TITLE: B-297262, Metro Home Medical Supply, Inc., December 8, 2005
BNUMBER: B-297262
DATE: December 8, 2005
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B-297262, Metro Home Medical Supply, Inc., December 8, 2005

   Decision

   Matter of: Metro Home Medical Supply, Inc.

   File: B-297262

   Date: December 8, 2005

   Cheryl Anderson-Small for the protester.

   Merilee D. Rosenberg, Esq., and Philip Kauffman, Esq., Department of
   Veterans Affairs, and John W. Klein, Esq., and Kenneth Dodds, Esq., Small
   Business Administration, for the agencies.

   Jennifer D. Westfall-McGrail, Esq., and Christine S. Melody, Esq., Office
   of the General Counsel, GAO, participated in the preparation of the
   decision.

   DIGEST

   Protest objecting to agency's failure to make award to protester, an
   Historically Underutilized Business Zone small business, on a sole-source
   basis is denied where prerequisites for a sole-source award, set forth in
   Federal Acquisition Regulation sect. 19.1306, were not met.

   DECISION

   Metro Home Medical Supply, Inc., a certified Historically Underutilized
   Business Zone (HUBZone) small business, protests the decision of the
   Department of Veterans Affairs (VA) to procure supplies and services for
   beneficiaries of the John D. Dingell VA Medical Center (VAMC) in Detroit
   under request for proposals (RFP) No. 583-00035-06, rather than through
   award of a contract to Metro on a sole-source basis.

   We deny the protest.

   The RFP, which was issued on July 15, 2005, sought home oxygen supplies
   and services for patients of seven VA medical centers and health care
   systems located in Veterans Integrated Service Network 11, one of which
   was the John D. Dingell VAMC. The solicitation contemplated the award of
   one or more fixed-price requirements contracts for a base period of 1 year
   and four 1-year options. The RFP, as amended, provided for award on the
   basis of the following cascaded preferences:

   .     for the John D. Dingell VAMC and three of the other facilities, if
   technically acceptable, competitive proposals were received from two or
   more HUBZone small businesses, award would be made to a HUBZone small
   business;

   .     for the remaining three facilities and for any of the above
   facilities not resulting in award to a HUBZone small business, if
   technically acceptable, competitive offers were received from two or more
   small businesses, award would be made to a small business; and

   .     in the event that award was not made pursuant to either of the above
   procedures, award would be made on the basis of full and open competition.

   On September 20, 3 days prior to the closing date for receipt of
   proposals, Metro protested to our Office, arguing that supplies and
   services for the John D. Dingell VAMC should be removed from the cascaded
   award process and a contract for them awarded to it on a sole-source basis
   under Federal Acquisition Regulation (FAR) sect. 19.1306. (Except in this
   limited sense, the protester did not challenge the lawfulness of the
   cascade approach.) The protester asserted that the VA has not complied
   with the goals for contracting to HUBZone small businesses that it has set
   for itself pursuant to the requirements of 15 U.S.C. sect. 644(g)(2)
   (2000), and that to remedy the noncompliance, the agency should award it
   (i.e., Metro) a sole-source contract.[1]

   The VA responds that it could not award a sole-source contract to Metro
   because the requirements of FAR sect. 19.1306 were not satisfied.[2] As
   relevant here, this section provides that a contracting officer may award
   a contract to a HUBZone small business concern on a sole-source basis
   without considering small business set-asides, provided that:

   (1)  Only one HUBZone small business concern can satisfy the requirement;

   (2)  The anticipated price of the contract, including options, will not
   exceed $5 million for a requirement within the North American Industry
   Classification System (NAICS) codes for manufacturing, or $3 million for a
   requirement within any other NAICS code;

   (3)  The requirement is not currently being performed by a non-HUBZone
   small business concern;

   (4)  The value of the acquisition exceeds the simplified acquisition
   threshold;

   (5)  The HUBZone small business concern has been determined to be a
   responsible contractor with respect to performance; and

   (6)  Award can be made at a fair and reasonable price.

   FAR sect. 19.306(a).

   The contracting officer observes that neither the requirement that only
   one HUBZone small business concern be capable of satisfying the
   requirement nor the requirement that the anticipated price of the
   contract, including options, not exceed $3 million (the applicable limit)
   was met here. In the former connection, the contracting officer notes that
   both Metro and another HUBZone small business, Eagle Home Medical Corp.,
   expressed interest in competing for the Dingell VAMC requirements; in the
   latter connection, he notes that the government's estimated price for the
   services for that location was in excess of $3 million. The protester has
   not sought to rebut the agency's position, which we find to be
   persuasive.[3] In this regard, we sought comments on the protest from the
   Small Business Administration (SBA). In its comments, SBA agreed that the
   requirement at issue may not be the subject of a sole-source award to a
   HUBZone small business because the prerequisites for consideration of such
   a sole-source contract are not present. SBA Comments at 1-2. Moreover, as
   SBA also noted, the language of FAR sect. 19.306(a) is discretionary in
   any event; neither the statutory provisions relating to the HUBZone
   program nor the implementing regulations require the contracting officer
   to award a sole-source contract even where the prerequisites for such an
   award are met. Id. at 2.

   Further, with regard to the protester's argument that the VA should award
   it a sole-source contract to remedy the agency's alleged failure to meet
   its annual goals for contracting to HUBZone small businesses, there is no
   legal basis for such a contention. As SBA points out, "Neither the
   statutory HUBZone provisions, the statutory goaling provisions, nor the
   implementing regulations contain an exception to the prerequisites for
   sole source HUBZone contract awards based on an agency's goaling
   performance. See 15 U.S.C. sections 644(g)-(h), 657a(b)(2); FAR sect.
   19.1306(a); 13 C.F.R. sect. 126.612." SBA Comments at 2.

   The protest is denied.

   Anthony H. Gamboa

   General Counsel

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

   [1] 15 U.S.C. sect. 644(g)(2) provides in relevant part as follows:

   The head of each Federal agency shall . . . establish goals for the
   participation by small business concerns, by small business concerns owned
   and controlled by service-disabled veterans, by qualified HUBZone small
   business concerns, by small business concerns owned and controlled by
   socially and economically disadvantaged individuals, and by small business
   concerns owned and controlled by women in procurement contracts of such
   agency.

   [2] In its comments on the agency report, the protester complains that the
   report was submitted to our Office 2 days late. To the extent that the
   protester suggests that due to the report's lateness, we should ignore its
   contents, we will consider a late report provided that its lateness did
   not prejudice the protester. General Elec. Co., B-228191, Dec. 14, 1987,
   87-2 CPD para. 585 at 2-3; see also Military Agency Servs. Pty., Ltd.,
   B-290414 et al., Aug. 1, 2002, 2002 CPD para. 130 at 9. Here, there is no
   evidence that the protester, which was given the full period allowed under
   our Regulations to comment on the report, was prejudiced by the agency's
   late submission. See Cajar Def. Support Co., B-237426, Feb. 18, 1990, 90-1
   CPD para. 286 at 6-7.

   [3] In responding to the agency report, the protester raised a new
   argument, i.e., that the Dingell VAMC should be removed from the cascaded
   set-aside and designated as an "unencumbered" HUBZone set-aside. This
   would mean that, if the contracting officer receives only one acceptable
   offer from a qualified HUBZone small business in response to a set-aside,
   the contracting officer is to make award to that concern. FAR sect.
   19.1305(d). We will not consider this argument because it pertains to the
   terms of the RFP, but was not raised prior to the closing date for receipt
   of proposals, and thus is untimely. Bid Protest Regulations, 4 C.F.R.
   sect. 21.2(a)(1) (2005).