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.