TITLE:  Global Solutions Network, Inc., B-290107, June 11, 2002
BNUMBER:  B-290107
DATE:  June 11, 2002
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Decision

Matter of:   Global Solutions Network, Inc.

File:            B-290107

Date:              June 11, 2002

Jacob B. Pompan, Esq., and Gerald H. Werfel, Esq., Pompan, Murray & Werfel,
for the protester.
Stephen R. Jones, Esq., Department of Labor, for the agency.
Susan K. McAuliffe, Esq., and Christine S. Melody, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

1.  Protest of agency's cancellation of request for proposals prior to
receipt of proposals is denied where cancellation was reasonable in light of
agency's need for additional review of its requirements relating to size
standard and set-aside considerations.

2.  Protest of agency's sole-source award to incumbent contractor, for
continued operation of residential educational and training center for a
1-year period while agency completes review of its requirements and ongoing
rulemaking process related to size standard and set-aside considerations, is
denied where agency reasonably determined that, due to considerable
transition period required for a change of contractors, only one responsible
firm, the incumbent contractor, was available to meet agency's immediate
need for the services during the limited time period.

DECISION

Global Solutions Network, Inc. protests the cancellation of request for
proposals (RFP) No. 3-JC-212-11, issued by the Department of Labor for Job
Corps program services in the Washington, D.C. area.  Global also challenges
the agency's sole-source award to the incumbent contractor for continuation
of the services while the agency conducts additional review of its needs
regarding size standard and set-aside terms, including related rulemaking
efforts.

We deny the protest.

The Job Corps program provides residential occupational training, education,
counseling, career transitioning and other support services at more than 120
centers nationwide to nearly 50,000 young adults from economically
disadvantaged backgrounds.  The RFP, issued on February 1, 2002, as a small
business set-aside, contemplated the award of a cost-plus-fixed fee contract
for a 2?year base period with three 1-year options, for the operation of the
Potomac Job Corps Center in Washington, D.C., to provide services to
approximately 500 students, including residential housing services for 425
students.  The RFP was cancelled on March 7, approximately 4 weeks prior to
the stated closing date for receipt of proposals.  This protest followed.

As a matter of background, we note that the current protest is one of
several challenges that have been filed by Global against the agency's
proposed procurement of required services for the operation of the Potomac
Job Corps Center.  Global initially protested the evaluation terms of a
previous solicitation for the services, RFP No. 3-JC-111-11, and alleged
that the agency's evaluation and award under that solicitation were
unreasonable and based on alleged favoritism toward the initial awardee,
Phoenix Group, Inc.  On January 8, 2002, Global's protest was dismissed by
our Office as academic, in light of the agency's cancellation of both the
solicitation and the award to Phoenix; the agency had determined that the
initial solicitation failed to include pertinent evaluation terms and that,
in any event, the agency's needs had changed substantially, warranting a
resolicitation.  While that protest was still pending, Global had also filed
a size status protest against the award to Phoenix; the Small Business
Administration (SBA) denied that challenge on January 15.  Global then
protested the propriety of the agency's cancellation of the challenged
solicitation (RFP No. 3-JC-111-11).  We denied that protest, finding that
the cancellation was reasonable based on the agency's substantially changed
requirements and elimination of restrictive terms.  Global Solutions
Network, Inc., B?289342.4, Mar. 26, 2002, 2002 CPD para. 64.

The resolicitation for the Potomac Job Corps Center requirements, RFP No.
3-JC-212-11, the subject of the current protest, was issued on February 1,
as a small business set-aside for small business concerns having average
annual receipts for the preceding 3 years not exceeding $20 million.  The
RFP identified North American Industrial Classification System (NAICS) code
561210 (Facilities Support Services--Base Maintenance), a $20 million size
standard, as the applicable size standard for the procurement.  The agency
reports that the $20 million size standard has been applied to Job Corps
center set-aside operations procurements for 20 years.  The same size
standard was used in the previously cancelled solicitation for the Potomac
Job Corps Center (RFP No. 3-JC-111-11), under which Global competed without
challenging the size standard.  On February 15, however, Global filed a size
standard appeal with the SBA Office of Hearings and Appeals (OHA) against
the resolicitation's $20 million size standard.  Global argued that the
applicable size standard instead should be a significantly lower standard of
$5 million.  On March 5,
the OHA granted Global's appeal and issued a ruling for the application of
NAICS code 611519 (Other Technical and Trade Schools) to the RFP, with a
corresponding $5 million size standard, for the operation of the residential
educational and training center.

The agency subsequently cancelled the proposed resolicitation (RFP No.
3-JC-212-11), citing a need for further review of its requirements in terms
of size standard and set-aside considerations applicable to the Potomac Job
Corps Center as well as numerous other Job Corps center locations for which
the agency procures similar services.  Shortly thereafter, the agency
initiated pursuit of formal rulemaking with the SBA for review and
resolution of these small business issues; that process is anticipated to
take approximately 1 year.  Due to the extended transition period needed for
a change of contractors for the required center operations services, the
agency determined that only one firm, Management and Training Corporation,
the incumbent contractor, was available to meet the agency's immediate need
for uninterrupted continuation of the required educational and residential
services for the hundreds of students currently residing at the Potomac Job
Corps Center.  Consequently, the agency made a sole-source award to that
firm for continuation of the required services for a 1-year period to permit
resolution of its small business requirements review and rulemaking efforts.

Global protests the agency's determination to cancel RFP No. 3-JC-212-11.
In a negotiated procurement, an agency has broad authority to decide whether
to cancel a solicitation and to do so, the contracting officer need only
have a reasonable basis.  Chant Eng'g Co., Inc., B-270149.2, Feb. 14, 1996,
96-1 CPD para. 96 at 2.  A sufficient basis to cancel exists when, for example,
solicitation terms no longer reflect an agency's actual needs and
resolicitation provides the potential for increased competition or cost
savings.  See Lucas Place, Ltd., B?235423, Aug. 30, 1989, 89-2 CPD para. 193 at
4-5.   We see no basis to object to the cancellation of the RFP here.

The agency reports that the cancellation of the solicitation was necessary
in order for it to further review its needs as to the set-aside nature of
the contract, including completion of size standard rulemaking efforts
currently pending with the SBA.  The agency argues that the significantly
lower NAICS code size standard (i.e., $5 million instead of an intended $20
million standard) identified by the March 5 OHA decision will not meet the
agency's overall Job Corps program needs.  The significantly lower size
standard, the agency contends, will unreasonably restrict competition to
much smaller firms than the small businesses it has contracted with in the
past, and it will unreasonably preclude award of more than one center
contract, including follow-on awards, to any one small business.  In this
regard, the agency explains that, since the average annual budget for a Job
Corps center is $9 million, a small business awardee of a center operations
contract will quickly exceed the $5 million standard size standard after
only 3 years of performance under only one such contract, rendering the firm
ineligible for award under any of its numerous other set-aside procurements
for similar services.[1]  Although the protester suggests that the lower
standard at present might apply only to this RFP, and not the entire Job
Corps program as argued by the agency, the agency contends that, due to the
similarities in the required services under its numerous Job Corps center
operations contracts, the size standard arguably would apply to its centers
nationwide, having a direct adverse effect on the entire Job Corps program.

The agency also explains that, historically, many center contractors have
held multiple contracts, which, in turn, has provided meaningful benefits to
the agency in terms of enhanced performance by contractors having gained
direct center operations experience (given the learning curve associated
with these contracts), cost savings to the agency from competitive pricing
by contractors able to spread costs of similar supplies and services over
additional contracts, and the need for less supervision of experienced
contractors.  The agency therefore reasons that the preclusion of multiple
or follow-on awards to these successful small business contractors and the
associated benefits gained from them, simply because the prior small
business awardees will exceed the significantly lower size standard after
the third year of performance of an initial contract for the services, fails
to meet its overall needs and jeopardizes the continued success of the Job
Corps program. [2]  In this regard, the agency reports that it is currently
working with the SBA in pursuit of rulemaking to establish a higher, more
appropriate size standard for its Job Corps center operations contracts,
which, the agency contends, is needed to better reflect the educational and
training aspects of these contracts, as well as the substantial, costly, and
varied residential and maintenance services provided under the
contracts.[3]  The record contains confirmation from the SBA that the
agency's stated concerns warrant further review of the appropriate size
standard, and that any change to the size standard would be accomplished
under the SBA's rulemaking authority.

Our review of the record provides no basis for us to question the
reasonableness of the agency's cancellation of RFP No. 3-JC-212-11.  The
agency has demonstrated that the cancellation was reasonable due to a change
in circumstances, namely, the challenged size standard, creating a need for
the agency to pursue additional review by the SBA of its requirements
relating to size standard and set-aside considerations for the procurement
of the required operations services.  Contrary to Global's opinion
otherwise, we agree with the agency that due to the similarity in services
provided at Job Corps centers nationwide, the set-aside considerations
raised here, and their resolution, could affect many other centers and,
ultimately, the overall Job Corps program.  Consequently, the record shows
that the agency's cancellation in order to allow for the needed additional
review, which also increases the potential for additional competition and
cost savings upon resolicitation, is reasonably based.  See Lucas Place,
Ltd., supra.

Global also protests the agency's sole-source award to the incumbent
contractor, Management and Training Corporation, which had been providing
the required services at the Potomac Job Corps Center, under contract No.
3-JC-619-11, for a 5-year period, plus two short-term extension periods, the
last of which was to expire on February 28.  Global alleges that the
official who authorized the sole-source award for continued services from
March 1 through February 28, 2003, was materially misled by the contracting
officer, as well as another Assistant Secretary at the agency, who did not
provide the authorizing official with certain information Global believes
that official would have wanted to know.  For instance, Global asserts that,
even though the initial award to Phoenix had been cancelled, and Global's
protest of that award was, accordingly, dismissed, the authorizing official
should have been told of the contentions Global made in its protest.  Global
also argues that the authorizing official should have been told that, before
seeking and obtaining that official's permission for the award, the
contracting officer had sought to extend the incumbent's contract, allegedly
without the proper authority to do so.  Global does not specifically
challenge the reasonableness of the agency's ultimate determinations that
the center's services must continue in an uninterrupted manner, or that only
one responsible firm was available on March 1 to meet the agency's immediate
need for uninterrupted services.  Rather, Global challenges the sufficiency
of the information provided to the authorizing official.

While the overriding mandate of the Competition in Contracting Act of 1984
(CICA) is for ?full and open competition? in government procurements through
the use of competitive procedures, 41 U.S.C. sect. 253(a)(1)(A) (1994), CICA
does permit noncompetitive acquisitions in specified circumstances, such as
when the services needed are available from only one responsible source or
when the agency's need for the services is of such an unusual and compelling
urgency that the agency would be seriously injured unless permitted to limit
the number of sources solicited.  41 U.S.C. sect.sect. 253(c)(1), (c)(2).  When an
agency uses noncompetitive procedures under 41 U.S.C. sect. 253(c)(1) or (c)(2),
it is required to execute a written justification and approval (J&A)
document with sufficient facts and rationale to support the use of the
specific authority.  Our review of the agency's decision to make a
sole-source award focuses on whether the J&A document sets forth a
reasonable basis for it to do so.  Diversified Tech. & Servs. of Va., Inc.,
B-282497, July 19, 1999, 99-2 CPD para. 16 at 3.

Our review of the record confirms that there is no basis to question the
reasonableness of the J&A supporting the sole-source award.  Global agrees
that the agency had an immediate need for the continued services and does
not argue that it or any other firm could have met that immediate need on
March 1 upon expiration of the previous short-term extension to the
incumbent's contract.  Global contends only that the authorizing official
should have been told of Global's earlier protest contentions, even though
its protest of the award to Phoenix had been dismissed and its protest
contentions had been rendered academic.  Global does not provide a
reasonable basis, however, for its apparent expectation that its protest
allegations would have had any effect on the agency's review and approval of
an award to a completely different entity.  Global simply has not shown that
the allegations materially affect the unchallenged basis cited in the J&A in
support of the sole-source award to the incumbent contractor, namely, the
agency's immediate need for the required services and the availability of
only one firm to meet that need during the period needed for the agency's
additional review.

Similarly, although Global contends that the authorizing official should
have been told that the contracting officer previously had attempted to
secure an extension of the incumbent's contract without, in Global's view,
the authority to do so, Global simply has not shown why--even assuming
Global's conclusion about the extent of the contracting officer's authority
is accurate--that information would render unreasonable the approval
official's justification for the needed services, and his approval of the
sole-source award for those services from March 1 to February 28, 2003 from
the only available contractor; any earlier contract extension attempt, even
if invalid, is not dispositive, since the ultimate J&A covers the same time
period and has not been shown to be unreasonable.[4]

Given the unchallenged, immediate need of the agency for an uninterrupted
continuation of services and the extended transition period required for any
change of contractor, the record shows that the agency reasonably determined
that there was only one available source for the required services during
the limited period necessary for resolution of the agency's size standard
and set-aside review and rulemaking efforts.[5]

The protest is denied.

Anthony H. Gamboa
General Counsel

-------------------------

[1] The agency points out that under the $5 million standard, the third
small business firm that had competed with Global and Phoenix under the
initial set-aside procurement for these services would no longer be eligible
to compete, since it would exceed the standard.  The agency argues that this
lower size standard's restriction on competition will also adversely affect
small businesses that may exceed the $5 million standard, but are still not
in a position, in terms of financial base and experience, to effectively
compete with established large businesses under an unrestricted center
operations procurement; such firms, the agency contends, thus would not
benefit from the developmental opportunities historically available to small
businesses under the higher $20 million size standard.
[2] The agency reports that a group of current small business Job Corps
center contractors has recently met with the SBA to challenge the lower size
standard, on the basis that the lower size standard's application to other
Job Corps center procurements will unreasonably restrict competition by
rendering ineligible any small business set-aside contractor that has
operated a Job Corps center for 3 or more years.
[3] Global argues that the agency's initial award to Phoenix, a new
business, indicates that the agency has already demonstrated its belief that
a very small business can perform the work.  The agency, however, does not
contend that such a small business will not be able to perform, but rather,
argues that such a firm's performance is typically strengthened over time
from its direct experience, and that it is unreasonable that, under the
lower size standard, the agency will be precluded from considering such firm
for future awards.  As to Global's alternate suggestions--such as for the
agency to withdraw the set-aside if proposed prices are too high, or to
require small business teaming arrangements to delay any one small business
from exceeding the $5 million size standard so quickly--the agency reports
that such approaches would not reasonably meet its needs.  Rather, the
agency explains, to promote small business interests, it is pursuing further
review of the size standard and set-aside issues to avoid withdrawal of the
requirements from the set-aside program; the suggested teaming arrangement
is also undesirable to the agency in terms of its potential for increasing
the need for agency supervision of multiple contractors, increasing costs to
the agency, and impeding the agency's efforts to meet its small business
prime contract goals.
[4]In fact, the record shows that, in response to Global's recent challenge
to his earlier J&A, the same authorizing official, who had been given
up-to-date information as to the status and duration of the incumbent's
contract, was told of the contracting officer's earlier contract extension
efforts, and affirmed, on May 10, both the stated rationale of his earlier
J&A and the sole-source award.
[5] Contrary to Global's contentions, the record does not show that the need
for the sole-source award was the result of lack of advance planning; in
fact, the initial award had been made in a timely fashion, but the agency
has since spent many months responding to Global's challenges to that award
and its proposed resolicitation of the agency's immediate requirements.  As
to the protester's argument that the agency did not discover the defect in
the initial solicitation's evaluation terms in a prompt manner, we note only
that Global's contention that the agency should have reexamined those terms
earlier is directly undermined by the fact that Global itself did not
challenge those same terms until after an award had been made under the same
challenged solicitation.  Similarly, although Global generally argues that
the agency failed to conduct market research prior to making the sole-source
award to the incumbent contractor, the protester does not show that the
agency did not know of Global's qualifications, as they were recently
submitted in the firm's proposal under the earlier attempted procurement,
and Global does not argue that it would have been available to perform on
the March 1 date, as was required by the agency's immediate need;
accordingly, the firm has shown no prejudice whatsoever from the challenged
lack of market research.