________________________________________________________ DISMISSED WITH PREJUDICE: July 28, 1993 ________________________________________________________ GSBCA 12494-P INTEGRATED SYSTEMS GROUP, INC., Protester, v. DEPARTMENT OF THE AIR FORCE, Respondent. Shelton H. Skolnick, Judy D. Leishman and Amy M. Hall, Skolnick & Leishman, Derwood, MD, counsel for Protester. Clarence D. Long, Office of General Counsel, Department of the Air Force, Washington, DC, counsel for Respondent. LaBELLA, Board Judge. ORDER This protest was filed by Integrated Systems Group, Inc. (ISG), on July 13, 1993, and amended on July 20, 1993. The protest concerns a procurement by the Department of the Air Force (Air Force) for a multi-year contract for maintenance of IBM compatible mainframe equipment. ISG alleged that the Air Force failed to set aside the procurement for exclusive small business participation. On July 16, 1993, the Board held a prehearing conference to discuss further proceedings in the case. On July 26, 1993, the Board received a Motion for Settlement signed by both parties. The Air Force has agreed to set the procurement at issue aside for small businesses. The Air Force has submitted a statement by the base Small and Disadvantaged Business Utilization Specialist as follows: I have reviewed AF Form 2579 for Solicitation F04699-93-4-0101 and find that our original concurrence with the contracting officer that Full and Open Competition was appropriate was in error. I do not concur. The change of position is based upon two factors: (1) a change of interpretation of what the "product" in [Federal Acquisition Regulation] FAR 19.502-2 is and (2) the knowledge that the test included in FAR 19.502-2 can be met. In our original review, the "product" in FAR 19.502-2 was originally taken to include both the services and the supplies necessary to accomplish the maintenance of the IBM 4381 mainframe computer. After carefully reviewing FAR 19.502-2, 19.504-(a)(2), 19.504-(a)(2), 19.508(c) and (e), 52.219- 14(b)(1) and DFARS 219.504, I find that this interpretation was too restrictive. The procurement action is classified as a service contract based upon the anticipation that the cost of services to be received will far exceed that cost of supplies to be furnished. In reading the above FAR references I conclude that they are only intended to apply to the service portion of this solicitation. Therefore, as long as a small business contractor complies with FAR 52.219-14(b)(1), to wit: "At least 50 percent of the cost of contract performance incurred for personnel shall be expended for employees of the concern.", that the small business contractor may purchase repair parts (supplies) from anyone, without regard to the size of the business from which the item is to be purchased. Given that the small business concern need only comply with FAR 52.219-14(b)(1), as discussed above, then all that remains is to complete the test provided in FAR 19.502-2 that (1) offers will be obtained from at least two responsible small business concerns and (2) awards will be made at fair market prices. At least two firms are known to exist. [names firms] Given that at least two small businesses exist, I feel it reasonable to expect that at least two responsive and responsible small business concerns will submit offers. With competition achieved, there exists a reasonable expectation of a fair market price. A secondary, but important issue is the choice of SIC code for this action. The SIC listed is 3571, computers, 1000 people. Since the product being procured is computer maintenance and repair, the correct SIC is 7378, $14.5 million. The bottom line is that all the required elements necessary to support a total small business set-aside exist. The solicitation should have been and should now be solicited as a total small business set-aside. The parties have requested that the protest be dismissed with prejudice. Accordingly, the parties' motion is granted. This protest is DISMISSED WITH PREJUDICE. Rule 28. VINCENT A. LaBELLA Board Judge