B-244605, Jul 10, 1991, 91-2 CPD ***

B-244605, Jul 10, 1991, 91-2 CPD ***

PROCUREMENT - Socio-Economic Policies - Small business 8(a) subcontracting - Use - Administrative discretion DIGEST: General Accounting Office will not review an agency's actions under the Section 8(a) program absent a showing that agency officials have violated regulations or engaged in fraud or bad faith.

Attorneys

LNM Corporation:

LNM Corporation protests the terms of invitation for bid (IFB) No. 62477- 91-B-2598, issued by the Department of the Navy for grounds maintenance at the Naval Surface Warfare Center, Dahlgren, Virginia. LNM objects to the Small Business Administration's (SBA) decision not to award a contract for this requirement under Section 8(a) of the Small Business Act, 15 U.S.C. Sec. 637(a) (1987).

We dismiss the protest.

On February 8, 1991, the Navy issued IFB No. N62477-91-B-2504 as a small business set-aside for ground maintenance services, with an amended bid opening date of March 21. Prior to bid opening, the Navy, on March 20, canceled the solicitation in its entirety in order to satisfy the requirement through a Section 8(a) award to LNM. Section 8(a) of the Small Business Act authorizes the 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 small business concerns.

The SBA declined to accept the solicitation for the 8(a) program because it believed it was unfair to cancel the solicitation because a significant number of small businesses had spent time and money preparing and submitting bids. /1/ The Navy then issued IFB No. N62477-91-B-2598 as an SBA set-aside. On June 7, LNM filed an agency level protest with the contracting officer asking that bid opening be postponed indefinitely, or until the SBA either rescinded or affirmed its decision. LNM argued that the SBA officer had based his initial decision on the erroneous fact that the IFB had been canceled after bid opening when actually it was canceled prior to bid opening. On June 25, LNM was notified that a Section 8(a) award would not be made and LNM in turn filed a protest with our Office on June 26, before the bid opening which was scheduled for that same date.

LNM contends in its protest that the Navy acted in bad faith and violated applicable federal laws and regulations in failing to award a contract pursuant to the Section 8(a) program.

Because of the broad discretion afforded the SBA and the contracting agencies under the applicable statute and regulation, our review of actions under the Section 8(a) program generally is limited to determining whether government officials have violated regulations or engaged in fraud or bad faith. See 4 C.F.R. Sec. 21.3(m)(4) (1991); Lecher Constr. Co.-- Recon., B-237964.2, Jan. 29, 1990, 90-1 CPD Para. 127. The protester has not shown the reasonable likelihood of either a violation of regulations or fraud or bad faith by government officials.

Considering the SBA's broad discretion under the 8(a) program, the SBA's decision that it was unfair at that particular stage of the procurement to change the procurement from a small business set-aside to an 8(a) award is not objectionable. The fact that the decision may have been based on a misunderstanding of the facts does not constitute bad faith or fraud.

We dismiss LNM's protest.

/1/ The IFB was actually canceled 1 day prior to the bid opening date.