TITLE: B-297240.2; B-297240.3; B-297240.4, OMNI Government Services, LP, March 22, 2006
BNUMBER: B-297240.2; B-297240.3; B-297240.4
DATE: March 22, 2006
********************************************************************************
B-297240.2; B-297240.3; B-297240.4, OMNI Government Services, LP, March 22, 2006

   DOCUMENT FOR PUBLIC RELEASE
   The decision issued on the date below was subject to a GAO Protective Order. 
   No party requested redactions; we are therefore releasing the decision in its
   entirety.

   Decision

   Matter of: OMNI Government Services, LP

   File: B-297240.2; B-297240.3; B-297240.4

   Date: March 22, 2006

   Alexander J. Brittin, Esq., Brittin Law Group, PLLC, for the protester.

   William K. Walker, Esq., Walker Reausaw, for Alutiiq Global Solutions,
   LLC, an intervenor.

   Jeffrey I. Kessler, Esq., and Beth Biez, Esq., Department of the Army, and
   John W. Klein, Esq., and Laura Mann Eyester, Esq., U.S. Small Business
   Administration, for the agencies.

   Paul N. Wengert, Esq., and Michael R. Golden, Esq., Office of the General
   Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   Protest is denied where agency reasonably determined that revised
   requirement for multimedia and visual information services would result in
   a price differential exceeding 25 percent of the cost of the incumbent
   contract and, therefore, in accordance with the regulations implementing
   the Small Business Administration's (SBA) section 8(a) program, the
   proposed contract constituted a new requirement that could be submitted
   for performance under the SBA's 8(a) program, notwithstanding the
   incumbent small business contractor's interest in competing for the work.

   DECISION

   OMNI Government Services, LP, a small business concern, protests the
   decision by the Department of the Army, U.S. Army Aviation and Missile
   Command (AMCOM), and the Small Business Administration (SBA), to accept
   under the SBA's section 8(a) business development program a requirement
   for multimedia and visual information services[1] for performance by
   Alutiiq Global Solutions, LLC, an Alaska native corporation.

   We deny the protest.

   OMNI is the incumbent contractor, providing certain multimedia and visual
   information services for AMCOM. On January 19, 2006, AMCOM notified OMNI
   that the SBA had accepted AMCOM's requirement for multimedia and visual
   information services for performance by Alutiiq, a participant in the
   SBA's 8(a) business development program. AR, Tab B, Letter from
   Contracting Officer to Protester (Jan. 19, 2006).

   OMNI objects that the proposed contract does not qualify as a "new
   requirement" and, therefore, the proposed contract cannot be placed in the
   8(a) program. 13 C.F.R. sect. 124.504 (2005). Section 8(a) of the Small
   Business Act authorizes the 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). The 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 the SBA. NANA Servs., LLC, B-297177.3, B-297177.4, Jan. 3, 2006, 2006
   CPD para. 4 at 2.

   The Army and the SBA argue that the scope of work has been changed so
   significantly from that in OMNI's incumbent contract that the price
   differential (which the regulation refers to as a "price adjustment," and
   in this case is a decrease in price) would exceed 25 percent, thereby
   making the proposed contract per se a new requirement under the applicable
   regulation. 13 C.F.R. sect. 124.504(c)(1)(ii)(C).[2] To reach this
   conclusion, the Army and the SBA calculated the differential by comparing
   the estimated maximum dollar value of the base year and four option years
   for the protested requirement--$6,711,000[3]--to the value of the
   incumbent contract, which they calculated as $9,791,025, which was
   adjusted for inflation.[4] Comparing the inflation-adjusted incumbent
   contract value and the government estimate for the 8(a) contract, the Army
   argues, and the record confirms, that there was a percentage differential
   (i.e., a decrease) of 31 percent. Army Request for Summary Dismissal,
   attach. 1.[5]

   The protester challenges the government estimate as erroneous because it
   allegedly does not include any labor costs for photographers, arguing that
   the functions described in several places in the new performance work
   statement necessarily encompass skills that would require performance by
   Photographer III, Photographer IV, and Photographer V, as defined in the
   occupational dictionary used by the Department of Labor. First
   Supplemental Protest at 2-7. The protester also objects that the
   government estimate does not appear to include additional fees and
   equipment costs.

   The Army responds that at least for purposes of an estimate, the
   non-photographer labor categories selected could perform the reduced
   photography requirements specified in the new performance work statement.
   Supplemental Memorandum of Law at 2; Joint Program Officials' Statement at
   2-6. Nevertheless, even if photographers were required, the Army points
   out that the Service Contract Act labor rates for photographers were
   generally below the labor rates of the labor categories used in the
   estimate and, therefore, the impact of substituting photographers would be
   expected to decrease the estimate, thereby further widening the
   differential between the cost of the new contract and the cost of the
   protester's inflation-adjusted incumbent contract. Joint Program
   Officials' Statement at 1. The protester has not meaningfully disputed the
   agency's position.

   The protester also has not shown that the Army's estimate was otherwise
   unreasonable. More specifically, the protester has not shown that the
   agency's estimate failed to include any additional fees and equipment
   costs required to perform the new contract. To the contrary, the Army has
   shown that its estimate did include estimates of direct materials and
   other direct costs. Supplemental Memorandum of Law at 2.

   In short, the protester has failed to show that the Army and the SBA were
   incorrect in concluding that the proposed contract was a "new requirement"
   and could be submitted and accepted for performance under the 8(a)
   program.

   The protest is denied.[6]

   Anthony H. Gamboa

   General Counsel

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

   [1] Such services include digital still imaging, digital graphics, digital
   motion imaging, presentation support, and maintenance of multimedia
   equipment. Agency Report (AR), Tab E, Performance Work Statement, at 8.

   [2] The regulation provides:

   The 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). The SBA's position is that a change
   of 25 percent is the key in this regard, even if (as in this case), the
   change is a reduction in price of 25 percent or more. See NANA Servs.,
   LLC, supra, at 9. The protester does not challenge the SBA's position on
   this point.

   [3] The Army and the SBA have consistently utilized this figure as the
   estimated cost of performance of the proposed contract. E.g., AR, Tab R,
   Letter from Army Chief of Small and Disadvantaged Business Utilization
   Office to SBA (Nov. 7, 2005) 1.

   [4] The protester objects to the agency's adjustment of its price to
   account for inflation. We agree with the Army and the SBA that it was
   reasonable, for purposes of comparison, to recalculate the price of each
   year of performance by the protester to reflect inflation-adjusted
   dollars, particularly since the applicable regulation requires the price
   adjustment calculation to be "adjusted for inflation." 13 C.F.R.
   sect. 124.504(c)(1)(ii)(C).

   [5] The SBA indicated that it concurred with the Army's method of
   calculating the differential as being a correct application of 13 C.F.R.
   sect. 124.504(c)(1)(ii)(C). Letter from SBA Counsel to GAO (Feb. 10,
   2006). We give great weight to the SBA's interpretation of its regulations
   in this regard. NANA Servs., LLC, supra, at 6.

   [6] In a supplemental protest, the protester argues that the estimate of
   the new contract cost should have been higher because of an increase in
   wages to be paid under the Service Contract Act of "approximately 5%."
   Second Supplemental Protest at 2. The protester's argument relies on a
   rough recalculation of the value of the proposed contract, and compares
   that to the protester's original contract value, without inflation
   adjustment. Even assuming that the supplemental protest is sufficiently
   specific and that the protester's rough recalculation of the cost of the
   proposed contract is correct, when compared to the value of the incumbent
   contract as adjusted for inflation (which, as discussed above, we agree is
   proper), the differential would still exceed 25 percent and, thus, the
   protester has not shown that it suffered competitive prejudice from the
   alleged error in wage rates.