B-156249, OCT. 22, 1965

B-156249: Oct 22, 1965

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FRED ISRAEL: REFERENCE IS MADE TO YOUR PROTEST BY LETTER DATED MARCH 17. THE NEED FOR WHICH IS REPORTED BY NAVY TO BE VERY PRESSING. ONE OF THE OPTION ITEMS IN THE RFQ IS A REQUEST FOR QUOTATION FOR 20 ADDITIONAL BENDIX SERIES 22 SYSTEMS. INTERCHANGEABILITY IS REQUIRED TO BE ESTABLISHED IN CONSONANCE WITH SPECIFICATION MIL-E-5400-F. MECHANICAL AND ELECTRICAL INTERCHANGEABILITY IS TO BE ESTABLISHED TO THE SUBASSEMBLY AND COMPONENT LEVEL WITH RESPECT TO THE COMPONENTS COMPRISING THE ARC- 101. PREPARATION OF QUOTATION. "/A) YOU ARE REQUESTED TO SUBMIT A QUOTATION DIRECTLY RESPONSIVE TO THE TERMS. UNNECESSARILY ELABORATE BROCHURES AND OTHER PRESENTATIONS BEYOND THAT SUFFICIENT TO PRESENT A COMPLETE AND EFFECTIVE QUOTATION ARE NOT DESIRED AND MAY BE CONSTRUED AS AN INDICATION OF THE QUOTER'S LACK OF COST CONSCIOUSNESS. "2.

B-156249, OCT. 22, 1965

TO MR. FRED ISRAEL:

REFERENCE IS MADE TO YOUR PROTEST BY LETTER DATED MARCH 17, 1965, AND SUBSEQUENT CORRESPONDENCE, ON BEHALF OF DAYTON AVIATION RADIO AND EQUIPMENT, INCORPORATED (DARE), A SMALL BUSINESS CONCERN, AGAINST AWARD OF A CONTRACT TO THE BENDIX CORPORATION (BENDIX) BY THE DEPARTMENT OF THE NAVY UNDER REQUEST FOR QUOTATIONS (RFQ) NO. 0169-65, ISSUED JANUARY 5, 1965, BY THE BUREAU OF NAVAL WEAPONS.

THE RFQ, ISSUED ONLY TO BENDIX, REQUESTED QUOTATIONS ON A FIRM FIXED- PRICE BASIS TO FURNISH APPROXIMATELY 73 BENDIX SERIES 22 DUAL VHF NAVIGATION/COMMUNICATION SYSTEMS FOR USE WITH P-3A AIRCRAFT EMPLOYED IN THE ANTISUBMARINE WARFARE PROGRAM, THE NEED FOR WHICH IS REPORTED BY NAVY TO BE VERY PRESSING, AND 103 AN/ARC-101 COMMUNICATION SYSTEMS (VHF SINGLE COMMUNICATION SYSTEMS) FOR INSTALLATION IN VARIOUS OPERATIONAL AIRCRAFT UNDER A MODERNIZATION PROGRAM. ONE OF THE OPTION ITEMS IN THE RFQ IS A REQUEST FOR QUOTATION FOR 20 ADDITIONAL BENDIX SERIES 22 SYSTEMS. INTERCHANGEABILITY IS REQUIRED TO BE ESTABLISHED IN CONSONANCE WITH SPECIFICATION MIL-E-5400-F, DATED JUNE 1, 1962, AS AMENDED, AND MECHANICAL AND ELECTRICAL INTERCHANGEABILITY IS TO BE ESTABLISHED TO THE SUBASSEMBLY AND COMPONENT LEVEL WITH RESPECT TO THE COMPONENTS COMPRISING THE ARC- 101. IN ADDITION, THE RFQ SETS FORTH VARIOUS PERFORMANCE REQUIREMENTS, INCLUDING SUPERQUELCH UNIT REQUIREMENT, AS WELL AS PREPRODUCTION TESTS TO CONSIST OF CONTRACTOR DEMONSTRATION TESTS TO COMMENCE SEPTEMBER 1, 1965, AND THEREAFTER, AT THE ELECTION OF THE GOVERNMENT, SERVICE APPROVAL TESTS TO COMMENCE OCTOBER 1, 1965.

PARAGRAPHS 1 AND 2, TERMS AND CONDITIONS OF REQUEST FOR QUOTATIONS, READ AS FOLLOWS:

"1. PREPARATION OF QUOTATION.

"/A) YOU ARE REQUESTED TO SUBMIT A QUOTATION DIRECTLY RESPONSIVE TO THE TERMS, CONDITIONS, SPECIFICATIONS AND CLAUSES OF THIS REQUEST FOR QUOTATIONS. QUOTATIONS NOT CONFORMING TO THIS REQUEST FOR QUOTATIONS MAY BE CATEGORIZED AS NONRESPONSIVE, THEREBY ELIMINATING THEM FROM FURTHER CONSIDERATION.

"/B) WHILE THE BUREAU OF NAVAL WEAPONS DESIRES THAT THE QUOTATION SUBMITTED IN RESPONSE TO THIS SOLICITATION BE AS COMPLETE AND CLEAR AS POSSIBLE, UNNECESSARILY ELABORATE BROCHURES AND OTHER PRESENTATIONS BEYOND THAT SUFFICIENT TO PRESENT A COMPLETE AND EFFECTIVE QUOTATION ARE NOT DESIRED AND MAY BE CONSTRUED AS AN INDICATION OF THE QUOTER'S LACK OF COST CONSCIOUSNESS.

"2. ALTERNATE QUOTATION. IF YOU DESIRE TO QUOTE ON DIFFERENT MATERIAL, DELIVERY, OR OTHER TERMS WHICH YOU BELIEVE ARE ADVANTAGEOUS TO THE GOVERNMENT, PRICE OR OTHER FACTORS CONSIDERED, YOU SHOULD SUBMIT, IN ADDITION TO A RESPONSIVE QUOTATION, AN ALTERNATE QUOTATION REFLECTING SUCH ADVANTAGES.'

THE PROCUREMENT OF THE SYSTEMS ON A SOLE-SOURCE BASIS FROM BENDIX WAS PRECEDED BY A DETERMINATION AND FINDINGS (D AND F) BY THE BUREAU'S CONTRACTING OFFICER, PURSUANT TO 10 U.S.C. 2304 (A) (10), AS IMPLEMENTED BY ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-210.2 (I), THAT IT WAS IMPRACTICABLE TO OBTAIN COMPETITION BY MEANS OF FORMAL ADVERTISING, THE ITEMS IN QUESTION BEING OBTAINABLE ONLY FROM BENDIX AND THERE BEING NO COMPLETE SPECIFICATIONS AVAILABLE TO THE GOVERNMENT. THE D AND F READS, IN PART, AS FOLLOWS:

"2. THE BENDIX SERIES 22 EQUIPMENT IS A VHF DUAL NAVIGATION) COMMUNICATION SYSTEM. THE AN/ARC-101, A VHF SINGLE COMMUNICATION SYSTEM, IS A BENDIX COMMERCIAL ITEM WHICH HAS BEEN ASSIGNED AN NOMENCLATURE. BOTH EQUIPMENTS ARE BENDIX OFF-THE-SHELF ITEMS. BOTH EQUIPMENTS ARE REQUIRED FOR AIRCRAFT OPERATING IN THE EUROPEAN THEATER. SINCE EUROPEAN AIRPORTS OPERATE ON VHF, THE EXPANDED FREQUENCY RANGE IS NECESSARY TO PERMIT NAVY AIRCRAFT TO COMMUNICATE WITH AND/OR LAND AT SUCH AIRPORTS. CURRENTLY, NAVY AIRCRAFT OPERATING IN THE EUROPEAN THEATER, WHICH LACK VHF CAPABILITY ARE GROUNDED AFTER 1700 DAILY. THE BENDIX SERIES 22 EQUIPMENT IS REQUIRED FOR INSTALLATION IN AND SPARES FOR FY 65 P-3A AIRCRAFT, AND TO SATISFY REQUIREMENTS FOR TRAINING AND THE COUNTRY OF NEW ZEALAND. THE AN/ARC 101 EQUIPMENT IS REQUIRED FOR FLEET INSTALLATION IN EC-121KP, E-1B, US 2, SH- 34J AND C-47 AIRCRAFT. DELIVERY IS REQUIRED TO COMMENCE IN DECEMBER 1965 AND BE COMPLETED IN MAY 1966 TO MEET AIRCRAFT INSTALLATION SCHEDULES.

"3. THE BENDIX SERIES 22 NAVIGATION/COMMUNICATION EQUIPMENT AND THE AN/ARC-101 COMMUNICATION EQUIPMENT WERE DESIGNED AND DEVELOPED BY BENDIX WITH CORPORATE FUNDS AND ARE PRODUCED EXCLUSIVELY BY THAT FIRM. THE COGNIZANT TECHNICAL NAVY ASSISTANT HAS APPROVED THIS EQUIPMENT FOR SERVICE USE. MANUFACTURING DRAWINGS, SPECIFICATIONS, MODELS, AND DESIGN DATA, NECESSARY FOR COMPETITIVE PROCUREMENT ARE NOT AVAILABLE. IT IS THEREFORE IMPRACTICABLE TO FORMALLY ADVERTISE THIS PROCUREMENT BECAUSE BENDIX IS THE ONLY SOURCE OF SUPPLY FOR THIS EQUIPMENT.'

THE PROCUREMENT WAS PUBLICIZED IN THE COMMERCE BUSINESS DAILY ON JANUARY 12, 1965, WITH NOTICE THAT NO SPECIFICATIONS, PLANS OR DRAWINGS WERE AVAILABLE AND THEREFORE COULD NOT BE FURNISHED BY THE GOVERNMENT. SMALL BUSINESS CONCERNS WERE ADVISED AS TO SUBCONTRACTING OPPORTUNITIES IN CONNECTION WITH THE PROCUREMENT.

PRIOR TO THE FINAL DATE FIXED BY THE RFQ FOR SUBMISSION OF A QUOTATION, DARE OBTAINED A COPY OF THE RFQ AND SUBMITTED TO THE BUREAU AN UNSOLICITED QUOTATION TO FILL THE PROCUREMENT NEEDS AT A LOWER PRICE THAN THE BENDIX QUOTATION. ACCORDINGLY, THE BUREAU, IN AN EFFORT TO DETERMINE WHETHER, CONTRARY TO THE D AND F CONCLUSION, DARE (OR SOMEONE OTHER THAN BENDIX) COULD SUPPLY THE ITEMS, INVITED DARE TO A MEETING ON FEBRUARY 10 TO DISCUSS WHETHER DARE COULD NOT ONLY PRODUCE THE REQUIRED EQUIPMENT BUT, IN VIEW OF THE TIME INVOLVED IN NECESSARY TESTING, COULD FURNISH IT IN TIME FOR DISPATCH TO THE FLEET WHEN NEEDED.

THE NAVY'S REPORT ON THE FEBRUARY 10 MEETING STATES THAT DARE REFRAINED FROM COMPLYING WITH A NAVY REQUEST FOR DATA AS TO ITS PROPOSED METHOD OF MANUFACTURE AND TESTING OF THE SYSTEMS UNLESS THE NAVY FIRST MADE A SURVEY OF DARE'S FACILITIES. ADDITIONALLY, SINCE THE NAVY DOES NOT HAVE COMPLETE SPECIFICATIONS FOR THE ITEMS AND CANNOT SPARE ANY SYSTEMS FOR USE BY PROSPECTIVE COMPETITORS OF BENDIX, NAVY SPECIFICALLY INQUIRED WHETHER DARE WOULD PRODUCE THE SYSTEMS BY RELIANCE ON ITS OWN KNOW-HOW AND EXPERIENCE AND USE OF AVAILABLE HANDBOOKS AND DATA OR WOULD OBTAIN BENDIX MODELS AND CONDUCT REVERSE ENGINEERING TO ESTABLISH INTERCHANGEABILITY. IT IS REPORTED THAT WHILE DARE SEEMED TO INDICATE IT WOULD USE HANDBOOKS TO ESTABLISH INTERCHANGEABILITY, IT DECLINED, UPON DIRECT INQUIRY, TO STATE THAT IT WOULD USE BENDIX EQUIPMENT FOR SUCH PURPOSE.

WHILE YOUR VERSION OF THE MEETING INDICATES THAT DARE WAS NOT REQUESTED TO FURNISH ADDITIONAL DATA TO NAVY, YOU ARE IN AGREEMENT WITH NAVY TO THE EXTENT THAT DARE HAS INSISTED ON A SURVEY BY NAVY OF ITS FACILITIES, DURING WHICH SURVEY YOU STATE DARE WILL FURNISH NAVY COMPLETE DOCUMENTATION ON ITS EQUIPMENT. FURTHER, YOU CONTEND THAT THE SPECIFICATIONS IN THE RFQ ARE ADEQUATE, NOTWITHSTANDING NAVY'S REPORT TO THE CONTRARY; THAT DARE IS COMPLETELY RESPONSIVE TO THE REQ; AND THAT THE MATTER OF WHETHER DARE CAN DEVISE A TESTING METHOD AS EFFECTIVE AS BENDIX, WHICH YOU CONTEND, IS NECESSARY FOR ONLY FOUR OF THE 14 PROCUREMENT ITEMS, IS A QUESTION OF CAPACITY, NOT RESPONSIVENESS, FOR REFERENCE TO THE SMALL BUSINESS ADMINISTRATION (SBA) FOR DETERMINATION UNDER THE CERTIFICATE OF COMPETENCY PROCEDURE SET FORTH IN ASPR 1-705.4 (B).

IN SUPPORT OF YOUR CONTENTION THAT ON ONLY FOUR OF THE 14 PROCUREMENT ITEMS IS EXTENSIVE TESTING TIME A FACTOR, YOU STATE THAT DARE HAS A CURRENT CONTRACT TO SUPPLY FIVE OF THE ITEMS AND THE NAVY HAS PREVIOUSLY PROCURED FIVE OTHER ITEMS ON A 30-DAY DELIVERY BASIS UNDER AN "OR EQUAL" ADVERTISED PROCUREMENT, BOTH OF WHICH FACTORS, YOU IMPLY, EVIDENCE THAT TESTING OF AT LEAST THOSE TEN ITEMS COULD BE ACCOMPLISHED QUICKLY.

CONCERNING DARE'S CURRENT CONTRACT, NAVY REPORTS WHAT WHILE FIVE OF THE ITEMS ARE COMMON TO THE TWO SYSTEMS IN QUESTION, DARE'S CONTRACT IS FOR THE AN/ARC-84 SYSTEM, WHICH VARIES SIGNIFICANTLY FROM THE BENDIX 22 AND ARC-101 SYSTEMS. MOREOVER, THE ARC-84 PROCUREMENT WAS BASED ON A FINAL MILITARY SPECIFICATION; A MODEL WAS FURNISHED TO THE SUCCESSFUL BIDDER (DARE); AND THOSE FACTORS ARE NOT PRESENT IN THE INSTANT SOLE-SOURCE PROCUREMENT. FURTHER, IT IS NAVY'S VIEW THAT THE ABILITY TO PRODUCE THE ARC-84 DOES NOT RENDER A PRODUCER CAPABLE OF PRODUCING THOSE NAVIGATION UNIT COMPONENTS WHICH ARE INCLUDED IN THE BENDIX 22 SYSTEM, BUT WHICH ARE NOT INCLUDED IN THE ARC-84.

AS TO THE PREVIOUS ADVERTISED PROCUREMENT OF THE FIVE OTHER ITEMS, WHICH ARE COMPONENTS OF THE ARC-101, NAVY REPORTS THAT THE GOVERNMENT RESERVED IN THE INVITATION TO BID THE RIGHT TO TEST EQUIPMENT OFFERED AS AN "OR EQUAL" ITEM TO DETERMINE EQUALITY AND INTERCHANGEABILITY, AND THE TESTS WERE TO BE PERFORMED AT A NAVY FACILITY PRIOR TO AWARD WITH SHIPMENT REQUIRED WITHIN FIVE DAYS OF NOTIFICATION OF AWARD. NO MODEL WAS FURNISHED BY NAVY. FURTHERMORE, IT IS NAVY'S VIEW THAT NAVY'S ABILITY TO TEST THE ARC-101 COMPONENTS FOR INTERCHANGEABILITY IN THAT PROCUREMENT DOES NOT CREATE A CAPABILITY FOR DARE TO ESTABLISH INTERCHANGEABILITY IN THE SUBSEQUENT PROCUREMENT FOR THE BENDIX 22, AS WELL AS THE ARC-101, SYSTEM.

SUBSEQUENT TO THE FEBRUARY 10 MEETING AND UPON CONSIDERATION OF ALL AVAILABLE INFORMATION AS TO THE POSSIBILITY OF OBTAINING THE REQUIRED ITEMS FROM DARE OR ANY OTHER SOURCE THAN BENDIX, NAVY CONCLUDED THAT BENDIX WAS THE ONLY PRODUCER WHO COULD DELIVER THE REQUIRED SYSTEMS, BECAUSE ANY OTHER SYSTEMS WOULD REQUIRE FOUR ADDITIONAL MONTHS FOR NAVY SERVICES APPROVAL AND RELIABILITY TESTS EVEN IF THE PRODUCER COULD DELIVER BY DECEMBER 1, 1965, AND ITS D AND F THEREFORE SHOULD NOT BE REVERSED. ACCORDINGLY, AWARD WAS MADE TO BENDIX UNDER THE RFQ. NAVY REPORTS, HOWEVER, THAT IT IS CURRENTLY EVALUATING THE POSSIBILITY FOR INITIATING COMPETITION FOR ITS 1967 FISCAL YEAR REQUIREMENTS FOR THE SYSTEMS, AND SHOULD COMPETITIVE PROCUREMENT BE EMPLOYED, POTENTIAL PRODUCERS SUCH AS DARE WILL BE SOLICITED.

BASICALLY, THE NAVY'S POSITION IS THAT AS A CONTRACTING AGENCY WHICH HAS MADE A DETERMINATION FOR GOOD CAUSE THAT ONLY ONE SOURCE CAN DELIVER THE REQUIRED EQUIPMENT TIMELY, THE DECISION WHETHER ANY OTHER FIRM CAN SO FULFILL ITS NEEDS IS VESTED IN NAVY; THAT SUCH DECISION RELATES TO RESPONSIVENESS, NOT TO CAPACITY; AND THAT THE DECISION THEREFORE NEED NOT BE REFERRED TO SBA. CONVERSELY, YOUR POSITION IS THAT NAVY HAS NO CHOICE BUT TO REFER THE MATTER TO SBA AND TO ABIDE BY SBA'S DECISION, ANY OTHER ACTION BEING CONTRARY, IN YOUR OPINION, TO THE INTENT OF THE SMALL BUSINESS ACT, WHICH, YOU STATE, "WAS DESIGNED TO TAKE THE POWER OF DISCARDING A LOW OFFICER FROM A SMALL BUSINESS, FROM THE CONTRACTING OFFICER AND TRANSFERRING IT TO THE SMALL BUSINESS ADMINISTRATION BECAUSE OF RECOGNIZED EXCESS OF CONTRACTING OFFICERS IN THE PAST IN PREFERRING LARGE BUSINESS OVER SMALL.' YOU REQUEST, THEREFORE, THAT THE SECRETARY OF THE NAVY BE DIRECTED TO SET ASIDE THE AWARD TO BENDIX AND TO NEGOTIATE WITH DARE FOR THE PROCUREMENT IN QUESTION.

UNDER 10 U.S.C. 2310 (B), THE FINDINGS ISSUED BY THE CONTRACTING OFFICER AS A BASIS FOR CONCLUDING THAT THE PROCUREMENT OF THE BENDIX 22 AND ARC- 101 SYSTEMS SHOULD BE NEGOTIATED WITH BENDIX PURSUANT TO 10 U.S.C. 2304 (A) (10) BECOME FINAL. ACCORDINGLY, OUR OFFICE IS WITHOUT AUTHORITY TO QUESTION SUCH FINDINGS UNLESS THEY ARE FRAUDULENT, ARBITRARY, CAPRICIOUS, GROSSLY ERRONEOUS, OR NOT SUPPORTED BY SUBSTANTIAL EVIDENCE. IN VIEW THEREOF WE MUST CONCLUDE THAT THE RECORD, SHOWING AN URGENT NEED FOR THE PROCUREMENT ITEMS, ALL OF WHICH MUST BE INTERCHANGEABLE WITH ITEMS IN USE IN EXISTING SYSTEMS, AND AN ABSENCE AT THIS TIME OF SUFFICIENT DATA TO INITIATE COMPETITION FOR THE NAVY'S FISCAL YEAR 1966 NEEDS, IS ADEQUATE TO SUBSTANTIATE THE NAVY'S ACTION. WE THEREFORE SEE NO LEGAL BASIS FOR OBJECTION TO THE PROCUREMENT OF THE SYSTEMS FROM BENDIX ON A SOLE-SOURCE BASIS.

CONCERNING THE ISSUE OF WHETHER NAVY IS REQUIRED BY LAW TO REFER THE QUESTION OF DARE'S ABILITY TO PERFORM THE CONTRACT TO SBA, BY ENACTMENT OF SECTION 8 (B) (7) OF THE SMALL BUSINESS ACT, 15 U.S.C. 637 (B) (7), CONGRESS HAS SEEN FIT TO LIMIT THE AUTHORITY OF ADMINISTRATIVE OFFICERS TO MAKE FINAL DETERMINATIONS OF RESPONSIBILITY OF SMALL BUSINESS BIDDERS BY PROVIDING THAT WHERE A SMALL BUSINESS CONCERN IS CERTIFIED BY SBA TO BE A COMPETENT GOVERNMENT CONTRACTOR WITH RESPECT TO CAPACITY AND CREDIT, THE PROCURING OFFICERS OF THE GOVERNMENT MUST ACCEPT SUCH CERTIFICATION AS CONCLUSIVE. HOWEVER, THIS LIMITATION ON THE ADMINISTRATIVE AUTHORITY RELATES ONLY TO DETERMINATIONS OF "CAPACITY AND CREDIT.' IN THIS CONNECTION, IT SHOULD BE NOTED THAT ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1 705.6, PARAGRAPH (B), IN RECOGNITION OF THE SBA AUTHORITY, REQUIRES REFERRAL TO SBA OF ONLY "OTHERWISE ACCEPTABLE" BIDS OR PROPOSALS OF SMALL BUSINESS CONCERNS WHICH CONTRACTING OFFICERS PROPOSE TO REJECT SOLELY FOR THE REASON THAT THE BIDDERS OR OFFERORS HAVE BEEN FOUND TO BE NONRESPONSIVE AS TO CAPACITY AND CREDIT. IN THE INSTANT CASE IT IS THE ADMINISTRATIVE POSITION, IN EFFECT, THAT REJECTION OF DARE'S OFFER IS NOT FOR REASONS OF CAPACITY OR CREDIT, BUT BECAUSE ITS OFFER IS NONRESPONSIVE TO THE REQUIREMENTS OF THE REQUEST FOR QUOTATIONS. IN OTHER WORDS, IT IS NAVY'S CONTENTION THAT SINCE IT CAN BE ASSURED OF RECEIVING AN ACCEPTABLE PRODUCT, WITHIN PERMISSIBLE TIME LIMITATIONS, ONLY IF BENDIX COMPONENTS ARE USED, A SOLE-SOURCE PROCUREMENT IS AUTHORIZED UNDER ASPR 3/210.2 AND THE DEPARTMENT THEREFORE HAS THE RIGHT TO INSIST UPON BENDIX COMPONENTS, WHICH DARE DID NOT OFFER. SINCE WE HAVE FOUND THAT THE DETERMINATION TO NEGOTIATE ON A SOLE SOURCE BASIS WITH BENDIX FOR THE SPECIFIED BENDIX SYSTEMS AND COMPONENTS IS IN ACCORD WITH APPLICABLE LAW AND REGULATION, WE MUST AGREE WITH THE ADMINISTRATIVE POSITION THAT, IN THE CIRCUMSTANCES HERETOFORE RELATED, AN OFFER TO FURNISH SOMETHING OTHER THAN THE SPECIFIC SYSTEMS AND COMPONENTS NAMED MAY BE CONSIDERED NONRESPONSIVE, AND THAT DARE'S OFFER THEREFORE WAS NOT AN "OTHERWISE ACCEPTABLE" PROPOSAL REQUIRING A DETERMINATION OF DARE'S "CAPACITY" BY SBA. SEE B 156448, JULY 9, 1965; B-152866, FEBRUARY 7, 1964; B-154028, SEPTEMBER 9, 1964.

AS TO THE LEGISLATIVE INTENT OF THE SMALL BUSINESS ACT, THE POLICY OF CONGRESS, AS SET FORTH IN 15 U.S.C. 631, IS TO INSURE THAT A FAIR PROPORTION OF GOVERNMENT CONTRACTS OR SUBCONTRACTS BE PLACED WITH SMALL BUSINESS CONCERNS. SEE 41 COMP. GEN. 649 FOR AN INTERPRETATION OF THE TERM ,FAIR PROPORTION.' THERE IS NO PROVISION, HOWEVER, IN EITHER THE ACT OR IN THE IMPLEMENTING PROCUREMENT REGULATIONS GRANTING TO SBA THE AUTHORITY TO DECIDE, OTHER THAN AS AUTHORIZED IN SECTION 8 (B) (7) OF THE ACT AND ASPR 1-705.4 (B) RELATING TO CAPACITY AND CREDIT, THAT, CONTRARY TO THE DETERMINATION OF THE CONTRACTING AGENCY, A SMALL BUSINESS CONCERN SHALL BE AWARDED A SPECIFIC GOVERNMENT CONTRACT. SEE 40 COMP. GEN. 35. MOREOVER, IN THIS CASE, THE INCLUSION IN THE RFQ OF A PROVISION FOR SUBCONTRACTING TO SMALL BUSINESS CONCERNS EVIDENCES THAT THE NAVY HAS COMPLIED WITH THE POLICY OF CONGRESS AS SET FORTH IN 15 U.S.C. 631.

FOR THE REASONS STATED, WE FIND NO LEGAL BASIS FOR OBJECTION TO THE ACTION OF THE NAVY IN REJECTING DARE'S UNSOLICITED OFFER AND MAKING THE SOLE-SOURCE AWARD TO BENDIX. ACCORDINGLY, YOUR PROTEST IS DENIED.