B-400157, Logistics Health, Inc., August 13, 2008
Decision
Matter of: Logistics Health, Inc.
Tom
Walch and Suzanne Witt-Botcher, Esq., for the protester.
Maj. William J. Nelson, Department of the Army, for the agency.
Paul E. Jordan, Esq., and John M. Melody, Esq., Office of
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Agency determination to set aside dental services procurement for exclusive small business participation was reasonable where market research identified eight small businesses, at least two of which appeared responsible and capable of performing the contract requirements.
DECISION
Logistics Health, Incorporated (LHI) protests the terms of request for proposals (RFP) No. W81K04-08-R-0036, a total small business set-aside, issued by the Department of the Army for a dental provider network. LHI, a large business, asserts that the agency improperly restricted the solicitation to small businesses.
The Army operates soldier readiness processing (
LHI is currently providing a dental network under a
sole-source contract, which was awarded in 2006 based on the agency’s determination
that it was the only responsible source available and that no other services
would satisfy the agency’s requirements.
See Federal Acquisition Regulation (FAR) sect. 6.302‑1. LHI protested an earlier solicitation for
these services on the basis that it was improperly restricted to service
disabled veteran-owned small businesses (SDVOSB). In response to that RFP, the agency received
only one proposal--which was non-compliant--and it thus canceled the solicitation;
we dismissed the protest as academic (B‑310934,
An acquisition with an
anticipated dollar value of more than $100,000 must be set aside for small business
concerns if the agency determines that there is a reasonable expectation that
offers will be received from two or more responsible small business concerns,
and that award will be made at a fair market price. FAR sect. 19.502-2(b). 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 potential competitors. National Linen Serv., B-285458,
The agency’s set-aside determination is
unobjectionable. Prior to issuing the
RFP, the contracting officer conducted market research using the small business
dynamic search of the Central Contractor Registration database. This research revealed--under North American
Industry Classification System (NAICS) code No. 621210 (offices of
dentists)--two Section 8(a)-certified firms, two small disadvantaged firms, six
SDVOSBs, nine veteran owned small businesses, and three woman-owned small
businesses. Contracting Officer’s
Statement paras. 6-7. The contracting
officer also posted a request for information (RFI) on the Federal Business
Opportunities (FedBizOpps) website.
Eight small businesses responded to the RFI, including two small
businesses, two veteran-owned small firms, and four SDVOSBs. Contracting Officer’s Statement
para. 8. Two of the companies, one a
veteran-owned small business and the other an SDVOSB, provided information
indicating that they were responsible and capable of performing the contract
requirements. For example, each had
numerous dentists available within the required
We find that the agency’s market research was thorough and reasonably conducted to identify potential small business offerors. Since the research identified multiple small businesses--at least two of which were deemed responsible and capable of performing the requirement--the record reasonably supports the contracting officer’s finding of a reasonable expectation of receiving two or more proposals from small businesses and that award would be made at a fair market price. In short, we conclude that the contracting officer reasonably exercised her business judgment to set the procurement aside for small businesses.
Our conclusion is not changed by LHI’s speculation that it
is “extremely unlikely” that sufficient small businesses could have acquired
the requisite expertise and past performance in the ensuing 18 months, since
the agency awarded LHI’s sole-source contract based on its being the only available
contractor. Protest at 1. In this regard, the record shows that, of the
eight small businesses responding to the RFI, six had experience ranging from
LHI also asserts that the agency did not need to conduct a
competition for this requirement. In the
protester’s view, the agency could have met its needs at a lower cost under
LHI’s recently awarded Reserve Health Readiness Program (RHRP) contract. However, LHI does not assert, and there is
nothing in the record to establish, that the agency was required to obtain its
dental services under the RHRP contract; LHI’s desire to have the agency
satisfy this requirement through LHI’s contract does not establish that it was
required to do so. Since the purpose of
our bid protest function is to ensure that agencies obtain full and open competition
to the maximum extent practicable, we will generally favor otherwise proper
agency actions--like the one here to use a competitive set-aside
solicitation--that are taken to increase competition. Knowledge Connections, Inc., B-297986,
The protest is denied.
Gary L. Kepplinger
General Counsel
[1]
The contracting officer’s record of market research contains detailed
capability statements from the firms responding to the RFI. However, because the procurement is ongoing,
we have not included more specific information on their capabilities in this
decision.
[2]
LHI asserts that the agency had more than 60 days to decide how it would meet
its needs at the time it awarded the sole-source contract. Comments at 4. However, even assuming that the protester is
correct, this does not mean that responsible and capable small businesses were
not then available; the agency simply had not done the market research to make
that determination.