B-174949, JUL 5, 1972

B-174949: Jul 5, 1972

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MUST AGREE WITH GSA THAT IF THE PROCUREMENT WERE ISSUED AS A SMALL BUSINESS SET-ASIDE. THE CONTRACTING OFFICER AND SEVERAL PRINCIPLE SUPPLIERS DETERMINED THAT A PARTIAL SET ASIDE WOULD HAVE RESULTED IN UNECONOMICAL PRODUCTION RUNS. SUCH DETERMINATIONS WERE WITHIN THE AGENCY'S ADMINISTRATIVE DISCRETION AND THE PROTEST MUST BE DENIED. INCORPORATED: REFERENCE IS MADE TO YOUR MAIL GRAM DATED JANUARY 14. THE SOLICITATION WAS FOR THE NORMAL SUPPLY REQUIREMENTS OF GSA SUPPLY DEPOTS FOR PAINT ROLLERS. IS DIVIDED INTO FOUR GROUPS WITH 16 LINE ITEMS. WAS NOT RESTRICTED TO SMALL BUSINESS. LARGE BUSINESS COMPANIES WERE PERMITTED TO ENTER THE COMPETITION. YOU POINT OUT THAT THE PREVIOUS PROCUREMENT WAS A TOTAL SET ASIDE FOR SMALL BUSINESS.

B-174949, JUL 5, 1972

BID PROTEST - NON-SET-ASIDE OF PROCUREMENT DECISION DENYING THE PROTEST OF PREMIER PAINT ROLLER MANUFACTURING COMPANY, INC., AGAINST THE NON-SET-ASIDE OF A SOLICITATION ISSUED BY THE FEDERAL SUPPLY SERVICE, GENERAL SERVICES ADMINISTRATION. FROM THE RECORD THE COMP. GEN. MUST AGREE WITH GSA THAT IF THE PROCUREMENT WERE ISSUED AS A SMALL BUSINESS SET-ASIDE, INADEQUATE PRICE COMPETITION COULD REASONABLY BE EXPECTED. FURTHER, THE CONTRACTING OFFICER AND SEVERAL PRINCIPLE SUPPLIERS DETERMINED THAT A PARTIAL SET ASIDE WOULD HAVE RESULTED IN UNECONOMICAL PRODUCTION RUNS, WITH AN ATTENDANT INCREASE IN COST. SUCH DETERMINATIONS WERE WITHIN THE AGENCY'S ADMINISTRATIVE DISCRETION AND THE PROTEST MUST BE DENIED.

TO PREMIER PAINT ROLLER MANUFACTURING COMPANY, INCORPORATED:

REFERENCE IS MADE TO YOUR MAIL GRAM DATED JANUARY 14, 1972, PROTESTING THE NON-SET-ASIDE OF SOLICITATION NO. 6PR-W-22441-HH-F, ISSUED BY THE FEDERAL SUPPLY SERVICE, REGION 6, ON DECEMBER 17, 1971, AND OPENED JANUARY 18, 1972, AT KANSAS CITY, MISSOURI.

THE SOLICITATION WAS FOR THE NORMAL SUPPLY REQUIREMENTS OF GSA SUPPLY DEPOTS FOR PAINT ROLLERS, ROLLER COVERS, ROLLER KITS, PAINT ROLLER TRAYS, BUCKET GRIND, PAINT MITT AND PAINT BRUSH CONDITIONER, AND IS DIVIDED INTO FOUR GROUPS WITH 16 LINE ITEMS, 10 DELIVERY POINTS.

SIMILAR PROCUREMENTS IN PRIOR YEARS HAD BEEN SET ASIDE FOR SMALL BUSINESS CONCERNS. THIS PROCUREMENT, HOWEVER, WAS NOT RESTRICTED TO SMALL BUSINESS, AND LARGE BUSINESS COMPANIES WERE PERMITTED TO ENTER THE COMPETITION. YOU OBJECT TO THE FAILURE TO SET ASIDE THE PROCUREMENT FOR SMALL BUSINESS OR THOSE LOCATED IN LABOR SURPLUS AREAS. YOU POINT OUT THAT THE PREVIOUS PROCUREMENT WAS A TOTAL SET ASIDE FOR SMALL BUSINESS, AND THAT A LETTER OF DECEMBER 22, 1971, TO ALL GSA REGIONAL DIRECTORS STATED THAT THIS TYPE OF PROCUREMENT SHOULD BE SET ASIDE FOR SMALL BUSINESS CONCERNS. SIMILAR PROTESTS, ON SUBSTANTIALLY THE SAME BASES, HAVE BEEN FILED HERE BY H&G INDUSTRIES, INCORPORATED, OF BELLEVILLE, NEW JERSEY, AND ADAMS PRODUCTS COMPANY, INCORPORATED, OF OXFORD, NORTH CAROLINA.

THE GENERAL SERVICES ADMINISTRATION (GSA) REPORTS THAT IN PREPARING FOR THIS PROCUREMENT:

"*** THE CRITERIA FOR TOTAL SET-ASIDES SET FORTH IN SECTION 1-1.706 5 OF THE FEDERAL PROCUREMENT REGULATIONS WERE REVIEWED AND IT WAS CONCLUDED THAT NO REASONABLE EXPECTATION EXISTED THAT BIDS WOULD BE OBTAINED FROM A SUFFICIENT NUMBER OF SMALL BUSINESS CONCERNS SO THAT AWARDS MIGHT BE MADE AT REASONABLE PRICES. THE DETERMINATION BY THE CONTRACTING OFFICER WAS BASED IN LARGE PART ON REGION 6'S EXPERIENCE WITH THE PREVIOUS YEAR'S (1971) SOLICITATION, 6PR-W-16 167-JB-F, WHICH CONTAINED THE SAME ITEM DESCRIPTIONS AS ARE IN THE CURRENT SOLICITATION. PRIOR TO 1971, CONTRACTS FOR THESE ITEMS HAD BEEN HANDLED ON A REGIONAL RATHER THAN ON A NATIONWIDE BASIS, AND HENCE, ARE NOT REPRESENTATIVE OF EITHER THE CURRENT OR THE 1971 SOLICITATION. THE 1971 SOLICITATION WAS A TOTAL SMALL BUSINESS SET-ASIDE AND WAS BROKEN DOWN INTO FOUR GROUPS WITH FOUR ADDITIONAL LINE ITEMS. PREMIER AND ESSEX GRAHAM COMPANY (ESSEX) BID ON GROUP I CONSISTING OF ITEMS 1 AND 2. AS ESSEX WAS DETERMINED TO BE A LARGE BUSINESS, PREMIER WAS AWARDED THIS PORTION WITHOUT COMPETITION FROM OTHER SMALL BUSINESSES. ITEMS 3, 4, AND 5 COMPRISED GROUP II, WHICH WAS BID ON BY ESSEX, PREMIER, AND ADAMS. THERE WAS A PRICE DIFFERENCE OF 13 PERCENT BETWEEN PREMIER'S AND ADAMS' BIDS. IN ADDITION, PREMIER'S BID WAS ESTIMATED AT $30,000 IN EXCESS OF THAT OF THE LOW BIDDER ESSEX. AGAIN, AWARD WAS MADE TO PREMIER. THE THIRD GROUP, CONSISTING OF ITEMS 6, 7, 8, AND 9, WAS DIVIDED INTO TWO PARTS; ONE FOR THE EASTERN REGION AND ONE FOR THE WESTERN REGION OF GSA.

"ON THE LARGER, WESTERN PORTION, BIDS WERE RECEIVED FROM ESSEX AND ADAMS. AWARD WAS MADE TO ADAMS. ON THE OTHER PORTION, AWARD WAS MADE TO ONE OF TWO SMALL BUSINESSES WHICH SUBMITTED BIDS (H&G AND ADAMS). GROUP IV, CONSISTING OF ITEMS 10, 11, AND 12, AS ONLY ONE BID FROM A LARGE BUSINESS WAS RECEIVED, THIS PART OF THE SOLICITATION WAS READVERTISED AND AWARD MADE TO ESSEX. A SIMILAR DETAILED ANALYSIS MAY BE MADE OF THE SEPARATE LINE ITEMS 13 THROUGH 16, WITH SIMILAR RESULTS. WHAT EVOLVES FROM A STUDY OF THE ABOVE IS THE INESCAPABLE CONCLUSION THAT INADEQUATE PRICE COMPETITION EXISTED ON THE 1971 SOLICITATION. NO MORE THAN TWO SMALL BUSINESSES BID ON ANY ONE ITEM AND THE COMPETITION BETWEEN THEM APPEARED MINIMAL. MOREOVER, TWO OF THE THEN SMALL BUSINESS BIDDERS, THE WOOSTER BRUSH COMPANY (WOOSTER) AND ESSEX, HAD BECOME LARGE BUSINESSES SINCE THE PREVIOUS PROCUREMENT. THOSE COMPANIES HAD SUPPLIED MUCH OF THE COMPETITION IN THE PAST, ***."

WE HAVE EXAMINED THE TABULATION AND BID ANALYSES OF PRIOR PROCUREMENTS ACCOMPANYING THE ADMINISTRATIVE REPORT AND AGREE WITH THE CONTRACTING OFFICER THAT AT THE INCEPTION OF THE PRESENT PROCUREMENT THERE APPEARED TO EXIST AN EXPECTATION OF INADEQUATE SMALL BUSINESS COMPETITION WITH RESPECT TO A TOTAL SET-ASIDE FOR THE PROCUREMENT. WE ARE ADVISED THAT THE SMALL BUSINESS REPRESENTATIVE CONCURRED IN THE CONTRACTING OFFICER'S DETERMINATION. AS REPORTED BY GSA, THE TABULATION AND BID ANALYSES OF THE CURRENT PROCUREMENT INDICATE THAT OUT OF THE TOTAL AWARDS IN EXCESS OF $970,000, A SAVINGS TO THE GOVERNMENT OF APPROXIMATELY $71,500 IS REALIZED BECAUSE OF PARTICIPATION BY LARGE BUSINESSES. MOREOVER, SMALL BUSINESSES WOULD RECEIVE 41.685 PERCENT OF THE TOTAL PROCUREMENT ON AN ADVERTISED NON SET-ASIDE BASIS.

IT IS ALSO REPORTED THAT CONSIDERATION WAS GIVEN BY THE GSA CONTRACTING OFFICER TO A PARTIAL SMALL BUSINESS SET-ASIDE ON THIS PROCUREMENT; THAT PRINCIPAL SUPPLIERS, ONE LARGE BUSINESS AND ONE SMALL BUSINESS, WERE CONSULTED BY HIM; AND THAT THEY WERE OF THE OPINION, AND THE CONTRACTING OFFICER AGREED, THAT SEVERING THE REQUIREMENTS WOULD RESULT IN UNECONOMICAL PRODUCTION RUNS, WITH AN ATTENDANT INCREASE IN COST.

THE MEMORANDUM OF DECEMBER 22, 1971, SENT TO REGIONAL OFFICES BY MR. WILLIAM W. THYBONY, ASSISTANT COMMISSIONER FOR PROCUREMENT, CONCERNS THE ADOPTION OF A PARTIAL SET-ASIDE PROGRAM AND REQUESTS THE REGIONAL OFFICERS TO SUBMIT INITIAL REPORTS WITHIN THREE WEEKS AFTER RECEIPT OF THE DECEMBER 22 MEMORANDUM ON HIGH VOLUME ITEMS SUITABLE FOR PARTIAL SET-ASIDE PROCUREMENT. HOWEVER, THE MEMORANDUM RECOGNIZES THAT "CONSIDERABLE TIME WILL BE INVOLVED IN THE REVIEWING COMMODITIES FOR APPLICABILITY TO THE PROGRAM." IT STATES THAT, "FURTHER RECOMMENDATIONS SHOULD BE SUBMITTED AS YOUR REVIEW PROGRESSES TO COMPLETION." WE DO NOT VIEW THIS LETTER AS CONSTITUTING A DIRECTIVE FOR THE INSTANT PROCUREMENT.

WE HAVE NOTED YOUR COMMENT THAT NO PART OF THE PROCUREMENT WAS SET ASIDE FOR LABOR SURPLUS AREA SUPPLIERS. GSA ADVISES THAT THIS SUGGESTION OFFERS A POSSIBILITY FOR FUTURE PROCUREMENTS, PARTICULARLY SINCE IT NOW APPEARS THAT FOUR OF THE BIDDERS WERE IN THAT CATEGORY AT DATE OF SOLICITATION. IT IS ALSO REPORTED THAT THE PUBLICATION "AREA TRENDS IN EMPLOYMENT AND UNEMPLOYMENT," UNITED STATES DEPARTMENT OF LABOR, NOVEMBER 1971, TO BE EFFECTIVE DECEMBER 1, 1971, DOES NOT REFLECT THAT THE BEDFORD-STUYVESANT AREA OF BROOKLYN, NEW YORK, IS A LABOR SURPLUS AREA, NOR IS PREMIER LISTED AS A CERTIFIED ELIGIBLE LABOR SURPLUS CONCERN IN THAT PUBLICATION. THE CERTIFICATION OBTAINED BY PREMIER WAS DATED JANUARY 10, 1972, SEVERAL WEEKS AFTER THE SOLICITATION WAS ISSUED.

DETERMINATIONS WITH RESPECT TO SET-ASIDES FOR SMALL BUSINESS FIRMS, HAVE BEEN HELD TO BE WITHIN THE AMBIT OF SOUND ADMINISTRATIVE DISCRETION AND WILL NOT ORDINARILY BE QUESTIONED BY OUR OFFICE. 45 COMP. GEN. 228 (1965). IN VIEW OF THE REPRESENTATIONS MADE BY GSA REGARDING THE LACK OF PARTICIPATION BY SMALL BUSINESS CONCERNS IN THE 1971 PROCUREMENT AND THE FACT THAT TWO OF THE SMALL BUSINESS CONCERNS IN THAT PROCUREMENT BECAME LARGE BUSINESSES, THUS REDUCING THE EXPECTATION OF COMPETITION AMONG SMALL BUSINESS CONCERNS, WE SEE NO BASIS FOR QUESTIONING GSA'S DETERMINATION NOT TO SET ASIDE THIS PROCUREMENT FOR SMALL BUSINESS CONCERNS.

HOWEVER, IN VIEW OF THE RESPONSE TO THIS SOLICITATION, GSA HAS INDICATED THAT FURTHER STUDY WILL BE MADE OF THE PROPRIETY OF SET ASIDES FOR FUTURE REQUIREMENTS.

IN VIEW OF THE ABOVE, WE MUST DENY THE PROTESTS.