BNUMBER: B-272374.2
DATE: March 11, 1997
TITLE: Southeast Technical Services--Entitlement to Costs
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Matter of:Southeast Technical Services--Entitlement to Costs
File: B-272374.2
Date:March 11, 1997
Robert Gibson for the protester.
Stacy North-Willis, Esq., Department of Veterans Affairs, for the
agency.
C. Douglas McArthur, Esq., and Christine S. Melody, Esq., Office of
the General Counsel, GAO, participated in the preparation of the
decision.
DIGEST
General Accounting Office will not recommend payment of the costs of
filing and pursuing a protest where the agency did not unduly delay
taking corrective action once the issue of whether it had properly
considered the use of simplified acquisition procedures had been put
squarely in dispute.
DECISION
Southeast Technical Services requests that our Office recommend that
the Department of Veterans Affairs (VA) pay it the reasonable costs of
filing and pursuing its protest.
We deny the request.
On May 8, 1995, the agency issued a solicitation for a firm,
fixed-price contract to provide labor, equipment, and material
necessary to remove and dispose of existing soil and install new
ethylene propylene diene monomer waterproofing material, a concrete
paver and pedestal system, a new wall, and an athletic turf system in
courtyard 2G of building 110 at the VA medical center in Augusta,
Georgia. Since the government estimate was less than $25,000, the
agency issued the solicitation as a set-aside for emerging small
businesses. See Federal Acquisition Regulation (FAR) Subpart 19.10.
The agency received two offers, both of which exceeded $25,000. The
agency dissolved the set-aside and revised its estimate. On August 3,
the agency issued a new solicitation, adding a bonding requirement, in
accordance with the then-current FAR implementation of the Miller Act,
40 U.S.C. sec. 270a (1994), which essentially required a contractor to
provide bid, performance, and payment bonds for any construction
requirement in excess of $25,000. See FAR sec. 28.102-1 (FAC 90-32).
The agency received no responses.
On February 28, 1996, the agency issued a new solicitation, again
including the bond requirement, with a higher government
estimate--$35,000--and received four bids. The protester submitted a
bid which did not include the required bid bond and was therefore
nonresponsive. The other bids substantially exceeded the government
estimate. The agency canceled the solicitation because it did not
consider the bid prices reasonable.
On May 24, the agency reissued the solicitation, with the bond
requirement, setting a date of June 24 for bid opening. Six hours
before the scheduled bid opening time, Southeast Technical Services
filed a protest with this Office, essentially objecting to the bonding
requirement.
During the time of this procurement, the FAR was being revised to
conform to the provisions of the Federal Acquisition Streamlining Act
of 1994 (FASA), Pub. L. No. 103-355, 108 Stat. 3243, 3342 (1994). On
July 3, 1995, prior to the issuance of the second solicitation here,
Federal Acquisition Circular (FAC) 90-29, an interim rule revising
Part 13 of the FAR, was issued to implement the simplified acquisition
procedures called for by FASA. The revised, interim rules mandated
the use of simplified acquisition procedures "to the maximum extent
practicable" where, as here, the government estimate was under
$50,000. Further, the revised Part 13 noted that the Miller Act
payment and performance bonds were no longer required for purchases
below the simplified acquisition threshold. However, FAR Part 28
continued to require such bonds until June 20, 1996, 4 days prior to
the fourth and final bid opening here, and the filing of the protest.
See FAC 90-39. Final rules for Part 13 were published on July 26,
1996, during the pendency of the protest; the interim rules for Part
28 are still in effect.)
In its protest, Southeast raised a number of contentions, most of
which were without merit or not for consideration by our Office.
Southeast complained of discrimination, arguing generally that the
bonding requirement discriminated against minority and nonminority
contractors, and that it was discriminatory to require a bond of
bidders not allowed to compete under a prior version of the
solicitation that did not require a bond. Southeast argued that the
initial emerging small business set-aside had discriminated against
nonlocal firms (presumably only Georgia firms submitted proposals for
the initial solicitation.).[1] The protester asserted that the agency
had failed to issue a written amendment to the solicitation advising
offerors that the government estimate exceeded $25,000 and failed to
provide notice of the rejection of Southeast's bid in February.[2] In
pertinent part, however, Southeast made a passing remark that the
agency was not using simplified acquisition procedures.[3]
The agency report of July 26 effectively responded to most of the
protest issues. In response to the protester's major contention--that
the agency was discriminating against certain contractors by insisting
on a bid bond--the VA stated that it was simply complying with FAR
Part 28, which required bid and Miller Act bonds for projects over
$25,000. The agency did not discuss the provisions of FAR Part 13,
implementing FASA by mandating the use of simplified acquisition
procedures where practicable for purchases under $50,000, or the June
20 revision to FAR Part 28, providing for the inapplicability of the
Miller Act to purchases conducted under simplified procedures. Its
only response to Southeast's mention of the simplified acquisition
procedures was the irrelevant assertion that, in accordance with FAR
Part 19, it set aside acquisitions under $25,000 for emerging small
businesses.
When Southeast, likewise, did not address the simplified acquisition
procedures issue in its comments, our Office raised the issue with the
parties. On September 5, we provided a written memorandum to the
parties, pointed out the changes to the FAR--the mandatory use of
simplified acquisition procedures where practicable as well as the
changes to Parts 13 and 28 regarding the applicability of the Miller
Act to purchases under such procedures. Since FAR Part 13 requires
the use of simplified procedures if "practicable," we asked the agency
to address whether using those procedures was "practicable" for the
instant solicitation. We also asked for a justification for the
bonding requirement apart from the provisions of the Miller Act. Six
days later, on September 11, the agency admitted that it had simply
not considered using simplified acquisition procedures and canceled
the solicitation. We dismissed the protest as academic, and Southeast
filed this request with our Office for a recommendation that it
recover its costs of pursuing the protest.
Under the Competition in Contracting Act of 1984 (CICA), our Office
may recommend recovery of costs where we find that an agency's action
violated a procurement statute or regulation. 31 U.S.C. sec. 3554(c)(1)
(1994). Additionally, as noted above, our Bid Protest Regulations, 4
C.F.R. sec. 21.8(e) (1996), provide that we may recommend that a
protester recover its costs of filing and pursuing a protest where the
contracting agency decides to take corrective action in response to a
protest. This does not mean, however, that our Office will recommend
the award of protest costs in every case in which an agency takes
corrective action in response to a protest; rather, we will recommend
payment of costs only where, based on the circumstances of the case,
we find that the agency unduly delayed taking corrective action in the
face of a clearly meritorious protest. Instrumentation Lab.
Co.--Request for Declaration of Entitlement to Costs, B-246819.2, June
15, 1992, 92-1 CPD para. 517. In deciding whether an agency's corrective
action was so delayed as to warrant recovery of costs, the
determination of the appropriate date from which the promptness is
measured is critical. Holiday Inn-Laurel--Entitlement to Costs,
B-265646.4, Nov. 20, 1995, 95-2 CPD para. 233.
With regard to the issue upon which the agency took corrective
action--the failure to follow the simplified acquisition procedures of
FAR Part 13--the protester did no more than use the phrase "simplified
acquisition procedures" in its initial protest and thus failed to
raise the issue in any meaningful way. In fact, it was not until our
Office directed the agency's attention to it, by our message of
September 5, that the issue was squarely framed. The promptness of
the agency's corrective action, taken on September 11, thus must be
measured from the time we identified the issue. Using that measure,
the record contains no basis for concluding that the agency unduly
delayed taking corrective action, once it realized that its position
might be in error. Rather, the VA's decision to cancel the
solicitation, 6 days after the simplified procedures issue effectively
was raised, constitutes exactly the type of prompt corrective action
which we seek in bid protest resolution, and which it is not our
intent to penalize. See Baxter Healthcare Corp.--Entitlement to
Costs, B-259811.3, Oct. 16, 1995, 95-2 CPD para. 174 (corrective action
taken 8 working days after the issue was first squarely put in dispute
was not unduly delayed).
The request is denied.
Comptroller General
of the United States
1. In its comments, Southeast referred to the Supreme Court decision
in Adarand Constructors, Inc. v. Pena, 115 S. Ct. 2097 (1995), which
found unconstitutional an unjustified preference for small and
disadvantaged business enterprises and referred to discriminating
"against contractors from different origins." It appears now that, by
"origins," the protester was referring to other places outside
Georgia, rather than other races or nationalities, and that the
reference to the Supreme Court decision was merely for emphasis.
2. Neither assertion was true. The cover page of the solicitation
expressly advised potential bidders of a government estimate in the
$25,000-$100,000 range. The agency sent two letters--one dated March
29, notifying Southeast of the rejection of its bid, and a second
dated May 14, notifying the protester that the solicitation was being
canceled.
3. The relevant portion of the protest is as follows:
". . . we were never notified that our offer was
unsuccessful from the previous bidding of this project.
This VA center does not use any of the prescribed
simplified acquisition procedures. They do not try to
reduce any administrative costs or costs of bonds that are
not required on contracts under $25,000. It appears that
they are trying to do a lot of job justification at the
expense of small businesses. We at Southeast Technical
Services believe that this VA center in Augusta, Georgia
are misus[ing] their option of requiring bi[d] and
performance bonds on all contracts is an open form of
discriminating . . . . " [sic]