TITLE:  Stewart Title Company of Illinois, B-283291, October 18, 1999
BNUMBER:  B-283291
DATE:  October 18, 1999
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Stewart Title Company of Illinois, B-283291, October 18, 1999

Decision

Matter of: Stewart Title Company of Illinois

File: B-283291

Date: October 18, 1999

Serge E. Gaudry, Government Compliance Consultants, Inc., for the protester.

Peter Alexander, Esq., an intervenor.

Jud E. McNatt, Esq., Department of Housing & Urban Development, for the
agency.

Scott H. Riback, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protest that agency improperly set acquisition aside for exclusive small
business participation is denied, where record shows that agency had a
reasonable basis to anticipate that it would receive offers from at least
two responsible small business concerns, and that award would be made at
fair market prices.

DECISION

Stewart Title Company of Illinois protests the terms of request for
proposals (RFP) No. R-ATL-00976, issued by the Department of Housing and
Urban Development (HUD) for real estate closing services in and around the
Chicago, Illinois area. Stewart maintains that the agency improperly issued
the solicitation as a 100-percent small business set-aside.

We deny the protest.

The solicitation calls for real estate closing services in three regions,
the Chicago area (region I), the surrounding counties (region II), and
central Illinois (region III). RFP at 4. Stewart's protest focuses on
regions I and II, where Stewart has been the incumbent contractor. HUD
synopsized the acquisition, identifying it as a set-aside, in the Commerce
Business Daily (CBD) on May 5, 1999, issued the solicitation on June 21, and
ultimately established a deadline for submitting offers of July 29. [1]

Stewart maintains that the agency previously acquired these services on an
unrestricted basis and that it did not perform adequate market research
before issuing the current RFP as a small business set-aside. According to
Stewart, the record shows that, prior to Stewart's raising the matter with
the agency before the deadline for submitting proposals, the agency had not
properly researched the propriety of setting aside the requirement.

Federal Acquisition Regulation (FAR) sect. 19.502-2(b) provides that an agency
shall set-aside an acquisition over $100,000 for exclusive small business
participation where it has a reasonable expectation that offers will be
obtained from at least two responsible small business concerns, and that
award will be made at fair market prices. The agency may look to the
procurement history of the same or similar items or services as one factor
in deciding whether there exists such a reasonable expectation. Id. Since
the decision to set aside a particular acquisition is essentially a business
judgment largely committed to the discretion of the contracting officer, our
Office will not object to an agency's set-aside decision unless the record
shows that the decision was a clear abuse of the contracting officer's
discretion. American Med. Response of Conn., Inc., B-278457, Jan. 30, 1998,
98-1 CPD para. 44 at 2-3.

The record shows that the contracting officer initially decided to set aside
the procurement based on his extensive knowledge of procurements for the
same services in the southeastern United States, which had been conducted as
small business set-asides. [2] A review of those procurements showed that 76
percent (35 of 46) of the real estate closing services contracts had been
awarded to small businesses under set-asides. Letter from Chief of Atlanta
Contracting Operations to GAO 2 (Aug. 30, 1999). The contracting officer
concluded that there was no reason why the Chicago area services would not
also be suitable for a set-aside. Contracting Officer's Statement at 2.
Subsequent to deciding that the acquisition could be set aside, the
contracting officer received 10 requests for copies of the RFP in response
to the CBD announcement which--because the announcement indicated that the
procurement was being set aside--he presumed were from small businesses.
Contracting Officer Statement at 3. The contracting officer viewed these
requests as confirming that there was sufficient small business interest
that he could reasonably expect to obtain at least two offers from eligible
concerns.

Thereafter, following a request by Stewart, the contracting officer sought
more specific information from the Chicago office that previously had
conducted the procurement for these services, specifically asking why the
services previously had been acquired on an unrestricted basis. E-mail
Memorandum from the Atlanta Regional Office to the Chicago Regional Office,
July 12, 1999. In response, the Chicago office advised the contracting
officer that there was no clear indication in their files regarding why the
prior procurements had been conducted on an unrestricted basis. E-mail
Memorandum from the Chicago Regional Office to the Atlanta Regional Office,
July 13, 1999. They further advised, however, that (1) during the prior
acquisition cycle for region I, 12 offers had been submitted, 7 of which
were from small businesses (2 of which were technically acceptable); and (2)
for region II, 10 offers had been submitted, 6 of which were from small
businesses (2 of which were technically acceptable). Id. (In region III, not
in issue here, four offers had been submitted, two from small business
concerns.) Id. Again, the contracting officer viewed this information as
further support for his set-aside decision. Contracting Officer's Statement
at 4.

The set-aside determination was proper. Because the acquisition here was of
the same size and type as the successful set-asides in the southeast, and
there was no apparent reason to expect a different outcome merely due to
geography, we think the contracting officer reasonably relied on his prior
experience in initially deciding to set this procurement aside. Moreover,
the contracting officer's further investigation--in response to the
protester's inquiry--bore out his conclusion, showing that, within the
Chicago and surrounding regions, there had been sufficient small business
competition to justify the conclusion that at least two viable small
business offers could be anticipated. Finally the record shows that, during
the pendency of the protest, the agency received offers in response to the
RFP and obtained at least two technically acceptable offers for regions I
and II, and that the prices offered were within the range of what could
reasonably be considered a fair market price. [3]

While the contracting officer obviously did not rely on this information in
initially deciding to set the acquisition aside, it nonetheless supports the
agency's decision. York Int'l Corp., B-244748, Sept. 30, 1991, 91-2 CPD para.
282 at 7.

The protest is denied.

Comptroller General
of the United States

Notes

1. Much of Stewart's argument in its protest rests on its incorrect
assertion that the CBD announcement did not identify the acquisition as a
set-aside. Although, as the protester points out, the CBD announcement
stated that "[a]ll responsible sources may submit a proposal," it
specifically references Standard Note No. 1, which provides "[t]he proposed
contract is 100 [percent] set aside for small business concerns." (The
Standard Notes are printed every Monday in the CBD. See, e.g., CBD, Sept.
13, 1999, at 48.)

2. The solicitation here was issued by HUD's Atlanta regional office,
whereas the services previously had been procured through a Chicago office.

3. We do not discuss the details of the offers received because the
information is source selection sensitive and our Office did not issue a
protective order in this case because the protester is not represented by
counsel. We do point out that at least one of the offers in each region is
below the government estimate for the services.