Bid Protest Weekly Newsletter by Bryan R. King, Attorney, General Counsel PC
Date: Wednesday, July 18, 2013, 4:21pm EST
Mountain West Helicopters, LLC; Trans Aero, Ltd., B-408150; B-408150.2, July 1, 2013
The “Rule of Two” is an important principle of government contracting, particularly for small businesses. According to the Rule of Two, a federal agency making a contract award anticipated to exceed $150,000 must set aside that award exclusively for small businesses where both of the following two conditions are met: (1) the contracting officer has a reasonable expectation that offers will be received by at least two responsible small businesses; and (2) there is a reasonable expectation that the award will be made at a fair market price.
In this case, two concerns protested the decision by the Forest Service to issue a solicitation as a small business set-aside for small businesses with annual revenues under $7 million. The protesters argued that the agency did not conduct adequate market research to support the determination that at least two capable small businesses would submit offers in response to the solicitation. GAO rejected the argument, and denied the protest.
In this case, the Forest Service conducted market research by posting a sources sought notice on the FedBizOpps website, in order to assess the interest and capabilities of small business concerns. A number of firms responded to the sources sought notice that appeared capable of performing, with most of them falling under the $7 million size standard. Based on the response to the sources sought notice, as well as his previous procurement experience with small businesses, the contracting officer made the determination to issue the solicitation as a small business set-aside. GAO found the contracting officer’s decision to be reasonable.
When making the determination of whether to set a procurement aside for small businesses, an agency is not required to follow any particular method of assessing the availability of responsible small businesses. According to GAO, an agency may rely on factors such as prior procurement history, recommendations of small business specialists, and market surveys that include responses to sources sought announcements. The key is that the agency makes an informed business judgment that there is a reasonable expectation of receiving at least two fairly priced offers from responsible small businesses. GAO will not generally question the agency’s judgment on this issue.