American College of Physicians Services, Inc.; COLA, B-294881; B-294881.2, January 3, 2005

American College of Physicians Services, Inc.; COLA, B-294881; B-294881.2, January 3, 2005 TITLE: American College of Physicians Services, Inc.; COLA, B-294881; B-294881.2, January 3, 2005 BNUMBER: B-294881; B-294881.2 DATE: January 3, 2005 ********************************************************************** Decision Matter of: American College of Physicians Services, Inc.; COLA File: B-294881; B-294881.2 Date: January 3, 2005 Mark A. Friend, American College of Physicians Services, Inc.; Richard D. Lieberman, Esq., and Karen R. O'Brien, Esq., McCarthy, Sweeney & Harkaway, for COLA, the protesters. David H. Turner, Esq., Department of the Navy, for the agency. Ralph O. White, Esq., and Christine S. Melody, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST 1. Contention that a solicitation unduly restricts competition by bundling the procurement of accreditation services and laboratory proficiency testing in a single contract is denied where the agency reasonably explains that procuring both services under the same contract is necessary to meet the agency's needs for maintaining its medical laboratories. 2. Contention that the agency violated the restriction, found at Federal Acquisition Regulation (FAR) SA 12.302(c), against including terms and conditions in a commercial item procurement that are inconsistent with customary commercial practices by bundling the purchase of two commercial items into a single procurement is denied because the regulatory restriction, on its face, applies to terms and conditions used to procure commercial items, and cannot properly be read as a supplemental restriction against bundling, nor can it reasonably be read as a supplement to the definition of a commercial item found at FAR SA 2.101. DECISION American College of Physicians Services, Inc. (ACPS) and COLA protest the terms of request for proposals (RFP) No. N00140-04-R-0102, issued by the Department of the Navy to procure professional accreditation services and proficiency testing for medical laboratories operated by the U.S. Navy Bureau of Medicine and Surgery. Both protesters argue that the solicitation unduly restricts competition by bundling the purchase of accreditation services and laboratory proficiency testing in a single procurement. In addition, ACPS argues that it is also unduly restrictive to use one solicitation for all of the Navy's proficiency testing requirements. Both protesters also allege that purchasing accreditation and proficiency testing services jointly is not a commercial practice. We deny the protests. BACKGROUND U.S. public heath regulations generally require certification of laboratories that perform testing on human specimens and report patient specific results for the diagnosis, prevention or treatment of disease, or impairment. 42 C.F.R. SSA 493.1, 493.3 (2004); see generally 42 C.F.R. Part 493. Federal laboratories, including those operated by the military services, are subject to these certification requirements, although the requirements may be modified by agency heads to address agency-unique circumstances. 42 C.F.R. SA 493.3(c). To implement the regulatory scheme for certification and accreditation of laboratories, the Department of Health and Human Services approves non-profit institutions, rather than for-profit contractors, to provide these services directly to the laboratories. 42 C.F.R. SSA 493.551(a), 493.553. The pleadings submitted by both the Navy and the protesters indicate that the community of institutions that perform these services is limited in size, and well-known to laboratories, and to each other. Within this heavily-regulated arena populated by non-profit institutions, the Navy is conducting a simplified acquisition for accreditation and proficiency testing services using the commercial item test program authorized by Federal Acquisition Regulation (FAR) Subpart 13.5, which permits the use of simplified procedures for the acquisition of commercial supplies and services in amounts up to $5 million. With respect to the proficiency testing portion of this procurement, the Navy and the protesters agree that there is currently only one entity, the College of American Pathologists (CAP), that provides the full range of possible proficiency testing that could be required here. Thus, there is no dispute that any successful offer to perform these services would have to be submitted by CAP, or include CAP as a subcontractor.[3] CAP is also the Navy's incumbent contractor for these services, although it currently performs the services under separate contracts.