TITLE:  Diversified Management Group, A Joint Venture, B-288443.2, October 12, 2001
BNUMBER:  B-288443.2
DATE:  October 12, 2001
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Diversified Management Group, A Joint Venture, B-288443.2, October 12, 2001

Decision

Matter of: Diversified Management Group, A Joint Venture

File: B-288443.2

Date: October 12, 2001

H. F. Lauer, Lauer Contract Services, Inc., for the protester.

Clare A. Kersten, Esq., and Wilson J. Campbell, Esq., Naval Facilities
Engineering Command, for the agency.

Jennifer D. Westfall-McGrail, Esq., and Christine S. Melody, Esq., Office of
the General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Cancellation of invitation for bids (IFB) prior to bid opening was in the
public interest where agency failed to investigate whether procurement
should be set aside for acquisition from National Institute for the Severely
Handicapped or small business prior to issuing the IFB on an unrestricted
basis.

DECISION

Diversified Management Group, a joint venture, protests the decision by the
Department of the Navy to cancel invitation for bids (IFB) No.
N68711-01-B-0116 and procure the services from the National Institute for
the Severely Handicapped (NISH).

We deny the protest.

The IFB, which was issued on June 26, 2001, sought bids to furnish base
family housing maintenance services at three Navy installations in
California (the Naval Base, Ventura County; the Naval Construction Battalion
Center, Port Hueneme; and the Naval Air Station, Point Mugu). The IFB
contemplated the award of a firm fixed-price/indefinite quantity contract
for a base and four option years. The solicitation was issued on an
unrestricted basis.

The IFB, as amended, set bid opening for July 30. On July 27, the incumbent
contractor, Tri-J Industries, protested the failure of the agency to set the
IFB aside for exclusive small business competition. Upon receipt of the
protest, the agency issued amendment No. 0004 to the solicitation, which
postponed bid opening indefinitely.

The agency determined that it had erred in releasing the IFB on an
unrestricted basis without evaluating potential set-aside preference
categories and that corrective action was warranted. To determine the
appropriate corrective action, the contracting officer consulted his
agency's "Small Business Programs Set-Aside Precedence Matrix," a document
that sets out by contract type and dollar threshold the order in which the
various set-aside programs should be considered. [1] The matrix indicated
that for facility support contracts of over $25,000 in value, first priority
should be given to procuring the services from NISH/NIB agencies pursuant to
the Javits-Wagner-O'Day (JWOD) Act , 41 U.S.C. sect. 46-48c (1994), [2] and that
second priority should be given to setting the acquisition aside for 8(a)
firms. [3]

Based on this guidance, the contracting officer contacted the regional NISH
representative to inquire whether NISH would be interested in performing the
solicited services. By letter dated August 10, the NISH regional office
notified the contracting officer that it would seek to have the services
added to the procurement list. Upon receipt of the letter from NISH, the
contracting officer issued amendment No. 0005 to the IFB, which cancelled
the solicitation and stated that the services would be procured in
accordance with the JWOD Act. On August 17, Diversified protested the
cancellation of the IFB to our Office.

The protester argues that the agency's decision to cancel the solicitation
lacked a reasonable basis.

The FAR recognizes that the cancellation of an IFB before bid opening
usually involves a loss of time, effort, and money spent by the government
and bidders; consequently, it instructs that IFBs should not be cancelled
prior to bid opening unless cancellation is clearly in the public interest.
FAR sect. 14.209(a). The FAR also requires that procurements meeting certain
requirements be set aside for agencies for the blind or severely
handicapped, [4] for particular categories of small businesses, [5] or for
small businesses generally. [6] Where prior to issuing a solicitation on an
unrestricted basis, an agency fails to investigate whether the conditions
requisite to a set-aside under the JWOD Act or for a category of small
business may be expected, cancellation is clearly in the public interest if
the agency subsequently determines that the solicitation should have been
set aside. Ryon, Inc., B-256752.2, Oct. 27, 1994, 94-2 CPD para. 163 at 4
(cancellation even after bid opening was proper where agency erroneously
determined initially not to set procurement aside for small business).

Here, the agency admits that prior to issuing the IFB on an unrestricted
basis, the contracting officer failed to consider whether it would be
appropriate to set this procurement aside for a JWOD participating agency or
for any of the categories of small businesses entitled to priority under the
FAR. The contracting officer subsequently determined, in response to Tri-J
Industries' protest, that the acquisition should have been set aside for
NISH, and in the event that NISH was unable to perform the services, for the
8(a) program. Under these circumstances, we think that the contracting
officer's decision to cancel the IFB was justified as clearly in the public
interest.

The protester further argues that it was contrary to the requirements of the
Competition in Contracting Act of 1984 (CICA) for the agency to have set the
procurement aside for acquisition from NISH pursuant to the JWOD Act.

While CICA generally requires contracting agencies to obtain full and open
competition through the use of competitive procedures, 10 U.S.C.sect.
2304(a)(1)(A) (1994 and Supp. IV 1998), non-competitive procedures are
authorized where a statute expressly authorizes that the procurement be made
through another agency or from a specified source. 10 U.S.C. sect. 2304(c)(5).
The JWOD Act provides authority for the noncompetitive acquisition of
supplies and services that appear on the procurement list maintained by the
Committee for Purchase from People Who Are Blind or Severely Disabled. See
FAR sect. 6.302-5(b)(2); JAVIT Enters., Inc., B-266326, B-266327, Feb. 5, 1996,
96-1 CPD para. 39 at 2. Accordingly, it was not contrary to the requirements of
CICA for the agency to have set the procurement aside for acquisition from
NISH.

Finally, Diversified complains that the solicited services were not on the
JWOD list at the time the IFB was cancelled. At the time the solicitation
was cancelled, NISH had expressed interest in performing the services, but
they had not been added to the procurement list. The services were added to
the list on October 5. We see nothing objectionable in the fact that the
services were not on the list at the time the IFB was cancelled given that
the agency did not enter into a contract with NISH at that time. Compare
JAVIT Enters., Inc., supra (agency violated CICA by issuing noncompetitive
purchase order to Goodwill Industries pursuant to the JWOD Act where
services acquired under the purchase orders were not listed on the JWOD
procurement list at the time the orders were issued).

The protest is denied.

Anthony H. Gamboa

General Counsel

Notes

1. The matrix identified the following set-aside programs: NISH/NIB
(National Institute for the Blind), 8(a), HUB (Historically Underutilized
Business) Zone,
Very Small Business, Emerging Small Business, and Small Business.

2. The JWOD Act establishes a committee known as the Committee for Purchase
From People Who Are Blind or Severely Disabled and authorizes it to
establish and maintain a list of commodities and services provided by
qualified nonprofit agencies for the blind or severely handicapped that it
has determined are suitable for procurement by the government (the
"procurement list"). 41 U.S.C. sect.sect. 46(a), 47(a). Once a commodity or service
has been added to the procurement list, contracting agencies are required to
procure that commodity or service from a qualified agency for the blind or
severely handicapped if it is available within the time period required. 41
U.S.C. sect. 48; Federal Acquisition Regulation (FAR) sect. 8.704;
Aleman & Assocs., Inc., B-287275.2, B-287356.2, July 2, 2001, 2001 CPD para. 120
at 3. The Act directs the Committee to designate a central nonprofit agency
or agencies to facilitate the distribution of orders for commodities and
services on the procurement list among qualified agencies for the blind or
severely handicapped, 41 U.S.C. sect. 47(c); in accordance with this
instruction, the Committee has designated NIB to represent people who are
blind and NISH to represent JWOD participating nonprofit agencies serving
people with severe disabilities other than blindness. FAR sect. 8.701.

3. The matrix further indicated that for this type of acquisition, third
priority should be given to a HUBZone set-aside and fourth priority to a
small business set-aside.

4. As previously noted, a service that appears on the JWOD procurement list
must be acquired from a qualified agency for the blind or severely
handicapped if available within the time period required. FAR sect. 8.704.

5. For example, an acquisition exceeding the simplified acquisition
threshold must
be set aside for HUBZone small business concerns when the contracting
officer reasonably expects that (1) offers will be received from two or more
HUBZone
small business concerns, and (2) award will be made at a fair market price.
FAR sect. 19.1305(a) and (b).

6. Agencies are required to set aside for small business participation each
acquisition of between $2,500 and $100,000 in value unless the contracting
officer determines there is not a reasonable expectation of obtaining offers
from two or more responsible small business concerns that are competitive in
terms of market prices, quality, and delivery. FAR sect. 19.502-2(a). Further,
agencies are required to set aside any acquisition over $100,000 for small
business participation when there is a reasonable expectation that (1)
offers will be obtained from at least two responsible small business
concerns offering the products of two different small business concerns, and
(2) award will be made at fair market prices. FAR sect. 19.502-2(b).