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FAR 7.107:  Bundling and consolidation

Comptroller General - Key Excerpts

MTU characterizes its protest as a challenge to the agency’s proposed sole-source award of the CLS contract to Boeing. According to the protester, the agency is required to separate the engine maintenance element of its overall requirement from the balance of the CLS requirement because MTU can perform that aspect of the requirement, and because, in MTU’s view, there are other potential contractors with the capability to perform the engine maintenance element of the requirement. MTU also notes that the solicitation itself contemplates that the engine maintenance element of the requirement will be subcontracted, and that this further demonstrates that it is suitable for competition. MTU argues that the agency’s decision to include the engine maintenance element of the requirement with the balance of the CLS requirements reflects a lack of advanced planning on the part of the agency.

We find no merit to MTU’s protest. As an initial matter, we point out that MTU does not object generally to the agency’s sole-source approach to this acquisition. In fact, in its February 19 response to the agency’s final sources sought notice, MTU’s consultant specifically stated that a sole-source award to Boeing “appears justified” and stated further that: “In summary, l fully appreciate that the government's market research was properly conducted and resulted in the decision to award the E-4B contract sole source to Boeing.” AR, exh. 8, MTU E-Mail to the Air Force, at 1-2. We note as well that, inasmuch as MTU has never alleged or demonstrated that it is capable of performing the entire CLS requirement, it is not an interested party to challenge the agency’s overall approach to awarding a contract for its CLS requirements on a sole-source basis. H.L. Boulton Co., Inc., B-256014, B‑256014.4, Oct. 24, 1994, 94-2 CPD ¶ 149 at 4.

Notwithstanding MTU’s characterization of its protest as a challenge to the agency’s proposed sole-source acquisition, its protest actually is a challenge to the agency’s decision to include the engine maintenance element of the requirement within the larger CLS contract. In effect, MTU maintains that the agency’s market research‑‑and correspondingly, its advance planning--was flawed because it failed to take cognizance of the fact that MTU is (and, allegedly, other concerns are) interested in, and capable of, competing separately for the engine maintenance element of the CLS effort. MTU therefore takes the position that the agency improperly has included the engine maintenance element of its requirement with the larger CLS requirement.

As noted, the record shows that, at the time it was engaged in market research for the current requirement, the agency contemporaneously considered whether it would be feasible or beneficial to separately compete the engine maintenance element under Boeing’s predecessor contract. In this connection, the record shows that the Air Force’s Deputy Assistant Secretary for Contracting (DASC) inquired about the viability of acquiring engine maintenance services through a separate contract.

The agency considered the question and responded to the DASC’s inquiry, finding, among other things, that, because the size of the E-4B fleet is so small (just four aircraft), the administrative costs of separately awarding a contract for engine maintenance would not justify any potential benefit. In addition, the agency noted that, on a different program for maintaining a similarly-configured engine system separately from maintenance of the remainder of the aircraft system, the cost for performing engine overhauls under that contract was more than double what the agency was paying for the same services under Boeing’s predecessor contract. AR, exh. 7, Considerations Relating to the Extension of the Boeing Predecessor Contract, at 1-2.[2] MTU has advanced no evidence to rebut these agency findings.

In addition to these considerations, during the course of the protest the agency has offered a reasonable explanation for consolidating all of the CLS requirements into a single contract vehicle. The agency’s program manager explains that the small size of the fleet, coupled with the extremely high demand for these aircraft because of critical national security requirements, translates into an unusually high demand for fleet readiness. The program manager explained in an affidavit as follows:

To meet the demanding commitment of having [a] nuclear hardened flying command post always ready for war, the integrated Contractor Logistics Support (CLS) concept was adopted over 30 years ago. By having an integrated CLS concept with the prime contractor fully responsible for the whole air vehicle (including engines), we have the agility to fix problems on the alert jet immediately--without additional administrative actions. If the Government were to start breaking apart our requirement, additional administrative delays would be incurred as the Government mediates to get contractor “A” to work with contractor “B” to fix a broken alert jet. The mission risk in this scenario is unacceptable. The current integrated CLS sustainment concept has succeeded and will continue to succeed in meeting national security requirements.

Affidavit of the E-4B Program Manager at 1 (emphasis in original).

In addition, the agency’s justification and approval for acquiring its requirement on a sole-source basis echoes these considerations, and also details the unique engineering and proprietary information only possessed by Boeing that is necessary to maintain the aircraft in the required heightened state of readiness. AR, exh. 1, Justification and Approval, at 3-6. Inasmuch as our Office affords considerable weight to an assertion on the part of a military agency that a requirement is necessary to meet critical human safety and military requirements, Coastal Seal Servs., LLC, B-406219, Mar. 12, 2012, 2012 CPD ¶ 111 at 4, and in light of the agency’s explanation here, we have no basis to object to the agency’s decision to include its engine maintenance requirements within its larger CLS requirement.

As a final matter, as discussed above, the record shows that the agency engaged in extensive market research that described in detail the CLS requirement. That research was intended to assist the agency in determining whether the overall CLS requirement was suitable for competition, as well as determining whether the various elements comprising the requirement were suitable for separate competition.

Notwithstanding the agency’s extensive efforts to probe the market for its requirements, MTU elected to remain silent and not participate in the agency’s research. During the course of this protest, MTU has not explained why it elected not to participate in the agency’s market research efforts. Thus, to the extent that MTU now characterizes the agency’s market research conclusions as inaccurate, the record shows that MTU itself is at least partially responsible for the state of the agency’s information because of its failure to participate in the RFI process. We also conclude that the extent and duration of the agency’s market research efforts belie any suggestion that the agency failed to engage in adequate advance planning.

The protest is denied.  (MTU Maintenance Canada, LTD B-411185, B-411185.2, B-411185.3: Jun 9, 2015)  (pdf)


The agency has historically satisfied its requirement for storage of household goods and baggage through two procurements, one for the East Coast and one for the West Coast. Guardian is the incumbent contractor for the East Coast, which had been set aside for small businesses. In order to explore the feasibility of combining those procurements while maintaining them as set-asides, the agency issued a request for information (RFI) that was posted on the Federal Business Opportunities (FedBizOps) website on February 28, 2014. Agency Report (AR), Exh. 7, RFI. The agency also provided notice of the RFI posting to the incumbent contractors and all other companies that had previously responded to an earlier, similar announcement. AR, Exh. 16, Market Research Report at 2.

Potential offerors were asked to respond to a series of questions, including whether the firms considered it appropriate to combine the requirements and whether the firms would be interested in providing services to both coasts. Market Research Report at 8, 23-24. Six of the seven firms that responded were small businesses. Id. Of those six small businesses, one (Guardian) was a HUBZone small business concern, one a woman-owned small business, and one a small disadvantaged business. Id. All of the respondents were interested in providing service on both coasts, while five of the respondents (including Guardian) stated that a single service provider would be appropriate. Id. at 15, 30-31. According to Guardian, “[t]he benefit of a single service provider is the cost savings to be achieved . . . .” Id. at 30. The agency checked the System of Award Management (SAM) to validate the vendors’ registration and business information. The contracting officer considered these responses and determined that, while it was unlikely that two or more HUBZone businesses would submit proposals, it was reasonable to expect at least two offers from small businesses. Id. at 6-7. The agency therefore decided, with the concurrence of the agency’s small business specialist and the Small Business Administration (SBA), to set the procurement aside for small businesses. See AR, Exh. 13, Small Business Coordination Record.

(sections deleted)

Guardian also asserts that the agency engaged in improper consolidation of requirements in violation of the Competition in Contracting Act of 1984 (CICA), 10 U.S.C. § 2305(a)(1) (2000). In this regard, CICA generally requires that solicitations include specifications which permit full and open competition and contain restrictive provisions and conditions only to the extent necessary to satisfy the needs of the agency. See 10 U.S.C. §§ 2305(a)(1)(A), (B). Since consolidated procurements may combine separate, multiple requirements into one contract, they have the potential for restricting competition by excluding firms that can furnish only a portion of the requirements. Aalco Forwarding, Inc., et al., B-277241.12, B‑277241.13, Dec. 29, 1997, 97-2 CPD ¶ 175 at 6. In interpreting CICA, we have assessed whether an agency has a reasonable basis for its contention that the consolidation is required to meet its needs, and have sustained protests only where no reasonable basis is demonstrated. Major Contracting Services, Inc., B-406980, October 10, 2012, 2012 CPD ¶ 288 at 4.

According to the protester, the consolidation precludes businesses capable of performing the requirement for only one coast from participation in the competition. Protest at 4. However, having responded to the agency’s inquiry during its market research by asserting that consolidation was appropriate, and indeed would result in cost savings, Market Research Report at 30, Guardian cannot now assert that consolidation would be inappropriate. The integrity of the protest process does not permit a protester to espouse one interpretation or position during the procurement, and then argue during a protest that the interpretation or position is unreasonable or otherwise improper. Northrop Grumman Space and Missile Systems Corp.; Textron Marine & Land Systems Corp., B-400837 et al., Feb. 17, 2009, 2009 CPD ¶ 52 at 10; IBM Global Bus. Servs., B‑298833.4, B-298833.5, Mar. 1, 2007, 2007 CPD ¶ 82 at 6; Northrop Grumman Sys. Corp., B-298954 et al., Jan. 12, 2007, 2007 CPD ¶ 63 at 8; BST Sys., Inc., B‑298761, B-298761.2, Dec. 1, 2006, 2007 CPD ¶ 62 at 6; AAI Eng’g Support Inc., B-257857, Nov. 16, 1994, 95-1 CPD ¶ 2 at 3-4. In any case, the RFP makes clear that offerors may propose to satisfy the requirement for services on either coast, or both coasts; it is not the case that firms capable of performance on only a single coast are precluded from the competition. Moreover, Guardian’s proposal offered to satisfy the agency’s requirements for both coasts. Guardian Proposal at 2. If, in fact, the solicitation language limits competition from other small businesses, that limitation would be to Guardian’s benefit, not detriment. enrGies, Inc., B-408609.9, May 21, 2014, 2014 CPD ¶ 158 at 9-10 (prejudice is an essential element of every viable protest, and where none is shown or otherwise evident, we will not sustain a protest, even where a protester may have shown that an agency’s actions arguably were improper).  (Guardian Moving & Storage Co., Inc., B-410171: Nov 6, 2014)  (pdf)


As an initial matter, ACM argues that the solicitation constitutes impermissible bundling under the Small Business Act, 15 U.S.C. § 631, in that the agency is bundling the work performed under 27 different manufacturer pricing agreements, 15 of which are currently with small businesses, into one contract for each lot. Protest at 12.

The Small Business Act, as amended, states that, “to the maximum extent practicable,” each agency shall “avoid unnecessary and unjustified bundling of contract requirements that precludes small business participation in procurements as prime contractors.” 15 U.S.C. § 631(j)(3) (2013). Bundling, for purposes of the Small Business Act, means “consolidating 2 or more procurement requirements for goods or services previously provided or performed under separate smaller contracts into a solicitation of offers for a single contract that is likely to be unsuitable for award to a small-business concern.” 15 U.S.C. § 632(o)(2); see Federal Acquisition Regulation (FAR) § 2.101. The term “separate smaller contract” is defined as “a contract that has been performed by 1 or more small business concerns or was suitable for award to 1 or more small business concerns.” 15 U.S.C. § 632(o)(3); FAR § 2.101.

ACM argues that the manufacturer pricing agreements that DLA established with various beef manufacturers, several of which are small businesses, constituted the “separate smaller contracts” under the Small Business Act; thus, according to the protester, the solicitation bundles several procurement requirements that were previously provided under smaller contracts by a small business. Protest at 7-8. However, we agree with the agency that the Lot 2 requirements do not constitute bundling, as defined by the Small Business Act. As relevant here, the term “separate smaller contract” is defined as “a contract that . . . was suitable for award to 1 or more small business concerns.” 15 U.S.C. § 632(o)(3); FAR § 2.101. Here, however, DLA previously satisfied its requirements for ground beef and primal cuts through contracts with multiple prime vendors, which are not small businesses, AR at 8, 12; under the RFP, the beef items will be extracted from the prime vendor contracts, and the prime vendors will be directed to place beef item orders under the appropriate contract to be awarded under the RFP. Thus, combining items from several prime vendor contracts into one contract does not result in a contract that has previously been performed by one or more small business concerns or was suitable for award to one or more small business concerns. Star Food Service, Inc., B‑408535, Nov. 1, 2013, 2013 CPD ¶ 246 at 3 (no improper bundling under Small Business Act where requirement for chicken parts was previously provided by prime vendors and not under separate smaller contracts that were suitable for award to small business concerns). In these circumstances, we find that ACM has furnished no basis for concluding that the solicitation constitutes impermissible bundling under the Small Business Act.  (American Custom Meats, LLC, B-409564: Jun 12, 2014)  (pdf)


The protesters contend that GSA failed to reasonably consider the economic effect on small businesses that would result from the award of the OS3 contracts. The protesters argue that despite the requirements in the SB Jobs Act that GSA “identif[y] any negative impact by the acquisition strategy on contracting with small business concerns,” the agency failed to give any consideration to the economic consequences of the OS3 program on small businesses. The protesters note that while there are several hundred office supply vendors currently on GSA MAS No. 75 for office supplies, this solicitation anticipates the award of approximately 24 contracts. The protesters argue that the companies that are not awarded contracts “are effectively locked out of business with the government.” American Toner Protest at 1. Therefore the protester requests an “accurate economic analysis of the consequences for small businesses, prior to the acceptance of [proposals] for this solicitation.” Id. Similarly, SBA joins the protesters in arguing that GSA’s consolidation analysis did not adequately or meaningfully address the requirements of the SB Jobs Act. For the reasons discussed below, we conclude that GSA’s consolidation analysis was reasonable.

Section 1313 of the SB Jobs Act requires agencies to consider the effect of contract consolidation on small businesses for procurements over $2 million. 15 U.S.C. § 657q(c). Consolidation means the use of a solicitation to obtain offers for a single contract or a multiple award contract:

(A) to satisfy 2 or more requirements of the Federal agency for goods or services that have been provided to or performed for the Federal agency under 2 or more separate contracts lower in cost than the total cost of the contract for which the offers are solicited; or

(B) to satisfy requirements of the Federal agency for construction projects to be performed at 2 or more discrete sites[.]

Id. § 657q(a).

The SB Jobs Act does not preclude agencies from consolidating requirements. The Act states, however, that an agency may not use an acquisition strategy that consolidates contract requirements with a total value of more than $2 million unless the agency’s senior procurement executive or chief acquisition officer takes the following actions:

(A) conducts market research;

(B) identifies any alternative contracting approaches that would involve a lesser degree of consolidation of contract requirements;

(C) makes a written determination that the consolidation of contract requirements is necessary and justified;

(D) identifies any negative impact by the acquisition strategy on contracting with small business concerns; and

(E) ensures that steps will be taken to include small business concerns in the acquisition strategy.

Id. § 657q(c)(1). In addition, the senior procurement executive or chief acquisition officer must make a determination that the consolidation is “necessary and justified” and that “the benefits of the acquisition strategy substantially exceed the benefits of each of the possible alternative contracting approaches” identified by the agency. Id. § 657q(c)(1), (2).

Our Office has addressed the bundling or consolidation of contract requirements with regard to the Small Business Act, 15 U.S.C. § 631(j)(3), and the Competition in Contracting Act of 1984 (CICA), 41 U.S.C. § 3306(a)(2)(B). Because bundled or consolidated procurements combine separate and multiple requirements into one contract, they have the potential for restricting competition by excluding firms that furnish only a portion of the requirement; we therefore review challenges to such solicitations to determine whether the approach is reasonably required to satisfy the agency’s needs. 2B Brokers et al., B-298651, Nov. 27, 2006, 2006 CPD ¶ 178 at 9. We have recognized that bundling may serve to meet an agency’s needs where the agency reasonably determines that consolidation will result in significant cost savings or operational efficiencies. Id.; Teximara, Inc., B‑293221.2, July 9, 2004, 2004 CPD ¶ 151 at 6.

Although our Office has not previously addressed the consolidation analysis requirements under the SB Jobs Act, we conclude that the statute requires an inquiry similar to that set forth in our decisions concerning consolidation or bundling under the Small Business Act and CICA. Specifically, we will look to whether GSA has conducted market research, and has reasonably found that the consolidation is “necessary and justified,” and that the benefits “substantially exceed” those of other contracting approaches. See 15 U.S.C. § 657(q)(c)(2).

As discussed above, prior to the issuance of the RFP, GSA prepared a consolidation analysis, which was signed by its senior procurement executive. This analysis concluded that the benefits of the consolidation approach under the OS3 program outweigh the potential negative impact to small business concerns. AR, Tab 2, Consolidation Analysis, at 7‑11. The agency contends that it “gave careful consideration to increasing small business concerns’ ability to participate in this solicitation and specifically chose to solicit this as a full and open competition to get the widest small business participation possible.”  Supp. AR at 2.

As discussed in the consolidation analysis, GSA found that although government-wide purchasing through MAS schedule No. 75 has worked well for many years, the growth of that contract vehicle has resulted in scattered purchases and a wide range of prices for similar items. AR, Tab 2, Consolidation Analysis, at 3. To support its approach of using a non-MAS contract vehicle, GSA conducted market research and outreach to industry. Id. The market research found that small office supply providers often specialize within an office supply sub-segment, as opposed to offering the full range of office supplies. Id. at 3, 7. In the consolidation analysis, GSA states that it took “active steps” to include small businesses in the OS3 acquisition strategy by engaging with the industry through the GSA’s Interact web blog site, and sponsoring one-on-one listening sessions with small businesses to gather information. Id. at 1. GSA also states that it hosted an “OS3 Listen to Industry Day” event to solicit feedback to the OS3 solicitation and engage in an “open and transparent dialogue” with the industry. Id. at 5.

GSA stated that it anticipates “very substantial benefits” from the OS3 consolidation, such as part number standardization to enable smart shopping, better terms and conditions, reduced cycle time, and improvements for the needs of the federal employee. Id. at 10. The agency estimated that this consolidation would result in a savings of 18 percent, as compared to alternative procurement approaches that did not involve consolidation. Id. at 8, 10.

GSA’s analysis also addressed the negative impact of the potential reduction in sales for small businesses not chosen as OS3 CLIN providers, but “determined the benefits to be gained through OS3 CLINs will outweigh this negative impact.” Id. To increase small business participation, and in response to the results of the market research described above, the agency divided the contract requirements into four separate CLINs of office supply products. These CLINS were intended to be broad enough to allow for adequate sales volume to drive pricing discounts, and narrow enough to ensure small businesses are not excluded. Id. at 7. GSA states that to increase small business awards that it anticipates that “[a]t least 95%” of the awards will be made to small businesses. Id. In this regard, the solicitation expresses a “significant preference” for small businesses. RFP, SOW, at 2. Although the RFP does not explain in detail the term “significant preference,” neither the protesters nor SBA dispute GSA’s expectation that 23 of 24 contracts will be awarded to small businesses. The agency further notes that the OS3 contracts will not be mandatory, and that small business vendors who have MAS contracts will still be eligible to receive orders under those contracts. AR at 4.

GSA states that it also considered other contracting approaches that would result in less consolidation of the contract requirements, such as establishing single-agency contracts, placing orders against existing MAS contracts, and full-and-open single-award contracts. AR, Tab 2, Consolidation Analysis, at 8. The agency concluded that these alternative approaches would have yielded less in savings than the estimated 18 percent savings benefit that is estimated for under the OS3 program. Id.

The protesters generally contend that GSA has failed to give adequate consideration to the economic consequences of the OS3 procurement. In particular, Dolphin Blue and Capital Shredder contend that GSA should be required to conduct a cost-benefit analysis to specifically quantify the economic impact on small businesses that would result from the OS3 procurement approach. Dolphin Blue’s Supp. Comments at 3; Capital Shredder Comments at 2.

Similarly, in a brief submitted in support of the protesters, SBA argues that GSA was required to perform “some type of data analysis” of the potential impact by OS3 on the federal government’s small business suppliers. SBA Comments (Apr. 3, 2014) at 7. Although SBA acknowledges that the SB Jobs Act requires an agency’s consolidation analysis to “identif[y] any negative impact by the acquisition strategy on contracting with small business concerns,” 15 U.S.C. § 657q(c)(1)(D), the agency contends that the statute should be interpreted to require “some type of data analysis” to justify the consolidation. SBA Comments (Apr. 3, 2014) at 7. With regard to GSA’s analysis, SBA argues that GSA’s assessment of the effect of consolidation on small businesses was “perfunctory” and lacked concrete data or analysis. SBA Comments (Apr. 11, 2014) at 3.

We find that GSA met the requirement under the Small Business Jobs Act to perform an analysis addressing whether the benefits of the consolidation acquisition strategy “substantially exceed” the benefits of each of the possible alternative contracting approaches. 15 U.S.C § 657q(c)(2)(A). While the protesters and SBA argue that the SB Jobs Act requires a more detailed or quantified cost-benefit analysis to justify the agency’s solicitation approach, we do not find such a requirement in the Act. Instead, as discussed above, the SB Jobs Act requires agencies to: conduct market research; identify potential alternative contracting approaches that involve lesser degrees of consolidation; issue a written determination in support of the consolidation; identify negative impacts on small businesses; and ensure that steps will be taken to include small business concerns in the acquisition strategy. 15 U.S.C. § 657q(c)(1).

As discussed above, GSA conducted market research and considered alternatives to the procurement approach set forth in the solicitation. Further, the agency prepared a consolidation analysis which recognized that there was a potential for a reduction in sales for small business contractors who did not receive awards under the OS3 solicitation. AR, Tab 2, Consolidation Analysis, at 7. The agency concluded, however, that the benefits to be gained through OS3 outweigh the potential negative impact to small business concerns. Id. at 7-11. We find that GSA’s analysis addressed the relevant requirements of the SB Jobs Act, and therefore find no basis to sustain the protest.  (American Toner & Ink; KPaul  Properties, LLC; Dolphin Blue, Inc.; Capital Shredder Corp., B-409528.7, B-409528.11, B-409528.14, B-409528.18: Jun 9, 2014)   (pdf)


Star complains that the RFP’s aggregation of 24 chicken parts (such as breasts, thighs, or tenderloins, and processed chicken products like nuggets, strips, or patties) in Lot 2 constitutes an unreasonable bundling and consolidation, as defined by FAR § 2.101 and DFARS § 207.170-2. Protest at 2. Specifically, Star argues that the RFP’s requirements are not new, and that DLA unreasonably bundled the Lot 2 chicken parts that were previously provided under the 13 prime vendor contracts into a single contract in violation of the Small Business Act. Comments at 2-3. Star also argues that bundling the Lot 2 requirements is unduly restrictive of competition and violates CICA. As discussed below, we deny Star’s protest that the RFP’s Lot 2 requirements violate the bundling requirements of the Small Business Act and dismiss as untimely Star’s complaint that that RFP otherwise violates CICA.

The Small Business Act, as amended, states that, “to the maximum extent practicable,” each agency shall “avoid unnecessary and unjustified bundling of contract requirements that precludes small business participation in procurements as prime contractors.” 15 U.S.C. § 631(j)(3) (2013). Bundling, for purposes of the Small Business Act, means “consolidating 2 or more procurement requirements for goods or services previously provided or performed under separate smaller contracts into a solicitation of offers for a single contract that is likely to be unsuitable for award to a small-business concern.” See 15 U.S.C. § 632(o)(2); see also FAR § 2.101; DFARS § 201.170-2. The term “separate smaller contract” is defined as “a contract that has been performed by 1 or more small business concerns or was suitable for award to 1 or more small business concerns.” 15 U.S.C. § 632(o)(3); FAR § 2.101.

Here, DLA explains that the RFP’s Lot 2 requirements for various chicken parts does not constitute bundling or consolidation under the Small Business Act, because the agency does not currently procure chicken parts directly through separate contracts. That is, DLA’s requirements for chicken parts are now satisfied under the prime vendor contracts, where the prime vendors procure the chicken parts directly from chicken suppliers under pricing established under manufacturer pricing agreements. DLA also states that the prime vendor contracts will not be eliminated as a result of the new acquisition strategy. Under the RFP, DLA will contract directly with chicken suppliers, and the prime vendors will obtain the chicken parts through DLA’s contracts with the chicken suppliers. AR at 5-6.

We agree with the agency that the RFP Lot 2 requirements do not constitute bundling, as defined by the Small Business Act, because DLA is not consolidating requirements that were previously provided under separate contracts into a solicitation for a single contract. Here, DLA extracted the chicken parts requirement from multiple prime vendor contracts and combined them into a single contract, from which the prime vendors will meet the requirements for their regions. With respect to Star’s argument that the prime vendor contracts are the relevant separate small contracts referred to in the definition of bundling, Comments at 2, Star misinterprets the meaning of the Small Business Act provision. As relevant here, the term “separate smaller contract” is defined as “a contract that . . . was suitable for award to 1 or more small business concerns.” 15 U.S.C. § 632(o)(3); FAR § 2.101. The prior contracts relevant to this analysis are the prime vendor contracts, which Star acknowledges are being performed by large businesses. See Protest, Exhib. A, Agency-Level Protest, at 11. Thus, although Star contends that small businesses were capable of providing chicken parts--and indeed, were providing chicken parts under subcontracts to the prime vendors, Star has not established that the prime vendor contracts were suitable for award to 1 or more small businesses. See Vox Optima, LLC, B-400451, Nov. 12, 2008, 2008 CPD ¶ 212 at 3.

With respect to Star’s argument that the consolidation of the RFP’s Lot 2 requirements otherwise violates DFARS § 207.170-2, this section defines “[c]onsolidation of contract requirements” as “the use of a solicitation to obtain offers for a single contract or a multiple award contract to satisfy two or more requirements of a department, agency, or activity for supplies or services that previously have been provided to, or performed for, that department, agency, or activity under two or more separate contracts.” For the reasons discussed above, we find that the Lot 2 requirements do not constitute consolidation as defined in DFARS § 207.170-2 because the chicken parts were not previously procured by DLA under two or more separate contracts.

Star also argues that awarding a single contract for the Lot 2 requirements constitutes an undue restriction upon competition in violation of CICA. Protest at 2; Comments at 1. We find that this ground of protest is untimely.

Our Bid Protest Regulations provide that where, as here, a protest has been initially filed with the contracting agency we will consider a subsequent protest if the initial protest with the agency was timely filed. 4 C.F.R. § 21.2(a)(3) (2013). Because our regulations do not provide for the unwarranted piecemeal presentation of protest issues, where a protester initially files a timely agency-level protest, and subsequently files a protest with our Office which includes additional grounds, the additional grounds must independently satisfy our timeliness requirements. MediaNow, Inc., B-405067, June 28, 2011, 2011 CPD ¶ 133 at 2; ABF Freight Sys., Inc.; Old Dominion Freight Line, Inc; Overnite Transp. Co.; Roadway Express, Inc.; and Yellow Freight Sys., Inc., B-291185, Nov. 8, 2002, 2002 CPD ¶ 201 at 7.

Here, Star argued in its agency-level protest that the RFP’s Lot 2 requirements constituted unlawful bundling as defined by FAR § 2.101 (which implements the Small Business Act bundling requirements) and unlawful consolidation as defined by DFARS § 207.170-2. Protest, Exhib. A, Agency-Level Protest, May 31, 2013, at 10-12. Star did not contend in its agency-level protest that the RFP Lot 2 requirements constituted an undue restriction of competition in violation of CICA. Rather, these arguments were first made in its protest to our Office on July 12, nine days after the closing date for receipt of proposals. To be timely, this challenge to the terms of the solicitation was required to be filed before the closing time for receipt of proposals, but was not. See 4 C.F.R. § 21.2(a)(1).  (Star Food Service, Inc. B-408535, Nov 1, 2013)  (pdf)


MCS, a portable latrine contractor, alleges that most portable latrine contractors do not service permanent latrines/septic tanks, that portable and permanent latrine services are separate industries requiring specialized equipment and personnel, and that consolidating the requirements in this RFP is restrictive of competition in violation of CICA.

CICA generally requires that solicitations permit full and open competition and contain restrictive provisions and conditions only to the extent “necessary to satisfy the needs of the executive agency.” 10 U.S.C. § 2305(a)(1)(A) (2006). Since consolidated or “bundled” procurements may combine separate, multiple requirements into one contract, they have the potential for restricting competition by excluding firms that can furnish only a portion of the requirements. Aalco Forwarding, Inc., et al., B-277241.12, B-277241.13, Dec. 29, 1997, 97-2 CPD ¶ 175 at 6. In interpreting CICA, we have assessed whether an agency has a reasonable basis for its contention that the consolidation is required to meet its needs, and have sustained protests only where no reasonable basis is demonstrated. U.S. Electrodynamics, Inc., B-403516, B-403516.2, Nov. 12, 2010, 2010 CPD ¶ 275 at 9; 2B Brokers et al., B-298651, Nov. 27, 2006, 2006 CPD ¶ 178 at 9; Teximara, Inc., B-293221.2, July 9, 2004, 2004 CPD ¶ 151 at 6. We have noted that mere administrative convenience alone does not provide a reasonable basis for restrictive competition through consolidation of requirements, but substantial cost savings through reduction of duplicative efforts and operational efficiencies may provide a reasonable basis for consolidation. See U.S. Electrodynamics, Inc., supra.

The agency identifies its overall procurement needs as protecting the health and safety of the community through the provision of highly reliable, effective disposal of sanitary refuse in a cost effective and administratively efficient manner while encouraging full and open competition among small business concerns for the agency’s refuse disposal requirements. Contracting Officer (CO) Statement at 7. Based on the market research results, the agency found that combining the portable and permanent latrine waste disposal services would substantially reduce contract costs by avoiding duplicative services in terms of overhead, manpower, materials and transportation costs. In reaching this conclusion the agency notes that approximately 63 percent of the permanent latrines are co-located with portable latrines and that, based on the RFI responses, the services are substantially the same, utilizing the same personnel, skills, and equipment. Id. at 6, 8. Further, the agency determined that combining these requirements under one contract would reduce the agency’s administrative costs by eliminating the costs associated with conducting and overseeing separate acquisitions, as well as the costs and inefficiencies associated with performing potentially twice as many inspections, which would only be required if the requirements are separately procured since the majority of the portable and permanent latrines are co-located. Id. at 8. Additionally, given the RFI responses indicating that firms did not desire to compete for smaller requirements, the agency was concerned that competition for the significantly smaller permanent latrine requirement would be limited if it was separately procured. Id. Based on the above considerations, the agency maintains that it was reasonably necessary to combine the portable and permanent latrine waste disposal requirements.

The record, to include the RFI responses, confirms the agency’s findings and the reasonableness of the agency’s decision to combine its portable and permanent latrine disposal requirements. As noted above, most of the contractors that responded to the RFI expressly indicated that separating the requirements would increase their prices, and the protester has not challenged the factual bases for the agency’s asserted operational savings associated with using two separate contractors to service the portable and permanent latrines, the majority of which are co-located. Further, as the agency points out, the RFI responses contradict the protester’s general assertion that separating the requirements would increase competition among small businesses. In this regard, based on the RFI responses, the agency was reasonably concerned that separating the requirements could potentially decrease competition since at least one otherwise interested small business stated that it would not be worthwhile for the firm to compete for the smaller, separated requirements, and another firm pointed out that the smaller requirements would be less financially attractive to firms located outside the geographical area. Moreover, notwithstanding the protester’s assertions to the contrary, the results of the agency’s market research do not reflect a need for different specialized equipment or personnel when performing the portable latrine waste disposal services as compared with the permanent latrine disposal services. As the agency reasonably found, the RFI responses uniformly indicate that the services are substantially similar.

Although the protester ultimately disagrees with the agency’s conclusion that procuring the portable and permanent latrine waste disposal services on a combined basis is reasonably necessary to meet its needs, and believes that the agency should not have relied on the market research results because, in the protester’s view, the RFI responses do not accurately reflect the industry, it has not shown that the agency’s findings of cost savings, operational efficiencies, and the potential for enhanced competition, were unreasonable. See U.S. Electrodynamics, Inc., supra. Accordingly, we have no basis to question the propriety of the agency’s decision to procure, on a combined basis, the portable and permanent latrine disposal services at issue.  (Major Contracting Services, Inc., B-406980, Oct 10, 2012)  (pdf)


First, CYIOS contends that the agency’s consolidation of the requirements constitutes “unnecessary and unjustified” contract bundling. CYIOS asserts that it is the “incumbent small business concern” performing some of the services that are being consolidated, and that the Army “has provided no justification for its decision” to consolidate the requirements. In this regard, CYIOS asserts that the consolidation violates the provisions of the Small Business Act and the Competition in Contracting Act of 1984 (CICA), along with their applicable implementing regulations. Protest at 2-5.

The Small Business Act, as amended, states that, “to the maximum extent practicable,” each agency shall “avoid unnecessary and unjustified bundling of contract requirements that precludes small business participation in procurements as prime contractors.” 15 U.S.C. § 631(j)(3) (2012). Bundling, for purposes of the Small Business Act, means “consolidating 2 or more procurement requirements for goods or services previously provided or performed under separate smaller contracts into a solicitation of offers for a single contract that is likely to be unsuitable for award to a small-business concern.” 15 U.S.C. § 632(o)(2). The term “separate smaller contract” is defined as “a contract that has been performed by 1 or more small business concerns or was suitable for award to 1 or more small business concerns.” 15 U.S.C. § 632(o)(3); FAR § 2.101.

Because bundled or consolidated procurements combine separate and multiple requirements into one contract, they have the potential for restricting competition by excluding firms that furnish only a portion of the requirement; we therefore review challenges to such solicitations to determine whether the approach is reasonably required to satisfy the agency’s needs. 2B Brokers et al., B-298651, Nov. 27, 2006, 2006 CPD ¶ 178 at 9. We have recognized that bundling may serve to meet an agency’s needs where the agency reasonably determines that consolidation will result in significant cost savings or operational efficiencies. Id.; Teximara, Inc., B-293221.2, July 9, 2004, 2004 CPD ¶ 151 at 6.

Under the Small Business Act, an agency may determine that consolidation of requirements is “necessary and justified” if, as compared to the benefits that would be derived from contracting to meet those requirements if not consolidated, the government would derive “benefits, including any combination of benefits that . . . are measurably substantial.” 15 U.S.C. § 644(e)(2)(B); 2B Brokers et al., supra, at 6. The FAR states in pertinent part that:

[m]easurably substantial benefits may include, individually or in any combination or aggregate, cost savings or price reduction, quality improvements that will save time or improve or enhance performance or efficiency, reduction in acquisition cycle times, better terms and conditions, and any other benefits. The agency must quantify the identified benefits and explain how their impact would be measurably substantial. Except as provided in paragraph (d) of this section, the agency may determine bundling to be necessary and justified if, as compared to the benefits that it would derive from contracting to meet those requirements if not bundled, it would derive measurably substantial benefits equivalent to

(1) Ten percent of the estimated contract or order value (including options) if the value is $94 million or less. . . .

FAR § 7.107(b)(2).

As discussed above, the agency performed an analysis regarding the benefits to be obtained by consolidation. Among other things, the agency determined that transitioning to a single contractor will result in improved IT support, operational efficiencies, increased task coordination, better accountability, more effective contractor incentives and cost savings. AR, Tab 6, DISA D&F, at 3, 5-7. With regard to cost savings, the agency specifically calculated savings of $5,421,753, which reflect “approximate[ly] 18%-19% cost savings when compared to overall contract value and historical cost trends. . . .” Id. at 6. DISA explains that these projected savings are the result of the “elimination of redundant program/project management and administrative support,” as well as a reduction of certain technical staff. Id.

In its comments responding to the agency report, CYIOS has not meaningfully challenged any aspect of the agency’s analysis. Specifically, CYIOS’s comments do not address the agency’s calculation of cost savings, nor otherwise discuss the substantial benefits the agency maintains it will obtain. Rather, CYIOS merely asserts that the agency “has provided no justification for its decision.”

On this record, we reject the protester’s arguments challenging the agency’s consolidation of contract requirements. See 2B Brokers et al., supra, at 10-11, 13 n.20 (protester has burden of showing agency’s analysis and explanation supporting bundling are unreasonable); Teximara, supra, at 7, 9 (protester failed to dispute that significant savings and efficiencies will occur by consolidating tasks). CYIOS’s protest alleging that the agency has engaged in improper bundling is denied.  (CYIOS, Inc., B-402728.3, Jul 13, 2012)  (pdf)


Consolidation of Requirements

As noted above, between December 2006 and November 2010, the Air Force investigated the consolidation of logistics support requirements for the C-20 and C-37 aircraft. See, e.g., www.fbo.gov, Special Notice, Dec. 20, 2006; Sources Sought Notice, Nov. 9, 2010. The agency sent RFIs to potential contractors asking their views as to possible cost savings or operational efficiencies that could be achieved by consolidating. The agency also conducted its own economic analysis to consider possible benefits of consolidating the requirements. See AR, Tab 8.1, Economic Analysis. From the RFI responses it received and its own analysis, the Air Force found that consolidation of these requirements would achieve significant cost savings and operational efficiencies. For example, the Air Force found that it would save more than $[Deleted] million by consolidating the requirements. See AR, Tab 8, Consolidation D&F, at 5. The agency also found that consolidation would result in significant operational efficiencies through a streamlined and centrally controlled inventory system, centralized depot scheduling, and increased field maintenance capabilities. Id. at 5-6; see also AR at 65-66. The Air Force also considered whether comparable benefits could be achieved under other alternative contracting approaches, including the approach advocated by Northrop Grumman in its protest (that is, award separate contracts for the aircraft). The Air Force concluded that none of these other approaches would provide the same level of cost savings or operational efficiencies. See AR, Tab 8.1, Economic Analysis, at 14.

The Competition in Contracting Act of 1984 (CICA) requires that solicitations generally permit full and open competition and contain restrictive provisions only to the extent necessary to satisfy the needs of the agency. 10 U.S.C. § 2305(a)(1)(B)(ii) (2006). Because bundled or consolidated procurements combine separate and multiple requirements into one contract, they have the potential for restricting competition by excluding firms that furnish only a portion of the requirement; we therefore review challenges to such solicitations to determine whether the approach is reasonably required to satisfy the agency’s needs. See 2B Brokers et al., B-298651, Nov. 27, 2006, 2006 CPD ¶ 178 at 9; Pemco Aeroplex, Inc., B-280397, Sept. 25, 1998, 98-2 CPD ¶ 79 at 8-9. An agency may consolidate or bundle requirements where the agency reasonably determines that consolidation will result in significant cost savings or efficiencies. B.H. Aircraft Co., Inc., B-295399.2, July 25, 2005, 2005 CPD ¶ 138 at 7.

Here, the record supports the agency’s determination that consolidation of the logistics support requirements for the C-20 and C-37 aircraft will result in significant cost savings and operational efficiencies. Although Northrop Grumman believes that these requirements should not be consolidated, it does not show, or even argue, that the Air Force will not achieve the substantial cost savings and significant operational efficiencies identified by the agency in its market research and economic analysis. As a result, we see no basis for concluding that the Air Force’s approach unreasonably consolidated these requirements.  (Northrop Grumman Technical Services, Inc., B-406523, Jun 22, 2012)  (pdf)


BlueStar first contends that the full and open portion of the procurement improperly bundles six federal accounts in violation of the Small Business Act, 15 U.S.C. sect. 631(j)(3) (2009).

The Small Business Act requires that "federal agencies, to the maximum extent practicable, shall avoid unnecessary and unjustified bundling of contract requirements that precludes small business participation in procurements as prime contractors." Id. In addition, the Act defines bundling as follows:

bundling of contract requirements means consolidating 2 or more procurement requirements for goods or services previously provided or performed under separate smaller contracts [that is, contracts being performed by a small business concern or suitable for award to a small business concern] into a solicitation of offers for a single contract that is likely to be unsuitable for award to a small business concern.15 U.S.C. sect. 632(o)(2)(3); see Federal Acquisition Regulation (FAR) sect. 2.101.

The agency explains that the seven accounts in the current solicitation have been included in a single contract requirement "since electric deregulation began in the ComEd service territory 7 to 8 years ago." Contracting Officer's Statement at 1. Thus, we agree with GSA that this solicitation did not constitute "bundling," as defined by the Small Business Act, because GSA has not consolidated separate smaller contracts into a single contract. See Outdoor Venture Corp.; Applied Cos., B-299675, B-299676, July 19, 2007, 2007 CPD para. 138 at 3 (no bundling where all requirements already procured as a single system). While BlueStar argues that the bundling rules should be applicable because these requirements should not have been consolidated in the Pepco contract, this provides no basis to challenge the current solicitation, which did not consolidate separate small contracts.  (BlueStar Energy Solutions, B-405690, December 12, 2011)  (pdf)


Vox argues that the RFP impermissibly bundles several separate requirements that could be performed by small businesses if the agency solicited them separately. According to the protester, it has been providing services to CHINFO in the areas of speechwriting and executive communications for the agency’s senior personnel, long-term strategic communications planning and time and event-based tactical planning, large-scale trade show planning, custom publishing, writing and editing, video and multimedia production, and internal and external program promotion. The protester asserts that these services are being solicited under sections 2.1, 2.3 and 5.3 of the RFP’s performance work statement, but are impermissibly bundled with a host of other services. Vox, a service-disabled, veteran-owned small business, concludes that, since it previously provided these services, it is improper under the requirements of the Small Business Act for the agency to bundle these requirements with the other requirements of the RFP. (The protester also maintains that there are three other small business contracts for work that is subsumed under the current solicitation.)

The agency responds that this is a new requirement for which it has not previously contracted, either with a small or a large business. In this connection, the agency notes that, although it has acquired certain limited services from the protester, it did so through a task order issued against a contract held by a different concern, the Cynergy Group of Baltimore, with which the protester has a subcontract. The agency also points out that the contract with Cynergy was entered into between the company and another Naval procuring activity, the Naval Sea Systems Command (NAVSEA). Moreover, according to the agency, while the solicitation includes a variety of individual tasks that might be required, the overarching requirement is for integrated use of the individual tasks together in connection with the agency’s overall requirement, which is for integrated, and at times worldwide, public affairs campaigns.

We find no merit to this aspect of Vox’s protest. The Small Business Reauthorization Act of 1997, Pub. L. No. 105‑135, 111 Stat. 2592, 2617‑20 (1997), amended the Small Business Act and provided that, “to the maximum extent practicable,” each agency shall “avoid unnecessary and unjustified bundling of contract requirements that precludes small business participation in procurements as prime contractors.” 15 U.S.C. sect. 631(j)(3) (2000). Bundling, for purposes of the Small Business Act, as amended, means “consolidating 2 or more requirements for goods or services previously provided or performed under separate smaller contracts into a solicitation of offers for a single contract that is likely to be unsuitable for award to a small-business concern.” 15 U.S.C. sect. 632(o)(2); see Federal Acquisition Regulation (FAR) sect. 2.101, “separate smaller contract” is defined as “a contract that has been performed by 1 or more small business concerns or was suitable for award to 1 or more small business concerns.” 15 U.S.C. sect. 632(o)(3); see FAR sect. 2.101.

The record does not support the protester’s assertion that the agency has bundled two or more requirements that previously have been acquired from small businesses under smaller, separate contracts. Two of the contract actions identified by the protester--Cynergy’s task order under its NAVSEA contract, under which Vox performed as a subcontractor, and work performed by a second subcontractor under that same task order--were under a contract executed by an entirely different activity (NAVSEA), and the protester has submitted no evidence to show that the NAVSEA contract is for requirements similar to the requirements being solicited for CHINFO under the current RFP. Accordingly there is no basis for us to find that the earlier work performed by Vox and the other Cynergy subcontractor constituted separate, smaller contracts previously entered into by CHINFO with small businesses. AR, exh. 15.

The third contract action identified by the protester is a contract that was entered into between a Department of Defense contracting activity (as opposed to CHINFO) and was for performance of computer programming work, as opposed to public affairs work. Agency Letter, Sept. 25, 2008, attach. 3-7. As with the task order discussed above, this is a contract with a different contracting activity for work not contemplated under the current solicitation, and it therefore cannot be characterized as a smaller, separate contract entered into by CHINFO for services included under the subject RFP. Finally, Vox has identified a request for quotations that currently is being competed that requires the preparation and publication of a DVD that the agency must submit to Congress. However, this cannot be said to be an earlier, smaller, contract previously entered into by the contracting activity, inasmuch as it is a solicitation for a future requirement.

In sum, we conclude that the current solicitation does not combine two or more smaller requirements for which the agency had previously entered into contracts with small businesses. Accordingly, the RFP is not inconsistent with the Small Business Act requirements regarding bundling. See USA Info. Sys., Inc., B-291417, Dec. 30, 2002, 2002 CPD para. 224 at 3.  (Vox Optima, LLC, B-400451, November 12, 2008)  (pdf)


1. Measurably Substantial Benefits

NEI argues that the Coast Guard’s bundling analysis is flawed in several respects. The protester first argues that the Coast Guard’s reliance on the Navy’s bundling justification is not reasonable because the Coast Guard did not adequately explain why it can expect the same efficiencies for the WHEC cutters the Navy claimed for its destroyers. The protester further argues that the Coast Guard unreasonably assumes that it will experience the same level of savings as the Navy, and thus the assumption of a similar 5.29 percent savings is not reasonable. Our review of the Coast Guard analysis shows that the agency does not directly compare the details of its maintenance and repair operations to the Navy’s operations. Instead, the analysis focuses on the benefits of adopting the phased maintenance model to address inefficiencies in the current practice of making single-contract awards. See AR, Tab 27, Bundling Analysis, at 3-4. Based on our review, we think the Coast Guard’s approach of identifying similar problems and adopting similar solutions to those identified and adopted by the Navy, was reasonable. Furthermore, the Coast Guard’s analysis did not assume, as the protester argues, that the same precise savings will result. Rather, the analysis relied on the combination of the projected cost savings as well as other benefits, discussed below, to conclude that the overall benefit to the government would exceed 10 percent of the value of the contract. See id. at 4. On this record, we believe that the Coast Guard’s reliance on the Navy data was reasonable.

Next, NEI argues that the Coast Guard’s use of the Navy’s data resulted in a double counting of “savings” by relying on both the 5.29 percent cost savings and the 18 percent reduction in the length of maintenance availabilities. The protester correctly notes that the Navy’s justification relied on the 18 percent reduction in the length of maintenance availabilities as a contributing factor to the overall 5.29 percent cost savings, and argues that it would not be appropriate to conclude that a transition by the Coast Guard to the phased maintenance model would result in both a 5.29 percent cost savings plus an additional 18 percent cost savings. The Coast Guard’s justification did not, however, rely on the Navy’s data in this way. Instead, as discussed below, while the 18 percent reduction in maintenance time was a component of the 5.29 percent cost savings for the Navy, it was also separately relied upon by the Coast Guard as a basis to conclude that the WHEC cutters would be available for more operational time. The Navy’s bundling justification for the destroyers did not attempt to quantify the benefit to the government from having additional operational time for the ships as a result of the decreased length of maintenance availabilities. Instead, the 18 percent savings in the Navy’s analysis represented costs saved by avoiding 2 weeks of maintenance costs; these savings were thus a component of the overall 5.29 percent savings anticipated by the Navy. See AR, Tab 22, Navy Small Business Justification, at 17.  The Coast Guard, however, chose to use the Navy’s data to quantify an additional benefit to the government from the increased operational time for the WHEC cutters. The Coast Guard’s analysis notes that although the Navy was “reluctant to quantify the benefits of returning a ship to operational status sooner,” the agency believed that “the benefits to [the] Coast Guard of increasing the available operational time for WHEC’s can be quantified.” CO Statement para. 46. In this regard, the intention of the new acquisition strategy was based on the “central goal of reducing the period of time for performance of maintenance tasks,” and thereby increasing “the number of days that the WHEC’s are available to perform national defense and homeland security missions.” Id. Thus, this benefit, although quantified, was not a calculation of “cost savings.” Put differently, the Coast Guard’s justification relied on two different benefits to the government: decreased maintenance and repair costs (quantified as a savings of 5.29 percent), and increased time that the WHEC cutters will be performing their duties (18 percent more time).  The Coast Guard’s identification of two benefits is consistent with the FAR, which states that measurably substantial benefits “may include, individually or in any combination or aggregate, cost savings or price reduction, quality improvements that will save time or improve or enhance performance or efficiency, reduction in acquisition cycle times, better terms and conditions, and any other benefits.” FAR sect. 7.107(b). NEI’s argument thus incorrectly characterizes the Coast Guard’s identification of benefits as a double-counting of “anticipated savings.” Protester’s Comments on AR at 22. The two benefits identified by the Coast Guard are, however, distinct, and each is an appropriate measure under the FAR. We find no basis on this record to challenge the reasonableness of the Coast Guard’s determination.

Finally, NEI argues that the agency inappropriately relied on the “reimbursable” rate of $178,488 per day to quantify the benefit to the government from increased operational time of the WHEC cutters. COMDIST 7310.1I states that the components of the reimbursable rate “should not be used to calculate reimbursement for [the Federal Emergency Management Agency] and foreseeable costs related to contracting actions,” because the rate contains “both fixed and variable components.” AR, Tab 27, COMDIST 7310.1I, at 2. Instead, the COMDIST states that “[r]ates for these purposes shall be promulgated separately.” Id. As noted in the facts above, the agency did separately promulgate rates for “variable and foreseeable costs” for the cutters of $39,384 per day. See AR, Tab 27, Coast Guard Variable Rate FY 06 Cost Tables, encl. 1.  The Coast Guard’s bundling analysis calculated the benefit to the government of increased operational time for the cutters based on the full reimbursable rate of $178,488 per day. AR, Tab 27, Bundling Analysis at 4. However, the analysis also noted that using the lower variable rate still results in measurably substantial benefits to the government that justifies bundling. AR, Tab 27, Bundling Analysis, at 3. Thus, the analysis concludes, that even the rate of $39,384 per day yields a benefit to the government of $2,363,040--approximately 20 percent of the estimated contract value. Although the protester only challenges the agency’s reliance on the $178,488 per day rate, rather than the $39,384 rate, we think that neither of these rates on their own is a reasonable measure of the benefit to the government for 1 day of use of a WHEC cutter. In this regard, the variable rate represents costs that the government will avoid during a maintenance availability, such as fuel. See CO Statement para. 48; AR, Tab 27, Coast Guard Variable Rate FY 06 Cost Tables, encl. 1. Thus, the variable rate of $39,384 per day represents costs avoided, rather than the increased benefit to the government from an additional day of operation for a cutter. During the course of this protest, the CO conceded a better calculation of the benefit to the government is achieved by subtracting the variable rate from the full reimbursable rate. CO Statement para. 48. Thus, in the CO’s view, the benefit to the government of an increased day of use for a cutter is $178,488 per day, less the variable costs of $39,384. Id. We think that this approach appears reasonable because it captures the quantifiable benefit to the government from the operation of ship, less the costs of operation. Further, this approach is consistent with COMDIST 7310.1I, which states that the reimbursable rate should not be used to calculate foreseeable costs relating to contracting actions because of its inclusion of both fixed and variable costs. AR, Tab 27, COMDIST 7310.1I, at 2. This calculation of a benefit to the government falls between the two calculations cited in the Coast Guard’s bundling analysis, but in any event well exceeds 10 percent of the value of the contract. Id.

In sum, we conclude that even if the consolidation of the dry dock and dockside requirements constituted bundling under the Small Business Act, the Coast Guard reasonably justified any such bundling by identifying measurably substantial benefits to the government from the consolidation. Even allowing for some margin of error in adopting the Navy’s estimates, the record supports the Coast Guard’s determination that the consolidation of the requirements will result in measurably substantial benefits to the government equal to at least 10 percent of the anticipated contract value.

B. Bundling in Violation of CICA

NEI argues that even if the Coast Guard’s approach of consolidating the maintenance and repair services does not violate the Small Business Act’s prohibitions on bundling, the solicitation violates CICA’s prohibition on improperly consolidating requirements. CICA generally requires that solicitations permit full and open competition and contain restrictive provisions and conditions only to the extent “necessary to satisfy the needs of the executive agency.” 41 U.S.C. sect. 253a(a)(2)(B). Since bundled or consolidated procurements may combine separate, multiple requirements into one contract, they have the potential for restricting competition by excluding firms that can furnish only a portion of the requirement. Aalco Forwarding, Inc., et al., B-277241.12, B-277241.13, Dec. 29, 1997, 97-2 CPD para. 175 at 6. In interpreting CICA, we have looked to see whether an agency has a reasonable basis for its contention that bundling is required, and we have sustained protests only where no reasonable basis is demonstrated. Phoenix Scientific Corp., B-286817, Feb. 22, 2001, 2001 CPD para. 24 at 10.

Here, the agency concluded that the combination of the dockside and shipside maintenance and repair work will result in measurably substantial benefits to the government. As discussed above, we conclude that these benefits, including maintenance and repair cost savings and increased operational time for the WHEC cutters based on reduced duration of maintenance availabilities, justified bundling under the Small Business Act. In our view, these benefits also provide a reasonable basis to justify the consolidation of the two requirements for purposes of CICA. See Teximara, Inc., B-293221.2, July 9, 2004, 2004 CPD para. 151 at 8-9.  (Nautical Engineering, Inc., B-309955, November 7, 2007) (pdf)


The protesters first contend that this requirement violates the bundling restrictions under the Small Business Act, and that the agency failed to conduct appropriate market research to show that the bundling was necessary; failed to reasonably justify the bundling of requirements; and failed to timely notify the Small Business Administration (SBA) of its decision to bundle the requirements and provide a statement regarding its justification for bundling. In response, the agency explains that the TMSS routinely has been purchased as a packaged system under the earlier DLA contract. The agency further explains that the TMSS components cannot be purchased separately in a cost effective manner but rather, must be procured as an integrated package. The agency states that its market research consisted of reviewing vendors’ literature, pamphlets, specifications, and face-to-face briefings/meetings, as well as observing and discussing vendors’ evolving capabilities and products at exhibitions, symposiums, and trade shows. The agency also argues that any challenge to bundling in this solicitation is untimely. The Small Business Reauthorization Act of 1997, Pub. L. No. 105-135 (1997), provided that “to the maximum extent practicable,” each agency shall “avoid unnecessary and unjustified bundling of contract requirements that precludes small business participation in procurements as prime contractors.” 15 U.S.C. sect. 6319 (j)(3) (2000). Bundling, for purposes of the Act means “consolidating 2 or more requirements for goods or services previously provided or performed under separate smaller contracts that is likely to be unsuitable for award to a small-business concern.” 15 U.S.C. sect. 632(o)(2); see FAR sect. 2.101. “Separate smaller contract . . . means a contract that has been performed by 1 or more small business concerns or was suitable for award to 1 or more small business concerns.” 15 U.S.C. sect. 632(o)(3); see FAR sect. 2.101. Our review of the record here shows that the SICPS/TMSS is currently being purchased as a packaged system under a DLA contract with DHS, and that the system has not been provided under separate smaller contracts. Further, the record shows that the SBA and the Small and Disadvantaged Business Utilization Specialist agreed that this requirement was not suitable for award to 1 or more small business concerns. Accordingly there is no “consolidation” of two or more requirements in this procurement as contemplated by the Small Business Act and the Small Business Act requirements pertaining to bundling are therefore not applicable here.

The protesters also argue that this solicitation represents an improperly bundled or total package procurement in violation of the Competition in Contracting Act of 1984 (CICA). 10 U.S.C. sect. 2305 (a)(1) (2000). The protesters maintain that the Army has consolidated these requirements for no reason other than convenience, which, the protesters argue is not a sufficient rationale for bundling. The reach of the restrictions against total package or bundled procurements in CICA is broader than the reach of restrictions against bundling under the Small Business Act, Phoenix Scientific Corp., B-286817, Feb. 22, 2001, 2001 CPD para. 24 at 9-10. Specifically, CICA generally requires that solicitations include specifications which permit full and open competition and contain restrictive provisions and conditions only to the extent necessary to satisfy the needs of the agency. See 10 U.S.C. sections 2305(a)(1)(A), (B). Because procurements conducted on a bundled or total package basis can restrict competition, we will sustain a challenge to the use of such an approach where it is not necessary to satisfy the agency’s needs. Better Serv., B-265751.2, Jan. 18, 1996, 96-1 CPD para. 90 at 2. The determination of a contracting agency’s needs and the best method for accommodating them are matters primarily within the agency’s discretion. Specialty Diving, Inc., B-285939, Oct. 16, 2000, 2000 CPD para. 169 at 3. Of particular relevance here, where a requirement relates to national defense or human safety, an agency has discretion to define the solicitation requirements to achieve not just reasonable results, but the highest possible reliability and effectiveness. Tucson Mobilephone, Inc., B-250389, Jan. 29, 1993, 93-1 CPD para. 79 at 5, aff’d, B-250389.2, June 21, 1993, 93-1 CPD para. 472. The Army states that the SICPS/TMSS is a mission critical system. CO’s Rebuttal Comments at 1- 3. It is currently fielded for troops in Iraq and Afghanistan to provide a quick and easy way to establish temporary battlefield communication centers. Military commanders use these centers to issue instructions and warn soldiers of approaching dangers. Moreover, the agency explains that untested, unsafe, or incompatible systems could cause delays and risks. As a result, the Army contends it needs to be certain these items will perform as a system, rather than as a collection of separate parts. While the protesters disagree with the Army’s need for the proven integration and compatibility of these systems, we think the agency has met its burden of showing a reasonable need for buying these items as a total system. We also see nothing unreasonable in the Army’s rejection of the protesters’ contention that the agency could enter into a separate integration contract. The Army responds that having a separate contract for an additional company to integrate all the separate components would not be time or cost effective, and that the Army would run the risk of not being able to procure enough systems in the event of a surge requirement. (Outdoor Venture Corporation; Applied Companies, B-299675; B-299676, July 19, 2007) (pdf)


When a proposed acquisition involves bundled requirements, the agency must first conduct market research to determine whether the bundling is necessary and justified, given the potential impact on small business participation, by ascertaining whether the government will derive measurably substantial benefits from the bundling and quantifying these benefits. FAR sect. 7.107(a), (b). In addition, the agency must, at least 30 days before issuing a solicitation, provide its acquisition package to the SBA procurement representative for review and also provide a statement why the (1) proposed acquisition cannot be divided into reasonably smaller lots for small businesses, (2) delivery schedules cannot be established that will encourage small business participation, (3) proposed acquisition cannot be structured so to make it likely that small businesses can compete for the prime contract, (4) consolidated construction project cannot be acquired as separate discrete projects, or (5) bundling is necessary and justified. FAR sect. 19.202-1(e). Furthermore, within the same 30 days, an agency must notify any affected incumbent small business concerns of the Government’s intention to bundle the requirement. FAR sect. 10.001(c)(2). However, the agency argues that FAR sections 7.107(a), (b); 10.001(c)(2); and 19.202-1 do not apply to the task orders or the BPA issued under Sverdrup’s FSS contract because these provisions applying bundling rules to FSS contracts were implemented after TACOM had completed the development of its acquisition plan. The requirements that agencies perform a bundling analysis and notify the SBA when requirements are bundled were specifically made applicable to BPAs and orders placed against FSS contracts by a Federal Register notice published October 20, 2003, with an "effective date" of October 20, 2003. 68 Fed. Reg. 60,000 (Oct. 20, 2003); FAR sect. 8.404(a). The FAR states that "[u]nless otherwise specified . . . FAR changes apply to solicitations issued on or after the effective date of the change.” FAR sect. 1.108(d)(1). Since the solicitation that led to the award of the BPA was not issued until December 5, 2003, which was after the effective date of the revised bundling regulations, the agency was required to comply with these regulations, even though at the time the Army finished its acquisition planning the regulations had not gone into effect. The Army next argues that these FAR bundling requirements do not apply because the SETA services previously performed by Sigmatech were not bundled with the other requirements and were merely a “follow on” to the Camber contract. However, the record shows that, for the past 15 years, the SETA services for the RSJPO have been provided by small businesses (including Sigmatech) under AMCOM contracts. These services were not, as the agency contends, a “follow on” to the Camber contract previously issued by TACOM because, although SETA services were provided under the Camber contract, this support for the RSJPO was not provided by Camber. Even after the RSJPO came under the control of TACOM, the Army still procured the RSJPO services from small businesses through the AMCOM contracts and BPAs for example, through exercising options under the ID/IQ contract as recently as 2004 (with performance into 2005) and through the BPA issued to Sigmatech in 2004, all as part of small business reserves. Thus, the inclusion of the RSJPO SETA services in Sverdrup’s BPA is a consolidation of two or more procurement requirements that were previously performed by small businesses under separate, smaller contracts. We also find that the procurement appears to result in a single contract (the Sverdrup BPA and resulting task orders) that is unsuitable for award to small businesses due to its size and the aggregate dollar amount of the anticipated award. In this regard, the estimated contract value is approximately $130 million over a 5‑year period and only two large businesses (and no small businesses) responded to the RFQ that resulted in the BPA award. We thus conclude, under these circumstances, that the consolidation of the SETA services for the RSJPO under the Sverdrup BPA meets the definition of bundling under the Small Business Act. However, the record shows that the Army failed to perform a bundling analysis as required by FAR sect. 7.107(a), (b), or comply with the requirements of FAR sect. 19.202-1 in providing notice of bundling to the SBA. The record further shows that the agency failed to provide notice to Sigmatech (the incumbent small business concern) of its intent to bundle the requirements and thus failed to comply with FAR sect. 10.001(c)(2). We sustain the protest on these bases. (Sigmatech, Inc., B-296401, August 10, 2005) (pdf)


Although DLA initially identified 3,431 NSNs as F404 consumable parts to be covered under the contract, DLA has since determined that 665 of those NSNs were already being provided under a separate Navy PBL contract, leaving 2,766 NSNs for which the contractor will provide logistical support services. Of those, DLA indicates that it will source and supply 312 "mainly competitive small business NSNs," for which General Electric will supply only logistical support, leaving 2,454 NSNs for which General Electric will provide logistical support, sourcing, and supply. CO Statement at 11. The record shows that prior to proceeding with the solicitation, DLA fulfilled its obligation to seek the views of the Small Business Administration (SBA), through its procurement center representative, regarding the anticipated bundling. See 15 U.S.C. Section 644 (2000); FAR Section 7.107. Initially the SBA objected to the bundling as unjustified, and pursued an appeal to reverse the bundling. Ultimately, however, the SBA withdrew its appeal and agreed to the bundling with certain conditions intended to promote and preserve small business participation for these parts, which were memorialized in writing between the SBA and DLA. AR, Tab 14, Defense Department Form 70, at 2. (B. H. Aircraft Company, Inc., B-295399.2, July 25, 2005) (pdf)


We find that there is no improper bundling here. Where there is a consolidation of two or more agency requirements, the Small Business Act, as amended, requires that agencies avoid bundling them together where the result would be a single contract that is likely to be unsuitable for award to a small business concern. 15 U.S.C. 632(o)(2). On the other hand, where, as here, the record shows that the agency has reserved its requirement for small businesses, and there is an expression of interest in the requirement by legitimate small businesses, there is no basis to conclude that the consolidated requirement is unsuitable for award to a small business within the meaning of the Small Business Act. Phoenix Scientific Corp. , supra , at 9. Here, the agency proceeded with the acquisition notwithstanding the protest, and on October1, 2004, made award of a contract for the consolidated requirement to a small business concern. Under the circumstances, we have no basis to conclude that the agency's consolidation of these requirements into a single contract was improper or inconsistent with the Small Business Act. (Health & Human Services Group, B-294703, December 15, 2004) (pdf)


The agency explains that the combined solicitation is necessary because Group Seattle contains only one MLB (located at Station Bellingham), which may not generate sufficient repair work to meet the $10,000 minimum amount under the contemplated IDIQ contract. A separate contract for Group Seattle also would deprive the agency of the potential cost benefit from a single contractor’s economies of scale that would result from repairs on more than one boat, and also would unnecessarily increase contract administration costs. The agency determined that, notwithstanding that Reedsport would not be able to compete, combining the Groups would not result in a limited competition, since 10 firms expressed interest in the requirement as structured. The agency’s approach is unobjectionable. We see no reason why the agency should not be permitted to consider, in configuring the lots for solicitation purposes, the amount of work that would be generated under different combinations of groups, stations and boats, and the potential effect on the prices for that work (due, for example, to economies of scale), as well as whether the work generated for the single MLB would satisfy the contract minimum. While these considerations resulted in Reedsport’s exclusion from the competition, it is clear that the Coast Guard gave due consideration to the broader competitive impact of its approach. In this regard, based on the numerous expressions of interest, the agency concluded that it could achieve the operational benefits of its approach while possibly receiving greater competition than it did under IFB 003. In arguing that its own inability to compete renders the solicitation restrictive, Reedsport ignores other legitimate competitive considerations that would lead to a different conclusion. For example, while splitting the requirement would enable Reedsport to compete for the Station Port Angeles MLBs, this might at the same time result in little or no competition for the single MLB at Station Bellingham. Similarly, Reedsport’s position fails to take into account the possibility that combining the two groups could make the requirement more attractive to some potential bidders, and ultimately result in greater competition overall. We conclude that the agency reasonably combined the two groups under Lot 5.  (Reedsport Machine & Fabrication, B-293110.2; B-293556, April 13, 2004) (pdf)


The reasons that the agency has offered, however, for grouping the travel locations by geographic region, and for issuing a single consolidated procurement, are not solely based on administrative convenience. As indicated previously, the underlying purposes behind the agency's single procurement included the legitimate requirement to reengineer the antiquated and costly DoD travel process, in part by consolidating the process, and structuring geographical groupings to allow for more small business participation. Agency officials testified that a major factor that was considered in structuring the RFP into 28 travel areas, with 89 locations was whether there was adequate sales volume to achieve effective competition. See Tr., June 11, 2003, at 12, 40-41. Moreover, this procurement approach allowed more choices by potential small business offerors to select the travel areas where they would be most competitive and able to successfully perform the contracts. Finally, unlike the protesters, DTS/PMO officials found, based on discussions with the Army, that the MEPS travel needs were well suited for support by small businesses because the travel services for MEPS are relatively “cut and dry”; the protesters have not shown this judgment was unreasonable. See Tr., June 6, 2003, at 41; Tr., June 9, 2003, at 105; Tr., June 11, 2003, at 12-15.  Since the agency had a legitimate requirement to reengineer DoD travel processes by consolidating them, and the agency did reasonably consider the impact on small businesses, we find the agency has justified its approach to consolidating the agency's requirements. In this regard, we have upheld the consolidation of requirements where, as here, an agency has provided a reasonable basis for using such an approach--e.g., a definitive agency requirement that mirrors the agency's minimum needs and necessitates the questioned consolidation. See The Sequoia Group, Inc., supra.  (AirTrak Travel etal., B-292101; B-292101.2; B-292101.3; B-292101.4; B-292101.5, June 30, 2003)  (pdf)


We do not question the agency's decision to classify food services as logistics support functions to be administered by the DOL. Rather, our concern is whether the agency has provided a reasonable justification of its needs in terms of including food services in the same RFP with base, vehicle, and aircraft maintenance services. In our view, the fact that the agency is organized in a manner which results in the administration of the performance of all of these functions by one particular office (which may itself be reasonable) does not provide a basis for insisting that all of these varied services be procured from one source. In other words, Fort Riley could, consistent with its view that food services are just as integral to the work of its DOL as the other functions, continue to have the contract for food services, as well as the contract for the other services, administered by the DOL. Beyond the question of whether all of the services are part of logistics and relate to supporting the troops, the agency's reason for bundling them all in a solicitation seems to merely reflect the belief that it is administratively more convenient to manage one entity performing all of the requirements--either the MEO or a private-sector offeror--as opposed to two entities--either the MEO or a private-sector offeror for the food services, and either another MEO or another private-sector offeror for the other base, vehicle, and aircraft maintenance requirements. Administrative convenience is not a legal basis to justify bundling of requirements, if the bundling of requirements restricts competition, as we believe it does here. Vantex Serv. Corp., supra, at 4; National Customer Eng'g, supra, at 6.  (EDPEnterprises, Inc., B-284533.6, May 19, 2003  (pdf))


This solicitation does not represent a “consolidation” of two or more requirements, inasmuch as the record establishes that all of the requirements here were previously provided under the one predecessor contract with IHS, a large business, and were not provided under separate smaller contracts.  Thus, the Small Business Act requirements pertaining to bundling are not applicable to this solicitation.   USA also argues that this solicitation represents an improperly bundled or total package procurement in violation of the Competition in Contracting Act of 1984 (CICA).  The reach of the restrictions against total package or bundled procurements in CICA is broader than the reach of restrictions against bundling under the Small Business Act.  Phoenix Scientific Corp., B-286817, Feb. 22, 2001, 2001 CPD ¶ 24 at 9‑10.  Specifically, CICA generally requires that solicitations include specifications which permit full and open competition and contain restrictive provisions and conditions only to the extent necessary to satisfy the needs of the agency.  See 10 U.S.C. §§ 2305(a)(1)(A), (B) (2000).  Because procurements conducted on a bundled or total package basis can restrict competition, we will sustain a challenge to the use of such an approach where it is not necessary to satisfy the agency's needs.  Better Serv., B‑265751.2, Jan. 18, 1996, 96-1 CPD ¶ 90 at 2.  The determination of a contracting agency's needs and the best method for accommodating them are matters primarily within the agency's discretion.  Specialty Diving, Inc., B-285939, Oct. 16, 2000, 2000 CPD ¶ 169 at 3.  Of particular relevance here, where  a requirement relates to national defense or human safety, an agency has discretion to define the solicitation requirements to achieve not just reasonable results, but the highest possible reliability and effectiveness.  Tucson Mobilephone, Inc., B-250389, Jan. 29, 1993, 93-1 CPD ¶ 79 at 5, aff'd, B-250389.2, June 21, 1993, 93-1 CPD ¶ 472.   (USA Information Systems, Inc., B-291417, December 30, 2002)


While we recognize that there are instances where an agency awards identical ID/IQ contracts so that it might be reasonable to define what was solicited and awarded as one procurement requirement (a question we need not resolve here), that is not what occurred in this instance. In this case, although a single solicitation (the MLA) was issued, it listed a variety of equipment needed by the agency. The MLA thus was not a statement of a single procurement requirement, as the agency suggests, but instead functioned more as a list of a range of multiple procurement requirements. As the protester notes, the nine contracts awarded under the MLA were of varied scope and covered varying lists of equipment. If the MLA referenced a single requirement, as the agency contends, that would mean that the contracting agency had awarded many (perhaps all) of the nine contracts even though (since they did not cover the entire MLA) they did not satisfy the agency's procurement requirement. The fact that all of the containers and all of the related equipment can be accurately described as intermodal container equipment does not establish that they are simply elements in a large unitary procurement requirement; otherwise, separate equipment contracts for different types of furniture, or for identical services in different regions of the country, would have to be viewed as contracts for a single procurement requirement. In our view, to define "procurement requirement" so broadly could shield from meaningful review the very sort of arbitrary consolidation of requirements that the Act's restrictions on bundling are intended to prevent.  (TRS Research, B-290644, September 13, 2002)  (pdf)


On the record before us, we find that the Army has not adequately demonstrated that combining its requirements for portable latrine and waste removal services was necessary to satisfy the agency's needs. The agency has not adequately explained why it chose to bundle the two kinds of work at Fort Campbell, yet did not bundle two kinds of work at either of the other two locations, and in fact structured the solicitation so that services for the three locations can be obtained by separate or combined awards, thus facilitating competition while not excluding the possibility of a combined contract. The agency's justification, quoted above, essentially amounts to reliance on administrative convenience as the basis for the bundling. However, the fact that the agency may find that combining the requirements is more convenient administratively, in that it has found dealing with one contract and contractor less burdensome, is not a legal basis to justify combining the requirements, if the combining of requirements restricts competition. CICA and its implementing regulations require that the scales be tipped in favor of ensuring full and open competition, whenever concerns of economy or efficiency are being weighed against ensuring full and open competition. See Better Serv., supra; National Customer Eng'g, B-251135, Mar. 11, 93-1 CPD ¶ 225 at 6.  (Vantex Service Corporation, B-290415, August 8, 2002)  (pdf)


Given the fundamentally expanded scope and complexity of the agency's food services requirement, we think USMC reasonably concluded that there was no reasonable expectation that such small business concerns, with primarily limited messhall contracts on the installation level, possessed the capabilities, resources and experience to satisfactorily perform the contemplated regional contracts.  (MCS Management, Inc., B-285813; B-285882, October 11, 2000)


Treasury reports that it projects achieving substantial technical benefits from consolidating its IT requirements, including the requirement here, under the Seat Management program. For example, Treasury expects that having a single contractor responsible for all of its desktop IT requirements--rather than continuing to rely on the current fragmented approach of using different sources for hardware/software and services--will result in significant quality improvements as a result of (1) having a single contractor responsible for infrastructure interoperability and product compatibility, (2) eliminating the confusion, delays and denials of responsibility for service interruptions or installation problems, and (3) facilitating consistent, timely upgrades and refreshment of technology. Treasury Reports, Apr. 2, 1999, at 25-26, Apr. 28, 1999, at 5-6, and Apr. 30, 1999, at 1-2; Agency Report, Tab 26, Acquisition Plan, Feb. 9, 1999, at 3, 9. 

SKE has not rebutted the basis for Treasury's determination to procure the services in question under the Seat Management contract; it has made no showing that Treasury in fact had no reasonable expectation of achieving substantial technical benefits from consolidating these IT requirements under the Seat Management contract. Thus, there is no basis for finding that the agency's approach violates the prohibition against improper bundling.  (S&K Electronics, B-282167, June 10, 1999)

Comptroller General - Listing of Decisions

For the Government For the Protester
MTU Maintenance Canada, LTD B-411185, B-411185.2, B-411185.3: Jun 9, 2015  (pdf) Sigmatech, Inc., B-296401, August 10, 2005 (pdf)
Guardian Moving & Storage Co., Inc., B-410171: Nov 6, 2014  (pdf) EDPEnterprises, Inc., B-284533.6, May 19, 2003  (pdf)
American Custom Meats, LLC, B-409564: Jun 12, 2014  (pdf) TRS Research, B-290644, September 13, 2002  (pdf)
American Toner & Ink; KPaul  Properties, LLC; Dolphin Blue, Inc.; Capital Shredder Corp., B-409528.7, B-409528.11, B-409528.14, B-409528.18: Jun 9, 2014   (pdf) Vantex Service Corporation, B-290415, August 8, 2002  (pdf)
Star Food Service, Inc. B-408535, Nov 1, 2013  (pdf) N&N Travel & Tours, Inc.; BCM Travel & Tours; Manassas Travel, Inc.;, B-285164.2; B-285164.3, August 31, 2000
Major Contracting Services, Inc., B-406980, Oct 10, 2012  (pdf) Pemco Aeroplex, Inc., B-280397, September 25, 1998
CYIOS, Inc., B-402728.3, Jul 13, 2012  (pdf)  
Northrop Grumman Technical Services, Inc., B-406523, Jun 22, 2012  (pdf)  
BlueStar Energy Solutions, B-405690, December 12, 2011  (pdf)  
Vox Optima, LLC, B-400451, November 12, 2008  (pdf)  
Nautical Engineering, Inc., B-309955, November 7, 2007 (pdf)  
Outdoor Venture Corporation; Applied Companies, B-299675; B-299676, July 19, 2007 (pdf)  
B. H. Aircraft Company, Inc., B-295399.2, July 25, 2005 (pdf)  
Health & Human Services Group, B-294703, December 15, 2004 (pdf)  
Reedsport Machine & Fabrication, B-293110.2; B-293556, April 13, 2004 (pdf)  
AirTrak Travel etal., B-292101; B-292101.2; B-292101.3; B-292101.4; B-292101.5, June 30, 2003  (pdf)  
USA Information Systems, Inc., B-291417, December 30, 2002  
Phoenix Scientific Corporation, B-286817, February 22, 2001  
MCS Management, Inc., B-285813; B-285882, October 11, 2000  
EAI Corporation, B-283129, October 7, 1999  
S&K Electronics, B-282167, June 10, 1999  

U. S. Court of Federal Claims - Key Excerpts

a. The DLA Did Not Violate the CICA or the FAR When It Consolidated the Procurement of Hardware and Software Services

As noted above, defendant concedes that plaintiff has standing to challenge the lawfulness of the DLA’s decision to consolidate the procurement of hardware and software maintenance services into one contract. Thus, the court first addresses plaintiff’s contention that the DLA’s decision to consolidate these services into one contract constituted bundling, as well as plaintiff’s argument that consolidation violated the CICA and the FAR.

As a preliminary matter, the court finds that the DLA’s consolidation of its of hardware and software services contracts did not constitute bundling. Case law that interprets the pertinent statutes and regulations makes it clear that “to constitute bundling, a solicitation must: (1) consolidate two or more requirements that were previously procured under separate smaller contracts into a single contract, and (2) likely be unsuitable for award to a small business.” Benchmade Knife Co. v. United States, 79 Fed. Cl. 731, 739 (2007) (citing 15 U.S.C. § 632(o)(2) and FAR 2.101). First, the DLA’s decision to obtain hardware and software maintenance support through one contract, instead of two separate contracts, was well within its discretion. This conclusion is supported by the ruling of the United States Court of Appeals for the Federal Circuit (“Federal Circuit”) in Tyler Construction Group v. United States, where the court evaluated the decision of the United States Army Corps of Engineers to acquire services for the design and construction of certain military buildings through an Indefinite Delivery/Indefinite Quantity (“IDIQ”) contract. 570 F.3d 1329 (Fed. Cir. 2009). In that case, the protestor argued that the government was not authorized by the FAR to use an IDIQ contract for a “large scale” construction project. Id. at 1332. The Federal Circuit affirmed the trial court’s denial of the protest, explaining that the “proper inquiry [wa]s not whether the FAR authorizes the use of IDIQ contracts for a procurement of construction, but whether there [wa]s any statutory or regulatory provision that precludes such use.” Id. at 1333. The court held that it was “unaware of any such provision,” and that the protestor had not identified any. Id. The court further held that under FAR 1.102(d), “government officers are authorized, indeed, encouraged, in exercising personal initiative in procurement matters, to assume that a specific strategy, practice, policy or procedure that is not addressed in the FAR nor prohibited by law . . . and that is in the best interests of the Government, is a permissible exercise of authority.” Id. (internal quotation marks omitted). The court explained that “federal procurement entities . . . ha[ve] broad discretion to determine what particular method of procurement will be in the best interests of the United States in a particular situation.” Id. at 1334. As the court held, “’[e]ffective contracting demands broad discretion.’” Id. (quoting Lockheed Missiles & Space Co. v. Bentsen, 4 F.3d 955, 958 (Fed. Cir. 1993)). Thus, plaintiff’s contention in this case that the DLA improperly consolidated its contracts is unpersuasive, because plaintiff cites to no provision of the FAR that prohibits such consolidation, and more broadly, because the DLA had wide discretion to consolidate.

Second, plaintiff does not demonstrate that the consolidated contract would “likely be unsuitable to a small business.” To the contrary, a small business concern was not only deemed technically acceptable, but was ultimately awarded the contract, as it was found to be “responsible” and its price was determined to be “fair and reasonable.” AR 110, 241-42, 311. In addition, the other two offerors were small businesses.6 Further, the Small Business Administration reviewed and approved the NAICS code that the DLA used to post the solicitation. Id. at 323. Thus, because the contract was not “unsuitable for award to a smallbusiness concern,” 15 U.S.C. § 632(o)(2), it cannot be considered an example of bundling.

Equally unpersuasive are plaintiff’s arguments that there were other means by which the DLA could have procured the desired services. The DLA had the right to award the contract under the FSS program. As the Federal Circuit has explained, “[t]he FSS was established by the [GSA] to provide Government agencies with a ‘simplified process for obtaining commercial supplies and services at prices associated with volume buying.’” Kingdomware Techs., Inc. v. United States, 754 F.3d 923, 925 (Fed. Cir. 2014) (quoting FAR 8.402(a)), cert. granted, 83 U.S.L.W. 3654 (U.S. June 22, 2015) (No. 14-916). Further, “[u]nless otherwise specified by statute or regulation, an agency has wide discretion to decide the method of contracting to use, including the FSS.” Id.; accord Kingdomware Techs., Inc. v. United States, 107 Fed. Cl. 226, 231 (2012) (“[A]n agency generally retains unfettered discretion to select the procurement method it wishes to use and in particular, whether it wishes to meet its acquisition requirements using the FSS.”), aff’d, 754 F.3d at 925. Moreover, the Court of Federal Claims has previously held, interpreting the FAR, that “[o]rders placed against the FSS are deemed to satisfy the conditions of full and open competition and are not subject to the requirements of traditional procurement procedures.” Kingdomware Techs., 107 Fed. Cl. at 231 (citing FAR 8.404(a)).

Indeed, “[t]he FAR specifies as a matter of contracting priority that an agency is encouraged to obtain goods and services from FSS contractors before purchasing from commercial sources . . . .” Kingdomware Techs., 754 F.3d at 925 (citing FAR 8.004).

In addition, plaintiff’s contention that the LSJ contained a false statement is erroneous. The LSJ stated that “[a]t the current time ORACLE has no agreements with 3rd party support organizations to resell hardware and software system support.” AR 106. Plaintiff argues that this statement is false because the DLA had a contract with plaintiff. Although plaintiff did have a contract with the DLA, the contract was limited to hardware system support. Thus, the statement in the LSJ that the DLA did not have any agreements to obtain both hardware and software system support was true, as plaintiff does not provide both types of support.

In short, the DLA did not violate the CICA or the FAR when it consolidated the procurement of hardware and software maintenance services into one contract. Accordingly, the court denies plaintiff’s motion for judgment on the administrative record and grants defendant’s cross-motion for judgment on the administrative record on this issue.  (CHE Consulting, Inc. v. U. S.,  No. 15-1244C, March 2, 2016)  (pdf)


Whether the bundling provisions of 15 U.S.C. § 631(j) should or do apply to acquisitions for new construction is a question we leave to Congress. To resolve the matter at hand, it is enough for us to conclude, assuming (without deciding) that the provisions do in fact apply, that the Corps has demonstrated that the consolidation of the contract requirements was necessary and justified within the meaning of the relevant statutes. As defendant makes clear, the Corps’ choice of acquisition strategy was dictated by an industry consensus that successfully meeting the Army’s goals in construction costs and time would require a departure from the Corps’ traditional “one project at a time” approach in favor of an acquisition strategy that maximized economies of scale. Given the Corps’ extensive market research and its detailed analysis of the issue, we can find no fault with the Corps’ decision to rely on the industry’s counsel.

Nor do we accept plaintiff’s contention that the Corps’ rationale for adopting a consolidated acquisition strategy—the benefits achieved through continuous work by an individual contractor—is largely illusory. As defendant explains, the Corps intends to award task orders on a sequenced, single-project basis (i.e., one task order for each barracks project) to promote price competition while reserving the right to order multiple projects using a single task order subject to the solicitation’s “Order Limitations” clause. By proceeding in this manner, the Corps anticipates that two or three contractors will perform the work required to construct nine facilities, with each contractor performing three or more projects, thereby realizing the anticipated economics of scale. Given this explanation, we see no reason to conclude that the Corps was not rational in determining that a consolidation of the contract requirements was necessary and justified.  (Tyler Construction Group, v. U. S., No. 08-94C, August 14, 2008)  (pdf)

U. S. Court of Federal Claims - Listing of Decisions
For the Government For the Protester
CHE Consulting, Inc. v. U. S.,  No. 15-1244C, March 2, 2016  (pdf)  
Tyler Construction Group, v. U. S., No. 08-94C, August 14, 2008  (pdf)  
Spherix, Inc. v. U. S. and ReserveAmerica Holdings, Inc., No. 03-2371C, November 17, 2004 (pdf)  
Spherix, Inc. v. U. S. and ReserveAmerica Holdings, Inc., No. 03-2371C, November 3, 2004 (pdf)  
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