B-147323, JAN. 9, 1962

B-147323: Jan 9, 1962

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DUDLEY AND EASTERWOOD: REFERENCE IS MADE TO A LETTER DATED SEPTEMBER 25. THE SUBJECT INVITATION FOR BIDS WAS ISSUED ON JULY 6. THE FEDERAL AVIATION AGENCY REPORTS THAT 10 BIDS WERE RECEIVED FROM FIRMS THAT REPRESENTED THEMSELVES TO BE SMALL BUSINESSES. IN ITS LETTER OF PROTEST TO OUR OFFICE LEE ELECTRIC STATES THAT PRIOR TO AWARD OF THE CONTRACT TO ACME IT NOTIFIED THE FEDERAL AVIATION AGENCY THAT ACME IN BIDDING ON THE CONTRACT WAS AFFILIATED WITH FISHBACK AND MOORE OF NEW YORK. LEE ELECTRIC FURTHER STATES THAT THE ISSUANCE OF A CERTIFICATE OF COMPETENCY BY THE SBA WAS IMPROPER SINCE SUCH CERTIFICATE CARRIES WITH IT THE REPRESENTATION THAT THE SUBJECT FIRM HAS THE NECESSARY FINANCIAL RESPONSIBILITY AND TECHNICAL QUALIFICATIONS TO PERFORM THE WORK.

B-147323, JAN. 9, 1962

TO MCNUTT, DUDLEY AND EASTERWOOD:

REFERENCE IS MADE TO A LETTER DATED SEPTEMBER 25, 1961, FROM YOUR CLIENT, THE R. E. LEE ELECTRIC COMPANY, INC., NEWINGTON, VIRGINIA, AND YOUR LETTER DATED OCTOBER 5, 1961, PROTESTING THE AWARD OF A CONTRACT BY THE FEDERAL AVIATION AGENCY (FAA) TO THE ACME ELECTRIC COMPANY, INC., FOR AIRFIELD LIGHTING AT DULLES INTERNATIONAL AIRPORT UNDER INVITATION FOR BIDS NO. S2- 24-B1.

THE SUBJECT INVITATION FOR BIDS WAS ISSUED ON JULY 6, 1961, ON THE BASIS OF A TOTAL SET-ASIDE FOR SMALL BUSINESS. IN A LETTER DATED OCTOBER 31, 1961, THE FEDERAL AVIATION AGENCY REPORTS THAT 10 BIDS WERE RECEIVED FROM FIRMS THAT REPRESENTED THEMSELVES TO BE SMALL BUSINESSES; THAT THE APPARENT LOW BIDDER, JOHN E. DELASHMUTT, ADVISED THE AGENCY HE HAD MADE AN ERROR IN PLACING DECIMAL POINTS IN THE UNIT PRICES FOR CERTAIN ITEMS AND THAT THE CORRECTION OF THIS OBVIOUS ERROR DISPLACED HIM AS LOW BIDDER, MAKING ACME ELECTRIC COMPANY, INC., THE LOW BIDDER.

IN ITS LETTER OF PROTEST TO OUR OFFICE LEE ELECTRIC STATES THAT PRIOR TO AWARD OF THE CONTRACT TO ACME IT NOTIFIED THE FEDERAL AVIATION AGENCY THAT ACME IN BIDDING ON THE CONTRACT WAS AFFILIATED WITH FISHBACK AND MOORE OF NEW YORK, A LARGE ELECTRIC COMPANY, AND FOR THIS REASON A QUESTION EXISTED AS TO WHETHER ACME COULD QUALITY AS A SMALL-BUSINESS CONCERN. LEE ELECTRIC ALSO STATES THAT THE SMALL BUSINESS ADMINISTRATION (SBA) UPON REFERRAL OF THE QUESTION BY THE FAA, SUBSEQUENTLY ISSUED A CERTIFICATE OF COMPETENCY IN FAVOR OF ACME AND ACTING UPON THIS CERTIFICATE THE FAA AWARDED THE CONTRACT TO ACME. LEE ELECTRIC FURTHER STATES THAT THE ISSUANCE OF A CERTIFICATE OF COMPETENCY BY THE SBA WAS IMPROPER SINCE SUCH CERTIFICATE CARRIES WITH IT THE REPRESENTATION THAT THE SUBJECT FIRM HAS THE NECESSARY FINANCIAL RESPONSIBILITY AND TECHNICAL QUALIFICATIONS TO PERFORM THE WORK. HOWEVER, LEE ELECTRIC ALLEGES THAT IT WAS INFORMED THAT ACME WAS UNABLE, ON THE BASIS OF ITS OWN FINANCIAL AND CREDIT STATUS, TO OBTAIN THE PERFORMANCE AND PAYMENT BOND REQUIRED UNDER THE CONTRACT AND THAT THE NATIONAL SURETY COMPANY REFUSED TO ISSUE SUCH A BOND TO ACME UNTIL ACME ENTERED INTO AN AFFILIATION WITH FISHBACK AND MOORE. LEE ELECTRIC CONCLUDES THAT IN ITS VIEW THESE CIRCUMSTANCES RAISE TWO QUESTIONS:

"1. WHETHER ACME COULD HAVE QUALIFIED FOR THE CONTRACT ON ITS OWN FINANCIAL STANDING IN VIEW OF THE FACT THAT IT COULD NOT ESTABLISH THE NECESSARY BONDING CAPACITY, AND

"2. WHETHER THE AFFILIATION WITH FISHBACK AND MOORE AMOUNTS TO A JOINT VENTURE ARRANGEMENT WHICH WOULD NECESSARILY DISQUALIFY ACME UNDER THE SIZE STANDARD TEST APPLIED BY THE SMALL BUSINESS ADMINISTRATION.'

IN SUPPLEMENT TO THE STATEMENTS MADE IN YOUR CLIENT'S LETTER, YOUR LETTER OF OCTOBER 5, 1961, MAKES THE FOLLOWING CONTENTIONS:

"SUBSEQUENT TO THE PROTEST FILED BY THE R. E. LEE ELECTRIC COMPANY, THE F.A.A. REFERRED THE MATTER TO THE SMALL BUSINESS ADMINISTRATION, AND THAT AGENCY ON SEPTEMBER 15, 1961 ISSUED A CERTIFICATE OF COMPETENCY IN FAVOR OF THE ACME ELECTRIC CORPORATION. ON THE BASIS OF THIS CERTIFICATE OF COMPETENCY F.A.A. AWARDED THE CONTRACT TO ACME. IT IS OUR VIEW THAT THE CERTIFICATE OF COMPETENCY ISSUED BY S.B.A. DID NOT ANSWER THE MAIN POINT RAISED BY THE R. E. LEE ELECTRIC COMPANY IN ITS PROTEST. THE PROTEST, IT WILL BE NOTED, WAS DIRECTED TO THE QUESTION AS TO WHETHER ACME, IN ITS AFFILIATION WITH FISHBACH AND MOORE, COULD PROPERLY BE CLASSIFIED AS A SMALL BUSINESS FIRM UNDER THE SIZE STANDARD REGULATIONS OF S.B.A. THE CERTIFICATE OF COMPETENCY, AS WE UNDERSTAND IT, GOES ONLY TO THE QUESTION OF FINANCIAL RESPONSIBILITY AND TECHNICAL QUALIFICATIONS.

"IT IS OUR CONTENTION THAT F.A.A. IMPROPERLY AWARDED THE CONTRACT TO ACME WITHOUT HAVING PROPERLY RESOLVED THE PRINCIPAL QUESTION RAISED IN THE R. E. LEE PROTEST. * * *"

A REPORT DATED DECEMBER 5, 1961, FROM THE SMALL BUSINESS ADMINISTRATION RELATES THE FOLLOWING EVENTS WITH REGARD TO THE ACTION TAKEN BY THAT ADMINISTRATION IN CONNECTION WITH THE LEE ELECTRIC PROTEST. THE CASE WAS FIRST BROUGHT TO SBA'S ATTENTION BY A LETTER DATED AUGUST 29, 1961, TO THE SBA RICHMOND REGIONAL OFFICE FROM THE CHIEF, MATERIEL CONTRACTS BRANCH, AVIATION FACILITIES SERVICE, FEDERAL AVIATION AGENCY, IN WHICH SBA WAS REQUESTED TO DETERMINE WHETHER ACME WAS A SMALL BUSINESS AND WHETHER IT WAS COMPETENT AS TO CAPACITY AND CREDIT. BY A LETTER DATED AUGUST 30, 1961, FROM THE ACTING REGIONAL DIRECTOR OF THE SBA RICHMOND REGIONAL OFFICE, ACME WAS REQUESTED TO EXECUTE AN SBA FORM 355, APPLICATION FOR SMALL BUSINESS CERTIFICATE OR SIZE DETERMINATION. ON SEPTEMBER 5, 1961, ACME FILED THE EXECUTED SBA FORM 355 WITH THE SBA RICHMOND REGIONAL OFFICE. ON SEPTEMBER 6, 1961, THE DIRECTOR OF THE SBA RICHMOND OFFICE ADVISED THE FAA BY TELEGRAM THAT HE HAD DETERMINED THAT ACME QUALIFIED AS A SMALL-BUSINESS CONCERN FOR THE PURPOSES OF INVITATION FOR BIDS NO. S2-24 -B1.

SUBSEQUENTLY, ON SEPTEMBER 22, 1961, LEE ELECTRIC FORWARDED A COPY OF AN AUGUST 29, 1961, LETTER IT HAD ADDRESSED TO THE CHIEF OF THE MATERIEL CONTRACTS BRANCH, FAA, AND REQUESTED THE SBA RICHMOND OFFICE TO REOPEN ITS INVESTIGATION ON THE AWARD. THE AUGUST 29 LETTER STATED THAT LEE HAD BEEN INFORMED THAT THE NATIONAL SURETY COMPANY HAD BONDED ACME BECAUSE OF FINANCIAL BACKING BY FISHBACK AND MOORE. IT ALSO STATED LEE'S SUSPICION THAT AGREEMENTS BETWEEN ACME AND FISHBACK AND MOORE MIGHT CONSTITUTE A JOINT VENTURE.

ON SEPTEMBER 25, 1961, THE SBA RICHMOND OFFICE, PURSUANT TO SECTION 121.3 -4 (D) OF THE SMALL BUSINESS SIZE STANDARDS REGULATION (REVISION 2), AS AMENDED, FORWARDED THE ACME FILE TO THE OFFICE OF SMALL BUSINESS SIZE STANDARDS IN WASHINGTON FOR RECONSIDERATION WITH THE ADVICE THAT THE CONTRACT HAD ALREADY BEEN AWARDED TO ACME. THE DIRECTOR, OFFICE OF SMALL BUSINESS SIZE STANDARDS, INFORMED THE SBA RICHMOND OFFICE ON SEPTEMBER 29, 1961, THAT IN PROTEST CASES WHERE THE CONTRACT HAS ALREADY BEEN AWARDED, THE PROTEST SHOULD BE SUBMITTED TO THE GENERAL ACCOUNTING OFFICE SINCE SBA NO LONGER HAS JURISDICTION OVER THE MATTER. THE DIRECTOR NOTED, HOWEVER, THAT THE INFORMATION SUBMITTED BY ACME, UNDER THE PENALTIES OF LAW APPLICABLE TO FURNISHING OF FALSE INFORMATION TO A GOVERNMENT AGENCY, SHOWED NO COMMON OWNERSHIP OR COMMON MANAGEMENT BETWEEN ACME AND FISHBACK AND MOORE AND CONTAINED THE STATEMENT THAT NO CONTRACTUAL RELATIONSHIP EXISTED BETWEEN THE TWO COMPANIES. HE, THEREFORE, CONCURRED WITH THE RICHMOND REGIONAL DIRECTOR'S DETERMINATION, IN THE ABSENCE OF EVIDENCE TO THE CONTRARY, THAT ACME WAS A SMALL BUSINESS FOR THE PURPOSE OF GOVERNMENT PROCUREMENT SINCE ITS AVERAGE ANNUAL RECEIPTS WERE ONLY $236,568 WHICH IS LESS THAT $5,000,000, THE APPLICABLE SIZE STANDARD. THE SBA REPORT CONCLUDES THAT AS OF THIS DATE ACME IS CONSIDERED TO BE A SMALL BUSINESS FOR THE PURPOSE OF GOVERNMENT PROCUREMENT.

WITH REGARD TO THE CERTIFICATE OF COMPETENCY THE REPORT DATED DECEMBER 5, 1961, FROM SBA STATES THAT ACME WAS AWARDED COC-IV-184 ON SEPTEMBER 15, 1961, IN CONNECTION WITH THE SUBJECT INVITATION FOR BIDS. SBA STATES THAT THE EXAMINATION OF THE ACME FILE INDICATED LITTLE REASON TO QUESTION ACME'S CAPACITY, AS THERE WAS EVIDENCE TO SHOW AVAILABLE EQUIPMENT, LABOR, MATERIALS AND APPLICABLE EXPERIENCE. IT IS ALSO STATED THAT THE NATIONAL SURETY CORPORATION AGREED IN A TELEGRAM TO SBA TO AWARD A PERFORMANCE AND PAYMENT BOND TO ACME IN THE EVENT OF CONTRACT AWARD.

THE RECORD ESTABLISHES THAT PRIOR TO AWARD OF THE CONTRACT TO ACME THE SMALL BUSINESS ADMINISTRATION HAD CERTIFIED, ON SEPTEMBER 6, 1961, THE STATUS OF ACME AS A SMALL-BUSINESS CONCERN FOR PURPOSES OF AWARD UNDER IFB NO. S2-24-B1. SUBSEQUENTLY, ON SEPTEMBER 15, 1961, THE SMALL BUSINESS ADMINISTRATION MADE A SEPARATE AND DISTINCT DETERMINATION AS TO ACME'S CAPACITY AND CREDIT AND ISSUED COC-IV-184. ON THE BASIS OF THE RECORD IT IS READILY APPARENT THAT THE QUESTION CONCERNING ACME'S SIZE STATUS, AS WELL AS THE QUESTION CONCERNING ACME'S BUSINESS ADMINISTRATION.

FURTHERMORE, UNDER THE PROVISIONS OF 15 U.S.C. 637 (B) (6) OFFICES OF THE GOVERNMENT HAVING PROCUREMENT POWERS MUST ACCEPT AS CONCLUSIVE AN SBA DETERMINATION AS TO WHICH ENTERPRISES ARE TO BE DESIGNATED SMALL-BUSINESS CONCERNS. COMPARABLE PROVISIONS WITH REGARD TO THE CONCLUSIVENESS OF A CERTIFICATE OF COMPETENCY ARE FOUND IN 15 U.S.C. 637 (B) (7).

THE RECORD BEFORE US DOES NOT REVEAL ANY BASIS UPON WHICH WE COULD OBJECT TO THE AWARD AS MADE. ACCORDINGLY THE PROTEST OF THE R. E. LEE ELECTRIC COMPANY MUST BE, AND IS, DENIED.