BNUMBER:  B-277241.26          
DATE:  January 6, 1999
TITLE: Aalco Forwarding, Inc., et al. --Reconsideration, B-
277241.26, January 6, 1999
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Matter of:Aalco Forwarding, Inc., et al.--Reconsideration

File:B-277241.26         
        
Date:January 6, 1999

Alan F. Wohlstetter, Esq., and Stanley I. Goldman, Esq., Denning & 
Wohlstetter, for the protesters.
Adam Vodraska, Esq., and James A. Spangenberg, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Request for reconsideration is denied where small business set-asides 
of some entire traffic channels (geographical portions) of a 
solicitation for interstate and international moving and storage 
services do not constitute a partial set-aside of the entire 
procurement but are properly considered total set-asides.

DECISION

Aalco Forwarding, Inc. and 56 other firms request that we reconsider 
that portion of our decision in Aalco Forwarding, Inc., et al., 
B-277241.20, B-277241.21, July 1, 1998, 98-2 CPD  para.  1, in which we 
denied their protests that the small business set-aside of request for 
proposals (RFP) No. DAMT01-97-R-3001, issued by the Department of the 
Army, Military Traffic Management Command (MTMC), failed to make 
maximum use of small business capacity.[1]  The RFP is for a pilot 
program reengineering the Department of Defense's current interstate 
and international program for shipping and storing the personal 
property of its military service members and civilian employees.

We deny the request.

The RFP requested proposals for 53 designated traffic channels (origin 
state-to- destination region) and originally set aside 12 percent of 
the traffic volume on 
27 designated high volume channels for exclusive small business 
participation.  The reasonableness of that partial set-aside was 
protested by many of the parties requesting reconsideration here.  We 
sustained those protests in Aalco Forwarding, Inc., et al., 
B-277241.16, Mar. 11, 1998, 98-1 CPD  para.  75, because the record did not 
evidence that the set-aside would ensure an economic production run or 
reasonable lot of shipments for small business concerns, as required 
by the regulation governing partial set-asides, Federal Acquisition 
Regulation (FAR)  sec.  19.502-3.  We recommended that the agency reexamine 
its partial set-aside determination to ensure that any set-aside 
portions represented economic production runs or reasonable lots, 
which reexamination might include deciding to set aside some entire 
channels for small business concerns.  Aalco Forwarding, Inc., et al., 
B-277241.16, supra, at 15-16.  

In response to our decision, the agency decided to eliminate the 
previous partial set-aside and to designate 17 of the channels as 
100-percent small business set-asides.  This set-aside decision was 
challenged by many of the same protesters, who argued that MTMC failed 
to establish that all of the set-aside channels constituted economic 
production runs or reasonable lots and that the set-aside decision 
lacked a reasonable basis.  

In Aalco Forwarding, Inc., et al., B-277241.20, B-277241.21, supra, we 
denied these protests, finding that the new set-aside determination 
was not a partial set-aside of the entire procurement under the 
applicable regulation but a total set-aside of each restricted 
channel.  We concluded that the set-aside had a reasonable basis and 
was in accord with the applicable regulation governing total 
set-asides, FAR  sec.  19.502-2, which does not require a total set-aside 
to constitute an economic production run or reasonable lot.  Aalco 
Forwarding, Inc., et al., B-277241.20, B-277241.21, supra,
at 8-9.  We also found reasonable the agency's determination not to 
totally set aside the 10 highest volume channels, id. at 9-10, and 
that the protesters did not timely contend that the 10 highest volume 
channels should be partially set aside because the contention was not 
made in, nor was it within the scope of, the initial protests, but 
instead was first raised in comments filed after receipt of the agency 
report, well after the time proposals were due.  Id. at 10 n.11.

In requesting reconsideration, the protesters assert that our decision 
is inconsistent with our recommendation in Aalco Forwarding, Inc., et 
al., B-277241.16, supra,
at 15-16, which anticipated retaining a partial set-aside in some 
format.  The protesters further argue that we erroneously concluded 
that the total set-aside regulation was applicable with respect to the 
channels set aside for small business, with the result that we 
improperly failed to consider MTMC's duty to maximize the 
participation of small business in the procurement. 

The details of implementing our protest recommendations for corrective 
action are within the sound discretion and judgment of the contracting 
agency.  QuanTech, Inc., B-265869.2, Mar. 20, 1996, 96-1 CPD  para.  160 at 
2.  We will not question an agency's ultimate manner of compliance, so 
long as it remedies the procurement impropriety that was the basis for 
the decision's recommendation.  Id.  Irrespective of the precise 
wording in our recommendation in Aalco Forwarding, Inc., et al., 
B-277241.16, supra, at 15-16, MTMC essentially overruled its previous 
partial set-aside determination, the inadequacy of which formed the 
basis of our recommendation.  MTMC decided to proceed with a set-aside 
determination that we found, in Aalco Forwarding, Inc., et al., 
B-277241.20, B-277241.21, supra, at 8, can only reasonably be 
characterized as making a total set-aside of each of the restricted 
channels, an action that was within the agency's discretion.  

We considered each restricted channel as a total set-aside because a 
partial
set-aside entails setting aside a portion of a quantity of items (or a 
class of items) exclusively for small business, and may only be 
utilized when, among other things, the requirement is severable into 
two or more economic production runs or reasonable lots.  See FAR  sec.  
19.502-3(a).  Further, a partial set-aside contemplates that only 
offerors who submit acceptable offers on the non-set-aside portion of 
the requirement are eligible to receive awards for the set-aside 
portion, whereas a total set-aside has no such prerequisite.  FAR  sec.  
19.502-2, 19.502-3(c)(2)(i), 52.219-7(b)(4).  Here, MTMC did not sever 
individual channels into separate portions, and did not require small 
business offerors responding to the RFP to submit proposals on the 
non-set-aside channels in order to be eligible for the 
set-aside ones--instead, offerors were free to submit offers on any or 
all traffic channels.  Accordingly, notwithstanding that the 
restricted channels constituted only a portion of the entire 
procurement, we believe we correctly characterized each traffic 
channel set aside in its entirety as a total set-aside.

In reaching our conclusion, we were guided by several prior decisions 
of our Office, which the protesters allege are not apposite.  One of 
these decisions was 38 Comp. Gen. 744 (1959), which involved a 
solicitation for air transportation services with 
15 items of service.  In that decision, we held that one of the items, 
set aside exclusively for small business, constituted a total 
set-aside under the circumstances of that case because the contracting 
agency's needs under that item "were independent of, and quite 
unrelated to, the needs described under the remaining fourteen items."  
Id. at 746.

The protesters contend that here, in contrast, the elements of the 
solicitation are interrelated and the traffic channels set aside 
exclusively for small business are not independent of, and unrelated 
to, the remaining channels, and thus do not constitute total 
set-asides.  These assertedly interrelated elements include the 
solicitation of offers for 53 channels under the same terms and 
conditions, the potential award of a single contract to each awardee 
that would include either multiple set-aside channels or both 
set-aside and non-set-aside ones, and a $25,000 minimum guarantee per 
contract regardless of the number of channels awarded to the 
contractor.

We continue to find the decision at 38 Comp. Gen. 744 persuasive 
precedent.  That case involved a solicitation for additional 
transportation requirements issued to holders of existing agreements 
fixing terms and conditions (other than prices, routes, and 
quantities) for the performance of commercial airlift services.  The 
set-aside item in question requested prices for transportation of a 
certain quantity of cargo from one specified location to another 
during given time periods.  Since this set-aside item included all of 
the contracting agency's additional cargo needs for the periods in 
question on the route specified (and appeared to be the only 
transportation requirement for this route in the entire solicitation), 
we found that the needs under this item were "independent of, and 
quite unrelated to," the needs described under the remaining items, 
and thus properly treated as a total set-aside, notwithstanding that 
the set-aside item constituted only a portion of the entire 
procurement.

Here, as with the items at issue in the decision at 38 Comp. Gen. 744, 
the fact that not all channels were restricted to small businesses 
does not in itself render the set-aside of particular channels a 
partial set-aside of the entire procurement.  Although each contractor 
is subject to the same terms and conditions, each of the 53 channels 
encompasses a different origin state-to-destination region, on which 
prices, routes, and quantities of services are based, and thus, like 
the set-aside item in the decision at 38 Comp. Gen. 744, each traffic 
channel is "independent of, and quite unrelated to," the needs 
represented by the other channels.  As with the set-aside item in the 
decision at 38 Comp. Gen. 744, the agency did not sever the individual 
channels themselves into set-aside and non-set-aside portions, as it 
would in a partial set-aside, but set aside each restricted channel in 
its entirety. 

We note that the protesters' arguments as to why the set-aside traffic 
channels are not independent of and unrelated to, each other directly 
contradicts their
June 3 comments on the agency report responding to their protests, in 
which they urged our adoption of exactly the opposite position--that 
each channel be considered a separate acquisition for set-aside 
purposes--as follows:[2]

     [E]ach channel is a separate acquisition for application of the 
     small business set-aside provisions of the FAR . . . .  For the 
     purpose of contract award, each channel is separately competed 
     with offers on a channel evaluated against each other, 
     independently of the offers on other channels. . . .  Further, 
     the solicitation specifically provides for separate evaluations 
     of an offeror's responsibility for each channel on which the 
     offeror submits an offer. . . .  The fact that the agency will 
     evaluate offers and make contract awards by channel demonstrates 
     . . . that each channel is a separate acquisition.  The agency's 
     combination of 53 channels in a single solicitation for 
     administrative convenience does not result in one single 
     acquisition.  Otherwise form would prevail over substance.

The protesters assert that the other precedent cited in our prior 
decision to support our conclusion, Midland Transp. Co., B-201319, 
Aug. 4, 1981, 81-2 CPD  para.  89, aff'd, 
B-201319.2, Dec. 11, 1981, 81-2 CPD  para.  459, did not hold that a 
set-aside of a geographical portion of a procurement constitutes a 
total set-aside.  The solicitation in Midland was for packing, 
crating, unpacking and storage services for Department of Defense 
personnel's property being shipped within each of several geographical 
areas, somewhat similar to the services involved in and the traffic 
channel approach of the MTMC solicitation.  As here, bids were 
required on all services within an area of performance and award was 
to be made by geographical area, some of which were set aside entirely 
for small business, with the remainder of the procurement being 
unrestricted.  We found that, as here, the procurement could not 
properly be considered as constituting a partial set-aside because the 
agency did not intend to sever any areas of performance into set-aside 
and non-set-aside portions, but intended to set aside certain areas in 
their entirety, and offerors were not required to submit proposals for 
the unrestricted portion of the requirement (the non-set-aside items), 
as they are required to do for a partial set-aside.  The Midland case 
is clearly a relevant precedent.

The protesters also have not persuaded us that we erred in concluding 
that MTMC reasonably did not set aside the 10 highest volume channels 
in their entirety.  As we pointed out in Aalco Forwarding, Inc., et 
al., B-277241.20, B-277241.21, supra, at 9-10, MTMC decided not to set 
aside the highest volume channels given the agency's concerns about 
small business capabilities to handle the pilot program's new 
requirements and traffic volumes and, as supplemented by a review of 
the offers received, the agency's concerns about the very high daily 
capacities offered by some small businesses over the various channels 
and the carrier affiliations that might render some of the offerors 
ineligible for award.  The protesters' mere disagreement with our 
conclusion that MTMC's decision was reasonable does not warrant 
reconsidering our decision.  RGII Techs., Inc.--Recon. and Protest, 
B-278352.2, B-278352.3, Apr. 14, 1998, 98-1 CPD  para.  130 at 3.

Finally, the protesters maintain that, even if we properly accepted 
MTMC's determination that setting aside any of the 10 highest volume 
channels for small business represented an unacceptable risk, we 
improperly concluded that they did not timely protest that those 
channels should have been the subject of partial set-asides.  The 
protesters point out that they had argued that the RFP's set-aside of 
the 17 designated channels did not make maximum use of small business 
capability under FAR  sec.  19.502-3(b), which they contend effectively 
constituted a protest of MTMC's failure to partially set aside the 10 
highest volume channels.  We disagree.  The initial protests simply 
did not contend that the 10 highest volume channels should each be 
partially set aside, but primarily argued that the 17 set-aside 
channels did not constitute economic production runs or reasonable 
lots based on the protesters' position that the designated set-aside 
channels constituted a partial set-aside of the procurement which, as 
discussed above, is not the case.

The prior decision is affirmed.

Comptroller General
of the United States

1. The protesters are:  Aalco Forwarding, Inc.; AAAA Forwarding, Inc.; 
A Advantage
Forwarders, Inc.; Air Van Lines International, Inc.; Allstates 
Worldwide Movers;
Aloha Worldwide Forwarders, Inc.; Alumni International, Inc.; American 
Heritage
International Forwarding, Inc.; American Shipping, Inc.; American 
World
Forwarders, Inc.; Apollo Forwarders, Inc.; Arnold International 
Movers, Inc.; Astron
Forwarding Company; BINL Incorporated; Burnham Service Company, Inc.; 
Cavalier
Forwarding, Inc.; Classic Forwarding, Inc.; Davidson Forwarding Co.; 
Deseret
Forwarding International, Inc.; Foremost Forwarders, Inc.; Great 
American
Forwarders, Inc.; Hi-Line Forwarders, Inc.; International Services, 
Inc.; Island
Forwarding, Inc.; Katy Van Lines, Inc.; Lincoln Moving & Storage; 
Miller Forwarding,
Inc.; Northwest Consolidators; Ocean Air International, Inc.; Senate 
Forwarding,
Inc.; Sentinel International Forwarding, Inc.; Shoreline 
International, Inc.; Stevens
Forwarders, Inc.; T.R.A.C.E. International, Inc.; Von Der Ahe 
International, Inc.;
Wold International, Inc.; Zenith Forwarders, Inc.; Acorn International 
Forwarding
Company; AAA Systems, Inc.; A.C.E. International Forwarders; Apex 
Forwarding
Company, Inc.; Armstrong International, Inc.; Art International 
Forwarding, Inc.;
Coast Transfer Company, Inc.; Crystal Forwarding, Inc.; CTC Forwarding 
Company,
Inc.; Diamond Forwarding, Inc.; Dyer International, Inc.; Harbour 
Forwarding
Company, Inc.; HC&D Forwarders International, Inc.; Jag International, 
Inc.; The
Kenderes Group, Inc.; Pearl Forwarding, Inc.; Rainier Overseas, Inc.; 
Rivers
Forwarding, Inc.; Ryans's World; and Sequoia Forwarding Company, Inc.

2. The protesters' contention is also inconsistent with our earlier 
holding in Aalco Forwarding, Inc., et al., B-277241.16, supra, that 
the sufficiency of the former partial set-aside should be determined 
on a per channel basis.