B-143873, NOV. 28, 1960

B-143873, NOV. 28, 1960

TO MULTI ELECTRIC MFG. INC.:

YOU REQUEST RECONSIDERATION, IN A LETTER OF OCTOBER 17, 1960, OF OUR LETTER OF OCTOBER 12, 1960 (REFERENCE B-143873), WHEREIN WE FOUND NO VALID LEGAL BASIS TO OBJECT TO THE WITHDRAWAL OF THE SMALL BUSINESS SET-ASIDE UNDER FEDERAL AVIATION AGENCY INVITATION NO. 1-3013-B1.

BRIEFLY, THE INVITATION WAS ISSUED ON JULY 22, 1960, CALLING FOR BIDS ON QUANTITIES OF APPROACH LIGHTING FIXTURES AND COLOR SCREENS, WITH OPENING DATE SET FOR AUGUST 12, 1960. THE PROCUREMENT WAS A 100 PERCENT SET-ASIDE FOR SMALL BUSINESS. PRIOR TO THE DATE OF ISSUANCE, THE CONTRACTING OFFICER CONCLUDED THAT THE SET-ASIDE DETERMINATION WAS IN ERROR UPON AN ANALYSIS WHICH INDICATED TO HIM THAT ONLY MULTI ELECTRIC MFG. INC., COULD REASONABLY BE EXPECTED TO SUBMIT A REALISTIC BID UNDER THE SET-ASIDE. HOWEVER, AFTER DISCUSSION WITH THE SBA REPRESENTATIVE, THE INVITATION WAS ISSUED WITH THE SET-ASIDE. ON AUGUST 8, 1960, A PROTEST TO THE SET-ASIDE DETERMINATION WAS RECEIVED FROM A LARGE BUSINESS CONCERN AND THE BID OPENING WAS EXTENDED TO AUGUST 18, 1960, DUE TO CERTAIN CHANGES IN THE SPECIFICATIONS. BY AUGUST 9, AFTER DETERMINING THAT NO BIDS HAD YET BEEN RECEIVED, THE CONTRACTING OFFICER ADVISED THE SBA REPRESENTATIVE THAT HE INTENDED TO INITIATE ACTION TO WITHDRAW THE SET-ASIDE. HOWEVER, THE SBA REPRESENTATIVE PERSUADED THE CONTRACTING OFFICER TO AGREE IF NO BIDS WERE RECEIVED BY THE CLOSE OF BUSINESS ON AUGUST 15, 1960, THE SET ASIDE WOULD THEN BE WITHDRAWN. THE SBA REPRESENTATIVE ATTEMPTED TO OBTAIN BIDS FROM THREE INTERESTED SMALL BUSINESS CONCERNS, HOWEVER, NO BIDS WERE RECEIVED BY AUGUST 15, 1960. ON AUGUST 15, THE SET-ASIDE WAS WITHDRAWN AND THE BID OPENING WAS EXTENDED TO AUGUST 26, 1960.

PARAGRAPH 1-1.708 OF THE FEDERAL PROCUREMENT REGULATIONS PROVIDES:

"IF, PRIOR TO AWARD OF A CONTRACT INVOLVING A SET-ASIDE FOR SMALL BUSINESS, THE CONTRACTING OFFICER CONSIDERS THAT PROCUREMENT OF THE SET- ASIDE FROM A SMALL BUSINESS CONCERN WOULD BE DETRIMENTAL TO THE PUBLIC INTEREST (E.G., BECAUSE OF UNREASONABLE PRICE), THE CONTRACTING OFFICER MAY INITIATE WITHDRAWAL OF THE SET-ASIDE DETERMINATION. IF THE SBA REPRESENTATIVE DOES NOT AGREE TO THE WITHDRAWAL, THE MATTER WILL BE REFERRED BY THE ADMINISTRATOR OF SBA TO THE AGENCY HEAD FOR FINAL RESOLUTION. A SIGNED MEMORANDUM OF ANY WITHDRAWAL OF A SET-ASIDE SHALL BE RETAINED IN THE CONTRACT FILE.'

YOU SUGGEST THAT THE ABOVE PARAGRAPH CONTEMPLATES THE WITHDRAWAL OF A SMALL BUSINESS SET-ASIDE ONLY AFTER THE BID OPENING SINCE THE QUESTION WHETHER A BID PRICE IS UNREASONABLE, OR DETRIMENTAL TO THE PUBLIC INTEREST, CAN ONLY BE DETERMINED AFTER THE BIDS ARE REVEALED.

THE SET-ASIDE OF A GOVERNMENT PROCUREMENT, OR PART THEREOF, FOR THE EXCLUSIVE PARTICIPATION OF SMALL BUSINESS IS ORDINARILY MADE PURSUANT TO A JOINT DETERMINATION BY THE CONTRACTING OFFICER AND THE SBA REPRESENTATIVE THAT SUCH ACTION WOULD BE IN THE INTERESTS OF (1) MAINTAINING OR MOBILIZING THE NATION'S FULL PRODUCTIVE CAPACITY, OR (2) WAR OR NATIONAL DEFENSE PROGRAMS, OR (3) ASSURING THAT A FAIR PROPORTION OF THE TOTAL PURCHASES AND CONTRACTS FOR PROPERTY AND SERVICES FOR THE GOVERNMENT ARE PLACED WITH SMALL BUSINESS CONCERNS. IN THE EVENT OF A DISAGREEMENT, THE MATTER IS SUBMITTED FOR FINAL DETERMINATION TO THE HEAD OF THE AGENCY. SEE 15 U.S.C. 644, FRR, PARA. 1-1.707 (A). THE ENTIRE PROCUREMENT IS TO BE SET-ASIDE WHERE THERE IS A REASONABLE EXPECTATION THAT BIDS WILL BE OBTAINED FROM A SUFFICIENT NUMBER OF RESPONSIBLE SMALL BUSINESS CONCERNS SO THAT THE AWARD WILL BE MADE AT A REASONABLE PRICE. (FPR, PARA. 1-1.707 (D) (1) ).

UNDER THE PERTINENT STATUTORY PROVISIONS AND REGULATIONS ISSUED PURSUANT THERETO, THE DETERMINATION TO SET ASIDE THE AWARD FOR SMALL BUSINESS, OR TO WITHDRAW THE SET-ASIDE, IS PLACED WITHIN THE AMBIT OF SOUND ADMINISTRATIVE DISCRETION. THE AUTHORITY IS VERY BROAD AND AN ADMINISTRATIVE DETERMINATION MADE PURSUANT TO SUCH AUTHORITY IS NOT ORDINARILY SUBJECT TO REVIEW. IN THIS RESPECT IT HAS LONG BEEN RECOGNIZED IN CONNECTION WITH GOVERNMENT CONTRACTS THAT NO BIDDER HAS AN ABSOLUTE RIGHT TO PUBLIC BUSINESS, BUT RATHER, THAT THE PUBLIC INTEREST IS FOR PRIMARY CONSIDERATION IN MAKING AN AWARD. 17 COMP. GEN. 554, AND CASES CITED THEREIN. HERE, THE CONTRACTING OFFICER CONCLUDED THAT THE ORIGINAL EXPECTATION OF REASONABLE COMPETITION UNDER THE SET-ASIDE WAS UNWARRANTED AND THAT THE PUBLIC INTEREST REQUIRED WITHDRAWAL OF THE SET-ASIDE. WHERE, IN EFFECT, IT IS CONCLUDED BY BOTH THE CONTRACTING OFFICER AND THE SBA REPRESENTATIVE THAT THE ORIGINAL SET-ASIDE DETERMINATION IS BASED UPON AN ERRONEOUS ASSUMPTION, IT WOULD APPEAR PREFERABLE IN SUCH CASES TO WITHDRAW THE SET-ASIDE PRIOR TO THE TIME THE BIDS ARE EXPOSED. WE CANNOT CONCLUDE THAT THE WITHDRAWAL OF THE SET-ASIDE HERE PRIOR TO BID OPENING WAS IMPROPER.

YOU ALSO OBJECT TO THE SET-ASIDE CANCELLATION ON THE BASIS THAT THE CONTRACTING OFFICER MOVED TO WITHDRAW THE SET-ASIDE ON THE SAME SET OF FACTS WHICH CAUSED THE SET-ASIDE TO ISSUE. WE DO NOT AGREE WITH YOUR OBJECTION. AS INDICATED ABOVE, THE PUBLIC INTEREST, I.E., THE BEST INTEREST OF THE GOVERNMENT, IS THE PRIMARY CONSIDERATION IN MAKING THE AWARD. IF, UPON FURTHER REFLECTION, THE ADMINISTRATIVE OFFICIALS CONCERNED HAVE REASON TO CONSIDER THAT THE ORIGINAL DETERMINATION TO SET- ASIDE AN AWARD FOR THE EXCLUSIVE PARTICIPATION OF SMALL BUSINESS IS IN ERROR, IT IS OUR VIEW THAT THE CONTRACTING OFFICER SHOULD INITIATE ACTION TO WITHDRAW THE SET-ASIDE, PREFERABLY BEFORE THE BIDS ARE EXPOSED.

FINALLY, YOU OBJECT TO THE PROCEDURES FOLLOWED HERE TO DECIDE IF THE SET- ASIDE WOULD STAND. IT WAS INDICATED IN OUR DECISION OF OCTOBER 12, 1960 (B-143873) THAT THERE WAS NO EVIDENCE TO INDICATE THAT SUFFICIENT COMPETITION AT REASONABLE PRICES WAS AVAILABLE UNDER THE SET-ASIDE OR THAT ATTEMPTS WERE MADE BY THE CONTRACTING OFFICER OR SBA REPRESENTATIVE TO PREVENT SUCH COMPETITION. WE DEEMED THE FACTS SUFFICIENT TO WARRANT THE SET-ASIDE WITHDRAWAL. YOU DO NOT OFFER ANY BASIS TO CAUSE US TO CHANGE OUR VIEWS. ACCORDINGLY, YOUR PROTEST MUST BE DENIED.