New
AeroSage’s first argument concerns what is known as the small
business nonmanufacturer rule. Ordinarily, in order to qualify
as a small business concern to provide manufactured products or
other supply items for a procurement assigned a manufacturing or
supply NAICS code, an offeror must be the manufacturer or
producer of the end item being procured. 13 C.F.R. §
121.406(a)(1). If the offeror does not manufacture the item
being purchased, the nonmanufacturer rule provides that the
offer of a nonmanufacturer small business concern can be
considered, provided, among other things, the small business
offeror represents that it will supply the product of a domestic
small business manufacturer or processor, or that a waiver of
this requirement is granted by the SBA. 15 U.S.C. § 637(a)(17);
13 C.F.R. § 121.406(b).
Whether the nonmanufacturer rule should be included in a
procurement set aside for small businesses primarily depends on
the NAICS code assigned to the procurement by the procuring
agency. See BlueStar Energy Solutions, B-405690, Dec. 12, 2011,
2011 CPD ¶ 275 at 3. In this regard, “[t]he nonmanufacturer rule
applies only to procurements that have been assigned a
manufacturing or supply NAICS code.” 13 C.F.R. § 121.406(b)(3);
see FAR § 19.303(a)(2) (“A concern that submits an offer or
[quotation] for a contract where the NAICS code assigned to the
contract is one for supplies, and furnishes a product it did not
itself manufacture or produce, is categorized as a
nonmanufacturer and deemed small if it meets the requirements of
[the nonmanufacturer rule].”).
As discussed above, the agency assigned NAICS code 324110,
Petroleum Refineries, to the solicitation. NAICS code 324110
falls under the subsector for petroleum and coal products
manufacturing. 13 C.F.R. § 121.201. The nonmanufacturer rule
therefore applies under this NAICS code. Id.; FAR §
19.102(f)(1); see RFP at 2. As discussed in a decision by the
SBA Office of Hearings and Appeals, the SBA has concluded that
the nonmanufacturer rule, as applied to NAICS code 324110,
requires a prospective small business offeror that is not a
refinery to offer the product of one or more small business
refineries. See AeroSage, LLC, SBA No. SIZ-5820, Mar. 23, 2017,
2017 SBA LEXIS 29.
DLA’s set-aside determination here assumed that, in order to
comply with the nonmanufacturer rule, non-refinery offerors
would need to obtain fuel from small business refineries.
COS/MOL at 3-4, 6-7. AeroSage argues that the market for fuel
involves a mixture of “fungible” fuel that is transported
through intermediaries, and that fuel is therefore not traceable
to specific refineries. See Comments at 2 (“There is a six-tier
logistics network for direct delivery to individual
installation[s] where fungible refined fuel goes into the
pipeline throughout the country not at all directly to a
location nearby.”). The protester reaffirmed its belief
regarding the fuel market in its response to questions from our
Office. See Protester’s Response to GAO Questions (June 26,
2017) at 3 (“As indicated [in] AeroSage DLA protest records, the
practical realities of the multi-tier distribution system make
it so no SDVOSB has ever met the unreasonable threshold . . .
documenting . . . delivery orders from a specific refinery.”).
The protester therefore argues that DLA should have sought a
waiver from SBA of the nonmanufacturer rule.
As our Office has explained, however, agencies are not required
to seek waivers of the nonmanufacturer rule. In this regard, the
FAR provides that, in a specific solicitation, a contracting
officer “may request a waiver” of the requirement that products
acquired under small business set-asides be manufactured by
small businesses. FAR § 19.102(f)(5). Because this provision is
discretionary, we have explained that an agency’s refusal to
seek a waiver of the nonmanufacturer rule does not provide a
basis to sustain a protest. Latvian Connection, LLC, B-412701,
Apr. 22, 2016, 2016 CPD ¶ 110 at 4 n.9. We therefore find no
basis to conclude that the agency was required to seek a waiver
of the nonmanufacturer rule and deny this protest allegation.
(AeroSage, LLC B-414640,
B-414640.3: Jul 27, 2017)
Pacific Lock
protests that Chinrose will not provide a domestic end item. In
this regard, the protester contends that, based on its industry
knowledge, Chinrose does not manufacture locks in the United
States. Protest at 4.
When a vendor responds to a solicitation by representing that it
will furnish products that comply with a solicitation’s domestic
production requirements, the vendor is contractually obligated
to comply with such representation. Simba USA, LLC; New Western
Supply, LLC, B-401971,B-401971.2, Dec. 28, 2009 2009 CPD ¶ 265
at 2. Absent a basis to question a vendor’s representation in
this regard, the agency may properly rely on the representation
in making its source selection decision. However, where an
agency has reason to believe that the firm will not provide
compliant products,the agency should go beyond the firm’s
representations to verify compliance,and our Office will review
a procuring agency’s actions to ensure that the agency’s
assessments and conclusions were reasonable. See, e.g.,Pacific
Lock Co., B-309982, Oct. 25, 2007, 2007 CPD ¶ 191 at 4; General
Kinetics, Inc., Cryptek Div., B-242052.2, May 7, 1991, 91-1 CPD
¶ 445 at7.
Here, Pacific Lock has not shown that the agency had any reason
to question Chinrose’s representation, given that nothing on the
face of its quotation indicated that the firm would not provide
a domestic part. We see no basis to question the agency’s
reliance on Chinrose’s certification that it would comply with
the solicitation’s requirement for a domestic part.
The protester also complains that agency extended from 90days to
180 days the time for delivery in the order issued to Chinrose.
The agency responds that it extended the delivery schedule to
accommodate product verification testing. We need not resolve
this dispute because Pacific Lock does not show that it was
prejudiced by the agency’s actions. Competitive prejudice is an
essential element of a viable protest, and where the protester
fails to demonstrate prejudice, our Office will not sustain a
protest. SeeArmed Forces Hospitality, LLC, B-298978.2,
B-298978.3, Oct.1, 2009, 2009 CPD ¶192 at 9-10;
McDonald-Bradley, B-270126, Feb. 8,1996, 96-1 CPD ¶ 54 at 3.
Here, Pacific Lock does not state what it would have done
differently had it been aware that the agency would accept a
longer delivery schedule for the locks.
The protest is denied. (Pacific
Lock Company, B-405800, December 27, 2011) (pdf)
BOT-USA submitted a quotation for the product of a large
business--Bluefin--as well as the additional work to make the
Bluefin AUV meet the agency’s requirements. However, there was
no valid class waiver in place exempting AUVs from the
nonmanufacturer rule, and the contracting officer did not seek
or obtain a special waiver. While SBA’s list includes a class
waiver for NAICS 334511--the code identified in the RFQ--the
waiver, by its terms, covers only “airborne integrated
components”; it undisputedly does not cover nautical products
such as the AUV under the RFQ, and NOAA does not now assert that
the waiver extended to the AUV. See Product Service Code 5821,
www.sba.gov/GC/approved.html. Since BOT-USA’s quotation, on its
face, showed that it was based on an item manufactured by a
large business and, as explained above, it is undisputed that
the class waiver for NAICS 334511 does not extend to nautical
items such as the item here, the contracting officer was or
should have been aware prior to issuance of the purchase order
that BOT-USA was not an eligible small business. The contracting
officer asserts neither that she believed there was an
applicable waiver, nor that she was confused as to the existence
of such a waiver. While, in the absence of a size protest from
an offeror, there is no requirement that a contracting officer
refer size status questions to SBA, we will review the
reasonableness of a contracting officer’s failure to do so.
Jensco Marine, Inc., B‑278929.7, Feb. 11, 1999, 99-1 CPD para.
32 at 5. Under the circumstances here--where the face of BOT-USA’s
quotation showed that the firm was not an eligible small
business--we can only conclude that it was unreasonable for the
contracting officer to accept BOT-USA’s quotation rather than
refer the matter to SBA. (Hydroid LLC,
B-299072, January 31, 2007) (pdf)
Our Office has held that there is
no conflict in a solicitation that includes both a requirement
for a domestic end item and clauses that implement the Buy
American Act. TRS Research, supra, at 4 (despite presence of Buy
American Act clauses, inclusion of the more stringent small
business set-aside restriction to domestic sources put offerors
on notice that only domestic products could be offered); MTS
Sys. Corp., B-238137, Apr. 27, 1990, 90-1 CPD para. 434 at 4 (no
conflict between Department of Defense clause restricting
offerors to domestic sources and Buy American Act clauses
allowing evaluation of foreign end products). (Power
Connector, Inc., B-285395, August 24, 2000) |
