B-175658, MAY 22, 1972

B-175658: May 22, 1972

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DECISIONS ESTABLISHING SMALL BUSINESS SET-ASIDES ARE NOT ORDINARILY QUESTIONED IF THERE EXISTS SUFFICIENT COMPETITION AND PRICES ARE CONSIDERED REASONABLE. IT APPEARS THAT THESE CONDITIONS HAVE BEEN MET. THE PROTEST IS WITHOUT MERIT AND MUST BE DENIED. TO OLIVETTI CORPORATION OF AMERICA: THIS IS IN REPLY TO YOUR LETTER OF APRIL 5. IT IS YOUR CONTENTION THAT RESERVING THE ENTIRE PROCUREMENT IN CERTAIN GEOGRAPHICAL AREAS FOR THE EXCLUSIVE PARTICIPATION OF SMALL BUSINESS CONCERNS IS NOT IN THE GOVERNMENT'S BEST INTEREST BECAUSE HIGHER PRICED AWARDS WILL RESULT IN SOME AREAS. YOU HAVE ALSO NOTED THE POSSIBLE ADVERSE EFFECT UPON FUTURE SALES OF OLIVETTI EQUIPMENT SHOULD THE GOVERNMENT BE FURNISHED INFERIOR SERVICE.

B-175658, MAY 22, 1972

BID PROTEST - SMALL BUSINESS SET-ASIDE DECISION DENYING THE PROTEST OF THE OLIVETTI CORPORATION OF AMERICA AGAINST THE SMALL BUSINESS SET-ASIDE RESTRICTION IN A GENERAL SERVICES ADMINISTRATION SOLICITATION FOR THE REPAIR AND MAINTENANCE OF ELECTRIC TYPEWRITERS. DECISIONS ESTABLISHING SMALL BUSINESS SET-ASIDES ARE NOT ORDINARILY QUESTIONED IF THERE EXISTS SUFFICIENT COMPETITION AND PRICES ARE CONSIDERED REASONABLE. FROM THE RECORD SUBMITTED BY GSA, IT APPEARS THAT THESE CONDITIONS HAVE BEEN MET. FURTHER, THE PREAWARD SURVEY PROCEDURES SHOULD PROVIDE ADEQUATE ASSURANCE OF THE PROPOSED CONTRACTOR'S ABILITY TO REPAIR THE ELECTRIC TYPEWRITERS OF ANOTHER MANUFACTURER. IN VIEW OF THE FOREGOING, THE PROTEST IS WITHOUT MERIT AND MUST BE DENIED.

TO OLIVETTI CORPORATION OF AMERICA:

THIS IS IN REPLY TO YOUR LETTER OF APRIL 5, 1972, PROTESTING THE SMALL BUSINESS SET-ASIDE RESTRICTION IN GENERAL SERVICES ADMINISTRATION, REGION 9, SOLICITATION GS-09-DP-(P)-209, FOR THE REPAIR AND MAINTENANCE OF ELECTRIC TYPEWRITERS.

IT IS YOUR CONTENTION THAT RESERVING THE ENTIRE PROCUREMENT IN CERTAIN GEOGRAPHICAL AREAS FOR THE EXCLUSIVE PARTICIPATION OF SMALL BUSINESS CONCERNS IS NOT IN THE GOVERNMENT'S BEST INTEREST BECAUSE HIGHER PRICED AWARDS WILL RESULT IN SOME AREAS, AND BECAUSE OF THE DIMINUTION IN THE QUALITY OF SERVICE PERFORMED ON OLIVETTI MACHINES IN SOME AREAS BY OTHERS NOT SPECIFICALLY TRAINED BY THE MANUFACTURER. YOU HAVE ALSO NOTED THE POSSIBLE ADVERSE EFFECT UPON FUTURE SALES OF OLIVETTI EQUIPMENT SHOULD THE GOVERNMENT BE FURNISHED INFERIOR SERVICE.

FEDERAL PROCUREMENT REGULATIONS 1-1.706-5 PROVIDES, IN PART, THAT THE ENTIRE AMOUNT OF AN INDIVIDUAL PROCUREMENT OR CLASS OF PROCUREMENTS SHALL BE SET ASIDE FOR EXCLUSIVE SMALL BUSINESS PARTICIPATION WHERE THERE IS A REASONABLE EXPECTATION THAT BIDS OR PROPOSALS SHALL BE OBTAINED FROM A SUFFICIENT NUMBER OF RESPONSIBLE SMALL BUSINESS CONCERNS SO THAT AWARDS WILL BE MADE AT REASONABLE PRICES. THIS REGULATION ALSO DIRECTS THAT TOTAL SET-ASIDES NOT BE MADE UNLESS SUCH A REASONABLE EXPECTATION EXISTS.

THE REPORT TO THIS OFFICE BY GSA STATES THAT THE UNRESTRICTED SOLICITATION FOR THE PRECEDING YEAR, COVERING THE SAME TYPE OF REPAIR AND MAINTENANCE SERVICE OF ELECTRIC TYPEWRITERS, RESULTED IN AWARDS TO 47 SMALL BUSINESS CONCERNS AND FOUR LARGE BUSINESS CONCERNS. GSA BELIEVES THAT THE RESPONSE TO THE PREVIOUS UNRESTRICTED SOLICITATION INDICATED THAT A SIGNIFICANT NUMBER OF SMALL BUSINESSES WERE AVAILABLE IN CERTAIN SERVICE AREAS. IN ADDITION, WE ARE ADVISED THAT SOME SMALL BUSINESS CONCERNS INFORMALLY INDICATED THEIR INTENTION TO EXPAND THEIR BUSINESSES TO OTHER OR NEW SERVICE AREAS. IT IS THE POSITION OF GSA THAT, SINCE EVIDENCE EXISTED THAT BIDS WOULD BE RECEIVED FROM A SUFFICIENT NUMBER OF RESPONSIBLE SMALL BUSINESS CONCERNS, IT WAS JUSTIFIED UNDER THE FOREGOING REGULATION IN RESERVING THE ENTIRE PROCUREMENT IN ALL BUT 29 OF THE 56 SERVICE AREAS LISTED IN THE SOLICITATION FOR THE EXCLUSIVE PARTICIPATION OF SMALL BUSINESS CONCERNS.

MOREOVER, GSA IS OF THE VIEW THAT BIDS RECEIVED FOR THE AREAS SET ASIDE FOR SMALL BUSINESS PARTICIPATION IN THE CURRENT SOLICITATION COMPARE FAVORABLY WITH THE CURRENT CONTRACT PRICES OBTAINED BY UNRESTRICTED COMPETITION AND THAT SUCH BIDS ARE CONSIDERED FAIR AND REASONABLE BY THE CONTRACTING OFFICER. GSA ALSO ADVISES THAT YOU SUBMITTED A "COURTESY BID" FOR CERTAIN AREAS NOTWITHSTANDING THE RESTRICTION AND THAT A COMPARISON OF THE LOW SMALL BUSINESS BID WITH YOUR BID FOR THESE AREAS SHOWS THAT THE HOURLY REPAIR RATE IS MUCH LOWER FOR THE SMALL BUSINESS FIRM AND THAT THE ANNUAL MAINTENANCE RATE FOR THE SMALL BUSINESS FIRM IS VERY COMPETITIVE WITH THE RATE OFFERED BY YOUR FIRM.

REGARDING DECISIONS TO SET ASIDE PROCUREMENTS FOR SMALL BUSINESS FIRMS, IT HAS BEEN THE POSITION OF THIS OFFICE THAT SUCH DETERMINATIONS ARE WITHIN THE AMBIT OF SOUND ADMINISTRATIVE DISCRETION AND WILL NOT ORDINARILY BE QUESTIONED BY OUR OFFICE. 45 COMP. GEN. 228 (1965). VIEW OF THE REPRESENTATIONS MADE BY GSA REGARDING THE INTEREST OF SMALL BUSINESS CONCERNS AS INDICATED BY THE PRIOR COMPETITION AND INFORMAL REPRESENTATIONS, WE SEE NO BASIS FOR QUESTIONING GSA'S EXPECTATION OF RECEIVING A SUFFICIENT NUMBER OF BIDS FROM RESPONSIBLE SMALL BUSINESS CONCERNS.

THE FACT THAT LOWER BIDS MAY BE EXPECTED FROM LARGE BUSINESS CONCERNS IN AN UNRESTRICTED PROCUREMENT IS NOT A SIGNIFICANT FACTOR IN DETERMINING WHETHER A PROCUREMENT SHOULD BE SET ASIDE FOR SMALL BUSINESS PARTICIPATION, AND WE HAVE HELD THAT THERE IS NO REQUIREMENT THE PRICES OFFERED UNDER A TOTAL SET-ASIDE PROCUREMENT BE EQUAL TO, OR BETTER THAN, PRICES WHICH MIGHT REASONABLY HAVE BEEN ANTICIPATED AS A RESULT OF UNRESTRICTED COMPETITION. 43 COMP. GEN. 497 (1963). IN THE FINAL ANALYSIS IF AWARD IS TO BE MADE PURSUANT TO THE RESTRICTED SOLICITATION THE CONTRACTING OFFICER MUST DETERMINE THAT THE PRICES ARE REASONABLE. HAVE REVIEWED THE PRICES BID UNDER THE TOTAL SET-ASIDE AND BELIEVE THEY ARE COMPARABLE TO THE CONTRACT PRICES OBTAINED FOR THE PERIOD OF JULY 1, 1971, THROUGH JUNE 30, 1972, AS WELL AS TO YOUR "COURTESY BID." WE MUST THEREFORE CONCLUDE THAT THE BID PRICES PRESENT NO BASIS FOR QUESTIONING THE PROPRIETY OF THE SET-ASIDE, OR OF AN AWARD BASED UPON THE BIDS RECEIVED.

WITH RESPECT TO YOUR COMPLAINT THAT A DIMINUTION IN THE QUALITY OF SERVICE PERFORMED ON OLIVETTI MACHINES WILL RESULT IF SERVICES ARE PERFORMED BY PERSONS NOT SPECIFICALLY TRAINED IN MAINTAINING YOUR LINE OF EQUIPMENT, GSA HAS ADVISED THAT A PLANT FACILITIES, PREAWARD INSPECTION, WILL BE PERFORMED PRIOR TO THE MAKING OF ANY AWARDS AND THAT PROCEDURES EXIST TO ASSURE THAT THE PROPOSED CONTRACTOR MAINTAIN TRAINED PERSONNEL AND AN ADEQUATE QUALITY ASSURANCE PROGRAM TO GUARANTEE PERFORMANCE. IT IS REPORTED THAT GSA WILL INQUIRE INTO THE LOW BIDDER'S NUMBER OF TECHNICAL PERSONNEL TO REPAIR AND MAINTAIN THE SPECIFIC NUMBER OF MACHINES, TOOLS REQUIRED, NUMBER OF BENCHES, ANNUAL CAPACITY, AND WHETHER IT POSSESSES THE CAPABILITY TO PERFORM AND MEET ALL THE REQUIREMENTS OF THE SOLICITATION. THE FINANCIAL RESPONSIBILITY OF THE LOW BIDDERS WILL ALSO BE EVALUATED.

IN OUR OPINION THE NORMAL PREAWARD INQUIRY PROVIDES ADEQUATE ASSURANCE AS TO A PROPOSED CONTRACTOR'S CAPABILITIES AND WE ARE AWARE OF NO CONVINCING REASONS FOR QUESTIONING, AS A MATTER OF PRINCIPLE, THE CAPABILITIES OF PERSONS NOT TRAINED BY THE MANUFACTURER TO REPAIR ELECTRIC TYPEWRITERS. WHETHER THE MANUFACTURER OF A PARTICULAR MACHINE CAN RENDER THE BEST SERVICE IS IMMATERIAL, SO LONG AS IT IS DETERMINED THAT ADEQUATE AND SATISFACTORY SERVICE WILL BE PERFORMED BY BIDDERS OTHER THAN THE MANUFACTURER.

FOR THE REASONS STATED ABOVE, WE FIND NO MERIT IN YOUR PROTEST WHICH IS, ACCORDINGLY, DENIED.