B-299072, Hydroid LLC, January 31, 2007

B-299072 Jan 31, 2007 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights Hydroid LLC protests issuance of a purchase order to Brooke Ocean Technology USA, Inc. (BOT-USA) under request for quotations (RFQ) No. NCNJ1000-6-00001, a 100-percent small business set-aside issued by the Department of Commerce, National Oceanic and Atmospheric Administration (NOAA), for an autonomous underwater vehicle (AUV). Hydroid asserts that BOT-USA was ineligible for the order as a small business. We sustain the protest. View Decision B-299072, Hydroid LLC, January 31, 2007 Decision Matter of: Hydroid LLC File: B-299072 Date: January 31, 2007 Charles R. Marvin, Jr., Esq., Thomas J. Madden, Esq., Sharon A. Jenks, Esq., and Dismas N. Locaria, Esq., Venable LLP, for the protester. Fred Kopatich, Esq., and Mark Langstein, Esq., National Oceanic and Atmospheric Administration, and Kenneth Dodds, Small Business Administration, for the agencies. Paul E. Jordan, Esq., and John M. Melody, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST In small business set-aside, agency's acceptance of firm's claimed entitlement to small business status under –nonmanufacturer rule— was unreasonable where agency should have known firm's claimed status was questionable, and therefore should have challenged its status before Small Business Administration. DECISION Hydroid LLC protests issuance of a purchase order to Brooke Ocean Technology USA, Inc. (BOT-USA) under request for quotations (RFQ) No. NCNJ1000-6-00001, a 100-percent small business set-aside issued by the Department of Commerce, National Oceanic and Atmospheric Administration (NOAA), for an autonomous underwater vehicle (AUV). Hydroid asserts that BOT-USA was ineligible for the order as a small business. We sustain the protest.[1] The AUV is to be used in conjunction with manned surface assets to perform rapid'response capability for underwater surveys of ports, harbors, and inland waterways. The RFQ was issued as a combined synopsis/solicitation for commercial items under Federal Acquisition Regulation (FAR) subpart 12.6. It identified North American Industry Classification System Code (NAICS) 334511--Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing--as applicable to this procurement, with an applicable size standard of 750 employees. Vendors' quotations were to be evaluated under three factors of relatively equal importance--approach, past performance, and price. The RFQ contemplated issuance of a fixed-price purchase order for one AUV, 2 years of technical support, warranty, and training, with delivery not later than 9 months after receipt of the order. The order was to be made on a –best value— basis. BOT-USA, a small business, submitted a quotation offering an AUV manufactured by Bluefin Robotics Corporation, a large business; Hydroid, also a small business, submitted a quotation to provide its own AUV. NOAA determined that BOT-USA's quotation provided the best value based on its technical superiority and lower price, and, on August 9, 2006, issued that firm a purchase order in the amount of $1,705,247. NOAA did not notify Hydroid of the issuance of the order until August 30, when the protester inquired about the procurement's status. On August 31, Hydroid filed a timely size protest with the contracting officer, who submitted it to the Small Business Administration (SBA) on September 21. On October 18, SBA determined that BOT-USA was ineligible for the purchase order because it was offering the product of a large business. NOAA subsequently determined that it would not terminate BOT'USA's purchase order, and this protest followed. In order to qualify as a small business concern eligible to provide manufactured products under a small business set-aside, a firm must either be a small business manufacturer of the end item being procured, or provide the product of another domestic small business manufacturing or processing concern; this is known as the –nonmanufacturer rule.— FAR sections 19.001, 19.102(f)(1); 13 C.F.R. sect. 121.406 (2006). The rule may be waived where the acquisition is for a product in a class for which SBA has determined that there are no small business manufacturers in the federal market'-see FAR sect. 19.102(f)(4)--or where the contracting officer seeks a special waiver from SBA based on the lack of small business manufacturers and SBA issues the waiver. FAR sections 19.102(f)(5), 19.502-2(c). BOT-USA submitted a quotation for the product of a large business--Bluefin--as well as the additional work to make the Bluefin AUV meet the agency's requirements. However, there was no valid class waiver in place exempting AUVs from the nonmanufacturer rule, and the contracting officer did not seek or obtain a special waiver.