B-173166, JUL 21, 1972

B-173166, JUL 21, 1972

BID PROTEST - SMALL BUSINESS SET-ASIDE - DETERMINATION DECISION AFFIRMING DENIAL OF PROTEST OF THE OSWALD SCHICKER MANUFACTURING CO., INC., UNDER AN RFP ISSUED BY THE DEFENSE PERSONNEL SUPPORT CENTER (DPSC), PHILADELPHIA, PENNSYLVANIA. THE PRINCIPAL CONTENTION OF THE PROTEST WAS THAT THE PROCUREMENT SHOULD HAVE BEEN TOTALLY SET ASIDE FOR SMALL BUSINESS CONCERNS. WHILE GAO REGRETS THAT PRIOR DECISION INDICATED ONLY FOUR INSIGNIA PROCUREMENTS WERE CONDUCTED BY DPSC BETWEEN AUGUST 1970 AND MAY 1971, IT STILL APPEARS THAT ADEQUATE COMPETITION WAS NOT OBTAINED IN THREE PROCUREMENTS OF POLYESTER BASE CLOTH INSIGNIA WITHIN A RELATIVELY BRIEF PERIOD PRIOR TO THE ISSUANCE OF RFP-1300. THEREFORE, ACCORDING TO STANDARD ESTABLISHED IN DECISION B-153264 OF APRIL 13, 1964, REGARDING SMALL BUSINESS SET ASIDES AND IN VIEW OF FAILURE TO OBTAIN ADEQUATE COMPETITION IN THREE PROCUREMENTS DURING THE FOUR PRECEDING MONTHS, GAO IS UNABLE TO SAY THAT THE JOINT DETERMINATION OF THE CONTRACTING OFFICER AND THE SMALL BUSINESS SPECIALIST THAT AN UNRESTRICTED PROCUREMENT WOULD BE APPROPRIATE, WAS EITHER ARBITRARY OR CAPRICIOUS.

TO LINCOLN & STEWART:

REFERENCE IS MADE TO YOUR LETTERS OF DECEMBER 30, 1971, AND JANUARY 12, 1972, REQUESTING RECONSIDERATION OF OUR DECISION B-173166, NOVEMBER 29, 1971, DENYING YOUR PROTEST ON BEHALF OF THE OSWALD SCHICKER MANUFACTURING CO., INC., UNDER REQUEST FOR PROPOSALS DSA100-71-R-1300 (RFP-1300), ISSUED BY THE DEFENSE PERSONNEL SUPPORT CENTER (DPSC), PHILADELPHIA, PENNSYLVANIA. THE PRINCIPAL CONTENTION OF YOUR PROTEST WAS THAT THE PROCUREMENT SHOULD HAVE BEEN TOTALLY SET ASIDE FOR SMALL BUSINESS CONCERNS.

YOUR REQUEST FOR RECONSIDERATION IS SPECIFICALLY DIRECTED TO THE FOLLOWING STATEMENT IN OUR DECISION OF NOVEMBER 29, 1971:

"WE HAVE RECEIVED FROM THE DEFENSE SUPPLY AGENCY, WHICH EXERCISES SUPERVISION OVER THE CENTER FOR THE DEPARTMENT OF DEFENSE, A REPORT OF THE CIRCUMSTANCES INVOLVED IN THIS RFP. THIS REPORT SHOWS THAT FOUR PREVIOUS SOLICITATIONS FOR SIMILAR KINDS OF INSIGNIA WERE ISSUED BY THE CENTER FROM AUGUST 1970 THROUGH MAY 1971. ***"

THIS CONCLUSION WAS DRAWN FROM THE FOLLOWING INFORMATION CONTAINED IN THE ADMINISTRATIVE REPORT:

"1. RFP DSA100-71-R-1300 WAS ISSUED 17 MAY 71 (WITH ORIGINAL CLOSING 27 MAY 1971) AND CLOSED 2 JUNE 1971 REQUESTING OFFERS FOR THE MANUFACTURE AND DELIVERY TO 5 DESTINATIONS OF 437,100 EA. BADGE, RATING, 1ST CLASS, PETTY OFCR FOR MEN POLYESTER, BLUE BACKGROUND. THIS SOLICITATION WAS ISSUED ON AN UNRESTRICTED BASIS TO 13 FIRMS. THE DETERMINATION TO NEGOTIATE ON AN UNRESTRICTED BASIS WAS BASED UPON AN 02 PRIORITY DESIGNATION (UNDER ASPR 3 -202.2(VI) NEGOTIATION WAS AUTHORIZED) AND A DETERMINATION THAT THERE WASN'T SUFFICIENT PROOF OF ABILITY TO GET COVERAGE AT REASONABLE PRICES FROM SMALL BUSINESS FIRMS. SUCH DETERMINATION WAS THE RESULT OF THE FOLLOWING 4 PROCUREMENTS:

"A. IFB DSA100-71-B-0218 WAS AWARDED 5 OCTOBER 70 TO ART EMBROIDERY CO., A DIVISION OF SILNA CORPORATION (HEREINAFTER ART) FOR 39,700 EA. BADGE, RATING 1ST CLASS, PETTY OFFICER FOR MEN POLYESTER, BLUE BACKGROUND AT $.227 EACH, THE OTHER BIDS BEING $.23 AND $.295. THIS SOLICITATION WAS SET-ASIDE 100% FOR SMALL BUSINESS.

"B. IFB DSA100-71-B-0785 WAS ISSUED 22 JANUARY 1971 AND OPENED 11 FEBRUARY 1971 FOR 39,700 EACH, BADGE, RATING, 1ST CLASS, PETTY OFFICER FOR MEN POLYESTER, BLUE BACKGROUND ON A 100% SMALL BUSINESS BASIS. ART BID $.214 AND INTERSTATE LACE, INC. (HEREINAFTER INTERSTATE) BID $.219. AS A RESULT OF ADMINISTRATIVE DELAYS, AWARD COULD NOT BE MADE WITHIN INTERSTATE'S ORIGINAL ACCEPTANCE PERIOD AND IT REFUSED TO EXTEND. IN THE MEANTIME, ART ADVISED THAT IT HAD BECOME LARGE BUSINESS, HAVING BEEN ACQUIRED BY GENERAL MILLS, INC. CONSEQUENTLY, IFB DSA100-71-B-0785 WAS CANCELLED.

"C. IFB DSA100-71-B-0919 WAS ISSUED 19 FEBRUARY AND OPENED 11 MARCH 1971 REQUESTING OFFERS FOR 28,400 EACH BADGE, RATING, MENS, PETTY OFFICER, 1ST CLASS, RAYON, EMBROIDERY ON BLUE, WOOL MELTON BACKGROUND ON A 100% SMALL BUSINESS SET-ASIDE BASIS. ART WAS THE ONLY BIDDER AT $.189. HOWEVER, SINCE IT HAD BECOME LARGE BUSINESS THE SOLICITATION HAD TO BE CANCELLED.

"D. RFP DSA100-71-R-1224 WAS ISSUED 27 APRIL AND CLOSED 7 MAY 1971 (ON AN UNRESTRICTED BASIS) REQUESTING OFFERS FOR 2 ITEMS: 39,700 POLYESTER RATING BADGES AND 28,400 MELTON RATING BADGES. FOUR (4) FIRMS WERE SOLICITED AND TWO (2) OFFERS RECEIVED. THE LOW OFFEROR WAS ART AT $.20 EA. FOR BOTH ITEMS AND INTERSTATE $.274 EACH FOR THE POLYESTER AND $.243 EA. FOR THE MELTON. AWARD WAS MADE TO ART FOR THE TOTAL QUANTITY ON 25 MAY 1971.

"2. THE ABOVE RECITATION INDICATES THAT IN 4 PREVIOUS PROCUREMENTS FOR SIMILAR RATING BADGES ONLY 2 COMPETITIVE OFFERS HAD BEEN RECEIVED, ART AND INTERSTATE. IN ADDITION, 2 OF THE PROCUREMENTS HAD TO BE DISSOLVED AFTER ART BECAME LARGE BUSINESS, AS ART WAS THE SOLE BIDDER IN ONE SOLICITATION AND THE ONLY REMAINING BIDDER IN THE OTHER. IN VIEW OF THE URGENCY AND THE PAST HISTORY OF THE ITEM, THE SMALL BUSINESS SPECIALIST JOINTLY WITH THE CONTRACTING OFFICER DETERMINED THAT AN UNRESTRICTED PROCUREMENT WAS THE PROPER METHOD OF FULFILLING THE URGENT SUPPLY REQUIREMENT."

IN VIEW THEREOF, WE CONCLUDED THAT THERE WAS AMPLE JUSTIFICATION FOR THE DECISION NOT TO SET ASIDE RFP-1300 FOR SMALL BUSINESS CONCERNS.

ATTACHED TO YOUR LETTER OF DECEMBER 30, 1971, IS A SCHEDULE WHICH SHOWS THAT FROM AUGUST 1970 UNTIL THE ISSUANCE OF RFP-1300 IN MAY 1971, DPSC CONDUCTED BID OPENINGS ON NINE SOLICITATIONS FOR COTTON, POLYESTER, OR WOOL MELTON INSIGNIA, RATHER THAN ISSUING FOUR SOLICITATIONS AS STATED IN OUR DECISION, AND YOU THEREFORE CONTEND OUR DECISION IS BASED UPON ERROR OF FACT. OMITTED FROM YOUR SCHEDULE IS RFP DSA 100-71-R-1224, DISCUSSED IN THE ABOVE-QUOTED PORTION OF THE INITIAL ADMINISTRATIVE REPORT. HOWEVER, SINCE IT APPEARS THAT THERE WERE MORE INSIGNIA PROCUREMENTS DURING THIS PERIOD THAN WE CONCLUDED HAD EXISTED FROM OUR READING OF THE ADMINISTRATIVE REPORT, WE REQUESTED CLARIFICATION FROM DPSC.

IN A SUPPLEMENTAL REPORT IN RESPONSE THERETO, THE DPSC CONTRACTING OFFICER ADVISED THAT HE HAD PREVIOUSLY DISCUSSED ONLY THOSE SOLICITATIONS RELATING TO THE DECISION TO ISSUE RFP-1300 ON AN UNRESTRICTED BASIS. INVITATION FOR BIDS-0218 WAS MENTIONED IN THE INITIAL ADMINISTRATIVE REPORT TO ILLUSTRATE THE FIRST PROCUREMENT BY DPSC UTILIZING POLYESTER BASE CLOTH AND TO INDICATE THE SUCCESS IN MAKING AN AWARD IN OCTOBER 1970 FOR A SMALL QUANTITY ON A TOTAL SMALL BUSINESS SET-ASIDE BASIS. HOWEVER, UNDER IFB-0785, ONLY ONE LARGE BUSINESS AND ONE SMALL BUSINESS BID WERE RECEIVED. ONLY ONE BID, THAT OF A LARGE BUSINESS, WAS SUBMITTED UNDER IFB -0919, AND ONLY ONE LARGE BUSINESS AND ONE SMALL BUSINESS OFFER WERE RECEIVED UNDER RFP-1224. THE BID OPENING DATES, AND THE CLOSING DATE FOR RECEIPT OF PROPOSALS, UNDER THESE THREE PROCUREMENTS OCCURRED AFTER THE PROCUREMENT UNDER IFB 0218 AND WITHIN THREE MONTHS PRIOR TO THE ISSUANCE OF RFP-1300. THE DIFFICULTIES ENCOUNTERED IN OBTAINING ADEQUATE COMPETITION IN THESE THREE PROCUREMENTS LED TO THE DETERMINATION TO ISSUE RFP-1300 ON AN UNRESTRICTED BASIS.

WHILE WE REGRET THAT OUR DECISION INDICATED ONLY FOUR INSIGNIA PROCUREMENTS WERE CONDUCTED BY DPSC BETWEEN AUGUST 1970 AND MAY 1971, IT STILL APPEARS THAT ADEQUATE COMPETITION WAS NOT OBTAINED IN THREE PROCUREMENTS OF POLYESTER BASE CLOTH INSIGNIA WITHIN A RELATIVELY BRIEF PERIOD PRIOR TO THE ISSUANCE OF RFP-1300.

IN OUR DECISION B-153264, APRIL 13, 1964, WE SET FORTH THE STANDARD FOR UPSETTING A DECISION RELATIVE TO INCLUSION OF A SMALL BUSINESS SET ASIDE AS BEING WHETHER THERE IS "CONVINCING EVIDENCE OF ARBITARY OR CAPRICIOUS ACTION." IN VIEW OF FAILURE TO OBTAIN ADEQUATE COMPETITION IN THREE PROCUREMENTS DURING THE FOUR PRECEDING MONTHS WE ARE UNABLE TO SAY THAT, AT THE TIME OF THE ISSUANCE OF RFP-1300, THE JOINT DETERMINATION OF THE CONTRACTING OFFICER AND THE SMALL BUSINESS SPECIALIST THAT AN UNRESTRICTED PROCUREMENT WOULD BE APPROPRIATE, WAS EITHER ARBITRARY OR CAPRICIOUS.

ACCORDINGLY, OUR DECISION OF NOVEMBER 29, 1971, IS AFFIRMED.