B-149130, AUG. 27, 1962

B-149130, AUG. 27, 1962

TO ARENT, FOX, KINTNER, PLOTKIN AND KAHN:

BY LETTER OF JUNE 11, 1962, YOU HAVE PROTESTED ON BEHALF OF HERCULES GALION PRODUCTS, INCORPORATED, THE COMPLETE SET-ASIDE FOR SMALL BUSINESS OF A PROCUREMENT OF REFUSE COLLECTION TRUCKS AND CONTAINERS BY THE DEPARTMENT OF THE ARMY UNDER INVITATION FOR BIDS NO. ORD-20-113-62-2276, ISSUED MAY 24, 1962, BY THE ORDNANCE TANK AUTOMOTIVE COMMAND.

IT IS STATED IN YOUR LETTER THAT TRUCKS CONFORMING TO THE SPECIFICATIONS ARE MANUFACTURED IN THE UNITED STATES ONLY BY HERCULES GALION, WHICH IS NOT A SMALL BUSINESS, AND DEMPSTER BROTHERS, INCORPORATED. YOU STATE FURTHER THAT THE CONTAINERS MEETING THE SPECIFICATIONS ARE MANUFACTURED ONLY BY THE FOREGOING AND LO DAL, INCORPORATED, OF NORWAY, MICHIGAN. VIEW OF THE LIMITED NUMBER OF SOURCES OF THE EQUIPMENT IT IS YOUR POSITION THAT THE SET-ASIDE FOR SMALL BUSINESS OF THE PROCUREMENT HAS THE EFFECT OF ELIMINATING COMPETITION ON THE PURCHASE OF THE TRUCKS.

YOU NOTE ALSO THAT WHILE DEMPSTER BROTHERS, INCORPORATED, MAY APPEAR TO QUALIFY AS A SMALL BUSINESS CONCERN, AN ACTION HAS BEEN FILED BY THE DEPARTMENT OF JUSTICE IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TENNESSEE AGAINST DEMPSTER BROTHERS, INCORPORATED, FOR VIOLATION OF SECTION 1 OF THE SHERMAN ANTI-TRUST ACT. YOU STATE THAT IN THE COMPLAINT FILED BY THE DEPARTMENT THE FIRM IS ALLEGED TO BE "THE DOMINANT MANUFACTURER OF MATERIAL HANDLING EQUIPMENT IN THE UNITED STATES.' YOU CONCLUDE, THEREFORE, THAT DEMPSTER BROTHERS, INCORPORATED, CANNOT QUALIFY AS A SMALL BUSINESS FOR PURPOSES OF FEDERAL PROCUREMENT, SINCE A SMALL BUSINESS CONCERN IS DEFINED IN SECTION 3 OF THE SMALL BUSINESS ACT OF 1958, AS

IN A REPORT FROM THE DEPARTMENT OF THE ARMY, RECEIVED AUGUST 2, 1962, WE ARE ADVISED THAT FOUR RESPONSIBLE SMALL BUSINESS FIRMS BID ON THE PROCUREMENT. THIS IS BELIEVED TO BE ADEQUATE COMPETITION TO MEET THE ASPR STANDARD FOR THE TOTAL SET-ASIDE OF A PROCUREMENT FOR SMALL BUSINESS PARTICIPATION EXCLUSIVELY: A REASONABLE EXPECTATION THAT BIDS WILL BE RECEIVED FROM A SUFFICIENT NUMBER OF RESPONSIBLE BIDDERS SO THAT AWARDS WILL BE MADE AT REASONABLE PRICES. FURTHER, WITH RESPECT TO THE SMALL BUSINESS STATUS OF DEMPSTER BROTHERS, INCORPORATED, THE PROCURING AGENCY HAS BEEN PUT ON NOTICE OF THE POSITION OF THE SMALL BUSINESS ADMINISTRATION THAT PENDING THE OUTCOME OF THE SUIT INSTITUTED BY THE DEPARTMENT OF JUSTICE AGAINST THAT FIRM THE ADMINISTRATION CANNOT STATE THAT DEMPSTER BROTHERS, INCORPORATED, IS OTHER THAN A SMALL BUSINESS CONCERN. THEREFORE, CONTRACTS WERE AWARDED UNDER THE INVITATION ON JUNE 30, 1962, TO EACH OF THREE SMALL BUSINESS CONCERNS INCLUDING DEMPSTER BROTHERS, INCORPORATED.

SO FAR AS CONCERNS THE REASONABLENESS OF THE COMPETITION OBTAINED ON THE TRUCKS INCLUDED IN THE PROCUREMENT, THE RECORD SHOWS THAT OF THE SEVEN ITEMS OF THE INVITATION COVERING THE TRUCKS IN QUESTION RESPONSIVE BIDS WERE RECEIVED FROM FOUR SMALL BUSINESS CONCERNS FOR EACH OF THOSE ITEMS EXCEPT ITEMS 2A AND 7A; AND ON THE LATTER TWO ITEMS THREE RESPONSIVE BIDS WERE RECEIVED. SECTION 15 OF THE SMALL BUSINESS ACT OF 1958, AS AMENDED, 15 U.S.C. 644, PROVIDES THAT SMALL BUSINESS CONCERNS SHALL RECEIVE ANY AWARD OF A CONTRACT WHERE THE SMALL BUSINESS ADMINISTRATION AND THE PROCURING AGENCY DETERMINE SUCH ACTION TO BE IN THE INTEREST OF ASSURING THAT A FAIR PROPORTION OF GOVERNMENT PURCHASES ARE PLACED WITH SMALL BUSINESS CONCERNS. A JOINT DETERMINATION TO SET ASIDE THE PROCUREMENT EXCLUSIVELY FOR SMALL BUSINESS WAS MADE BY THE SMALL BUSINESS ADMINISTRATION AND THE PROCURING ACTIVITY UNDER THE TERMS OF THE CITED STATUTE AND REGULATIONS PROMULGATED THEREUNDER. THE AUTHORITY TO SET SUCH PROCUREMENTS ASIDE IS VERY BROAD AND AN ADMINISTRATIVE DETERMINATION MADE PURSUANT THERETO IS ORDINARILY NOT SUBJECT TO REVIEW BY OUR OFFICE. 145698, JUNE 1, 1961. IN VIEW THEREOF, AND OF THE NUMBER OF RESPONSIVE BIDS RECEIVED FROM SMALL BUSINESS FIRMS, WE FIND NO BASIS TO QUESTION THE VALIDITY OF THE SET-ASIDE.

AS TO DEMPSTER'S SIZE STATUS, THAT FIRM WAS ABLE TO SELF-CERTIFY ITSELF AS A SMALL BUSINESS, SINCE IT HAS FEWER THAN 500 EMPLOYEES. IT IS TRUE THAT UNDER THE DEFINITION OF A SMALL BUSINESS INCLUDED IN PARAGRAPH 10 OF STANDARD FORM 33, A FIRM TO QUALIFY, IN ADDITION TO HAVE FEWER THAN 500 EMPLOYEES, MUST NOT BE DOMINANT IN ITS FIELD OF OPERATION. DOMINANCE IS OBVIOUSLY A MUCH MORE SUBJECTIVE MATTER THAN THE NUMBER OF EMPLOYEES AND, THEREFORE, MAY BE EXPECTED TO PRODUCE A GREATER VARIETY OF REASONABLE CONCLUSIONS. WHILE THE ACTION BROUGHT BY THE DEPARTMENT OF JUSTICE AGAINST THE FIRM MIGHT SUBJECT TO SUBSTANTIAL QUESTION ITS ABILITY TO QUALIFY UNDER THE DOMINANCE CRITERION, IT MUST BE RECOGNIZED THAT THE MERE FILING OF SUCH A SUIT, EVEN BY AN AGENCY OF THE FEDERAL GOVERNMENT, DOES NOT ESTABLISH THAT THE ACCUSED FIRM IS GUILTY OF THE CHARGES LEVELED AGAINST IT.

THE PROCURING AGENCY, HAVING RECEIVED A BID FROM DEMPSTER CONTAINING THE SELF-CERTIFICATION, MADE INQUIRY OF THE SMALL BUSINESS ADMINISTRATION WHOSE FINDINGS AS TO SIZE ARE CONCLUSIVE ON THE PROCURING ACTIVITIES OF THE GOVERNMENT UNDER 15 U.S.C. 637 (B) (6). THE SMALL BUSINESS ADMINISTRATION, IN A LETTER OF MAY 11, 1962, STATED THAT DEMPSTER, SINCE IT EMPLOYS LESS THAN 500 PERSONS, QUALIFIES AS A SMALL BUSINESS UNLESS IT IS DOMINANT IN THE FIELD OF OPERATIONS IN WHICH IT IS BIDDING. THE LETTER FURTHER STATED THAT, IN VIEW OF THE COURT ACTION, THE ADMINISTRATION WOULD NOT PRESUME TO DETERMINE ADMINISTRATIVELY WHETHER SUCH DOMINANCE EXISTED UNTIL THE MATTER WAS RESOLVED BY THE COURT. THE SBA THEREFORE CONCLUDED THAT IT COULD NOT STATE THAT THE FIRM WAS OTHER THAN A SMALL BUSINESS CONCERN. THE PROCURING AGENCY ASCERTAINED THAT THE POSITION OF THE SBA HAD NOT CHANGED SUBSEQUENT TO THE DATE OF THE LETTER. ASPR 1-703 (B) STATES:

"/B) SMALL BUSINESS CERTIFICATES AND STATEMENTS THAT A BIDDER OR OFFEROR IS A SMALL BUSINESS CONCERN SHALL BE EFFECTIVE, EVEN THOUGH QUESTIONED IN ACCORDANCE WITH THE TERMS OF THIS SUBPARAGRAPH (B), UNLESS THE SBA, IN RESPONSE TO SUCH QUESTION AND PURSUANT TO THE PROCEDURES IN (3) BELOW, DETERMINES THAT THE BIDDER OR OFFEROR IN QUESTION IS NOT A SMALL BUSINESS CONCERN. * * *"

IN VIEW OF THE QUOTED PROVISION, THE SELF-CERTIFICATION, AND THE POSITION OF THE SMALL BUSINESS ADMINISTRATION, IT IS OUR VIEW THAT THE PROCURING AGENCY HAD NO ALTERNATIVE BUT TO REGARD DEMPSTER AS A SMALL BUSINESS CONCERN FOR PURPOSES OF THE PROCUREMENT.