Link: GAO Opinion
Agency: Department of the Interior
Disposition: Protest denied.
Keywords: 8(a) sole source awards
General Counsel P.C. Highlight: SBA and contracting agencies have broad discretion in selecting procurements for the 8(a) program. GAO will not consider a protest challenging a decision to procure under the 8(a) program absent a showing of possible bad faith on the part of government officials, or that applicable regulations may have been violated.
Ohana Industries, Ltd. protests the decision of the Department of the Interior, Fish and Wildlife Service (FWS) and the Small Business Administration (SBA), to place an FWS requirement for restoration/construction work on the historic Kilauea Lighthouse, Kilauea Point National Wildlife Refuge, Kauai, Hawaii, under SBA’s section 8(a) program for award of a sole-source contract
The requirement is for design/build services for Phase II restoration/construction work on the Kilauea Lighthouse structure, the lightkeepers’s quarters, an oil storage building and landing station. Ohana, a small business concern, competed successfully for the Phase I contract, which was limited to the repair and rehabilitation of the historic lantern of the Kilauea Lighthouse. To address the Phase II requirement, the agency initially planned to proceed with a competitive acquisition among existing design/build indefinite-delivery/indefinite-quantity (ID/IQ) multiple-award task order contract (MATOC) holders. FWS decided to pursue this requirement as a sole-source award under the 8(a) program. By letter to the SBA, FWS offered to contract with the awardee for the lighthouse restoration under the section 8(a) program. FWS considered the Phase I and Phase II work to be significantly different, such that the Phase II work constituted a “new” requirement. When FWS had not received SBA’s acceptance letter within several weeks, the agency decided to award the work as a task order under its MATOC to the same awardee. Ohana protested and FWS subsequently advised GAO that it would terminate the awardee’s task order and instead award a sole-source section 8(a) contract to the awardee for the required restoration work. FWS requested that SBA cancel its original request and submitted a revised letter to SBA, offering to contract with the awardee under the section 8(a) program. By e-mail SBA accepted the requirement into the 8(a) program. In connection with the protest, SBA has advised GAO that an adverse impact analysis was not required because the Phase II work constituted a new, separate and distinct restoration/construction requirement.
Ohana asserts that FWS failed to provide SBA with complete and accurate information as part of its section 8(a) program offering, and that FWS and SBA incorrectly determined that the Phase II work constituted a new requirement. GAO states that section 8(a) of the Small Business Act authorizes SBA to contract with other government agencies and to arrange for the performance of those contracts by awarding subcontracts to socially and economically disadvantaged small businesses. The Act affords SBA and contracting agencies broad discretion in selecting procurements for the 8(a) program; GAO will not consider a protest challenging a decision to procure under the 8(a) program absent a showing of possible bad faith on the part of government officials, or that applicable regulations may have been violated. Under the Act’s implementing regulations, SBA may not accept any procurement into the section 8(a) program if doing so would have an adverse impact on an individual small business, a group of small businesses in a specific geographical location, or other small business programs. However, SBA regulations explicitly provide that an adverse impact determination need not be performed where a “new” requirement is offered to the 8(a) program. As is pertinent here, the regulations specifically note that “[c]onstruction contracts, by their very nature (e.g. the building of a specific structure), are deemed new requirements.”
Here, SBA determined that the Phase II requirement constituted separate and distinct construction services, such that an adverse impact analysis was not required. SBA concluded that Ohana’s Phase I contract was limited to restoration/construction work on the lighthouse lantern, which is separate and distinct from the Phase II work, which involves work on the lighthouse, lightkeeper’s quarters, the oil storage building and the landing station. While Ohana disagrees, arguing that the Phase II work simply is the completion of the lighthouse restoration work currently in progress, its disagreement, without more, does not demonstrate that SBA’s determination was made in bad faith or was otherwise inconsistent with applicable regulations. To the contrary, SBA’s determination was consistent with applicable SBA regulations, inasmuch as those regulations specifically define construction work as “new” work. Consequently, GAO has no basis to object to SBA’s determination that there was no requirement to conduct an adverse impact analysis prior to accepting the new, Phase II requirement under the 8(a) program. The protest is denied.