B-151338, B-151460, JAN. 21, 1964

B-151338,B-151460: Jan 21, 1964

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

BURNEY AND NESBITT: FURTHER REFERENCE IS MADE TO YOUR LETTERS OF APRIL 18 AND MAY 3. ON THE BASIS THAT BOTH OF THOSE FIRMS ARE AFFILIATES OF LARGE BUSINESS CONCERNS AND. ARE NOT "SMALL BUSINESS" AS THAT TERM HAS BEEN DEFINED BY THE SMALL BUSINESS ADMINISTRATION. YOU HAVE FURNISHED IN SUPPORT OF YOUR PROTEST (1) A 7-PAGE "FACT SHEET" CONTAINING INFORMATION PURPORTING TO ESTABLISH THAT THE GULF COAST DREDGING COMPANY. IS NOTHING MORE THAN AN AFFILIATE OF BAUER DREDGING COMPANY. THAT SABINE DREDGING AND CONSTRUCTION COMPANY IS AN AFFILIATE OF T. YOU ADVISED US THAT YOU WERE RECENTLY INFORMED THAT T. WAS THE LOW BIDDER ON INVITATION NO. WAS THE SECOND LOWEST BIDDER. ADVICE WAS ALSO FURNISHED TO THE EFFECT THAT INASMUCH AS NEITHER THE GULF COAST DREDGING COMPANY.

B-151338, B-151460, JAN. 21, 1964

TO FISCHER, WOOD, BURNEY AND NESBITT:

FURTHER REFERENCE IS MADE TO YOUR LETTERS OF APRIL 18 AND MAY 3, 1963, WITH ENCLOSURES, PROTESTING ON BEHALF OF SEVERAL FIRMS LISTED IN THOSE LETTERS AGAINST ANY PROPOSED AWARDS TO GULF COAST DREDGING COMPANY, INCORPORATED, OR SABINE DREDGING AND CONSTRUCTION COMPANY UNDER INVITATIONS NOS. CIVENG-41-243-63-76 AND CIVENG-41-243-63-88, ISSUED AS TOTAL SET-ASIDES FOR SMALL BUSINESS, ON THE BASIS THAT BOTH OF THOSE FIRMS ARE AFFILIATES OF LARGE BUSINESS CONCERNS AND, THEREFORE, ARE NOT "SMALL BUSINESS" AS THAT TERM HAS BEEN DEFINED BY THE SMALL BUSINESS ADMINISTRATION.

YOU HAVE FURNISHED IN SUPPORT OF YOUR PROTEST (1) A 7-PAGE "FACT SHEET" CONTAINING INFORMATION PURPORTING TO ESTABLISH THAT THE GULF COAST DREDGING COMPANY, INCORPORATED, IS NOTHING MORE THAN AN AFFILIATE OF BAUER DREDGING COMPANY, INCORPORATED, AND THAT SABINE DREDGING AND CONSTRUCTION COMPANY IS AN AFFILIATE OF T. L. JAMES AND COMPANY AND (2) PHOTOCOPIES OF DUN AND BRADSTREET'S ANALYTICAL REPORTS REFLECTING THE ORGANIZATION AND FINANCIAL STATUS OF BOTH THE GULF COAST DREDGING COMPANY, INCORPORATED, AND BAUER DREDGING COMPANY, INCORPORATED. ON JULY 2, 1963, YOU ADVISED US THAT YOU WERE RECENTLY INFORMED THAT T. L. JAMES AND COMPANY WITHIN THE LAST 180 DAYS HAD MADE PAYMENT IN FULL ON A NOTE FOR SABINE DREDGING AND CONSTRUCTION COMPANY IN AN AMOUNT IN EXCESS OF $100,000.

THE SMALL BUSINESS ADMINISTRATION, WASHINGTON, D.C., IN RESPONSE TO OUR REQUEST OF MAY 1, 1963, FOR A FULL REPORT IN THE MATTER ADVISED IN THEIR LETTER OF MAY 22, 1963, THAT FRIO SERVICE, INCORPORATED, WHOM YOU REPRESENT, WAS THE LOW BIDDER ON INVITATION NO. CIVENG-41-243-63-76 AND BURNELL DREDGING COMPANY, WHOM YOU ALSO REPRESENT, WAS THE SECOND LOWEST BIDDER. ADVICE WAS ALSO FURNISHED TO THE EFFECT THAT INASMUCH AS NEITHER THE GULF COAST DREDGING COMPANY, INCORPORATED, NOR THE SABINE DREDGING AND CONSTRUCTION COMPANY WAS THE LOW BIDDER ON THIS PARTICULAR PROCUREMENT THE DALLAS OFFICE OF THE SMALL BUSINESS ADMINISTRATION PROPERLY ADVISED YOU ON APRIL 29, 1963, TO HOLD THE MATERIAL DEVELOPED IN SUPPORT OF THE PROTEST UNTIL SUCH TIME AS ONE OR BOTH OF THE PROTESTED FIRMS IS THE APPARENT LOWEST BIDDER ON A FUTURE PROCUREMENT SET ASIDE FOR SMALL BUSINESS COMPETITION. THE SMALL BUSINESS ADMINISTRATION FURTHER ADVISED THAT IN VIEW OF YOUR ALLEGATIONS THEY DIRECTED A FULL FIELD INVESTIGATION REGARDING THE ELIGIBILITY OF BOTH THE PROTESTED FIRMS. ON JULY 18, 1963, WE FURNISHED THAT OFFICE THE INFORMATION EMBODIED IN YOUR LETTER OF JULY 2, 1963.

WE ALSO HAVE BEFORE US A REPORT DATED JUNE 3, 1963, WHICH WAS FURNISHED BY THE DEPARTMENT OF THE ARMY, OFFICE OF THE CHIEF OF ENGINEERS, WASHINGTON, D.C., PURSUANT TO OUR REQUEST OF MAY 1, 1963. IT IS SHOWN THEREIN THAT UNDER INVITATION NO. CIVENG-41-243-63-76 THE AWARD OF THE CONTRACT WAS MADE TO FRIO SERVICE, INCORPORATED, ON MAY 2, 1963, AND THAT UNDER INVITATION NO. CIVENG-41-243-63-88 THE CONTRACT WAS AWARDED TO GARRETT CONSTRUCTION COMPANY, ANOTHER OF YOUR CLIENTS IN THIS MATTER.

BY LETTER OF SEPTEMBER 30, 1963, THE SMALL BUSINESS ADMINISTRATION, WASHINGTON, D.C. FURNISHED US WITH A COMPLETE AND COMPREHENSIVE REPORT OF THEIR FULL FIELD INVESTIGATION CONDUCTED RELATIVE TO THE SIZE STATUS OF THE GULF COAST DREDGING COMPANY, INCORPORATED. FOR REASONS GIVEN, THEY FOUND THAT THE GULF COAST DREDGING COMPANY, INCORPORATED, AND BAUER DREDGING COMPANY, INCORPORATED, ARE CONTROLLED BY THE SAME THIRD PARTY AND, THEREFORE, THAT BOTH OF THESE CONCERNS ARE AFFILIATED WITHIN THE MEANING OF THE SMALL BUSINESS ADMINISTRATION REGULATIONS. THEY ALSO FOUND THAT SINCE THE BAUER DREDGING COMPANY, INCORPORATED, DOES NOT QUALIFY AS A SMALL BUSINESS FOR THE PURPOSE OF BIDDING ON GOVERNMENT PROCUREMENTS FOR DREDGING CONTRACTS AND SINCE UNDER THE REGULATIONS A CONCERN INCLUDING ITS AFFILIATE MUST MEET THE APPLICABLE SIZE STANDARD, THE GULF COAST DREDING COMPANY, INCORPORATED, IS NOT A SMALL BUSINESS FOR THE PURPOSE OF BIDDING ON GOVERNMENT DREDGING PROCUREMENTS.

ON DECEMBER 11, 1963, THE SMALL BUSINESS ADMINISTRATION FURNISHED US WITH A DETAILED REPORT RELATIVE TO THEIR FULL FIELD INVESTIGATION OF THE SIZE STATUS OF THE SABINE DREDGING AND CONSTRUCTION COMPANY. THAT REPORT SHOWS, AMONG OTHER THINGS, THAT L. C. GIBBS, WHO WAS THE VICE PRESIDENT OF THAT CONCERN AND WHO IS MENTIONED ON PAGES 5 AND 6 OF YOUR "FACT SHEET," RESIGNED EFFECTIVE MAY 15, 1963, AND THAT HE WAS NOT THE DREDGING SUPERINTENDENT OF T. L. JAMES AND COMPANY, AS ALLEGED. THE SMALL BUSINESS ADMINISTRATION HAS ALSO ADVISED THAT UNDER THEIR REGULATIONS SABINE DREDGING AND CONSTRUCTION COMPANY IS CONSIDERED AS BEING AFFILIATED ONLY WITH A CONCERN OTHER THAN T. L. JAMES AND COMPANY AND SINCE THE TOTAL ANNUAL RECEIPTS OF BOTH OF THESE CONCERNS DID NOT EXCEED $5 MILLION FOR THE PRECEDING THREE FISCAL YEARS, IT WAS DETERMINED THAT SABINE DREDGING AND CONSTRUCTION COMPANY IS A SMALL BUSINESS CONCERN FOR THE PURPOSE OF DREDGING PROCUREMENTS.

CONCERNING YOUR ALLEGATION OF THE CONTROL OF SABINE DREDGING AND CONSTRUCTION COMPANY BY T. L. JAMES AND COMPANY, THE SMALL BUSINESS ADMINISTRATION HAD ADVISED IN THEIR REPORT THAT THEY HAVE CONCLUDED THAT ONLY THE OFFICERS AND DIRECTORS OF SABINE DREDGING AND CONSTRUCTION COMPANY HAVE THE POWER TO CONTROL THE COMPANY. WHILE IT IS DISCLOSED IN THE REPORT THAT A JOINT VENTURE WAS FORMED BETWEEN THOSE CONCERNS ON SEPTEMBER 1, 1960, UNDER THE TRADE NAME OF "DIXIE DREDGING COMPANY," IT IS FURTHER DISCLOSED THAT THIS JOINT VENTURE IS NOW IN THE PROCESS OF DISSOLUTION. CONCERNING THE PERFORMANCE OF CONTRACTS BY SABINE DREDGING AND CONSTRUCTION COMPANY UNDER THAT JOINT VENTURE THE SMALL BUSINESS ADMINISTRATION HAS STATED AS FOLLOWS:

"WITH REGARD TO THE ALLEGATION CONCERNING THE JOINT VENTURE WITH T. L. JAMES, IT IS OUR POSITION THAT AN INDEPENDENTLY OPERATED CONCERN DOES NOT BECOME AN AFFILIATE OF ANOTHER CONCERN JUST BECAUSE THEY INCIDENTALLY ARE PARTIES TO ONE OR MORE JOINT VENTURE AGREEMENTS. HOWEVER, CONCERNS THAT PERFORM A PARTICULAR GOVERNMENT CONTRACT AS JOINT VENTURES ARE CONSIDERED AS AFFILIATES FOR THE PURPOSE OF SUCH PARTICULAR CONTRACT. FOR EXAMPLE, COMPANY "X," IF OTHERWISE A SMALL BUSINESS CONCERN FOR THE PURPOSE OF CONTRACT NO. 1, WILL NOT BECOME INELIGIBLE AS A SMALL BUSINESS CONCERN FOR THE PURPOSE OF SUCH CONTRACT JUST BECAUSE COMPANY "X" AND COMPANY "Y" (A LARGE BUSINESS CONCERN) ARE PERFORMING CONTRACT NO. 2 AS JOINT VENTURES. ON THE OTHER HAND, EVEN IF COMPANY "X" IS OTHERWISE ELIGIBLE AS A SMALL BUSINESS CONCERN, IT WOULD BE INELIGIBLE AS A SMALL BUSINESS CONCERN FOR THE PURPOSE OF CONTRACT NO. 1 IF IT WILL PERFORM SUCH CONTRACT AS A JOINT VENTURER WITH COMPANY "Y" (A LARGE BUSINESS CONCERN).

"THUS, ALTHOUGH WE HAVE DETERMINED THAT SABINE PRESENTLY IS A SMALL BUSINESS CONCERN, IT WAS NOT A SMALL BUSINESS CONCERN FOR ANY CONTRACT WHICH IT PERFORMED AS A JOINT VENTURER WITH T. L. JAMES. FURTHER, IT WILL NOT BE A SMALL BUSINESS FOR ANY FUTURE SET-ASIDE CONTRACT, WHICH IT WILL PERFORM AS A JOINT VENTURER WITH ANY OTHER CONCERN IF THE TOTAL AVERAGE ANNUAL RECEIPTS OF THE TWO CONCERNS TAKEN TOGETHER EXCEED $5 MILLION.'

IN ACCORDANCE WITH ITS STATED POSITION, THE SMALL BUSINESS ADMINISTRATION HAS FURTHER ADVISED THAT WHILE SABINE DREDGING AND CONSTRUCTION COMPANY WAS NOT A SMALL BUSINESS CONCERN FOR THE PURPOSE OF MOST OF THE CONTRACTS WHICH IT PERFORMED FROM 1960 TO AUGUST 1, 1963, BECAUSE ITS PERFORMANCE WAS AS A JOINT VENTURER WITH T. L. JAMES AND COMPANY, A CONCERN WHICH DOES NOT QUALIFY AS A SMALL BUSINESS, IT HAS DETERMINED, HOWEVER, THAT SABINE DREDING AND CONSTRUCTION COMPANY IS A SMALL BUSINESS FOR THE PURPOSE OF ANY CONTRACT WHICH IT WILL PERFORM BY ITSELF, PROVIDED, HOWEVER, THAT THIS DOES NOT PREVENT SUBCONTRACTING WITHIN THE LIMITS PERMITTED BY THE CONTRACTING OFFICER.

SECTION 637/B) (6), TITLE 15, U.S.C. PROVIDES, IN SUBSTANCE, THAT THE SMALL BUSINESS ADMINISTRATION IS EMPOWERED TO DETERMINE WITHIN ANY INDUSTRY THE CONCERNS WHICH ARE TO BE DESIGNATED SMALL BUSINESS CONCERNS. THAT SECTION FURTHER PROVIDES THAT OFFICES OF THE GOVERNMENT HAVING PROCUREMENT POWERS SHALL ACCEPT AS CONCLUSIVE THE ADMINISTRATION'S DETERMINATIONS AS TO WHICH ENTERPRISES ARE TO BE DESIGNATED SMALL BUSINESS CONCERNS. AS INDICATED ABOVE, THE SABINE DREDGING AND CONSTRUCTION COMPANY HAS BEEN DETERMINED TO BE A SMALL BUSINESS AND PURSUANT TO THE ABOVE PROVISION OF LAW SUCH DETERMINATION IS CONCLUSIVE. IN VIEW OF THE FOREGOING AND SINCE NEITHER OF THE CONTRACTS UNDER INVITATIONS NOS. CIVENG -41-243-63-76 AND CIVENG-41-243- 63-88 WAS AWARDED TO THE GULF COAST DREDGING COMPANY, INCORPORATED, THERE IS NO FURTHER ACTION FOR THIS OFFICE TO TAKE IN THE MATTER.