BNUMBER:  B-271251.2
DATE:  July 22, 1996
TITLE:  E.L. Enterprises, Inc.

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Matter of:E.L. Enterprises, Inc.

File:     B-271251.2

Date:July 22, 1996

Reggy Gray for the protester.
Terrence J. Tychan, Department of Health and Human Services, for the 
agency.
Jeanne W. Isrin, Esq., and John M. Melody, Esq., Office of the General 
Counsel, GAO, participated in the preparation of the decision.

DIGEST

1.  The Buy Indian Act confers broad discretion on contracting 
officials to set aside procurements for exclusive participation of 
Indian firms when practicable, but does not require that particular 
contracts be set aside for Indian firms; protest that procurement 
should have been restricted to Indian firms is denied where 
contracting officials did not abuse discretion.

2.  Solicitation provision is not unduly restrictive of competition 
where it's inclusion is mandatory under the Federal Acquisition 
Regulation and, in any case, it does not preclude the protester from 
competing. 

DECISION

E.L. Enterprises, Inc. protests the terms of request for proposals 
(RFP) No. 246-96-R-0002, issued by the Oklahoma City Area office of 
the Indian Health Service (IHS), Public Health Service (PHS), 
Department of Health & Human Services (HHS), for dental management 
services and general dental services for Indian clients in Oklahoma 
and parts of Kansas and Nebraska.
 
We deny the protest.

The RFP contemplates award of a fixed-price, requirements contract for 
three types of services:  (1) claims processing and report generation 
related to dental services provided at IHS facilities by dentists 
performing under a pre-existing contract unrelated to this protest 
(fee-for-clinic services); (2) claims processing and report generation 
related to dental laboratory services provided under a pre-existing 
contract unrelated to this protest; and (3) general dental services 
(including claims processing and report generation) to be provided 
through a network of dentists under contract to the successful 
offeror, in response to referrals made by IHS facilities 
(fee-for-service services). 

Both technical and business proposals are required, award to be made 
to the responsible offeror whose proposal represents the best value to 
the government.  ELE filed this protest on April 12, 1996.  Proposals 
were due on April 15; ELE did not submit a proposal.

SET-ASIDE

ELE argues that the agency's failure to set this procurement aside 
exclusively for Indian-owned concerns constituted an abuse of 
discretion. 

The Buy Indian Act, 25 U.S.C.  sec.  47 (1994), establishes Indian 
preferences and confers broad discretionary authority to negotiate 
exclusively with Indian contractors.  However, it leaves set-aside 
decisions to the discretion of the agency, and does not require 
particular procurements to be set aside.  Indian Resources Int'l, 
Inc., B-256671, July 18, 1994, 94-2 CPD  para.  29.[1]  Accordingly, our 
Office will review set-aside decisions only where there is a prima 
facie showing of a possible abuse of discretion.  See Adams 
Mechanical, B-235280, May 11, 1989, 89-1 CPD  para.  447.  
 
ELE asserts that the agency abused its discretion here in that it 
failed to make a good faith effort to locate qualified Indian firms 
and wrongly found ELE and another Indian firm, ESTE Medical Services, 
Inc., unqualified.  This argument is without merit.

The agency clearly made a reasonable effort to identify potential 
Indian concern offerors.  IHS published a "sources sought" synopsis in 
the November 27 edition of the Commerce Business Daily (CBD).  One 
Indian firm, ESTE, responded, but the capability statement provided by 
the firm showed that the firm had a limited corporate history and had 
never provided dental services.  IHS was also aware of ELE's interest 
in the contract, but determined that ELE also was not a viable 
prospective offeror since it too had never provided dental services.  
IHS also consulted the "Oklahoma City Area Indian Health Service Buy 
Indian Certified Firms List," dated October 3, 1995, which is a list 
of qualified Indian firms in different service categories; no Indian 
firms were listed as qualified dental services providers.  Based on 
these factors, contracting officials determined that there was no 
Indian firm that could meet the requirements, and hence issued the RFP 
as unrestricted.  

ELE's real argument seems to be that, since the agency was aware that 
ELE was a provider of "government services" under prior contracts, the 
agency should have considered whether ELE also could provide dental 
services.  However, it is not an abuse of discretion for an agency to 
decide that an Indian concern set-aside is not warranted where there 
are no Indian concerns that have provided the services required; 
indeed, we would question the reasonableness of a decision to set a 
requirement aside for Indian firms under these circumstances.

UNDULY RESTRICTIVE PROVISION

ELE objects to the inclusion in the RFP of the clause at Federal 
Acquisition Regulation (FAR)  sec.  52.222-46, entitled "Evaluation of 
Compensation for Professional Employees (Feb 1993)" (RFP clause L.19), 
which states, in pertinent part, as follows:

        "(b) . . . proposals envisioning compensation levels lower 
        than those of  predecessor contractors for the same work will 
        be evaluated on the basis of maintaining program continuity, 
        uninterrupted, high-quality work, and availability of required 
        competent professional service employees.  Offerors are 
        cautioned that lowered compensation for essentially the same 
        professional work may indicate . . . lack of understanding of 
        the requirement.

                    .     .     .     .     .

        "(d) Failure to comply with these provisions may constitute 
        sufficient cause to justify rejection of a proposal."

ELE maintains that this provision gives the incumbent contractor an 
improper competitive advantage by essentially precluding the 
underbidding of the incumbent.   
The FAR expressly requires that this provision be included in 
solicitations for negotiated service contracts when the contract 
amount is expected to exceed $500,000 and the service to be provided 
will require meaningful numbers of professional employees, as in this 
case where the services of many dentists will be provided.  FAR  sec.  
22.1103; Relief Servs., Inc.; Radiological Physics Assocs., Inc.,     
B-252835.3; B-252835.4, Aug. 24, 1993, 93-2 CPD  para.  116.  We thus have 
no basis for objecting to its inclusion here.  In any case, we find 
nothing improper in a clause putting offerors on notice that proposing 
reduced compensation for professionals will be viewed negatively in 
the evaluation; such reduced compensation reasonably relates to the 
agency's legitimate interest in ensuring that the successful offeror 
will be able to attract and retain the high quality professionals 
necessary to provide quality services, and thus reflects on the 
offeror's understanding of the requirement.  See Research Management 
Corp., 69 Comp. Gen. 368 (1990), 90-1 CPD  para.  352.[2]

RFP AMBIGUITIES

ELE contends that the RFP contains numerous inconsistencies, 
ambiguities, unclear terms, and otherwise does not clearly convey the 
government's requirements.  ELE claims that these deficiencies should 
be corrected and the closing date further extended in order that ELE 
can prepare its proposal in view of the anticipated corrections.

While the RFP perhaps could have been written more clearly in some 
areas, we find no material RFP deficiencies.  For example, ELE 
maintains that, as a result of changes made by amendment No. 03, the 
RFP is unclear as to whether offerors are to furnish prices for the 
fee-for-clinic services and dental laboratory services, or prices only 
for the processing of claims and the generation of reports related to 
those two services.  However, section C-4 of the work statement, added 
by amendment No. 02, clarifies this matter, stating clearly that the 
contractor is to provide only claims processing and report generation 
for the fee-for-clinic services and dental laboratory services.  
Furthermore, the pricing schedules added by amendment No. 03 (pages 44 
and 45) clearly demand prices only for the clerical work, not the 
actual dental services; this is the only reasonable interpretation of 
the RFP.
  
As another example, ELE maintains that section F-2 (b), paragraph 3, 
is unclear.  That paragraph states:

        "To insure continuous access dental care throughout the 
        contract period, the cumulative disbursed amount shall not 
        exceed twenty-five percent of the total contract amount 
        allotted for direct services per fiscal quarter nor at any 
        time exceed the total allocated funds unless overall 
        adjustments are indicated and supported by the Contracting 
        Officer's Representative."

This provision is unambiguous; it clearly states that only 25 percent 
of the contract funds will be expended per fiscal quarter without 
approval by the agency.  ELE seems to assert that the provision is 
deficient because it does not explain how the contract would proceed 
if services provided during a fiscal quarter exceeded         25 
percent of the contract funds.  However, we think it is clear that 
this would become a matter for negotiation between the agency and the 
contractor.  We see nothing improper or ambiguous in the agency's 
leaving such performance problems to be resolved during performance.  
RFPs need not be drafted in such detail as to eliminate completely any 
risk or remove every uncertainty for offerors or the contractor; risks 
are inherent in procurements, and offerors are expected to use their 
professional expertise and business judgment in anticipating a variety 
of influences affecting performance costs.  National Customer Eng'g, 
B-254950, Jan. 27, 1994, 94-1 CPD  para.  44.[3]

INSUFFICIENT RESPONSE  TIME

ELE states that, on April 8, it received Amendment 05, which made 
changes and extended the closing date to April 15.  ELE complains that 
7 days was insufficient time to incorporate the changes and submit a 
proposal.  

Contracting officers are vested with discretion to determine whether 
and to what extent closing date extensions are necessary.  FAR  sec.  
15.410; Systems 4, Inc.,         B-270543, Dec. 21, 1995, 95-2 CPD  para.  
281.  We will not disturb a contracting officer's decision in this 
regard unless it is shown to be unreasonable or the result of a 
deliberate attempt to exclude the protester from the competition.  
Systems 4, Inc.,  
supra.

There has been no such showing.  Amendment No. 05 made two changes to 
the RFP:  (1) the correction of a telephone number for a contact 
person knowledgeable about the IHS data processing system; and (2) a 
clarification that prices for specified difficult-to-price procedure 
codes would not be evaluated.  It is not apparent--and ELE has not 
shown--why any substantial additional proposal preparation time would 
be needed based on these minor changes.  In any case, the agency was 
not required to extend the closing date solely to accommodate ELE, and 
there is no evidence that the agency was motivated by a desire to 
exclude ELE from the competition.[4]

The protest is denied.

Comptroller General
of the United States

1. PHS regulations currently provide only that IHS will give 
preference to Indian concerns when "practicable."  48 C.F.R.  sec.  PHS 
380.501(a). 

2. ELE also objects to the requirement in FAR  sec.  52.222-46 that 
offerors provide a detailed professional employee compensation plan.  
Again, however, this provision is required to be included in the RFP 
here.

3. ELE argues that it should be reimbursed its proposal preparation 
costs due to the numerous deficiencies in the RFP and solicitation 
process (for example, not allowing offerors sufficient time to respond 
to solicitation changes).  Since ELE did not submit a proposal, and 
given our conclusion that the RFP is not materially deficient, there 
is no basis for finding ELE entitled to these costs.  4 C.F.R.  sec.  21.8 
(1996).

4. ELE maintains that the agency's refusal to set the requirement 
aside and eliminate RFP deficiencies was motivated by its desire to 
retain the incumbent contractor.  Contracting officials are presumed 
to act in good faith.  Thus, in order to establish bad faith, a 
protester must submit convincing proof that contracting officials 
intended to harm the protester.  Indian Affiliates, Inc., B-243420, 
Aug. 1, 1991, 91-2 CPD  para.  109.  ELE's bare allegations do not meet this 
burden.