TITLE:  Apex Support Services, Inc., B-288936; B-288936.2, December 12, 2001
BNUMBER:  B-288936; B-288936.2
DATE:  December 12, 2001
**********************************************************************
Decision

Matter of: Apex Support Services, Inc.

File: B-288936; B-288936.2

Date: December 12, 2001

Timothy P. Healy for the protester.

Sherri Snowden for Zeta Construction Corporation, an intervenor.

Gay F. Chase, Esq., General Services Administration, 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

Protest against performance bond and bid guarantee requirements is sustained
where agency fails to demonstrate that it reasonably determined that bonding
requirements were necessary to protect the government's interest.

DECISION

Apex Support Services, Inc., a very small business concern, protests the
bonding requirements in request for proposals (RFP) No. GS05P01GAC0168,
issued by the General Services Administration (GSA) for planning and
estimating services. Apex contends that the bonding requirements unduly
restricted competition.

We sustain the protest.

The RFP requested the services of two planner/estimators, one to work at a
GSA office in Cleveland and the other to work at a GSA office in Cincinnati,
for a base period of 1 year and two option periods of 1 year each. The two
individuals are to be responsible for requesting, inspecting, and accepting
construction work on behalf of the government. Tasks which they will perform
include developing specifications, finalizing scopes of work, scheduling
work, performing cost estimation, and preparing procurement documents. The
solicitation included requirements for a bid guarantee (in an amount equal
to 20 percent of the bid amount for the base period of performance) and a
performance bond (in an amount equal to 20 percent of the contract price for
the initial 12-month period).

The protester argues that the bonding requirements would effectively bar it
and other similarly situated small and very small businesses from submitting
offers and that there are less restrictive ways to protect the government's
interests. [1]

As a preliminary matter, GSA argues that the protester is not an interested
party to protest the terms of this solicitation because it did not submit a
proposal in response to the RFP and thus would not be in line for award if
its protest were sustained.

We disagree. Whether a protester is an interested party is determined by the
nature of the issues raised and the direct or indirect benefit or relief
sought. Courtney Contracting Corp., B-242945, June 24, 1991, 91-1 CPD para. 593
at 4. Where, as here, the protester challenges the terms of a solicitation
that allegedly deterred it from competing, and the remedy sought is the
opportunity to compete under a revised solicitation, it is an interested
party to protest the terms of the solicitation even if it did not submit a
bid or offer under the challenged solicitation. Id. at 4-5.

Regarding the merits of Apex's protest, the Federal Acquisition Regulation
(FAR) instructs that agencies generally should not require performance bonds
for other than construction contracts. [2] FAR sect. 28.103-1. The FAR goes on
to recognize, however, as an exception to this general rule, that
performance bonds may be required for contracts exceeding the simplified
acquisition threshold when necessary to protect the government's interest.
FAR sect. 28.103-2. The FAR gives four examples of such situations (where
government property or funds are to be provided to the contractor for its
use or as partial compensation; where the government wants assurance that a
contractor's successor-in-interest is financially capable; where substantial
progress payments are to be made before delivery begins; and where the
contract is for dismantling, demolition, or removal of improvements, id.),
but we have recognized that this list is not exhaustive and that there may
be other circumstances where a bond is required to protect the government's
interest. RCI Mgmt., Inc., B-228225, Dec. 30, 1987, 87-2 CPD para. 642 at 2. In
reviewing a challenge to the imposition of a bonding requirement, we
consider whether the requirement is reasonable. E.D.P. Enters., Inc.,
B-282232, June 17, 1999, 99-2 CPD para. 42 at 3.

Here, the contracting officer determined that a performance bond was
necessary to protect the government's interest based on the following
considerations:

   * The contractor will have use of government property (facilities) in
     performance of the required services.
   * The estimated value of the initial contract is over $100,000,
     representing a significant volume of requirements which are considered
     essential to GSA's mission.
   * At the least, the health, welfare, and morale of visitors and employees
     at the location where services will be provided would be negatively
     affected should the contractor fail to perform. It is also possible
     that, should the contractor fail to perform, it would be impossible for
     essential governmental functions to be carried out.
   * As the government does not have the means to perform the service in the
     event of the contractor's default, the ability to resort to the
     contractor's surety to obtain the required services may be vital.

Memorandum for the Solicitation File (July 20, 2001).

We cannot conclude that the agency's imposition of a bonding requirement
here was reasonable based upon the rationales advanced by the agency. First,
regarding the agency's contention that the contractor will have use of
government facilities in performance of the services, the only government
facilities to be furnished are office space, furnishings, and furniture for
two contractor employees. [3] RFP at sect. C.F. In our view, this is not a
furnishing of government facilities sufficient to justify the imposition of
a performance bond in an amount equivalent to 20 percent of the contract
price for the initial 12-month period. See Bara-King Photographic, Inc.,

B-226408.2, Aug. 20, 1987, 87-2 CPD para. 184 at 3.

Further, we find unpersuasive the agency's bare assertion that the health,
safety, and morale of government employees and members of the public would
be negatively affected should the contractor fail to perform. Likewise, we
find unpersuasive GSA's assertion that the government does not have the
means to perform the services in the event of the contractor's default. In
contrast to other cases where we have upheld bonding requirements on the
basis that continuous performance of the solicited services is critical to
personnel health, safety, or welfare, see, e.g., Northern Mgmt. Servs.,
Inc., B-261424, June 26, 1995, 95-1 CPD para. 291 at 2; Diversified Contract
Servs., Inc., B-233620, Feb. 21, 1989, 89-1 CPD para. 180 at 3, or that
reprocurement of the services within the necessary timeframe would be
difficult should the contractor default, see, e.g., RCI Mgmt, Inc., supra,
at 2; Dohrman Mach. Prod., Inc., B-236003, Oct. 12, 1989, 89-2 CPD para. 344 at
3, the agency here has not explained either how a disruption in services
would jeopardize employee health, safety, or welfare or why it would have
difficulty in reprocuring the services should the contractor fail to
perform. Moreover, the arguments raised by the agency--i.e., that a
disruption in services would have a negative impact on the agency and that
it does not have the capability to perform the services in-house--would
apply to virtually any service contract; had the drafters of the FAR
intended for the inclusion of a performance bond requirement in
solicitations for service contracts to be the norm, as opposed to the
exception, they would not have included the instruction that agencies should
generally not require performance bonds for other than construction
contracts.

We conclude that GSA has failed to demonstrate that a performance bond is
required to protect the government's interest here. Accordingly, we sustain
Apex's protest. We recommend that the agency amend the RFP to delete the
bonding requirements and solicit another round of offers. We also recommend
that the agency reimburse the protester for its costs of filing and pursuing
the protest. Bid Protest Regulations, 4 C.F.R. sect. 21.8(d)(1) (2001). In
accordance with section 21.8(f) of our Regulations, Apex's 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 the decision.

The protest is sustained.

Anthony H. Gamboa

General Counsel

Notes

1. The protester also argued that the agency improperly had failed to
include past performance as an evaluation factor in the RFP. The agency
subsequently took corrective action in response to this ground of the
protest, advising that it would amend the RFP to include past performance as
an evaluation factor.

2. A contracting officer may not require a bid guarantee unless a
performance bond or a performance and payment bond is also required. FAR sect.
28.101-1(a). Accordingly, we focus our analysis on the performance bond
requirement.

3. In response to our request for clarification of the type of facilities to
be furnished to the contractor, the agency noted that the contractor would
be provided "office space and office equipment (telephone, computers,
computer software, printers, fax machine, etc.)" GSA Memorandum, Nov. 7,
2001, at 1. In commenting on the agency response, the protester complained
that the solicitation had not identified these items and asked that the
agency be required to amend the RFP to include a list of the property to be
furnished to the contractor.

This complaint is not appropriate for resolution in our forum because the
protester has not alleged that the agency's failure to enumerate the precise
items to be furnished to the contractor resulted in a restriction on
competition. Since our role in considering protests is to ensure that the
statutory goals for full and open competition are met, our Office will not
consider an argument that a solicitation should be written differently
unless a restriction on competition is alleged. Purification Envtl.,
B-259280, Mar. 14, 1995, 95-1 CPD para. 142 at 2.

In any event, we think that a reasonable offeror would have understood
office "furnishings," as that term is used in the RFP, as encompassing the
office equipment that the agency has enumerated; accordingly, we see no
reason that GSA should be required to amend the RFP to list the equipment
item by item.