B-168420 (1), FEB. 13, 1970

B-168420 (1), FEB. 13, 1970

BID PROTEST--BID BOND REQUIREMENT DECISION DENYING PROTEST OF HALIFAX ENGINEERING, INC. AGAINST REJECTION OF BID BY SACRAMENTO AIR MATERIEL AREA, MCCLELLAN AIR FORCE BASE UNDER SMALL BUSINESS SET-ASIDE PROCUREMENT. A BIDDER WHO FAILED TO FURNISH A REQUIRED BID BOND HAS SUBMITTED A NONRESPONSIVE BID. TO PERMIT THE FURNISHING OF A BID BOND AFTER OPENING WOULD COMPROMISE THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM. IN VIEW OF URGENCY OF PROCUREMENT A BIDDER'S REQUEST TWO DAYS BEFORE OPENING THAT OPENING TIME BE EXTENDED TO ENABLE BIDDER TO GET BOND WAS PROPERLY DENIED.

TO TECHNER, RUBIN, SHAPIRO, SILVERSTEIN & REMICK:

REFERENCE IS MADE TO THE TELEGRAM OF NOVEMBER 19, 1969, AND THE LETTERS, WITH ENCLOSURES, OF NOVEMBER 24, 1969 AND DECEMBER 11, 1969, ON BEHALF OF UNITEC INDUSTRIES, INCORPORATED (UNITEC), AGAINST THE AWARD OF A CONTRACT UNDER ADVERTISED SOLICITATION NO. F04606-70-B-0040, ISSUED BY THE SACRAMENTO AIR MATERIEL AREA, DIRECTORATE OF PROCUREMENT AND PRODUCTION, MCCLELLAN AIR FORCE BASE, CALIFORNIA, AS AN EXCLUSIVE SMALL BUSINESS SET- ASIDE.

THE PROCUREMENT IS FOR:

"* * * DEPOT LEVEL MAINTENANCE (DLM) AND REPAIR SERVICES INCLUDING EMERGENCY TECHNICAL ASSISTANCE OF GOVERNMENT OWNED RADOMES UTILIZED WITH GROUND COMMUNICATIONS-ELECTRONICS METEOROLOGICAL (CEM) EQUIPMENT LOCATED AT SITES AND INSTALLATIONS WORLD-WIDE, EXCEPT IN CANADA PERFORMANCE IS LIMITED TO AIR STATIONS SAGLEK, MELVILLE, AND STEPHENVILLE IN NORTHEAST CANADA IN ACCORDANCE WITH APPENDIX 'A' (FILE NO. SMNLP-5800-3-70-1) AND APPENDIX 'B' (FILE NO. SMNL/5800/70/5) DATED 69 AUG 1 AND T.O. 31-1-69 DATED 67 MAY 12 AND INCORPORATED BY REFERENCE * * *"

BIDS, WHICH WERE OPENED ON NOVEMBER 14, 1969, WERE RECEIVED FROM THREE SMALL BUSINESS CONCERNS AS FOLLOWS:

1. CENTURY, INCORPORATED - $ 433,000

2. HALIFAX ENGINEERING,

INCORPORATED - $410,000

3. ELECTRONIC SPACE SYSTEMS

CORPORATION (ESSCO) - $1,434,513

WE HAVE BEEN ADVISED BY THE AIR FORCE THAT PRIOR DLM SERVICE CONTRACTS HAVE BEEN TOTAL SMALL BUSINESS SET-ASIDES. ATTACHMENT NO. 1, PREPARED BY UNITEC INDUSTRIES AND FORWARDED WITH THE LETTER OF NOVEMBER 24, 1969, INDICATES THAT AT LEAST FOUR SMALL BUSINESS CONCERNS INCLUDING UNITEC BID ON PRIOR PROCUREMENTS FOR THIS TYPE OF SERVICE. ATTACHMENT NO. 1 ALSO INDICATES THAT ESSCO WAS A MORE COMPETITIVE BIDDER ON THE PRIOR PROCUREMENTS. IN 1968, UNITEC APPARENTLY HAD OUTGROWN ITS SMALL BUSINESS STATUS AND, THEREFORE, BECAME INELIGIBLE TO BID ON SMALL BUSINESS SET- ASIDES. AWARD WAS MADE TO CENTURY SUBSEQUENT TO THE RECEIPT OF UNITEC'S PROTEST SINCE THE SERVICES WERE URGENTLY REQUIRED. IT HAS BEEN DETERMINED BY THE AIR FORCE THAT THE PRICES IN CENTURY'S BID ARE REASONABLE.

THE BASIS FOR THE PROTEST IS THAT A SET-ASIDE IN THIS PROCUREMENT DOES NOT COMPLY WITH ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1 706.5 (A) (1) WHICH PROVIDES THAT THE ENTIRE AMOUNT OF A PROCUREMENT SHALL BE SET ASIDE FOR EXCLUSIVE SMALL BUSINESS PARTICIPATION IF THE CONTRACTING OFFICER DETERMINES THAT THERE IS REASONABLE EXPECTATION THAT BIDS OR PROPOSALS WILL BE OBTAINED FROM A SUFFICIENT NUMBER OF RESPONSIBLE SMALL BUSINESS FIRMS SO THAT AWARDS WILL BE MADE AT REASONABLE PRICES. IT IS URGED THAT SINCE HALIFAX'S BID WAS DETERMINED TO BE NONRESPONSIVE FOR FAILING TO FURNISH A REQUIRED BID BOND AND SINCE ESSCO'S BID WAS SUBSTANTIALLY HIGHER THAN THE OTHER TWO BIDS, THE NET EFFECT WAS THAT CENTURY'S BID WAS THE ONLY COMPETITIVE BID RECEIVED.

THE LETTER OF DECEMBER 11, 1969, HAS CITED OUR DECISION, B-167789, NOVEMBER 26, 1969, TO RAVEN ELECTRONICS, INCORPORATED, IN SUPPORT OF THE PROPOSITION THAT THE INSTANT SOLICITATION SHOULD BE CANCELLED AND THE PROCUREMENT READVERTISED WITHOUT THE SMALL BUSINESS SET-ASIDE. IT IS ALSO URGED IN THE LETTER OF DECEMBER 11 THAT "* * * THE TERM 'SUFFICIENT NUMBER OF SMALL BUSINESS CONCERNS' AS USED IN ASPR (ARMED SERVICES PROCUREMENT REGULATION) 1-706.5 MUST OF NECESSITY BE INTERPRETED TO MEAN MORE THAN THREE BIDDERS IN ORDER TO SATISFY THE INTENT OF SUCH A CLAUSE."

OUR DECISION, B-167789, NOVEMBER 26, 1969, CONCERNED A SITUATION IN WHICH TWO BIDS WERE RECEIVED IN RESPONSE TO A TOTAL SMALL BUSINESS SET ASIDE. BECAUSE OF THE URGENCY OF THAT PROCUREMENT IT WAS DETERMINED THAT WAIVER OF FIRST ARTICLE APPROVAL WAS NECESSARY; THEREFORE, ONLY PRIOR PRODUCERS OF THE ITEM WERE QUALIFIED TO BID. THE ONLY PRIOR PRODUCERS WERE THE TWO CONCERNS WHICH SUBMITTED BIDS. THE SECOND LOW BID WAS NOT CONSIDERED TO BE REASONABLE. THE LOW BIDDER HAD CERTIFIED THAT IT WAS A SMALL BUSINESS CONCERN AND A SMALL BUSINESS ADMINISTRATION (SBA) REGIONAL OFFICE HAD ALSO DETERMINED THAT THE LOW BIDDER WAS A SMALL BUSINESS CONCERN. IN VIEW OF THE LOW BIDDER'S SELF CERTIFICATION, THE SBA REGIONAL OFFICE'S DETERMINATION AND THE URGENCY, THE CONTRACTING OFFICER PROMPTLY AWARDED A CONTRACT TO THE LOW BIDDER. IN THE MEANTIME, THE OTHER BIDDER HAD APPEALED THE SBA REGIONAL OFFICE'S SIZE DETERMINATION TO THE SBA SIZE APPEALS BOARD. AFTER THE AWARD HAD BEEN MADE TO THE LOW BIDDER, THE BOARD HELD THAT THE LOW BIDDER DID NOT QUALIFY AS A SMALL BUSINESS CONCERN AS OF MAY 1, 1969, WHICH WAS PRIOR TO AWARD.

IN THE CIRCUMSTANCES WE CONCLUDED THAT THE AWARD SHOULD NOT BE DISTURBED SINCE COMPETITION HAD BEEN OBTAINED TO THE MAXIMUM PRACTICABLE EXTENT AND RESOLICITATION OF OFFERS WITHOUT THE SMALL BUSINESS SET-ASIDE WOULD THEREFORE NOT SERVE ANY USEFUL PURPOSE. WE ALSO STATED THAT IF THE ACTUAL SIZE STATUS OF THE LOW BIDDER HAD BECOME KNOWN IN TIME, AWARD TO THE ONLY SMALL BUSINESS BIDDER WOULD NOT HAVE BEEN IN COMPLIANCE WITH ASPR 1-706.5 AND RESOLICITATION ON AN UNRESTRICTED BASIS WOULD HAVE BEEN PROPER.

IT IS URGED THAT THE RATIONALE IS APPLICABLE HERE. WE THINK THE RULE OF THE HYPOTHETICAL SITUATION APPLIES ONLY WHERE THE SET-ASIDE LIMITS MEANINGFUL COMPETITION TO ONE SMALL BUSINESS WHOSE BID IS CONSIDERED UNREASONABLE. IN THE PRESENT CASE THREE SMALL BUSINESS CONCERNS SUBMITTED BIDS AND THE LOW PRICE WAS CONSIDERED REASONABLE.

IN B-166255, MAY 2, 1969, WE STATED:

"THE DETERMINATION TO SET ASIDE A PART OF A PROCUREMENT EXCLUSIVELY FOR SMALL BUSINESS PARTICIPATION IS A DISCRETIONARY ACT ON THE PART OF THE CONTRACTING OFFICER NOT SUBJECT TO QUESTION BY OUR OFFICE UNLESS DETERMINED TO BE ARBITRARY, CAPRICIOUS, OR MADE IN BAD FAITH. SEE B 159483, DECEMBER 1, 1966; B-164555, SEPTEMBER 10, 1968."

IT CANNOT BE ASSUMED THAT THE PROCURING ACTIVITY KNEW AT THE TIME OF THE SET-ASIDE DETERMINATION THAT ONE BID WOULD BE NONRESPONSIVE AND THAT ANOTHER BID WOULD BE MUCH HIGHER THAN THE ONLY OTHER RESPONSIVE BID RECEIVED. IN VIEW OF THE CIRCUMSTANCES ALREADY DESCRIBED, WE CANNOT FIND THAT THE PROCURING ACTIVITY ABUSED ITS DISCRETION IN MAKING EITHER THE SET -ASIDE DETERMINATION OR THE AWARD. CF. B-168184, JANUARY 21, 1970.

PURSUANT TO OUR REVIEW WE HAVE FOUND NO BASIS TO QUESTION AIR FORCE'S DETERMINATIONS THAT THE SUBJECT OF THIS PROCUREMENT WAS URGENTLY REQUIRED AND THAT CENTURY'S PRICES WERE REASONABLE.

WE FIND NO BASIS FOR THE CONTENTION IN THE LETTER OF DECEMBER 11, 1969, THAT ASPR 1-706.5 REQUIRES BIDS FROM AT LEAST THREE SOURCES. ON THIS POINT WE STATED IN B-159483, FEBRUARY 17, 1967:

"YOU ARE ADVISED THAT SECTION 1-706.5 OF THE ARMED SERVICES PROCUREMENT REGULATION DOES NOT ESTABLISH ANY SPECIFIC MINIMUM NUMBER OF BIDS WHICH MUST BE EXPECTED BEFORE A PROCUREMENT CAN BE SET ASIDE IN FAVOR OF SMALL BUSINESS CONCERNS. THIS SECTION OF ASPR PROVIDES THAT THE ENTIRE AMOUNT OF AN INDIVIDUAL PROCUREMENT SHALL BE SET ASIDE EXCLUSIVELY FOR SMALL BUSINESS CONCERNS IF THE CONTRACTING OFFICER DETERMINES THAT THERE IS A REASONABLE EXPECTATION THAT BIDS OR PROPOSALS WILL BE OBTAINED FROM A SUFFICIENT NUMBER OF RESPONSIBLE SMALL BUSINESS CONCERNS SO THAT AWARDS WILL BE MADE AT REASONABLE PRICES. THIS DETERMINATION IS BASED PRIMARILY ON THE JUDGMENT OF THE CONTRACTING OFFICER. * * *" ..END :