B-310904, FlowSense, LLC, March 10, 2008

B-310904 Mar 10, 2008 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights FlowSense, LLC, a service-disabled veteran-owned small business (SDVOSB), protests the proposed sole-source award of a contract to Tarraf Construction, Inc. under solicitation No. VA-263-08-RP-0025, a section 8(a) set-aside issued by the Department of Veterans Affairs (VA) for boiler replacement at the VA Medical Center (VAMC) in St. Cloud, Minnesota. FlowSense asserts that VA improperly set the contract aside for an 8(a) sole-source award rather than make award to FlowSense as an SDVOSB. We deny the protest. View Decision B-310904, FlowSense, LLC, March 10, 2008 Decision Matter of: FlowSense, LLC File: B-310904 Date: March 10, 2008 Patrick C. Summers, Mackall Crounse & Moore, PLC, for the protester. Phillipa L. Anderson, Esq., Department of Veterans Affairs, for the agency. Peter D. Verchinski, Esq., and John M. Melody, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST 1. Protest that agency improperly passed over protester, a service-disabled veteran'owned small business (SDVOSB), in order to award contract to 8(a) firm is denied where agency reasonably determined that neither protester nor other SDVOSBs were viable potential offerors. 2. Protest that awardee and protester were similarly situated firms, and that agency thus unreasonably determined that awardee could perform the work while protester could not, is denied where agency determined that awardee had capability to perform based on its prior performance of contracts for agency. DECISION FlowSense, LLC, a service-disabled veteran-owned small business (SDVOSB), protests the proposed sole-source award of a contract to Tarraf Construction, Inc. under solicitation No. VA-263-08-RP-0025, a section 8(a) set-aside issued by the Department of Veterans Affairs (VA) for boiler replacement at the VA Medical Center (VAMC) in St. Cloud, Minnesota. FlowSense asserts that VA improperly set the contract aside for an 8(a) sole-source award rather than make award to FlowSense as an SDVOSB. We deny the protest. In September 2007, VA conducted market research to determine whether two or more SDVOSB concerns were available to perform the work at issue here. In this regard, the Veterans Benefits, Health Care, and Information Technology Act of 2006 (the Act) establishes priorities for contracting preferences for VA requirements; first priority goes to SDVOSBs, so the agency must consider those concerns' ability to satisfy a requirement before considering other preferences, such as for section 8(a) concerns. 38 U.S.C. sect. 8127(i). Based upon a search of VA's Vendor Information Pages (VIP) database, the contracting officer (CO) identified four SDVOSBs (including the protester) that possessed the applicable North American Industry Classification System (NAICS) code and were located in Minnesota; the agency determined that none of these firms was a viable potential competitor. Regarding FlowSense, VA discovered through searches of various databases that the firm had average annual revenue of $1'2 million and a staff of only 8 employees, and that its largest prior contract was for only $475,000. The CO concluded that it was doubtful that FlowSense would be able to obtain the necessary bonding for the boiler replacement contract here, since the estimated cost was $2-3.5 million. Agency Report, exh. 9, at 1. The CO also suspected that, since the protester had 20 NAICS codes listed in the Central Contractor Registration database, the firm may be primarily a broker of services. Given that VA had no other knowledge of FlowSense's capabilities, it concluded that the firm was not a viable potential SDVOSB offeror for purposes of either an SDVOSB set'aside or sole'source award. Id. The agency subsequently decided to conduct the procurement under the Small Business Administration's (SBA) section 8(a) program. By letter dated September 19, the CO offered the requirement to SBA, recommending a non'competitive award to Tarraf. Noting that Tarraf had successfully completed other projects for the agency, the agency stated that it believed that Tarraf had the capabilities and financial resources to handle a project of this size, and would be able to meet or exceed the timelines set forth in the project specifications. CO's Statement at 3. In this regard, the record shows that Tarraf received at least four other building maintenance contracts from VAMC in the first half of 2007. Protester's Comments, exh. 14, at 7, 11, 19, 21. Approximately 1 month later, SBA accepted the requirement under the 8(a) program. On October 29, the CO issued the RFP with the intent to negotiate with Tarraf on a sole-source basis. Thereafter, FlowSense filed this protest. FlowSense challenges the agency's decision to set the procurement aside for award under the section 8(a) program.