B-154807, DEC. 18, 1964

B-154807: Dec 18, 1964

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TO FALSTROM COMPANY: REFERENCE IS MADE TO YOUR LETTER OF JULY 21. THIS PROCUREMENT COVERED AN ESTIMATED 400 ELECTRONIC EQUIPMENT ENCLOSURES AND WAS INITIATED AS A 100 PERCENT SET-ASIDE FOR SMALL BUSINESS CONCERNS. P-208-4 WAS SENT TO 52 POTENTIAL BIDDERS. THIRTEEN PROPOSALS WERE RECEIVED. OF WHICH 10 WERE FOUND TO BE TECHNICALLY UNACCEPTABLE. THE THREE ACCEPTABLE PROPOSALS WERE RECEIVED FROM CALCOR SPACE FACILITY. CC-395-4 WAS ISSUED THEREAFTER TO THESE THREE FIRMS FOR SOLICITATION OF PRICES UNDER STEP TWO OF THE PROCUREMENT. BIDS WERE OPENED JUNE 1. EACH BIDDER CERTIFIED THAT IT WAS A SMALL BUSINESS CONCERN. WAS LOW BIDDER IN THE AMOUNT OF $180. WESTERN ALLEGED THAT IT HAD PREVIOUSLY WON A SIZE STANDARD DISPUTE AND THAT ITS CORRECT STANDARD WAS 750 EMPLOYEES RATHER THAN 500.

B-154807, DEC. 18, 1964

TO FALSTROM COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF JULY 21, 1964, PROTESTING CANCELLATION OF INVITATION FOR BIDS NO. CC-395-4 AND THE NEGOTIATION AND AWARD OF A CONTRACT TO ANOTHER CONCERN BY THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION (NASA), COCOA BEACH, FLORIDA.

THIS PROCUREMENT COVERED AN ESTIMATED 400 ELECTRONIC EQUIPMENT ENCLOSURES AND WAS INITIATED AS A 100 PERCENT SET-ASIDE FOR SMALL BUSINESS CONCERNS, UNDER A TWO-STEP FORMAL ADVERTISING PROCEDURE AUTHORIZED BY PART 2, SUBPART 5, OF THE NASA PROCUREMENT REGULATION. PURSUANT TO STEP ONE, REQUEST FOR TECHNICAL PROPOSALS NO. P-208-4 WAS SENT TO 52 POTENTIAL BIDDERS. THIRTEEN PROPOSALS WERE RECEIVED, OF WHICH 10 WERE FOUND TO BE TECHNICALLY UNACCEPTABLE. THE THREE ACCEPTABLE PROPOSALS WERE RECEIVED FROM CALCOR SPACE FACILITY, INC., WESTERN DEVICES, INC., AND YOUR COMPANY, AND INVITATION FOR BIDS NO. CC-395-4 WAS ISSUED THEREAFTER TO THESE THREE FIRMS FOR SOLICITATION OF PRICES UNDER STEP TWO OF THE PROCUREMENT. BIDS WERE OPENED JUNE 1, 1964, AND EACH BIDDER CERTIFIED THAT IT WAS A SMALL BUSINESS CONCERN. WESTERN DEVICES, INC., WAS LOW BIDDER IN THE AMOUNT OF $180,302.50 AND FALSTROM AND CALCOR SUBMITTED BIDS IN THE AMOUNTS OF $254,074.60 AND $333,026.10, RESPECTIVELY.

AFTER THE BID OPENING, BUT BEFORE AWARD, YOUR COMPANY AND CALCOR PROTESTED ANY AWARD TO WESTERN DEVICES ON THE GROUND THAT IT DID NOT MEET THE SMALL BUSINESS SIZE STANDARD OF EMPLOYING, WITH ITS AFFILIATES, FEWER THAN 500 EMPLOYEES. HOWEVER, WESTERN ALLEGED THAT IT HAD PREVIOUSLY WON A SIZE STANDARD DISPUTE AND THAT ITS CORRECT STANDARD WAS 750 EMPLOYEES RATHER THAN 500. THE CONTRACTING OFFICER DISCUSSED THE MATTER WITH THE LOCAL REPRESENTATIVE OF THE SMALL BUSINESS ADMINISTRATION (SBA), WHO SENT A TELEGRAM TO HIS LOS ANGELES REGIONAL OFFICE ON JUNE 4, 1964, REQUESTING A SIZE DETERMINATION ON WESTERN DEVICES. REPLY DATED JUNE 5, FROM THE SBA REGIONAL DIRECTOR, ADVISED THAT WESTERN, WITH AFFILIATES, EMPLOYED SLIGHTLY OVER 600 PERSONNEL, BUT THAT A SIZE DETERMINATION COULD NOT BE MADE BECAUSE THE STANDARD INDUSTRIAL CLASSIFICATION (SIC) WAS NOT GIVEN IN THE ORIGINAL REQUEST. THE WASHINGTON OFFICE OF SBA WAS ALSO CONTACTED, BUT ADVISED THAT IT COULD NOT DETERMINE THE SIZE STATUS OR THE PROPER SIC FOR THE EQUIPMENT ENCLOSURES WITHOUT A REVIEW OF THE APPLICABLE TECHNICAL SPECIFICATION, A COPY OF WHICH WAS ACCORDINGLY SENT TO THE WASHINGTON OFFICE.

AT THIS JUNCTURE THE REQUIRING TECHNICAL ACTIVITY ADVISED THAT THE NEED FOR 50 OF THE ENCLOSURES HAD BECOME EMERGENT AND THAT NEED FOR THE REMAINING QUANTITIES WOULD ALSO, UNLESS IMMEDIATE CONTRACT AWARD WAS MADE. THEREUPON, IT WAS DETERMINED BY THE CONTRACTING OFFICER THAT TIME WOULD NOT PERMIT A DETERMINATION BY SBA OF THE APPLICABLE SIZE STANDARD, AND THE SMALL BUSINESS SET-ASIDE WAS CANCELED, WITH THE CONCURRENCE OF THE SBA REPRESENTATIVE, AND THE PROCUREMENT WAS NEGOTIATED, WITH AWARD BEING MADE TO WESTERN DEVICES IN THE TOTAL ESTIMATED AMOUNT OF $179,481.

YOUR LETTER OF JULY 21, 1964, PROTESTS THE ABOVE AWARD FOR THE FOLLOWING REASONS:

"1. THAT THE CONTRACT WAS AWARDED TO BIG BUSINESS AND IT IS SO LISTED IN THEIR REGIONAL SBA OFFICE.

"2. THE FACT THAT THE BID OF THE RECIPIENT OF THE AWARD WAS ACCEPTED WHEN THE SPECIFIC DESIGNATION OF BOTH THE TECHNICAL PROPOSAL REQUEST AND THE INVITATION FOR BID WAS SMALL BUSINESS. THIS WAS UNFAIR TO OTHER BIG BUSINESS SINCE THEY ABIDED BY THE SMALL BUSINESS SET ASIDE RULE.

"3. THAT THE TECHNICAL PROPOSALS WERE NOT DECLARED VOID WHEN THE SMALL BUSINESS SET ASIDE WAS WITHDRAWN. THAT REQUESTS FOR NEW TECHNICAL PROPOSALS AND THE I.F.B. WERE NOT RE-ADVERTISED.

"4. THAT THE NAMES OF INTENDED BIDDERS WERE NOT AVAILABLE TO US SO THAT WE COULD QUESTION THEIR SMALL BUSINESS STATUS PRIOR TO BID SUBMITTAL.

"5. THE FACT THAT THE SMALL BUSINESS SET ASIDE WAS WITHDRAWN.'

YOUR OBJECTIONS WILL BE ANSWERED IN THE SAME ORDER AS SET OUT ABOVE.

1. WE HAVE NO INFORMATION THAT THE CORRECT SIZE STANDARD FOR THIS PROCUREMENT HAS BEEN DEFINITELY ESTABLISHED. HOWEVER, EVEN IF THE CORRECT STANDARD WAS FINALLY DETERMINED TO BE FEWER THAN 500 EMPLOYEES, WHICH WOULD MAKE WESTERN BIG BUSINESS, THE ACTION OF THE CONTRACTING OFFICER IN WITHDRAWING THE SET-ASIDE, CANCELLING THE INVITATION AND NEGOTIATING A CONTRACT WITH WESTERN WAS JUSTIFIED BY THE CIRCUMSTANCES AND WAS IN STRICT ACCORD WITH PERTINENT REGULATIONS, AS SET FORTH BELOW.

2.SECTION 1.706-3 (B) (1) OF THE NASA PROCUREMENT REGULATION (NPC 400) PROVIDES IN PERTINENT PART, AS FOLLOWS:

"IF, PRIOR TO THE AWARD OF A CONTRACT INVOLVING AN INDIVIDUAL OR CLASS SET-ASIDE FOR SMALL BUSINESS, THE CONTRACTING OFFICER CONSIDERS THAT PROCUREMENT OF THE SET-ASIDE FROM A SMALL BUSINESS CONCERN WOULD BE DETRIMENTAL TO THE PUBLIC INTEREST (E.G., BECAUSE OF UNREASONABLE PRICE), THE CONTRACTING OFFICER MAY WITHDRAW A UNILATERAL SET-ASIDE DETERMINATION OR INITIATE THE WITHDRAWAL OF A JOINT SET-ASIDE DETERMINATION BY GIVING TO THE SBA REPRESENTATIVE WRITTEN NOTICE CONTAINING THE REASONS FOR WITHDRAWING A JOINT DETERMINATION.'

SECTION 2.404-1 (B) (V) OF THE NASA PROCUREMENT REGULATION FURTHER PROVIDES THAT INVITATIONS FOR BIDS MAY BE CANCELED AFTER OPENING BUT PRIOR TO AWARD WHERE THE CONTRACTING OFFICER DETERMINES IN WRITING THAT CANCELLATION IS IN THE BEST INTEREST OF THE GOVERNMENT FOR THE REASON THAT ALL OTHERWISE ACCEPTABLE BIDS RECEIVED ARE AT UNREASONABLE PRICES. SINCE THE CONTRACTING OFFICER CONSIDERED THAT THE PRICES OF THE SECOND AND THIRD LOW BIDDERS WERE UNREASONABLE, AND SINCE HE COULD NOT MAKE AN AWARD TO THE LOW BIDDER AS SMALL BUSINESS IN THE ABSENCE OF A SIZE DETERMINATION, FOR WHICH THE PROCUREMENT COULD NOT BE DELAYED, HE INITIATED CANCELLATION OF THE SET-ASIDE. WHILE SOME BIG BUSINESS CONCERNS WOULD NO DOUBT HAVE SUBMITTED BIDS, BUT FOR THE SET ASIDE, THERE WAS NO WAY OF KNOWING IN ADVANCE THAT REASONABLE PRICES COULD NOT BE OBTAINED SOLELY FROM SMALL BUSINESS. SINCE ALL ACTIONS WERE TAKEN IN GOOD FAITH AND IN ACCORDANCE WITH THE APPLICABLE REGULATIONS, THEY CAN HARDLY BE CHARACTERIZED AS UNFAIR TO BIG BUSINESS.

3. AS PREVIOUSLY STATED, THE URGENCY OF THE NEED FOR THE ENCLOSURES WOULD NOT PERMIT OF THE DELAY WHICH WOULD HAVE BEEN OCCASIONED BY THE SOLICITATION OF NEW TECHNICAL PROPOSALS AND THE READVERTISEMENT OF THE REQUIREMENT. THE PROCUREMENT WAS THEREFORE NEGOTIATED PURSUANT TO 10 U.S.C. 2304 (A) (2), WHICH AUTHORIZES NEGOTIATION OF THIS TYPE OF PURCHASE IF "THE PUBLIC EXIGENCY WILL NOT PERMIT THE DELAY INCIDENT TO ADVERTISING.'

4. TO FURNISH THE NAMES OF INTENDED BIDDERS WOULD BE IMPOSSIBLE, SINCE THERE IS NO WAY OF KNOWING IN ADVANCE WHO INTENDS TO SUBMIT A BID. IF THE TERM "INTENDED BIDDERS" IS INTENDED TO MEAN ALL FIRMS SOLICITED, IT SEEMS OBVIOUS THAT PUBLICIZING THIS INFORMATION WOULD PLACE A COSTLY AND TIME CONSUMING ADMINISTRATIVE BURDEN ON PURCHASING OFFICES, AND ONE WHICH IS NOT REQUIRED BY STATUTE OR REGULATION AND WOULD NOT OTHERWISE BE JUSTIFIED. THE LACK OF JUSTIFICATION FOR FURNISHING SUCH INFORMATION IS POINTED UP BY THE UNCERTAINTY OF THE RESPONSE THAT MAY BE EXPECTED AND THE FACT THAT IT IS OFTEN VERY LIMITED IN RELATION TO THE NUMBER OF FIRMS SOLICITED. FOR EXAMPLE, IN THE PRESENT CASE, ONLY 13 OF 52 POSSIBILITIES SUBMITTED TECHNICAL PROPOSALS AND ONLY THREE OF THESE COULD BE CONSIDERED.

5. THIS OBJECTION APPEARS TO HAVE BEEN FULLY ANSWERED UNDER NUMBERS 1 AND 2 ABOVE.

FOR THE REASONS STATED, WE MUST CONCLUDE THAT THE ACTIONS TAKEN IN THIS CASE WERE FULLY JUSTIFIED BY THE CIRCUMSTANCES AND WERE AUTHORIZED UNDER THE APPLICABLE STATUTES AND REGULATIONS. YOUR PROTEST MUST THEREFORE BE DENIED.