B-152153, DECEMBER 30, 1963, 43 COMP. GEN. 497

B-152153: Dec 30, 1963

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PRINTING AND BINDING - PURCHASES FROM OTHER THAN PUBLIC PRINTER - SMALL BUSINESS SET-ASIDES PRINTING PROCUREMENTS THE PUBLIC PRINTER IS UNABLE OR NOT EQUIPPED TO DO WHICH ARE RETURNED TO THE MILITARY DEPARTMENTS FOR DIRECT CONTRACTING PURSUANT TO 44 U.S.C. 14 AND GOVERNMENT PRINTING AND BINDING REGULATION NO. 15. THE EXPECTATION THAT LOWER BID PRICES MAY BE SUBMITTED BY LARGE CONCERNS IS NOT SIGNIFICANT. " BUT ONLY REQUIRING THAT A REASONABLE EXPECTATION EXISTS THAT SUFFICIENT SMALL BUSINESS CONCERNS WILL SUBMIT BIDS TO AFFORD ADEQUATE PRICE COMPETITION. YOU CONTEND THAT THERE IS NO AUTHORITY TO SET ASIDE AN ENTIRE PRINTING PROCUREMENT FOR SMALL BUSINESS FOR THE FOLLOWING EASONS: ALL PRINTING.

B-152153, DECEMBER 30, 1963, 43 COMP. GEN. 497

PRINTING AND BINDING - PURCHASES FROM OTHER THAN PUBLIC PRINTER - SMALL BUSINESS SET-ASIDES PRINTING PROCUREMENTS THE PUBLIC PRINTER IS UNABLE OR NOT EQUIPPED TO DO WHICH ARE RETURNED TO THE MILITARY DEPARTMENTS FOR DIRECT CONTRACTING PURSUANT TO 44 U.S.C. 14 AND GOVERNMENT PRINTING AND BINDING REGULATION NO. 15, DATED APRIL 1, 1963, MAY BE SET ASIDE EXCLUSIVELY FOR SMALL BUSINESS CONCERNS, CONTRACT PRINTING NOT BEING EXEMPT FROM THE PROVISIONS OF THE SMALL BUSINESS ACT (15 U.S.C. 631, ET SEQ.), AND THE EXPECTATION THAT LOWER BID PRICES MAY BE SUBMITTED BY LARGE CONCERNS IS NOT SIGNIFICANT, THE EXERCISE OF THE AUTHORITY CONTAINED IN 15 U.S.C. 644, IMPLEMENTED BY PARAGRAPH 1-706.5 OF THE ARMED SERVICES PROCUREMENT REGULATION, FOR TOTAL SET-ASIDE OF DEFENSE PROCUREMENTS NOT BEING CONTINGENT UPON A DETERMINATION THAT COSTS TO THE GOVERNMENT WOULD NOT BE INCREASED BY THE SET-ASIDE, NOR REQUIRING THE "TESTING OF THE MARKET," BUT ONLY REQUIRING THAT A REASONABLE EXPECTATION EXISTS THAT SUFFICIENT SMALL BUSINESS CONCERNS WILL SUBMIT BIDS TO AFFORD ADEQUATE PRICE COMPETITION.

TO THE STANDARD REGISTER COMPANY, DECEMBER 30, 1963:

BY LETTER DATED JULY 29, 1963, WITH ATTACHMENT, AND TELEFAX DATED OCTOBER 10, 1963, YOU PROTESTED AGAINST THE INCLUSION OF THE "NOTICE OF TOTAL SMALL BUSINESS SET-ASIDE" CLAUSE IN INVITATIONS FOR BIDS NOS. 33-601-63- 434 AND AAG-49-092-64-13. YOU CONTEND THAT THERE IS NO AUTHORITY TO SET ASIDE AN ENTIRE PRINTING PROCUREMENT FOR SMALL BUSINESS FOR THE FOLLOWING EASONS:

ALL PRINTING, PURCHASED BY THE FEDERAL GOVERNMENT IS PURCHASED UNDER THE AUTHORITY OF THE CONGRESSIONAL JOINT COMMITTEE ON PRINTING (UNITED STATES CODE, TITLE 44). THE MANNER IN WHICH PRINTING IS TO BE PURCHASED IS SET FORTH BY THIS COMMITTEE IN GOVERNMENT PRINTING AND BINDING REGULATIONS NO. 15, DATED APRIL 1, 1963.

PARAGRAPH 45, ON PAGE 18 OF THESE REGULATIONS QUOTES SECTION 14, TITLE 44, U.S.C. AS THE AUTHORITY FOR THE PUBLIC PRINTER TO RETURN TO ANY DEPARTMENT OF THE GOVERNMENT ANY WRITTEN REQUISITION FOR PRINTING FOR PURCHASE BY THAT DEPARTMENT. THIS SAME PARAGRAPH (NO. 45) SPECIFICALLY STATES "SUCH WAIVER, WHEN GRANTED, SHALL NOT BE CONSTRUED AS AN EXEMPTION FROM THE PROVISIONS OF THESE REGULATIONS.'

THE ISSUANCE OF A WAIVER BY THE PUBLIC PRINTER, OR AUTHORITY TO PURCHASE FIELD CONTRACT PRINTING IS CLEARLY COVERED BY SECTION 111 AND SECTION 111A OF TITLE 44, UNITED STATES CODE. IN NO CASE IS THE AUTHORITY OF THE JOINT COMMITTEE ON PRINTING RELINQUISHED, BUT RATHER IS EXTENDED TO THE DEPARTMENT BY AUTHORIZING IT TO ACT AS AN AGENT IN PLACE OF THE PUBLIC PRINTER.

THE PURCHASE OF PRINTING IS SPECIFICALLY RESERVED AS A LEGISLATIVE FUNCTION AS SET FORTH IN TITLE 44, UNITED STATES CODE. WHEN A CONTRACTING OFFICER PURCHASES PRINTING, HE IS ACTING AS AN AGENT OF THE JOINT COMMITTEE ON PRINTING AND AS SUCH, CAN NOT INTRODUCE REGULATIONS PROMULGATED BY THE EXECUTIVE BRANCH OF THE GOVERNMENT.

THE ACTION BY THE DIRECTORATE OF PROCUREMENT, WRIGHT PATTERSON, AFB, IS BASED ON AN EXECUTIVE ORDER AND ASPR 1-706.5, 30 SEPT. 62. THIS EXECUTIVE ORDER AND ARMED SERVICE PROCUREMENT REGULATIONS RESULTING FROM IT CANNOT BE APPLIED TO THE PURCHASE OF PRINTING.

HOWEVER, IN FOLLOWING ASPR 1-706.5, THEY HAVE IGNORED ASPR 5-601, PART 6, WHICH SPECIFICALLY STATES,"PRINTING, BINDING AND BLANK BOOK WORK, AND ENVELOPES, PAPER AND RELATED SUPPLIES, SHALL BE PROCURED IN ACCORDANCE WITH (I) REGULATIONS OF THE CONGRESSIONAL JOINT COMMITTEE ON PRINTING.' THEY HAVE ALSO IGNORED AFR-5-650.1, PART 6, WHICH REPEATS ASPR 5-601.

THE PRINTING CONTEMPLATED BY THESE INVITATIONS IS AUTHORIZED BY 44 U.S.C. 14 AND 111. PURSUANT TO SECTION 14 OF 44 U.S.C., THE JOINT COMMITTEE ON PRINTING PROMULGATED PARAGRAPH 45 OF THE GOVERNMENT PRINTING AND BINDING REGULATIONS, DATED APRIL 1, 1963, NO. 15, IN PERTINENT PART AS FOLLOWS:

* * * THE PUBLIC PRINTER IS PERMITTED TO RETURN TO ANY DEPARTMENT OF THE GOVERNMENT ANY WRITTEN REQUISITION FOR PRINTING, BINDING, AND BLANK-BOOK WORK, OTHERWISE AUTHORIZED BY LAW, AS IN HIS OPINION HE IS NEITHER ABLE NOR SUITABLY EQUIPPED TO EXECUTE OR WHICH MAY BE MORE ECONOMICALLY, OR IN THE BETTER INTEREST OF THE GOVERNMENT, PROCURED ELSEWHERE THAN AT THE GOVERNMENT PRINTING OFFICE; AND IN ALL SUCH INSTANCES IS HEREBY PERMITTED TO AUTHORIZE SUCH GOVERNMENT ACTIVITY TO PROCURE THE WORK DIRECT FROM OTHER SOURCES. SUCH WAIVER, WHEN GRANTED, SHALL NOT BE CONSTRUED AS AN EXEMPTION FROM THE PROVISIONS OF THESE REGULATIONS. * * *

PARAGRAPH 5-601, ARMED SERVICES PROCUREMENT REGULATION, RECOGNIZES THAT ALL PRINTING SHALL BE PROCURED IN ACCORDANCE WITH THE TITLE 44 OF THE U.S.C. AND THE REGULATIONS OF THE JOINT COMMITTEE ON PRINTING. HOWEVER, NEITHER THE PRINTING AND BINDING STATUTES CODIFIED IN TITLE 44 OF THE U.S.C. NOR THE REGULATIONS THEREUNDER EXEMPT CONTRACT PRINTING FROM THE PROVISIONS OF THE SMALL BUSINESS ACT, 15 U.S.C. 631, ET SEQ. SECTION 631 (A) THEREOF PROVIDES IN PERTINENT PART:

* * * IT IS THE DECLARED POLICY OF THE CONGRESS THAT THE GOVERNMENT SHOULD AID, COUNSEL, ASSIST, AND PROTECT, INSOFAR AS IS POSSIBLE, THE INTERESTS OF SMALL-BUSINESS CONCERNS IN ORDER TO PRESERVE FREE COMPETITIVE ENTERPRISE, TO INSURE THAT A FAIR PROPORTION OF THE TOTAL PURCHASES AND CONTRACTS FOR PROPERTY AND SERVICES FOR THE GOVERNMENT (INCLUDING BUT NOT LIMITED TO CONTRACTS FOR MAINTENANCE, REPAIR, AND CONSTRUCTION) BE PLACED WITH SMALL-BUSINESS ENTERPRISES, TO INSURE THAT A FAIR PROPORTION OF THE TOTAL SALES OF GOVERNMENT PROPERTY BE MADE TO SUCH ENTERPRISES, AND TO MAINTAIN AND STRENGTHEN THE OVER-ALL ECONOMY OF THE NATION.

THE TOTAL SET-ASIDE OF DEFENSE PROCUREMENTS FOR SMALL BUSINESS IS AUTHORIZED BY 15 U.S.C. 644 AS IMPLEMENTED BY ASPR 1-706.5. THE STATUTE PROVIDES:

TO EFFECTUATE THE PURPOSES OF THIS CHAPTER, SMALL-BUSINESS CONCERNS WITHIN THE MEANING OF THIS CHAPTER SHALL RECEIVE ANY AWARD OF CONTRACT OR ANY PART THEREOF, AND BE AWARDED ANY CONTRACT FOR THE SALE OF GOVERNMENT PROPERTY, AS TO WHICH IT IS DETERMINED BY THE ADMINISTRATION AND THE CONTRACTING PROCUREMENT OR DISPOSAL AGENCY (1) TO BE IN THE INTEREST OF MAINTAINING OR MOBILIZING THE NATION'S FULL PRODUCTIVE CAPACITY, (2) TO BEGIN THE INTEREST OF WAR OR NATIONAL DEFENSE PROGRAMS, (3) TO BE IN THE INTEREST OF ASSURING THAT A FAIR PROPORTION OF THE TOTAL PURCHASES AND CONTRACTS FOR PROPERTY AND SERVICES FOR THE GOVERNMENT ARE PLACED WITH SMALL-BUSINESS CONCERNS, OR (4) TO BE IN THE INTEREST OF ASSURING THAT A FAIR PROPORTION OF THE TOTAL SALES OF GOVERNMENT PROPERTY BE MADE TO SMALL -BUSINESS CONCERNS; * * *. THESE DETERMINATIONS MAY BE MADE FOR INDIVIDUAL AWARDS OR CONTRACTS OR FOR CLASSES OF AWARDS OR CONTRACTS. WHENEVER THE ADMINISTRATION AND THE CONTRACTING PROCUREMENT AGENCY FAIL TO AGREE, THE MATTER SHALL BE SUBMITTED FOR DETERMINATION TO THE SECRETARY OR THE HEAD OF THE APPROPRIATE DEPARTMENT OR AGENCY BY THE ADMINISTRATOR.

IT WILL BE NOTED THAT ONLY ONE OF THE FOUR CONDITIONS NEEDS TO BE PRESENT IN ANY CASE TO SUPPORT A DETERMINATION FOR SET-ASIDE. SEE, ALSO, THE APPLICABLE SMALL BUSINESS ADMINISTRATION REGULATION CODIFIED AT 13 C.F.R. 127.

IT IS ALSO SIGNIFICANT TO NOTE THAT THE LANGUAGE OF THE STATUTE IS EXTREMELY BROAD IN THAT IT ENCOMPASSES ALL GOVERNMENT PROCUREMENT. MOREOVER, THE LEGISLATIVE HISTORY OF THE SMALL BUSINESS ACT CONTAINS NO INDICATION THAT THE CONGRESS INTENDED TO EXEMPT CERTAIN CATEGORIES OF PROCUREMENTS FROM THE ACT. ADDITIONALLY, 10 U.S.C. 2301 RESTATES 15 U.S.C. 631 (A), SUPRA, BUT ELIMINATES THE WORD "TOTAL" THERETOFORE USED IMMEDIATELY BEFORE THE PHRASE "PURCHASES AND CONTRACTS" AS SURPLUSAGE. THIS IS STRONGLY INDICATIVE THAT THE CONGRESS INTENDED THAT A FAIR PROPORTION OF THE TOTALITY OF MILITARY PROCUREMENT WOULD BE SUBJECT TO THE PROVISIONS OF THE SMALL BUSINESS ACT.

THUS, IT IS EVIDENT THAT THE SET-ASIDES INITIATED HERE WERE TAKEN PURSUANT TO STATUTE AND IMPLEMENTING REGULATIONS AND NOT, AS STATED BY YOU, PURSUANT TO AN EXECUTIVE ORDER.

WHILE ASPR 1-706.5 PROVIDES THAT THE ENTIRE AMOUNT OF AN INDIVIDUAL PROCUREMENT MAY BE SET ASIDE EXCLUSIVELY FOR SMALL BUSINESS PARTICIPATION WHERE THERE IS A REASONABLE EXPECTATION THAT A SUFFICIENT NUMBER OF BIDS WILL BE RECEIVED SO THAT "AWARDS WILL BE MADE AT REASONABLE PRICES," THERE IS NO BASIS FOR CONCLUDING THAT BID PRICES RECEIVED UNDER THESE INVITATIONS WOULD BE CONSIDERABLY HIGHER THAN HAD UNRESTRICTED BIDDING BEEN PERMITTED. WE KNOW OF NO REQUIREMENT, STATUTORY OR REGULATORY, WHICH WOULD MAKE A TOTAL SMALL BUSINESS SET ASIDE CONTINGENT UPON A DETERMINATION THAT COSTS TO THE GOVERNMENT WOULD NOT BE INCREASED THEREBY. B-145698 DATED JUNE 1, 1961; B-147333 DATED NOVEMBER 21, 1961. ASPR 1-706.5 DOES NOT REQUIRE A "TESTING OF THE MARKET" BUT ONLY REQUIRES THAT A REASONABLE EXPECTATION EXISTS THAT SUFFICIENT SMALL BUSINESS CONCERNS WILL SUBMIT BIDS TO AFFORD ADEQUATE PRICE COMPETITION. HENCE, THE FACT THAT LOWER BIDS MAY BE EXPECTED FROM LARGE BUSINESS CONCERNS IS NOT A SIGNIFICANT FACTOR IN DETERMINING WHETHER A PROCUREMENT SHOULD BE SET ASIDE FOR SMALL BUSINESS PARTICIPATION ONLY.

FROM THE FOREGOING, IT IS APPARENT THAT NEITHER 15 U.S.C. 644 NOR THE PROCUREMENT REGULATIONS IMPOSE ANY REQUIREMENT THAT THE PRICES OFFERED UNDER A TOTAL SET-ASIDE PROCUREMENT BE EQUAL TO, OR BETTER THAN, PRICES WHICH MIGHT REASONABLY HAVE BEEN ANTICIPATED AS A RESULT OF UNRESTRICTED COMPETITION. BIDS RECEIVED FROM OTHER THAN SMALL BUSINESS CONCERNS IN RESPONSE TO A TOTAL SET-ASIDE INVITATION FOR BIDS ARE REQUIRED TO BE REJECTED AS INELIGIBLE FOR AWARD IN VIEW OF THE MANDATE IN 15 U.S.C. 644 THAT SMALL BUSINESS CONCERNS SHALL RECEIVE ANY AWARD OF CONTRACT AS TO WHICH IT HAD BEEN DETERMINED JOINTLY BY THE SMALL BUSINESS ADMINISTRATION AND THE PROCUREMENT AGENCY THAT ONE OF THE CONDITIONS THEREIN SPECIFIED IS APPLICABLE TO THE PARTICULAR PROCUREMENT. THUS, NO AUTHORITY IN LAW OR REGULATION EXISTS FOR FAVORABLY CONSIDERING BIDS SUBMITTED BY LARGE BUSINESS CONCERNS UNDER TOTAL SET-ASIDE PROCUREMENT EVEN THOUGH, IN PARTICULAR CASES, IT MIGHT BE SAID THAT THE COSTS TO THE GOVERNMENT MAY BE INCREASED IF THE BID OF A LARGE BUSINESS CONCERN WERE DISREGARDED.

ACCORDINGLY, WE MUST CONCLUDE THAT THE PROCUREMENT OF PRINTING UNDER THESE TWO INVITATIONS UNDER RESTRICTED SMALL BUSINESS TOTAL SET-ASIDE PROCEDURES IS NOT LEGALLY OBJECTIONABLE.