B-311242, Division Laundry and Cleaners, Inc., May 19, 2008

B-311242 May 19, 2008 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights Division Laundry and Cleaners, Inc. protests the Department of the Air Force's decision to cancel request for proposals (RFP) No. FA3047-08-R-0001, issued as a small business set-aside for commercial bulk laundry and dry cleaning services at Lackland Air Force Base and other locations in San Antonio, Texas. Division asserts that the cancellation was improper based on the agency's unreasonable determination that its proposed price was excessive. We deny the protest. View Decision B-311242, Division Laundry and Cleaners, Inc., May 19, 2008 Decision Matter of: Division Laundry and Cleaners, Inc. File: B-311242 Date: May 19, 2008 David F. Barton, Esq., The Gardner Law Firm, for the protester. Gary R. Allen, Esq., Department of the Air Force, for the agency. Paula A. Williams, Esq., and Ralph O. White, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST Agency had a reasonable basis to cancel small business set-aside and resolicit its requirement on an unrestricted basis where the record supports the reasonableness of agency's determination that prices offered by eligible small business concerns were unreasonable. DECISION Division Laundry and Cleaners, Inc. protests the Department of the Air Force's decision to cancel request for proposals (RFP) No. FA3047-08-R-0001, issued as a small business set-aside for commercial bulk laundry and dry cleaning services at Lackland Air Force Base and other locations in San Antonio, Texas. Division asserts that the cancellation was improper based on the agency's unreasonable determination that its proposed price was excessive. We deny the protest. As amended, the RFP anticipated award of a fixed-price requirements contract for a period of 4 years, to the offeror whose proposal was considered the –best value.— RFP at 143. The RFP advised that award would be made without conducting discussions unless the agency otherwise determined discussions to be necessary. Id. at 147. Three offerors, including Division, submitted proposals by the closing date, one of which was rejected because the offeror was not a small business. The contracting officer (CO) reviewed the proposals of the two eligible small business concerns and concluded that each offeror's proposed price exceeded the government estimate by more than 35 percent. The CO also compared the small business offerors' prices to the proposed price of the ineligible large business firm in determining that the prices offered by both small business concerns were not fair and reasonable. CO's Statement at 3. After the CO concluded that she had no realistic expectation that the significant difference between the proposed prices and the government estimate could be negotiated to more reasonable prices through discussions, she canceled the solicitation. Agency Report (AR) exh. 8, Determination and Findings at 2-3. Thereafter, the CO sought and received approval from the Small Business Administration's small business specialist to withdraw the set-aside and resolicit the requirements using full and open competition procedures. Id. at 15. Division challenges the agency's decision to cancel the solicitation rather than conduct discussions, asserting that the Air Force improperly evaluated its price against a flawed estimate of the government's needs. In this regard, Division contends that the government estimate reflects considerably lower estimates for various solicitation requirements such as the pick-up and return laundry requirements at each location. Specifically, the protester asserts –on information and belief— that the incumbent contractor is not counting the actual number of items in each bundle of cleaning, as required by the canceled RFP which, if done according to the solicitation's requirements, would require more manpower and time, resulting in higher costs. Protester's Comments at 3-4. A determination of price reasonableness for a small business set-aside is within the discretion of a CO, and we will not disturb such a determination unless it is clearly unreasonable or there is a showing of fraud or bad faith on the part of contracting officials. A. Hirsh, Inc., B-271829, July 26, 1996, 96-2 CPD para. 55 at 2. In making such a determination, the CO may consider such factors as the government estimate, the procurement history for the solicited services, the current market climate, and the –courtesy bid— of an otherwise ineligible large business offeror. Id.; Nutech Laundry & Textiles, Inc., B-291739, Feb. 10, 2003, 2003 CPD para. 34 at 4; see also, Federal Acquisition Regulation (FAR) sections 19.202-6, 15.404-1(b). Furthermore, in view of the congressional policy favoring small businesses, contracts may be awarded under small business set-aside procedures to small business firms at premium prices, so long as those prices are not unreasonable.