United States Government Accountability Office

Washington, DC 20548

Comptroller General

of the United States

 

Decision

Matter of: CYIOS, Inc. 

File: B-402728.3

Date: July 13, 2012

Timothy W. Carnahan, for the protester.

MAJ Christine Fontenelle, Department of the Army, for the agency.

Noah B. Bleicher, Esq., and Glenn G. Wolcott, Esq., Office of the General Counsel, 

GAO, participated in the preparation of the decision.

DIGEST

1. Protest that procurement consolidating information technology support services 

was an impermissible bundling of requirements is denied, where the agency 

reasonably determined that consolidation would result in substantial cost savings 

and efficiencies and was necessary to meet the agency’s needs.

2. Protest that procurement should be set aside for small business concerns is 

denied, where agency reasonably found, based upon market research and the 

publication of a sources sought notice, that the agency was not likely to receive 

proposals from at least two small businesses with sufficient experience to perform 

the overall requirement.

DECISION

CYIOS, Inc., of Washington, D.C., protests the Department of Defense (DOD), 

Defense Information Systems Agency’s (DISA), issuance of solicitation 

No. EG0206-00, under the General Services Administration’s (GSA) Alliant 

government-wide acquisition program, for information technology (IT) support 

services. CYIOS alleges that the solicitation constitutes improper bundling of 

requirements, and that the agency violated applicable small business set-aside 

requirements. 

We deny the protest.
Page 2 B-402728.3 

BACKGROUND

Since 2009, the Army’s Information Technology Agency has relied on three 

contracts with large businesses to obtain a full range of IT support services for the 

Army, including desktop installation services, end user support, videoteleconferencing, requirements analysis and IT service management.1

 Agency 

Report (AR), Tab 6, DISA Determination & Finding (D&F), at 1. According to DISA--

the DOD agency that conducted the subject acquisition on behalf of the Army--the 

Army has experienced “chronic problems” trying to integrate the three vendors into 

a “larger, technically and operationally co-dependent environment.” Id. at 2. 

Moreover, DISA reports that the three-vendor scenario “hamper[s] efficient task 

coordination,” and has resulted in “significant delays,” “mission degradation” and 

has had an “impact on customer base.” Id. For these reasons, in early 2011, the 

Army began to consider whether it should consolidate the work performed under the 

3 contracts, thereafter concluding that a “single integrated vendor” should provide 

standardized end user computing device support services. Id. at 3. 

In June 2011, DISA prepared a determination and finding (D&F) that addressed the 

proposed consolidation of the end user computing device support services. See

AR, Tab 6, DISA D&F, at 1. The D&F detailed the benefits and savings associated 

with consolidating the requirements. In this regard, DISA noted that the 

consolidation of the three contracts into a single scope of work would “provide better 

accountability” and “facilitate more efficient task coordination.” Id. at 3. DISA also 

determined that a consolidated contract would result in “substantial savings,” which 

the agency projected to be more than $5 million over the life of the contract. 

Id. at 7-8.

In connection with its decision to award a single contract, the Army performed 

market research to assess whether two or more qualified and capable small 

businesses could “successfully act as prime vendors” in providing the required IT 

support services. AR, Tab 5(a), Sources Sought Responses, at 1. Specifically, the 

Army issued a publicly-available “14 day Sources Sought Request for Information”

(RFI), asking small business vendors to demonstrate their ability to meet a number 

of requirements encompassed in the support services being consolidated.

2

 Id. The 

Army received responses from 16 firms; CYIOS did not respond. Id. at 2. 

 1 CYIOS has performed as a subcontractor to one of these large businesses under 

these contracts. AR, Tab 1, Army Contracting Officer’s Statement of Fact, at ¶ 6.

2 The RFI sought capability assessments under North American Industry 

Classification System (NAICS) codes 541513 and 541519. AR, Tab 5(a), Sources 

Sought Responses, at 1.
Page 3 B-402728.3 

The Army analyzed the RFI responses to assess whether the firms had experience 

in various functional areas and were financially capable of performing the end user 

computing device support services as prime contractors. See id. at 5-11. The 

agency found that while some small businesses demonstrated experience in DOD’s 

IT environment, most of the experience was outside the functional areas relevant to 

the end user computing device support requirements. Id. at 12. The Army noted 

that “insufficient small business vendors capable of successfully serving as a prime 

vendor exist[] to assure adequate levels of support, minimize risk to [the Army], 

and/or achieve mandatory minimum levels of competition during a solicitation.” AR, 

Tab 5(b), Market Research Report, at 3. Moreover, the Army determined that 

limiting competition to only small business vendors would “pose a significant and 

unacceptable risk,” and that the requirement was “not suitable for small business 

only competition.” Id. 

Finally, prior to issuing a solicitation, DISA coordinated with its Office of Small 

Business (OSB). AR, Tab 1, Army Contracting Officer’s Statement of Fact, at ¶ 8. 

The OSB and a representative from the Small Business Administration (SBA) 

concurred with DISA’s acquisition approach of consolidating the requirements of the 

three separate contracts into one scope of work offered to GSA Alliant contract 

holders.3 See AR, Tab 7, Small Business Coordination Record, at 1.

On July 6, 2011, DISA issued the request for proposals (RFP) to GSA Alliant 

contract holders for the Army’s consolidated “Enterprise End User Computing 

Device Support” contract.4

 AR, Tab 2, DISA Contracting Officer’s Statement of 

Fact, at 3. The RFP contemplated the award of a fixed-price contract with a 1-year 

base period, a 1-year option period and a maximum value of $43,673,088.

5

 RFP 

at 1; AR, Tab 6, DISA D&F, at 3. 

DISA received revised proposals from eight firms on August 30, 2011, including an 

offer from Serco, Inc., a company with which the protester had a teaming 

agreement. AR, Tab 2, DISA Contracting Officer’s Statement of Fact, at 3; Agency 

 3 The Army recommended that the GSA Alliant program be utilized for the 

acquisition because that program would maximize the number of vendors that could 

compete, and would include some firms that would be excluded from competing if 

another GSA program were used. AR, Tab 5(b), Market Research Report, at 3.

4 The agency utilized GSA’s “Opt-in/Opt-out” procedure to determine that 31 out of

the 59 GSA Alliant vendors wanted to receive the solicitation. AR, Tab 2, DISA 

Contracting Officer’s Statement of Fact, at 2.

5 Under the RFP, firms would be evaluated on a best value basis considering three 

evaluation criteria: technical/management approach, past performance and price. 

RFP at 2-3. 
Page 4 B-402728.3 

Motion to Dismiss, Tab 8, Serco Statement, at 1. On March 23, 2012, award was 

made to L-3 Services. When CYIOS, a small business, learned of the acquisition, it 

protested to our Office.6

DISCUSSION

CYIOS contends that the consolidation of requirements amounts to improper 

contract bundling. Protest at 5. CYIOS also alleges that the agency violated 

statutory and regulatory small business requirements by not setting aside the 

acquisition for small businesses. Id. at 3. 

Bundling

First, CYIOS contends that the agency’s consolidation of the requirements 

constitutes “unnecessary and unjustified” contract bundling. CYIOS asserts that it is 

the “incumbent small business concern” performing some of the services that are 

being consolidated, and that the Army “has provided no justification for its decision” 

to consolidate the requirements. In this regard, CYIOS asserts that the 

consolidation violates the provisions of the Small Business Act and the Competition 

in Contracting Act of 1984 (CICA), along with their applicable implementing 

regulations. Protest at 2-5. 

The Small Business Act, as amended, states that, “to the maximum extent 

practicable,” each agency shall “avoid unnecessary and unjustified bundling of 

contract requirements that precludes small business participation in procurements 

as prime contractors.” 15 U.S.C. § 631(j)(3) (2012).7

 6 CYIOS had initially protested a proposed acquisition for the same services in April 

2010. Our Office dismissed that protest as premature because the Army had not 

yet issued a solicitation.

Bundling, for purposes of the 

Small Business Act, means “consolidating 2 or more procurement requirements for 

goods or services previously provided or performed under separate smaller 

contracts into a solicitation of offers for a single contract that is likely to be 

unsuitable for award to a small-business concern.” 15 U.S.C. § 632(o)(2). The 

term “separate smaller contract” is defined as “a contract that has been performed 

7 The CICA contains a similar limitation on unnecessary consolidation of agency 

requirements. 41 U.S.C. § 253a(a)(2)(B) (2012). We have held that an agency’s 

compliance with the above-referenced Small Business Act requirements constitutes 

compliance with the similar CICA requirements. Nautical Eng’g Inc., B-309955, 

Nov. 7, 2007, 2007 CPD ¶ 204 at 13-14.
Page 5 B-402728.3 

by 1 or more small business concerns or was suitable for award to 1 or more small 

business concerns.”8 15 U.S.C. § 632(o)(3); FAR § 2.101.

Because bundled or consolidated procurements combine separate and multiple 

requirements into one contract, they have the potential for restricting competition by 

excluding firms that furnish only a portion of the requirement; we therefore review 

challenges to such solicitations to determine whether the approach is reasonably 

required to satisfy the agency’s needs. 2B Brokers et al., B-298651, Nov. 27, 2006, 

2006 CPD ¶ 178 at 9. We have recognized that bundling may serve to meet an 

agency’s needs where the agency reasonably determines that consolidation will 

result in significant cost savings or operational efficiencies. Id.; Teximara, Inc., 

B-293221.2, July 9, 2004, 2004 CPD ¶ 151 at 6.

Under the Small Business Act, an agency may determine that consolidation of 

requirements is “necessary and justified” if, as compared to the benefits that would 

be derived from contracting to meet those requirements if not consolidated, the 

government would derive “benefits, including any combination of benefits that . . . 

are measurably substantial.” 15 U.S.C. § 644(e)(2)(B); 2B Brokers et al., supra, 

at 6. The FAR states in pertinent part that:

[m]easurably substantial benefits may include, individually or in any 

combination or aggregate, cost savings or price reduction, quality 

improvements that will save time or improve or enhance performance 

or efficiency, reduction in acquisition cycle times, better terms and 

conditions, and any other benefits. The agency must quantify the 

identified benefits and explain how their impact would be measurably 

substantial. Except as provided in paragraph (d) of this section, the 

agency may determine bundling to be necessary and justified if, as 

 8 The agency argues that the consolidation of the services at issue here does not

constitute bundling as contemplated by the Small Business Act, because the work is 

not currently being performed by any small business concern. AR at 10. The Army 

acknowledges that, from 2004 through 2009, CYIOS held one of several indefinitedelivery, indefinite-quantity (IDIQ) contracts for IT services, but maintains that 

CYIOS was never awarded any task orders as a prime vendor under that IDIQ. 

Rather, the agency maintains that CYIOS’s performance has been only that of a 

subcontractor under one of the large business’ IDIQ contracts. AR at 10. CYIOS 

disputes the agency’s position, arguing that it was awarded at least one “business 

units requirements” task order as a prime contractor to provide IT customer liaison 

services. These services, CYIOS argues, are part of the requirements being 

consolidated here. Protest at 3; Comments at 4. We need not resolve this dispute 

because the record shows, as explained below, that the agency reasonably 

determined that consolidation of the requirements will result in measurable benefits 

to the government. See e.g., Nautical Eng’g Inc., supra, at 8.
Page 6 B-402728.3 

compared to the benefits that it would derive from contracting to meet 

those requirements if not bundled, it would derive measurably 

substantial benefits equivalent to

(1) Ten percent of the estimated contract or order value (including 

options) if the value is $94 million or less. . . .

FAR § 7.107(b)(2).

As discussed above, the agency performed an analysis regarding the benefits to be 

obtained by consolidation. Among other things, the agency determined that 

transitioning to a single contractor will result in improved IT support, operational 

efficiencies, increased task coordination, better accountability, more effective 

contractor incentives and cost savings. AR, Tab 6, DISA D&F, at 3, 5-7. With 

regard to cost savings, the agency specifically calculated savings of $5,421,753, 

which reflect “approximate[ly] 18%-19% cost savings when compared to overall 

contract value and historical cost trends. . . .” Id. at 6. DISA explains that these 

projected savings are the result of the “elimination of redundant program/project 

management and administrative support,” as well as a reduction of certain technical 

staff. Id.

In its comments responding to the agency report, CYIOS has not meaningfully 

challenged any aspect of the agency’s analysis. Specifically, CYIOS’s comments 

do not address the agency’s calculation of cost savings, nor otherwise discuss the 

substantial benefits the agency maintains it will obtain. Rather, CYIOS merely 

asserts that the agency “has provided no justification for its decision.” 

On this record, we reject the protester’s arguments challenging the agency’s 

consolidation of contract requirements. See 2B Brokers et al., supra, at 10-11, 

13 n.20 (protester has burden of showing agency’s analysis and explanation 

supporting bundling are unreasonable); Teximara, supra, at 7, 9 (protester failed to 

dispute that significant savings and efficiencies will occur by consolidating tasks). 

CYIOS’s protest alleging that the agency has engaged in improper bundling is 

denied. 

Small Business Set-Aside

Next, CYIOS asserts that the agency improperly failed to conduct this procurement 

as a small business set-aside pursuant to FAR subpart 19.5. Protest at 2. 

Specifically, CYIOS asserts that the agency “violated the requirement in [FAR] 

§ 19.502-2(b)” which provides that acquisitions shall be set aside for small 

businesses where there is a reasonable expectation of receiving fair market price 

offers from at least two responsible small business concerns. Comments on 

Agency Report, at 3. 
Page 7 B-402728.3 

Agencies are generally required to set aside for small businesses procurements that

exceed $150,000 if there is a reasonable expectation of receiving fair market price 

offers from at least two responsible small business concerns. FAR § 19.502-2(b); 

e.g., Metasoft, LLC, B-402800, July 23, 2010, 2010 CPD ¶ 170 at 2. An agency 

must undertake reasonable efforts to ascertain whether it is likely that it will receive 

offers from at least two responsible small businesses capable of performing the 

work in question. EMMES Corp., B-402245, B-402245.2, Feb. 17, 2010, 2010 CPD

¶ 53 at 5; Rochester Optical Mfg. Co., B-292247, B-292247.2, Aug. 6, 2003, 2003 

CPD ¶ 138 at 4. No particular method of assessing the availability of capable small 

businesses is required; rather, the assessment must be based on sufficient facts so 

as to establish its reasonableness. E.g., EMMES Corp., supra, at 5.

Here, as discussed above, prior to issuing the RFP, the agency conducted market 

research to “assess the capability of the small business community.” AR, Tab 5(a), 

Sources Sought Responses, at 1. Specifically, the Army published a sources 

sought notice asking vendors to demonstrate experience in a number of IT areas 

relevant to the consolidated scope of work. The agency received 16 responses--15 

of which were from small businesses--and examined the companies capabilities, 

which ranged from experience in various functional areas to financial capability. 

Significantly, CYIOS did not respond to the sources sought notice. 

Based on the information it obtained, the agency concluded that “[t]he small 

business vendors seemed to specialize in a particular task area or two but lacked 

comprehensive technical capacity and successful performance history across the 

entire scope of work.” Id. at 12. The agency concluded that “insufficient small 

business vendors [were] capable of successfully serving as a prime vendor.” Id. 

Additionally, before issuing the solicitation DISA coordinated with its OSB. In this 

respect, a small business specialist and an SBA representative approved the 

acquisition approach. See AR, Tab 7, Small Business Coordination Record, at 1.

Although CYIOS now complains that it has performed part of the consolidated 

requirements in the past, it has not shown to be flawed or unreasonable the 

agency’s market research and conclusions regarding whether there are two or more 

small businesses that could perform the overall contract requirements here at a 

reasonable price. Based on this record, including the absence of any objection from 

the OSB and SBA representatives, we find DISA’s decision not to set aside the RFP 

exclusively for small businesses to be reasonable. See MCS Mgmt., Inc., 

B-285813, B-285882, Oct. 11, 2000, 2000 CPD ¶ 187 at 7 (set-aside not required 

where there is no indication that small business concerns could perform food 

service contracts of the scope and complexity required under the solicitation).
Page 8 B-402728.3 

In sum, we find nothing objectionable about the agency’s decision to consolidate the 

services at issue and to award a single task order to a GSA Alliant contractor, or 

about the decision not to set aside this requirement for small businesses.

9

The protest is denied.

Lynn H. Gibson

General Counsel

 9 In its comments on the agency’s report, CYIOS argues for the first time that the 

award to L-3 creates an organizational conflict of interest. Comments at 5. CYIOS 

provides no meaningful explanation or support for this allegation. Id. In any event, 

the allegation is untimely because it was filed more than 10 days after the protester 

knew or should have known the basis of protest; accordingly, it will not be 

considered. See 4 C.F.R. § 21.2(a)(2) (2012); see also Recreation Res. Mgmt. of 

America, Inc., B-406072, Feb. 1, 2012, 2012 CPD ¶ 60 at 6.