Decision
Matter of: LBM, Inc.
File: B-290682
Date: September 18, 2002
Frank Moody for the protester.
Capt. Charles K. Bucknor, Ralph J. Frick, Esq., and Raymond M.
Saunders, Esq., Department of the Army, and Audrey H. Liebross, Esq.,
and John W. Klein, Esq., Small Business Administration, for the
agencies.
Guy R. Pietrovito, Esq., and James A. Spangenberg, Esq., Office of
the General Counsel, GAO, participated in the preparation of the
decision.
DIGEST
1. The statutory limitation on General
Accounting Office's bid protest jurisdiction over challenges to the
award or proposed award of a task order under an
indefinite-delivery/indefinite-quantity contract does not apply to a
protest challenging the transfer to that contract vehicle of an
acquisition for services that had been previously set aside exclusively
for small businesses without regard to the Federal Acquisition
Regulation § 19.502‑2(b) requirements pertaining to small
business set‑asides; this is a challenge to the terms of the
underlying solicitation.
2. Protest that the transfer of the acquisition of motor pool
transportation services at a particular installation to a
multiple-award, indefinite-delivery/indefinite-quantity (ID/IQ) task
order contract violates the requirement in Federal Acquisition
Regulation § 19.502-2(b) to set aside acquisitions for small
businesses where there is a reasonable expectation of receiving fair
market price offers from at least two responsible small business
concerns is sustained, where the record shows that the agency did not
consider the application of this regulation in transferring the
acquisition of these services to the ID/IQ contract, even though this
work had been set aside for small businesses, and there were at least
two small businesses who have performed these services.
DECISION
LBM, Inc., a small business concern,
protests the decision of the Department of the Army Atlanta Contracting
Center (AACC) to acquire transportation motor pool services at Fort
Polk, Louisiana, under the Logistical Joint Administrative Management
Support Services (LOGJAMSS) contracts, which are multiple-award,
indefinite-delivery, indefinite-quantity (ID/IQ) task order contracts.
LBM complains that these services, which were previously provided
exclusively by small business concerns, should be set aside for small
business competition.
We sustain the protest.
Transportation motor pool services, including among other things
dispatching and operating vehicles and minor maintenance, have been
performed exclusively by small businesses, including LBM, under small
business set-asides at Fort Polk over the last 10 years. The most recent
contract for these services was awarded to another small business
concern in 1997 and expired on July 31, 2002 (after the date this
protest was filed).
In 1996, the Army instituted a “regionalization” contracting
approach to “achieve savings resulting from improved processes and
economies of scale.” Contracting Officer's Statement at 1; see
<www.forscom.army.mil/contract/force_xxi_cont.htm>. Under this
approach, the Army established contracting centers to regionalize the
award of contracts over $500,000 and to award consolidated or master
contracts. The AACC is a contracting center for various Army facilities,
including Fort Polk.[1]
In implementing the Army's contract regionalization plan, the AACC
developed LOGJAMSS as “a fast and flexible contract vehicle for
logistical services.” Contracting Officer's Statement at 2. According to
the Army, “[t]he LOGJAMSS scope of work encompasses a wide range of
logistical functions and supporting tasks,” and the “16 task areas
[comprising LOGJAMSS] are broad in scope due to the inherently uncertain
nature of requirements and to provide flexibility in determining the
exact tasks associated with a logistical function.” Id. at 4. For
example, the task areas included services ranging from storing, issuing,
and inventorying supplies to acquiring, supporting, and maintaining
office automation systems and supporting local and wide area networks.
Agency Report, Tab 10, LOGJAMSS Task Areas. However, no specific
projects at particular locations were identified. In 1998 and 1999, the
AACC awarded nine contracts under LOGJAMSS to five large businesses, two
small businesses, and two small disadvantaged businesses. In making
awards under LOGJAMSS, the Army coordinated with the Small Business
Administration (SBA), whose procurement center representative accepted
“for competition in the 8(a) Program [the Army's] offer for
[LOGJAMSS].”[2] Agency Report, Tab 8, Small Business
Coordination Record (Mar. 3, 1998).
As part of the Army's regionalization plan, the follow-on
requirement for Fort Polk's motor pool services was forwarded to the
AACC for procurement. “Through coordination between the [Directorate of
Contracting], Fort Polk and [the AACC], Fort Polk agreed to transfer the
requirement to [the AACC] for regional processing under LOGJAMSS.”
Contracting Officer's Statement in Support of Army's Motion for Summary
Dismissal (June 14, 2002) at 1. During April and May 2002, the
contracting officer evaluated whether these services should be
transferred to the LOGJAMSS contracts. The contracting officer concluded
that the motor pool services were within the scope of the LOGJAMSS
statement of work and that “the LOGJAMSS suite of contract[s] would
result in the best-qualified contractor at a fair and reason[able]
price.” Agency Report, Tab 7, Findings and Determination to Place Polk
Transportation Motor Pool under LOGJAMSS (June 14, 2002), at 3. She
further found that “adding the [transportation motor pool] requirement
did not increase the overall value of the LOGJAMSS contract nor increase
the period of its performance.” Contracting Officer's Statement in
Support of Army's Motion for Summary Dismissal (June 14, 2002) at 2. The
contracting officer estimated that the Fort Polk motor pool services
requirement would be approximately $10 million for the total 5-year
performance period.[3] Contracting Officer's Statement at 6.
This is in contrast to the more than a quarter of a billion dollars that
has already been ordered under the LOGJAMSS contracts. Agency Report,
Tab 13, Agency Chart Showing the Value of LOGJAMSS Orders.
Having decided to transfer the Fort Polk work to the ID/IQ
contracts, on May 31, the AACC solicited proposals from the LOGJAMSS
contractors for the award of a fixed‑price task order for a base
year with 4 option years to perform motor pools services at Fort Polk
with a June 26 closing date for receipt of proposals. Agency Report, Tab
4, Electronic Mail (E‑mail) from the AACC to LOGJAMSS Contractors
(May 31, 2002). The Army did not coordinate with, or notify, the SBA of
its intent to withdraw the Fort Polk motor pool services from exclusive
small business competition and to transfer these services to LOGJAMSS
contracts. SBA Report (July 25, 2002) at 2.
Meanwhile, on June 5, 2002, LBM, realizing the current small
business set-aside contract would shortly be expiring, contacted the
Army to ask when a new solicitation would be issued for the motor pool
services at Fort Polk. LBM was informed “that the [Fort Polk motor pool
transportation services] was now a part of the . . . LOGJAMSS
[contracts].” Agency Request for Dismissal (June 17, 2002) at 2. LBM
protested to our Office on June 11.
The crux of LBM's complaint is that the Army should have continued
to set aside the transportation motor pool services requirement at Fort
Polk exclusively for small businesses, and that the Army improperly
failed to coordinate with the SBA in deciding to withdraw these services
from exclusive small business participation and instead to transfer the
services to the LOGJAMSS contracts.
The Army requests dismissal of the protest because, in its view, the
protest challenges the proposed award of a task order under a ID/IQ
contract. Under 10 U.S.C. § 2304c(d) (2000):
A protest is not authorized in connection with the issuance or
proposed issuance of a task or delivery order except for a protest on
the ground that the order increases the scope, period, or maximum value
of the contract under which the order is issued.
LBM responds that it is not challenging the issuance or proposed
issuance of an order under the LOGJAMSS contracts, but is complaining
that the Fort Polk motor pool services requirement should be set aside
for exclusive small business competition and that the requirement should
not have been removed from exclusive small business competition without
coordination with the SBA.
We agree with LBM that the limitation on our bid protest
jurisdiction in 10 U.S.C. § 2304c(d) does not apply here. Contrary
to the Army's arguments, LBM is not challenging the proposed issuance of
a task order for these services, but is raising the question of whether
work that had been previously set aside exclusively for small businesses
could be transferred to LOGJAMSS, without regard to the Federal
Acquisition Regulation (FAR) § 19.502-2(b) requirements pertaining to
small business set-asides. This is a challenge to the terms of the
underlying LOGJAMSS solicitation and is within our bid protest
jurisdiction. See N&N Travel & Tours, Inc. et al.,
B-285164.2, B-285164.3, Aug. 31, 2000, 2000 CPD ¶ 146 at 6. In our view,
the limitation on our bid protest jurisdiction was not intended to, and
does not, preclude protests that timely challenge the transfer and
inclusion of work in ID/IQ contracts without complying with applicable
laws or regulations, but was to preclude protests in connection with the
actual or proposed issuance of an individual task or delivery orders
under those contracts. This view is consistent with the legislative
history to this particular section, which was enacted in the Federal
Acquisition Streamlining Act of 1994 (FASA), Pub. L. No. 103-355, 108
Stat. 3243, 3253. Specifically, the Joint Explanatory Statement of the
Committee of Conference states:
In addition, the conference agreement would provide general
authorization for the use of task and delivery order contracts to
acquire goods and services other than advisory and assistance services.
The conferees note that this provision is intended as a codification of
existing authority to use such contractual vehicles. All otherwise
applicable provisions of law would remain applicable to such
acquisitions, except to the extent specifically provided in this
section.
H.R. Conf. Rep. No. 103-712, at 181 (1994). The requirements of the
Small Business Act and its implementing regulations, including the
predecessor regulation to FAR § 19.502-2(b), were applicable to
acquisitions prior to the enactment of FASA, and nothing in that statute
authorizes the transfer of acquisitions to ID/IQ contracts in violation
of those laws and regulations.
The Army argues nevertheless that LBM's protest of the transfer of
the Fort Polk motor pool services to the LOGJAMSS contract should be
dismissed as untimely. The Army believes that LBM should have been on
notice from the LOGJAMSS solicitation that the Fort Polk motor pool
services “could” be ordered under the LOGJAMSS contracts and therefore
its protest after the award of the LOGJAMSS contracts is untimely. We
disagree.
We have recognized that the increasing use of ID/IQ contracts with
very broad and often vague statements of work may place an unreasonable
burden upon potential offerors, who may be required to guess as to
whether particular work, for which they are interested in competing,
will be acquired under a particular ID/IQ contract. See
Valenzuela Eng'g, Inc., B-277979, Dec. 9, 1997, 98-1 CPD ¶ 51
(Letter to the Acting Sec'y of the Army, Jan. 26, 1998, at 2). This
burden may be particularly problematic for small businesses. Id.
In our view, it is unreasonable to require a small business that
believes that one specific acquisition should continue to be set aside
for small businesses to identify the possibility, at the time proposals
for ID/IQ contracts to perform a broad and undefined scope of work are
solicited, that the specific, and relatively small, acquisition it is
interested in may ultimately be transferred to the ID/IQ contracts.
The breadth and vagueness of the LOGJAMSS scope of work illustrate
this, since it encompassed a “wide range of logistical functions and
supporting tasks” and was undefinitized at the time the LOGJAMSS
contracts were solicited. [4] Accordingly, we conclude that LBM could
not reasonably be aware, and required to protest, at the time the
LOGJAMSS contracts were being competed (and apparently years before the
Army considered using those contracts for the Fort Polk motor pool
services), that the broad and nonspecific scope of work in the LOGJAMSS
solicitation could be improperly used as a vehicle for the agency to
perform the motor pool services at Fort Polk without first taking the
steps legally required regarding a possible further acquisition of that
work under a small business set-aside.
Our conclusion regarding the timeliness of the protest is buttressed
by the fact that the Fort Polk motor pool services at issue here have
been acquired as a total small business set-aside for the last 10 years,
so that, in our view, LBM could reasonably expect that the Army would
comply, as is required, with applicable regulations in determining
whether these motor pool services at Fort Polk (as opposed to other
locations that may or may not have been set aside exclusively for small
businesses) would continue to be acquired by means of a total small
business set-aside.[5] The record shows that the Army itself
did not decide to transfer these services at Fort Polk to the LOGJAMSS
contracts until more than 3 years after the award of the first of the
LOGJAMSS contracts. See Agency Report, Tab 7, Findings and
Determination to Place Polk Transportation Motor Pool under LOGJAMSS
(June 14, 2002). It was only at the point that the agency decided to
withdraw the Fort Polk motor pool services from the small business
set-aside program and to transfer them to the LOGJAMSS contracts that
the analysis required by applicable regulations, that is, as discussed
below, FAR § 19.502-2(b), became relevant. Until this time, LBM could
have every expectation that the Army would comply with applicable law
and regulations in deciding whether to continue to set aside these
services for small businesses.
In sum, we find, given the breadth and vagueness of the LOGJAMSS
scope of work and given that the Fort Polk motor pool services had
previously been exclusively set-aside for small businesses, that LBM
cannot reasonably be viewed as on notice that the Army would transfer
this work to LOGJAMSS without consideration of FAR § 19.502-2(b).
Where an alleged solicitation impropriety is not apparent, a protest
filed within 10 days of when the protester becomes aware, or should have
become aware, of its protest basis is timely.[6] See N&N Travel Tours, Inc.,
supra, at 7; Ocuto Blacktop & Paving Co., Inc.,
B-284165, Mar. 1, 2000, 2000 CPD ¶ 32 at 6; see also
Vitro Servs. Corp., B-233040, Feb. 9, 1989, 89-1 CPD ¶ 136 n.1
(protest filed within 10 days of the date the protester learned of an
agency's interpretation of a latent solicitation ambiguity is timely). A
protester need not protest until it has knowledge that the agency is
intending action that is believed to be incorrect or inimical to the
protester's interests. Dock Express Contractors, Inc.,
B-227865.3, Jan. 13, 1988, 88-1 CPD ¶ 23 at 6. Moreover, we resolve
doubts over issues of timeliness in favor of protesters. See
Complere Inc., B‑257946, Nov. 23, 1994, 94-2 CPD ¶ 207 at 4
n.3.
Here, the record shows that LBM first learned the basis of its
protest on June 5, 2002, when it became aware that the agency would be
transferring the Fort Polk motor pool transportation services to
LOGJAMSS, and LBM timely protested this action to our Office within 10
days of that date. 4 C.F.R. § 21.2(a)(2) (2002); Valenzuela
Eng'g, Inc., B-277979, Dec. 9, 1997, 98-1 CPD ¶ 51 at 4-5.
With respect to LBM's contention that the motor pool services at
Fort Polk should have been set aside exclusively for small businesses,
we agree.
Contracting officers generally are required to set aside for small
business all “acquisitions” exceeding $100,000 if there is a reasonable
expectation of receiving fair market price offers from at least two
responsible small business concerns. FAR § 19.502-2(b); N&N
Travel & Tours, Inc. et al., supra, at 8. We regard such
a determination as a matter of business judgment within the contracting
officer's discretion, which we will not disturb absent a showing that it
was unreasonable. Neal R. Gross & Co., Inc., B-240924.2, Jan.
17, 1991, 91-1 CPD ¶ 53 at 2. However, a contracting officer must
make reasonable efforts to ascertain whether it is likely that offers
will be received from at least two small businesses capable of
performing the work. Mortara Instrument, Inc., B‑272461,
Oct. 18, 1996, 96-2 CPD ¶ 212 at 3. Our Office will review the record in
a protest to determine whether a contracting officer has made such
efforts. Library Sys. & Servs./Internet Sys., Inc.,
B‑244432, Oct. 16, 1991, 91-2 CPD ¶ 337 at 7.
Here, there is no evidence in the record that the agency considered
whether these services should be set aside exclusively for small
business participation. Moreover, the Army does not dispute that there
are at least two responsible small business concerns capable of
competing for the Fort Polk motor pool services, nor does it contend
that there was not a reasonable expectation of receiving fair market
price offers. In fact, the record reflects that there are at least two
responsible small business concerns capable of performing, that is, LBM
and the small business contractor that most recently performed the
services under a set-aside contract.
Nevertheless, the Army argues that FAR § 19.502-2(b) (the so-called
“rule of two”) does not apply to task orders issued under FAR Subpart
16.5, but only to acquisitions under FAR Parts 13, 14, and 15.
See Army Response to SBA Report (Aug. 2, 2002) at 4-7.
In the agency's view, FAR § 19.502-2 only applies “in the contract
formation part of the acquisition process,” and not to “a post-award
ordering action.” Id. at 4, 7. The agency also argues that, in
any event, the “rule of two” would not apply because “under LOGJAMSS the
agency has already exceeded its small business goal of 23% by a wide
margin.” Id. at 7. The Army finally argues that because the SBA
representative approved LOGJAMSS, it did not need to comply with any
further SBA requirements.
We find unpersuasive the Army's arguments, which mischaracterize the
protest as a challenge to the proposed award of a task order under the
existing LOGJAMSS contracts. As explained above, LBM's challenge is to
the agency's acquisition planning in deciding to transfer the Fort Polk
motor pool transportation services to LOGJAMSS without considering
applicable law and regulation pertaining to small businesses.
Also, contrary to the Army's arguments, we believe that FAR §
19.502-2(b) applies to the Army's acquisition of the motor pool services
at Fort Polk. By its express terms, FAR § 19.502-2(b) states that “the
rule of two” is applicable to “any acquisition over $100,000.”
Acquisition is defined by the FAR to mean:
the acquiring by contract with appropriated funds of supplies or
services (including construction) by and for the use of the Federal
Government through purchase or lease, whether the supplies or services
are already in existence or must be created, developed, demonstrated,
and evaluated. Acquisition begins at the point when agency needs are
established and includes the description of requirements to satisfy
agency needs, solicitation and selection of sources, award of contracts,
contract financing, contract performance, contract administration, and
those technical and management functions directly related to the process
of fulfilling agency needs by contract.
FAR § 2.101. Under this broad definition, the agency's purchasing
the Fort Polk motor pool services by contract with appropriated funds is
an “acquisition,” subject to FAR § 19.502-2(b), regardless of the
fact that the agency anticipated acquiring those services through their
transfer to the LOGJAMSS scope of work. See Valenzuela Eng'g,
Inc., supra (Letter to the Acting Sec'y of the Air Force,
Jan. 26, 1998, at 2-3 n.1). Had the agency complied with the
requirements of FAR § 19.502‑2(b), it might have concluded
that the LOGJAMSS contracts were not the appropriate vehicle for this
acquisition. Whatever the outcome of the FAR § 19.502‑2(b)
analysis, though, the agency's intent to use a task order under LOGJAMSS
as the contract vehicle did not eliminate the legal requirement that the
agency undertake that analysis.
We also do not agree with the Army that it was not required to
comply with FAR § 19.502-2(b) because the agency has already met or
exceeded its small business participation goals. As noted by the SBA in
its report, the percentage of an agency's contracts that small
businesses are receiving is not relevant to whether FAR
§ 19.502-2(b) applies. We are unaware of any provision in law or
regulation (and the Army has not cited any authority to us) that permits
an agency to ignore FAR § 19.502-2(b), based upon the agency's
belief that its small business goals have already been satisfied. In
fact, FAR § 19.502-5(f) specifically identifies as an insufficient cause
for not setting aside an acquisition the fact that “[s]mall business
concerns are already receiving a fair proportion of the agency's
contracts for supplies and services.”
Finally, the fact that the SBA “accepted” some aspects of LOGJAMSS
did not exempt the Army from its obligations under FAR. These particular
Fort Polk motor pool services, added more than 3 years later, were not
specifically contemplated to be included under LOGJAMSS and the SBA did
not advise the Army that these services did not need to be set aside.
See Valenzuela Eng'g, Inc., supra (Letter to the
Acting Sec'y of the Air Force, Jan. 26, 1998, at 4).
In short, we find that Army violated FAR § 19.502-2(b) when the
agency did not consider continuing to acquire the Fort Polk motor pool
services under a total small business set-aside, and we sustain LBM's
protest on this basis.[7]
We recommend that the Army consider whether, in accordance with FAR
§ 19.502‑2(b), the transportation motor pool services at Fort
Polk should be set aside exclusively for small business participation.
We also recommend that LBM be reimbursed the reasonable costs of filing
and pursuing the protest. 4 C.F.R. § 21.8(d)(1). LBM should submit
its certified claim for costs, detailing the time expended and costs
incurred, directly to the Army within 60 days after receipt of this
decision.
Anthony H. Gamboa
General Counsel
[1] The AACC solicits and awards contracts in
support of Headquarters, U.S. Army Forces Command (FORSCOM);
Headquarters, Third U.S. Army; Headquarters, First U.S. Army; and
Headquarters, U.S. Army Reserve Command. The AACC also provides support
for the U.S. Army Garrisons at Forts McPherson (East Point) and Gillem
(Forest Park), Georgia, and reimbursable customers in Atlanta, Georgia
(Army Research Laboratory, located at Georgia Tech). Finally, the AACC
provides centralized contracting support for FORSCOM activities
nation-wide and will provide regionalized support for Fort Dix, New
Jersey; Fort Irwin, California; Fort Polk, Louisiana; and Fort McCoy,
Wisconsin. <www.forscom.army.mil/aacc>.
[2] The SBA notes that, in concurring with the Army's
decision to enter into LOGJAMSS contracts, the SBA did not know that
LOGJAMSS would include the performance of transportation motor pool
services. SBA Report (July 25, 2002) at 10.
[3] The LOGJAMSS contracts provide that for task orders
under $3 million, the contracting officer may direct award to any
contractor, for task orders between $3 million and $7 million the
contracting officer may set aside the requirement for small business or
section 8(a) contractors or conduct a competition among the nine
contractors, and for task orders over $7 million the contracting officer
would ordinarily conduct a competition among the nine contractors.
[4] At the time the Army conducted the acquisition that
resulted in the awards of LOGJAMSS contracts the agency did not know
what specific tasks would be acquired under the contracts. See
Agency Report, Tab 8, LOGJAMSS Acquisition Plan, at 5 (“Specific tasks
required are currently unknown; therefore, [the agency] will address
cost issues for the task orders to be issued under this contract by
establishing fixed rates and/or fixed loaded rates, requiring approved
cost accounting systems for those task orders that require that level of
support, and reviewing and approving subcontract arrangements.”)
[5] It may be that if the LOGJAMSS solicitation had
identified motor pool transportation services at Fort Polk, LBM would
have had reasonable notice of its protest allegation.
[6] To the extent that our decision in Hospital Klean,
Inc., B‑286791, Dec. 8, 2000, 2000 CPD ¶ 205, could be read to
require small business offerors to protest the terms of a general and
nonspecific statement of work in an ID/IQ procurement solicitation in
order to raise a timely challenge to the potential transfer of work at a
particular facility under that broad statement of work without
compliance with applicable small business regulations, that case will no
longer be followed.
[7] LBM also complains that transferring the Fort Polk
motor pool services to the LOGJAMSS contracts is improper bundling under
the Small Business Act and that the Army improperly “bundled” without
notifying the SBA. Given that there are four small business concerns
that hold LOGJAMSS contracts and that can compete for the Fort Polk
motor pool services, we are unable to find that consolidating these
services into the LOGJAMSS contracts would make it “likely to be
unsuitable for award to a small-business concern,” as required by the
Small Business Act. See 15 U.S.C. § 631(j)(3); FAR § 2.101
(definition of bundling); Phoenix Scientific Corp.,
B‑286817, Feb. 22, 2001, 2001 CPD ¶ 24 at 7. For the same reason,
we also do not find any statute or regulation that specifically requires
the Army to notify the SBA of the addition of these motor pool services
to the LOGJAMSS contracts. Such notification is required where “a
proposed procurement includes in its statement of work goods or services
currently being performed by a small business, and if the proposed
procurement is in a quantity or estimated dollar value the magnitude of
which renders small business prime contract participation unlikely . .
.” See 15 U.S.C. § 644(a); see also FAR §
19.202-1(e)(1). As noted above, we are unable to find here that small
business participation is unlikely. While it is true that the Small
Business Act requires procuring agencies to cooperate, and consult, with
the SBA in carrying out the requirements of the Small Business Act,
see 15 U.S.C. § 644(k)(8), we find no specific statute or
regulation requiring notification of the SBA in this case.