Protest of Decision To Set Aside Procurement

Three firms protested the restriction to small business concerns of a request for proposals (RFP) for ship repair and modernization. Although the RFP was originally unrestricted, the agency limited participation to small business firms by amending the RFP 6 days prior to the date set for the receipt of initial proposals. The protesters objected to the decision to set aside the procurement. The protesters contended that setting the procurement aside for small business firms, with only 6 days remaining before the date set for receipt of initial proposals, was arbitrary. They argued that they had essentially completed their proposal preparation effort by that date and had lost other opportunities for business in the process. Therefore, they requested reimbursement of proposal preparation costs. The protesters also contended that there was no basis for anticipating that offers would have been submitted by at least two responsible small business firms; thus, the small business set-aside amounted to a sole-source award. The protesters also contended that a lower small business size standard should be established for ship repair firms as they do not employ as many workers as shipbuilders. One protester contended that the work should have been procured through formal advertising rather than through competitive negotiations, since work of this type has been obtained routinely by advertising in the past. This protester also questioned the documentary support of the decision to negotiate. The issues relating to advertised procurement and documentation were untimely as they should have been raised before the closing date for receipt of proposals. Good procurement policy dictates that set-aside determinations should be made prior to the issuance of a solicitation. However, a set-aside determination is permissible after a solicitation is issued if there is a reasonable basis for the determination. Here, the record supported the determination. The fact that the protesters incurred costs in preparing to submit proposals did not establish that the decision to restrict the procurement to small businesses was arbitrary. GAO saw no basis for concluding that the SBA definition of ship repair contractors was contrary to the Small Business Act. Since GAO did not find that the agency acted improperly, there was no basis to grant the protesters proposal preparation costs. Accordingly, the protests were dismissed in part and denied in part, and the claims were denied.