TITLE: B-299660.2, Operational Support & Services, September 24, 2007
BNUMBER: B-299660.2
DATE: September 24, 2007
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B-299660.2, Operational Support & Services, September 24, 2007
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: Operational Support & Services
File: B-299660.2
Date: September 24, 2007
Joan K. F. Fiorino, Esq., and John C. Dulske, Esq., Dulske & Fiorino, for
the protester.
Bruce N. Edwards, Esq., and Michael R. Sorensen, Esq., Sorensen & Edwards,
for
Shee Atika Languages, the intervenor.
John W. Klein, Esq., and Kenneth Dodds, Esq., Small Business
Administration.
Maj. David Abdalla, and Capt. Robert B. Nelson, Department of the Army,
for the agency.
David A. Ashen, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
Noncompetitive award under Small Business Administration's section 8(a)
program was unobjectionable where meeting requirement under 8(a) program
did not violate statute or regulation.
DECISION
Operational Support & Services (OSS) protests the award of Department of
the Army, United States Special Operations Command (USSOCOM), contract
No. H92222-07-D-0021, to Shee Atika Languages (SAL), for comprehensive
foreign language interpretation, transcription, reporting and translation
services. OSS asserts that the USSOCOM acted in bad faith and in violation
of applicable regulations in making the award to SAL on a sole-source
basis under the Small Business Administration's (SBA) section 8(a)
program.
We deny the protest.
On December 28, 2006, USSOCOM issued a presolicitation notice on the
Federal Business Opportunities (FedBizOps) website announcing its
intention to issue, within 30 days, a solicitation for comprehensive
foreign language interpretation, transcription, reporting and translation
services in support of Special Operations Forces (SOF) operational
requirements worldwide. At the time of the notice, Worldwide Language
Resources, Inc. was providing the services to be procured under the
contemplated solicitation. The FedBizOps notice advised that the
solicitation would provide for multiple awards of
indefinite-delivery/indefinite-quantity contracts, with one award to be
reserved for a small business concern and one to be made on an
unrestricted basis.
On December 29, SAL, which is certified as an Alaskan Native Corporation
(ANC) under the SBA 8(a) program, responded to the FedBizOps notice with
an e-mail to the agency advising of its interest in the procurement, its
status as a section 8(a) ANC, and the fact that it had assembled a "team"
whose partners have "extensive experience with Special Operations,"
including current support of SOF in Afghanistan. SAL E-mail to USSOCOM
Contract Specialist, Dec. 29, 2006. The USSOCOM contracting officer at the
time, aware that SAL had a business relationship with Worldwide, the
incumbent contractor, decided to further investigate the possibility of an
award to SAL. E-mail from USSOCOM Contracting Officer to USSOCOM Contract
Specialist, Dec. 29, 2007; Declaration of USSOCOM Contracting Officer,
July 20, 2007. On January 9, 2007, SAL e-mailed the agency a statement of
the capabilities and intended approach of "Team Shee Atika" in performing
the requirement. On January 12, in response to an inquiry from USSOCOM,
SAL e-mailed the contracting officer a more detailed statement of
capabilities and approach; this statement listed Worldwide as one of SAL's
team members. On January 31, SAL provided a capabilities briefing to
USSOCOM, in which it listed the four members of Team Shee Atika, including
Worldwide. At the conclusion of the briefing, USSOCOM determined that SAL
was capable of satisfying its foreign language services requirement.
USSOCOM Contracting Officer Memorandum, Jan. 31, 2007. Accordingly, on
February 2, USSOCOM synopsized in FedBizOps its intention to award a
contract to SAL under SBA's 8(a) program.
On February 9, two other companies filed agency-level protests questioning
SAL's qualifications to perform the contemplated work, asserting that the
determination to abandon a competitive procurement was the result of a
conflict of interest, and that SAL was affiliated with Worldwide--whose
owner held a 49 percent ownership interest in SAL--so as to render SAL
other than a small business concern. On February 15, USSOCOM requested
that SBA make a formal size determination with respect to SAL. However,
SBA dismissed the matter on the bases that (1) it was premature because
there had been no formal solicitation and no response to a solicitation
from the protesters, and (2) the protesters were not interested parties
because they were not 8(a) concerns. SBA Decision, Case 1-SD-2007-30, Feb.
22, 2007. In addition, USSOCOM's investigation of the alleged conflict of
interest, which concerned a reserve officer's alleged involvement in the
procurement while being employed by Worldwide, concluded that the
allegation was unfounded; the reserve officer in fact had no involvement
in the procurement. Letters from USSOCOM to Counsel for Torres Advanced
Enterprise Solutions, LLC, and Allworld Language Consultants, Inc., Mar.
16, 2007.
As a result of the above delays in its effort to award a successor
contract, when the incumbent contract with Worldwide expired on March 29,
USSOCOM awarded Worldwide a bridge contract. On April 5, OSS filed a
protest with our Office challenging SAL's status as a section 8(a) ANC and
citing the fact that the owner of Worldwide had a 49 percent ownership
interest in SAL. We dismissed this protest on the basis that a firm's
status as an ANC is a matter for determination by SBA. (B-299625, Apr. 6,
2007). On April 9, OSS filed a second protest with our Office, asserting
that the bridge contract award was improper. Thereafter, USSOCOM advised
us that it intended to award a contract for the requirement to SAL under
the 8(a) program, would begin transition of its language services
requirements to SAL immediately upon award, and would terminate
Worldwide's bridge contract on or about June 1. Based on this proposed
action, we dismissed the protest as academic. (B-299660, May 11, 2007).
In the interim, on April 18, in response to a further request from USSOCOM
regarding the alleged affiliation of SAL and Worldwide, SBA informed the
agency that it found no evidence of affiliation. Thereafter, on April 23,
USSOCOM offered the foreign language services requirement to SBA for award
to SAL under the 8(a) program on a sole-source basis. SBA Comments, Aug.
6, 2007, at 2. On May 17, SBA, having determined that SAL was a small
business for the procurement and that SAL has the requisite capabilities
to satisfactorily perform the contract, accepted USSOCOM's offer. SBA
Letter of Acceptance, May 17, 2007; SBA Comments, Aug. 6, 2007, at 2-3;
see SBA E-mail to USSOCOM Contracting Officer, Apr. 18, 2007. Thereafter,
on May 31, the agency made award to SAL. OSS then filed this protest with
our Office.
Section 8(a) of the Small Business Act, 15 U.S.C. sect. 637(a) (2000),
authorizes SBA to enter into contracts with government agencies and to
arrange for performance through subcontracts with socially and
economically disadvantaged small business concerns. Federal Acquisition
Regulation (FAR) sect. 19.800. The Act affords SBA and contracting
agencies broad discretion in selecting procurements for the 8(a) program;
accordingly, we will not consider a protest challenging a decision to
procure under the 8(a) program absent a showing of possible bad faith on
the part of government officials or that regulations may have been
violated. 4 C.F.R. sect. 21.5(b)(3) (2007); Rothe Computer Solutions, LLC
d/b/a Rohmann J.V., B-299452, May 9, 2007, 2007 CPD para. 92 at 3;
Designer Assocs., Inc., B-293226, Feb. 12, 2004, 2004 CPD para. 114 at 4.
In this regard, government officials are presumed to act in good faith,
and a protester's claim that contracting officials were motivated by bias
or bad faith must be supported by convincing proof; our Office will not
attribute unfair or prejudicial motives to procurement officials on the
basis of inference or supposition. Basic Concepts, Inc., B-299545, May 31,
2007, 2007 CPD para. 98 at 3-4; Shinwa Elecs., B-290603 et al., Sept. 3,
2002, 2002 CPD para. 154 at 5 n.6.
We have considered all of OSS's arguments, and find that none furnishes a
basis to question the award to SAL. We discuss the most significant
arguments below.
BAD FAITH
OSS asserts that USSOCOM acted in bad faith in making award to SAL;
according to the protester, USSOCOM "wanted to make a sole source award to
SAL because the Agency knew [Worldwide] would perform the linguist work."
OSS Comments, Aug. 20, 2007, at 13.
The record does show that the agency was aware that SAL had a prior
business relationship with Worldwide, and that Worldwide's participation
as a subcontractor was a significant factor in its decision to make award
to SAL. E-mail from USSOCOM Contracting Officer to USSOCOM Contract
Specialist, Dec. 29, 2007; Declaration of USSOCOM Contracting Officer,
July 20, 2007. In fact, the contracting officer indicated to SAL's CEO
that "working with WorldWide was a `plus' based on some of our units."
Declaration of USSOCOM Contracting Officer, July 20, 2007.
However, the agency's consideration of Worldwide's participation in
performance of the contract was not improper. In this regard, there is no
applicable statute or regulation that prohibits section 8(a) firms from
entering into subcontracting arrangements for purposes of competing for an
8(a) award. In fact, SBA's regulations actually contemplate that 8(a)
participants will subcontract (but specifically provide that an 8(a) firm
must comply with the limitation on subcontracting requirements). See 13
C.F.R. sections 124.510(a) and 125.6; Myers Investigative and Sec. Servs.,
Inc., B-286971.2, B-286971.3, Apr. 2, 2001, 2001 CPD para. 59 at 4.
Likewise, OSS has not cited any statute or regulation--and we are aware of
none--that precludes the contracting agency from considering--in deciding
whether to offer a requirement to SBA under the 8(a) program--whether the
proposed 8(a) contractor will subcontract with a particular firm in
performing the requirement. SBA has advised us of its view (in response to
our request for its position) that USSOCOM's consideration of SAL's
contemplated subcontractors was reasonable and consistent with law and
regulation. SBA Comments, Aug. 6, 2007, at 4; FAR sections 9.104-1(e),
9.104-3 and 19.804-1(f). We conclude that there is no basis for finding
bad faith on the part of USSOCOM.
LIMITATION ON SUBCONTRACTING
OSS asserts that SAL's proposal evidenced an intention to violate the
requirement that a concern awarded an 8(a) contract agree to perform at
least 50 percent of the personnel cost under the contract with its own
employees, reflecting its plan to have Worldwide continue performing the
work. 13 C.F.R. sect. 125.6(a); FAR sect. 19.811(3)(e); see FAR
sect. 52.219-14, Limitations on Subcontracting, incorporated into SAL
Contract at 52.
We have recognized that, where a proposal indicates that an offeror could
not and would not comply with the subcontracting limitation, the proposal
is unacceptable and may not form the basis for an award under the section
8(a) program. See generally Ecompex, Inc., B-292865.4 et al., June 18,
2004, 2004 CPD para. 149 at 5.
Here, it is clear from the record that SAL expressly committed to
complying with the limitation on subcontracting requirements in performing
the contemplated contract. In this regard, SAL stated in its proposal to
USSOCOM that:
[SAL] will provide the program management staff and all leadership roles
for this contract. As positions are tasked, SAL will fill linguist slots
as required in order to insure that at all times 51% of the labor cost
will be performed by SAL direct (ie., W-2) employees.
To the greatest extent possible consistent with the requirement that SAL
perform 51% of the labor cost, SAL intends to use Worldwide Language
Resources as a subcontractor to provide linguists in those arenas where
Worldwide has previously been USSOCOM's contractor. Obviously, if
USSOCOM provides SAL sufficient total positions throughout the world,
then SAL will use Worldwide Language Resources as its subcontractor for
all the positions where Worldwide Language Resources was the incumbent.
SAL Management Proposal, Apr. 16, 2007, at 15-16. Further, SAL's
correspondence with USSOCOM was consistent with the position expressed in
SAL's proposal, that is, that Worldwide would continue furnishing the
linguists performing under its current contract, but only to the extent
consistent with SAL's performing 51 percent of the overall effort. In this
regard, SAL's chief executive officer (CEO) advised USSOCOM, prior to
award, as follows:
I have talked to [Worldwide] and, if the worst case scenario occurs and
the only task order we get is for their customer, SAL will simply impose
our management and "hire away" enough [Worldwide] linguists to insure
that we have at least 51% of the work. [Worldwide] has reluctantly
agreed to this.
E-mail from SAL CEO to USSOCOM Contracting Officer, Apr. 17, 2007.
Likewise, the record indicates that USSOCOM emphasized the necessity for
complying with the limitation on subcontracting requirements, with SAL's
stated approach to complying being a response to USSOCOM's request that
SAL: "readdress [its] plan on how [it] will achieve the 51% of labor
dollars with Shee Atika employees--this plan needs to address timeliness
in obtaining the proper skill sets, etc." Id.; Agency Supplemental Reort,
Aug 15, 2007, at 4. As a result, SAL's contract included not only the
standard limitation on subcontracting clause at FAR sect. 52.219-14, but
also a special limitation on subcontracting clause, which read as follows:
H.2. PRIME CONTRACTOR PREDOMINANCE OF SUPPORT NOTICE. [SAL] as the prime
Contractor, is required to perform 51% of ALL labor as measured by total
labor dollars under this contract. This requirement does not apply to
each task order. However, it is required that the balance be maintained
at any point in time and must be in compliance at the end of the
contract. Actual compliance shall be monitored through the monthly
manning report submitted by the Contractor to the USSOCOM Contracting
Officer.
SAL Contract, sect. H.2.[1] We conclude that there was, and is, no
indication that SAL did not intend to comply with the limitation on
subcontracting; in fact, the record shows that the agency took steps to
ensure that SAL understood its obligation and would not violate the
limitation during contract performance.
FAIR MARKET PRICE
OSS challenges USSOCOM's determination that SAL's contract price
represented a fair market price. In this regard, the FAR provides that
"[a]n 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). A "fair market price"
with regard to the small business programs is defined as "a price based on
reasonable costs under normal competitive conditions and not on lowest
possible cost." FAR sect. 19.001. In order to ensure that awards made to
8(a) participants do not exceed the fair market price, the FAR requires
that contracting officers "estimate the fair market price of the work to
be performed by the 8(a) contractor," and that in estimating the fair
market price, the contracting officer (as appropriate) use cost or price
analysis, and consider recent award prices for the same or similar work,
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 sect. 19.807. We will review an agency's fair market price
determination only to determine whether it was reasonable, or where there
is a showing of possible fraud or bad faith. NANA Servs., LLC, B-297177.3,
B-297177.4, Jan. 3, 2006, 2006 CPD para. 4 at 8; Techno-Sciences, Inc.,
B-277260, Sept. 22, 1997, 97-2 CPD para. 115 at 5.
The fair market price determination here was unobjectionable. The record
indicates that the agency considered extensive data regarding current
pricing for linguist services similar, or generally similar, to those
required here. Specifically, the contracting officer considered: (1)
pricing data from 22 separate General Services Administration schedule
contracts, with an emphasis on the pricing of linguists used in support of
Operation Enduring Freedom and Operation Iraqi Freedom (because such
services are similar to the linguist services in support of special
operations forces required here); (2) cost and pricing data furnished by
SAL; (3) the Defense Contract Audit Agency's (DCAA) review of SAL's direct
and indirect rates; and (4) market research into linguist salaries, as
listed on employment websites. USSOCOM Business Clearance Memorandum, Aug.
15, 2007; Contracting Officer's Supplemental Statement of Facts, Aug. 27,
2007, at 1-37, and attachments 51-105.
The protester questions various aspects of the agency's approach, but we
find its methodology reasonable. For example, OSS questions the contract
daily rate of $[DELETED] for host nation nationals in Category I, Group B
(which includes Arabic languages in Afghanistan, Iraq, and other Middle
Eastern countries). However, as explained in the agency's business
clearance memorandum, and subsequently by the contracting officer, this
daily rate was derived from the daily pay offered by three contractors to
Category 1 host nation nationals in Afghanistan and Iraq, to which the
agency applied overhead and general and administrative rates approved by
DCAA, and a profit falling within Department of Defense guidelines.
USSOCOM Business Clearance Memorandum, Aug. 15, 2007, at 15-17;
Contracting Officer's Supplemental Statement of Facts, Aug. 27, 2007, at
33-35. There is no basis for us to find this rate excessive.
OSS asserts that the fair market price determination was improper because
some of the items on the contract schedule were unpriced, with the items
marked "TBN," that is, prices to be negotiated at a later date. The agency
takes the position, however, and we agree, that, since the TBN items were
for services for which there was a possible future need, but no current
need, and for which pricing information was limited or unavailable, these
items reasonably were excluded from the fair market price analysis. Agency
Supplemental Report, Aug. 28, 2007, at 12-13; Contracting Officer's
Supplemental Statement of Facts, Aug. 27, 2007, at 3. This view is
consistent with SBA's regulations, which recognize the possibility that a
contract awarded under the 8(a) program may include unpriced options, and
provide that exercise of an unpriced option is considered to be a new
contracting action. 13 C.F.R. sect. 124.514(a). As a result, according to
SBA, the contracting agency would be required to make a fair market price
determination regarding the option exercise price at the time of the
exercise of the option. SBA Comments, Sept. 7, 2007, at 2. We are aware
of--and OSS has cited--no statutory or regulatory authority that provides
otherwise with respect to the 8(a) program. Accordingly, we conclude that
this argument does not warrant questioning the fair market price analysis.
The protest is denied.
Gary L. Kepplinger
General Counsel
------------------------
[1] The record indicates that, in its July 9 report to the agency, SAL
stated that it was performing the contract in compliance with the
limitation on subcontracting clause; [DELETED] SAL employees and [DELETED]
Worldwide employees were working under the contract. SAL E-mail to USSOCOM
Contract Specialist, July 9, 2007.