B-183963, B-184058, B-184065, B-184102, B-184102(2), B-184117, NOVEMBER 19, 1975, 55 COMP.GEN. 475

B-183963,B-184058,B-184102,B-184065,B-184117,B-184102(2): Nov 19, 1975

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CONTRACTS - AWARDS - SMALL BUSINESS CONCERNS - FAIR PROPORTION CRITERIA IT IS POLICY OF CONGRESS THAT FAIR PROPORTION OF PURCHASES AND CONTRACTS BE PLACED WITH SMALL BUSINESS CONCERNS IF ADEQUATE PRICES AND REASONABLE COMPETITION CAN BE EXPECTED AND DETERMINATION OF THESE FACTS IS MADE BY CONTRACTING OFFICER AND SMALL BUSINESS REPRESENTATIVE PRIOR TO ISSUANCE OF SOLICITATION. CONTRACTS - AWARDS - TO OTHER THAN LOWEST BIDDER - SMALL BUSINESS SET-ASIDES MERE FACT THAT LOWER BID IS SUBMITTED BY LARGE BUSINESS ON SMALL BUSINESS SET-ASIDE SOLICITATION DOES NOT PER SE MAKE AWARD TO SMALL BUSINESS. UNSUBSTANTIATED ALLEGATION THAT DEFENSE SUPPLY AGENCY (DSA) HAS IMPROPERLY DECIDED TO RESTRICT ALL HAT PROCUREMENTS WITHIN SIC 2352 TO SMALL BUSINESS WILL NOT BE CONSIDERED.

B-183963, B-184058, B-184065, B-184102, B-184102(2), B-184117, NOVEMBER 19, 1975, 55 COMP.GEN. 475

CONTRACTS - AWARDS - SMALL BUSINESS CONCERNS - FAIR PROPORTION CRITERIA IT IS POLICY OF CONGRESS THAT FAIR PROPORTION OF PURCHASES AND CONTRACTS BE PLACED WITH SMALL BUSINESS CONCERNS IF ADEQUATE PRICES AND REASONABLE COMPETITION CAN BE EXPECTED AND DETERMINATION OF THESE FACTS IS MADE BY CONTRACTING OFFICER AND SMALL BUSINESS REPRESENTATIVE PRIOR TO ISSUANCE OF SOLICITATION. CONTRACTS - AWARDS - TO OTHER THAN LOWEST BIDDER - SMALL BUSINESS SET-ASIDES MERE FACT THAT LOWER BID IS SUBMITTED BY LARGE BUSINESS ON SMALL BUSINESS SET-ASIDE SOLICITATION DOES NOT PER SE MAKE AWARD TO SMALL BUSINESS, AT SLIGHTLY HIGHER PERCENTAGE DIFFERENTIAL, AGAINST PUBLIC INTEREST UNDER ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-706.3 SINCE 15 U.S.C. 631 HAS BEEN INTERPRETED TO MEAN THAT GOVERNMENT MAY PAY PREMIUM PRICE TO SMALL BUSINESS FIRMS ON RESTRICTED PROCUREMENTS TO IMPLEMENT INTENT OF CONGRESS. CONTRACTS - PROTESTS - UNSUBSTANTIATED ALLEGATIONS - ABSENCE OF EVIDENCE IN RECORD ABSENT FURTHER EVIDENCE IN RECORD, UNSUBSTANTIATED ALLEGATION THAT DEFENSE SUPPLY AGENCY (DSA) HAS IMPROPERLY DECIDED TO RESTRICT ALL HAT PROCUREMENTS WITHIN SIC 2352 TO SMALL BUSINESS WILL NOT BE CONSIDERED. CONTRACTS - PROTESTS - PROCEDURES - BID PROTEST PROCEDURES - IMPROPRIETIES AND TIMELINESS ALLEGATION THAT CONTRACTING OFFICER'S ORIGINAL DETERMINATION TO ADVERTISE SOLICITATION ON UNRESTRICTED BASIS SHOULD NOT HAVE BEEN REVERSED BY SDA, FIRST RAISED ALMOST 10 WEEKS AFTER ISSUANCE OF AMENDMENT WHICH REVERSED CONTRACTING OFFICER'S DETERMINATION, IS UNTIMELY AND NOT FOR CONSIDERATION UNDER 4 CFR 20.2(A) OF THEN APPLICABLE INTERIM BID PROTEST PROCEDURES AND STANDARDS, WHICH REQUIRES THAT SUCH PROTESTS BE FILED PRIOR TO BID OPENING. BIDS - COMPETITIVE SYSTEM - UNFAIR PRACTICES ALLEGATION CONTENTION RAISING ALLEGEDLY "QUESTIONABLE" PATTERN OF BIDDING BY CERTAIN SMALL BUSINESS FIRMS IS NOT FOR CONSIDERATION, SINCE ASPR 1 111.2, "NONCOMPETITIVE PRACTICES," PROVIDES THAT SUCH MATTERS SHOULD BE REFERRED BY PROCURING AGENCY TO ATTORNEY GENERAL FOR PROSECUTION. CONTRACTS - AWARDS - SMALL BUSINESS CONCERNS - PRICE REASONABLENESS WHILE PROVISIONS OF SMALL BUSINESS ACT AUTHORIZE AWARD OF CONTRACTS TO SMALL BUSINESS CONCERNS AT PRICES WHICH MAY BE HIGHER THAN THOSE OBTAINABLE BY UNRESTRICTED COMPETITION, NO BASIS EXISTS UPON WHICH IT MAY BE CONCLUDED THAT ACT WAS INTENDED TO REQUIRE AWARD OF CONTRACTS TO SMALL BUSINESS CONCERNS AT PRICES CONSIDERED UNREASONABLE BY CONTRACTING AGENCY, OR THAT CONTRACTING AGENCY WOULD BE PROHIBITED FROM WITHDRAWING SET-ASIDE DETERMINATION WHERE BIDS SUBMITTED BY SMALL BUSINESS CONCERNS WERE CONSIDERED UNREASONABLE. CONTRACTS - AWARDS - SMALL BUSINESS CONCERNS - SET-ASIDES - WITHDRAWAL - BID PRICE EXCESSIVE DETERMINATION OF UNREASONABLENESS OF PRICE OF SMALL BUSINESS BID, BASED UPON COMPARISON WITH PRIOR PROCUREMENT AND WITH GOVERNMENT ESTIMATES, INVOLVES NO IMPROPRIETY ON PART OF CONTRACTING OFFICER AND, THEREFORE, NO LEGAL BASIS EXISTS TO OBJECT TO CANCELLATION AND RESOLICITATION OF PROCUREMENT ON UNRESTRICTED BASIS.

IN THE MATTER OF SOCIETY BRAND, INC.; PROPER INTERNATIONAL, INC.; WALDMAN MANUFACTURING COMPANY; BANCROFT CAP COMPANY; RACHMAN MANUFACTURING COMPANY, INC., NOVEMBER 19, 1975:

THIS DECISION INVOLVES THE FOLLOWING FIVE SOLICITATIONS ISSUED BY THE DEFENSE PERSONNEL SUPPORT CENTER (DPSC), DEFENSE SUPPLY AGENCY (DSA):

SOLICITATION ISSUED

DSA100-75-B-1101 . . . MAY 27, 1975.

DSA100-75-B-0753 . . . FEBRUARY 13, 1975.

DSA100-75-B-1037 . . . MAY 1, 1975.

DSA100-75-B-0966 . . . MARCH 27, 1975.

DSA100-75-B-0970 . . . APRIL 28, 1975.

EACH SOLICITATION REQUESTED BIDS FOR DIFFERING AMOUNTS OF VARIOUS TYPES OF MILITARY SERVICE CAPS. EACH SOLICITATION WAS A 100-PERCENT SMALL BUSINESS SET-ASIDE.

ALL OF THE SOLICITATIONS RESULTED IN PROTESTS BEING FILED WITH OUR OFFICE. EACH PROTEST WILL BE DISCUSSED, IN TURN, BELOW.

PROTEST ON SOLICITATION-- 1101

ON JUNE 16, 1975, BIDS WERE OPENED UNDER SOLICITATION-- 1101 AND WERE AS FOLLOWS:

PROPPER INTERNATIONAL, INC. (PROPPER) . . . $7.149

SOCIETY BRAND, INC. (BI) . . . 7.685

BANCROFT CAP COMPANY (BANCROFT) . . . 8.33

RACHMAN MANUFACTURING CO. (RACHMAN) . . . 10.00

CUSTOM HAT CORP . . . 10.95

WALDMAN MANUFACTURING CO. (WALDMAN) . . . 10.96

SAM BONK . . . 12.00

SBI MADE NO REPRESENTATION AS TO ITS SIZE STATUS IN ITS BID. PROPPER REPRESENTED THAT IT "IS NOT" A SMALL BUSINESS CONCERN. AN ADDITION TO ITS REPRESENTATION WAS THE NOTE: "PENDING DECISION OF SBA SIZE APPEALS BOARD."

BY MAIL GRAMS DATED JUNE 5, 1975, AND JUNE 17, 1975, COUNSEL FOR PROPPER AND SBI PROTESTED AGAINST AN AWARD BEING MADE TO ANY OTHER BIDDER. BOTH PROTESTS CONTENDED THAT THE CONTRACTING OFFICER HAD ACTED IN AN ARBITRARY AND CAPRICIOUS MANNER IN RESTRICTING THIS PROCUREMENT TO SMALL BUSINESS ONLY. HOWEVER, DUE TO THE URGENT SUPPLY SITUATION EXISTING WITH RESPECT TO THE SERVICE CAPS IN QUESTION, DSA AWARDED THE INSTANT PROCUREMENT TO BANCROFT. BOTH SBI AND PROPPER WERE HELD TO BE OTHER THAN SMALL BUSINESS FIRMS AT THE TIME OF SUBMISSION OF THEIR BIDS AND AT THE TIME OF AWARD. DUE TO THE FACT THAT THE SUBJECT PROCUREMENT WAS A 100-PERCENT SMALL BUSINESS SET-ASIDE, THE BIDS OF PROPPER AND SBI WERE DEEMED NONRESPONSIVE AND, CONSEQUENTLY, REJECTED IN ACCORDANCE WITH ARMED SERVICES PROCUREMENT REGULATION (ASPR) SEC. 1-703 (1974 ED.).

THE ISSUE OF THE "NONRESPONSIVENESS" OF BOTH PROPPER'S AND SBI'S BIDS HAS GONE UNCHALLENGED IN THE RECORD BEFORE US. THEREFORE, WE WILL RESTRICT THIS PORTION OF OUR DECISION TO THE PROPRIETY OF THE 100 PERCENT SET- ASIDE.

AS STATED AT 10 U.S.C. 2301 (1970),

IT IS THE POLICY OF CONGRESS THAT A FAIR PROPORTION OF THE PURCHASES AND CONTRACTS MADE UNDER THIS CHAPTER BE PLACED WITH SMALL BUSINESS CONCERNS.

15 U.S.C. 631 (1970 ED.) OF THE SMALL BUSINESS ACT STATES IN PART AS FOLLOWS:

IT IS THE DECLARED POLICY OF THE CONGRESS THAT THE GOVERNMENT SHOULD AID, COUNSEL, ASSIST, AND PROTECT, INSOFAR AS IS POSSIBLE, THE INTERESTS OF SMALL-BUSINESS CONCERNS IN ORDER TO PRESERVE FREE COMPETITIVE ENTERPRISE, TO INSURE A FAIR PROPORTION OF THE TOTAL PURCHASES AND CONTRACTS OR SUBCONTRACTS FOR PROPERTY AND SERVICES FOR THE GOVERNMENT BE PLACED WITH SMALL-BUSINESS ENTERPRISES, . . . AND TO MAINTAIN AND STRENGTHEN THE OVER- ALL ECONOMY OF THE NATION.

DSA CONTENDS THAT THESE ACTS OF CONGRESS, WHICH EXPRESSLY SET FORTH THE POLICY OF THE GOVERNMENT IN AWARDING CONTRACTS TO SMALL BUSINESS CONCERNS, ARE IMPLEMENTED BY ASPR SEC. 1-706.5 (1974 ED.) WHICH STATES, IN PERTINENT PART:

(A)(1) SUBJECT TO THE ORDER OF PRECEDENCE ESTABLISHED IN 1-706.1(A), THE ENTIRE AMOUNT OF AN INDIVIDUAL PROCUREMENT OR A CLASS OF PROCUREMENTS, INCLUDING BUT NOT LIMITED TO CONTRACTS FOR MAINTENANCE, REPAIR, AND CONSTRUCTION, SHALL BE SET ASIDE FOR EXCLUSIVE SMALL BUSINESS PARTICIPATION (SEE 1-701.1) IF THE CONTRACTING OFFICER DETERMINES THAT THERE IS REASONABLE EXPECTATION THAT OFFERS WILL BE OBTAINED FROM A SUFFICIENT NUMBER OF RESPONSIBLE SMALL BUSINESS CONCERNS SO THAT AWARDS WILL BE MADE AT REASONABLE PRICES. TOTAL SET ASIDES SHALL NOT BE MADE UNLESS SUCH A REASONABLE EXPECTATION EXISTS. (BUT SEE 1-706.6 AS TO PARTIAL SET-ASIDES.) ALTHOUGH PAST PROCUREMENT HISTORY OF THE ITEM OR SIMILAR ITEMS IS ALWAYS IMPORTANT, IT IS NOT THE ONLY FACTOR WHICH SHOULD BE CONSIDERED IN DETERMINING WHETHER A REASONABLE EXPECTATION EXISTS.

ALTHOUGH PROPPER AND SBI HAVE CONTENDED THAT THERE WAS AN ABUSE OF AGENCY DISCRETION IN SETTING THIS PROCUREMENT ASIDE, ALLEGING THAT NO REASONABLE EXPECTATION OF ADEQUATE COMPETITION EXISTED ON THE PART OF DSA, DSA STATES THAT A REVIEW OF THE PREVIOUS PROCUREMENTS FOR THE SUBJECT ITEM REVEALED THAT THERE WAS A BASIS UPON WHICH TO DETERMINE THAT ADEQUATE COMPETITION COULD BE EXPECTED FROM SMALL BUSINESS FIRMS TO JUSTIFY A SET-ASIDE DETERMINATION, DESPITE THE DETERMINATION BY THE SMALL BUSINESS ADMINISTRATION (SBA) THAT SBI AND PROPPER WERE OTHER THAN SMALL BUSINESS FIRMS. DSA POINTS OUT THAT THE SUBJECT ITEM IS ONE WHICH HISTORICALLY RECEIVED ADEQUATE COMPETITION FROM SMALL BUSINESS FIRMS EXCLUDING SBI AND PROPPER. THEREFORE, PRIOR TO THE ISSUANCE OF THE SOLICITATION, A JOINT DETERMINATION WAS REACHED BY THE SBA AND THE CONTRACTING OFFICER TO RESTRICT THIS PROCUREMENT TO SMALL BUSINESS FIRMS. ADDITIONALLY, DSA PRESENTS AS EVIDENCE TO SUBSTANTIATE THE DETERMINATION TO RESTRICT THE PROCUREMENT THE FACT THAT FIVE BIDS WERE RECEIVED FROM SMALL BUSINESS FIRMS.

AS CONCERNS THE REASONABLENESS OF PRICE OF THE AWARD MADE TO BANCROFT, DSA STATES THAT THE AWARD PRICE OF $8.33 PER UNIT REFLECTS A DECREASE OF $0.28 PER UNIT FROM THE MOST RECENT PRIOR AWARD PRICE ON THE CAPS IN QUESTION. MOREOVER, THE PRICE SUBMITTED BY BANCROFT WAS CONSIDERABLY BENEATH THE GOVERNMENT ESTIMATE OF $8.97 EACH. ASPR SEC. 1-706.3 (1974 ED.) ENTITLED, "REVIEW, WITHDRAWAL, OR MODIFICATION OF SET-ASIDES OR SET- ASIDE PROPOSALS" PROVIDES IN PERTINENT PART AS FOLLOWS:

IF, PRIOR TO AWARD OF A CONTRACT INVOLVING AN INDIVIDUAL OR CLASS SET- ASIDE, THE CONTRACTING OFFICER CONSIDERS THAT PROCUREMENT OF THE SET-ASIDE FROM A SMALL BUSINESS CONCERN WOULD BE DETRIMENTAL TO THE PUBLIC INTEREST (E.G. BECAUSE OF UNREASONABLE PRICE), HE MAY WITHDRAW A UNILATERAL OR JOINT SET-ASIDE DETERMINATION BY GIVING WRITTEN NOTICE TO THE SMALL BUSINESS SPECIALIST, AND THE SBA REPRESENTATIVE, IF AVAILABLE, STATING THE REASONS FOR THE WITHDRAWAL.

THE MERE FACT THAT A LOWER BID PRICE WAS SUBMITTED BY PROPPER ON THE SOLICITATION DOES NOT PER SE MAKE AN AWARD TO BANCROFT, AT A SLIGHTLY HIGHER PERCENTAGE DIFFERENTIAL, AGAINST THE PUBLIC INTEREST WITHIN THE MEANING OF ASPR SEC. 1-706.3, SUPRA. OUR OFFICE HAS INTERPRETED 15 U.S.C. 631, ET SEQ., TO MEAN THAT THE GOVERNMENT MAY PAY A PREMIUM PRICE TO SMALL BUSINESS FIRMS ON RESTRICTED PROCUREMENTS TO IMPLEMENT THIS POLICY OF CONGRESS. 53 COMP.GEN. 307 (1973); 41 ID. 306 (1961); 31 ID. 431 (1952). THEREFORE, DSA SUBMITS THAT IN MAKING THE THE AWARD TO BANCROFT, THE CONTRACTING OFFICER WAS IMPLEMENTING THE POLICY OF CONGRESS, AS STATED IN 15 U.S.C. 644 AND IMPLEMENTED BY ASPR PART 1, SEC. 7, IN THAT THE MINOR PRICE DIFFERENTIAL BETWEEN THE LOW SMALL BUSINESS BIDDER AND THE PRICE SUBMITTED BY PROPPER ONLY AMOUNTED TO THE RECOGNIZED PREMIUM WHICH IS PERMISSIBLE FOR SMALL BUSINESS RESTRICTED PROCUREMENTS.

ACCORDINGLY, WHILE THE TOTAL SET-ASIDE IN THIS CASE MAY HAVE PRECLUDED PROPPER AND SBI FROM HAVING THEIR BIDS CONSIDERED FOR AWARD PURPOSES FOR THIS PROCUREMENT, THE FACT REMAINS THAT THE SET-ASIDE WAS IN ACCORDANCE WITH ASPR SEC. 1-706. THIS BEING THE CASE, THERE IS NO BASIS FOR ANY LEGAL OBJECTION BY OUR OFFICE TO THIS SET-ASIDE BASED ON THE JOINT DETERMINATION. EVERGREEN HELICOPTERS, INC., B-183482, JUNE 24, 1975, 75-1 CPD 382; SEALTEST FOODS, B-177587, JANUARY 15, 1974, 74 1 CPD 6.

THE FINAL ISSUE RAISED BY PROPPER AND SBI UNDER THE SOLICITATION IS THAT THERE HAS BEEN AN IMPROPER DECISION BY DSA TO RESTRICT ALL HAT PROCUREMENTS WITHIN STANDARD INDUSTRIAL CLASSIFICATION (SIC) NO. 2352 TO SMALL BUSINESS RESTRICTED PROCUREMENTS. IN RESPONSE, DSA STATES THAT,

* * * THERE HAS BEEN NO DECISION TO ESTABLISH A CLASS SET-ASIDE FOR HAT PROCUREMENTS UNDER SIC 2352. AT THE PRESENT TIME, THERE ARE NO SMALL BUSINESS CLASS SET-ASIDES WITHIN SIC 2352 FOR ANY SPECIFIC ITEM. THE DECISION AS TO WHETHER A PROCUREMENT SHOULD BE RESTRICTED OR UNRESTRICTED IS MADE ON A CASE BY CASE BASIS PRIOR TO THE ISSUANCE OF EACH INDIVIDUAL SOLICITATION.

ABSENT FURTHER EVIDENCE IN THE RECORD BEFORE US, OUR OFFICE CANNOT CONCLUDE THAT ANY IMPROPER DECISION REGARDING A CLASS SET-ASIDE HAS IN FACT, BEEN MADE.

IN VIEW OF THE FOREGOING, THE PROTESTS OF SBI AND PROPPER UNDER SOLICITATION-1101 ARE DENIED.

PROTEST ON SOLICITATION -0753

SOLICITATION -0753 WAS ORIGINALLY ISSUED AS 50-PERCENT UNRESTRICTED AND 50-PERCENT LABOR SURPLUS AREA SET-ASIDE (LSA). ON FEBRUARY 24, 1975, THE SBA REPRESENTATIVE AT DPSC PROTESTED TO THE CONTRACTING OFFICER THE DECISION TO MAKE THE SOLICITATION A 50-PERCENT LSA, AND RECOMMENDED THAT THE PROCUREMENT BE A COMBINED SMALL BUSINESS/LSA. ON FEBRUARY 25, THE CONTRACTING OFFICER DENIED THIS PROTEST. THE SBA REPRESENTATIVE, BY LETTER DATED FEBRUARY 26, THEN APPEALED THE CONTRACTING OFFICER'S DECISION TO THE DIRECTOR OF CLOTHING AND TEXTILES IN ACCORDANCE WITH ASPR SEC. 1- 706.3(E) (1974 ED.). THE DIRECTOR, BY LETTER DATED MARCH 13, 1975, REJECTED THE APPEAL. FINALLY, BY LETTER OF MARCH 14, 1975, THE SBA REPRESENTATIVE ASKED THE CONTRACTING OFFICER TO SUSPEND THE PROCUREMENT PENDING THE OUTCOME OF THE APPEAL.

AFTER VARIOUS EXCHANGES OF CORRESPONDENCE, BY MESSAGE DATED APRIL 16, 1975, DSA INFORMED DPSC THAT THE APPEAL OF SBA HAD BEEN SUSTAINED AND THE SOLICITATION SHOULD BE AMENDED TO PROVIDE FOR A SMALL BUSINESS/LAW, PURSUANT TO ASPR SEC. 1-706.7 (1974 ED.). ON APRIL 17, 1975, AMENDMENT - 0005 WAS ISSUED WHICH FORMALLY AMENDED THE SOLICITATION TO THE COMBINED SET-ASIDE.

ON MAY 12, 1975, BIDS WERE OPENED UNDER SOLICITATION -0753. THE LOW BID WAS SUBMITTED BY PROPPER, THE SECOND LOW BID BEING SUBMITTED BY BANCROFT. PROPPER, HOWEVER, DID NOT INCLUDE A SIZE STATUS INDICATION IN ITS BID.

BY LETTER DATED MAY 13, 1975, COUNSEL FOR BANCROFT PROTESTED TO DPSC THE NONRESPONSIVENESS OF PROPPER'S BID. BY MAIL GRAM OF MAY 19, PROPPER PROTESTED THE MAKING OF ANY AWARD UNDER THE SOLICITATION TO ANY FIRM OTHER THAN ITSELF. HOWEVER, IN SPITE OF THE FILING OF THESE PROTESTS, THE CONTRACTING OFFICER DISCOVERED THAT AN URGENT SUPPLY SITUATION EXISTED WITH RESPECT TO THE PARTICULAR CAPS IN QUESTION. THEREFORE, PERMISSION WAS REQUESTED, AND GRANTED, FROM HEADQUARTERS, DSA TO MAKE AN AWARD. AWARD WAS MADE TO BANCROFT ON JULY 22, 1975. ON JULY 24, 1975, THE SET- ASIDE PORTION OF THE PROCUREMENT WAS ALSO AWARDED TO BANCROFT.

PROPPER HAS RAISED FOUR ISSUES OF PROTEST UNDER THIS SOLICITATION, THE FIRST BEING THAT THE CONTRACTING OFFICER'S ORIGINAL DETERMINATION TO ADVERTISE THE SOLICITATION ON AN UNRESTRICTED BASIS WAS REASONABLE AND SHOULD NOT HAVE BEEN REVERSED BY DSA. HOWEVER, THE ISSUE WAS FIRST RAISED IN PROPPER'S JUNE 24, 1975, LETTER TO OUR OFFICE, ALMOST 10 WEEKS AFTER THE ISSUANCE OF AMENDMENT -0005 WHICH REVERSED THE CONTRACTING OFFICER'S ORIGINAL DETERMINATION. PURSUANT TO SEC. 20.2(A) OF OUR THEN APPLICABLE INTERIM BID PROTEST PROCEDURES AND STANDARDS, 4 C.F.R. (1974) THIS ISSUE, WHICH WAS READILY APPARENT PRIOR TO BID OPENING HAD TO HAVE BEEN FILED PRIOR TO THE BID OPENING. PROPPER HAVING FAILED TO SO FILE ITS PROTEST CAUSES THIS ISSUE TO BE UNTIMELY RAISED AND NOT FOR CONSIDERATION.

THE SECOND ISSUE RAISED BY COUNSEL FOR PROPPER IS THE ALLEGED "QUESTIONABLE" PATTERN OF BIDDING REFLECTED ON THIS AND OTHER RESTRICTED HEADWEAR PROCUREMENTS ON BIDS SUBMITTED BY BANCROFT AND CERTAIN OTHER BIDDERS. IN REBUTTAL, COUNSEL FOR BANCROFT HAS FULLY DENIED THIS ALLEGATION. IN ANY EVENT, ASPR SEC. 1-111.2 (1974 ED.), "NONCOMPETITIVE PRACTICES," PROVIDES THAT EVIDENCE OF VIOLATION OF THE ANTITRUST LAWS (FOR EXAMPLE, COLLUSIVE BIDDING) IN ADVERTISED PROCUREMENTS SHOULD BE REFERRED TO THE ATTORNEY GENERAL BY THE PROCURING AGENCY INVOLVED. THIS IS SO BECAUSE THE INTERPRETATION AND ENFORCEMENT OF THE CRIMINAL LAWS OF THE UNITED STATES ARE FUNCTIONS OF THE ATTORNEY GENERAL AND THE FEDERAL COURTS, AND IT IS NOT WITHIN OUR JURISDICTION TO DETERMINE WHAT DOES OR DOES NOT CONSTITUTE A VIOLATION OF A CRIMINAL STATUTE. (WE NOTE, HOWEVER, THAT PROPPER MAY DIRECTLY REQUEST THE DEPARTMENT OF JUSTICE TO CONSIDER THE CASE IF IT BELIEVES CRIMINAL LAW VIOLATIONS ARE INVOLVED.)

NEXT, AS IN SOLICITATION -1101, COUNSEL FOR PROPPER CONTENDS THAT ALL PROCUREMENTS WITHIN SIC 2352 SHOULD NOT BE MADE A CLASS SET-ASIDE FOR SMALL BUSINESS PARTICIPATION. AND, AS STATED ABOVE, DSA STATES THAT THERE HAS BEEN NO DECISION TO ESTABLISH A CLASS SET-ASIDE FOR HAT PROCUREMENTS UNDER SIC 2352. AGAIN, ABSENT FURTHER EVIDENCE IN THE RECORD BEFORE US, OUR OFFICE CANNOT CONCLUDE THAT ANY IMPROPER DECISION REGARDING A CLASS SET-ASIDE HAS, IN FACT, BEEN MADE. THE FINAL ARGUMENT PRESENTED BY COUNSEL FOR PROPPER IS AGAIN SIMILAR TO THE ARGUMENT RAISED UNDER SOLICITATION -1101, THAT THE INSTANT PROCUREMENT SHOULD NOT HAVE BEEN SET- ASIDE FOR SMALL BUSINESSES, AS BOTH INADEQUATE COMPETITION AND UNREASONABLE PRICES WOULD RESULT. AS ABOVE, DSA CONTENDS THAT THE DECISION TO RESTRICT THE SUBJECT PROCUREMENT TO SMALL BUSINESS FIRMS WAS NEITHER ARBITRARY NOR CAPRICIOUS.

RELYING AGAIN UPON 10 U.S.C. 2301 (1970), 15 U.S.C. 631, AND ASPR SEC. 1- 706, DSA ARGUES THAT -0753 WAS PROPERLY SET-ASIDE AS THE DETERMINATION TO DO SO WAS BASED UPON A REASONABLE EXPECTATION OF OBTAINING ADEQUATE COMPETITION AND MAKING AN AWARD AT A REASONABLE PRICE. PRIOR TO REACHING THE DETERMINATION TO SET THIS PROCUREMENT ASIDE, DSA REVIEWED PREVIOUS PROCUREMENTS FOR SIMILAR ITEMS AND, THROUGH CONSULTATION WITH THE SBA REPRESENTATIVE, LEARNED THAT ADDITIONAL SMALL BUSINESS FIRMS HAD EXPRESSED A SERIOUS INTEREST IN PARTICIPATING IN THE PROCUREMENT. BASED ON THESE FACTS, DSA BELIEVES THAT ITS ACTIONS WERE PROPER.

AGAIN, WHILE THE SET-ASIDE IN THIS CASE MAY HAVE PRECLUDED PROPPER FROM HAVING ITS BID CONSIDERED FOR AWARD PURPOSES FOR THIS PROCUREMENT, THE FACT REMAINS THAT THE SET-ASIDE WAS IN ACCORDANCE WITH ASPR SEC. 1 706. THIS BEING THE CASE, THERE AGAIN IS NO BASIS FOR ANY LEGAL OBJECTION BY OUR OFFICE TO THIS SET-ASIDE.

AS CONCERNS THE REASONABLENESS OF THE AWARD PRICE TO BANCROFT, DSA, PRIOR TO AWARD, PERFORMED A PRICE ANALYSIS ON THE SUBJECT PROCUREMENT UPON WHICH THE CONTRACTING OFFICER SUBSEQUENTLY DETERMINED THAT THE PRICES OFFERED BY BANCROFT WERE FAIR AND REASONABLE. ALTHOUGH THERE DID EXIST A PRICE DIFFERENTIAL BETWEEN PROPPER AND BANCROFT, DSA BELIEVED THAT IN MAKING THE AWARD, THE CONGRESSIONAL INTENT OF FOSTERING SMALL BUSINESSES WOULD BE FURTHERED. IN VIEW OF OUR DISCUSSION AND CITATIONS ABOVE PERTAINING TO THIS ISSUE, WE MUST AGREE WITH DSA.

ACCORDINGLY, THIS PROTEST ON BEHALF OF PROPPER IS DENIED.

PROTEST ON SOLICITATION -1037

BIDS SUBMITTED IN RESPONSE TO SOLICITATION -1037 WERE OPENED ON JUNE 2, 1975, AND WERE AS FOLLOWS:

RACHMAN . . . $1.84

PROPPER . . . 1.049

ALTHOUGH THE SOLICITATION WAS 100-PERCENT SET-ASIDE FOR SMALL BUSINESS, PROPPER MADE NO REPRESENTATION AS TO ITS SIZE STATUS IN ITS BID. CONSEQUENTLY, PROPPER'S BID WAS HELD TO BE NONRESPONSIVE, LEAVING ONLY THE BID OF RACHMAN FOR ACCEPTANCE.

GIVEN THIS SITUATION, THE CONTRACTING OFFICER, ON JUNE 9, 1975, DETERMINED THAT RACHMAN'S PRICE WAS UNREASONABLE AND, THEREFORE, SOLICITATION -1037 WAS CANCELED IN ACCORDANCE WITH ASPR SEC. 1 706.3(A), SUPRA. THE REQUIREMENT WAS THEN RESOLICITED ON AN UNRESTRICTED BASIS. THE RESOLICITATION, INVITATION FOR BIDS (IFB) DSA100-76-B-0025 WAS ISSUED ON JULY 22, 1975, AND BIDS SUBMITTED THEREUNDER WERE OPENED ON AUGUST 1. THE LOW BID SUBMITTED WAS PROPPER'S, IN THE AMOUNT OF $1.139. ON SEPTEMBER 9, 1975, AWARD OF IFB -0025 WAS MADE TO PROPPER.

COUNSEL FOR RACHMAN HAS PROTESTED TO OUR OFFICE THE CANCELLATION AND RESOLICITATION OF SOLICITATION -1037. COUNSEL CONTENDS THAT THE $1.84 BID OF RACHMAN WAS, IN FACT, REASONABLE "IN THESE HIGHLY INFLATIONARY TIMES," AND THEREFORE, THE DECISION TO CANCEL AND RESOLICIT THIS PROCUREMENT WAS ARBITRARY AND CAPRICIOUS.

IN RESPONSE, DSA, WHILE ADMITTING THAT THE INTENT OF CONGRESS IN ENACTING THE SMALL BUSINESS ACT, 15 U.S.C. 630 ET AL., WAS, IN PART, TO AID SMALL BUSINESS FIRMS IN THE GOVERNMENT PROCUREMENT PROCESS, CONTENDS THAT THIS DOES NOT MEAN THAT ALL OTHER STATUTES AND REGULATIONS SHOULD BE COMPLETELY DISREGARDED DURING THE IMPLEMENTATION OF A SMALL BUSINESS PROCUREMENT. DSA SPECIFICALLY REFERS TO 10 U.S.C. SEC. 2305 OF THE ARMED SERVICES PROCUREMENT ACT WHICH STATES, IN PERTINENT PART, AS FOLLOWS:

AWARDS SHALL BE MADE WITH REASONABLE PROMPTNESS BY GIVING WRITTEN NOTICE TO THE RESPONSIBLE BIDDER WHOSE BID CONFORMS TO THE INVITATION AND WILL BE THE MOST ADVANTAGEOUS TO THE UNITED STATES, PRICE AND OTHER FACTORS CONSIDERED.

DSA NOTES THAT ALTHOUGH AID TO SMALL BUSINESS FIRMS IN THE GOVERNMENT PROCUREMENT PROCESS IS CERTAINLY ONE OF THE "OTHER FACTORS" CITED IN 10 U.S.C. 2305, NONETHELESS IT IS MORE EVIDENT THAT PRICE IS SPECIFICALLY ENUMERATED IN 10 U.S.C. 2305 AS INDICATING TO WHOM AN AWARD SHOULD BE MADE. THIS INTENT OF CONGRESS THAT PRICE IS SPECIFICALLY ENUMERATED IN 10 U.S.C. 2305 AS INDICATING TO WHOM AN AWARD SHOULD BE MADE. THIS INTENT OF CONGRESS THAT PRICE IS OF PARAMOUNT IMPORTANCE VIS-A-VIS THE SMALL BUSINESS PROGRAM IS IMPLEMENTED BY ASPR SEC. 1-706.3 ENTITLED, "REVIEW, WITHDRAWAL, OR MODIFICATION OF SET-ASIDES OR SET-ASIDE PROPOSALS," WHICH PROVIDES IN PERTINENT PART AS FOLLOWS:

IF, PRIOR TO AWARD OF A CONTRACT INVOLVING AN INDIVIDUAL OR CLASS SET- ASIDE, THE CONTRACTING OFFICER CONSIDERS THAT PROCUREMENT OF THE SET-ASIDE FROM A SMALL BUSINESS CONCERN WOULD BE DETRIMENTAL TO THE PUBLIC INTEREST (E.G., BECAUSE OF UNREASONABLE PRICE), HE MAY WITHDRAW A UNILATERAL OR JOINT SET-ASIDE DETERMINATION BY GIVING WRITTEN NOTICE TO THE SMALL BUSINESS SPECIALIST, AND THE SBA REPRESENTATIVE, IF AVAILABLE, STATING THE REASONS FOR THE WITHDRAWAL.

FURTHER, DSA NOTES THAT IN SPEAKING OF THE WITHDRAWAL OF THE SET ASIDE THE EXAMPLE GIVEN IN ASPR GOES DIRECTLY TO PRICE. BASED ON THE ABOVE, DSA FINDS IT CLEAR THAT WHEN A SMALL BUSINESS SET-ASIDE IS INVOLVED, THE CONTRACTING OFFICER STILL HAS AN AFFIRMATIVE DUTY TO SERIOUSLY CONSIDER THE PRICES AT WHICH AN AWARD CAN BE MADE. THE MERE FACT THAT A SMALL BUSINESS SET-ASIDE IS INVOLVED DOES NOT MEAN THAT THESE FIRMS SHOULD BE SUBSIDIZED TO A POINT WHERE THEY ARE COMPLETELY INSULATED FROM COMPETITION FROM LARGE BUSINESS FIRMS TO THE EXTENT THAT EXCESSIVE AND UNREASONABLE PRICES ARE BEING PAID.

OUR OFFICE, IN DISCUSSING THIS ISSUE, STATED IN B-149889, NOVEMBER 2, 1962, THAT:

WHILE THERE CAN BE NO DOUBT THAT THE PROVISIONS OF THE SMALL BUSINESS ACT AUTHORIZE THE AWARD OF CONTRACTS TO SMALL BUSINESS CONCERNS AT PRICES WHICH MAY BE HIGHER THAN THOSE OBTAINABLE BY UNRESTRICTED COMPETITION, WE ARE AWARE OF NO VALID BASIS UPON WHICH IT MAY BE CONCLUDED THAT THIS ACT WAS INTENDED TO REQUIRE THE AWARD OF CONTRACTS TO SMALL BUSINESS CONCERNS AT PRICES CONSIDERED UNREASONABLE BY THE CONTRACTING AGENCY, OR THAT THE CONTRACTING AGENCY WOULD BE PROHIBITED FROM WITHDRAWING A SET-ASIDE DETERMINATION WHERE THE BIDS SUBMITTED BY SMALL BUSINESS CONCERNS WERE CONSIDERED UNREASONABLE. CONVERSELY, THE PROVISIONS OF SECTION 2(15) OF THE SMALL BUSINESS ADMINISTRATION AND THE CONTRACTING AGENCY WITH RESPECT TO THE AWARD OF CONTRACTS TO SMALL BUSINESS CONCERNS TO BE SUBMITTED FOR DETERMINATION TO THE HEAD OF THE PROCURING AGENCY, WOULD APPEAR TO CLEARLY INDICATE A CONGRESSIONAL INTENTION THAT DISCRETION AND FINAL AUTHORITY TO DECIDE WHETHER AN AWARD SHOULD BE MADE, EVEN UNDER A JOINT DETERMINATION TO SET ASIDE, WAS TO BE LEFT IN THE PROCURING AGENCY. IT IS THEREFORE OUR OPINION THAT THE REGULATIONS QUOTED ABOVE, PERMITTING SET-ASIDE ACTION ONLY WHERE THERE IS A REASONABLE EXPECTATION OF SUFFICIENT COMPETITION TO PRODUCE REASONABLE PRICES AND PROVIDING FOR WITHDRAWAL OF THE SET ASIDE WHERE THAT EXPECTATION IS NOT REALIZED, ARE NOT IN CONFLICT WITH THE SMALL BUSINESS ACT. THE WITHDRAWAL OF A SET-ASIDE, BASED UPON A PROPER DETERMINATION THAT BID PRICES RECEIVED FROM SMALL BUSINESS CONCERNS ARE UNREASONABLE, THEREFORE REPRESENTS A VALID EXERCISE OF THE AUTHORITY OF A CONTRACTING AGENCY.

SEE ALSO 49 COMP.GEN. 740 (1970); B-164735, OCTOBER 4, 1968; AND B 164377, JULY 26, 1968. THEREFORE, WHILE AN AWARD CAN BE MADE ON A SMALL BUSINESS SET-ASIDE AT A PRICE ABOVE THAT OBTAINABLE ON THE OPEN MARKET FROM LARGE BUSINESS FIRMS, THIS PREMIUM PRICE DOES NOT ALLOW AN AWARD TO BE MADE WHEN THE CONTRACTING OFFICER MAKES A DETERMINATION THAT THE ONLY PRICES OFFERED ARE EXCESSIVE AND UNREASONABLE. ACCORDINGLY, IF GIVEN THIS SITUATION, THE ONLY VIABLE ALTERNATIVE THAT REMAINS IS TO CANCEL THE SOLICITATION AND RESOLICIT THE REQUIREMENTS ON AN UNRESTRICTED BASIS. THE QUESTION REMAINING FOR RESOLUTION THEN, IS THE PROPRIETY OF THE CONTRACTING OFFICER'S DETERMINATION REGARDING THE REASONABLENESS OF RACHMAN'S PRICE.

THE CONTRACTING OFFICER'S DETERMINATION THAT THE BID PRICE OF RACHMAN WAS UNREASONABLE WAS INITIALLY PREMISED ON THE PAST PRICE HISTORY OF THE ITEMS IN QUESTION. THE LAST TWO PROCUREMENTS FOR THIS ITEM OCCURRED IN OCTOBER 1974 AND JANUARY 1975. ON BOTH OCCASIONS, AWARD WAS MADE TO PROPPER AT PRICES OF $0.965 AND $1.188, RESPECTIVELY. ALTHOUGH COUNSEL FOR RACHMAN CONTENDS THAT THESE PRIOR PRICES SHOULD BE DISREGARDED SINCE PROPPER IS A LARGE BUSINESS, THE FACT REMAINS THAT AT THE TIME OF AWARD OF THESE PREVIOUS CONTRACTS, PROPPER WAS, FOR CERTIFICATION PURPOSES, A SMALL BUSINESS. THE MONETARY DIFFERENCE BETWEEN THE LAST AWARD TO PROPPER AND RACHMAN'S BID WAS $0.652 EACH. THIS FACTOR ALONE, CONTENDS DSA, WOULD PROVIDE A SUFFICIENT BASIS UPON WHICH THE CONTRACTING OFFICER COULD HAVE MADE A REASONABLE DETERMINATION THAT THE BID PRICE OF RACHMAN WAS UNREASONABLE AS TO PRICE AND, THEREFORE, SHOULD BE CANCELED IN ACCORDANCE WITH ASPR SEC. 2-404.1(B)(VI) (1974 ED.), WHICH SECTION PROVIDES FOR THE CANCELLATION OF AN INVITATION, AFTER OPENING, WHERE ALL OTHERWISE ACCEPTABLE BIDS ARE RECEIVED AT UNREASONABLE PRICES.

ANOTHER FACTOR UTILIZED BY THE CONTRACTING OFFICER IN REACHING HIS DETERMINATION TO REJECT RACHMAN'S BID WAS A COMPARISON OF ITS BID PRICE WITH THE PRESOLICITATION ESTIMATE. THE ESTIMATE IN THIS CASE WAS $1.30 PER UNIT OR $0.54 PER UNIT LESS THAN RACHMAN'S BID. AGAIN, CONTENDS DSA, THIS FACTOR PROVIDES A SUFFICIENT BASIS FOR THE CONTRACTING OFFICER'S FINDING THE BID PRICE OF RACHMAN TO BE UNREASONABLE.

THE QUESTION REGARDING THE PROPRIETY OF A DECISION TO CANCEL A SMALL BUSINESS SET-ASIDE AND RESOLICIT THE ITEMS ON AN UNRESTRICTED BASIS HAS BEEN BEFORE OUR OFFICE IN THE PAST. IN 37 COMP.GEN. 147 (1957), OUR OFFICE UPHELD THE WITHDRAWAL OF A SMALL BUSINESS SET-ASIDE WHEN THE SMALL BUSINESS BID WAS APPROXIMATELY 10 PERCENT HIGHER THAN THE PREVIOUS PROCUREMENT FOR THE ITEM. IN B-158789, MAY 19, 1966, OUR OFFICE UPHELD A CANCELLATION WHERE THE PRICE INCREASE WAS 12 PERCENT ABOVE THE PREVIOUS PROCUREMENT. IN OUR OPINION, EACH CASE MUST BE RESOLVED INDIVIDUALLY, AND WE BELIEVE THAT NO ARBITRARY CUTOFFS SHOULD BE ESTABLISHED TO DETERMINE THE REASONABLENESS OF A SMALL BUSINESS PRICE SUBMITTED. HOWEVER, IN VIEW OF THE ALMOST 55-PERCENT INCREASE IN RACHMAN'S BID OVER THE PRIOR PROCUREMENT, AND UPON COMPARISON WITH THE GOVERNMENT'S ESTIMATE, WE FIND NO IMPROPRIETY IN THE CONTRACTING OFFICER'S DETERMINATION TO CANCEL THE PROCUREMENT AND RESOLICIT ON AN UNRESTRICTED BASIS. SEE ALSO B-169008, APRIL 8, 1970.

WE REACH THIS CONCLUSION COGNIZANT OF COUNSEL FOR RACHMAN'S ARGUMENT THAT THE CONTRACTING OFFICER IMPROPERLY UTILIZED THE "COURTESY BID" SUBMITTED BY PROPPER FOR COMPARISON PURPOSES. IN VIEW OF OUR ABOVE OPINION UPHOLDING THE CANCELLATION BASED UPON COMPARISON WITH PRIOR PROCUREMENTS AND THE GOVERNMENT ESTIMATE, WE FIND THIS ARGUMENT UNNECESSARY FOR RESOLUTION AT THIS JUNCTURE.

ACCORDINGLY, THE PROTEST OF RACHMAN IS DENIED.

PROTEST ON SOLICITATION -0966

BIDS SUBMITTED IN RESPONSE TO SOLICITATION -0966 WERE OPENED ON MAY 27, 1975, AND WERE AS FOLLOWS:

PROPPER . . . $1.345

SBI . . . 1.54/1.50

BANCROFT . . . 1.61

WALDMAN . . . 1.73

RACHMAN . . . 1.955

IN ITS SUBMISSION, PROPPER REPRESENTED THAT IT "IS NOT" A SMALL BUSINESS CONCERN AND THAT THE SUPPLIES "WILL" BE MANUFACTURED BY A SMALL BUSINESS CONCERN. AN ADDITION TO ITS REPRESENTATION WAS THE NOTE: "PENDING DECISION OF SBA SIZE APPEALS BOARD." SBI REPRESENTED THAT IT "IS NOT" A SMALL BUSINESS CONCERN. BOTH PROPPER AND SBI'S BIDS WERE DETERMINED TO BE NONRESPONSIVE, SINCE NEITHER FIRM WAS A SMALL BUSINESS.

GIVEN THIS SITUATION, THE CONTRACTING OFFICER DETERMINED THAT BANCRORFT'S PRICE WAS UNREASONABLE AND, THEREFORE, SOLICITATION -0966 WAS CANCELED IN ACCORDANCE WITH ASPR SEC. 1-706.3(A), SUPRA. THIS REQUIREMENT WAS THEN RESOLICITED ON AN UNRESTRICTED BASIS. THE RESOLICITATION, IFB DSA100-76-B -0026 WAS ISSUED ON JULY 22, 1975, AND BIDS SUBMITTED THEREUNDER WERE OPENED ON AUGUST 1. THE LOW BID SUBMITTED WAS THAT OF PROPPER'S IN THE AMOUNT OF $1.35. AWARD WAS MADE TO PROPPER FOR THIS REQUIREMENT ON SEPTEMBER 12, 1975.

COUNSEL FOR BANCROFT HAS PROTESTED THE ABOVE ACTIONS OF DSA CONTENDING THAT THE ACTIONS OF THE CONTRACTING OFFICER WERE IMPROPER. THE ALLEGATIONS MADE, THE RESPONSE OF DSA, AND THE CITATIONS IN SUPPORT OF EACH POSITION ARE BASICALLY IDENTICAL TO THOSE RAISED UNDER PROTESTED SOLICITATION -1037. ACCORDINGLY, THE ONLY QUESTION THAT NEED BE DISCUSSED AND RESOLVED IS THE PROPRIETY OF THE CONTRACTING OFFICER'S DETERMINATION REGARDING THE REASONABLENESS OF BANCROFT'S PRICE.

THE CONTRACTING OFFICER'S DETERMINATION WAS INITIALLY PREMISED UPON A COMPARISON OF AWARD PRICES FOR THE PRIOR TWO PROCUREMENTS FOR THE SUBJECT ITEM. THE LAST TWO PROCUREMENTS, OCCURRING IN AUGUST AND OCTOBER OF 1974, WERE BOTH MADE TO PROPPER (THEN CLASSIFIED AS SMALL BUSINESS) AT PRICES OF $1.235 AND $1.215, RESPECTIVELY. THE MONETARY DIFFERENCE BETWEEN THE LAST AWARD TO PROPPER AND BANCROFT'S BID WAS $0.395 PER UNIT, OR A 45.1-PERCENT INCREASE. AS ABOVE, DSA CONTENDS THAT THIS FACTOR ALONE WOULD PROVIDE A SUFFICIENT BASIS FOR THE CONTRACTING OFFICER'S FINDING THE BID PRICE OF BANCROFT TO BE UNREASONABLE.

THE CONTRACTING OFFICER ALSO LOOKED AT THE CURRENT MARKET CONDITIONS IN REACHING HIS DETERMINATION TO REJECT BANCROFT'S BID. THE PRICE ESTIMATE WHICH THE GOVERNMENT ARRIVED AT PRIOR TO THE ISSUANCE OF THE ORIGINAL SOLICITATION WAS $1.24 PER UNIT (ALTHOUGH DSA ADMITS THIS FIGURE WAS MORE APPROPRIATELY TERMED A "GUESSTIMATE"). THIS ESTIMATE WAS $0.37 LOWER THAN BANCROFT'S BID. AFTER BID OPENING, A MORE ACCURATE COST ESTIMATE BASED ON THE CURRENT MARKET CONDITIONS WAS PERFORMED ON THIS ITEM, THE RESULTS OF WHICH INDICATED THAT THE COST PER UNIT SHOULD FALL WITHIN A RANGE OF $1.31 TO $1.36. USING THIS RANGE, BANCROFT'S BID IS STILL $0.25 PER UNIT MORE, OR ON THE TOTAL CONTRACT QUANTITY, AN AWARD TO BANCROFT WOULD COST THE GOVERNMENT APPROXIMATELY $54,000 MORE THAN WHAT THE GOVERNMENT ESTIMATE OF THE CURRENT MARKET COST SHOULD BE. AGAIN, DSA CONTENDS THAT FACTOR ALONE IS A SUFFICIENT BASIS TO REJECT BANCROFT'S BID AS UNREASONABLE. BASED UPON OUR HOLDING REGARDING SOLICITATION -1037 ABOVE, WE BELIEVE THAT THE SAME AUTHORITIES AND RATIONALE ARE EQUALLY APPLICABLE HERE. IN VIEW OF THE APPROXIMATELY 45-PERCENT INCREASE IN BANCROFT'S BID OVER THE PRIOR PROCUREMENT, AND UPON COMPARISON WITH THE GOVERNMENT'S REVISED ESTIMATE, WE AGAIN FIND NO IMPROPRIETY IN THE CONTRACTING OFFICER'S DETERMINATION TO CANCEL THE PROCUREMENT AND RESOLICIT ON AN UNRESTRICTED BASIS, AND ACCORDINGLY THE PROTEST IS DENIED.

PROTEST ON SOLICITATION -0970

BIDS SUBMITTED IN RESPONSE TO THE FIFTH AND FINAL SOLICITATION UNDER PROTEST -0970 WERE OPENED ON MAY 28, 1975, AND WERE AS FOLLOWS:

SBI . . . $2.139

PROPPER . . . 2.245

WALDMAN . . . 2.58

TAMPA G . . . 2.66

RACHMAN . . . 2.68

BERNARD . . . 3.20

BANCROFT . . . 3.60

NEITHER SBI NOR PROPPER MADE REPRESENTATION AS TO SIZE STATUS IN THEIR BIDS. AS A RESULT, BOTH WERE HELD TO BE NONRESPONSIVE IN ACCORDANCE WITH ASPR SEC. 1-703 AND COULD NOT BE CONSIDERED FOR AWARD. CONSEQUENTLY, THE LOW RESPONSIVE BID BECAME THAT OF WALDMAN AT $2.58.

GIVEN THIS SITUATION, THE CONTRACTING OFFICER, ON JUNE 24, 1975, DETERMINED THAT WALDMAN'S PRICE WAS UNREASONABLE AND, THEREFORE, SOLICITATION -0970 WAS CANCELED IN ACCORDANCE WITH ASPR SEC. 1 706.3(A). THE REQUIREMENT WAS THEN RESOLICITED ON AN UNRESTRICTED BASIS. THE RESOLICITATION, IFB DSA100-76B-0027, WAS ISSUED ON JULY 22, 1975, AND BIDS WERE OPENED ON AUGUST 1. FIVE BIDS WERE RECEIVED AS FOLLOWS:

PROPPER . . . $2.345

SBI . . . 2.43

BANCROFT . . . 2.48

TAMPA G . . . 2.54

WALDMAN . . . 2.58

RACHMAN . . . 2.61

AWARD UNDER THIS RESOLICITATION IS BEING WITHHELD PENDING THE OUTCOME OF THIS DECISION.

COUNSEL FOR WALDMAN (THE LOW SMALL BUSINESS BIDDER UNDER -0970) HAS PROTESTED TO OUR OFFICE THE CANCELLATION AND RESOLICITATION OF SOLICITATION -0970 AS BEING IMPROPER. AS ABOVE, THE ALLEGATIONS MADE, THE RESPONSE OF DSA, AND THE CITATIONS IN SUPPORT OF EACH POSITION ARE BASICALLY IDENTICAL TO THESE RAISED UNDER PROTESTED SOLICITATIONS -1037 AND -0966. ACCORDINGLY, THE ONLY QUESTION THAT NEED BE DISCUSSED AND RESOLVED IS THE PROPRIETY OF THE CONTRACTING OFFICER'S DETERMINATION REGARDING THE REASONABLENESS OF WALDMAN'S PRICE.

THE CONTRACTING OFFICER'S DETERMINATION THAT THE BID OF WALDMAN WAS UNREASONABLE AS TO PRICE WAS BASED PRIMARILY UPON A COMPARISON OF WALDMAN'S PRICE TO THAT OF THE TWO PRIOR PROCUREMENTS. THE LAST PROCUREMENT FOR THIS PARTICULAR CAP WAS AWARDED TO SBI, THEN A SMALL BUSINESS, IN THE AMOUNT OF $2.149. WALDMAN'S BID PRICE OF $2.58 WAS APPROXIMATELY 20 PERCENT HIGHER THAN THIS PREVIOUS PROCUREMENT. WHILE REASONABLE MEN MAY DIFFER AS REGARDS THE "REASONABLENESS" OF WALDMAN'S PRICE, OUR OFFICE CANNOT FIND THAT THE CONTRACTING OFFICER ACTED IN AN ARBITRARY OR CAPRICIOUS MANNER IN VIEW OF OUR HOLDING AT 37 COMP.GEN. 147, SUPRA. IN VIEW OF THIS, ANY COMPARISON BY THE CONTRACTING OFFICER TO THE BIDS SUBMITTED BY THE LARGE BUSINESSES WAS UNNECESSARY, BUT NOT IMPROPER. SEE 53 COMP.GEN. 307 (1973).

ACCORDINGLY, THE PROTEST OF WALDMAN IS DENIED.