TITLE:  Designer Associates, Inc., B-293226, February 12, 2004
BNUMBER:  B-293226
DATE:  February 12, 2004
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Designer Associates, Inc., B-293226, February 12, 2004

   Decision
    
    
Matter of:   Designer Associates, Inc.
    
File:            B-293226
    
Date:              February 12, 2004
    
Rulon W. Waite for the protester.
Eric Kattner and James B. Howarth, Esq., Department of the Air Force, and
John W. Klein, Esq., Small Business Administration, for the agencies.
Louis A. Chiarella, Esq., and Christine S. Melody, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
    
1.  Protest that the contracting agency*s letter offering requirement to
Small Business Administration (SBA) for acceptance into 8(a) program
failed to provide SBA with complete and accurate information regarding the
proposed offering is denied where the record shows that despite
inadequacies in the contracting agency*s initial offering letter to SBA,
SBA ultimately obtained all of the information required by its regulations
and the protester was not prejudiced by the contracting agency*s error.
    
2.  Protest that the contracting agency*s decision to alter the
traditional duration of its service contract, in order to make a
noncompetitive award under the SBA 8(a) program, was made in bad faith is
denied where there is no evidence of such bad faith and where the record
shows that the agency had a valid reason for its action.
DECISION
    
Designer Associates, Inc. protests the decision of the Department of the
Air Force and the Small Business Administration (SBA) to place the Air
Force requirement for maintenance and repairs services for military family
housing at Hill Air Force Base (AFB), Utah, under SBA*s section 8(a)
business development program for award of a sole-source contract to
Creative Times, Inc. Designer Associates contends that the Air Force*s
decision to offer these requirements to SBA, and SBA*s resulting
acceptance, were improper.
    

   We deny the protest.
    
The requirement here is for maintenance and repair services for
approximately 1,140 military family housing units at Hill AFB, and
involves interior and exterior painting, refinishing and replacement of
floors, repair and replacement of appliances, and change of occupancy
maintenance.  Designer Associates, a small business concern, competed
unsuccessfully for the prior housing maintenance contract awarded by the
Air Force in 1998, the result of a small business set-aside
procurement.[1]  Consisting of a base year and four 1-year options, the
prior housing maintenance contract had an expiration date of December 31,
2003. 
    
The Air Force is now participating in the Department of Defense (DOD)
Military Housing Privatization Initiative.  Authorized by Congress as a
pilot program, the Military Housing Privatization Initiative has the goal
of improving DOD military family housing more economically and more
quickly than if the traditional military construction approach were used. 
This initiative allows private sector financing, ownership, operation, and
maintenance of military housing.[2]  National Defense Authorization Act
for Fiscal Year 1996, Pub. L. No. 104-06, S:S: 2801 et seq., 110 Stat. 186
et seq., codified at 10 U.S.C. S:S: 2871-2885 (2000), amended by the
National Defense Authorization Act for Fiscal Year 2001, Pub L. No.
106-398, S: 2806.  Additionally, relevant to this protest, after housing
privatization, the military service involved no longer has a requirement
for housing maintenance services, as the rights and responsibilities of
property ownership then rest with the private-sector developer.  One of
the bases at which the Air Force is now in the process of privatizing
military housing is Hill AFB, with an expected contract award in
mid-to-late 2004.
    
By letter to SBA dated August 29, 2003, the Air Force offered to contract
with Creative Times for the Hill AFB military family housing maintenance
services under the section 8(a) program.  The letter advised SBA that the
agency anticipated awarding a fixed-price contract for a base year with
one 1-year option at an estimated total value of $1,537,899.[3]  The Air
Force also represented to SBA as follows:
    
Public solicitation for the specific procurement has not already been
issued under a small business set-aside.  It would normally be expected
that this program would be awarded to a disadvantaged firm under
conventional procedures.  Current history shows that this has not been
previously awarded to a small business firm.
    
AR, Tab 5, Letter from Air Force to SBA, Aug. 29, 2003. 
    
SBA accepted the Air Force*s offering on behalf of Creative Times on
September 3.  As part of its acceptance letter to the Air Force, SBA
stated, *A determination has been made that acceptance of this procurement
will cause no adverse impact on another small business concern.*  AR, Tab
6, Letter from SBA to Air Force, Sept. 3, 2003.  After Designer Associates
learned of the agency*s intent not to competitively reprocure housing
maintenance services here from among small business concerns, and that the
Air Force instead planned to noncompetitively award a contract to Creative
Times under the 8(a) program, this protest followed.
    
Designer Associates protests that the Air Force failed to provide SBA with
complete and accurate information as part of its section 8(a) program
offering.  Specifically, Designer Associates contends that the Air Force
falsely stated to SBA that the housing maintenance contract had not been
previously awarded to a small business firm when in fact the requirement
here had been set aside for award to small business concerns since 1979. 
Designer Associates argues that the Air Force*s misinformation resulted in
SBA making an improper determination that acceptance of this requirement
under the 8(a) program would cause no adverse impact on small business
concerns such as itself, and that had SBA been provided with accurate
information, SBA would not have made the decision that it did.
    
The Air Force first contends that Designer Associates* protest should be
dismissed because Designer Associates does not qualify as an interested
party.  An interested party is an actual or prospective bidder or offeror
whose direct economic interest would be affected by the award of a
contract or by the failure to award a contract, which the protester is
required to demonstrate.  4 C.F.R. S: 21.0(a) (2003).  The Air Force
argues that because this procurement action is under SBA*s 8(a) program,
and the protester is not an 8(a) contractor, Designer Associates is not an
interested party to protest the agency*s actions in connection with the
procurement.  Specifically, the Air Force states as follows: *[E]ven
though Designer Associates wants to compete and, even if for argument
sake, the Air Force were required to compete the requirement under the SBA
8(a) program . . ., Designer Associates is not an 8(a) contractor and is
not eligible for an award under either a sole source or competitive 8(a)
procurement.*  Agency Report at 5.
    
We disagree.  Quite simply, the Air Force*s argument fails to recognize
the nature of Designer Associates* protest.  Designer Associates is not
asserting that the procurement here should be conducted under the 8(a)
program on a competitive basis; instead, the protester is arguing that the
decision to place the procurement under the 8(a) program at all, on a
noncompetitive basis or otherwise, was improper because it was based on
inaccurate information from the contracting agency, to the detriment of
small business concerns such as itself that were thus excluded from
competing as a result of such action. Thus, Designer Associates, a small
business that has previously competed for the maintenance service contract
in question, is an interested party because it may have the opportunity to
compete for the agency*s requirements if it is determined that the
decision to place the procurement here under the 8(a) program was
improper.
    
Section 8(a) of the Small Business Act authorizes SBA to enter into
contracts with government agencies and to arrange for performance of such
contracts by awarding subcontracts to socially and economically
disadvantaged small businesses.[4] 15 U.S.C.
S: 637(a) (2000).  The Act affords SBA and contracting agencies broad
discretion in selecting procurements for the 8(a) program; we will not
consider a protest challenging a decision to procure under the 8(a)
program absent a showing of possible bad faith on the part of government
officials or that regulations may have been violated.  4 C.F.R. S:
21.5(b)(3); American Consulting Servs., Inc., B-276149.2,
B-276537.2, July 31, 1997, 97-2 CPD P: 37 at 9; Comint Sys. Corp.,
B-274853,
B-274853.2, Jan. 8, 1997, 97-1 CPD P: 14 at 3.
    
Under the Act*s implementing regulations, SBA may not accept any
procurement for award as an 8(a) contract if doing so would have an
adverse impact on an individual small business, a group of small
businesses in a specific geographic location, or other small business
programs.  13 C.F.R. S: 124.504(c)(1)-(3) (2003).  In making decisions
regarding 8(a) procurements and to avoid adverse impacts, SBA is entitled
to rely on the contracting agency*s representations regarding the offered
requirement.  In this regard, SBA*s regulations place the primary
responsibility on the procuring agency to submit all relevant information
necessary to SBA*s decision-making process.  13 C.F.R. S: 124.502;
Security Consultants Group, Inc., B-276405,
B-276405.2, June 9, 1997, 97-1 CPD P: 207 at 2; Comint Sys. Corp., supra. 
Additionally, under 13 C.F.R. S: 124.502(b)(9), the procuring activity is
unambiguously required to include in its 8(a) offering letter to SBA,
among other things, the acquisition history, if any, of the offered
requirement.
    
For the reasons set forth below, we conclude that the Air Force*s offering
letter here did not provide complete and accurate information as required
by SBA*s regulations.  We find that the agency*s error, however, did not
prejudice Designer Associates.
    
In its agency report filed with our Office, the Air Force admits that its
statement to SBA regarding the history of the requirement here was
inaccurate, and acknowledges that the maintenance services here have been
accomplished by small business contractors since at least 1993.  Agency
Report at 3.  The Air Force contends that its offering letter to SBA
should have instead stated, *Current history shows that this (housing
maintenance contract) was never previously awarded to another 8(a) small
business firm,* id., although even this statement, albeit accurate, fails
to provide the information required by SBA*s regulations.
    
Pursuant to a request from our Office, the Air Force provided a copy of
its report to SBA for comment.  After learning that the Air Force*s
offering letter was inaccurate insofar as the requirement*s acquisition
history, SBA performed a new adverse impact analysis.[5]  SBA concluded
that acceptance of the requirement here would not have an adverse impact
on other small business programs, SBA*s Comments, exh. A, SBA Adverse
Impact Review, December 11, 2003, a determination that Designer Associates
has not challenged.
    
In light of SBA*s subsequent determination, we find that the Air Force*s
error of failing to provide SBA with complete and accurate information
regarding the requirement*s acquisition history did not prejudice Designer
Associates.  Competitive prejudice is an essential element of every viable
protest.  Diverco, Inc., B-259734, Apr. 21, 1995, 95-1 CPD P: 209 at 4;
see McDonald-Bradley, B-270126, Feb. 8, 1996,
96-1 CPD P: 54 at 3; Statistica, Inc. v. Christopher, 102 F.3d 1577, 1581
(Fed. Cir. 1996).  Under these circumstances, there is no basis for
questioning the agency's actions.
    
Lastly, Designer Associates alleges that the Air Force acted in bad
faith.  Designer Associates argues that the agency*s bad faith is
evidenced by, among other things, the fact that the Air Force has changed
the traditional duration of the contract here from its normal 5-year
length, with an estimated value in excess of $6 million, to an 18-month
contract, having an estimated value of less than $3 million, thereby
permitting a noncompetitive award under the 8(a) program.  See FAR S:
19.805-1(a)(2).  Government officials are presumed to act in good faith
and, where a protester contends that contracting officials are motivated
by bias or bad faith, it must provide convincing proof, since this Office
will not attribute unfair or prejudicial motives to procurement officials
on the basis of inference or suppositions.  United Coatings, B-291978.2,
July 7, 2003, 2003 CPD P: 146 at 14.  Here, Designer Associates has not
provided any proof to support this allegation.  Moreover, we are unaware
of any law or regulation dictating the *traditional duration* of a
contract, see New Technology Mgmt., Inc., B-287714.2 et al., Dec. 4, 2001,
2001 CPD P: 196 at 4, and the record shows that the Air Force had valid
reasons for limiting the duration of the contract here as it did,
including the fact that the maintenance requirement would cease to exist
with the privatization of Hill AFB family housing, estimated to occur in
July 2004.
    
The protest is denied.
    
Anthony H. Gamboa
General Counsel
    

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

   [1] Designer Associates contends, and the Air Force does not dispute, that
the housing maintenance services contracts at Hill AFB have been set aside
for award to small business concerns since 1979.  Protest, attach. 1,
Letter from Designer Associates to GAO, Nov. 1, 2003, at 1.
[2] Under the housing privatization program, the military service selects
a private-sector developer to build, renovate, manage, and maintain family
housing communities on the military installations.  The developer provides
the capital necessary to accomplish these tasks, as well as its expertise
in operating successful private-sector communities.  The developer assumes
ownership of the existing family housing units and receives a long-term
lease in the underlying land.  The developer*s return on the project is
expected to come from developing, operating, and managing these housing
units, and its main source of revenue will be rents in the amount of a
service member*s basic allowance for housing paid by each service member
living in a privatized unit.  See North Am. Mil. Housing, LLC, B-289604,
Mar. 20, 2002, 2002 CPD P: 69 at 2.
[3] The Air Force subsequently acknowledged that the amount of $1,537,899
represented the estimated value for the base year only.  Agency Report at
2.  Accordingly, the total estimated value of the agency*s offer to the
SBA here was $3,075,798 (2 x $1,537,899 = $3,075,798).
[4] These subcontracts may be awarded on a competitive or noncompetitive
basis, based primarily on the size of the contracts.  See Federal
Acquisition Regulation
(FAR) S: 19.800.
[5] The Air Force also separately informed SBA that because of an update
to its housing privatization schedule (i.e., the anticipated award date
was now July 31, 2004), the requirement here would now be for a term of 6
months with two 6-month option periods, at a total estimated price of
$2,300,476.50.  SBA Comments, exh. B, Letter from Air Force to GAO, Dec.
11, 2003.