B-165510, DEC. 16, 1968

B-165510, DEC. 16, 1968

TO GOSNELL, DURKIN AND CAPPELLO:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 28, 1968, AND THE TELEGRAM AND LETTER OF OCTOBER 23 AND NOVEMBER 12, 1968, RESPECTIVELY, FROM JAMES R. HARRIS, ESQUIRE, REGARDING THE PROTEST BY THE LOYD W. RICHARDSON CONSTRUCTION CORPORATION AGAINST ANY AWARD UNDER INVITATION FOR BIDS NO. DACW64-69-B-0026, ISSUED BY THE GALVESTON DISTRICT, UNITED STATES ARMY CORPS OF ENGINEERS.

THE INVITATION FOR BIDS, INVOLVING DREDGING OPERATIONS FOR A PORTION OF THE GULF INTRACOASTAL WATERWAY, WAS OPENED OCTOBER 23, 1968, IN THE GALVESTON DISTRICT OFFICE, CORPS OF ENGINEERS, AND ORIGINALLY WAS TOTALLY SET ASIDE FOR SMALL BUSINESS. HOWEVER, ON OCTOBER 9, 1968, THE CONTRACTING OFFICER ISSUED AN AMENDMENT TO THE INVITATION WITHDRAWING THE INVITATION FROM SMALL BUSINESS SET-ASIDE. THE CONTRACTING OFFICER GAVE AS HIS REASON FOR WITHDRAWING THE INVITATION FROM SMALL BUSINESS SET-ASIDE THAT HE HAD DETERMINED FROM THE FACTS AVAILABLE TO HIM THAT THERE WAS NO REASONABLE EXPECTATION THAT BIDS COULD BE OBTAINED FROM A SUFFICIENT NUMBER OF RESPONSIBLE SMALL BUSINESS CONCERNS. AT THE BID OPENING DATE, BIDS WERE RECEIVED FROM FOUR SMALL BUSINESS CONCERNS AND FOUR LARGE BUSINESS CONCERNS.

YOU SPECIFICALLY PROTEST THE CONTRACTING OFFICER'S DECISION TO WITHDRAW THE INVITATION FROM SMALL BUSINESS SET-ASIDE AS BEING IMPROPER. ADDITIONALLY, YOU PROTEST AWARD TO BAUER DREDGING COMPANY, INC., THE LOW LARGE BUSINESS BIDDER UNDER THE INVITATION, BECAUSE OF AN ALLEGED PREVIOUS HISTORY OF IMPROPER PRACTICES.

THE CONTRACTING OFFICER IN HIS FINDINGS OF FACT STATED, IN PERTINENT PART, AS FOLLOWS: "2. FOR A GOOD MANY YEARS, THERE HAVE BEEN FOUR SMALL BUSINESS DREDGERS CONTINUOUSLY OPERATING IN THE GALVESTON DISTRICT AND CONSISTENTLY BIDDING ON OUR DREDGING PROJECTS. THEY ARE - "GARRETT CONSTRUCTION COMPANY, CORPUS CHRISTI, TEXAS KING FISHER MARINE SERVICE, INC., PORT LAVACA, TEXAS LOYD W. RICHARDSON CONSTRUCTION COMPANY, ARANSAS PASS, TEXAS MIKE HOOKS, INC., LAKE CHARLES, LOUISIANA "INTERMITTENTLY, THERE HAVE BEEN OTHERS BUT AVAILABILITY OF ADEQUATE PLANT OF THE ABOVE NAMED FIRMS HAS BEEN THE PRIME CRITERION FOR DETERMINING SET ASIDE EXCEPT IN THE EARLY DAYS OF THE PROGRAM BEFORE BAUER DREDGING CO., INC., PORT LAVACA, TEXAS, BECAME LARGE BUSINESS. "3. AN ADVANCE NOTICE TO BIDDERS COVERING PROPOSED INVITATION NO. DACW64-69-B-0026 FOR DREDGING IN THE GULF INTRACOASTAL WATERWAY (HIGH ISLAND TO PORT HOLIVAR) AND CHANNEL TO PORT BOLIVAR (HIGHWAY FERRY SLIP) IN CHAMBERS AND GALVESTON COUNTIES, TEXAS, WAS ISSUED ON 24 SEPTEMBER. AS STATED THEREIN, THE PROJECT WAS A 100 PERCENT SET ASIDE FOR SMALL BUSINESS. INFORMATION AVAILABLE AT THE TIME INDICATED THAT AT LEAST THREE OF THE FOUR ABOVE NAMED FIRMS WERE IN A POSITION TO OFFER A BID THEREBY PROVIDING COMPETITION SUFFICIENT TO AWARD AT REASONABLE PRICES. THE FOURTH, GARRETT, WAS QUESTIONABLE. HIS TWO DREDGES WERE RUNNING BEHIND SCHEDULE ON TWO GOVERNMENT PROJECTS BUT CONCEIVABLY HE COULD HAVE A DREDGE AVAILABLE TO COMMENCE THE JOB ON TIME UNLESS HE OBTAINED PRIVATE WORK UNKNOWN TO US. ACCORDINGLY, AND CONSISTENT WITH PAST PRACTICE, I SET THE PROJECT ASIDE. IN FACT, THE AVERAGE AND MINIMUM PRODUCTION RATES SET FORTH IN THE SPECIFICATIONS WERE TAILORED TO ACCOMMODATE A WELL EQUIPPED STANDARD 12 INCH OR LARGER DREDGE OPERATION, THUS INSURING THE SUSCEPTIBILITY OF ACCOMPLISHMENT BY SMALL BUSINESS FIRMS. "4. DURING THE ADVERTISING PERIOD, A COMBINATION OF TWO OCCURRENCES DICTATED THE CHANGE FROM SET ASIDE TO NON-SET ASIDE.

"A. EACH MONTH A -REPORT ON STATUS OF DREDGES' IS REQUESTED OF APPROPRIATE FIRMS. (AS OF SEPTEMBER 30, 1968, THREE SMALL BUSINESS DREDGERS FILED REPORTS.) GARRETT FAILED TO FILE A REPORT. UNDER NORMAL CIRCUMSTANCES (APPROXIMATELY 15 DAYS FOR AWARD, CONTRACT EXECUTION AND NOTICE TO PROCEED, AND 30 DAYS TO COMMENCE WORK), WORK WOULD HAVE TO BE COMMENCED BY ABOUT 1 DECEMBER IN ORDER TO MEET THE MINIMUM, NOT AVERAGE, PRODUCTION REQUIREMENTS SET OUT IN THE SPECIFICATIONS. THIS MEANS NO DREDGE REPORTED AVAILABLE UNTIL MID DECEMBER. TOO, IT HAS BEEN OUR EXPERIENCE THAT THE AVAILABILITY DATES REPORTED ARE GENERALLY SOMEWHAT OPTIMISTIC. FURTHER, -AVAILABILITY DATE- MEANS EXPECTED COMPLETION OF THE JOB BEING PERFORMED NOT THE DATE THE DREDGE IS READY TO COMMENCE A NEW DREDGING OPERATION AT SOME OTHER, POSSIBLY DISTANT, LOCATION AS HERE. ACCORDING TO RICHARDSON'S OWN REPORT, HE HAD NO PLANT AVAILABLE WITH WHICH TO MEET THE FIRST MONTHS' MINIMUM PRODUCTION.

"B. FISHER'S REPORT AS OF 30 SEPTEMBER SHOWS AVAILABILITY OF THREE SUITABLE DREDGES. THE OTHER THREE, THE -MIGHTY MITE,- -TYRO JR.- AND LITTLE JESS,- ARE PORTABLE DREDGES AND ARE TOO SMALL FOR EFFICIENTLY PROSECUTING THIS WORK. IN FACT, WE HAVE NO RECORD OF THE -LITTLE JESS' EVER BEING USED ON ONE OF OUR PROJECTS. THE -SHAMROCK,- SHOWN AS AVAILABLE IN 45 DAYS, WAS BEHIND SCHEDULE ON OUR CONTRACT NO. 68 0111 AND NO DREDGING HAD YET STARTED ON OUR CONTRACT NO. 69-0025. ASSUMING THE - SHAMROCK- WOULD BE USED ON CONTRACT NO. 69-0025, IT WOULD NOT BE AVAILABLE IN TIME TO COMMENCE THE PROPOSED WORK. FISHER WAS LOW BIDDER ON A NON-SET ASIDE PROJECT FOR WHICH BIDS WERE OPENED IN THE GALVESTON DISTRICT ON 8 OCTOBER FOR DREDGING TRINITY RIVER AND TRIBUTARIES, ETC. THE AVERAGE PRODUCTION RATE FOR THIS PROJECT IS 400,000 CUBIC YARDS PER MONTH. HE HAS COMMITTED THE TWO DREDGES -TYRO AND -MIGHTY MITE- TO START THE WORK. ACCORDING TO PRODUCTION REQUIREMENTS, IT APPEARS THAT THE DREDGE -LEONARD FISHER- MUST BE PLACED ON THIS JOB TO KEEP IT ON SCHEDULE REGARDLESS OF WHAT REMAINING EQUIPMENT IS COMMITTED. THE -LEONARD FISHER- IS DREDGING IN THE LITTLE ROCK DISTRICT AT THE PRESENT TIME AND A CHECK WITH THAT DISTRICT INDICATES THAT THE DREDGE WILL BE AVAILABLE ON OR ABOUT 1 DECEMBER RATHER THAN 1 NOVEMBER AS PER FISHER'S INDICATED AVAILABILITY DATE. IN THE FINAL ANALYSIS, IT APPEARED THAT FISHER WAS UNABLE TO COMPETITIVELY BID THE PROJECT IN QUESTION. "5. WE RECEIVED A REQUEST FOR PLANS AND SPECIFICATIONS FROM A SMALL BUSINESS FIRM, C.F. BEAN, INC., OF HARVEY, LOUISIANA. WHILE AN ESTABLISHED DREDGING FIRM, THEY HAD NOT SUBMITTED A BID FOR GALVESTON DISTRICT WORK IN MANY YEARS. ON 9 OCTOBER, MR. BEAN WAS CONTACTED AND ASKED WHETHER OR NOT HE PLANNED TO SUBMIT A BID ON THE PROJECT IN QUESTION. MR. BEAN ADVISED THAT HE EXPECTED TO HAVE A DREDGE AVAILABLE ABOUT THAT TIME BUT WAS UNCERTAIN WHETHER OR NOT HE WOULD FOLLOW THROUGH WITH A BID ON OUR PROJECT. "6. EFFECTIVELY, WE NOW COULD COUNT ON A COMPETITIVE BID ONLY FROM HOOKS WITH THE OUTSIDE CHANCE OF GARRETT. THERE WAS NO LONGER A GOOD PROSPECT THAT BIDS WOULD BE OBTAINED FROM A SUFFICIENT NUMBER OF RESPONSIBLE SMALL BUSINESS CONCERNS SO THAT AWARD WOULD BE MADE AT REASONABLE PRICES. THUS, IN ACCORDANCE WITH ASPR 1 -706.3 (A), I CONSIDERED THAT THE PROCUREMENT THROUGH SET ASIDE WOULD BE DETRIMENTAL TO THE GOVERNMENT'S INTEREST AND I WITHDREW THE SET ASIDE BY GIVING WRITTEN NOTICE TO THE SMALL BUSINESS SPECIALIST WHO CONCURRED IN THE ACTION.'

IN THIS REGARD, PARAGRAPHS 1-706.5 AND 1-706.3, RESPECTIVELY, OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) PROVIDE IN PART AS FOLLOWS:

"/A) (1) * * * THE ENTIRE AMOUNT OF AN INDIVIDUAL PROCUREMENT OR A CLASS OF PROCUREMENTS, INCLUDING BUT NOT LIMITED TO CONTRACTS FOR MAINTENANCE, REPAIR, AND CONSTRUCTION, SHALL BE SET ASIDE FOR EXCLUSIVE SMALL BUSINESS PARTICIPATION (SEE 1-701.1) 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 CONCERNS SO THAT AWARDS WILL BE MADE AT REASONABLE PRICES. TOTAL SET-ASIDES SHALL NOT BE MADE UNLESS SUCH A REASONABLE EXPECTATION EXISTS. * * *

"/A) * * * IF, PRIOR TO AWARD OF A CONTRACT INVOLVING AN INDIVIDUAL OR CLASS SET-ASIDE, THE CONTRACTING OFFICER CONSIDERS THAT PROCUREMENT OF THE SET-ASIDE FROM A SMALL BUSINESS CONCERN WOULD BE DETRIMENTAL TO THE PUBLIC INTEREST (E.G., BECAUSE OF UNREASONABLE PRICE), HE MAY WITHDRAW A UNILATERAL OR JOINT SET-ASIDE DETERMINATION BY GIVING WRITTEN NOTICE TO THE SMALL BUSINESS SPECIALIST, * * *"

OUR OFFICE HAS HELD THAT THE DETERMINATION AS TO WHETHER SUCH A REASONABLE EXPECTATION EXISTS IS WITHIN SOUND ADMINISTRATIVE DISCRETION AND WE WILL NOT SUBSTITUTE OUR JUDGMENT FOR THAT OF THE CONTRACTING OFFICER IN THE ABSENCE OF A CLEAR SHOWING OF ABUSE OF THE DISCRETION PERMITTED HIM. 45 COMP. GEN. 228. SEE, ALSO, B-162440 DATED NOVEMBER 14, 1967. IN THE PRESENT CASE, THE FACTS WHICH WERE CONSIDERED BY THE CONTRACTING OFFICER APPEAR TO JUSTIFY HIS CONCLUSION THAT HE WOULD NOT RECEIVE A SUFFICIENT NUMBER OF BIDS FROM SMALL BUSINESS CONCERNS TO ASSURE A REASONABLE PRICE TO THE GOVERNMENT. MOREOVER, IT APPEARS THAT THE LOWEST BID RECEIVED IN THE AMOUNT OF $198,820 FROM BAUER WAS MORE THAN $54,000 LESS THAN THE LOWEST BID RECEIVED FROM A SMALL BUSINESS BIDDER (RICHARDSON). WE ALSO NOTE THAT RICHARDSON'S BID WAS ALMOST $30,000 IN EXCESS OF THE GOVERNMENT'S ESTIMATE FOR THE JOB.

WE THEREFORE CONCLUDE THAT THE RECORD SUPPORTS THE CONTRACTING OFFICER'S DETERMINATION TO CANCEL THE SET-ASIDE AND SOLICIT BIDS ON AN UNRESTRICTED BASIS.

WITH REGARD TO THE ALLEGATION OF PREVIOUS IMPROPER PRACTICE BY THE LOW BIDDER UNDER THE INVITATION, YOU ARE ADVISED THAT OUR OFFICE FINDS NOTHING IN THE RECORD BEFORE US WHICH WOULD SUBSTANTIATE YOUR ALLEGATION.

ACCORDINGLY, AND SINCE WE FIND NO LEGAL BASIS TO OBJECT TO AN AWARD UNDER THE INVITATION TO THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER, YOUR PROTEST IS DENIED.