B-166963-1, AUG. 19, 1969

B-166963-1: Aug 19, 1969

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INCLUSION OF TOTAL SMALL BUSINESS SET-ASIDE IN PROCUREMENT WHICH HAD PRECIOUSLY SHOWN THAT NO DOMESTIC SUPPLIER WOULD BID WAS INADVERTENT AND CORRECTIVE ACTION TO PREVENT RECURRENCE HAS BEEN TAKEN. WHERE ALL BIDDERS IN RESPONSE TO SMALL BUSINESS SET ASIDE PROCUREMENT OFFERED FOREIGN-MADE PRODUCT AND AWARD WAS MADE TO THE LOW BIDDER WHO DID NOT HAVE SMALL BUSINESS STATUS. SUCH AWARD WAS IMPROPERLY MADE. GINN AND COMPANY: REFERENCE IS MADE TO YOUR LETTER OF MAY 14. THE RECORD INDICATES THAT BIDS RECEIVED UNDER THE INVITATION WERE OPENED ON JULY 23. AWARD WAS MADE ON OCTOBER 2. THEREFORE WAS A LARGE BUSINESS AND INELIGIBLE FOR AWARD. YOUR LETTER TO THIS OFFICE INDICATES THAT YOU HAD NO KNOWLEDGE OF THE AWARD UNDER SUBJECT SOLICITATION UNTIL ON OR ABOUT NOVEMBER 8 AND YOU APPARENTLY WERE ADVISED BY THE CONTRACTING OFFICER THAT YOUR PROTEST CONCERNING ELBE'S SIZE STATUS WAS UNTIMELY AND WOULD NOT BE CONSIDERED.

B-166963-1, AUG. 19, 1969

BID PROTEST - SMALL BUSINESS STATUS DECISION DENYING PROTEST AGAINST AWARD TO ELBE FILE AND BINDER CO., INC. UNDER TOTAL SMALL BUSINESS SET-ASIDE PROCUREMENT BY GENERAL SERVICES ADMINISTRATION ON BASIS LOW BIDDER NOT ELIGIBLE SMALL BUSINESS CONCERN. INCLUSION OF TOTAL SMALL BUSINESS SET-ASIDE IN PROCUREMENT WHICH HAD PRECIOUSLY SHOWN THAT NO DOMESTIC SUPPLIER WOULD BID WAS INADVERTENT AND CORRECTIVE ACTION TO PREVENT RECURRENCE HAS BEEN TAKEN. WHERE ALL BIDDERS IN RESPONSE TO SMALL BUSINESS SET ASIDE PROCUREMENT OFFERED FOREIGN-MADE PRODUCT AND AWARD WAS MADE TO THE LOW BIDDER WHO DID NOT HAVE SMALL BUSINESS STATUS, SUCH AWARD WAS IMPROPERLY MADE. HOWEVER IN SUCH CASE CANCELLATION WOULD NOT BE IN BEST INTEREST OF GOVERNMENT. PROTEST MADE 7 MONTHS AFTER AWARD AND AFTER CONTRACTOR HAS COMPLETED 75 PERCENT OF ESTIMATED REQUIREMENTS CANCELLATION AND READVERTISING WOULD SERVE NO USEFUL PURPOSE.

TO M.S. GINN AND COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF MAY 14, 1969, AND ENCLOSURES, PROTESTING THE AWARD OF A CONTRACT TO ANOTHER FIRM UNDER SOLICITATION NO. FPNSO-ET-0341-A, ISSUED BY THE FEDERAL SUPPLY SERVICE, GENERAL SERVICES ADMINISTRATION (GSA), NEW YORK, NEW YORK.

THE SOLICITATION CONTAINED A "NOTICE OF TOTAL SMALL BUSINESS SET ASIDE" WHICH STATED, IN PERTINENT PART, THAT BIDDERS WOULD BE ELIGIBLE FOR AWARD AS SMALL BUSINESS CONCERNS ONLY IF THEY MET THE APPLICABLE SMALL BUSINESS SIZE STANDARD AND IF THEY AGREED TO FURNISH END ITEMS MANUFACTURED OR PRODUCED IN THE UNITED STATES, ITS POSSESSIONS, OR PUERTO RICO BY SMALL BUSINESS CONCERNS. THE RECORD INDICATES THAT BIDS RECEIVED UNDER THE INVITATION WERE OPENED ON JULY 23, 1968, AND AWARD WAS MADE ON OCTOBER 2, 1968, TO ELBE FILE AND BINDER COMPANY, INC. (ELBE), AS THE LOWEST RESPONSIVE AND RESPONSIBLE BIDDER.

BY LETTER OF NOVEMBER 8, 1968, YOU PROTESTED TO GSA AGAINST ANY AWARD TO ELBE ON THE GROUND THAT THE COMPANY BECAME AN AFFILIATE OF THE STERLING PRECISION COMPANY ON OCTOBER 1, 1968, AND THEREFORE WAS A LARGE BUSINESS AND INELIGIBLE FOR AWARD. YOUR LETTER TO THIS OFFICE INDICATES THAT YOU HAD NO KNOWLEDGE OF THE AWARD UNDER SUBJECT SOLICITATION UNTIL ON OR ABOUT NOVEMBER 8 AND YOU APPARENTLY WERE ADVISED BY THE CONTRACTING OFFICER THAT YOUR PROTEST CONCERNING ELBE'S SIZE STATUS WAS UNTIMELY AND WOULD NOT BE CONSIDERED.

NOTWITHSTANDING THE FACT THAT YOU MAY NOT HAVE LEARNED OF THE AWARD TO ELBE UNTIL NOVEMBER 8, THE ADVICE REGARDING YOUR UNTIMELY PROTEST WAS FURNISHED IN ACCORDANCE WITH SECTION 1-1.703-2 (B) OF THE FEDERAL PROCUREMENT REGULATIONS (FPR). THIS REGULATION PROVIDES, IN PERTINENT PART, THAT A CHALLENGE CONCERNING THE SMALL BUSINESS STATUS OF ANY OTHER BIDDER RECEIVED AFTER AWARD OF A CONTRACT WILL NOT BE CONSIDERED A "PROTEST" AND WILL BE RETURNED TO THE SENDER WITH AN EXPLANATION OF WHY IT COULD NOT BE ACTED UPON. THIS IS IN CONFORMITY WITH THE REGULATIONS OF THE SMALL BUSINESS ADMINISTRATION (SBA) WHICH HAS STATUTORY AUTHORITY TO MAKE FINAL AND BINDING DECISIONS AS TO SIZE STATUS OF BUSINESS CONCERNS. SEE 13 CFR 121.3-5.

AS INDICATED IN YOUR LETTER OF MAY 14, YOU APPARENTLY WERE FURTHER ADVISED BY GSA THAT THE BIDS OF BOTH ELBE AND YOUR FIRM OFFERED TO SUPPLY THE GOVERNMENT WITH FOREIGN MANUFACTURED PRODUCTS AND THAT PRIOR PROCUREMENT HISTORY FOR THESE ITEMS ALSO INDICATED THAT THE PROCUREMENT SHOULD NOT HAVE BEEN SET ASIDE IN THE FIRST INSTANCE. ACCORDINGLY, YOU PROTESTED TO THIS OFFICE AND HAVE REQUESTED THAT WE CONSIDER WHETHER THE PROCUREMENT WAS CORRECTLY, OR INCORRECTLY, SET ASIDE FOR SMALL BUSINESS AND, SECONDLY, WHETHER THE GOVERNMENT MAY "OVERTURN" THE SET ASIDE PROVISIONS IN AN INVITATION AND AWARD A CONTRACT TO A FIRM WHICH IS NOT SMALL BUSINESS.

WITH RESPECT TO YOUR QUESTION AS TO THE CORRECTNESS OF SETTING ASIDE THE SUBJECT PROCUREMENT FOR SMALL BUSINESS PARTICIPATION, THE PROCUREMENT REGULATIONS ESTABLISH CRITERIA FOR THE INITIATION OF SET ASIDES AND PLACE THE RESPONSIBILITY UPON THE CONTRACTING OFFICER FOR MAKING UNILATERAL DETERMINATIONS OR IN THE ALTERNATIVE UPON AN SBA REPRESENTATIVE AND A CONTRACTING OFFICER WHERE JOINT ACTION IS PURSUED. FPR 1-1.706-1. GSA HAS REPORTED THAT PROCUREMENT PERSONNEL HAD KNOWLEDGE OF RECENT PROCUREMENT HISTORY INDICATING THAT, IN ALL PROBABILITY, NO DOMESTIC SUPPLIER WOULD BID ON THE PROCUREMENT. THE REPORT STATES THAT THE INCLUSION OF THE "NOTICE OF TOTAL SMALL BUSINESS SET-ASIDE" WAS INADVERTENT AND ERRONEOUS AND HAS BEEN BROUGHT TO THE ATTENTION OF THE PROCUREMENT PERSONNEL RESPONSIBLE THEREFOR. IT IS ANTICIPATED THAT THERE WILL NOT BE A RECURRENCE OF THIS ERROR.

WITH RESPECT TO YOUR QUESTION REGARDING THE GOVERNMENT'S ACTION IN AWARDING A CONTRACT TO A NON-SMALL BUSINESS CONCERN NOTWITHSTANDING THE TOTAL SMALL BUSINESS SET-ASIDE RESTRICTION IN THE INVITATION, THE ADMINISTRATIVE REPORT INDICATES THAT ALL BIDDERS ON THIS PROCUREMENT WERE OFFERING FOREIGN MADE PRODUCTS AND THAT THE PROCURING ACTIVITY EITHER WAS OR SHOULD HAVE BEEN ON NOTICE OF THIS FACT AT THE TIME OF AWARD. UNDER THE TERMS OF THE NOTICE OF SMALL BUSINESS SET-ASIDE CONTAINED IN THE INVITATION THE OFFERING OF A DOMESTIC MANUFACTURED PRODUCT OF A SMALL BUSINESS CONCERN IS A PART OF THE DEFINITION OF A SMALL BUSINESS FOR THE PURPOSE OF THE PROCUREMENT. SEE THE INTERIM DEFINITION OF A SMALL BUSINESS NON-MANUFACTURER APPENDED AS A NOTE UNDER 13 CFR 121.3-8 (C). SUCH A BIDDER OFFERING A FOREIGN PRODUCT IS THEREFORE NO MORE ENTITLED TO BE CONSIDERED A SMALL BUSINESS CONCERN THAN ONE HAVING A GREATER NUMBER OF EMPLOYEES THAN PRESCRIBED IN THE APPLICABLE SIZE STANDARD.

WHILE WE MUST CONCLUDE THEREFORE THAT THE CONTRACT WAS IMPROPERLY AWARDED INASMUCH AS NO BIDDERS MET THE PRESCRIBED QUALIFICATIONS FOR SMALL BUSINESS STATUS, WE MUST AGREE WITH THE POSITION TAKEN BY GSA THAT CANCELLATION WOULD NOT BE IN THE BEST INTEREST OF THE GOVERNMENT. WE NOTE THAT YOUR PROTEST TO THIS OFFICE WAS MADE NEARLY SEVEN MONTHS AFTER THE AWARD OF THIS CONTRACT AND LESS THAN FOUR MONTHS OF PERFORMANCE NOW REMAIN. THE CONTRACTOR HAS EITHER DELIVERED OR HAS ON HAND 75 PERCENT OF THE ESTIMATED REQUIREMENTS OF THESE SUPPLIES FOR THE CONTRACT PERIOD. SINCE AWARD COULD NOT PROPERLY HAVE BEEN MADE TO ANY BIDDER ON THE INVITATION AS ISSUED, CANCELLATION OF THE AWARD TO ELBE WOULD REQUIRE RESOLICITATION OF BIDS WITHOUT THE SMALL BUSINESS RESTRICTION. SUCH ACTION, AFTER BIDS HAVE BEEN OPENED AND PRICES DISCLOSED, IS ALWAYS UNDESIRABLE AND TO BE AVOIDED WHENEVER POSSIBLE. IN THE ABSENCE OF A PROTEST FROM ANY FIRM WHICH MAY HAVE BEEN PREJUDICED, SUCH AS OTHER LARGE BUSINESS CONCERNS WHICH MAY HAVE REFRAINED FROM BIDDING FOR THE PROCUREMENT BECAUSE OF THE SET-ASIDE RESTRICTION, WE CONCLUDE THAT NO USEFUL PURPOSE WOULD BE SERVED BY CANCELLATION AND READVERTISING.

FOR ALL OF THE ABOVE REASONS, YOUR PROTEST IS DENIED.

SINCE YOUR LETTER OF MAY 14 ALSO APPEARS TO REQUEST INFORMATION GENERALLY CONCERNING THE OPERATION OF SELF-CERTIFICATION PROCEDURES USED IN PROCUREMENTS SET ASIDE FOR SMALL BUSINESS PARTICIPATION, YOU ARE ADVISED THAT THE SELF-CERTIFICATION PROCEDURES, INCLUDING THE REGULATORY PROVISION THAT PROTESTS CONCERNING THE SMALL BUSINESS STATUS OF OTHER BIDDERS BE RECEIVED BY THE CONTRACTING OFFICER WITHIN FIVE WORKING DAYS AFTER BID OPENING, WERE DESIGNED TO SIMPLIFY AND EXPEDITE SIZE DETERMINATIONS AND THE PROCUREMENT PROCESSES. ACCORDINGLY, A CONTRACTING OFFICER IN THE ABSENCE OF A WRITTEN PROTEST OR OTHER INFORMATION CAUSING HIM TO QUESTION IT, IS REQUIRED TO ACCEPT AS CONCLUSIVE FOR THE PURPOSE OF A SPECIFIC PROCUREMENT A REPRESENTATION BY THE BIDDER THAT IT IS A SMALL BUSINESS CONCERN. SEE FPR 1-1.703-1 (A), AND THE SBA REGULATION, 13 CFR 121.3-8. THE CONTROLLING POINT IN TIME FOR A DETERMINATION CONCERNING THE SIZE STATUS OF A QUESTIONED BIDDER IS ORDINARILY THE DATE OF AWARD, BUT IT SHOULD BE NOTED THAT A BIDDER IS NOT ELIGIBLE FOR AWARD AS A SMALL BUSINESS CONCERN IF THE SMALL BUSINESS CERTIFICATION IN ITS BID WAS NOT MADE IN GOOD FAITH. SEE FPR 1-1.703-1 (B). HOWEVER, OUR OFFICE HAS HELD THAT A CONTRACT ERRONEOUSLY AWARDED IN GOOD FAITH ON THE BASIS OF A BIDDER'S SELF CERTIFICATION IS VOIDABLE ONLY AT THE OPTION OF THE GOVERNMENT. 41 COMP. GEN. 252.

WE TRUST THE FOREGOING INFORMATION WILL SERVE TO CLARIFY SMALL BUSINESS SET-ASIDE PROCEDURES PRESENTLY IN EFFECT.