B-170506, OCT. 29, 1970

B-170506: Oct 29, 1970

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ON BASIS THAT BIDDER LACKED FINANCIAL RESOURCES TO PERFORM AND WAS DENIED CERTIFICATE OF COMPETENCY BY SBA AND AWARD TO SEQUOIA FOREST INDUSTRIES. A DETERMINATION THAT THE HIGH BIDDER WAS NONRESPONSIBLE TOGETHER WITH THE REFUSAL OF THE SBA TO ISSUE A CERTIFICATE OF COMPETENCY DOES NOT AFFORD ANY BASIS TO DISTURB THE DETERMINATION AND UNDER THE SMALL BUSINESS ACT. THEIR DETERMINATIONS ARE FINAL AND CONCLUSIVE. TO GENDRON & GENDRON: FURTHER REFERENCE IS MADE TO YOUR LETTER OF JULY 31. THE TIMBER WAS OFFERED FOR SALE UNDER ORAL AUCTION BIDDING PROCEDURES ON MAY 28. AFTER THE SALE WAS FORMALLY ADVERTISED ON APRIL 27. THREE SEALED BIDS WERE RECEIVED AND OPENED FROM THE E. THESE THREE BIDDERS WERE QUALIFIED TO CONTINUE WITH THE ORAL AUCTION.

B-170506, OCT. 29, 1970

BID PROTEST - BIDDER RESPONSIBILITY - SBA CERTIFICATE OF COMPETENCY DENIAL OF PROTEST AGAINST REJECTION OF HIGH BIDDER FOR TIMBER SALE AT FOSTER RIDGE SIERRA NATIONAL FOREST, CALIF., ON BASIS THAT BIDDER LACKED FINANCIAL RESOURCES TO PERFORM AND WAS DENIED CERTIFICATE OF COMPETENCY BY SBA AND AWARD TO SEQUOIA FOREST INDUSTRIES, INC. UNDER A TIMBER SALES INVITATION THAT ADVISED BIDDERS THAT THEY COULD BE REQUESTED TO DEMONSTRATE FINANCIAL CAPACITY TO PERFORM, A DETERMINATION THAT THE HIGH BIDDER WAS NONRESPONSIBLE TOGETHER WITH THE REFUSAL OF THE SBA TO ISSUE A CERTIFICATE OF COMPETENCY DOES NOT AFFORD ANY BASIS TO DISTURB THE DETERMINATION AND UNDER THE SMALL BUSINESS ACT, THEIR DETERMINATIONS ARE FINAL AND CONCLUSIVE.

TO GENDRON & GENDRON:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JULY 31, 1970, WITH ENCLOSURES, APPEALING THE DECISION OF THE FOREST SERVICE IN REJECTING THE HIGH BID OF BAR K SAWMILL, INC., AND THE DECISION OF THE SMALL BUSINESS ADMINISTRATION (SBA) IN REFUSING TO ISSUE A CERTIFICATE OF COMPETENCY (COC) IN CONNECTION WITH A TIMBER SALE OFFERING AT FOSTER RIDGE, SIERRA NATIONAL FOREST, CALIFORNIA.

THE SALE OFFERING INCLUDED AN ESTIMATED 16,700,000 BOARD FEET OF SAWTIMBER APPRAISED AT $91,950, INCLUSIVE OF SPECIFIED PURCHASER ROAD CONSTRUCTION. THE TIMBER WAS OFFERED FOR SALE UNDER ORAL AUCTION BIDDING PROCEDURES ON MAY 28, 1970, AFTER THE SALE WAS FORMALLY ADVERTISED ON APRIL 27. THREE SEALED BIDS WERE RECEIVED AND OPENED FROM THE E. B. YANCEY LUMBER CO., INC., SEQUOIA FOREST INDUSTRIES, INC., AND BAR K SAWMILL, INC. THESE THREE BIDDERS WERE QUALIFIED TO CONTINUE WITH THE ORAL AUCTION. BAR K SAWMILL WAS THE HIGH BIDDER ON THE ORAL BIDDING IN THE AMOUNT OF $138,000. THE FOREST SERVICE REVIEWED THE FINANCIAL STATEMENT PROVIDED BY BAR K AND CONCLUDED THAT THE COMPANY'S FINANCIAL RESOURCES WERE INADEQUATE TO COMPLETE THE CONTEMPLATED TIMBER CONTRACT AND ADVISED SBA ON JUNE 25, 1970, AS FOLLOWS:

"WE HAVE REVIEWED THE FINANCIAL STATEMENT OF BAR K SAWMILL, INC. IT IS OUR OPINION THAT THE BAR K SAWMILL, INC. DOES NOT HAVE THE WORKING CAPITAL, LOGGING EQUIPMENT OR MANUFACTURING FACILITIES TO FINANCIALLY QUALIFY FOR AWARD OF THE FOSTER RIDGE RESALE. IN ORDER TO COMPLETE THIS SALE UNDER THE TERMS OF THE TIMBER SALE CONTRACT, BAR K SAWMILL, INC. WILL HAVE TO LOG AT LEAST 1,000 M BOARD FEET PER MONTH. THE COMPANY WILL NEED SUFFICIENT WORKING CAPITAL TO COVER ADVANCE PAYMENTS FOR STUMPAGE, WHICH AVERAGES $8.26 PER M BOARD FOOT; COSTS OF LOGGING, ESTIMATED TO BE ABOUT $27.60 PER M BOARD FOOT; AND MANUFACTURING COSTS OF ABOUT $47 PER M BOARD FOOT; UNTIL THEY RECEIVE PAYMENTS FOR THE SALE OF LUMBER. WORKING CAPITAL OF OVER $100,000 WILL BE REQUIRED AT VARIOUS TIMES, IF BAR K SAWMILL, INC. IS TO PERFORM UNDER THE CONTRACT. IN VIEW OF THE PAST PERFORMANCE OF FRED KYRISS AND THE POOR FINANCIAL STATEMENT SUBMITTED BY BAR K SAWMILL, INC., WE DO NOT BELIEVE THAT THEY HAVE THE FINANCIAL ABILITY TO COMPLETE THIS CONTRACT."

ON JULY 23, 1970, THE ACTING REGIONAL FORESTER WAS ADVISED BY THE SBA PACIFIC COASTAL REGIONAL OFFICE THAT BASED ON A COMPREHENSIVE ANALYSIS OF ALL AVAILABLE INFORMATION, THAT AGENCY HAD DECLINED TO ISSUE A COC TO BAR K SAWMILL ON THIS SALE. THE BIDDER WAS INFORMED BY SBA LETTER OF THE SAME DATE TO THE SAME EFFECT. ON JULY 28, 1970, THE FOREST SERVICE ADVISED THE BAR K SAWMILL THAT ITS BID FOR THE INSTANT TIMBER SALE HAD BEEN REJECTED BECAUSE SBA HAD REFUSED TO ISSUE A COC TO THAT BIDDER. ON AUGUST 12, 1970, THE AWARD OF THE FOSTER RIDGE TIMBER WAS MADE TO SEQUOIA FOREST INDUSTRIES, INC., AT THE HIGH BID PRICES RECEIVED FROM BAR K SAWMILL.

THE SALES INVITATION ADVISED BIDDERS THAT AWARD WOULD BE MADE TO THAT RESPONSIBLE BIDDER WHOSE BID IS MOST ADVANTAGEOUS BASED ON THE TOTAL RETURN TO THE UNITED STATES AND THE BIDDERS COULD BE REQUESTED TO DEMONSTRATE THEIR FINANCIAL CAPACITY TO PERFORM THE CONTRACT. FURTHER, 36 CFR 221.10(A) PROVIDES AS FOLLOWS:

"(A) ADVERTISED TIMBER WILL BE AWARDED TO THE HIGHEST BIDDER UPON SATISFACTORY SHOWING BY HIM OF ABILITY TO MEET FINANCIAL REQUIREMENTS AND ANY OTHER CONDITIONS OF THE SALE OFFER *** " SECTION 8(B)(7) OF THE SMALL BUSINESS ACT, AS AMENDED, 15 U.S.C. 637(B)(7), AUTHORIZES SBA:

"TO CERTIFY TO GOVERNMENT PROCUREMENT OFFICERS, AND OFFICERS ENGAGED IN THE SALE AND DISPOSAL OF FEDERAL PROPERTY, WITH RESPECT TO THE COMPETENCY, AS TO CAPACITY AND CREDIT, OF ANY SMALL-BUSINESS CONCERN OR GROUP OF SUCH CONCERNS TO PERFORM A SPECIFIC GOVERNMENT CONTRACT. IN ANY CASE IN WHICH SMALL-BUSINESS CONCERN OR GROUP OF SUCH CONCERNS HAS BEEN CERTIFIED BY OR UNDER THE AUTHORITY OF THE ADMINISTRATION TO BE A COMPETENT GOVERNMENT CONTRACTOR WITH RESPECT TO CAPACITY AND CREDIT AS TO A SPECIFIC GOVERNMENT CONTRACT, THE OFFICERS OF THE GOVERNMENT HAVING PROCUREMENT OR PROPERTY DISPOSAL POWERS ARE DIRECTED TO ACCEPT SUCH CERTIFICATION AS CONCLUSIVE, AND ARE AUTHORIZED TO LET SUCH GOVERNMENT CONTRACT TO SUCH CONCERN OR GROUP OF CONCERNS WITHOUT REQUIRING IT TO MEET ANY OTHER REQUIREMENT WITH RESPECT TO CAPACITY AND CREDIT."

IN THESE CIRCUMSTANCES, AFTER THE ACTING REGIONAL FORESTER DETERMINED BAR K SAWMILL TO BE NONRESPONSIBLE AND SBA REFUSED TO ISSUE A COC AS TO ITS CREDIT, THERE IS FOR APPLICATION THE RULE THAT SUCH DENIAL OF A COC IS PERSUASIVE WITH RESPECT TO THE COMPETENCY OR CREDIT OF THE BIDDER CONCERNED. 39 COMP. GEN. 705 (1960). WHEN THE ISSUANCE OF A COC IS DENIED, THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY MUST BE REGARDED AS HAVING BEEN AFFIRMED. MOREOVER, WE HAVE NO AUTHORITY TO REVIEW DETERMINATIONS OF SBA OR TO REQUIRE IT TO ISSUE A COC. SEE 47 COMP. GEN. 360 (1968). NOR DO WE FIND ANY BASIS ON THE RECORD BEFORE US TO DISTURB THE DETERMINATION OF THE ACTING REGIONAL FORESTER THAT BAR K SAWMILL WAS NOT FINANCIALLY ABLE TO PROPERLY PERFORM THE SALES CONTRACT.