BNUMBER:  B-270259
DATE:  February 20, 1996
TITLE:  ACCU-Lab Medical Testing

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Matter of:ACCU-Lab Medical Testing

File:     B-270259

Date:     February 20, 1996

Joseph Gallo, Esq., Gallo and Ross, for the protester.
H. Charles Coburn, Esq., Department of Justice, Federal Bureau of 
Prisons, for the agency.
Audrey H. Liebross, Esq., for the Small Business Administration.
Adam Vodraska, Esq., and James A. Spangenberg, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Agency improperly withdrew small business set-aside for drug testing 
services, notwithstanding its receipt of 21 expressions of interest 
from small businesses, where the agency did not perform an adequate 
market survey to determine whether it could reasonably expect 2 or 
more responsible small businesses to submit bids at fair market 
prices, but simply relied on prior procurement history that did not 
itself justify the decision to withdraw the set-aside.

DECISION

ACCU-Lab Medical Testing protests the issuance of invitation for bids 
(IFB) No. 100-0575-5 by the Department of Justice, Federal Bureau of 
Prisons, for inmate drug testing services.  ACCU-Lab asserts that the 
solicitation should have been set aside for exclusive small business 
participation.

We sustain the protest.

As originally issued by the Bureau in September 1994, the solicitation 
was set aside for exclusive small business participation.  Twenty-one 
small businesses responded to the synopsis in the Commerce Business 
Daily (CBD) by requesting copies of the IFB.  Before bids were 
submitted, the Bureau determined that the Department of Veterans 
Affairs (VA) Medical Center in Dallas, Texas, would be able to provide 
the drug testing services less expensively than the incumbent 
contractor.  Instead of continuing with the procurement, the Bureau 
entered into an inter-agency agreement with the VA for the solicited 
drug testing services with performance commencing on July 13, 1995.  
Pharmchem, the incumbent contractor, then filed an action in the 
United States District Court to enjoin the Bureau from obtaining the 
drug testing services from the VA.  Pharmchem alleged, among other 
things, that the Bureau had improperly determined that the VA could 
provide the services more conveniently or cheaply than a commercial 
enterprise, a determination that is required by the Economy Act, 31 
U.S.C.  sec.  1535(a)(4) (1994), prior to entering into an inter-agency 
agreement.  The Bureau decided to resolve the matter by agreeing to 
reissue the solicitation for the inmate drug testing services and, on 
that basis, the court dismissed Pharmchem's motion.

When it reissued the solicitation, the Bureau announced in an August 
23, 1995, CBD notice that the acquisition would no longer be 
restricted to small businesses.[1]  ACCU-Lab, a small business, filed 
an agency-level protest objecting to the Bureau's withdrawal of the 
set-aside restriction.  After it received the Bureau's denial of its 
protest, ACCU-Lab filed a timely protest with our Office, renewing its 
assertion that the solicitation should have remained set aside for 
small businesses.  ACCU-Lab contends that there are numerous capable 
small businesses which can offer the solicited drug testing services 
at fair market prices.

An acquisition of services must be set aside for exclusive small 
business participation if 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.  Federal Acquisition Regulation (FAR)  sec.  
19.502-2(b).  For the most part, we view this determination as a 
business judgment within the contracting officer's discretion.  
Bollinger Mach. Shop and Shipyard, Inc., B-258563; B-259265, Jan. 31, 
1995, 95-1 CPD  para.  56.  The use of any particular method of assessing 
the availability of small businesses is not required so long as the 
agency undertakes reasonable efforts to locate responsible small 
business competitors.  CardioMetrix, B-261327, Aug. 30, 1995, 95-2 CPD  para.  
96. Where, as here, a set-aside is withdrawn, the contracting officer 
is required to give written notice to the agency's small business 
specialist and the Small Business Administration (SBA) procurement 
center representative, if one is assigned, stating the reasons for the 
withdrawal.  FAR  sec.  19.506(a).  

The Bureau reports that the contracting officer decided to withdraw 
the set-aside because she concluded that it was unlikely that at least 
two bids from small businesses would be received here because (1) 
during the 1990 solicitation for the same services only one bid from a 
small business was received at a fair market price; (2) a 1993 
set-aside for inmate laboratory testing services at a correctional 
facility in San Diego resulted in no qualified bids from small 
businesses; (3) an inquiry of the National Institute on Drug Abuse 
found that that agency does not contract with a small business for its 
drug testing requirements; and (4) a small business probably would 
have insufficient expertise and resources given the contract 
requirements.

We initially note that, in withdrawing the set-aside, the agency 
failed to comply with FAR  sec.  19.506(a), which requires the contracting 
officer to consult with the agency's small business specialist and the 
SBA procurement center representative, if one is assigned.  See Neal 
R. Gross and Co., Inc.; Capital Hill Reporting, Inc., 72 Comp. Gen. 23 
(1992), 92-2 CPD  para.  269; Bollinger Mach. Shop and Shipyard, Inc., 
supra.  Although the SBA procurement center representative for the 
Department of Justice had been detailed to SBA at the time the Bureau 
withdrew the set-aside, the record does not show that the agency's 
small business specialist was consulted or that the Bureau notified 
the SBA.  

In response to our request for its views on this matter, the SBA 
reviewed the record and concluded that the Bureau's decision not to 
set aside this requirement for small business was unsupported and 
unreasonable.  From our review, we agree with SBA that the Bureau has 
not provided a reasonable basis for its determination that it does not 
have a reasonable expectation of receiving bids from two or more small 
businesses at fair market prices.  In this regard, we generally give 
great weight to the views of SBA in these matters.[2]  Neal R. Gross 
and Co., Inc.; Capital Hill Reporting, Inc., supra.  

The record shows that the contracting officer primarily relied on the 
prior procurement history instead of investigating the numerous small 
business responses to the CBD announcement, performing a current 
market survey, or consulting with the small business representative or 
SBA.  

While prior procurement history is certainly one factor to be 
considered, see FKW Inc., B-249189, Oct. 22, 1992, 92-2 CPD  para.  270, the 
history here does not itself justify the decision to withdraw the 
set-aside.  For example, the Bureau's unsuccessful 1993 set-aside of 
the San Diego facility's laboratory testing requirements was limited 
in terms of scope and location, and the Bureau has not explained how 
that unsuccessful set-aside suggests that no adequate small business 
competition would be received 2 years later for the current 
procurement, given the increased magnitude and nationwide scope of the 
drug testing services being solicited here.  Regarding the 1990 
solicitation, the scope of which more closely resembles the scope of 
the services being solicited here, even assuming only one small 
business actually offered a fair market price on that 
procurement--which the protester disputes--that unrestricted 
procurement was issued 5 years earlier and, as SBA and the protester 
contend, significant changes in the market since that time may have 
occurred increasing the likelihood that more small businesses may 
participate and submit acceptable offers at reasonable prices.

The contracting officer concededly did not perform a current market 
survey to ascertain whether there were two or more responsible small 
businesses that could submit fair market prices to perform these 
services.  Although 21 small businesses showed interest in the 
solicitation while it was still set aside, the contracting officer did 
not investigate whether any of those small businesses were likely to 
submit bids or were capable of performing the contract requirements 
before she withdrew the set-aside.  See TLC Servs. Inc., B-255758, 
Mar. 28, 1994, 94-1 CPD  para.  217.  The contracting officer also did not 
conduct a search of the Procurement Automated Source System (PASS)[3] 
database to identify qualified small businesses with experience in 
drug testing services, nor does the record show that the contracting 
officer asked the one agency source she did contact--the National 
Institute on Drug Abuse--whether it had unsuccessfully attempted to 
solicit small businesses.  Consequently, we find that the contracting 
officer did not make a reasonable effort to survey the market to 
ascertain whether there was a reasonable expectation that two or more 
responsible small business concerns would submit bids at fair market 
prices.  See Neal R. Gross and Co., Inc.; Capital Hill Reporting, 
Inc., supra; Bollinger Mach. Shop and Shipyard, Inc., supra.

The Bureau also has provided no evidence to support its assertion, 
disputed by the protester and the SBA, that small businesses might 
lack the necessary expertise and will have difficulty meeting the 
performance requirements because of the magnitude of the contract, or 
shown that drug testing provided by large firms is more accurate and 
efficient.  See Neal R. Gross & Co., B-240924.2, Jan. 17, 1991, 91-1 
CPD  para.  53; Stay, Inc., 69 Comp. Gen. 730 (1990), 90-2 CPD  para.  248.  
Indeed, despite the nationwide scope of the contract, only a single 
laboratory is required for the approximately 136,601 to 195,152 
screenings of urine samples the Bureau estimates will be performed 
annually because the agency, not the contractor, will be collecting 
the urine samples from the inmates at approximately 180 facilities and 
sending the samples to the contractor's laboratory.  Furthermore, 
since the agency has not actually investigated whether any small 
business would be able to meet the requirements of this IFB, we find 
the Bureau's reservations regarding the expertise and capability of 
small businesses to be unsupported by the record.  See Stay, Inc., 
supra.

In this regard, both the protester and the SBA point to an earlier 
Department of Labor (DOL) solicitation for drug testing issued in 
February 1994, successfully set aside for small business, that has a 
similar statement of work and is of similar scope to the solicitation 
at issue here.  Under the DOL solicitation, urine samples are also 
collected by the agency, in this case from Job Corps participants at 
111 sites nationwide, and then sent to the contractor's laboratory for 
drug testing.  DOL estimated the number of screenings to be performed 
annually as ranging from 155,000 to 195,000.  Award was made to 1 of 
the 10 small business bidders and there is no indication that award 
was made at other than a fair market price or that the small size of 
the awardee has had any adverse effect on its performance.

Based on our review of the record, we agree with the SBA that the 
contracting officer, prior to dissolving the set-aside, did not 
conduct a reasonable investigation and that there is in fact a 
reasonable expectation that there are two or more responsible small 
businesses which would submit bids at fair market prices in response 
to the IFB.  

We recommend that the current IFB be canceled and reissued as a small 
business set-aside.  In addition, we recommend that ACCU-Lab be 
reimbursed the costs of filing and pursuing the protest, including 
reasonable attorneys' fees.  Bid Protest Regulation  sec.  21.8(d)(1), 60 
Fed. Reg. 40,737, 40,743 (Aug. 10, 1995) (to be codified at 4 C.F.R.  sec.  
21.8(d)(1)).  ACCU-Lab's certified claim for such costs, detailing the 
time expended and costs incurred, should be submitted directly to the 
agency within 90 days after receipt of this decision.  Bid Protest 
Regulations  sec.   21.8(f)(1).

The protest is sustained.

Comptroller General
of the United States

1. The CBD notice also stated that the submitted bids would serve as a 
cost comparison to enable the Bureau to determine whether performance 
of the work under a commercial contract or by the government would be 
more economical.

2. Since the SBA's views are incorporated into our analysis, we will 
not repeat them here.

3. PASS is an SBA database with descriptions of firms permitting the 
user to conduct market searches for firms possessing desired 
characteristics.