B-154849, AUG. 18, 1964

B-154849: Aug 18, 1964

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TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO A LETTER DATED JULY 28. THREE BIDS WERE RECEIVED. 622 WAS SUBMITTED BY G. THE RECORD INDICATES THAT ALL BIDDERS FELL IN THE CATEGORY OF SMALL BUSINESS CONCERNS AND AWARD OF THE CONTRACT WAS MADE TO COLYER. CRAWFORD CONSIDERED THAT THESE BIDDERS WERE VIOLATING THE INTENT OF THE SMALL BUSINESS SET-ASIDE BY REASON OF THE FACT THAT THEY INTENDED TO SUBCONTRACT A GREAT PORTION OF THE WORK. THE ONLY PROVISION IN THE INVITATION AND THE ARMED SERVICES PROCUREMENT REGULATION WITH REGARD TO THE AMOUNT OF SUBCONTRACTING TO EITHER LARGE OR SMALL BUSINESS CONCERNS IN REGARD TO CONSTRUCTION CONTRACTS AS HERE INVOLVED IS THAT CONTAINED IN THE CLAUSE DEALING WITH UTILIZATION OF SMALL BUSINESS CONCERNS.

B-154849, AUG. 18, 1964

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED JULY 28, 1964, FROM THE DIRECTOR OF PROCUREMENT, REQUESTING A DECISION IN REGARD TO THE PROTEST OF THE CRAWFORD SPRINKLER SUPPLY CO., AGAINST THE AWARD OF A CONTRACT TO G. C. COLYER AND COMPANY UNDER INVITATION FOR BIDS NO. AIII-01-088-64-9, ISSUED BY THE PURCHASING AND CONTRACTING OFFICE, FORT MCCLELLAN, ALABAMA, ON MARCH 7, 1964.

THE INVITATION SOLICITED BIDS--- TO BE OPENED ON MARCH 23, 1964--- FOR FURNISHING ALL PLANT, LABOR, MATERIAL AND EQUIPMENT NECESSARY FOR INSTALLATION OF A DRY VALVE SPRINKLER SYSTEM IN BUILDING NO. 229, QUARTERMASTER SALES STORE, FORT MCCLELLAN, ALABAMA, IN STRICT ACCORDANCE WITH CERTAIN SPECIFICATIONS AND DRAWINGS. THE INVITATION CONTAINED THE CLAUSE ENTITLED "NOTICE OF A TOTAL SMALL BUSINESS SET ASIDE" AS SET OUT IN PARAGRAPH 1-706.5 OF THE ARMED SERVICES PROCUREMENT REGULATION AND ALSO, THE CLAUSE ENTITLED "UTILIZATION OF SMALL BUSINESS CONCERNS" AS SET OUT IN PARAGRAPH 1-707.3A OF THE ARMED SERVICES PROCUREMENT REGULATION. THREE BIDS WERE RECEIVED. THE LOW BID OF $9,622 WAS SUBMITTED BY G. C. COLYER AND COMPANY. THE RECORD INDICATES THAT ALL BIDDERS FELL IN THE CATEGORY OF SMALL BUSINESS CONCERNS AND AWARD OF THE CONTRACT WAS MADE TO COLYER.

THE HIGHEST BIDDER IN THIS CASE, CRAWFORD SPRINKLER SUPPLY CO., THROUGH ITS PRESIDENT, W. B. CRAWFORD, JR., HAD VIGOROUSLY PROTESTED THE AWARD TO ANY OF THE OTHER TWO LOWER BIDDERS BECAUSE MR. CRAWFORD CONSIDERED THAT THESE BIDDERS WERE VIOLATING THE INTENT OF THE SMALL BUSINESS SET-ASIDE BY REASON OF THE FACT THAT THEY INTENDED TO SUBCONTRACT A GREAT PORTION OF THE WORK, ALLEGED TO BE AS MUCH AS 90 PERCENT OF THE CONTRACT WORK.

THE ONLY PROVISION IN THE INVITATION AND THE ARMED SERVICES PROCUREMENT REGULATION WITH REGARD TO THE AMOUNT OF SUBCONTRACTING TO EITHER LARGE OR SMALL BUSINESS CONCERNS IN REGARD TO CONSTRUCTION CONTRACTS AS HERE INVOLVED IS THAT CONTAINED IN THE CLAUSE DEALING WITH UTILIZATION OF SMALL BUSINESS CONCERNS. INSOFAR AS HERE RELEVANT, THAT CLAUSE PROVIDES THAT THE CONTRACTOR AGREES TO ACCOMPLISH THE MAXIMUM AMOUNT OF SUBCONTRACTING TO SMALL BUSINESS CONCERNS THAT THE CONTRACTOR FINDS TO BE CONSISTENT WITH THE EFFICIENT PERFORMANCE OF THE CONTRACT.

THE MATTER OF THE CONTEMPLATED SUBCONTRACTING BY COLYER WAS SUBMITTED BY THE CONTRACTING OFFICER TO THE SMALL BUSINESS ADMINISTRATION REGIONAL OFFICE AT ATLANTA, GEORGIA. A REPRESENTATIVE OF THE SBA REGIONAL OFFICE ADVISED THE CONTRACTING OFFICER BY LETTER OF MAY 18, 1964, AS FOLLOWS:

"PROCUREMENT FOR THE FURNISHING AND INSTALLATION OF A SPRINKLER SYSTEM IS CONSIDERED CONSTRUCTION WORK AND SUBJECT TO THE REQUIREMENTS APPLICABLE TO CONSTRUCTION CONTRACTS. ACCORDINGLY, THE APPLICABLE REGULATIONS DO NOT DISQUALIFY THE SUCCESSFUL BIDDER UNDER A PROCUREMENT SET-ASIDE FOR AWARD TO SMALL BUSINESS BECAUSE THE SUPPLIES WHICH IT WOULD USE IN PERFORMING THE WORK ARE PROCURED FROM LARGE BUSINESS CONCERNS. NEITHER DOES IT DISQUALIFY THE SUCCESSFUL BIDDER IF HE PROPOSES TO SUBCONTRACT THE WORK TO A LARGE BUSINESS CONCERN.

"IF THIS HAD BEEN A SUPPLY PROCUREMENT, THE SMALL BUSINESS SIZE STANDARDS REGULATION WOULD PRECLUDE THE SUCCESSFUL BIDDER FROM FURNISHING A PRODUCT NOT MANUFACTURED BY THE BIDDER OR ANOTHER SMALL BUSINESS CONCERN.'

ALSO, THE SBA REPRESENTATIVE ADVISED THE CONTRACTING OFFICER THAT A CONTRACTOR COULD SUBCONTRACT AS MUCH WORK TO LARGE OR SMALL BUSINESS CONCERNS AS HE DESIRED, AS LONG AS THE AMOUNT WAS REASONABLE UNDER THE CIRCUMSTANCES AND THE CONTRACTOR WAS NOT TRYING TO VIOLATE THE INTENT OF THE SMALL BUSINESS SET-ASIDE. BASED ON A SIGNED STATEMENT BY COLYER THAT THE MAXIMUM PERCENT OF THE AWARD TO BE SUBCONTRACTED TO LARGE BUSINESS CONCERNS WAS 49 PERCENT (LATER REDUCED TO 30 PERCENT) THE CONTRACTING OFFICER DETERMINED ON MAY 4, 1964, THAT COLYER SHOULD NOT BE DISQUALIFIED BECAUSE OF SUBCONTRACTING TO LARGE BUSINESS FIRMS AS STATED IN MR. CRAWFORD'S PROTEST. ALSO, THE CONTRACTING OFFICER DETERMINED THAT SUBCONTRACTING OF LESS THAN HALF OF THE CONTRACT WORK TO LARGE BUSINESS FIRMS WAS DEEMED TO BE REASONABLE AND NOT IN VIOLATION OF THE INTENT OF THE SMALL BUSINESS SET-ASIDE PROVISION. IT APPEARS THAT THE SBA REPRESENTATIVE INFORMALLY AGREED WITH THIS DETERMINATION.

IN VIEW OF THE FOREGOING, WE MUST CONCLUDE THAT THE PROTEST OF CRAWFORD IS WITHOUT MERIT AND THAT THE BID OF COLYER WAS RESPONSIVE TO THE SMALL BUSINESS SET-ASIDE PROVISIONS OF THE INVITATION.