Matter of: Grace Industries, Inc. File: B-261020 Date: July 10, 1995

Matter of: Grace Industries, Inc. File: B-261020 Date: July 10, 1995

Small Business Administration (SBA) determination to accept for award under SBA's 8(a) program a requirement for custodial services, which were previously contracted from the protester, a small business, is unobjectionable where SBA reasonably determined, in accordance with applicable regulations, that acceptance of the requirements would not have an "adverse impact" on the protester.

Attorneys

DECISION

Grace Industries, Inc., a small business, protests the proposed award of a contract for custodial services under request for proposals (RFP) No. DABT57-95-R-0006, to Hiltons Environmental, Inc., a small disadvantaged business, under section 8(a) of the Small Business Act, 15 U.S.C. Sec. 637(a) (1994). Section 8(a) authorizes the Small Business Administration (SBA) to enter into contracts with government agencies and to arrange for the performance of such contracts by letting subcontracts to socially and economically disadvantaged businesses.

We deny the protest.

In April 1994, under a small business set-aside solicitation, the Army awarded Grace contract No. DABT57-95-R-0006 to provide custodial services at Fort Eustis, Fort Story and three U.S. Army Reserve Centers, for a base period of 5 months with four 1-year options. From the start, the Army noted deficiencies in Grace's contract performance, which were communicated to Grace through letters and meetings with the contracting activity. By letter to the Army contracting officer dated August 30, Grace advised that:

"As stated before, we feel that we are at irreconcilable differences and that these differences, if left to continue into an option period, would be both damaging to the Government and to Grace Industries, Inc.

"Therefore, we request that the Government not exercise its option and that a contractor more suitable to the Government's needs be acquired."

On November 14, the Army asked SBA to consider accepting into the 8(a) program the custodial services then provided by Grace. [1] The following day SBA accepted the Army's offering on behalf of Hiltons Environmental, Inc., based on its finding that no other small businesses would be adversely impacted by SBA's award of an 8(a) contract for the work. [2]

This protest followed in which Grace contends that the acceptance of the requirement into SBA's 8(a) program deprived it of an opportunity to compete for the contract and challenges SBA's decision to accept the requirement into the 8(a) program without an impact study on how this action would affect Grace. During the course of this protest, on April 22, Grace also submitted a request to SBA to reconsider this decision.

In response, on May 1, SBA confirmed its decision to accept the requirement into the 8(a) program because it determined that no other small business would be adversely impacted. This included the protester, whose prior contract represented less than 25 percent of its most recent annual gross sales, and who had been performing the contract for less than 24 months. In making its finding that loss of this contract would not cause Grace to experience severe financial hardship, the SBA also relied on Grace's own request to the Army that the option period not be exercised. The Small Business Act affords SBA and contracting agencies broad discretion in selecting procurements for the 8(a) program. Accordingly, our Office will not consider a protest challenging the decision to procure under the 8(a) program, absent a showing of possible fraud or bad faith on the part of government officials or that specific laws or regulations may have been violated. Microform Inc., B-244881.2, July 10, 1992, 92-2 CPD Para. 13; Korean Maintenance Co., B-243957, Sept. 16, 1991, 91-2 CPD Para. 246. Here, there is no evidence in the record to support the required showing.

SBA regulations provide that SBA will not accept a requirement previously met by a small business into the 8(a) program if doing so would have an adverse impact on other small business programs or on an individual small business. 13 C.F.R. Sec. 124.309(c) (1995). The regulations provide that SBA will presume an adverse impact on small business where (1) a small business, which has performed the requirement for at least 24 months, is currently performing the requirement or had finished performance within 30 days of the procuring agency's offer of the requirement for the 8(a) program and (2) the estimated dollar value of the offered 8(a) award would be 25 percent or more of the incumbent's most recent annual gross sales. 13 C.F.R. Sec. 124.309(c)(2). In this case, it is undisputed that the protester has been performing the requirement for less than 24 months. In addition, SBA determined that the estimated dollar value of the offered 8(a) award was less than 25 percent of Grace's most recent annual gross sales. Grace does not assert that SBA failed to consider other relevant factors in its determination that acceptance of this requirement would not adversely impact either another small business program or an individual small business. Therefore, we conclude that SBA's decision to accept this requirement under the 8(a) program did not violate the applicable regulation.

Grace also argues that SBA's determination that acceptance of this requirement would not have an adverse impact on Grace was the result of bias. Government officials are presumed to act in good faith; we will not attribute unfair prejudicial motives to procurement officials on the basis of inference or supposition. Northwestern Travel Agency, Inc., B-244592, Oct. 23, 1991, 91-2 CPD Para. 363. The record here shows that SBA did not initially conduct an adverse impact study because it concluded, based on Grace's request that the Army not extend its contract, that the offering would constitute a new requirement. As noted above, SBA subsequently decided, consistent with the applicable regulation, that there was no adverse impact on Grace. The record thus provides no evidence to support the protester's accusations of bad faith.

The protest is denied.

1. Pending reprocurement, the Army extended Grace's performance pursuant to Federal Acquisition Regulation Sec. 52.217-9, Extension of Services.

2. The SBA had initially viewed the custodial services as a new requirement which did not require an impact study because of Grace's letter indicating that it did not want to perform under the option period.