BNUMBER:  B-272213.2
DATE:  October 22, 1996
TITLE:  Aspen Systems Corporation

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Matter of:Aspen Systems Corporation

File:     B-272213.2

Date:October 22, 1996

Gilbert J. Ginsburg, Esq., and Constance A. Wilkinson, Esq., for the 
protester.
Dalton F. Phillips, Esq., and Michael Colvin, Department of Health and 
Human Services, for the agency.
Charles W. Morrow, Esq., Guy R. Pietrovito, Esq., and James A. 
Spangenberg, Esq., Office of the General Counsel, GAO, participated in 
the preparation of the decision.

DIGEST

A procurement for services supporting an information clearinghouse was 
properly set aside for exclusive small business participation, where 
the agency head's designee reasonably determined that the agency could 
expect offers from at least two responsible small business concerns 
and that award would be made at a fair market price, notwithstanding 
that the contracting officer had earlier reached a contrary 
conclusion.

DECISION

Aspen Systems Corporation protests the decision of the Department of 
Health and Human Services (HHS) to set aside request for proposals 
(RFP) No. 200-96-0502(P) for exclusive small business participation.  
The RFP was issued by the Centers for Disease Control and Prevention 
(CDC) for information retrieval services. 

We deny the protest.

The CDC initiated this procurement to obtain a contractor to develop, 
maintain, and operate a comprehensive centralized clearinghouse for 
information concerning HIV/AIDS, sexually transmitted diseases, 
tuberculosis, and other preventable diseases.  The CDC Small And 
Disadvantaged Business Utilization Specialist (SADBUS) recommended to 
the contracting officer that the CDC conduct the procurement as a 
total small business set-aside because there appeared to be six small 
business firms that were capable of performing the contract work.  In 
response to the SADBUS' recommendation, the contracting officer 
published a "sources sought" notice in the Commerce Business Daily to 
evaluate the interest and capability of small business concerns.  
Interested small businesses were requested to submit technical and 
experience information, subject to a 20-page limitation, to 
demonstrate their capability to perform the contract.  

Fourteen small business concerns submitted technical capability 
statements.  The contracting officer determined that only one small 
business concern was qualified, that eleven firms were not qualified, 
and that two firms were "obviously not qualified."  With respect to 
the one qualified small business, the contracting officer determined 
that it was unlikely that this firm would submit a proposal at a 
reasonable price because, in a prior procurement, this firm had 
submitted an offer for similar services which was approximately 30 
percent higher than the eventual contract award price.  The 
contracting officer decided not to set aside the procurement for 
exclusive small business participation based upon her view that it was 
not reasonable to expect offers from at least two responsible small 
business concerns at a reasonable price.  Under Federal Acquisition 
Regulation (FAR)  sec.  19.502-2, a contracting officer is only authorized 
to set aside a procurement for exclusive small business participation 
where there is a reasonable expectation that offers will be obtained 
from at least two responsible small business concerns and award will 
be made at a fair market price.

The HHS Office of Small And Disadvantaged Business Utilization 
Specialist (OSBDU) and the Small Business Administration (SBA) 
Procurement Center Representative (PCR) disagreed with the contracting 
officer's conclusion because of contacts OSBDU and the PCR had from 
three interested small businesses that appeared capable of performing 
the contract work.  Also, the OSBDU and PCR believed that the 
contracting officer made too restrictive an evaluation of the 
interested small business concerns' capability statements, which 
caused the contracting officer to eliminate capable small businesses 
for a perceived lack of capability, even though the particular 
concerns could have been addressed in complete technical proposals.  
The PCR requested that the contracting officer set aside the 
procurement for exclusive small business participation.  The 
contracting officer denied this request.  

In accordance with FAR  sec.  19.505,[1] the PCR appealed the contracting 
officer's decision to the Director of the CDC.  The CDC Director 
upheld the contracting officer's determination that this procurement 
should not be set aside for exclusive small business participation.  
SBA appealed to the Secretary of HHS, who through the Secretary's 
designee--the Deputy Assistant Secretary for Grants and Acquisition 
Management--upheld the SBA's appeal, finding that there were at least 
two responsible small business concerns that could perform the 
contract at a fair market price and directed the contracting officer 
to conduct the procurement as a total small business set-aside.  

This protest followed, in response to which we obtained a report from 
HHS and the SBA and conducted a hearing to receive the testimony of 
the HHS Deputy Assistant Secretary for Grants and Acquisition 
Management concerning his determination to set aside the procurement 
for exclusive small business participation.  

As a general rule, the decision as to whether to set aside a 
particular procurement is within the discretion of the contracting 
agency.  ACCU-Lab Medical Testing, B-270259, Feb. 20, 1996, 96-1 CPD  para.  
106.  We will not disturb the agency's discretion absent a clear 
showing that the agency has abused that discretion.  See Israel 
Aircraft Indus., Ltd., B-258229, Dec. 28, 1994, 94-2 CPD  para.  262.  

The Deputy testified that he determined it was reasonable to 
anticipate the receipt of offers from at least two responsible small 
businesses at reasonable price after consulting with various 
high-level CDC procurement and program officials, the OSBDU, and other 
HHS procurement officials as well as cognizant SBA officials, and 
after reviewing CDC's written evaluation summaries of each of the 
small businesses' technical capability statements and the SBA's 
appeal.  Video Transcript (VT) at 9:45:37-9:46:00.  Specifically, the 
Deputy found, from his review of the evaluation summaries, that a 
number of the responding small businesses were operating other 
information clearinghouse systems work which the CDC evaluators had 
found was similar to the work to be performed here.  The Deputy 
concluded that the evaluators' comments concerning these small 
businesses evidenced that these firms possessed the technical skills 
and competence to perform the required contract tasks, and was 
persuaded by the evaluators' comments that this other work was 
sufficiently similar as to evidence these firms' capabilities to 
successfully perform this contract.  VT at 10:03:42-10:07.  

The Deputy discounted the contracting officer's contrary judgment 
because it was based upon assertedly insufficient information 
concerning the capabilities of the interested small businesses.  In 
this regard, the Deputy found that the capability statements were 
considered by the contracting officer and CDC evaluators as if they 
were technical proposals required to be responsive to the agency's 
detailed requirements, even though they were not intended to be such.  
For example, although the capability statements had strict page 
limitations, the CDC evaluators criticized these statements as not 
containing complete technical information to demonstrate how the small 
businesses would perform the contract.  In the Deputy's view, the 
capability statements did not have to provide that level of 
comprehensiveness; in his further view, as confirmed by his 
discussions with cognizant HHS and SBA officials, the statements were 
sufficiently detailed to reasonably establish the likelihood that 
actual proposals from some number of these small businesses would 
establish these firms' capabilities to perform this contract work.  
See VT at 10:03-10:07, 10:59-11:02:44.  

Based on his review and consultation with cognizant HHS and SBA 
officials, the Deputy believed that at least six small businesses 
appeared qualified and capable of performing, and that with this level 
of competition there would be adequate price competition resulting in 
a fair market price.  See VT at 9:55, 10:07.  Given that a number of 
the interested small businesses had received contracts to operate 
other, albeit smaller, clearinghouses, necessarily at fair and 
reasonable prices, we cannot say that the Deputy's determination was 
unreasonable.

Aspen argues that the Deputy did not have the authority to overturn 
the contracting officer's judgment that the procurement should not be 
set aside for exclusive small business participation.  As indicated, 
while FAR  sec.  19.505 vests the contracting officer with the authority to 
make set-aside decisions, that regulation expressly provides for SBA 
appeals of such decisions to the agency head whose determinations are 
final as to the SBA and the contracting officer.  The authority of 
agencies to conduct procurements is vested in the head of the agency 
who generally may delegate his or her authority.  See FAR  sec.  1.601; 
Advanced Sciences, Inc., B-259569.3, July 3, 1995, 95-2 CPD  para.  52.  
Here, the record shows that the authority of the head of agency to 
determine whether the procurement should be set aside for small 
businesses was properly delegated to the Deputy.

Aspen also argues that the Deputy's determination to set aside the 
procurement for small businesses was unreasonable because the Deputy 
did not consult directly with the contracting officer or any of the 
CDC evaluators to determine the basis for their evaluation of the 
small businesses and failed to consider all the underlying 
documentation supporting the evaluation panel's determination that 
most of the responding small businesses were not capable.  See VT at 
10:47:50-57, 10:49:23, 10:49:49.  

The question for our Office is whether the Deputy had a reasonable 
basis for his determination that at least two offers from responsible 
small businesses could be expected and award made at a fair market 
price.  We find that he did.  As noted above, the Deputy reviewed the 
evaluation summaries of the capability statements and consulted with a 
number of HHS and SBA officials; the protester has not demonstrated 
that this provided insufficient information upon which the Deputy 
could base his decision, even though the Deputy did not review the 
underlying statements or interview the contracting officer or 
evaluators as to their opinions.  While Aspen clearly disagrees with 
the Deputy's exercise of his discretion, and would prefer the 
contracting officer's determination, this does not demonstrate that 
the Deputy acted unreasonably.

The protest is denied.

Comptroller General
of the United States  

1. Under FAR  sec.  19.505, the PCR may appeal the contracting officer's 
decision not to set aside a procurement for exclusive small business 
participation to the head of the contracting activity.  If the head of 
the contracting activity agrees with the contracting officer, SBA may 
appeal the procuring agency's determination to the head of the agency.  
The agency head's decision concerning whether the procurement should 
be restricted to small businesses is final as to SBA and the 
contracting officer.