United States Government Accountability Office

Washington, DC 20548

Comptroller General

of the United States

 

Decision

Matter of: Marshall & Swift-Boeckh, LLC

File: B-407329; B-407329.2

Date: December 18, 2012

David T. Ralston Jr., Esq., and Frank S. Murray, Esq., Foley & Lardner LLP, for the 

protester.

Clinton L. Hubbard, Esq., for The Bluebook International, Inc., the intervenor.

Jonathan English, Esq., and Julie K. Cannati, Esq., Department of Housing and 

Urban Development, for the agency.

Christina Sklarew, Esq., and Guy R. Pietrovito, Esq., Office of the General Counsel, 

GAO, participated in the preparation of the decision.

DIGEST

Protest challenging an agency’s decision to set aside an acquisition for small 

businesses is denied where the contracting officer had a reasonable expectation 

that the agency would receive quotations from at least two capable small 

businesses.

DECISION

Marshall & Swift-Boeckh LLC, of Milwaukee, Wisconsin, protests the terms of 

request for quotations (RFQ) No. DU100H-12-Q-0002, issued by the Department of 

Housing and Urban Development (HUD) for a cost-estimating software and related 

licenses and services for the Federal Housing Administration (FHA). Marshall, a 

large business concern, complains that the RFQ should not have been set aside for 

small businesses.

We deny the protest.

BACKGROUND

FHA administers the single family mortgage insurance program and insures 

approved lenders against the risk of loss on mortgages obtained with FHA 

financing. Real estate is conveyed to FHA from approved lenders following 

foreclosure and other reacquisition activities. FHA is required to maintain/repair and 

preserve the value of these properties until they are sold. The agency uses industry 

DOCUMENT FOR PUBLIC RELEASE

The decision issued on the date below was subject to 

a GAO Protective Order. This redacted version has 

been approved for public release.
Page 2 B-407329, B-407329.2 

standard cost estimating software to evaluate the costs of preservation and 

protection. Agency Report (AR) at 1-2.

The prior contract for the cost estimating software was awarded to The Bluebook 

International, Inc., a small business, on September 20, 2011.1 AR, Tab 29, 

Bluebook Contract. This procurement was set aside for small businesses based 

upon the agency’s determination from its market research that it could expect to 

receive quotations from two or more small businesses. AR, Tab 21, 2011 Market 

Research. In fact, the agency received quotations from 6 small businesses, 

including Bluebook, of which four were found acceptable. AR, Tab 26, 2011 

Technical Evaluation, at 704.

In 2012, HUD again performed market research in preparation for issuing a new 

solicitation for the cost estimating software. See AR, Tab 31, 2012 Market 

Research. The agency found that there were four small businesses, including 

Bluebook, that were capable of satisfying the agency’s requirements. Id. at 9. 

Specifically, the agency found that Bluebook was capable of satisfying all of the 

requirements, and that the other three small businesses were potentially capable of 

satisfying the requirements with “appropriate Team relationships and satisfying the 

minimum requirements while in compliance with FAR [clause] 52.219-14, 

Limitations on Subcontracting.” Id. at 6, 9.

HUD issued the RFQ as a small business set-aside for the cost estimating software 

tool and associated training support. This protest followed.

DISCUSSION

Marshall makes numerous arguments challenging HUD’s determination that it could 

reasonably expect to receive quotations from two or more capable small 

businesses. We have considered all of the protester’s arguments, although we only 

address the primary ones, and find that none provide a basis to object to the 

agency’s decision to set aside the RFQ for small businesses.

Under Federal Acquisition Regulation (FAR) §19.502-2(b), a procurement with an 

anticipated dollar value of more than $150,000, such as the one here, must be set 

aside for exclusive small business participation when there is a reasonable 

expectation that offers will be received from at least two responsible small business 

concerns and that award will be made at fair market prices. The use of any 

particular method of assessing the availability of small businesses is not required so 

 

1 Marshall was awarded 1-year contracts in 2009 and 2010 for the cost estimating 

software. See AR, Tab 3, Marshall Contract, Sept. 9, 2009; Tab 17, Marshall 

Contract, Sept. 17, 2010. Neither of these procurements were set aside for small 

businesses. 
Page 3 B-407329, B-407329.2 

long as the agency undertakes reasonable efforts to locate responsible small 

business competitors. National Linen Serv., B-285458, Aug. 22, 2000, 2000 CPD 

¶ 138 at 2. The decision whether to set aside a procurement may be based on an 

analysis of factors such as the prior procurement history, the recommendations of 

appropriate small business specialists, and market surveys that include responses 

to sources-sought announcements. SAB Co., B-283883, Jan. 20, 2000, 2000 CPD 

¶ 58 at 1-2; PR Newswire, B-279216, Apr. 23, 1998, 98-1 CPD ¶ 118 at 2. Because 

a decision whether to set aside a procurement is a matter of business judgment

within the contracting officer’s discretion, our review generally is limited to 

ascertaining whether that official abused his or her discretion. ViroMed Labs., 

B-298931, Dec. 20, 2006, 2007 CPD ¶ 4 at 3.

Marshall contends that, based upon its own familiarity with the competitive market 

for cost estimating database software, the contracting officer could not reasonably 

have determined that two responsible small businesses were capable of satisfying 

the RFP’s requirement at fair market prices. In this regard, the protester argues that 

the agency’s market research, and the procurement history, were not relevant or 

reliable because the RFQ contains new requirements that are unlikely to be 

satisfied by small businesses. Protest at 13-14. Specifically, Marshall argues that 

the RFQ now requires that the cost estimating service be internet-based and 

backed by an accurate and comprehensive proprietary database; and that it be 

available on a 24-hours per day, 7-days per week basis. Id.

 

HUD disagrees that these requirements are either new or indicate that the agency 

could not expect to receive quotations from two or more capable small businesses. 

The requirements that the system be “internet-based” and be backed by “an 

accurate and comprehensive proprietary database” were included in Bluebook’s 

2011 contract, AR, Tab 29, Bluebook Contract, at 3, apparently because this was 

offered by the small businesses in response to that solicitation.2 Similarly, the 

requirement that the system be available continuously was promised by four of the 

small businesses in response to the solicitation, although this requirement was not 

incorporated in Bluebook’s contract. AR at 8. We find that these requirements do 

not call into question the agency’s market research that indicated that it could 

expect quotations from two or more small businesses.

 

2 The agency also stated that the 2010 sources-sought notice described the system 

as “web-based.” Further, with respect to the “proprietary database” requirement, 

HUD points out that the RFQ does not require, as Marshall insists, that the system 

be proprietary to the offeror, but only that it be proprietary--and that this is a 

requirement that small business quoters can easily meet. As HUD points out, each 

of the six firms that submitted quotations for the 2011 acquisition either teamed with 

a large business to provide the relevant software/database (some teamed with 

Marshall), or offered their own. AR at 7.
Page 4 B-407329, B-407329.2 

Marshall also argues that HUD’s expectation that it would receive small business 

quotations based on subcontracting or teaming arrangements was unreasonable 

because its market research did not take into account various likely affiliation issues 

inherent in such arrangements, such as whether the quotations would comply with 

the RFQ’s limitations on subcontracting clause or SBA’s ostensible subcontractor 

rule. Protester’s Comments and Supp. Protest at 7-21. Marshall argues, for 

example, that a contracting officer had an affirmative duty to ask the Small Business 

Administration whether these prospective teaming arrangements would violate the 

SBA’s “ostensible subcontractor” rule. Id. at 19. 

There is no merit to these arguments. Marshall confuses the standard for 

determining whether an agency may accept on its face a small business’s selfcertification when its offer is being considered for award, and whether there is a 

reasonable expectation that two or more offers will be submitted by capable small 

businesses. In making set-aside decisions, agencies need not make either actual 

determinations of responsibility or decisions tantamount to determinations of 

responsibility with regard to prospective offerors; they need only make an informed 

business judgment that there are small businesses expected to submit offers that 

are capable of performing. ViroMed Labs., supra, at 3–4. 

Marshall also contends that the agency’s acceptance of quotations based upon a 

teaming arrangement where a small business proposes to use a subcontractor for 

the database service places too great a risk on HUD. This contention also has no 

merit. It is true that the agency recognized that such a teaming arrangement posed 

a potential performance risk, see AR, Tab 31, 2012 Market Research, at 7, but the 

agency did not find that this indicated it could not expect quotations from two or 

more capable small businesses. 

In short, the record shows that HUD’s expectation that it would receive two or more 

quotations from responsible small businesses at fair market prices was reasonable. 

The protest is denied.

Susan A. Poling

General Counsel