TITLE: Carriage Abstract, Inc.
BNUMBER: B-290676; B-290676.2
DATE: August 15, 2002
**********************************************************************
Carriage Abstract, Inc., B-290676; B-290676.2, August 15, 2002
Decision
Matter of: Carriage Abstract, Inc.
File: B-290676; B-290676.2
Date: August 15, 2002
Alfred J. Verdi, Esq., for the protester.
Richard A. Marchese, Esq., Department of Housing and Urban Development, 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
Agency's award of contracts to three small businesses, without consideration
of protester's large business offer, is unobjectionable where the awards
were made in accordance with solicitation terms providing a cascading
set-aside preference for small business awards, without consideration of any
large business offer received, where two or more competitive offers were
received from qualified small business concerns.
DECISION
Carriage Abstract, Inc. protests the award of three contracts to small
business concerns under request for proposals (RFP) No. R-PHI-00851, issued
by the Department of Housing and Urban Development (HUD) for real estate
closing agent services related to the sale of HUD-owned single-family
residences in Maryland. Three contracts were contemplated under the
RFP--one for each of three geographic regions--for a base year and two
option periods. Carriage, a large business and the incumbent provider of
the required services, contends that the agency was required to consider its
proposal and that, in not doing so, the agency improperly awarded contracts
to small business offerors in excess of fair market prices.
We deny the protest.
As a matter of background, the current requirement is a reprocurement of
services initially solicited as a total small business set-aside
procurement, under which a contract had been awarded to Carriage. That
procurement was cancelled, however, due to a successful size status protest
filed with the Small Business Administration (SBA) by another firm, and
Carriage's unsuccessful appeal of that decision. The current solicitation
also was initially issued as a small business set-aside. Shortly after
issuance, however, the solicitation was amended to instead provide a
cascading set-aside preference for awards to small businesses only where
sufficient small business competition is received. Specifically, the RFP
provided the following
"set-aside award" terms:
(a) All potential offerors may submit proposals for any or all of the
geographic areas specified in . . . this solicitation.
(b)(1) In accordance with [Federal Acquisition Regulation (FAR)] Subpart
19.8, any award(s) for a geographic area covered by this solicitation will
be made on a competitive basis to eligible Section 8(a) business concerns,
provided that a minimum of two (2) competitive offers are received from
eligible Section 8(a) business concerns for the geographic area.
(2) If a minimum of two (2) competitive offers from eligible Section 8(a)
concerns are not received, any award(s) for a geographic area covered by
this solicitation will be made on a competitive basis to eligible small
business concerns in accordance with FAR Subpart 19.5, provided that a
minimum of two (2) competitive offers are received from eligible small
business concerns for the geographic area.
(3) If a minimum of two (2) competitive offers from eligible small business
concerns are not received, any award(s) for a geographic area covered by
this solicitation will be made on the basis of full and open competition
from among all responsible business concerns submitting offers for the
geographic area.
RFP � M-5, amend. 1, at 5.
The closing date for receipt of proposals was August 3, 2001. The agency
received
11 small business proposals; the 2 submitted by section 8(a) concerns were
determined to be technically unacceptable. Five of the small business
proposals were found technically acceptable, but one of them was considered
to be unreasonably high-priced, so it was not considered further. Most of
the four remaining competitive proposals provided offers for more than one
of the three geographic areas to be awarded; accordingly, each area offered
was considered as a separate offer. Considering the small business prices
received, Carriage's historical pricing of $220 per closing, and comparable
market pricing in government markets (and higher prices for private
markets), the agency determined that reasonable pricing for awards under the
RFP would fall within the range of prices submitted by the majority of small
business offerors (ranging from $200 to $286 per closing).
Citing the "best value" terms for award under the RFP, where technical
factors were to have greater weight than price, the agency determined that
an award would be made for each of the three geographic areas to those firms
whose proposals offered the best value to the government among the offers
received from eligible small businesses for each geographic area. For area
No. 1, the contract price was awarded at $250 per closing; for area No. 2,
the contract price was $200; and for area No. 3, the contract price was
$250. Notice of the awards was sent to the protester on May 23, 2002; that
notice explained that, because sufficient small business competition had
been achieved under the RFP, no large business proposals were considered for
award.
Following a debriefing, Carriage filed this protest with our Office
challenging the agency's award of the contracts without first considering
the protester's large business proposal as offering the best value to the
agency. In support of its contention that its proposal had to be evaluated
prior to award, the protester argues that its proposal was competitive, in
terms of price and technical merit, citing Federal Acquisition Regulation
(FAR) � 15.305(a), which provides in part that the contracting agency is to
evaluate "competitive proposals" and then assess their relative qualities
based on the evaluation factors in the solicitation. Further, since
Carriage's historical price of $220 is lower than the award price ($250)
under two of the contracts awarded under the RFP, the protester contends
that the agency's failure to consider its proposal resulted in the award of
those contracts (for area Nos. 1 and 3) to small businesses in excess of
fair market prices.[1] See FAR � 19.502-2(b) (providing that a total small
business set-aside shall not be made unless there is a reasonable
expectation that award will be made at a fair market price).
In response to the agency's concerns as to the timeliness of the protest,
Carriage confirms that it is not challenging the cascading set-aside
preference terms of the RFP. Rather, Carriage contends that, despite those
terms, its proposal should have been evaluated because of its alleged
technical merit and favorable price. The protester, however, has not
identified any requirement, nor are we aware of any, that the agency must
consider the protester's large business proposal for award under the
cascading set-aside preference terms of the RFP.
Specifically, although the protester points out that an agency may review a
large business proposal submitted under a cascading set-aside preference,
Carriage has provided no legal support for its contention that the agency is
required to do so. In fact, in the case cited by the firm as support for
such a requirement, Wilson 5 Serv. Co., Inc., B-285343.2; B-285343.3, Oct.
10, 2000, 2000 CPD � 157 at 2?3, even though the contracting agency had
initially reviewed all of the proposals received under that solicitation,
including those from large businesses, all of the large business proposals
were, as here, excluded from further consideration once a determination was
made that sufficient small business competition had been achieved under the
procurement.
Our Office has found no reason to question similar cascading set-aside
preference provisions used by HUD for certain real estate services. HUD has
explained that such an approach promotes the interests of small business
concerns and also provides the agency with an efficient means to continue
the procurement in the event that sufficient small business participation is
not realized. HUD explains that the cascading set-aside approach was
formulated in conjunction with, and has been endorsed by, the SBA. See The
Urban Group, Inc.; McSwain and Assocs., Inc., B?281352, B?281353, Jan. 28,
1999, 99-1 CPD � 25 at 7. The cascading set-aside preference provision used
in the RFP here reasonably put large businesses on notice that, if the
agency receives a sufficient number of eligible small business offers, large
business proposals received simply would not be considered for award. See
id. As such, the cascading set-aside preference terms establish, at best,
only a potential for participation of large businesses in the competition
for award.
Here, since an adequate number of eligible small business proposals were
received, we find reasonable the agency's conclusion that Carriage's large
business proposal was not a "competitive proposal" for award, and thus,
under the terms of this competition, was not entitled to the comparative
evaluation sought by the protester under FAR � 15.305(a).
The protester contends that its proposal must be considered by the agency in
order to properly assess fair market prices for the services. The RFP's
cascading set-aside terms, however, do not require such consideration--in
fact, as stated above, large business proposal review is not contemplated
where sufficient small business competition has been achieved. The
protester argues that, since its historical pricing is slightly lower than
the prices under two of the awarded contracts, the agency must consider its
historical pricing to determine reasonable pricing for the services. As
stated above, however, Carriage's historical pricing was considered in the
price analysis and the agency found that it in fact supported its conclusion
regarding the reasonablness of the prices received from the small
businesses, as Carriage's historical price fell squarely within the range of
prices deemed reasonable by the agency.
In its supplemental protest filed several weeks after its initial protest,
Carriage argues for the first time that the evaluation of all of the small
business proposals was flawed. As support for its suspicion of impropriety,
the protester argues that, since, according to Carriage, the contracting
officer should have known that one of the awardees is unfit to perform the
required services, the evaluation of any other proposal conducted during the
competition must be deficient. We find this allegation legally insufficient
to constitute a valid basis of protest. Clearly, an argument against the
evaluation of one firm's eligibility, even if meritorious, provides
insufficient basis upon which to demonstrate, as the protester suggests,
widespread improprieties in the evaluation of all of the other small
business proposals. In any event, the allegation is untimely--the protester
knew the identity of the challenged awardee for over a month before the
supplemental protest was filed, and the information about the firm which
Carriage now puts forth as supposed evidence of widespread evaluation
improprieties in this procurement was publicly available at the time
Carriage learned of the award. A protester has the affirmative obligation
to diligently pursue the information that forms the basis for its protest.
Horizon Trading Co., Inc.; Drexel Heritage Furnishings, Inc., B-231177,
B-231177.2, July 26, 1988, 88-2 CPD � 86 at 7-8. Since Carriage has not
shown that it expeditiously
pursued the information in the supplemental protest, we view the protest as
untimely filed in any event. [2] Illumination Control Sys., Inc., B-237196,
Dec. 12, 1989, 89-2 CPD � 546 at 2.
The protest is denied.
Anthony H. Gamboa
General Counsel
-------------------------
[1] Carriage raises additional issues that we have considered, but have
determined do not warrant further review due to procedural deficiencies or
legal insufficiency. For example, although the protester contends that the
agency failed to notify Carriage at the time of the small business
proposals' evaluations that large businesses would not be considered for
award, and thus did not give Carriage prompt notice that it was excluded
from the competitive range, the protester simply has not demonstrated that
it has suffered any prejudice from the timing of the agency's notice of the
firm's exclusion from the competition--its challenge to its exclusion is
currently receiving the same review as Carriage states it would have pursued
had it been informed earlier of the agency's failure to consider large
business proposals. To the extent the protester suggests that the agency
should have considered a partial set-aside award to allow part of the
overall requirement to be awarded to large businesses, the contention is
untimely--the RFP did not contemplate a partial set-aside approach.
Allegations of improprieties in a solicitation must be raised prior to the
closing time for the receipt of proposals under the solicitation. Bid
Protest Regulations, 4 C.F.R. � 21.2(a)(1) (2002).
[2] We also find unpersuasive Carriage's strained argument that its
supplemental protest allegation of an improper evaluation of all small
business proposals should be considered timely because it is encompassed by
the firm's initial protest of the agency's flawed evaluation. Our review of
the initial protest confirms that the submission does not raise the issue of
the agency's evaluation of the small business proposals; the initial protest
instead focused on the agency's failure to consider the protester's
proposal. In confirmation of this, we note that the protester itself,
elsewhere in the record, characterizes its own initial protest as
challenging "only the post submission misevaluation of its own proposal,"
and states that "the crux of the protest was the summary exclusion" of that
proposal, not the evaluation of the small business proposals received by the
agency. Letters from Carriage to GAO, June 30, 2002, at 1, and July 29, at
2 (emphasis added).