B-145644, MAY 26, 1961

B-145644: May 26, 1961

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TO THE SECRETARY OF THE ARMY: WE HAVE A LETTER OF MAY 17. THE INVITATION WAS ISSUED MARCH 3. BIDDERS WERE ADVISED THAT THE CONTRACT HAD BEEN SET ASIDE FOR AWARD TO SMALL BUSINESS BY PARAGRAPH 25 OF THE SPECIAL PROVISIONS READING AS FOLLOWS: "NOTICE OF SMALL BUSINESS SET-ASIDE "BIDS OR PROPOSALS UNDER THIS PROCUREMENT ARE SOLICITED FROM SMALL BUSINESS CONCERNS ONLY AND THIS PROCUREMENT IS TO BE AWARDED ONLY TO ONE OR MORE SMALL BUSINESS CONCERNS. THIS ACTION IS BASED ON A DETERMINATION BY THE CONTRACTING OFFICER ALONE OR IN CONJUNCTION WITH A REPRESENTATIVE OF THE SMALL BUSINESS ADMINISTRATION. THAT IT IS IN THE INTEREST OF MAINTAINING OR MOBILIZING THE NATION'S FULL PRODUCTIVE CAPACITY IN THE INTEREST OF WAR OR NATIONAL DEFENSE PROGRAM.

B-145644, MAY 26, 1961

TO THE SECRETARY OF THE ARMY:

WE HAVE A LETTER OF MAY 17, 1961, WITH ENCLOSURES, FROM THE CHIEF, CONTRACTS DIVISION, IN RESPONSE TO OUR REQUEST DATED APRIL 21, 1961, FOR A REPORT ON A PROTEST BY DAVID M. CREVELING AGAINST AWARD TO HENDERSON, BLACK AND GREENE, INCORPORATED, UNDER INVITATION FOR BIDS NO. 01-044-61- 20.

THE INVITATION WAS ISSUED MARCH 3, 1961, FOR IMPROVEMENTS TO LIVING QUARTERS AT FORT RUCKER, ALABAMA. BIDDERS WERE ADVISED THAT THE CONTRACT HAD BEEN SET ASIDE FOR AWARD TO SMALL BUSINESS BY PARAGRAPH 25 OF THE SPECIAL PROVISIONS READING AS FOLLOWS:

"NOTICE OF SMALL BUSINESS SET-ASIDE

"BIDS OR PROPOSALS UNDER THIS PROCUREMENT ARE SOLICITED FROM SMALL BUSINESS CONCERNS ONLY AND THIS PROCUREMENT IS TO BE AWARDED ONLY TO ONE OR MORE SMALL BUSINESS CONCERNS. THIS ACTION IS BASED ON A DETERMINATION BY THE CONTRACTING OFFICER ALONE OR IN CONJUNCTION WITH A REPRESENTATIVE OF THE SMALL BUSINESS ADMINISTRATION, THAT IT IS IN THE INTEREST OF MAINTAINING OR MOBILIZING THE NATION'S FULL PRODUCTIVE CAPACITY IN THE INTEREST OF WAR OR NATIONAL DEFENSE PROGRAM, OR IN THE INTEREST OF ASSURING THAT A FAIR PROPORTION OF GOVERNMENT PROCUREMENT IS PLACED WITH SMALL BUSINESS CONCERNS. A SMALL BUSINESS CONCERN IS A CONCERN THAT---

(I) IS INDEPENDENTLY OWNED AND OPERATED;

(II) IS NOT DOMINANT IN ITS FIELD OF OPERATION; AND

(III) THE AVERAGE ANNUAL RECEIPTS OF THE CONCERN AND ITS AFFILIATES FOR THE PRECEDING THREE YEARS ARE $5,000,000 OR LESS.

"BIDS OR PROPOSALS RECEIVED FROM FIRMS WHICH ARE NOT SMALL BUSINESS CONCERNS SHALL BE CONSIDERED NONRESPONSIVE.'

THE TWO BIDS SUBMITTED WERE OPENED IN ACCORDANCE WITH THE TERMS OF THE INVITATION ON APRIL 3, 1961. THE LOW BIDDER WAS FOUND TO BE HENDERSON, BLACK AND GREENE. THAT FIRM HAD FILLED IN THE FOLLOWING CERTIFICATIONS APPEARING ON PAGE BS-3 OF THE SCHEDULE TO INDICATE THAT IT WAS A SMALL BUSINESS CONCERN AND HAD NOT BEEN DENIED A SMALL BUSINESS CERTIFICATE:

"BIDDER REPRESENTS: (CHECK APPROPRIATE BOXES)

(1) (A) THAT IT ( ( IS, ( ( IS NOT, A SMALL BUSINESS CONCERN. (FOR THIS PURPOSE, A SMALL BUSINESS CONCERN IS ONE THAT IS NOT DOMINANT IN ITS FIELD OF OPERATION AND, WITH ITS AFFILIATES, EMPLOYS FEWER THAN 500 EMPLOYEES, OR IS CERTIFIED AS A SMALL BUSINESS CONCERN BY THE SMALL BUSINESS ADMINISTRATION.)

(B) THAT IT ( ( HAS, ( ( HAS NOT, PREVIOUSLY BEEN DENIED A SMALL

"A SMALL BUSINESS CONCERN IN THE CONSTRUCTION INDUSTRY FOR THE PURPOSE OF GOVERNMENT PROCUREMENT IS A CONCERN THAT (1) IS INDEPENDENTLY OWNED AND OPERATED (2) IS NOT DOMINANT IN ITS FIELD OF OPERATION, AND (3) THE AVERAGE ANNUAL RECEIPTS OF THE CONCERN AND ITS AFFILIATES FOR THE PRECEDING THREE YEARS ARE $5,000,000 OF LESS.'

AWARD WAS MADE TO THE LOW BIDDER ON APRIL 4, 1961, THE DAY AFTER OPENING. ON THAT SAME DAY, APRIL 4, 1961, THE OTHER BIDDER, DAVID M. CREVELING, SENT A TELEGRAM TO THE SMALL BUSINESS ADMINISTRATION PROTESTING THE AWARD ON THE BASIS THAT HENDERSON, BLACK AND GREENE WAS NOT A SMALL BUSINESS AND THEREFORE WAS NOT ELIGIBLE FOR AWARD UNDER PARAGRAPH 25. CREVELING ALSO PROTESTED THE AWARD TO OUR OFFICE BY LETTER OF APRIL 14, 1961. THIRD ARMY HEADQUARTERS ISSUED AN ORDER ON APRIL 24, 1961, DIRECTING THE CONTRACTOR TO STOP WORK PENDING THE OUTCOME OF THE PROTEST.

THE SMALL BUSINESS ADMINISTRATION HAD UNDERTAKEN TO LOOK INTO THE MATTER UPON RECEIPT OF CREVELING'S TELEGRAM BUT DETERMINED, AFTER LEARNING THAT THE AWARD HAD ALREADY BEEN MADE, TO CHECK THE CONTRACTOR'S STATUS AS A SMALL BUSINESS ONLY FOR PURPOSES OF FUTURE PROCUREMENTS. HOWEVER, WHEN ADVISED OF THE STOP ORDER THE SMALL BUSINESS ADMINISTRATION DECIDED TO HANDLE THE MATTER EXPEDITIOUSLY FOR APPLICATION TO THE PROCUREMENT IN QUESTION. AFTER LOOKING INTO THE FACTS THE SBA REGIONAL DIRECTOR AT ATLANTA, GEORGIA, ANNOUNCED HIS DETERMINATION IN A LETTER OF MAY 2, 1961, THAT FOUR OTHER FIRMS WERE AFFILIATES OF HENDERSON, BLACK AND GREENE AND THEREFORE THAT THE CONTRACTOR DID NOT QUALIFY AS A SMALL BUSINESS.

UNDER SECTION 8 (B) (6) OF THE SMALL BUSINESS ACT, AS AMENDED, 15 U.S.C. 637 (B) (6), THE SMALL BUSINESS ADMINISTRATOR IS AUTHORIZED---

"/6) TO DETERMINE WITHIN ANY INDUSTRY THE CONCERNS, FIRMS, PERSONS, CORPORATIONS, PARTNERSHIPS, COOPERATIVES, OR OTHER BUSINESS ENTERPRISES WHICH ARE TO BE DESIGNATED ,SMALL-BUSINESS CONCERNS" FOR THE PURPOSE OF EFFECTUATING THE PROVISIONS OF THIS ACT. TO CARRY OUT THIS PURPOSE THE ADMINISTRATOR, WHEN REQUESTED TO DO SO, SHALL ISSUE IN RESPONSE TO EACH SUCH REQUEST AN APPROPRIATE CERTIFICATE CERTIFYING AN INDIVIDUAL CONCERN AS A "SMALL-BUSINESS CONCERN" IN ACCORDANCE WITH THE CRITERIA EXPRESSED IN THIS ACT. ANY SUCH CERTIFICATE SHALL BE SUBJECT TO REVOCATION WHEN THE CONCERN COVERED THEREBY CEASES TO BE A "SMALL-BUSINESS CONCERN.' OFFICES OF THE GOVERNMENT HAVING PROCUREMENT OR LENDING POWERS, OR ENGAGING IN THE DISPOSAL OF FEDERAL PROPERTY OR ALLOCATING MATERIALS OR SUPPLIES, OR PROMULGATING REGULATIONS AFFECTING THE DISTRIBUTION OF MATERIALS OR SUPPLIES, SHALL ACCEPT AS CONCLUSIVE THE ADMINISTRATION'S DETERMINATION AS TO WHICH ENTERPRISES ARE TO BE DESIGNATED "SMALL-BUSINESS CONCERNS," AS AUTHORIZED AND DIRECTED UNDER THIS PARAGRAPH; * * *"

THE DETERMINATIONS OF THE SMALL BUSINESS ADMINISTRATION IN THESE MATTERS HAVE CONSISTENTLY BEEN REGARDED AS BINDING AND CONCLUSIVE. SEE 37 COMP. GEN. 679.

IN VIEW OF THE SMALL BUSINESS ADMINISTRATION DETERMINATION IN THIS CASE, THE PROVISIONS OF THE ACT, AND THE RESTRICTION OF ELIGIBLE BIDDERS TO SMALL BUSINESS CONCERNS, IT IS OUR POSITION THAT A LEGAL AND BINDING CONTRACT COULD NOT BE MADE WITH A FIRM WHICH IN FACT HAS BEEN FOUND BY THE SMALL BUSINESS ADMINISTRATION NOT TO HAVE BEEN A SMALL BUSINESS WHEN THE CONTRACT WAS ENTERED INTO. 34 COMP. GEN. 115, 117. SEE ALSO B-138415, SEPTEMBER 24, 1959. ACCORDINGLY THE AWARD SHOULD BE CANCELED.

IN THIS CASE THE PROTESTING BIDDER HAS ALLEGED FACTS TENDING TO ESTABLISH THAT THE UNUSUAL SPEED IN MAKING AWARD WAS DESIGNED TO PREVENT THE BIDDER FROM QUESTIONING THE SMALL BUSINESS STATUS OF THE LOW BIDDER UNDER ASPR 1- 703 (B) (1). IT APPEARS THAT THE AWARD WAS TECHNICALLY PROPER SINCE UNDER ASPR 1-703 (A) THE CONTRACTING OFFICER MAY ACCEPT SELF-CERTIFICATIONS AS TO SIZE AT FACE VALUE AND ANY OTHER PARTY MUST, UNDER ASPR 1-703 (B) (1), QUESTION SUCH CERTIFICATION IN WRITING TO BOTH THE SMALL BUSINESS ADMINISTRATION AND THE CONTRACTING OFFICER PRIOR TO AWARD. HOWEVER, THE CIRCUMSTANCES LEND CREDENCE TO THE PROTESTING BIDDER'S ALLEGATION; AND IN OUR VIEW IT IS CONTRARY TO THE INTENT OF THE SMALL BUSINESS ACT TO ACCELERATE THE AWARD PROCESS TO CIRCUMVENT A BIDDER'S RIGHT TO QUESTION A CERTIFICATION AS TO SIZE. WE BELIEVE THAT THIS VIEWPOINT SHOULD BE BROUGHT TO THE ATTENTION OF CONTRACTING OFFICERS.