B-170778, DEC 3, 1970

B-170778, DEC 3, 1970

BID PROTEST - RESTRICTIVE REQUIREMENTS - SMALL BUSINESS SET-ASIDE DENIAL OF PROTEST OF F. W. BELL, INC., AGAINST LIMITING OF PROCUREMENT AS A 100% SMALL BUSINESS SET-ASIDE AND AWARD OF A CONTRACT FOR VIBRATION TRANSDUCER MAGNETICS INSTRUMENTATION SYSTEMS ISSUED BY SAN ANTONIO AIR MATERIAL AREA, KELLY AFB, TEXAS, TO RFL INDUSTRIES, INC. PROTESTANT'S CONTENTION THAT THERE WAS NO REASONABLE EXPECTATION OF RECEIVING MORE THAN ONE BID FROM SMALL BUSINESS BIDDERS AND THAT, THEREFORE, THE 100% SMALL BUSINESS SET-ASIDE PROVISION WAS IN ERROR, IS CONTRADICTED BY THE REVIEW OF THE BIDDER'S LIST CONDUCTED WHICH REVEALED 31 SMALL BUSINESS FIRMS CAPABLE OF BIDDING ON THE SET-ASIDE EVEN THOUGH THE ANTICIPATED COMPETITION DID NOT MATERIALIZE AND ONLY ONE BID WAS RECEIVED.

TO F. W. BELL, INC.:

FURTHER REFERENCE IS MADE TO YOUR TELEFAX OF SEPTEMBER 9, 1970, AND SUPPLEMENTING LETTERS OF SEPTEMBER 10 AND 21 AND OCTOBER 14, 1970, PROTESTING ANY AWARDS UNDER SOLICITATION NO. F41608-70-B-1303, ISSUED BY THE SAN ANTONIO AIR MATERIEL AREA (SAAMA), KELLY AIR FORCE BASE, TEXAS.

THE INVITATION WAS ISSUED ON MAY 15, 1970, REQUESTING BIDS ON VIBRATION TRANSDUCER MAGNETICS INSTRUMENTATION SYSTEMS IN ACCORDANCE WITH PURCHASE EXHIBIT LPM-305, DECEMBER 15, 1969, WHICH SPECIFIED THE SYSTEM TO BE "RFL INDUSTRIES, INC., OR EQUIVALENT" AND SET FORTH THE SALIENT CHARACTERISTICS WHICH WERE REQUIRED. THE PROCUREMENT WAS A 100 PERCENT SET-ASIDE FOR SMALL BUSINESS. IN YOUR LETTER OF JUNE 8, 1970, ADDRESSED TO THE SAAMA CONTRACTING OFFICE, YOU TOOK ISSUE WITH VARIOUS TECHNICAL ASPECTS OF THE SPECIFICATION AS BEING RESTRICTIVE AND WITH THE SMALL BUSINESS SET-ASIDE FEATURE OF THE SOLICITATION. THE BID OPENING DATE WAS SUSPENDED BY AMENDMENT 0001 TO THE INVITATION TO ALLOW INVESTIGATION OF YOUR ALLEGATIONS REGARDING THE RESTRICTIVE CHARACTER OF THE SPECIFICATIONS. CHANGES TO THE INVITATION REMOVING THE RESTRICTIVE SPECIFICATION FEATURES WERE ACCOMPLISHED BY AMENDMENT 0002 DATED AUGUST 20, 1970, BUT YOU WERE ADVISED THAT THE SMALL BUSINESS SET ASIDE WOULD NOT BE RESCINDED.

ONLY ONE BID WAS RECEIVED AND OPENED ON SEPTEMBER 8, 1970, FROM RFL INDUSTRIES, INC., A SELF-CERTIFIED SMALL BUSINESS CONCERN. YOUR TELEFAX PROTEST TO OUR OFFICE FOLLOWED THE NEXT DAY. YOU REQUESTED THAT NO AWARD BE MADE AND THAT A NEW SOLICITATION BE ISSUED WITHOUT THE 100-PERCENT SET- ASIDE FOR SMALL BUSINESS. YOU ALLEGED FURTHER THAT RFL INDUSTRIES IS DOMINANT IN ITS FIELD AND THAT ITS BID SHOULD THEREFORE BE DECLARED NONRESPONSIVE AS HAVING BEEN SUBMITTED BY A LARGE BUSINESS CONCERN. THE BASIS OF YOUR PROTEST TO OUR OFFICE IS THAT THE 100 PERCENT SMALL BUSINESS SET-ASIDE PROVISION WAS IN ERROR AS THERE WAS NOT A REASONABLE EXPECTATION OF RECEIVING MORE THAN ONE BID FROM A SMALL BUSINESS BIDDER, AND THAT RFL IS DOMINANT IN ITS FIELD OF MAGNET CHARGING AND MAGNET TREATING EQUIPMENT. IN YOUR LETTER OF SEPTEMBER 21, 1970, YOU SUPPLEMENTED YOUR PROTEST BY STATING THAT RFL DID NOT SPECIFY A MODEL NUMBER FOR THE EQUIPMENT OFFERED IN ITS BID AND BY LETTER DATED OCTOBER 14, 1970, YOU STATED FURTHER THAT ITEM 1.2 OF PURCHASE EXHIBIT LPM-305 CALLS FOR A MAGNET TREATER, RFL MODEL NUMBER 889B; THAT THIS ITEM HAS NOT APPEARED IN RFL'S CATALOG FOR AT LEAST 2 YEARS; AND THAT SINCE RFL DID NOT QUOTE MODEL NUMBERS IN THEIR BID IT WOULD APPEAR THAT THE ITEM OFFERED IS THE OBSOLETE MODEL 889B.

BY LETTER DATED SEPTEMBER 28, 1970, YOU WERE ADVISED BY THE SMALL BUSINESS ADMINISTRATION (SBA) THAT YOUR ALLEGATION THAT RFL INDUSTRIES WAS DOMINANT IN ITS FIELD WAS WITHOUT SUBSTANCE. SINCE THE SMALL BUSINESS SIZE DECISION OF SBA IS "CONCLUSIVE" BY 15 U.S.C. 637(B)(6), WE FIND NO LEGAL BASIS TO QUESTION THE DETERMINATION THAT RFL INDUSTRIES IS SMALL BUSINESS FOR PURPOSES OF THIS PROCUREMENT. 46 COMP. GEN. 102 (1966); 44 ID. 271 (1964); AND 41 ID. 649 (1962).

SECTION 15 OF THE SMALL BUSINESS ACT, 15 U.S.C. 644, PROVIDES THAT SMALL BUSINESS CONCERNS SHALL RECEIVE ANY AWARD OR CONTRACT OR ANY PART THEREOF AS TO WHICH IT IS DETERMINED TO BE IN THE INTEREST OF ASSURING THAT A FAIR PROPORTION OF THE TOTAL PURCHASES AND CONTRACTS FOR PROPERTY AND SERVICES FOR THE GOVERNMENT ARE PLACED WITH SMALL BUSINESS CONCERNS. UNDER SECTION 15 OF THE ACT, THE DETERMINATION AS TO WHETHER A PARTICULAR PROCUREMENT SHOULD BE SET ASIDE IS ORDINARILY WITHIN THE JURISDICTION OF THE PROCURING AGENCY. SEE ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-706.1(A). WITH RESPECT TO TOTAL SET-ASIDES, ASPR 1 706.5 PROVIDES IN SUBSTANCE THAT THE ENTIRE AMOUNT OF AN INDIVIDUAL PROCUREMENT MAY BE SET ASIDE EXCLUSIVELY FOR SMALL BUSINESS PARTICIPATION WHERE THERE IS A REASONABLE EXPECTATION THAT A SUFFICIENT NUMBER OF BIDS OR PROPOSALS WILL BE OBTAINED "SO THAT AWARDS WILL BE MADE AT REASONABLE PRICES." SAAMA FULLY RECOGNIZED THAT RFL INDUSTRIES WAS ONE OF THE MAJOR PRODUCERS OF THE TYPE OF EQUIPMENT BEING PROCURED. THIS IS EVIDENCED BY THE FACT THAT THE SOLICITATION IDENTIFIED THE EQUIPMENT BY THE BRAND NAME OF RFL INDUSTRIES OR EQUAL. CONSIDERATION WAS GIVEN TO A SOLE-SOURCE NEGOTIATION WITH THIS FIRM; HOWEVER, IN CONSONANCE WITH POLICY OF FOSTERING COMPETITION WHEREEVER POSSIBLE, THE DECISION WAS MADE TO ADVERTISE THE PROCUREMENT. REVIEW OF THE BIDDERS' LIST FOR ITEMS OF THIS TYPE OF EQUIPMENT REVEALED 31 SMALL BUSINESS FIRMS, WHICH INDICATED THAT THIS PROCUREMENT WOULD HAVE A POTENTIAL FOR SMALL BUSINESS SET-ASIDE. BY THE TIME YOUR LETTER OF JUNE 8, 1970, WAS RECEIVED, IT IS REPORTED THAT 15 ADDITIONAL SMALL BUSINESS FIRMS HAD REQUESTED BID SETS AFTER LEARNING OF THE PROCUREMENT THROUGH SYNOPSES IN THE COMMERCE BUSINESS DAILY. THE SMALL BUSINESS SET-ASIDE WAS THE RESULT OF A DETERMINATION BY THE CONTRACTING OFFICER, WITH THE CONCURRENCE OF THE SAAMA SMALL BUSINESS SPECIALIST AND THE RESIDENT SBA REPRESENTATIVE. THEREFORE, THE DECISION TO CONTINUE THE 100-PERCENT SMALL BUSINESS SET-ASIDE AFTER RECEIPT OF YOUR PROTEST WAS NOT ARBITRARILY TAKEN UNDER FACTS ABOVE STATED.

OUR OFFICE HAS HELD THAT THE DETERMINATION AS TO WHETHER SUCH A REASONABLE EXPECTATION OF SMALL BUSINESS COMPETITION EXISTS IS WITHIN THE AMBIT OF SOUND ADMINISTRATIVE DISCRETION AND WE WILL NOT SUBSTITUTE OUR JUDGMENT FOR THAT OF THE CONTRACTING OFFICER IN THE ABSENCE OF A CLEAR SHOWING OF ABUSE OF THE DISCRETION PERMITTED HIM. 45 COMP. GEN. 228 (1965). APPLICABLE REGULATIONS ONLY REQUIRE THAT A REASONABLE EXPECTATION EXIST THAT SUFFICIENT SMALL BUSINESS CONCERNS WILL SUBMIT BIDS TO AFFORD ADEQUATE PRICE COMPETITION. THE FACT THAT LOWER BIDS MAY BE EXPECTED FROM LARGE BUSINESS CONCERNS IS NOT NECESSARILY A DETERMINATING FACTOR. COMP. GEN. 497, 500 (1963). WE MUST CONCLUDE THAT THE RECORD DOES NOT SHOW THAT THE DETERMINATION TO SET ASIDE THE PROCUREMENT WAS EITHER ARBITRARY, CAPRICIOUS, MADE IN BAD FAITH, OR WAS OTHERWISE AN ABUSE OF THE ADMINISTRATIVE DISCRETION PERMITTED. FURTHER, WE HAVE HELD THAT THE RECEIPT OF ONLY ONE RESPONSIVE BID DOES NOT PRECLUDE AWARD OF A CONTRACT OR NULLIFY AN AWARD WHERE THE SET ASIDE APPEARS TO HAVE BEEN MADE WITHIN THE FRAMEWORK OF PERTINENT LAWS AND REGULATIONS ON THE BASIS OF A DETERMINATION AUTHORIZED TO BE MADE BY THE CONTRACTING OFFICER. B-164635, DECEMBER 24, 1968; B-156718, JUNE 16, 1965; AND B-154641, OCTOBER 15, 1964.

ALTHOUGH THE BROADER COMPETITION ANTICIPATED BY THE PROCURING ACTIVITY DID NOT MATERIALIZE IN THE CASE AT HAND, THE PURPOSE OF SUCH COMPETITION AS SET OUT IN ASPR 1-706.5(A) IS TO INSURE THAT AWARD WILL BE MADE AT A FAIR PRICE TO THE GOVERNMENT. BY TELEGRAM OF SEPTEMBER 8, 1970, TO THE CONTRACTING OFFICER, YOU LISTED PRICES THAT YOU WOULD HAVE BID HAD YOU NOT BEEN EXCLUDED. YOUR PRICES AS COMPARED WITH RFL INDUSTRIES' BID PRICES ARE AS FOLLOWS:

QUANTITY F. W. BELL RFL INDUSTRIES

1-29 $1,750.00 $1,641.32

30-58 1,645.00 1,562.32

59-87 1,540.00 1,382.32

88-116 1,435.00 1,255.32 IN THESE CIRCUMSTANCES, IT CAN BE CONCLUDED THAT RFL'S PRICES ARE FAIR AND REASONABLE.

THEREFORE, THAT PART OF YOUR PROTEST PERTAINING TO THE SMALL BUSINESS SIZE ELIGIBILITY OF RFL AND THE LEGALITY OF THE SET-ASIDE MUST BE DENIED.

WITH REGARD TO THAT PART OF YOUR PROTEST OF THE ABSENCE OF MODEL NUMBERS IN RFL'S BID, PART XVII OF THE IFB, THE "BRAND NAME OR EQUAL" CLAUSE, PROVIDES IN PART (B) THEREOF THE FOLLOWING:

"(B) UNLESS THE OFFEROR CLEARLY INDICATES IN HIS OFFER THAT HE IS OFFERING ON 'EQUAL' PRODUCT, HIS OFFER SHALL BE CONSIDERED AS OFFERING A BRAND NAME PRODUCT REFERENCED IN THE SOLICITATION." YOU PROTEST FURTHER THAT IF RFL IS OFFERING THE BRAND NAME PRODUCT THEN ITEM 1.2 OF PURCHASE EXHIBIT LPM-305 OF THE IFB CALLS FOR A MAGNET TREATER, RFL MODEL NUMBER 889B; THAT THIS ITEM HAS NOT APPEARED IN RFL'S CATALOG FOR AT LEAST 2 YEARS; THAT THIS UNIT HAS BEEN REPLACED BY THE MODEL 990 MAGNET TREATER; AND THAT SINCE RFL DID NOT QUOTE MODEL NUMBERS IN THEIR BID, IT WOULD APPEAR THAT THE ITEM OFFERED IS THE OBSOLETE MODEL 889B.

IT IS REPORTED THAT THE MODEL 889B MAGNET TREATER IS NOT OBSOLETE. BOTH THE MODELS 889B AND 990 ARE AVAILABLE UNITS. THE MODEL 990 SELLS FOR $750 AND THE MODEL 889B FOR $500. BECAUSE OF RFL'S EMPHASIS ON MAXIMUM FLEXIBILITY THEY RECOMMEND AND SELL TO MOST CUSTOMERS THE MODEL 990. HOWEVER, THE MODEL 889B IS AVAILABLE FOR CUSTOMERS WHO DO NOT NEED ALL THE SYSTEMS CAPABILITY AND PROGRAMMING FEATURES OF THE MODEL 990. THIS MODEL 990 UNIT IS DESIGNED FOR QUANTITY PURCHASES WHERE A CUSTOMER NEEDS 20 UNITS OR MORE. THE 889B HAS SUFFICIENT CAPABILITY ALONG WITH STATE OF THE ART DESIGN AT A LOWER PRICE. RFL TOOK NO EXCEPTIONS TO THE PURCHASE DESCRIPTIONS. THE DEPARTMENT OF THE AIR FORCE MADE A COMPLETE REVIEW OF THE RFL MODEL 889B MAGNET TREATER AS IT APPLIES TO ITS MEASUREMENT APPLICATION. IT WAS AGAIN DETERMINED THAT AN INSTRUMENT WITH THE MINIMUM CHARACTERISTICS OF THE RFL MODEL 889B BEST SATISFIES THE TOTAL MEASUREMENT REQUIREMENTS. THE AIR FORCE FACILITY INVOLVED REPORTED THAT IT HAS NO PRESENT REQUIREMENT TO PROVIDE FOR AUTOMATION OR REMOTE PROGRAMMING OF THE SYSTEM AS IS INCLUDED IN THE RFL MODEL 990.

ACCORDINGLY, WE FIND NO BASIS TO QUESTION THE VALIDITY OF AN AWARD TO RFL UNDER THIS SOLICITATION.