B-171391, JUN 29, 1971

B-171391, JUN 29, 1971

BID PROTEST - SUBCONTRACT OR IN-HOUSE PERFORMANCE DECISION DENYING PROTEST AGAINST THE FAILURE OF THE BOEING COMPANY TO AFFORD PROTESTANT AN OPPORTUNITY TO COMPETE FOR A SUBCONTRACT FOR FIRE PROTECTION SERVICES AT KENNEDY SPACE CENTER. IN THE INSTANT CASE, THE FIRE PROTECTION SERVICES WERE NOT COVERED BY THE SET-ASIDE DETERMINATIONS AND WHILE NASA PR 1.707-2 CONTEMPLATES THE USE OF SMALL BUSINESS CONCERNS ON SUBCONTRACTS, THERE IS NO REQUIREMENT THAT A PRIME CONTRACTOR WHO IS CAPABLE OF PERFORMING CERTAIN FUNCTIONS WITHIN HIS OWN ORGANIZATION EMPLOY A SUBCONTRACTOR FOR SUCH PURPOSES.

TO HULLIN, ROBERTS, MINES, FITE & RIVELAND:

WE REFER TO YOUR PROTEST BY LETTER DATED APRIL 28, 1971, ON BEHALF OF WEST COAST FIRE SERVICE, INC. (WEST COAST), AGAINST THE FAILURE OF THE BOEING COMPANY (BOEING) TO AFFORD WEST COAST AN OPPORTUNITY TO COMPETE FOR A SUBCONTRACT FOR PERFORMANCE OF FIRE PROTECTION SERVICES AT KENNEDY SPACE CENTER (KSC). THE SERVICES IN QUESTION ARE INCLUDED WITH OTHER SERVICES TO BE PERFORMED UNDER A SUPPORT SERVICE PRIME CONTRACT, NAS 10-7444, WHICH WAS AWARDED TO BOEING ON MARCH 11, 1971, BY THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION (NASA).

YOU STATE THAT PRIOR TO THE AWARD OF THE PRIME CONTRACT WEST COAST CONSULTED WITH BOEING AND OTHER COMPETITORS FOR THE PRIME CONTRACT REGARDING PERFORMANCE UNDER SUBCONTRACT OF THE FIRE PROTECTION SERVICES AT KSC; THAT WEST COAST SUBMITTED A PROPOSAL TO BOEING AND HAD REASON TO BELIEVE THAT THE PROPOSAL WOULD BE SERIOUSLY CONSIDERED BY BOEING; AND THAT BOEING ELECTED TO PERFORM THE FIRE PROTECTION SERVICES IN HOUSE THEREBY DEPRIVING WEST COAST OF AN OPPORTUNITY TO COMPETE FOR A SUBCONTRACT.

WITH YOUR PROTEST YOU ENCLOSED A COPY OF A LETTER OF APRIL 5, 1971, ADDRESSED TO YOU BY NASA IN RESPONSE TO A PREVIOUS PROTEST, WHICH INCLUDES THE FOLLOWING PERTINENT STATEMENTS:

"PRIOR TO APRIL 1970, KEY MEMBERS OF KSC AND THE SMALL BUSINESS ADMINISTRATION ANALYZED IN DETAIL THIRTEEN FUNCTIONS UNDER THE EXISTING TWA BASE SUPPORT CONTRACT, FOR POSSIBLE BREAKOUT FOR SET ASIDE PROCUREMENT ACTION. AS A RESULT OF THIS ANALYSIS, IT WAS DETERMINED THAT THE FOLLOWING THREE FUNCTIONS WOULD BE APPROPRIATE AS SET-ASIDES:

"MICROFILMING AND PRINTING SERVICES

LIBRARY SERVICES*

MAIL AND DISTRIBUTION

"*FURTHER RESTRICTED TO MINORITY BUSINESS (SECTION 8 (A) OF THE SMALL BUSINESS ACT)

"THAT DETERMINATION WAS BASED ON THE BEST JUDGMENT OF THE GOVERNMENT PERSONNEL INVOLVED, AND REFLECTED BOTH ECONOMIC CONSIDERATIONS, AND THE CRITICAL NATURE OF EACH FUNCTION AS IT RELATES TO THE ACCOMPLISHMENT OF THE CENTER'S OVERALL MISSION.

"FURTHER, IN REGARD TO THE BIDDER'S UTILIZATION OF SMALL BUSINESS CONCERNS IN SUBCONTRACTING, YOU REFERENCE THE RFP GENERAL PROVISIONS, CLAUSE 9, WHICH READS IN PART AS FOLLOWS:

'(B) THE CONTRACTOR AGREES TO ACCOMPLISH THE MAXIMUM AMOUNT OF SUBCONTRACTING TO SMALL BUSINESS CONCERNS THAT THE CONTRACTOR FINDS TO BE CONSISTENT WITH THE EFFICIENT PERFORMANCE OF THIS CONTRACT',

AND ALLEGE THAT THIS POLICY WAS NOT FOLLOWED.

"IN THIS REGARD, I WOULD LIKE TO REAFFIRM THE VIEW I EXPRESSED IN MY EARLIER CORRESPONDENCE (OCTOBER 2, 1970) WITH YOUR CLIENT, THAT NASA DOES SUPPORT A POLICY OF MAXIMIZING SMALL BUSINESS AND MINORITY BUSINESS SUBCONTRACTING UNDER NASA SUPPORT SERVICES CONTRACTS, WHEN SMALL BUSINESS PRIME CONTRACTING IS NOT FEASIBLE. HOWEVER, EXCEPT UNDER THE MOST CRITICAL CIRCUMSTANCES, NASA DOES NOT ATTEMPT TO INFLUENCE A PRIME CONTRACTOR IN MAKING ITS SELECTION OF PARTICULAR SUBCONTRACTORS; NOR DOES IT ATTEMPT TO INFLUENCE A PRIME CONTRACTOR CONCERNING HIS DETERMINATION AS TO WHETHER A PARTICULAR FUNCTION SHOULD BE PERFORMED IN-HOUSE OR BY A SUBCONTRACTOR, UNLESS A 'MAKE-OR-BUY' PLAN IS INVOLVED. THE REASON FOR THIS, OF COURSE, IS THE FACT THAT THE PRIME CONTRACTOR IS RESPONSIBLE TO THE GOVERNMENT FOR THE SUCCESSFUL ACCOMPLISHMENT OF HIS CONTRACTUAL OBLIGATIONS, AND, THEREFORE, MUST BE PERMITTED TO RETAIN THE PREROGATIVE TO SELECT THE SUBCONTRACTORS, IF ANY, WHICH WILL ALLOW HIM TO PERFORM THE CONTRACT IN A SUCCESSFUL AND EFFICIENT MANNER. IN THIS REGARD, I AM ADVISED THAT THE BOEING COMPANY HAS EMPLOYED AT LEAST ONE SMALL BUSINESS SUBCONTRACTOR TO ASSIST IN THE PERFORMANCE OF THE KSC INSTALLATION SUPPORT SERVICES CONTRACT.

"IN REVIEWING THE ACTIONS TAKEN BY THE KSC OFFICIALS IN THIS PROCUREMENT, I AM CONVINCED THAT APPROPRIATE STEPS WERE TAKEN TO INSURE THAT THE SMALL BUSINESS AND MINORITY BUSINESS POLICIES WERE FULLY CONSIDERED IN LIGHT OF THE AGENCY'S REQUIREMENTS. THIS IS WELL ILLUSTRATED BY THE SUBSEQUENT AWARD OF THE THREE FUNCTIONS SELECTED AS SET-ASIDES TO SMALL BUSINESS, INCLUDING A MINORITY BUSINESS SET-ASIDE, AS WELL AS THE SMALL BUSINESS SUBCONTRACT AWARDED BY THE BOEING COMPANY UNDER THEIR CONTRACT."

YOU QUESTION WHETHER THE BOEING POLICY OF PERFORMING THE FIRE PROTECTION SERVICES IN HOUSE IS IN COMPLIANCE WITH CLAUSE 9 OF THE RFP GENERAL PROVISIONS. FURTHER, YOU MAINTAIN THAT SET ASIDE OF THE FIRE PROTECTION SERVICES FUNCTION FOR AWARD TO SMALL BUSINESS, ALTHOUGH NOT MANDATORY, SHOULD NEVERTHELESS BE EFFECTED IN THIS INSTANCE IN KEEPING "WITH THE PRESIDENT'S EXECUTIVE ORDERS, THE FEDERAL LAWS AND THE ADMINISTRATIVE RULES AND REGULATIONS, ALL OF WHICH REQUIRE THAT WITHIN THE LIMITS OF GOOD BUSINESS PRACTICE A PRIME CONTRACTOR SHOULD UTILIZE THE SERVICES OF SMALL BUSINESS CONTRACTORS WHO ARE READY, WILLING AND PROVEN IN THEIR ABILITY TO ACCOMPLISH THE JOB THAT IS SOUGHT."

THE SET ASIDE OF GOVERNMENT PROCUREMENTS, EITHER TOTALLY OR PARTIALLY, FOR AWARD TO SMALL BUSINESS CONCERNS IS GOVERNED BY THE PROCUREMENT REGULATIONS APPLICABLE TO THE CONTRACTING AGENCIES INVOLVED. 13 CFR 127.15-2. NASA PROCUREMENT REGULATION (PR) 1.706-1 AUTHORIZES A SMALL BUSINESS SET-ASIDE WHEN SUCH ACTION IS DETERMINED TO BE IN THE INTEREST OF MAINTAINING OR MOBILIZING THE NATION'S FULL PRODUCTIVE CAPACITY, OR ASSURING THAT A FAIR PROPORTION OF GOVERNMENT PROCUREMENT IS PLACED WITH SMALL BUSINESS CONCERNS. THE DETERMINATION MAY BE UNILATERAL (I.E., BY THE CONTRACTING OFFICER UPON INITIATION OF THE SMALL BUSINESS SPECIALIST OR UPON HIS OWN INITIATION), OR JOINT (I.E., MADE JOINTLY BY A SMALL BUSINESS ADMINISTRATION (SBA) REPRESENTATIVE AND THE CONTRACTING OFFICER). FINAL DETERMINATION WHETHER A SET-ASIDE SHOULD BE MADE RESTS WITH THE SECRETARY OR HEAD OF THE PROCURING DEPARTMENT OR AGENCY IN CASE OF DISAGREEMENT BETWEEN SBA AND THE PROCURING ACTIVITY. 13 CFR 127.15- 2(A)(2).

IN THIS CASE, ALTHOUGH NASA ELECTED TO SET ASIDE CERTAIN OF THE SUPPORT SERVICES AT KSC FOR AWARD TO SMALL BUSINESS CONCERNS, THE FIRE PROTECTION SERVICES WERE NOT COVERED BY THE SET-ASIDE DETERMINATIONS. IN THE CIRCUMSTANCES, THE FIRE PROTECTION SERVICES WERE PROPERLY INCLUDED IN THE PRIME SUPPORT SERVICES CONTRACT AWARDED TO BOEING.

AS TO THE USE OF SUBCONTRACTORS BY BOEING, NASA PR 1.707-2 CONTEMPLATES THAT PRIME CONTRACTORS SHALL AFFORD SUBCONTRACTING OPPORTUNITIES TO SMALL BUSINESS CONCERNS. THERE IS NO REQUIREMENT, HOWEVER, IN EITHER NASA PR OR THE SBA REGULATIONS THAT A PRIME CONTRACTOR WHO IS CAPABLE OF PERFORMING CERTAIN FUNCTIONS WITHIN HIS OWN ORGANIZATION EMPLOY A SUBCONTRACTOR FOR SUCH PURPOSE, NOR ARE WE AWARE OF ANY SUCH REQUIREMENT BY STATUTES OR BY EXECUTIVE ORDER.

INASMUCH AS BOEING ELECTED TO PERFORM THE FIRE PROTECTION SERVICES WITH ITS OWN EMPLOYEES AND AS ITS PROPOSAL ON SUCH BASIS WAS ACCEPTED BY NASA, WE SEE NO LEGAL BASIS ON WHICH BOEING MAY BE REQUIRED TO SUBCONTRACT FOR THE FIRE PROTECTION SERVICES. YOUR PROTEST IS THEREFORE DENIED.