BNUMBER:  B-280851             
DATE:  October 29, 1998
TITLE: Safety Storage, Inc., B-280851, October 29, 1998
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Matter of:Safety Storage, Inc.

File:B-280851            
        
Date:October 29, 1998

Sam Z. Gdanski, Esq., and Jeffrey I. Gdanski, Esq., for the protester. 
John P. Patkus, Esq., Defense Logistics Agency, for the agency.
Aldo A. Benejam, Esq., and Christine S. Melody, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protest challenging agency decision not to set aside procurement for 
small business concerns is sustained where decision was based on 
insufficient efforts to ascertain small business capability to perform 
the contract.

DECISION

Safety Storage, Inc. (SSI) protests the decision of the Defense 
Industrial Supply Center (DISC) to issue request for proposals (RFP) 
No. SPO-500-98-R-0999 for mobile reuse centers (MRC) for shore and 
land-based operations for the control and storage of hazardous 
materials, on an unrestricted basis.  SSI, a small business, argues 
that the requirement should be set aside for small business concerns.

We sustain the protest.

Background

The RFP contemplates the award of an indefinite-quantity, 
indefinite-delivery requirements contract for a 1-year base period 
with up to four 1-year option periods.  RFP at 105.  The total 
estimated value of the procurement is $499,999 for a maximum of 125 
MRCs over the life of the contract.  Agency Report (AR) at 1, and RFP 
clause No. I67.  The Defense Supply Center, Columbus, Ohio (DSC-OH), 
initially synopsized the solicitation in the Commerce Business Daily 
(CBD) on September 3, 1997, as an unrestricted procurement.  
Subsequently, in a November 5 CBD notice, the agency announced that 
the solicitation was canceled and that a new solicitation would be 
issued by DISC, Philadelphia, Pennsylvania (DISC-PA).  DISC-PA 
synopsized the procurement in the CBD on January 23, 1998, and issued 
the RFP on April 17, on an unrestricted basis.   

In a letter to DISC-PA dated May 23, SSI pointed out that the required 
MRC units are comparable to items that both itself and another small 
business had manufactured in the past, and requested that the RFP be 
set aside for small businesses.  DISC-PA responded that:

     As stated at the pre-proposal conference, the MRC has never been 
     purchased by DISC before.  At this point in time, it has not been 
     determined that 2 small businesses can manufacture this item. 
     This MRC has never been purchased with the specifications that 
     are required for this item in this solicitation.  Solicitation 
     will continue to be an unrestricted solicitation.

DISC-PA's May 27 response to SSI.  SSI subsequently filed this protest 
in our Office.

The protester maintains that the contracting officer should have 
expected offers from at least two small business concerns.  In this 
regard, SSI states that the required MRCs are not unique and are 
almost identical to MRCs procured under previous solicitations and 
manufactured by three different small businesses, including SSI.  The 
protester asserts that the MRCs previously manufactured by these 
companies were of equivalent tube steel frame construction; enclosed 
with heavy gauge sheet metal; and that, except for one "minor cosmetic 
difference," the MRC design shown in an appendix to the RFP is almost 
identical to the units previously supplied to the government.  
Protest, August 21, 1998, at 2.  SSI also points out that more than 
two small business concerns are on the bidders' mailing list prepared 
for this solicitation.

The agency responds that this is the first time DISC-PA has purchased 
this MRC, and that the MRC is a very complex and "military-unique" 
item.  AR at 4.  According to the agency, among the complexities are 
the need to "meet a habitability requirement including a wide range of 
operating environments . . . which are beyond typical commercial 
applications," and "the need to 'withstand 100% shock loads and retain 
[the] integrity of the sump and provide no missile hazard to 
surrounding personnel or equipment.'"  Id. at 4-5.

In addition, the agency disagrees with the protester's assertion that 
there are only "cosmetic differences" between the MRC solicited here 
and units that were manufactured in the past by small businesses.  The 
agency points out, for instance, that the MRCs required here include 
thicker tubular components; an indentation at one end that allows the 
item to be certified for safe containers; and the addition of 
"[s]ignificant material and structure . . . to provide 'egg-crating' 
in the sump area to limit sloshing due to US Navy defined ship motion. 
. . ."  Id. at 5.  In sum, the agency concludes that primarily based 
on the complexity of the required MRC and the fact that this is a 
first-time buy for DISC-PA, the contracting officer properly 
determined not to set aside the procurement for small businesses.

Discussion

Contracting officers generally are required to set aside for small 
business all procurements exceeding $100,000 if there is a reasonable 
expectation of receiving fair market price offers from at least two 
responsible small business concerns.  Federal Acquisition Regulation 
(FAR)  sec.  19.502-2(b).  Generally, we regard such a determination as a 
matter of business judgment within the contracting officer's 
discretion which we will not disturb absent a showing that it was 
unreasonable.  Neal R. Gross & Co., Inc., B-240924.2, Jan. 17, 1991, 
91-1 CPD  para.  53 at 2.  However, a contracting officer must make 
reasonable efforts to ascertain whether it is likely that offers will 
be received from at least two small businesses capable of performing 
the work.  Mortara Instrument, Inc., B-272461, Oct. 18, 1996, 96-2 CPD  para.  
212 at 3.  Our Office will review a protest to determine whether a 
contracting officer has made such efforts.  Library Sys. & 
Servs./Internet Sys., Inc., B-244432, Oct. 16, 1991, 91-2 CPD  para.  337 at 
7.

In our view, the record does not show that the contracting officer 
reasonably investigated whether the procurement could be set aside for 
exclusive small business participation.  While the use of any 
particular method of assessing the availability of small businesses is 
not required, and measures such as prior procurement history, market 
surveys and/or advice from the agency's small business specialist and 
technical personnel may all constitute adequate grounds for a 
contracting officer's decision not to set aside a procurement, 
American Imaging Servs., Inc., B-246124.2, Feb. 13, 1992, 92-1 CPD  para.  
188 at 3, the assessment must be based on sufficient facts so as to 
establish its reasonableness.  McSwain & Assocs., Inc.; Shel-Ken 
Properties, Inc.; and Elaine Dunn Realty, B-271071 et al., May 20, 
1996, 96-1 CPD  para.  255 at 3.  Based upon the facts underlying the 
determination as they were provided to our Office, we conclude that 
the contracting officer's determination not to set aside the 
procurement was based on incomplete information, unsupported 
assertions regarding the complexity of the required MRCs, and 
insufficient efforts to ascertain small business capability to perform 
the contract.

According to the agency, 22 firms, most of them small businesses, 
responded to the initial September 3, 1997 CBD announcement issued by 
DSC-OH and 3 small business firms, including SSI, responded to the CBD 
announcement issued by 
DISC-PA.  Agency's Sept. 23, 1998 response to questions for the record 
at 1.  In this connection, the protester states, and the agency report 
confirms, that the announcement published by DISC-PA appeared as a 
"Special Notice"[1] in the CBD, which, according to SSI, is not where 
notice of this type of procurement would be expected to appear.  This 
might explain why the agency received 22 responses when the notice 
appeared where expected in the CBD, and only 3 responses when DISC-PA 
issued its CBD announcement.  In any case, it is clear that by the 
time DISC-PA issued the RFP, the agency had received expressions of 
interest in competing from at least three small businesses, including 
the protester.  However, there is no evidence in the record that the 
contracting officer surveyed any of these firms to assess their 
capability to perform the contract.

The agency also asserts that based on a meeting with a consulting firm 
regarding the technical aspects of the MRC solicitation, after 
discussing the complexity of the unit and the problems encountered 
with a previous Navy contract, and based on his review of the 
specifications for this RFP, "the contracting officer could not make a 
positive determination as to the existence of two or more small 
businesses capable of complying with the new specifications and all 
the new tests required . . . " under the RFP.  Agency's Sept. 23, 1998 
response to questions for the record at 2.

The agency's general assertion that the MRCs and the tests required 
are too complex to be successfully accomplished by a small business 
simply states a conclusion that is not supported by any facts provided 
to our Office.  While the technical complexity of a required item and 
the fact that it is a first-time buy may be factors an agency may 
properly consider in determining whether to set aside a procurement 
for small business participation, Mortara Instrument, Inc., supra, 
there is no evidence in the record that the MRC or tests required here 
are beyond the capability of small business firms.  As for the 
agency's reference to asserted problems with a previous Navy contract, 
the agency does not explain the nature of those problems and concedes 
that the Navy contract involved different specifications.  Agency's 
Sept. 23, 1998 response to questions for the record at 2.  In any 
case, the agency has provided no evidence that the asserted problems 
encountered in the Navy contract were related to technical 
complexities of the required units.[2]

Further, as already explained, there is no evidence in the record that 
the agency made any attempt to contact any of the small businesses 
that had responded to the initial DSC-OH CBD announcement, or surveyed 
the three small business firms that responded to the subsequent 
DISC-PA CBD announcement.  In addition, there is no evidence in the 
record that the agency made any attempt to coordinate its 
determination with the Small Business Administration or with the 
agency's Small Business Utilization Specialist.  See FAR  sec.  19.401, 
19.501(c).  In short, we conclude that there is no evidence in the 
record that the agency made any reasonable effort to adequately survey 
the market place in order to determine whether there are any small 
businesses capable of performing the contract.  

Conclusion and Recommendation

We conclude that the contracting officer's determination that there 
was no likelihood of receiving offers from at least two responsible 
small businesses was not reasonable, and we sustain the protest on 
this basis.  We recommend that the contracting officer conduct a 
proper market survey to adequately investigate the potential small 
business capability and interest in the procurement and determine 
whether there is a reasonable expectation that offers will be obtained 
from two responsible small business concerns and that award can be 
made at a fair market price.  Although the agency recently has 
received offers under the RFP, unless the contracting officer now 
determines, after conducting a proper market survey, that there is not 
a reasonable expectation of receiving offers from at least two 
responsible small businesses at a fair market price, the contracting 
officer should cancel the RFP and re-issue it as a set-aside for small 
businesses.  SSI is also entitled to its costs of filing and pursuing 
the protest.  Bid Protest Regulations,      4 C.F.R.  sec.  21.8(d)(1) 
(1998).  The protester should submit its certified claim for such 
costs, detailing the time expended and costs incurred, directly to the 
contracting agency within 60 days of receiving this decision.  4 
C.F.R.  sec.  21.8(f)(1).

The protest is sustained.

Comptroller General
of the United States

1. FAR  sec.  5.205(c), regarding special notices, states in relevant part:

            Contracting officers may publish in the CBD special 
            notices of procurement matters such as business fairs, 
            long-range procurement estimates, pre-bid/pre-proposal 
            conferences, meetings, and the availability of draft 
            solicitations or draft specifications for review.

Clearly, special notices are not intended to replace the requirement 
that contracting officers synopsize contract actions pursuant to FAR  sec.  
5.201.

2. In a submission to our Office by Shields Environmental, one of the 
small businesses identified by SSI as having produced the MRCs in the 
past, Shields states that under a Navy contract (N00600-94-C-2792), 
the firm experienced difficulty in meeting its obligations due to the 
quantities of MRCs ordered.  Specifically, Shields states that "[t]he 
volume of production was well beyond the capacity of our financial and 
facility resources."  Letter from Shields Environmental at 1 
(Sept. 4, 1998).   Nothing in Shields's letter suggests, however, and 
the agency has presented no evidence, that the difficulties the firm 
encountered in performing that contract were related to the technical 
complexities of the required units.  Further, the agency's rationale 
for not setting aside the procurement did not indicate that financial 
or facility issues were its concern.