B-167789(1), NOV. 26, 1969

B-167789(1): Nov 26, 1969

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COMPETITION SUFFICIENCY WHERE AWARD OF CONTRACT WAS MADE BASED ON SELF-CERTIFICATION AND SMALL BUSINESS ADMINISTRATION (SBA) DETERMINATION THAT CONTRACTOR WAS SMALL BUSINESS CONCERN. PROTEST TO AWARD IS DENIED FOR. WHILE SBA SIZE APPEALS BOARD DETERMINED AFTER AWARD THAT CONTRACTOR WAS LARGE BUSINESS CONCERN. CONTRACT AWARDED WAS VOIDABLE AS TERMINATION WAS NOT IN BEST INTEREST OF GOVERNMENT. CONTRACTING OFFICER'S DETERMINATION THAT DUE TO URGENCY OF PROCUREMENT IT WAS IMPRACTICAL TO OBTAIN COMPETITION BY FORMAL ADVERTISING AND TO NEGOTIATE WITH ONLY TWO FORMER SUPPLIERS WAS PROPER AND SINCE COMPETITION WAS OBTAINED TO MAXIMUM PRACTICABLE EXTENT AND RESOLICITATION OF OFFERS WITHOUT SMALL BUSINESS RESTRICTION WOULD HAVE SERVED NO USEFUL PURPOSE.

B-167789(1), NOV. 26, 1969

AWARDS--SMALL BUSINESS CONCERNS--SET-ASIDES--COMPETITION SUFFICIENCY WHERE AWARD OF CONTRACT WAS MADE BASED ON SELF-CERTIFICATION AND SMALL BUSINESS ADMINISTRATION (SBA) DETERMINATION THAT CONTRACTOR WAS SMALL BUSINESS CONCERN, PROTEST TO AWARD IS DENIED FOR, WHILE SBA SIZE APPEALS BOARD DETERMINED AFTER AWARD THAT CONTRACTOR WAS LARGE BUSINESS CONCERN, CONTRACT AWARDED WAS VOIDABLE AS TERMINATION WAS NOT IN BEST INTEREST OF GOVERNMENT. CONTRACTING OFFICER'S DETERMINATION THAT DUE TO URGENCY OF PROCUREMENT IT WAS IMPRACTICAL TO OBTAIN COMPETITION BY FORMAL ADVERTISING AND TO NEGOTIATE WITH ONLY TWO FORMER SUPPLIERS WAS PROPER AND SINCE COMPETITION WAS OBTAINED TO MAXIMUM PRACTICABLE EXTENT AND RESOLICITATION OF OFFERS WITHOUT SMALL BUSINESS RESTRICTION WOULD HAVE SERVED NO USEFUL PURPOSE, GAO SEES NO REASON TO RESCIND CONTRACT.

TO RAVEN ELECTRONICS, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF AUGUST 22, 1969, AND SUBSEQUENT CORRESPONDENCE, PROTESTING THE AWARD OF A CONTRACT TO DORSETT ELECTRONICS, INC., UNDER REQUEST FOR PROPOSALS N00019-69-R 0188, ISSUED BY THE NAVAL AIR SYSTEMS COMMAND (NAVAIR).

THE REFERENCED SOLICITATION REQUESTED SUBMISSION OF OFFERS BY JUNE 11, 1969, FOR 150 AN/DRQ-3A TRANSPONDERS AND WAS ENTIRELY SET ASIDE FOR PARTICIPATION OF SMALL BUSINESS CONCERNS ONLY. TWO OFFERS WERE RECEIVED WITH THE FOLLOWING PRICES:

DORSETT ELECTRONICS, INC. $ 85,050.00

RAVEN ELECTRONICS, INC. 196,140.14

A TIMELY PROTEST WAS RECEIVED BY NAVAIR FROM YOUR COMPANY ON JUNE 12, 1969, IN WHICH YOU ALLEGED THAT DORSETT WAS A LARGE BUSINESS AND DID NOT QUALIFY FOR THE PROCUREMENT. THE CONTRACTING AGENCY CONTACTED THE SMALL BUSINESS ADMINISTRATION (SBA) REGIONAL OFFICE AT OKLAHOMA CITY AND WAS ADVISED THAT IT HAD DETERMINED ON MARCH 28, 1969, THAT DORSETT WAS A SMALL BUSINESS. PURSUANT TO INSTRUCTIONS RECEIVED BY YOU FROM THE SBA OFFICE YOU APPEALED TO THE SBA SIZE APPEALS BOARD, WHICH DETERMINED ON AUGUST 20, 1969, THAT DORSETT WAS A LARGE BUSINESS AS OF MAY 1, 1969.

HOWEVER, ON THE BASIS OF THE URGENCY OF THE PROCUREMENT, THE CONTRACTING OFFICER AWARDED DORSETT A CONTRACT ON JULY 11, 1969, RELYING UPON DORSETT'S SELF-CERTIFICATION AND THE DETERMINATION OF MARCH 28, 1969, BY THE SBA REGIONAL DIRECTOR.

NOTWITHSTANDING THE ULTIMATE DETERMINATION THAT DORSETT DID NOT MEET THE SIZE REQUIREMENTS OF THE SOLICITATION, WE BELIEVE THAT THE CONTRACT AWARDED TO IT WAS, AT WORST, MERELY VOIDABLE, AND THAT TERMINATION THEREOF WOULD NOT BE IN THE BEST INTEREST OF THE GOVERNMENT. SEE 41 COMP. GEN. 252 (1961). WE BELIEVE ALSO THAT EVEN IF DORSETT'S LARGE BUSINESS STATUS HAD BEEN PROPERLY DECIDED BEFORE THE AWARD TO IT, AN AWARD TO YOU WOULD HAVE BEEN IMPROPER.

THE RECORD SHOWS THAT THE PROCUREMENT WAS NEGOTIATED ON THE GROUND THAT THE GOVERNMENT'S DELIVERY REQUIREMENTS DID NOT PERMIT THE DELAY INCIDENT TO OBTAINING THE FIRST ARTICLE APPROVAL FOR THE REQUIRED ITEM, AND THAT SUCH APPROVAL COULD BE WAIVED ONLY FOR THE PREVIOUS PRODUCERS, DORSETT AND RAVEN. ACCORDINGLY, THE CONTRACTING OFFICER MADE A WRITTEN DETERMINATION ON APRIL 25, 1969, THAT IT WAS IMPRACTICABLE TO OBTAIN COMPETITION BY FORMAL ADVERTISING AND HE PROPOSED TO LIMIT NEGOTIATIONS TO YOUR FIRM AND DORSETT PURSUANT TO THE AUTHORITY OF 10 U.S.C. 2304 (A) (10).

THE PROVISIONS OF ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1 706.5, PROHIBIT TOTAL SET-ASIDES FOR SMALL BUSINESS UNLESS THERE IS A REASONABLE EXPECTATION THAT BIDS OR PROPOSALS WILL BE OBTAINED FROM A SUFFICIENT NUMBER OF SMALL BUSINESS CONCERNS TO INSURE THAT AWARDS WILL BE MADE AT REASONABLE PRICES. IT IS THUS CLEAR THAT THE SET-ASIDE DETERMINATION MADE IN THIS CASE COULD PROPERLY HAVE BEEN MADE ONLY ON THE BASIS THAT BOTH AVAILABLE SOURCES WERE SMALL BUSINESS CONCERNS, AND HAD THE CORRECT STATUS OF DORSETT BECOME KNOWN BEFORE AWARD THE PROPER ACTION WOULD HAVE BEEN TO WITHDRAW THE SET-ASIDE. SEE 45 COMP. GEN. 228 (1965). MOREOVER, SINCE NAVAIR HAS ADVISED US THAT THE PRICE QUOTED BY YOU IS CONSIDERED UNREASONABLE, AND IT CLEARLY WAS SIGNIFICANTLY HIGHER THAN DORSETT-S, WITHDRAWAL OF THE SET-ASIDE WOULD HAVE BEEN REQUIRED BY ASPR 1-706.3 (A).

SINCE THE URGENCY OF THE GOVERNMENT'S NEEDS MADE IT ESSENTIAL TO PROCURE THESE ITEMS FROM A SOURCE WHICH HAD PREVIOUSLY PRODUCED THE EQUIPMENT, IT APPEARS THAT IN THIS CASE COMPETITION WAS OBTAINED TO THE MAXIMUM PRACTICABLE EXTENT, AND RESOLICITATION OF OFFERS WITHOUT THE SMALL BUSINESS RESTRICTION WOULD HAVE SERVED NO USEFUL PURPOSE. IN ANY EVENT, DORSETT COULD NOT UNILATERALLY AVOID THIS CONTRACT BY REASON OF ITS LARGE BUSINESS STATUS (SEE OTIS STEEL PRODUCTS CORPORATION V UNITED STATES, 316 F.2D 937 (1963), AND IN THE CIRCUMSTANCES WE SEE NO REASON FOR THE GOVERNMENT TO RESCIND IT.

FOR THE REASONS STATED YOUR PROTEST IS DENIED.

IN YOUR LETTER OF OCTOBER 17, 1969, YOU PRESENTED TWO ADDITIONAL OBJECTIONS TO THE AWARD TO DORSETT. FIRST, ON THE BASIS OF YOUR HISTORICAL COST, YOU QUESTION WHETHER DORSETT IS CAPABLE OF PERFORMING ITS CONTRACT AT THE PRICE QUOTED. SECONDLY, YOU QUESTION WHETHER THE COMPANY IS CAPABLE OF MEETING THE DELIVERY SCHEDULE SINCE IT HAS NOT PRODUCED THE ITEM FOR SOME TIME. IN THIS REGARD, WE WERE INFORMALLY ADVISED BY NAVAIR ON NOVEMBER 4, 1969, THAT DORSETT WAS SATISFACTORILY PROCEEDING WITH PERFORMANCE OF THE CONTRACT, AND THAT THE COMPANY HAS NOT INDICATED TO DATE THAT ITS PRICE IS ERRONEOUS.