BNUMBER:  B-279714             
DATE:  July 14, 1998
TITLE: Instrument Specialists, Inc., B-279714, July 14, 1998
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Matter of:Instrument Specialists, Inc.

File:B-279714            
        
Date:July 14, 1998

Carl Payne Tobey, Jr., Esq., for the protester. 
Darryl Bardusch, Esq., Maj. Michael J. O'Farrell, and Col. Nicholas P. 
Retson, Department of the Army, for the agency. 
Paul E. Jordan, Esq., and Paul I. Lieberman, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

1.  Protest that solicitation requirements for monthly on-site 
maintenance tasks and relatively fast turn-around time for off-site 
repairs are unduly restrictive of competition is denied where record 
establishes that the requirements were reasonably designed to ensure 
that the agency's actual needs would be met.

2.  Agency is not required to structure solicitation requirements to 
eliminate competitive advantages of offerors located closer to site of 
performance where advantages did not result from any unfair government 
action.

DECISION

Instrument Specialists, Inc. (ISI) protests the terms of solicitation 
No. DADA16-98-T-0162, issued by the Department of the Army as a total 
small business set-aside, for repair and maintenance of general and 
specialized surgical instruments.  ISI contends that the 
specifications are unduly restrictive.

We deny the protest.

The solicitation contemplated the award of a fixed-price, requirements 
contract for a 6-month base period with four, 1-year options, under 
which the awardee will perform on-site repair and preventive 
maintenance on a monthly basis and off-site services on an as-needed 
basis.  Off-site turn-around time may not exceed 15 working days.  
According to the statement of work (SOW), at 5: 

     Repair and preventive maintenance work shall include sharpening, 
     adjusting, polishing, cleaning, realignment and replacement of 
     parts that are lost, worn, or broken to like new condition on 
     Government-owned general and specialized surgical instruments for 
     Tripler Regional Medical Center [Hawaii]; Oral Surgery Service . 
     . . and all other services at Tripler.

Repair services also include guaranteed quality, color coding, etching 
and demagnetizing, reinsulation of laparoscopic instruments, and 
replacement of tungsten carbide inserts for needle holders.  The 
contractor must provide all labor, transportation, equipment, 
materials, and supplies to accomplish the SOW requirements, and remove 
all materials it brings on-site after each service visit is completed.  

Offers in response to the solicitation were due on April 7, 1998.  
Instead of submitting an offer, ISI filed this protest challenging 
various requirements as being unduly restrictive of competition.  
Specifically, ISI objects to the short duration of the base period; 
the requirements to clean and polish surgical instruments; the 
requirement to furnish a mobile unit to perform the contract;[1] the 
requirement for monthly service calls; and the 15 working day, 
off-site turn-around requirement.  In ISI's view, these 
specifications, all of which represent changes from the requirements 
under the predecessor contract (which ISI held), are unduly 
restrictive with respect to all small businesses not located in 
Hawaii.  In its comments on the agency report, ISI concedes that it 
"can perform in accordance with specifications as presently written, 
but at a cost, which will be predictably higher than a local 
contractor."  

Agencies are required to specify their needs in a manner designed to 
promote full and open competition and thus may include restrictive 
requirements only to the extent necessary to satisfy their actual 
needs.  10 U.S.C.  sec.   2305(a)(1)(A)(i), (B)(ii) (1994).  We will not 
question an agency's determination of its actual needs unless that 
determination has no reasonable basis.  Innovative Refrigeration 
Concepts, B-272370, Sept. 30, 1996, 96-2 CPD  para.  127 at 3.  Here, we 
find that the agency has demonstrated reasonable bases for the 
challenged requirements.

With regard to the 6-month base period, the agency explains that the 
period coincides with the remainder of the current fiscal year (April 
to the end of September) and is specified in order to fund the 
services with fiscal year 1998 appropriations.  Since the term of 
contracts for services funded by annual appropriations shall not 
extend beyond the end of the fiscal year of the appropriation (Federal 
Acquisition Regulation (FAR)  sec.  37.106), there is nothing unreasonable 
in the agency's decision.  In this regard, ISI does not dispute the 
agency's obligation to follow FAR  sec.  37.106; rather, ISI argues that it 
would not be economical for mainland offerors to submit proposals for 
such a short base period and suggests that the agency should wait 
until the beginning of the new fiscal year.  These contentions are 
without merit.  The fact that it may not be as economical for some 
offerors to compete does not render the agency's actions unreasonable.  
Further, as acknowledged by ISI, it has been nearly 2 years since the 
end of the predecessor contract.  In view of this extended period 
without a regular contractor, it is not unreasonable for the agency to 
attempt to obtain services sooner, rather than later.  

With regard to the requirement that the contractor clean and polish 
instruments, the agency explains that it listed these tasks in 
addition to others (sharpening, adjusting, realignment, etc.) to make 
clear what was entailed in repairing and maintaining instruments to 
"like new" condition.  Again, ISI does not dispute that the 
instruments require cleaning and polishing as part of the refurbishing 
process.  Rather, ISI observes that under its predecessor contract, 
government personnel cleaned and polished the instruments.[2]  In 
ISI's view, since the agency possesses the necessary sonic washer to 
perform these tasks and has done so in the past, the contractor should 
not be required to perform these tasks.  The agency explains that the 
contractor will not take over all routine cleaning, polishing, and 
sterilization of surgical instruments, but only that of instruments 
the contractor refurbishes.  Since ISI itself concedes that cleaning 
and polishing are necessary, its mere disagreement with the agency's 
determination that it is more efficient for the refurbishing 
contractor to perform those tasks does not render that determination 
unreasonable.  Aaron Refrigeration Servs., B-230833.2, Aug. 17, 1988, 
88-2 CPD  para.  153 at 4. 

The Army explains that its need for monthly service is based on 
Tripler's increased surgical caseload and its status as a training 
hospital, both of which result in increased instrument use and 
breakage rates.  Monthly service is necessary in order to provide 
quick turn-around time, maintain inventory control, and prolong the 
life of the surgical instruments.  ISI complains that in the past, the 
agency's needs were met by two on-site visits per year.  While ISI 
claims that nothing has changed at Tripler, it has submitted nothing 
to support its claims and has not shown that quick turn-around time, 
inventory control, and prolonged life of instruments are not desirable 
results that flow directly from more frequent maintenance.  For 
example, the Army advises that a hip chisel may become dull after a 
single surgical procedure and the agency is unwilling to wait up to 6 
months for it to be refurbished.  As with the other requirements, ISI 
admits that it can perform monthly service and simply complains that 
the associated costs would make ISI noncompetitive with Hawaii-based 
contractors.  ISI's desire to minimize its costs does not make the 
agency's determination of its needs unreasonable. 

With regard to the 15 working day turn-around time for off-site 
repairs, the Army acknowledges that in past contracts, the turn-around 
time was 26 calendar days.  The Army explains that, as with other 
instruments, efficiencies associated with quick turn-around time and 
inventory control are the basis for the off-site turn-around limit.  
While the off-site repair time is shorter than under the predecessor 
contract, the Army states that less time will be necessary for 
off-site work because of the requirement for monthly on-site service.  
This will result in smaller quantities of instruments requiring 
off-site service and lower freight costs associated with smaller 
quantities.  Although ISI complains that the requirement leaves 
insufficient time to perform off-site maintenance and repair, it 
provides no supporting evidence, other than to assert that it may take 
up to 6 days for the instruments to be shipped one way.  This is 
apparently based on ISI's past performance, which involved larger 
volumes of instruments.  However, even if considerable time were 
required for shipment to and from Tripler, ISI has not explained why 
it would be incapable of performing services on fewer instruments in 
the remaining time.  Instead, ISI simply complains that the reduced 
turn-around time will be more costly to, and thereby less competitive 
for, mainland offerors.  In the absence of any evidence that the 
off-site turn-around time is unreasonably short, ISI's complaint 
provides no basis to conclude that the reduced time represents an 
unduly restrictive specification.  

In sum, ISI's protest is based on its belief that as a mainland 
contractor, it is at a competitive disadvantage relative to 
Hawaii-based contractors.  However, in seeking competition, an agency 
is not required to construct its procurements in a manner that 
neutralizes the competitive advantage that some potential offerors may 
have over others by virtue of their own particular circumstances where 
the advantages did not result from unfair action on the part of the 
government.  MCA Research Corp., B-276865, July 29, 1997, 97-2 CPD  para.  
33 at 2-3.  Here, the geographic advantages of local contractors 
relative to the protester have nothing to do with any unfair action on 
the part of the government.  Moreover, notwithstanding ISI's 
unwillingness to submit a proposal because of its perception that its 
costs would be too high, the record reflects that the agency received 
more than one proposal from mainland contractors which were 
competitive both with those submitted by Hawaii contractors and with 
ISI's costs under the predecessor contract. 

The protest is denied.

Comptroller General of
the United States

1. In order to perform the required on-site services, including 
replacement of tungsten carbide needle inserts, ISI claims that it 
will require a mobile unit.  However, nothing in the solicitation 
requires contractors to furnish a mobile unit or any other vehicle to 
perform the services, and space has apparently been allocated for the 
contractor to perform on-site services.  In the absence of a stated 
requirement, a contractor's choice to use a mobile unit to perform the 
contract is a matter of its business judgment which does not establish 
that a solicitation is unduly restrictive of competition.   

2. ISI's objection stems from its predecessor contract.  A new chief 
of Central Material Supply was assigned administration of that 
contract and he required ISI to clean the instruments it refurbished, 
including the removal of rust on the instruments.  ISI objected to 
what it perceived as additional work and obtained a modification to 
its contract to allow the use of government-owned equipment.  As a 
result of a dispute involving the last option under the predecessor 
contract, ISI filed an appeal at the Armed Services Board of Contract 
Appeals.  ISI also perceived that the Chief had dealt with ISI in bad 
faith.  Since this allegation concerns the administration of ISI's 
predecessor contract, we will not review it.  Bid Protest Regulations, 
4 C.F.R.  sec.  21.5(a) (1998).  ISI also speculates that the Chief's bad 
faith resulted in the restrictive specifications.  However, government 
officials are presumed to act in good faith; we will not attribute 
unfair or prejudicial motives to procurement officials on the basis of 
inference or supposition.  Triton Marine Constr. Corp., B-250856, Feb. 
23, 1993, 93-1 CPD  para.  171 at 6.  In addition to producing credible 
evidence showing bias, the protester must demonstrate that the agency 
bias translated into action that unfairly affected the protester's 
competitive position.  Id.  Here, since the record establishes that 
the specifications represent the actual needs of the agency, there is 
no basis to infer bad faith.