BNUMBER: B-270881
DATE: May 10, 1996
TITLE: BFI Medical Waste Systems of Arizona, Inc.
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Matter of:BFI Medical Waste Systems of Arizona, Inc.
File: B-270881
Date:May 10, 1996
Allen Samelson, Esq., Rogers, Joseph, O'Donnell & Quinn, for the
protester.
Terrence J. Tychan, Department of Health and Human Services, for the
agency.
Jerold D. Cohen, Esq., Office of the General Counsel, GAO,
participated in the preparation of the decision.
DIGEST
Protest of decision to set a procurement aside for small businesses is
sustained where the record does not support the agency's determination
that there was a reasonable expectation of bids from at least two
responsible small businesses.
DECISION
BFI Medical Waste Systems of Arizona, Inc., protests the decision by
the Phoenix Area Office of the Indian Health Service (IHS), Department
of Health & Human Services (HHS), to set aside for small businesses
invitation for bids (IFB) No. 5015 for the collection and disposal of
medical waste.
We sustain the protest.
Federal Acquisition Regulation (FAR) sec. 19.502 requires that a
solicitation be set aside for small business participation when there
is a reasonable expectation that offers will be obtained from at least
two responsible small business concerns, and that award will be made
at a fair market price. IHS set the procurement aside after the IHS
small and disadvantaged business utilization specialist (SADBUS) and
the contracting officer agreed that a set-aside was warranted under
the FAR criteria. IHS mailed out 11 copies of the solicitation and
received two bids in response, one from a small business, Arizona
Medical Waste Management, Inc. ($152,496 total for a base year and 4
option years), and one from an ineligible large business ($230,828
total).
BFI, which timely protested before bids were opened, argues that IHS
made virtually no initial effort to determine whether the criteria in
the FAR for a set-aside were met, and did not investigate the matter
even after BFI raised the issue with the contracting officer.[1] BFI
argues that a proper investigation in fact would have shown that a
set-aside was not appropriate. BFI also maintains that Arizona
Medical--the only small business to have responded to the IFB--cannot
be found a responsible concern because some of the medical waste will
have to be disposed of by incineration, which the firm is not equipped
to do.
As a general rule, the decision whether to set aside a particular
procurement is within the discretion of the contracting agency. York
Int'l Corp., B-244748, Sept. 30, 1991, 91-2 CPD para. 282. However, an
agency must undertake reasonable efforts to ascertain whether it is
likely that the agency will receive offers from at least two small
businesses capable of performing the work. Library Sys. &
Servs./Internet Sys., Inc., B-244432, Oct. 16, 1991, 91-2 CPD para. 337.
There is no particular method prescribed for assessing the
availability of small businesses, although we have recognized it
appropriate to refer to factors such as prior procurement history,
nature of the contract, type of contract, market surveys, and/or
advice from the agency's technical specialists. See FKW Inc.,
B-249189, Oct. 22, 1992, 92-2 CPD para. 270. Our Office will object to a
set-aside decision that does not have a reasonable basis. York Int'l
Corp., supra.
We agree with BFI that the record in this case does not support the
set-aside. The record includes only three agency comments concerning
the determination to restrict the procurement. In the protest report,
HHS states:
"[T]he contracting officer conferred with the IHS small and
disadvantaged business utilization specialist, who had personal
knowledge of other medical waste disposal contracts in the state
being performed by small businesses. They both agreed that there
was a reasonable expectation of receiving bids from at least two
responsible small businesses at reasonable prices."
In a memorandum prepared for the report, the contracting officer
states that a
set-aside "was recommended by the SADBUS Coordinator and concurred by
the Contracting Officer." In another memorandum prepared for the
report, the IHS Supervisory Contract Specialist repeats the
contracting officer's statement, adding that the determination "was
based upon a previous and similar requirement initiated by this office
for the Whiteriver Indian Hospital."
IHS has provided no information about the "other" Arizona medical
waste disposal contracts of which SADBUS had knowledge, e.g., whether
they were at all similar to the one in issue here, and why they
supported an expectation of small business competition. There also is
nothing in the record about the "similar requirement initiated" by IHS
for the Whiteriver Indian Hospital, e.g., what is meant by
"initiated," which on its face suggests an ultimately unsuccessful
set-aside attempt, or whether the result was a successful set-aside
procurement that would serve as a procurement history to support the
current set-aside.[2] There is nothing else in the record to explain
why the contracting officer agreed with the SADBUS's recommendation.
Finally, the record does not indicate that any market survey was
conducted, that any small businesses expressed interest in the
contemplated procurement, or any other rationale that would establish
the propriety of the set-aside.
In sum, the record is devoid of any substantive support for the
contracting officer's decision that IHS reasonably could expect at
least two offers from responsible small business concerns, the first
of the two FAR criteria. We therefore have no basis to find the
decision to set this procurement aside reasonable. See York Int'l
Corp., supra ("the bare assertion that the determination was based on
a reasonable expectation of small business participation, provides no
basis on which to conclude that the decision, when made, was
reasonable."). Additionally, we note that, unlike in York Int'l
Corp., "subsequent events"--sufficient small business
participation--did not justify the set-aside; only one small business
responded to IHS's solicitation.
BFI's protest is sustained. We recommend that IHS cancel the IFB
under protest and conduct an unrestricted procurement. We also
recommend that BFI be reimbursed the costs of filing and pursuing its
protest, including reasonable attorneys' fees. Bid Protest
Regulations, 4 C.F.R. sec. 21.8(d)(1) (1996). The protester should
submit its detailed and certified claim for costs directly to the
agency within 90 days after receipt of this decision. Bid Protest
Regulations, 4 C.F.R. sec. 21.8(f)(1).
Comptroller General
of the United States
1. BFI initially protested that IHS could not reasonably expect bids
from two small businesses capable of incinerating all waste--IHS had
advised BFI that incineration was the required disposal method. IHS
subsequently reported that the advice to BFI had been incorrect, but
maintained that BFI had not been prejudiced in the competition because
the set-aside otherwise was proper, so that the protester was not
eligible for award. In response, BFI argues that the set-aside is not
supportable in any event.
2. In fact, in the previous, unrestricted procurement of the services
involved here, the solicitation had been mailed to 30 potential
bidders and the only two bids received were from BFI (the awardee) and
another large business.