Triad Isotopes, Inc., of Orlando, Florida, protested the decision (reference Triad Isotopes for full decision) of the Department of Veterans Affairs (VA) to issue request for quotations (RFQ) No. VA247-15-Q-0330, for the acquisition of radiopharmaceuticals, as a small business set-aside. Triad contends that the agency’s market research did not provide a reasonable basis to conclude that the agency would receive proposals from two or more small business concerns, and therefore, argues that the requirement should be competed on an unrestricted basis.
The procurement was set-aside for small business because of a search using the SBA Dynamic SB Database and the VetBiz.gov sites, which produced several small businesses under that particular NAICS.
Market research report stated the previous purchase of the item/service did not demonstrate two or more SBs, but the previous purchase was for a shorter time (120 days) frame. The current acquisition was for five years and the CO felt this should produce more small business interest. There was nothing in the market research report that backed up the assumption that a longer contract would attract more small businesses.
Triad protested the adequacy of the agency’s market research, arguing that the agency’s market research was flawed and inconsistent with the terms of the RFQ. Triad contended that a search of two databases for small businesses operating under NAICS Code 325412 could not properly support a conclusion that there are small businesses manufacturing radiopharmaceuticals and meet the delivery requirements of the RFQ. The reason was that the applicable NAICS code includes a large array of different types of businesses manufacturing all types of pharmaceuticals, including cold medicines and lip balms. Triad contends that the VA has not reasonably shown there is even one small business that can both meet the requirement that it manufacture its own radiopharmaceuticals and the brief delivery requirements set out in the solicitation.
To understand how unique these are, it is important to know what they are. Radiopharmaceuticals are drugs that carry a limited degree of radioactivity, and are normally used in nuclear medicine as an alternative to standard radiation for the treatment of certain cancers or as a diagnostic tool to allow better internal imaging of certain organs and arteries. They are usually able to focus on just one particular part of the body, which can make treatment a lot more effective than regular radiation, which tends to focus on the entire body. Drugs in this class are generally very specialized, and require a lot of related equipment and expertise to use. Most of the time people only take them under the close guidance of a physician or care provider, and usually have to be monitored throughout the time the drug is in the body.
GAO concluded that the agency’s market research was insufficient to support the agency’s conclusion that it would receive viable quotations from at least two responsible small business concerns and found the agency’s reliance on the market research in deciding to restrict the RFQ to small businesses was unreasonable. GAO sustained the protest.
So there are two take-aways I can give you from this ruling. First is the issue of NAICS codes and how capricious they can be. It seems that the contracting office used one that was very general in nature, which led to poor market results. Choosing a NAICS code is as much an art as it is a science. As a buyer and then later as a CO, I spent a lot of time determining the best possible NAICS for each acquisition. I cannot tell you how often I was shot down by the local small business liaison. Many more were disapproved than approved the first time. One way is to search FBO (www.fbo.gov) for similar buys and see what NAICS code they used.
The second lesson is the need to prepare a good market research report. I can tell you that I have seen some that actually made me laugh – and that’s not a good thing! I would never recommend only using quick website searches as the overall basis for your report. Post a sources sought or request for information. Check FBO to see if other agencies/offices are buying the same items/services and if they are setting them aside for small business or not. Market research reports are the foundation of the acquisition and need to be rock solid to be able to stand up to a protest. Don’t let yourself get into a battle you cannot win like the one discussed in this blog.