B-218098, AUG 8, 1985, OFFICE OF GENERAL COUNSEL

B-218098: Aug 8, 1985

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MINNESOTA 55101 WE ARE WRITING IN RESPONSE TO YOUR REQUEST. THE DEPARTMENT OF DEFENSE (DOD) DENIED RAYGO CONTRACTS IN PROCUREMENTS FOR WHICH RAYGO WAS THE APPARENT LOW BIDDER. ALL THREE PROCUREMENTS WERE SMALL BUSINESS SET- ASIDES FOR THE ACQUISITION OF MOTORIZED ROLLERS USED TO COMPACT ASPHALT. APPARENTLY HE IS REFERRING TO INVITATION FOR BIDS (IFB) NO. WERE UNREASONABLE. THE CONTRACTING OFFICER'S DETERMINATION RESULTED FROM THE FACT THAT RAYGO'S LOW BID WAS 26 PERCENT. THE PROTEST WAS DISMISSED FOR RAYGO'S FAILURE TO FURTHER RESPOND REGARDING THE MATTER. DLA700-85-B-4523 THIS SOLICITATION WAS ISSUED BY DLA ON OCTOBER 18. ONLY RAYGO WAS A SMALL BUSINESS. THE WITHDRAWAL OF A SET-ASIDE IS APPROPRIATE WHERE THE CONTRACTING OFFICER CONSIDERS THE SET-ASIDE TO BE DETRIMENTAL TO THE PUBLIC INTEREST.

B-218098, AUG 8, 1985, OFFICE OF GENERAL COUNSEL

PRECIS-UNAVAILABLE

THE HONORABLE RUDY BOSCHWITZ: UNITED STATES SENATOR 419 NORTH ROBERT STREET ST. PAUL, MINNESOTA 55101

WE ARE WRITING IN RESPONSE TO YOUR REQUEST, DATED JANUARY 21, 1985 (YOUR FILE 4297880002), FORWARDING A LETTER OF COMPLAINT FROM YOUR CONSTITUENT, ROBERT H. MCCLARAN, CONTRACT ADMINISTRATOR FOR RAYGO, INC. (RAYGO). MR. MCCLARAN MAINTAINS THAT ON THREE OCCASIONS, THE DEPARTMENT OF DEFENSE (DOD) DENIED RAYGO CONTRACTS IN PROCUREMENTS FOR WHICH RAYGO WAS THE APPARENT LOW BIDDER. ALL THREE PROCUREMENTS WERE SMALL BUSINESS SET- ASIDES FOR THE ACQUISITION OF MOTORIZED ROLLERS USED TO COMPACT ASPHALT. WE REQUESTED A REPORT ON THE MATTER FROM DOD. AS EXPLAINED BELOW, BASED ON OUR REVIEW OF THE REPORT, WE DO NOT AGREE THAT DOD ACTED IMPROPERLY.

IFB NO. DLA700-84-B-4655

FROM MR. MCCLARAN'S LETTER TO YOU, IT APPEARS THAT HE NO LONGER WISHES TO PURSUE HIS QUESTIONING OF ONE OF THE THREE DOD PROCUREMENTS TO WHICH HE REFERS. APPARENTLY HE IS REFERRING TO INVITATION FOR BIDS (IFB) NO. DLA700-84-B4655 ISSUED BY THE DEFENSE LOGISTICS AGENCY (DLA). THE CONTRACTING OFFICER CANCELED THE SOLICITATION, BASED ON THE DETERMINATION THAT THE PRICES BID, INCLUDING RAYGO'S LOW BID, WERE UNREASONABLE. THE CONTRACTING OFFICER'S DETERMINATION RESULTED FROM THE FACT THAT RAYGO'S LOW BID WAS 26 PERCENT, OR $275,565, ABOVE A "COURTESY BID" SUBMITTED BY A LARGE BUSINESS. RAYGO FORMALLY PROTESTED THE IFB CANCELLATION TO GAO, BUT THE PROTEST WAS DISMISSED FOR RAYGO'S FAILURE TO FURTHER RESPOND REGARDING THE MATTER. (SEE OUR LETTER TO YOU, DATED JANUARY 16, 1985, REGARDING FILE B-216513, COPY ENCLOSED.)

IFB NO. DLA700-85-B-4523

THIS SOLICITATION WAS ISSUED BY DLA ON OCTOBER 18, 1984. UPON RECEIVING A PROTEST FROM A LARGE BUSINESS, DLA CONDUCTED A MARKET SURVEY WHICH REVEALED THAT ONLY TWO BIDDERS WOULD SUBMIT OFFERS AND THAT, OF THE TWO, ONLY RAYGO WAS A SMALL BUSINESS. CONSEQUENTLY, ON DECEMBER 12, 1984, PRIOR TO BID OPENING, THE DLA CONTRACTING OFFICER WITHDREW THE SET-ASIDE. THE WITHDRAWAL OF A SET-ASIDE IS APPROPRIATE WHERE THE CONTRACTING OFFICER CONSIDERS THE SET-ASIDE TO BE DETRIMENTAL TO THE PUBLIC INTEREST. FEDERAL ACQUISITION REGULATION (FAR), 48 C.F.R. SEC. 19.506 (1984). IN THIS CASE, BASED ON THE MARKET SURVEY, THERE NO LONGER EXISTED A REASONABLE EXPECTATION THAT OFFERS WOULD BE RECEIVED FROM AT LEAST TWO SMALL BUSINESS CONCERNS, AND THE CONTRACTING OFFICER CONCLUDED THE SET-ASIDE WAS NOT APPROPRIATE. SEE FAR, 48 C.F.R. SEC. 19.501(G) (1984). THIS DETERMINATION WAS CONCURRED IN BY THE SMALL BUSINESS ADMINISTRATION PROCUREMENT CENTER REPRESENTATIVE AND THE ASSOCIATE DIRECTOR OF SMALL BUSINESS FOR DLA. ABSENT A SHOWING OF UNREASONABLENESS, BAD FAITH OR FRAUD, THERE IS NO BASIS TO OBJECT TO AN AGENCY'S DECISION TO WITHDRAW THE SET-ASIDE. JAMES S. SCROGGINS & CO., B-213363, APR. 17, 1984, 84-1 CPD PARA. 429. WE SEE NO BASIS FOR OBJECTION HERE.

FURTHERMORE, RAYGO WAS NOT PREJUDICED BY DLA'S DECISION, SINCE DLA HAS INFORMED US THAT AFTER THE SMALL BUSINESS SET-ASIDE WAS WITHDRAWN, RAYGO WAS AWARDED THE CONTRACT UNDER THE UNRESTRICTED IFB.

IFB NO. DLA700-84-B-4663

THE THIRD IFB MENTIONED IN MR. MCCLARAN'S LETTER WAS ISSUED BY DLA ON MAY 29, 1984. RAYGO WAS THE LOW BIDDER AND THE ONLY OTHER BIDDER WAS DETERMINED TO BE NONRESPONSIVE. THE IFB WAS SUBSEQUENTLY CANCELED BY DLA, OVER THE PROTEST OF RAYGO. IN REJECTING RAYGO'S PROTEST, DLA CITED THE EXISTENCE OF ERRORS IN THE IFB, NOT NOTED PRIOR TO BID OPENING. RAYGO DID NOT FILE A FORMAL PROTEST WITH OUR OFFICE REGARDING THIS MATTER. INSPECTION OF THE RECORD PROVIDED US REVEALS THAT THE IFB ITEM DESCRIPTION REQUIRES THAT THE ROLLERS BE GASOLINE ENGINE DRIVEN, WHILE THE IFB ORDERING DATA STATES "GASOLINE ENGINE NOT REQUIRED."

ORDINARILY, A CONTRACTING AGENCY MAY ONLY CANCEL A SOLICITATION AFTER BID OPENING FOR A COGENT AND COMPELLING REASON. FAR, 48 C.F.R. SEC. 14.404-1 (1984). A DETERMINATION THAT A SOLICITATION OVERSTATES THE AGENCY'S NEEDS AND THUS IS UNDULY RESTRICTIVE CONSTITUTES A COMPELLING REASON TO CANCEL UNLESS: (1) AN AWARD WOULD SERVE THE NEEDS OF THE GOVERNMENT, AND (2) SUCH AN AWARD WOULD NOT RESULT IN COMPETITIVE PREJUDICE. DOUG LENT, INC., B-209287.2, JUNE 21, 1983, 83-2 CPD PARA. 9. DLA CONTRACTING OFFICIALS CONCLUDED THAT OTHER SMALL BUSINESS MANUFACTURERS MAY NOT HAVE BID BECAUSE THEY INTERPRETED THE SOLICITATION TO REQUIRE A GASOLINE ENGINE, AND THAT THE COMPETITION THEREFORE WAS PREJUDICED.

WE BELIEVE THAT DLA'S DECISION WAS REASONABLE. IN THIS REGARD, WE NOTE THAT DLA RECEIVED ONLY TWO BIDS IN RESPONSE TO THE 17 INVITATIONS IT SENT OUT INITIALLY, BUT THAT UPON REVISION AND RESOLICITATION, DLA RECEIVED BIDS FROM FOUR ADDITIONAL FIRMS. ON THIS EVIDENCE, WE CANNOT FIND DLA LACKED A REASONABLE BASIS TO CONCLUDE THAT THE COMPETITION HAD BEEN PREJUDICED AND THAT THE IFB SHOULD BE CANCELED. SEE JACKSON MARINE COMPANIES, B-217882, ET AL., APR. 10, 1984, 84-1 CPD PARA. 402.

PER YOUR INSTRUCTIONS, WE ARE ENCLOSING YOUR ORIGINAL CORRESPONDENCE

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