Knudsen Systems, Inc. (N0025323R0022)

B-422433.2 Aug 09, 2024 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights Knudsen Systems Inc. (KSI), a woman-owned small business of Ogdensburg, New York, protests the terms of amendment 4 to request for proposals (RFP) No. N0025323R0022, issued by the Department of the Navy, Naval Undersea Warfare Center (Navy), for sound navigation and ranging (SONAR) sounding sets. The protester argues that the solicitation's amended terms render the agency's market research and resulting set-aside decision unreasonable, and therefore contends that the requirement should be competed on an unrestricted basis. We sustain 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: Knudsen Systems, Inc. File: B-422433.2 Date: August 9, 2024 Thomas M. Craig, Esq., and Emily A. Spence, Esq., Fluet & Associates, PLLC, for the protester. Christopher Lybeck, Esq., and Laura A. Whitten, Esq., Department of the Navy, for the agency. Kyle E. Gilbertson, Esq., and Peter H. Tran, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST Protest is sustained where agency's market research was insufficient to conclude that agency would likely receive proposals from at least two responsible small business concerns that could meet solicitation's requirements at a fair market price, and therefore, agency's decision to restrict solicitation to small businesses was unreasonable. DECISION Knudsen Systems Inc. (KSI), a woman-owned small business of Ogdensburg, New York, protests the terms of amendment 4 to request for proposals (RFP) No. N0025323R0022, issued by the Department of the Navy, Naval Undersea Warfare Center (Navy), for sound navigation and ranging (SONAR) sounding sets. The protester argues that the solicitation's amended terms render the agency's market research and resulting set-aside decision unreasonable, and therefore contends that the requirement should be competed on an unrestricted basis. We sustain the protest. BACKGROUND On June 1, 2023, the Navy issued the RFP as a total small business set-aside pursuant to the procedures of Federal Acquisition Regulation (FAR) part 15 and subpart 19.5. Contracting Officer's Statement (COS) at 3; Agency Report (AR), Tab I, RFP at 1, 37.[1] The solicitation seeks proposals for the production, testing, and delivery of SONAR sounding sets for use on Navy ships.[2] RFP at 2-4, 101. The RFP contemplates the award of a single indefinite-delivery, indefinite-quantity fixed-price contract. Id. at 2-6, 88, 101. The solicitation provides for a best-value tradeoff source selection process, using the following three evaluation factors, listed in descending order of importance: (1) technical; (2) past performance; and (3) price. Id. at 101-102. The agency assigned North American Industry Classification System (NAICS) code 334511 to the solicitation, which applies to search, detection, navigation, guidance, aeronautical, and nautical system and instrument manufacturing.[3] Id. at 68, 89. When it was initially issued in June 2023, the solicitation did not include FAR clause 52.219-33 (Nonmanufacturer Rule). Instead, the RFP informed offerors that the Small Business Administration (SBA) had issued a nonmanufacturer rule “class waiver for NAICS Code 334511.” Id. at 89. Two offerors, KSI and SyQwest, Inc., submitted proposals by the July 14 due date. COS at 5. In its proposal, KSI explained that it intended to use SONAR equipment manufactured in Canada by [DELETED]. Comments at 1. On November 15, after the Navy had completed its evaluation, the agency discovered that the SBA class waiver referenced in the RFP did not, in fact, apply to the SONAR sounding sets being procured, and therefore the RFP's notification regarding the class waiver was in error. COS at 5. As a result, the agency determined that KSI was ineligible for award because it was “unable to comply with the non-manufacturer rule.” Memorandum of Law (MOL) at 4. The Navy also contacted the SBA procurement center representative, who confirmed KSI's ineligibility due to the firm's proposed use of a Canadian product to satisfy the solicitation's requirements. COS at 5. On March 1, 2024, the Navy notified KSI that it intended to award the contract to SyQwest as the best-value proposal, in the amount of $2,528,875. Protest at 3; COS at 5. As part of the debriefing, the contracting officer informed KSI that its proposal was found to be unacceptable because the firm intended to use products manufactured in Canada. KSI Extended Debriefing Letter at 1. KSI protested the award to our Office on March 15. Knudsen Sys., Inc., B-422433, Apr. 18, 2024 (unpublished decision).