B-154597, OCT. 1, 1964

B-154597: Oct 1, 1964

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TO THE SECRETARY OF THE AIR FORCE: REFERENCE IS MADE TO LETTERS DATED AUGUST 18 AND SEPTEMBER 22. THE PROCUREMENT WAS SET ASIDE FOR EXCLUSIVE SMALL BUSINESS PARTICIPATION AND BIDS WERE SOLICITED FOR THE FURNISHING OF A QUANTITY OF LIQUID OXYGEN INDICATORS AND APPLICABLE DATA. A CLAUSE WAS INCLUDED THEREIN WHICH PROVIDED THAT BIDS RECEIVED FROM FIRMS WHICH WERE NOT SMALL BUSINESS CONCERNS WOULD BE CONSIDERED NONRESPONSIVE AND BE REJECTED. IN WHICH THE NUMBER OF EMPLOYEES PERMITTED FOR "SMALL BUSINESS" CONCERNS WAS 1. THE INVITATION HAD BEEN ISSUED IN THE BELIEF THAT THE PROPER SIC WAS NO. 3821. ON JULY 14 THE SIZE STANDARDS DIVISION OF SBA RULED THAT THIS WAS CORRECT. IN THE MEANWHILE BIDS WERE OPENED ON JUNE 30.

B-154597, OCT. 1, 1964

TO THE SECRETARY OF THE AIR FORCE:

REFERENCE IS MADE TO LETTERS DATED AUGUST 18 AND SEPTEMBER 22, 1964, FILE AFSPPCA, FROM YOUR CHIEF, PROCUREMENT OPERATIONS DIVISION, DIRECTORATE, PROCUREMENT POLICY, DCS/S AND L, FURNISHING THIS OFFICE WITH REPORTS RELATIVE TO THE PREAWARD PROTEST OF SIMMONDS PRECISION PRODUCTS, INC., IFB NO. 33-657-64-288 ISSUED MAY 28, 1964, AND REQUESTING A DECISION WHETHER THE CONTRACT MAY BE AWARDED TO THAT FIRM OR WHETHER THE INVITATION SHOULD BE CANCELED AND THE PROCUREMENT READVERTISED.

THE PROCUREMENT WAS SET ASIDE FOR EXCLUSIVE SMALL BUSINESS PARTICIPATION AND BIDS WERE SOLICITED FOR THE FURNISHING OF A QUANTITY OF LIQUID OXYGEN INDICATORS AND APPLICABLE DATA. A CLAUSE WAS INCLUDED THEREIN WHICH PROVIDED THAT BIDS RECEIVED FROM FIRMS WHICH WERE NOT SMALL BUSINESS CONCERNS WOULD BE CONSIDERED NONRESPONSIVE AND BE REJECTED. THE INVITATION FOR BIDS DEFINED A "SMALL BUSINESS CONCERN" AS ONE HAVING NOT MORE THAN 500 EMPLOYEES. THESE CONCERNS RESPONDED INCLUDING SIMMONDS PRECISION PRODUCTS, INC., WHICH EMPLOYS MORE THAN 500 AND LESS THAN 1,000 EMPLOYEES. ON JUNE 11, 1964, WELL IN ADVANCE OF THE SCHEDULED OPENING DATE OF JUNE 30, 1964, THAT FIRM PROTESTED TO THE CONTRACTING AGENCY ALLEGING THAT THE ITEMS BEING PROCURED SHOULD PROPERLY BE CLASSIFIED IN STANDARD INDUSTRIAL CLASSIFICATION NO. 3729, IN WHICH THE NUMBER OF EMPLOYEES PERMITTED FOR "SMALL BUSINESS" CONCERNS WAS 1,000 EMPLOYEES OR LESS. THE INVITATION HAD BEEN ISSUED IN THE BELIEF THAT THE PROPER SIC WAS NO. 3821, AND ON JULY 14 THE SIZE STANDARDS DIVISION OF SBA RULED THAT THIS WAS CORRECT. ON JULY 15 SIMMONDS APPEALED THIS RULING TO THE SIZE APPEALS BOARD OF SBA. IN THE MEANWHILE BIDS WERE OPENED ON JUNE 30, 1964, AT WHICH TIME THE BID OF SIMMONDS PRECISION PRODUCTS, INC., WAS FOUND TO BE THE LOWEST. AS A RESULT OF SIMMONDS' ACTION, WHICH APPEARED TO HAVE BEEN INITIATED IN GOOD FAITH, NO AWARD WAS MADE UNDER THE INVITATION PENDING DECISION ON THE PROTEST. ON AUGUST 17, 1964, THE SIZE APPEALS BOARD OF THE SMALL BUSINESS ADMINISTRATION DECIDED THAT THE APPROPRIATE CLASSIFICATION FOR THE LIQUID OXYGEN INDICATOR WAS AS CONTENDED BY THE PROTESTOR.

IN RECOMMENDING THAT THE PROCURING ACTIVITY BE AUTHORIZED TO PROCEED WITH AN AWARD UNDER THE EXISTING INVITATION, RATHER THAN TO CANCEL THE IFB AND READVERTISE USING THE CORRECT SMALL BUSINESS DEFINITION, THE FOLLOWING PERTINENT CIRCUMSTANCES ARE SET FORTH IN THE PROCUREMENT OPERATIONS DIVISION LETTER OF SEPTEMBER 22:

"ALL KNOWN SMALL BUSINESS FIRMS HAVING AN INTEREST IN THIS TYPE OF PROCUREMENT HAVE ACTUALLY BID OR HAD AN OPPORTUNITY TO BID UNDER IFB 33- 657-64-288. THE CONTRACTING OFFICER REPORTS THAT ONLY THREE SMALL BUSINESS COMPANIES HAD PREVIOUSLY FABRICATED OXYGEN INDICATORS, NAMELY, MAGNETIC INSTRUMENTS COMPANY, CONSOLIDATED AIRBORNE SYSTEMS, INC.,AND SIMMONDS PRECISION PRODUCTS, INC. THERE IS ALSO A FOURTH POTENTIAL SMALL BUSINESS SOURCE FOR THIS EQUIPMENT, EMPLOYING LESS THAN 500 INDIVIDUALS, WHO HAS NEVER MANUFACTURED THIS ITEM, NAMELY, THE DERO RESEARCH AND DEVELOPMENT CORP. THIS IS CONFIRMED BY BIDS RECEIVED ON A SUBSEQUENT PROCUREMENT FOR A SIMILAR OXYGEN INDICATOR BY THE SAME PROCURING ACTIVITY. THAT INVITATION WAS A PARTIAL SMALL BUSINESS SET-ASIDE AND INCLUDED A SMALL BUSINESS DEFINITION USING THE CRITERIA OF 500 EMPLOYEES. ALL INTERESTED FIRMS, BOTH LARGE AND SMALL BUSINESS, WERE SOLICITED. ONLY BIDS FROM THE ABOVE FIRMS WERE RECEIVED ON THAT INVITATION.'

THE PROCURING AGENCY ALSO STATES THAT THE INDICATORS ARE BEING PROCURED TO SUPPORT NEW AIRCRAFT AND THAT DELAY INVOLVED IN READVERTISING WOULD JEOPARDIZE THE AIRPLANE PROGRAMS AND VERY LIKELY RESULT IN EXPENSIVE OUT OF STATION INSTALLATIONS IN SOME INSTANCES.

WHILE IT IS WELL ESTABLISHED THAT READVERTISEMENT OF THE GOVERNMENT'S NEEDS MAY BE REQUIRED WHEN THE REJECTION OF ALL BIDS IS IN THE PUBLIC INTEREST, WE HAVE RECOGNIZED THAT, CONTRARY TO THE PURPOSES FOR WHICH THE PUBLIC PROCUREMENT STATUTES WERE ENACTED, THE REJECTION OF ALL BIDS--- WITHOUT ABANDONMENT OF THE PROPOSED PROCUREMENT--- IS A SERIOUS MATTER AND TENDS TO DISCOURAGE COMPETITION BECAUSE IT RESULTS IN MAKING ALL BIDS PUBLIC WITHOUT AWARD. THEREFORE, THE AUTHORITY TO REJECT ALL BIDS MUST BE EXERCISED WITH CARE AND ONLY UPON A BONA FIDE DETERMINATION THAT THE PUBLIC INTERESTS WOULD THEREBY BE SERVED. 37 COMP. GEN. 12; ID. 760; 39 ID. 563; 41 ID. 536.

IN THE PRESENT CASE THE INVITATION CONTAINED A "SMALL BUSINESS CONCERN" CRITERIA WHICH WAS PROPERLY QUESTIONED BY THE LOWEST BIDDER AND SUBSEQUENTLY DETERMINED NOT TO BE APPROPRIATE. IN VIEW OF THE ADMINISTRATIVE BELIEF THAT NO ADDITIONAL BIDDERS WOULD RESPOND TO A NEW INVITATION SETTING FORTH THE APPROPRIATE SMALL BUSINESS CONCERN CRITERIA, AND SINCE THE LOWEST BIDDER HAS PRIOR TO AWARD BEEN DETERMINED TO BE A SMALL BUSINESS CONCERN FOR THE FURNISHING OF THE ITEM INVOLVED IN THE PROCUREMENT, WE DO NOT BELIEVE, UNDER THE CIRCUMSTANCES HERE INVOLVED, THAT READVERTISEMENT OF THE PROCUREMENT WOULD SERVE ANY USEFUL PURPOSE OR WOULD BE IN THE BEST INTEREST OF THE GOVERNMENT. AWARD MAY THEREFORE BE MADE TO SIMMONDS IF OTHERWISE PROPER.

THE FILES FORWARDED WITH THE PROCUREMENT OPERATIONS DIVISION LETTERS OF AUGUST 18 AND SEPTEMBER 22 ARE RETURNED.