CEPEDA Associates, Inc. (N64498-20-R-0002)

B-418284 Feb 24, 2020 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights CEPEDA Associates, Inc. (CEPEDA), a small business of Louisville, Kentucky, protests the terms of request for proposals (RFP) No. N64498-20-R-0002, issued by the Department of the Navy for advanced carbon dioxide removal units (ACRU) production units, associated special tools, and ACRU spare parts. CEPEDA contends that the procurement should have been set aside for small businesses under Federal Acquisition Regulation (FAR) § 19.502-2(b), also known as the Rule of Two. We deny the protest. View Decision DOCUMENT FOR PUBLIC RELEASE The decision issued on the date below was subject to a GAO Protective Order. This redacted version has been approved for public release.       Decision Matter of:  CEPEDA Associates, Inc. File:  B-418284 Date:  February 24, 2020 Mark Leach, Mark W. Leach Law Firm, PSC, for the protester. Paul Scheck, Esq., Department of the Navy, for the agency. Lois Hanshaw, Esq., and Stephanie B. Magnell, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST Protest challenging an agency’s decision not to set aside a procurement for small businesses is denied, where the agency reasonably concluded that there was not a reasonable expectation of receiving offers from two or more small business concerns at fair market prices. DECISION   CEPEDA Associates, Inc. (CEPEDA), a small business of Louisville, Kentucky, protests the terms of request for proposals (RFP) No. N64498-20-R-0002, issued by the Department of the Navy for advanced carbon dioxide removal units (ACRU) production units, associated special tools, and ACRU spare parts.  CEPEDA contends that the procurement should have been set aside for small businesses under Federal Acquisition Regulation (FAR) § 19.502-2(b), also known as the Rule of Two. We deny the protest. BACKGROUND The solicitation, issued on November 12, 2019, contemplates the award of one or more indefinite-delivery, indefinite-quantity contracts with hybrid fixed-price, fixed-price-incentive-fee, and cost-plus-fixed-fee contract line items.[1]  Agency Report (AR), Tab 13, RFP at 106; Tab 14 RFP amend.1 at 1.  The agency seeks one or more contractors to manufacture ACRU production units, associated special tools, and ACRU spare parts based on a technical data package for the submarine life support and ventilation systems branch of the Naval Surface Warfare Center Philadelphia Division (NSWCPD).[2]  RFP at 9.  The manufacture of ACRU production units is a new requirement, as no production units have been built to date.  Id.  The independent government estimate for the procurement is $23,438,579.  AR, Tab 11, Contracting Officer’s (CO) Set-Aside Decision, at 4.  Prior to issuing the solicitation, in accordance with FAR § 19.502-4, Multiple Award Contracts and Small Business Set-Asides, the contracting officer engaged in various research activities in order to determine whether the agency was likely to receive proposals from two or more small businesses capable of performing the contract requirements.  First, the agency considered the procurement history.  AR, Tab 6, Market Research Memorandum, at 1.  In this regard, the ACRU production units would follow an earlier contract for ACRU qualification units that were recently developed under a contract awarded to a large business on a sole-source basis.  AR, Tab 11, CO’s Set-Aside Decision, at 1-2.  The Navy found that the procurement history did not provide a rationale to set aside the solicitation because the procurement of the ACRU qualification units was performed by a large business on a sole-source basis and the current solicitation is a new requirement.  Id. at 2.  The contracting officer also conducted market research.  On February 21, 2018, the agency held an industry day and answered questions from the three companies that attended:  one large business and two small businesses--CEPEDA and Treadwell Corporation.  AR, Tab 11, CO’s Set-Aside Decision, at 2.  On May 30, the agency published a request for information (RFI) on the Federal Business Opportunities (FedBizOpps) website.  AR, Tab 2, RFI, at 1.  The RFI requested that respondents provide specific details regarding their ability to provide four ACRU production units and special tools, and to meet the requirements included in the draft statement of work.  Id.  By the July 13 RFI closing date, the agency received capability statements from the same three businesses that attended industry day, including CEPEDA and Treadwell.[3]  AR, Tab 5, RFI Evaluation, at 1.  The agency’s subject matter expert (SME) reviewed the capability statements and, based on the responses received, found that CEPEDA was the only small business capable of providing the requirement at a fair market price.[4]  Id.