B-154714, NOV. 6, 1964

B-154714: Nov 6, 1964

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TO OKLAHOMA SEATING COMPANY: FURTHER REFERENCE IS MADE TO YOUR LETTER OF JULY 11. 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 AND SHALL BE REJECTED. "/B) DEFINITION. A "SMALL BUSINESS CONCERN" IS A CONCERN.

B-154714, NOV. 6, 1964

TO OKLAHOMA SEATING COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JULY 11, 1964, AND SUBSEQUENT CORRESPONDENCE, PROTESTING AGAINST THE ACTION OF THE ALTUS AIR FORCE BASE, OKLAHOMA, IN AWARDING A CONTRACT TO GRIGGS EQUIPMENT, INC., BELT ON, TEXAS, UNDER INVITATION NO. 34-612-64-54.

THE INVITATION REQUESTED BIDS FOR REMOVING EXISTING SEATS IN THE BASE THEATER AT THE ALTUS AIR FORCE BASE AND FOR FURNISHING AND INSTALLING NEW SEATS. THE INVITATION CONTAINED THE FOLLOWING NOTICE:

"NOTICE OF TOTAL SMALL BUSINESS SET ASIDE (NOV. 1963)

"/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 AND SHALL BE REJECTED.

"/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 IN WHICH IT IS BIDDING ON GOVERNMENT CONTRACTS, AND CAN FURTHER QUALIFY UNDER THE CRITERIA SET FORTH IN REGULATIONS OF THE SMALL BUSINESS ADMINISTRATION (CODE OF FEDERAL REGULATIONS, TITLE 13, SECTION 121.3-8). FOR SERVICE INDUSTRIES THE AVERAGE ANNUAL SALES OR RECEIPTS OF THE CONCERN AND ITS AFFILIATES FOR THE PRECEDING THREE FISCAL YEARS MUST NOT EXCEED $1 MILLION ($1,250,000 IF LOCATED IN ALASKA).'

FOUR BIDS WERE RECEIVED AND OPENED ON JUNE 25, 1964. GRIGGS EQUIPMENT, INC., SUBMITTED THE LOWEST BID FOR THE REQUIRED THEATER SEATS AND THAT FIRM, ON THE FACE OF THE BID FORM, CERTIFIED ITSELF AS A SMALL BUSINESS CONCERN. THE SECOND LOWEST BID WAS SUBMITTED BY YOUR FIRM.

IT IS REPORTED THAT AFTER THE BIDS WERE READ, MR. SMITH OF YOUR FIRM ASKED THE BID OPENING OFFICIAL, MR. BLACKWELL, IF THE LOW BIDDER, GRIGGS EQUIPMENT, INC., WAS A SMALL BUSINESS CONCERN; THAT MR. BLACKWELL EXAMINED THE BID OF GRIGGS EQUIPMENT, INC., AND INFORMED YOUR MR. SMITH THAT THE BID REPRESENTATION ON THE BID STATED THAT THE FIRM WAS A SMALL BUSINESS; AND THAT MR. SMITH THEN QUESTIONED THE DEFINITION OF SMALL BUSINESS AND THAT MR. BLACKWELL EXPLAINED TO HIM, IN PARTICULAR, THE MEANING OF AVERAGE ANNUAL RECEIPTS FOR THE PRECEDING THREE YEARS. IT IS ALSO REPORTED THAT ON JUNE 26, 1964, AFTER GRIGGS EQUIPMENT, INC., CONFIRMED ITS LOW BID AND THE REPRESENTATION CONTAINED THEREIN THAT IT WAS A SMALL BUSINESS CONCERN, CONTRACT NO. AF 34/612/-2173 WAS AWARDED TO THAT FIRM. IT IS REPORTED THAT PERFORMANCE UNDER THE CONTRACT BEGAN IMMEDIATELY UPON RECEIPT OF THE CONTRACTOR'S RECEIPT OF THE EXECUTED CONTRACT AND WAS COMPLETED AND ACCEPTED BY THE GOVERNMENT ON JULY 31, 1964.

BY LETTER DATED JUNE 26, 1964, ADDRESSED TO THE CONTRACTING OFFICER, WHICH WAS RECEIVED BY THAT OFFICE ON JUNE 29, YOUR FIRM PROTESTED AGAINST AN AWARD TO GRIGGS EQUIPMENT, INC., ON THE BASIS THAT IT WAS NOT A SMALL BUSINESS FIRM QUALIFIED FOR AWARD BECAUSE THE SALES VOLUME OF THAT FIRM EXCEEDED THE $1 MILLION AVERAGE OVER THE PAST THREE FISCAL YEARS. IN A LETTER DATED JUNE 30, 1964, THE CONTRACTING OFFICER ADVISED YOUR FIRM THAT GRIGGS EQUIPMENT, INC., HAD REPRESENTED ON ITS BID THAT IT WAS A SMALL BUSINESS CONCERN; THAT UNDER THE PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATION A CONTRACTING OFFICER IS REQUIRED TO ACCEPT SUCH REPRESENTATION AT FACE VALUE; AND THAT SINCE IT WAS DESIRABLE TO MAKE AN AWARD ON THIS PROCUREMENT AS QUICKLY AS POSSIBLE, AWARD WAS MADE TO GRIGGS EQUIPMENT, INC., ON JUNE 26, 1964.

IT IS REPORTED THAT BY LETTER DATED JUNE 30, 1964, YOU FORMALLY PROTESTED THE AWARD OF A CONTRACT TO GRIGGS EQUIPMENT, INC., UNDER THE SUBJECT INVITATION ON THE BASIS THAT THE FIRM'S ANNUAL REPORT REFLECTED A $10 MILLION SALES VOLUME IN 1963, AND ABOUT AN $8 MILLION SALES VOLUME IN 1962. BY LETTER DATED JULY 3, 1964, THE CONTRACTING OFFICE ADVISED YOUR FIRM THAT YOUR PROTEST COULD NOT BE ACTED UPON BECAUSE IT WAS NOT RECEIVED UNTIL AFTER DATE OF THE AWARD IN VIEW OF THE PROVISIONS OF PARAGRAPH 1- 703/B) (1) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) WHICH PROVIDES, IN PART, THAT "A PROTEST RECEIVED AFTER AWARD OF A CONTRACT WILL NOT BE CONSIDERED A "PROTEST" AND WILL BE RETURNED TO THE SENDER WITH AN EXPLANATION OF WHY IT COULD NOT BE ACTED UPON.'

BY LETTER DATED JULY 11, 1964, ADDRESSED TO OUR OFFICE, YOU PROTESTED THE AWARD OF A CONTRACT TO GRIGGS EQUIPMENT, INC., ON THE BASIS THAT THE CORPORATION DID NOT QUALIFY AS A SMALL BUSINESS CONCERN BECAUSE ITS VOLUME OF SALES FOR THE PREVIOUS THREE YEARS AVERAGED MORE THAN $1 MILLION. YOU CONTEND THAT SINCE THE INVITATION FOR BIDS DEFINED A SMALL BUSINESS CONCERN AS ONE WHOSE AVERAGE ANNUAL SALES OR RECEIPTS FOR THE PRECEDING THREE FISCAL YEARS DID NOT EXCEED $1 MILLION AND SINCE YOUR REPRESENTATIVE NOTIFIED THE BID OPENING OFFICIAL THAT THE ANNUAL SALES OF GRIGGS EQUIPMENT, INC., EXCEEDED THAT AMOUNT, THE BID OF THE CORPORATION SHOULD HAVE BEEN REJECTED AS BEING NONRESPONSIVE TO THE INVITATION. IN VIEW OF THE ABOVE CONTENTION, OUR OFFICE REQUESTED THE SMALL BUSINESS ADMINISTRATION (SBA) TO FURNISH US WITH A REPORT OF THE ACTION TAKEN BY THAT AGENCY WITH RESPECT TO THE SIZE STATUS OF GRIGGS EQUIPMENT, INC. BY LETTER DATED OCTOBER 15, 1964, THE SBA FURNISHED OUR OFFICE WITH A REPORT IN WHICH IT STATED:

"THE CONTRACT IN QUESTION WAS FOR THE INSTALLATION OF 712 THEATER SEATS AT ALTUS AIR FORCE BASE. THE INVITATION INDICATED THAT THE PROCUREMENT WAS ONE FOR A SERVICE AND THAT THE $1 MILLION AVERAGE ANNUAL RECEIPTS SIZE STANDARD FOR THE PURPOSE OF BIDDING ON A SERVICE CONTRACT WAS APPLICABLE (SEE SEC. 121.308 (E) OF THE SMALL BUSINESS SIZE STANDARD REGULATION) (REVISION 4), AS AMENDED, COPY ENCLOSED. THE CASE WAS NOT REFERRED TO THE SMALL BUSINESS ADMINISTRATION (SBA) BECAUSE THE OKLAHOMA SEATING COMPANY, DID NOT, AS REQUIRED BY SEC. 121.3-5/A) OF THE REGULATION, THEN IN EFFECT, FILE A WRITTEN PROTEST WITH THE CONTRACTING OFFICER PRIOR TO AWARD. THEREFORE, SBA DID NOT DETERMINE THE ELIGIBILITY OF GRIGGS AS A SMALL BUSINESS CONCERN. THE CONTRACTING OFFICER AWARDED THE CONTRACT TO GRIGGS WHICH HAD REPRESENTED IN ITS BID THAT IT WAS A SMALL BUSINESS CONCERN.

"YOU NOW ASKED THAT WE DETERMINE WHETHER GRIGGS IN FACT WAS A SMALL BUSINESS CONCERN ON JUNE 26, 1964, THE DATE ON WHICH IT WAS AWARDED THE CONTRACT. ON OCTOBER 9, 1964, OUR REGIONAL DIRECTOR AT DALLAS, TEXAS, DETERMINED AS FOLLOWS:

" "BASED UPON THE INFORMATION SUBMITTED TO THIS OFFICE, GRIGGS EQUIPMENT COMPANY, IN OUR OPINION, WAS A SMALL BUSINESS CONCERN IN THE CONSTRUCTION INDUSTRY, UNDER THE CRITERIA SET FORTH IN SECTION 121.3 8/A) OF SMALL BUSINESS SIZE STANDARD REGULATIONS, AS OF THE DATE OF THE AWARD UNDER ALTUS AIR FORCE BASE IFB 34-612-64-54, WHICH REFERENCED CONTRACT WAS AWARDED JUNE 26, 1964. THIS DETERMINATION IS BASED UPON THE FACT THAT AS OF THE DATE OF SAID AWARD, IT WAS INCUMBENT UPON SBA, RATHER THAN THE CONTRACTING OFFICER, TO DETERMINE THE INDUSTRY INTO WHICH THE PRODUCT OR SERVICE PROCURED SHOULD HAVE BEEN PROPERLY CLASSIFIED.

" "THE BASIS FOR THIS DETERMINATION IS:

" "1. PROPERLY, THE IFB WAS ONE FOR CONSTRUCTION, MODIFICATION OR REPAIR, TO REAL PROPERTY.

" "2. THE APPLICABLE SIZE STANDARD FOR CONSTRUCTION IS AVERAGE ANNUAL RECEIPTS FOR THE PRECEDING THREE FISCAL YEARS NOT EXCEEDING $7 1/2 MILLION.

" "3. GRIGGS EQUIPMENT COMPANY AND AFFILIATES' AVERAGE RECEIPTS WERE LESS THAN $7-1/2 MILLION ANNUALLY.'"

"WE ARE NOTIFYING THE OKLAHOMA SEATING COMPANY OF THE ABOVE DETERMINATION. THE DETERMINATION CAN BE APPEALED TO THE SMALL BUSINESS SIZE APPEALS BOARD, PURSUANT TO SEC. 121.3-6 OF THE REGULATION.

"IT SHOULD BE NOTED THAT INFORMATION FURNISHED TO US BY GRIGGS INDICATES THAT, WHILE ITS RECEIPTS DID NOT EXCEED $7-1/2 MILLION, THEY DID EXCEED $1 MILLION.'

SECTION 8/B) (6) OF THE SMALL BUSINESS ACT AS AMENDED BY PUBLIC LAW 85- 536, 72 STAT. 384, 390, 15 U.S.C. 637/B) (6), AUTHORIZES THE SMALL BUSINESS ADMINISTRATION TO DETERMINE WHICH BUSINESS ENTERPRISES ARE TO BE DESIGNATED AS SMALL BUSINESS CONCERNS AND MAKES ITS DETERMINATIONS IN THESE MATTERS CONCLUSIVE. SPECIFICALLY, THAT SECTION PROVIDES THAT "OFFICES OF THE GOVERNMENT * * * SHALL ACCEPT AS CONCLUSIVE THE ADMINISTRATION'S DETERMINATION AS TO WHICH ENTERPRISES ARE TO BE DESIGNATED "SMALL-BUSINESS CONCERNS.'"

AS ABOVE INDICATED, GRIGGS EQUIPMENT, INC., CERTIFIED IN ITS BID THAT IT WAS A SMALL BUSINESS CONCERN AND THAT IN RESPONSE TO THE REQUEST OF THE CONTRACTING OFFICE, THE CORPORATION CONFIRMED THAT STATUS. WHILE IT IS TRUE THAT THE CORPORATION COULD NOT BE CONSIDERED A SMALL BUSINESS CONCERN UNDER THE DEFINITION SET FORTH IN THE INVITATION FOR BIDS, THE FACT REMAINS THAT THE SBA HAS NOW DETERMINED THAT THE PROCURING ACTIVITY USED THE WRONG DEFINITION OF SMALL BUSINESS IN THE INVITATION FOR BIDS FOR THE TYPE OF PROCUREMENT INVOLVED AND THAT GRIGGS EQUIPMENT, INC., WAS ELIGIBLE AS A SMALL BUSINESS CONCERN FOR PURPOSES OF AWARD UNDER THE SUBJECT INVITATION. SINCE THE SMALL BUSINESS ACT MAKES THE SIZE DETERMINATIONS OF THE SBA CONCLUSIVE ON ALL "OFFICES OF THE GOVERNMENT," WE MUST CONCLUDE THAT THERE IS NO LEGAL BASIS UPON WHICH WE MAY QUESTION THE CONTRACT AWARD THAT WAS MADE TO GRIGGS EQUIPMENT, INC., UNDER THIS INVITATION.

ACCORDINGLY, YOUR PROTEST AGAINST THE AWARD OF CONTRACT NO. AF 34/612/- 2173 IS DENIED.