B-171899, JUN 25, 1971

B-171899, JUN 25, 1971

BID PROTEST - SMALL BUSINESS PROCUREMENT DENIAL OF PROTEST OF CENTURY, INC., AGAINST AWARD OF CONTRACT TO LOW BIDDER, A JOINT VENTURE COMPOSED OF INFORMATION TECHNOLOGY INC., AND CONTEL CORPORATION, UNDER IFB ISSUED BY DEPARTMENT OF THE AIR FORCE FOR DEPOT LEVEL MAINTENANCE AND REPAIR SERVICE ON RADOMES FOR GROUND COMMUNICATION EQUIPMENT. ALTHOUGH PROTESTANT INSISTS THAT CONTEL IS SO ASSOCIATED WITH UNITED INDUSTRIES, INC., A LARGE BUSINESS, AS TO BE INELIGIBLE FOR A SMALL BUSINESS PROCUREMENT, THE DETERMINATION BY THE SMALL BUSINESS ADMINISTRATION THAT CONTEL IS A SMALL BUSINESS CONCERN IS BINDING, UNLESS THE RULING IS SHOWN TO BE ARBITRARY OR CLEARLY ERRONEOUS.

TO CENTURY, INC.:

WE REFER TO YOUR PROTEST BY TELEGRAMS OF MAY 12 AND 26, 1971, AGAINST AWARD BY THE DEPARTMENT OF THE AIR FORCE OF A CONTRACT FOR THE PERFORMANCE OF DEPOT LEVEL MAINTENANCE AND REPAIR SERVICES OF RADOMES FOR GROUND COMMUNICATIONS EQUIPMENT TO THE LOW BIDDER UNDER INVITATION FOR BIDS (IFB) F04606-71-B-0080, ISSUED OCTOBER 30, 1970, BY SACRAMENTO AIR MATERIEL AREA, MCCLELLAN AIR FORCE BASE, CALIFORNIA. THE PROCUREMENT IS A 100- PERCENT SMALL BUSINESS SET-ASIDE, AND IT IS YOUR CONTENTION THAT THE LOW BIDDER, A JOINT VENTURE COMPOSED OF INFORMATION TECHNOLOGY, INCORPORATED AND CONTEL CORPORATION (CONTEL), DOES NOT QUALIFY AS A SMALL BUSINESS CONCERN FOR THE PURPOSE OF THE PROCUREMENT.

THE SIZE STANDARD SET FORTH IN THE IFB SET-ASIDE CLAUSE WAS AVERAGE ANNUAL RECEIPTS FOR THE BIDDING CONCERN, INCLUDING ITS AFFILIATES, OF NOT MORE THAN $7,500,000 FOR EACH OF THE PRECEDING THREE FISCAL YEARS, WITH ONE EXCEPTION NOT PERTINENT HERE. THE LOW BIDDER CERTIFIED ITSELF AS A SMALL BUSINESS CONCERN. YOU MAINTAIN, HOWEVER, THAT CONTEL IS AFFILIATED WITH UNITEC INDUSTRIES, INCORPORATED (UNITEC), A LARGE BUSINESS, AND THAT THE JOINT VENTURE THEREFORE DOES NOT QUALIFY AS SMALL BUSINESS. IN THIS CONNECTION, YOU STATE THAT MR. H. L. DERRICKSON, A MEMBER OF THE BOARD OF DIRECTORS OF CONTEL, IS A PRINCIPAL OFFICER AND STOCKHOLDER OF UNITEC, FOR WHICH HE CURRENTLY SERVES AS A MEMBER OF THE BOARD OF DIRECTORS.

ON THE BASIS OF A LETTER DATED MAY 3, WHICH YOUR ATTORNEY ADDRESSED TO THE PROCURING ACTIVITY ON THIS MATTER, THE CONTRACTING OFFICER SUBMITTED A REQUEST UNDER DATE OF MAY 7 TO THE SMALL BUSINESS ADMINISTRATION (SBA) FOR A DETERMINATION OF THE SIZE OF THE LOW BIDDER. BY LETTER OF MAY 26 SBA NOTIFIED THE PROCURING ACTIVITY THAT THE LOW BIDDER HAD FURNISHED TO SBA INFORMATION REFLECTING AVERAGE SALES OR RECEIPTS FOR THE MEMBERS OF THE JOINT VENTURE AND THEIR AFFILIATES OF $5,907,180 FOR EACH OF THE MOST RECENTLY COMPLETED THREE FISCAL YEARS. THE LOW BIDDER ALSO FURNISHED TO SBA INFORMATION TO THE EFFECT THAT MR. HAROLD L. DERRICKSON SERVES AS A DIRECTOR OF UNITEC AND IS A 7.27 PERCENT STOCKHOLDER IN UNITEC BUT IS NO LONGER CHAIRMAN OF THE BOARD OR AN OFFICER OR EMPLOYEE OF UNITEC, AND THAT THE CONTROLLING INTEREST IN UNITEC IS NOW VESTED IN ONE GEORGE J. CAMPBELL, JR., BY VIRTUE OF HIS HOLDING OF APPROXIMATELY 44 PERCENT OF UNITEC'S OUTSTANDING COMMON STOCK. SBA FURTHER STATED THAT THE INFORMATION RELATIVE TO MR. DERRICKSON'S INTEREST IN UNITEC HAD BEEN CORROBORATED BY AN INDEPENDENT SBA INVESTIGATION. ON THE BASIS OF SUCH INFORMATION, SBA DETERMINED THAT THE JOINT VENTURE OF CONTEL CORPORATION AND INFORMATION TECHNOLOGY, INCORPORATED, IS A SMALL BUSINESS CONCERN WITH RESPECT TO IFB F04606-71-B-0080.

PURSUANT TO 13 CFR 121.3-6, YOU FILED AN APPEAL ON MAY 26 FROM THE ABOVE DECISION. UNDER DATE OF JUNE 17, HOWEVER, THE SBA SIZE APPEALS BOARD UPHELD THE PRIOR DECISION.

UNDER SECTION 8(B)(6) OF THE SMALL BUSINESS ACT OF 1958, 15 U.S.C. 637(B)(6), THE SMALL BUSINESS ADMINISTRATOR IS AUTHORIZED TO DETERMINE WHICH FIRMS WITHIN ANY INDUSTRY ARE TO BE DESIGNATED AS SMALL BUSINESS CONCERNS FOR THE PURPOSE OF GOVERNMENT PROCUREMENT, AND THE DETERMINATION THUS MADE IS CONCLUSIVE ON GOVERNMENT PROCUREMENT OFFICIALS. IN LIGHT OF SUCH PROVISIONS, AND IN THE ABSENCE OF EVIDENCE THAT SUCH A DETERMINATION IS ARBITRARY OR CLEARLY ERRONEOUS, A DETERMINATION BY SBA AS TO THE SIZE STATUS OF A PARTICULAR BIDDER IS ALSO CONCLUSIVE ON THIS OFFICE. 46 COMP. GEN. 898 (1967); 44 ID. 271 (1964) AND COURT CASES THEREIN CITED.

IN LINE WITH THE FOREGOING, WE SEE NO LEGAL BASIS TO OBJECT TO AWARD TO THE LOW BIDDER PROVIDED IT IS OTHERWISE RESPONSIBLE AND RESPONSIVE. YOUR PROTEST IS THEREFORE DENIED.