BNUMBER: B-272223
DATE: August 28, 1996
TITLE: Schwegman Constructors and Engineers, Inc.
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Matter of:Schwegman Constructors and Engineers, Inc.
File: B-272223
Date:August 28, 1996
Christopher Solop, Esq., and Lynn Hawkins Patton, Esq., Ott & Purdy,
for the protester.
Richard P. Castiglia, Jr., Esq., Department of the Air Force, for the
agency.
Tania L. Calhoun, Esq., and Christine S. Melody, Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Protest challenging solicitation's inclusion of evaluation
preference for small disadvantaged business concerns in construction
acquisitions pursuant to Department of Defense test program on ground
that the preference contravenes the Small Business Competitiveness
Demonstration Program (SBCDP) Act's mandate for full and open
competition is denied; since the evaluation preference does not limit
the sources that are permitted to compete, the competition remains
"full and open" and does not violate the SBCDP Act.
2. General Accounting Office will not consider allegation that
evaluation preference for small disadvantaged business concerns in
construction acquisitions pursuant to Department of Defense test
program is unconstitutional in light of Adarand Constructors, Inc. v.
Pena and City of Richmond v. Croson Co. because neither decision
constitutes clear judicial precedent on the constitutionality or
legality of this test program and its evaluation preference.
DECISION
Schwegman Constructors and Engineers, Inc. protests the terms of
invitation for bids (IFB) No. F22600-96-B-0031, issued by the
Department of the Air Force to replace chillers at Keesler Air Force
Base, Mississippi. Schwegman contends that the solicitation's
inclusion of an evaluation preference for small and disadvantaged
business (SDB) concerns is improper.
We deny the protest.
In Adarand Constructors, Inc. v. Pena, 115 S.Ct. 2097 (1995), the
Supreme Court held that racial classifications must be subject to
strict scrutiny and must serve a compelling governmental interest and
be narrowly tailored to further that interest. The Department of
Defense (DOD) subsequently suspended those sections of the Defense
Federal Acquisition Regulation Supplement (DFARS) which prescribed the
set-aside of acquisitions for SDB concerns in order to take account of
the Adarand decision while an interagency government-wide review of
affirmative action programs was conducted. 60 Fed. Reg. 54,954 (Oct.
27, 1995). On April 29, 1996, DOD issued its final rule amending the
DFARS to implement initiatives designed to facilitate awards to SDB
concerns in consideration of the Adarand decision. 61 Fed. Reg.
18,686 (Apr. 29, 1996). Relevant to this protest, DOD established a
test program to ensure that offers from SDB concerns would be given an
evaluation preference in most construction acquisitions whose value
exceeds the simplified acquisition threshold. Id. at 18,688.
Under the test program, set forth at DFARS Subpart 219.72, offerors
are required to separately state their bond costs where a solicitation
requires bonding. Offers will first be evaluated on the basis of
total price. If the apparently successful offeror is an SDB concern,
no preference will be applied. If the apparently successful offeror
is not an SDB concern, offers will be evaluated based upon total price
minus bond costs. If, after the exclusion of bond costs, the
apparently successful offeror is an SDB concern, bond costs will be
added back to all offers, and SDB concerns will be given an evaluation
preference by adding a factor of 10 percent to the total price of all
other offers. The clause at DFARS sec. 252.219-7008, which explains this
procedure, is to be included in all solicitations to which the test
program applies.
On May 6, the Air Force issued this solicitation as an unrestricted
procurement. The work to be performed is classified as construction
work with a value in excess of $25,000. After amendment No. 0001 was
issued to incorporate the clause at DFARS sec. 252.219-7008 into the
solicitation, Schwegman filed this protest. Schwegman principally
argues that the solicitation's inclusion of the clause violates the
Small Business Competitiveness Demonstration Program (SBCDP) Act of
1988, 15 U.S.C. sec. 644 note (1994).
The SBCDP Act establishes a demonstration program under which
solicitations for the procurement of services in designated industry
groups are to be issued on an unrestricted basis, provided the agency
has attained its small business participation goals. Construction is
one of these designated industry groups. Section 717(b). Relevant to
this protest, section 713 of the SBCDP Act states:
"(a) Full and Open Competition. . . . [E]ach contract
opportunity with an anticipated value of more than $25,000 for
the procurement of services from firms in the designated industry
groups (unless set aside pursuant to section 8(a) of the Small
Business Act (15 U.S.C. 637(a)) or section 2323 of Title 10,
United States Code) shall be solicited on an unrestricted basis .
. . . Any regulatory requirements which are inconsistent with
this provision shall be waived."
Schwegman contends that the solicitation's inclusion of the evaluation
preference renders this a restricted competition, in contravention of
the SBCDP Act.
Unrestricted competition and restricted competition are terms that
define the universe of firms that may compete for award under a given
solicitation. Generally, in an unrestricted competition, all
responsible sources are permitted to compete. Federal Acquisition
Regulation (FAR) sec. 6.003. In a restricted competition, the sources
permitted to compete are limited to, for example, small businesses
under a small business set-aside. FAR sec. 6.203. Indeed, the SBCDP Act
itself defines restricted competitions as those restricted to small
business concerns under a small business set-aside, see section
713(b), and FAR sec. 19.1003(a) explains that the purpose of the program
is to test the ability of small businesses to compete successfully in
certain industry categories "without competition being restricted by
the use of small business set-asides." Since the evaluation
preference here does not limit the sources that are permitted to
compete, the competition remains unrestricted and does not contravene
the requirements of the SBCDP Act.
Schwegman claims our Office has held that using an evaluation
preference in a procurement covered by the SBCDP Act violates the Act,
citing our decision in Perdomo & Sons, Inc., B-240436, Nov. 19, 1990,
90-2 CPD para. 404. Schwegman has misread this decision.
In Perdomo, the Air Force inadvertently included the SDB evaluation
preference clause prescribed at DFARS sec. 252.219-7007 in an
unrestricted solicitation under the SBCDP Act. Our conclusion that
the agency properly refused to apply the preference was not based upon
any notion that it violated the SBCDP Act, but upon the fact that the
applicable regulations specifically prohibited the inclusion of the
evaluation preference. Presently, DFARS sec. 219.1006(b)(1)(B)
specifically prohibits use of the evaluation preference at DFARS sec.
219.70, the provision at issue in Perdomo.[1] However, that same
section specifically recognizes the exception for the construction
acquisitions test program. Hence, unlike in Perdomo, use of the
evaluation preference at issue here is not prohibited by the
applicable regulations.
Schwegman's fundamental complaint is that this evaluation preference
is unduly restrictive of competition. The protester believes that its
application could be catastrophic to small businesses competing for
the same procurement because they cannot reduce their prices by 10
percent and survive. However, a solicitation may include restrictive
provisions to the extent necessary to satisfy the needs of the agency
or as authorized by law. 10 U.S.C. sec. 2305(a)(1)(B) (1994). Since
DFARS Part 219.72 required the Air Force to include this evaluation
preference here, its presence is not legally objectionable.
Schwegman alternatively asks this Office to find that the inclusion of
the clause is unconstitutional in light of the Adarand decision. The
protester contends that DOD's test program regulations are not based
on specific, direct evidence that past discrimination has limited the
ability of SDB concerns to obtain contracts with the federal
government.
There must be clear judicial precedent before we will consider a
protest based on the asserted unconstitutionality of the procuring
agency's actions. DePaul Hosp. and The Catholic Health Ass'n of the
United States, B-227160, Aug. 18, 1987, 87-2 CPD para. 173. We have
consistently held that since the Court in Adarand simply announced the
standard that is to be applied in determining the constitutionality of
programs involving racial classifications in the federal government,
and remanded the case to the lower courts for further consideration in
light of that standard, Adarand did not provide that precedent.
Advanced Eng'g & Research Assocs., Inc., B-261377.2 et al., Oct. 3,
1995, 95-2 CPD para. 156; Elrich Contracting, Inc.; The George Byron Co.,
B-262015; B-265701, Aug. 17, 1995, 95-2 CPD para. 71.
Schwegman contends that, following the Court's decision in Adarand,
racially based set-aside programs imposed by the federal government
are subjected to the same level of "strict scrutiny" applied to
racially based set-aside programs at the state or local level
following the Court's decision in City of Richmond v. Croson Co., 488
U.S. 469 (1989), which concerned a municipality's minority set-aside
program. Schwegman maintains that these two decisions taken together
provide our Office with the clear judicial precedent it requires to
review this matter. We disagree.
There must be clear judicial precedent on the precise issue presented
to us before we will consider a protest based on the asserted
unconstitutionality of a procuring agency's action. Neither the
Adarand nor the Croson decision constitutes clear judicial precedent
on the constitutionality or legality of this test program and its SDB
evaluation preference. These decisions addressed the particular
programs that were before the Court and, while they indicate what
factors need to be considered to determine the constitutionality of
such programs, we are unaware of, and the protester does not cite to,
any dispositive federal court decisions applying the standards
articulated in Adarand and Croson to a program which is sufficiently
similar to this one so as to warrant regarding those decisions as
clear judicial precedent here. G.H. Harlow Co., Inc.--Recon.,
B-266144.3, Feb. 28, 1996, 96-1 CPD para. 116; see also Seyforth Roofing
Co., Inc., B-235703, June 19, 1989, 89-1 CPD para. 574.
The protest is denied.
Comptroller General
of the United States
1. At the time the decision in Perdomo was issued, DFARS sec.
219.1070-1(c)(3) prohibited application of the evaluation preference
at issue in that case.