BNUMBER:  B-280044.2 
DATE:  September 21, 1998
TITLE: HAP Construction, Inc., B-280044.2, September 21, 1998
**********************************************************************

Matter of:HAP Construction, Inc.

File:     B-280044.2

Date:September 21, 1998

Johnathan M. Bailey, Esq., Law Offices of Theodore M. Bailey, for the 
protester.
Lloyd D. Pike, Esq., Department of the Army, for the agency.
Robert C. Arsenoff, Esq., and Paul I. Lieberman, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protest that solicitation terms do not adequately implement statutory 
requirement to provide preference for local firms, to the extent 
feasible and practicable, when awarding disaster relief contracts is 
denied where solicitation does provide for evaluation credit to local 
firms and the agency process for determining how to provide an 
appropriate preference is consistent with the statute and implementing 
regulations and is not otherwise objectionable.

DECISION

HAP Construction, Inc. protests the terms of request for proposals 
(RFP) No. DACW17-98-R-0008, issued by the Department of the Army, 
Corps of Engineers, for removing, reducing the volume of, and 
disposing of debris generated by storms or other natural disasters in 
the U.S. Virgin Islands (USVI) and Puerto Rico.  HAP contends that the 
RFP fails to conform to the requirements of the Robert T. Stafford 
Disaster Relief and Emergency Assistance Act, 42 U.S.C.  sec.  5150 (1994) 
(Stafford Act), which calls for a preference for local businesses in 
awarding certain disaster relief contracts, to the extent feasible and 
practicable.

We deny the protest.

The RFP, issued on March 31, 1998, contemplated the award of two 
indefinite-delivery, indefinite-quantity contracts for debris removal 
and related services, one of which will cover services in Puerto Rico, 
the other of which will cover the USVI.  Award is to be made on the 
basis of a best value assessment of technical factors and price which 
are to be considered equal in weight.  RFP  sec.  M.2.   The technical 
factors, listed in descending order of importance are:

     (1) Management Plan
     (2) Past Performance
     (3) Extent of subcontracting with small and small disadvantaged
          businesses
     (4) Location of the offeror's primary place of business

RFP  sec.  M.3B.

Section M.3B(3)(b) of the RFP specifically states that the contracts 
will be subject to the Stafford Act, which provides that:

     In the expenditure of Federal funds for debris clearance, 
     distribution of supplies, reconstruction, and other major 
     disaster or emergency assistance activities which may be carried 
     out by contract or agreement with private organizations, firms, 
     or individuals, preference shall be given, to the extent feasible 
     and practicable, to those organizations, firms, and individuals 
     residing or doing business primarily in the area affected by such 
     major disaster or emergency.  This section shall not be 
     considered to restrict the use of Department of Defense resources 
     in the provision of major disaster assistance under this chapter.

42 U.S.C.  sec.  5150.

Under factor 3, offerors are required to submit a subcontracting plan 
which "must include provisions for awarding subcontracts to firms that 
primarily do business in the disaster area," RFP  sec.  M.3B(3)(b), and the 
RFP further provides that the plans would be evaluated, inter alia, to 
determine the "extent of subcontracting with firms primarily doing 
business in the disaster area."  RFP  sec.  M.3D(3).

Under factor 4, offerors are required to provide the "street address 
of [their] primary place of business," RFP  sec.  M.3B(4), and the RFP 
further provides that those offerors "whose primary place of business 
is outside the serviced area (either Puerto Rico or the Virgin 
Islands) should provide a synopsis of the total amount of business 
they have done in the serviced area in the last 3 years."  Id.  
Additionally, the RFP provides:

     The offeror will be awarded the maximum points if its primary 
     place of business is located in the area where services will be 
     provided; i.e., for services to be performed in Puerto Rico, 
     maximum points will be awarded to Puerto Rican firms; and for 
     services to be performed in the Virgin Islands, maximum points 
     will be awarded to Virgin Islands firms.  Offerors whose primary 
     place of business is outside the serviced area will be awarded 
     points based on the amount of business they have done in the 
     serviced area in the last 3 years.

RFP  sec.  M.3D(4).

Proposals were received on June 12 and are being held, unopened, 
pending our resolution of the protest in which HAP basically asserts 
that the "preference" accorded local firms by the RFP falls short of 
what the Stafford Act, as implemented by Federal Acquisition 
Regulation (FAR)  sec.  6.302-5, requires.

FAR  sec.  6.302-5 states in pertinent part:

     Full and open competition need not be provided for when . . .
     [a] statute authorizes or requires that the acquisition be made
     through another agency or from a specified source.

               .    .    .    .    .

     This authority may be used when statutes, such as the following,
     expressly authorize or require that acquisition be made from
     a specified source or through another agency:

        (1) Federal Prison Industries (UNICOR)--18 U.S.C. 4124
     (see Subpart 8.6).
        (2) Qualified Nonprofit Agencies for the Blind or other
     Severely Handicapped--41 U.S.C. 46-48c (see Subpart 8.7).
        (3) Government Printing and Binding--44 U.S.C. 501-504,
     1121 (see Subpart 8.8).
        (4) Sole source awards under the 8(a) Program[--]15 U.S.C.
     637 (see Subpart 19.8).
        (5) The Robert T. Stafford Disaster Relief and Emergency
     Assistance Act--42 U.S.C. 5150 (see Subpart 26.2).

FAR Subpart 26.2 basically reflects the provision of the Stafford Act 
quoted above and limits the application of the preference to 
acquisitions that are conducted during the term of a major disaster or 
emergency declaration made by the President under the authority of the 
Stafford Act.
           
PROTEST, RESPONSE AND ANALYSIS

In its final comments, HAP summarizes its grounds of protest as 
follows:

     [T]he plain language of the Stafford Act and its inclusion in 
     FAR 6.302-5(b) as a member of a select group of statutory 
programs 
     for which the requirement of full and open competition has been 
     waived, demonstrate that contracts for disaster relief services, 
such 
     as the instant one, must be awarded to local contractors, where 
it is    feasible to do so. The proper implementation of this 
requirement
     should consist of either a set aside for local competition, or an 
     evaluation scheme [where locality is on a virtual par with price] 
     which will produce award to a local contractor, unless all bids
     from local contractors are so highly priced as to not be feasible
     for award.

Protester's August 4, 1998 Comments at 3-4. 

The agency maintains that the plain language of the Stafford Act gives 
considerable discretion to the contracting officer in deciding how to 
structure a preference for local firms.  Further, the agency submits 
that based on recent procurement histories
for disaster relief services in Puerto Rico and the USVI, there is no 
basis for concluding that there will be competition among local firms 
which will assure reasonable prices; from this, the agency asserts 
that, for this procurement, a set-aside of the type sought by HAP is 
not "feasible" within the meaning of the Stafford Act.  As for the 
inclusion of the reference to the Stafford Act in FAR  sec.  6.302-5, the 
agency argues that, since each of the other statutes listed in that 
section involve discretion on the part of contracting officers and 
since the language of the section itself is permissive, the regulatory 
provision does not automatically compel the absolute preference 
asserted by HAP.  Finally, the agency maintains that an appropriate 
local firm preference is accorded in the RFP by virtue of technical 
factor 3--for subcontracting with local firms--and factor 4--for being 
located in or doing business in Puerto Rico or the USVI.  

The following analysis considers the three principal issue areas 
addressed by the parties:  (1) the language of the Stafford Act 
itself; (2) the effect of the reference to the Stafford Act in FAR  sec.  
6.302-5; and (3) the reasonableness of the agency's specific manner of 
according a preference for local firms in the RFP.

Our Office will not question an agency's implementation of statutory 
procurement requirements unless the record shows that the 
implementation was unreasonable or inconsistent with congressional 
intent.  See Harris Corp. Broadcast Div.,
B-255302, Feb. 10, 1994, 94-1 CPD  para.  107 at 6.  Where a statute 
requires that a preference be given to a class of potential 
contractors, but does not specify a particular evaluation formula, 
agency acquisition officials have broad discretion in selecting 
evaluation factors that should apply to an acquisition to effectuate 
the statutory mandate, and the relative importance of those factors.  
U.S. Defense Sys., Inc., B-251544 et al., Mar. 30, 1993, 93-1 CPD  para.  
279 at 4-5.  Further, the determination of the agency's needs and the 
best methods of accommodating them are primarily within the agency's 
discretion and, therefore, we will not question such a determination 
unless the record clearly shows that it was without a reasonable 
basis.  Id. at 5.

Notwithstanding the language that "preference shall be given" to local 
firms, both parties recognize that the Stafford Act limits this 
statement with the phrase "to the extent feasible and practicable."  
Neither the language of the statute nor, as the parties agree and our 
research confirms, the legislative history of the Stafford Act, 
defines the terms "preference," "feasible," and "practicable."

HAP cites a definition of "feasible" in Black's Law Dictionary 609 
(6th ed. 1990)--"[c]apable of being done"--in support of its argument 
to the effect that the plain statutory language of the Stafford Act 
requires that local firms be preferred whenever it is possible to do 
so.  From this premise, HAP concludes that this procurement must, in 
effect, be set aside for local firms because it is possible to do so.

This argument ignores the second definition of the term in Black's 
indicating that for a course of action to be "feasible" it must 
present a "[r]easonable assurance of success."  Id.  Further, the 
protester fails to consider the other limiting term in the Stafford 
Act--"practicable"--which clearly indicates more than simply being 
possible.  Whether a course of action is "practicable" or not involves 
a value judgment as to its likely cost and benefit.  See GMI, Inc., 
B-239064, July 3, 1990, 90-2 CPD  para.  8 at 3 (excessively expensive 
corrective action is not practicable).  In our view, the agency's 
conclusion that limiting competition to local firms was not feasible 
because the procurement history did not provide a basis for concluding 
that there would be adequate competition which would ensure reasonable 
prices is consistent with an appropriate definition of both the terms 
"feasible" and "practicable."

Our Office gives deference to the interpretation given a statutory 
provision by an agency charged with the administration of a 
statute[1], see Israel Aircraft Indus.,
Ltd.--Recon., B-258229.2, July 26, 1995, 95-2 CPD  para.  46 at 5, and we 
have no basis for questioning the broader definition of "feasible" 
inherent in the agency's position in this case.  Likewise, the 
language of the Stafford Act does not itself provide any basis to 
question the agency's interpretation of the undefined term 
"preference." The record simply does not show that the agency's 
interpretations are unreasonable or inconsistent with congressional 
intent.  

HAP also argues that inclusion of Stafford Act coverage in FAR  sec.  
6.302-5--exceptions to full and open competition when authorized or 
required by statute--places it within a select group of procurements 
that are limited to specified sources and thus calls for award to 
local firms regardless of competition considerations or restraints.  
HAP contends that the agency has not met the requirements of the FAR 
on this basis because of its failure to limit the competition to local 
firms in this case.  Protester's July 21, 1998 Comments at 2.

The language of the regulation is not, as HAP suggests, mandatory.  
FAR  sec.  6.302-5 (a)(2) states that "[f]ull and open competition need not 
be provided for when . . . [a] statute expressly authorizes or 
requires that the acquisition be made . . . from a specified source."  
(Emphasis supplied.)  FAR  sec.  6.302-5 (b) contains an illustrative list 
of statutes which authorize less than full and open competition; prior 
to the list itself, the section begins by stating that the regulatory 
authority "may be used" when one of the listed statutes (or other, 
non-listed statutes) applies.  (Emphasis supplied.)  Thus, the plain 
terms of the FAR section at issue make clear the agency was not 
required to limit competition in the manner suggested by HAP if it 
properly concluded that it was not feasible to do so.  In short, the 
statute, as implemented by the regulation provides that an agency may, 
but does not have to, conduct a set-aside for local firms when 
procuring disaster relief services.

In this instance, the agency determined that it would not get adequate 
competition to ensure reasonable prices if it used a local firm 
set-aside.  July 8, 1998 Cover Letter to Agency Report at 8.  In our 
view, this is an appropriate standard to use because, in order to 
limit full and open competition under the Stafford Act,
FAR  sec.  6.302-5(c)(2) requires a contracting agency to support its 
actions by a written justification and approval including a 
determination that limited competition will still result in fair and 
reasonable prices.  FAR  sec.  6.303-2(a)(7). 

HAP also challenges whether the agency's procurement history supports 
its conclusions regarding the likely result of limiting competition to 
local firms.  HAP's position is primarily supported by agency disaster 
relief competitions conducted in 1995; however, since then the more 
relevant recent procurement history supports the agency's position.  
For example, for three procurements conducted in 1996 for work in 
Puerto Rico, local competition consisted of one firm for each 
acquisition at prices which exceeded the lowest non-local prices by 
anywhere from 97 percent to 256 percent. Contracting Officer's July 8, 
1998 Statement at 3.  While HAP did receive a $1,052,199.50 contract 
in 1996 with local and non-local competition, that contract is now the 
subject of investigations concerning a request for equitable 
adjustment exceeding $7,000,000.  Id. at 5.  Further, in 1997, for an 
RFP similar to this one,  HAP competed as a USVI firm and was not low 
for work in its area or in Puerto Rico.  Finally, the agency reports 
that under the present RFP, six offers were received but only one was 
from Puerto Rico and one from the USVI.  On this record, we have no 
basis to challenge the agency's determination that a set-aside would 
be inappropriate.   

Although the procurement was not set aside, the agency did provide for 
an evaluation preference to be given to local firms.  As indicated 
above, offerors were to be given evaluation credit under two 
evaluation factors, for proposing to subcontract with local firms and 
for being local themselves.  Since it does not appear that utilization 
of local contractors is otherwise related to any need of the agency, 
these preferences reflect, in effect, a form of limitation on full and 
open competition and thus appropriately implement FAR  sec.  6.302-5. 

Noting that factors 3 and 4 were the least significant technical 
factors and that price was equal with the entire technical evaluation, 
HAP argues that no meaningful preference under the Stafford Act is 
accorded by the present evaluation scheme.
The statute does not specify the extent of the preference to be 
accorded to local firms.  Accordingly, we must give deference to the 
agency's interpretation of the degree to which a preference should be 
accorded.  Israel Aircraft Indus.,
Ltd.--Recon., supra, at 5.  There is no showing that the RFP 
preference implementation is inconsistent with congressional intent, 
Harris Corp. Broadcasting Div., supra, at 6, and beyond HAP's mere 
disagreement, there is no showing that the agency's actions in 
developing the RFP as it did were unreasonable.  See U.S. Defense 
Sys., Inc., supra, at 5.  Accordingly, we have no basis to object to 
the terms of the solicitation providing a preference which benefits 
local contractors and subcontractors.

The protest is denied.

Comptroller General
of the United States

1. The Corps of Engineers is such an agency with respect to the 
Stafford Act.  See FAR Case 93-303 (regulatory history of the Stafford 
Act coverage in FAR  sec.  6.302-5) (1993-96) at 12.