BNUMBER:  B-266211
DATE:  November 17, 1995
TITLE:  Northwest Hydraulic Consultants, Inc.

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Matter of:Northwest Hydraulic Consultants, Inc.

File:     B-266211

Date:     November 17, 1995

John Lukjanowicz, Esq., and Robert J. Burke, Esq., Oles Morrison & 
Rinker, for the protester.
Lafayette N. Johnson, Esq., Federal Emergency Management Agency, for 
the agency.
Behn Miller, Esq., and Christine S. Melody, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protest challenging decision to convert unrestricted procurement into 
small business set-aside is denied where contracting officer 
reasonably determined that at least two responsible small businesses 
would submit reasonably priced offers.

DECISION

Northwest Hydraulic Consultants, Inc. protests the award of a contract 
to any other firm under synopsis No. 96-065, issued by the Federal 
Emergency Management Agency (FEMA) for performance of flood studies in 
various FEMA regions, including FEMA Region X, which covers the states 
of Alaska, Idaho, Oregon, and Washington.  Northwest contends that 
FEMA improperly converted an unrestricted procurement into a small 
business set-aside, and that the agency otherwise improperly evaluated 
technical proposals.

We deny the protest.

The flood studies which are the subject of this procurement are 
classified as architect-engineer (A-E) services and are required by 
FEMA to enable the agency to administer a national flood insurance 
program.  FEMA's A-E procurements are conducted under the selection 
procedures set forth in the Brooks Act, 40 U.S.C.  541 et seq. 
(1988).  Under these procedures, after publicly announcing a 
requirement in the Commerce Business Daily (CBD), the agency 
establishes an evaluation board to review the performance data and 
statements of qualifications submitted by interested A-E firms that 
wish to be considered for this requirement.  The evaluation board then 
conducts discussions with no less than three firms, ranks them, and 
submits the firms' stated qualifications to a selection official who 
selects the most highly qualified offeror.  Negotiations are then 
conducted with that offeror.  See generally Federal Acquisition 
Regulation (FAR) subpart 36.6.

On March 13, 1995, FEMA published synopsis No. 96-065 in the CBD, 
stating that it intended to award multiple contracts for flood 
insurance studies in various geographic regions, and requesting 
interested parties to submit a completed Standard Form (SF) 254 (A-E 
and Related Services Questionnaire, see FAR  53.301-254) and an SF 
255 (A-E and Related Services for Specific Project Questionnaire, see 
FAR  53.301-255), which are the standard forms on which interested 
firms provide and detail their qualifications.  In the synopsis, FEMA 
advised prospective firms that contracts for six of the identified 
regions would be set aside for small businesses; however, contracts to 
be awarded for region VII and X were unrestricted.  The synopsis 
required all interested A-E firms to submit the required SF 254 and SF 
255 by 4 p.m. on April 14.

On April 10, Northwest submitted the required forms for the Region X 
competition.  By letter dated May 24, FEMA advised Northwest that the 
agency had completed its initial evaluation and directed the protester 
to respond to additional qualification questions by June 7.

On May 31, Northwest submitted the supplemental responses to the 
agency.   On September 7, while waiting for the results of the 
agency's second qualifications evaluation, Northwest learned that the 
Region X competition had been converted to a total small business 
set-aside in response to a competitor's protest.  On September 20, 
Northwest filed this protest at our Office, challenging the set-aside 
decision.

The record shows that on April 14, a small business competitor--the 
Montgomery Water Group (MWG)--filed an agency-level protest with FEMA 
which argued that the Region X competition should be restricted to 
small businesses.  In response to this protest, the contracting 
officer referred the matter to the FEMA Director of Small and 
Disadvantaged Business Utilization (DSDBU) for further consideration.  
FEMA reports that it did not initially reserve the Region X 
competition for exclusive small business competition since it did not 
expect at least two small businesses in that region to submit 
reasonably priced offers.

After reviewing the MWG protest, the DSDBU received several telephone 
calls from small businesses located in Region X advising her that they 
intended to compete for the Region X contract.  As a result of these 
telephone contacts, the DSDBU determined that there was a reasonable 
expectation that at least two small business concerns would submit 
reasonably priced offers for the Region X competition; consequently, 
the DSDBU advised the contracting officer to convert the Region X 
competition to a small business set-aside.

As a general rule, a procurement must be set aside for small 
businesses where the contracting officer determines that there is a 
reasonable expectation that offers will be received from at least two 
responsible small business concerns and that award will be made at a 
fair market price.  FAR  19.502-2(a).  A decision whether to set 
aside a procurement for small businesses is essentially a business 
judgment within the contracting officer's discretion, which we 
generally will not disturb absent a showing that this discretion was 
abused.  Israel Aircraft Indus., Inc., B-258229, Dec. 28, 1994, 94-2 
CPD  262.  A contracting officer may rely on advice from the agency's 
small business specialist in deciding whether or not to set aside a 
procurement.  See Raven Servs. Corp., B-243911, Aug. 27, 1991, 91-2 
CPD  203.  

In this case, as discussed above, the DSDBU official received serious 
expressions of interest in competing on this requirement from more 
than two qualified small business concerns, which prompted her to 
counsel FEMA to conduct the Region X procurement as a total small 
business set-aside.  Under these circumstances, we find FEMA's 
determination to reserve the Region X contract for exclusive small 
business competition to be unobjectionable.[1]

In its protest, Northwest argues that because the MWG agency-level 
protest was untimely filed after all interested competitors' SF 254 
and 255 qualification statements had been submitted, the agency was 
barred from converting the procurement to a small business set-aside.  
In this regard, the FAR provides that agency-level protests concerning 
alleged solicitation improprieties--such as a procurement's status as 
unrestricted or set aside--should be filed prior to bid opening or the 
closing date for receipt of  proposals.  See generally FAR  
33.103(b)(2).  Even assuming that MWG's agency-level protest was 
untimely filed, however, lack of timeliness is no bar to an agency's 
taking appropriate action--here in the form of restricting the Region 
X contract to exclusive small business competition--regardless of when 
the matter is brought to its attention.[2]  See Park Inn Int'l 
Airport, B-248369.2; B-248680, May 20, 1992, 92-1 CPD  458.  
Accordingly, the alleged untimeliness of MWG's agency-level protest, 
by itself, does not provide a valid basis for objecting to the small 
business set-aside restriction in this case.

The protester attempts to characterize the agency's action here as a 
failure to follow the evaluation scheme by factoring size status into 
the evaluation.  This argument completely mischaracterizes the 
agency's action.  The agency's decision to set the procurement aside 
for small businesses is distinct from the evaluation of proposals.  
The set-aside decision made small business size status a prerequisite 
for participation in the competition; it in no way represents a 
deviation from the evaluation scheme announced in the synopsis.  The 
protester's related arguments--that the contracting officer acted in 
derogation of the authority of the A-E Board and the source selection 
official to evaluate proposals for technical merit, and that there is 
insufficient documentation in the record to "exclude" Northwest from 
the competition--are based on the same mischaracterization of the 
agency's action and are similarly without merit.

The protest is denied.

Comptroller General
of the United States

1. Northwest makes no substantive challenge to the agency's 
determination that the statutory requirements for a small business 
set-aside--that the agency could expect to receive offers at 
reasonable prices from at least two responsible small businesses--were 
met.  Northwest indirectly challenges this decision by arguing that 
its qualifications should have been taken into account in the 
set-aside decision, on the theory that the qualifications of potential 
small business offerors would be shown to be inferior when compared 
with the qualifications of Northwest.  Northwest's argument is based 
on a misunderstanding of the purpose of the small business set-aside 
determination, which focuses not on a comparison of potential small 
business and large business offerors but on whether the agency 
reasonably expects to receive offers at reasonable prices from two 
responsible small businesses.

2. Once a contracting officer determines that there is a reasonable 
expectation that bids from at least two small business concerns will 
be received and that award can be made at a reasonable price, an 
agency may  cancel a solicitation and convert an unrestricted 
procurement to a small business set-aside.  See Baker Support Servs., 
Inc.; Management Tech. Servs., Inc., B-256192.3; B-256192.4, Sept. 2, 
1994, 95-1 CPD  75; American Dredging Co., B-201687, May 5, 1981, 
81-1 CPD  344.