B-167613, OCT. 22, 1969

B-167613, OCT. 22, 1969

AWARDS--SMALL BUSINESS CONCERNS--SIZE--AFFILIATES OF LARGE BUSINESS CONCERNS UNSUCCESSFUL SMALL BUSINESS OFFEROR WHO CONTENDS THAT SUCCESSFUL OFFEROR IS DIVISION OF LARGE BUSINESS AND THEREFORE INELIGIBLE FOR AWARD UNDER TOTAL SMALL BUSINESS SET-ASIDE, OFFERS NO BASIS FOR OBJECTION SINCE RECORD CONTAINS NO CONCLUSIVE INFORMATION TO REFUTE OR CONFIRM ALLEGATION THAT CONTRACTOR WAS OR WAS NOT AT TIME OF AWARD SMALL BUSINESS; MOREOVER, GAO WILL MAKE NO SUCH DETERMINATION SINCE THAT AUTHORITY IS VESTED BY LAW IN SMALL BUSINESS ADMINISTRATION. CONTRACTING OFFICER WAS REQUIRED TO ACCEPT SUCCESSFUL OFFEROR'S SELF CERTIFICATION OF SMALL BUSINESS STATUS UNLESS HE POSSESSED INFORMATION TO CONTRARY. NOTHING INDICATED SUCCESSFUL OFFEROR HAD PARENT FIRM OR CORPORATE AFFILIATION WHICH WOULD DISQUALIFY IT. IN ANY EVENT, PROTEST WAS UNTIMELY UNDER THEN CURRENT REGULATIONS.

TO BACON AMERICAN CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JULY 30, 1969, AND SUBSEQUENT CORRESPONDENCE, PROTESTING AGAINST THE AWARD OF A CONTRACT FOR THE FURNISHING AND INSTALLATION OF A TIRE REBUILD SHOP TO WISDOM RUBBER INDUSTRIES, INC. (HEREAFTER WISDOM) ON JUNE 30, 1969, BY ROCK ISLAND ARSENAL, ROCK ISLAND, ILLINOIS, UNDER RFP NO. DAAF01-69-R-0815, ISSUED ON MAY 29, 1969, AS A TOTAL SMALL BUSINESS SET-ASIDE. ON JULY 1, 1969, THE DAY AFTER CONTRACT AWARD, YOU PROTESTED AGAINST THE AWARD TO WISDOM BY TELEGRAM TO THE CONTRACTING OFFICER. WHILE A RESPONSE TO YOUR PROTEST WAS BEING PREPARED BY ROCK ISLAND ARSENAL, YOU INFORMED THE ARSENAL THAT YOU WERE INITIATING A PROTEST TO THIS OFFICE. THE ADMINISTRATIVE REPORT FURNISHED US IN THIS MATTER STATES THAT INFORMATION CONCERNING YOUR PROTEST HAS BEEN PROVIDED TO THE SMALL BUSINESS ADMINISTRATION (SBA) PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-703 (B) (1) (III).

YOU CONTEND THAT AWARD TO WISDOM WAS IMPROPER BECAUSE (1) AN AMENDMENT TO THE RFP WAS MADE TO PERMIT A LARGE BUSINESS TO WITHDRAW ITS OFFER; (2) WISDOM DECREASED ITS PRICE IN RESPONSE TO THE AMENDMENT, EVEN THOUGH THE AMENDMENT INCREASED THE CONTRACT REQUIREMENTS, INDICATING WISDOM'S RECEIPT OF MORE PRECISE INFORMATION THAN WAS GIVEN YOU; (3) THE CONTRACTING OFFICER REVEALED A BIAS AGAINST YOUR FIRM BY STATING YOU WOULD HAVE A "BETTER CHANCE" ON SUBSEQUENT PROCUREMENTS; AND (4) WISDOM IS A DIVISION OF A LARGE BUSINESS AND THEREFORE WAS INELIGIBLE FOR AWARD.

THE ADMINISTRATIVE RECORD SHOWS THAT IN RESPONSE TO RFP NO. DAAF01 69-R- 0815, OFFERS WERE RECEIVED FROM FOUR FIRMS: BACON AMERICAN; SUPER MOLD CORPORATION (SUPER MOLD); JAMES C. HEINTZ CO. (HEINTZ); AND WISDOM. EXAMINATION OF SUPER MOLD'S OFFER REVEALED IT WAS NOT A SMALL BUSINESS CONCERN. UPON DISCOVERY THAT SUPER MOLD WAS NOT ELIGIBLE FOR AWARD, NO FURTHER NEGOTIATIONS WERE CONDUCTED WITH IT. ROCK ISLAND ARSENAL REQUESTED A PARTIAL PRE-AWARD SURVEY BE MADE OF WISDOM, THE LOW OFFEROR. THE SURVEY, CONDUCTED BY THE DEFENSE CONTRACT ADMINISTRATION SERVICES REGION (DCASR), SAN FRANCISCO, DATED JUNE 20, 1969, RECOMMENDED "COMPLETE AWARD" TO WISDOM. THE SURVEY IDENTIFIED WISDOM AS A CORPORATION WHICH WAS A DISTRIBUTOR, REGULAR DEALER AND A MANUFACTURER'S AGENT, BUT THERE WAS NO INDICATION THAT WISDOM HAD A PARENT FIRM OR OTHER CORPORATE AFFILIATIONS. WISDOM HAD ALSO CERTIFIED ITSELF AS A SMALL BUSINESS IN THE SUBMISSION OF ITS OFFER.

THE RFP REQUIRED OFFERORS TO FURNISH THREE TIRE TREAD BUFFING MACHINES WHICH, AMONG OTHER STATED CHARACTERISTICS, WERE TO HAVE 30 HP, 1750-RPM MOTORS. ALL OFFERS WERE SUBMITTED TO THE ARMY TIRE RECONDITIONING SURVEY TEAM FOR TECHNICAL EVALUATION. THE TEAM, BY LETTER OF JUNE 11, 1969, TO THE CONTRACTING OFFICER, FOUND THAT NO OFFERS MET THE 30 HP - 1750 RPM MOTOR REQUIREMENTS, AND RECOMMENDED THAT CERTAIN ALTERNATE EQUIPMENT BE SUBSTITUTED IN THE RFP, TO STATE A REQUIREMENT FOR EQUIPMENT WHICH COULD BE SATISFIED BY ALL OFFERORS. THIS RECOMMENDATION WAS EMBODIED IN AMENDMENT NO. 1 TO THE RFP, WHICH WAS SENT TO BACON AMERICAN, HEINTZ AND WISDOM BY TELEGRAM OF JUNE 12, 1969, AND WHICH WAS LATER FORMALLY INCORPORATED INTO THE RFP. IN RESPONSE TO THE AMENDMENT, HEINTZ WITHDREW ITS OFFER, AND YOUR FIRM AND WISDOM SUBMITTED MODIFIED OFFERS IN WHICH EACH FIRM INCREASED ITS PRICE.

SUBSEQUENTLY, THE CONTRACTING OFFICER REOPENED NEGOTIATIONS TO CLARIFY THE DELIVERY SCHEDULE AND TO VERIFY ITS IMPACT UPON PRICE. THE RFP PROVIDED FOR THE EQUIPMENT TO BE COMPLETELY INSTALLED AND OPERATING WITHIN 120 DAYS OF AWARD OF CONTRACT, BUT PERMITTED PROPOSED ALTERNATE DELIVERY SCHEDULES. SINCE THE EQUIPMENT WAS TO BE INSTALLED IN TAIWAN, THE GOVERNMENT HAD CONTEMPLATED A 25-DAY PERIOD BETWEEN DELIVERY OF MATERIAL TO THE POINT OF LOADING AND THE ARRIVAL OF THE MATERIAL AT THE SITE OF INSTALLATION. YOU INFORMED THE CONTRACTING OFFICER THAT THIS INTERVAL WOULD NOT CHANGE YOUR PRICE OR PROPOSED ALTERNATE DELIVERY SCHEDULE OF 175 DAYS. WISDOM SIMILARLY DID NOT REVISE ITS PRICE OR DELIVERY SCHEDULE OF 120 DAYS.

A PRICE AND COST ANALYSIS WAS CONDUCTED OF WISDOM'S PROPOSAL, AND THE GOVERNMENT INDEPENDENTLY ESTIMATED THE COST OF PERFORMANCE. THE GOVERNMENT ESTIMATE EXCEEDED THE WISDOM PRICE BY $5,000, AND IN VIEW OF THIS FAVORABLE COMPARISON, AWARD TO WISDOM WAS RECOMMENDED. THE ROCK ISLAND ARSENAL BOARD OF AWARDS MET ON JUNE 27, 1969, AND UPON REVIEW OF THE OFFERS RECEIVED, RECOMMENDED AWARD TO WISDOM. THE CONTRACT WAS AWARDED ON JUNE 30, 1969, AND YOU PROTESTED AGAINST THE AWARD ON THE FOLLOWING DAY.

YOUR FIRST CONTENTION IS THAT AMENDMENT NO. 1 TO THE RFP WAS ISSUED TO PERMIT SUPER MOLD "TO DROP OUT OF THE BIDDING.' THE ADMINISTRATIVE RECORD SHOWS THAT THE AMENDMENT WAS ISSUED, UPON THE RECOMMENDATION OF THE ARMY TIRE RECONDITIONING SURVEY TEAM, TO SUBSTITUTE EQUIPMENT WHICH COULD BE SUPPLIED BY ALL OFFERORS. IN ADDITION, SUPER MOLD WAS NO LONGER CONSIDERED FOR AWARD, AND NO FURTHER NEGOTIATIONS WERE CONDUCTED WITH IT, AFTER DISCOVERY OF ITS LARGE BUSINESS STATUS. AMENDMENT NO. 1 WAS NOT EVEN SENT TO SUPER MOLD. YOUR ATTENTION IS ALSO DIRECTED TO PARAGRAPH 7 (B) OF STANDARD FORM 33A, A PART OF THE RFP, WHICH STATES:

"IF THIS SOLICITATION IS NEGOTIATED, OFFERS MAY BE MODIFIED (SUBJECT TO PAR. 8, WHEN APPLICABLE) OR WITHDRAWN BY WRITTEN OR TELEGRAPHIC NOTICE RECEIVED AT ANY TIME PRIOR TO AWARD. * * *" SUPER MOLD WAS THUS FREE TO WITHDRAW ITS OFFER AT ANY TIME PRIOR TO AWARD. THERE WAS NO PREREQUISITE OF GOVERNMENT ACTION, SUCH AS AN AMENDMENT TO THE RFP, FOR WITHDRAWAL OF AN OFFER. WE THEREFORE FIND YOUR FIRST CONTENTION IS WITHOUT MERIT.

YOU ALSO ALLEGE THAT WISDOM WAS GIVEN MORE COMPLETE INFORMATION THAN YOUR FIRM, ENABLING THEM TO REDUCE, INSTEAD OF INCREASE, THEIR PRICE IN RESPONSE TO AMENDMENT NO. 1. HOWEVER, THE RECORD INDICATES THAT WISDOM INCREASED, RATHER THAN REDUCED, ITS PRICE IN RESPONDING TO THE AMENDMENT. THERE IS NO INDICATION OF RECORD THAT WISDOM WAS PROVIDED MORE COMPLETE INFORMATION THAN YOUR FIRM. BACON AMERICAN, HEINTZ AND WISDOM WERE ALL SENT THE SAME TELEGRAM ON JUNE 12, 1969. THEREFORE, WE FIND NO BASIS FOR YOUR SECOND CONTENTION.

SIMILARLY, THERE IS NO EVIDENCE OF RECORD THAT THE CONTRACTING OFFICER EXHIBITED BIAS IN THE EVALUATION OF YOUR OFFER. YOUR STATEMENT THAT THE CONTRACTING OFFICER PROMISED YOU A "BETTER CHANCE" IN FUTURE PROCUREMENTS APPEARS TO RESULT FROM A MISINTERPRETATION OF AN EXPRESSION THAT YOU WOULD BE AFFORDED AN OPPORTUNITY TO PARTICIPATE IN FUTURE PROCUREMENTS.

YOU ALSO MAINTAIN THAT WISDOM IS A DIVISION OF SUPER MOLD AND THEREFORE WAS INELIGIBLE FOR AWARD UNDER A TOTAL SMALL BUSINESS SET ASIDE PROCUREMENT. NO CONCLUSIVE INFORMATION APPEARS IN THE RECORD TO EITHER REFUTE OR CONFIRM YOUR ALLEGATION THAT WISDOM WAS OR WAS NOT AT THE TIME OF AWARD A SMALL BUSINESS CONCERN, NOR WILL THIS OFFICE MAKE SUCH A DETERMINATION. THE AUTHORITY TO DETERMINE IN PROCUREMENT MATTERS WHETHER A BIDDER WHO REPRESENTS HIMSELF AS A SMALL BUSINESS CONCERN IS, IN FACT, A SMALL BUSINESS CONCERN IS VESTED BY LAW IN THE SMALL BUSINESS ADMINISTRATION. 15 U.S.C. 637 (B) (6). NEITHER THE CONTRACTING AGENCY NOR THE OTHER BIDDERS ARE AUTHORIZED OR QUALIFIED TO MAKE SUCH A DETERMINATION, AND THE PROCEDURES ESTABLISHED BY REGULATION FOR REFERRAL OF SMALL BUSINESS QUESTIONS TO THE SMALL BUSINESS ADMINISTRATION ARE PREDICATED UPON SUCH A CONCLUSION.

UNDER PERTINENT PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATION IT WAS NECESSARY THAT YOUR PROTEST BE RECEIVED WITHIN FIVE DAYS FOLLOWING THE CLOSING DATE FOR RECEIPT OF PROPOSALS IF IT WAS TO BE CONSIDERED TIMELY AND MERIT REFERRAL TO SBA FOR A SIZE DETERMINATION. IN THE INSTANT CASE, THE CONTRACTING OFFICER TREATED YOUR PROTEST AS UNTIMELY, AND PURSUANT TO ASPR 1-703 (B) (1) (III), FORWARDED THE PROTEST TO THE SBA ONLY FOR ITS CONSIDERATION IN REGARD TO FUTURE PROCUREMENTS.

OUR DECISION B-163128, APRIL 24, 1968, WAS CONCERNED WITH A PROTEST SIMILAR TO YOURS IN THAT IT WAS A PROTEST MADE AFTER AWARD OF A CONTRACT NEGOTIATED UNDER A TOTAL SMALL BUSINESS SET-ASIDE. THE PROTESTANT HAD ALLEGED THAT THE CONTRACT WAS IMPROPERLY AWARDED TO A FIRM AFFILIATED WITH A LARGE BUSINESS. IN THAT DECISION, WE STATED:

"UNDER ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-703 AND SMALL BUSINESS ADMINISTRATION REGULATION (SBAR) 121.3-8 A CONTRACTING OFFICER IS REQUIRED TO ACCEPT AT FACE VALUE FOR THE PARTICULAR PROCUREMENT INVOLVED, A REPRESENTATION BY THE OFFEROR THAT IT IS A SMALL BUSINESS CONCERN UNLESS A WRITTEN PROTEST IS RECEIVED CONCERNING THE SIZE STATUS OF THE APPARENTLY SUCCESSFUL OFFEROR OR THE CONTRACTING OFFICER QUESTIONS THE SMALL BUSINESS STATUS OF THE OFFEROR AND SUBMITS HIS QUESTION TO SBA FOR DETERMINATION. SBAR 121.3-5 (A) STIPULATES THAT A SIZE PROTEST WILL BE CONSIDERED TIMELY IF IT IS SUBMITTED TO THE CONTRACTING OFFICER PRIOR TO THE FIFTH DAY, EXCLUSIVE OF SATURDAYS, SUNDAYS AND LEGAL HOLIDAYS, AFTER PROPOSAL OPENING. AN OFFEROR SUBMITTING A SIZE PROTEST WHICH IS RECEIVED AFTER AWARD IS TO BE INFORMED THAT HIS PROTEST HAS BEEN REFERRED TO THE APPROPRIATE SBA REGIONAL OFFICE FOR ITS CONSIDERATION IN FUTURE ACTIONS, WITH A NOTATION THEREON THAT AN AWARD HAS BEEN MADE. SEE ASPR 1-703 (B) (1) (III).

"SINCE ASPR 3-508.3 (A) (NOW 3-507.2 (A) ( PROVIDES THAT THE IDENTITY OF OFFERORS IN NEGOTIATED PROCUREMENTS SHALL NOT BE DIVULGED UNTIL AFTER AN AWARD HAS BEEN MADE, EFFECTIVE PROTEST BY ANY OFFEROR AGAINST THE SMALL BUSINESS STATUS OF ANOTHER IS VIRTUALLY PRECLUDED, AND THE PROTECTION INTENDED TO BE PROVIDED BY THE PROTEST PROCEDURE AGAINST IMPROPER AWARD TO AN OFFEROR NOT PROPERLY QUALIFIED AS A SMALL BUSINESS IS LOST. THIS OBVIOUSLY TENDS TO THWART THE STATUTORY POLICY ESTABLISHED BY THE SMALL BUSINESS ACT OF 1953, 15 U.S.C. 631-647, THAT A -FAIR PROPORTION- OF THE GOVERNMENT'S TOTAL PURCHASES BE PLACED WITH SMALL BUSINESS CONCERNS. ACCORDINGLY, WE ARE RECOMMENDING TO THE SBA AND THE ASPR COMMITTEE THAT CORRECTIVE ACTION SHOULD BE TAKEN TO PROVIDE A PRACTICAL PROCEDURE FOR CONTESTING SMALL BUSINESS SIZE CERTIFICATIONS IN NEGOTIATED PROCUREMENTS PRIOR TO AWARD. WE ARE UNABLE, HOWEVER, TO CONSIDER THE SUBJECT CONTRACT ILLEGALLY AWARDED BECAUSE OF THIS CONSIDERATION, SINCE NEITHER THE STATUTE NOR THE IMPLEMENTING REGULATIONS PRESENTLY CONTAIN ANY SPECIFIC REQUIREMENT FOR SUCH PROCEDURE.' IN A SUBSEQUENT LETTER B-163128, OF MAY 27, 1968, TO THE ADMINISTRATOR, SMALL BUSINESS ADMINISTRATION, WE COMMENTED:

"WE ARE PLEASED TO NOTE THAT AS A RESULT OF OUR SUGGESTION, THE SBA SIZE APPEALS BOARD WILL CONSIDER A PROTEST IN A NEGOTIATED PROCUREMENT AS TIMELY IF FILED WITHIN FIVE WORKING DAYS FROM THE DATE THE PROTESTING OFFEROR HAS NOTICE OF THE AWARD. SUCH PROCEDURE SHOULD COMPENSATE FOR THE LIKELIHOOD THAT THE PROTESTER WAS NOT AWARE OF THE PROTESTED CONCERN'S PARTICIPATION IN THE PROCUREMENT UNTIL RECEIPT OF THE AWARD NOTICE. APPRECIATE THAT YOU ARE NOT IN A POSITION TO COMPEL THE CONTRACTING OFFICER TO AWAIT YOUR RULING, OR TO PREVENT THE MAKING OF AN AWARD, BUT WE ARE HOPEFUL THAT THE ASPR COMMITTEE MAY SEE FIT TO SUPPLEMENT YOUR AMENDMENT IN SUCH MANNER AS TO GIVE IT MEANINGFUL EFFECT.'

THE PERTINENT ASPR AND SBAR PROVISIONS WERE ESSENTIALLY THE SAME AT THE TIME OF YOUR PROTEST AS THEY WERE AS OF OUR LETTER OF MAY 27, 1968. THE PROVISIONS OF BOTH REGULATIONS MUST BE CONSULTED TO DETERMINE THE TIMELINESS OF AND THE PROCEDURES GOVERNING A SMALL BUSINESS SIZE STATUS PROTEST IN ARMED SERVICES PROCUREMENTS. AT THE TIME OF AWARD TO WISDOM, SBAR 121.3-5 (A) PROVIDED THAT A SIZE STATUS PROTEST IN NEGOTIATED PROCUREMENTS WOULD BE TIMELY IF "FILED BY A BIDDER OR OFFEROR WITHIN 5 DAYS AFTER RECEIPT OF THE IDENTITY OF ANOTHER BIDDER OR OFFEROR FROM A CONTRACTING OFFICER * * *.' THEREFORE, YOUR PROTEST OF JULY 1, 1969, WAS TIMELY UNDER THE SBA REGULATIONS.

HOWEVER, ASPR HAD NOT UNDERGONE A CORRESPONDING REVISION, AND AS OF THE DATE OF YOUR PROTEST, ASPR 1-703 (B) (1) PROVIDED THAT A SIZE PROTEST "MUST BE RECEIVED BY THE CONTRACTING OFFICER PRIOR TO THE CLOSE OF BUSINESS ON THE FIFTH WORKING DAY * * * AFTER BID OPENING DATE OR CLOSING DATE FOR RECEIPT OF PROPOSALS.' SINCE THE CLOSING DATE FOR RECEIPT OF PROPOSALS WAS JUNE 9, 1969, AND YOUR PROTEST WAS MADE ON JULY 1, IT WAS UNTIMELY. HOWEVER, UNDER ASPR 1-703 (B) (1) (III), YOUR PROTEST WAS FORWARDED TO SBA FOR ITS CONSIDERATION IN FUTURE PROCUREMENTS.

THE CONTRACTING OFFICER WAS REQUIRED TO ACCEPT WISDOM'S SELF CERTIFICATION OF SMALL BUSINESS STATUS UNLESS HE POSSESSED INFORMATION TO THE CONTRARY. ROCK ISLAND ARSENAL PROCUREMENT RECORDS IDENTIFIED WISDOM AS A SMALL BUSINESS. THERE WAS NO INFORMATION IN THE PRE-AWARD SURVEY ON THAT FIRM INDICATING THAT IT HAD A PARENT FIRM OR CORPORATE AFFILIATION WHICH WOULD DISQUALIFY IT AS A SMALL BUSINESS. FURTHER, UNDER ASPR 1-703 (B) (1), QUOTED ABOVE, YOUR PROTEST WAS UNTIMELY. UNDER THESE CIRCUMSTANCES, WE CAN FIND NO IMPROPRIETY IN THE CONTRACTING OFFICER'S AWARD TO WISDOM AND HIS REFERRAL OF YOUR PROTEST TO SBA FOR ITS CONSIDERATION IN LATER PROCUREMENTS. ACCORDINGLY, YOUR PROTEST MUST BE DENIED. AS A POINT OF INFORMATION, YOUR ATTENTION IS INVITED TO REVISION NO. 4, DATED AUGUST 29, 1969, TO THE 1969 EDITION OF ASPR WHICH MODIFIES ASPR 1-703 (B) (1) AND 1-703 (B) (5) TO CONFORM TO SBAR 121.3-5 (A). REVISION NO. 4 BECOMES EFFECTIVE 90 DAYS AFTER ITS ISSUANCE, ALTHOUGH COMPLIANCE THEREWITH IS AUTHORIZED UPON ITS RECEIPT. THE EFFECT OF THE REVISION, IN SITUATIONS SUCH AS THE INSTANT PROCUREMENT, WILL BE TO REQUIRE THE CONTRACTING OFFICER TO NOTIFY UNSUCCESSFUL OFFERORS OF THE IDENTITY OF THE FIRM TO WHICH AWARD IS PROPOSED. AWARD MUST THEN BE WITHHELD UNTIL THE EXPIRATION OF A STATED PERIOD OF TIME, NOT LESS THAN FIVE WORKING DAYS, DURING WHICH SIZE STATUS PROTESTS MAY BE RECEIVED. UNDER THE REVISED REGULATIONS, IT WOULD THEREFORE APPEAR THAT A PROTEST SUCH AS YOURS, MADE THE DAY AFTER YOU WERE NOTIFIED OF THE IDENTITY OF THE SUCCESSFUL OFFEROR, WILL BE CONSIDERED TIMELY.