TITLE:  Priority One Services, Inc.--Costs, B-288836.5, November 8, 2002
BNUMBER:  B-288836.5
DATE:  November 8, 2002
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Priority One Services, Inc.--Costs, B-288836.5, November 8, 2002

   Decision
    
    
Matter of:   Priority One Services, Inc.--Costs
    
File:            B-288836.5
    
Date:              November 8, 2002
    
Kevin P. Mullen, Esq., Piper Rudnick, for the protester.
Michael Colvin, Department of Health & Human Services, for the agency.
Charles W. Morrow, Esq., and James A. Spangenberg, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
    
Request for reimbursement of costs of filing and pursuing a protest, which
was recommended in a decision sustaining a protest of a procurement
set-aside for small businesses, is denied where the protester was
ineligible for award under the protested procurement because it was not a
small business and the protester did not comply with the 13 C.F.R. S:
121.1009(g)(3) (2001) requirement that it immediately notify responsible
officials of an adverse size determination under the same size standard as
included in the protested procurement. 
DECISION
    
Priority One Services, Inc. protests the denial by the National Institute
of Allergy and Infectious Diseases (NIAID), National Institutes of Health
(NIH), Department of Health & Human Services (HHS), of its claim for the
costs of filing and pursuing its protest, under request for proposals
(RFP) No. NIAID-DIR-01-56, a small business set-aside, for the care, use,
and the humane treatment of laboratory animals and technical skills
related to the scientific study and manipulation of animals and animal
products.
    
We deny the request that we recommend reimbursement of the firm's protest
costs.
    
This claim arose from our decision in Priority One Servs., Inc., B-288836,
B‑288836.2, Dec. 17, 2001, 2002 CPD P: 79, in which we sustained
Priority One's protest against an award to SoBran, Incorporated.  We
sustained the protest because the agency failed to perform a proper
cost-realism evaluation and conducted improper discussions with SoBran. 
We recommended that the agency reopen discussions, request revised
proposals, reevaluate proposals, and make a new award selection
determination.  We also recommended that Priority One be reimbursed the
costs of filing and pursuing its protest, including reasonable attorneys'
fees. 
    
HHS argues that because Priority One has been found by the Small Business
Administration (SBA) to be other than a small business, and thus was
ineligible for award under the protested procurement, it was not an
interested party under our Bid Protest Regulations and should not be
reimbursed its costs of filing and pursuing the protest.  The protester
argues that it was a small business when it filed its protest and there is
no reason to modify the recommendation made in our initial decision that
these costs be reimbursed.  In order to better understand the parties'
respective positions, some background facts are necessary.
    
On April 20, 2001, Priority One certified that it was a small business
under the protested NIAID solicitation's $20 million size standard. 
Meanwhile, on June 21, Priority One submitted a proposal in response to
another NIH solicitation containing the same size standard, where it also
certified that it was a small business. 
    
On August 28, Priority One was advised of the award to SoBran under the
protested NIAID solicitation and on September 7 protested that award to
our Office.  On October 1, Priority One received the award under the other
NIH solicitation.  A size protest of this award was filed with the SBA on
October 2.
    
On October 9, HHS submitted its report on the protested NIAID procurement,
and on October 19 Priority One filed its comments on the report and a
supplemental protest.
    
On October 23, the SBA Area Office found that Priority One was not a small
business concern for the other NIH procurement.  Priority One did not
bring this adverse size determination to the attention of the NIAID
contracting officer.
    
On November 3, HHS submitted its report on the supplemental protest, and
on November 12 Priority One submitted its comments on that report.
    
On November 13, Priority One filed an appeal of the SBA Area Office's size
determination with the SBA's Office of Hearings and Appeals (OHA).
    
As indicated, we sustained the protest on December 17.  At that time
neither party had brought the SBA's adverse size determination on the
other NIH procurement to our attention.  In response to our decision,
NIAID implemented the recommended corrective action, including obtaining
revised proposals, and again selected SoBran for award on March 11, 2002. 
On March 12, Priority One protested this selection, which we dismissed on
March 15 because Priority One was to receive a debriefing on that date. 
    
Meanwhile, on March 13, the OHA affirmed the adverse size determination of
Priority One on the NIH procurement.
    
On March 20, following a debriefing, Priority One again protested the
SoBran award to our Office.  HHS immediately requested that we dismiss the
protest because the SBA OHA determination that Priority One was other than
small on the NIH procurement meant that Priority One was not an interested
party eligible to challenge the award under the protested small business
set-aside procurement, which had the same size standard for which Priority
One was ruled other than small.  We requested the views of the SBA, which
stated that under applicable regulations Priority One was not a small
business eligible for award under the protested NIAID procurement.
    
On May 1, we dismissed Priority One's protest, finding it was not an
interested party eligible to challenge the award under the small business
set-aside.  We found in this regard that:
    
SBA's interpretation is consistent with the plain language of 13 C.F.R.
S: 121.1009(g)(3) [(2001)] that states *a concern determined to be other
than small for a particular size standard is ineligible for any
procurement  . . . requiring the same or lower size standard* (emphasis
added).  The additional requirement under that regulation for the firm to
immediately inform responsible officials under pending procurements of the
adverse size determination appears to provide for the prompt application
of the adverse size determination to the firm's eligibility under other
procurements where a contract has yet to be awarded.
Priority One Servs., Inc., B-288836.4, May 1, 2002, 2002 CPD P: __, at 3.
    
Meanwhile, on February 14, Priority One filed with NIAID its claim for the
costs of filing and pursuing its sustained protest which we recommended be
reimbursed in our December 17 decision.  On May 13, NIAID denied Priority
One's claim.  This denial was based upon our May 1 decision, finding that
Priority One was not an interested party because it was other than a small
business and was thus not eligible for award under the solicitation. 
NIAID asserted that the reasoning in that decision was equally applicable
to our December 17 decision sustaining the protest because when we issued
that decision Priority One was not a small business and was thus not an
interested party.  Priority One then filed its claim with our Office. 
    
As discussed in our May 1 decision, even though Priority One
self-certified itself as a small business when it submitted its proposal
on the protested procurement and had not been found to be other than small
by the SBA until after it had filed its protest, the SBA, citing
applicable regulations, does not consider Priority One to be a small
business eligible for award under this procurement at any time after the
SBA area office issued its adverse size determination.  In this regard,
under the SBA's regulations, a *size determination becomes effective
immediately and remains in full and force and effect unless and until
reversed by OHA.*  13 C.F.R. S: 121.1009(g)(1). 
As indicated in our May 1 decision, 13 C.F.R. S: 121.1009(g)(3) obligates
a concern which had already certified itself as small on a pending
procurement (such the one protested here) to *immediately* inform the
officials responsible for the pending procurement of an adverse size
determination.  Priority One did not notify NIAID of the adverse size
determination and the record indicates that NIAID procurement officials
only became aware of the adverse size determination about the time that
the OHA issued its decision.  Priority One offered no response to our
query as to why this regulation was not complied with.  If NIAID had been
apprised of the adverse size determination, it would presumably have
sought a dismissal request on the grounds that Priority One was not an
interested party, a request we would have granted.  We therefore conclude
that it would be inappropriate for Priority One to be reimbursed its costs
of filing and pursuing its protest.
    
The request for a recommendation of reimbursement of protest costs is
denied.
    
Anthony H. Gamboa
General Counsel