Bid Protest Lawyer Blog

Promotions Small Business Set-Aside Bid Protest Punted

Posted by Joseph Whitcomb on Nov 1, 2014 8:24:05 PM
Joseph Whitcomb

Why file a small business set-aside bid protest?

Small Business Set-Aside Bid ProtestMilitary pilots wear gloves.  The government supplies those gloves.  The gloves must come from somewhere. This week, the Government Accountability Office (“GAO”) decided a bid protest issue about where those gloves come from.  Promotions Plus filed a bid protest when the Defense Logistics Agency’s (“DLA”) awarded a contract to be supplied green and tan Summer Flyer’s Gloves by M&M Manufacturing. The GAO ultimately denied the protest.

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The DLA’s Request

The DLA’s solicitation request set aside 50% of the total contract award as a small business set-aside.  It called for a 1-year base period with  two 1-year options that follow. The criteria included the following, in respective order of importance: 1) price; 2) product demonstrations; and 3) past performance.

To ensure the small business set-aside did in fact benefit small businesses, it further stated that the small business offerors must also only furnish end items that are manufactured or produced by small businesses located in the United States or its outlying areas. The small business itself was also required to perform at least 50% of the manufacturing of the products.

The Four Submitted Bids

The DLA received four bids. M&M’s bid was approximately $10 million and it received an acceptable rating for its product demonstrations and an outstanding past performance rating. In contrast, Promotions’ bid totaled nearly $12 million, it received an acceptable rating for its product demonstration, and an outstanding past performance rating. Since the bids were nearly identical except for M&M’s lower bid price, the DLA selected M&M.

The Protest

Promotions argued that DLA should have rejected M&M’s proposal as unacceptable because M&M’s proposal did not comply with the solicitation’s limitations on subcontracting. Specifically, Promotions argued that M&M did not plan to perform at least 50% of the manufacturing work. In addition, Promotions argued that one of M&M’s proposed sub-contractors was not a small business, which would violate the solicitation requirement that the contractor only furnish end items manufactured or produced by a small business.

The GAO’s Denial

According to GAO rules, a bid is unacceptable where the GAO can determine, looking at the face of the bid, that the offeror cannot comply with a solicitation requirement. However, when the GAO cannot be certain that the offeror cannot comply, the GAO will respect the agency’s reasonable selection.

Although M&M stated that it would rely on a non-small business subcontractor, the GAO could not conclusively determine that more than 50% of M&M’s cost of manufacturing would be performed by non-small businesses. For example, the proposed subcontractor might only perform 15% of the manufacturing.

The GAO also disagreed with Promotions’ argument that M&M’s end items would not be produced by a small business based on the assertion that M&M’s subcontractors is not a small business. The GAO stated that a large company’s work on an item does not automatically turn the end product into a large company-produced product. Like the example above, the large company may only provide 10% of the work required to create the end product.  In the GAO’s mind, finding that this small amount of work turned the entire item into a non-small business-produced item would be unfair.

Launching a Successful Bid

Although Promotions could not ultimately convince the GAO, their situation provides insight into how future protestors create their arguments and ultimately obtain the contract. If your business is involved in government contracting and procurement, the experienced attorneys at Whitcomb Law, P.C. can help you craft persuasive arguments in your bid protest.

Topics: Bid Protest

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