TITLE:  Holiday Inn; Baymont Inn & Suites, B-288099.3; B-288099.4, September 20, 2001
BNUMBER:  B-288099.3; B-288099.4
DATE:  September 20, 2001
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Holiday Inn; Baymont Inn & Suites, B-288099.3; B-288099.4, September 20,
2001

Decision

Matter of: Holiday Inn; Baymont Inn & Suites

File: B-288099.3; B-288099.4

Date: September 20, 2001

Phillip E. Johnson, Federal Contract Specialists, Inc., for the protesters.

Col. Michael R. Neds and Capt. Anissa N. Parekh, Department of the Army, for
the agency.

Aldo A. Benejam, Esq., and Christine S. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

Cancellation of solicitation to provide meals, lodging, and transportation
for applicants at a military entrance processing station is not
objectionable where the agency had a reasonable basis for the cancellation.

DECISION

Holiday Inn and Baymont Inn & Suites protest the cancellation of request for
proposals (RFP) No. DABT23-01-R-0043, issued by the Department of the Army
to provide meals, lodging, and transportation for applicants processing at
the military entrance processing station in Nashville, Tennessee. The
protesters contend that the cancellation was the result of the agency's lack
of advance planning, and in retaliation for their earlier protests
challenging the unrestricted nature of this RFP and other solicitations for
similar services.

We deny the protests.

The agency issued the RFP unrestricted on June 1, 2001, contemplating the
award of a fixed-price, requirements contract to provide the required
services for a base year, with up to four 1-year options. On June 15,
Holiday Inn and Baymont filed protests with our Office challenging the
contracting officer's (CO) decision not to set the solicitation aside
exclusively for small business participation. In those protests, the firms
argued that since they were both small businesses, the agency was required
to set the RFP aside exclusively for small businesses. See Federal
Acquisition Regulation sect. 19.502-2(b); American Med. Response of Conn., Inc.,
B-278457, Jan. 30, 1998, 98-1 CPD para. 44 at 2.

Rather than setting the procurement aside for small businesses based on the
protesters' representations, the CO decided that further market research was
necessary. In this connection, the CO explains that based on her research,
she had concluded that both protesters' hotels are affiliated or franchised
with national hotel chains and, thus, questioned whether the firms would be
small businesses eligible to participate in this procurement. In particular,
the CO states that she found that Baymont is owned by a company that also
owns dozens of other lodging facilities, casting further doubt on that
firm's representation. The CO states that given the results of her research,
she was concerned that if the procurement were set aside, there was a
possibility that the Small Business Administration (SBA) ultimately would
determine that the proposed awardee was not a small business, requiring a
new competition. The CO thus decided to cancel the solicitation in order to
conduct a more in-depth market survey to determine whether to reissue the
solicitation on a restricted basis. Upon learning of the cancellation, the
firms withdrew their protests challenging the unrestricted nature of the
RFP, and filed the instant protests.

The protesters challenge the cancellation on several grounds. For instance,
the protesters contend that the cancellation was the result of the Army's
lack of advance planning. In this regard, the protesters assert that the
agency's market research was flawed because it did not find any small
businesses eligible to compete under this RFP. The protesters also argue
that the agency canceled the solicitation in retaliation for their earlier
protests challenging the unrestricted nature of this RFP and other
solicitations for similar services, suggesting bad faith on the part of the
agency. [1] Holiday Inn and Baymont further argue that the cancellation will
unduly prolong the issuance of a new solicitation.

In a negotiated procurement, the CO has broad authority to decide whether to
cancel the solicitation; there need be only a reasonable basis for the
cancellation. Cantu Servs., Inc., B-219998.9, B-233697, Mar. 27, 1989, 89-1
CPD para. 306 at 2. Here, we think that the agency's explanation provides a
reasonable basis for the cancellation.

The CO explains that prior to issuing the solicitation, she conducted a
market survey which included an Internet search on "ProNet," a website
maintained by the SBA. [2] The CO states that the ProNet search did not
reveal any small businesses in the lodging category in the Nashville area.
The CO also completed a standard form used to facilitate coordination
between the buying activity and the Army's small business specialist. The CO
explains that this coordination allows the small business advocate within
the Army and the local SBA to assist in locating eligible small businesses.
In the remarks section of the form, the CO noted that historically, the SBA
has been unable to identify small businesses, small disadvantaged
businesses, or section 8(a) firms for similar requirements in the Nashville
area; that the CO's ProNet search had not identified any small businesses in
the area; and that the requirement will remain "full and open." Agency
Report (AR) exh. F, DD Form 2579, May 29, 2001. The record shows that the
Army's small business specialist concurred with the CO's determination. [3]

The record further shows that prior to canceling the solicitation, in an
effort to obtain further information upon which to determine whether the
solicitation should be set aside, the CO requested the protesters to verify
that they are, in fact, small businesses. AR exh. H, CO's Letter June 19,
2001. In that letter, the CO expressed her doubts that either firm is a
small business and requested further information verifying their size
status. The CO specifically requested that the protesters validate their
size; identify the owners of each of the two hotels; identify other business
interests of those owners; and provide the gross revenues of those other
interests. Id. at 1.

Although both Holiday Inn and Baymont responded with virtually identical
letters noting their respective average annual total revenues, neither firm
identified the owners of the hotels; nor did they identify or explain
whether those owners had other business interests, or provide gross revenues
for those other interests, as requested. The record is clear that in the
CO's view, the firms' incomplete responses raised questions about their
size. The CO states that during subsequent telephone conversations with
Holiday Inn and Baymont, rather than confirming their small business size
status, both firms provided additional information that cast further doubt
on their business size. Specifically, the CO states that Holiday Inn's
general manager indicated that the owner of that facility also owned at
least four other lodging facilities. Baymont Inn's general manager also
confirmed that if the gross receipts of other lodging facilities controlled
by the owner of Baymont were considered for purposes of determining business
size, Baymont would be a large business. AR exh. B, CO Statement at 3. In
addition to contacting the firms directly, the CO also contacted the SBA's
office covering Nashville to request that office provide information on the
two protesters' hotels, or on any hotel in the Nashville area that would
qualify as a small business. According to the CO, the SBA did not have any
information on file about the two protesters' hotels, nor could the SBA
provide information for any other hotels in the Nashville area that would
qualify as small businesses.

The protesters' contention that the agency's market survey shows the Army's
lack of advance planning is without merit. The use of any particular method
of assessing the availability of small businesses is not required so long as
the agency undertakes reasonable efforts to locate responsible small
business competitors. PR Newswire, B-279216, Apr. 23, 1998, 98-1 CPD para. 118
at 2. Here, we think that the CO took reasonable efforts to verify the
protesters' business size and to ascertain the availability of other small
businesses eligible for this procurement. The fact that the CO did not
identify any small businesses eligible to compete--resulting in the agency
issuing the solicitation on an unrestricted basis--did not render the CO's
approach unreasonable.

There is also nothing which even suggests that the cancellation was made in
bad faith or in retaliation because of prior challenges by these protesters
of unrestricted solicitations. We will not attribute unfair or prejudicial
motives to contracting officials on the basis of inference or supposition.
See GTE Gov't Servs. Corp., B-222587, Sept. 9, 1986, 86-2 CPD para. 276 at 10.
So long as there is a reasonable basis for doing so, an agency may cancel a
solicitation after the announcement of a different course of action in
response to a GAO protest. See Atlantic Sci. & Tech. Corp., B-276334.2, Oct.
27, 1997, 97-2 CPD para. 116 at 1-2. Here, given the apparently conflicting
information concerning the protesters' eligibility as small businesses, we
have no basis to question the CO's decision to cancel the RFP in order to
conduct a more in-depth market search to locate responsible small businesses
and determine whether the solicitation should be reissued on a restricted
basis. [4]

Finally, the protesters' objections to the Army's plan to conduct an
in-depth market survey because it will unduly delay issuing a new
solicitation is not properly within the scope of our bid protest review
authority. Under the Competition in Contracting Act of 1984, 31 U.S.C. sect.sect.
3551-3556 (Supp. IV 1998), and our Bid Protest Regulations, 4 C.F.R. part 21
(2001), our Office's jurisdiction is limited to considering protests
involving solicitations already issued by federal agencies and awards made
or proposed under those solicitations. Here, since the agency has canceled
the underlying RFP, and the protesters' objection does not involve the award
or proposed award of a contract, there is no legal basis for us to consider
the protesters' allegation that the Army's proposed course of action is
improper. See Howard Johnson; Sunrise Int'l Group, Inc., B-287111,
B-287111.2, Feb. 2, 2001 (protest that agency's proposed market survey
following cancellation of solicitation for similar services will unduly
prolong the issuance of a new solicitation summarily dismissed as beyond the
scope of GAO's jurisdiction); CardioMetrix--Recon., B-252622.2, April 16,
1993, 93-1 CPD para. 329 at 1-2 (dismissal of protest concerning agency's
procurement practices, in general, rather than a specific solicitation or
award affirmed on reconsideration); National Customer Eng'g, B-250641, Oct.
5, 1992, 92-2 CPD para. 226 at 1-2 (generalized allegations of government-wide
violations of procurement laws and regulations do not constitute a valid
protest).

The protests are denied.

Anthony H. Gamboa

General Counsel

Notes

1. The protesters also argue that the cancellation here, together with other
cancelled solicitations, evidences a pattern by the Army of improperly
issuing unrestricted solicitations for similar services, and then canceling
those procurements in response to their protests challenging the
unrestricted nature of the solicitations. The fact that the Army has issued
other solicitations for similar services on an unrestricted basis is
irrelevant to our analysis of the reasonableness of the cancellation here;
each procurement is a separate transaction, and an agency's actions under
one procurement do not affect the propriety of its actions under a different
procurement. See Southern CAD/CAM, B-254201, Nov. 16, 1993, 93-2 CPD para. 278
at 4.

2. Pro-Net is an Internet-based database on small, disadvantaged, 8(a) and
women-owned businesses. The SBA's website describes "Pro-Net [as] an
electronic gateway of procurement information--for and about small
businesses. It is a search engine for contracting officers, a marketing tool
for small firms and a ‘link' to procurement opportunities and
important information. It is designed to be a ‘virtual' one-stop
procurement shop."  The protesters assert that it
was unreasonable for the CO to use this site because "very few small
business owners are aware of this service," suggesting that they are not
registered on the site and do not regularly search the site for procurement
opportunities for small businesses. Comments at 2. While it is unfortunate
that the protesters--both of which claim small business status--lack
familiarity with the SBA's website (which is specifically designed as a tool
for small firms to market their capabilities and provides a convenient
electronic link to procurement opportunities), the CO's use of this database
is not unreasonable.

3. Although the Army's small business specialist concurred with the CO's
determination, the protesters complain that the absence of a signature from
the SBA representative suggests that the CO did not forward to the form to
the SBA for its concurrence. The CO states, however, that she subsequently
contacted the SBA's Nashville office, and the SBA was unable to identify any
eligible small businesses. In view of the CO's statement, we view the lack
of SBA concurrence on the form as a relatively minor administrative
oversight corrected by the CO contacting the SBA directly and not, as the
protesters suggest, an attempt by the agency to bypass the SBA's approval.

4. We note that, even assuming that there was some personal animus toward
the protesters on the agency's part, the protesters still must show that the
agency's actions were not reasonable, which they have not done here. Johnson
Controls World Servs., Inc., B-285144, July 6, 2000, 2000 CPD para. 108 at 5.