TITLE:  Ocuto Blacktop & Paving Company, Inc., B-284165, March 1, 2000
BNUMBER:  B-284165
DATE:  March 1, 2000
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Ocuto Blacktop & Paving Company, Inc., B-284165, March 1, 2000

Decision

Matter of: Ocuto Blacktop & Paving Company, Inc.

File: B-284165

Date: March 1, 2000

Stephen L. Walthall, Esq., Kelly & Walthall, for the protester.

Dawn G. Phillips, Esq., and Frances S. Higgins, Esq., Army Corps of
Engineers, for the agency.

Ralph O. White, Esq., and Christine S. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

1. The statutory limitation on General Accounting Office bid protest
jurisdiction over challenges to the award of a task order under an
indefinite-delivery/indefinite-quantity (ID/IQ) contract does not apply
where the protester's challenge, in essence, raises the question of whether
the solicitation for the underlying ID/IQ contract properly included
environmental remediation work at closing military installations in light of
a statutory requirement to provide a preference for such work to businesses
located in the vicinity of those installations.

2. Despite the requirement that protests alleging improprieties in a
solicitation must be filed before the time set for receipt of proposals in
response to the solicitation, 4 C.F.R. sect. 21.2(a)(1) (1999), a protester's
challenge to a solicitation is timely where the solicitation did not give
sufficient notice to potential offerors that environmental remediation
projects for military installations which were closed or realigned as part
of the base realignment and closure process were included within the reach
of the solicitation, and where the protester filed its challenge within 10
days of learning of the agency's interpretation of its solicitation.

3. Protester's contention that the use of preplaced regional ID/IQ contracts
for environmental remediation at closed or realigned military installations
violates a statutory requirement to provide a preference, to the greatest
extent practicable, for such work to businesses located in the vicinity of
such installations is sustained where the record does not show that the
agency gave reasonable consideration to the practicability of the statutory
preference before awarding such contracts.

DECISION

Ocuto Blacktop & Paving Company, Inc. protests the award of a contract to
Cape Environmental Management Inc. by the Army Corps of Engineers for the
capping of a landfill at the former Griffis Air Force Base (AFB) in Rome,
New York. Ocutu complains that the Corps failed to consider awarding the
work to businesses located in the vicinity of Griffis, in violation of
section 2912 of the National Defense Authorization Act for Fiscal Year 1994,
Pub. L. No. 103-160, which established a preference for contracting with
local, small, and small disadvantaged businesses for work associated with
closing or realigning military installations under a base closure law. This
preference explicitly includes "contracts to carry out activities for the
environmental restoration and mitigation" of such installations, as here.
Pub. L. No. 103-160, sect. 2912(a) (set forth at 10 U.S.C. sect. 2687 note (1994)).

We sustain the protest.

BACKGROUND

Set forth below is a brief explanation of the posture of this protest; the
statutory preference for using local businesses to perform environmental
remediation work at closing military installations; and the Corps's
comprehensive approach to using regional task order contracts to perform
such work regardless of whether it involves civilian sites, active military
installations, or realigned former military installations. At the conclusion
of this background, we will review the procedural and substantive issues
raised by Ocuto's protest.

On November 16, 1999, a representative of the Base Realignment and Closure
(BRAC) Commission advised Ocuto of a pending award for a contract for
capping a landfill at the former Griffis AFB to Cape Environmental, located
in Waukegan, Illinois. The landfill capping contract was identified only as
project no. JREZ-98-7002. On November 22, Ocuto filed a protest with our
Office claiming that the award was made without regard to a statutory
preference for the use of businesses located in the vicinity of the closed
base.

The statutory preference Ocuto claims should be applied here is codified at
10 U.S.C. sect. 2687 note, and provides, in relevant part:

(a) Preference required.--In entering into contracts with private entities
as part of the closure or realignment of a military installation under a
base closure law, the Secretary of Defense shall give preference, to the
greatest extent practicable, to qualified businesses located in the vicinity
of the installation and to small business concerns and small disadvantaged
business concerns. Contracts for which this preference shall be given shall
include contracts to carry out activities for the environmental restoration
and mitigation at military installations to be closed or realigned.

The regulations implementing this preference provide that before making a
small business or small disadvantaged business set-aside determination for
acquisitions in support of base closure or realignment, contracting officers
shall determine "whether there is a reasonable expectation that offers will
be received from responsible business concerns located in the vicinity of
the military installation that is being closed or realigned." Defense
Federal Acquisition Regulation Supplement (DFARS) sect. 226.7103(a). When offers
can be expected from local businesses, the regulation prohibits the use of
set-asides of any kind, unless an offer is expected from a local business
within the set-aside category. [1] Id. sect. 226.7103(c).

On December 1, the Corps asked that our Office dismiss Ocuto's protest,
explaining that the alleged pending "contract" challenged by Ocuto is, in
fact, the first intended task order under a not-yet-awarded
indefinite-delivery/indefinite-quantity (ID/IQ) contract for environmental
remediation throughout the geographic area of Environmental Protection
Agency (EPA) Region II. The Corps states that it intends to award both the
base ID/IQ contract, and the first task order for the landfill cap,
simultaneously.

The Corps's ID/IQ contract here is part of a joint program where the Corps
provides contracting support to help the EPA meet its needs for hazardous,
toxic, and radioactive waste remediation efforts at civil or military
locations. Agency Report (AR) at 1; Acquisition Plan at 1. The Corps
explains that until the mid-1990s it attempted to accomplish this work
through site-specific contracts, but concluded that a site-specific approach
was "unacceptable to the government in terms of cost, staff resources, and
time." AR, Cover Letter, at 1. Thus, the Corps now uses regional preplaced
ID/IQ remedial action contracts (PRAC) for environmental remediation
projects. Id. The Corps explains that although BRAC environmental
remediation projects may be performed under any of the PRACs, none of them
are limited to BRAC projects. [2]

The Corps issued three solicitations for PRACs that are relevant here. All
three solicitations cover EPA Region II [3] and the Northwest Division of
the Corps of Engineers. [4] One solicitation was issued on an unrestricted
basis (No. DACW41-98-R-0012), the second was set aside for small businesses
(No. DACW41-98-R-0013), and the third was reserved for small disadvantaged
businesses involved in the Small Business Administration's section 8(a)
set-aside program (No. DACW41-98-R-0014). The landfill project at the former
Griffis AFB is to be ordered under one of two contracts under the 8(a)
set-aside solicitation (contract no. -0014). [5] Award of this ID/IQ
contract has not been made.

PROCEDURAL ISSUES

Jurisdiction

The Corps first argues that our Office has no jurisdiction over Ocuto's
protest because Ocuto is challenging the award of a task order under an
ID/IQ contract. 10 U.S.C. sect. 2304c(d) (1994), provides that "[a] protest is
not authorized in connection with the issuance or proposed issuance of a
task or delivery order except for a protest on the ground that the order
increases the scope, period, or maximum value of the contract under which
the order is issued."

While we recognize that Ocuto's challenge, on its face, focuses on the
landfill project at the former Griffis AFB, Ocuto's complaint, in essence,
raises the question of whether the solicitation for the underlying ID/IQ
contracts properly includes environmental remediation work at closing
military installations in light of the statutory requirement to provide a
preference for such work to businesses located in the vicinity of these
installations. Thus, Ocuto is mounting a challenge to the terms of the
underlying solicitation, not--as the Corps argues--a challenge to a delivery
order, and the limitation on our bid protest jurisdiction in 10 U.S.C.
sect. 2304c(d) therefore does not apply. Since we are charged by statute with
reviewing protests alleging that a solicitation does not comply with
applicable procurement statutes and regulations, see 31 U.S.C.
sect.sect. 3552, 3554(b)(1) (1994), we conclude that Ocuto's protest is properly
within our bid protest jurisdiction.

Timeliness

The Corps also argues that, to the extent we are inclined to view Ocuto's
protest as a challenge to the solicitation, Ocuto's protest is untimely. The
Corps states that Ocuto was included on its bidders' list for all three of
the ID/IQ solicitations, that a copy of each solicitation was mailed to
Ocuto, and that the solicitations should have put Ocuto on notice that BRAC
environmental remediation projects were covered by the solicitations. Under
our Bid Protest Regulations, a protest based upon alleged improprieties in a
solicitation which are apparent prior to the time set for receipt of initial
proposals must be filed before the time set for receipt of such proposals.
4 C.F.R. sect. 21.2(a)(1) (1999). Since proposals in response to the
solicitation for the ID/IQ contract here were due not later than May 19,
1998, the Corps contends that Ocuto cannot now challenge the terms of the
solicitations for these ID/IQ contracts for environmental remediation. We
disagree.

While Ocuto claims that it does not recall receiving any of the three
solicitations at issue here, we need not reach a conclusion on whether Ocuto
received them (or had constructive notice of them), as we do not believe
that the solicitations gave sufficient notice to potential offerors that
BRAC environmental remediation projects covered by section 2912 of Pub. L.
No. 103-160 were included within their reach. All three solicitations
stated, in relevant part:

This contract for environmental response actions and associated
investigation and removal activities will include service and construction
activities mandated by the Defense Environmental Restoration Program (DERP),
Superfund, Formerly Used Sites Remedial Action Program (FUSRAP), and other
environmental laws and regulations requiring support activities for military
installations, Corps' civil works projects, and work for other agencies. The
DERP projects will include Installation Restoration Program (IRP) activities
on active Army and Air Force installations and on Formerly Used Defense
Sites (FUDS).

RFP DACW41-98-R-0014, at C-1. The listed programs identified in these
solicitations--DERP, Superfund, and FUSRAP--do not explicitly include
remediation work associated with the closure or realignment of military
installations under the base closure laws. [6] Thus, the solicitations here
do not provide clear notice that the Corps will use these contracts to
procure environmental remediation work at BRAC sites. Under these
circumstances, we will not conclude that Ocuto should have been aware of the
agency's interpretation of these solicitations, and the protest will be
considered timely as it was filed within 10 days of when Ocuto became aware
of its basis of protest. 4 C.F.R. sect. 21.2(a)(2); see, e.g., Vitro Servs.
Corp., B-233040, Feb. 9, 1989, 89-1 CPD para. 136 at 3 n.1.

ANALYSIS

As stated above, Ocuto argues that the Corps's use of regional ID/IQ
contracts to perform environmental remediation projects at closing or
realigned military installations is inconsistent with the statutory
preference for businesses located in the vicinity of these facilities. In
addition, Ocuto argues that the Corps's actions violate the DFARS subpart
226.71 procedures established to implement the preference. In response, the
Corps argues that the statute does not require a preference, but states only
that a preference should be provided "to the greatest extent practicable."
Section 2912(a), Pub. L. No. 103-160 (set forth at 10 U.S.C. sect. 2687 note).
The Corps essentially argues that implementing the statutory preference for
businesses located in the vicinity of closing or closed military
installations in the award of ID/IQ contracts is impracticable. The Corps
maintains that it is satisfying the terms of the statute by requiring that
Cape Environmental subcontract with local businesses in completing the
landfill capping project. [7] In this regard, the Corps notes that a
district court has previously ruled that implementing the preference for
local contractors in any given case is a discretionary duty assigned to the
Secretary of Defense, not a mandatory one. Ocuto Blacktop and Paving Co.,
Inc. v. Perry, 942 F.Supp. 783, 787 (N.D.N.Y. 1996). [8]

Although it is true, as the Corps argues, that the statutory preference for
local businesses is not mandatory, the statute does require that the Corps
give reasonable consideration to the practicability of the statutory
preference. In our view, where Congress directs that a preference be given
to the greatest extent practicable, an agency must either provide the
preference or articulate a reasoned explanation of why it is impracticable
to do so. Here, the Corps has done neither.

Specifically, while the Corps's procurement strategy may address the
statute's other goals of preferences for small and small disadvantaged
business concerns, there is nothing in this record to indicate that the
Corps considered any of the various possible methods for implementing the
statutory preference for local businesses. For example, with respect to the
possibility of "breaking out" the BRAC-related work and contracting for it
separately (the solution that Ocuto advocates), the Corps has not (as
explained below) provided an adequate explanation of why that alternative is
not practicable. In addition, even if the Corps could show that "breaking
out" the work is not practicable, we believe the statute required the Corps
to consider whether other alternatives could maximize the use of local
businesses. These alternatives might include, for example, creating a
schedule of regional ID/IQ contractors, to include local businesses that
would receive a preference when the agency procures work at nearby BRAC
sites, without those businesses having to commit to performing work in other
locations; or including a contractual requirement in the ID/IQ contracts
directing contractors to subcontract with local business for a significant
part of the BRAC-related work. Without a reasoned analysis of the various
possibilities, however, we cannot find that the Corps satisfied its duty to
give a preference to local businesses in the BRAC-related work to the
greatest extent practicable.

We recognize that the Corps could conclude, after reasoned analysis, that
all of these potential solutions (and others) are impracticable. That
analysis would presumably address factors such as the agency's budgeting and
staffing constraints, the degree of local business interest and capability,
and the number of projects subject to the statutory preference for which the
Corps expects to award contracts. None of these considerations, however, are
addressed in the current record.

In its sweeping rejection of Ocuto's proposed solution to the statutory
preference--that the Corps contract separately for its BRAC-related
work--the Corps contends that it lacks sufficient personnel to hold a
separate competition for each of the environmental remediation projects for
which it contracts. This response overstates the reach of Ocuto's complaint.
The ID/IQ contracts at issue here cover a broad range of environmental
remediation efforts. These contracts are available to the Corps and the EPA
for hazardous, toxic, and radioactive waste remediation efforts at any civil
or military location anywhere in EPA's Region II--i.e., New York, New
Jersey, the U.S. Virgin Islands, or Puerto Rico. (In future cases, when the
Corps does not use the 8(a) set-aside contract at issue here, orders can
also be placed for sites anywhere in the Corp's Northwest Division.) Thus,
the universe covered by these regional ID/IQ PRACS would appear to be
significantly larger than the subset of remediation projects on closed or
realigned military installations covered by the BRAC process. Without
providing any evidence indicating what share of the overall scope of this
procurement consists of BRAC-related work, we think the Corps cannot
establish that the preference here is impracticable. [9]

In this regard, we note that the Corps's use of ID/IQ PRACs will never
result in local businesses receiving preferential consideration for the
award of a contract for environmental remediation at a closed or realigned
military installation. This is because the preplaced regional ID/IQ
contracts will have already been awarded, and because the award decision was
made without regard to the location of the contractor. [10] Moreover, the
Corps's practice will never result in a local business receiving the award
of such a contract, except by happenstance. Under these circumstances, we
fail to see how these solicitations comply with either the letter, or the
spirit, of the statutory scheme requiring a preference for using local
businesses to provide such work, and it is inconsistent with the statutory
scheme to use these solicitations without consideration of alternative
approaches that could create a more meaningful preference for local
businesses.

In addition, the Corps's approach of having the contracting officer require
the ID/IQ contractor to use local subcontractors in performing this
particular task order does not resolve this solicitation challenge. There is
no requirement in the solicitations, or in the resulting ID/IQ contracts, to
ensure a preference for local subcontractors in future cases where the
agency is ordering environmental remediation work at closed or realigned
military installations. We note that the Corps's willingness to mandate the
use of local subcontractors does suggest, however, that the agency does not
consider such an approach impracticable.

As a final matter, the Corps's approach to procuring environmental
remediation services at closed or closing military installations does not
comply with the requirements of DFARS subpart 226.71. As stated above, DFARS
sect. 226.7103(a) requires contracting officers to determine whether there is a
reasonable expectation of offers from businesses located in the vicinity of
the military installation being closed or realigned. There is nothing in the
record here to indicate that the contracting officer attempted to make any
such finding. If Ocuto's interest had been considered by the contracting
officer, the regulation would have prohibited the use of the 8(a) set-aside
ID/IQ contract for the remediation project here, unless there was also a
local small disadvantaged business interested in performing this work. DFARS
sect. 226.7103(c).

RECOMMENDATION

We recommend that the Corps review its approach in these procurements in
order to comply with the requirements of DFARS subpart 226.71 and with the
statutory mandate that it give preference, to the greatest extent
practicable, to qualified local businesses in contracting for environmental
remediation work at military installations being closed or realigned
pursuant to the BRAC process. If, after due consideration to alternative
methods of implementing such a preference, including those discussed above,
the Corps concludes that it is not practicable to give any preference to
local businesses, that conclusion must be documented in a reasoned analysis.
If the Corps concludes that it is feasible to implement the statutory
preference for local businesses, it should revise the solicitations to
incorporate the preference.

We also recommend that the protester be reimbursed the reasonable costs of
filing and pursuing its protest, including attorneys' fees. 4 C.F.R.
sect. 21.8(d)(1). In accordance with 4 C.F.R. sect. 21.8(f)(1), Ocuto's certified
claim for such costs, detailing the time expended and the costs incurred,
must be submitted directly to the agency within 60 days after receipt of
this decision.

The protest is sustained.

Comptroller General
of the United States

Notes

1. The statute creates a preference not just for local businesses (as Ocuto
argues) but also for small, and small disadvantaged businesses. However, the
statute does not establish a priority among the three preferences. The DFARS
resolves this ambiguity in favor of local businesses by barring set-aside
decisions unless a local business is within the set-aside category. The
DFARS resolution of this ambiguity appears consistent with the limited
legislative history of this provision, which was added as a floor amendment
to the Fiscal Year 1994 Defense Authorization Bill in the House of
Representatives. 139 Cong. Rec. H6637 (daily ed. Sept. 13, 1993) (statement
of Rep. Snowe).

2. An example of the Corps's approach to implementing the statutory
preference for using local businesses to perform environmental remediation
work at closing or realigned military installations prior to using regional
ID/IQ contracts is available in our decision in GZA Remediation, Inc.,
B-272386, Oct. 3, 1996, 96-2 CPD para. 155. In that procurement, the Corps
included an evaluation factor in the solicitation related to geographical
location to implement the statutory preference. Id. at 4-5.

3. EPA Region II includes New Jersey, New York, and the territories of
Puerto Rico and the U.S. Virgin Islands. AR at 1.

4. The Corps's Northwest Division includes Washington, Oregon, Idaho,
Montana, Wyoming, North Dakota, South Dakota, Nebraska, Kansas, Missouri,
and parts of Minnesota, Colorado, Iowa, Nevada, and Utah. Id.

5. Of the two contracts to be awarded pursuant to the 8(a) set-aside
solicitation, one covered the Corps's Northwest Division; this contract has
already been awarded. The other--the contract at issue here--will cover EPA
Region II. AR at 2.

6. The programs specifically identified in the solicitation are distinct
from environmental cleanups associated with installations that are being
closed or realigned under the BRAC process. See Environmental Cleanup:
Defense Funding Allocation Process and Reported Funding Impacts,
(GAO/NSIAD-99-34, Nov. 16, 1998) at 1.

7. The Corps offers no response to Ocuto's allegation that the agency is
violating the DFARS subpart 226.71 regulations, although Ocuto raised this
contention in its initial protest, in response to the agency request for
dismissal, and in its comments on the agency report.

8. The Corps also argues that the court decision resolves the substance of
this protest, and should control the outcome of our decision here. We
disagree. The court dismissed Ocuto's mandamus action on the basis that the
district courts will not use their mandamus jurisdiction to compel
discretion to be exercised in a particular manner, but will rather compel
the official to carry out his or her duty to exercise such discretion. Ocuto
Blacktop and Paving Co., Inc. v. Perry, supra. Given other contracting
opportunities available to local businesses in the vicinity of the former
Griffis AFB, the court was unable to conclude that mandamus jurisdiction was
appropriate. 942 F.Supp. at 788. We also note that the court was not
reviewing the Corps's subsequent decision to use regional ID/IQ contracts to
meet its need for these services because any other solution was deemed
impracticable.

9. Even if it could show that the BRAC work represents a large proportion of
the work covered by these solicitations, the agency would still have failed
to consider alternative solutions that, in our view, must be considered when
a statute directs an agency to provide a preference "to the greatest extent
practicable."

10. We note that, at this juncture, the Corps may not even be aware of
future orders for environmental remediation at military installations that
are closed or closing as a result of the BRAC process that will be placed
against its ID/IQ contracts.