URGENCY OF THE PROCUREMENT. SINCE SUCH A DECISION IS WITHIN THE DISCRETION OF THE PROCURING AGENCY AND THE SMALL BUSINESS ADMINISTRATION, THE COMPTROLLER GENERAL WILL NOT QUESTION THE AWARD, ABSENT A SHOWING OF AN ABUSE OF DISCRETION.

TO ADVENTURE LINE MANUFACTURING COMPANY, INCORPORATED:

FURTHER REFERENCE IS MADE TO YOUR LETTERS OF SEPTEMBER 17 AND OCTOBER 5, 1970, PROTESTING THE FAILURE OF INVITATION FOR BIDS NO. F42600-70-B 3229, ISSUED BY OGDEN AIR MATERIEL AREA, HILL AIR FORCE BASE, UTAH, TO PROVIDE FOR THE SET ASIDE OF A PORTION OF THE PROCUREMENT FOR SMALL BUSINESS OR LABOR SURPLUS AREA FIRMS.

THE RECORD SHOWS THAT IN APRIL 1970, THE PROCURING AGENCY RECEIVED AN ADVANCE PLANNING PURCHASE REQUEST FOR A QUANTITY OF 161,973 CARTONS OF TOP HEMISPHERES FOR BOMB BODIES AND A LIKE QUANTITY OF BASE HEMISPHERES TO BE DELIVERED OVER A SIX-MONTH PERIOD BEGINNING NOVEMBER 1970 AT AN AVERAGE MONTHLY RATE OF 26,996 CARTONS OF EACH. THE PURCHASE REQUEST INCLUDED A STATEMENT THAT THIS QUANTITY REPRESENTED THE BEST ESTIMATED PRODUCTION REQUIREMENT WITH PROVISIONS FOR AWARD OF A MINIMUM QUANTITY OF 83,452 CARTONS OF EACH AND A RANGE UP TO A MAXIMUM OF 376,880 CARTONS OF EACH. TO COMPLY WITH THE PURCHASE REQUEST REQUIREMENTS AND ALSO TO MEET THE AIR FORCE DIRECTIVE TO MAINTAIN A MINIMUM OF THREE MOBILIZATION BASES, THE SOLICITATION, WHICH WAS ISSUED ON JUNE 12, 1970, WAS DRAWN TO INCLUDE A PRICING TABLE WITH INCREMENTS RANGING FROM 5,000 CARTONS TO 250,000 CARTONS OF EACH ITEM FOR A SIX-MONTH PERIOD. BIDDERS WERE TO SUBMIT BIDS ON THEIR MAXIMUM CAPABILITY WITHIN THESE RANGES AND ON ALL LESSER QUANTITY RANGES. NO PORTION OF THE PROCUREMENT WAS SET ASIDE FOR AWARD TO SMALL BUSINESS OR LABOR SURPLUS AREA FIRMS.

BIDS WERE OPENED ON JULY 14, 1970, WITH RESPONSE FROM ONLY THE FIVE CONTRACTORS THEN CURRENTLY IN PRODUCTION, OF WHICH YOU WERE THE ONLY SMALL BUSINESS FIRM. ON JULY 17, 1970, THE PROCURING AGENCY RECEIVED NOTICE OF A RESCHEDULING OF THE PROGRAM DOWNWARD AND THE REDUCTION OF THE MOBILIZATION SOURCE REQUIREMENT FROM THREE TO TWO. ON AUGUST 31, 1970, THE PROCURING AGENCY RECEIVED AN AMENDMENT TO THE PURCHASE REQUEST SETTING THE TOTAL SIX MONTHS REQUIREMENT FOR EACH ITEM AT 94,360 CARTONS. ACCORDINGLY, AWARDS WERE MADE ON SEPTEMBER 14, 1970, TO THE LOWEST EVALUATED BIDDER, GIBBS DIE CASTING ALUMINUM CORPORATION, FOR A QUANTITY OF 42,768 CARTONS OF EACH ITEM, THEIR MAXIMUM CAPACITY, AND TO HONEYWELL, INCORPORATED, THE NEXT LOWEST EVALUATED BIDDER, FOR THE REMAINING QUANTITY OF 51,592 CARTONS OF EACH ITEM.

YOUR PROTEST IS PRIMARILY BASED ON THE FAILURE OF THE SOLICITATION TO PROVIDE FOR A PARTIAL SET-ASIDE OF THE PROCUREMENT FOR SMALL BUSINESS OR LABOR SURPLUS AREA FIRMS, PARTICULARLY IN VIEW OF THE SUBSTANTIALLY REDUCED REQUIREMENTS FOR THE ITEMS.

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, OR PART THEREOF, SHOULD BE SET ASIDE FOR SMALL BUSINESS IS WITHIN THE JURISDICTION OF THE PROCURING AGENCY AND THE SMALL BUSINESS ADMINISTRATION. B-167131, JULY 23, 1969. IT IS OUR POSITION THAT THE DETERMINATION TO SET ASIDE A PROCUREMENT FOR SMALL BUSINESS IS WITHIN THE AMBIT OF SOUND ADMINISTRATIVE DISCRETION. THIS AUTHORITY IS VERY BROAD AND AN ADMINISTRATIVE DETERMINATION MADE PURSUANT TO SUCH AUTHORITY IS NOT ORDINARILY REVIEWED BY OUR OFFICE. B 150048, DECEMBER 12, 1962, B-165119, OCTOBER 4, 1968. OUR OFFICE WILL QUESTION SUCH A DETERMINATION ONLY UPON A CLEAR SHOWING OF ABUSE OF THE DISCRETION. B-168587, FEBRUARY 17, 1970.

IN SUPPORT OF YOUR CONTENTION THAT A PORTION OF THE PROCUREMENT SHOULD HAVE BEEN SET ASIDE, YOU NOTE THAT PREVIOUS SOLICITATIONS FOR THE ITEMS INCLUDED SMALL BUSINESS AND LABOR SUPLUS SET-ASIDES.

THE ADMINISTRATIVE REPORT INDICATES THAT THE INITIAL PROCUREMENT IN THIS AREA CONTAINED A FIFTY PERCENT SMALL BUSINESS SET-ASIDE BUT NO AWARD WAS MADE ON THE SET-ASIDE. THE SECOND AND FOURTH PROCUREMENTS CONTAINED A LABOR SURPLUS PROVISION. THE THIRD PROCUREMENT WAS A TOTAL SMALL BUSINESS SET-ASIDE WITH A SPECIAL LABOR SURPLUS SET-ASIDE, BUT ONLY 6,800,000 OF THE 10,000,000 UNIT QUANTITY COULD BE AWARDED UNDER THIS SOLICITATION AND THE REMAINDER HAD TO BE OBTAINED BY OTHER MEANS. THE FIFTH AND SIXTH PROCUREMENTS INCLUDED NO SET-ASIDES. THE CONTRACTING OFFICER INDICATES THAT YOU PARTICIPATED IN THE FIRST AND FIFTH PROCUREMENTS, THE LATTER AWARD BEING MADE TO YOU AT A PRICE EQUAL TO THE HIGHEST AWARD AFTER YOU HAD REDUCED YOUR PRICE BY TWENTY-FIVE PERCENT.

WITH RESPECT TO A SET-ASIDE UNDER THE INSTANT PROCUREMENT, THE ADMINISTRATIVE REPORT STATES:

"PRIOR TO PREPARATION OF THE SOLICITATION, THE QUESTION OF SET-ASIDES WAS DISCUSSED AT LENGTH WITH SMALL BUSINESS AND CONTRACTOR RELATIONS OFFICE PERSONNEL. PREVIOUS EXPERIENCE HAS POINTED OUT THE DIFFICULTY IN OBTAINING THIS ITEM UNDER ANY OF THE PRESCRIBED SET-ASIDE PROCEDURES, PARTICULARLY WHERE QUANTITIES ARE UNKNOWN AND ONLY A SMALL PORTION OF THE ANTICIPATED PRODUCTION CAPABILITY IS AVAILABLE FROM SMALL BUSINESS. WITH ONLY ONE KNOWN SMALL BUSINESS SUPPLIER, WHOSE BID PRICES UNDER THE MOST RECENT PROCUREMENTS WERE EXCESSIVE, AND THE UNCERTAINTY OF THE QUANTITY TO BE PROCURED, IT WAS DETERMINED THAT THERE WAS IN FACT NO REASONABLE WAY TO ESTABLISH A SMALL BUSINESS SET ASIDE QUANTITY. AFTER SEVERAL MEETINGS, IT WAS DETERMINED THAT SINCE THE SPECIAL AUTHORITY PREVIOUSLY AUTHORIZED FOR INCLUSION OF A SPECIAL MOBILIZATION BASE SET-ASIDE CLAUSE HAD NOT BEEN EXTENDED FOR USE ON THE FY71 PROGRAM, THAT INCLUSION OF ANY OTHER PROVISION WOULD ONLY SERVE TO IMPEDE THE PROCUREMENT, PARTICULARLY WITH THE SHORT LEAD TIME AVAILABLE AFTER ESTABLISHMENT OF QUANTITY AND RECEIPT OF FUNDS. IN ARRIVING AT THIS DECISION, CONSIDERATION WAS SPECIFICALLY GIVEN TO THE URGENCY OF THE PROCUREMENT AND THE NEED TO MAINTAIN PRODUCTION CONTINUITY, WITH DELIVERY BEGINNING IN NOV 1970, TO SUPPORT THE URGENT SEA REQUIREMENT."

YOU ALSO CONTEND THAT THE TWO COMPANIES WHO RECEIVED AWARDS UNDER THE CURRENT SOLICITATION ARE USING GOVERNMENT-OWNED EQUIPMENT AND IN ONE CASE A GOVERNMENT-OWNED, CONTRACTOR-OPERATED (GOCO) PLANT. IN RESPONSE TO THIS POINT, THE ADMINISTRATIVE REPORT STATES:

"THE LOW EVALUATED BIDDER, GIBBS DIE CASTING ALUMINUM CORP, UTILIZES THREE DIE CASTING MACHINES, TWO OF WHICH ALONG WITH SOME MISCELLANEOUS HANDLING AND PROCESSING EQUIPMENT ARE GOVERNMENT-OWNED. HONEYWELL INC, THE SECOND LOW EVALUATED BIDDER ALSO USES GOVERNMENT-OWNED FACILITIES FOR THE PRODUCTION OF BOTH HEMISPHERES (BOMBLETS) AND STEEL BALLS AND DOES LEASE AND USE SEVERAL GOVERNMENT-OWNED BUILDINGS, BUT THIS IS NOT CONSIDERED TO BE A 'GOCO PLANT.' THE HEMISPHERES ARE PRODUCED IN HIS OWN BUILDING. HOWEVER, IN ACCORDANCE WITH ESTABLISHED REGULATIONS AND PROCEDURES, THE APPLICABLE RENTAL FACTORS FOR THE USE OF SUCH GOVERNMENT- OWNED FACILITIES WERE CONSIDERED IN THE EVALUATION OF BIDS IN ACCORDANCE WITH THE PROVISIONS OF ASPR SECTION 13-501 AND 13-502, THUS ALLEVIATING COMPETITIVE ADVANTAGE AND CREATING A DIRECT COMPARISON BETWEEN THOSE BIDDERS HAVING ACCESS TO GOVERNMENT-OWNED FACILITIES AND THOSE WHICH DO NOT, THEREBY CREATING A GOOD COMPETITIVE SITUATION."

SINCE, AS HEREINBEFORE STATED, THE QUESTION WHETHER A PARTICULAR PROCUREMENT, OR A PORTION THEREOF, SHOULD BE SET ASIDE FOR AWARD ONLY TO SMALL BUSINESS OR LABOR SURPLUS AREA FIRMS, IS FOR DETERMINATION BY THE PROCURING AGENCY AND THE SMALL BUSINESS ADMINISTRATION, WE FIND NO LEGAL BASIS TO QUESTION THE AWARDS MADE UNDER THE INSTANT SOLICITATION.