TITLE:  Phoenix Scientific Corporation, B-286817, February 22, 2001
BNUMBER:  B-286817
DATE:  February 22, 2001
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Phoenix Scientific Corporation, B-286817, February 22, 2001

Decision

Matter of: Phoenix Scientific Corporation

File: B-286817

Date: February 22, 2001

J. Hatcher Graham, Esq., McManus & Graham, for the protester.

Gregory H. Petkoff, Esq., Warren D. Leishman, Esq., and Bradley S. Adams,
Esq., Department of the Air Force; Kenneth W. Dodds, Esq., Small Business
Administration, for the agencies. [1]

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

DIGEST

1. Protester's contention that an agency's solicitation is an improperly
bundled procurement, in violation of the bundling restrictions in the Small
Business Act, 15 U.S.C. sect. 631(j)(3) (Supp. IV 1998), is denied where the
solicitation, while clearly comprised of consolidated requirements, does not
fall within the reach of the Act because the solicitation will not result in
contracts that are "unsuitable for award to a small-business concern,"
within the meaning of 15 U.S.C. sect. 632(o)(2).

2. Protester's alternative contention that the bundling in the solicitation
violated the Competition in Contracting Act of 1984, 10 U.S.C. sect. 2305(a)(1)
(1994), is denied where the agency has established in the record that its
consolidated approach is needed to satisfy its needs, and where the
protester has not shown that the approach will not provide the benefits
claimed, or is unreasonable.

DECISION

Phoenix Scientific Corporation protests request for proposals (RFP) No.
F09603-00-R-42001, issued by the Department of the Air Force, anticipating
multiple-award indefinite-delivery/indefinite-quantity (ID/IQ) task order
supply and support contracts for the maintenance of Air Force-managed
weapons systems. The contracts anticipated by this solicitation, and the
program they implement, are referred to as the Air Force's Flexible
Acquisition and Sustainment Tool (FAST). Phoenix argues that the FAST
solicitation is improperly bundled and impermissibly vague, and violates
other procurement regulations.

We deny the protest.

BACKGROUND

Under the FAST solicitation, issued October 3, 2000, by the Warner-Robins
Air Logistics Center (WR-ALC), the Air Force will award up to six ID/IQ task
order contracts covering unplanned maintenance requirements for all Air
Force-managed weapons systems, for a 5-year base period, with an option to
extend the contracts for 2 additional years. [2] RFP at 2. As unplanned
needs arise, the solicitation anticipates that the ID/IQ contract holders
will compete for the award of individual task orders, up to the maximum
total estimated value of the contracts, which is $7.441 billion. Contracting
Officer's (CO) Statement at 2, 12. In essence, and as set forth more fully
below, the unplanned maintenance sought here involves all of the Air Force's
unforeseeable requirements for modifications, spare parts, repairs, and
services for all the weapons systems it manages.

The scope portion of this solicitation is set forth within the statement of
work (SOW), attached to the RFP as Appendix A. The SOW advises that the
focus of FAST

is the sustainment of all Air Force managed weapon systems, support systems,
subsystems, and components. This requirement includes services,
modifications, spares, and repairs. FAST does not include Military
Construction (MILCON), Civil Engineering, or Base Operating Support (BOS).
In addition, FAST will not be used for new development programs.

SOW at 4. The SOW also includes definitions of the following terms used to
explain the scope of this procurement: systems, subsystems, services,
modifications, spares and repairs. SOW at 17-19. For example, the SOW
defines the term "spares" as reserve, replacement, and repair parts. Id. at
19. In addition, the SOW explains that the use of FAST to buy spares is
limited to spares used for modifications, and those that can be classified
as contingency, limited, or critical spares. Again, definitions for these
terms are set forth in the SOW. For example, a spare may be considered a
"contingency spare" when

Source for part is non-responsive, work-around source is obtained to meet
near term customer requirements. Contingency spares are within the scope of
FAST.

Id. FAST does not include the purchase of spares to replenish stocks of
parts used in the routine maintenance, overhaul, and/or repair of equipment.
Id.; Tr. at 12.

During the course of this protest, our Office asked the Air Force to provide
more detail about the systems and subsystems covered by the FAST
solicitation. In a written submission provided to all parties, the agency
explained that the FAST solicitation would cover any need for any of the
following weapons systems, or subsystems or components included in them, as
limited by the definitions set forth in the scope section of the SOW:

Fighter aircraft (A-10, F-4, F-15, F-16, F-111)

Bomber aircraft (B-1B, B-2, B-52)

Transport aircraft (C-5, C-130, C-141)

Tanker aircraft (KC-135)

Trainer aircraft (T-37, T-38)

Reconnaissance/Command and Control aircraft (E-3, E-6, E-8, U-2)

Air Force helicopters

Armament (cruise and ballistic missiles, air-to-ground munitions, air-to-air

munitions, electronic countermeasures)

Space Command Control Communications Intelligence [SC3I] (ground-based

radars/communications, range threat systems, telecommunications,

mission planning systems)

Air Force Response to GAO, Jan. 31, 2001, at 1.

The same response also identified the following weapons systems, and

the subsystems and components within them, as outside the scope of the FAST
solicitation:

Fighter aircraft (F-22, Joint Strike Fighter, F-117)

Transport aircraft (C-9, C-17, C-12, C-20 series, C-32)

Tanker aircraft (KC-10)

Trainer aircraft (T-1, T-6, T-43)

Id. Although this level of detail was not included in either the RFP or the
SOW, the Air Force explained that potential offerors were briefed on the
information above at an Industry Day briefing held in November 1999. Id. The
Air Force also explained that this information is set forth, in a different
format, on a link from its FAST webpage,
http://pkec.robins.af.mil/FAST/IndDay2.htm.

With respect to small business participation in FAST, the solicitation
describes a cascading consideration for award of up to six anticipated task
order contracts. RFP at 27. Specifically, the solicitation advises that all
offerors, including small businesses, will be considered for one of four
unrestricted awards. After this selection process, any previously unselected
small businesses will be considered for award of up to two contracts that
are reserved for small businesses. The solicitation advises that at least 15
percent of the total value of all task orders will be awarded to small
business prime contractors, and that the large business prime contractors
will be required to subcontract a minimum of 23 percent of the total value
of their task orders to small businesses. Id. at 18.

The Small Business Administration's Challenge to the FAST Solicitation

Prior to the initiation of this protest, and beginning even before the Air
Force released the solicitation, the Small Business Administration (SBA)
challenged this procurement as improperly bundled, pursuant to the process
identified at Federal Acquisition Regulation (FAR) sect. 19.505. After first
arguing, by letter dated June 15, 2000, that the Air Force lacked a
reasonable justification for the bundling in the FAST solicitation, and
receiving a written response from the contracting officer denying those
arguments, the SBA's Procurement Center Representative appealed to the Head
of the Contracting Activity (HCA) at the WR-ALC. By letter dated July 6, the
HCA rejected the SBA's request to unbundle this procurement and argued that
certain savings associated with the use of FAST adequately justified any
bundling of the requirements in this solicitation.

By letter dated August 3, the Associate Administrator of the SBA appealed
the HCA decision to proceed with this procurement over the SBA's objections
to the Secretary of the Air Force, as anticipated under FAR sect. 19.505(c)(2).
On August 29, the Secretary--acting through the Director of the Air Force's
Office of Small and Disadvantaged Business Utilization--again rejected the
SBA's view that this procurement is improperly bundled.

On November 14, the protester filed this challenge to the Air Force's FAST
solicitation, raising many of the same arguments the Air Force rejected
during its exchanges with the SBA. [3] In addition, the SBA intervened in
this protest on behalf of Phoenix, and urges that the protest be sustained.

ANALYSIS

The contention by Phoenix and the SBA that the Air Force's FAST solicitation
unduly restricts competition, and improperly bundles requirements in a
manner that precludes maximum participation by small businesses, leads
directly to the intersection of three significant procurement
initiatives--the desire to maximize full and open competition by prohibiting
the unnecessary consolidation of discrete requirements in a manner that
restricts competition; the desire to maximize federal government reliance on
small business prime contractors by barring consolidation of procurements
into packages that are not suitable for performance by small businesses; and
the desire to streamline government purchases by, among other approaches,
using pre-placed (and often broadly-scoped) contractual instruments, like
the one here, to add speed and flexibility to an agency's buying power. Our
analysis of whether this particular streamlined procurement runs afoul of
the statutes governing competition and bundling necessarily begins with a
review of the statutory framework in this area.

The Statutory Framework Applicable to Bundling Challenges

The Competition in Contracting Act (CICA) of 1984 provided a general
statutory basis for challenging solicitations for agency requirements that,
over the years, have been labeled as bundled, consolidated, or total-package
procurements. See The Caption Ctr., B-220659, Feb. 19, 1986, 86-1 CPD para. 174
at 4-5. [4] CICA generally requires that solicitations permit full and open
competition and contain restrictive provisions and conditions only to the
extent necessary to satisfy the needs of the agency. 10 U.S.C. sect. 2305(a)(1)
(1994). Since bundled, consolidated, or total-package procurements combine
separate, multiple requirements into one contract, they have the potential
for restricting competition by excluding firms that can furnish only a
portion of the requirement. Aalco Forwarding, Inc., et al., B-277241.12,
B-277241.13, Dec. 29, 1997, 97-2 CPD para. 175 at 6. The great majority of our
decisions addressing allegations that a solicitation improperly restricts
competition have been decided under the general CICA restriction described
above.

CICA's general restriction against consolidating requirements has been
supplemented with a more specific statutory restriction against bundling,
enacted as part of the Small Business Reauthorization Act of 1997, Pub. L.
No. 105-135, 111 Stat. 2592, 2617-20 (1997). The Small Business Act, as
amended, states that, "to the maximum extent practicable," each agency shall
"avoid unnecessary and unjustified bundling of contract requirements that
precludes small business participation in procurements as prime
contractors." 15 U.S.C. sect. 631(j)(3) (Supp. IV 1998). To implement this
restriction, the Small Business Act defines bundling as:

consolidating 2 or more procurement requirements for goods or services
previously provided or performed under separate smaller contracts into a
solicitation of offers for a single contract that is likely to be unsuitable
for award to a small-business concern due to--
(A) the diversity, size, or specialized nature of the elements of the
performance specified;
(B) the aggregate dollar value of the anticipated award;
(C) the geographical dispersion of the contract performance sites; or
(D) any combination of the factors described in subparagraphs (A), (B), and
(C).

15 U.S.C. sect. 632(o)(2); see also Federal Acquisition Regulation (FAR)
sect. 2.101.

The Small Business Act's statutory prohibition against bundling requirements
is not absolute, however, as an agency may determine that consolidation of
requirements is "necessary and justified if, as compared to the benefits
that would be derived from contracting to meet those requirements if not
consolidated, the Federal Government would derive from the consolidation
measurably substantial benefits, including any combination of benefits that,
in combination, are measurably substantial." 15 U.S.C. sect. 644(e)(2)(B). The
statute explains that such benefits may include: (i) cost savings, (ii)
quality improvements, (iii) reductions in acquisition cycle times,
(iv) better terms and conditions, or (v) any other benefits. Id. On the
other hand, the statute states that "[t]he reduction of administrative or
personnel costs alone shall not be a justification for bundling of contract
requirements unless the cost savings are expected to be substantial in
relation to the dollar value of the procurement requirements to be
consolidated." 15 U.S.C. sect. 644(e)(2)(C).

Bundling Under the Small Business Act

In reviewing Phoenix's contention that the FAST solicitation is improperly
bundled, we recognize at the outset that this is a consolidated procurement
under any common understanding of bundled procurements. On the other hand,
since Phoenix argues that the FAST solicitation violates the specific
restrictions against bundling set forth in the Small Business Act, it
necessarily contends that FAST is a consolidation of (1) two or more
requirements previously provided under separate contracts, (2) into a
solicitation of offers for a single contract, (3) that is likely to be
unsuitable for award to a small business concern, as required under
15 U.S.C. sect. 632(o)(2). In addition, Phoenix argues that the Air Force has
not shown that it is necessary to consolidate these requirements.

The Air Force replies that the FAST procurement does not fall within the
reach of the Act because FAST is not a "bundled" procurement, as that term
is defined at 15 U.S.C. sect. 632(o)(2). [5] First, the Air Force argues that
the requirements found in FAST were not previously provided under separate
contracts. In this regard, the agency explains that FAST was not designed to
replace existing contracts, but to provide an in-house instrument to regain
control over approximately $1 billion in annual expenditures by Air Force
program personnel using Military Interdepartmental Purchase Request (MIPR)
procedures. CO's Statement at 2. Second, the Air Force argues that it is not
consolidating its requirements here into a single contract, but will award
six contracts. Third, the Air Force contends that the solicitation cannot be
said to be unsuitable for award to small business when it anticipates that
at least two of the six awardees will be small businesses, and provides that
those small business awardees will be able to compete for all task orders
issued under the contract. The SBA disagrees with the Air Force's contention
that this procurement is not covered by the Small Business Act restrictions
on bundling.

As explained below, we conclude that the 1997 bundling provisions of the
Small Business Act do not apply to this procurement. We reach this
conclusion because the requirements here cannot be termed "unsuitable for
award to a small-business concern" within the meaning of 15 U.S.C.
sect. 632(o)(2).

On this issue, the SBA has argued, in essence, that the sheer magnitude of
the FAST solicitation virtually guarantees that the resulting contracts will
not be suitable for award to small businesses. While the SBA acknowledges
that small businesses have expressed interest in participating in the
procurement, it argues that these businesses are either small business teams
that should not be viewed as supporting a conclusion that these requirements
are appropriately bundled, [6] or are very large small businesses. SBA also
contends that in a multiple-award environment, all of the awards must be set
aside for small businesses, or else we must conclude that the work is
unsuitable for award to small businesses.

We agree with the SBA that the magnitude of this procurement will likely
exclude the participation of many small businesses that might be able to
perform some portion of the work included within the FAST solicitation. We
also agree with the SBA's contention that the small businesses expressing
interest in this procurement are generally very large small businesses. In
this regard, we note that the applicable small business size standard here
is for businesses with up to 1,500 employees, and that Phoenix filed an
earlier challenge arguing that the size standard should be lowered, which
was denied by the SBA's own Office of Hearings and Appeals (OHA). [7] NAICS
[8] Appeal of Phoenix Scientific Corp., SBA OHA No. NAICS-2000-10-05-30
(Nov. 16, 2000). On the other hand, we see nothing in the Small Business Act
that elevates the interest of one type of small business over another. Thus,
to the extent that the small business interest in this solicitation is from
larger small businesses (to the exclusion of smaller ones), these are
nonetheless small businesses and their participation here means that the
contracts resulting from this solicitation cannot be termed "unsuitable for
award to a small-business concern."

With respect to the SBA's contention that the failure to set aside all of
the awards under a multiple-award contract shows that the contract is
"unsuitable for award to a small-business concern," we again disagree. There
is no link in this Act (or in the SBA's regulations implementing the Act)
between a decision not to set

aside a contract and a conclusion that a contract is unsuitable for award to
a small business. Nor is there any evidence in the Act or regulations to
support the SBA's contention that all of the work under a solicitation for a
multiple-award contract must be set aside for small business to avoid the
conclusion that the work is unsuitable for award to a small business.

In determining whether the contracts here will be suitable for award to
small businesses, we view it as significant that the Air Force has reserved
at least two of its six anticipated awards under this solicitation for small
businesses, and will permit those awardees to compete for all future task
orders. Moreover, as noted above, the solicitation advises that at least 15
percent of the total value of all task orders will be awarded to small
business prime contractors. In addition, the record shows the Air Force has
received expressions of interest (and indeed, proposals) from bona fide
small businesses that apparently do not view the requirements in this
solicitation as unsuitable for them. Tr. at 51; Letter from Air Force to GAO
at 10 (Jan. 25, 2001). In fact, one small business offeror, Modern
Technologies Corporation, participated in the hearing our Office conducted
in connection with this protest and argued that we should not conclude that
small businesses will be unable to perform this requirement. Tr. at 122.
Given these expressions of interest (and the resulting offers), we do not
agree that this solicitation will result in contracts that are unsuitable
for award to small business concerns. Accordingly, we conclude that the FAST
procurement does not fall within the reach of the Act's bundling
restrictions. [9]

Bundling Under CICA

Phoenix argues, in the alternative, that even if the Air Force's approach in
the FAST procurement does not run afoul of the statutory bundling
restrictions in the Small Business Act, it is nonetheless an improperly
consolidated procurement under the more general restrictions established in
CICA.

The reach of the restrictions against bundled procurements in CICA is
clearly broader than the reach of restrictions against bundling under the
Small Business Act. For example, unlike CICA's restrictions, the Small
Business Act's bundling provisions have no application to arguments by large
businesses that discrete portions of consolidated procurements should be
broken out for competition. See, e.g., Pemco Aeroplex, Inc., B-280397, Sept.
25, 1998, 98-2 CPD para. 79, and National Airmotive Corp., B-280194, Sept. 4,
1998, 98-2 CPD para. 60 (cases where two large businesses argued that discrete
portions of the workload of closing Air Logistic Centers should be broken
out of a consolidated solicitation and competed separately). Also, as
discussed above, there are other circumstances where the Small Business Act
offers no relief, yet CICA may.

In addition to the differences in specificity between the bundling
restrictions in CICA and those in the Small Business Act, there is also a
difference in the showing required to justify bundling. The Small Business
Act requires that agencies demonstrate "measurably substantial benefits" in
order to justify a bundled procurement. [10] 15 U.S.C. sect. 644(e)(2)(B). In
contrast, CICA permits solicitations to contain restrictive provisions and
conditions only to the extent necessary to satisfy the needs of the agency.
10 U.S.C. sect. 2305(a)(1). In interpreting CICA, we have looked to see that an
agency has a reasonable basis for its contention that bundling is necessary,
and we have sustained protests where no reasonable basis was shown. National
Customer Eng'g, B-251135, Mar. 11, 1993, 93-1 CPD para. 225 at 5.

In reviewing the Air Force's claimed needs for FAST under the standards
applicable to CICA, we note that the agency began its attempts to justify
this procurement looking only to the justification requirements of the Small
Business Act, and as part of the process of giving notice to the SBA of
upcoming bundled requirements, as anticipated by FAR sect. 19.202-1(e)(1)(iii).
By transmittal letter dated May 31, the Air Force provided the SBA with a
document titled, "Rationale for Developing [FAST]," to which was appended a
document titled, "Bundling Justification." Agency Report, Tab 11. The
rationale document set forth some of the agency's considerations in adopting
the FAST approach; the justification document estimated cost savings the Air
Force argues are associated with its approach. The justification document
expressly indicates that it was prepared to show a "measurable substantial
benefit" from the intended bundling in the FAST solicitation, as required
under the rules implementing the bundling restrictions of the Act. Bundling
Justification at 1.

In its justification document, and in subsequent materials submitted to the
SBA and our Office, the Air Force claims it will save at least 9.99 percent
of the cost of purchasing its requirements (as it currently buys them), by
consolidating its purchases under FAST. The Air Force also argues that these
savings exceed the threshold required to justify bundling set forth at FAR
sect. 7.107(b)(2). The claimed savings fall into two areas: (1) a savings of
4.49 percent achieved by avoiding the administrative fees paid when agency
personnel use non-Air Force contractual vehicles to meet their needs, such
as MIPRs to place orders against other military contracts; and (2) a savings
of 5.5 percent associated with the competition among the ID/IQ contract
awardees for task orders.

Both Phoenix and the SBA argue that the Air Force's claimed savings do not
adequately justify the bundling here. We agree.

While we take no issue with the quantum of either of the two elements of the
Air Force's claimed savings, we disagree with the logic of the agency's
claim that these savings are associated with its decision to procure these
requirements on a consolidated basis. With respect to the avoidance of
administrative fees incurred through the use of other agencies' contracts,
we note that such fees would be avoided by the use of any Air Force contract
vehicle--whether that Air Force contract vehicle be a sole-source purchase
from an original equipment manufacturer, the competitive award of a
traditional single contract, or use of the multiple-award ID/IQ contracts
anticipated here. Thus, we reject the Air Force assertion that these savings
arise from the decision to bundle these requirements.

We find similarly unpersuasive the assertion that the consolidation of these
requirements leads to the savings anticipated from the competition for task
orders the Air Force anticipates among its ID/IQ contract holders. To
calculate these claimed savings, the Air Force compared the prices it paid
to original equipment manufacturers with the savings it achieved under full
and open competition. Bundling Justification, supra, at 1-2. As with the
avoidance of administrative fees, discussed above, these savings have no
logical connection to justifying consolidation of the FAST workload. While
we do not doubt that the limited competitions envisioned here among ID/IQ
contact holders may generate savings when compared with the prices that
would be paid under a single-award ID/IQ contract, these savings provide
support only for the decision to use a multiple-award contract, rather than
a single-award contract. These savings tell us nothing about the need to
consolidate the requirements contained in this workload into one
solicitation.

The Air Force's justifications for the use of FAST, however, are not limited
to the cost figures it developed in response to the "measurably substantial
savings" requirement of the Small Business Act, nor need they be so limited
under a CICA analysis. Rather, our review of the materials prepared prior
to, and during, the course of the SBA's challenge to FAST, the materials
prepared during the course of this protest, and the testimony of Air Force
witnesses in a hearing before our Office, leads us to conclude that other
benefits from this approach adequately justify its use.

In the materials prepared for review by the SBA, the Air Force explained
that it needed the FAST approach because of significant reductions in its
civilian workforce, the unique requirements of maintaining an aging aircraft
fleet, and decreases in Air Force funding. Rationale for Developing FAST at
1. These general contentions were amplified during the course of the
protest, in a filing by the Air Force prepared in response to Questions for
the Record from our Office. In essence, the agency explained it needs one
contract vehicle to permit it to address unique, nonrecurring, and generally
unforeseeable requirements, that arise practically anywhere the Air Force
has a weapons system. In addition, the Air Force stated that these
requirements call for coordination and integration of multiple tasks, with
limited resources. Letter from Air Force to GAO at 8 (Jan. 25, 2001). The
Air Force also pointed to its need to significantly reduce the acquisition
cycle time for addressing unforeseeable maintenance and modifications
associated with the use of aging aircraft for expanding requirements, and to
quickly integrate related tasks in doing so. These tasks include "design
engineering, fabrication and testing, technical documentation, installation
and kit proofing, spares, and interim contractor support." Id. In the Air
Force's view, the FAST pre-placed ID/IQ contracts will allow the agency to
improve the readiness and availability of its aircraft fleet. Id.

Because of the seriousness of the needs claimed by the Air Force, and the
potentially negative impact of this approach on small businesses, our Office
convened a hearing to explore further the Air Force's claimed needs for
FAST. During this hearing, an Air Force witness explained that the agency's
resources for integrating and administering the multiple contracts for
unplanned maintenance were stretched thin by reductions in staffing of more
than 50 percent since the early 1990s. Tr. at 10. In addition, this witness
explained in greater detail the increase in agency operational demands; the
increased complexity of detecting, isolating, and determining causes of
problems and finding solutions for them; and the impact of trying to
maintain an aging fleet of aircraft under these circumstances. Id., at
11-12. A second witness explained that for one aging Air Force system, the
C-5 transport aircraft, the agency has more than 3,000 parts with no known
vendor. Id., at 42. In these cases, unforeseeable needs for these parts,
often involving the need to design and fabricate them, can be met quickly
using FAST.

In our view, these needs and benefits provide a reasonable basis to justify
the use of a consolidated contract here. In addition, we note that the
protester has not shown that these claimed benefits will not be achieved, or
are unreasonable.

Phoenix also argues that the FAST solicitation is impermissibly vague, and
that this vagueness is another form of bundling prohibited by CICA. See
Letter to the Army in the Matter of Valenzuela Eng'g, Inc., Jan. 26, 1998,
98-1 CPD para. 51 at 2 ("Statements of work that are too general provide
insufficient information for prospective offerors to decide whether to
submit a proposal or what to offer to best meet the agency's needs"). Under
this argument, Phoenix contends that the scope of work in the FAST
solicitation does not adequately describe the Air Force's requirements.

As described above, the FAST solicitation advises potential offerors that
the resulting ID/IQ contracts will be used for all Air Force-managed weapons
systems. SOW at 4. As also described above, our Office asked the Air Force
to address this issue during the course of this protest, and received a
comprehensive list of the weapons systems that are covered by FAST, and
those that are not. [11] While the Air Force's use of the word "all" to
describe the weapons systems covered by this solicitation raised concerns
about the breadth of this solicitation--i.e., bundling--it cannot be termed
vague. In addition, the Air Force has imposed limits on the availability of
FAST for its sustainment needs that, in essence, translate to the difference
between needs that are foreseeable, and needs that are not. Tr. at 11-12.
These restrictions on the use of FAST are concrete and subject to review as
part of any future challenge that a task order issued pursuant to FAST
exceeds the scope of the underlying contract. Given these restrictions, we
do not agree that the solicitation here is improperly vague.

Before leaving the subject of bundling under CICA, we feel compelled to
answer Phoenix's contention that the FAST solicitation here is as broad, and
as consolidated, as any solicitation we have ever reviewed in the course of
a bid protest, and the ancillary contention that if we do not sustain its
challenge to this solicitation, there will be no remaining room for any
future challenge under CICA that a solicitation is improperly consolidated.
While we need not address the arguments between the Air Force and Phoenix
over whether the solicitation here is broader than the solicitation in
Valenzuela, supra, we are aware that both of these solicitations consolidate
extensive requirements. Nonetheless, our review of an allegation that a
solicitation is improperly consolidated does not take place in a vacuum: the
breadth of a solicitation is but the starting point of our review.

Protesters challenging consolidated procurements are generally seeking the
award of some identifiable portion of the work within the solicitation. [12]
The agency then responds with an explanation of its need for the
consolidation, which can be reviewed for its adequacy and reasonableness, as
discussed above. See, e.g., Pemco Aeroplex, Inc., supra, at 8-16 (protester
sought to perform depot maintenance on KC-135 aircraft, which had been
unreasonably consolidated with other significant requirements); Better
Service, B-265751.2, Jan. 18, 1996, 96-1 CPD para. 90 at 2-4 (protester sought
to perform repair and maintenance on photocopiers, which had been
unreasonably consolidated with the purchase of photocopiers); and Magnavox
Elec. Sys. Co., B-258037, B-258037.2, Dec. 8, 1994, 94-2 CPD para. 227 at 7-8
(protester sought to provide mid-course guidance systems for certain
missiles, which had been reasonably consolidated with the purchase of the
AGM-130 missile). As shown in the Pemco Aeroplex and Better Service
decisions, we will sustain such protests when the agency is unable to
establish that the consolidation is necessary to meet its needs.
Accordingly, our decisions are based not just on the breadth of the
solicitation but on the agency's claimed need for consolidating its
requirements. Our decision accepting the Air Force's need for the
consolidated workload in the FAST solicitation thus in no way limits our
review of future challenges to consolidated workloads either larger or
smaller than the one here. [13]

The protest is denied.

Anthony H. Gamboa

Acting General Counsel

Notes

1. Modern Technologies Corporation (MTC), a small business offeror seeking
award as a prime contractor under the FAST solicitation, intervened in this
protest on a limited basis, pursuant to our discretionary authority at 4
C.F.R. sect. 21.3(j) (2000). MTC was represented by Michael A. Gordon, Esq.,
Holmes, Schwartz & Gordon.

2. The Air Force uses the term "sustainment" to describe the universe of its
maintenance needs, and this term is found throughout the materials
referenced in this decision. At a hearing on this protest, an Air Force
witness explained that sustainment falls into two categories--planned and
unplanned--and that the FAST procurement is designed to address the
unplanned portion of the Air Force's sustainment needs. Hearing Transcript
(Tr.) at 11-12.

3. During the course of this protest, the Air Force challenged Phoenix's
standing as an "interested party" to pursue a bid protest under our Bid
Protest Regulations, 4 C.F.R. sect. 21.0(a). In its challenge, the Air Force
argued that Phoenix had received only one Air Force contract in its
existence, and that Phoenix has never held a contract as either a prime
contractor, or a subcontractor, on any Air Force weapon system sustainment
task that would fall within the scope of this procurement. Air Force
Memorandum of Law at 3. After reviewing the materials submitted by Phoenix
in response to the Air Force dismissal request--including the business plan
it tendered to our Office, and to the Air Force, showing its intentions for
participating in future Air Force procurements as a small business
offeror--we concluded that Phoenix, as a potential offeror, is an interested
party for purposes of pursuing this protest.

4. Although The Caption Ctr. was our first consideration of a challenge to a
consolidated procurement under CICA, the cases cited therein show an already
well-established body of law for interpreting whether an agency's
total-package approach was necessary to meet its needs. Id.

5. The Air Force's contention that FAST is not a "bundled" procurement is
the second instance in the three protests we have reviewed to date alleging
violations of the Act's bundling restrictions where limitations in the
definition of bundling have been raised as a defense by the agency. See The
Urban Group, Inc.; McSwain and Assocs., Inc., B-281352, B-281353, Jan. 28,
1999, 99-1 CPD para. 25 at 9-10. (The other protester challenging this
procurement, The Urban Group, Inc., did not allege that the procurement was
improperly bundled.) We did not reach the issue of whether the solicitation
in McSwain was bundled under the Act, as we concluded that the agency had
established that the bundling was justified, and the protester had not shown
otherwise. Id. at 10-11.

6. The 1997 amendments specifically provided that when an agency is
soliciting for consolidated requirements, a small business may propose the
use of a team of contractors to perform the work, and under these
circumstances, the use of this team shall not affect its status as a small
business concern. 15 U.S.C. sect. 644(e)(4). As SBA correctly argues, however, a
Joint Explanatory Statement accompanying the bill in the Senate stated that
"[t]he ability of small businesses to team with other small businesses
should not be considered an opportunity for procurement officials to justify
a decision to bundle one or more requirements." 143 Cong. Rec. S11526 (daily
ed. Oct. 31, 1997) (joint explanatory statement, inserted by Sen. Bond).

7. Our Office does not have jurisdiction to consider challenges to size
standards, which are reviewed solely by the SBA. 4 C.F.R.sect. 21.5(b)(1).

8. NAICS is the acronym for the North American Industry Classification
System. See FAR Subpart 19.303.

9. Because of this conclusion, we need not decide whether the bundling
provisions of the Small Business Act apply where, as here, a solicitation
anticipates award of more than one contract. The Air Force points out that
the statute's definition of bundling applies to "a solicitation of offers
for a single contract," while the FAST solicitation seeks offers for
multiple contracts. On that reading, the plain language of the statute would
mandate a finding that it does not apply here. On the other hand, we
recognize that what may make an acquisition "unsuitable for award to a small
business concern" is the consolidation of previously separate acquisitions
into one solicitation and the requirement that firms responding to that
solicitation submit "offers for a single contract"--that is, each offeror
must propose to perform all of the requirements, not merely some of them.
This bundling concern may arise regardless of whether that consolidated
contract is awarded on a single-award or a multiple-award basis, which
suggests that it would be unreasonable to read the Act to exclude
multiple-award contracts from its scope.

10. For the record, we note that the SBA's new regulations on justifying
bundled procurements require that before an agency can show "measurably
substantial benefits," it must quantify the savings associated with any
decision to bundle requirements, and show a cost savings of 5 percent of the
contract value, for contracts valued at $75 million or more. 13 C.F.R.
sect. 125.2(d)(5)(i), 65 Fed. Reg. 45,831, 45,834 (2000). The SBA's regulations
require this quantification even if the basis for consolidating the
procurement is not cost savings. As quoted above, the Act permits an agency
to justify a consolidated procurement if it can show "measurably substantial
benefits," which expressly include: "(i) cost savings, (ii) quality
improvements; (iii) reductions in acquisition cycle times, (iv) better terms
and conditions, or (v) any other benefits." 15 U.S.C.A. sect. 644(e)(2)(B).
Alternatively, the regulations permit a limited number of agency officials
to justify a consolidated procurement, even if the agency cannot show the
required quantifiable cost savings, when consolidation is "critical to the
agency's mission success," and steps have been taken to provide for the
"maximum practicable participation by small business." 13 C.F.R.
sect. 125.2(d)(5)(ii).

11. The protester points out that a review of the list of the 12 types of
aircraft not covered by FAST shows that these 12 aircraft types are either
experimental, leased, or so new to the Air Force that they are still
maintained by the original manufacturer. This observation, which appears
accurate, is consistent with the Air Force's position that the scope of FAST
is limited to Air Force-managed weapons systems.

12. Phoenix's posture, as mentioned in our discussion of whether Phoenix is
an interested party, differs somewhat from that of most other protesters in
this area.

13. In arguing that the FAST solicitation violates statutes and regulations
applicable to small businesses, Phoenix also contends that the Air Force has
failed to provide 30 days notice of its intention to proceed with a bundled
procurement to small businesses holding contracts for requirements that will
be consolidated into FAST, as set forth at FAR sect. 10.001(c)(2)(i). While the
Air Force has not admitted that any small business contracts will be
consolidated into FAST, it also argues that Phoenix has never held a
contract involving the kinds of sustainment tasks anticipated under the FAST
solicitation. Despite numerous opportunities to do so, Phoenix has not
provided any evidence to refute the Air Force assertion. Given the lack of
evidence that Phoenix has ever been in a position to receive the kind of
notice anticipated by FAR sect. 10.001(c)(2)(i), we fail to see how Phoenix
could have been prejudiced by any failure to send such a notice.