B-147333, NOV. 21, 1961

B-147333: Nov 21, 1961

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TO ASSOCIATED GENERAL CONTRACTORS OF AMERICA: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF OCTOBER 3. YOU CONTEND THAT THERE WERE NOT ENOUGH SMALL -BUSINESS FIRMS AVAILABLE TO PROVIDE PROPER COMPETITION AND THAT THE SMALL -BUSINESS SET-ASIDE RESULTED IN EXCESSIVE COSTS TO THE GOVERNMENT. THE INVITATION INCLUDED A NOTICE OF TOTAL SMALL-BUSINESS SET-ASIDE AS FOLLOWS: "BIDS OR PROPOSALS UNDER THIS PROCUREMENT WAS SOLICITED FROM SMALL BUSINESS CONCERNS ONLY AND THIS PROCUREMENT IS TO BE AWARDED ONLY TO A SMALL BUSINESS CONCERN. THIS ACTION IS BASED ON A DETERMINATION BY THE CONTRACTING OFFICER AND THE SMALL BUSINESS ADMINISTRATION UNDER THE AUTHORITY OF SECTION 15 OF THE SMALL BUSINESS ACT. A SMALL BUSINESS CONCERN IS ANY FIRM WHICH MEETS THE CRITERIA ESTABLISHED BY TITLE 13.

B-147333, NOV. 21, 1961

TO ASSOCIATED GENERAL CONTRACTORS OF AMERICA:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF OCTOBER 3, 1961, PROTESTING AGAINST AWARD BY THE FEDERAL AVIATION AGENCY TO GRUNLEY WALSH CONSTRUCTION COMPANY, INC., FOR YARDWORK AT AND ADJACENT TO DULLES INTERNATIONAL AIRPORT UNDER INVITATION FOR BIDS NO. S2-28-B1 ISSUED JUNE 22, 1961, BY THE FEDERAL AVIATION AGENCY. YOU CONTEND THAT THERE WERE NOT ENOUGH SMALL -BUSINESS FIRMS AVAILABLE TO PROVIDE PROPER COMPETITION AND THAT THE SMALL -BUSINESS SET-ASIDE RESULTED IN EXCESSIVE COSTS TO THE GOVERNMENT.

THE INVITATION REQUESTED BIDS--- TO BE OPENED JULY 27, 1961--- FOR YARDWORK AT AND ADJACENT TO THE TERMINAL BUILDING AT DULLES INTERNATIONAL AIRPORT NEAR CHANTILLY, VIRGINIA. THE INVITATION INCLUDED A NOTICE OF TOTAL SMALL-BUSINESS SET-ASIDE AS FOLLOWS:

"BIDS OR PROPOSALS UNDER THIS PROCUREMENT WAS SOLICITED FROM SMALL BUSINESS CONCERNS ONLY AND THIS PROCUREMENT IS TO BE AWARDED ONLY TO A SMALL BUSINESS CONCERN. THIS ACTION IS BASED ON A DETERMINATION BY THE CONTRACTING OFFICER AND THE SMALL BUSINESS ADMINISTRATION UNDER THE AUTHORITY OF SECTION 15 OF THE SMALL BUSINESS ACT. A SMALL BUSINESS CONCERN IS ANY FIRM WHICH MEETS THE CRITERIA ESTABLISHED BY TITLE 13, CHAPTER I, PART 121, OF THE CODE OF FEDERAL REGULATIONS. BIDS OR PROPOSALS RECEIVED FROM FIRMS WHICH ARE NOT SMALL BUSINESS CONCERNS WILL BE CONSIDERED NONRESPONSIVE.'

THE FEDERAL AVIATION AGENCY REPORTS THAT NOTICE OF THE PROCUREMENT WAS SENT TO 181 CONSTRUCTION CONTRACTORS AND SUPPLIERS AND THAT 24 CONCERNS REQUESTED COPIES OF THE INVITATION, SPECIFICATIONS AND DRAWINGS. BIDS WERE RECEIVED FROM VIRGINIA STONE AND CONSTRUCTION COMPANY ($1,445,091), JOHN TESTER AND SON, INC. ($1,617,217), GRUNLEY WALSH CONSTRUCTION COMPANY, INC. ($1,641,000), LOVETTE ELECTRIC CONSTRUCTION COMPANY ($1,706,000) AND HUMPHREYS AND HARDING ($1,760,000), ALL OF WHICH BIDDERS REPRESENTED THEMSELVES TO BE SMALL BUSINESS CONCERNS.

IN RESPONSE TO A REQUEST FROM THE PROCUREMENT OFFICE, THE SMALL BUSINESS ADMINISTRATION ADVISED THAT THE TWO LOWEST BIDDERS WERE NOT QUALIFIED AS SMALL-BUSINESS CONCERNS. THEREFORE, AWARD WAS MADE TO GRUNLEY-WALSH CONSTRUCTION COMPANY, INC. ON SEPTEMBER 25, 1961 (CONTRACT NO. FA-2611), ITS BID BEING REGARDED AS FAIR AND REASONABLE. THE PROCUREMENT OFFICE STATES THAT THE TWO HIGH BIDDERS WERE NOT EVALUATED AS TO WHETHER THEY WERE LARGE OR SMALL BUSINESS CONCERNS. IT IS REPORTED ALSO THAT IN MAKING THE AWARD CONSIDERATION WAS GIVEN TO THE DISADVANTAGES OF READVERTISING; ALSO, TO THE LATENESS OF THE SEASON FOR PERFORMING THE PROPOSED CONSTRUCTION WORK BECAUSE OF THE CONSIDERABLE TIME REQUIRED IN EVALUATING THE BIDS.

SECTION 15 OF THE SMALL BUSINESS ACT OF 1958, APPROVED JULY 18, 1958, 15 U.S.C. 644, PROVIDES IN PART AS FOLLOWS:

"TO EFFECTUATE THE PURPOSES OF THIS CHAPTER, SMALL-BUSINESS CONCERNS WITHIN THE MEANING OF THIS CHAPTER SHALL RECEIVE ANY AWARD OF CONTRACT OR ANY PART THEREOF, AND BE AWARDED ANY CONTRACT FOR THE SALE OF GOVERNMENT PROPERTY, AS TO WHICH IT IS DETERMINED BY THE ADMINISTRATION AND THE CONTRACTING PROCUREMENT OR DISPOSAL AGENCY (1) TO BE IN THE INTEREST OF MAINTAINING OR MOBILIZING THE NATION'S FULL PRODUCTIVE CAPACITY, (2) TO BE IN THE INTEREST OF WAR OR NATIONAL DEFENSE PROGRAMS, (3) TO BE IN THE INTEREST OF ASSURING THAT A FAIR PROPORTION OF THE TOTAL PURCHASES AND CONTRACTS FOR PROPERTY AND SERVICES FOR THE GOVERNMENT ARE PLACED WITH SMALL-BUSINESS CONCERNS, * * *.'

SECTION 1-1.707 OF THE FEDERAL PROCUREMENT REGULATIONS READS IN PERTINENT PART AS FOLLOWS:

"/A) GENERAL. ANY PROCUREMENT, OR AN APPROPRIATE PART THEREOF, WHETHER CLASSIFIED OR UNCLASSIFIED, SHALL BE SET ASIDE FOR THE EXCLUSIVE PARTICIPATION OF SMALL BUSINESS CONCERNS WHEN SUCH ACTION IS JOINTLY DETERMINED BY SBA AND THE CONTRACTING PROCUREMENT AGENCY TO BE IN THE INTEREST OF (1) MAINTAINING OR MOBILIZING THE NATION'S FULL PRODUCTIVE CAPACITY, OR (2) WAR OR NATIONAL DEFENSE PROGRAMS, OR (3) ASSURING THAT A FAIR PROPORTION OF THE TOTAL PURCHASES AND CONTRACTS FOR PROPERTY AND SERVICES FOR THE GOVERNMENT ARE PLACED WITH SMALL BUSINESS CONCERNS. THESE DETERMINATIONS MAY BE MADE FOR INDIVIDUAL ITEMS OR FOR CLASSES OF ITEMS.

"/D) TOTAL SET-ASIDES.

"/3) IN PROCUREMENTS INVOLVING TOTAL SET-ASIDES FOR SMALL BUSINESS, EACH INVITATION FOR BIDS OR REQUEST FOR PROPOSALS SHALL CONTAIN SUBSTANTIALLY THE FOLLOWING NOTICE:

"NOTICE OF TOTAL 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 AND THE SMALL BUSINESS ADMINISTRATION UNDER THE AUTHORITY OF SECTION 15 OF THE SMALL BUSINESS ACT. A SMALL BUSINESS CONCERN IS ANY FIRM WHICH MEETS THE CRITERIA ESTABLISHED BY TITLE 13, CHAPTER I, PART 121, OF THE CODE OF FEDERAL REGULATIONS. BIDS OR PROPOSALS RECEIVED FROM FIRMS WHICH ARE NOT SMALL BUSINESS CONCERNS WILL BE CONSIDERED NONRESPONSIVE.'

THE SET-ASIDE OF THIS PROCUREMENT FOR SMALL BUSINESS APPEARS TO HAVE BEEN MADE WITHIN THE FRAMEWORK OF PERTINENT LAWS AND REGULATIONS ON THE BASIS OF A DETERMINATION AUTHORIZED TO BE MADE BY THE CONTRACTING OFFICER AND THE SMALL BUSINESS ADMINISTRATION. THE ADMINISTRATIVE OFFICE STATES THAT THERE WAS A SUFFICIENT NUMBER OF SMALL-BUSINESS FIRMS ON THE PROSPECTIVE BIDDERS LIST TO JUSTIFY THE SET-ASIDE DETERMINATION MADE IN CONNECTION WITH THIS PROCUREMENT.

IT HAS BEEN HELD THAT, UNDER THE TERMS OF THE EXISTING STATUTES AND REGULATIONS, AWARDS TO SMALL-BUSINESS CONCERNS AT HIGHER PRICES THAN OTHERWISE OBTAINABLE ARE NOT SUBJECT TO OBJECTION BY OUR OFFICE. SEE 31 COMP. GEN. 347; ID. 431. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THIS MATTER, WE FIND NO LEGAL BASIS ON WHICH TO QUESTION THE DETERMINATION TO ACCOMPLISH THE PROCUREMENT UNDER A TOTAL SET-ASIDE FOR SMALL-BUSINESS CONCERNS. ANY QUESTION AS TO WHETHER THE BEST INTERESTS OF THE GOVERNMENT ARE SERVED BY MAKING AWARDS TO SMALL BUSINESS CONCERNS EVEN THOUGH THE RESULTING COST TO THE GOVERNMENT IS INCREASED WOULD BE FOR CONSIDERATION BY THE CONGRESS.