_________________________________________________ DENIED: November 10, 1992 ________________________________________________ GSBCA 12005-P VALIX FEDERAL PARTNERSHIP I, Protester, v. DEPARTMENT OF THE ARMY, Respondent, and SMALL BUSINESS ADMINISTRATION, Intervenor. Shelton H. Skolnick, Derwood, MD, counsel for Protester. Col. Gregory E. Smith and Capt. Jacqueline J. Jackson, Office of the Chief Attorney, Defense Supply Service-Washington, Department of the Army, Washington, DC, counsel for Respondent. John W. Klein, Chief Counsel for Special Programs, U.S. Small Business Administration, Washington, DC, counsel for Intervenor. Before Board Judges HENDLEY, NEILL, and VERGILIO. HENDLEY, Board Judge. In accordance with Rule 11 of the Board's Rules of Procedure, the parties elected to submit the case for decision on the documentary record without a hearing on the merits. The protest was filed on September 9, 1992. There is but one issue in this case. After placing a notice in the Commerce Business Daily (CBD) of its intent to compete a requirement, may an agency in conjunction with the Small Business Administration (SBA) instead reserve the procurement for the SBA 8(a) program? We conclude that it can. Findings of Fact 1. On March 11, 1992, the respondent, the Defense Supply Service-Washington (DSS-W), synopsized in the CBD its intent to procure, in accordance with full and open competition, sixteen 80486 cache or compatible computers under solicitation number MDA903-92-R-0056. Protest File, Exhibit 4. On April 9, 1992, the CBD synopsis was modified to correct workstation specifications. Protest File, Exhibit 5. 2. On March 20, 1992, the respondent received an 8(a) search letter from the SBA for automatic data processing (ADP) equipment. This letter was sent pursuant to section 8(a) of the Small Business Act, 15 U.S.C. 637(a) (1988). Protest File, Exhibit 2. By letter dated March 19, 1992, Corporate Systems Resources, Inc., a participant in the 8(a) program, notified the respondent that it had requested a search letter from the SBA regarding the CBD notice of March 11, 1992, for procurement under solicitation number MDA903-92-R-0056. Protest File, Exhibit 3. 3. On June 1, 1992, in response to the SBA search letter and in accordance with Federal Acquisition Regulation (FAR) 19.804-2(b) and 15 U.S.C. 637(a), the respondent offered the acquisition to the SBA through a subcontracting effort under the auspices of the 8(a) program. Protest File, Exhibit 7. The SBA had determined that the acceptance of this procurement would not cause an adverse impact on any other small business concern. Protest File, Exhibit 6. The decision to reserve this procurement for the 8(a) program was a direct result of the SBA's search letter dated March 20, 1992. 4. The respondent never issued the solicitation but canceled the earlier announcement for the 80486 computers. This cancellation was listed in the CBD notice of June 8, 1992, in accordance with FAR 5.202(a)(4). Protest File, Exhibit 6. 5. During the second or third week of July 1992, Ms. Denise Link, the respondent's original contract specialist for the procurement, received a telephone inquiry from Mr. Stephen Mills, Vice-President, Marketing, Integrated Systems Group, Inc., about his prior letter regarding solicitation number MDA903-92-R- 0056. Ms. Link informed Mr. Mills that (1) the solicitation had been canceled, (2) the trade was so informed by a notice in the CBD, and (3) the procurement was reserved for the 8(a) program. Respondent's Motion to Dismiss for Lack of Timeliness, Exhibit 1, Encl. 4. On August 7, 1992, Ms. Sandra Park replaced Ms. Link as the contract specialist to handle the procurement, Ms. Link having departed. Link Affidavit, Encl. 4. 6. In a letter to the respondent dated August 6, 1992, Integrated Systems Group, Inc., under the signature of Mr. Stephen Mills, expressed concern over "the recent removal of the SOL MDA903-92-R-0056 in order to make the award through an 8(a) firm." Protest File, Exhibit 10. On September 8, 1992, Sandra Park was contacted by "Justine" from Integrated Systems Group, Inc. Justine inquired about the status of solicitation MDA903- 92-R-0056. Ms. Park explained that the solicitation had been canceled. Ms. Park then asked Justine if she worked with Steve Mills. Justine responded that she did work with Mr. Mills. At this time, Ms. Park informed Justine that the respondent had received a letter from Mr. Mills and that he was aware that the solicitation had been canceled. Protest File, Exhibit 11. 7. On September 9, 1992, the protester, Valix Federal Partnership I (Valix), under the signature of Mr. Stephen Mills, protested to this Board alleging that the respondent had failed to set aside the procurement for small business and that the respondent had excluded Valix from the competition by restricting the competition to 8(a) businesses in violation of the DFARS. 8. The protester is not an 8(a) program participant, nor is it a small disadvantaged business. Neither has it been designated by the SBA as a small business. Protester's Discovery Response, Interrog. number 3, dated October 9, 1992, Encl. 3. The protester did not file a response to the CBD notice of March 11, 1992, with the respondent. Kelly Affidavit, Encl. 1. 9. Prior to the protest, the respondent had not set aside any procurements for the purchase of 80486 computers "or equal" to small businesses. Kelly Affidavit, Encl. 1; Thomas Affidavit, Encl. 2. Discussion There is but one issue in this case. After placing a notice in the CBD of its intent to compete a requirement, may an agency in conjunction with the SBA instead reserve the procurement for the SBA 8(a) program? The protester contends that the issue is governed by FAR 19.501(g), 48 CFR 19.501(g) (1992), which states: (g) Once a product or service has been acquired successfully by a contracting office on the basis of a small business set-aside, all future requirements of that office for that particular product or service not subject to simplified small purchase procedures shall, if required by agency regulations, be acquired on the basis of a repetitive set-aside. The protester further points out that DFARS 219.501(g), 48 CFR 219.501(g) (1992), the Department of Defense's regulation implementing the FAR provision, states: "(g) This repetitive set- aside procedure applies to DoD," and that DFARS 219.502-2- 70(b)(1) states: Do not set-aside acquisitions for SDB's [Small 1 Disadvantaged Business] when - . . . . (1) The product or service has been successfully acquired as a small business set-aside (see FAR 19.501(g)). . . . The protester contends that the respondent has violated DFARS 219.502-2-70(b)(1) and FAR 19.501(g). The protester is wrong. The protester's argument simply overlooks the fact that under the statutory and regulatory scheme, small business set- asides and SDB set-asides are separate and apart from the SBA 8(a) reservation program. In any event, first, the respondent has not previously acquired the same product in a small business set-aside. Kelly Affidavit, Encl. 1. Second, the acquisition has not been set aside for an SDB. Instead, the procurement is being made in accordance with the SBA's 8(a) program, which is initiated and controlled by the SBA. Protest File, Exhibit 2. The protester contends that if a product has been procured under the small business-small purchase procedures of FAR Part 13, all future requirements for that product must be set aside for small business. But the respondent has not acquired the particular product using small business-small purchase procedures. Even had the respondent done so, the acquisition could still be procured under the SBA 8(a) program. In Bucky X-Ray International Corp., B-231353, 88-2 CPD 79, (July 25, 1988), the General Accounting Office (GAO) held that the determination to cancel a competitive procurement and to initiate a procurement under section 8(a) of the Small Business Act, 15 U.S.C. 637(a), is a matter for the contracting agency and the Small Business Administration to decide. The Comptroller General refused to review the agency's and SBA's decision to convert the acquisition to an 8(a) procurement, absent a showing of bad faith or possible fraud by government officials. In Bucky, the agency had synopsized a request for proposals in the CBD as a competitive total set-aside for small business firms. Subsequently, at the request of the SBA, the agency offered the requirement to SBA under the 8(a) program, and therefore, did not issue the solicitation. The protester contended that because the agency advertised the requirement, it could not later withdraw the proposed solicitation and reserve the acquisition for procurement under the 8(a) program. As in the instant case, the protester cited FAR 5.101 in support of this position. The Comptroller General held that a solicitation may be withdrawn and the procurement instead effectuated under the 8(a) program at any time. The Comptroller General has even gone so far as to hold that canceling an invitation for bids and then reserving the requirement for a minority contractor under the Small Business Administration's 8(a) program just one day before bid opening was within the agency's broad discretion. The Comptroller General concluded that it is not improper to prepare for, or even conduct, an unrestricted procurement while discussions are taking place with a potential 8(a) subcontractor. The Comptroller General recommended that as soon as an agency learns that the SBA is interested in a procurement, it should notify all bidders of the possibility that the solicitation may be canceled and that, consequently, the bid opening should be suspended or postponed pending resolution of the set-side question. E-Z Tight, Inc., B- 195823, 79-2 CPD 394 (Dec. 6, 1979). In the instant case, protester has made no allegation of bad faith or fraud on the part of any of the respondent's or the SBA's officials, and there is not a hint of such conduct. The Small Business Act affords the SBA and contracting agencies broad discretion in selecting procurements for the 8(a) program. Microform Inc., B-244881.2, 92-2 CPD 13 (July 10, 1992). Protester has not demonstrated any abuse of discretion. Although the decisions of the Comptroller General are not binding precedent for this Board, they are persuasive authority. In the instant case we fully agree with the cited decisions holding that the determination of the SBA and the procuring agency to reserve a procurement for purchase under the SBA 8(a) program is purely within their discretion. Decision We cannot find that the respondent has violated any statute or regulation in the conduct of this procurement, nor has there been any abuse of discretion. Consequently, the protest is DENIED. The suspension of the respondent's delegation of procurement authority lapses by its own terms. ___________________________ JAMES W. HENDLEY Board Judge We concur: _____________________________ ____________________________ EDWIN B. NEILL JOSEPH A. VERGILIO Board Judge Board Judge