B-178752, MAR 21, 1974

B-178752, MAR 21, 1974

PROTEST AGAINST AWARD OF CONTRACT FOR MESS ATTENDANT SERVICES UNDER SECTION 8(A) OF SMALL BUSINESS ACT, 15 U.S.C. 637(A), DENIED ON RECONSIDERATION SINCE THERE IS NO EVIDENCE THAT 20-PERCENT SET-ASIDE LIMIT SET FORTH IN SBA POLICY NO. 60-40 WAS EXCEEDED BY SBA, AND INDEPENDENT GAO INVESTIGATION OF PROTESTANT'S CLAIM AS PART OF BID PROTEST PROCEDURE IS NEITHER REQUIRED NOR WARRANTED ON THE FACTS. SINCE PROTESTANT IS NOT AN ELIGIBLE 8(A) CONTRACTOR, IT THEREFORE, HAS NO STANDING AS AN "INTERESTED PARTY" TO CHALLENGE THE AMOUNT OF CONTRACTS LET TO A SPECIFIC 8(A) FIRM.

TO KLEEN-RITE JANITORIAL SERVICE, INC.:

BY OUR DECISION B-178752 DATED OCTOBER 11, 1973, WE DENIED THE PROTEST LODGED BY KLEEN-RITE JANITORIAL SERVICE, INC., AGAINST THE AWARD OF A CONTRACT TO BROKEN LANCE ENTERPRISES FOR MESS ATTENDANT SERVICES AT FORT DIX, NEW JERSEY, UNDER SECTION 8(A) OF THE SMALL BUSINESS ACT, 15 U.S.C. 637(A).

THE BASES OF KLEEN-RITE'S PROTEST WERE THAT AN EXCESSIVE NUMBER OF CUSTODIAL SERVICE AND MESS ATTENDANT CONTRACTS WERE BEING SET ASIDE FOR 8(A) SUBCONTRACTING IN THE NEW YORK-NEW JERSEY REGION AND THAT ONE 8(A) FIRM HAS BEEN FAVORED IN THE AWARD OF THESE CONTRACTS TO THE DETRIMENT OF OTHER 8(A) FIRMS. IN DENYING KLEEN-RITE'S PROTEST WE STATED THAT THE SMALL BUSINESS ADMINISTRATION (SBA) WAS COMPLYING WITH ITS OWN REGULATIONS AND POLICY AS TO THE NUMBER OF 8(A) SET-ASIDES. WE FURTHER HELD THAT SINCE KLEEN-RITE WAS NOT AN ELIGIBLE 8(A) CONTRACTOR, IT HAD NO STANDING TO CHALLENGE THE AMOUNT OF CONTRACTS LET TO A SPECIFIC FIRM.

KLEEN-RITE HAS REQUESTED OUR OFFICE TO RECONSIDER OUR DECISION OF OCTOBER 11, 1973.

IN ITS REQUEST FOR RECONSIDERATION, KLEEN-RITE CONTENDS THAT OUR OFFICE SHOULD HAVE LOOKED BEYOND THE ADMINISTRATIVE REPORT AND CONDUCTED OUR OWN INDEPENDENT INVESTIGATION TO DETERMINE WHETHER THE SBA ACTED IN ACCORDANCE WITH ITS REGULATIONS AND POLICY STATEMENT IN SELECTING PROPOSED PROCUREMENTS SUITABLE FOR PERFORMANCE BY SECTION 8(A) BUSINESSES.

13 CFR 124.8-2(B) PROVIDES THAT IN SELECTING PROCUREMENTS FOR THE SECTION 8(A) PROGRAM, SBA WILL TAKE INTO CONSIDERATION "*** THE PERCENTAGE OF ALL SIMILAR CONTRACTS AWARDED UNDER THE SECTION 8(A) PROGRAM OVER A RELEVANT PERIOD OF TIME ***." THIS REQUIREMENT IS EXPLAINED AND IMPLEMENTED IN SECTION 10(A) OF SBA POLICY NO. 60-40, EFFECTIVE NOVEMBER 9, 1971, WHICH STATES:

"10. BECAUSE OF ITS PARAMOUNT OBLIGATION TO ALL SMALL BUSINESS, THE SBA WILL NOT SEEK 8(A) CONTRACTS WHERE ONE OR MORE OF THE FOLLOWING CIRCUMSTANCES EXISTS:

"A. IN THE JUDGMENT OF THE SBA, THE AMOUNT SOUGHT FOR 8(A) CONTRACTING IS EXCESSIVE IN RELATION TO THE TOTAL PURCHASES OF LIKE OR SIMILAR PRODUCTS, OR SERVICES (THOSE CAPABLE OF BEING PRODUCED WITH SIMILAR SKILLS OR EQUIPMENT) BY ALL AGENCIES OF THE FEDERAL GOVERNMENT CONSIDERED COLLECTIVELY. NO QUANTITY IN EXCESS OF 20 PERCENT MAY BE REQUESTED WITHOUT THE EXPRESS APPROVAL OF THE ASSOCIATE ADMINISTRATOR FOR PROCUREMENT AND MANAGEMENT ASSISTANCE."

IN ITS ADMINISTRATIVE REPORT OF JULY 31, 1973, SBA INDICATES THAT IN ADMINISTERING THE ABOVE REGULATION AND POLICY, IT PROVIDES PROJECTION LIMITS FOR 8(A) CONTRACTING IN AREAS WHERE THERE IS A REASONABLE POSSIBILITY THAT THE 20-PERCENT LIMITATION MIGHT BE EXCEEDED. SBA FURTHER REPORTED THAT IT DETERMINED THAT SUCH A PROJECTION WAS NOT WARRANTED IN THE PRESENT INSTANCE, SINCE THIS WAS ONE OF THE FIRST CONTRACTS AWARDED FOR THE FISCAL YEAR. FURTHERMORE, SBA POINTS OUT THAT SUCH AN EARLY PROJECTION IS NOT FEASIBLE SINCE CONTRACTING DATA FROM THE VARIOUS GOVERNMENT PROCURING ACTIVITIES NECESSARY FOR ANY SUCH PROJECTION ARE NOT MADE AVAILABLE UNTIL LATER IN THE FISCAL YEAR. ON THE BASIS OF THE FOREGOING, SBA DETERMINED THAT THE 20-PERCENT LIMITATION WAS IN NO DANGER OF BEING EXCEEDED AND THAT THE CONTRACT IN QUESTION FOR MESS ATTENDANT SERVICES WAS FULLY WITHIN THE REQUIREMENTS OF THE APPLICABLE REGULATION AND POLICY.

KLEEN-RITE ALLEGES, HOWEVER, THAT THE 20-PERCENT LIMITATION HAS BEEN EXCEEDED AND REQUESTS OUR OFFICE TO MAKE FURTHER INQUIRY INTO THE MATTER. NO PROOF HAS BEEN SUBMITTED BY KLEEN-RITE TO SUPPORT THIS ALLEGATION. MOREOVER, ASSUMING ARGUENDO, THAT THE 20-PERCENT FIGURE WAS EXCEEDED, IT WOULD NOT RENDER THE CONTRACT WITH BROKEN LANCE ILLEGAL. UNLIKE A REGULATION WHICH HAS THE FORCE AND EFFECT OF STATUTORY LAW, SBA IS NOT IRREVOCABLY BOUND BY ITS STATEMENT OF POLICY AND IT COULD BE WAIVED IF DEEMED NECESSARY BY SBA. B-154606, AUGUST 20, 1964.

KLEEN-RITE ALSO CONTENDS THAT IT HAS STANDING AS AN "INTERESTED PARTY" UNDER OUR INTERIM BID PROTEST PROCEDURES AND STANDARDS, 4 CFR 20.1, TO INQUIRE INTO THE ELIGIBILITY OF THE FIRM WHICH WAS AWARDED THE CONTRACT.

KLEEN-RITE IS NOT AN ELIGIBLE 8(A) CONTRACTOR. THEREFORE, ONCE SBA DETERMINED THAT ONLY 8(A) CONCERNS WOULD BE CONSIDERED FOR THE AWARD, KLEEN-RITE WAS AUTOMATICALLY EXCLUDED FROM CONSIDERATION. THE FACT THAT SBA CHOSE ONE 8(A) FIRM OVER ANOTHER 8(A) FIRM FOR THE AWARD CLEARLY HAS NO EFFECT ON KLEEN-RITE'S INELIGIBLE STATUS. IN OUR PRIOR DECISION OF OCTOBER 11, 1973, WE STATED THAT UNDER THE HOLDING OF THE UNITED STATES COURT OF APPEALS, FIFTH CIRCUIT, IN RAY BAILLE TRASH HAULING, INC. V. THOMAS S. KLEPPE (NO. 72-1163, APRIL 18, 1973), KLEEN RITE WOULD NOT HAVE STANDING TO SUE. HOWEVER, WE DID NOT MEAN TO EQUATE STANDING TO SUE WITH THE TERM "INTERESTED PARTY" AS USED IN OUR PROCEDURES. OUR PURPOSE WAS SIMPLY TO NOTE THE COURT'S POSITION THAT A PARTY WHICH WAS NOT ELIGIBLE UNDER 8(A) AND HAD NEVER EVEN APPLIED FOR ELIGIBILITY WAS NOT DIRECTLY AFFECTED BY A DECISION AS TO THE PROPRIETY OF AN 8(A) AWARD.

FOR THE FOREGOING REASONS, OUR DECISION OF OCTOBER 11, 1973, IS AFFIRMED.