Decision 

Phillip E. Johnson for the protesters.

Matthew W. Bowman, Esq., Richard L. Hatfield, Esq., and Raymond M. Saunders, Esq., Department of the Army, and John W. Klein, Esq., and Kenneth Dodds, Esq., for the Small Business Administration, the agencies.

Katherine I. Riback, Esq., and James A. Spangenberg, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision.

DIGEST
 
Agency determination not to set aside procurement for small businesses was proper where agency reasonably concluded--based on a market survey, request for interest targeted at small businesses, and concurrence of the Small Business Administration and the agency's small business specialist--that it could not expect to receive proposals from at least two responsible small business offerors at fair market prices.

DECISION
 
Quality Hotel Westshore and Quality Inn Busch Gardens protest the Department of the Army's decision to issue request for proposals (RFP) No. DABT23-02-R-0010, for the meals, lodging and transportation for applicants processing at the military entrance processing station (MEPS) in Tampa, Florida, on an unrestricted basis.  The protesters assert that this requirement should have been set aside for exclusive small business participation.

We deny the protest.

The RFP was issued on an unrestricted basis on February 20, 2002 for meals, lodging and transportation for armed service applicants at the Tampa MEPS.  The RFP was issued as a commercial item acquisition using simplified acquisition procedures, and contemplated the award of a fixed-price, indefinite-quantity requirement contract for a base year with four 1-year options.     
 
These services had previously been obtained through unrestricted procurements.  A previous unrestricted solicitation for these services was canceled after it was protested.  The agency then conducted more in-depth market research to determine whether the procurement could be set aside for small businesses. 
 
Specifically, the contracting officer explains that prior to issuing this RFP, she conducted a market survey, which included an Internet search on “ProNet,” a website maintained by the Small Business Administration (SBA).^[1]  This search did not reveal any small businesses in the lodging category in the Tampa area.  Contracting Officer's Statement at 2. 
 
The contracting officer also coordinated with the Army's small business advocate and the local SBA office to assist in locating eligible small businesses.  The contracting officer noted that historically the SBA has been unable to identify small businesses, small disadvantaged businesses, or section 8(a) firms for similar requirements in the Tampa area; that the contracting officer's ProNet search had not identified any small businesses in the area; that the local SBA office had been contacted and could not identify small business sources; and that the requirement would remain “full and open.”  The Army's small business specialist and the local SBA representative concurred with the contracting officer's determination.  Army Report, Tab J, Memorandum of Contracting Officer (Feb. 8, 2002); Tab K, DD Form 2579 (Feb. 2, 2002). 
 
The contracting officer also advertised on the Federal Business Opportunities (FedBizOpps) website for interest by small businesses in this requirement.  The notice required that interested small business respondents complete and return a survey, which required, among other things, that the respondent identify the owner of the hotel and list its annual receipts,  including all annual receipts of all affiliates (e.g., other hotels) combined, not just the hotel proposed.  The notice specifically provided that “[f]ailure to submit all required information may preclude consideration of your company as a viable candidate.”  Army Report, Tab F, FedBizOpps Notification (Sept. 14, 2001).  
 
The agency received responses from only the two protesters, both of which claimed to be small businesses.  Contracting Officer's Statement at 1; Protester's Comments (Apr. 14, 2002), Tab 1, Survey Forms Completed by Protesters.  The contracting officer noted that these responses did not state the gross revenues of all of the affiliates, as required by the survey.  The contracting officer had requested this information because, based on her experience, she had found that the type of hotels sought under these “best value” procurements for MEPS were most likely to be franchised or affiliated with a national hotel chain, and that the owners of those hotels were very likely to own more than one lodging facility; while an owner of a single lodging facility may meet the $5 million size standard, it was considered unlikely that the owner of more than one lodging facility would meet the size standard.^[2] Army Report at 2. 
 
The contracting officer states that she then contacted the two responding hotels and requested that they identify the principals of the hotels' owners and asked whether they owned other properties, and list the total gross revenue of all affiliates, as was requested on the FedBizOpps form.  Although the contracting officer was provided certain information in telephone conversations with the two hotels, the contracting officer was not convinced that these hotels were not affiliated with other properties, in which case they may exceed the size standard and may not qualify as small businesses.  With regard to one of the hotels, the contracting officer requested the hotel's representative provide in writing by February 8, 2002 specific information regarding the gross revenues of three properties that the contracting officer learned were owned by the owner of that hotel.  When the contracting officer did not receive the requested information in writing by February 8, she decided to issue the RFP as unrestricted, concluding that there was insufficient information in the record indicating that there were two or more qualified small businesses from which there was a reasonable expectation of receiving fair market price offers.  The RFP was issued on February 20.  This protest followed. 
 
Federal Acquisition Regulation § 19.502-2(b) requires a procurement to be set aside for small businesses when there is a reasonable expectation that offers will be obtained from at least two responsible small businesses at fair market prices.  A contracting officer's determination under this regulation concerns a matter of business judgment within the contracting officer's discretion that we will not disturb absent a showing that it was unreasonable.  Neal R. Gross & Co., Inc., B-240924.2, Jan. 17, 1991, 91-1 CPD ¶ 53 at 2.  However, a contracting officer must make reasonable efforts to ascertain whether it is likely that offers will be received from at least two responsible small businesses at fair market prices, Mortara Instrument, Inc., B-272461, Oct. 18, 1996, 96-2 CPD ¶ 212 at 3, and we will review a protest to determine whether a contracting officer has made such efforts.  Library Sys. & Servs./ Internet Sys., Inc., B-244432, Oct. 16, 1991, 91-2 CPD ¶ 337 at 7.  While the use of any particular method of assessing the availability of small businesses is not required, and measures such as prior procurement history, market surveys and advice from the SBA and the agency's small business specialist and technical personnel may all constitute adequate grounds for a contracting officer's decision not to set aside a procurement, American Imaging Servs., Inc., B-246124.2, Feb. 13, 1992, 92-1 CPD ¶ 188 at 3, the assessment must be based on sufficient facts so as to establish its reasonableness.  McSwain & Assocs., Inc. et al., B-271071 et al., May 20, 1996, 96-1 CPD ¶ 255 at 2-3.
 
We find that the contracting officer acted within her discretion in issuing the RFP on an unrestricted basis.  The contracting officer performed an adequate market survey, and coordinated with appropriate SBA and agency small business personnel, from which she reasonably concluded that there were no qualified small businesses that would respond to the RFP.  The contracting officer also advertised for small business interest.  As noted by the SBA:

Here, the protesters were given ample opportunity to conclusively convince the [contracting officer] of their small business status, but they repeatedly failed to provide the [contracting officer] with requested information or otherwise clearly address her concerns over their potential affiliation.  SBA Report at 3.  The SBA concluded that the contracting officer's determination that she did not have a reasonable expectation of receiving offers from at least two small business concerns was not unreasonable.  SBA Supplemental Report at 3.  We give great weight to the views of the SBA in these matters.^[3]  See CardioMetrix, B-260747, July 18, 1995, 95-2 CPD ¶ 28 at 3. 
 
The protest is denied.
 
Anthony H. Gamboa
General Counsel

^[1] Pro-Net is an Internet database for small, disadvantaged, 8(a) and women-owned businesses.  The SBA's website describes “Pro-Net [as] an electronic gateway of procurement information--for and about small businesses.  It is a search engine for contracting officers, a marketing tool for small firms and a 'link' to procurement opportunities and important information.  It is designed to be a 'virtual' one-stop- procurement-shop.”  http://pro-net.sba.gov/
^[2] The applicable size standard for NAICS 721110 “Hotels (except Casino Hotels) and Motels” was increased to $6 million for solicitations issued on or after February 22, 2002.  67 Fed. Reg. 3041 (2002); see SBA Report at 1 n.1. 
^[3] To the extent that the protesters have provided additional information regarding their small business status during the course of this protest, it will not be considered because information that first becomes available after issuance of a solicitation does not demonstrate that the contracting officer prior determination not to set aside a procurement was unreasonable.  See FKW Inc., B-249189, Oct. 22, 1992, 92-2 CPD ¶ 270 at 5.