B-145948, AUG. 2, 1961

B-145948, AUG. 2, 1961

TO M. A. GARLAND CONSTRUCTION:

WE REFER TO YOUR LETTER OF MAY 22, 1961, WITH ENCLOSURE, AND SUBSEQUENT CORRESPONDENCE, PROTESTING AGAINST THE AWARD OF A CONTRACT UNDER INVITATION FOR BIDS NO. ENG-25-066-61-138, ISSUED ON MARCH 15, 1961, BY THE OMAHA DISTRICT, CORPS OF ENGINEERS, DEPARTMENT OF THE ARMY.

THE INVITATION CALLED FOR BIDS ON THE CONSTRUCTION OF SAC MISSILE FACILITIES AT ELLSWORTH AIR FORCE BASE, RAPID CITY, SOUTH DAKOTA. THE PROJECT WAS RESTRICTED TO SMALL BUSINESS CONCERNS ONLY. BIDS WERE OPENED ON APRIL 13, 1961, AND FIVE BIDS WERE RECEIVED AS FOLLOWS:

TABLE

NOR-PAC CORPORATION $404,714.00

M. A. GARLAND CONSTRUCTION 412,766.20

BREZINA CONSTRUCTION CO., INC. 417,194.00

NOYES CONSTRUCTION COMPANY 420,074.80

OTTO J. ERCKHOF AND SONS INC. 440,073.00

GOVERNMENT ESTIMATE 355,580.40

ON APRIL 13, 1961, YOU WROTE TO THE CONTRACTING OFFICE AT OMAHA, NEBRASKA, ADVISING THAT NOR-PAC CORPORATION MIGHT BE AFFILIATED WITH H. HALVORSON, INC., AND THAT NOR-PAC'S SMALL BUSINESS STATUS SHOULD BE INVESTIGATED. PURSUANT THERETO, THE OMAHA BRANCH OF SMALL BUSINESS ADMINISTRATION WAS REQUESTED TO FURNISH THE CONTRACTING OFFICE WITH A DETERMINATION OF THE QUALIFICATIONS OF NOR-PAC AS A SMALL BUSINESS CONCERN. BY LETTER OF APRIL 14, 1961, THE OMAHA SBA OFFICE RESPONDED TO THE CONTRACTING OFFICE WITH REFERENCE TO NOR-PAC CORPORATION AS FOLLOWS:

"THIS IS TO ADVISE THAT THE SUBJECT CORPORATION HAS BEEN DETERMINED TO BE "SMALL BUSINESS" FOR PROCUREMENT PURPOSES.

"THIS DETERMINATION WAS MADE BY WASHINGTON AND HANDED DOWN TO THE SEATTLE OFFICE.'

THE CONTRACTING OFFICE NOTIFIED YOU BY LETTER OF APRIL 20, 1961, THAT THE SEATTLE BRANCH OF SBA HAD DETERMINED THAT THE NOR-PAC CORPORATION, SPOKANE, WASHINGTON, IS A SMALL BUSINESS CONCERN AND APPARENTLY NOT AFFILIATED WITH H. HALVORSON, INC., A LARGE BUSINESS CONCERN, LOCATED AT 4218 SHARP AVENUE, SPOKANE, WASHINGTON. ON THE SAME DAY, APRIL 20, 1961, NOR-PAC RECEIVED AWARD OF CONTRACT NO. DA-25 066-ENG-6839 FOR CONSTRUCTION OF THE MISSILE FACILITIES.

AFTER AWARD, UNDER DATE OF APRIL 24, 1961, YOU WROTE TO THE CONTRACTING OFFICE, ALLEGING AGAIN THAT NOR-PAC IS AFFILIATED WITH H. HALVORSON, INC., A LARGE BUSINESS CONCERN, AND THEREFORE NOR-PAC WAS ALSO LARGE BUSINESS. THE CONTRACTING OFFICE REPLIED BY LETTER OF MAY 1, 1961, THAT SINCE AWARD WAS ALREADY MADE TO NOR-PAC BASED ON AN SBA DETERMINATION THAT IT WAS SMALL BUSINESS, ANY FURTHER QUESTIONS ON THIS MATTER SHOULD BE MADE TO THE OMAHA BRANCH OF SBA. YOU WROTE TO SIOUX FALLS, SOUTH DAKOTA, SBA BRANCH OFFICE, QUESTIONING NOR-PAC'S SMALL BUSINESS STATUS.

YOU WERE SUBSEQUENTLY ADVISED BY SBA, WASHINGTON, D.C., UNDER DATE OF MAY 17, 1961, THAT SINCE AN AWARD TO NOR-PAC HAD ALREADY BEEN MADE, IT NO LONGER HAD AUTHORITY TO DETERMINE SIZE FOR PURPOSES OF THE SUBJECT PROCUREMENT, BUT THAT IF YOU FILED A PROTEST WITH THE GENERAL ACCOUNTING OFFICE, AND IF THAT OFFICE REQUESTED SBA TO MAKE A SIZE DETERMINATION, IT WOULD ACT ON SUCH A REQUEST.

ON MAY 22, 1961, YOU WROTE TO THIS OFFICE SETTING FORTH THE FACTS AND REQUESTING THAT WE ASK SBA TO REDETERMINE NOR-PAC'S ELIGIBILITY FOR AWARD UNDER THE SUBJECT INVITATION. SUCH REQUEST TO SBA WAS MADE, AND BY LETTER DATED JUNE 29, 1961, THE DIRECTOR, OFFICE OF SMALL BUSINESS SIZE STANDARDS, SBA, WASHINGTON 25, D.C., ADVISED US AS FOLLOWS:

"WE, THEREFORE, HAVE DETERMINED THAT NOR-PAC CORPORATION IS AFFILIATED WITH H. HALVORSON, INC., AND SINCE THE TOTAL AVERAGE ANNUAL RECEIPTS OF NOR-PAC CORPORATION AND H. HALVORSON, INC. FOR THE PRECEDING THREE FISCAL YEARS EXCEED $5,000,000, THE SIZE STANDARD APPLICABLE TO A CONCERN FOR THE PURPOSE OF BIDDING ON CONSTRUCTION PROCUREMENTS (SEE SECTION 121.3-8 (A) OF THE REGULATION) WE HAVE DETERMINED THAT NOR-PAC CORPORATION (1) WAS NOT, ON APRIL 20, 1961, A SMALL BUSINESS CONCERN FOR THE PURPOSE OF GOVERNMENT PROCUREMENTS AND (2) IS NOT PRESENTLY A SMALL BUSINESS CONCERN FOR SUCH PURPOSES.

"IT IS ACKNOWLEDGED THAT FIELD OFFICES OF THIS AGENCY DETERMINED ON FEBRUARY 28, 1961 AND AGAIN ON OR ABOUT APRIL 20, 1961, THAT NOR-PAC CORPORATION WAS A SMALL BUSINESS CONCERN. WE CONSIDER THAT THOSE DETERMINATIONS WERE MADE ON INSUFFICIENT INFORMATION.'

UPON RECEIPT OF THIS INFORMATION, WE REQUESTED FROM THE DEPARTMENT OF THE AIR FORCE, ITS VIEWS WITH REGARD TO A POSSIBLE CANCELLATION AND REAWARD TO ANOTHER BIDDER OF THIS CONTRACT FOR MISSILE CONSTRUCTION WORK AT ELLSWORTH AIR FORCE BASE. BY LETTER OF JULY 11, 1961, WE WERE ADVISED BY THE DEPARTMENT OF THE AIR FORCE "THAT SUCH ACTION WOULD CAUSE SERIOUS AND UNACCEPTABLE DELAY IN THIS CONSTRUCTION PROJECT.' THE AIR FORCE RECOMMENDED AGAINST THE CANCELLATION OF THE NOR-PAC CONTRACT.

IN AN ANALOGOUS SITUATION CONSIDERED BY THIS OFFICE, PUBLISHED AT 34 COMP. GEN. 115, WE CONCLUDED THAT SINCE THE BIDDER WAS NOT, IN FACT, A SMALL BUSINESS CONCERN THE AWARD TO THAT FIRM WAS UNAUTHORIZED AND APPROPRIATE STEPS SHOULD BE TAKEN TO CANCEL IT. IN THE PRESENT CASE WE HAVE AS A FACTOR THAT THE CONTRACT WORK (WHICH WE UNDERSTAND IS SUBSTANTIALLY UNDER WAY) INVOLVES A PROJECT (MISSILE CONSTRUCTION WORK) CLOSELY IDENTIFIED WITH THE MILITARY DEFENSE EFFORT. IN THIS REGARD THE DEPARTMENT OF THE AIR FORCE STATES THAT CONTRACT CANCELLATION FOR THIS PROJECT WOULD CAUSE SERIOUS AND UNACCEPTABLE DELAY IN THE PROJECT, AND THAT CANCELLATION IS NOT RECOMMENDED.

IN VIEW OF THE FOREGOING WE MUST CONCLUDE THAT CANCELLATION OF THE CONTRACT AT THIS TIME WOULD BE DETRIMENTAL TO THE BEST INTERESTS OF THE GOVERNMENT. UNDER THESE CIRCUMSTANCES THE GOVERNMENT IS NOT REQUIRED TO, AND SHOULD NOT CANCEL THE CONTRACT. SEE B-137689, JUNE 14, 1960, JANUARY 21, 1959. ALSO 37 COMP. GEN. 679, SUPRA. ..END :