B-157078, NOV. 2, 1965

B-157078: Nov 2, 1965

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IT WAS AWARDED TO DAVEY COMPRESSOR COMPANY OF KENT. FIRST YOU CONTEND THAT DAVEY IS NOT A SURPLUS LABOR AREA CONCERN BUT HAS SET UP LOCATIONS OUTSIDE KENT. SECOND YOU CONTEND THAT THE PRESENT SMALL BUSINESS DEFINITION OF 500 EMPLOYEES IS MUCH TOO LARGE AND UNREALISTIC. A "LABOR SUPRLUS AREA CONCERN" WAS DEFINED (PARAGRAPH (D) (2) ( AS A CONCERN THAT HAD AGREED TO PERFORM. "SUBSTANTIAL PROPORTION" WAS DEFINED TO MEAN MORE THAN 50 PERCENT OF THE CONTRACT PRICE. ASPR 1-802 STATES THAT IT IS THE POLICY OF THE DEPARTMENT OF DEFENSE TO AID LABOR SURPLUS AREAS "BY ENCOURAGING PRIME CONTRACTORS TO PLACE SUBCONTRACTS WITH CONCERNS WHICH WILL PERFORM SUBSTANTIALLY IN LABOR SURPLUS AREAS.'. THE PURPOSE OF THIS PROGRAM IS TO PLACE WORK WITHIN DEPRESSED AREAS.

B-157078, NOV. 2, 1965

TO LOGEL AND HOUCHIN:

WE REFER TO YOUR LETTER OF AUGUST 24, 1965, RELATIVE TO THE AWARD UNDER THE LABOR SURPLUS AREA SET-ASIDE PORTION OF INVITATION FOR BIDS NO. AMC (A/-18-035-65-698 ISSUED ON MAY 15, 1965, BY THE UNITED STATES DEPARTMENT OF THE ARMY, EDGEWOOD ARSENAL, MARYLAND.

THE LABOR SUPRLUS AREA SET-ASIDE PORTION OF THE INVITATION COVERED A QUANTITY OF 175 EACH DECONTAMINATING APPARATUS, M12, WITH GENERATOR AND REGULATOR. ON JULY 29, 1965, IT WAS AWARDED TO DAVEY COMPRESSOR COMPANY OF KENT, OHIO, A SELF-CERTIFIED SMALL BUSINESS CONCERN. DAVEY HAD STATED IN ITS BID THAT IT WOULD INCUR MORE THAN 50 PERCENT OF THE CONTRACT PRICE IN VARIOUS DESIGNATED AREAS OF PERSISTENT LABOR SURPLUS. YOU OBJECT TO THE AWARD ON TWO GROUNDS. FIRST YOU CONTEND THAT DAVEY IS NOT A SURPLUS LABOR AREA CONCERN BUT HAS SET UP LOCATIONS OUTSIDE KENT, OHIO, MERELY TO QUALIFY FOR THE AWARD. THIS YOU REGARD AS A TOKEN BID OR DEVICE, UNFAIR TO LEGITIMATE LABOR SURPLUS AREA CONCERNS. SECOND YOU CONTEND THAT THE PRESENT SMALL BUSINESS DEFINITION OF 500 EMPLOYEES IS MUCH TOO LARGE AND UNREALISTIC, SINCE A FIRM SUCH AS YOURS, OF 20 TO 30 EMPLOYEES CANNOT COMPETE AGAINST A CONCERN OF 499 EMPLOYEES.

GENERAL PROVISION NO. 41 OF THE INVITATION INCORPORATED THE "NOTICE OF LABOR SUPRLUS AREA SET-ASIDE" CLAUSE PROVIDED FOR IN ASPR 1 804.2/C) (NOV. 1964). PARAGRAPH (G) OF THE CLAUSE STATES AS FOLLOWS:

"/G) TOKEN BIDS. NOTWITHSTANDING THE PROVISIONS OF THIS NOTICE, THE GOVERNMENT RESERVES THE RIGHT, IN DETERMINING ELIGIBILITY OR PRIORITY FOR SET-ASIDE NEGOTIATIONS, NOT TO CONSIDER TOKEN BIDS OR OTHER DEVICES DESIGNED TO SECURE AN UNFAIR ADVANTAGE OVER OTHER BIDDERS ELIGIBLE FOR THE SET-ASIDE PORTION.'

A "LABOR SUPRLUS AREA CONCERN" WAS DEFINED (PARAGRAPH (D) (2) ( AS A CONCERN THAT HAD AGREED TO PERFORM, OR CAUSE TO BE PERFORMED, A SUBSTANTIAL PROPORTION OF A CONTRACT IN LABOR SURPLUS AREAS. "SUBSTANTIAL PROPORTION" WAS DEFINED TO MEAN MORE THAN 50 PERCENT OF THE CONTRACT PRICE, TO BE PERFORMED EITHER BY THE CONCERN ITSELF OR BY ITS FIRST-TIER SUBCONTRACTORS. ASPR 1-802 STATES THAT IT IS THE POLICY OF THE DEPARTMENT OF DEFENSE TO AID LABOR SURPLUS AREAS "BY ENCOURAGING PRIME CONTRACTORS TO PLACE SUBCONTRACTS WITH CONCERNS WHICH WILL PERFORM SUBSTANTIALLY IN LABOR SURPLUS AREAS.' THE PURPOSE OF THIS PROGRAM IS TO PLACE WORK WITHIN DEPRESSED AREAS. IT IS NOT IMPORTANT WHERE THE CONTRACTOR MAINTAINS ITS HOME PLANT, SO LONG AS IT PERFORMS, OR CAUSES TO BE PERFORMED, MOST OF THE CONTRACT WORK IN DEPRESSED AREAS. WE SEE NO REASON TO QUESTION DAVEY'S QUALIFICATIONS AS A LABOR SURPLUS AREA CONCERN.

YOUR SECOND OBJECTION CONCERNS WHETHER A PROPER SIZE STANDARD HAS BEEN SET IN A PARTICULAR INDUSTRY. THIS IS NOT A MATTER WITHIN THE JURISDICTION OF THIS OFFICE. THE DETERMINATION OF SIZE STANDARDS FOR SMALL BUSINESS IS SPECIFICALLY VESTED IN THE SMALL BUSINESS ADMINISTRATION (15 U.S.C. 632, 637 (B) (6) (, AND WE DO NOT UNDERTAKE TO DECIDE WHETHER A SIZE STANDARD FIXED BY THE SMALL BUSINESS ADMINISTRATION IS ERRONEOUS. COMP. GEN. 649, 653.