TITLE: B-297177.3; B-297177.4, NANA Services, LLC, January 3, 2006
BNUMBER: B-297177.3; B-297177.4
DATE: January 3, 2006
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B-297177.3; B-297177.4, NANA Services, LLC, January 3, 2006
DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective
Order. This redacted version has been approved for public release.
Decision
Matter of: NANA Services, LLC
File: B-297177.3; B-297177.4
Date: January 3, 2006
Steven W. Silver, Esq., and Carl Winner, Esq., Robertson, Monagle &
Eastaugh, and Richard B. Oliver, Esq., McKenna Long & Aldridge, for the
protester.
Carl Walker, Esq., and Elizabeth Rivera, Esq., Department of the Navy, and
Laura Mann Eyester, Esq., and John W. Klein, Esq., Small Business
Administration, for the agencies.
John L. Formica, Esq., and James A. Spangenberg, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
The award of noncompetitive bridge contract under the Small Business
Administration's section 8(a) program is unobjectionable where the
acceptance of the requirement into the 8(a) program does not violate any
statute or regulation.
DECISION
NANA Services, LLC protests the award of a contract for morale, welfare,
and recreation (MWR) services for Department of Defense (DOD) personnel on
Guam, made by the Department of the Navy under the Small Business
Administration's (SBA) section 8(a) program on a noncompetitive basis for
performance by Global Food Services (GFS).
We deny the protest.
The agency explains that the "MWR services on Guam are indispensable due
to the `remote' location and the needs of the U.S. personnel and their
families on the island of Guam." Agency Report (AR) at 2. The MWR services
to be provided include "child development/child care and youth services,
recreation, physical fitness and library services to multiple [DOD]
commands, activities, detachments, and Federal activities." Id. The agency
points out that the "child development and child care facilities on Guam
care for approximately 200 children during core work hours," and that the
"lack of these services would have an extremely deleterious effect on the
service members and civilian workforce who rely on these services while on
duty." AR at 3.
The MWR services had been provided since 2000 by Raytheon Technical
Services under a large base operations support (BOS) contract, with that
contract having an end date of September 30, 2005. AR at 3. In preparation
for the expiration of Raytheon's contract, the agency issued request for
proposals (RFP) No. N00604-05-R-0003 (RFP -0003) as a small business
set-aside for the MWR services only. The agency received proposals from
NANA and GFS, and selected GFS's proposal for award. NANA filed protests
with our Office on September 8 and 13, 2005, challenging the agency's
selection of GFS for award, and in response, the agency informed our
Office and the parties that it would reevaluate the proposals of NANA and
GFS, and make a new source selection. Because the agency's actions
rendered NANA's protests academic, our Office dismissed the protests on
September 15.
The record reflects that the agency considered a number of options to
ensure the uninterrupted provision of the MWR services while the proposals
of NANA and GFS were being reevaluated, including the extension of the MWR
services portion of Raytheon's contract past September 30, and the
provision of the services through SBA's section 8(a) program. AR, Tab 3,
Memorandum for the Record Concerning Raytheon's BOS Contract (Sept. 22,
2005); Tab 4, Memorandum for the Record Concerning Raytheon's BOS Contract
(Sept. 23, 2005). Based upon its understanding that Raytheon was either
not interested or unable to provide the MWR services past September 30,
and because the agency's requirement for a bridge contract to acquire the
MWR services while the proposals were being reevaluated was accepted by
SBA into its section 8(a) program, a contract for the MWR services with a
base period of 3 months and one 3-month option period at a total price of
$2,711,097 was awarded to GFS, a section 8(a) firm, through the 8(a)
program on a noncompetitive basis. AR, Tab 25, Post-Negotiation Memorandum
(Sept. 26, 2005), at 3-4. This protest followed.
NANA argues that the Navy and SBA violated regulations governing the
placement of work under SBA's 8(a) program, as well as the regulations
governing the award of a contract under the 8(a) program on a
noncompetitive basis.
Section 8(a) of the Small Business Act authorizes SBA to contract with
other government agencies, and to arrange for the performance of those
contracts via subcontracts awarded to socially and economically
disadvantaged small businesses. 15 U.S.C. sect. 637(a) (2000); C. Martin
Co., Inc., B-292662, Nov. 6, 2003, 2003 CPD para. 207 at 3. SBA and
contracting agencies have broad discretion in selecting procurements for
the 8(a) program, and a contracting officer has broad discretion to let a
noncompetitive contract under section 8(a) of the Small Business Act upon
such terms and conditions as may be agreed upon by the procuring agency
and SBA. See C. Martin Co., Inc., supra; United Enter. & Assocs.,
B-295742, Apr. 4, 2005, 2005 CPD para. 67 at 3.
The section 8(a) program has both competitive and noncompetitive
components, depending on the dollar value of the requirement. See 13
C.F.R. sect. 124.506(a) (2005); United Enter. & Assocs., supra. Generally,
where the acquisition value exceeds $3 million, a section 8(a) contract
must be competed among section 8(a) firms; section 8(a) acquisitions with
values less than $3 million generally are awarded on a noncompetitive
basis. United Enter. & Assocs., supra. In order to obtain the information
necessary for SBA to determine that an offered requirement is eligible and
appropriate for award under the 8(a) program (whether on a competitive or
noncompetitive basis), SBA's regulations require that contracting agencies
furnish detailed information about a procurement when offering it for
inclusion in the program. 13 C.F.R. sect. 124.502; C. Martin Co., Inc.,
supra, at 4. In this regard, 13 C.F.R. sect. 124.502(c) sets forth 17
enumerated items which must be identified in a contracting agency's letter
offering work for inclusion in SBA's 8(a) program. See also FAR
sect. 19.804-2(a). As a general matter, SBA is entitled to rely on a
contracting agency's representations regarding offered requirements for
the 8(a) program. C. Martin Co., Inc., supra, at 7.
The record reflects that the Navy submitted an offering letter to SBA on
September 22, and then submitted a second, amended offering letter to SBA
on September 23. AR, Tab 11, Navy Offering Letter (Sept. 22, 2005); Tab
13, Navy Offering Letter (Sept. 23, 2005). In its initial offering letter
of September 22, the Navy provided the "acquisition history" of the
requirement as "currently provided by Raytheon Corporation, a large
business." AR, Tab 11, Navy Offering Letter (Sept. 22, 2005), at 2; see 13
C.F.R. sect. 124.502(c)(9); FAR sect. 19.804-2(a)(8) (offering letters
shall include "[t]he acquisition history, if any, of the requirement").
The acquisition history continued by stating that "Raytheon does not want
a follow-on contract," and that "GFS is a sub-contractor to the MWR
portion of the current Raytheon contract." The offering letter added that
a solicitation for the requirement (i.e., RFP -0003) had been issued "as a
small business set-aside," and that a "contract was awarded to GFS" for
the MWR services under that solicitation. The offering letter noted that a
protest had been filed with our Office by NANA challenging the award to
GFS, and that because of the agency's corrective action in response to the
protest, "a bridge contract is necessary to avoid interruption of
services." AR, Tab 11, Navy Offering Letter (Sept. 22, 2005), at 2.
In its September 22 offering letter, the Navy also identified GFS as the
8(a) concern nominated for performance of the requirement through the 8(a)
program, and justified its nomination of GFS for performance of the
services by stating that "[t]he acquisition is a follow-on contract and
GFS is one of the current sub-contractors." AR, Tab 11, Navy Offering
Letter (Sept. 22, 2005), at 2; see 13 C.F.R. sect. 124.502(12) (offering
letters shall include "[i]dentification of any specific Participant that
the procuring activity contracting officer nominates for award of a sole
source 8(a) contract, if appropriate, including a brief justification for
the nomination."); see also FAR sect. 19.804-2(a)(10). This section of the
offering letter further stated that "GFS is currently performing 50% of
the requirement," and that because GFS had begun transitioning for the
performance of the requirement under RFP -0003, "[a]warding a bridge
contract to GFS would ensure a seamless transition." AR, Tab 11, Navy
Offering Letter (Sept. 22, 2005) at 2. In accordance with applicable
regulations, the offering letter also identified NANA as a "known 8(a)
concern . . . that [had] expressed an interest in being considered for the
specific requirement." FAR sect. 19.804-2(a)(12); 13 C.F.R. sect.
124.502(c)(14) (offering letters "must" identify "all Participants which
have expressed an interest in being considered for the acquisition").
The record reflects that on September 23 the cognizant Navy contracting
specialist was informed by an SBA representative that "according to the
offering letter, it appeared that the requirement was previously solicited
as a small business set aside," and that "[a]lthough the offering letter
stated that the contract offered to the 8(a) . . . program was a `bridge'
contract, the letter did not discuss in detail the differences between
this bridge contract and the previously solicited small business set
aside." The SBA representative further informed the Navy contracting
specialist that "SBA could not accept the procurement for award as an 8(a)
contract, unless and until [the Navy] made further distinctions regarding
the offered requirement." SBA Supplemental Report, attach. 1, Declaration
of SBA Business Development Specialist (Dec. 6, 2005), at 1.
Later that day, the Navy "determined that although the requirement is a
result of a previously protested award, the bridge contract is considered
a new acquisition," and amended the offering letter by deleting the
acquisition history that had been set forth in the September 22 letter and
any reference to GFS as having previously performed any MWR services. AR,
Tab 15, Contracting Specialist's Memorandum for the Record (Sept. 23,
2005), at 2. That is, the Navy's September 23 offering letter described
the acquisition history as "None," and while nominating GFS for the
performance of the services, provided no explanation or justification for
the nomination. AR, Tab 13, Navy Offering Letter (Sept. 23, 2005).
The protester argues that the Navy's letters offering this procurement to
SBA lacked certain information required by the applicable regulations or
were misleading with regard to the information that was provided, such
that the offering letters could not properly provide the basis for SBA to
accept the procurement into the 8(a) program or to allow for the award of
a contract for the MWR services to GFS on a noncompetitive basis.
Specifically, the protester contends that the offering letter of September
22 was inaccurate with regard to the identification and justification of
GFS for the performance of the bridge contract, in that it incorrectly
stated that GFS was "currently performing 50% of the requirement," where,
as conceded by the agency and confirmed by the record, GFS was actually
performing only 6.2 percent of the MWR requirement. Protester's Comments
at 11; see AR, Tab 6, Acquisition Strategy Approval for Services
Memorandum, at 4; Tab 11, Navy Offering Letter (Sept. 22, 2005). The
protester argues in the alternative that the Navy's September 23 offering
letter was deficient in that the Navy, by deleting the acquisition history
and its justification for its nomination of GFS for the performance of the
contract, failed to provide any basis on which SBA could reasonably
conclude that the noncompetitive award of the bridge contract to GFS was
appropriate. Protester's Comments at 15.
NANA also argues that the Navy's offering letters failed to adequately
identify NANA as a "known 8(a) concern . . . that [had] expressed an
interest in being considered for the specific requirement," as was
assertedly required by FAR sect. 19.804-2(a)(12). Protest at 3. The
protester contends here that the agency, in addition to identifying NANA
as an interested 8(a) concern, was also required to provide additional
information regarding NANA's interest in performing the requirement in the
offering letter. The protester argues that the Navy's offering letter
should have explained, for example, that NANA's proposal submitted in
response RFP -0003 had [DELETED], and that NANA had repeatedly expressed
its interest in performing the MWR services and was "eager to compete for
any such contract." Protester's Comments at 10-11. In sum, the protester
argues that the Navy's offering letter was required to "reveal" to SBA
that NANA was interested in the contract and "had at least equal
experience and ability to undertake the contract" as GFS. Protester's
Comments at 11. In support of its argument that the Navy was required by
regulation to do more than identify NANA as an interested 8(a) concern,
the protester points to FAR sect. 19.804-2(a)(16), which provides that an
agency's offering letter must contain "[a]ny other pertinent and
reasonably available data." See also 13 C.F.R. sect. 124.502(c)(17)
(offering letters "must" include "[a]ny other information that the
procuring activity deems relevant or which SBA requests"). The protester
concludes that the "omission" of information regarding NANA's interest and
ability to perform the bridge contract "rendered the offer letters
misleading and did not permit the SBA to make an informed decision."
Protester's Comments at 11.
SBA responds that in accordance with applicable regulations, "[g]enerally,
the SBA will accept a contracting activity's recommended source" for a
noncompetitive award under the 8(a) program. SBA Supplemental Report at 4;
FAR sect. 19.804-3(b); see also 13 C.F.R. sect. 124.503(c)(1) ("Once SBA
determines that a procurement is suitable to be accepted as an 8(a) sole
source contract, SBA will normally accept it on behalf of the Participant
recommended by the procuring activity"). That is, according to SBA, the
regulation subsections pertaining to the identification and justification
of the nominated concern "do[] not require a justification as to [the
nominated source's] responsibility," but rather are intended to "ensure
that a Participant that caused the requirement to be offered to the 8(a)
program (i.e., self-marketed the requirement) was not ignored." SBA
Supplemental Report at 3. SBA explains that in reviewing an agency's
request regarding the nominated concern, it determines, as it did here,
whether the nominated concern meets the necessary 8(a) program
requirements. Id. SBA also explains that while, as stated above, it
"deferred to [the Navy's] selection of GFS and its determination that GFS
could perform the requirement," it was aware of GFS's qualifications to
perform the work (presumably through the September 22 offering letter),
including the fact that GFS "had been performing some of the work as a
subcontractor to Raytheon and had 8 days of mobilization." SBA
Supplemental Report, at 4 n.1. SBA adds that because it as a general
matter relies on the contracting activity to determine whether the
nominated concern is capable of performing the offered requirement, "it
did not matter to SBA whether GFS performed 50% or 6% of the work on the
previous, larger MWR contract as a subcontractor to Raytheon." SBA
Supplemental Report at 4. As to the contentions regarding whether further
information should have been provided in the offering letters regarding
NANA, SBA explains that because it had "determined that the requirement
was suitable for the 8(a) . . . program and the nominated concern complied
with the [applicable] requirements, the SBA accepted the requirement on
behalf of GFS," and that because of this, there was simply no need for any
other information or data regarding NANA, nor did SBA feel a need to
request any additional information. SBA concludes that in its view "the
offering letter complied with the regulations." SBA Supplemental Report at
5.
As the agency responsible for promulgating the regulations setting forth
the required contents of an agency's letter offering a procurement
requirement as an 8(a) contract, SBA's interpretation of the regulations,
including the requirements posed by the regulation subsections pertaining
to the identification and justification of the nominated concern, deserves
great weight. See The Urban Group, Inc.; McSwain and Assoc., Inc..
B-281352; B-281353, Jan. 28, 1999, 99-1 CPD para. 25 at 6.
Here, the record reflects that the Navy's offering letter identified GFS
as the nominated concern, thus allowing SBA to determine whether GFS met
applicable 8(a) program requirements. Additionally, with regard to the
justification of GFS for award, we note that as pointed out by SBA,
regardless of whether the agency's September 23 offering letter complied
with the regulations pertaining to the "justification" of the nomination,
as asserted by the agencies, or failed to, as asserted by the protester,
the record reflects that SBA was aware of the reasoning behind the Navy's
nomination of GFS, that is, that GFS had performed the requirement under
the incumbent contract and had begun transitioning for the performance of
the requirement under RFP -0003. Accordingly, even if we were to agree
with the protester that the September 23 letter failed to provide an
adequate written "justification" for the Navy's nomination of GFS for the
award, the protester was not prejudiced by this alleged error. See United
Enter. & Assocs., supra, at 5 (SBA's failure to follow applicable
regulations did not prejudice the protester where the record reflects that
had SBA followed its regulations, it would have reached the same
conclusions).
With regard to the protester's contention that the Navy's offering letter
should have included information regarding NANA's capability to perform
the required MWR services, as opposed to only identifying NANA as a firm
interested in the requirement, we note that the regulations specifically
require only the identification of the 8(a) "[p]articipants which have
expressed an interest is being considered for the acquisition," which is
what the Navy's offering letter accomplished. We cannot find unreasonable
SBA's view that any further information or data regarding NANA's
capabilities was neither needed nor relevant given the fact that, as
mentioned above, SBA will generally accept a contracting activity's
recommended source for the noncompetitive award under the 8(a) program,
and GFS was found by SBA to meet the applicable 8(a) program requirements.
Simply put, under the regulatory scheme here, nothing precluded the Navy
from nominating GFS, rather than NANA, for the performance of the MWR
services on a noncompetitive basis, and the Navy's offering letter was not
required to do more than identify NANA as an 8(a) concern interested in
performing the services.[1]
NANA next argues that GFS's price for the bridge contract exceeded the
fair market price for the services, and that because of this, GFS should
not have been awarded the contract. Protester's Comments at 16.
The FAR defines "fair market price" with regard to the small business
programs as a "price based on reasonable costs under normal competitive
conditions and not on [the] lowest possible cost." FAR sect. 19.001. The
FAR also provides that "an 8(a) contract, sole source or competitive, may
not be awarded if the price of the contract results in a cost to the
contracting agency which exceeds a fair market price." FAR
sect. 19.806(b). In order to ensure that awards made to 8(a) participants
do not exceed the fair market price of the items or services, the FAR
requires that contracting officers "estimate the fair market price of the
work to be performed by the 8(a) contractor," and that "[i]n estimating
the fair market price . . . the contracting officer shall use cost or
price analysis and consider commercial prices for similar products and
services, available in-house cost estimates, data (including cost or
pricing data) submitted by the SBA or the 8(a) contractor, and data
obtained from any other Government agency." FAR sections 19.807(a), (b).
Our Office will not question an agency's fair market price determination
unless it is not reasonably based or there is a showing of fraud or bad
faith. Techno-Sciences, Inc., B-277260, Sept. 22, 1997, 97-2 CPD para. 115
at 5.
The record reflects that the Navy developed an estimated cost to the
government for the bridge contract "based upon the original government
estimate for [RFP -0003] for MWR services." The record includes a detailed
explanation of the methodology and assumptions used by the agency in
developing this estimate, including the agency's consideration of the
workload presented by the performance work statement for the bridge
contract and the number of personnel performing the MWR services under the
predecessor contract, as well as the estimated fully burdened labor rates
for key personnel, skilled labor, and unskilled labor. The agency
ultimately estimated the bridge contract's cost to the government for the
base and option periods at $2,511,255. AR, Tab 25, Post-Negotiation
Memorandum (Sept. 26, 2005), at 2.
Although the protester is correct that GFS's price of $2,719,928 for the
base and option periods of the bridge contract was roughly 8 percent more
than the government's estimate, we do not find objectionable the agency's
ultimate conclusion that GFS's price did not exceed the fair market value
of the services. In this regard, the record reflects that agency found
GFS's price for the bridge contract
reasonable based upon the higher level of risk due to the shorter
performance period; the shorter period available for the contractor to
recover costs when compared to a 60-month contract, greater costs
associated with the phase-in and phase-out periods which would require
hiring, training, transitioning, relocating new employees under stringent
time constraints which would also be limited to recovery under a shorter
period of performance.
Id. at 3. In considering GFS's price, the Navy noted that the above-quoted
"items were not considered in the development of the [government
estimate]," and thus concluded that although GFS's price exceeded the
Navy's initial estimate by 8 percent, its "proposed price for the base and
option period [was] . . . reasonable." Id.
The protester, although provided with the complete record of the agency's
determination that GFS's price was reasonable and not in excess of a fair
market price, does not challenge the agency's subsequent determinations
that its estimate did not account for a number of factors that would lead
to an increase in costs as set forth above. Given this, and the apparent
reasonableness of the agency's judgments in this regard as expressed
above, we find the agency's determination that GFS's proposed price did
not exceed the fair market price for the MWR services to be reasonable.
The protester next argues that the Navy's determination that the MWR
services to be provided under the bridge contract constituted a "new"
requirement, and subsequent deletion of the acquisition history from its
offering letter to SBA, were improper. Protester's Comments at 14. In this
regard, the protester points out that in accordance with applicable
regulations "SBA will not accept a procurement for award as an 8(a)
contract if . . . [t]he procuring activity issued a solicitation for or
otherwise expressed publicly a clear intent to reserve the procurement as
a small business or small disadvantaged business (SDB) set-aside prior to
offering the requirement to SBA for award of an 8(a) contract." 13 C.F.R.
sect. 124.504(a). The protester concludes here that because the Navy had
issued RFP -0003 for the MWR services as a small business set-aside, the
acceptance of the bridge contract for award to GFS under the 8(a) program
was expressly precluded by 13 C.F.R. sect. 124.504(a).
SBA's regulations define a new requirement as one that "has not been
previously procured by the relevant procuring activity," and clarify that
"[t]he expansion or modification of an existing requirement will be
considered a new requirement where the magnitude of change is significant
enough to cause a price adjustment of at least 25 percent (adjusted for
inflation) or to require significant additional or different types of
capabilities or work." 13 C.F.R. sect. 124.504(c)(1)(ii)(C); see SBA
Supplemental Report at 5-6. Consistent with this, SBA states that it
"generally finds that bridge contracts are new requirements since, as
here, they are for a shorter period of time and much less money than the
originally anticipated contract." SBA Report at 2 n.1; SBA Supplemental
Report at 6. In this regard, SBA notes that the total value of the bridge
contract awarded to GFS is less than $3 million, in contrast to RFP -0003,
which had an estimated value of more than $25 million, and also notes that
the bridge contract has a base period of 3 months with one 3-month option,
as opposed to RFP -0003, which provides for a base period of 1 year with
four 1-year options. SBA Supplemental Report at 6. SBA concludes that
because the bridge contract is for a far shorter period of time and
involves far less money than RFP -0003, and because "[t]here is no
evidence in the record that [the Navy] issued a solicitation for or
otherwise expressed publicly a clear intent to reserve the particular
procurement at issue in this protest - the bridge contract -- as a small
business or SDB set-aside prior to offering the requirement to SBA for
award as an 8(a) contract," there was nothing that "prohibit[e]d the SBA
from accepting the requirement into the 8(a) program." Id.
Again, as the agency responsible for promulgating the applicable
regulations, SBA's interpretation of the regulations, that is, what
constitutes a "new" requirement and whether that particular requirement
can be accepted into the 8(a) program, deserves great weight, and we defer
to its interpretation of its regulations as long as it is reasonable. The
Urban Group, Inc.; McSwain and Assoc., Inc., supra.
We think that SBA's interpretation of its regulations governing whether a
requirement is "new" and can be accepted into the 8(a) program is
reasonable. In this regard, SBA's interpretation is consistent with the
above-quoted relevant provision in its regulations essentially providing
that a procurement will be considered "new" if the value of the work
changes by at least 25 percent. See 13 C.F.R. sect. 124.504(c)(1)(ii)(C).
Additionally, and as noted by SBA, the bridge contract at issue here,
while for the same services, is not meant to replace the contract to be
awarded under RFP -0003, but rather is merely the contract vehicle that
enables the Navy to acquire the MWR services for a relatively short period
of time while it implements its corrective action. That is, there is no
dispute that the MWR services will ultimately be provided by the awardee
under RFP -0003.
The protester also argues that the bridge contract's award price will in
actuality exceed $3 million, such that it was required to be competed
among eligible 8(a) firms, including NANA. Protest at 3; see 13 C.F.R.
sect. 124.506(a) (providing that contracts with an anticipated award price
of $3 million or more be competed among eligible 8(a) firms). NANA points
out in this regard that the bridge contract as awarded not only contained
a base period of 3 months with a 3-month option period, upon which the
agency's estimate was based, but also included an option to extend the
bridge contract for an additional 6 months. The protester also argues that
the agency should have included "the estimated revenue from user fees for
[the MWR] services." Protest at 3.
The Navy concedes that the bridge contract as awarded did provide for an
extension of GFS's performance for an additional 6 months, but that the
inclusion of this clause was "inadvertent[]," and the contract was
modified to correct this oversight by deleting the subject clause. Navy
Submission (Nov. 16, 2005). The agency further explains that in estimating
the total value of the bridge contract, the "[r]evenues from patrons were
properly excluded since the statement of work provides that the contractor
shall not retain any revenues from patrons." AR at 7. Given the agency's
explanations here, the protester's failure to substantively rebut them, as
well as the fact that GFS's bridge contract provides for a total price of
$2,711,097 based upon the estimates set forth in the contract's pricing
schedule, which also have not been challenged by the protester, we find
this aspect of NANA's protest to be without merit.
The protester finally argues that instead of awarding this noncompetitive
8(a) contract, the Navy should have required Raytheon to provide the MWR
services while the agency implemented its corrective action, regardless of
whether Raytheon was "interested" in performing the MWR services. Protest
at 3; Protester's Comments at 3-8. The protester argues in the alternative
that even if the agency "lacked the absolute contractual right to require
Raytheon to continue to perform the MWR services until the re-evaluation
was completed," it could have turned to a named "third party contractor"
that the protester asserts was prepared to perform the services.
Protester's Comments at 7. The protester argues that by not obtaining the
MWR services through either of these alternatives, the agency failed "to
treat [NANA and GFS] equally," and "unfairly [gave] GFS an unwarranted
incumbent's competitive advantage." Protester's Comments at 3, 17. The
protester claims here that GFS, "after performing the bridge contract for
three to six months," will have advantages with regard to its technical
proposal, past experience, and transition costs with regard to RFP -0003.
Protester's Comments at 18.
We first note that the NANA's contention that GFS will gain an unfair
competitive advantage through its performance of the bridge contract is
apparently premised on the agency reopening the competition after GFS's
completion of the bridge contract, and requesting revised proposals. Given
that the agency's stated corrective action is only to reevaluate the
proposals and make a new source selection, we fail to see how GFS's
performance of the bridge contract will provide it with any advantage.
Moreover, as detailed above, the award of the bridge contract under the
section 8(a) program to GFS on a noncompetitive basis did not, in our
view, violate statute or regulation. As such, even if the agency were to
reopen the competition and seek revised proposals, this aspect of NANA's
protest would be without merit. The mere existence of a prior contractual
relationship between a contracting agency and a firm does not create an
unfair competitive advantage, nor is an agency required to compensate for
every competitive advantage inherently gleaned by a potential offeror's
performance of a particular requirement. Optimum Tech., Inc., B-266339.2,
Apr. 16, 1996, 96-1 CPD para. 188 at 7. Additionally, we note that the
agency has expressly stated in its agency report that, consistent with its
proposed corrective action of reevaluating the offerors' proposals without
seeking revised proposals, it will not consider GFS's performance of the
bridge contract in assessing the firm's past performance. AR at 8.
Finally, the fact that the Navy may have been able to acquire the needed
MWR services through another contract vehicle, be it an extension of
Raytheon's contract, or a contract with a "third party" outside the 8(a)
program, is irrelevant. Agencies, when looking to acquire goods or
services, frequently have options available to them, and our Office will
only object to an agency's selection of a particular option where it
violates a procurement statute or regulation. As set forth above, under
the regulatory and statutory scheme applicable here, nothing precluded the
Navy from offering the MWR requirement for inclusion in SBA's 8(a) program
and nominating GFS, rather than NANA, for the performance of the work, nor
did anything preclude SBA from accepting the work into its 8(a) program on
behalf of GFS on a noncompetitive basis.[2]
The protest is denied.
Anthony H. Gamboa
General Counsel
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[1] The protester also argues that if the agency had provided it with the
solicitation for the bridge contract as the protester argues is required
by FAR sect. 19.202-4(c), the protester "could have prepared a proposal
and demonstrated to [the Navy] and SBA that NANA should have been
considered for award of the bridge contract." Protest at 2; Protester's
Comments at 10. The section of the FAR to which NANA refers is not
applicable to noncompetitive awards under the 8(a) program. In fact,
"[f]ormal technical evaluations for sole source 8(a) requirements" are not
authorized under applicable SBA regulations. 13 C.F.R. sect. 124.503(e).
Thus, an agency, in determining whether to offer the procurement to SBA
for the 8(a) program, or in nominating a specific contractor for the award
of a section 8(a) contract on a noncompetitive basis, is not required to
provide all interested 8(a) concerns with the underlying solicitation.
The protester also asserts, apparently in the alternative, that the Navy
decided to nominate GFS for the performance of the MWR requirements after
"conduct[ing] an illegal and unreasonable competition between GFS and
NANA." Protester's Comments at 18. The protester claims that the Navy, in
determining to nominate GFS, referred to "information it had gained from
the discredited evaluation" of proposals under RFP -0003. Id. The
protester continues by pointing out what, in its views, were the flaws in
the agency's alleged evaluation of GFS and NANA and selection of GFS for
the nomination. Id. at 18-21. The protester's argument here is, in our
view, inconsistent with the record. That is, the record does not reflect
that the Navy conducted any competition with regard to the award of the
bridge contract, and the selection of GFS for the bridge contract was not
dependent on the competition conducted under RFP -0003. Rather, the record
indicates that the Navy concluded, based upon the fact that GFS had been
performing the MWR services under the predecessor contract and had begun
transitioning for performance under the contract awarded under RFP -0003,
that GFS could meet its needs for the continued provision of the MWR
services. The protester's contention again reflects its misunderstanding
of SBA's 8(a) program and the discretion afforded to agencies in the
nomination of contractors for the awards of contracts under the 8(a)
program on an noncompetitive basis.
[2] The protester asserts that as another alternative the Navy could also
have requested that SBA approve "a competitive 8(a) award below the
competitive thresholds" in accordance with FAR sect. 19.805-1(d).
Protester's Comments at 9. Again, although the Navy may have had the
option of making such a request, there was no requirement in statute or
regulation that it do so.