USA Fabrics, Inc., B-295737; B-295737.2, April 19, 2005

USA Fabrics, Inc., B-295737; B-295737.2, April 19, 2005 TITLE: USA Fabrics, Inc., B-295737; B-295737.2, April 19, 2005 BNUMBER: B-295737; B-295737.2 DATE: April 19, 2005 ********************************************************************** Decision Matter of: USA Fabrics, Inc. File: B-295737; B-295737.2 Date: April 19, 2005 James McKinney for the protester. Todd Bailey, Esq., Department of Justice, and Laura Eyester, Esq., Small Business Administration, for the agencies. Kenneth Kilgour, Esq., and Christine S. Melody, Esq., Office of the General Counsel, participated in the preparation of the decision. DIGEST 1. Protest that solicitation requirement that the contractor maintain minimum levels of consignment inventory is unduly restrictive of competition is denied where the record establishes that the requirement was reasonably designed to ensure that the government's needs would be met. 2. Protest challenging agency decision not to set aside procurement for Historically Underutilized Business Zone (HUBZone) small businesses is sustained where decision was based on insufficient facts to establish reasonableness of conclusion that there are not two or more HUBZone business concerns interested in performing the requirement, or that contract would not be awarded at fair market price. DECISION USA Fabrics, Inc. protests the terms of solicitation No. CT1696-05, issued by Federal Prison Industries (FPI) for T-shirt fabric. USA Fabrics asserts that the solicitation, issued as a total small business set-aside, instead should have been set aside for HUBZone small businesses concerns. USA Fabrics also asserts that the solicitation is unduly restrictive of competition because the agency improperly required contractors to maintain a certain level of consignment fabric inventory. We sustain the protest in part and deny it in part. JURISDICTION Preliminarily, the agency argues that because FPI is a non-appropriated fund instrumentality (NAFI), our Office lacks jurisdiction to hear the protest. The statutory authority of our Office to decide bid protests is set forth in the Competition in Contracting Act (CICA), 31 U.S.C. SS 3551-3556 (2000), amended by the Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005, Pub. L. No. 108-375, S 326, 118 Stat. 1811 (2004). CICA defines a protest as a written objection by an interested party to a solicitation by a federal agency for the procurement of property or services, or a written objection by an interested party to the award or proposed award of a contract. 31 U.S.C. S 3551(1). Since the passage of CICA, our bid protest jurisdiction has not been based on the expenditure of appropriated funds or on the existence of some direct benefit to the government. Americable Int'l, Inc., B-251614, B-251615, Apr. 20, 1993, 93-1 CPD P 336 at 2. Instead, our threshold jurisdictional concern is whether the procurement at issue is being conducted by a federal agency. Id. In limiting our jurisdiction to procurements by federal agencies, CICA adopted the definition of that term set forth in the Federal Property and Administrative Services Act of 1949 (FPASA). 40 U.S.C.A. S 102 (West 2005). 31 U.S.C. SA 3551(3). As defined therein, a federal agency includes any wholly-owned government corporation. 40A U.S.C.A. S 102(4)(B), (5). Thus, under the plain terms of CICA, we have jurisdiction to hear protests arising out of procurements by wholly-owned government corporations. FPI is defined by statute as a wholly-owned government corporation. 18 U.S.C. S 4121 (2000); 31 U.S.C. S 9101(3)(E) (2000). As a result, we have consistently held that our Office has jurisdiction over bid protests concerning FPI procurements. E.g., Tri Tool, Inc., B-265649.2, Jan. 22, 1996, 96-1 CPD P 14 at 1 n.1. Citing Core Concepts of Florida, Inc. v. United States, 327 F.3d 1331, 1339 (Fed.Cir. 2003), the agency argues that this Office does not have jurisdiction over FPI because FPI is a NAFI.[1] According to the agency, in view of the Court's holding in Core Concepts, and since our Bid Protest Regulations state that our jurisdiction does not extend to protests of procurements by NAFIs, we lack jurisdiction over the protest here. We disagree. We recognize that our Bid Protest Regulations, 4 C.F.R. S 21.5(g) (2004), state that protests of procurements by nonappropriated fund activities are beyond our bid protest jurisdiction. By its terms, however, this provision excludes from our jurisdiction protests concerning procurements by agencies "other than Federal agencies" as defined in the FPASA. Accordingly, we do not view the term "nonappropriated fund activity" as used in our Regulations as including FPI, an entity defined by statute as a federal agency and therefore explicitly subject to our jurisdiction under CICA and the FPASA.