B-151419, JUN. 25, 1963

B-151419: Jun 25, 1963

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THE INVITATION WAS ISSUED ON MARCH 8. THE INVITATION WAS TOTALLY SET-ASIDE FOR SMALL BUSINESS CONCERNS. BID OPENING WAS HELD ON MARCH 29. BIDS WERE RECEIVED FROM THE FOLLOWING FIVE FIRMS: TABLE A. YOUR FIRM WAS FOUND TO BE A LARGE BUSINESS CONCERN AND. ARE ELIGIBLE SMALL BUSINESS FIRMS. THE BIDDER IS CONSIDERED TO BE NONRESPONSIVE TO THIS INVITATION FOR REASONS OTHER THAN SIZE. " A SMALL BUSINESS CONCERN IS DEFINED AS: "/B) DEFINITION. 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.

B-151419, JUN. 25, 1963

TO CRANE COMPANY:

WE REFER TO YOUR LETTER OF APRIL 29, 1963, PROTESTING AGAINST AN AWARD UNDER INVITATION FOR BIDS NO. 104-1603-63, ISSUED BY THE DEPARTMENT OF THE NAVY, SHIPS PARTS CONTROL CENTER, MECHANICSBURG, PENNSYLVANIA.

THE INVITATION WAS ISSUED ON MARCH 8, 1963, CALLING FOR CERTAIN QUANTITIES OF GLOBE VALVES AS SPECIFIED. PURSUANT TO A JOINT DETERMINATION, THE INVITATION WAS TOTALLY SET-ASIDE FOR SMALL BUSINESS CONCERNS.

BID OPENING WAS HELD ON MARCH 29, 1963, AND BIDS WERE RECEIVED FROM THE FOLLOWING FIVE FIRMS:

TABLE

A. WESTERN AFFILIATED, SALT LAKE CITY, UTAH.

B. CANADIAN COMMERCIAL (VELAN ENGINEERING, LTD.) OTTAWA, CANADA.

C. VELAN VALVE, PLATTSBURG, NEW YORK.

D. ANCHOR EQUIPMENT, SAN FRANCISCO, CALIFORNIA.

E. CRANE COMPANY, WASHINGTON, D.C.

YOUR FIRM WAS FOUND TO BE A LARGE BUSINESS CONCERN AND, THUS, NOT ELIGIBLE FOR CONSIDERATION UNDER THIS INVITATION.

YOU CONTEND THAT NEITHER CANADIAN COMMERCIAL (VELAN ENGINEERING LTD.), NOR VELAN VALVE OF PLATTSBURG, NEW YORK, ARE ELIGIBLE SMALL BUSINESS FIRMS. YOU SAY THAT VELAN VALVE RECEIVES THE MAJOR PART OF ITS COMPONENTS FROM VELAN COMPANY OF CANADA; OR FROM THE SAME COMPANIES AS THOSE THAT SUPPLY VELAN OF CANADA. IN LINE WITH YOUR PROTEST, THE CONTRACTING OFFICE REPORTS THAT IT HAS REJECTED THE BID OF CANADIAN COMMERCIAL ON THE BASIS THAT IT DOES NOT QUALIFY AS A SMALL BUSINESS CONCERN. AS FOR VELAN VALVE, WHILE THE CONTRACTING OFFICE FINDS VELAN VALVE TO BE A SMALL BUSINESS CONCERN (IN ACCORDANCE WITH A PRIOR DETERMINATION OF THE SMALL BUSINESS ADMINISTRATION (LETTER OF DECEMBER 29, 1961) (, THE BIDDER IS CONSIDERED TO BE NONRESPONSIVE TO THIS INVITATION FOR REASONS OTHER THAN SIZE. THE CONTRACTING OFFICE PROPOSES TO MAKE THE AWARD TO WESTERN AFFILIATED ENGINEERING CO., INCORPORATED, AS THE LOWEST RESPONSIVE-RESPONSIBLE BIDDER UNDER THE INVITATION.

YOU CONTEND, HOWEVER, THAT THE TERMS OF THIS INVITATION PERMIT AN AWARD WHICH WOULD AID SMALL BUSINESS IN FOREIGN COUNTRIES, CONTRARY TO THE INTENT OF THE SMALL BUSINESS LEGISLATION.

ON PAGE NO. 12 OF THE INVITATION, UNDER THE CLAUSE ENTITLED "NOTICE OF TOTAL SMALL BUSINESS SET-ASIDE," A SMALL BUSINESS CONCERN IS DEFINED AS:

"/B) DEFINITION. 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 NOT MORE THAN 500 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; PROVIDED, THAT THIS ADDITIONAL REQUIREMENT DOES NOT APPLY IN CONNECTION WITH CONSTRUCTION OR SERVICE CONTRACTS.'

THIS PROVISION IS PRESCRIBED FOR USE BY ASPR 1-706.5. AS INDICATED BY THE UNDERSCORING ABOVE, THE ELIGIBLE SMALL BUSINESS BIDDER MUST AGREE TO FURNISH IN THE PERFORMANCE OF THE CONTRACT END ITEMS MANUFACTURED OR PRODUCED IN THE UNITED STATES (OR ITS POSSESSIONS OR PUERTO RICO) BY SMALL BUSINESS CONCERNS. WE FAIL TO SEE HOW FOREIGN FIRMS ARE AIDED UNDER THE TERMS OF THIS INVITATION.

REFERRING TO THE SET-ASIDE, YOU QUESTION THE WISDOM OF RESTRICTING VALVE PROCUREMENT FOR "SUCH CRITICAL SERVICE AS HIGH PRESSURE STEAM" TO ONLY SMALL BUSINESS CONCERNS. IT IS YOUR CONTENTION THAT BY ELIMINATING LARGE COMPANIES FROM BIDDING ON THESE CRITICAL ITEMS, THE GOVERNMENT IS ,PENALIZING" ITSELF AND IS ELIMINATING "THE BENEFITS OF RESEARCH, DEVELOPMENT, AND ENGINEERING FACILITIES OF LARGE COMPANIES.'

THE INVITATION WAS SET ASIDE EXCLUSIVELY FOR SMALL BUSINESS PURSUANT TO A JOINT DETERMINATION OF THE CONTRACTING AGENCY AND THE SMALL BUSINESS ADMINISTRATION. IN VIEW OF THE EXPRESSED CONGRESSIONAL POLICY IN FAVOR OF SMALL BUSINESS PARTICIPATION IN THE GOVERNMENT PROCUREMENT PROGRAM, AND THE CONSIDERABLE DISCRETION PLACED WITH THE SBA AND THE CONTRACTING AGENCY TO IMPLEMENT THIS POLICY BY MEANS OF EXCLUSIVE OR PARTIAL SET-ASIDE (SEE 15 U.S.C. 631, 644), SMALL BUSINESS SET-ASIDES CANNOT BE CONSIDERED IMPROPER BY THIS OFFICE UNLESS THEIR EFFECT IS TO INCREASE SMALL BUSINESS AWARDS IN A PARTICULAR AREA BEYOND A "FAIR PROPORTION.' 41 COMP. GEN. 649, 650-651.

WHILE THIS PARTICULAR INVITATION IS TOTALLY RESTRICTED TO SMALL BUSINESS, THIS IS NO INDICATION THAT THE ENTIRE GOVERNMENT PROCUREMENT OF GLOBE VALVES HAS BEEN PERMANENTLY CLOSED TO LARGE BUSINESS. CONSEQUENTLY, WE CANNOT PROPERLY QUESTION THE PROPRIETY OF THE TOTAL SMALL BUSINESS SET- ASIDE UNDER THE INVITATION.

FOR THE REASONS STATED, YOUR PROTEST AGAINST AN AWARD UNDER THIS INVITATION IS DENIED.