B-149122, JUL. 31, 1962

B-149122: Jul 31, 1962

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160 DETECTING SETS WERE SET ASIDE UNDER THE INVITATION FOR NEGOTIATION WITH CONCERNS IN LABOR SURPLUS AREAS (WITH PREFERENCE TO SMALL BUSINESS CONCERNS IN SUCH AREAS). NEGOTIATIONS WERE TO BE CONDUCTED ONLY WITH RESPONSIBLE LABOR SURPLUS AREA CONCERNS WHO SUBMITTED RESPONSIVE BIDS ON THE NONSET-ASIDE PORTION AT A UNIT PRICE WITHIN 120 PERCENT OF THE HIGHEST AWARD MADE ON THE NONSET-ASIDE PORTION. BIDS WERE OPENED ON FEBRUARY 12. SINCE YOUR COMPANY WAS THE LOWEST RESPONSIVE BIDDER ON THE 2. DA-11-184-ENG-19500 WAS MADE TO YOU OF THOSE UNITS ON MARCH 29. A SIZE STATUS DETERMINATION WAS REQUESTED OF SBA ON MARCH 23. YOU WERE CONSIDERED TO BE AFFILIATED WITH DELMO AND. THAT JOINT VENTURERS ARE CONSIDERED AS CONTROLLING.

B-149122, JUL. 31, 1962

TO THE BURTON MANUFACTURING COMPANY:

BY TELEGRAM DATED JUNE 7, 1962, YOU PROTESTED AGAINST THE ISSUANCE OF A CERTIFICATE OF COMPETENCY BY THE SMALL BUSINESS ADMINISTRATION (SBA) TO POLAN INDUSTRIES, INC., IN CONNECTION WITH THE SET-ASIDE PORTION OF A PROCUREMENT UNDER INVITATION FOR BIDS NO. ENG-11-184-6 2 EE-75, AS AMENDED.

THE INVITATION, ISSUED ON DECEMBER 8, 1961, REQUESTED BIDS ON 2,161 EACH "DETECTING SET, MINE, PORTABLE, METALLIC (U)," TOGETHER WITH TECHNICAL DATA. IN ADDITION, A QUANTITY OF 2,160 DETECTING SETS WERE SET ASIDE UNDER THE INVITATION FOR NEGOTIATION WITH CONCERNS IN LABOR SURPLUS AREAS (WITH PREFERENCE TO SMALL BUSINESS CONCERNS IN SUCH AREAS). NEGOTIATIONS WERE TO BE CONDUCTED ONLY WITH RESPONSIBLE LABOR SURPLUS AREA CONCERNS WHO SUBMITTED RESPONSIVE BIDS ON THE NONSET-ASIDE PORTION AT A UNIT PRICE WITHIN 120 PERCENT OF THE HIGHEST AWARD MADE ON THE NONSET-ASIDE PORTION, IN A LISTED GROUPING OF PRIORITY. BIDS WERE OPENED ON FEBRUARY 12, 1962, AND SINCE YOUR COMPANY WAS THE LOWEST RESPONSIVE BIDDER ON THE 2,161 NONSET-ASIDE UNITS, AWARD OF CONTRACT NO. DA-11-184-ENG-19500 WAS MADE TO YOU OF THOSE UNITS ON MARCH 29, 1962.

IN AN EFFORT TO DETERMINE YOUR ELIGIBILITY TO NEGOTIATE FOR AWARD OF THE SET-ASIDE PORTION AS A SMALL BUSINESS CONCERN IN A PERSISTENT LABOR SURPLUS AREA, A SIZE STATUS DETERMINATION WAS REQUESTED OF SBA ON MARCH 23, 1962. ON APRIL 3, 1962, THE LOS ANGELES REGIONAL DIRECTOR, SBA, DETERMINED THAT BECAUSE OF A JOINT VENTURE ARRANGEMENT WITH DALMO VICTOR DIVISION OF TEXTRON, INCORPORATED, YOU WERE CONSIDERED TO BE AFFILIATED WITH DELMO AND, AS SUCH, LARGE BUSINESS. ON YOUR APPEAL FROM SUCH DETERMINATION, SBA DETERMINED ON APRIL 27, 1962, THAT YOU AND DALMO, THROUGH CERTAIN AGREEMENTS, CONSTITUTED A JOINT VENTURE; THAT JOINT VENTURERS ARE CONSIDERED AS CONTROLLING, OR HAVING THE POWER TO CONTROL, EACH OTHER AND, THEREFORE, ARE AFFILIATED. SINCE YOU AND DELMO TOGETHER EMPLOYED ABOUT 30,000 PERSONS, SBA RULED THAT YOU WERE NOT A SMALL BUSINESS FOR THE PURPOSE OF PARTICIPATING IN SET-ASIDE PROCUREMENTS.

ON THE BASIS OF THE APRIL 3 DETERMINATION, POLAN INDUSTRIES, INC., BECAME THE NEXT BIDDER IN THE ORDER OF PRIORITY FOR CONSIDERATION IN NEGOTIATING THE SET-ASIDE PORTION. HOWEVER, AN UNFAVORABLE PREAWARD SURVEY WAS RECEIVED ON POLAN WHICH SHOWED THAT IT DID NOT POSSESS THE NECESSARY ENGINEERING AND TECHNICAL KNOW-HOW TO PERFORM THE DESIGNING, ENGINEERING, AND PRODUCTION OF THE END ITEM. IN ACCORDANCE WITH ASPR 1-705.6 (B), THE MATTER OF POLAN'S CAPACITY TO PERFORM THE REQUIRED WORK WAS SUBMITTED TO SBA ON MAY 7, 1962, FOR A DETERMINATION WHETHER A CERTIFICATE OF COMPETENCY SHOULD BE ISSUED TO POLAN. ON MAY 29, 1962, SBA ISSUED A CERTIFICATE OF COMPETENCY TO POLAN. THE SMALL BUSINESS QUALIFICATIONS OF POLAN WERE CONFIRMED IN A LETTER DATED MAY 25, 1962, FROM SBA TO YOU IN ANSWER TO YOUR PROTEST AGAINST THE ELIGIBILITY OF POLAN. IN VIEW OF THE SBA CERTIFICATE OF COMPETENCY, AWARD OF THE 2,160 UNITS SET ASIDE IN THE INVITATION WAS MADE TO POLAN ON JUNE 18, 1962, UNDER CONTRACT NO. DA-11- 184-ENG-19752.

UNDER SECTION 8 (B) (7) OF THE SMALL BUSINESS ACT, AS AMENDED, 15 U.S.C. 637 (B) (7), THE ISSUANCE OF A CERTIFICATE OF COMPETENCY BY SBA IS CONCLUSIVE UPON GOVERNMENT PROCUREMENT OFFICERS WITH RESPECT TO THE COMPETENCY, AS TO CAPACITY AND CREDIT, OF ANY SMALL BUSINESS CONCERN TO PERFORM A GOVERNMENT CONTRACT. IN CONSONANCE THEREWITH, ASPR 1 705.6 (B) REQUIRES THAT AN OTHERWISE ACCEPTABLE BID SUBMITTED BY A SMALL BUSINESS CONCERN SHALL NOT BE REJECTED BY REASON OF LACK OF CAPACITY OR CREDIT UNTIL THE MATTER SHALL HAVE BEEN REFERRED TO SBA FOR THE POSSIBLE ISSUANCE OF A CERTIFICATE OF COMPETENCY. THE TERM "CAPACITY" IS DEFINED IN ASPR 1- 705.6 (A) AS MEANING THE OVERALL ABILITY TO MEET QUALITY, QUANTITY, AND TIME REQUIREMENTS OF A PROPOSED CONTRACT AND INCLUDES ABILITY TO PERFORM, ORGANIZATION, EXPERIENCE, TECHNICAL KNOWLEDGE, SKILLS, KNOW-HOW, TECHNICAL EQUIPMENT AND FACILITIES. THUS, IT WILL BE SEEN THAT THE PROTECTION EXTENDED BY THE SMALL BUSINESS ACT AND THE ASPR IS AVAILABLE ONLY TO SMALL BUSINESS CONCERNS MEETING THE SIZE STATUS REQUIREMENTS PRESCRIBED BY SBA, PURSUANT TO STATUTE, IN 13 CFR 121.3. SBA HAS THE SOLE JURISDICTION TO DETERMINE THE COMPETENCY OF A SMALL BUSINESS BIDDER WHOSE BID HAS BEEN DETERMINED BY THE CONTRACTING OFFICER TO BE NONRESPONSIVE DUE TO LACK OF CAPACITY OR CREDIT. ONCE SBA HAS DETERMINED TO ISSUE A CERTIFICATE OF COMPETENCY, IT IS CONCLUSIVE ON THE CONTRACTING OFFICER SO FAR AS THE BIDDER'S CAPACITY OR CREDIT IS CONCERNED. SEE 38 COMP. GEN. 864; 40 ID. 106.