TITLE:  Marketing & Management Information, Inc., B-283399.4, May 18, 2000
BNUMBER:  B-283399.4
DATE:  May 18, 2000
**********************************************************************
Marketing & Management Information, Inc., B-283399.4, May 18, 2000

Decision

Matter of: Marketing & Management Information, Inc.

File: B-283399.4

Date: May 18, 2000

Ira E. Hoffman, Esq., and Brian T. Scher, Esq., Grayson & Kubli, PC, for the
protester.

Jay Manning, Esq., and Rexford T. Bragaw, III, Esq., Defense Commissary
Agency, for the agency.

Susan K. McAuliffe, Esq., and Christine S. Melody, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protest that requirement should have been set aside for exclusive small
business participation is denied where the contracting officer conducted
market research, in response to prior General Accounting Office
recommendation for additional investigation of small business capability and
interest, which supports reasonableness of his conclusion that the agency
could not expect to receive proposals from at least two responsible small
business concerns capable of performing the solicitation requirements at a
fair market price.

DECISION

Marketing & Management Information, Inc. (MMI) protests the decision by the
Defense Commissary Agency (DeCA) to issue request for proposals (RFP)
No. DECA01-99-R-0069, for subscription access to an information retrieval
database, on an unrestricted basis. MMI primarily challenges the adequacy of
market research conducted by DeCA in implementing corrective action
recommended in our decision in Marketing & Management Information, Inc.,
B-283399.2, B-283399.3, Nov. 30, 1999, 99-2 CPD para. 105. That decision
sustained MMI's protest of the agency's initial market research efforts
prior to issuance of the solicitation, which we found to be insufficient to
support the agency's determination to conduct the procurement on an
unrestricted basis. MMI again contends that the procurement should be set
aside for exclusive small business participation.

We deny the protest.

As detailed in our earlier decision, DeCA's grocery commissaries, located
worldwide, are generally equipped with cash register equipment with
front-end scanners that collect data on specific items sold, including
information as to item price and quantity, as well as total revenue from
each sale. DeCA's commissary sales data is available to contractors by
"subscription agreement" involving the purchase of a 3-year license (at an
annual cost of $700,000) for the use of the raw product movement data.
Contracting Officer's Determinations & Findings (D&F), Jan. 28, 2000, at 2.
[1] DeCA seeks access to a contractor's information retrieval database
containing the agency's product movement sales data for commissaries within
the continental United States, as well as comparable sales/movement data
from commercial grocery stores within the same geographical areas, so that
DeCA personnel can manipulate the data to generate their own category
management and product movement reports. Statement of Work at 4.

The RFP, issued July 14, 1999 on an unrestricted basis, contemplated the
award of a fixed-price contract for a base period (of approximately 1 year)
with an 18-month option period. A synopsis of the requirement was posted on
the Commerce Business Daily (CBD) electronic bulletin board (CBD-Net) on
August 11; that synopsis remained posted for public access for 30 days. D&F
at 3. In response to that advertisement, DeCA received eight requests for a
copy of the solicitation; two of those requests were from large businesses
and six were from small businesses, including MMI. [2] Id.

MMI protested the unrestricted nature of the procurement and contended that
the procurement should have been set aside for exclusive small business
participation. We sustained that protest because of the limited nature of
the contracting officer's initial market research, on which the agency
relied to support the determination that there was no reasonable expectation
of receiving two or more offers from responsible small businesses at fair
market prices. That research effort involved only a review of the three
current subscribers of the DeCA commissary data (two large businesses and
MMI). Marketing & Management Information, Inc., supra, at 3-5. We also found
that the contracting officer's determination not to set the procurement
aside was based, in part, on his unsupported assumption that a small
business could not perform profitably under the contract in light of both
the substantial financial outlay required to obtain the necessary data and
the existence of established businesses providing similar services. Id. at
5-6. We recommended that the contracting officer 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 at fair market prices,
and if so, to set aside the requirement for small businesses. Id. at 6-7.

MMI again protests the reasonableness of the contracting officer's
determination, made subsequent to the additional market research he
conducted in implementing our corrective recommendation, that there is no
reasonable expectation of receiving offers from at least two responsible
small businesses at fair market prices. Protest at 7-8. MMI argues that the
additional market research conducted by the contracting officer was
insufficient to support the unrestricted basis of the procurement because
the agency failed to adequately "solicit" small business interest in the
requirement. Protester's Comments at 3-4. We disagree.

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 sect. 19.502-2(b). Generally,
we regard such a determination as a matter of business judgment within the
contracting officer's discretion that 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. 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; our Office will review
a protest to determine whether a contracting officer has made such efforts.
CardioMetrix, B-271012, May 15, 1996, 96-1 CPD para. 227 at 2. A particular
method of assessing the availability of small businesses is not required;
rather, the assessment must be based on sufficient facts so as to establish
its reasonableness. American Imaging Servs., Inc., B-246124.2, Feb. 13,
1992, 92-1 CPD para. 188 at 3.

The contracting officer reports that in implementing our recommendation for
additional market research to assess small business capability and interest
in performing the required services, he utilized computerized databases
maintained by the Small Business Administration (SBA) for identification of
potential small business sources. D&F at 4-5. For example, the contracting
officer conducted a search for small business firms registered with the SBA
under the Standard Industrial Classification (SIC) code applicable to this
procurement--SIC 7375, for information retrieval services. From the numerous
sources identified, the contracting officer randomly selected 25 small
businesses from which to solicit information about the firms' interest in
and capability to perform the required work at fair market prices; the
agency requested information from these firms as to whether they could
perform this type of work. [3] Id. Five firms responded to the contracting
officer's inquiry, which had included a detailed synopsis of the RFP
requirements, but none of them reported an interest in and capability to
perform the work. [4] Id. at 5.

The contracting officer also reports that he contacted the five small
businesses other than MMI that had responded to the CBD-Net advertisement of
the requirement; at the time of the advertisement, each of those firms had
requested and had been forwarded a copy of the solicitation. D&F at 5. The
contracting officer questioned each of those firms as to its interest in the
procurement, and its failure to submit a proposal for award. Three of the
firms indicated that the initial expense to obtain the DeCA and commissary
data would be prohibitive; one firm provided no substantive explanation,
having no recollection of the requirement; and the last firm, which had
submitted an initial proposal in response to the RFP, did not respond to the
contracting officer's requests for an explanation as to why the firm
subsequently withdrew from the competition.

The contracting officer then researched the eight firms that had been
identified by MMI during the earlier protest proceedings as businesses
operating in this industry that have access to, or could obtain, the
requisite data. [5] D&F at 5. The contracting officer reports that five of
the firms were found to be large business concerns, and thus were not
researched further. Id. at 5-6. The contracting officer further reports that
two of the remaining firms were found to specialize in business areas
(marketing and engineering/design) different from the services required
under the current requirement, and thus were not considered potential
sources, and that the last firm listed could not be located due to the
limited identification information provided for the firm. Id.

Through his additional market research efforts, the contracting officer
received confirmation from several small businesses that the substantial
capital outlay necessary for the acquisition of the required data will
constrain small business participation in the procurement; no additional
potential small business sources were identified. Id. at 6-7. Consequently,
the contracting officer reaffirmed his determination that DeCA has no
reasonable expectation of receiving at least two offers from responsible
small businesses at fair market prices. Id.

We have no basis to question either the reasonableness of the additional
market research efforts pursued by the contracting officer or the
reasonableness of his determination not to set the requirement aside.
Although the protester continues to argue that the contracting officer
should have conducted more comprehensive research and more aggressively
encouraged small business interest in the procurement, we believe the record
of his research and the results of that research provide an adequate basis
to support his determination that a set-aside was not warranted here. The
record shows that no small business, other than MMI, has indicated any
continued interest in competing for the requirement. The contracting officer
specifically researched firms identified by MMI as potential sources,
questioned the small businesses that had responded to the CBD notice and
requested a copy of the solicitation but failed to pursue the contract, and
solicited information from 25 small businesses identified by the SBA
database under the applicable SIC code--without receiving one additional
expression of interest or capability to perform the requirement. Although
MMI requests a more exhaustive search to find additional interested small
businesses, such additional effort is not required here, since the
contracting officer otherwise exercised reasonable efforts to investigate
small business interest and capability to perform the agency's advertised
data retrieval requirements. See Information Ventures, Inc., B-279924, Aug.
7, 1998, 98-2 CPD para. 37 at 3-5; Ruchman and Assocs., Inc., B-275956, Apr. 23,
1997, 97-1 CPD para. 147 at 2-3 (market research reasonably supported
unrestricted basis of procurement where research included questioning an
identified potential source and firms that had requested solicitation, but
such research failed to locate any additional capable small business for
first-time, sizeable procurement); cf. ACCU-Lab Med. Testing, B-270259, Feb.
20, 1996, 96-1 CPD para. 106 at 3-4 (where an agency's failure to investigate
capability of small businesses that had previously requested solicitation
and failure to consult SBA's source databases was held to be unreasonable).
As discussed above, that effort failed to identify any additional potential
small business offeror or provide any basis for a reasonable expectation
that at least two offers would be received from responsible small businesses
at fair market prices. Accordingly, the decision not to set the procurement
aside was proper.

The protest is denied.

Comptroller General
of the United States

Notes

1. Under the subscription agreement, subscribers may place DeCA's commissary
data in their firms' databases for use in the production of reports for
manufacturers and suppliers of resale products which, for example, track
product movement, demand and prices; the subscriber, however, may not sell
or release the actual data. Subscription Agreement para.para. 5, 6.

2. As noted in our prior decision, DeCA did not research the interest or
capability of these small businesses as potential offerors under the RFP
when their requests for copies of the RFP were received by the agency. As
discussed further in this decision, however, DeCA subsequently contacted
those firms as part of additional market research efforts undertaken in
response to our corrective recommendation in that decision.

3. MMI questions the contracting officer's solicitation of only 25 firms and
suggests that the search criteria (i.e., to target small businesses
providing services under SIC 7375) were too broad, since they did not focus
on only those firms currently equipped with the electronic data interchange
(EDI) capability required under the RFP. The protester, however, has not
identified any legal requirement supporting its contention that the market
research must be focused only on those firms currently capable of meeting
all of a solicitation's requirements; rather, the purpose of the search was
to assess the interest and capability of small businesses to provide this
type of information retrieval service. Since EDI capability may be obtained
by a firm interested in acquiring it, we believe that limiting the search as
the protester suggests could have unnecessarily limited the scope of the
search of potential sources by excluding those interested in obtaining the
EDI capability to perform the requirement.

4. MMI speculates that the wording of the contracting officer's synopsis to
these small businesses was misleading. First, MMI points out that the
synopsis identified a need for additional market research in a procurement
under which some proposals had already been received, which MMI contends may
have stifled the firms' interest. Protester's Comments at 8-9. To the
contrary, we think the synopsis reasonably describes the agency's interest
in conducting additional research to identify additional potential
competitors for its current RFP and future procurements. Market Research
Synopsis at 1. Second, MMI contends that the synopsis was misleading because
it provided information to potential offerors about the required annual
subscription fee for DeCA data without emphasizing that the offeror need not
have the subscription in place at the time of proposal submission. Again, we
do not agree with MMI's assessment of the synopsis information--the synopsis
provides information about the availability of the commissary data by
subscription agreement, but it does not convey that the subscription fee
must be paid in order to submit a proposal. Id. at 2.

5. In our prior decision, we noted that DeCA had not specifically challenged
the capability of these firms.