Walden Security

DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective Order. This version with no redactions has been approved for public release.

Decision

Matter of: Walden Security

File: B-407022; B-407022.2

Date: October 10, 2012

DIGEST

Protest challenging an agency’s decision to set aside aprocurement for small businesses is denied where the record shows that thecontracting officer reasonably expected that at least two responsible smallbusiness concerns would compete for the award and that award would be made at afair market price.

Metropolitan Security Services, Inc. d/b/a WaldenSecurity, of Chattanooga, Tennessee, protests the decision of the Department ofHealth and Human Services, Centers for Disease Control and Prevention (CDC), toissue request for quotations (RFQ) No. 2012-Q-14617, for security guardservices at various locations in the metropolitan Atlanta, Georgia, area, as asmall business set-aside.

We deny the protest.

BACKGROUND

The CDC operates facilities at four federally-ownedcampuses, and utilizes multiple leased office facilities, in the metropolitanAtlanta area. Security must be provided at all of these facilities. Contracting Officer’s (CO) Statement at 1. Walden, a large business, is theincumbent contractor.[1] At issue here is thefollow-on procurement to Walden’s expiring contract.

In preparation for the procurement, the CO consulted withthe CDC’s small business officer and sent e-mails to small businesses withrelevant General Services Administration schedule contracts requestingstatements of their capabilities. CO Statement at 5 n.3. On February 9, 2012,the CDC published an initial sources sought notice for its securityrequirements and received capability statements from numerous firms. The COstates that an analysis of the responses indicated that at least two smallbusinesses could meet the requirements, and the agency issued RFQ No.2012-Q-14257 as a small business set-aside. Id. at 2 n.1. Walden fileda protest in our Office challenging this decision. After the CDC canceled thesolicitation to add requirements, we dismissed Walden’s protest as academic.

On June 8, the CDC posted a new sources sought notice todetermine the availability of small businesses that could meet the agency’srequirements. The notice summarized the requirement and attached theperformance work statement (PWS). The notice explained that contractors mustbe certified and licensed to provide security guard services in the State ofGeorgia, and that all applicable licenses and certifications for armed guardswere required. Prospective contractors were asked to respond to questionsconcerning their capabilities, and, where teaming arrangements werecontemplated, to provide information for each teaming entity. AR, Exh. J, June8, 2012, Sources Sought Notice, at BATES No. 0000199.

The CDC received 19 capability statements by the June 13deadline. The contract specialist verified the small business status of theresponding firms, and a program analyst determined that four firms met theRFQ’s requirements. Supp. AR, Declaration of Contract Specialist at ¶¶ 4-6; COStatement at 3. The only contemporaneous evidence of analysis underlying thisdetermination is an e-mail to the contract specialist from the program analystassigned to evaluate the capability statements. The e-mail states, “[h]ere arethe results of the most recent sources sought,” and lists the names of thefirms that responded to the notice with a “yes” or “no” notation next to eachname. AR, Exh. S, June 13, 2012 E-mail from Program Analyst to ContractSpecialist, at BATES No. 0001362. The CO decided to set aside the procurementfor small businesses based on the program analyst’s evaluation, as well asmarket research and discussions with the Small Business Administration. AR,Exh. W, CO Declaration at ¶ 7.

The RFQ anticipates the award of a fixed-price contract, withseparate labor hour line items for surge, emergency, and overtimerequirements. RFQ at 2-7. The services are to be provided over one base year,with up to four 1-year option periods. The solicitation includes a 120-daytransition period. Id. Award is to be made on a best value basis,considering technical factors and price.

Of relevance to the protest, contractors are required tohave a business or corporate license to operate as a commercial securityservice on or before the date of award, and to ensure that each securityguard/officer has obtained all licenses and certifications that are required byfederal, state, and/or local laws 120 days after award. PWS ¶¶ 4.2.2, 4.1.8,4.1.3. The PWS includes experience requirements; this experience could be metby either the prime contractor or a subcontractor. AR, Exh. E, July 11 E-mailfrom Contract Specialist to Vendors. In this regard, the RFQ allows forpartnering agreements with non-qualifying entities provided that the primecontractor performs at least 51 percent of the labor costs. PWS ¶ 4.3.1.

Walden filed this protest prior to the RFQ’s July 16closing date. The CDC received eight quotations in response to thesolicitation.

DISCUSSION

Walden argues that the decision to set aside theprocurement for small business participation was unreasonable, improper, and anabuse of the contracting officer’s discretion. Walden asserts that the CDC didnot contemporaneously evaluate whether there were two capable and qualifiedsmall business concerns that met the RFQ’s requirements at a fair marketprice. Alternatively, Walden contends that the CDC’s set-aside determinationwas unreasonable since no small business is capable of meeting the RFQ’s licensingrequirements, or providing the services at a fair market price.

Under Federal Acquisition Regulation (FAR) § 19.502-2(b),a procurement with an anticipated dollar value of more than $150,000, such asthe one here, must be set aside for exclusive small business participation whenthere is a reasonable expectation that: (1) offers will be received from atleast two responsible small business concerns, and (2) that award will be madeat a fair market price. The use of any particular method of assessing theavailability of small businesses is not required so long as the agencyundertakes reasonable efforts to locate responsible small businesscompetitors. Med-South, Inc., B-401214, May 20, 2009, 2009 CPD ¶ 112 at2; National Linen Serv., B-285458, Aug. 22, 2000, 2000 CPD ¶ 138 at 2.

The decision whether to set aside a procurement may bebased on an analysis of factors such as the prior procurement history, therecommendations of appropriate small business specialists, and market surveysthat include responses to sources sought announcements. Commonwealth HomeHealth Care, Inc., B-400163, July 24, 2008, 2008 CPD ¶ 140 at 3. In makingset-aside decisions, agencies need not make actual determinations ofresponsibility or decisions tantamount to determinations of responsibility;rather, they need only make an informed business judgment that there is areasonable expectation of receiving acceptably priced offers from smallbusiness concerns that are capable of performing the contract. Ceradyne,Inc., B-402281, Feb. 17, 2010, 2010 CPD ¶ 70 at 4. Because a decisionwhether to set aside a procurement is a matter of business judgment within thecontracting officer’s discretion, our review is limited to determining whetherthat official abused his or her discretion. KNAPP Logistics Automation,Inc., B-406303, Mar. 23, 2012, 2012 CPD ¶ 101 at 2. We will not question asmall business set aside determination where the record shows that the evidencebefore the contracting officer was adequate to support the reasonableness ofthe conclusion that small business competition reasonably could be expected. CommonwealthHome Health Care, Inc., supra, at 3.

We first address Walden’s argument that the CDC failed toconduct, or document, any contemporaneous analysis or evaluation to support itsdecision to issue the solicitation as a small business set-aside, and itscompanion argument that we should give the agency’s post-protest analysislittle or no weight.

The only contemporaneous evidence of the set-asideanalysis is the e-mail from the program analyst to the contractspecialist discussed above, with “yes” or “no” notations beside the names offirms responding to the sources sought notice. Walden challenged the agency’sdocumentation in its comments on the agency report, and GAO asked the agency torespond. The CDC provided a declaration, and a supplemental declaration, fromthe program analyst.[2] The program analyst statesthat, after she received the capability statements, she read and evaluated eachagainst a set of questions and responses established to ascertain a firm’scapability to perform. She states that, during the course of this protest, sherefreshed her memory of that evaluation by re-reading the capability statementsof the firms found capable and recollected the reasons for her findings. AR,Exh. X, Supp. Program Analyst Declaration, at ¶¶ 3-10. She provided herdocumented recollections for each firm.[3]

Walden argues that the agency’s post-protest analysis shouldbe accorded no weight, as it was prepared during the adversarial protestprocess and does more than fill in limited gaps in the contemporaneous record. We do not agree.

As Walden acknowledges, GAO will not limit its review tocontemporaneous evidence, but considers all the information provided, includinga party’s arguments and explanations. See Serco, Inc., B-406683,B-406683.2, Aug. 3, 2012, 2012 CPD ¶ 216 at 7. While we generally give little orno weight to reevaluations and judgments prepared in the heat of theadversarial process, Boeing Sikorsky Aircraft Support, B-277263.2,B-277263.3, Sept. 29, 1997, 97-2 CPD ¶ 91 at 15, post-protestexplanations that provide a detailed rationale for contemporaneous conclusions,and simply fill in previously unrecorded details, will generally be consideredin our review as long as those explanations are credible and consistent withthe contemporaneous record. NWT, Inc.; PharmChem Labs., Inc., B-280988,B-280988.2, Dec. 17, 1998, 98-2 CPD ¶ 158 at 16.

Here, the contemporaneous conclusions were the “yes”notations in the program analyst’s e-mail to the contract specialist. Theprogram analyst’s post-protest explanations provide detailed and crediblerationales for those conclusions, and fill in the details she did notpreviously record. As a result, we consider these explanations in our reviewof the propriety of the agency’s set-aside determination.[4]

Walden alternatively argues that the CDC’s post-protestanalysis does not show that there were two capable and qualified small businessconcerns that met the RFQ’s requirements at a fair market price. Walden’sprincipal argument is that there is no reasonable expectation that two or moresmall businesses can meet the solicitation’s armed guard license requirementsunder Georgia law.

As noted above, the PWS requires the contractor to ensurethat each security guard has obtained all licenses, permits and certificatesrequired by federal, state and local laws 120 days after award. PWS ¶¶ 4.1.3,4.1.8. The CDC does not dispute that armed security guards must be licensedunder Georgia law. The CDC also does not dispute Walden’s characterization ofGeorgia law as requiring that the security company, as the employer, must applyfor and obtain the license on behalf of its employee. After properlyregistering its employees, the security company retains the license of itsarmed security guards. Georgia does not permit the transfer of such licensesbetween employers. Protest at 6.

Walden argues that no small business can meet thisrequirement because the 120-day transition period does not allow enoughtime to re-certify the security guards now working for Walden or a sufficientnumber of other security guards to perform the requirements. Walden arguesthat, to apply for a license, the employees must be employed by the contractor,and obtaining the licenses takes between 5 and 7 months, longer than thetransition period. Walden’s estimate is drawn from an October 2011 e-mail froma CDC supervisory contracting officer to the contract specialist. Protest, TabC, at 43-45. In this e-mail, which concerned a planning meeting for therecompetition of these requirements, the supervisory contracting officer refersto the licenses at issue and states that “[i]t takes about 5 to 7 months toobtain the licenses from the State of Georgia . . . ” Id.

The CDC counters that this e-mail is not dispositivebecause it does not reflect the time estimate of the State of Georgia, thelicensing entity. The CO states that her independent investigation oftimetables for obtaining licenses showed that the state’s estimates forprocessing an application coincided with the transition period in thesolicitation. CO Statement at 7. In this regard, the contract specialiststates that she contacted the Georgia Secretary of State, ProfessionalLicensing Board Division, to find out the timeframe for security guardcompanies to obtain guard licenses for their employees, so the CDC could setreasonable timeframes for contract transition. She states that on threeoccasions, including February and July of 2012, she contacted the state and wasgiven the affirmative timeframe of 25 to 30 days for a company to obtainlicenses for employees to work under their company as security guards. AR,Att. 1, Declaration of Contract Specialist, at ¶¶ 3-5.

We agree with the CDC that the e-mail proffered by Waldenis, at best, the supervisory contracting officer’s estimate, and that the CDCreasonably relied on information obtained from the state of Georgia itself. Walden’s argument that the contract specialist’s declaration is not accompaniedby more specific documentation affords us no basis to question its contents. Walden argues that the estimate of 25-30 days does not account for delays infiling applications or post-application delays due to incorrectly completedapplications. However, Walden has not shown that any of these potential delaysundercut the agency’s determination that offers from two or more responsiblesmall businesses can reasonably be expected.

Finally, Walden asserts that the agency did not analyze whethersmall businesses could offer fair market prices. Walden argues that, becauseof the licensing and other technical requirements, any small business wouldhave to add a premium to its proposed pricing, thereby resulting in priceshigher than fair market.

A contracting officer may reasonably rely on anexpectation that there will be adequate price competition to conclude that thecompetition will result in a fair market price. KNAPP Logistics Automation,Inc., B-406303, Mar. 23, 2012, 2012 CPD ¶ 137 at 5. The FAR provides thatadequate price competition exists where two or more responsible offerors submitproposals that satisfy the government’s requirements, award is based on a bestvalue determination where price is a substantial factor, and the price of thesuccessful offeror is not unreasonable. FAR §§ 15.403-1(c)(1);15.404-1(b)(2)(i). Here, the CDC concluded that four of 19 firms responding tothe notice were small businesses capable of meeting the solicitation’srequirements. Walden’s speculation that small businesses would propose priceshigher than fair market is just that. Under the circumstances, we concludethat it was reasonable for the CDC to anticipate adequate price competition,and that, as a result of that price competition, award would be made at a fairmarket price under the set-aside procurement.[5] National Linen Serv.,supra, at 3-4.

The protest is denied.

Lynn H. Gibson
General Counsel