B-147020, NOV. 17, 1961

B-147020: Nov 17, 1961

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TO PACKAGE MACHINERY COMPANY: REFERENCE IS MADE TO YOUR LETTER OF AUGUST 18. PARAGRAPH SP1-01 OF THE SPECIAL PROVISIONS OF THE INVITATION PROVIDED THAT THE PROCUREMENT WOULD BE RESTRICTED TO SMALL BUSINESS CONCERNS AND THAT BIDS OR PROPOSALS RECEIVED FROM FIRMS WHICH ARE NOT SMALL BUSINESS CONCERNS SHALL BE CONSIDERED NONRESPONSIVE. IT IS REPORTED THAT FOUR BIDS WERE RECEIVED ON THE AUTOMATIC WRAPPING MACHINE. THAT TWO OF THESE BIDS WERE REJECTED BECAUSE THE BIDDERS DID NOT OFFER EQUIPMENT MEETING THE REQUIREMENTS OF THE SPECIFICATIONS. THAT THE THIRD BID WAS SUBMITTED BY YOUR FIRM. THAT YOUR BID WAS REJECTED BECAUSE OF YOUR CLASSIFICATION AS A LARGE BUSINESS. THAT THE FOURTH BID WAS SUBMITTED BY THE OLIVER MACHINERY COMPANY WHO.

B-147020, NOV. 17, 1961

TO PACKAGE MACHINERY COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 18, 1961, WITH ENCLOSURES, PROTESTING THE ACTION OF THE DEPARTMENT OF THE AIR FORCE IN AWARDING CONTRACT NO. AF24/604/-1573 TO THE OLIVER MACHINERY COMPANY.

THE BASE PROCUREMENT OFFICE, MALMSTROM AIR FORCE BASE, MONTANA, BY INVITATION NO. 24-604-61-72, REQUESTED BIDS FOR FURNISHING ONE AUTOMATIC MEAT AND PRODUCE WRAPPING MACHINE, ITEM 2. PARAGRAPH SP1-01 OF THE SPECIAL PROVISIONS OF THE INVITATION PROVIDED THAT THE PROCUREMENT WOULD BE RESTRICTED TO SMALL BUSINESS CONCERNS AND THAT BIDS OR PROPOSALS RECEIVED FROM FIRMS WHICH ARE NOT SMALL BUSINESS CONCERNS SHALL BE CONSIDERED NONRESPONSIVE.

IT IS REPORTED THAT FOUR BIDS WERE RECEIVED ON THE AUTOMATIC WRAPPING MACHINE; THAT TWO OF THESE BIDS WERE REJECTED BECAUSE THE BIDDERS DID NOT OFFER EQUIPMENT MEETING THE REQUIREMENTS OF THE SPECIFICATIONS; THAT THE THIRD BID WAS SUBMITTED BY YOUR FIRM, BUT THAT YOUR BID WAS REJECTED BECAUSE OF YOUR CLASSIFICATION AS A LARGE BUSINESS; AND THAT THE FOURTH BID WAS SUBMITTED BY THE OLIVER MACHINERY COMPANY WHO, ON THE FACE OF THE BID FORM, CERTIFIED ITSELF AS A SMALL BUSINESS CONCERN. IN ACCORDANCE WITH THE PROVISIONS OF SECTION 1-703 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), THE CONTRACTING OFFICE ACCEPTED AT FACE VALUE THE ABOVE CERTIFICATION BY THE OLIVER MACHINERY COMPANY.

THE RECORD INDICATES THAT UPON RECEIPT OF A LETTER DATED MARCH 9, 1961, FROM YOU, IN WHICH YOU QUESTIONED THE STATUS OF THE OLIVER MACHINERY COMPANY AS A SMALL BUSINESS CONCERN, THE CONTRACTING OFFICE CONTACTED, BY TELEPHONE, A REPRESENTATIVE OF THAT COMPANY WHO STATED THAT THE COMPANY WAS SMALL BUSINESS AND THAT IT HAD NEVER BEEN DENIED SMALL BUSINESS STATUS BY THE SMALL BUSINESS ADMINISTRATION (SBA). ON APRIL 10, 1961, A CONTRACT FOR FURNISHING THE AUTOMATIC WRAPPING MACHINE WAS AWARDED TO THE OLIVER MACHINERY COMPANY.

BY LETTER DATED MAY 11, 1961, YOU PROTESTED THE AWARD OF A CONTRACT TO THE OLIVER MACHINERY COMPANY ON THE GROUND THAT YOU HAD STRONG EVIDENCE THAT THE COMPANY CANNOT MEET THE REQUIREMENTS OF A SMALL BUSINESS AS DEFINED IN PARAGRAPH SP1-01 OF THE SPECIAL PROVISIONS OF THE INVITATION, PARTICULARLY PART (III) RELATING TO ANNUAL RECEIPTS OVER A PERIOD OF THREE YEARS. IT IS REPORTED THAT UPON RECEIPT OF YOUR LETTER OF MAY 11, 1961, THE CONTRACTING OFFICE CONTACTED THE DETROIT REGIONAL OFFICE OF THE SMALL BUSINESS ADMINISTRATION BY TELEPHONE AND THAT MR. KRAFT OF THAT OFFICE INFORMED THE CONTRACTING OFFICER THAT THE OFFICE RECORDS INDICATE THAT THE OLIVER MACHINERY COMPANY WAS CONSIDERED A SMALL BUSINESS.

PARAGRAPH SP1-01 OF THE SPECIAL PROVISIONS OF THE INVITATION PROVIDES 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 PROGRAMS 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 OPERATIONS; AND

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

"THE RIGHT IS RESERVED TO REJECT ANY OR ALL BIDS OR PROPOSALS WHEN IT IS IN THE INTEREST OF THE GOVERNMENT TO DO SO. BIDS OR PROPOSALS RECEIVED FROM FIRMS WHICH ARE NOT SMALL BUSINESS CONCERNS SHALL BE CONSIDERED NON- RESPONSIVE.'

IT IS REPORTED THAT THE ABOVE NOTICE OF SMALL BUSINESS SET-ASIDE IS THE NOTICE USED IN CONSTRUCTION CONTRACTS AND THAT THE FOLLOWING SMALL BUSINESS SET-ASIDE SHOULD HAVE BEEN USED INSTEAD OF THE SPECIAL INDUSTRY DEFINITION:

"NOTICE OF SMALL BUSINESS SET-ASIDE (MAR 1960)

"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 PROGRAMS, 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, IS NOT DOMINANT IN ITS FIELD OF OPERATION AND, WITH ITS AFFILIATES, EMPLOYS FEWER THAN 500 EMPLOYEES, OR

(II) IS CERTIFIED AS A SMALL BUSINESS CONCERN BY THE SMALL BUSINESS ADMINISTRATION.

IN ADDITION TO MEETING THESE CRITERIA, A MANUFACTURER OR A REGULAR DEALER SUBMITTING BIDS OR PROPOSALS IN HIS OWN NAME MUST AGREE TO FURNISH IN THE PERFORMANCE OF THE CONTRACT END ITEMS MANUFACTURED OR PRODUCED IN THE UNITED STATES, ITS POSSESSIONS, OR PUERTO RICO, BY SMALL BUSINESS CONCERNS; PROVIDED, THAT THIS ADDITIONAL REQUIREMENT DOES NOT APPLY IN CONNECTION WITH CONSTRUCTION OR SERVICE CONTRACTS. BIDS OR PROPOSALS RECEIVED FROM FIRMS WHICH ARE NOT SMALL BUSINESS CONCERNS SHALL BE CONSIDERED NONRESPONSIVE.'

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 WHICH 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-136751, SEPTEMBER 25, 1958. SEE ALSO 35 COMP. GEN. 233 AND 37 ID. 679. NO EVIDENCE TO SUPPORT SUCH A DETERMINATION HAS BEEN SUBMITTED IN THIS INSTANCE.

IN VIEW OF THE FOREGOING, WE MUST CONCLUDE THAT THERE HAS BEEN PRESENTED NO BASIS WHICH WOULD JUSTIFY A DETERMINATION BY US THAT THE AWARD TO THE OLIVER MACHINERY COMPANY BY THE DEPARTMENT OF THE AIR FORCE WAS IMPROPER.