B-166937, JUN. 16, 1969

B-166937: Jun 16, 1969

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INC. .$ REFERENCE IS MADE TO YOUR ATTORNEY'S LETTER OF MAY 10. THE RECORD INDICATES THAT THE TIMBER WAS OFFERED FOR SALE EXCLUSIVELY TO SMALL BUSINESS CONCERNS ON NOVEMBER 25. YOUR BID WAS THE HIGHEST RECEIVED. WHICH WAS SUBMITTED WITH YOUR BID AS REQUIRED BY THE BID DOCUMENTS. WAS DECLARED A LARGE BUSINESS CONCERN BY THE SMALL BUSINESS ADMINISTRATION (SBA). AS A RESULT OF ITS REQUEST FOR RECONSIDERATION THE QUESTION WAS GIVEN FURTHER CONSIDERATION BY SBA. IN THE INTERIM THE COMPANY NAME WAS CHANGED TO IDAHO FOREST INDUSTRIES. A DETERMINATION WAS ISSUED WHICH READ IN PERTINENT PART. AS FOLLOWS: "AS YOUR NEW FIRM AND ITS AFFILIATED CONCERN HAVE LESS THAN 500 EMPLOYEES. YOU HAVE NOW SEVERED YOUR CONTRACTUAL AFFILIATION WITH POTLATCH INDUSTRIES.

B-166937, JUN. 16, 1969

TO FERNWOOD TIE MILL COMPANY, INC. .$

REFERENCE IS MADE TO YOUR ATTORNEY'S LETTER OF MAY 10, 1969, PROTESTING THE PROPOSED AWARD OF A SMALL BUSINESS SET-ASIDE CONTRACT FOR THE SALE OF GOVERNMENT TIMBER ON THE ST. JOE NATIONAL FOREST TO A LOWER BIDDER BY THE DEPARTMENT OF AGRICULTURE, FOREST SERVICE.

THE RECORD INDICATES THAT THE TIMBER WAS OFFERED FOR SALE EXCLUSIVELY TO SMALL BUSINESS CONCERNS ON NOVEMBER 25, 1968, AFTER BEING FORMALLY ADVERTISED FOR THE REQUIRED PERIOD OF NOT LESS THAN 30 DAYS UNDER SEALED BID PROCEDURE. YOUR BID WAS THE HIGHEST RECEIVED, BUT THE NEXT HIGH BIDDER, THE BURNS-YAAK RIVER LUMBER COMPANY, FILED A TIMELY PROTEST QUESTIONING THE VALIDITY OF THE SELF-CERTIFICATION AS TO YOUR SMALL BUSINESS STATUS, WHICH WAS SUBMITTED WITH YOUR BID AS REQUIRED BY THE BID DOCUMENTS. ON JANUARY 13, 1969, FERNWOOD TIE, BECAUSE OF ITS AFFILIATIONS WITH ATLAS TIE COMPANY, ST. MARIES PLYWOOD COMPANY, AND POTLATCH FORESTS, INC., WAS DECLARED A LARGE BUSINESS CONCERN BY THE SMALL BUSINESS ADMINISTRATION (SBA). AS A RESULT OF ITS REQUEST FOR RECONSIDERATION THE QUESTION WAS GIVEN FURTHER CONSIDERATION BY SBA. IN THE INTERIM THE COMPANY NAME WAS CHANGED TO IDAHO FOREST INDUSTRIES, INC., AND ON APRIL 3, 1969, A DETERMINATION WAS ISSUED WHICH READ IN PERTINENT PART, AS FOLLOWS:

"AS YOUR NEW FIRM AND ITS AFFILIATED CONCERN HAVE LESS THAN 500 EMPLOYEES, AND YOU HAVE NOW SEVERED YOUR CONTRACTUAL AFFILIATION WITH POTLATCH INDUSTRIES, INC., YOU ARE HEREBY DECLARED TO HAVE SATISFIED OUR SIZE STANDARDS REGULATIONS FOR SMALL BUSINESS STATUS.'

THE REFERENCE TO SEVERANCE OF AFFILIATION WITH POTLATCH APPEARS TO REFER TO THE EXPIRATION ON MARCH 1, 1969, OF THE MANAGEMENT AGREEMENT UNDER WHICH YOUR FIRM HAD BEEN CONSIDERED BY SBA TO BE AFFILIATED WITH ATLAS TIE COMPANY, ST. MARIES PLYWOOD COMPANY AND POTLATCH FORESTS, INC.

THE FOREST SERVICE HAS TAKEN THE POSITION THAT FERNWOOD TIE WAS DETERMINED TO BE A LARGE BUSINESS AT THE TIME OF BID OPENING AND THEREFORE IT IS INELIGIBLE FOR AWARD NOTWITHSTANDING ITS CURRENT SMALL BUSINESS STATUS. THIS DETERMINATION APPARENTLY HAS AS ITS BASIS THE RULES ESTABLISHED IN SEVERAL PAST DECISIONS BY THIS OFFICE INVOLVING SMALL BUSINESS SET-ASIDES ON PROCUREMENTS WHEREIN CONTRACTS WERE DENIED BIDDERS WHO IMPROPERLY REPRESENTED THEMSELVES AS SMALL BUSINESS CONCERNS AT THE TIME OF BID OPENING AND ACQUIRED THE STATUS OF A SMALL BUSINESS CONCERN BEFORE THE TIME OF AWARD BY TAKING AFFIRMATIVE ACTION AFTER BID OPENING FOR THE PURPOSE OF QUALIFYING FOR AWARD. SEE 41 COMP. GEN. 47; 42 ID. 219; B-149695, OCTOBER 26, 1962; B-152297, NOVEMBER 7, 1963.

IT HAS BEEN STATED IN OUR PREVIOUS DECISIONS THAT IF BIDDERS WHO CANNOT PROPERLY CERTIFY THEMSELVES AS SMALL BUSINESS CONCERNS AT TIME OF BID OPENING ARE PERMITTED TO DELAY CONTRACT AWARDS IN ORDER TO ALLOW TIME TO MAKE APPLICATION TO THE SBA FOR A SMALL BUSINESS CERTIFICATE BECAUSE THEIR STATUS MAY HAVE CHANGED SUFFICIENTLY IN THE INTERIM -- BETWEEN BID OPENING AND AWARD -- SO AS TO QUALIFY AS A SMALL BUSINESS CONCERN, THE EFFECTIVENESS OF THE SMALL BUSINESS SET-ASIDE PROCEDURE WOULD BE SERIOUSLY IMPAIRED AND NO USEFUL PURPOSE WOULD BE SERVED BY REQUIRING SELF- CERTIFICATION ON SIZE STATUS. ACCORDINGLY, WE HAVE HELD THAT SUCH ACTION BY BIDDERS IS DETRIMENTAL TO THE EFFECTIVENESS OF THE SMALL BUSINESS SET- ASIDE PROCEDURES AND GIVES SUCH BIDDERS AN UNDUE ADVANTAGE OVER OTHER BIDDERS. SEE 40 COMP. GEN. 550 AND B-157921, NOVEMBER 29, 1965, IN ADDITION TO THE DECISIONS CITED ABOVE.

IT SHOULD BE NOTED THAT THESE DECISIONS SPELL OUT AN EXCEPTION TO THE GENERAL RULE THAT THE FINAL DETERMINATION OF THE ELIGIBILITY OF A BIDDER AS A SMALL BUSINESS CONCERN IS TO BE MADE AS OF THE DATE OF AWARD. WHILE THEY DEAL ONLY WITH GOVERNMENT PROCUREMENTS, WE CONSIDER THEIR RATIONALE TO BE EQUALLY APPLICABLE TO THE INSTANT SITUATION, WHICH INVOLVES A SALE.

FOR THE REASONS STATED ABOVE, WE ARE ADVISING THE DEPARTMENT OF AGRICULTURE BY LETTER OF TODAY THAT YOUR PROTEST HAS BEEN DENIED AND THAT YOUR BID MAY NOT PROPERLY BE CONSIDERED FOR AWARD.