B-298533, Celadon Laboratories, Inc., November 1, 2006

B-298533 Nov 01, 2006 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights Celadon Laboratories, Inc. protests the decision of the Department of Health and Human Services (HHS) not to fund its phase I proposal under the Small Business Innovation Research (SBIR) program solicitation No. PHS 2006-1. Celadon asserts that the agency failed to reasonably consider conflicts of interest that it contends likely impaired the objectivity of the four members of the Special Emphasis Panel (SEP), which evaluated its proposal. We sustain the protest. View Decision B-298533, Celadon Laboratories, Inc., November 1, 2006 Decision Matter of: Celadon Laboratories, Inc. File: B-298533 Date: November 1, 2006 Lawrence A. Kessner, Esq., for the protester. Douglas Kornreich, Esq., Department of Health and Human Services, for the agency. Katherine I. Riback, Esq., and James A. Spangenberg, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST Agency failed to determine whether the evaluators of the protester's proposal under a Small Business Innovation Research program solicitation had a conflict of interest, where the evaluators were employed by firms that promote a type of technology that assertedly is directly challenged by the type of technology offered in the protester's proposal. DECISION Celadon Laboratories, Inc. protests the decision of the Department of Health and Human Services (HHS) not to fund its phase I proposal under the Small Business Innovation Research (SBIR) program solicitation No. PHS 2006-1. Celadon asserts that the agency failed to reasonably consider conflicts of interest that it contends likely impaired the objectivity of the four members of the Special Emphasis Panel (SEP), which evaluated its proposal. We sustain the protest. The SBIR program is conducted pursuant to the Small Business Innovation Development Act, 15 U.S.C. sect. 638 (2000), which requires certain federal agencies to reserve a portion of their research and development funds for awards to small businesses. Firms first apply for a 6-month phase I award to test the scientific, technical, and commercial merit and feasibility of a certain concept. If phase I is successful, the firm may be invited to apply for a phase II award to further develop the concept. After the completion of phase II, firms are expected to obtain funding from the private sector and/or non-SBIR government sources to develop the concept into a product for sale in the private sector and/or military markets. See Small Business Administration's SBIR Website, http://www.sba.gov/sbir/. To commence the program, the agency issues an SBIR solicitation that sets forth research and development topics and subtopics that emphasize the need for proposals with advanced concepts to meet specific agency requirements, which may be general or narrow in scope, depending on the needs of the agency. The object of this phase I procurement is to obtain and evaluate small business proposals under stated evaluation criteria to determine which small businesses should receive phase I contracts. During phase I, the agency will determine the scientific and technical merit and feasibility of the proposed effort and the quality of performance of the small business concern with a relatively small agency investment before consideration of further federal support in phase II. SBIR Program Policy Directive para. 4(a). On August 4, 2005, HHS issued this solicitation which identified a number of research topics for the National Institutes of Health (NIH) and the Centers for Disease Control. One of the topics included in the solicitation was Topic 216, Development of Inhibitory Reagents for the Study of Protein Function, which was a research topic of interest requested by the National Cancer Institute (NCI), a division of NIH. The purpose of this topic was to solicit proposals from small business concerns to encourage the development and commercialization of new technology for the generation of small molecules and novel mechanisms to modulate protein function within a cancer cell. Solicitation at 33. Proposals submitted in response to this solicitation were to be evaluated by an SEP. The SEP is an independent peer review panel, which evaluates the proposals, determines which small business concerns should receive phase I contracts and makes specific recommendations related to the scope, direction and/or conduct of the proposed research. Solicitation at 18. In this instance, the SEP, assembled by the NCI, consisted of three members from private industry and one from academia. According to the agency, in preparation for their work on the SEP, prospective members were mailed a copy of NIH's rules, including those relating to conflicts of interest.