B-144876, MAR. 1, 1961

B-144876, MAR. 1, 1961

TO MEDICAL FABRICS COMPANY, INC.:

REFERENCE IS MADE TO YOUR TELEGRAM OF JANUARY 23 AND YOUR CONFIRMING LETTER OF JANUARY 26, 1961, PROTESTING AGAINST THE AWARD OF A CONTRACT TO PAULIS SILK COMPANY FOR THE SET-ASIDE PORTION UNDER INVITATION NO. IFB-32- 76-61 ISSUED BY THE MILITARY MEDICAL SUPPLY AGENCY, BROOKLYN, NEW YORK, UNDER DATE OF JANUARY 3, 1961. YOU STATE YOUR PROTEST "UPON THE GROUND THAT IT (PAULIS SILK COMPANY) IS NOT CURRENTLY QUALIFIED UNDER PRESENT APPLICABLE LAW AND REGULATION AS A SMALL BUSINESS.' HOWEVER, YOU HAVE NOT SPECIFICALLY MENTIONED ANY RESPECT IN WHICH PAULIS SILK COMPANY FAILS TO QUALIFY AS A SMALL BUSINESS.

THE INVITATION REQUESTED BIDS--- TO BE OPENED JANUARY 23, 1961--- FOR FURNISHING FOUR ITEMS OF COTTON ELASTIC BANDAGES OF VARIOUS SIZES, TO BE DELIVERED IN SPECIFIED AMOUNTS FROM APRIL TO SEPTEMBER 1961. IDENTICAL QUANTITIES OF BANDAGES WERE COVERED BY PARAGRAPH 91.2-1A OF THE INVITATION, WHICH PROVIDED IN PART WITH RESPECT TO SET-ASIDE FOR LABOR SURPLUS AREAS:

"THE ADDITIONAL QUANTITIES OF THE ITEM/S) SET FORTH BELOW HAVE BEEN SET ASIDE FOR AWARD ONLY TO ONE OR MORE LABOR SURPLUS AREA CONCERNS, AND, TO A LIMITED EXTENT, TO SMALL BUSINESS CONCERNS WHICH DO NOT QUALIFY AS LABOR SURPLUS AREA CONCERNS. NEGOTIATIONS FOR AWARD OF THIS SET-ASIDE PORTION WILL BE CONDUCTED ONLY WITH RESPONSIBLE LABOR SURPLUS AREA CONCERNS (AND SMALL BUSINESS CONCERNS TO THE EXTENT INDICATED BELOW) WHO HAVE SUBMITTED RESPONSIVE BIDS OR PROPOSALS ON THE NON-SET-ASIDE PORTION AT A UNIT PRICE WITHIN 120 PERCENT OF THE HIGHEST AWARD MADE ON THE NON-SET-ASIDE PORTION. NEGOTIATIONS FOR THE SET-ASIDE PORTION WILL BE CONDUCTED WITH SUCH BIDDERS IN THE FOLLOWING ORDER OF PRIORITY:

"GROUP 1. PERSISTENT LABOR SURPLUS AREA CONCERNS WHICH ARE ALSO SMALL BUSINESS CONCERNS.

"GROUP 2. OTHER PERSISTENT LABOR SURPLUS AREA CONCERNS.

"GROUP 3. SUBSTANTIAL LABOR SURPLUS AREA CONCERNS WHICH ARE ALSO SMALL BUSINESS CONCERNS.

"GROUP 4. OTHER SUBSTANTIAL LABOR SURPLUS AREA CONCERNS.

"GROUP 5. SMALL BUSINESS CONCERNS WHICH ARE NOT LABOR SURPLUS AREA CONCERNS.

"WITHIN EACH OF THE ABOVE GROUPS, NEGOTIATIONS WITH SUCH CONCERNS WILL BE IN THE ORDER OF THEIR BIDS ON THE NON-SET-ASIDE PORTION, BEGINNING WITH THE LOWEST RESPONSIVE BID. THE SET-ASIDE PORTION WILL BE AWARDED AT THE HIGHEST UNIT PRICE AWARDED ON THE NON-SET-ASIDE PORTION, ADJUSTED TO REFLECT TRANSPORTATION AND OTHER COST FACTORS WHICH WERE CONSIDERED IN EVALUATING BIDS ON THE NON-SET-ASIDE PORTION. HOWEVER, THE GOVERNMENT RESERVES THE RIGHT NOT TO CONSIDER TOKEN BIDS OR OTHER DEVICES DESIGNED TO SECURE AN UNFAIR ADVANTAGE OVER OTHER BIDDERS ELIGIBLE FOR THE SET-ASIDE PORTION.

"/3) A "SMALL BUSINESS CONCERN" IS A CONCERN THAT (I) IS CERTIFIED AS A SMALL BUSINESS CONCERN BY THE SMALL BUSINESS ADMINISTRATION, OR (II) IS INDEPENDENTLY OWNED AND OPERATED, IS NOT DOMINANT IN ITS FIELD OF OPERATIONS AND, WITH ITS AFFILIATES, EMPLOYS FEWER THAN 500 EMPLOYEES. ADDITION TO MEETING THESE CRITERIA, A MANUFACTURER OR REGULAR DEALER SUBMITTING BIDS OR PROPOSALS IN ITS OWN NAME MUST AGREE TO FURNISH IN THE PERFORMANCE OF THE CONTRACT END ITEMS MANUFACTURED OR PRODUCED IN THE UNITED STATES, ITS TERRITORIES, ITS POSSESSIONS, OR PUERTO RICO, BY SMALL BUSINESS CONCERNS; PROVIDED, THAT THIS ADDITIONAL REQUIREMENT DOES NOT APPLY IN CONNECTION WITH CONSTRUCTION OR SERVICE CONTRACTS.'

IN RESPONSE TO THE INVITATION, PAULIS SILK COMPANY SUBMITTED THE LOW BID ON EACH OF THE FOUR ITEMS IN A TOTAL AMOUNT OF $121,810.44 AND YOU SUBMITTED THE SECOND LOW BID IN THE TOTAL AMOUNT OF $128,942.55. IN ITS BID, PAULIS SILK COMPANY STATED THAT IT WAS A MANUFACTURER OF THE SUPPLIES BID UPON AND THAT THE AGGREGATE NUMBER OF EMPLOYEES OF THE COMPANY AND ITS AFFILIATES WAS LESS THAN 500. AWARD WAS MADE TO PAULIS SILK COMPANY ON ALL ITEMS OF THE NON-SET-ASIDE PORTION.

BY A TELEGRAM DATED JANUARY 23, 1961, TO THE CONTRACTING OFFICER, YOU PROTESTED AGAINST ANY AWARD TO PAULIS SILK COMPANY FOR THE SET ASIDE PORTION UPON THE GROUND THAT PAULIS SILK COMPANY WAS "NOT CURRENTLY QUALIFIED UNDER PRESENT APPLICABLE LAW AND REGULATION AS A SMALL BUSINESS.' THE CONTRACTING OFFICER TRANSMITTED TO THE SMALL BUSINESS ADMINISTRATION OFFICE IN NEW YORK A COPY OF YOUR TELEGRAM AND REQUESTED AN INVESTIGATION OF THE STATUS OF PAULIS SILK COMPANY AS A SMALL BUSINESS. IN A LETTER DATED JANUARY 26, 1961, TO THE CONTRACTING OFFICER, THE REGIONAL DIRECTOR, SMALL BUSINESS ADMINISTRATION, STATED THAT PAULIS SILK COMPANY, INCLUDING ALL AFFILIATES, HAD LESS THAN 500 EMPLOYEES AND WAS DETERMINED TO BE SMALL BUSINESS FOR ANY AWARD ACTION UNDER INVITATION NO. IFB-32-76-61, STATING ALSO THAT YOUR TELEGRAM WAS "AN ASSUMPTION WITHOUT BASIC FACTS FOR MAKING A CHALLENGE.' SIMILAR INFORMATION WAS FURNISHED TO YOU BY THE REGIONAL DIRECTOR IN HIS LETTER OF JANUARY 26, 1961, A COPY OF WHICH IS IN THE FILE.

IT IS REPORTED THAT AWARD HAS BEEN MADE TO PAULIS SILK COMPANY FOR A PORTION OF THE SET-ASIDE QUANTITIES OF BANDAGES PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION 2-407.9 (B) (3) IN ORDER TO AVOID DELAY IN DELIVERY OF THAT PORTION.

IN VIEW OF THE FOREGOING, THERE APPEARS NO PROPER BASIS FOR OBJECTION BY OUR OFFICE TO THE ACTION HERETOFORE TAKEN BY THE MILITARY MEDICAL SUPPLY AGENCY IN THIS MATTER OR TO GIVING CONSIDERATION TO THE PAULIS SILK COMPANY IN NEGOTIATING A CONTRACT FOR THE REMAINDER OF THE SET-ASIDE PORTION.