B-144614, JAN. 5, 1961

B-144614: Jan 5, 1961

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UNDER THE TERMS OF THE INVITATION THE PROCUREMENT WAS LIMITED TO SMALL BUSINESS FIRMS. BIDS WERE OPENED ON NOVEMBER 7. IT WAS DETERMINED THAT THE LOWEST RESPONSIVE BID HAD BEEN SUBMITTED BY THE F. PROPOSES TO SUBCONTRACT A MATERIAL PORTION OF THE WORK TO A FIRM WHICH YOU ALLEGE IS A LARGE BUSINESS. IN THE SUBMISSION IT WAS SPECIFICALLY NOTED THAT THE VALUE OF THE OPERATIONS PROPOSED TO BE PERFORMED BY THE LOW BIDDER ITSELF WOULD AMOUNT TO JUST UNDER 20 PERCENT OF THE BID PRICE. THE SMALL BUSINESS ADMINISTRATION IS EMPOWERED TO DETERMINE WHAT FIRMS WITHIN ANY INDUSTRY ARE TO BE DESIGNATED AS SMALL BUSINESS CONCERNS FOR PURPOSES OF GOVERNMENT PROCUREMENT. SUCH DETERMINATIONS ARE CONCLUSIVE UPON THE PROCUREMENT OFFICERS OF THE GOVERNMENT.

B-144614, JAN. 5, 1961

TO PRECISION METAL CRAFT, INCORPORATED:

WE REFER AGAIN TO YOUR TELEGRAM OF DECEMBER 8 AND YOUR LETTER OF DECEMBER 10, 1960, PROTESTING AGAINST THE AWARD OF A CONTRACT TO THE APPARENT LOW BIDDER UNDER POST OFFICE DEPARTMENT INVITATION NO. 1393, ISSUED SEPTEMBER 28, 1960, FOR THE PROCUREMENT OF 15,000 UTILITY CARTS, POST OFFICE DEPARTMENT ITEM NO. 1075. UNDER THE TERMS OF THE INVITATION THE PROCUREMENT WAS LIMITED TO SMALL BUSINESS FIRMS.

IN ACCORDANCE WITH THE PROVISIONS OF THE INVITATION, AS AMENDED, BIDS WERE OPENED ON NOVEMBER 7, 1960, AND IT WAS DETERMINED THAT THE LOWEST RESPONSIVE BID HAD BEEN SUBMITTED BY THE F. H. LANGSENKAMP COMPANY. YOU PROTEST THE PROPOSED AWARD TO THAT FIRM ON THE BASES (1) THAT SINCE THE COMPANY, ALTHOUGH ITSELF A SMALL BUSINESS, PROPOSES TO SUBCONTRACT A MATERIAL PORTION OF THE WORK TO A FIRM WHICH YOU ALLEGE IS A LARGE BUSINESS, AN AWARD TO LANGSENKAMP WOULD BE CONTRARY TO THE PROVISION OF THE INVITATION LIMITING AWARDS TO SMALL BUSINESS CONCERNS; AND (2) THAT THE FIRM IMPROPERLY CERTIFIED ITSELF TO BE A MANUFACTURER OF THIS TYPE OF PRODUCT IN ITS BID.

THE POST OFFICE DEPARTMENT, BY LETTER OF DECEMBER 21, 1960, SUBMITTED THE QUESTION OF LANGSENKAMP'S QUALIFICATIONS AS A SMALL BUSINESS FOR THIS PROCUREMENT TO THE SMALL BUSINESS ADMINISTRATION. IN THE SUBMISSION IT WAS SPECIFICALLY NOTED THAT THE VALUE OF THE OPERATIONS PROPOSED TO BE PERFORMED BY THE LOW BIDDER ITSELF WOULD AMOUNT TO JUST UNDER 20 PERCENT OF THE BID PRICE. THE DEPUTY ADMINISTRATOR OF THE SMALL BUSINESS ADMINISTRATION REPLIED THAT THE LOW BIDDER COULD PROPERLY CERTIFY ITSELF AS A SMALL BUSINESS CONCERN, PROVIDED THAT IT DID NOT EMPLOY MORE THAN 500 PERSONS AS SPECIFIED IN THE APPLICABLE SMALL BUSINESS REGULATIONS. SEE 13 C.F.R. 121.3-8 (A).

UNDER THE TERMS OF THE SMALL BUSINESS ACT, AS AMENDED, 15 U.S.C. 637 (B) (6), THE SMALL BUSINESS ADMINISTRATION IS EMPOWERED TO DETERMINE WHAT FIRMS WITHIN ANY INDUSTRY ARE TO BE DESIGNATED AS SMALL BUSINESS CONCERNS FOR PURPOSES OF GOVERNMENT PROCUREMENT, AND SUCH DETERMINATIONS ARE CONCLUSIVE UPON THE PROCUREMENT OFFICERS OF THE GOVERNMENT. WE HAVE CONSISTENTLY TAKEN THE POSITION THAT WE HAVE NO AUTHORITY TO QUESTION THE SIZE DETERMINATIONS OF THE SMALL BUSINESS ADMINISTRATION, EXCEPT UPON CLEAR AND CONVINCING PROOF THAT THE FINDING IS ARBITRARY OR CLEARLY ERRONEOUS, B-036751, SEPTEMBER 25, 1958. SEE ALSO 35 COMP. GEN. 233. EVIDENCE TO SUPPORT SUCH A DETERMINATION HAS BEEN SUBMITTED IN THIS INSTANCE. AS TO THE STATUS OF THE LANGSENKAMP CONCERN AS A SMALL BUSINESS MANUFACTURER, THE DEPUTY ADMINISTRATOR STATED:

"THE COMPANY'S LETTER OF DECEMBER 2, 1960, REPORTS THAT 19.9 PERCENT OF THE CONTRACT WOULD BE MANUFACTURED BY LANGSENKAMP, WITH THE BALANCE OF THE COMPONENTS OBTAINED FROM OTHER SOURCES, LARGE AND SMALL. THE APPLICANT CLEARLY ADDS VALUE TO THE CONTRACT BOTH BY MANUFACTURING AND ASSEMBLING CERTAIN OF THE KEY COMPONENTS OF THE UTILITY CART. THEREFORE, FOR THE PURPOSE OF IFB 1393, IN THIS RESPECT THE F. H. LANGSENKAMP COMPANY QUALIFIES AS A SMALL BUSINESS CONCERN.'

WITH RESPECT TO YOUR CONTENTION THAT THE LOW BIDDER, CONTRARY TO THE CERTIFICATION IN HIS BID, CANNOT QUALIFY AS A MANUFACTURER WITH RESPECT TO THE ITEM IN QUESTION UNDER THE WALSH-HEALEY ACT, AS AMENDED, 41 U.S.C. 35, ET SEQ., WE ADVISED YOU IN OUR LETTER OF DECEMBER 16, 1960, THAT THE QUESTION WHETHER A FIRM QUALIFIES AS A MANUFACTURER UNDER THAT ACT IS ONE FOR DETERMINATION IN THE FIRST INSTANCE BY THE CONTRACTING OFFICER, SUBJECT TO REVIEW BY THE SECRETARY OF LABOR. NO AUTHORITY TO REVIEW THE CONTRACTING OFFICER'S DETERMINATION WITH REGARD TO THIS MATTER RESTS IN OUR OFFICE. SEE B 123889, MAY 20, 1955. FOR YOUR GENERAL INFORMATION, HOWEVER, WE WOULD LIKE TO POINT OUT OUR HOLDING AT 39 COMP. GEN. 435 THAT A FIRM WHICH PERFORMS WORK ON, AND ADDS MATERIAL TO, A PRODUCT WHICH IS SMALL IN COMPARISON TO THE VALUE OF THE FINISHED PRODUCT MAY NEVERTHELESS QUALIFY AS A MANUFACTURER OF THE END ITEMS. FURTHER, IT IS OUR POSITION THAT NOTHING IN THE WALSH-HEALEY ACT PROHIBITS AN AWARD TO A MANUFACTURER WHO CONTEMPLATES SUBCONTRACTING. 34 COMP. GEN. 595.

IN VIEW OF THE FOREGOING, WE MUST CONCLUDE THAT THERE HAS BEEN PRESENTED NO BASIS WHICH WOULD JUSTIFY A DETERMINATION BY US THAT THE PROPOSED AWARD TO THE LANGSENKAMP COMPANY BY THE POST OFFICE DEPARTMENT WOULD BE IMPROPER.