TITLE: B-298931, ViroMed Laboratories, December 20, 2006
BNUMBER: B-298931
DATE: December 20, 2006
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B-298931, ViroMed Laboratories, December 20, 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: ViroMed Laboratories

   File: B-298931

   Date: December 20, 2006

   Thomas A. Schmutz, Esq., and Jennifer A. Bowen, Esq., Morgan, Lewis &
   Bockius LLP, for the protester.

   Maj. ChristinaLynn E. McCoy, Department of the Army, and Laura Mann
   Eyester, 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 that agency failed to conduct adequate market research to
   determine appropriateness of small business set-aside by failing to verify
   the representations of small business offerors regarding their
   capabilities is denied; in the absence of evidence that small business
   sources had misrepresented their capabilities, it was reasonable for the
   contracting officer to rely upon these representations in making set-aside
   determination.

   DECISION

   ViroMed Laboratories protests the decision by the Department of the Army
   to set aside for small business competition request for proposals (RFP)
   No. W81K04-06-R-0014, for Human Immunodeficiency Virus Type 1 (HIV-1)
   testing and reporting services. The protester contends that the
   contracting officer failed to make reasonable efforts to determine whether
   fair market price offers from two or more responsible small business
   concerns would be received.

   We deny the protest.

   BACKGROUND

   The RFP, which was issued on August 29, 2006, contemplated the award of a
   fixed-price indefinite-delivery/indefinite-quantity contract. The contract
   was to cover a 1-year base, and four 1-year option, periods.

   Prior to issuing the solicitation, the contracting officer posted a
   "sources sought" notice on the FedBizOpps website. The notice furnished a
   comprehensive listing of the test procedures to be performed, estimated
   quantities, data management requirements, and contractor accreditation
   requirements. Thirteen businesses responded to the sources sought notice;
   11 of the 13 firms furnished capability information, and of these 11, 9
   were small businesses. The notice invited sources with the skills and
   capabilities to perform the stated requirement to furnish information
   regarding their capabilities. The contracting officer reviewed the
   responses received and conducted additional research through the Central
   Contractor Registration System and the Dynamic Small Business Search
   (DSBS) System. In addition, she contacted the companies that had responded
   and queried them regarding their capability to perform the information
   technology (IT) portion of the requirement. Based on the information that
   she gathered, the contracting officer concluded that there were at least
   three small businesses capable of performing the RFP's requirements. The
   contracting officer further concluded that since her research showed that
   HIV testing was offered and sold competitively in substantial quantities
   in the commercial marketplace, there was a reasonable expectation of award
   at a fair market price. Accordingly, the contracting officer concluded
   that the requirement should be set aside for small business competition.

   The contracting officer conducted further market research at the time she
   completed DD Form 2519, Small Business Coordination Record. The research
   consisted of searching the DSBS system using the NAICS code assigned to
   the solicitation and the keyword "HIV." The search yielded three small
   businesses, one of which was considered to be a possible additional
   source.[1]

   The agency held a pre-proposal conference on September 11, 2006.
   Representatives from the protester, which is the incumbent contractor and
   a large business, and five small businesses attended. Three of the small
   businesses were firms that had submitted responses to the sources sought
   notice.

   On September 12, ViroMed filed an agency-level protest objecting to the
   agency decision to set aside the acquisition for small business
   competition. By decision dated September 21, the contracting officer
   denied the protest. On October 3, prior to the closing date set for
   receipt of proposals, ViroMed protested to our Office.

   DISCUSSION

   Under Federal Acquisition Regulation (FAR) sect. 19.502-2(b), a
   procurement with an anticipated dollar value of more than $100,000, such
   as the one here, must be set aside for exclusive small business
   participation when there is a reasonable expectation that offers will be
   received from at least two responsible small business concerns and that
   award will be made at a fair market price. The use of any particular
   method of assessing the availability of small businesses is not required
   so long as the agency undertakes reasonable efforts to locate responsible
   small business competitors. National Linen Serv., B-285458, Aug. 22, 2000,
   2000 CPD para. 138 at 2. The decision whether to set aside a procurement
   may be based on an analysis of factors such as the prior procurement
   history, the recommendations of appropriate small business specialists,
   and market surveys that include responses to sources sought announcements.
   SAB Co., B-283883, Jan. 20, 2000, 2000 CPD para. 58 at 1-2; PR Newswire,
   B-279216, Apr. 23, 1998, 98-1 CPD para. 118 at 2. Because a decision
   whether to set aside a procurement is a matter of business judgment within
   the contracting officer's discretion, our review generally is limited to
   ascertaining whether that official abused his or her discretion. Admiral
   Towing and Barge Co., B-291849, B-291849.2, Mar. 6, 2003, 2003 CPD para.
   164 at 3-4; PR Newswire, supra, at 2. We will not question a small
   business set-aside determination where the record shows that the evidence
   before the contracting officer was adequate to support the reasonableness
   of the conclusion that small business competition reasonably could be
   expected. National Linen Serv., supra, at 2.

   The protester argues that the market research conducted by the contracting
   officer here was inadequate to support her conclusion that offers from at
   least two responsible small business concerns could reasonably be
   expected. ViroMed maintains in this regard that at a minimum, adequate
   market research required the contracting officer to determine whether each
   small business that responded to the sources sought notice had (1)
   appropriately equipped facilities, (2) an adequate number of personnel,
   (3) the capability to process up to 8,000 HIV tests per day, and (4) the
   ability to secure the required IT capability. The protester contends that
   rather than verifying the accuracy of sources' claims regarding their
   capabilities, the contracting officer simply accepted their self-serving
   assertions, which was insufficient.

   While acknowledging that agencies are not required to make determinations
   regarding the responsibility of prospective sources in deciding whether to
   set aside an acquisition, Protester's Comments, Nov. 13, 2006, at 3, the
   protester in essence argues that the agency should have made
   determinations tantamount to affirmative determinations of responsibility
   with regard to the prospective sources here. In making set-aside
   decisions, agencies need not make either actual determinations of
   responsibility or decisions tantamount to determinations of
   responsibility, however; rather, they need only make an informed business
   judgment that there is a reasonable expectation of receiving acceptably
   priced offers from small business concerns that are capable of performing
   the contract. SAB Co., supra, at 3-4; PR Newswire, supra, at 3.

   The market research performed by the contracting officer here clearly
   permitted her to make an informed business judgment that offers from
   multiple small businesses with the capability to perform the required
   volume of tests and to secure the required IT capability could reasonably
   be expected.[2] Regarding the protester's assertion that the contracting
   officer should not have accepted the "self-serving" claims of prospective
   offerors regarding their capabilities without verification, in the absence
   of evidence of misrepresentation, we do not think that such a level of
   scrutiny was required.

   The protest is denied.

   Gary L. Kepplinger

   General Counsel

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

   [1] One of the other two firms was a firm that had responded to the
   sources sought notice (and thus had already been counted as a potential
   source), while the other was a supplier of test products, rather than a
   laboratory, and thus was not considered to be a potential source.

   [2] In a December 4, 2006 report on the protest, the Small Business
   Administration opined that the contracting officer's market research was
   adequate and supported her determination to set the acquisition aside for
   small business competition.