E.D.P. Enterprises, Inc., B-282232, June 17, 1999

B-282232 Jun 17, 1999 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights DIGEST Solicitation bonding requirements are unobjectionable where the agency reasonably required bonds in an amount designed to ensure continuous provision of on-site food services for students in federal training programs. Where contractor will have the use of government-furnished facility and equipment in order to provide the required food services. EDP asserts that the bonding requirements are unreasonable and unduly restrict competition. The agency states that although there are restaurants in the surrounding area. None of them are able to provide meals for the student population within the time available during training sessions. EDP protests that the performance bond requirement is unreasonable and should either be eliminated or reduced to approximate the current. View Decision Matter of: E.D.P. Enterprises, Inc. File: B-282232 Date: June 17, 1999 DIGEST Attorneys DECISION E.D.P. Enterprises, Inc., a small business, protests the bonding requirements in request for proposals (RFP) No. FTC 99-3, issued by the Department of the Treasury, Federal Law Enforcement Training Center, for the provision of food services at its training center in Glynco, Georgia. EDP asserts that the bonding requirements are unreasonable and unduly restrict competition. We deny the protest. The RFP, issued on January 27, 1999 and amended three times, calls for offers to provide three meals per day in support of center training programs in a cafeteria-style dining facility on the center grounds. The center offers a variety of training programs that range from a single week to 18 weeks in duration, and typically employs approximately 2,000 staff and contract support personnel to provide training for 2,000 students. The students receive all their meals in the dining facility, and many staff members eat some of their meals in the facility. The agency states that although there are restaurants in the surrounding area, none of them are able to provide meals for the student population within the time available during training sessions. Contracting Officer's Statement at 2. The RFP contemplated the award of a contract for a 1-year base period, with four 1-year option periods. The RFP, in Sections L.17 and L.18, required offerors to submit a bid bond equal to 20 percent of the bid amount for the base period, not to exceed $3,000,000, and to furnish within 10 days after receipt of award a performance bond equal to 20 percent of the amount awarded for each contract year. EDP protests that the performance bond requirement is unreasonable and should either be eliminated or reduced to approximate the current, depreciated value of the government-furnished property under the contemplated contract. /1/ Protest at 7. The protester argues that the bonding requirements unduly restrict competition because the substantial additional expense of obtaining the bonds makes it difficult for small businesses to compete. The agency explains that its decision to include a performance bond requirement was "based upon an overriding Government interest in the performance of an uninterrupted contract," and that this, in turn, is based on both the need to ensure uninterrupted performance and the need to protect government property entrusted to the contractor for the performance of the required services. Agency Report, Memorandum of Law, at 3. Under FAR Sec. 28.103-2, the contracting officer has the discretion to determine whether bonds are needed to protect the government's interest in a particular procurement. Space Servs. Int'l Corp., B-215402.2, Oct. 22, 1984, 84-2 CPD Para. 430 at 1. This regulation lists four examples of situations that may warrant a performance bond, one of which is where government property or funds are to be provided to the contractor for use in performing the contract. FAR Sec. 28.103-2(a)(1). In addition, as the agency correctly points out, the contracting officer is permitted to require a performance bond to protect the government's interest whether or not the rationale for imposing the requirement falls within the four examples listed in the FAR. See Cobra Techs., Inc., B-238031 et al., Feb. 27, 1990, 90-1 CPD Para. 242 at 3. Although a bond requirement may result in a restriction of competition by excluding some small businesses, it nevertheless can be a necessary and proper means of securing to the government the fulfillment of the contractor's obligation under the contract in appropriate situations. Id.; Govern Serv., Inc., B-233365, Jan. 27, 1989, 89-1 CPD Para. 92 at 2. This is so even where a small business set-aside solicitation is involved. Aspen Cleaning Corp., B-233983, Mar. 21, 1989, 89-1 CPD Para.