TITLE: B-298481, Murray-Benjamin Electric Company, LP, September 7, 2006
BNUMBER: B-298481
DATE: September 7, 2006
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B-298481, Murray-Benjamin Electric Company, LP, September 7, 2006

   Decision

   Matter of: Murray-Benjamin Electric Company, LP

   File: B-298481

   Date: September 7, 2006

   Brad Benjamin for the protester.

   Gail Booth, Esq., and Edward C. Hintz, Esq., Defense Logistics Agency, and
   Michael J. Noble, Esq., General Services Administration, for the agencies.

   Paul E. Jordan, Esq., and John M. Melody, Esq., Office of the General
   Counsel, GAO, participated in the preparation of the decision.

   DIGEST

   1. Protest that procurement violates agency's obligation to place orders
   under various contracts held by protester concerns matter of contract
   administration, which Government Accountability Office will not review.

   2. Agency is not required to order supplies under non-mandatory Federal
   Supply Schedule (FSS) contract, and where it is in agency's best
   interests--including need to establish "best value" among potential
   offerors--agency may compete its requirements among commercial sources of
   supply instead of under non-mandatory FSS.

   DECISION

   Murray-Benjamin Electric Company, LP (MBE) protests the terms of request
   for proposals (RFP) No. SP0930-06-R-A401, issued by the Defense Supply
   Center Columbus, Defense Logistics Agency (DLA), for an indefinite
   quantity of fiber optic cables. MBE asserts that DLA is obligated to
   procure the items listed in this RFP under current contracts with MBE.

   We deny the protest.

   The RFP, issued on an unrestricted basis, sought offers on nine different
   fiber optic cables used in support of the Nuclear Power Plants, Weapon
   System Code 21N. The solicitation contemplated the award of a fixed-price,
   indefinite-quantity contract for a 1-year base period, with up to 4 option
   years. [1] The RFP set a contract maximum of $3 million and a minimum of
   $45,000. Offers were to be evaluated for "best value" on the basis of
   price, past performance, proposed delivery, surge and sustainment,
   socioeconomic support, DLA mentoring business program, and the
   Javits-Wagner-O'Day program, with price approximately equal in weight to
   all other factors. Prior to the closing time for receipt of proposals, MBE
   submitted an offer and filed this protest with our Office.

   MBE principally argues that, instead of competing the requirement, the
   agency should have purchased certain of the RFP's line items under its
   Federal Supply Schedule (FSS) contract, Department of Defense E-Mall
   contract, or previously negotiated Indefinite Delivery Purchase Orders
   (IDPO), and the other items under other unidentified MBE contract
   vehicles. MBE notes that five of its IDPO contracts have been extended
   into 2007, and asserts that the agency is obligated under these contracts
   to procure the items from MBE.[2]

   Under the Competition in Contracting Act of 1984, our jurisdiction to
   resolve bid protests extends to resolving disputes concerning the alleged
   violation of procurement laws and regulations in connection with the award
   of contracts by federal agencies. 31 U.S.C. sect. 3551-3552 (2000),
   amended by the Ronald W. Reagan National Defense Authorization Act of
   Fiscal Year 2005, Pub. L. No. 108-375, sect. 326, 118 Stat. 1811 (2004).
   In exercising this authority, we do not review matters of contract
   administration (with exceptions not relevant here), which are within the
   discretion of the contracting agency and are, under the Contract Disputes
   Act of 1978, for review by a cognizant board of contract appeals or the
   Court of Federal Claims. 4 C.F.R. sect. 21.5(a); Hawker Eternacell, Inc.,
   B-283586, Nov. 23, 1999, 99-2 CPD para. 96 at 3. Resolving this aspect of
   MBE's protest would entail interpreting MBE's existing contracts and
   determining whether DLA's actions constituted breaches of those contracts.
   This is a matter of contract administration, and therefore will not be
   considered.[3]

   In a related argument, MBE asserts that the agency should have placed
   orders under the protester's FSS contract instead of competing the
   requirement because, under the FSS, no further competition is required. In
   this regard, MBE notes that the agency has previously relied upon Federal
   Acquisition Regulation (FAR) sect. 8.404 in making FSS purchases, and that
   FAR sect. 8.002 makes the General Services Administration (GSA), which
   administers the FSS, a required source of supply. While MBE concedes that
   use of its FSS contract is not mandatory (Supplemental Protest at 1), it
   maintains that the agency nevertheless was required to order against its
   FSS contract based on these FAR provisions and Department of Defense (DoD)
   policy.

   MBE's assertions are without merit. Under a mandatory FSS contract, an
   agency generally must order its requirements under that FSS if its minimum
   needs will be met by the products or services listed in the schedule.
   Adams Magnetic Prods., Inc., B-256041, May 3, 1994, 94-1 CPD para. 293 at
   3. However, as conceded by MBE, its FSS contract is not mandatory; thus,
   an agency's use of that contract is voluntary.[4] There is nothing else in
   the FAR, or elsewhere, that compelled the agency here to meet its
   requirements under MBE's FSS contract. FAR sect. 8.404 simply provides
   guidance on the use of the FSS--e.g., restricting competition to the FSS
   and eliminating the need for additional determinations of fair and
   reasonable pricing; it does not require agencies to use the FSS.
   Similarly, while the list of required sources found in FAR sect. 8.002
   places non-mandatory FSS contracts above commercial sources in priority,
   it does not require an agency to order from the FSS. Further, although an
   agency's placement of an FSS order indicates that the agency has concluded
   that the order represents the best value (FAR sect. 8.404(d)), the
   regulation does not establish a presumption that all FSS contractors
   represent the best value, such that the agency would be required to
   purchase from an FSS contractor.[5]

   Our conclusion is not changed by MBE's assertion that DLA has previously
   placed FSS orders for weapon systems and nuclear application programs and
   that other agency's have competed their needs through FSS contracts. Each
   federal procurement stands on its own; the fact that DLA and other
   agencies may have made FSS contract purchases in the past does not require
   DLA to do so here. Sabreliner Corp., B-275163 et al., Dec. 31, 1996, 96-2
   CPD para. 244 at 2 n.2. MBE's reliance on a letter from DoD's Director of
   Defense Procurement and Acquisition Policy on use of the FSS is similarly
   misplaced. The letter represents an internal matter of executive policy
   for the guidance and benefit of government personnel, and does not have
   the force and effect of law. Thus, the fact that the procurement may not
   conform to it does not represent a valid basis for protest. American
   Contract Servs., Inc., B-225182, Feb. 24, 1987, 87-1 CPD para. 203 at 4.
   In any event, while the letter provided guidance on the use of the FSS, it
   did not require its use.

   MBE asserts that the solicitation should have included an evaluation
   preference for HUBZone offerors under FAR sect. 19.1307. Noting that the
   preference is not limited to manufacturers, MBE maintains that it would be
   entitled to the preference as a small, woman-owned, HUBZone business.

   MBE's assertion is without merit. A HUBZone preference is only required to
   be included in a procurement conducted on the basis of full and open
   competition. FAR sections 19.1307, 19.1308. Here, the agency determined
   that the required fiber optic cable is available only from a limited
   number of manufacturers, and thus restricted the competition under the
   authority of 10 U.S.C. sect. 2304(c)(1). AR, Tab 4, Justification For
   Other Than Full and Open Competition. In any case, MBE was not prejudiced
   by the absence of the preference. In this regard, under the terms of the
   standard preference clause (FAR sect. 52.219-4), in order to receive the
   price preference a nonmanufacturer HUBZone small business, such as MBE,
   must agree to furnish only end items manufactured or produced by HUBZone
   small business manufacturing concerns. FAR sect. 52.219-4(f). The record
   shows that none of the approved manufacturers of the solicited cable is a
   HUBZone small business; MBE thus would not be able to meet this
   requirement, and thus would not qualify for the HUBZone price preference.

   MBE challenges the RFP's contract limitations clause, which provides for a
   contract minimum of only $45,000. MBE asserts that the minimum is
   unreasonable and places undue hardship on offerors.

   The essence of MBE's protest is that the agency has imposed too much risk
   on offerors. Solicitation provisions are not improper merely because they
   may impose risk on the contractor. It is within an agency's administrative
   discretion to offer for competition a proposed contract that imposes
   maximum risks upon the contractor and minimum burdens on the agency, and
   an offeror should account for this in formulating its proposal. TN-KY
   Contractors, B-291997.2, May 5, 2003, 2003 CPD para. 91 at 3; Instrument
   Control Serv., Inc.; Science & Mgmt. Res., Inc., B-289660, B-289660.2,
   Apr. 15, 2002, 2002 CPD para. 66 at 7. Therefore, MBE's objection to the
   imposition of risk on the contractor does not provide a valid basis of
   protest.[6]

   The protest is denied.

   Gary L. Kepplinger

   General Counsel

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

   [1] These items are referenced by National Stock Number (NSN) as follows:
   6015-01-467-9547 (9547), 6015-01-467-9549 (9549), 6015-01-467-9552 (9552),
   6015-01-467-9550 (9550), 6015-01-528-2487 (2487), and 6015-01-528-2481
   (2481), 6015-01-442-9423 (9423), 6015-01-442-9420 (9420), and
   6015-01-531-4355 (4355).

   [2] MBE also complains that the agency plans to change the variation in
   quantity provision in one of its IDPOs to reduce it from +/- 10 percent to
   +/- 0 percent, a change MBE asserts is "emblematic" of agency actions that
   have been detrimental to contractors. Protest at 2. To the extent MBE
   intends this to be a basis for protest; it concerns the administration of
   an unrelated contract and, as such, is not for review by our Office. Bid
   Protest Regulations, 4 C.F.R. sect. 21.5(a) (2006).

   [3] In any event, DLA explains that use of MBE's various contract vehicles
   would be inappropriate for this procurement. In this regard, only four of
   the NSNs (9547, 9549, 9552, and 9550) are listed on MBE's contracts, and
   MBE's FSS contract covering NSNs 9549, 9552, and 9550 is not mandatory.
   Further, the minimum order obligation under each active IDPO has been met,
   and the contract maximum under one IDPO has been met. With regard to the
   E-Mall, DLA has fulfilled its only obligation--to purchase not less than
   $1 in exchange for the listing.

   [4] In comments requested by our Office, GSA confirms that, absent a
   statute or regulation explicitly providing that use of a particular FSS
   contract is mandatory, an agency's use of that contract is voluntary. GSA
   Comments at 1.

   [5] As explained by GSA, while agencies are encouraged to use the FSS,
   where an agency concludes that it is in its best interests to meet its
   needs through an open-market procurement, it is free to do so. GSA
   Comments at 1. MBE asserts that DLA did not make a "best interests"
   determination, but we are aware of no legal requirement--and MBE cites
   none--that an agency do so. In any case, such a determination is implicit
   from the record. DLA explains that this acquisition is for critical
   application items used on a critical weapons system--nuclear power plants,
   weapons system code 21N--and will result in moving inventory control into
   the hands of the contractor. Agency Report (AR) paras. 28-29. For these
   reasons, DLA determined that it is necessary to make a determination of
   best value among competing proposals.

   [6] To the extent MBE believes the stated minimum represents insufficient
   consideration, its position is without merit. The agency explains that the
   military's demand for fiber optic cable has become more difficult to
   forecast due to contingency operations in different parts of the world,
   and maintains that the stated minimum ensures that the agency does not
   exceed what it is fairly certain to order. Where, as here, the government
   cannot predetermine, above a specified minimum, the precise quantity of
   supplies that will be required during the contract period, and where it is
   inadvisable for the government to commit itself for more than a minimum
   quantity, it may use an indefinite-quantity contract. FAR sect. 16.504(b);
   Aalco Forwarding, Inc. et al., B-277241.15, Mar. 11, 1998, 98-1 CPD para.
   87 at 6. To ensure that the contract is binding, the minimum quantity must
   be more than a nominal amount, but should not exceed the amount the agency
   is fairly certain to order. FAR sect. 6.504(a)(2). The determination of
   whether a stated minimum quantity is "nominal" must consider the nature of
   the acquisition as a whole. Sea-Land Serv., Inc., B-278404.2, Feb. 9,
   1998, 98-1 CPD para. 47 at 12. In view of the uncertainty in the amount of
   cable to be ordered, we believe the agency has reasonably established that
   the minimum represents more than a nominal amount.