TITLE: B-296401, Sigmatech, Inc., August 10, 2005
BNUMBER: B-296401
DATE: August 10, 2005
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B-296401, Sigmatech, Inc., August 10, 2005

   Decision

   Matter of: Sigmatech, Inc.

   File: B-296401

   Date: August 10, 2005

   E. Ray McKee, Jr., Esq., for the protester.

   Vera Meza, Esq., Department of the Army, and Laura Mann Eyester, Esq.,
   Small Business Administration, for the agencies.

   Sharon L. Larkin, Esq., and James A. Spangenberg, Esq., Office of the
   General Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   1. Protest challenging bundling of system engineering and support services
   with other requirements under a single-award blanket purchase agreement
   (BPA) issued under awardee's Federal Supply Schedule contract is timely,
   where record does not demonstrate that protester knew of basis for protest
   until task orders for work, which the protester had previously performed,
   were issued under the BPA, and the protester filed its protest within 10
   days thereafter; GAO resolves doubts regarding timeliness in favor of
   protesters.

   2. Protest challenging bundling of system engineering and support services
   with other requirements under a single-award BPA issued under awardee's
   Federal Supply Schedule contract is sustained, where agency failed to
   perform bundling analysis or satisfy the requirements of Federal
   Acquisition Regulations sections 7.107 (a), (b); 10.001(c)(2); and
   19.202-1.

   DECISION

   Sigmatech, Inc. protests the placement of two task orders with Sverdrup
   Technology, Inc. under blanket purchase agreement (BPA) No.
   W56HZV-04-A-0005, awarded by the United States Army Tank-Automotive and
   Armaments Command (TACOM) for engineering and support services under
   request for quotations (RFQ) No. DAAE07-03-Q-N287. Sigmatech, a small
   business contractor that has previously performed system engineering and
   technical assistance (SETA) support services under a separate contract
   with another office of the Army, contends that the agency improperly
   bundled this requirement with other support services performed under the
   BPA.

   We sustain the protest.

   BACKGROUND

   On March 26, 2004, TACOM awarded a single-source BPA to Sverdrup under the
   firm's General Services Administration (GSA) schedule contract. This BPA,
   estimated at a value of $130,100,946 over a 5-year period, contemplates
   performance of a wide range of program and engineering services for the
   Army's Program Executive Office for Ground Combat Systems (PEO-GCS). The
   BPA currently supports, among other activities, the Robotic Systems Joint
   Project Office (RSJPO), which is also known as the Unmanned Ground
   Vehicles Project Office.

   Prior to the award of this BPA, program and engineering support services
   were provided under an indefinite-delivery/indefinite-quantity (ID/IQ)
   contract issued in 1999 by TACOM to Camber Corporation. Camber's contract,
   which expired in December of 2004, did not support the RSJPO.

   Instead, for the past 15 years, support for the RSJPO was provided under
   contracts issued by the Army's Aviation and Missile Command (AMCOM) to
   small business concerns. In 2000, the agency awarded an ID/IQ contract to
   Sigmatech, under which orders were placed for SETA services for the
   RSJPO,[1] and options were exercised under this contract until 2004 (after
   award of the Sverdrup BPA discussed above), with performance continuing
   into 2005. In 2004, the agency awarded Sigmatech a BPA, which also
   contemplated performing SETA services for the RSJPO. Sigmatech was among
   those firms that received awards as part of the small business reserves
   under the ID/IQ contract and the BPA.

   In October of 2002, the RSJPO came under the "cognizance" of the PEO-GCS.
   At about the same time, TACOM began its acquisition strategy for replacing
   the contract supporting the PEO-GCS held by Camber. On February 18, 2003,
   TACOM issued a "sources sought" notice for services required by the
   PEO-GCS. This notice identified that the required services included
   support for the following disciplines: engineering, technical, management,
   information management, product/quality assurance, testing, logistics, and
   program/project management. According to the notice, support was to be
   provided for several program management offices throughout the United
   States and overseas, including the Abrams, Stryker, Bradley, Future Combat
   Systems, JLW 155, and "Unmanned Gunned Vehicles."[2] The notice indicated
   that a base number of 200,000 hours per year, with a possibility of up to
   400,000 hours per year, would be required under a 5-year contract. The
   notice sought information about interested firms, their past performance,
   and whether the firms were 8(a) or historically underutilized business
   zone (HUBZone) concerns. Agency Report (AR), Tab 11, Sources Sought Notice
   (Feb. 18, 2003).

   TACOM received 45 responses to the "sources sought" notice from both large
   and small businesses, including a response from Sigmatech. Sigmatech's
   response stated that the firm was a small business, but not an 8(a) or
   HUBZone concern. After reviewing the responses, TACOM decided to obtain
   the services for the PEO-GCS with a single award BPA for 5 years under GSA
   Federal Supply Schedule (FSS) 871, for professional engineering services.

   On September 23, 2003, the agency asserts it sent a letter to Sigmatech,
   advising the firm of its change in acquisition strategy. Specifically, the
   letter stated that "[o]ur acquisition strategy is to award a single
   Blanket Purchase Agreement for 5 years of services under the GSA Multiple
   Award Schedule 871 for Professional and Engineering Services." The letter
   further advised that the agency would not provide Sigmatech with the
   solicitation because "the Government will not release this solicitation to
   those companies not included on the solicitation mailing list." AR, Tab
   13, Letter from TACOM Contracting Officer to Sigmatech (Sept. 23, 2003).
   Sigmatech denies receiving this letter and the agency has provided no
   evidence that Sigmatech did receive the letter.[3]

   On December 5, 2003, TACOM issued an RFQ to nine GSA Schedule 871 contract
   holders for program and engineering services for the PEO-GCS. The
   solicitation, which was open to both large and small businesses, stated
   that award would be limited to Schedule 871 vendors who could perform
   tasks under six special item numbers identified on the schedule. The RFQ
   generally sought program management, technical, logistics, and information
   technology support for the successful operation of the agency's weapon
   system acquisition mission. RFQ, sections A.1(a)(2), C.1, and attach. 1.
   The RFQ did not identify specific program offices that would be supported
   (unlike the "sources sought" notice). The RFQ was not provided to
   Sigmatech because the firm did not hold a GSA Schedule 871 contract.

   Sverdrup and Camber, both large businesses, were the only two vendors to
   respond to the RFQ. TACOM selected only Sverdrup for award and issued the
   firm a BPA on March 26, 2004.

   On April 29, 2005, TACOM issued two task orders under the Sverdrup BPA for
   program support for the RSJPO.[4] These two task orders specifically
   covered the SETA work performed by Sigmatech under the AMCOM contracts.
   Sigmatech was notified by e-mail on April 29 that its AMCOM work would
   thereafter be performed by Sverdrup under the TACOM BPA.

   Sigmatech protests the award of the BPA and task orders, contending that
   the SETA services for the RSJPO are improperly bundled under the TACOM
   BPA.

   TIMELINESS

   The agency initially asserts that Sigmatech's protest is untimely filed.
   In this regard, the agency first contends that Sigmatech knew, or should
   have known, its basis for protest as early as either the February 18, 2003
   "sources sought" notice or Sigmatech's February 24 response to that
   notice. These documents, the agency argues, show that Sigmatech knew, or
   should have known, that the RSJPO services were going to be procured by
   TACOM under a different contract vehicle, and thus Sigmatech should have
   protested at that time. However, the "sources sought" notice is not a
   solicitation, and since our Office only hears protests of solicitations,
   Pancor Corp., B-234168, Mar. 29, 1989, 89-1 CPD para. 328 at 2,
   Sigmatech's protest would have been premature at that point. Lockheed
   Martin Sys. Integration--Owego, B-287190.2, B-287190.3, May 25, 2001, 2001
   CPD para. 110 at 16 n.10.

   The agency next asserts that the protest is untimely because it was not
   filed within 10 days of the agency's September 23, 2003 letter that
   informed Sigmatech that the contract would be competed only among FSS 871
   holders. However, Sigmatech denies receiving this letter, and in any event
   the RFQ still had not been issued (it was not issued until December 5), so
   a protest again would have been premature. Id.

   The agency also asserts that the firm did not diligently pursue its
   protest after submitting its response to the "sources sought" notice. Had
   it done so, the Army argues, Sigmatech would have discovered that the
   services would be procured only through TACOM under a BPA issued to an FSS
   871 contractor, and that Sigmatech would be ineligible to compete because
   it did not hold an FSS 871 contract.[5] However, nothing in the record
   (other than the September 23 letter that Sigmatech denies receiving)
   indicates that Sigmatech should have known that the TACOM BPA would be the
   vehicle used to procure the RSJPO services. Indeed, as noted above, the
   agency did not "release" a copy of the RFQ to Sigmatech, from which the
   firm may have been able to determine a basis for protest, or specifically
   notify Sigmatech that the SETA work it was performing for RFJPO was to be
   "bundled" into the BPA. In fact, even after award of the Sverdrup BPA in
   2003, AMCOM placed orders for these services with Sigmatech extending into
   2005, and recompeted the requirement. Thus, on this record, we cannot
   conclude that Sigmatech's failure to earlier become apprised of the Army's
   asserted plan to obtain these services through the Sverdrup BPA was the
   result of a lack of diligent pursuit of this information by the protester.
   In this regard, we resolve doubts over issues of timeliness in favor of
   protesters. See LBM, Inc., B-290682, Sept. 18, 2002, 2002 CPD para. 157 at
   7.

   The record before us indicates that it was not until February 2005 that
   Sigmatech was informed by telephone of the Army's plan to procure the SETA
   services solely through the Sverdrup BPA, and subsequent written
   communications from the agency during February, March, and April suggested
   that this plan was not final even then. In fact, the AMSCOM ombudsman
   stated as recently as April 21, 2005 that TACOM was "considering my
   recommendations" to compete the requirement and include small businesses
   in this competition. As he informed Sigmatech, based on his discussions
   with TACOM, "I believe there is a very high probability that they will
   issue a competitive RFP for the [SETA] services--and I see no reason that
   Sigmatech will be precluded from competing." Protest, attach. 9, E-mail
   from AMSCOM Ombudsman to Sigmatech (Apr. 21, 2005). The agency does not
   deny that TACOM was still considering whether to compete the requirement
   during this time. Given that we resolve doubts of timeliness in favor of
   the protester, we cannot on this record find Sigmatech's protest to be
   untimely.

   The record shows that on April 29, Sigmatech was informed in writing that
   the SETA services it was currently performing were going to be performed
   under the TACOM BPA effective May 1. Sigmatech protested to our Office
   within 10 days of this letter, and we find that its protest was timely
   filed. 4 C.F.R. sect. 21.2(a)(1) (2005).

   BUNDLING

   Sigmatech protests the "roll up" of the RSJPO services into the TACOM BPA
   awarded to Sverdrup. It contends that the agency improperly bundled the
   SETA services for the RSJPO with the TACOM program and engineering
   services, and that the agency did not conduct any bundling analysis or
   give proper notice to Sigmatech or the Small Business Administration (SBA)
   in order to allow Sigmatech a fair opportunity to compete for these
   services. The SBA also asserts that the Army violated bundling regulations
   here.

   The Small Business Act, 15 U.S.C. sect. 632, defines bundling as:

   consolidating 2 or more procurement requirements for goods or services
   previously provided or performed under separate smaller contracts into a
   solicitation of offers for a single contract that is likely to be
   unsuitable for award to a small-business concern due to--

   (A)  the diversity, size, or specialized nature of the elements of the
   performance specified;

   (B) the aggregate dollar value of the anticipated award;

   (C) the geographical dispersion of the contract performance sites; or

   (D) any combination of the factors described in subparagraphs (A), (B),
   and (C).

   15 U.S.C. sect. 632(o)(2) (Supp. 2004); see also 13 C.F.R. sect.
   125.2(d)(1)(i); Federal Acquisition Regulation (FAR) sect. 2.101. The term
   "separate smaller contract" is defined as "a contract that has been
   performed by 1 or more small business concerns or was suitable for award
   to 1 or more small business concerns." 15 U.S.C. sect. 632(o)(3); 13
   C.F.R. sect. 125.2(d)(1)(ii).

   When a proposed acquisition involves bundled requirements, the agency must
   first conduct market research to determine whether the bundling is
   necessary and justified, given the potential impact on small business
   participation, by ascertaining whether the government will derive
   measurably substantial benefits from the bundling and quantifying these
   benefits. FAR sect. 7.107(a), (b). In addition, the agency must, at least
   30 days before issuing a solicitation, provide its acquisition package to
   the SBA procurement representative for review and also provide a statement
   why the (1) proposed acquisition cannot be divided into reasonably smaller
   lots for small businesses, (2) delivery schedules cannot be established
   that will encourage small business participation, (3) proposed acquisition
   cannot be structured so to make it likely that small businesses can
   compete for the prime contract, (4) consolidated construction project
   cannot be acquired as separate discrete projects, or (5) bundling is
   necessary and justified. FAR sect. 19.202-1(e). Furthermore, within the
   same 30 days, an agency must notify any affected incumbent small business
   concerns of the Government's intention to bundle the requirement. FAR
   sect. 10.001(c)(2).

   Here, the record shows that TACOM did not perform any bundling analysis or
   notify the SBA or Sigmatech of its acquisition strategy. However, the
   agency argues that FAR sections 7.107(a), (b); 10.001(c)(2); and 19.202-1
   do not apply to the task orders or the BPA issued under Sverdrup's FSS
   contract because these provisions applying bundling rules to FSS contracts
   were implemented after TACOM had completed the development of its
   acquisition plan.

   The requirements that agencies perform a bundling analysis and notify the
   SBA when requirements are bundled were specifically made applicable to
   BPAs and orders placed against FSS contracts by a Federal Register notice
   published October 20, 2003, with an "effective date" of October 20,
   2003.[6] 68 Fed. Reg. 60,000 (Oct. 20, 2003); FAR sect. 8.404(a). The FAR
   states that "[u]nless otherwise specified . . . FAR changes apply to
   solicitations issued on or after the effective date of the change." FAR
   sect. 1.108(d)(1). Since the solicitation that led to the award of the BPA
   was not issued until December 5, 2003, which was after the effective date
   of the revised bundling regulations, the agency was required to comply
   with these regulations, even though at the time the Army finished its
   acquisition planning the regulations had not gone into effect.

   The Army next argues that these FAR bundling requirements do not apply
   because the SETA services previously performed by Sigmatech were not
   bundled with the other requirements and were merely a "follow on" to the
   Camber contract. However, the record shows that, for the past 15 years,
   the SETA services for the RSJPO have been provided by small businesses
   (including Sigmatech) under AMCOM contracts. These services were not, as
   the agency contends, a "follow on" to the Camber contract previously
   issued by TACOM because, although SETA services were provided under the
   Camber contract, this support for the RSJPO was not provided by Camber.
   Even after the RSJPO came under the control of TACOM, the Army still
   procured the RSJPO services from small businesses through the AMCOM
   contracts and BPAs for example, through exercising options under the ID/IQ
   contract as recently as 2004 (with performance into 2005) and through the
   BPA issued to Sigmatech in 2004, all as part of small business reserves.
   Thus, the inclusion of the RSJPO SETA services in Sverdrup's BPA is a
   consolidation of two or more procurement requirements that were previously
   performed by small businesses under separate, smaller contracts.

   We also find that the procurement appears to result in a single contract
   (the Sverdrup BPA and resulting task orders)[7] that is unsuitable for
   award to small businesses due to its size and the aggregate dollar amount
   of the anticipated award. In this regard, the estimated contract value is
   approximately $130 million over a 5-year period and only two large
   businesses (and no small businesses) responded to the RFQ that resulted in
   the BPA award.

   We thus conclude, under these circumstances, that the consolidation of the
   SETA services for the RSJPO under the Sverdrup BPA meets the definition of
   bundling under the Small Business Act. However, the record shows that the
   Army failed to perform a bundling analysis as required by FAR sect.
   7.107(a), (b), or comply with the requirements of FAR sect. 19.202-1 in
   providing notice of bundling to the SBA. The record further shows that the
   agency failed to provide notice to Sigmatech (the incumbent small business
   concern) of its intent to bundle the requirements and thus failed to
   comply with FAR sect. 10.001(c)(2). We sustain the protest on these bases.

   We recommend that the Army conduct an analysis in accordance with FAR
   sect. 7.107 to determine whether it was necessary and justified for the
   SETA services for the RSJPO to be bundled with the services included under
   the Sverdrup BPA, or whether these services should remain reserved for
   small businesses. We also recommend that once this analysis is complete,
   the agency provide its acquisition package to the SBA procurement center
   representative as required by FAR sect. 19.202-1. If it is determined that
   the SETA services for the RSJPO were improperly bundled and should be set
   aside for small businesses, we recommend that the Army compete the
   requirement among small businesses. We further recommend that the
   protester be reimbursed its reasonable costs of filing and pursuing its
   protest. The protester shall file its certified claim for costs, detailing
   the time expended and costs incurred, with the agency within 60 days of
   receipt of this decision.

   The protest is sustained.

   Anthony H. Gamboa

   General Counsel

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

   [1] One of the task orders issued under the 2000 ID/IQ contract was valued
   in excess of $5,000,000.

   [2] The parties agree that the term "Unmanned Gunned Vehicles" was
   incorrect, and that the correct program office is the "Unmanned Ground
   Vehicles Project Office."

   [3] Sigmatech has provided this Office with two affidavits denying
   receipt, including an affidavit from the addressee of the letter.

   [4] These task orders are scheduled to expire on July 31, 2005.

   [5] The Army also asserts that Sigmatech is not an interested party to
   protest the award of the BPA, or task orders issued thereunder, because
   the firm does not hold an FSS 871 contract. However, Sigmatech is not
   protesting its eligibility to compete under the RFQ, but rather the fact
   that a portion of the services procured thereunder should have been
   procured separately and set aside for small businesses. Since Sigmatech is
   a small business that can perform the SETA services that are asserted to
   be improperly bundled, the firm has the direct economic interest
   sufficient to protest this issue before our Office. 4 C.F.R. sect.
   21.0(a).

   [6] Prior to this notice, the FAR was silent as to whether the bundling
   rules applied to FSS awards or orders thereunder.

   [7] A "single contract" that may be unsuitable for award to a small
   business concern includes orders placed against an indefinite-quantity
   contract under an FSS contract. FAR sect. 2.101; 13 C.F.R. sect.
   125.2(d)(1)(iii).