B-166065, APR. 14, 1969

B-166065: Apr 14, 1969

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OF ARIZONA: REFERENCE IS MADE TO YOUR PROTEST CONCERNING THE SMALL BUSINESS SIZE STATUS OF BIDDERS OR OFFERORS UNDER GENERAL SERVICES ADMINISTRATION (GSA) INVITATION FOR BIDS NO. BOTH SOLICITATIONS WERE ISSUED BY THE GSA. F/40149-TG WAS ISSUED ON NOVEMBER 29. OFFERS THEREUNDER WERE REQUIRED TO BE SUBMITTED BY DECEMBER 6. F/40214-TE WAS ISSUED ON DECEMBER 18. BOTH SOLICITATIONS WERE TOTALLY SET-ASIDE FOR AWARD TO SMALL BUSINESS CONCERNS. CERTIFIED ITSELF TO BE A SMALL BUSINESS CONCERN AND WAS THE LOW BIDDER ON EACH SOLICITATION. AWARD WAS MADE TO MINERVA ON DECEMBER 26. YOUR COMPANY PROTESTED TO THE CONTRACTING OFFICER THAT MINERVA WAS NOT. YOU POINTED OUT THAT MINERVA WAS A DIVISION OF ALCO STANDARD CORPORATION.

B-166065, APR. 14, 1969

TO MID-WEST WAX PAPER CO. OF ARIZONA:

REFERENCE IS MADE TO YOUR PROTEST CONCERNING THE SMALL BUSINESS SIZE STATUS OF BIDDERS OR OFFERORS UNDER GENERAL SERVICES ADMINISTRATION (GSA) INVITATION FOR BIDS NO. F/40214-TE AND NEGOTIATED SOLICITATION NO. F/40149 -TG, BOTH OF WHICH COVERED REQUIREMENTS FOR WAXED WRAPPING PAPER.

BOTH SOLICITATIONS WERE ISSUED BY THE GSA, FORT WORTH, TEXAS, OFFICE. SOLICITATION NO. F/40149-TG WAS ISSUED ON NOVEMBER 29, 1968, PURSUANT TO THE PUBLIC EXIGENCY EXCEPTION TO ADVERTISING AS AUTHORIZED BY 41 U.S.C. 252 (C) (2). OFFERS THEREUNDER WERE REQUIRED TO BE SUBMITTED BY DECEMBER 6, 1968. INVITATION NO. F/40214-TE WAS ISSUED ON DECEMBER 18,1968, AND SPECIFIED A BID OPENING DATE OF JANUARY 7, 1969. BOTH SOLICITATIONS WERE TOTALLY SET-ASIDE FOR AWARD TO SMALL BUSINESS CONCERNS. IN EACH INSTANCE, THE MINERVA WAX PAPER CO. CERTIFIED ITSELF TO BE A SMALL BUSINESS CONCERN AND WAS THE LOW BIDDER ON EACH SOLICITATION.

AWARD WAS MADE TO MINERVA ON DECEMBER 26, 1968, UNDER SOLICITATION NO. F/40149-TG. YOUR COMPANY SUBMITTED THE NEXT LOW BID. BY LETTER OF JANUARY 8, 1969, YOUR COMPANY PROTESTED TO THE CONTRACTING OFFICER THAT MINERVA WAS NOT, IN FACT, A SMALL BUSINESS CONCERN FOR THE PURPOSES OF THE PROCUREMENTS, AND YOU POINTED OUT THAT MINERVA WAS A DIVISION OF ALCO STANDARD CORPORATION, A LARGE BUSINESS CONCERN. SINCE THE PROTEST WAS RECEIVED AFTER THE AWARD HAD BEEN MADE TO MINERVA UNDER THE URGENT NEGOTIATED PROCUREMENT, YOU WERE ADVISED ON JANUARY 15, 1969, THAT NO FURTHER ACTION WOULD BE TAKEN BY THE PROCUREMENT AGENCY WITH RESPECT TO SUCH AWARD. THIS ADVICE WAS BASED ON SECTION 1-1.703-2 (B) OF THE FEDERAL PROCUREMENT REGULATIONS (FPR), WHICH PROVIDES:

"/B) AS USED IN THIS SECTION, -PROTEST- MEANS A CHALLENGE IN WRITING FROM ANY BIDDER OR OFFEROR AS TO THE SMALL BUSINESS STATUS OF ANY OTHER BIDDER OR OFFEROR ON THE SMALL PROCUREMENT. THE PROTEST SHALL CONTAIN THE BASIS FOR THE PROTEST, TOGETHER WITH SPECIFIC DETAILED EVIDENCE SUPPORTING THE PROTESTANT'S CLAIM THAT SUCH BIDDER OR OFFEROR IS NOT A SMALL BUSINESS CONCERN. SUCH PROTEST MUST BE RECEIVED BY THE CONTRACTING OFFICER PRIOR TO THE CLOSE OF BUSINESS ON THE 5TH WORKING DAY AFTER BID OPENING DATE OR CLOSING DATE FOR THE RECEIPT OF PROPOSALS. A PROTEST RECEIVED AFTER SUCH TIME SHALL BE CONSIDERED TIMELY, IF IN THE CASE OF MAILED PROTESTS, SUCH PROTEST IS SENT BY REGISTERED OR CERTIFIED MAIL AND THE POSTMARK THEREON INDICATES THAT THE PROTEST WOULD HAVE BEEN DELIVERED WITHIN THIS TIME LIMIT BUT FOR DELAYS BEYOND THE CONTROL OF THE PROTESTANT OR, IN ANY CASE OF TELEGRAPHED PROTESTS, THE TELEGRAM DATE AND TIME LINE INDICATES THAT THE PROTEST WOULD HAVE BEEN DELIVERED WITHIN THIS TIME LIMIT BUT FOR DELAYS BEYOND THE CONTROL OF THE PROTESTANT. A PROTEST RECEIVED AFTER AWARD OF A CONTRACT, EVEN THOUGH TIMELY, WILL NOT BE CONSIDERED A -PROTEST - AND WILL BE RETURNED TO THE SENDER WITH AN EXPLANATION OF WHY IT COULD NOT BE ACTED UPON.'

HOWEVER, YOUR PROTEST WAS TIMELY WITH RESPECT TO INVITATION NO. F/40214- TE, AND IN ACCORDANCE WITH FPR SECTION 1-1.703-2 (A), WAS FORWARDED TO THE SMALL BUSINESS ADMINISTRATION (SBA) FOR CONSIDERATION. THAT AGENCY ADVISED GSA BY LETTER DATED JANUARY 30, 1969, THAT MINERVA IS NOT A SMALL BUSINESS CONCERN BECAUSE OF ITS AFFILIATION WITH THE ALCO STANDARD CORPORATION. THEREFORE, THE LOW BID OF MINERVA UNDER INVITATION NO. F/40214-TE WAS REJECTED AND THE AWARD WAS MADE TO YOUR COMPANY, THE LOWEST RESPONSIVE BIDDER UNDER THE INVITATION. WE FEEL THAT THE ADMINISTRATIVE ACTIONS TAKEN IN THESE RESPECTS WERE PROPER FOR THE FOLLOWING REASONS.

ALTHOUGH THE AWARD MADE TO MINERVA UNDER THE NEGOTIATED PROCUREMENT WAS CONTRARY TO THE SPIRIT OF THE SMALL BUSINESS ACT, THE CIRCUMSTANCES INVOLVED AS VIEWED IN THE LIGHT OF THE PROCUREMENT REGULATIONS WERE SUCH AS TO PRECLUDE ANY ACTION ON THE PART OF OUR OFFICE TO DISTURB SUCH AWARD. AS STATED ABOVE, YOUR PROTEST AGAINST THE SMALL BUSINESS STATUS OF MINERVA WAS UNTIMELY; THAT IS, IT WAS ASSERTED AFTER RECEIPT OF OFFERS AND AWARD BASED THEREON. HOWEVER, UNDER FPR 1-1.703-1 (A), A CONTRACTING OFFICER SHALL ACCEPT AS CONCLUSIVE A REPRESENTATION BY AN OFFEROR THAT IT IS A SMALL BUSINESS CONCERN. THE GENERAL RULE WITH REGARD TO THE PARTICULAR POINT IN TIME AT WHICH AN OFFEROR'S STATUS AS TO SIZE IS HELD TO BE DETERMINATIVE IS THE TIME OF AWARD AND WE PERCEIVE OF NO COGENT REASONS FOR DEPARTING FROM THAT RULE IN THIS INSTANCE.

THE SELF-CERTIFICATION PROCEDURE EMPLOYED HERE WAS DESIGNED TO SIMPLIFY AND EXPEDITE SIZE DETERMINATIONS AND THE PROCUREMENT PROCESSES. FURTHER, IN THE ABSENCE OF A PROTEST PRIOR TO AWARD FROM OTHER BIDDERS WHO ARE INTERESTED IN THE PROCUREMENT, A CONTRACT AWARDED ON THE BASIS OF A BIDDER'S STATEMENT THAT IT IS A SMALL BUSINESS CONCERN IS NOT VOID BUT IS ONLY VOIDABLE AT THE OPTION OF THE GOVERNMENT. 40 COMP. GEN. 550; 41 ID. 252. SEE, ALSO, ROYAL SERVICES, INC., V MAINTENANCE, INC., 361 F.2D 86, 92, WHERE THE COURT HELD:

"THE DECLARED PURPOSE OF THE SMALL BUSINESS ACT IS TO PRESERVE AND EXPAND FULL AND FREE COMPETITION FOR THE ECONOMIC WELL-BEING AND SECURITY OF THE NATION, BY ENCOURAGING AND DEVELOPING THE ACTUAL AND POTENTIAL CAPACITY OF SMALL BUSINESS, THROUGH AIDING, COUNSELING, ENCOURAGING, ASSISTING AND PROTECTING THE INTERESTS OF SMALL BUSINESSES. WE THINK THE PURPOSE WAS PUBLIC IN CHARACTER, VIZ., THE PRESERVATION AND EXPANSION OF FULL AND FREE COMPETITION TO INSURE THE NATION'S ECONOMIC WELL-BEING AND SECURITY, AND THAT THERE WAS NO INTENT TO CREATE CIVIL RIGHTS OF ACTION IN PRIVATE PERSONS.

"IN OTHER LEGISLATION ENACTED BY CONGRESS TO PRESERVE FREE COMPETITION, AND SUBJECTING A VIOLATOR TO CIVIL LIABILITIES IN ACTIONS BY THE UNITED STATES AND TO CRIMINAL PENALTIES, WHERE CONGRESS HAS SEEN FIT ALSO TO GIVE A CIVIL RIGHT OF ACTION AGAINST A VIOLATOR TO A PRIVATE PERSON INJURED BY THE VIOLATION, IT HAS DONE SO IN CLEAR AND UNMISTAKABLE LANGUAGE.

"WE THINK HAD CONGRESS INTENDED TO GIVE A CIVIL REMEDY TO THE SECOND LOWEST BIDDER AGAINST THE LOWEST AND SUCCESSFUL BIDDER, BECAUSE THE LATTER MADE AN UNTRUE STATEMENT IN HIS CERTIFICATION RESPECTING HIS STATUS AS A SMALL-BUSINESS CONCERN, IT WOULD HAVE DONE SO, EITHER BY EXPRESS PROVISION OR BY CLEAR IMPLICATION. IT DID NOT DO SO IN THE SMALL BUSINESS ACT.'

BECAUSE IT IS RECOGNIZED THAT ERRORS IN SMALL BUSINESS CERTIFICATIONS MAY OCCUR, THE REGULATIONS PROVIDE PROCEDURES UNDER WHICH ANY OFFEROR'S REPRESENTATION MAY BE CHALLENGED. SEE FPR 1-1.703-2. ALTHOUGH THESE PROCEDURES PLACE CONSIDERABLE RELIANCE ON THE ASSISTANCE OBTAINED FROM SMALL BUSINESS CONCERNS WHICH ARE INTERESTED IN THE PARTICULAR PROCUREMENT, THEY DO NOT MANIFEST ANY INTEREST OR INTENT ON THE PART OF THE GOVERNMENT TO ABSOLVE ITSELF OF ANY RESPONSIBILITY. THE SELF CERTIFICATION PROCEDURES HAVE BEEN ADOPTED AS A PRACTICAL SOLUTION TO AN OTHERWISE MORE DIFFICULT PROBLEM IN THE KNOWLEDGE THAT MISREPRESENTATIONS BY BUSINESS CONCERNS ARE INFREQUENT AND THAT SMALL BUSINESS CONCERNS IN AN INDUSTRY ARE IN THE BEST POSITION TO KNOW THE SIZE STATUS OF THEIR COMPETITORS. A CASE-BY-CASE INVESTIGATION OF THE STATUS OF BIDDERS AND OFFERORS ON EVERY GOVERNMENT PROCUREMENT WOULD BE EXTREMELY EXPENSIVE AND TIME-CONSUMING. IT IS FELT THAT THESE PROCEDURES ARE EMINENTLY REASONABLE AND NECESSARY TO THE PROPER ADMINISTRATION OF GOVERNMENT CONTRACTS.

IT IS ADMINISTRATIVELY REPORTED THAT DESPITE THE FACT THAT THIS SIZE PROTEST WAS NOT TIMELY SUBMITTED, GSA DID, AS A MATTER OF POLICY, CONSIDER THE POSSIBILITY OF CANCELING THE CONTRACT MADE IN RELIANCE ON ERRONEOUS CERTIFICATIONS AS TO SMALL BUSINESS STATUS. BUT IN THIS INSTANCE, THE GOVERNMENT'S INTERESTS WOULD HAVE BEEN PREJUDICED HAD THE CONTRACT BEEN CANCELED. THERE IS NOTHING IN THE PRESENT RECORD TO INDICATE THAT THE CONTRACTING OFFICER WAS ON NOTICE, PRIOR TO AWARD, THAT MINERVA WAS NOT A SMALL BUSINESS CONCERN UNDER THE APPLICABLE SIZE STANDARDS. FURTHER, THE CONTRACT WAS AN EMERGENCY PURCHASE TO FILL ORDERS ON HAND AT THE DEPOT FOR WHICH THERE WAS NO STOCK TO ISSUE. MINERVA HAS ALREADY SHIPPED ONE-HALF THE STOCK COVERED BY THE CONTRACT AND THE REMAINDER IS TO BE SHIPPED IN THE NEAR FUTURE. UNDER THESE CIRCUMSTANCES, WE CANNOT DISAGREE WITH THE ADMINISTRATIVE POSITION THAT CANCELLATION OF THE CONTRACT AWARDED TO MINERVA WOULD BE INAPPROPRIATE.