BNUMBER: B-281414
DATE: February 5, 1999
TITLE: BMAR & Associates, Inc., B-281414, February 5, 1999
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Matter of:BMAR & Associates, Inc.
File: B-281414
Date:February 5, 1999
Donald E. Barnhill, Esq., Joan K. Fiorino, Esq., and Valinda J.
Astoria, Esq., Douglas & Barnhill, for the protester.
Maj. David Newsome, Department of the Army; and Denise Benjamin, Esq.,
Small Business Administration, for the agencies.
Christina Sklarew, Esq., and Paul Lieberman, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Allegation by small business contractor performing under an interim
contract that the Small Business Administration (SBA) failed to
properly determine the adverse impact on the protester of accepting a
contract requirement for the same services into the 8(a) program is
denied where the protester merely disagrees with SBA's conclusion and
does not show any violation of applicable regulations.
DECISION
BMAR & Associates, Inc. protests the decision by the Department of the
Army and the Small Business Administration (SBA) to place request for
proposals (RFP) No. DAKF19-98-R-0001 for maintenance and operations
services in SBA's 8(a) business development program. BMAR, a small
business contractor that has been performing these services on an
interim basis since October 1997 through task orders placed under a
previously awarded contract, contends that SBA did not properly
analyze all relevant factors, as required by SBA regulations, in
determining the adverse impact on BMAR from setting the requirement
aside for the 8(a) program.
We deny the protest.
Previously, by letter dated July 29, 1996, the Directorate of
Contracting at Fort Riley, Kansas offered a requirement for
maintenance and operations services for all non-medical electrical and
mechanical equipment at the Fort Riley MEDDAC/ DENTAC facilities and
related energy plant to SBA for award under the 8(a) business
development program. The SBA Wichita District Office determined that,
because the requirement involved a new procurement, it would not be
necessary to perform an adverse impact analysis, and concluded that
the offering was suitable for acceptance under the program.
Accordingly, SBA's Central Office accepted the offering as a
competitive 8(a) procurement on August 15, 1996. On August 26, 1997,
SBA Wichita requested that the solicitation be modified in a manner
that would increase the number of 8(a) firms that would be eligible
under the solicitation's experience requirements and thereby maximize
competition. The Army requested release of the procurement from the
8(a) program based on the agency's concerns about whether the 8(a)
firms that had attended a site visit had sufficient experience to
perform the work successfully. However, after consulting further with
SBA Wichita, the Army withdrew its request for release and agreed that
the solicitation should be amended in the manner proposed by SBA.
Citing significant delays encountered in the process of this
procurement, the Army then decided to cancel the solicitation and
instead to satisfy the requirement on an interim basis by issuing task
orders under an existing Medical Command (MEDCOM) preventive
maintenance contract with BMAR that was being administered through the
Army Corps of Engineers in Mobile, Alabama. The MEDCOM contract is an
indefinite-quantity contract under which task orders are negotiated
and issued as fixed-price task orders for preventive maintenance
services at various locations. It had been awarded to BMAR in May
1996 for a base year with 4 option years. The initial interim task
order for the requirement at issue was placed with BMAR for a period
of 6 months, from October 1, 1997 to March 31, 1998.
On March 3, 1998, the Army cancelled the solicitation for this
requirement, and so advised SBA on March 13.[1] On March 27, the Army
issued another 6-month task order for BMAR to continue providing the
services. Subsequently, the contracting officer reassessed the
requirement and again determined that it should be filled through the
8(a) program.
By letter of April 1, 1998, the Army informed SBA Wichita that it
intended to resolicit the requirement. Since there was now an
incumbent small business contractor, SBA Wichita analyzed whether
conditions were present which would require the presumption of an
adverse impact on that contractor. SBA regulations provide that SBA
will not accept into the 8(a) program a requirement previously met by
a small business if doing so would have an adverse impact on other
small business programs or on an individual small business. 13 C.F.R. sec.
124.309(c) (1998). In this regard, the regulations state that SBA
will consider "all relevant factors" in determining the impact of an
8(a) award. 13 C.F.R. sec. 124.309(c)(1). The regulations further
provide that SBA will presume an adverse impact on small business
concerns and not accept a procurement into the program where (1) a
small business which has performed the requirement for at least 24
months is currently performing the requirement or has finished
performance within 30 days of the procuring agency's offer of the
requirement for the 8(a) program; and (2) the estimated dollar value
of the offered 8(a) award is 25 percent or more of that firm's most
recent annual gross sales. 13 C.F.R. sec. 124.309(c)(2).
Because the incumbent, BMAR, had not been performing the contract for
the minimum time period specified as necessary to give rise to the
presumption, SBA concluded that no adverse impact existed and no
additional impact analysis was necessary. It therefore accepted the
requirement into the 8(a) program on April 8, 1998. BMAR protested
this decision to the agency on May 4, and, after the agency had denied
the protest, filed a protest in our Office on June 12, which we
dismissed as premature.
Apparently as a result of the protest, SBA Wichita decided to perform
a full adverse impact analysis, and, on August 17, it requested
financial and organizational information from BMAR for that purpose;
BMAR delivered the requested information on August 31. SBA analyzed
the data and concluded that there was no likelihood that BMAR would be
forced into bankruptcy if it could not continue to provide the
services under the contract, since the percentage of BMAR's business
that is dedicated to this particular contract is relatively small;
that the employees dedicated to this contract represent only about 8
percent of BMAR's workforce; and that although BMAR had made capital
expenditures for this project, BMAR had not shown that the value of
the assets acquired would be significantly impaired by the loss of the
contract or that the firm's future business capability would be
significantly impaired. SBA determined on this basis on September 10
that acceptance of the requirement into the 8(a) program would not
have a significant adverse impact on BMAR, and that the offering was
therefore suitable for acceptance under the 8(a) program.[2] SBA
Wichita Impact Analysis at 1-2.
On October 21, SBA published a notice in the Commerce Business Daily
of its intent to solicit the requirement as a competitive 8(a)
set-aside. BMAR's protest was filed in our Office on October 29,
alleging that SBA had failed to perform a proper adverse impact
analysis, in violation of SBA regulations.
Because the Small Business Act affords SBA and contracting agencies
broad discretion in selecting procurements for the 8(a) program, our
Office will not question the decision to procure under the 8(a)
program absent a showing of bad faith on the part of government
officials or that specific regulations have been violated. Korean
Maintenance Co., B-243957, Sept. 16, 1991, 91-2 CPD para. 246 at 5.
BMAR primarily contends that SBA violated 13 C.F.R. sec. 124.309(c)(1) by
failing to properly analyze "all relevant factors" prior to
determining that accepting this requirement into the 8(a) program
would not have an adverse impact on BMAR as the incumbent small
business contractor. BMAR complains that SBA's adverse impact
analysis utilized a "mechanical approach . . . which has resulted in a
violation of 13 C.F.R. sec. 124.309(c)(1)," because SBA focused primarily
on the following three factors:
1. Whether the small business incumbent would be forced into
bankruptcy if it could not continue to provide the product or
service called for under the procurement;
2. Whether the performance of the procurement requires a very
large percentage of the incumbents' current employees and the
loss of this contract would cause these dedicated employees to be
terminated; and
3. Whether the incumbent has invested substantial amounts of
capital and equipment solely dedicated to the procurement, and
failure to continue performance on the procurement would
significantly impair the value of such assets.
Protester's Comments at 5.
BMAR refers to our decision in Microform Inc., B-244881.2, July 10,
1992, 92-2 CPD para. 13, where SBA considered these same factors when it
performed an adverse impact analysis, as a result of which we
concluded that SBA's analysis and conclusions were unobjectionable.
Because SBA considered the same factors here, BMAR contends that the
analysis was "mechanical" and failed to consider "all relevant
factors" specific to the situation at hand. Protester's Comments at
4, 5. This argument is without merit. The responsibility for
determining what is and what is not a "relevant factor" under 13
C.F.R. sec. 124.309(c)(1) rests with SBA, not the protester. The
analysis contemplated by this regulation involves an exercise of
discretion on the part of SBA, which must balance various program
requirements for different segments of the small business community.
American Mut. Protective Bureau, B-243329.2, June 16, 1994, 94-1 CPD para.
371 at 6. As in Microform, here SBA examined the factors that it
considered most relevant to the issue of adverse impact, as evidenced
by the extent to which the loss of the contract could be expected to
have an impact on BMAR's viability, based on all of the information
provided by BMAR. The protester has not provided any reason why SBA's
analysis was inadequate, beyond labeling the approach "mechanical" and
disagreeing with SBA's conclusions. In our view, the fact that SBA's
approach here was consistent
with an approach which our Office previously recognized to be
unobjectionable supports, rather than calls into question, the
propriety of the resulting analysis.
In addition, the "other factors that may result in an impact on an
incumbent contractor" to which BMAR refers do not appear relevant to
the requirements under the regulation. For example, BMAR argues that
because "the issuance of the subject solicitation will cause an abrupt
termination to this portion of BMAR's MEDCOM Contract" (i.e., the task
orders covering the Fort Riley requirement), SBA was somehow required
to analyze the effect of accepting the requirement into the 8(a)
program differently. Protester's Comments at 5-6. We find this
argument unconvincing. Each of the task orders that was issued for
this requirement referred to the temporary nature of the agreement and
defined the period of performance. No task order was written for a
period of longer than 12 months.[3] Each task order was complete in
itself, and none of them contained any promise or guarantee of a
continuation of the services after the expiration of the task order.
Letter from the Contracting Officer to the Protester's Attorney at 1
(June 1, 1998). There is nothing in the record to suggest that the
underlying contract under which BMAR is currently performing will be
terminated.[4]
BMAR also cites, as other "relevant factors," an alleged "adverse
impact on the taxpayers and the inordinate cost for procuring
services." Protest at 15. These are clearly not relevant to the
concern with "protect[ing] small business concerns which are
performing Government contracts awarded outside the 8(a) program,"
which the regulation sets forth as the purpose for which the "adverse
impact concept is designed." 13 C.F.R. sec. 124.309(c).
BMAR has raised various other issues in its protest which we find
without merit. For example, BMAR alleges that the Army failed to
conduct a proper evaluation to determine the extent to which the
requirement should be offered in support of the 8(a) program, as
provided for under FAR sec. 19.804-1, or to satisfy the requirement under
FAR sec. 19.805-1 that, in order for an agency to offer the acquisition
to the SBA under the competitive 8(a) program, it must have a
reasonable expectation that at least two eligible and responsible
firms will submit offers and that award can be made at a fair market
price. The contracting officer who evaluated the acquisition each
time it was offered to SBA explains that in her analysis she took into
account: that numerous 8(a) contractors were seeking to perform these
services at Fort Riley; that Fort Riley had a goal of maximizing its
involvement in the 8(a) program; that Fort Riley had success in the
past with 8(a) contractors, including two firms that had expressed
interest in this requirement and had made technical presentations;
that there was no reason to expect that an 8(a) firm would cause any
delay in delivery; and that market research and other sources
identified 29 prospective 8(a) firms. Contracting Officer's
Statement, Nov. 24, 1998, at 1-2. In our view, this analysis
reasonably satisfied the regulatory requirements and BMAR's
disagreement with and objection to the assessment does not show that
the Army acted either in bad faith or in violation of the regulations.
The protest is denied.
Comptroller General
of the United States
1. On March 23, another vendor, Contract Services Inc., filed a
protest in our Office against the cancellation, which was dismissed
for failure to state a valid basis.
2. BMAR argues that SBA's failure to perform a full adverse impact
analysis before it accepted the procurement into the 8(a) program
violated 13 C.F.R. sec. 124.309. While we agree that SBA's initial
conclusion that it did not need to perform a full analysis once it
determined that no presumption of adverse impact existed was
incorrect, we see no merit to this argument in these circumstances.
The agency completed its full analysis on September 10, before the
solicitation was reissued.
3. BMAR's apparent argument that the agency's intention not to place
additional task orders under options that may or may not be exercised
under the MEDCOM contract in the future should be viewed as a
"termination" of a "contract" with BMAR is misplaced. In addition to
the fact that a contractor has no rights in connection with a task
order that has not been issued, options are generally exercisable at
the sole discretion of the government, and a contractor thus has no
legal right to compel the government to exercise an option. Wayne D.
Josephson, B-256243, May 12, 1994, 94-1 CPD para. 307 at 5.
4. To the extent BMAR is anticipating the agency's failure to exercise
an option under its MEDCOM contract, or to place additional task
orders, this issue is not for our review since a contracting agency's
decision whether to exercise an option is a matter of contract
administration outside the scope of our bid protest function.
American Consulting Servs., Inc., B-276149.2, B-276537.2, July 31,
1997, 97-2 CPD para. 37 at 9.