Can a prospective contractor be determined nonresponsible prior to an agency's set-aside decision?

The situation: An agency has a requirement for which it anticipates the receipt of offers from four HUBZone small business concerns and award can be made at a fair market price (the criteria at FAR 19.1305(b) have been met). However, one of the HUBZone small business concerns has an unsatisfactory performance record (FAR 9.104-1(c)) and the other three do not have the necessary experience to perform the contract (FAR 9.104-1(e)). As such, the agency would rather not set aside the acquisition for HUBZone small business concerns. The agency would like to pursue a determination of nonresponsibility of the HUBZone contractors with the SBA and proceed with a small business set-aside.

If this won't work, is there any other way out of this mess?

ji20874  Posted on Wednesday, December 03, 2003 - 06:52 am:   

If one has an unsatisfactory performance record and the other three do not have the necessary experience, and your market research proves this, then you DO NOT have a reasonable expectation of offers from two or more responsible sources and a set-aside is not appropriate.

The FAR requirement for a determination of responsibility or a nonresponsiblity determination (FAR 9.103(b)) has been generally understood to apply at time of award; that is, at the time of award of the contract.

Thus, I do not recommend a formal determination of nonresponsibility -- rather, I recommend a contracting officer's statement based on the market research that there is no reasonable expectation of receiving sources from two or more responsible HUB-zone sources.

Vern Edwards  Posted on Wednesday, December 03, 2003 - 10:06 am:

However, see FAR § 9.105-1(b)(1).

Don Acquisition  Posted on Wednesday, December 03, 2003 - 11:22 am:   

ji20874,

FAR 19.1305 doesn't say anything about two or more "responsible" sources. It states that:

"(b) To set aside an acquisition for competition restricted to HUBZone small business concerns, the contracting officer must have a reasonable expectation that-
(1) Offers will be received from two or more HUBZone small business concerns; and
(2) Award will be made at a fair market price."

Further, I don't believe that the contracting officer could make a determination of nonresponsibility based solely on market research without referring the matter to the SBA.

Stan March  Posted on Wednesday, December 03, 2003 - 02:39 pm:   

It seems to me that determining a "prospective" contractor non-responsive is akin to a defacto debarrment without due process.

Stan March  Posted on Wednesday, December 03, 2003 - 02:43 pm:   

It seems to me that determining a "prospective" contractor non-responsive is akin to a defacto debarrment without due process.

CM  Posted on Wednesday, December 03, 2003 - 03:34 pm:

TRY 13 CFR 126.607. Also a determination to set aside a project for a HZ firm is not merely based on wether the firm has listed a relative NAIC in PRO NET. No one is debarred de facto or otherwise as these firms are permitted to bid when the package is released....this exercise is to determine which set aside program is appropriate.

ji20874  Posted on Wednesday, December 03, 2003 - 05:55 pm:   

Don Acquisition --

You're right that Part 19 doesn't talk about responsible sources. But 10.001(a)(3) does indicate that one of the purposes of market research is to determine if sources exist to meet the agency's requirements -- so please let me change the first paragraph of my earlier posting to read as follows--

"If one has an unsatisfactory performance record and the other three do not have the necessary experience, and your market research proves this, then you DO NOT have a reasonable expectation of offers from two or more credible sources or of making an award at a fair and reasonable price and a set-aside is not appropriate."

With an unrestricted acquisition, or just a SB set aside, the HUB-zone sources could still play. So there is no determination on non-responsibility and no de facto debarment -- just a determination that there is no reasonable expectation that a HUB-Zone set-aside will produce an acceptable outcome; that is, effective competition and a resulting fair price.

Don Acquisition  Posted on Wednesday, December 03, 2003 - 08:03 pm:  

ji20874,

Part 19 doesn't say, implicitly or explicitly, that you have to have two or more credible sources or that there must be a reasonable expectation of an acceptable outcome. It just says two or more sources. The two or more sources could be turkeys and, provided you could award at a fair market price, you would still meet the criteria for a HUBZone set-aside at 19.1305(b). In the scenario that I stated, the only justification for not setting the acquisition aside that I can think of would be if the agency could determine three of the prospective offerors to be nonresponsible. Instead of going through a source selection and waiting until right before contract award to determine responsibility, I'm wondering if an agency can make the responsibility determination (which would involve seeking a COC from the SBA) prior to the set-aside decision. This would avoid having to resolicit after having found the HUBZone offerors nonresponsible during the initial source selection.

If you have identified, through market research, two or more HUBZone sources that would submit an offer and that award could be made at a fair market price, FAR 19.1305(b) requires a HUBZone set-aside. If the procurement is not set aside under these conditions because the contracting officer believes that the sources are not "credible" or that a set-aside would not produce an acceptable outcome, the he/she is, in effect, making a nonresponsibility determination of the interested sources. I don't believe that the contracting officer can make this determination without referring the matter to the SBA.

Don Acquisition  Posted on Wednesday, December 03, 2003 - 10:33 pm:   

CM,

Interesting. 13 CFR 126.607(c) includes the term "responsible":

"(c) After determining that neither paragraph (a) or (b) of this section apply, the contracting officer must set aside the requirement for competition restricted to qualified HUBZone SBCs if the contracting officer:
(1) Has a reasonable expectation, after reviewing SBA's list of qualified HUBZone SBCs that at least two responsible qualified HUBZone
SBCs will submit offers; and
(2) Determines that award can be made at fair market price."

Who determines if the HUBZone SBC is responsible? It's not clear if this can be a unilateral determination of the contracting officer. Why was "responsible" left out at FAR 19.1305(b)? Another example of poor regulation writing?

ji20874  Posted on Thursday, December 04, 2003 - 10:32 am:

Don--
But you can't award at a reasonable price to a turkey who doesn't have the experience requirements or has a lousy past performance. Yes, it might be lousy regulation writing. I do not believe that FAR 19 should be interpreted to mean any two turkeys, but rather two or more credible sources.

Responsible means reasonably capable of doing the job -- we don't do formal responsibility determinations in the pre-RFP stage, but you can do market research to show whether or not there is a REASONABLE EXPECTATION of two or more responsible and qualified souces. If your market research shows all four candidates are turkeys, then you have no reasonable expectation of receiving offers from two or more responsible qualified HUBZone sources. The key is REASONABLE EXPECTATION -- and this can be done by market research and without a formal responsibility determination.

Don Acquisition  Posted on Thursday, December 04, 2003 - 12:00 pm:  

ji20874,

I disagree with the assertion that you cannot get fair market pricing from poor performers or inexperienced contractors, but that is beside the point.

I like your interpretation of 19.1305(b), and it jives with 13 CFR 126.607(c). However, the fact still remains that 19.1305(b) is silent on responsibility. I gather that you would believe that the omission of "responsible" in the FAR was an oversight. Given the poor writing we have seen in the FAR, you would have good reason to believe that.

For argument's sake, let's assume that the omission of "responsible" at FAR 19.1305(b) was intentional. If so, what could that mean? Perhaps the FAR Council did not want the contracting officer to unilaterally decide that there was no reasonable expectation that interested sources would turn out to be responsible, without referring the matter to the SBA.

I have a call in to the SBA on this. I'll let you know what they say.

Don Acquisition  Posted on Thursday, December 04, 2003 - 04:57 pm: