B-167073, JUL. 15, 1969

B-167073: Jul 15, 1969

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ALLEGATIONS THAT ONE OF BIDDERS WAS NOT SMALL BUSINESS. THAT FAILURE TO SUBMIT SIGNED AMENDMENT SHOULD HAVE BEEN CONSIDERED MATERIAL DEVIATION. THAT PRICES OF ANOTHER WERE TOO LOW ARE REFUTED ON BASIS OF RECORD. TO ABC LINEN SERVICE: REFERENCE IS MADE TO YOUR LETTER DATED MAY 23. SUCH INFORMATION IS RELIED ON IN SUPPORT OF YOUR CONTENTION THAT UNDER THE 1969 FISCAL YEAR CONTRACT SUNNY SOUTH CLEANERS AND LAUNDRY. WAS IN FACT ACTING FOR AND IN BEHALF OF SUNSHINE LAUNDRIES AND DRY CLEANING CORPORATION. THE ITEMS ON WHICH BIDS WERE REQUESTED WERE GROUPED UNDER THREE LOTS. TO AWARD BY INDIVIDUAL LOT WHEN THE CONTRACTING OFFICER DETERMINES THAT THIS IS MORE ADVANTAGEOUS TO THE GOVERNMENT.'.

B-167073, JUL. 15, 1969

BID PROTEST DECISION TO ABC LINEN SERVICE DENYING PROTEST AGAINST AWARDS TO THREE BIDDERS ON BASIS OF LOWEST AGGREGATE TOTAL FOR SERVICES FOR FURNISHING LAUNDRY AND DRY CLEANING SERVICES FOR LACKLAND AIR FORCE BASE. ALLEGATIONS THAT ONE OF BIDDERS WAS NOT SMALL BUSINESS; THAT FAILURE TO SUBMIT SIGNED AMENDMENT SHOULD HAVE BEEN CONSIDERED MATERIAL DEVIATION, AND THAT PRICES OF ANOTHER WERE TOO LOW ARE REFUTED ON BASIS OF RECORD.

TO ABC LINEN SERVICE:

REFERENCE IS MADE TO YOUR LETTER DATED MAY 23, 1969, WITH ENCLOSURES, PROTESTING AWARD OF A CONTRACT UNDER SOLICITATION NO. F41615-69-B-1686, ISSUED BY THE BASE PROCUREMENT DIVISION, LACKLAND AIR FORCE BASE, TEXAS.

AS EVIDENCED IN THE ENCLOSURES WITH YOUR LETTER YOU QUESTION CERTAIN ACTIVITIES OF SUNSHINE LAUNDRY, BASED UPON INFORMATION INCLUDED IN A LETTER ORIGINATING WITH THE ADMINISTRATOR OF THE SMALL BUSINESS ADMINISTRATION (SBA). SUCH INFORMATION IS RELIED ON IN SUPPORT OF YOUR CONTENTION THAT UNDER THE 1969 FISCAL YEAR CONTRACT SUNNY SOUTH CLEANERS AND LAUNDRY, A SMALL BUSINESS FIRM AND THE 1969 CONTRACTOR FOR ORGANIZATIONAL LAUNDRY AND DRY CLEANING SERVICES AT LACKLAND AIR FORCE BASE, WAS IN FACT ACTING FOR AND IN BEHALF OF SUNSHINE LAUNDRIES AND DRY CLEANING CORPORATION, A LARGE BUSINESS FIRM, AT THE TIME OF BID OPENING FOR THE 1969 CONTRACT. YOU URGE THAT "THIS FLAGRANT ATTEMPT TO CIRCUMVENT THE INTENT AND EFFECT OF THE SMALL BUSINESS SET-ASIDE PROVISIONS OF THE SMALL BUSINESS REGULATIONS SHOULD DISQUALIFY SUNSHINE FROM BIDDING ON THIS (FISCAL YEAR 1970) OR FUTURE CONTRACT.' YOU ALSO PROTEST ANY AWARD TO SNOW WHITE LAUNDRY, CHARGING THAT SNOW WHITE FAILED TO SUBMIT AN ACKNOWLEDGMENT OF AN AMENDMENT TO THE SOLICITATION AS REQUIRED BY THE INVITATION FOR BIDS, AND FURTHER THAT SNOW WHITE PLANT FACILITIES CANNOT ACCOMMODATE THE AMOUNT OF WORK REQUIRED IN THIS PROCUREMENT.

THIS SOLICITATION REQUESTED BIDS FOR ORGANIZATIONAL LAUNDRY AND DRY CLEANING SERVICES FOR LACKLAND AIR FORCE BASE FOR THE FISCAL YEAR COMMENCING JULY 1, 1969. THE ITEMS ON WHICH BIDS WERE REQUESTED WERE GROUPED UNDER THREE LOTS. LOT I CONSISTS OF SEVEN ITEMS OF LAUNDERING, BEDDING AND MISCELLANEOUS ITEMS. LOT II CONSISTS OF LAUNDERING NUMEROUS ITEMS OF CLOTHING. LOT III CONSISTS OF DRY CLEANING. THE SCHEDULE CONTAINED THE FOLLOWING PROVISIONS, AMONG OTHERS: "BIDS SHALL BE EVALUATED ON THE BASIS OF THE ESTIMATED QUANTITIES STATED IN THE INVITATION. SUBJECT TO THE PROVISION CONTAINED HEREIN, AWARD GENERALLY SHALL BE MADE TO A SINGLE BIDDER FOR ALL LOTS. THE GOVERNMENT RESERVES THE RIGHT, HOWEVER, TO AWARD BY INDIVIDUAL LOT WHEN THE CONTRACTING OFFICER DETERMINES THAT THIS IS MORE ADVANTAGEOUS TO THE GOVERNMENT.'

IT IS REPORTED THAT BIDS WERE OPENED AS SCHEDULED ON MAY 13, 1969; THAT SIX BIDS WERE RECEIVED; AND THAT ON THE BASIS OF THE LOWEST BIDS RECEIVED, THE FOLLOWING THREE AWARDS WERE MADE AS THE MOST ADVANTAGEOUS TO THE GOVERNMENT, IN THAT THEY REPRESENT THE LOWEST AGGREGATE TOTAL COST FOR ALL THE REQUIRED SERVICES: SUNSHINE LAUNDRIES AND DRY CLEANING CORP. LOT I, ITEMS 1 THROUGH 7

$321,251.31 SNOW WHITE LAUNDRY LOT II, ITEMS 8 THROUGH 30 $179,479.90 AMERICAN LAUNDRY AND CLEANERS LOT III, ITEMS 31 THROUGH 61 $ 6,683.30

TOTAL$507,414.30

THE SMALL BUSINESS ADMINISTRATION COMMENTS RELIED ON TO DEFEAT SUNSHINE'S ELIGIBILITY FOR AWARD OF A 1970 FISCAL YEAR CONTRACT ARE TO THE EFFECT THAT THE ARRANGEMENT INVOLVING THE PAYMENT OF A COMMISSION TO SUNNY SOUTH BY SUNSHINE AND THE USE OF SUNSHINE TRUCKS AND EMPLOYEES BY SUNNY SOUTH WERE NOT KNOWN TO THE SMALL BUSINESS ADMINISTRATION, AND THAT HAD THE SMALL BUSINESS ADMINISTRATION BEEN IN POSSESSION OF SUCH INFORMATION AT THE TIME OF THE SIZE APPEALS BOARD CONSIDERATION OF SUNNY SOUTH'S ELIGIBILITY (JUNE 27, 1968), THE BOARD MIGHT WELL HAVE ARRIVED AT A DIFFERENT CONCLUSION. THE SMALL BUSINESS ADMINISTRATION ALSO COMMENTED THAT WHETHER THE USE OF SUNSHINE EMPLOYEES AND TRUCKS CONSTITUTED A BREACH OF THE THEN CURRENT CONTRACT IS A MATTER OF CONTRACT ADMINISTRATION FOR THE PROCURING AGENCY TO DETERMINE, AND NOT WITHIN THE PROVINCE OF THE SMALL BUSINESS ADMINISTRATION.

CONCERNING THE RELATIONSHIP OF SUNNY SOUTH AND SUNSHINE LAUNDRIES THE CONTRACTING OFFICER STATES AS FOLLOWS: "DURING ADMINISTRATION OF THE FY 1969 CONTRACT, THE CONTRACTING OFFICER WAS CONCERNED OVER THE RELATIONSHIP BETWEEN SUNNY SOUTH AND ITS SUBCONTRACTOR, SUNSHINE LAUNDRY. THIS CONCERN AROSE OVER THE CONTRACTING OFFICER'S KNOWLEDGE THAT THE PRE-AWARD SURVEY TEAM INVESTIGATED SUNNY SOUTH'S CAPABILITY TO PERFORM THE FY 1969 CONTRACT WITH THE UNDERSTANDING THAT THE PROPOSED SUBCONTRACT TO SUNSHINE INVOLVED $178,964.50 (ESTIMATED) OUT OF A TOTAL CONTRACT AWARD OF $208,470.75 (ESTIMATED). THE REMAINDER WAS TO BE PERFORMED BY SUNNY SOUTH ITSELF. THE SBA REGIONAL OFFICE AND SIZE APPEALS BOARD CONSIDERED THIS PRECISE SUBCONTRACT ARRANGEMENT WHEN IT EVALUATED THE SIZE PROTEST AGAINST SUNNY SOUTH AND RULED THAT A FIRM DOES NOT LOSE ITS SMALL BUSINESS STATUS MERELY BECAUSE IT SUBCONTRACTS TO A LARGE BUSINESS. THE CONTRACTING OFFICER, THEREFORE, INSPECTED SUNNY SOUTH'S PLANT IN AUGUST 1968, AND DETERMINED THAT THE CONTRACTOR WAS NOT PERFORMING ACCORDING TO THE PLAN IT HAD CERTIFIED TO THE PRE AWARD SURVEY TEAM. THE CONTRACTING OFFICER, THEREFORE, ISSUED A LETTER TO SUNNY SOUTH, DATED AUGUST 1968, REQUESTING COMPLIANCE WITH THE CONTRACT. A FOLLOW-UP INSPECTION IN SEPTEMBER 1968 REVEALED THE CONTRACTOR WAS THEN IN COMPLIANCE. THE FY 1969 CONTRACT ITSELF IMPOSED NO LIMITS ON THE ALLOWABLE SUBCONTRACT PERCENTAGE, SUBCONTRACTING ARRANGEMENT, OR SUBCONTRACT PRICING ARRANGEMENT, I.E., FIRM FIXED PRICE, FIXED PRICE INCENTIVE, COST REIMBURSEMENT, ETC. NOTHING PRESENTED TO THE CONTRACTING OFFICER INDICATES A VIOLATION OF THE CURRENT CONTRACT BY EITHER SUNNY SOUTH OR SUNSHINE. THE PROTESTANT'S LETTER OF 21 MAY 1969 REFERS TO ASPR 1-605 DEALING WITH THE SUSPENSION OF A CONTRACTOR, BIDDER, OR OFFEROR; HOWEVER, THE PROTESTANT'S ALLEGATION IS NOT SUPPORTED WITH EVIDENCE, E.G., AN AFFILIATION BETWEEN SUNNY SOUTH AND SUNSHINE. THE FACTS AVAILABLE TO THE CONTRACTING OFFICER INDICATE SUNNY SOUTH LAUNDRY IS A PROPRIETORSHIP FORMED IN 1965, OWNED BY MR. C. E. BARRON. THERE IS NO EVIDENCE TO INDICATE MR. BARRON IS AFFILIATED WITH SUNSHINE LAUNDRY OR THAT SUNSHINE IS AFFILIATED WITH SUNNY SOUTH. THE IMPLICATIONS IN THE SBA LETTER ATTACHED TO THE PROTESTANT'S LETTER OF 14 MAY 1969 ARE NOT SUPPORTED BY EVIDENCE AVAILABLE TO THE CONTRACTING OFFICER.'

IT MUST BE NOTED THAT SBA DOES NOT CATEGORICALLY STATE THAT THE RELATIONSHIP BETWEEN THE TWO COMPANIES WAS SUCH AS TO REQUIRE A CONCLUSION THAT SUNSHINE, A LARGE BUSINESS, WAS IN FACT PERFORMING THE CONTRACT, BUT ONLY THAT A DIFFERENT CONCLUSION MIGHT HAVE BEEN REACHED. THE CONTRACTING OFFICER, ON THE OTHER HAND, WAS SATISFIED THAT ONLY A CONTRACTOR- SUBCONTRACTOR RELATIONSHIP EXISTED.

IN CONNECTION WITH THE SIZE STATUS OF LAUNDRIES, YOU MAY BE ADVISED THAT THE SBA REGULATIONS WERE REVISED EFFECTIVE DECEMBER 29, 1968, AND LAUNDRY FIRMS CAN NOW QUALIFY AS A SMALL BUSINESS IF THEIR AVERAGE SALES OR RECEIPTS FOR THE PRECEDING THREE FISCAL YEARS DO NOT EXCEED $3 MILLION A YEAR.

ON THE RECORD WE CANNOT CONCLUDE THAT SUNSHINE WAS OTHER THAN A SUBCONTRACTOR TO SUNNY SOUTH ON THE 1969 FISCAL YEAR CONTRACT.

CONCERNING THE FAILURE OF SNOW WHITE LAUNDRY TO SUBMIT A SIGNED RECEIPT OF AMENDMENT TO THE SOLICITATION, PRIOR TO BID OPENING, THE CONTRACTING OFFICER DETERMINED THAT THE FAILURE WAS A MINOR INFORMALITY OR IRREGULARITY WHICH HAD MERELY A TRIVIAL OR NEGLIGIBLE EFFECT ON PRICE, QUALITY, QUANTITY, OR DELIVERY, AND IN ACCORDANCE WITH ASPR 2 405, PERMITTED SNOW WHITE TO CURE THE DEFICIENCY.

MODIFICATION (A) OF THE AMENDMENT PROVIDED FOR THE DELETION OF "PRESSING" AS A REQUIRED SERVICE IN CONJUNCTION WITH THE LAUNDERING OF 25 WEB BELTS. THE REMAINING MODIFICATIONS HAD TO DO WITH CONTRACT ADMINISTRATION, DELETION OF INAPPLICABLE REFERENCES, AND VALUE ENGINEERING INCENTIVE.

ASPR 2-405, AFTER DEFINING A MINOR INFORMALITY OR IRREGULARITY AS ONE WHICH IS MERELY A MATTER OF FORM OR IS SOME IMMATERIAL VARIATION FROM THE EXACT REQUIREMENTS OF THE INVITATION FOR BIDS, HAVING NO EFFECT OR MERELY A TRIVIAL OR NEGLIGIBLE ON PRICE AND NO EFFECT ON QUALITY, QUANTITY, OR DELIVERY OF THE SUPPLIES OR PERFORMANCE OF THE SERVICES BEING PROCURED, AND THE CORRECTION OR WAIVER OF WHICH WOULD NOT AFFECT THE RELATIVE STANDING OF, OR BE OTHERWISE PREJUDICIAL TO BIDDERS, PROVIDES THAT THE CONTRACTING OFFICER SHALL GIVE THE BIDDER AN OPPORTUNITY TO CURE ANY DEFICIENCY RESULTING FROM THE MINOR INFORMALITY OR IRREGULARITY IN A BID, OR, WAIVE ANY SUCH DEFICIENCY WHERE IT IS TO THE ADVANTAGE OF THE GOVERNMENT.

WHILE THE GENERAL RULE IS THAT UNACKNOWLEDGED AMENDMENTS AFFECTING PRICE TO A DE MINIMIS EXTENT CAN BE WAIVED, SUCH RULE IS APPLICABLE ONLY IN SITUATIONS WHERE THE AMENDMENTS EFFECT CHANGES WHICH INCREASE THE COST OF PERFORMANCE SINCE, IN THAT EVENT, THE BIDDER IS OFFERING THE GOVERNMENT SOMETHING LESS THAN IT REQUIRES. HOWEVER, IN A SITUATION WHERE THE AMENDMENTS PROVIDE FOR CHANGES WHICH REDUCE THE COST OF PERFORMANCE, AND THE BIDDER FAILS TO ACKNOWLEDGE SUCH CHANGES, HE THEN IS OFFERING TO UNDERTAKE A MORE BURDENSOME CONTRACT THAN OTHER BIDDERS. AS WAS STATED IN 41 COMP. GEN. 530, 553, IF IT IS ASSUMED "THAT THE LOW BIDDER'S FAILURE TO ACKNOWLEDGE THE ADDENDUM WAS DUE TO IGNORANCE OF ITS EXISTENCE, THEN HIS BID PRICE WOULD NOT REFLECT THE LESSENED REQUIREMENTS OF THE SPECIFICATIONS AND, THEREFORE, HIS FAILURE TO ACKNOWLEDGE WOULD ONLY BE PREJUDICIAL TO HIS COMPETITIVE POSITION AND EVEN POSSIBLY BENEFICIAL TO THE POSITION OF THE OTHER BIDDERS.' FURTHER, IN B-159412, JULY 26, 1966, WE HELD THAT "WHERE THE UNACKNOWLEDGED AMENDMENT MERELY EFFECTS A DECREASE IN THE COST OF PERFORMANCE FAILURE TO ACKNOWLEDGE IT SHOULD BE WAIVED AS A MINOR INFORMALITY.' THUS, THE AMOUNT OF THE DECREASE WAS NOT THE SIGNIFICANT FACTOR IN THAT CASE. SEE, ALSO, B-156651, JUNE 21, 1965. FURTHER, IN A SITUATION WHERE THE BIDDER FAILS TO ACKNOWLEDGE AMENDMENTS HAVING THE EFFECT OF DECREASING THE COST OF PERFORMANCE, THE BIDDER DOES NOT HAVE THE OPTION OF REMAINING SILENT AND NOT RECEIVING THE AWARD, SINCE THE GOVERNMENT, PURSUANT TO ASPR 2-405, MAY WAIVE THE FAILURE TO ACKNOWLEDGE THE AMENDMENTS AND MAKE AN AWARD ON THE BASIS OF THE BID AS SUBMITTED.

WE AGREE THAT THE FAILURE TO SUBMIT THE SIGNED AMENDMENT IN THIS CASE WAS A MINOR IRREGULARITY, AND WAS PROPERLY WAIVED BY THE CONTRACTING OFFICER.

THE CHARGE THAT SNOW WHITE'S FACILITIES ARE INADEQUATE TO PERFORM THE CONTRACT ON LOT II, IS AT VARIANCE WITH A PRE-AWARD SURVEY CONDUCTED TO DETERMINE ITS ABILITY TO PERFORM THE CONTRACT. THE SURVEY TEAM RECOMMENDED COMPLETE AWARD OF LOT II TO SNOW WHITE ON THE FISCAL YEAR 1970 SOLICITATION.

REGARDING THE AUTHORITY OF THE SMALL BUSINESS ADMINISTRATION TO CERTIFY THE COMPETENCY OF A SMALL BUSINESS CONCERN AS TO CAPACITY AND CREDIT, YOU MAY BE ADVISED THAT SINCE THE CONTRACTOR, IN THIS INSTANCE SNOW WHITE, HAS FURNISHED SATISFACTORY EVIDENCE OF RESPONSIBILITY (CAPACITY AND CREDIT) TO THE CONTRACTING OFFICER, THE SMALL BUSINESS ADMINISTRATION CERTIFICATE OF COMPETENCY WOULD BE REDUNDANT. IT IS ONLY WHERE THE CONTRACTING OFFICER PROPOSES TO REJECT A SMALL BUSINESS CONCERN BID FOR LACK OF CAPACITY OR CREDIT THAT REFERENCE TO THE SMALL BUSINESS ADMINISTRATION IS REQUIRED. SEE ASPR 1-705.4 (C).

FINALLY, AS TO THE ALLEGATION THAT SNOW WHITE'S BID PRICES ARE TOO LOW, UPON EXAMINATION OF THE RECORD IT APPEARS THAT SNOW WHITE'S PRICES ARE COMPETITIVE WHEN COMPARED TO OTHER BID PRICES. IT ALSO APPEARS THAT OF 23 ITEMS COMPRISING LOT II OF THE SOLICITATION, SNOW WHITE'S BID WAS LOW BID ON ONLY 7 ITEMS, ALTHOUGH ITS AGGREGATE BID IS LOW BY ABOUT 9 PERCENT. ADDITION, SNOW WHITE CONFIRMED ITS BID WHEN REQUESTED TO DO SO. ..END :