B-137474, OCTOBER 22, 1958, 38 COMP. GEN. 328

B-137474: Oct 22, 1958

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QUALIFIED AS A SMALL BUSINESS CONCERN ON A DATE PRIOR TO THE TIME OF THE BID EVALUATION AND THE AWARD OF THE CONTRACT IS IN THE ABSENCE OF ANY RESTRICTION ON THE AUTHORITY OF THE SMALL BUSINESS ADMINISTRATION TO ISSUE A RETROACTIVE CERTIFICATION. WHICH SPECIFY THAT PROTESTS AGAINST THE RIGHT OF A BIDDER TO CERTIFY HIMSELF AS SMALL BUSINESS ARE TO BE SUBMITTED TO. THE BURDEN OF QUESTIONING THE SMALL BUSINESS STATUS OF A BIDDER IS PLACED ON COMPETING BIDDERS RATHER THAN ON THE CONTRACTING OFFICER. 9 OF THE INVITATION WERE TO BE PROCURED ON A " SMALL BUSINESS RESTRICTED ADVERTISING" BASIS. WILL BE AWARDED TO ONE OR MORE SMALL BUSINESS CONCERNS. THIS ACTION IS THE RESULT OF A DETERMINATION BY THE CONTRACTING OFFICE.

B-137474, OCTOBER 22, 1958, 38 COMP. GEN. 328

CONTRACTS - AWARDS - SMALL BUSINESS - CERTIFICATIONS - RETROACTIVE A RETROACTIVE SMALL BUSINESS CERTIFICATION THAT A CONCERN, WHICH HAD BEEN AWARDED A SMALL BUSINESS SET-ASIDE CONTRACT, QUALIFIED AS A SMALL BUSINESS CONCERN ON A DATE PRIOR TO THE TIME OF THE BID EVALUATION AND THE AWARD OF THE CONTRACT IS IN THE ABSENCE OF ANY RESTRICTION ON THE AUTHORITY OF THE SMALL BUSINESS ADMINISTRATION TO ISSUE A RETROACTIVE CERTIFICATION, A CONCLUSIVE DETERMINATION OF THE SMALL BUSINESS STATUS OF CONCERN AT THE RETROACTIVE DATE AND THE POSSIBILITY THAT THE CONCERN MAY AT SOME FUTURE DATE BECOME INELIGIBLE DOES NOT AFFECT ITS PRESENT STATUS AS A SMALL BUSINESS. UNDER SECTION 103.5 (A) OF THE SMALL BUSINESS ADMINISTRATION REGULATIONS AND PARAGRAPH 1-703 (B) (1) OF THE ARMED SERVICES PROCUREMENT REGULATION, WHICH SPECIFY THAT PROTESTS AGAINST THE RIGHT OF A BIDDER TO CERTIFY HIMSELF AS SMALL BUSINESS ARE TO BE SUBMITTED TO, AND CONSIDERED BY, THE SMALL BUSINESS ADMINISTRATION, THE BURDEN OF QUESTIONING THE SMALL BUSINESS STATUS OF A BIDDER IS PLACED ON COMPETING BIDDERS RATHER THAN ON THE CONTRACTING OFFICER.

TO SHAW, PITTMAN, POTTS AND MAECHLING, OCTOBER 22, 1958:

YOUR LETTER DATED SEPTEMBER 24, 1958, AND SUBSEQUENT CORRESPONDENCE WRITTEN IN BEHALF OF OVERSEAS NATIONAL AIRWAYS, INCORPORATED, PROTESTS AGAINST THE ACTION OF THE DEPARTMENT OF THE AIR FORCE IN AWARDING ITEMS 8 AND 9 OF IFB 11-626-59-3-CAB TO SLICK AIRWAYS, INCORPORATED.

IFB 11-626-59-3-CAB REQUESTED BIDS ON THIRTEEN ITEMS WHICH SET OUT THE NEEDS OF THE MILITARY AIR TRANSPORT SERVICE FROM OCTOBER 1, 1958, THROUGH SEPTEMBER 30, 1959, FOR THE MOVEMENT BY AIR OF PASSENGERS AND CARGO FROM AND TO VARIOUS FOREIGN AND DOMESTIC LOCATIONS. ITEMS 6, 7, 8, AND 9 OF THE INVITATION WERE TO BE PROCURED ON A " SMALL BUSINESS RESTRICTED ADVERTISING" BASIS, AND WITH RESPECT THERETO THE INVITATION PROVIDED AS FOLLOWS:

THE PROCUREMENT OF ITEMS 6, 7, 8 AND 9, WILL BE AWARDED TO ONE OR MORE SMALL BUSINESS CONCERNS. THIS ACTION IS THE RESULT OF A DETERMINATION BY THE CONTRACTING OFFICE, ALONE, OR IN CONJUNCTION WITH A DULY AUTHORIZED SMALL BUSINESS ADMINISTRATION REPRESENTATIVE, THAT IT IS IN THE INTEREST OF MAINTAINING OR MOBILIZING THE NATION'S FULL PRODUCTIVE CAPACITY, OR IN THE INTEREST OF WAR OR NATIONAL DEFENSE PROGRAMS. THEREFORE, BIDS OR PROPOSALS UNDER THE ABOVE STATED ITEMS 6, 7, 8 AND 9 ARE RESTRICTED TO SMALL BUSINESS CONCERNS AND AWARDS WILL BE MADE TO A SMALL BUSINESS CONCERN OR CONCERNS. THE RIGHT IS RESERVED TO REJECT ANY BID OR PROPOSAL WHEN IT IS IN THE INTEREST OF THE GOVERNMENT TO DO SO. BIDS OR PROPOSALS RECEIVED FROM FIRMS NOT CLASSIFIED AS SMALL BUSINESS WILL BE CONSIDERED NON-RESPONSIVE.

BIDS WERE OPENED ON SEPTEMBER 4, 1958. SLICK AIRWAYS SUBMITTED THE LOW BID ON ITEMS 8 AND THE SECOND LOW BID ON ITEM 9. ITEM 8 WAS AWARDED TO SLICK AIRWAYS ON SEPTEMBER 15 AND, THE LOW BID ON ITEM 9 HAVING BEEN REJECTED, ON SEPTEMBER 16 ITEM 9 WAS ALSO AWARDED TO SLICK AIRWAYS. YOUR PROTEST AGAINST SUCH AWARDS IS BASED UPON ALLEGATIONS THAT THE SUCCESSFUL BIDDER WAS DENIED A SMALL BUSINESS CERTIFICATE IN JUNE 1957 AND DID NOT MEET THE CRITERIA FOR SMALL BUSINESS, AS SET OUT IN PERTINENT REGULATIONS OF THE SMALL BUSINESS ADMINISTRATION, EITHER AT THE TIME ITS BID WAS SUBMITTED OR AT THE TIME OF THE AWARD. YOU THEREFORE CONTEND THAT THE BIDS SUBMITTED BY SLICK AIRWAYS ON ITEMS 8 AND 9 WERE NOT RESPONSIVE TO THE INVITATION AND THAT THE AWARDS ON THESE ITEMS SHOULD BE CANCELED.

UNDER THE TERMS OF THE INVITATION BIDDERS ON ITEMS 8 AND 9 WERE REQUIRED TO COMPLETE ONE OF THE FOLLOWING REPRESENTATIONS SET FORTH ON PAGE 6 OF THE INVITATION:

BIDDER REPRESENTS: (ONE OF THE FOLLOWING ONLY SHALL BE EXECUTED BY THE BIDDER AS APPLICABLE). ---- THAT THE AGGREGATE NUMBER OF EMPLOYEES OF THE BIDDER AND ITS

AFFILIATES IS 500 OR MORE, AND HAS NOT BEEN CERTIFIED BY SMALL

BUSINESS ADMINISTRATION AS A SMALL BUSINESS CONCERN. ---- THAT THE BIDDER IS NOT DOMINANT IN ITS FIELD OF OPERATION AND WITH

AFFILIATES EMPLOYS FEWER THAN 500 EMPLOYEES. ---- THAT THE BIDDER IS CERTIFIED AS A SMALL BUSINESS CONCERN BY SMALL

BUSINESS ADMINISTRATION FOR THE PURPOSE OF GOVERNMENT PROCUREMENT.

SLICK AIRWAYS COMPLETED THIS CERTIFICATE BY CHECKING THE BOX INDICATING THAT IT WAS NOT DOMINANT IN ITS FIELD AND DID NOT, WITH ITS AFFILIATES, EMPLOY MORE THAN 500 EMPLOYEES, AND YOUR PROTEST TO THE CONTRACTING OFFICER, MADE AFTER THE AWARDS TO SLICK AIRWAYS, ALLEGED THAT SUCH AWARDS WERE IMPROPER BECAUSE, WHILE THE NUMBER OF PERSONNEL ACTUALLY EMPLOYED BY SLICK AIRWAYS ON SEPTEMBER 4, THE DATE OF BID OPENING, WAS LESS THAN 500, THE AVERAGE EMPLOYMENT DURING THE FOUR PRECEDING QUARTERS, COMPUTED IN ACCORDANCE WITH THE FORMULA SET OUT IN SECTION 103.2 (C) OF THE SMALL BUSINESS ADMINISTRATION REGULATIONS, 13 CFR 103.2 (C), WAS IN EXCESS OF 500.

YOUR PROTEST WAS FILED WITH THE DEPARTMENT OF THE AIR FORCE ON SEPTEMBER 18, AND ON SEPTEMBER 22 THE CONTRACTING OFFICER REQUESTED A DETERMINATION BY THE SMALL BUSINESS ADMINISTRATION AS TO THE SMALL BUSINESS STATUS OF SLICK AIRWAYS. ON SEPTEMBER 29 THE DIRECTOR, OFFICE OF ECONOMIC ADVISER, SMALL BUSINESS ADMINISTRATION, ADVISED THE CONTRACTING OFFICER THAT THE COMPANY WAS NOT SMALL BUSINESS, PURSUANT TO SMALL BUSINESS ADMINISTRATION REGULATIONS AND DEFINITIONS AS TO SIZE, AT THE TIME ITS BID WAS MADE. THE INTERIM, ON SEPTEMBER 23 SLICK AIRWAYS FILED AN APPLICATION FOR A SMALL BUSINESS CERTIFICATE WITH THE SMALL BUSINESS ADMINISTRATION, AND ON OCTOBER 2 THE COMPANY ALSO APPEALED FROM THE DETERMINATION OF SEPTEMBER 29. ON OCTOBER 2 THE ADMINISTRATOR OF SMALL BUSINESS ISSUED A SMALL BUSINESS CERTIFICATE TO THE COMPANY "BASED UPON THE INFORMATION SUBMITTED BY SLICK AIRWAYS, INC., IN ITS APPLICATION FOR A SMALL BUSINESS CERTIFICATE, DATED SEPTEMBER 23, 1958, AND ALL SUPPLEMENTAL INFORMATION," AND FURTHER PROVIDING THAT SUCH CERTIFICATION "SHALL BECOME EFFECTIVE AS OF SEPTEMBER 2, 1958.'

IN VIEW OF THESE ACTIONS BY THE SMALL BUSINESS ADMINISTRATION SUBSEQUENT TO SEPTEMBER 24, THE DATE OF YOUR ORIGINAL PROTEST TO THIS OFFICE, IT WOULD APPEAR THAT THE QUESTION NOW TO BE DECIDED BY THIS OFFICE IS WHETHER THE AWARD OF A CONTRACT SET ASIDE FOR SMALL BUSINESS CAN BE CONSIDERED INVALID AFTER THE ISSUANCE OF A SMALL BUSINESS CERTIFICATE WHICH RETROACTIVELY CLASSIFIED SLICK AIRWAYS AS A SMALL BUSINESS CONCERN ON A DATE PRECEDING THE DATE OF BID OPENING.

THE PURPOSE OF THE RULE IN FEDERAL PROCUREMENT THAT BIDS MUST BE RESPONSIVE TO THE TERMS OF THE INVITATION IS TO ASSURE THAT THE CONTRACT WILL BE AWARDED UPON THE SAME TERMS THAT WERE OFFERED TO ALL BIDDERS. FOLLOWS THAT THE PORTION OF IFB 11-626-59-3-CAB WHICH STATED THAT BIDS "RECEIVED FROM FIRMS NOT CLASSIFIED AS SMALL BUSINESS WILL BE CONSIDER NONRESPONSIVE" WAS INTENDED SOLELY TO PREVENT AN AWARD TO, AND PERFORMANCE BY, A BIDDER WHO DID NOT MEET THE CRITERIA FOR SUCH CLASSIFICATION. APPEARS, THEREFORE, THAT THE DECISION OF THIS OFFICE MUST NECESSARILY DEPEND UPON WHETHER THE RETROACTIVE PROVISION IN THE SMALL BUSINESS CERTIFICATE ISSUED ON OCTOBER 2 DID, IN FACT, CONSTITUTE SLICK AIRWAYS A SMALL BUSINESS CONCERN ON SEPTEMBER 2 FOR THE PURPOSE OF BID EVALUATION AND CONTRACT AWARD.

SECTION 8 (B) (6) OF THE SMALL BUSINESS ACT, AS AMENDED BY PUBLIC LAW 85- 536, 72 STAT. 390, 15 U.S.C. 637 (B) (6), AUTHORIZES THE SMALL BUSINESS ADMINISTRATION TO DETERMINE WHICH BUSINESS ENTERPRISES ARE TO BE DESIGNATED AS SMALL BUSINESS CONCERNS AND MAKES ITS DETERMINATIONS IN THESE MATTERS CONCLUSIVE. SPECIFICALLY THAT SECTION PROVIDES THAT " OFFICES OF THE GOVERNMENT * * * SHALL ACCEPT AS CONCLUSIVE THE ADMINISTRATION'S DETERMINATION AS TO WHICH ENTERPRISES ARE TO BE DESIGNATED "SMALL-BUSINESS CONCERNS-" * * *.' THERE IS NO RESTRICTION UPON SUCH AUTHORITY WHICH WOULD PRECLUDE THE ISSUANCE IN GOOD FAITH OF A CERTIFICATE OF SMALL BUSINESS WITH RETROACTIVE EFFECT, AND IN THE ABSENCE OF SUCH RESTRICTION WE ARE AWARE OF NO SOUND BASIS UPON WHICH IT MAY BE ARGUED THAT THE CERTIFICATE ISSUED IN THE INSTANT CASE DID NOT, AS A MATTER OF LAW, CONSTITUTE A CONCLUSIVE DETERMINATION THAT SLICK AIRWAYS WAS A SMALL BUSINESS CONCERN ON SEPTEMBER 2. WHETHER OR NOT SLICK AIRWAYS PROPERLY COULD HAVE CERTIFIED THAT IT HAD LESS THAN 500 EMPLOYEES IS NOT NOW DECISIVE. THE INVITATION PROVIDED AN ALTERNATE CRITERION, IN THE FORM OF A SMALL BUSINESS CERTIFICATE, BY WHICH BIDDERS COULD QUALIFY. INDICATED ABOVE, THE PURPOSE OF INCLUDING THESE CRITERIA IN THE INVITATION WAS TO ASSURE THAT THE CONTRACT WOULD BE AWARDED TO, AND PERFORMED BY, A SMALL BUSINESS CONCERN. ACCORDINGLY, SINCE SLICK AIRWAYS WAS, IN FACT, A CERTIFICATED SMALL BUSINESS CONCERN AS OF SEPTEMBER 2, WE ARE UNABLE TO SAY THAT IT WAS NOT A SMALL BUSINESS CONCERN FOR THE PURPOSE OF BID EVALUATION ON SEPTEMBER 4 AND CONTRACT AWARDS ON SEPTEMBER 15 AND 16.

IN ARRIVING AT SUCH CONCLUSION WE HAVE CONSIDERED ADVICE TO THE EFFECT THAT AN APPLICATION BY SLICK AIRWAYS PRESENTLY PENDING BEFORE THE CIVIL AERONAUTICS BOARD FOR FEDERAL AID TO PERMIT RESUMPTION OF ITS COMMON CARRIER OPERATIONS WILL, IF GRANTED, RESULT IN THE RECALL OF FURLOUGHED EMPLOYEES SUFFICIENT TO RAISE THE TOTAL PERSONNEL OF THE COMPANY TO AT LEAST 1,500 EMPLOYEES. HOWEVER WE ARE OF THE OPINION THAT SUCH POSSIBILITY, OR ITS ACTUAL OCCURRENCE AT SOME FUTURE DATE, WOULD HAVE NO BEARING UPON THE QUESTION OF WHETHER SLICK AIRWAYS IS TO BE CONSIDERED AS A SMALL BUSINESS CONCERN FOR THE PURPOSES OF BID EVALUATION ON SEPTEMBER 4, AND CONTRACT AWARDS ON SEPTEMBER 15 AND 16, 1958.

WE HAVE ALSO CONSIDERED THE FACT THAT THE SELF-CERTIFICATION TO BE EXECUTED BY BIDDERS WHO DID NOT HOLD SMALL BUSINESS CERTIFICATES DID NOT ASK SUCH BIDDERS TO CERTIFY, IN ACCORDANCE WITH THE PROVISION OF 13 CFR 103.3 (D), THAT THEY HAD NOT BEEN DENIED A SMALL BUSINESS CERTIFICATE. HOWEVER, WE ARE UNABLE TO AGREE WITH THE CONTENTION THAT IT WAS INCUMBENT UPON THE CONTRACTING OFFICER, UNDER THE PROVISIONS OF PARAGRAPH 1-703 (A) OF THE ARMED SERVICES PROCUREMENT REGULATION, TO REQUEST SUCH CERTIFICATION FROM BIDDERS PRIOR TO AWARD, OR THAT FAILURE TO DO SO WAS A NONCOMPLIANCE WITH THE PROVISIONS OF ASPR WHICH WOULD DEPRIVE THE CONTRACTING OFFICER, UNDER THE PROVISIONS OF ASPR 1-403 (A), OF AUTHORITY TO MAKE A BINDING AWARD. WE ARE OF THE OPINION THAT ASPR 1-703 (A) IMPOSES NO OBLIGATION UPON THE CONTRACTING OFFICER EXCEPT TO MAKE IT MANDATORY UPON HIM TO ACCEPT AT FACE VALUE SELF CERTIFICATIONS WHICH COVER ALL OF THE THREE FACTORS SET OUT THEREIN. WE ARE NOT AWARE OF ANY REGULATION WHICH WOULD PREVENT THE CONTRACTING OFFICER, IN THE ABSENCE OF PROTEST FROM OTHER BIDDERS, FROM ACCEPTING AT FACE VALUE, AND WITHOUT INVESTIGATION, A CERTIFICATION WHICH DOES NOT INCLUDE A STATEMENT THAT THE BIDDER HAS NOT PREVIOUSLY BEEN DENIED A SMALL BUSINESS CERTIFICATE. SEE THE DEFINITION OF SMALL BUSINESS AS SET OUT IN 13 CFR 103.3 (A) AND ASPR 1 -701.1 (A).

WHILE THE ISSUANCE OF A RETROACTIVE CERTIFICATE IN THE INSTANT CASE HAS RESULTED IN CONSIDERABLE CONFUSION AND DOUBT AMONG BIDDERS, AND IT WOULD APPEAR THAT THE ADOPTION OF SUCH PROCEDURE AS A CONTINUING MATTER WOULD BE EXTREMELY DISRUPTIVE TO ORDERLY SMALL BUSINESS PROCUREMENT, WE ARE NOT UNMINDFUL OF THE FACT THAT BOTH SECTION 103.5 (A) OF THE SMALL BUSINESS ADMINISTRATION REGULATIONS, 13 CFR 103.5 (A), AND PARAGRAPH 1 703 (B) (1) OF THE ARMED SERVICES PROCUREMENT REGULATION SPECIFY THAT PROTESTS AGAINST THE RIGHT OF A BIDDER TO CERTIFY HIMSELF AS SMALL BUSINESS ARE TO BE SUBMITTED TO, AND CONSIDERED BY, THE SMALL BUSINESS ADMINISTRATION PRIOR TO AWARD. WE ARE OF THE OPINION THAT THESE REGULATIONS PLACE THE PRIMARY BURDEN OF QUESTIONING THE SMALL BUSINESS STATUS OF A PARTICULAR BIDDER ON THE REMAINING BIDDERS, RATHER THAN ON THE CONTRACTING OFFICER. PRESUMABLY, IN THE EVENT THE REMAINING BIDDERS IN THIS CASE HAD COMPLIED WITH SUCH REGULATIONS AND PROTESTED THE STATUS OF SLICK AIRWAYS PRIOR TO AWARD, NEITHER DOUBT NOR CONFUSION WOULD HAVE RESULTED. IN THE ABSENCE OF EVIDENCE TO THE CONTRARY, WE MUST ASSUME THAT IF SUCH PROCEDURE HAD BEEN FOLLOWED THE SMALL BUSINESS ADMINISTRATION WOULD HAVE CONSIDERED THE STATUS OF SLICK AIRWAYS PRIOR TO AWARD AND ARRIVED AT THE SAME CONCLUSION THAT WAS REACHED ON OCTOBER 2. UNDER SUCH CIRCUMSTANCES THE AWARDS CLEARLY WOULD THEN HAVE BEEN MADE TO A SMALL BUSINESS CONCERN, EVEN THOUGH THE DETERMINATION WOULD NOT ACTUALLY HAVE BEEN MADE UNTIL AFTER THE DATE OF BID OPENING, AND WOULD THEREFORE NECESSARILY HAVE BEEN RETROACTIVE IN EFFECT. THE FAILURE TO OBTAIN SUCH DETERMINATION FROM THE SMALL BUSINESS ADMINISTRATION PRIOR TO AWARD MUST BE ATTRIBUTED PRIMARILY TO THE REMAINING BIDDERS, AND THE SMALL BUSINESS STATUS OF SLICK AIRWAYS IS NOW SUPPORTED BY A SMALL BUSINESS CERTIFICATE WHICH APPEARS TO HAVE BEEN GIVEN RETROACTIVE EFFECT ONLY BECAUSE OF THE FAILURE TO REQUEST A TIMELY DETERMINATION.