In its initial protest, Six3 argued that a small business meeting the specified size standard of $7 million could not possibly have the personnel required to meet the solicitation's requirements; it was unlikely that a small business would be capable of successfully deploying qualified personnel immediately after award due to high demand for individuals with the required skill sets; small businesses were unlikely to have the infrastructure necessary to recruit, train, and manage the necessary personnel; and small businesses were not financially capable of performing. The protester further argued that the sources sought notice failed to elicit information that INSCOM needed to assess the capability of small businesses to perform, and that the small businesses might be intending to rely on large business partners to an improper extent.

The agency responded to these arguments in its report, maintaining that both [deleted] and [deleted] were rapidly growing companies that had demonstrated the capability to take on larger workloads; the protester had failed to furnish any support for its claim that small businesses were unlikely to be able to deploy qualified personnel (and to the extent that there was any validity to the protester's argument regarding high demand for personnel with biometrics-related qualifications, it would apply equally to large businesses); the protester had presented no evidence that small businesses lack the infrastructure to recruit, train, and manage employees and subcontractors, and the protester's own experience demonstrated that it was possible for a small business to gear up for a substantially increased workload quickly; and the protester's argument that small businesses lacked the financial resources for performance was speculative. The agency further argued that the contracting officer had reviewed sufficient information to allow her to make an informed business judgment that offers from at least two small businesses that were capable of performing could reasonably be expected, and that the protester's argument regarding improper reliance upon large business partners was speculative.

In commenting on the agency report, the protester did not seek to rebut the Army's responses to the above arguments, but instead challenged the reasonableness of the contracting officer's finding that [deleted] and [deleted] were capable of satisfying the RFP's requirements. In this connection, the protester asserted that to set aside the procurement for small business, the contracting officer had to determine that offers would be obtained from at least two responsible small businesses, and that to be determined responsible, prospective contractors had to demonstrate, among other things, a satisfactory performance record and the necessary organization, experience, and technical skills to perform, or the ability to obtain them. Protester's Comments at 9. Six3 contends that the contracting officer did not reasonably assess whether [deleted] and [deleted] had the skills, experience, and organization necessary for successful performance, and that the record does not contain evidence supporting the contracting officer's conclusion that both companies had good past performance.

At the outset, we note that the protester incorrectly asserts that before making a small business set-aside determination, a contracting officer must determine that offers will be received from two or more responsible small businesses. The FAR does not require a determination that offers will be received from two or more responsible small businesses--it requires only a determination that offers from two or more responsible small businesses may reasonably be expected. Moreover, in making set-aside decisions, agencies need not make either actual determinations of responsibility or decisions tantamount to determinations of responsibility with regard to prospective offerors; they need only make an informed business judgment that there are small businesses expected to submit offers that are capable of performing. ViroMed Labs., supra, at 3-4.

In our view, the record here demonstrates a reasonable basis for the contracting officer's conclusion that both [deleted] and [deleted] are capable of performing. In their responses to the sources sought notice, prospective offerors were asked to self assess their teams' skill level in each of ten biometric functional areas on a scale of 1-5, with 1 representing little or no experience and 5 representing a high level of experience. [Deleted] represented that its team had a skill level of 4 or 5 in eight of the required functional areas, and a skill level of 3 in a ninth area, whereas [deleted] represented that its team had a skill level of 4 or 5 in nine of the required functional areas, and a skill level of 3 in the tenth area. The contracting officer found that both companies had grown significantly in the past year, demonstrating, in her view, that they were capable of taking on a sizeable workload increase and enlarging their operations to meet the requirements of the RFP. The contracting officer also found that both had good past performance, both had provided fair and reasonable pricing on other government contracts, and neither had delinquent federal debt.

Six3 also alleges that [deleted] no longer qualifies as a small business because its average annual revenue for the past 3 years has exceeded $7 million. According to the protester, the contracting officer should have recalculated [deleted] average annual receipts in July 2011 using information regarding recent sales that [deleted] had posted on its website. We disagree. [Deleted] represented in its response to the sources sought notice that it was a small business under NAICS code 541690 and a service-disabled, veteran-owned small business, and that it was not scheduled to graduate from any small business programs within the next 365 days; moreover, the contracting officer verified that [deleted] continued to be certified as a small business when she conducted her summer-2011 market research. The contracting officer's reliance upon [deleted] self-representations and information available in the Dynamic Small Business database was clearly reasonable.

Finally, Six3 argues that the contracting officer did not adequately document the basis for her finding that there was a reasonable expectation of award at fair market prices. We disagree. The contracting officer found that both [deleted] and [deleted] had provided fair and reasonable pricing under other government contracts, including an INSCOM multiple-award ID/IQ contract with an overall value of $492 million (the "Omnibus III" contract), and that it was evident from their work on the Omnibus III contract that "both [deleted] and [deleted] [were] able to provide fair market support to large requirements in both a U.S. and overseas setting." Contracting Officer's Memorandum for Record, Aug. 22, 2011, at 8. We think that it was reasonable for the contracting officer to conclude, based on the two offerors' general history of providing fair and reasonable pricing and on their specific history of providing fair and reasonable pricing under the Omnibus III contract, which has similarities to the contract here, that award at fair market prices could be expected here. We also note that the task orders to be issued under the multiple-award contract here will be competed among the awardees, and that the agency thus has a reasonable basis to anticipate price competition, resulting in fair market prices, for the task orders.  (Six3 Systems, Inc., B-404885.2, October 20, 2011)  (pdf)

The protesters contend that the decision to conduct this competition among FSS vendors using FAR part 8 procedures violates the small business set-aside requirements of the Small Business Act, 15 U.S.C. sect. 644(a), as implemented by FAR sect. 19.502-2(b). The cited FAR provision implements the Act by generally requiring an agency to set aside acquisitions with an anticipated dollar value of more than $100,000, such as the one here, for small businesses where there is a reasonable expectation of receiving fair market prices from at least two small business concerns (the so-called "Rule of Two"). The protesters contend that the agency is required to evaluate whether the Rule of Two is satisfied (and if so, set aside the solicitation for small businesses) before purchasing needed goods or services though the FSS program. Protest at 5-8; Comments at 9-10.

The regulations implementing the Small Business Act and GSA's FSS Program expressly anticipate and exclude FSS buys from set-aside requirements. FAR sections 8.404(a), 19.502-1(b), 38.101(e); Future Solutions, Inc., B‑293194, Feb. 11, 2001, 2004 CPD para. 39 at 3. In this regard, FAR sect. 8.404(a) and sect. 38.101--both of which pertain to FSS contracting--provide that FAR part 19, pertaining to small business programs, do not apply to BPAs or orders placed against FSS contracts. Similarly, FAR sect. 19.502-1(b), which implements small business requirements, also confirms that set-aside provisions do not apply to FSS buys.

Despite the clear language of these FAR provisions, the protesters argue that the provisions are inapplicable here. Specifically, the protesters rely on introductory provisions in FAR sect. 8.002(a), which state that "except as . . . otherwise provided by law, agencies shall satisfy requirements for supplies and services from" FSS vendors (among other sources). In their view, the Small Business Act, as implemented through the set-aside requirements of FAR sect. 19.502-2(b)--i.e., the Rule of Two--is "otherwise provided by law" and takes precedence over FSS purchases. Comments at 11; Supplemental Comments at 4-5. We find these arguments unpersuasive.

Nothing in the Small Business Act suggests or requires that the Rule of Two--which is set forth in the regulations that implement that Act (but is not found in the Act itself), see Delex Sys., Inc., B-400403, Oct. 8, 2008, 2008 CPD para. 181 at 6-7--takes precedence over the FSS program. To the contrary, and as noted above, the implementing regulations for the small business set-aside program and the FSS program expressly provide that set-aside requirements for the program do not apply to FSS buys. See FAR sections 8.404(a), 19.502-1(b), 38.101(e). Accordingly, we conclude that the Small Business Act and its implementing regulations do not impose a requirement on agencies to first evaluate whether a solicitation should be set-aside for small businesses before purchasing the goods or services through the FSS program.

The protests are denied.  (Edmond Computer Company; Edmond Scientific Company, B-402863; B-402864, August 25, 2010)  (pdf)

The protester argues that the agency should have set aside the acquisition, either totally or in part, for exclusive small business participation.

Under FAR sect. 19.502-2(b), a procurement with an anticipated dollar value of more than $100,000 must be set aside for exclusive small business participation when there is a reasonable expectation that offers will be received from at least two responsible small business concerns and that award will be made at a fair market price. That is, an acquisition must be set aside where there is a reasonable expectation that two or more acceptably priced offers will be received from small business concerns that are capable of performing the contract. ViroMed Laboratories, B-298931, Dec. 20, 2006, 2007 CPD para. 4 at 3. A partial set-aside must be made if a total set-aside is not appropriate, the requirement is severable into two or more economic production runs or reasonable lots, and one or more small business concerns are expected to have the technical competence and productive capacity to satisfy the set-aside portion at a reasonable price. FAR sect. 19.502-3(a). While the use of any particular method of assessing the availability of small businesses is not required, the agency must undertake reasonable efforts to locate responsible small business competitors. ViroMed Laboratories, supra, at 3-4. Because a decision whether to set aside a procurement (either totally or partially) is a matter of business judgment within the contracting officer's discretion, our review is limited to determining whether that official abused his or her discretion. Ceradyne, Inc., B‑402281, Feb. 17, 2010, 2010 CPD para. 70 at 4; Vox Optima, LLC, B‑400451, Nov. 12, 2008, 2008 CPD para. 212 at 5.

Here, while the protester challenges at length the contracting officer's conclusions regarding its own capability to perform at least 50 percent of the services in question, it has not challenged the contracting officer's conclusions regarding the capabilities of the other small business respondents, other than to assert that (1) the Navy's assessment was based on incomplete information because none of the small businesses had access to the software source code at the time they responded to the sources sought notice and (2) the agency evaluated responses to the notice on the basis of overstated technical requirements not included in the RFP itself.

In response to the first allegation, the agency explained that access to the source code was not required for a firm to respond to the sources sought notice because the notice focused primarily on fundamental capabilities and experience developing, testing, porting, and certifying, rather than on actual technical approaches or solutions. Agency Report at 15-16. We think that the agency's explanation is reasonable; moreover, the protester did not take issue with or otherwise seek to rebut it in its comments.[5] We will not consider the protester's second argument because it was not raised in a timely manner. That is, the argument, which was not raised until June 7, is based on information furnished to the protester at its April 9 debriefing and on the contents of the RFP, which was issued on April 26 and amended on May 20 and May 25. See Bid Protest Regulations, 4 C.F.R. sect. 21.2(a)(2) (2010) (protests based on other than a solicitation impropriety must be raised within 10 days after the basis of protest is, or should have been, known).

In sum, because the record fails to demonstrate that small business concerns were denied access to information necessary for the preparation of responses to the sources sought notice, and the protester has not raised any other timely challenges to the agency's findings pertaining to small businesses other than itself, Metasoft has not shown that the contracting officer abused his discretion in concluding that offers from at least two capable small business offerors could not be expected.  (Metasoft, LLC, B-402800, July 23, 2010)  (pdf)

In its protest, Ceradyne principally argues that the agency’s decision to set aside delivery order No. 9 for the small business ID/IQ contract holders (Armacel and ArmorWorks) was unreasonable because the Army failed to consider the capability of the small business concerns in making its set-aside decision. According to Ceradyne, neither firm has performed contracts of the magnitude required under delivery order No. 9. Specifically, Ceradyne alleges that both Armacel’s and ArmorWorks’ largest delivery orders under their [Small Arms Protective Inserts] SAPI ID/IQ contracts are, respectively, approximately 1/3 and less than 10 percent of the value for delivery order No. 9. In addition, Ceradyne suggests that both firms have had performance problems under their current ID/IQ contracts as reflected by the fact that the Army has, in some instances, extended delivery schedules for orders issued under these contracts.

Pursuant to FAR sect. 19.502--2(b), a procurement with an anticipated dollar value of more than $100,000 must be set aside for exclusive small business participation when there is a reasonable expectation that offers will be received from at least two responsible small business concerns and that award will be made at a fair market price. Often referred to as the “rule of two,” these set-aside provisions apply to competitions for task and delivery orders issued under multiple-award contracts, such as the ID/IQ contracts at issue in this protest. See Delex Sys., Inc., B-400403, Oct. 8, 2008, 2008 CPD para. 181 at 5-10. Agencies are not required to use a particular method to assess the availability of small businesses; rather, an agency need only undertake reasonable efforts to locate responsible small business competitors. Because a decision whether to set aside a procurement is a matter of business judgment within the contracting officer’s discretion, our review generally is limited to ascertaining whether that official abused his or her discretion. ViroMed Laboratories, B-298931, Dec. 20, 2006, 2007 CPD para. 4 at 3-4. We will not question a small business set-aside determination where the record shows that the evidence before the contracting officer was adequate to support the reasonableness of the conclusion that small business competition reasonably could be expected. Id.

Here, Ceradyne’s arguments essentially challenge the responsibility of Armacel and ArmorWorks. As noted above, Ceradyne questions the capability of the small business ID/IQ contract holders to successfully perform requirement No. 9. According to Ceradyne, given the size of requirement No. 9, as well as concerns regarding the ability of Armacel and ArmorWorks to timely perform other delivery orders, the Army should not have set aside requirement No. 9 based solely on the representations of these firms regarding their respective production capacity. Ceradyne’s arguments, however, are misplaced under the circumstances here.

Generally, responsibility is a contract formation term that refers to the ability of a prospective contractor to perform the contract for which it has submitted an offer, and, by law, a contracting officer must determine that an offeror is responsible before awarding it a contract. See 41 U.S.C. sect. 253b(c), (d); FAR sect. 9.103(a), (b), Advanced Tech. Sys., Inc., B-296493.6, Oct. 6, 2006, 2006 CPD para. 151 at 5. Once an offeror has been determined to be responsible and is awarded a contract, as is the case with Armacel and ArmorWorks, both of which were found responsible when they were awarded their underlying ID/IQ contracts, there is no requirement that an agency make additional responsibility determinations during contract performance, i.e., when placing individual delivery orders under an existing ID/IQ contract. See FAR sect. 16.505; ESCO Marine, Inc., B-401438, Sept. 4, 2009, 2009 CPD para. 234 at ___; Advanced Tech. Sys., Inc., supra.

Moreover, in making set-aside decisions, agencies need not make actual determinations of responsibility or decisions tantamount to determinations of responsibility; rather, they need only make an informed business judgment that there is a reasonable expectation of receiving acceptably priced offers from small business concerns that are capable of performing the contract. ViroMed Laboratories, supra. In the context of a multiple-award ID/IQ contract, where there are at least two small business contract holders, as in this case, the agency’s inquiry properly may be of limited scope, since the agency has already identified responsible small business concerns for award of task or delivery orders under the umbrella ID/IQ contract. Thus, where an agency receives expressions of interest from the small business contract holders and they represent their ability to perform requirements that the agency intends to order, the agency has a reasonable basis upon which to conclude that the “rule of two” has been met. While Ceradyne maintains that the Army should not have relied on the production capacities claimed by Armacel and ArmorWorks, in the absence of evidence of misrepresentation by these firms, we do not think the Army had a duty to subject these representations to a greater level of scrutiny. ViroMed Laboratories, supra.  (Ceradyne, Inc., B-402281, February 17, 2010)  (pdf)

EMMES argues that the agency unreasonably determined that it and the other small business concern could not perform the work. In this regard, EMMES notes that the agency had found that it was "capable of fulfilling the 16 functions described in the solicitation," and that the firm "has the facilities, equipment and resources necessary for the performance requirements delineated in the sources sought notice," and concludes that the agency should have found EMMES to be a responsible small business capable of performing the work. Instead, EMMES argues, the agency improperly relied on experience alone in determining that the firm is not fit to perform the work, and, in doing so, engaged in a "de facto" non-responsibility determination.

We do not agree that NIH could not consider EMMES's and the other small business firm's experience in assessing their capability to perform. See ViroMed Labs., B‑298931, Dec. 20, 2006, 2007 CPD para. 4 at 3‑4; Information Ventures, Inc., B‑279924, Aug. 7, 1998, 98-2 CPD para. 37 at 3 (in determining the availability of responsible small business concerns for set‑aside purposes, the contracting agency's investigation goes not only to the existence of the businesses, but also to their capability to perform the contract). In this regard, the agency need not make either an actual determination of responsibility or a decision tantamount to a determination of responsibility, but must make an informed business judgment that there is a reasonable expectation of receiving acceptably priced offers from two small business concerns that are capable of performing the contract. The considerations relevant to this judgment may be similar to responsibility standards. Railroad Constr. Co., Inc., B-249748.3, Dec. 29, 1992, 92-2 CPD para. 446 at 5. In the final analysis, the set-aside decision necessarily entails consideration of whether small businesses can be expected to perform satisfactorily; if the agency reasonably determines that they cannot, a set‑aside is not warranted.

We also do not agree with EMMES that the agency's review (in response to the sources sought notice) of the small business concerns' experience in performing the requirement reflected requirements that exceeded the RFP's scope of the work. See Comments at 2. Here, the RFP specifically provided for an evaluation of offerors' experience in performing the overall requirement. See AR, Tab 10, RFP at 84. Moreover, the RFP's statement of work laid out, in greater detail, the same 16 tasks described in the sources sought notice. AR, Tab 10, RFP, attach. 3, Statement of Work, at 6‑13. Although the RFP provided that experience would be weighted 20 percent in the technical evaluation, this does not show that the lack of experience in performing the overall requirement could not be considered in NIH's assessment of the firm's capability to perform the contract.

EMMES also challenges NIH's conclusion that, although the protester and the small business firm likely could "perform most of the functions performed by a traditional coordinating center," neither had demonstrated that they had experience as a coordinating center of the size and type being procured here, and a set-aside therefore was not warranted.EMMES complains that NIH unreasonably found that EMMES had not provided evidence that the firm had ever been involved in conducting or coordinating multiple large epidemiologic studies and complex survey studies, both in the collection of epidemiologic data from multiple sites and experience in monitoring the quality and timeliness of such data from a large number of individuals. See AR, Tab 7, Program's Review of the Small Business Capability Statements, at 6. EMMES asserts that the agency has overlooked its experience with the [DELETED]--one of the projects listed in a chart contained in the capability statement--which consisted of a multicenter, multiprotocol epidemiologic and clinical trial research program of human blood products.

We find no basis in the record to conclude that NIH unreasonably assessed EMMES's experience. EMMES did not highlight the [DELETED] or provide any explanation or description for why the work the firm did there was relevant to the work being procured here. The capability statement merely listed the study under a table of current and selected completed projects, without any explanation. Even assuming that the study consisted of a multi-center, multi‑protocol epidemiologic research program involving blood that demonstrated relevant experience, we find no reason for the agency to have credited EMMES with this experience, given EMMES lack of explanation in its capability statement.  (EMMES Corporation, B-402245; B-402245.2, February 17, 2010) (pdf)

Under Federal Acquisition Regulation (FAR) sect. 19.502-2(b), a procurement with an anticipated dollar value of more than $100,000, such as the one here, must be set aside exclusively for small business participation when there is a reasonable expectation that offers will be received from at least two responsible small business concerns and that award will be made at a fair market price. The use of any particular method of assessing the availability of small businesses is not required so long as the agency undertakes reasonable efforts to locate responsible small business competitors. National Linen Serv., B-285458, Aug. 22, 2000, 2000 CPD para. 138 at 2<. The decision whether to set aside a procurement may be based on an analysis of factors such as the prior procurement history, the recommendations of appropriate small business specialists, and market surveys that include responses to sources sought announcements. Commonwealth Home Health Care, Inc., B-400163, July 14, 2008, 2008 CPD para. 140 at 3; National Linen Serv., supra, at 2. Because a decision whether to set aside a procurement is a matter of business judgment within the contracting officer’s discretion, our review generally is limited to ascertaining whether that official abused his or her discretion. Admiral Towing and Barge Co., B‑291849, B-291849.2, Mar. 6, 2003, 2003 CPD para. 164 at 3-4. We will not question a small business set-aside determination where the record shows that the evidence before the contracting officer was adequate to support the reasonableness of the conclusion that small business competition reasonably could be expected. Commonwealth Home Health Care, Inc., supra, at 3.

Med-South contends that the VA’s market research was inadequate and does not demonstrate that at least two small businesses can satisfy the RFP’s requirements. However, our review confirms both the adequacy of the market research and the reasonableness of the agency’s decision to set aside the procurement for small businesses. In this regard, the record shows that the contracting officer surveyed the market by searching established databases to identify small businesses in the industry, researched those firms, and sought the advice of the Office of the Small Disadvantaged Business Utilization (OSDBU). The contracting officer also reviewed GAO bid protest decisions challenging similar solicitations for home oxygen, including one where the GAO upheld the decision to set aside the procurement for small business. Based on this information, the contracting officer concluded, and the OSDBU concurred, that the VA would likely receive offers from at least two small businesses that were capable of performing the work at a fair and reasonable price. We note, also, that the VA reports that it received offers from three small businesses in response to the solicitation. Agency Report at 3.

Based on this market research, we find the agency’s decision to set aside the procurement for small businesses to be reasonable. While the protester argues that the agency should have verified the capabilities of the small businesses identified as potential offerors, it has not provided any credible evidence to show that the market research was inadequate or flawed.  (Med-South, Inc., B-401214, May 20, 2009)  (pdf)

IVI contends that the agency improperly failed to set aside this procurement for small businesses, alleging that the agency's market research was flawed and does not support the determination to issue the solicitation on an unrestricted basis. Acquisitions with an anticipated dollar value of more than $100,000, such as the one here, must be set aside for small businesses if the agency makes two determinations, only the first of which is at issue here: that there is a reasonable expectation that offers will be received from two or more responsible small business concerns, and that award will be made at a fair market price. Federal Acquisition Regulation sect. 19.502-2(b); American Artisan Prods., Inc., B-292380, July 30, 2003, 2003 CPD para. 132 at 5-6.

The determination as to whether there is a reasonable expectation of receiving offers from two or more small businesses that are capable of performing the required work is a matter of business judgment within the contracting officers discretion that we will not disturb absent a showing that it was unreasonable. ViroMed Labs., B-298931, Dec. 20, 2006, 2007 CPD para. 4 at 3-4; Information Ventures, Inc., B-279924, Aug. 7, 1998, 98-2 CPD para. 37 at 3. While the use of any particular method of assessing the availability of capable small businesses is not required, an analysis of factors such as the prior procurement history, the recommendations of appropriate small business specialists, and market surveys that include responses to sources sought announcements, may all constitute adequate grounds for a contracting officer’s decision not to set aside a procurement. Quality Hotel Westshore; Quality Inn Busch Gardens, B-290046, May 31, 2002, 2002 CPD para. 91 at 3-4.

Here, IVI alleges that the agency's market research is flawed in a number of ways. For instance, the protester contends that the capability statements were evaluated by the agency "as if they were proposals," Protest at 2; that the agency unreasonably evaluated the small businesses’ ability to "perform each and every task" listed in the sources sought notice; and that the agency used undisclosed needs contained in the prior contract to evaluate the capability statements received. Protester's Comments at 6-9. These arguments do not provide a basis to sustain the protest. Rather, the record establishes that the agency did in fact conduct adequate market research to determine whether it was reasonable to set aside the acquisition for small business concerns.

As discussed above, the agency's determination was based on its review of the information provided by small business concerns in their responses to the "sources sought" notice and review of the procurement history for these or similar services. Moreover, the record confirms that the agency's small business specialist and the SBA's PCR were integrated in the contracting officer's decision-making process and they both concurred with his business judgment that the requirement should be competed on an unrestricted basis. While the protester argues that this determination was unreasonably based on a flawed research analysis, the protester has produced no credible evidence to support any of its allegations.

As a specific example, the protester argues that it was not reasonable for the agency to consider during its review whether the small business respondents had experience providing similar services. In this regard, the protester argues that the small business firms could have supplemented their experience with consultants, or other vendors. Protester's Comments at 7. While we agree with the protester that small businesses might be able to supplement their experience with consultants--and, in fact, a prior small business vendor providing these services might have done exactly that--we will not conclude that the agency violated a procurement law or regulation--the standard we must apply to sustain this challenge--in performing this review. In short, we are not prepared to conclude that it was improper for the agency to assess whether the small business respondents had experience similar to the required services here, and we note for the record, the agency’s SBA representatives were unwilling to do so as well.  (Information Ventures, Inc., B-400604, December 22, 2008) (pdf)

Applicability of the Rule of Two

As set forth above, the Navy raises a threshold question, i.e., whether FAR sect. 19.502‑2(b) (the Rule of Two) applies to the placement of task and delivery orders under multiple‑award contracts. In the Navy’s view, set-aside requirements apply only to initial contract awards, and not to orders under multiple-award ID/IQ contracts.

The Navy’s argument, in essence, is that an agency’s obligation to follow the requirements of FAR Subpart 19.5 springs from, and is driven by, its obligation to follow the requirements for full and open competition set forth in FAR Part 6. Thus, the Navy notes that FAR sect. 6.203(c) requires contracting agencies to follow FAR Subpart 19.5, which governs small business set-asides. When an agency is placing task and delivery orders under a multiple-award contract, however, the Navy notes that FAR sect. 16.505(b)(1)(ii) advises that “the competition requirement in [FAR] Part 6 do[es] not apply to the ordering process.” Thus, the Navy contends, since FAR Part 6 contains the requirement that agencies comply with FAR Subpart 19.5 (which contains the Rule of Two, sect. 19.502-2(b)), and since agencies are exempted from the requirements of FAR Part 6 when placing task and delivery orders, there is no requirement for agencies placing such orders to comply with FAR Subpart 19.5. Navy Memorandum of Law, at 25-26 (July 24, 2008). We disagree.

As a preliminary matter, the requirements addressed in the Navy’s argument, synopsized above, are not simply matters of regulation; most of them are matters of statute. For example, the regulations for using full and open competition set forth in FAR Part 6 are implementing the requirements for competition set forth in the Competition in Contracting Act of 1984 (CICA). 10 U.S.C. sect. 2304(a)(1)(A) (2000). Likewise, the regulations for using multiple-award ID/IQ contracts in FAR Subpart 16.5 are implementing the requirements of the Federal Acquisition Streamlining Act of 1994 (FASA). 10 U.S.C. sect. 2304a(d) (2000). And, of particular importance to this discussion, the regulations for awarding contracts to small businesses set forth in FAR Subpart 19.5, are implementing the requirements of the Small Business Act. 15 U.S.C. sect. 644(a) (2000).

As the SBA points out in its brief, the oldest of these statutory enactments, the Small Business Act, states that small businesses:

shall receive any award or contract or any part thereof, and be awarded any contract for the sale of Government property, as to which it is determined by the Administration and the contracting procurement or disposal agency (1) to be in the interest of maintaining or mobilizing the Nation’s full productive capacity, (2) to be in the interest of war or national defense programs, (3) to be in the interest of assuring that a fair proportion of the total purchases and contracts for property and services for the Government in each industry category are placed with small-business concerns, or (4) to be in the interest of assuring that a fair proportion of the total sales of Government property be made to small-business concerns; ….

15 U.S.C. sect. 644(a). As is evident from the text quoted above, the Small Business Act does not, on its face, enunciate the Rule of Two. Instead, as discussed below, the rule was established to implement the Act.

The origin of the Rule of Two predates the FAR; when the FAR was promulgated, the Office of Federal Procurement Policy (OFPP) prepared a Federal Register notice seeking comments on the rule’s inclusion in the new government-wide procurement regulation. 49 Fed. Reg. 40135 (Oct. 3, 1984). This notice explains that the Rule of Two is intended to implement the Small Business Act language in 15 U.S.C. sect. 644(a), quoted above, requiring that small businesses receive a “fair proportion of the total purchases and contracts for property and services for the Government.” Id. In addition, the notice advised that, in the view of OFPP, “the FAR language complies with current law and reflects the will of the Congress as expressed in the Small Business Act.” Id. Thus, while the Rule of Two is not specifically set out in the Small Business Act, it has been adopted as the FAR’s implementation of the Act’s requirements through notice and comment rulemaking.

We note next that when CICA was enacted in 1984, and when FASA was enacted in 1994, both statutes expressly recognized that their requirements were to be harmonized with existing statutes. See 10 U.S.C. sect. 2304 (a)(1) (CICA) and 10 U.S.C. sect. 2304a(a) (FASA). This explains, for example, why the “full and open” competition requirements of CICA can be harmonized with the FAR Rule of Two provision (which restricts competition, where the Rule of Two is met), since the latter implements the Small Business Act. Moreover, nothing in CICA or FASA would exempt task or delivery orders--and certainly nothing explicitly exempts them--from the requirements of FAR sect. 19.502-2(b).

With respect to the Navy’s contention that FAR sect. 16.505(b)(1)(ii) exempts task and delivery orders from the requirements of FAR Subpart 19.5, we think the Navy overreads the provision. When an agency is placing task and delivery orders under multiple‑award contracts, it cannot, by definition, hold a full and open competition as described by FAR Part 6. This is because a contractor’s eligibility for future task and delivery orders is established by its receipt of one of the underlying awards; once the multiple‑award contract is established, contractors who have not received an award have no vehicle (i.e., no contract) which they can use to compete for the placement of orders. Thus, in our view, the opening sentence of FAR sect.16.505(b)(1)(ii)--i.e., “[t]he competition requirements in Part 6 and the policies in Subpart 15.3 do not apply to the ordering process”--means only what it says: that the competition requirements of Part 6 do not apply to ordering. In short, without an express waiver of the requirements of the Small Business Act (implemented here by the Rule of Two), we have no basis to conclude that this limited, and appropriate, exemption from the requirements of full and open competition in FAR Part 6 can exempt agencies from the requirements of FAR sect. 19.502-2(b) when placing orders.

The Navy also argues that Congress has never indicated that the small business set‑aside requirements apply to the placement of task and delivery orders, despite numerous opportunities to do so in the years since the passage of FASA. Navy Memorandum of Law at 24-25 (July 24, 2008). In our view, this logic provides no basis for concluding that Congress intended that the small business set-aside requirements do not apply to FASA’s authorization of the use of task and delivery order contracts. In fact, we think the Navy’s argument is not supported by the facts.

The SBA points out that section 816 of the National Defense Authorization Act for FY 2006, Pub. L. No. 109-163, required the Secretary of Defense to issue guidance on the use of tiered evaluation schemes (sometimes referred to as “cascading set-aside clauses”) for assessing offers for contracts and task and delivery orders. We note in particular that this enactment prescribes a prohibition on the use of such schemes unless a contracting officer has

conducted market research in accordance with part 10 of the Federal Acquisition Regulation in order to determine whether or not a sufficient number of qualified small businesses are available to justify limiting competition for the award of such contract or task or delivery order under applicable law and regulations.

Pub. L. No., 109-163, sect. 816(b)(1). While this provision does not expressly state that the small business set-aside requirements of FAR sect. 19.502-2(b) are applicable to the placement of orders under ID/IQ contracts, it clearly indicates that Congress recognizes the possibility of limiting competition for task and delivery orders to small businesses when there is a sufficient number of small businesses to justify doing so. This provision also recognizes that there will be instances where the number of qualified small businesses will justify limiting competition pursuant to applicable law and regulations.

In our view, the legal question is whether the Rule of Two, which by its terms applies to “any acquisition over $100,000,” FAR sect. 19.502-2(b), applies to individually competed task or delivery orders under multiple-award contracts. We conclude that it does, because, at least for purposes of this analysis, those orders are properly viewed as “acquisitions.” We have previously concluded that a delivery order placed under an ID/IQ contract is, itself, a “contract,” at least for some purposes, see FAR sect. 2.101, and contracts are covered by the definition of “acquisition” in FAR sect. 2.101. Letters to the Air Force and Army concerning Valenzuela Engineering, Inc., 98-1 CPD para. 51 (Letter to the Air Force at n.1). Competitions for task and delivery orders are the stage when holders of multiple-award ID/IQ contracts offer prices and solutions to meet specific agency needs. This is therefore the most meaningful stage for a Rule of Two analysis, in which the contracting officer needs to judge the likelihood of receiving at least two fair-market priced submissions from small businesses for the services or supplies being acquired under a specific solicitation. In sum, we conclude that individually-competed task and delivery orders are “acquisitions” for purposes of FAR sect. 19.502‑2(b), so that the Rule of Two applies. 

Reasonable Expectation of Offers from Two or More Small Businesses

Next, as to the agency’s decision that it does not expect to receive two or more offers from small businesses, Delex argues that the decision was unreasonable. Our Office generally regards a set-aside determination as a matter of business judgment within the CO’s discretion which we will not disturb absent a showing that it was unreasonable. Neal R. Gross & Co., Inc., B-240924.2, Jan. 17, 1991, 91-1 CPD para. 53 at 2. While the use of any particular method of assessing the availability of firms is not required, measures such as prior procurement history, market surveys, and advice from the appropriate small business specialists may all constitute adequate grounds for a CO’s decision to set aside, or not to set aside, a procurement. American Imaging Servs., Inc., B-246124.2, Feb. 13, 1992, 92-1 CPD para. 188 at 3. The assessment must be based on sufficient facts so as to establish its reasonableness. Rochester Optical Mfg. Co., B‑292247; B-292247.2, Aug. 6, 2003, 2003 CPD para. 138 at 5.

The principal bases for the agency’s set-aside determination was information obtained from a review of the TSC II procurement history. The CO explains that the agency’s analysis of this information indicated that Delex did not submit a proposal for the predecessor GATP requirement; that in fiscal year 2007, while Delex had expressed interest in the last five delivery order acquisitions, it submitted proposals for only three of the five acquisitions. Moreover, the Navy explains that in a previous delivery-order competition under this ID/IQ contract, where only DPA and Delex submitted proposals, Delex’s proposal was evaluated as unsatisfactory, leaving the agency with only the option of making award to DPA. CO Statement at 7‑10. As a result, the CO explains that she does not think Delex will submit a viable proposal to successfully perform the GATP requirements, which, she explains, have a value five times the value of any delivery order Delex has previously performed. Id. at 8, 9.

Delex argues that the agency’s analysis has a number of flaws. First, with respect to the predecessor GATP delivery order, Delex points out that the order was not reserved for small businesses. As a result, Delex explains that it made a business decision not to compete with the large business ID/IQ contract-holders for this work. Second, with respect to the last five delivery order acquisitions, for which Delex responded to only three, the protester (and the SBA) note that multiple solicitations were issued in a short period of time, so that the company reasonably chose to respond to some, but not all, of the solicitations. Finally, with respect to the delivery order competition 2 years earlier where Delex’s proposal was evaluated as unsatisfactory, Delex contends the Navy’s focus on that one proposal, while ignoring more current and more relevant information, is unfair.

We have examined each of the reasons identified by the Navy for withdrawing the initial set-aside determination, and we conclude that the Navy has not adequately documented the basis for its decision. For example, with respect to the predecessor delivery order for this requirement, we agree with Delex that a small business could reasonably decide not to compete with the large business contract-holders for this work, and that an agency should not rely on the results of an unrestricted competition to determine the likelihood that a small business will participate in a set-aside competition. With respect to the five previous acquisitions, we again agree with Delex. We know of no requirement that a small business participate in every acquisition for which it is eligible to compete, especially when several of these acquisitions are occurring over a short period of time. (Delex Systems, Inc., B-400403,October 8, 2008) (pdf)

LHI is currently providing a dental network under a sole-source contract, which was awarded in 2006 based on the agency’s determination that it was the only responsible source available and that no other services would satisfy the agency’s requirements. See Federal Acquisition Regulation (FAR) sect. 6.302‑1. LHI protested an earlier solicitation for these services on the basis that it was improperly restricted to service disabled veteran-owned small businesses (SDVOSB). In response to that RFP, the agency received only one proposal--which was non-compliant--and it thus canceled the solicitation; we dismissed the protest as academic (B‑310934, Jan. 11, 2008). When the agency reissued the RFP as a small business set-aside, LHI filed this protest challenging the propriety of the set-aside determination. LHI asserts that the set-aside is improper because it believes that there are not two small businesses with demonstrated qualifications or past performance that can provide the services requested at all mobilization site locations.

An acquisition with an anticipated dollar value of more than $100,000 must be set aside for small business concerns if the agency determines that there is a reasonable expectation that offers will be received from two or more responsible small business concerns, and that award will be made at a fair market price. FAR sect. 19.502-2(b). The use of any particular method of assessing the availability of small businesses is not required so long as the agency undertakes reasonable efforts to locate responsible potential competitors. National Linen Serv., B-285458, Aug. 22, 2000, 2000 CPD para. 138 at 2. The decision whether to set aside a procurement may be based on an analysis of factors such as prior procurement history, recommendations of appropriate small business specialists, and market surveys that include responses to sources sought announcements. Id.; SAB Co., B‑283883, Jan. 20, 2000, 2000 CPD para. 58 at 1-2. Generally, our Office regards such a determination as a matter of business judgment, and we will not disturb that determination absent a clear showing that it was unreasonable. National Linen Serv., supra, at 2.

The agency’s set-aside determination is unobjectionable. Prior to issuing the RFP, the contracting officer conducted market research using the small business dynamic search of the Central Contractor Registration database. This research revealed--under North American Industry Classification System (NAICS) code No. 621210 (offices of dentists)--two Section 8(a)-certified firms, two small disadvantaged firms, six SDVOSBs, nine veteran owned small businesses, and three woman-owned small businesses. Contracting Officer’s Statement paras. 6-7. The contracting officer also posted a request for information (RFI) on the Federal Business Opportunities (FedBizOpps) website. Eight small businesses responded to the RFI, including two small businesses, two veteran-owned small firms, and four SDVOSBs. Contracting Officer’s Statement para. 8. Two of the companies, one a veteran-owned small business and the other an SDVOSB, provided information indicating that they were responsible and capable of performing the contract requirements. For example, each had numerous dentists available within the required SRP service radius. The contracting officer’s market research indicated that there were a large number of small and large business vendors providing these services and she also found that pricing for the services would be competitively based. Agency Report, Tab 9, at 4.

We find that the agency’s market research was thorough and reasonably conducted to identify potential small business offerors. Since the research identified multiple small businesses--at least two of which were deemed responsible and capable of performing the requirement--the record reasonably supports the contracting officer’s finding of a reasonable expectation of receiving two or more proposals from small businesses and that award would be made at a fair market price. In short, we conclude that the contracting officer reasonably exercised her business judgment to set the procurement aside for small businesses.  (Logistics Health, Inc., B-400157, August 13, 2008) (pdf)

Commonwealth filed its protest challenging the set-aside decision and designation of the requirements as “supplies” prior to the solicitation closing date of May 30, 2008. Subsequently, the agency received offers from six small business concerns in response to the solicitation.

Under Federal Acquisition Regulation (FAR) sect. 19.502-2(b), a procurement with an anticipated dollar value of more than $100,000, such as the one here, must be set aside for exclusive small business participation when there is a reasonable expectation that offers will be received from at least two responsible small business concerns and that award will be made at a fair market price. The use of any particular method of assessing the availability of small businesses is not required so long as the agency undertakes reasonable efforts to locate responsible small business competitors. National Linen Serv., B-285458, Aug. 22, 2000, 2000 CPD para. 138 at 2. The decision whether to set aside a procurement may be based on an analysis of factors such as the prior procurement history, the recommendations of appropriate small business specialists, and market surveys that include responses to sources sought announcements. SAB Co., B-283883, Jan. 20, 2000, 2000 CPD para. 58 at 1-2; PR Newswire, B-279216, Apr. 23, 1998, 98-1 CPD para. 118 at 2. Because a decision whether to set aside a procurement is a matter of business judgment within the contracting officer’s discretion, our review generally is limited to ascertaining whether that official abused his or her discretion. Admiral Towing and Barge Co., B‑291849, B-291849.2, Mar. 6, 2003, 2003 CPD para. 164 at 3-4. We will not question a small business set-aside determination where the record shows that the evidence before the contracting officer was adequate to support the reasonableness of the conclusion that small business competition reasonably could be expected. National Linen Serv., supra, at 2.

Here, the protester questions the accuracy and reliability of the agency’s market research and opines that it is simply not possible for a small business concern meeting the designated size standard to perform the contract from a financial or operational standpoint. Protester’s Comments at 2. The record, however, establishes that the agency did in fact conduct adequate market research to determine whether it was reasonable to set aside the requirement for small business concerns, and, based upon the results of this research, reasonably determined that it could expect small business competition. While the protester argues that the set-aside determination was unreasonable because it does not believe that a small business is capable of performing the work, this argument reflects nothing more than the protester’s disagreement with the agency’s judgment regarding the viability of a set-aside, which does not establish a basis for our Office to question the agency’s determination. IBV, Ltd., B-311244, Feb. 21, 2008, 2008 CPD para. 47 at 2.  (Commonwealth Home Health Care, Inc., B-400163, July 24, 2008) (pdf)

Although agencies need not use any particular methodology in assessing the availability of firms for a set-aside, measures such as prior procurement history, market surveys, and advice from the agency’s small business specialist may all constitute adequate grounds for a contracting officer’s decision to set aside, or not set aside, a procurement. See American Imaging Servs., Inc., B‑246124.2, Feb. 13, 1992, 92-1 CPD para. 188 at 3. The assessment must be based on sufficient evidence to establish its reasonableness. See Rochester Optical Mfg. Co., B-292247, B-292247.2, Aug. 6, 2003, 2003 CPD para. 138 at 5.  As stated above, the agency based its decision here on the information contained largely in the VIP database--the accuracy of which the protester does not challenge--showing that the firm’s total annual revenue--$1‑2 million--was substantially below the estimated value of this contract, and that the value of its largest prior contract was only $475,000; this brought into question the firm’s capacity to perform, since the contract here was valued at $2-3.5 million. Information such as this, concerning firms’ business history, properly may be considered by agencies when making a determination as to whether there are viable potential competitors so as to warrant setting a requirement aside under a small business preference program. See, e.g., MCS Mgmt., Inc., B‑285813, B‑285882, Oct. 11, 2000, 2000 CPD para. 187 (agency reasonably considered annual revenues and size of past contracts when examining whether small businesses were capable of performing contract for a set-aside solicitation). This information led the agency to conclude that “there were no SDVOSB firms, which included FlowSense, with the capabilities and capital to procure the necessary bonding and to perform the work associated with the project.” CO’s Statement at 2. We find nothing unreasonable in this conclusion.  (FlowSense, LLC, B-310904, March 10, 2008) (pdf)

An agency must undertake reasonable efforts to ascertain whether it is likely that it will receive offers from at least two responsible small businesses capable of performing the work in question. Rochester Optical Mfg. Co., B-292247, B-292247.2, Aug. 6, 2003, 2003 CPD para. 138 at 4. No particular method of assessing the availability of capable small businesses is required; rather, the assessment must be based on sufficient facts so as to establish its reasonableness. Id. at 5. USSOCOM’s decision not to set this procurement aside was unobjectionable because the record shows that it reasonably determined that it was not likely to receive offers from two capable small businesses. As an initial matter, the record shows that USSOCOM is highly familiar with the body armor industry. It has been procuring ballistic plates for the last 8 years, during which time it has worked with industry to modify the plate designs to increase their ballistic capabilities. AR, Tab 2, Legal Memorandum, at 2. Further, USSOCOM’s small business advisor--who concurred with the agency’s decision not to set the requirement aside--has been attending trade shows and small business innovation research events for the last 10 years. USSOCOM Letter to GAO, Oct. 9, 2007, Declaration of Karen L. Pera, at 1. The principal basis for the agency’s determination was the information obtained through the industry day meetings with prospective offerors prior to the release of the solicitation. As noted, the agency met with five small businesses--including all three of the small business offerors under the first solicitation‑-in one-on-one sessions and specifically discussed with them their ability to meet the current requirement. In this regard, the agency asserts, and the protester does not dispute, that the required ballistic plates are “completely distinct from any other standard product in the marketplace,” USSOCOM Letter to GAO, Oct. 9, 2007, Contracting Officer’s Statement, at 1, and are significantly more difficult to produce than other body armor plates--including the “small arms protective inserts” and “enhanced small arms protective inserts” manufactured by the protester and the other small businesses that attended the industry day conference--which do not meet USSOCOM standards for weight, thickness, and ballistic requirements. USSOCOM Letter to GAO, Oct. 9, 2007, Declaration of Richard W. Elder, at 1-4. The agency asserts--and TPG does not dispute--that none of the small businesses, including the protester and the firm the protester identified as a second likely competitor for the requirement, provided any information during the industry day conference showing that they could or intended to try to meet the government’s requirements for this procurement. TPG now asserts that it is has the desire and capability to supply the ballistic plates. However, notwithstanding its current stated intent, again, TPG does not dispute that it failed to furnish the agency any information during the industry day meetings that demonstrated its intent and capability to compete. Since there likewise is nothing in the record refuting the agency’s determination that no other small businesses were viable prospective offerors for the requirement, we find the agency reasonably determined that it would not receive two offers from capable small businesses. See Belleville Shoe Mfg. Co. et al., B‑287237 et al., May 17, 2001, 2001 CPD para. 87 (set-aside not required where record supports finding that firm had never produced boots of the type and quantity required under the solicitation); MCS Mgmt., Inc., B‑285813, B‑285882, Oct. 11, 2000, 2000 CPD para. 187 (set-aside not required where there is no indication that small business concerns could perform food service contracts of the scope and complexity required under the solicitation).  (The Protective Group, Inc., B-310018, November 13, 2007) (pdf)

The protester argues that the market research conducted by the contracting officer here was inadequate to support her conclusion that offers from at least two responsible small business concerns could reasonably be expected. ViroMed maintains in this regard that at a minimum, adequate market research required the contracting officer to determine whether each small business that responded to the sources sought notice had (1) appropriately equipped facilities, (2) an adequate number of personnel, (3) the capability to process up to 8,000 HIV tests per day, and (4) the ability to secure the required IT capability. The protester contends that rather than verifying the accuracy of sources’ claims regarding their capabilities, the contracting officer simply accepted their self-serving assertions, which was insufficient.  While acknowledging that agencies are not required to make determinations regarding the responsibility of prospective sources in deciding whether to set aside an acquisition, Protester’s Comments, Nov. 13, 2006, at 3, the protester in essence argues that the agency should have made determinations tantamount to affirmative determinations of responsibility with regard to the prospective sources here. In making set-aside decisions, agencies need not make either actual determinations of responsibility or decisions tantamount to determinations of responsibility, however; rather, they need only make an informed business judgment that there is a reasonable expectation of receiving acceptably priced offers from small business concerns that are capable of performing the contract. SAB Co., supra, at 3-4; PR Newswire, supra, at 3. 
The market research performed by the contracting officer here clearly permitted her to make an informed business judgment that offers from multiple small businesses with the capability to perform the required volume of tests and to secure the required IT capability could reasonably be expected.[2] Regarding the protester’s assertion that the contracting officer should not have accepted the “self-serving” claims of prospective offerors regarding their capabilities without verification, in the absence of evidence of misrepresentation, we do not think that such a level of scrutiny was required. (ViroMed Laboratories, B-298931, December 20, 2006)  (pdf)

We find that Encompass’s arguments do not demonstrate that VA’s judgment that the agency would receive two or more offers from responsible small business concerns at a fair market price was unreasonable. That is, even accepting the protester’s argument that bulk fabric can only be obtained from large businesses, a small business concern would not necessarily be unable to satisfy the “nonmanufacturer” rule simply because the small business firm obtains bulk fabric from a large business. This is so because VA is not purchasing bulk fabric, but finished goods, which require the transformation of the bulk fabric. As noted above, SBA’s regulations provide that the manufacturer of an end item “is the concern which, with its own facilities, performs the primary activities in transforming inorganic or organic substances, including the assembly of parts and components, into the end item being acquired.” 13 C.F.R. sect. 121.406(b)(2). Under this rule, a firm that transforms the bulk fabric into end items such as sheets, pillow cases or blankets could qualify as a manufacturer of the end items despite the origin of the bulk fabric. Accordingly, we find that Encompass’s argument that there are no small business manufacturers of the bulk fabric does not show that the agency was unreasonable in concluding that it would obtain two or more offers from small business manufacturers of the sheets, pillow cases and blankets. (Encompass Group LLC, B-296602; B-296617, August 10, 2005) (pdf)

Moog does not dispute that AMCOM has previously procured this requirement as a small business set-aside. Rather, Moog argues that AMCOM erroneously failed to acquire these services from approved sources. As noted above, we find that the RFP does not require source approval to perform these services. Moog also argues that the previous performance of these services by the small business contractor has been deficient. AMCOM disputes Moog's allegations and states that the small business has satisfactorily performed "without having any safety of flight related problems or other significant quality issues." See Contracting Officer's Statement at 2; AR, Tab 16, Letter from AMCOM to Moog (Aug. 19, 2003) at 4. Although Moog disagrees with the agency's assessment that the small business satisfactorily performed the overhaul services, its disagreement provides us with no basis to conclude that no responsible small business could perform these services. We find that AMCOM reasonably determined that it could expect to receive offers from at least two responsible small business concerns at a fair market price, and therefore the solicitation was appropriately set aside for exclusive small business participation. (Moog Inc., B-294600, November 12, 2004) (pdf)

In our view, the record does not show that the contracting officer reasonably considered whether the procurement could be set aside for exclusive small business participation. On the contrary, the record indicates that the contracting officer failed to take into account known information indicating the interest of capable small business concerns in this procurement. As discussed above, the contracting officer reports that prior to determining that there was no reasonable expectation of receiving offers from at least two responsible small business concerns, contracting personnel contacted five contractors in the GSA Advantage database, including three small business concerns and two large businesses, and also a nonprofit organization; according to the agency, all responded that they could not perform the agencys requirement. However, the agency has pointed to nothing in the record that indicates that the reported inability of the selected entities to undertake the contemplated contract was related to their size (rather than to other considerations, such as, for example, other commitments). As part of our development of the record, we requested and received comments from SBA, who contends that the agencys market research was inadequate. SBA notes that the contracting officer failed to investigate other recommended, readily available sources of information concerning the availability of responsible small business concerns. For example, FAR 13.102, applicable to simplified acquisitions such as this one, provides that [c]ontracting officers should use the Central Contractor Registration [CCR] database . . . as their primary sources of vendor information. In this regards, SBA notes that small business concerns are encouraged to register in the CCR. The contracting officer, however, did not consult the CCR. Had she done so, using the North American Industry Classification System (NAICS) code that she views as appropriate, NAICS code 54161, Management Consulting Services, she would have discovered a large pool of small business concerns from which to select firms for further evaluation. [3] SBA also points to the agencys failure to search SBAs PRO-NET, which is an online database of information on more than 195,000 small, disadvantaged, Section 8(a), Historically Underutilized Business Zone (HUBZone), and women-owned businesses. (SBA recently merged the CCR and PRO-NET databases into the Dynamic Small Business Search database.) In addition, FAR 19.202-2 generally requires contracting officers, before issuing solicitations, to make every reasonable effort to find additional small business concerns, which should include contacting the agency SBA procurement center representative, or if there is none, the SBA. Likewise, FAR 19.202 requires contracting officers to consider recommendations of the agency Director of Small and Disadvantaged Business Utilization, or the Directors designee, as to whether a particular acquisition should be set aside for small businesses, while FAR 19.501(e) states that the contracting officer shall review acquisitions to determine if they can be set aside for small business, giving consideration to the recommendations of agency personnel having cognizance of the agencys small business programs. Again, however, the contracting officer failed to utilize these available sources of information concerning potential small business participation. Furthermore, the record establishes that the contracting officer in fact was on notice, prior to issuance of the solicitation on June 18, of substantial small business interest in this procurement, including interest from small business concerns that the agency itself ultimately determined to be capable of performing the requirement. In this regard, in response to the presolicitation notice, six small business concerns requested a copy of the solicitation, and two included evidence of their capabilities. Further, the agency ultimately found two of the small business concerns (including one that had submitted prior to issuance of the solicitation a qualifications statement with its request for a copy of the solicitation) to be capable and qualified and requested each to submit a proposal. The contracting officer, however, apparently did not evaluate the capabilities of any of the small businesses which had expressed interest in the solicitation to determine, before issuing the solicitation, whether her previous determination that there was no reasonable expectation of receiving offers from at least two responsible small business concerns was still supportable. The agency, instead, simply issued the solicitation on an unrestricted basis. We agree with SBA that the contracting officer should have assessed the capability of the small business concerns that had responded to the presolicitation notice before issuing the solicitation on an unrestricted basis. See Safety Storage, Inc. , B-280851, Oct. 29, 1998, 98-2 CPD 102 at 3 (contracting officer failed to survey firms that had responded to Commerce Business Daily announcements to assess their capability to perform the contract); see also ACCU-Lab Medical Testing, B-270259, Feb. 20, 1996, 96-1 CPD 106 at 3 (contracting officer failed to consider small business concerns that showed interest when requirement was still set-aside). (Information Ventures, Inc., B-294267, October 8, 2004)  (pdf)

This case involves the unusual situation where, consistent with the terms of the RFP, the agency’s decision to make this solicitation a 100-percent set-aside for small businesses was made after receipt of proposals that included several from small businesses. Under such circumstances, we do not think that the agency, in determining to set aside this procurement, was required to determine whether the initial proposals as submitted were technically compliant or acceptably priced. See id.; cf. York Int’l Corp., B-244748, Sept. 30, 1991, 91‑2 CPD ¶ 282 at 7 (although agency’s determination to issue a solicitation as a small business set-aside lacked a reasonable basis, its receipt of offers from small businesses justified the set-aside). Rather, we think that the agency need only determine, based upon the initial proposals received, that there is a reasonable expectation that it will ultimately receive offers from at least two small business concerns that are capable of performing the contract and that award will be made at a fair market price. See FAR § 19.502-2; American Med. Response of Connecticut, Inc., supra. (Admiral Towing and Barge Company, B-291849; B-291849.2, March 6, 2003) (pdf)

As noted above, the contracting officer performed three Pro-Net searches, at least one of which was performed in consultation with the SBA, and from these searches could not identify two or more small businesses with bonding capacity that could perform design, fabrication, and installation work. Based on these results, and with the concurrence of the SBA, the contracting officer determined that there was no reasonable expectation that the BLM would receive two or more offers from small businesses in response to the RFP. We find this determination to be reasonable. We accord substantial weight to the fact that the contracting officer's determination was made in concurrence with the SBA, was subsequently reviewed by the SBA's local office, and was again reviewed by the SBA during this protest and found not to be unreasonable. Quality Hotel, supra, at 4; CardioMetrix, B-260747, July 18, 1995, 95-2 CPD ¶ 28 at 3.  (American Artisan Productions, Inc., B-292380, July 30, 2003)  (pdf)

The VA first asserts that the prices proposed by Rochester and Barnett and Ramel under the prior small business set-aside procurement were not low. TC at 101-03. However, as stated above, FAR § 19.502-2(b) requires that in determining whether to procure requirements under a small business set‑aside, an agency must have a reasonable expectation of receiving “fair market price” offers, not “low” prices, from at least two responsible small business concerns. Although the prices proposed by Rochester and Barnett and Ramel under the prior procurement were not low (among the four offers received),[6] the fact that these two small business concerns received ID/IQ contracts under a small business set‑aside reasonably demonstrates that the agency believed that their offers ultimately contained fair and reasonable prices. FAR § 15.402(a). Under these circumstances, the failure of these two small business concerns to submit the lowest prices under the prior procurement does not establish a reasonable basis for the VA to conclude that these two firms could not submit fair market price offers for the protested requirement.  The VA next argues that in determining not to procure its current VISN 9 requirement under a small business set-aside, it believed, based on the prior small business set-aside procurement, that it would not receive offers from at least two “responsible” small business concerns. In other words, the VA was not concerned with the quantum of known competition from the prior procurement--two small businesses, Rochester and Barnett and Ramel; rather, the VA believed that these two firms were not responsible contractors. In this regard, the VA states that under the prior procurement, Rochester received a cure notice for not submitting qualifications statements for proposed personnel and Barnett and Ramel subcontracted with a large business. (Under their respective ID/IQ contracts, Rochester received minimal orders, while Barnett and Ramel received no orders. TC at 347.) The record shows, however, that Rochester complied with the cure notice and its contract was not terminated by the VA. TC at 325. In addition, the record shows that Barnett and Ramel's subcontract relationship with a large business was acceptable so long as Barnett and Ramel, as the small business prime contractor, complied with the 50 percent limitation on subcontracting clause at FAR § 52.219-14, which was included in the solicitation. None of this establishes on its face that these two firms were not responsible contractors and we conclude that the VA's position, as stated above, does not provide a reasonable basis for it to decide not to procure its current VISN 9 requirement under a small business set‑aside. Finally, the record shows that the contracting officer's market research was inadequate and fails to support the determination not to set aside the current VISN 9 requirement for small business concerns. The first problem with the contracting officer's Pro-Net search is that she unreasonably limited her search to one state, Tennessee, as shown above, when VISN 9 also covers the states of Kentucky and West Virginia. When asked at the hearing conducted by our Office why she did not do the Pro-Net search for the three states covered in VISN 9 (or even nationwide), the contracting officer responded, “actually, when I did the Pro-Net search, I thought that block [on the Internet page] was 'where are you at' and I'm at Tennessee, so that's what I used and I came up with nothing.” TC at 491. In other words, the contracting officer unreasonably limited her Pro-Net search to the state of Tennessee because that is where she was located, thus ignoring the possibility that there could be small business concerns in at least the other two states, Kentucky and West Virginia, that might be interested in competing for the current VISN 9 requirement. Another problem with the contracting officer's Pro-Net search is that in inserting an average annual gross revenue amount corresponding to NAICS code 446130, the contracting officer inserted “$6.0,” not “$6,000,000.00.” During the hearing, the contracting officer could not point to anything that would suggest that the monetary figure inserted by her translated to “millions of dollars,” as opposed to just “dollars.” TC at 497-535, 547. As a result, it should have come as no surprise that no small business concern was found to have had an average annual gross revenue amount not exceeding “$6.00.”[8] At the hearing, our Office told the VA that we had performed a Pro‑Net search on a nationwide basis using “$6000000” and NAICS code 446130, without a “manufacturing, service” restriction; when pointed out to the VA that our search yielded 65 firms matching this criteria, the VA had no response. TC at 497. On this record, where the contracting officer's market research was geographically limited for no legitimate reason and where she used inaccurate information as the basis for her research, we conclude that the contracting officer's market research was materially deficient and could not reasonably be relied upon in determining not to conduct the current procurement as a small business set-aside.  (Rochester Optical Manufacturing Company, B-292247; B-292247.2, August 6, 2003)  (pdf)

As noted in our prior decision, it was the Army's decision in May 2002 to transfer this work to LOGJAMSS, the scope of which was broad and vague and did not specifically contemplate this work, that violated FAR § 19.502-2(b). That regulation requires the agency to consider setting aside this work for exclusive small business competition. The Army apparently now concedes that under FAR § 19.502-2(b) these services should be set aside for exclusive small business competition. As discussed above, any such competition must be a full and open competition among the eligible small businesses; there is no legal authority in such circumstances to limit this competition to certain designated small businesses. The Fort Polk motor pool work was not called out in the LOGJAMSS solicitation, and the fact that there was full and open competition for the LOGJAMSS contracts is therefore irrelevant to the application of the rule of two to the Fort Polk requirement.  [Request for Modification of Recommendation in Decision LBM, Inc., B-290682, September 18, 2002.]  (Department of the Army--Request for Modification of Recommendation, B-290682.2, January 9, 2003)

Here, there is no evidence in the record that the agency considered whether these services should be set aside exclusively for small business participation. Moreover, the Army does not dispute that there are at least two responsible small business concerns capable of competing for the Fort Polk motor pool services, nor does it contend that there was not a reasonable expectation of receiving fair market price offers. In fact, the record reflects that there are at least two responsible small business concerns capable of performing, that is, LBM and the small business contractor that most recently performed the services under a set-aside contract.  (LBM, Inc., B-290682, September 18, 2002)  (pdf)

While the use of any particular method of assessing the availability of small businesses is not required, and measures such as prior procurement history, market surveys and advice from the agency's small business specialist and technical personnel may all constitute adequate grounds for a contracting officer's decision not to set aside a procurement, American Imaging Servs., Inc., B-246124.2, Feb. 13, 1992, 92-1 CPD para. 188 at 3, the assessment must be based on sufficient facts so as to establish its reasonableness. McSwain & Assocs., Inc.; Shel-Ken Properties, Inc.; and Elaine Dunn Realty, B-271071 et al., May 20, 1996, 96-1 CPD para. 255 at 2-3.  (MCS Management, Inc., B-285813; B-285882, October 11, 2000)

In structuring the multiple contract alternative, DSCP determined to compete scenarios 1 and 2 using full and open competition, and to set aside scenario 3 for small business concerns. Under the single contract alternative, a contract will be awarded on the basis of full and open competition. Id. at 5. The protesters raise several arguments challenging the agency's determination to set aside only one of the three scenarios for small business concerns and, alternatively, its failure to partially set aside scenarios for which a total set-aside was not appropriate. We find that the agency reasonably determined that it was appropriate to totally set aside only one scenario, but that the agency improperly failed to consider whether partial set-asides for the remaining scenarios were required.  (Belleville Shoe Manufacturing Company; Altama Delta Corporation;, B-287237; B-287237.2; B-287237.3, May 17, 2001)

Specifically, while we recognize that this challenge focuses on, and is triggered by, the decision to use a task order under GSA's ID/IQ contract to procure travel services at Travis AFB, this complaint, in essence, raises the question of whether the solicitation for the underlying ID/IQ contracts properly included Travis despite the claimed independent requirement to reserve the Travis effort for small businesses. Thus, as discussed in greater detail below, we conclude that the small business protesters are mounting a challenge to the terms of the underlying solicitation, and that the limitation on our bid protest jurisdiction in 10 U.S.C. sect. 2304c(d) therefore does not apply to this protest. Since we are charged by statute with reviewing protests alleging that a solicitation does not comply with applicable procurement statutes and regulations, 31 U.S.C. sect.sect. 3552, 3554(b)(1), we conclude that this portion of the protest is properly within our bid protest jurisdiction. Ocuto Blacktop & Paving Co., Inc., B-284165, Mar. 1, 2000, 2000 CPD para. 32 at 4-5.  (N&N Travel & Tours, Inc.; BCM Travel & Tours; Manassas Travel, Inc.;, B-285164.2; B-285164.3, August 31, 2000)

Contrary to the central thrust of the protester's arguments, in making set-aside decisions, agencies need not make determinations tantamount to affirmative determinations of responsibility; rather, they need only make an informed business judgment that there is a reasonable expectation of receiving acceptably priced offers from small business concerns that are capable of performing the contract. American Medical Response of Conn., Inc., B-278457, Jan. 30, 1998, 98-1 CPD para. 44 at 2-3; Anchor Continental, Inc., B-220446, Feb. 6, 1986, 86-1 CPD para. 137 at 3-4; Fermont Div., Dynamics Corp. of Am.; Onan Corp., B-195431, June 23, 1980, 80-1 CPD para. 438 at 8-9. The historical information available to the agency here was sufficient to permit it to make such an informed judgment. The set-aside therefore was unobjectionable.  (SAB Company, B-283883, January 20, 2000)

The record shows that an important factor in the agency's determination to issue the RFP on an unrestricted basis was the contracting officer's belief, gained through communications with the subscribers, that only the two large businesses "currently secure . . . front-end sales and movement data from the civilian grocery chains on a nationwide basis." Contracting Officer's Statement of Fact at 1-2. As MMI points out, however, the RFP does not require commercial grocery data on a nationwide basis; rather, the required database is more limited in scope, since only "comparable sales/movement data from commercial grocery stores within the same geographical areas" as the DeCA commissaries is required. RFP SOW at 4. The RFP also did not require any firm to have the necessary databases in place prior to award. MMI, in response to the agency report, identifies several firms, including at least two other small business concerns, which operate in this industry and have access to, or could obtain, the requisite data; DeCA has not specifically challenged the capability of the firms identified by MMI. Since the RFP does not require a potential offeror to have a subscription for the DeCA commissary data or the comparable commercial data in place at the time of proposal submission, a market survey limited to the three current subscribers was insufficient to reasonably assess potential industry interest and capability to meet the agency's needs, particularly regarding small businesses.  (Marketing & Management Information, Inc., B-283399.2; B-283399.3, November 30, 1999)

The set-aside determination was proper. Because the acquisition here was of the same size and type as the successful set-asides in the southeast, and there was no apparent reason to expect a different outcome merely due to geography, we think the contracting officer reasonably relied on his prior experience in initially deciding to set this procurement aside.  (Stewart Title Company of Illinois, B-283291, October 18, 1999)  

Further, as already explained, there is no evidence in the record that the agency made any attempt to contact any of the small businesses that had responded to the initial DSC-OH CBD announcement, or surveyed the three small business firms that responded to the subsequent DISC-PA CBD announcement. In addition, there is no evidence in the record that the agency made any attempt to coordinate its determination with the Small Business Administration or with the agency's Small Business Utilization Specialist. See FAR sec. 19.401, 19.501(c). In short, we conclude that there is no evidence in the record that the agency made any reasonable effort to adequately survey the market place in order to determine whether there are any small businesses capable of performing the contract.  (Safety Storage, Inc., B-280851, October 29, 1998)

I.     Background

On October 12, 2010 defendant issued RFQ-0043 for the procurement of 533 shifter forks. AR 9-11 (RFQ-0043). Shifter forks were listed as “a critical application item” and are part of the shifting mechanism in M939 series five-ton trucks. AR 11 (RFQ-0043); AR 254 (Apr. 1, 2011 Contracting Officer Memorandum for Record (CO Memo)). The Original RFQ was issued as a small business set-aside [SBSA], AR 9 (RFQ-0043); the estimated value of the Original RFQ was $73,551, AR 99 (DLA memo).

(sections deleted)

On November 29, 2010, nearly five weeks after the October 26, 2010 closing date for offers, AR 9 (RFQ-0043), the DLA buyer of shifter forks, [Elizabeth ______], prepared a “Memo for file” that sought the dissolution of the SBSA associated with the Original RFQ, AR 99 ([______] Memo); AR 254-55 (CO Memo). Ms. [______] “reviewed the procurement and made a determination that the solicitation should not have been set aside to begin with.” AR 254 (CO Memo). Citing DAG 19.502-2(b)(ii)(a), Ms. [______] reasoned that there was not a “reasonable expectation that two or [more] small business concerns were going to offer the product of [a] small business manufacturer.” AR 255 (CO Memo); AR 99 ([______] Memo); see FAR 19.502-2(a).

Ms. [______’s] memo was never reviewed or approved by the contracting officer, Richard [____] (Mr. [____]). AR 255 (CO Memo); id. at 257 (identifying Mr. [____] as the contracting officer). Ms. [______] believed, however, that the SBSA had been dissolved and “proceeded as if the solicitation had been issued on an unrestricted basis.” AR 255 (CO Memo). On December 15, 2010 defendant awarded the contract to Science Applications International Corporation (SAIC), a large business concern, which offered shifter forks manufactured by AxleTech International (AxleTech). AR 254-55 (CO Memo); see AR 133-51 (SAIC Purchase Order). At the time of the award to SAIC, the DLA product specialist believed that AxleTech had been previously approved as a source of shifter forks. AR 159, 165 (Dec. 20, 2010 DLA email correspondence between Meritor and DLA); AR 183 (Dec. 21, 2010 DLA email). However, AxleTech’s shifter forks were not acceptable because their dimensions “prevent[ed] the fork from fitting on the transfer clutch.” AR 205 (May 21, 2009 DSCC email); AR 255 (CO Memo) (stating that the SAIC offer of AxleTech-manufactured shifter forks “had been erroneously determined to be [] acceptable”).

On December 16, 2010 Meritor contacted Ms. [______] and “advised that the award was improper because SAIC [was] not supplying either an approved Meritor or GWI [shifter fork].” AR 256 (CO Memo). The following day, GWI objected to the award and requested a debriefing pursuant to FAR 15.506. AR 180 (Dec. 17, 2010 GWI email). The court received GWI’s Complaint on January 4, 2011. See Compl. 1.

After recognizing that that the AxleTech part was “technically unacceptable,” AR 213 (Dec. 30, 2010 DLA email), defendant cancelled its award to SAIC on January 3, 2011, AR 229 (SAIC Cancellation Order); AR 216 (Jan. 3, 2011 DLA email), and canceled the Original RFQ shortly thereafter, see AR 261 (Procurement History) (stating that RFQ-0043 was canceled); Pl.’s Resp. 2 (stating that the AR does not indicate when defendant cancelled RFQ-0043, “but it would seem eminently reasonable to presume that such cancellation did not occur before the cancellation/termination” of the award on January 3, 2011); EDR 4:27:00-14 (Mr. [__________]) (representing that RFQ-0043 was cancelled between January 3 and January 5, 2011).

Defendant subsequently issued, and ultimately canceled, at least three additional shifter fork acquisition solicitations in January and March of 2011.5 See Def.’s Opp’n to Pl.’s Mot. to Supplement the Administrative R. (Def.’s Opp’n), Dkt. No. 49, at 2-3 (referring to RFQ-0333 as the Second RFQ, RFQ-0423 as the Third RFQ and RFQ-0606 as the Fourth RFQ). On January 11, 2011 defendant “attempted to re-procure the shifter forks through unrestricted competition by issuing Request for Quotations SPM7L3-11-Q- 0333 [(RFQ-0333 or Second RFQ)].”6 Id. at 2; AR 237 (RFQ-0333) (listing January 11, 2011 as the issue date). Defendant canceled the Second RFQ ten days later after discovering documentation problems. Def.’s Opp’n 2; Pl.’s Corrected Updated Mot. to Supp. the R., Dkt. No. 43, Ex. 6 (Notice of Cancellation of RFQ-0333). On January 26, 2011 defendant’s automated procurement system issued SPM7L3-11-Q-0423 (RFQ-0423 or Third RFQ) in error. Def.’s Opp’n 2; Pl.’s Corrected Updated Mot. to Supp. the R., Ex. 7 (RFQ-0423). “Because it was not ready to proceed with a re-procurement at that time,” Def.’s Opp’n 2, defendant canceled the Third RFQ on February 1, 2011, Def.’s Notice, Dkt. No. 28, at 1. In late March of 2011, defendant’s automated procurement system again issued a solicitation in error, SPM7L3-11-Q-0606 (RFQ-0606 or Fourth RFQ), and it was canceled shortly thereafter. Def.’s Opp’n 3; see Pl.’s Corrected Updated Mot. to Supp. the R., Ex. 9 (Apr. 5, 2011 DLA email).

B. Parties’ Cross Motions for Judgment on the Administrative Record

1. Defendant’s Cancellation of RFQ-0043 and Subsequent RFQs

(sections deleted)

The administrative record shows that the award of the Original RFQ to SAIC contained at least two significant errors. First, although the Original RFQ was issued as a small business set aside, defendant nevertheless awarded the contract to a large business concern. Second, the awardee was offering an unapproved product manufactured by AxleTech. The administrative record indicates that it was the second defect that prompted the contracting officer to cancel the Original RFQ. On December 30, 2010 Mr. [____] received an email from DLA’s Senior Counsel, which states:

The problem is the AxleTech part (that we previously bought) is technically unacceptable. See attached documents.

That is why I said that a statement similar to the following needs to be inserted in the PID/AID/POT: “AxleTech Part number 3296-C-107 is not acceptable.” Or something needs [to be] done that will prevent future product specialists from approving this item for award as “previously supplied[.]”

As far as what action is to be taken. SAIC’s contract needs to be canceled. Hopefully we can get a no-cost cancellation.

The only question is whether we want [to] just cancel the requirement and start over or make an award to the best value offeror that is providing a technically acceptable part.

AR 217 (Dec. 30, 2010 DLA email) (emphasis added) (footnote added). On January 3, 2011 a contracting officer notified DLA’s Senior Counsel that the SAIC purchase order was being cancelled. AR 213 (Jan. 3, 2011 DLA email).

The December 30, 2010 email from DLA’s Senior Counsel is the most relevant and closely contemporaneous document in the AR regarding the cancellation of RFQ-0043. The email proposed two options for dealing with the non-conforming AxleTech part: start over by issuing a new RFQ or “make an award to the best value offeror that is providing a technically acceptable part.” AR 217 (Dec. 30, 2010 DLA email). Both options were reasonable given the AxleTech error, and it appears to the court that Mr. [____] chose the former in order to “prevent future product specialists from approving [the AxleTech part] for award as ‘previously supplied.’” See id. The fact that plaintiff would have preferred Mr. [____] to have made an “award to the best value offeror that is providing a technically acceptable part,” id., is not relevant to Mr. [____]’s decision. It does not appear that Mr. [____] was offered an alternative justification for cancellation, namely, that the solicitation did not properly notify offerors that the AxleTech part was unacceptable. See id.

Plaintiff argues that it “had an absolute right to the award” of the original RFQ under FAR 19.502-2(a). Pl.’s Mem. 15. Defendant disagrees. Def.’s Reply 4. FAR 19.502-2(a) states, in relevant part:

Each acquisition of supplies . . . is automatically reserved exclusively for small business concerns and shall be set aside for small business unless the contracting officer determines there is not a reasonable expectation of obtaining offers from two or more responsible small business concerns that are competitive in terms of market prices, quality, and delivery. . . . If the contracting officer receives only one acceptable offer from a responsible small business concern in response to a set-aside, the contracting officer should make an award to that firm.

FAR 19.502-2(a).

Defendant first argues that the “snippet of language in section 19.502-2(a)” relied upon by plaintiff does not apply if “‘the contracting officer determines there is not a reasonable expectation of obtaining offers from two or more responsible small business concerns that are competitive.’” Def.’s Reply 4 (quoting FAR 19.502-2(a)). According to defendant, because DLA “‘at no time’ had such ‘a reasonable expectation’ of competition in connection with [the Original RFQ],” Def.’s Reply 4 (quoting AR 256-57 (CO Memo)), plaintiff’s reliance on FAR 19.502-2(a) is inapposite, id. Defendant claims that, if DLA had placed an order with GWI under the Original RFQ “at a time when the agency already had determined that the Original RFQ was improper,” DLA “arguably would have abused its discretion.” Def.’s Mot. 22 (citing AR 256 (CO Memo)).

Defendant also contends that:

[t]his case is unlike a situation where the agency does have a reasonable expectation of receiving two or more quotes from small businesses offering the product manufactured by a small business and properly sets aside the procurement for small business, but for whatever reason, the agency only receives one such quote from a responsible firm. Under those
circumstances, not present here, the agency normally would place an order with the firm that submitted the quote.

Def.’s Mot. 22-23 (emphasis in original) (citing FAR 19.502-2(a)). Defendant’s position is that here, however, DLA “did not have a reasonable expectation of receiving two or more quotes from small businesses offering the product manufactured by a small business, and the agency concluded that the Original RFQ was improperly set aside for small business.” Id. at 23 (emphasis in original) (citing AR 99 (Ms. Hanlon Memo); AR 256 (CO Memo); AR 262 (Procurement History)). Defendant concludes that GWI’s argument “that the agency violated the law by trying to adhere to it makes no sense.”Id.

Defendant argues in the alternative that FAR 19.502-2(a) “is not mandatory and does not direct the agency to make an award to any particular firm or to make any award at all.” Def.’s Reply 4 (citing FAR 19.502-2(a)). As defendant correctly points out, FAR 19.502-2(a) employs “should,” a permissive term that “reserves discretion to the agency.” Def.’s Reply 4 (citing United States v. UPS Customhouse Brokerage, Inc., 575 F.3d 1376, 1382 (Fed. Cir. 2009) (comparing “will,” which is “a mandatory term, not a discretionary one,” with “discretionary terms such as ‘should’” when interpreting a different federal regulation)); 3 Norman J. Singer & J.D. Shambie Singer, Sutherland Statutes and Statutory Construction § 57:3, at 30 (7th ed. 2008) (“‘Should’ generally denotes discretion and should not be construed as ‘shall.’”); see Cybertech Grp., Inc. v. United States, 48 Fed. Cl. 638, 649 (2001) (“[I]n everyday discourse, ‘shall’ is used to denote an affirmative command or obligation whereas ‘should,’ by contrast, is used to denote a request or suggestion.”). The court agrees with defendant that the regulations do not compel the agency to make an award to GWI.

2.   Defendant’s Dissolution of the SBSA for Shifter Fork Procurements

Plaintiff requests that the court declare that the dissolution of SBSA status for the “subject procurements is unlawful, arbitrary, capricious, and erroneous,” and permanently enjoin the dissolution of SBSA status for shifter fork procurements. Pl.’s Mem. 2. Plaintiff maintains that GWI received ten requests for quotation from small businesses to supply shifter forks for the cancelled Second RFQ. Id. at 11. Plaintiff further argues that DLA’s sudden cancellation of the Third RFQ “again left [GWI] with no opportunity to provide quotes in response to the Requests for Quotations from other small businesses.” Id.

Defendant maintains that the contracting officer’s decision to issue the New RFQ through unrestricted competition is rational. Def.’s Mot. 18. Defendant states that the contracting officer’s decision that no reasonable expectation existed that at least two small businesses would submit offers “was based upon a detailed analysis of the procurement history and the results of recent market research documented in the [AR].” Id. at 19 (citation omitted). Declaring that “‘competition is the bedrock principle of procurement law,’” id. at 22 (quoting Tyler Constr. Grp. v. United States, 83 Fed. Cl. 94, 99 (2008), aff’d, 570 F.3d 1329 (Fed. Cir. 2009)), defendant argues that GWI’s claim that DLA is required to set aside the subject RFQ for small business “is tantamount to requiring a sole source contract without meaningful competition—gaming the system—in clear derogation of Federal law,” id.

Defendant also disputes GWI’s speculation that “as many as ten or more small business firms might compete in the future with offers of Gear Wizzard’s shifter forks,” noting that, “to date, none of them have done so.” Id. at 20 (citing AR 262 (Procurement History)). According to defendant, GWI declined DLA’s “request for contact information for all but three of the firms, and those three firms indicated that they were not likely to compete.” Id. at 20-21 (citing AR 263 (Procurement History), 266-69 (DLA and GWI emails)). Defendant concludes, and the court agrees, that GWI fails to “point to any ‘hard facts’ in the record that would be necessary to impeach the agency’s good faith analysis of this fact intensive issue.” Id. at 21 (citations omitted).

According to the Procurement History, three previous procurements of shifter forks had been set aside for small business. AR 261 (Procurement History) (referring to RFQ-0326, RFQ-0409 and RFQ-0233). The first procurement issued as a SBSA followed GWI’s approval as a source of shifter forks, so it was reasonable for DLA “to expect that two or more of the many small business concerns that had previously supplied the Meritor part would likely offer the newly approved Gear Wizzard part.” AR 261 (discussing RFQ-0326). The Procurement History states that the second procurement should have been “solicitated as unrestricted, because the estimated value of the procurement was in excess of $25,000 . . . and the prior acquisition . . . demonstrated that there was no reasonable expectation that two or more small business concerns were going to offer the product of [a] small business manufacturer.” Id. (discussing RFQ- 0409). Finally, because the value of the third procurement was estimated to be below $25,000, it fell within the exception to the nonmanufacturer rule and was awarded to a small business concern that offered Meritor’s part. Id. (discussing RFQ-0233) (citing FAR 19.201(f)(7)).

Based on the Procurement History, which includes the fact that DLA has never received two or more quotes from small businesses offering shifter forks manufactured by a small business concern, DLA concluded that the Original RFQ should have been solicited as unrestricted. AR 262 (discussing RFQ-0043). The court agrees that DLA “had a rational basis for its finding that the Original RFQ erroneously had been designated as a set aside.” Def.’s Reply 3 (citing AR 262 (Procurement History)).

Moreover, the contracting officer’s market research indicates that it was difficult for other small businesses to compete with GWI’s price on its own product. In response to GWI’s January 22, 2011 email protesting the dissolution of the SBSA “for . . . any . . . Shifter Fork procurement,” AR 269-70 (Jan. 22, 2011 GWI email), the Acting Associate Director of DLA’s Small Business Programs Office, Ms. [_________], requested a list of these small business concerns, AR 269 (undated DLA email), “so that the contracting officer could conduct market research and confirm their ability to supply the Gear Wizzard part,” AR 262 (Procurement History). In an email dated February 5, 2011, GWI provided Ms. [_________] with the names of twenty-seven small businesses that could be “reasonably expected” to offer GWI’s part. AR 268 (Feb. 5, 2011 GWI email). GWI also noted that “[a]t least 18 small businesses submitted offers on [DLA’s] last aborted acquisition” of shifter forks. Id.

Apparently dissatisfied with this list of businesses, Ms. [_________] repeated her request for a list of “small businesses that are ready, willing and able to submit offers to supply the Shifter Forks manufactured by GWI.” AR 267 (undated DLA email). GWI ultimately provided Ms. [_________] with the names and addresses of three small businesses: Pioneer Ind., Inc. (Pioneer), JGILS, LLC (JGILS) and Kampi Components Co., Inc. (Kampi). AR 267 (Feb. 12, 2011 GWI email).

Ms. [______] contacted each of these three businesses and inquired: “If [shifter forks are] set-aside for small business concerns are you able to quote the Gear Wizzard part number GWI-C0107?” AR 278-79 (Feb. 15, 2011 [______] email to Pioneer); AR 275 (Feb. 15, 2011 Hanlon email to JGILS); AR 273 (Feb. 17, 2011 [______] email to Kampi). Pioneer stated that it doubted GWI would be “willing provide pricing as an estimate at this time.” AR 277 (Feb. 17, 2011 Pioneer email). JGILS simply responded: “We cannot quote this guy.” AR 275 (Feb. 15, 2011 JGILS email). Kampi’s response was more detailed, explaining that GWI quotes “direct on this item,” and that, therefore, GWI’s quote would “more than likely[] be more competitive” than Kampi’s. AR 272 (Feb. 17, 2011 Kampi email). The representative requested that the government refrain from soliciting Kampi for items that the government “intend[s] to award to the manufacturer anyway.” Id. Kampi’s representative further stated:

Kampi does our best to help with the needs of our government customer, however it has become cost prohibitive to constantly submit and subsequently update bids when the reality of the situation is that we will not receive the award. With that being said[,] yes[,] we are interested in quoting assuming our quotation is actually being considered. We are unable to provide an estimated delivery or unit price until we have a quantity.

Id.

Relying on this market research and the Procurement History, DLA determined that it did not “have a reasonable expectation of obtaining offers from two or more responsible small business concerns that are competitive in terms of market prices, quality and delivery that will offer the approved part manufactured by Gear Wizzard,” and that the new procurement should be issued as unrestricted. AR 263 (Procurement History). Accordingly, DLA prepared a new DD Form 2579 “Small Business Coordination Record” recommending that the procurement be solicited on an unrestricted basis. AR 258-59 (DD Form 2579).

DLA shared its DD Form 2579, market research and the Procurement History with the SBA. AR 258-79 (DD Form 2579 and Attachment). A representative of SBA concurred in defendant’s recommendation that the procurement be solicited on an unrestricted basis. AR 258 (DD Form 2579). On April 1, 2011 defendant issued an unrestricted New RFQ for the procurement of 335 shifter forks (NSN-8717), with a closing date for offers on May 31, 2011. AR 280-82 (RFQ-0780). The estimated value of the Fifth RFQ is $37,114.65. AR 257 (CO Memo).

“The decision not to set aside a solicitation for small business concerns is a matter of business judgment within the contracting officer’s discretion and, as such, must be upheld unless the Court finds the decision to be arbitrary, capricious, an abuse of discretion or otherwise not in accordance with the law.” Benchmade Knife Co. v. United States, 79 Fed. Cl. 731, 738 (2007) (internal quotation omitted); see Admiral Towing & Barge Co., B-291849 et al., 2003 WL 22309106, at *3 (Comp. Gen. Mar. 6, 2003). “While the use of any particular method of assessing the availability of small businesses is not required, and measures such as prior procurement history, market surveys, and/or advice from the agency’s small business specialist and technical personnel may all constitute adequate grounds for a contracting officer’s decision not to set aside a procurement, the assessment must be based on sufficient facts so as to establish its reasonableness.” Rochester Optical Mfg. Co., B-292247 et al., 2003 WL 21884877, at *3 (Comp. Gen. Aug. 6, 2003) (internal citation omitted); see MCS Mgmt., Inc. v. United States, 48 Fed. Cl. 506, 511, aff’d, 25 F. App’x 957 (Fed. Cir. 2001). The court finds that the contracting officer’s decision to cancel the Original RFQ and issue the New RFQ on an unrestricted basis was reasonable, rationally based on sufficient facts and not in violation of law.  (Gear Wizzard, Inc. v. U. S., No. 11-007C, June 16, 2011)  (pdf) 

2. Application of the 50% rule under FAR 52.219-14

The SSS¹ required a respondent to demonstrate that it could perform 50% of the requirements itself. Ms. Lindom’s D & F states the following:

5. The senior leadership of the 709 NSS conducted an analysis to determine if there were potential small businesses that could successfully perform these new requirements in compliance with FAR 52.219-14, Limitation on Subcontracting, which requires at least 50% of the cost of contract performance incurred for personnel shall be expended for employees of the small business. They concluded that there were no small businesses that possessed adequate resources in the breadth of technical disciplines required by the 709 NSS.

AR at 406. Plaintiff argues that the contracting officer improperly and unreasonably utilized FAR 52.219-14 and applied the 50% rule in making the determination that there is not a reasonable expectation that two or more small businesses would submit offers for a solicitation.

FAR 52.219-14 provides, in relevant part:

(b) By submission of an offer and execution of a contract, the Offeror/Contractor agrees that in performance of the contract in the case of a contract for--
(1) Services (except construction). At least 50 percent of the cost of contract performance incurred for personnel shall be expended for employees of the concern.

Defendant responds that FAR 52.219-14 would be included in any contract award because the limitation on subcontracting is a material term of a small business contract. As a consequence, defendant argues, the Air Force properly considered the limitation on subcontracting in evaluating the Statements of Capabilities because it was assessing whether small businesses could satisfy the material terms of the procurement and submit “technically acceptable offers.” Def.’s Br. filed May 4, 2009, at 8. The Air Force anticipated that some of its technical support would be made on an as-needed and short-term basis, sometimes within hours or days, as substantiated by Capt. Norman. See (First) Norman Declaration Mar. 26, 2009, ¶ 12.

In citing to Chapman Law Firm v. United States, 63 Fed. Cl. 519, 527 (2005), aff’d in part and rev’d and remanded in part on other grounds, 490 F.3d 934 (Fed. Cir. 2007), for support, defendant urges the court to view the 50% rule as a technical requirement that plaintiff show its personnel with the requisite skills and experience to meet the Air Force’s requirements on a sometimes as-needed and short-term basis.

In Chapman the court found the following proposition to be instructive:

As a general matter, an agency’s judgment as to whether a small business offeror will comply with the subcontracting limitation is a matter of responsibility, and the contractor’s actual compliance with the provision is a matter of contract administration. However, where a proposal, on its face, should lead an agency to the conclusion that an offeror could not and would not comply with the subcontracting limitation, we have considered this to be a matter of the proposal’s technical acceptability; a proposal that fails to conform to a material term and condition of the solicitation, such as the subcontracting limitation, is unacceptable and may not form the basis for an award.

63 Fed. Cl. at 527 (quoting Coffman Spec., Inc., B-284546, B-284546.2, 2000 WL 572693, at *4 (Comp. Gen. May 10, 2000). Chapman is distinguishable because the technical evaluation of proposals was undertaken after a solicitation. However, defendant’s point is well taken in the context of an agency’s determining whether it is reasonable to expect responsible small businesses to submit offers.

Defendant thus takes the position that it was appropriate for the Air Force to include the limitation on subcontracting in its preliminary analysis under FAR 19.502-2. According to defendant, the specific, as-needed tasks, although undefined, did not prevent the Air Force from properly performing this preliminary analysis because the nature of the specific work requirements was specified, and as-needed support could require the respondents to demonstrate that they themselves were capable of filling the entire range of requirements. The evaluators reasonably could glean this information under FAR 19.502-2(b) by having the respondents identify the skills of their employees and not their subcontractors.

The SSS bulleted a number of required skills spanning across “[a] broad range of technical levels across the following engineering and science fields” that respondents should demonstrate that they could provide: “Microbiology; Chemistry; Biology; Operations research; Geology; Aerospace engineering; Mechanical engineering; Electrical engineering; Physics; Civil Engineering; Computer Engineering; Nuclear Engineering; Computer Science; Materials Science.” AR at 30-31. The SSS also enumerated specific expertises that the NSS would need for the set-aside, such as expertise in “neutralization methodologies & tools for chemical compounds to include bulk neutralization techniques” and in “nuclear weapon design, analysis, effects, and assessments.” Id. at 30.

Defendant finds support in the record from a request for clarification from Contracting Officer Lindom sent to plaintiff on July 24, 2008, asking for the qualifications and a matrix that facilitated plaintiff’s response:

We request that you provide clarification of the information provided in the area of relevant experience and ability to perform a minimum of 50% of the effort. To help clarify the Statements of Capabilities submitted, request that you fill out the attached table detailing the qualifications, education, and experience of the personnel submitted in your Statement of Capabilities.

AR at 42. Plaintiff’s July 29, 2008 response stated that its original answer “meets the FAR 52.219-14 requirements.” Id. at 44. Plaintiff advised that, unless the Air Force is more specific about the task distribution in each mission area, it cannot answer the question more thoroughly. Id.

The Air Force provided plaintiff with a specific request. Plaintiff’s response, however, sought to substitute its concept of what the Air Force needed to satisfy the anticipated procurement, i.e., a breakdown by task, rather than the information specified. The manner in which the Air Force assesses its technical needs lies within its own discretionary domain. See E.W. Bliss Co. v. United States, 77 F.3d 445, 449 (Fed Cir. 1996) (stating, in the context of a negotiated procurement, that “the minutiae of the procurement process in such matters as technical ratings[ ], . . . involve discretionary determinations of procurement officials that a court will not second guess”).

Plaintiff continues that, even if the Air Force’s nonresponsibility determination was not premature and was properly made, Ms. Lindom should have referred plaintiff to the SBA for a possible COC, pursuant to FAR 19.601(d). In contrast, defendant characterizes the determination made by Ms. Lindom as a preliminary determination under subpart 19.5 of the FAR. FAR 19.601(d) provides that “[w]hen a solicitation requires a small business to adhere to the limitations on subcontracting, a contracting officer’s finding that a small business cannot comply with the limitation shall be treated as an element of responsibility and shall be subject to the COC process. . . .” (Emphasis added.) The first observation made when reviewing FAR 19.601 is that section (d) plainly refers to nonresponsibility determinations following the issuance of a solicitation for a small business concern. Moreover, when faced with a similar issue on appeal, the Federal Circuit made this distinction, finding that FAR 19.602-1 applies to an award that already has been set aside for a SBA program. Blue Dot Energy Co. v. United States, 179 Fed. App’x 40, 46 (Fed. Cir. 2006) (unpublished). This unpublished opinion is not cited as precedent; however, the Federal Circuit has indicated its view. See Fed. Cir. R. 32.1(d) (stating that “[t]he court may refer to a nonprecedential disposition in an opinion or order and may look to a nonprecedential disposition for guidance or persuasive reasoning, but will not give one of its own nonprecedential dispositions the effect of binding precedent”). The initial determination of whether to set aside the contract is made by the Air Force and not one that requires referral to the SBA. Id.

The facts and issues addressed in JT Construction, No. B-254257, 1993 WL 505803 (Comp. Gen. Dec. 6, 1993), provide a comparable situation. The potential bidder in JT Construction, a small disadvantaged business (“SDB”), responded to a synopsis advertised by the Air Force to determine whether two or more responsible SDBs would submit an offer for a contract to renovate military family housing units. The protestor argued that the requirements specified in the synopsis were “far in excess” of what is needed for the contracting officer to reasonably determine whether to set-aside the contract for a SDB. Id. at *2 (citing Defense Federal Acquisition Regulation Supplement 48 C.F.R. § 219.502-2-70 (1993)). The protestor also added that its response fully addressed the specified requirements; the Air Force’s determination that it would not receive offers from at least two responsible SDB concerns was “a premature impermissible determination of nonresponsibility without referral of the determination to the” SBA. Id.

The GAO responded that it generally views such determinations as a business judgment and within the contracting officer’s discretion. Id. Nevertheless, the contracting officer has a duty to make a reasonable effort in ascertaining information to assist in making this determination. The GAO found the inquiry made by the Air Force to be reasonable, considering that the Air Force is obligated to make an affirmative determination under the FAR and given that the contract was for a renovation project that had an estimated cost of $5 to $10 million. See id. at *3. The GAO also found, in response to the protestor’s assertion that it submitted sufficient evidence for the Air Force to assess its financial status, that the synopsis provided clear instructions on what information was required in order to assess responses. Finally, the GAO faulted the protestor for failing to distinguish between a determination of whether two or more responsible SDBs will submit an offer and one whereby an offeror is not considered responsible to perform a contract. Id. at *4 (citation omitted). In the former, the Air Force is making a pre-solicitation determination about the responsibility of potential bidders, whereas the latter determination precludes a potential awardee from receiving a contract. See id. It is the possible preclusion of a putative small business awardee for failure to satisfy the 50% subcontracting limitation that must be referred to the SBA.

The Air Force’s requirement in the SSS is that plaintiff “[c]learly demonstrate the ability as the prime to complete fifty percent of the effort for each mission area as well as all areas concurrently and demonstrate how the efforts not supported by the prime will be supported,” AR at 31, fairly can be characterized as an initial responsibility determination that does not trigger referral to the SBA. See Blue Dot, 179 Fed. App’x at 46 (citing JT Constr. Co., B-254257, 1993 WL 505803, at *4). 19/ The applicable provision, FAR 19.502-2(b), inherently includes an initial responsibility determination, as the regulation provides that “[t]he contracting officer shall set aside any acquisition over $100,000 for small business participation when there is a reasonable expectation that [] offers will be obtained from at least two responsible small business concerns . . . .” (emphasis added). As defendant emphasizes, plaintiff has not explained why a preliminary determination under FAR 52.219- 14 is distinguishable from the other preliminary determinations that the Air Force has the discretionary authority to make under FAR 19.502-2(b).

Plaintiff’s next criticism of the Air Force’s use of the 50% subcontracting limitation in the SSS is that the NSS’s requirements are too undefined for proper application of the rule. The parties do not dispute that the Air Force’s requirements were undefined. However, the specific areas of expertise were listed, see AR at 30-31, and the Air Force did not unreasonably seek respondents that could supply them.

If plaintiff had identified its employees, as opposed to those of its subcontractor, defendant maintains that undefined tasks would not preclude the Air Force from evaluating the capabilities of the small business on a reasonable basis. Given that the Air Force was required to make an affirmative determination under FAR 19.502-2(b), the reasonableness of an inquiry made during the market-research stage of a procurement process should be measured against the nature of the procurement. See JT Constr., No. B-254257, 1993 WL 505803, at *3. Given that the proposed contract, estimated to be a $36 million effort over a five-year period, was seeking technical support for the Air Force’s counterproliferation and nuclear weapons efforts, see AR at 26, 31, the Air Force could “reasonably request the scope and type of information requested in the” SSS, JT Constr., No. B-254257, 1993 WL 505803, at *3.

Plaintiff’s final argument on the 50% requirement, and its bearing on the reasonableness of the D & F, is that the Air Force lacked a rational basis for concluding that plaintiff could not meet this 50% subcontracting requirement. Plaintiff maintains that it provided sufficient information for the Air Force reasonably to conclude that plaintiff could comply with the subcontracting limitation by: 1) its past performance of a 51% effort over the last five years of the ARSS contract (Pl.’s Br. filed May 4, 2009, at 13 citing AR at 115); 2) a table demonstrating its area coverage capability (id. citing AR at 117); 3) the resumes of fifty-nine individuals who would be able to provide services under the NSS contract, fourteen of whom are plaintiff’s employees (id. at 14 citing AR at 124-255); and 4) a matrix evidencing that twelve of plaintiff’s employees possess skills applicable to more than one mission area (id. citing AR at 120-21). Plaintiff explains that it did not respond to Ms. Lindom’s July 24, 2008 e-mail because plaintiff already had provided the requested information in its Statement of Capabilities and could not offer more specific information without a specific task distribution.

Defendant undermines plaintiff’s position with two salient points. First, defendant charges that plaintiff failed to establish it could satisfy the NSS’s requirements through its own fourteen employees, and not through plaintiff’s subcontractors. Second, defendant reviews all of the resumes of the fourteen employees submitted by plaintiff, highlighting the bases upon which the NSS concluded it did not have a reasonable expectation that these employees could satisfy 50% of the contract effort. See Def.’s Br. filed May 11, 2009, at 8- 10.

Defendant undermines plaintiff’s position with two salient points. First, defendant charges that plaintiff failed to establish it could satisfy the NSS’s requirements through its own fourteen employees, and not through plaintiff’s subcontractors. Second, defendant reviews all of the resumes of the fourteen employees submitted by plaintiff, highlighting the bases upon which the NSS concluded it did not have a reasonable expectation that these employees could satisfy 50% of the contract effort. See Def.’s Br. filed May 11, 2009, at 8- 10.

Plaintiff’s argument would be, and was, much more convincing when review of the reasonableness of the Air Force’s decision was based on the D & F alone at the time defendant was arguing lack of jurisdiction and mootness. And, although the administrative record reveals that the Air Force reluctantly performed the required analysis under FAR 19.502-2(b), and only did so after plaintiff forced the issue, the FAR does not require the Air Force to negate evidence of a predisposition. The Air Force was required to allow plaintiff a full opportunity to make its case during the market-research phase of this procurement. The court has read the three technical evaluations of the three respondents’ Statements of Capabilities. The evaluations at this early phase are more detailed, coherent, and explanatory than this court has seen in reviewing typical evaluations of technical proposals submitted in response to solicitations for competitive procurements. Plaintiff’s submission was treated fairly. See, e.g., Centex Corp. v. United States, 395 F.3d 1283, 1304 (Fed. Cir. 2005) (stating that every contract includes the implied covenant of good faith and fair dealing).

Plaintiff has proved neither an unreasonable agency decision nor a clear and prejudicial violation of an applicable procurement regulation.  (Rhinocorps Ltd. Co., v. U. S., No. 08-410C, June 4, 2009)  (pdf)

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¹  Sources Sought Synopsis

The Court therefore finds no basis in the administrative record to find that the contracting officer acted arbitrarily or capriciously when issuing the Solicitation. As stated, the record demonstrates that the contracting officer had multiple reasons for her decision to issue the Solicitation as a small business set-aside. First, the procurement history shows that the expectation of at least two responsive small business bidders was reasonable. Second, the contracting officer conducted sufficient market research and acquisition planning before issuing the Solicitation as a small business set-aside. Additionally, there was nothing in the record to indicate the attempts were made arbitrarily or capriciously. The decision to set-aside the Solicitation for small business follows the standard set forth in FAR part 19, the regulation provision that governs small business set-asides in procurements such as the one subject to this challenge. 48 C.F.R. §19.502-2(b). For these reasons, the Court finds HRSA’s decision to make the Solicitation a small business set-aside to be rational. Accordingly, McKing fails to meet its burden of showing that HRSA had no rational basis for its decision.  (McKing Consulting Corporation, v. U. S., 07-17C, Reissued October 12, 2007) (pdf)

In sum, the alternative scenario proposed by Greenleaf runs counter to the normal timing of responsibility determinations, runs counter to the agency’s application of the RFP in this case, and would lead to the anomalous result that a determination of adequate competition must be revisited over time to account for the vagaries of a bidders’ circumstances. We therefore conclude that reversal of the decision to cascade was correct. The adequacy of competition at the small business tier had been sufficiently addressed. The fact that * * * withdrew, leaving Chapman as the lone small business offeror, did not compel a cascade to the unrestricted tier. While Greenleaf has established prejudice, it fails on the merits of its argument that the agency violated the terms of the RFP. (Greenleaf Construction, Co., Inc., v. U. S., and Chapman Law Firm Co., No. 05-703C, September 13, 2005) (pdf)

Plaintiff’s argument that the USMC failed to perform an analysis of whether there were two responsible small business concerns that would submit offers at fair market prices is wholly without merit. This assertion is not supported by the record. On the contrary, the record indicates that the USMC went to great lengths to publicize the solicitations and to ascertain small business interest and capabilities. The contracting officer did not abuse his discretion in deciding not to set aside the two contracts exclusively for small business because his decision was based on a rational assessment of the scope and complexities of the solicitations, the prior procurement history, input obtained from industry and consultations with the SBA and the USMC’s small business specialist.  (MCS Management, Inc., v. U.S., No. 00-639C, January 18, 2001)