B-134574, APRIL 15, 1958, 37 COMP. GEN. 679

B-134574: Apr 15, 1958

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CONTRACTS - AWARDS - SMALL BUSINESS CONCERNS - CERTIFICATIONS - INELIGIBILITY PRIOR TO REVOCATION OBJECTION TO A SMALL BUSINESS SET-ASIDE CONTRACT WHICH WAS AWARDED ON THE BASIS OF A SMALL BUSINESS CERTIFICATE. WHICH WAS NOT REVOKED UNTIL SOME TIME LATER FOR THE REASON THAT PRIOR TO THE AWARD THE PARENT CORPORATION OF THE CONTRACTOR HAD ACQUIRED AN ADDITIONAL SUBSIDIARY. THE ACCEPTANCE BY A PROCUREMENT AGENCY OF A SMALL BUSINESS CERTIFICATE WHICH IS VALID AT THE TIME A SET-ASIDE AWARD IS MADE AND IS BASED ON INFORMATION WHICH IS CORRECT AT THE TIME REQUESTED IS REQUIRED BY LAW AND REGULATION (15 U.S.C. 642 (B) AND SECTION 1-703 OF THE ARMED SERVICES PROCUREMENT REGULATION.). 1958: FURTHER REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 2.

B-134574, APRIL 15, 1958, 37 COMP. GEN. 679

CONTRACTS - AWARDS - SMALL BUSINESS CONCERNS - CERTIFICATIONS - INELIGIBILITY PRIOR TO REVOCATION OBJECTION TO A SMALL BUSINESS SET-ASIDE CONTRACT WHICH WAS AWARDED ON THE BASIS OF A SMALL BUSINESS CERTIFICATE, WHICH WAS NOT REVOKED UNTIL SOME TIME LATER FOR THE REASON THAT PRIOR TO THE AWARD THE PARENT CORPORATION OF THE CONTRACTOR HAD ACQUIRED AN ADDITIONAL SUBSIDIARY, WOULD SERVE NO USEFUL PURPOSE AFTER THE TIME FOR PLACING ORDERS UNDER THE CONTRACT HAS EXPIRED. THE ACCEPTANCE BY A PROCUREMENT AGENCY OF A SMALL BUSINESS CERTIFICATE WHICH IS VALID AT THE TIME A SET-ASIDE AWARD IS MADE AND IS BASED ON INFORMATION WHICH IS CORRECT AT THE TIME REQUESTED IS REQUIRED BY LAW AND REGULATION (15 U.S.C. 642 (B) AND SECTION 1-703 OF THE ARMED SERVICES PROCUREMENT REGULATION.)

TO THE UNION OIL COMPANY OF CALIFORNIA, APRIL 15, 1958:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 2, 1957, AND ACCOMPANYING MEMORANDUM, RELATIVE TO YOUR PROTEST AGAINST THE AWARD OF CONTRACT NO. ASP-18345, DATED SEPTEMBER 13, 1957, TO THE WILSHIRE OIL COMPANY OF CALIFORNIA, A SUBSIDIARY OF MALCO REFINERIES, INC., UNDER INVITATION FOR BIDS NO. 57-148, ISSUED BY THE MILITARY PETROLEUM SUPPLY AGENCY ON JUNE 14, 1957, AND PUBLICLY OPENED ON JULY 16, 1957.

THE INVITATION PROVIDED FOR A PARTIAL SET-ASIDE FOR SMALL BUSINESS OF 4,000,000 BARRELS OF JP-4 JET FUEL OUT OF A TOTAL REQUIREMENT OF 39,600,000 BARRELS. AWARD WAS MADE TO WILSHIRE OF 20,000,000 GALLONS UNDER ITEM 270A, WHICH CONSTITUTED THE ENTIRE QUANTITY OF THAT ITEM SET ASIDE FOR SMALL BUSINESS. WHILE NOT INVOLVED HERE, WILSHIRE ALSO WAS AWARDED 30,000,000 GALLONS OF THE NON-SET-ASIDE PORTION OF ITEM 270A AND YOUR COMPANY RECEIVED AN AGGREGATE AWARD OF 22,260,000 GALLONS UNDER THE SAME ITEM.

THE SUBSTANCE OF YOUR PROTEST IS THAT WILSHIRE WAS NOT A SMALL BUSINESS FIRM AT THE TIME IT RECEIVED THE AWARD OF THE SET-ASIDE PORTION OF ITEM 270A, AND HENCE WAS NOT ELIGIBLE TO RECEIVE THAT AWARD.

THE RECORD ESTABLISHES THAT PRIOR TO THE DATE OF WILSHIRE'S BID, THE SMALL BUSINESS ADMINISTRATION HAD CERTIFIED, ON JUNE 24, 1957, THE STATUS OF MALCO REFINERIES, INC., WILSHIRE'S PARENT CORPORATION, AS A SMALL BUSINESS CONCERN FOR THE PURPOSE OF MAKING BIDS AND PROPOSALS FOR VARIOUS PETROLEUM PRODUCTS, INCLUDING THOSE INVOLVED IN THE SUBJECT PROCUREMENT. THIS CERTIFICATE WAS MADE EFFECTIVE UNTIL DECEMBER 31, 1957, UNLESS SOONER REVOKED BY THE SMALL BUSINESS ADMINISTRATION, AND WAS IN FORCE AND EFFECT AT THE TIME THE SET-ASIDE PORTION OF ITEM 270A WAS AWARDED TO WILSHIRE. THEREAFTER, ON OCTOBER 21, 1957, THE SMALL BUSINESS ADMINISTRATION NOTIFIED MALCO THAT BECAUSE OF ITS ACQUISITION OF AN ADDITIONAL SUBSIDIARY IN APRIL 1957, NEITHER MALCO NOR ITS SUBSIDIARIES COULD BE CLASSIFIED AS SMALL BUSINESS, AND THAT ITS CERTIFICATE OF JUNE 24, 1957, WAS REVOKED AS OF OCTOBER 21, 1957.

WHILE THE RECORD INDICATES THAT THE MALCO GROUP WAS NOT IN FACT SMALL BUSINESS AT THE TIME THE SET-ASIDE AWARD WAS MADE TO WILSHIRE, WE ARE OF THE VIEW THAT SINCE THE TIME FOR PLACING ORDERS UNDER THE CONTRACT HAS NOW EXPIRED, NO USEFUL PURPOSE WOULD BE SERVED BY ANY ACTION WHICH COULD NOW BE TAKEN.

FURTHERMORE, THE PROCUREMENT AGENCY WAS REQUIRED BY LAW AND REGULATION (SEE 15 U.S.C. 642 (B) AND SECTION 1-703 OF THE ARMED SERVICES PROCUREMENT REGULATION) TO ACCEPT THE SMALL BUSINESS CERTIFICATE ISSUED TO MALCO AND IN FORCE AT THE TIME OF AWARD, AND THE CERTIFICATE WAS BASED UPON INFORMATION RECEIVED FROM MALCO WHICH WAS CORRECT AT THE TIME IT WAS REQUESTED.

HOWEVER, SINCE THE ISSUANCE OF SUCH CERTIFICATES FOR FIXED PERIODS OF TIME, WITHOUT AN AFFIRMATIVE REQUIREMENT OF PROMPT DISCLOSURE OF ANY CHANGE IN THE STATUS OF THE BUSINESS INVOLVED, MAY RESULT IN ABUSES OF THE INTENT OF THE LAW, WE ARE SUGGESTING TO THE SMALL BUSINESS ADMINISTRATION THAT CONSIDERATION BE GIVEN TO MODIFICATION OF ITS PROCEDURES TO AVOID OR MINIMIZE THE POSSIBILITY OF SUCH UNDESIRABLE RESULTS.