BNUMBER:  B-270391
DATE:  February 29, 1996
TITLE:  Hughes & Sons Sanitation

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Matter of:Hughes & Sons Sanitation

File:     B-270391

Date:     February 29, 1996

Stacey Hughes for the protester.
Sherry Kinland Kaswell, Esq., Department of the Interior, for the 
agency.
Paula A. Williams, Esq., and Michael R. Golden, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protest of agency's decision to convert small business set-aside into 
an unrestricted procurement under simplified acquisition procedures is 
denied where the decision to withdraw the set-aside was based on the 
receipt of unreasonably high quotations from small business concerns 
as judged by the most recent contract prices for similar services and 
two quotations received from otherwise ineligible large businesses.

DECISION

Hughes & Sons Sanitation protests the issuance of request for 
quotations (RFQ) 
No. 1590-6-0005 as an unrestricted procurement under simplified 
acquisition procedures, by the Department of the Interior, National 
Park Service (NPS), for trash collection at Zion National Park and 
Kolob Canyons.  Hughes, a small business, argues that the agency was 
required to set aside the RFQ for small business concerns because, it 
asserts, two responsible, responsive small businesses submitted 
competitive prices under a recently canceled solicitation for these 
services.

We deny the protest.

Under the simplified acquisition procedures, an acquisition of 
services that has an anticipated dollar value exceeding $2,500 and not 
exceeding $100,000 is reserved exclusively for small business concerns 
and must be set aside.  Federal Acquisition Regulation (FAR)  sec.  
13.105(a) (FAC 90-29).  An agency can proceed on an unrestricted 
basis, however, if the contracting officer determines that there is no 
reasonable expectation of obtaining quotations from two or more 
responsible small business concerns that will be competitive in terms 
of market price, quality, and delivery.  FAR  sec.  13.105(c)(2).  
Moreover, if an agency, having set a procurement aside, fails to 
receive a reasonable quotation from a responsible small business 
concern, the contracting officer may cancel the set-aside and complete 
the purchase on an unrestricted basis.  FAR  sec.  13.105(c)(3); see 
Western Filter Corp., B-247212, May 11, 1992, 92-1 CPD  para.  436.  

NPS reports that the contracting officer's decision not to set aside 
the procurement was based on the results of the quotations received 
under recent RFQs that indicated that a set-aside award at a fair 
market price could not be anticipated.  On September 5, 1995, the 
agency had issued an RFQ for the trash collection services as a small 
business set-aside.  The agency estimated the services would not cost 
more than $25,000.  The agency received quotations from four firms, 
two of which were large business concerns ineligible for award under 
the set-aside.  The agency determined that Hughes's quotation of 
$29,758 and Staheli Waste Removal Inc.'s quotation of $36,193 were 
unreasonable because they exceeded the current market price for the 
services as established by the price paid in fiscal years 1994 (by 15 
percent) and 1995 (by 30 percent).  Also, each of the two large 
business quotes received was approximately $20,000.  Because the two 
small business quotations were found to be unreasonably high, NPS 
decided to withdraw the set-aside, and the agency issued another RFQ 
on September 27.[1]  

By the September 28 closing date, only one small 
business--Hughes--submitted a price quote, again $29,758; two large 
contractors again responded with quotes of $20,000.  A purchase order 
was awarded to Laidlaw Waste Systems, a large business, on October 6.  
However, the purchase order and the amended RFQ were canceled on 
October 11 because the RFQ failed to specify the number of trash 
pickups at Kolob Canyons.  The services were resolicited in the 
instant solicitation, issued on October 26 on an unrestricted basis.                  

Hughes challenges NPS's conclusion that the quotations received from 
the two small business concerns that responded to the initial small 
business set-aside were unreasonable which, effectively, was the basis 
for both the September 27 and October 26 unrestricted 
solicitations.[2]  According to the protester, the prices quoted by 
itself and Staheli were reasonable and reflected current market prices 
given the significant increase in landfill fees (from $9.00 per ton to 
$16.80 per ton) for that area and the most recent contract price for 
these services.

The contracting officer has the discretion to determine price 
reasonableness in a small business set-aside, and we therefore will 
not disturb such a determination unless it is unreasonable.  General 
Metals, Inc., B-248446.3, Oct. 20, 1992, 92-2 CPD  para.  256.  The record 
in this case supports NPS's determination that neither small business 
concern had submitted a reasonable price quotation.

Both small business quoted prices that substantially exceeded the 
current market price as established by the prices paid within the last 
2 years by NPS, and by the quotes received from the two large 
businesses.  The Hughes quote exceeded the last 2 years' contract 
prices by 15 percent and 30 percent, respectively--the FAR 
specifically provides that a price reasonableness determination may be 
based on a comparison with previous purchase prices.  FAR  sec.  
13.106-2(a).  Further, we have recognized that a contracting officer 
properly may consider the low quote of an otherwise ineligible offeror 
in making a price reasonableness determination.  See General Metals, 
Inc., supra.  Here, the quotes received from the large firms were 
approximately $9,000 lower than that submitted by Hughes, and also 
were in line with both the most recent prices paid and the agency's 
estimate that the dollar value of these services would not exceed 
$25,000.  Finally, while the protester argues that recent landfill-fee 
increases justified its offer, the record shows that the agency had 
modified the 1995 contract for the services to recognize the increases 
and that the total cost of that contract still was less than $25,000. 

Under the circumstances, we have no basis to question the contracting 
officer's decision to issue RFQ No. 1590-6-0005 on an unrestricted 
basis.  The protest is denied.

Comptroller General
of the United States
        
1. Both small businesses filed timely agency-level protests 
challenging the withdrawal of the set-aside; the protests were denied 
by the agency on October 5.

2. The September 27 RFQ was not restricted based on FAR  sec.  13.105(c)(3) 
(i.e., the failure to receive a reasonable small business quotation in 
response to the September 5 RFQ).  The October 26 RFQ was not 
restricted based on FAR  sec.  13.105(a) (no reasonable expectation of 
competitively priced small business offers).