B-149194, AUG. 8, 1962

B-149194: Aug 8, 1962

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THE INVITATION RESTRICTED BIDDING TO SMALL BUSINESS CONCERNS AND IN THE ATTACHED "NOTICE OF SMALL BUSINESS SET-ASIDE" IT WAS PROVIDED AS FOLLOWS: "B. DEFINITIONS. (1) A "SMALL BUSINESS CONCERN" IS A CONCERN THAT (I) IS CERTIFIED AS A SMALL BUSINESS CONCERN BY THE SMALL BUSINESS ADMINISTRATION. OR (II) IS INDEPENDENTLY OWNED AND OPERATED. IS NOT DOMINANT IN THE FIELD OF OPERATION IN WHICH IT IS BIDDING ON GOVERNMENT CONTRACTS AND. FOUR BIDS WERE RECEIVED AND OPENED AS SCHEDULED ON MAY 2. IT WAS REPRESENTED THAT YOU WERE A SMALL BUSINESS CONCERN AND THAT ALL SUPPLIES WOULD BE MANUFACTURED OR PRODUCED BY A SMALL BUSINESS CONCERN IN THE UNITED STATES. YOU ALSO REPRESENTED THAT YOU WERE A REGULAR DEALER IN THE SUPPLIES BID UPON.

B-149194, AUG. 8, 1962

TO PAUL H. WERRES COMPANY, INC.:

BY LETTER DATED JUNE 14, 1962, WITH ENCLOSURE, YOU PROTESTED AGAINST THE AWARD MADE BY THE POST PURCHASING AND CONTRACTING OFFICE, FORT DIX, NEW JERSEY, UNDER INVITATION FOR BIDS NO. AI-28-013-62-41, ISSUED ON APRIL 2, 1962, FOR THE FURNISHING AND INSTALLING OF STORAGE RACKS.

THE INVITATION RESTRICTED BIDDING TO SMALL BUSINESS CONCERNS AND IN THE ATTACHED "NOTICE OF SMALL BUSINESS SET-ASIDE" IT WAS PROVIDED AS FOLLOWS:

"B. DEFINITIONS. (1) A "SMALL BUSINESS CONCERN" IS A CONCERN THAT (I) IS CERTIFIED AS A SMALL BUSINESS CONCERN BY THE SMALL BUSINESS ADMINISTRATION, OR (II) IS INDEPENDENTLY OWNED AND OPERATED, IS NOT DOMINANT IN THE FIELD OF OPERATION IN WHICH IT IS BIDDING ON GOVERNMENT CONTRACTS AND, WITH ITS AFFILIATES, EMPLOYS EITHER NOT MORE MORE THAN 500 EMPLOYEES, OR, IF THE CONCERN QUALIFIES AS A LABOR SURPLUS AREA CONCERN, NOT MORE THAN 625 EMPLOYEES. IN ADDITION TO MEETING THESE CRITERIA, A MANUFACTURER OR REGULAR DEALER SUBMITTING BIDS OR PROPOSALS IN HIS OWN NAME MUST AGREE TO FURNISH IN THE PERFORMANCE OF THE CONTRACT END ITEMS MANUFACTURED OR PRODUCED IN THE UNITED STATES, ITS POSSESSIONS, OR PUERTO RICO, BY SMALL BUSINESS CONCERNS * * *.'

FOUR BIDS WERE RECEIVED AND OPENED AS SCHEDULED ON MAY 2, 1962, AND IT APPEARED THAT YOU SUBMITTED THE LOWEST BID IN THE AMOUNT OF $13,448.47 AND BERNARD GLOEKLER NORTH EAST CO. SUBMITTED THE NEXT LOWEST BID IN THE AMOUNT OF $14,069.44. ON THE FACE OF YOUR BID, IT WAS REPRESENTED THAT YOU WERE A SMALL BUSINESS CONCERN AND THAT ALL SUPPLIES WOULD BE MANUFACTURED OR PRODUCED BY A SMALL BUSINESS CONCERN IN THE UNITED STATES, ITS TERRITORIES, ITS POSSESSIONS, OR PUERTO RICO. YOU ALSO REPRESENTED THAT YOU WERE A REGULAR DEALER IN THE SUPPLIES BID UPON. NOTE 4 ON PAGE 3 OF THE INVITATION REQUIRED THE SUBMISSION OF DESCRIPTIVE DATA OF SUCH NATURE TO PERMIT A FULL COMPARISON WITH OTHER BIDS. AN EXAMINATION OF THE DESCRIPTIVE DATA SUBMITTED WITH YOUR BID REVEALED THAT THE MANUFACTURER OF THE RACKS WOULD BE THE UNION-ASBESTOS AND RUBBER COMPANY, AN ORGANIZATION EMPLOYING OVER 650 PERSONS. ON MAY 4, 1962, THE SMALL BUSINESS ADMINISTRATION (SBA) WAS REQUESTED TO FURNISH A WRITTEN DETERMINATION TO THE PROCUREMENT AGENCY AS TO WHETHER UNION-ASBESTOS IS A SMALL BUSINESS CONCERN. SBA ADVISED ON MAY 22, 1962, THAT ITS RICHMOND REGIONAL OFFICE HAD REPORTED THAT UNION-ASBESTOS DID NOT QUALIFY AS SMALL BUSINESS. SINCE SUFFICIENT INFORMATION WAS BEFORE THE PROCUREMENT AGENCY TO CONCLUDE THAT YOU WERE NOT ELIGIBLE FOR AWARD, CONTRACT NO. DA-28-013-AI-3258 WAS AWARDED TO BERNARD GLOEKLER NORTH EAST CO. ON MAY 29, 1962, AS THE LOWEST RESPONSIVE SMALL BUSINESS BIDDER.

CONTRARY TO YOUR "REGULAR DEALER" CERTIFICATION, YOU NOW ALLEGE THAT YOU ARE A MANUFACTURER OF THE END ITEM AND THAT UNION-ASBESTOS WOULD HAVE MERELY PERFORMED INITIAL PROCESSING OF STEEL AND THAT YOU WOULD HAVE PRODUCED THE END ITEM. IN THIS CONNECTION, YOU REFER TO OUR DECISION B- 148260 DATED MAY 8, 1962, WHEREIN WE HELD, IN PART, THAT:

"IN THE INSTANT CASE IT WOULD APPEAR TO USE THAT THE "SIGN," WHICH APPARENTLY CONSTITUTES THE MAJOR PORTION OF THE WORK AND IS SUSCEPTIBLE OF BEING MADE BY SMALL BUSINESS, WOULD CONSTITUTE AN "END ITEM" WHICH SHOULD BE MANUFACTURED BY A SMALL BUSINESS CONCERN. IT WOULD HARDLY APPEAR THAT THE PROCUREMENT WAS SET ASIDE FOR SMALL BUSINESS SOLELY FOR THE OVERLAYS AND PACKAGING. IN A SOMEWHAT SIMILAR CASE, REPORTED IN 38 COMP. GEN. 434, INVOLVING A PROCUREMENT OF FOAM RUBBER MATTRESSES, A SMALL BUSINESS CONCERN BIDDER PROPOSED TO FURNISH MATTRESSES ON WHICH IT WOULD DO ONLY A SMALL AMOUNT OF SEWING, AND ALL THE OTHER LABOR AND MATERIAL WOULD BE SUPPLIED TO IT BY BIG BUSINESS. IN SUCH CIRCUMSTANCES THE SMALL BUSINESS ADMINISTRATION DETERMINED FOR THAT PROCUREMENT THAT THE SMALL BUSINESS BIDDER DID NOT QUALIFY AS A SMALL BUSINESS CONCERN SINCE IT WOULD BE ACTING AS A DEALER FURNISHING A PRODUCT PRIMARILY MANUFACTURED BY A LARGE BUSINESS CONCERN.

"IT IS RECOGNIZED THAT AN OVERALL PERCENTAGE OR OTHER LIMITATION ON SUBCONTRACTING TO BIG BUSINESSES MIGHT ADVERSELY AFFECT OR DISCRIMINATE AGAINST SMALL BUSINESSES SUCH AS JOBBERS, DISTRIBUTORS, FABRICATORS AND ASSEMBLERS WHO MIGHT NECESSARILY DEPEND UPON LARGE BUSINESSES FOR PURCHASE OF MATERIALS AND PARTS WHICH REPRESENT A LARGE PORTION OF THE CONTRACT VOLUME. NEVERTHELESS, IT WOULD SEEM IN DETERMINING THAT A PARTICULAR PROCUREMENT SHOULD BE RESTRICTED TO SMALL BUSINESS CONCERNS, THERE COULD ALSO BE DETERMINED THE AMOUNT OF WORK BY PERCENTAGE OR FUNCTIONS THAT SMALL BUSINESS FIRMS COULD REASONABLY BE EXPECTED TO PERFORM IN CONNECTION WITH THE PARTICULAR PROCUREMENT. IN FAIRNESS TO ALL, THE AMOUNT AND TYPE OF WORK REQUIRED TO BE PERFORMED BY SMALL BUSINESS FIRMS SHOULD BE SET FORTH IN THE INVITATION FOR BIDS.'

SBA WAS REQUESTED TO COMMENT ON YOUR POSITION AND THAT AGENCY ADVISED US AS FOLLOWS:

"BECAUSE THE LOW BIDDER, PAUL H. WERRES COMPANY, WAS A DEALER RATHER THAN A MANUFACTURER, IT WAS REQUIRED NOT ONLY TO BE A SMALL BUSINESS ITSELF, BUT ALSO TO FURNISH THE PRODUCT OF A SMALL BUSINESS MANUFACTURER. SEE SECTION 121.3-8 (B) OF THE SMALL BUSINESS SIZE STANDARDS REGULATION (REVISION 2), AS AMENDED * * *.

"SINCE THIS OFFICE WAS CONSIDERING, IN CONNECTION WITH ANOTHER CASE, THE QUESTION WHETHER PAUL H. WERRES COMPANY'S SUPPLIER, UNION ASBESTOS AND RUBBER COMPANY, CHICAGO, ILLINOIS, WAS A SMALL MANUFACTURER, OUR RICHMOND REGIONAL OFFICE REFERRED THE PROTEST TO WASHINGTON FOR A SIZE DETERMINATION.

"ON JUNE 8, 1962, HAVING DETERMINED THAT THE SUPPLIER, UNION ASBESTOS, WAS NOT A SMALL BUSINESS FOR THE PURPOSE OF GOVERNMENT PROCUREMENTS, WE DETERMINED THAT PAUL H. WERRES COMPANY, INC., WAS NOT A SMALL BUSINESS FOR THE PURPOSE OF AWARD UNDER INVITATION NO. AI-28 013-62-41.

"IT APPEARS THAT PAUL H. WERRES COMPANY IS NOW CLAIMING THAT IT IS THE MANUFACTURER OF THE ITEMS TO BE PURCHASED BY THE GOVERNMENT. THAT QUESTION WAS NOT AN ISSUE IN THE DETERMINATION REFERRED TO ABOVE, SINCE IT WAS THE UNDERSTANDING OF THIS OFFICE THAT PAUL H. WERRES COMPANY BID AS A DEALER RATHER THAN A MANUFACTURER. IN THIS CONNECTION YOU WILL NOTE IN THE LETTER FROM THE CONTRACTING OFFICER TO OUR REPRESENTATIVE, THAT THE CONTRACTING OFFICER ADVISED MR. BRODERICK, VICE PRESIDENT OF PAUL H. WERRES COMPANY ON OR BEFORE MAY 4, 1962, THAT THE ISSUE WAS WHETHER HIS CONCERN'S SUPPLIER WAS A SMALL BUSINESS. MR. BRODERICK APPARENTLY DID NOT, AT THAT TIME, DENY THAT HIS CONCERN WAS A DEALER RATHER THAN A MANUFACTURER. RATHER, HE VOLUNTEERED TO OBTAIN EVIDENCE THAT UNION ASBESTOS AND RUBBER COMPANY WAS SMALL.

"UNION ASBESTOS AND RUBBER COMPANY HAS SINCE SUBMITTED CERTAIN DOCUMENTS TO THIS AGENCY DESIGNED TO ELIMINATE ITS AFFILIATION WITH TWO OTHER COMPANIES, SO THAT IT MIGHT BE CONSIDERED A SMALL BUSINESS CONCERN. UP TO THE PRESENT DATE, HOWEVER, IT HAS NOT PROVIDED US WITH SUCH INFORMATION AS WOULD CAUSE US TO CHANGE OUR POSITION THAT IT IS NOT A SMALL BUSINESS CONCERN FOR THE PURPOSE OF GOVERNMENT PROCUREMENTS.'

15 U.S.C. 637 (B) (6) AUTHORIZES SBA TO DETERMINE WHICH BUSINESS CONCERNS ARE TO BE DESIGNATED AS SMALL BUSINESS CONCERNS AND MAKES THOSE DESIGNATIONS CONCLUSIVE. SPECIFICALLY, THAT STATUTE PROVIDES:"OFFICES OF THE GOVERNMENT * * * SHALL ACCEPT AS CONCLUSIVE THE ADMINISTRATION'S DETERMINATION AS TO WHICH ENTERPRISES ARE TO BE DESIGNATED "SMALL-BUSINESS CONCERNS.'"

GENERALLY, THE FINAL DETERMINATION OF THE ELIGIBILITY OF A BIDDER AS A SMALL BUSINESS CONCERN UNDER A SMALL BUSINESS RESTRICTED INVITATION IS MADE AS OF THE DATE OF AWARD. THAT DATE ESTABLISHES THE LEGAL CAPACITY OF A BIDDER TO RECEIVE AN AWARD WHICH IS RESTRICTED BY STATUTE TO A CERTAIN CLASS OF BIDDERS.

THAT PORTION OF THE INVITATION WHICH PROVIDED THAT BIDS "RECEIVED FROM FIRMS WHICH ARE NOT SMALL BUSINESS CONCERNS SHALL BE CONSIDERED NONRESPONSIVE AND SHALL BE REJECTED" WAS INTENDED SOLELY TO PREVENT AN AWARD TO, AND PERFORMANCE BY, A BIDDER WHO COULD NOT MEET THE CRITERIA OF SUCH CLASSIFICATION. THE DETERMINATION BY SBA CONCERNING UNION ASBESTOS WAS CONCLUSIVE ON THAT POINT.

CONCERNING OUR DECISIONS B-148260, QUOTED, IN PART, ABOVE, IT SHOULD BE NOTED THAT THE LOW BIDDER THERE CERTIFIED ITSELF AS A "MANUFACTURER" AND IN VIEW THEREOF SUCH BIDDER SHOULD HAVE HIMSELF MANUFACTURED THE END ITEM RATHER THAN A LARGE BUSINESS SUBCONTRACTOR. HERE, YOU CERTIFIED THAT YOU WERE A "REGULAR DEALER" WHO WOULD NOT BE EXPECTED TO PERFORM A SUBSTANTIAL PART OF THE MANUFACTURING OF THE END ITEM. WE, THEREFORE, BELIEVE THAT THE CITED CASE IS NOT PERSUASIVE HERE. THE FACT THAT SUBSEQUENT TO AWARD YOU ALLEGED THAT YOU WERE A MANUFACTURER, NOT A REGULAR DEALER AS CERTIFIED IN YOUR BID, IS NOT SIGNIFICANT SINCE YOUR ELIGIBILITY FOR AWARD NECESSARILY HAD TO BE BASED ON THE SELF-CERTIFICATION CONTAINED IN YOUR BID WHICH REMAINED EFFECTIVE AT LEAST UNTIL AWARD WAS MADE ON MAY 29, 1962. IN ANY EVENT, SUCH CHANGE IN BUSINESS CHARACTER COULD NOT ADVERSELY AFFECT AN AWARD LEGALLY MADE IN COMPLIANCE WITH THE INVITATION AND THE SMALL BUSINESS ACT.