Protest of NIH Contract Award

B-201333: Oct 8, 1981

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A small business concern protested the award of a National Institutes of Health (NIH) contract for the installation of environmental cold rooms. The protester contended that the NIH rejection of its low bid as nonresponsible without referral of the matter to the Small Business Administration (SBA) for consideration under the Certificate of Competency (COC) program violated the Small Business Act. The protester maintained that the award of the contract was illegal, the contract should be canceled, and the work should be awarded to it. In the alternative, the protester claimed bid preparation costs incurred in responding to the solicitation. NIH determined that the protester's proposal was nonresponsible for failure to satisfy a solicitation criterion. NIH did not refer the matter to SBA because its procurement regulations provide that no referral need be made if, as NIH concluded, urgent circumstances existed. The Small Business Act provides that a small business may not be precluded from an award on the basis of nonresponsibility without referral to SBA for final disposition under COC procedures. The language and the legislative history of the Act, the SBA implementing regulations, and the Federal Procurement Regulations provide no apparent exceptions to this referral procedure. GAO concluded that the rejection of the protester's low bid on the basis of nonresponsibility without referral to SBA was unreasonable and tantamount to arbitrary or capricious action. Therefore, the protest was sustained. Since the contract had been performed, no award to the protester was possible. Before bid preparation costs can be allowed, it must be determined whether the protester had a substantial chance of being awarded the contract. The GAO review was limited to ascertaining whether the evidence submitted reasonably showed compliance with the definitive responsibility criteria; quality and sufficiency of evidence are judgment matters reserved to the contracting officer. The agency's technical personnel checked the references in the protester's bid, which included a room installed in a non-Government facility, and found that it lacked various material components and failed to operate under conditions called for by the criterion. Based on these findings, GAO held that the contracting officer reasonably determined that the protester did not comply with the definitive responsibility criterion. Accordingly, the claim for bid preparation costs was denied.