ASG Solutions Corporation d/b/a American Systems Group



Matter of: ASG Solutions Corporation d/b/a American Systems Group

Case: B-420743

Date: August 10, 2022

Ritobrata Banerjee for the protester.
Andrew McCabe, Esq., and Robert McCall, Esq., Department of the Navy, for the agency.
Hannah Barnes, Esq., Christopher Alwood, Esq., and Christina Sklarew, Esq., General Counsel’s Office, GAO, assisted in the preparation of the decision.


The protest alleging that the agency was required by regulation to procure for warehouse services using the Navy’s SeaPort Next Generation contract vehicle is dismissed when the plain language of the regulation exempts the agency from obligation to take this contractual vehicle into account when acquiring commercial items.

ASG Solutions Corporation, d/b/a American Systems Group (ASG), a small business in San Diego, California, protests the terms of Request for Quotation (RFQ) # N00244-22-R-0035, issued by the Department of the Navy, Naval Supply Systems Command, for warehouse services in San Diego and Port Hueneme, CA. ASG contends that the Navy is required by regulation to make this purchase using the Navy’s SeaPort Next Generation (SeaPort NxG) contract vehicle.

We deny the protest.


On April 28, 2022, in accordance with Subpart 8.4 of the Federal Acquisition Regulations (FAR), the agency released the RFQ, using the General Services Administration’s Federal Supply Schedule (FSS) procedures. (GSA), as a reserve for the historically underutilized Commercial Zone (HUBZone) small businesses. Agency Report (AR), Tab 2, RFQ at 1. The tender was for warehouse services, including receipt, identification, stowage and delivery of materiel, for Navy vessels in San Diego and Port Hueneme. ID. at 10-14.

The request for quotation provided for an award on the basis of the best compromise, taking into account the following three evaluation factors, listed in descending order of importance: technical ability, past performance and price. ID. at age 66.

During the pre-solicitation process, the agency conducted market research and reviewed various contract vehicles, including the Navy SeaPort NxG vehicle, and determined that there were no existing contract vehicles to procure the services. warehouse support needed by the agency. Contracting Officer (COS) Statement at 2. As part of its Market Research, the Navy issued a Source Search Notice seeking qualified small businesses and received 24 responses as of the closing date of 31 January for responses to the notice. ID. On January 13, the GSA contacted the Navy in response to solicited sources and provided market research information that the Navy said indicated sufficient competition among small businesses, including among HUBZone small businesses. ID.

As a result of this research and information, the contracting officer determined that a HUBZone reserve was in the best interest of the government. ID. On February 8, the contracting officer conducted a trade item determination supporting the conclusion that the warehouse services required by the agency were “of a type competitively offered and sold in substantial quantities on the commercial market”. Memory of law (MOL) at 3; see COS at 2, citing FAR part 12 (Acquisition of Commercial Products and Commercial Services); see FAR 2.101 (defining a commercial service). As a result of this decision, the agency concluded that the SeaPort NxG contract was not an appropriate vehicle for the services required and that the solicitation would be issued pursuant to Part 8 of the FARs as a HUBZone Reserve. CS at 2-3.

The agency issued a pre-solicitation notice between April 22 and April 28. AR, Tab 4, Pre-Solicitation Notice at 2. Beginning April 23, the protester initiated a series of communications with the agency claiming that the Navy was required to procure these warehouse services through SeaPort NxG. COS at 3. The agency launched the solicitation on April 28, and the protester continued to email and call the agency from various phone numbers. ID. at 4. On May 4, the protester was referred to the Procurement Officer, who provided the protester with an explanation of why the agency believed SeaPort NxG was not the appropriate contract vehicle for this market. ID. at 4-5; see protest exh. A, Communication by e-mail. On May 10, this demonstration followed.


ASG argues that the Navy is required by regulation to make this purchase using the SeaPort NxG contract vehicle.[1] Protest at 2. The protester cites its regulations, arguing that the Navy has not complied with any of the exemptions for the use of the SeaPort NxG vehicle. Protest at 3-4. The ASG references Subpart 5237.1 of the Navy Marine Corps Acquisition Regulations Supplement (NMCARS), which lists exceptions to “mandatory consideration for use of SeaPort” as a contract vehicle for certain requirements.[2] NMCARS 5237.102.

The agency responds that its decision not to use the SeaPort NxG contract vehicle was consistent with its regulations and SeaPort NxG standard operating procedures. MOL at 4. The Navy argues that SeaPort NxG’s operating procedures emphasize that this contract vehicle is for non-commercial, non-commercial service, and MCARS item 5237.102 clearly provides an exception to the requirement that the agency is considering the use of SeaPort NxG where there are “actions for commercial items under Part 12”. NMCARS 5237.102(4); MOL at 6; AR, Tab 5, SeaPort NxG Standard Operating Procedures at 7 (stating that SeaPort NxG is not considered commercial and strictly commercial purchases should be handled outside of SeaPort). The agency also asserts that the contracting officer cited this exception by signing an internal waiver to use SeaPort to purchase the required warehouse services and signing the Commercial Item Determination per which SeaPort was not the appropriate vehicle for the requirement at hand. MOL at 7. The Navy argues that it correctly considered the FSS program, which “provides [f]federal agencies with a streamlined process for acquiring trade supplies and trade services. ID. (citing FAR 38.101(a)).

Our analysis begins with the interpretation of the relevant law or regulation. See Curtin Mar. Corp.., B-417175.2, March 29, 2019, 2019 CPD ¶ 117 at 9 (citing Hughes Aircraft Co. v. Jacobson, 525 US 432, 438 (1999) (“As with all statutory interpretation, our analysis begins with the ‘language of the statute.'”)). In interpreting the law or regulation, “[t]The first step “is to determine whether the language at issue has a clear and unambiguous meaning with respect to the particular dispute in the case”. Barnhart v Sigmon Coal Co., Inc.534 US 438, 450 (2001) (citing Robinson v. Shell Oil Co., 519 US 337, 340 (1997)). If the statutory or regulatory language is clear and unambiguous, the inquiry ends with the plain meaning. Curtin Mar. Corp., above (citing Chevron USA, Inc. v. Natural Res. Def. Consulting, Inc.467 US 837, 842-43 (1984)).

Here, the relevant section of the Navy’s regulations specifically and unambiguously states that the agency is exempt from the requirement to consider the SeaPort contract vehicle for “[a]actions for [c]commercial [i]time. NMCARS 5237.102(4). We note that the agency’s statement that it “has determined that the required services are of a type offered and sold competitively in substantial quantities in the commercial marketplace” is supported by the determination of the commercial item of the contracting officer.[3] MOL at 3-4; see FAR 2.101(b)(2) (defining a commercial service as a service “of a kind offered and sold competitively in substantial quantities in the commercial market on the basis of established catalog or market prices for tasks performed or specific results to be achieved and under standard commercial terms”). We agree with the agency that its determination that the warehouse services required are commercial in nature means that the procurement falls under one of the relevant exceptions to the Navy regulations, as the plain language of the regulations does not require SeaPort NxG to be considered commercial services We do not believe, and no party has demonstrated, that There is another reasonable meaning to this section of NMCARS.

In summary, since the protester’s arguments are at odds with the ordinary meaning of the unambiguous section of the NMCARS, which clearly exempts the agency from considering SeaPort NxG as a contract vehicle when purchasing commercial services, we find no reason to question the reasonableness of the agency’s decision. to issue the Solicitation in accordance with Subpart 8.4 of the FARs as a Reserved HUBZone using GSA FSS procedures.

The protest is dismissed.

Edda Emmanuelli Perez
General Counsel


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