The GAO's decision in Information Ventures, Inc. (GAO - B-294267) is an excellent example of how small business concerns can effectively protest an agency's decision to not set-aside a procurement for small business concerns.

Background

In May 2004, the Department of the Interior (DOI) published a pre-solicitation notice on Fed Biz Opps (www.fedbizopps.gov) announcing its intent to procure, on behalf of the Department of Health and Human Services, a report on the current state of health education methods and proposals for implementing more innovative methods.

Several business concerns requested a copy of the solicitation, including six small business concerns (two of which included capability statements with their requests). The DOI subsequently issued a Request for Proposal that was not set-aside for small business concerns. Information Ventures, Inc. filed a protest with the GAO challenging the fact that the procurement was not set aside for small business concerns. Specifically, Information Ventures alleged that the DOI failed to conduct adequate market research before determining not to set aside the procurement. Information Ventures argued that a proper market survey should have included a review of the Central Contractor Registration (CCR) database and obtaining the input of the SBA, DOI small business representative and the Department of Health and Human Services small business representative.

Decision

FAR 19.502-2(b) requires contracting officers to set aside for small business all procurements exceeding $100,000 if there is a reasonable expectation of receiving fair market price offers from at least two responsible small business concerns. The GAO will review a protest of an agency decision not to set aside a procurement to determine whether the contracting officer has undertaken reasonable efforts to ascertain the availability of capable small businesses.

The GAO found that the DOI contracting officer failed to take into account known information indicating the interest of capable small business concerns in this procurement. First, the contracting officer did not search the CCR database - a review of the CCR database would have revealed a large pool of small business concerns from which to select firms for further evaluation. Second, the contracting officer did not contact the DOI's SBA procurement center representative or director of small and disadvantaged business utilization. Finally, the contracting officer was on notice, prior to the issuance of the RFP, of substantial small business interest in the procurement. As noted above, six small business concerns responded to the pre-solicitation notice by requesting a copy of the solicitation - two included evidence of their capabilities. The contracting officer, however, did not evaluate the capabilities of any of the small businesses that had expressed interest in the solicitation before issuing the solicitation.

The GAO sustained the protest because it found that the contracting officer's determination that there was no reasonable expectation that two or more responsible small business concerns would submit bids was not based on sufficient facts to establish its reasonableness. The GAO therefore recommended that that the contracting officer cancel the solicitation and reissue it as a small businesses set-aside.

Michael Tuite contributed to this advisory.