B-147876, APR. 19, 1962

B-147876: Apr 19, 1962

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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. (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. YOUR BID WAS CONSIDERED NONRESPONSIVE BECAUSE THE SMALL BUSINESS ADMINISTRATION DECLARED YOUR COMPANY TO BE OTHER THAN SMALL BUSINESS. AWARD WAS MADE TO SHILSTONE TESTING LABORATORY. YOU CONTEND THAT THE SETTING ASIDE OF THIS AWARD FOR SMALL BUSINESS GAVE AN EFFECTIVE EXCLUSIVE ON THE CONTRACT TO SHILSTONE TESTING LABORATORY BECAUSE ALL FIRMS OTHER THAN YOUR OWN WERE LOCATED AT A POINT TOO FAR DISTANT TO BE COMPETITIVE.

B-147876, APR. 19, 1962

TO PITTSBURGH TESTING LABORATORY:

YOUR LETTER OF JANUARY 4, 1962, PROTESTS THE AWARD OF A CONTRACT JOINTLY SET ASIDE FOR SMALL BUSINESS BY GENERAL SERVICES ADMINISTRATION AND SMALL BUSINESS ADMINISTRATION PURSUANT TO SECTION 15 OF THE SMALL BUSINESS ACT OF 1958, 72 STAT. 395, 15 U.S.C. 644, WHICH PROVIDES IN PART:

"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, OR (4) TO BE IN THE INTEREST OF ASSURING THAT A FAIR PROPORTION OF THE TOTAL SALES OF GOVERNMENT PROPERTY BE MADE TO SMALL -BUSINESS CONCERNS * * *.'

GENERAL SERVICES ADMINISTRATION ISSUED INVITATION FOR BIDS NO. DA DMS-129 ON NOVEMBER 13, 1961, TO TEN PROSPECTIVE SOURCES, REQUESTING QUOTATIONS FOR SAMPLING AND ANALYZING OF AN ESTIMATED QUANTITY OF BAUXITE ORE. FOUR RESPONDED, SUBMITTING BIDS IN THE FOLLOWING AMOUNTS:

TABLE

PITTSBURGH TESTING LABORATORY $0.0499 PER LWT.

SHILSTONE TESTING LABORATORY $0.059 PER LWT.

BRUCE WILLIAMS LABORATORIES $0.0747 PER LWT.

ANDRES S. MCCREATH AND SON, INC. $0.09 PER LWT.

YOUR BID WAS CONSIDERED NONRESPONSIVE BECAUSE THE SMALL BUSINESS ADMINISTRATION DECLARED YOUR COMPANY TO BE OTHER THAN SMALL BUSINESS, AND AWARD WAS MADE TO SHILSTONE TESTING LABORATORY, THE LOWEST SMALL BUSINESS BIDDER.

YOU CONTEND THAT THE SETTING ASIDE OF THIS AWARD FOR SMALL BUSINESS GAVE AN EFFECTIVE EXCLUSIVE ON THE CONTRACT TO SHILSTONE TESTING LABORATORY BECAUSE ALL FIRMS OTHER THAN YOUR OWN WERE LOCATED AT A POINT TOO FAR DISTANT TO BE COMPETITIVE. YOU OFFER AS EVIDENCE OF THIS CONTENTION THE ALLEGEDLY "HIGH FIGURES" SUBMITTED BY THE OTHER TWO BIDDERS.

THE REGULATION RELEVANT TO SET-ASIDES IS FOUND AT 13 CFR 127.15-2 (A). IT WAS ISSUED BY THE SMALL BUSINESS ADMINISTRATION UNDER AUTHORITY OF THE SMALL BUSINESS ACT OF 1958, 72 STAT. 385, 15 U.S.C. 634 (B) (6), AND PROVIDES IN PART:

"/2) WHEN A PROCUREMENT OR A CLASS OF PROCUREMENTS MEETS ONE OR MORE OF THE STATUTORY CRITERIA AND THERE ARE SUFFICIENT NUMBERS OF SMALL BUSINESS CONCERNS CONSIDERED CAPABLE OF FURNISHING THE PROPERTY OR SERVICES, AT FAIR AND REASONABLE PRICES, SBA REPRESENTATIVES WILL INITIATE SMALL BUSINESS SET-ASIDES. * * *

"/3) IN A 100 PERCENT SET-ASIDE, THE ENTIRE PROCUREMENT IS RESTRICTED TO SMALL BUSINESS CONCERNS AND BIDS OR QUOTATIONS BY LARGE FIRMS WILL BE REJECTED AS NONRESPONSIVE. IT IS SBA POLICY TO REQUEST 100 PERCENT SET- ASIDES WHEN THERE IS REASONABLE EXPECTATION THAT BIDS OR PROPOSALS MAY BE OBTAINED FROM A SUFFICIENT NUMBER OF RESPONSIBLE SMALL BUSINESS CONCERNS SO THAT AWARDS WILL BE MADE AT REASONABLE PRICES.'

GENERAL SERVICES ADMINISTRATION DOES NOT AGREE THAT THE SET-ASIDE GAVE SHILSTONE TESTING LABORATORY AN EFFECTIVE EXCLUSIVE ON THE CONTRACT. POINTS OUT THAT THREE RESPONSIVE BIDS WERE RECEIVED, THE LOWEST OF WHICH WAS QUITE COMPETITIVE WITH THE ONE YOU SUBMITTED. THERE IS NO REQUIREMENT THAT PRICES OFFERED UNDER A SMALL BUSINESS SET ASIDE PROCUREMENT BE EQUAL TO OR BETTER THAN PRICES WHICH MIGHT REASONABLY HAVE BEEN ANTICIPATED AS A RESULT OF UNRESTRICTED COMPETITION. 38 COMP. GEN. 744. THE REGULATION REQUIRES ONLY "FAIR AND REASONABLE PRICES," AND THE BID OF SHILSTONE TESTING LABORATORY WAS ACCEPTED ONLY AFTER DETERMINATION THAT THE PRICE TO BE PAID BY THE GOVERNMENT WAS REASONABLE FOR THE SERVICES TO BE RENDERED.

WE CAN FIND NO BASIS, UNDER THE ABOVE-CITED STATUTE OR REGULATION, UPON WHICH WE MIGHT CONCLUDE THAT THE ADMINISTRATIVE DETERMINATION TO SET THE AWARD ASIDE FOR SMALL BUSINESS WAS IMPROPER. FURTHERMORE, EVEN IF HINDSIGHT SHOULD NOW INDICATE THAT THE OFFERING OF FAIR AND REASONABLE PRICES WAS NOT INSURED BY THE PARTICIPATION IN THE BIDDING OF ONLY SMALL BUSINESS FIRMS, WE CANNOT OBJECT UNDER THE FACTS OF THIS CASE, BECAUSE THE AWARD WAS SET ASIDE IN REASONABLE EXPECTATION THAT SEVERAL SMALL BUSINESSES CAPABLE OF SUBMITTING REASONABLE BIDS WOULD PARTICIPATE IN THE BIDDING AND THE CONTRACT WAS IN FACT AWARDED AT A REASONABLE BID PRICE.

YOU ALSO REQUEST THAT THE GENERAL SERVICES ADMINISTRATION NOT BE PERMITTED TO INVOKE ITS OPTION TO RENEW THE CONTRACT FOR 1963 AND 1964 PROCUREMENTS. SINCE IT APPEARS THAT THE SETTING ASIDE OF THIS PROCUREMENT FOR SMALL BUSINESS WAS 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, IT FOLLOWS THAT THERE WOULD BE NO OBJECTION TO THE FUTURE EXERCISE OF AN OPTION TO RENEW, IF SUCH OPTION PROVES TO BE IN THE BEST INTEREST OF THE GOVERNMENT. THAT CONNECTION THE GENERAL SERVICES ADMINISTRATION HAS ADVISED US THAT THE OPTION WILL NOT BE EXERCISED UNTIL DETERMINED THROUGH ADVERTISING THAT IT IS IN THE BEST INTEREST OF THE GOVERNMENT TO DO SO.

ACCORDINGLY, YOUR PROTEST AGAINST THE AWARD AND YOUR REQUEST THAT THE GENERAL SERVICES ADMINISTRATION NOT BE PERMITTED TO INVOKE THE RENEWAL CLAUSE OF THE CONTRACT, ARE DENIED.