B-152198, NOV. 6, 1963

B-152198: Nov 6, 1963

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INC.: REFERENCE IS MADE TO YOUR TWO TELEGRAMS DATED AUGUST 5. BIDS WERE SOLICITED FOR THE FURNISHING OF PRINTING SERVICES ON A CALL BASIS FOR THE FISCAL YEAR 1964 FOR THE AIR FORCE SYSTEMS COMMAND. PARAGRAPH D OF THE ADDITIONAL SPECIAL PROVISONS OF THE INVITATION PROVIDED THAT THE PROCUREMENT WOULD BE RESTRICTED TO SMALL BUSINESS CONCERNS AND THAT BIDS OR PROPOSALS RECEIVED FROM FIRMS WHICH WERE NOT SMALL BUSINESS CONCERNS SHOULD BE CONSIDERED NONRESPONSIVE. SMALL BUSINESS CONCERN WAS DEFINED AS: "* * * (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.

B-152198, NOV. 6, 1963

TO COLONIAL PRESS PRINTING, INC.:

REFERENCE IS MADE TO YOUR TWO TELEGRAMS DATED AUGUST 5, 1963, AND TO YOUR LETTER OF AUGUST 8, 1963, PROTESTING AGAINST THE ACTION OF THE BASE PROCUREMENT OFFICE, 1001ST AIR BASE WING, ANDREWS AIR FORCE BASE, MARYLAND, IN REJECTING YOUR BID AND IN AWARDING A CONTRACT TO MCGREGOR AND WERNER, INC., UNDER INVITATION NO. 49-642-63-73.

BY THE REFERRED-TO INVITATION ISSUED ON MAY 15, 1963, BIDS WERE SOLICITED FOR THE FURNISHING OF PRINTING SERVICES ON A CALL BASIS FOR THE FISCAL YEAR 1964 FOR THE AIR FORCE SYSTEMS COMMAND, ANDREWS AIR FORCE BASE, MARYLAND. PARAGRAPH D OF THE ADDITIONAL SPECIAL PROVISONS OF THE INVITATION PROVIDED THAT THE PROCUREMENT WOULD BE RESTRICTED TO SMALL BUSINESS CONCERNS AND THAT BIDS OR PROPOSALS RECEIVED FROM FIRMS WHICH WERE NOT SMALL BUSINESS CONCERNS SHOULD BE CONSIDERED NONRESPONSIVE. SMALL BUSINESS CONCERN WAS DEFINED AS:

"* * * (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 THAN 500 EMPLOYEES. * * *"

FIVE BIDS WERE RECEIVED AND OPENED ON JUNE 14, 1963. THE BIDS WERE EVALUATED FOR AWARD PURPOSES AND IT WAS DETERMINED THAT YOUR FIRM HAD SUBMITTED THE LOWEST AGGREGATE BID OF $65,992.10 FOR THE REQUIRED SERVICES AND MATERIALS.

IT APPEARS THAT AS A RESULT OF A PREAWARD SURVEY THE CONTRACTING OFFICER DETERMINED THAT YOUR BID SHOULD BE REJECTED BECAUSE YOUR FIRM LACKED THE NECESSARY FINANCIAL RESOURCES TO PERFORM THE CONTRACT. IN COMPLIANCE WITH THE PROVISIONS OF SECTION 1-705.6 (B) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), THE MATTER OF YOUR FIRM'S RESPONSIBILITY WAS REFERRED TO THE SMALL BUSINESS ADMINISTRATION (SBA) FOR CONSIDERATION AS TO WHETHER A CERTIFICATE OF COMPETENCY AS TO YOUR CAPACITY AND CREDIT SHOULD BE ISSUED. ON JULY 22, 1963, THE SBA ADVISED THE PROCUREMENT ACTIVITY THAT YOUR FIRM WAS BEING DENIED A CERTIFICATE OF COMPETENCY. THE NEXT LOW BID OF $66,066.29 WAS SUBMITTED BY MCGREGOR AND WERNER, INC., WASHINGTON, D.C., WHO, ON THE FACE OF THE BID FORM, CERTIFIED ITSELF AS A SMALL BUSINESS CONCERN. IN ACCORDANCE WITH THE PROVISIONS OF ASPR 1-703 THE CONTRACTING OFFICER ACCEPTED AT FACE VALUE THE ABOVE CERTIFICATION BY MCGREGOR AND WERNER, INC. ON JULY 23, 1963, A CONTRACT FOR THE PRINTING SERVICES WAS AWARDED TO MCGREGOR AND WERNER, INC.

YOU CONTEND THAT MCGREGOR AND WERNER, INC., DOES NOT QUALIFY AS A SMALL BUSINESS CONCERN UNDER THE NEW SBA DEFINITION OF A SMALL BUSINESS FOR THE PURPOSE OF CONTRACTS FOR SERVICES. YOU ALSO CONTEND THAT MCGREGOR AND WERNER, INC., DOES NOT QUALIFY AS A SMALL BUSINESS CONCERN BECAUSE OF ITS AFFILIATION WITH OFFSET COMPOSITION SERVICES, INC., MCGREGOR AND WERNER MIDWEST CORPORATION, MCGREGOR AND WERNER SOUTHWEST, AND LITHOPRINT. VIEW OF THE ABOVE CONTENTIONS, OUR OFFICE REQUESTED THE SBA TO FURNISH US WITH A REPORT ON THE ACTION TAKEN BY THAT AGENCY WITH RESPECT TO THE SMALL BUSINESS SIZE STATUS OF MCGREGOR AND WERNER, INC.

IN ITS REPORT THE SBA STATES THAT AT THE TIME THE INVITATION IN QUESTION WAS ISSUED, MAY 15, 1963, THE GENERAL 500-EMPLOYEE SIZE STANDARD WAS THEN IN EFFECT FOR ALL INDUSTRIES EXCEPT CERTAIN ONES NOT HERE APPLICABLE; THAT ON JULY 1, 1963, NEW DEFINITIONS OF A SMALL BUSINESS ON AN INDUSTRY BY INDUSTRY BASIS WENT INTO EFFECT; AND THAT UNDER THE NEW STANDARDS A SMALL BUSINESS FOR THE PURPOSE OF CONTRACTS FOR SERVICES WAS DEFINED AS ONE WHOSE ANNUAL RECEIPTS FOR THE PRECEDING FISCAL YEAR DID NOT EXCEED $1,000,000. IT APPEARS TO BE YOUR CONTENTION THAT THE SIZE STATUS OF MCGREGOR AND WERNER, INC., SHOULD BE DETERMINED UNDER THE LATTER REGULATION. SBA STATES THAT THE 500 EMPLOYEE SIZE STANDARD RATHER THAN THE ANNUAL RECEIPTS SIZE STANDARD IS APPLICABLE TO MCGREGOR AND WERNER, INC., BECAUSE ALL THE PRINTING, PUBLISHING AND ALLIED INDUSTRIES ARE CLASSIFIED IN THE STANDARD INDUSTRIAL CLASSIFICATION MANUAL AS MANUFACTURING INDUSTRIES RATHER THAN AS SERVICE TRADES. IN REGARD TO THE REFERRED-TO NEW SBA DEFINITION OF SMALL BUSINESS, IT IS NOTED THAT BY NOTICE DATED JUNE 18, 1963, INTERESTED PARTIES WERE ADVISED THAT THE NEW DEFINITION OF A SMALL BUSINESS, WHICH WOULD BECOME EFFECTIVE ON JULY 1, 1963, WAS TO APPLY IN THE CASE OF GOVERNMENT PRIME CONTRACTS ONLY TO THOSE PROCUREMENTS FOR WHICH INVITATIONS FOR BIDS OR REQUESTS FOR PROPOSALS WERE ISSUED ON OR AFTER JULY 1, 1963. SINCE THE INVITATION IN QUESTION HERE WAS ISSUED ON MAY 15, 1963, WE ARE OF THE OPINION THAT THE REFERRED-TO ANNUAL RECEIPTS DEFINITION OF A SMALL BUSINESS IS NOT APPLICABLE TO THIS INVITATION.

IN REGARD TO THE AFFILIATES OF MCGREGOR AND WERNER, INC., SBA STATES THAT DURING ITS INVESTIGATION IT DISCOVERED THAT MCGREGOR AND WERNER IS AFFILIATED WITH TEXAS REPRO CENTER, MCGREGOR AND WERNER MIDWEST CORPORATION, MCGREGOR AND WERNER INTERNATIONAL CORPORATION AND OFFSET COMPOSITION SERVICES, INC. SBA ALSO STATES THAT LITHOPRINT HAS BEEN DISSOLVED; THAT THERE NEVER HAS BEEN A CONCERN CALLED MCGREGOR AND WERNER SOUTHWEST; AND THAT MCGREGOR AND WERNER'S HOUSTON OFFICE IS KNOWN AS ITS SOUTHWEST DIVISION. IT ALSO STATES THAT IT HAS DETERMINED THAT MCGREGOR AND WERNER, INC., IS A SMALL BUSINESS CONCERN FOR THE PURPOSE OF THE CONTRACT IN QUESTION BECAUSE, INCLUDING ITS AFFILIATES, (1) ITS TOTAL AVERAGE EMPLOYMENT FOR THE PRECEDING FOUR QUARTERS DID NOT EXCEED 500 PERSONS AND, (2) THE ONLY ITEMS FOR WHICH IT WOULD BE DEEMED A NONMANUFACTURER WILL BE PRODUCED BY SMALL BUSINESS CONCERNS. UNDER THE PROVISIONS OF 15 U.S.C. 637 (B) (6), OFFICERS OF THE GOVERNMENT HAVING PROCUREMENT POWERS MUST ACCEPT AS CONCLUSIVE AN SBA DETERMINATION AS TO WHICH ENTERPRISES ARE TO BE DESIGNATED SMALL BUSINESS CONCERNS.

YOU FURTHER CONTEND THAT THE 72-HOUR PERIOD ALLOWED TO YOU BY SBA FOR THE PURPOSE OF ESTABLISHING YOUR FINANCIAL CAPABILITY IS CERTAINLY NOT A REALISTIC REQUIREMENT AND THAT SUCH A REQUIREMENT SHOULD NOT BE USED AS A BASIS FOR REJECTING YOUR BID. THE SBA REPORT DOES NOT CONTAIN ANY STATEMENT AS TO THE AMOUNT OF TIME ALLOWED BY SBA FOR THE SUBMISSION BY YOU OF EVIDENCE IN SUPPORT OF YOUR FINANCIAL CAPABILITY. UNDER ASPR 1- 705.6 (B), FIFTEEN WORKING DAYS ARE ALLOWED SBA TO MAKE A DETERMINATION AS TO THE CAPACITY AND CREDIT OF A PROSPECTIVE CONTRACTOR. WE ARE OF THE OPINION THAT THE AMOUNT OF TIME TO BE ALLOWED A PROSPECTIVE CONTRACTOR FOR THE SUBMISSION OF EVIDENCE IN SUPPORT OF A CERTIFICATE OF COMPETENCY IS FOR DETERMINATION BY THE SBA.

WE HAVE HELD THAT THE REFUSAL OF THE SBA TO ISSUE A CERTIFICATE OF COMPETENCY AS TO A SMALL BUSINESS BIDDER MUST BE REGARDED AS PERSUASIVE WITH RESPECT TO THE COMPETENCY OR CREDIT OF THE BIDDER CONCERNED. COMP. GEN. 705. WHEN THE ISSUANCE OF A CERTIFICATE OF COMPETENCY IS DENIED, THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY MUST BE REGARDED AS HAVING BEEN AFFIRMED. WE HAVE NO AUTHORITY TO REVIEW DETERMINATIONS OF THE SMALL BUSINESS ADMINISTRATION OR REQUIRE IT TO ISSUE A CERTIFICATE OF COMPETENCY. NOR DO WE DISTURB THE DETERMINATIONS OF A CONTRACTING OFFICER WHERE, AS HERE, THEY APPEAR TO BE SUPPORTED BY THE EVIDENCE OF RECORD AND ARE NEITHER ARBITRARY NOR CAPRICIOUS.

YOU ALLEGE THAT MCGREGOR AND WERNER, INC., DID NOT QUOTE A PRICE FOR ALL OF THE ITEMS IN THE INVITATION AND, THEREFORE, AN AGGREGATE AWARD OF ALL ITEMS COULD NOT BE MADE TO THAT CORPORATION. THE RECORD SHOWS THAT MCGREGOR AND WERNER, INC., FAILED TO QUOTE A PRICE FOR ITEM 111 (A), PRINTING OF PUBLICATIONS AND PERIODICALS. YOU STATE THAT YOUR FIRM WAS THE ONLY COMPANY WHICH QUOTED IN ACCORDANCE WITH PARAGRAPH 1 OF THE SPECIAL PROVISIONS, WHICH PROVIDES, IN PERTINENT PART, AS FOLLOWS:

"AWARD: THE AWARD OF THIS CONTRACT WILL BE BASED UPON THE AGGREGATE OF THE PRICES QUOTED ON ALL ITEMS IN THE SCHEDULE * * *.'

"NOTE: THE CONTRACTOR IS CAUTIONED TO SUBMIT A BID ON ALL ITEMS IN SECTION 1 THRU 6, AND SUPPLEMENT I. IN THE EVENT "NO CHARGE" IS TO BE MADE FOR AN ITEM,"N/C" WILL BE INDICATED FOR THAT ITEM. BIDDERS NOT SUBMITTING A BID ON ALL ITEMS MAY BE CONSIDERED NONRESPONSIVE TO THE INVITATION FOR BID AND MAY BE REJECTED.'

WE THINK IT PROPER TO NOTE THAT PARAGRAPH 1 OF THE SPECIAL PROVISIONS OF THE INVITATION STATED THAT BIDS "MAY" BE CONSIDERED NONRESPONSIVE IF ALL ITEMS ARE NOT BID. THE CONTRACTING OFFICER STATES THAT THE WORD "MAY" WAS USED IN THIS CASE IN ACCORDANCE WITH ASPR 1-210.10 AS A PERMISSIVE WORD. "SHALL" AS MEANING IMPERATIVE, AS DEFINED IN ASPR 1-201.16, WAS NOT USED. THE CONTRACTING OFFICER ALSO STATES THAT THE REASON THAT "MAY" WAS USED IN THE INVITATION TO BIDS AND NOT "SHALL" WAS BECAUSE OF THE GREAT NUMBER OF ITEMS (463) AS TO WHICH PRICES OR PERCENTAGES HAD TO BE BID; AND THAT 463 ITEMS COULD EASILY INCREASE HUMAN ERROR SO THAT IT MIGHT BE POSSIBLE TO MISS AN ITEM. IT WAS ALSO REPORTED THAT IT WAS FELT THAT IF ONE OR MORE ITEMS WERE MISSED THE GOVERNMENT SHOULD BE IN THE POSITION OF JUDGING WHETHER OR NOT THE MISSED ITEM WAS OF SIGNIFICANT VALUE TO HAVE ANY CHANCE OF DISPLACING ANOTHER BID; THAT THE TWO BIDDERS WHO DID QUOTE A PRICE FOR ITEM 111 (A) QUOTED PRICES OF $1 AND $3; AND THAT IN THIS CASE, THE $1 AND $3 THAT OTHER CONTRACTORS BID ON ITEM 111 (A) COULD IN NO WAY DISPLACE ANOTHER BIDDER SINCE THE ITEM WOULD HAVE TO BE PRICED ABOVE $1,129.11 TO DISPLACE THE NEXT BID. IT IS FURTHER REPORTED THAT THE FAILURE OF MCGREGOR AND WERNER, INC., TO ENTER A PRICE UNDER ITEM 111 (A) TO COVER A CHARGE FOR THICKNESS IN EXCESS OF 2 1/2 INCHES WAS CONSIDERED AS A MINOR INFORMALITY HAVING A TRIVIAL OR NEGLIGIBLE EFFECT ON THE PRICE AS SET FORTH IN ASPR 2-405 AND THAT THE SECOND SENTENCE UNDER ITEM 111 (A) CONTAINING A BLANK SPACE FOR THE OMITTED PRICE IN QUESTION SHOULD HAVE BEEN DELETED FROM THE INVITATION AS THE PRICES FOR VOLUMES EXCEEDING 2 1/2 INCHES THICK ARE LISTED UNDER SUB-ITEMS (4), (5), AND (6) OF ITEM 111 (A). IN VIEW OF THE FOREGOING, WE ARE OF THE OPINION THAT THE ACTION OF THE CONTRACTING OFFICER IN CONSIDERING THE FAILURE OF MCGREGOR AND WERNER, INC., TO QUOTE A PRICE FOR ITEM 111 (A) TO BE A MINOR INFORMALITY WAS PROPER UNDER THE CIRCUMSTANCES.

ACCORDINGLY, WE FIND NO LEGAL BASIS FOR QUESTIONING THE REJECTION OF YOUR FIRM'S BID AND THE AWARD OF A CONTRACT TO MCGREGOR AND WERNER, INC. ..END