B-155085, NOV. 24, 1964

B-155085: Nov 24, 1964

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THE BASIS OF YOUR OBJECTION IS THAT MAINTENANCE. AS A LARGE BUSINESS ORGANIZATION WAS INELIGIBLE FOR AWARD UNDER THE TOTAL SMALL BUSINESS SET-ASIDE. AMC/Z/-01-021-64-213 WAS ISSUED BY REDSTONE ARSENAL ON MAY 7. BIDS WERE OPENED JUNE 1. SEVEN BIDS WERE SUBMITTED. THE ELIGIBILITY OF MANY OF THE BIDDERS AS SMALL BUSINESSES WAS CHALLENGED BY COMPETITORS AFTER BID OPENING AND THE CONTRACTING OFFICER. WAS REFERRED TO THAT OFFICE WHICH DETERMINED THE COMPANY TO BE A SMALL BUSINESS CONCERN. IT IS ALLEGED THAT YOUR COMPANY IMMEDIATELY TELEPHONED THE CONTRACTING OFFICER ON JUNE 29. YOU STATE THAT THE CALL WAS PROMPTLY FOLLOWED UP BY A TELEGRAPHIC PROTEST. AUTHORIZES THE SMALL BUSINESS ADMINISTRATION TO DETERMINE WHICH BUSINESS ENTERPRISES ARE TO BE DESIGNATED AS SMALL BUSINESS CONCERNS AND RENDERS ITS DETERMINATIONS CONCLUSIVE UPON OFFICES OF THE GOVERNMENT HAVING PROCUREMENT POWERS.

B-155085, NOV. 24, 1964

TO SPRINGFIELD WHITE CASTLE COMPANY:

WE REFER AGAIN TO YOUR LETTERS DATED AUGUST 31, 1964, WITH ENCLOSURES, AND OCTOBER 13, 1964, PROTESTING THE AWARD OF CONTRACT NO. DA 01-021-AMC- 409/Z) DATED JUNE 29, 1964, COVERING CUSTODIAL SERVICES FOR THE PERIOD BEGINNING JULY 1, 1964, AND ENDING JUNE 30, 1965, AT THE UNITED STATES ARMY MATERIAL COMMAND INSTALLATION OF REDSTONE ARSENAL, TO MAINTENANCE, INCORPORATED. THE BASIS OF YOUR OBJECTION IS THAT MAINTENANCE, INCORPORATED, AS A LARGE BUSINESS ORGANIZATION WAS INELIGIBLE FOR AWARD UNDER THE TOTAL SMALL BUSINESS SET-ASIDE.

INVITATION FOR BIDS NO. AMC/Z/-01-021-64-213 WAS ISSUED BY REDSTONE ARSENAL ON MAY 7, 1964, AND BIDS WERE OPENED JUNE 1, 1964. SEVEN BIDS WERE SUBMITTED. THE ELIGIBILITY OF MANY OF THE BIDDERS AS SMALL BUSINESSES WAS CHALLENGED BY COMPETITORS AFTER BID OPENING AND THE CONTRACTING OFFICER, PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION 1- 703/B) (1), FORWARDED THE VARIOUS PROTESTS TO THE ATLANTA REGIONAL OFFICE OF THE SMALL BUSINESS ADMINISTRATION FOR DETERMINATIONS OF STATUS. THUS YOUR PROTEST DATED JUNE 16, 1964, INVOLVING AMONG OTHER BIDDERS, MAINTENANCE, INCORPORATED, WAS REFERRED TO THAT OFFICE WHICH DETERMINED THE COMPANY TO BE A SMALL BUSINESS CONCERN. THE DIRECTOR, OFFICE OF SMALL BUSINESS SIZE STANDARDS OF THE SBA, IN WASHINGTON, D.C., CONCURRED IN THIS RULING BY TELEPHONE, WIRE AND LETTER OF JUNE 29, 1964.

IT IS ALLEGED THAT YOUR COMPANY IMMEDIATELY TELEPHONED THE CONTRACTING OFFICER ON JUNE 29, NOTIFIED HIM OF YOUR INTENTION TO APPEAL THE DETERMINATION WITH RESPECT TO MAINTENANCE, INCORPORATED, TO THE SIZE APPEALS BOARD OF THE SMALL BUSINESS ADMINISTRATION IN WASHINGTON, D.C., AND REQUESTED THE AWARD BE HELD IN ABEYANCE PENDING THE BOARD'S CONCLUSIONS. YOU STATE THAT THE CALL WAS PROMPTLY FOLLOWED UP BY A TELEGRAPHIC PROTEST. THE CONTRACTING OFFICER CONTENDS THE AWARD HAD BEEN CONSUMMATED PRIOR TO HIS RECEIPT OF NOTICE OF THE APPEAL AND SO NOTIFIED YOUR FIRM BY LETTER OF JUNE 30, 1964. MEANWHILE, ON THE SAME DAY, THE ATLANTA REGIONAL OFFICE OF SBA DETERMINED YOUR COMPANY TO BE A LARGE BUSINESS ENTITY.

APPROXIMATELY ONE MONTH AND A HALF LATER, THE SIZE APPEALS BOARD SUSTAINED YOUR APPEAL IN A DECISION DATED AUGUST 17, 1964, WHICH DECISION REVERSED THE TWO PRIOR DETERMINATIONS AND DECLARED MAINTENANCE, INCORPORATED, TO BE A LARGE BUSINESS BY VIRTUE OF THE VETO POWER HELD OVER ITS ACTIVITIES BY A GROUP ON THE BOARD OF DIRECTORS. THE SIZE APPEALS BOARD DEEMED THE COMPANY AN AFFILIATE OF CERTAIN CORPORATIONS CONTROLLED BY THIS GROUP WITHIN THE MEANING OF SECTION 121.3-2/A) OF THE SMALL BUSINESS SIZE STANDARDS REGULATIONS, 13 C.F.R. 121.3-2/A).

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 RENDERS ITS DETERMINATIONS CONCLUSIVE UPON OFFICES OF THE GOVERNMENT HAVING PROCUREMENT POWERS. THE DATE OF AWARD TO MAINTENANCE, INCORPORATED, THE REGIONAL OFFICE AND THE DIRECTOR, OFFICE OF SMALL BUSINESS SIZE STANDARDS OF THE SMALL BUSINESS ADMINISTRATION IN WASHINGTON, D.C., HAD DETERMINED THAT THE CONTRACTOR WAS INDEED A SMALL BUSINESS ENTITY.

THE RECORD SHOWS THAT AWARD WAS MADE BEFORE THE CONTRACTING OFFICER BECAME AWARE OF YOUR COMPANY'S INTENTION TO APPEAL THE LATER RULING. EVEN HAD NOTICE OF THE APPEAL BEEN FORTHCOMING BEFORE AWARD, NEITHER THE ARMED SERVICES PROCUREMENT REGULATION NOR THE REGULATIONS OF THE SMALL BUSINESS ADMINISTRATION REQUIRE A STAY IN AWARD PROCEEDINGS PENDING THE OUTCOME OF SUCH AN APPEAL. SEE B-148911 DATED JULY 12, 1962.

IN VIEW OF THE FOREGOING CIRCUMSTANCES, THE ABSENCE OF ANY SHOWING OF BAD FAITH ON THE PART OF ANY OF THE FIRMS OR INDIVIDUALS CONCERNED, AND THE LAPSE OF TIME SINCE THE AWARD, WE FIND IT WOULD NOT BE IN THE BEST INTERESTS OF THE GOVERNMENT TO REQUIRE CANCELLATION OF THE AWARD. SEE B- 152134, OCTOBER 24,1963, COPY ENCLOSED. ACCORDINGLY YOUR PROTEST IS DENIED.