TITLE: B-311420, DAV Prime, Inc., May 1, 2008
BNUMBER: B-311420
DATE: May 1, 2008
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B-311420, DAV Prime, Inc., May 1, 2008

   Decision

   Matter of: DAV Prime, Inc.

   File: B-311420

   Date: May 1, 2008

   Brian Finley for the protester.

   Elin M. Dugan, Esq., Department of Agriculture, Forest Service, for the
   agency.

   Cherie J. Owen, Esq., and Ralph O. White, Esq., Office of the General
   Counsel, GAO participated in the preparation of the decision.

   DIGEST

   Protest that agency failed to restrict its solicitation to
   service-disabled veteran-owned small business concerns (SDVOSBCs) is
   dismissed because the law providing for SDVOSBC set-asides is permissive,
   not mandatory, and does not require an agency to set aside contracts for
   SDVOSBCs.

   DECISION

   DAV Prime, Inc., a service-disabled veteran-owned small business concern
   (SDVOSBC) protests the terms of solicitation No. AG-024B-S-07-0005, issued
   by the Department of Agriculture, U.S. Forest Service, for portable
   latrines. DAV argues that this work should have been reserved for SDVOSB
   companies. It contends a set-aside is required because the agency has
   violated the Small Business Act, as amended by sect. 36 of the Veterans
   Benefits Act of 2003, Pub. L. No. 108-183, 117 Stat. 2651, 2662 (2003), 15
   U.S.C. sect. 657f (Supp. IV 2004), by failing to meet its stated goal of
   awarding 3 percent of its annual contracts to SDVOSBCs, and by failing to
   conduct a market survey to determine whether an SDVOSBC set-aside is
   appropriate. Protest at 2; Response to Motion to Dismiss at 1.

   We dismiss the protest because it does not establish a valid basis for
   challenging the agency's action.

   Section 36 of the Veterans Benefits Act of 2003 provides:

     In accordance with this section, a contracting officer may award
     contracts on the basis of competition restricted to [SDVOSBCs] if the
     contracting officer has a reasonable expectation that not less than 2
     [SDVOSBCs] will submit offers and that the award can be made at a fair
     market price.

   15 U.S.C. sect. 657f(b).

   In our view, the language of the Act is clearly discretionary. As such, it
   permits, but does not require, a contracting officer to restrict
   competition to SDVOSBCs if certain conditions are satisfied.

   With regard to the protester's argument that our holding in MCS Portable
   Restroom Serv., B-299291, Mar. 28, 2007, 2007 CPD para. 55, requires a
   different result, the protester's reliance on that case is misplaced. MCS
   stands for the proposition that, although a contracting officer is not
   required to undertake the analysis set forth in the Act, if he or she does
   conduct such an analysis, his or her analysis must be reasonable.

   In MCS, the contracting officer conducted a market survey to determine
   whether the criteria of the Act were met. Id. at 1. After searching the
   CCR database for the proper NAICS code and locating 28 SDVOSBCs that
   potentially could perform the work, the agency sent e-mails to these firms
   and received responses from two SDVOSBCs, (MCS and a Florida-based
   company). Id. Two months later, the agency posted a "sources sought"
   notice on FedBizOps and only one SDVOSBC (MCS) responded. Id. After
   considering this market research, the contracting officer concluded that
   she did not have a reasonable expectation of receiving two or more bids
   from SDVOSBCs. Id. Therefore, the solicitation was posted as a small
   business set-aside. Id.

   MCS protested the contracting officer's conclusion, arguing that it was
   not reasonable, given the results of the contracting officer's market
   research. Id. at 2. The Small Business Administration (SBA) agreed that
   the contracting officer's analysis of the market research was not
   reasonable. Id. at 3. The SBA noted that the agency's disregard of the
   Florida SDVOSBC's expression of interest (which was based upon the
   assumption that the firm was no longer interested because it did not also
   respond to the "sources sought" notice) was unreasonable because the firm
   may not have seen the notice or it may have believed a response was
   unnecessary given that it had already expressed interest. Id. at 3. After
   considering the results of the contracting officer's market research and
   the SBA's opinion, we held that the contracting officer's assessment of
   the criteria set forth in the Act was not reasonable and we sustained the
   MCS protest. Id. at 4.

   Here, unlike the case cited by the protester, DAV does not claim that the
   agency undertook the analysis outlined in the Act and reached an
   unreasonable conclusion. Rather, protester argues that the agency violated
   the Act simply because it failed to conduct a market survey. Response to
   Motion to Dismiss at 1. This argument is not supported by the plain
   language of the statute, nor is it supported by our holding in MCS.

   Our holding here also requires us to clarify our recent decision in IBV,
   Ltd., B-311244, Feb. 21, 2008, 2008 CPD para. 47. In that decision we
   cited MCS for the proposition that "[p]rior to proceeding with a small
   business set-aside, a procuring agency is required to make reasonable
   efforts to ascertain whether an SBVOSBC set-aside is appropriate," which,
   upon further reflection, we think overstates both the holding in MCS and
   the requirements of the Act. Though our decision in IBV remains unchanged,
   we think a proper explanation of the Act and the MCS decision is that
   there is no requirement to set-aside a procurement for SDVOSBCs. That
   said, when an agency undertakes an SDVOSBC set-aside analysis, the
   conclusions it draws from the analysis must be reasonable.

   As a result, we think DAV's protest does not include sufficient
   information to establish the likelihood that the agency in this case
   violated applicable procurement laws or regulations. The protest therefore
   is dismissed without further action. See Bid Protest Regulations, 4 C.F.R.
   sect. 21.5(f) (2007).

   The protest is dismissed.

   Gary L. Kepplinger
   General Counsel