B-400466, Ashland Sales and Service Company/Macon Garment Inc., a Joint Venture, October 23, 2008
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:
Ruth E. Ganister, Esq., Rosenthal and Ganister, for the protester.
Jared P. Weissberger, Esq., Defense Supply Center Philadelphia, for the agency.
Eric M. Ransom, Esq., and Christine S. Melody, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Protest that set-aside for Historically Underutilized Business Zone concerns should have been withdrawn because prices received were unreasonably high is denied where the contracting officer properly relied on multiple relevant factors to determine that the awardee’s price was reasonable.
DECISION
Ashland Sales and Service
Company/Macon Garment Inc., a Joint Venture, (AM-JV) protests the decision of
the Defense Logistics Agency, Defense Supply Center Philadelphia (
In coordination with the Small Business Administration,
Under the HUBZone set-aside solicitation,
FAR sect. 19.1305 states that in order to set aside an
acquisition for HUBZone small businesses the contracting officer must have a
reasonable expectation that offers will be received from two or more HUBZone
small businesses and that award will be made at a fair market price. If the contracting officer sets the
acquisition aside but receives no acceptable offers, the HUBZone set-aside must
be withdrawn. FAR sect. 19.1305(d). The
determination of price reasonableness in a set-aside is a matter within the
discretion of the contracting offer and will not be disturbed unless it is
unreasonable. A. Hirsh, Inc.,
B-271829,
In
view of the congressional policy favoring small businesses, our Office has
stated that contracts may be awarded under small business set-aside procedures
to small business firms at premium prices, so long as those prices are not
unreasonable. Vitronics, Inc.,
B-237249,
AM-JV asserts that under the circumstances presented in
this case, Zacbac’s price was unreasonable.
AM-JV specifically emphasizes that Zacbac’s price was over 30 percent higher than that offered by
AM-JV (itself a small business), that the item being produced is a mass
production item that does not require research or development, and that there
are no special reasons why production in a HUBZone should be any more expensive
than production in AM-JV’s facilities.
AM-JV also points to previous decisions by our Office in which we have
upheld a contracting officer’s decision to cancel a set-aside when the small
business’ price was less than 30 percent higher than that of an ineligible
business. American Imaging Servs.,B-238969, B-238971,
We note, however, that our Office also has upheld a
contracting officer’s decision to proceed with a set-aside where the small
business’ price has been as much as 51 percent higher than that of an ineligible large business. Browning-Ferris
Here, the record indicates that the contracting officer
conducted a thorough price analysis of Zacbac’s offer. This price analysis explicitly made a
comparison between Zacbac’s price and the price offered by AM-JV on the small
business set-aside, and noted the 30.7 percent price differential. Agency Report, Tab 5, at 6. The price analysis also considered that there
was adequate price competition in the HUBZone set-aside solicitation in the
form of offers from five different HUBZone firms, three of which were included
in the competitive range; during discussions, all three firms were advised to
review their proposed prices.
Based on our review of the record, we cannot conclude that the contracting officer’s conclusion was unreasonable. That all offers received in response to the HUBZone set-aside solicitation were higher in price than the offer submitted by the protester on the prior solicitation can reasonably be interpreted (as the contracting officer did) to indicate that the difference in volume between the two solicitations had a material impact on price. In light of that factor, we find the contracting officer’s decision to discount the differential between solicitations in determining reasonable price, relying on the price competition achieved on the particular solicitation at issue, to be unobjectionable.
The protest is denied.
Gary L. Kepplinger
General Counsel
[1] Both solicitations provided for a best value source selection procedure under which all evaluation factors other than price, when combined, were significantly more important than price. HUBZone Solicitation at 65.
[2] The protester also asserts that the agency failed to properly publicize the award notice, which prevented AM-JV from filing a protest within 10 days of award.AM-JV argues that this action in effect violated the statutory stay provisions of the Competition in Contracting Act of 1984(CICA).Issues regarding whether an agency is complying with the CICA stay requirements are not subject to review by our Office.Systalex Corp., B-400109, July 17, 2008, 2008 CPD para. 148 at 6; Grot Inc.,B-276979, Aug. 14, 1997, 97-2 CPD para. 50 at 3 n.1.