B-153624, APR. 27, 1964

B-153624: Apr 27, 1964

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TO JOHN CHATILLON AND SONS: FURTHER REFERENCE IS MADE TO YOUR LETTERS DATED FEBRUARY 27. 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. THIS ACTION IS BASED ON A DETERMINATION BY THE CONTRACTING OFFICER. THAT IT IS IN THE INTEREST OF MAINTAINING OR MOBILIZING THE NATION'S FULL PRODUCTIVE CAPACITY. OR IN THE INTEREST OF ASSURING THAT A FAIR PROPORTION OF GOVERNMENT PROCUREMENT IS PLACED WITH SMALL BUSINESS CONCERNS. BIDS OR PROPOSALS RECEIVED FROM FIRMS WHICH ARE NOT SMALL BUSINESS CONCERNS SHALL BE CONSIDERED NONRESPONSIVE. "/B) DEFINITION. A "SMALL BUSINESS CONCERN" IS A CONCERN.

B-153624, APR. 27, 1964

TO JOHN CHATILLON AND SONS:

FURTHER REFERENCE IS MADE TO YOUR LETTERS DATED FEBRUARY 27, MARCH 6, AND APRIL 2, 1964, PROTESTING THE AWARD OF A CONTRACT TO THE TRINER SCALE AND MANUFACTURING COMPANY OF CHICAGO, ILLINOIS, UNDER POST OFFICE DEPARTMENT INVITATION FOR BIDS NO. 253.

THE ADMINISTRATIVE REPORT FURNISHED THIS OFFICE SHOWS THAT ON JANUARY 28, 1964, THE POST OFFICE DEPARTMENT ISSUED THE ABOVE INVITATION SOLICITING BIDS FOR A SPECIFIED QUANTITY OF PARCEL POST SCALE CHARTS. SINCE THE TOTAL PROCUREMENT HAD BEEN SET ASIDE FOR SMALL BUSINESS, THE INVITATION CONTAINED THE FOLLOWING NOTICE:

"NOTE OF TOTAL SMALL BUSINESS SET-ASIDE

"/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. THIS ACTION IS BASED ON A DETERMINATION BY THE CONTRACTING OFFICER, ALONE OR IN CONJUNCTION WITH A REPRESENTATIVE OF THE SMALL BUSINESS ADMINISTRATION, THAT IT IS IN THE INTEREST OF MAINTAINING OR MOBILIZING THE NATION'S FULL PRODUCTIVE CAPACITY, IN THE INTEREST OF WAR OR NATIONAL DEFENSE PROGRAMS, OR IN THE INTEREST OF ASSURING THAT A FAIR PROPORTION OF GOVERNMENT PROCUREMENT IS PLACED WITH SMALL BUSINESS CONCERNS. BIDS OR PROPOSALS RECEIVED FROM FIRMS WHICH ARE NOT SMALL BUSINESS CONCERNS SHALL BE CONSIDERED NONRESPONSIVE.

"/B) DEFINITION. A "SMALL BUSINESS CONCERN" IS A CONCERN, INCLUDING ITS AFFILIATES, WHICH IS INDEPENDENTLY OWNED AND OPERATED, IS NOT DOMINANT IN THE FIELD OF OPERATION WHICH IT IS BIDDING ON GOVERNMENT CONTRACTS, AND CAN FURTHER QUALIFY UNDER THE CRITERIA SET FORTH IN THE REGULATIONS OF THE SMALL BUSINESS ADMINISTRATION (13 CFR 121.3-8). IN ADDITION TO MEETING THESE CRITERIA, A MANUFACTURER OR A 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.'

IMMEDIATELY AFTER THE SCHEDULED OPENING, A REPRESENTATIVE OF THE TRINER SCALE AND MANUFACTURING COMPANY REGISTERED A PROTEST WITH THE GOVERNMENT CLAIMING THAT JOHN CHATILLON AND SONS WAS NOT A SMALL BUSINESS CONCERN. BY LETTER DATED FEBRUARY 11, 1964, THE SMALL BUSINESS ADMINISTRATION CONFIRMED THIS ASSERTION POINTING OUT THAT JOHN CHATILLON AND SONS HAD AVERAGED MORE THAN 500 EMPLOYEES FOR THE PRECEEDING FOUR QUARTERS OF 1963. WHILE ADMITTING THE VALIDITY OF SBA'S REPORT, IT IS EXPLAINED IN YOUR LETTER OF FEBRUARY 12,1964, TO THE POST OFFICE DEPARTMENT THAT THIS WAS A TEMPORARY SITUATION WHICH RESULTED FROM RECENT ACQUISITIONS AND THAT AT THE TIME OF WRITING THERE WERE, IN FACT, ONLY 461 EMPLOYEES.

UNDER THE EXPRESS TERMS OF THE SMALL BUSINESS ACT, AS AMENDED, 15 U.S.C. 637 (B) (6) THE SMALL BUSINESS ADMINISTRATION (SBA) IS THE AGENCY EMPOWERED TO DETERMINE WITHIN ANY INDUSTRY WHICH FIRMS ARE TO BE DESIGNATED AS SMALL BUSINESS CONCERNS FOR PURPOSES OF GOVERNMENT PROCUREMENT. ONCE MADE, SUCH DETERMINATIONS ARE CONCLUSIVE UPON THE PROCUREMENT AGENCY. THIS OFFICE HAS CONSISTENTLY TAKEN THE POSITION THAT WE HAVE NO AUTHORITY TO QUESTION A SIZE DETERMINATION MADE BY SBA EXCEPT UPON CLEAR AND CONVINCING PROOF THAT THE FINDING WAS IN FACT ARBITRARY OR CLEARLY ERRONEOUS. SEE B-152179, SEPTEMBER 24, 1963, AND CASES CITED THEREIN. THEREFORE, NOTWITHSTANDING THAT YOUR COMPANY MAY HAVE ACTUALLY SUBMITTED THE LOWEST BID ON SEVERAL OF THE ITEMS NEEDED, WE MUST CONCLUDE UNDER THE FACTS AS PRESENTED THAT THE CONTRACTING OFFICER HAD NO ALTERNATIVE BUT TO DECLARE YOUR FIRM INELIGIBLE FOR THIS AWARD.

WHILE MORE COMPETITIVE PRICES MIGHT HAVE BEEN OBTAINED HAD THE INVITATION NOT BEEN SET ASIDE FOR EXCLUSIVE PARTICIPATION BY SMALL BUSINESS, WE HAVE CONSISTENTLY POINTED OUT THAT THERE IS NO REQUIREMENT THAT PRICES OFFERED UNDER A SMALL BUSINESS SET-ASIDE BE EQUAL TO OR BETTER THAN PRICES WHICH MIGHT REASONABLY HAVE BEEN ANTICIPATED AS A RESULT OF UNRESTRICTED COMPETITION. 38 COMP. GEN. 744. THE SET-ASIDE OF THIS PROCUREMENT FOR SMALL BUSINESS APPEARS TO HAVE BEEN MADE WITHIN THE FRAMEWORK OF PERTINENT LAWS AND REGULATIONS ON THE BASIS OF A DETERMINATION AUTHORIZED TO BE MADE BY THE CONTRACTING OFFICER AND THE SMALL BUSINESS ADMINISTRATION. SEE 15 U.S.C. 644. IN THIS REGARD, THE ADMINISTRATIVE OFFICER REPORTS THAT ALTHOUGH ONLY TWO BIDS WERE RECEIVED, A NUMBER OF FIRMS IN FACT WERE SOLICITED. EVEN IF HINDSIGHT NOW INDICATES THAT THE AWARD SHOULD NOT HAVE BEEN SET ASIDE FOR SMALL BUSINESS, THE ADMINISTRATIVE OFFICER REPORTS THAT THE CRITICAL TIME LIMIT DID NOT PERMIT REJECTION OF ALL BIDS AND READVERTISEMENT ON A NONRESTRICTED BASIS.

IN THE FINAL PARAGRAPH OF YOUR LETTER DATED FEBRUARY 27, 1964, YOU QUESTION WHETHER IT IS ETHICAL TO ALLOW A BIDDER TO CHANGE HIS BID. WHILE IT IS WELL ESTABLISHED THAT BIDDERS MAY NOT, AS A GENERAL RULE, VARY THEIR PROPOSALS AFTER BID OPENING, IT IS EQUALLY WELL ESTABLISHED THAT THE LOWEST ACCEPTABLE BIDDER MAY VOLUNTARILY DECREASE THE AMOUNT OF HIS BID. IN AN ANALOGOUS CASE, B-146229, SEPTEMBER 1, 1961, WE STATED:

"* * * THE PROPRIETY OF SUCH PROCEDURE HAS BEEN RECOGNIZED BY THE COURT OF CLAIMS AND OUR OFFICE, THE RULE BEING THAT WHERE A BIDDER HAS SUBMITTED THE OTHERWISE LOW ACCEPTABLE BID, THERE IS NO REASON WHY HE MAY NOT, AFTER BID OPENING, VOLUNTARILY DECREASE THE AMOUNT OF HIS BID, SINCE THE RIGHTS OF OTHER BIDDERS ARE NOT PREJUDICED. ALEC LEITMAN V. UNITED STATES, 104 CT.CL. 324; 37 COMP. GEN. 251, 254; 39 ID. 779, 781.'

IN VIEW THEREOF, WE FIND NO VALID BASIS TO FURTHER QUESTION THE AWARD. SEE B-147333, DATED NOVEMBER 21, 1961, AND B-147876, DATED APRIL 19, 1962.