Protest alleging that the agency improperly bundled requirements is dismissed, where the protesters submitted quotations asserting they were capable of performing all CLINs, and therefore were not precluded from competing. GAO also dismissed a protest arguing that the agency should have set aside the procurement for SDVOSBs, because if the procurement were set-aside in this manner, the nonmanufacturer rule would apply and neither protester attested they would be able to comply with the rule.
AeroSage LLC and SageCare Inc. protested the terms of a Defense Logistics Agency Energy solicitation for the delivery of fuel products to four locations in New York.
First, the protesters argued that DLA unlawfully bundled requirements, as the RFQ combined requirements that have been or are being performed through separate small contracts. An allegation of improper bundling under the Competition in Contracting Act claims that a contract combines separate requirements beyond what is necessary to meet the agency’s needs, thereby limiting the competition by excluding offerors that can only perform a portion of the requirement. The Small Business Act contains similar prohibitions on unnecessary bundling of requirements.
However, GAO concluded that the consolidation of requirements in the solicitation did not constitute bundling because the protesters, who are small business concerns, have not been precluded from competing. To the contrary, both protesters submitted quotations responding to the solicitation requirements, asserting that they are capable of performing all seven CLINs. Because small businesses have not been precluded from competing, GAO found the protester failed to state a valid basis for their challenge.
Next, the protester challenged the agency’s decision not to set aside the procurement for small business concerns. Specifically, the protesters argued that the Small Business Act requires acquisitions below $150,000 to be reserved for small businesses. The protesters further contend that any individual purchase orders issued under the resulting contract would not exceed $150,000 due to tank sizes. Accordingly, the protesters argue that the procurement should be set aside for small business concerns.
In response, DLA argued that if it were to set aside the procurement for small business concerns, the nonmanufacturer rule would apply. As applied to the NAICS code assigned to the procurement, the nonmanufacturer rule would require prospective firms that are not refineries, such as AeroSage and SageCare, to offer the product of a small business refinery. Because neither protester represents that it would offer the product of a small business refinery, DLA argued that the protesters are not interested parties to challenge the agency’s set-aside decision. In response, the protesters argue that the nonmanufacturer rule does not apply to this procurement because individual purchase orders would fall below $150,000.
While the protesters argued that the value of the individual task orders should be used to determine the application of the nonmanufacturer rule, DLA argued the relevant value is the estimated value of the acquisition as a whole, not the individual CLINs or delivery orders. To support its position, DLA relies upon a decision from the SBA Office of Hearings and Appeals, which concluded that the dollar thresholds listed in the regulation apply to procurements as a whole, not individual orders or contracts.
Based on SBA’s decision, GAO rejected the protesters’ contention that the relevant value is the estimated value of individual delivery orders. However, GAO found SBA’s decision did not conclusively clarify whether the CLIN value or the total contract value would be relevant here, because under the terms of the solicitation, vendors are permitted to submit quotations on a by-CLIN basis and the agency is permitted to award contracts on a by-CLIN basis.
Regardless, GAO concluded that it did not have to resolve this issue, because both protesters proposed prices for the individual CLINs and for the procurement as a whole that exceed $150,000. Accordingly, GAO concluded that the exception to the nonmanufacturing rule would not apply. Because neither protester attested that they could perform the requirements of the resulting contracts without a waiver of the nonmanufacturer rule, GAO concluded they were not interested parties to challenge DLA’s decision not to set aside the procurement for small businesses or SDVOSBs.
Next, the protesters argued that the RFQ improperly required vendors to identify the refineries from which they intend to source fuel. The protesters alleged that this requirement is impossible because there are no small refineries, domestic or foreign. GAO dismissed this ground as factually insufficient, as the RFQ did not require vendors to source fuel from small business refineries to be eligible for award. Thus, the protesters cannot establish how the challenged solicitation term prejudices their ability to submit a quotation or otherwise restricts competition.
Finally, the protesters argued that the total estimated quantities of fuel products listed in the RFQ are grossly inaccurate and that, as a result, the government has failed to comply with requirements to provide annual estimates, minimum quantities, and other information. GAO noted that the regulation cited the protesters provides instructions to requiring activities regarding the submission of fuel requirements to DLA. The regulation states that estimated annual fuel requirements that are less than 10,000 gallons shall not be submitted to DLA unless the requiring activity does not have the authority or capability to procure locally.
GAO found that other than alleging that the estimated quantities are false, the protesters failed to state how DLA or the requiring activities violated this provision. Even assuming that the protesters are alleging that this requirement should not have been submitted to DLA, the protesters did not explain how DLA’s conduct of the procurement prejudiced their ability to submit quotations or otherwise restricts competition.
AeroSage LLC and SageCare Inc. are represented by David M. Snyder. The government is represented by Matthew Vasquez and May Sena, Defense Logistics Agency. GAO attorneys Elizabeth Witwer and Jennifer D. Westfall-McGrail participated in the preparation of the decision.
