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]