B-173371, JAN 18, 1972

B-173371, JAN 18, 1972

BID PROTEST - SMALL BUSINESS SET-ASIDE - RESOLICITATION ON UNRESTRICTED BASIS CONCERNING PROTEST BY CENTRAL STATES DIVERSIFIED AGAINST THE SET ASIDE OF AN INVITATION COVERING THE PROCUREMENT OF REQUIREMENTS FOR PACKING LIST ENVELOPES AND BEDSIDE PAPER BAGS WHICH WAS THE SUBJECT OF DECISION, B- 173371, DECEMBER 17, 1971. FOR 5 YEARS PREVIOUS TO SOLICITATION IN QUESTION, ONLY CENTRAL AND CADILLAC PRODUCTS HAVE BID ON THIS PROCUREMENT. SINCE BOTH FIRMS CERTIFIED THEMSELVES TO BE SMALL BUSINESSES, THE PROCUREMENT WAS MADE A SMALL BUSINESS SET-ASIDE. WHEN BIDS WERE OPENED CADILLAC WAS LOW ON SEVEN ITEMS AND CENTRAL ON THE OTHER FIVE. A PREAWARD SURVEY INDICATED THAT CENTRAL HAD 4 OR 5 MORE EMPLOYEES IN EXCESS OF THE 500 CEILING FOR SMALL BUSINESS. AWARD TO CADILLAC AS TO THE ITEMS ON WHICH IT WAS LOW BIDDER WAS PROPER. HOWEVER, AWARD TO OTHER THAN LOW BIDDER ON 5 ITEMS ON WHICH CENTRAL WAS LOW WOULD NOT BE EQUITABLE. IF THE ACTUAL FACT SITUATION HAD BEEN KNOWN, I.E., THAT CENTRAL WAS NOT A SMALL BUSINESS, THE SOLICITATION WOULD NOT HAVE BEEN MADE AS A SET-ASIDE. ACCORDINGLY, THERE SHOULD BE A RESOLICITATION ON AN UNRESTRICTED BASIS, WITH AWARD TO THE LOW BIDDER.

TO MR. ROBERT L. KUNZIG:

REFERENCE IS MADE TO OUR DECISION OF DECEMBER 17, 1971, TO CENTRAL STATES DIVERSIFIED, A COPY OF WHICH WAS SENT TO YOU THE SAME DAY.

OUR LETTER DEALT WITH A PROTEST BY CENTRAL AGAINST THE SET-ASIDE FOR SMALL BUSINESS OF AN INVITATION COVERING THE PROCUREMENT OF REQUIREMENTS FOR PACKING LIST ENVELOPES AND BEDSIDE PAPER BAGS THROUGH AUGUST 31, 1972. THE PERTINENT FACTS OF THE CASE ARE SIMPLE.

FOR THE PAST 5 YEARS ONLY CENTRAL AND CADILLAC PRODUCTS HAVE BID ON THIS PROCUREMENT. SINCE BOTH FIRMS HAD CERTIFIED THEMSELVES TO BE SMALL BUSINESS, THE PROCUREMENT WAS MADE A TOTAL SMALL BUSINESS SET ASIDE A YEAR AGO, WITH AWARD GOING TO CENTRAL FOR THE YEAR ENDING AUGUST 31, 1971. BOTH FIRMS CERTIFIED THEMSELVES AS SMALL BUSINESS FOR THE SUCCEEDING YEAR'S PROCUREMENT. WHEN BIDS ON THE 12 ITEMS WERE OPENED, CADILLAC WAS LOW ON 7 ITEMS AND CENTRAL ON 5 ITEMS.

HOWEVER, THE PREAWARD SURVEY ON CENTRAL INDICATED THAT IT HAD A CONSIDERABLE NUMBER OF EMPLOYEES IN EXCESS OF 500 AND THEREFORE WAS NOT SMALL BUSINESS. THE CONTRACTING OFFICER THEREUPON REQUESTED A SIZE RULING FROM THE SMALL BUSINESS ADMINISTRATION. THE SBA REGIONAL OFFICE RULED CENTRAL WAS NOT SMALL BUSINESS AND, UPON APPEAL BY CENTRAL, THE SBA SIZE APPEALS BOARD FOUND THAT CENTRAL'S AVERAGE EMPLOYMENT DURING THE PRECEDING YEAR WAS 4 OR 5 EMPLOYEES IN EXCESS OF THE 500 CEILING, AND AFFIRMED THE REGIONAL OFFICE FINDING. IN THE LIGHT OF THESE FACTS, WE DO NOT QUESTION CENTRAL'S GOOD FAITH IN CERTIFYING ITSELF TO BE SMALL BUSINESS.

ADMITTEDLY, IF IT HAD BEEN REALIZED THAT CENTRAL WAS NO LONGER SMALL BUSINESS, THE CURRENT PROCUREMENT WOULD NOT HAVE BEEN CONTINUED AS A SMALL BUSINESS SET-ASIDE. THE SAME TWO BIDDERS BID AFTER THE PROCUREMENT WAS SET ASIDE AS HAD BID THE PREVIOUS 3 YEARS. PRESUMABLY, THE SAME PRICES WOULD HAVE BEEN BID BY BOTH WHETHER THERE WAS A SET ASIDE OR NOT. THUS, IF THE TRUE FACTUAL SITUATION AS TO CENTRAL'S SIZE STATUS HAD BEEN KNOWN, THERE APPARENTLY WOULD HAVE BEEN NO SET-ASIDE AND NO PROBLEM. AWARD WOULD HAVE BEEN MADE TO CADILLAC FOR THE 7 ITEMS ON WHICH IT WAS LOW AND TO CENTRAL FOR THE 5 ITEMS ON WHICH IT WAS LOW.

AT THE TIME OF OUR DECISION OF DECEMBER 17, 1971, WE WERE UNDER THE IMPRESSION THAT NO AWARDS HAD BEEN MADE ON ANY OF THE 12 ITEMS. WE WERE BEING REQUESTED BY CENTRAL TO RULE THAT THE ENTIRE PROCUREMENT OF ALL 12 ITEMS SHOULD NOT HAVE BEEN SET ASIDE, AND SHOULD BE RECOMPETED. WE HAVE SINCE LEARNED THAT AWARD HAD BEEN MADE TO CADILLAC FOR THE 7 ITEMS ON WHICH IT WAS LOW.

WE AGREE WITH THIS ACTION. HOWEVER, UPON RECONSIDERATION OF SITUATION WITH RESPECT TO THE 5 ITEMS ON WHICH CENTRAL WAS LOW, WE FEEL THAT IT WOULD NOT BE FAIR OR EQUITABLE TO AWARD THESE TO A BIDDER WHO WAS NOT IN FACT THE LOW BIDDER AND WHO, PRESUMABLY, WOULD NOT HAVE BEEN LOW BIDDER ON THESE ITEMS IF THE TRUE FACTUAL SITUATION HAD BEEN KNOWN TO THE GOVERNMENT.

IN VIEW OF ALL THE CIRCUMSTANCES, WE FEEL THE EQUITIES OF THE SITUATION CALL FOR A RESOLICITATION ON AN UNRESTRICTED BASIS AS TO THE 5 ITEMS ON WHICH CENTRAL WAS THE LOW BIDDER, AND WE RECOMMEND THIS BE DONE.