B-152431, OCT. 23, 1963

B-152431, OCT. 23, 1963

TO J. V. MOAN COMMISSARY CORPORATION:

THIS REFERS TO YOUR LETTERS OF SEPTEMBER 9 AND 4, 1963, PROTESTING AGAINST THE REJECTION OF YOUR LOW BID UNDER INVITATION FOR BIDS NO. 26 600 -64-1, ISSUED BY THE DEPARTMENT OF THE AIR FORCE AT NELLIS AIR FORCE BASE, NEVADA.

THE INVITATION WAS ISSUED ON JULY 15, 1963, FOR SERVICES TO OPERATE DINING HALLS, KITCHEN AND FOOD PROCESSING FACILITIES AT NELLIS AIR FORCE BASE. PARAGRAPH NO. 15 ON PAGES 5 AND 6 OF THE INVITATION PROVIDED IN PERTINENT PART AS FOLLOWS:

"15. NOTICE OF TOTAL SMALL BUSINESS SET-ASIDE (OCT. 1962)

"/A) RESTRICTION. BIDS OR PROPOSALS UNDER THIS PROCUREMENT ARE SOLICITED FROM SMALL BUSINESS CONCERNS ONLY AND THIS PROCUREMENT IS TO BE AWARDED ONLY TO ONE OR MORE SMALL BUSINESS CONCERNS. * * *.

"/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.

SEVEN BIDS WERE RECEIVED AT THE BID OPENING ON AUGUST 16, 1963, AND THE TWO LOW BIDS WERE EVALUATED AS FOLLOWS:

CHART

EVALUATED PRICE

J. V. MOAN COMMISSARY CORP. $271,404.19

ABC FOOD SERVICE, INC. 284,429.66

YOUR FIRM REPRESENTED ITSELF AS SMALL BUSINESS. HOWEVER, ABC FOOD PROTESTED YOUR SMALL BUSINESS STATUS; AND, IN ACCORDANCE WITH ASPR 1 703, THE MATTER WAS REFERRED TO THE SAN FRANCISCO REGIONAL OFFICE OF THE SBA. BY LETTER OF AUGUST 26, 1963, SBA ADVISED THE CONTRACTING OFFICER THAT YOUR FIRM WAS LARGE BUSINESS, IN ACCORDANCE WITH SECTION 121.3-8 (4) (D) OF PART 121 SMALL BUSINESS SIZE STANDARDS, AMENDMENT 4, REVISION 3 (AVERAGE ANNUAL SALES FOR THE PRECEDING 3 FISCAL YEARS IN EXCESS OF $1 MILLION). THE SBA FURTHER ADVISED THE CONTRACTING OFFICER THAT THIS NEW DEFINITION, WHICH IS BASED ON THE YEARLY AMOUNT OF SALES AND SERVICES, WENT INTO EFFECT ON JULY 1, 1963; AND THAT PUBLICATION OF THIS NEW REGULATION, CONTAINING THE EFFECTIVE DATE, WAS MADE ON APRIL 5, 1963, IN THE FEDERAL REGISTER (28 F.R. 3324).

YOU APPEALED THE SIZE DETERMINATION; BUT ON OCTOBER 3, 1963, THE DIRECTOR, OFFICE OF SMALL BUSINESS SIZE STANDARDS, NOTIFIED YOUR ATTORNEY (MR. W. JOHN KENNEY) THAT YOUR APPEAL WAS DENIED. (IT WAS DENIED ON THE BASIS THAT THIS PROCUREMENT CALLED FOR FOOD SERVICES RATHER THAN MANUFACTURING OF FOOD PREPARATIONS; AND THAT THE NEW REGULATION WAS THEREFORE APPLICABLE.)

YOU CONTEND HERE THAT THE INVITATION DEFINITION OF SMALL BUSINESS SHOULD GOVERN AS TO THE WARD; AND YOU POINT OUT THAT, FOR SMALL BUSINESS LOAN PURPOSES, YOUR FIRM IS A QUALIFIED SMALL BUSINESS FIRM, SINCE IT EMPLOYS 249 PEOPLE (CITING 28 F.R. 5610).

IN REACHING THE CONCLUSION THAT THE INVITATION DEFINITION OF SMALL BUSINESS SHOULD GOVERN, YOU CITE OUR DECISION B-149583, DATED AUGUST 20, 1962, WHERE WE STATED THAT: "THE RIGHTS OF BIDDERS AND THE PROPRIETY OF THE GOVERNMENT'S CONSIDERATION OF LATE MAILED BIDS MUST BE DETERMINED ON THE BASIS OF THE TERMS OF THE INVITATION.' IN THAT DECISION THE INVITATION PERMITTED THE CONSIDERATION OF LATE MAILED BIDS, UNDER SPECIFIED CIRCUMSTANCES, WITHOUT REGARD TO WHETHER THE LATE BID WAS SENT BY REGISTERED OR CERTIFIED MAIL, WHILE A REGULATION (ASPR REVISION NO. 9, DATED APRIL 15, 1962) PRECLUDED THE CONSIDERATION OF LATE MAILED BIDS UNLESS SENT BY REGISTERED OR CERTIFIED MAIL. HOWEVER, THE INVITATION HAD BEEN ISSUED ON MAY 10, 1962, WHILE THE EFFECTIVE DATE OF THE REGULATION WAS JULY 14, 1962. WE STATED AS FOLLOWS:

"* * *.BASED ON THE ISSUANCE DATE OF APRIL 15, 1962, THE REQUIRED EFFECTIVE DATE OF ASPR REVISION NO. 9 WAS JULY 14, 1962, AND, UNTIL THAT DATE, THE INCLUSION IN INVITATIONS FOR BIDS OF PROVISIONS PRESCRIBED THEREBY WAS OPTIONAL WITH THE PROCUREMENT AGENCIES.'

WE ACCORDINGLY CONCLUDED THAT THE INVITATION PROVISION ON LATE BIDS SHOULD GOVERN. IN THE PRESENT CASE, HOWEVER, THE GOVERNING SBA REGULATION WAS ALREADY IN EFFECT ON JULY 15, 1963, WHEN THE INVITATION WAS ISSUED.

BASED ON THIS REGULATION THE SBA DETERMINED THAT YOUR FIRM WAS NOT AN ELIGIBLE SMALL BUSINESS BIDDER UNDER THE SUBJECT INVITATION. BY PROVISION OF LAW THIS DETERMINATION WAS CONCLUSIVE ON THE PROCURING AGENCY (SEE U.S.C. 637 (B) (6) (, REGARDLESS OF HOW THE INVITATION DEFINED A SMALL BUSINESS CONCERN.

AS TO THE SBA DEFINITION OF SMALL BUSINESS FOR PURPOSES OF SMALL BUSINESS LOANS, IT IS CLEAR FROM THE PROVISIONS OF THE SMALL BUSINESS ACT AND THE LEGISLATIVE HISTORY OF THE ACT THAT THE SIZE STANDARDS SET FOR PURPOSES OF LOAN ASSISTANCE ARE NOT CONTROLLING FOR PURPOSES OF GOVERNMENT PROCUREMENT. SEE SENATE REPORT NO. 1714, 85TH CONGRESS, 2D SESSION P. 7, WHERE A PROPOSED CHANGE BY THE HOUSE OF REPRESENTATIVES IN THE SMALL BUSINESS ACT OF 1953 TO EFFECT THE SAME SIZE STANDARDS FOR FINANCIAL ASSISTANCE AND PROCUREMENT WAS DELETED FROM THE SMALL BUSINESS ACT OF 1958.

ACCORDINGLY, YOUR PROTEST AGAINST THE REJECTION OF YOUR BID MUST BE DENIED. IN THIS CONNECTION, WE HAVE BEEN ADVISED BY THE DEPARTMENT OF THE AIR FORCE THAT ALL BIDS HAVE BEEN REJECTED (BECAUSE OF UNREASONABLE PRICES), AND THAT THE PROCUREMENT HAS BEEN READVERTISED WITHOUT REGARD TO SIZE.