B-173954, NOV 19, 1971

B-173954: Nov 19, 1971

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THAT THE ENTIRE AMOUNT OF AN INDIVIDUAL PROCUREMENT MAY BE SET ASIDE EXCLUSIVELY FOR SMALL BUSINESS PARTICIPATION WHERE THERE IS A REASONABLE EXPECTATION THAT A SUFFICIENT NUMBER OF BIDS OR PROPOSALS WILL BE OBTAINED "SO THAT AWARDS WILL BE MADE AT REASONABLE PRICES.". THE DETERMINATION AS TO WHETHER SUCH A REASONABLE EXPECTATION EXISTS IS WITHIN THE AMBIT OF SOUND ADMINISTRATIVE DISCRETION AND GAO WILL NOT SUBSTITUTE ITS JUDGMENT FOR THAT OF THE CONTRACTING OFFICER IN THE ABSENCE OF A CLEAR SHOWING OF ABUSE OF THE DISCRETION PERMITTED HIM. PURSUANT TO THE RECORD PRESENTED IT CANNOT BE SAID THAT THE DETERMINATION THAT THIS PROCUREMENT SHOULD BE A TOTAL SMALL BUSINESS SET-ASIDE WAS ARBITRARY OR CAPRICIOUS.

B-173954, NOV 19, 1971

BID PROTEST - SMALL BUSINESS SET-ASIDE DECISION DENYING PROTEST OF SIDRAN SPORTSWEAR INC. AGAINST THE AWARD OF A CONTRACT TO TENNESSEE OVERALL COMPANY, INC. UNDER AN IFB ISSUED BY THE DEFENSE PERSONNEL SUPPORT CENTER, DEFENSE SUPPLY AGENCY, PHILADELPHIA, PA., FOR A QUANTITY OF TROUSERS. ASPR 1-706.5(A)(1) PROVIDES, IN PERTINENT PART, THAT THE ENTIRE AMOUNT OF AN INDIVIDUAL PROCUREMENT MAY BE SET ASIDE EXCLUSIVELY FOR SMALL BUSINESS PARTICIPATION WHERE THERE IS A REASONABLE EXPECTATION THAT A SUFFICIENT NUMBER OF BIDS OR PROPOSALS WILL BE OBTAINED "SO THAT AWARDS WILL BE MADE AT REASONABLE PRICES." THE DETERMINATION AS TO WHETHER SUCH A REASONABLE EXPECTATION EXISTS IS WITHIN THE AMBIT OF SOUND ADMINISTRATIVE DISCRETION AND GAO WILL NOT SUBSTITUTE ITS JUDGMENT FOR THAT OF THE CONTRACTING OFFICER IN THE ABSENCE OF A CLEAR SHOWING OF ABUSE OF THE DISCRETION PERMITTED HIM. PURSUANT TO THE RECORD PRESENTED IT CANNOT BE SAID THAT THE DETERMINATION THAT THIS PROCUREMENT SHOULD BE A TOTAL SMALL BUSINESS SET-ASIDE WAS ARBITRARY OR CAPRICIOUS.

TO SIDRAN SPORTSWEAR, INCORPORATED:

REFERENCE IS MADE TO THE LETTER OF AUGUST 26, 1971, ON BEHALF OF SIDRAN SPORTSWEAR, INCORPORATED (SIDRAN), AGAINST THE AWARD OF A CONTRACT TO ANOTHER CONCERN UNDER INVITATION FOR BIDS NO. DSA 100-71-B 1442, ISSUED ON JUNE 24, 1971, BY THE DEFENSE PERSONNEL SUPPORT CENTER (DPSC), DEFENSE SUPPLY AGENCY (DSA), PHILADELPHIA, PENNSYLVANIA.

THE PROCUREMENT, A 100 PERCENT SMALL BUSINESS SET-ASIDE, WAS FOR A QUANTITY OF 214,800 PAIRS OF BLUE AIR FORCE SHADE MEN'S POLYESTER WOOL/TROPICAL TROUSERS.

THE FIVE BIDS RECEIVED WERE OPENED ON JULY 21, 1971. SIDRAN'S BID OF $5.50 PER PAIR LESS A DISCOUNT OF 2 PERCENT, 20 DAYS WAS LOW. THE BID FROM TENNESSEE OVERALL COMPANY, INCORPORATED (TENNESSEE), QUOTING PRICES RANGING FROM $5.59 TO $5.68 PER PAIR LESS A DISCOUNT OF 2 PERCENT, 20 DAYS WAS SECOND LOW. BOTH BIDDERS CERTIFIED THAT THEY WERE SMALL.

PURSUANT TO A PROTEST AGAINST SIDRAN'S SMALL BUSINESS STATUS FILED BY TENNESSEE WITH THE CONTRACTING OFFICER ON JULY 26, 1971, SBA DETERMINED THAT SIDRAN DID NOT QUALIFY AS A SMALL BUSINESS FOR PURPOSES OF THE PROCUREMENT. THIS DETERMINATION WAS APPEALED TO THE SBA SIZE APPEALS BOARD. WE HAVE BEEN ADVISED THAT ON OCTOBER 1, 1971, THE SIZE APPEALS BOARD AFFIRMED THE DETERMINATION THAT SIDRAN WAS A LARGE BUSINESS CONCERN.

ON AUGUST 19, 1971, SIDRAN PROTESTED TENNESSEE'S SMALL BUSINESS STATUS TO THE CONTRACTING OFFICER. ON AUGUST 26, 1971, THE CONTRACTING OFFICER ADVISED SIDRAN THAT ITS SIZE PROTEST AGAINST TENNESSEE WAS NOT TIMELY; HOWEVER, THE CONTRACTING OFFICER REFERRED TENNESSEE'S SIZE STATUS TO SBA FOR CONSIDERATION WITH RESPECT TO FUTURE PROCUREMENTS. SBA HAS DETERMINED THAT TENNESSEE IS A SMALL BUSINESS CONCERN.

ON SEPTEMBER 24, 1971, OUR OFFICE WAS ADVISED THAT AN AWARD WOULD BE MADE PENDING YOUR PROTEST ON THE BASIS OF URGENCY. ON THE SAME DATE CONTRACT NO. DSA 100-72-C-0411 WAS AWARDED TO TENNESSEE.

FIVE QUESTIONS HAVE BEEN RAISED IN THE LETTER OF AUGUST 26 DEALING WITH WHETHER THERE WAS AN ADEQUATE FACTUAL BASIS TO SUPPORT THE TOTAL SET-ASIDE DETERMINATION. THE FOLLOWING EXCERPT SETS FORTH EACH OF THESE QUESTIONS AND THE CONTRACTING OFFICER'S RESPONSES THERETO:

"(1) QUESTION: WHAT IS THE PERCENTAGE OF PROCUREMENT ACTIONS IN THE DEPARTMENT OF DEFENSE THAT ARE ENTIRELY RESTRICTED TO SMALL BUSINESS?

"ANSWER: ATTACHED IS CHART DATED 20 AUG 71 (ENCL #11) PREPARED BY DEPARTMENT OF DEFENSE OASD (COMPTROLLER) SHOWING PRIME CONTRACTS AWARDED TO LARGE AND SMALL BUSINESS FIRMS FOR FISCAL YEAR 1970-71. THIS CHART SHOWS THAT FOR FISCAL YEAR 1971 THE DOLLAR VALUE OF SET ASIDES FOR SMALL BUSINESS AMOUNTED TO $1,588,569,000.00 COMPARED TO TOTAL AWARDS OF $31,062,791,000.00 OR 5.1% OF SET ASIDES TO TOTAL AWARDS. THE PORTION OF THE CHART PERTAINING TO DEFENSE SUPPLY AGENCY (DSA) SHOWS THAT FOR FISCAL YEAR 1971 THE DOLLAR VALUE OF SET ASIDES FOR SMALL BUSINESS AMOUNTED TO $505,693,000.00 COMPARED TO TOTAL AWARDS OF $2,987,555,000.00 OR 16.9% OF SET ASIDES TO TOTAL AWARDS. THIS PERCENTAGE OF 16.9% AS COMPARED TO THE ARMY, NAVY AND AIR FORCE'S PERCENTAGE OF 5.4%, 2.4%, AND 3.1%, RESPECTIVELY, IS DISCUSSED MORE FULLY HEREINAFTER.

"(2) QUESTION: WHAT IS THE PERCENTAGE OF PROCUREMENT ACTIONS AT DPSC THAT IS RESTRICTED TO SMALL BUSINESS?

"ANSWER: SEE TABULATION BELOW

DPSC FISCAL YEAR 1971 (PARTIAL)

L.S.

TOTAL PROC. 100% RESTR. S.B. SET SET

ACTIONS UNRESTRICTED TO S.B. ASIDES ASIDES

CLOTHING & TEXTILES 1,553 619 892 6 36

MEDICAL 4,618 4,190 331 57 40

SUBSISTENCE 30,015 17,878 11,989 45 103

TOTAL 36,186 22,687 13,212 108 179

(L.S. LABOR SURPLUS)

(S.B. SMALL BUSINESS)

TOTAL $ AWARDED TOTAL ALLOCATED

OVER $2,500 TO SMALL BUSINESS PERCENTAGE

CLOTHING & TEXTILES $252,608,000.00 $173,961,000.00 68.9%

MEDICAL 171,442,000.00 29,104,000.00 17.0%

SUBSISTENCE 945,034,000.00 517,726,000.00 54.8%

$1,369,084,000.00 $720,791,000.00 52.7%

BY LETTER DATED 16 AUG 71 (ENCL #12) HDQ, DSA FORWARDED TO ALL ITS CENTERS INTERIM SMALL BUSINESS OBJECTIVES BY PROCUREMENT PROGRAM ESTABLISHED BY OASD (I&L) FOR FISCAL YEAR 1972. THE SMALL BUSINESS INTERIM GOAL ESTABLISHED BY OASD FOR TEXTILE, CLOTHING & EQUIPAGE WAS 67%.

"(3) QUESTION: WHEN WAS THE LAST PROCUREMENT MADE ON AN UNRESTRICTED BASIS FOR THE SAME ITEM AS CALLED FOR IN THE INSTANT PROCUREMENT?

"ANSWER: 10 AUG 1970. WITH RESPECT TO THIS UNRESTRICTED PROCUREMENT, ALTHOUGH PRE-INVITATION NOTICES (PINS) WERE SENT TO 80 LARGE AND SMALL FIRMS, ONLY FIVE ACTUAL OFFERS WERE RECEIVED, ALL SMALL BUSINESS FIRMS.

"(4) QUESTION: WHAT FACTUAL ANALYSIS WAS MADE IN THIS PROCUREMENT TO ASSURE THE GOVERNMENT THAT IT COULD SECURE ADEQUATE COMPETITION FROM SMALL BUSINESS?

"ANSWER: ON 24 MAY 71 PINS UNDER IFB 1442 WERE SENT TO 50 LARGE AND SMALL FIRMS. OF THESE FIRMS QUERIED, EIGHT AFFIRMATIVE REPLIES WERE RECEIVED, SIX FROM SMALL AND TWO FROM LARGE BUSINESS FIRMS. (BOTH SIDRAN AND TENNESSEE ARE INCLUDED IN THE SIX MENTIONED AS BEING SMALL BUSINESS FIRMS SINCE THIS IS THE WAY THEY ARE SHOWN ON THE BIDDERS' LIST.) BY DPSC FORM 2080, THE SMALL BUSINESS SPECIALIST MADE A 100% SMALL BUSINESS SET ASIDE DETERMINATION FOR IFB 1442 BASED ON THE HISTORY OF THE PRIOR PROCUREMENT WHICH WAS TOTALLY RESTRICTED TO SMALL BUSINESS. THIS HISTORY SHOWS THAT OF THE FOUR OFFERS RECEIVED ONLY ONE WAS NOT WITHIN 130% OF THE HIGHEST AWARD PRICE.

"(5) QUESTION: HAS ANY ANALYSIS BEEN MADE PRIOR TO THIS PROCUREMENT ON WHETHER RESTRICTING THE PROCUREMENT TO SMALL BUSINESS WOULD CAUSE AN INCREASE IN BID PRICE?

"ANSWER: YES. THE AWARD PRICE ON THE LAST PROCUREMENT MADE ON AN UNRESTRICTED BASIS FOR THE SAME ITEM (AWARDED TO STATHAM GARMENT ON 10 AUG 1970) RANGED FROM $5.424 TO $5.519, LESS 2% - 30 DAYS. SINCE THIS UNRESTRICTED PROCUREMENT ON 10 AUG 1970, TWO MORE PROCUREMENTS WERE ISSUED TOTALLY RESTRICTED TO SMALL BUSINESS. THE SUCCESSFUL BIDDERS AND THE PRICE AT WHICH AWARD WAS MADE ARE AS FOLLOWS:

"(A) AWARD TO TENNESSEE OVERALL ON 5 APR 71 AT $5.90, LESS 2%-20 DAYS.

"(B) AWARD TO STATHAM GARMENT ON 21 APR 71 AT PRICES RANGING FROM $5.51 TO $5.663, LESS 2% - 20 DAYS. IT WILL BE NOTED THAT STATHAM WAS THE LOW BIDDER IN THE LAST UNRESTRICTED PROCUREMENT AND THE LAST PROCUREMENT TOTALLY RESTRICTED TO SMALL BUSINESS. ALSO, THE PRICES PAID TO STATHAM GARMENT ARE WITHIN THE COMPETITIVE RANGE OF PRICES OFFERED BY SIDRAN AND TENNESSEE UNDER IFB 1442.

"3. *** THE SEGMENT OF INDUSTRY SUPPLYING MILITARY CLOTHING TO DPSC CONSISTS OVERWHELMINGLY OF SMALL BUSINESS CONCERNS. LOGICALLY THEN, DPSC WOULD BE EXPECTED TO HAVE SMALL BUSINESS OBJECTIVES ESTABLISHED COMMENSURATE WITH THE DEGREE OF PARTICIPATION OF SMALL BUSINESS CONCERNS IN THE PROGRAM.

"4. BY THE SAME TOKEN, DSA HAS A HIGHER PERCENTAGE OF SET ASIDES TO TOTAL AWARDS THAN (THEN) ARMY, NAVY AND AIR FORCE SINCE THE PROCUREMENT PROGRAMS ADMINISTERED BY DSA LEND THEMSELVES TO GREATER SMALL BUSINESS PARTICIPATION; WHEREAS THE PROCUREMENT ADMINISTERED BY THE MILITARY DEPARTMENT INCLUDE MOST OF THE HIGH DOLLAR VALUE ITEM MANUFACTURED BY LARGE BUSINESS CONCERNS. TO ISOLATE DPSC'S SMALL BUSINESS ROLE FROM THE TOTAL DOD PROCUREMENT PICTURE IS MISLEADING AND SERVES NO USEFUL PURPOSE."

PURSUANT TO THE PROVISIONS OF THE SMALL BUSINESS ACT, PUB. L. 85-536, AS AMENDED (15 U.S.C. CHAPTER 14A) THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), SECTION 1-706.1(A), PROVIDES THAT A PROCUREMENT " *** SHALL BE SET ASIDE FOR THE EXCLUSIVE PARTICIPATION OF SMALL BUSINESS CONCERNS WHEN SUCH ACTION IS DETERMINED TO BE IN THE INTEREST OF (I) MAINTAINING OR MOBILIZING THE NATION'S FULL PRODUCTIVE CAPACITY, (II) WAR OR NATIONAL DEFENSE PROGRAMS, OR (III) ASSURING THAT A FAIR PROPORTION OF GOVERNMENT PROCUREMENT IS PLACED WITH SMALL BUSINESS CONCERNS."

ALSO, ASPR 1-706.5(A)(1) PROVIDES, IN PERTINENT PART, THAT THE ENTIRE AMOUNT OF AN INDIVIDUAL PROCUREMENT MAY BE SET ASIDE EXCLUSIVELY FOR SMALL BUSINESS PARTICIPATION WHERE THERE IS A REASONABLE EXPECTATION THAT A SUFFICIENT NUMBER OF BIDS OR PROPOSALS WILL BE OBTAINED "SO THAT AWARDS WILL BE MADE AT REASONABLE PRICES."

OUR OFFICE HAS HELD THAT THE DETERMINATION AS TO WHETHER SUCH A REASONABLE EXPECTATION EXISTS IS WITHIN THE AMBIT OF 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 (1965). ALSO, THE FACT THAT LOWER BIDS MAY BE EXPECTED FROM LARGE BUSINESS CONCERNS IS NOT A SIGNIFICANT FACTOR IN DETERMINING WHETHER A PROCUREMENT SHOULD BE SET ASIDE FOR SMALL BUSINESS PARTICIPATION ONLY. 43 COMP. GEN. 497 (1963). SEE ALSO B-162440, NOVEMBER 14, 1967.

PURSUANT TO THE RECORD PRESENTED WE CANNOT SAY THAT THE DETERMINATION THAT THIS PROCUREMENT SHOULD BE A TOTAL SMALL BUSINESS SET-ASIDE WAS ARBITRARY OR CAPRICIOUS. IN THE CIRCUMSTANCES, WE FIND NO BASIS TO QUESTION THE REJECTION OF SIDRAN'S BID AND THE AWARD TO TENNESSEE.

FOR THESE REASONS YOUR PROTEST IS DENIED.