B-166255, MAY 2, 1969

B-166255, MAY 2, 1969

TO BENDIX CORPORATION:

YOUR TELEGRAM OF FEBRUARY 21, 1969, PROTESTS THAT A PARTIAL SMALL BUSINESS SET-ASIDE UNDER NAVAL ELECTRONIC SYSTEMS COMMAND INVITATION FOR BIDS NO. N00039-69-B-2018 IS IMPROPER.

THE SUBJECT INVITATION REQUESTED BIDS ON 7,738 RADIACMETERS, DESCRIBED AS "QUARTZ-FIBRE, SELF-INDICATING, 1M-9) ( (PD" , AND PROVIDED FOR A 50- PERCENT SMALL BUSINESS SET-ASIDE. THE METERS CALLED FOR IN THE INVITATION ARE INCLUDED IN QUALIFIED PRODUCTS LIST 24037-3 DATED JUNE 5, 1967, WHICH LISTS THE LANDSVERK ELECTROMETER CO. AND THE VICTOREEN INSTRUMENT CO., IN ADDITION TO THE BENDIX CORPORATION AS QUALIFIED PRODUCERS.

ALTHOUGH FOUR BIDS WERE RECEIVED BY THE BID OPENING DATE OF FEBRUARY 25, 1969, TWO WERE REJECTED AS NONRESPONSIVE, LEAVING ONLY THE BENDIX BID IN THE AMOUNT OF $266,728.86 AND THE BID OF THE LANDSVERK ELECTROMETER CO. IN THE AMOUNT OF $119,706.86 FOR CONSIDERATION. NO AWARD HAS BEEN MADE TO DATE, ALTHOUGH AWARD IS CONTEMPLATED TO LANDSVERK ON BOTH THE SET-ASIDE AND NON-SET-ASIDE PORTIONS OF THE PROCUREMENT AS THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER.

YOU PROTEST AGAINST THE SET-ASIDE PORTION OF THE INVITATION ON FOUR GROUNDS. FIRST, YOU CONTEND THAT THE ONLY SMALL BUSINESS BIDDER LISTED ON THE QUALIFIED PRODUCTS LIST, LANDSVERK ELECTRONICS COMPANY, IS DOMINANT IN ITS FIELD OF OPERATIONS AND AS SUCH SHOULD NO LONGER BE CLASSIFIED AS A SMALL BUSINESS CONCERN. SECOND, YOU POINT TO TWO RECENT NAVY RADIACMETER PROCUREMENTS AND SEVERAL RECENT ARMY PROCUREMENTS WHICH DID NOT INCLUDE ANY SET-ASIDE QUANTITIES AND YOU CONTEND THAT THE INSTANT SET-ASIDE IS THEREFORE "ANOMALOUS.' THIRD, YOU MAINTAIN THAT A 50-PERCENT SMALL BUSINESS SET-ASIDE IN A SITUATION SUCH AS IS INVOLVED HERE WHERE THERE ARE ONLY THREE QUALIFIED PRODUCERS AND ONLY ONE SMALL BUSINESS PRODUCER PUTS THE LARGE BUSINESS PRODUCERS AT A "SERIOUS COMPETITIVE DISADVANTAGE" WHICH IS NOT IN THE GOVERNMENT'S BEST INTEREST. FINALLY, YOU SUGGEST CANCELLATION AND REISSUANCE OF THE INVITATION ON THE THEORY THAT ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-706 (A) (III) REQUIRES SUCH CANCELLATION AND REISSUANCE WHEN ONLY TWO BIDS, ONE FROM LARGE BUSINESS AND ONE FROM SMALL BUSINESS, ARE RECEIVED.

THE QUESTION OF WHETHER LANDSVERK IS DOMINANT IN ITS FIELD OF OPERATIONS WAS REFERRED BY THE NAVY TO THE SMALL BUSINESS ADMINISTRATION(SBA) FOR RESOLUTION IN ACCORDANCE WITH ASPR 1-703, WHICH REQUIRES SUBMISSION OF QUESTIONS RELATING TO SMALL BUSINESS STATUS TO THE APPROPRIATE SBA REGIONAL OFFICE. BY LETTER DATED APRIL 10, 1969, A COPY OF WHICH WAS DIRECTED TO YOUR ATTENTION, SBA DETERMINED THAT LANDSVERK IS NOT DOMINANT IN ITS FIELD OF OPERATIONS AND THEREFORE IS QUALIFIED AS A SMALL BUSINESS CONCERN. DETERMINATIONS BY THE SBA WITH REGARD TO SMALL BUSINESS STATUS ARE FINAL UNDER 15 U.S.C. 637 (B) (6) AND ARE THEREFORE NOT SUBJECT TO QUESTION BY OUR OFFICE. SEE 44 COMP. GEN. 271.

CONCERNING THE TWO RECENT NAVY RADIACMETER PROCUREMENTS WHICH WERE CONDUCTED ON AN UNRESTRICTED BASIS, THE REPORT FROM THE DEPARTMENT OF THE NAVY ADVISES THAT THE FIRST INVITATION CITED BY YOU, IFB N00039-68 B-3020, DID NOT CONTAIN A SET-ASIDE QUANTITY BECAUSE A PRESOLICITATION REVIEW CONDUCTED BY THE ELECTRONIC SYSTEMS COMMAND SMALL BUSINESS SPECIALIST REVEALED THAT THAT PARTICULAR PROCUREMENT WAS NOT SEVERABLE INTO TWO OR MORE PRODUCTION RUNS, ONE OF THE PREREQUISITES FOR PARTIAL SET-ASIDES PROVIDED IN ASPR 1-706.6. NO SET-ASIDE WAS INCLUDED IN THE SECOND INVITATION CITED IN YOUR TELEGRAM, IFB N00039-68-B-2057, EVEN THOUGH A PARTIAL SET-ASIDE HAD ORIGINALLY BEEN RECOMMENDED, BECAUSE IT WAS DETERMINED THAT THERE WERE ONLY TWO QUALIFIED PRODUCERS ON THE APPROPRIATE QUALIFIED PRODUCTS LIST. SINCE NEITHER OF THE DISABILITIES PRESENT IN THE TWO PRIOR PROCUREMENTS WAS PRESENT IN THE INSTANT PROCUREMENT, IT WAS ADVERTISED ON A 50-PERCENT SMALL BUSINESS SET ASIDE BASIS.

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. SINCE SUCH ADMINISTRATIVE DETERMINATIONS ARE NECESSARILY CONDUCTED ON A CASE-BY CASE BASIS WITH DIFFERING FACTUAL SITUATIONS REQUIRING DIFFERENT RESULTS, WE CANNOT AGREE THAT ANY ANOMALY IS PRESENT IN THE CONTRACTING OFFICER'S ACTIONS IN THE PRESENT CASE.

WHILE NO COMMENT IS MADE IN THE NAVY REPORT TO US CONCERNING THE ARMY PROCUREMENTS MENTIONED BY YOU, THE IMPORTANT FACTOR FOR CONSIDERATION, IN OUR OPINION, IS WHETHER THE PARTIAL SET-ASIDE DETERMINATION IN THE INSTANT CASE WAS WARRANTED UNDER THE CIRCUMSTANCES, A DETERMINATION WHICH CANNOT BE INFLUENCED BY THE ACTIONS OF OTHER GOVERNMENT AGENCIES ON OTHER PROCUREMENTS WHICH MAY OR MAY NOT BE SIMILAR TO THE ONE AT HAND.

WITH REGARD TO THE THIRD ELEMENT OF YOUR PROTEST, I.E., THAT A 50 PERCENT SET-ASIDE IS INAPPROPRIATE WHERE ONLY THREE BIDS, TWO SMALL BUSINESS AND ONE LARGE, ARE ANTICIPATED, ASPR 1-706.6, WHICH DEALS WITH PARTIAL SET- ASIDES, PROVIDES THAT NO PARTIAL SET-ASIDE SHALL BE MADE ,IF THERE IS A REASONABLE EXPECTATION THAT ONLY TWO CONCERNS (ONE LARGE AND ONE SMALL) * * * WILL RESPOND," BUT OTHERWISE REQUIRES THAT A SMALL BUSINESS SET-ASIDE SHALL BE MADE WHENEVER BIDS ON A SEVERABLE PROCUREMENT ARE ANTICIPATED FROM ONE OR MORE SMALL BUSINESS CONCERNS. SINCE AT LEAST THREE BIDS COULD REASONABLY BE EXPECTED IN THE INSTANT CASE, WE CANNOT CONCLUDE THAT THE SET-ASIDE WAS IMPROPER.

SIMILARLY, SINCE THE ABOVE-QUOTED ASPR SECTION REQUIRES ONLY "A REASONABLE EXPECTATION" OF MORE THAN TWO BIDS, WE FAIL TO SEE ANY BASIS FOR CANCELLATION OF THE INVITATION, AS SUGGESTED BY YOU. NOT ONLY WERE MORE THAN TWO BIDS ANTICIPATED, MORE THAN TWO BIDS WERE ACTUALLY RECEIVED. THE FACT THAT TWO OF THE FOUR BIDS SUBMITTED WERE ULTIMATELY DETERMINED TO BE NONRESPONSIVE HAS NO BEARING ON THE CONTRACTING OFFICER'S REASONABLE EXPECTATION OF MORE THAN TWO BIDS AT THE TIME THE INVITATION WAS ISSUED.

ON THE BASIS OF THE PRESENT RECORD, WE MUST CONCLUDE THAT THE ACTION OF THE CONTRACTING OFFICER IN SETTING ASIDE A PORTION OF THIS PROCUREMENT FOR SMALL BUSINESS PARTICIPATION WAS A PROPER EXERCISE OF THE DISCRETION RESERVED TO HIM.