TITLE:  SAB Company, B-283883, January 20, 2000
BNUMBER:  B-283883
DATE:  January 20, 2000
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SAB Company, B-283883, January 20, 2000

Decision

Matter of: SAB Company

File: B-283883

Date: January 20, 2000

Mitchell W. Quick, Esq., Michael Best & Friedrich, for the protester.

Damon Martin, Esq. and Vickie E. O'Keefe, Esq., Naval Facilities Engineering
Command, for the agency.

Marie Penny Ahearn, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protest against agency's determination to set aside procurement for
exclusive small business competition is denied where procurement history
provided basis for reasonable expectation that offers would be received from
at least two responsible small businesses and that award would be at fair
market prices; contrary to protester's argument, in making set-aside
decisions, agencies need not make determinations tantamount to affirmative
determinations of responsibility but, rather need only make an informed
business judgment.

DECISION

SAB Company, a large business concern and the incumbent contractor (as part
of a joint venture), protests the determination by the Naval Facilities
Engineering Command (NAVFAC) to set aside for exclusive small business
competition request for proposals (RFP) No. N62766-99-R-9050, for supplies
and services associated with change of occupancy maintenance and occupied
rehabilitations of Navy housing on Guam, Mariana Islands. The protester
contends that NAVFAC abused its discretion in determining that this
procurement should be set aside for small businesses.

We deny the protest.

The Federal Acquisition Regulation (FAR) directs that an acquisition valued
at more than $100,000, as here, be set aside for exclusive small business
participation where there is a reasonable expectation that offers will be
obtained from at least two responsible small businesses and award will be
made at fair market prices. FAR sect. 19.502-2(b). In this regard, the decision
whether to set aside a procurement may be based on an analysis of factors
such as the prior procurement history and market surveys that include
responses to Commerce Business Daily (CBD) announcements.
PR Newswire, B-279216, Apr. 23, 1998, 98-1 CPD para. 118 at 2.

SAB maintains that the agency lacked a reasonable basis for anticipating
that adequate small business competition would be received. NAVFAC reported
in response that its set-aside determination was based on procurement
history, and included a CBD survey of interest. In this regard, under the
unrestricted solicitation for the predecessor contract for work similar to
the solicitation here, although award was made to a large business (All
Star/SAB, A Joint Venture), the agency reports it received two "competitive"
offers from "eligible small businesses." Agency Report
at 2; Supplemental Agency Report at 2. Further, in response to the CBD
pre-solicitation notice for a prior canceled solicitation for work identical
to that here, which was issued under a smaller size standard than the one
applicable here
($7 million or less in annual receipts versus $20 million), the agency
received 18 expressions of interest from small businesses. These expressions
of interest included the two small businesses that had submitted offers
under the predecessor unrestricted solicitation. Finally, before the prior
solicitation was canceled, the agency received nine small business offers,
three of which it determined were technically acceptable, and one marginally
acceptable (before discussions); the agency considered all four reasonably
priced. Based on these factors, along with the increase of the size standard
from $7 million to $20 million, the agency believed that it could reasonably
expect to receive at least two small business responses, and likely more.
Agency Report at 6; Supplemental Agency Report at 1-3; Declaration of
Contracting Officer, Nov. 10, 1999; Acquisition Officer's Memorandum to the
File, July 30, 1999; Acquisition Plan, July 30, 1999, at 2. (The agency
states that its expectations were confirmed by the numerous small business
offers it received in response to the current solicitation. Agency Report at
7; Abstract of Offers, Oct. 12, 1999.)

In its comments in response to the agency report, SAB disputes that the
historical information cited by the agency supported the set-aside
determination. Specifically, the protester argues that the small business
responses to the predecessor unrestricted solicitation are inadequate to
support the set-aside because the agency did not identify the offerors. The
protester further asserts that the small business expressions of interest
received in response to the pre-solicitation CBD notice for the canceled
solicitation and the offers received in response to the canceled
solicitation itself do not constitute valid support for the determination
because there is no indication that the firms responding were responsible,
and because there is no guarantee that they would actually submit offers at
fair market prices. [1]

In a supplemental report, the agency responded to each of the arguments in
the protester's comments. The protester opted not to submit substantive
comments in response to this supplemental report, and instead orally
notified our Office that it wished to have us consider the protest on the
basis of the existing record. Based on the existing record, the agency
clearly has established that the set-aside determination was proper. For
example, in response to the protester's assertion that the agency failed to
identify the small business offerors under the predecessor unrestricted
procurement, the agency identified the two firms, and noted that both had
also expressed interest in the subsequent canceled solicitation.
Supplemental Agency Report at 3; Agency Report at 2. The agency also
submitted the business clearance memorandum for the procurement, which
indicated that these firms were eligible for award and had submitted
reasonable prices, i.e., their proposals were rated acceptable or higher
technically, based in part on experience, and their prices were below the
government estimate. Supplemental Agency Report, Business Clearance
Memorandum and Attachs., RFP No. N62766-93-R-9017, Nov. 14, 1994. Finally,
NAVFAC has submitted detailed information from the evaluation of offers in
response to the canceled solicitation (which was available at the time the
set-aside determination was made) in support of its conclusion that the
small business offers in fact were viable. Specifically, this information
shows that four small business offers were rated marginally acceptable or
higher, based in part on past performance and the reasonableness of their
prices. Agency Report, Source Selection Board Report, RFP No.
N62766-99-R-9002, Feb. 1, 1999, and Price Evaluation Board Report, RFP No.
N62766-99-R-9002, Jan. 29, 1999.

We find that the information relied upon by the agency, as discussed above,
was sufficient to support its conclusion that there would be adequate small
business competition to warrant a set-aside. [2] Contrary to the central
thrust of the protester's arguments, in making set-aside decisions, agencies
need not make determinations tantamount to affirmative determinations of
responsibility; rather, they need only make an informed business judgment
that there is a reasonable expectation of receiving acceptably priced offers
from small business concerns that are capable of performing the contract.
American Medical Response of Conn., Inc., B-278457,

Jan. 30, 1998, 98-1 CPD para. 44 at 2-3; Anchor Continental, Inc., B-220446,
Feb. 6, 1986, 86-1 CPD para. 137 at 3-4; Fermont Div., Dynamics Corp. of Am.;
Onan Corp., B-195431, June 23, 1980, 80-1 CPD para.  438 at 8-9. The historical
information available to the agency here was sufficient to permit it to make
such an informed judgment. The set-aside therefore was unobjectionable.

The protest is denied.

Comptroller General
of the United States

Notes

1. SAB also argues that, of the offers received on the current solicitation,
at most only one was from a responsible small business and offered a fair
market price. However, since the propriety of a set-aside turns on the
reasonableness of the agency's expectation of adequate small business
competition, the offers actually received under the solicitation are not, in
themselves, determinative of whether the set-aside determination was proper.

2. The small business expressions of interest received in response to the
pre-solicitation CBD notice for the canceled solicitation provided
additional support for the set-aside determination. While such expressions
of interest by themselves may not be sufficient to establish the likelihood
of small business competition at fair market prices, Ruchman and Assocs.,
Inc., B-275974, Apr. 25, 1997, 97-1 CPD para. 155
at 3 n.1, here, the expressions of interest were considered only in
conjunction with actual offers received under prior procurements.