Chaedrol GAO Protest Log 20240822: Knudsen (AI)

Knudsen Systems, Inc. - B-422433.2

You should care.

Category: Set-asides

Date: August 9, 2024

URL: https://www.gao.gov/products/b-422433.2

In this case, Knudsen Systems, Inc., protested the agency's decision to restrict the solicitation for SONAR sounding sets to small businesses, arguing that the agency's market research was insufficient to support such a set-aside. The protester claimed that the agency failed to evaluate whether two or more responsible small business concerns could comply with the nonmanufacturer rule after the agency discovered an error in its initial market research assumptions. GAO sustained the protest, emphasizing that the agency's flawed market research did not adequately demonstrate a reasonable expectation of receiving competitive proposals from small businesses. As a result, the GAO highlighted the importance of thorough market analysis in procurement decisions and mandated that the agency reassess its set-aside determination in light of the correct application of the nonmanufacturer rule.

Digest

Protest is sustained where agency's market research was insufficient to conclude that agency would likely receive proposals from at least two responsible small business concerns that could meet solicitation's requirements at a fair market price, and therefore, agency's decision to restrict solicitation to small businesses was unreasonable.