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).