B-132740, OCTOBER 23, 1957, 37 COMP. GEN. 271

B-132740, OCTOBER 23, 1957, 37 COMP. GEN. 271

CONTRACTS - AWARDS - SMALL BUSINESS CONCERNS - HOUSING CONTRACTS THE SET-ASIDE FOR THE EXCLUSIVE AWARD TO SMALL BUSINESS CONCERNS OF A PORTION OF THE CONSTRUCTION CONTRACTS AUTHORIZED PURSUANT TO THE HOUSING AMENDMENTS ( ACT) OF 1955 WOULD BE CONTRARY TO SECTION 403 (B) OF THE ACT, 42 U.S.C. 1594 (B), WHICH REQUIRES UNRESTRICTED ADVERTISING, THE CONSIDERATION OF ALL BIDS RECEIVED FROM FIRMS QUALIFIED BY EXPERIENCE AND FINANCIAL RESPONSIBILITY, AND AWARD TO THE LOWEST ACCEPTABLE BIDDER. IN VIEW OF THE FACT THAT SECTION 214 OF SMALL BUSINESS ACT OF 1953, 15 U.S.C. 643, WHICH RELATES PRIMARILY TO UTILIZATION OF POTENTIAL PRODUCTIVE CAPACITY OF PLANTS OPERATED BY SMALL BUSINESS CONCERNS, REFERS SPECIFICALLY TO "CONTRACTS FOR SUPPLIES AND SERVICES," "CONTRACTS FOR RESEARCH AND DEVELOPMENT," AND TO FURNISHING OF "MATERIALS," "SUPPLIES" AND "EQUIPMENT" THERE IS DOUBT AS TO ITS APPLICATION TO CONSTRUCTION CONTRACTS AUTHORIZED PURSUANT TO THE HOUSING AMENDMENTS ( ACT) OF 1955.

TO THE ADMINISTRATOR, SMALL BUSINESS ADMINISTRATION, OCTOBER 23, 1957:

REFERENCE IS MADE TO YOUR LETTER OF JULY 26, 1957, REQUESTING OUR CONSIDERATION OF THE PROPRIETY OF EXERCISING THE AUTHORITY GRANTED UNDER SECTION 214 OF THE SMALL BUSINESS ACT OF 1953, AS AMENDED, 15 U.S.C. 643, AND SETTING ASIDE FOR EXCLUSIVE AWARD TO SMALL BUSINESS CONCERNS A SUBSTANTIAL PORTION OF THE CONTRACTS TO BE MADE PURSUANT TO SECTION 403 OF THE HOUSING AMENDMENTS OF 1955, 69 STAT. 651, 42 U.S.C. 1594.

THE AMENDED SECTION 214 OF THE SMALL BUSINESS ACT OF 1953 PROVIDES THAT SMALL BUSINESS CONCERNS WITHIN THE MEANING OF THE ACT SHALL RECEIVE ANY AWARD OR CONTRACT OR ANY PART THEREOF AS TO WHICH IT IS DETERMINED BY THE SMALL BUSINESS ADMINISTRATION AND THE CONTRACTING PROCUREMENT AGENCY (A) TO BE IN THE INTEREST OF MAINTAINING OR MOBILIZING THE NATION'S FULL PRODUCTIVE CAPACITY, OR (B) TO BE IN THE INTEREST OF WAR OR NATIONAL DEFENSE PROGRAMS.

SECTION 403 OF THE HOUSING AMENDMENTS OF 1955 AUTHORIZES THE SECRETARY OF DEFENSE OR HIS DESIGNEE TO ENTER INTO CONTRACTS WITH ANY ELIGIBLE BUILDER TO PROVIDE FOR THE CONSTRUCTION OF HOUSING ON LANDS OWNED OR LEASED BY THE UNITED STATES SITUATED ON OR NEAR A MILITARY RESERVATION OR INSTALLATION. ADVERTISING IS REQUIRED IN THE MANNER PROVIDED IN SECTION 3 OF THE ARMED SERVICES PROCUREMENT ACT OF 1947, 41 U.S.C. 152, AND THE TERM "ELIGIBLE BUILDER" IS DEFINED IN SUBSECTION (B) OF SECTION 403, 42 U.S.C., 1594 (B), AS A PERSON, PARTNERSHIP, FIRM OR CORPORATION DETERMINED BY THE SECRETARY AFTER CONSULTATION WITH THE FEDERAL HOUSING COMMISSIONER "/1) TO BE QUALIFIED BY EXPERIENCE AND FINANCIAL RESPONSIBILITY TO CONSTRUCT HOUSING OF THE TYPE DESCRIBED IN SUBSECTION (A) OF THIS SECTION, AND (2) TO HAVE SUBMITTED THE LOWEST ACCEPTABLE BID.'

IT IS PROPOSED THAT CERTAIN OF THESE CONSTRUCTION CONTRACTS BE LET BY ADVERTISING RESTRICTED TO SMALL BUSINESS BIDDERS IN ORDER TO GIVE EFFECT TO THE CONGRESSIONAL POLICY THAT THE GOVERNMENT SHOULD AID, COUNSEL, ASSIST AND PROTECT, INSOFAR AS POSSIBLE, THE INTEREST OF SMALL BUSINESS CONCERNS. YOUR LETTER SETS FORTH THAT THE PERCENTAGE OF GOVERNMENT CONTRACTS AND PURCHASES AWARDED TO SMALL BUSINESS FIRMS HAS BEEN DECLINING AND THAT THIS CONSISTENT DECLINE HAS CAUSED CONCERN IN BOTH THE EXECUTIVE AND LEGISLATIVE BRANCHES OF THE GOVERNMENT. THE SMALL BUSINESS ADMINISTRATION HAS ASCERTAINED THAT SMALL BUSINESS CONCERNS ARE PARTICULARLY EQUIPPED TO PARTICIPATE IN THE GOVERNMENT'S CONSTRUCTION PROGRAMS, AND IN SEVERAL INSTANCES WHERE PROPOSALS FOR CONSTRUCTION OF HOUSING AUTHORIZED BY SECTION 403 OF THE HOUSING AMENDMENTS OF 1955 HAVE BEEN EXAMINED THE ADMINISTRATION HAS DETERMINED THAT AWARDS TO SMALL BUSINESS CONCERNS WOULD BE IN THE INTEREST OF MAINTAINING OR MOBILIZING THE NATION'S FULL PRODUCTIVE CAPACITY OR IN THE INTEREST OF THE WAR OR NATIONAL DEFENSE PROGRAMS.

WE ARE ADVISED THAT THE CONTRACTING OFFICIALS INVOLVED IN THREE OF THE PROPOSED CONSTRUCTION PROJECTS HAVE INDICATED CONCURRENCE WITH THESE DETERMINATIONS BUT THAT A QUESTION HAS BEEN RAISED AS TO WHETHER THE CONTEMPLATED PROCEDURE OF RESTRICTING THE AWARDS TO SMALL BUSINESS CONCERNS WOULD COMPLY WITH THE REQUIREMENTS FOR ADVERTISING SET OUT IN SECTION 3 OF THE ARMED SERVICES PROCUREMENT ACT OF 1947. IT APPEARS TO HAVE BEEN SUGGESTED THAT, IF ONLY SMALL BUSINESS CONCERNS WERE MADE ELIGIBLE FOR AWARD, THE RESULTING CONTRACTS WOULD BE OF A NEGOTIATED TYPE NOT PERMITTED UNDER SECTION 403 OF THE HOUSING AMENDMENTS OF 1955.

YOUR LETTER DISCUSSES THE GENERAL QUESTION AS TO THE EFFECT OF STATUTORY AUTHORITY PERMITTING THE LIMITING OF ELIGIBLE BIDDERS AND THE OPINION IS EXPRESSED THAT JOINT DETERMINATION SET-ASIDES FOR SMALL BUSINESS AWARDS ARE NOT NEGATED BY THAT PART OF SUBSECTION (A) OF SECTION 403 OF THE HOUSING AMENDMENTS OF 1955, 42 U.S.C. 1594 (A), WHICH REQUIRES ADVERTISING IN THE MANNER PRESCRIBED IN SECTION 3 OF THE ARMED SERVICES PROCUREMENT ACT OF 1947. IT IS ARGUED THAT A CONTRARY CONCLUSION WOULD DO VIOLENCE TO THE CONGRESSIONAL INTENT AND POLICY THAT THE GOVERNMENT SHOULD AID, COUNSEL, ASSIST AND PROTECT, INSOFAR AS POSSIBLE, THE INTEREST OF SMALL BUSINESS CONCERNS; AND THAT THE CONTRARY CONCLUSION WOULD BE IN CONFLICT WITH THE ACCEPTED RULE OF STATUTORY CONSTRUCTION THAT REMEDIAL STATUTES SHOULD BE LIBERALLY CONSTRUED.

ON THE OTHER HAND, WE ARE BOUND TO RECOGNIZE THE FACT THAT FULL, FREE, AND OPEN COMPETITION FOR GOVERNMENT CONTRACTS HAS BEEN THE BASIC POLICY OF THE CONGRESS AS DECLARED IN ITS ENACTMENTS FOR MORE THAN A HUNDRED YEARS, AND WE DO NOT FEEL THAT SPECIFIC STATUTORY EXCEPTIONS TO THAT GENERAL RULE ARE TO BE CONSTRUED MORE FREELY THAN REASONABLY NECESSARY TO EFFECTUATE THEIR APPARENT INTENT.

VIEWED FROM THIS STANDPOINT, THERE IS SERIOUS DOUBT WHETHER SECTION 214 OF THE SMALL BUSINESS ACT OF 1953, AS AMENDED, WAS INTENDED TO BE APPLICABLE TO CONSTRUCTION CONTRACTS. THE ACT RELATES PRIMARILY TO THE UTILIZATION OF THE POTENTIAL PRODUCTIVE CAPACITY OF PLANTS OPERATED BY SMALL BUSINESS CONCERNS AND IT SPECIFICALLY REFERS ONLY TO "CONTRACTS FOR SUPPLIES AND SERVICES," ,CONTRACTS FOR RESEARCH AND DEVELOPMENT" AND TO THE FURNISHING OF "MATERIALS," "SUPPLIES" AND ,EQUIPMENT.' IN THIS CONNECTION, IT IS TO BE NOTED THAT THE MATTER OF ENTERING INTO CONSTRUCTION CONTRACTS IS SEPARATELY CONSIDERED IN BOTH THE ARMED SERVICES PROCUREMENT ACT OF 1947 AND THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AND THAT CONTRACTS FOR "SUPPLIES AND SERVICES" AND THOSE FOR CONSTRUCTION OF PUBLIC BUILDINGS AND WORKS HAVE TRADITIONALLY BEEN TREATED AS SEPARATE AND DISTINCT SUBJECTS IN STATUTES, REGULATIONS, AND DECISIONS OF THE ACCOUNTING OFFICERS. ALSO, THE ELIGIBILITY PROVISIONS OF SUBSECTION (B) OF SECTION 403 OF THE HOUSING AMENDMENTS OF 1955 APPEAR CLEARLY TO HAVE BEEN INTENDED TO REQUIRE UNRESTRICTED ADVERTISING AND THE CONSIDERATION OF ALL BIDS RECEIVED FROM FIRMS QUALIFIED BY EXPERIENCE AND FINANCIAL RESPONSIBILITY TO CONSTRUCT HOUSING OF THE TYPE DESCRIBED IN SUBSECTION (A) OF SECTION 403.

IN THE CIRCUMSTANCES, YOU ARE ADVISED THAT WE BELIEVE IT WOULD BE IMPROPER FOR THE CONTRACTING AGENCIES INVOLVED TO SET ASIDE ANY PORTION OF THE CONTRACTS TO BE MADE PURSUANT TO SECTION 403 OF THE HOUSING AMENDMENTS OF 1955 FOR EXCLUSIVE AWARD TO SMALL BUSINESS CONCERNS.