B-172948, OCT 1, 1971

B-172948, OCT 1, 1971

BID PROTEST - BIDDER RESPONSIBILITY - SMALL BUSINESS STATUS DECISION DENYING PROTEST BY LOW BIDDER, AERO-TECH, INC. (NOW ARTKO CORPORATION), AGAINST REJECTION OF ITS BID UNDER AN RFP ISSUED BY HILL AFB FOR 1,010 RATE GYROS FOR F-4 AIRCRAFT, AND SUBSEQUENT AWARD TO U.S. DYNAMICS CORPORATION. DUE TO A NEGATIVE PRE-AWARD SURVEY ON PROTESTANT'S RESPONSIBILITY, THE MATTER WAS REFERRED TO THE SBA FOR A CERTIFICATE OF COMPETENCY. WHEN THIS WAS DECLINED BECAUSE OF A DETERMINATION BY SBA THAT PROTESTANT WAS A LARGE BUSINESS FOR THE REQUIRED REPAIR AND OVERHAUL WORK, SUCH DECISION WAS CONCLUSIVE UNDER 15 U.S.C. 637(B)(6) AND THE PROTEST MUST BE DENIED.

TO WACHTEL, WIENER & ROSS:

REFERENCE IS MADE TO COPY OF YOUR LETTER OF JULY 26, 1971, TO THE SMALL BUSINESS ADMINISTRATION, AND PRIOR CORRESPONDENCE, REGARDING THE PROTEST OF AERO-TECH, INC. (NOW KNOWN AS ARTKO CORPORATION), TUCSON, ARIZONA, AGAINST THE REJECTION OF ITS OFFER UNDER REQUEST FOR PROPOSALS (RFP) F42600-71-R-0794, ISSUED BY HILL AIR FORCE BASE, UTAH.

THE RFP, AS AMENDED, SOLICITED PROPOSALS FOR THE REPAIR OF AN ESTIMATED 1,010 RATE GYROS FOR F-4 AIRCRAFT. PROSPECTIVE OFFERORS WERE ADVISED ON PAGE 10 OF THE SOLICITATION THAT THE SMALL BUSINESS PRODUCT CLASSIFICATION WAS STANDARD INDUSTRIAL CLASSIFICATION (SIC) CODE 7699 AND THAT THE SIZE STANDARD WAS ESTABLISHED AS $1,000,000.

THREE PROPOSALS WERE RECEIVED AND OPENED ON MARCH 23, 1971. ALTHOUGH AERO-TECH SUBMITTED THE LOWEST PROPOSAL, THE CONTRACTING OFFICER WAS UNABLE TO MAKE AN AFFIRMATIVE DETERMINATION AS TO THAT FIRM'S RESPONSIBILITY AS REQUIRED BY ASPR 1-904.1. THIS DETERMINATION WAS BASED ON A PREAWARD SURVEY CONDUCTED BY THE DEFENSE CONTRACT ADMINISTRATION SERVICES DIRECTORATE (DCASD), PHOENIX, ARIZONA. THE PREAWARD SURVEY FOUND THAT AERO-TECH WAS NOT CAPABLE OF ACCOMPLISHING ALL OF THE FOLLOWING WITHIN 60 DAYS AFTER RECEIPT OF ORDER: (1) PURCHASE OR FABRICATE EQUIPMENT AND TOOLING; (2) SET UP PRODUCTION LINE; (3) REVERSE ENGINEER TO MAKE OR SUBCONTRACT PARTS REQUIRED; AND (4) MODIFY AND REPAIR UNITS.

SINCE AERO-TECH HAD CERTIFIED ITSELF TO BE A SMALL BUSINESS CONCERN, THE CONTRACTING OFFICER PURSUANT TO ASPR 1-705.4(C) REFERRED THE MATTER OF ITS RESPONSIBILITY TO THE SMALL BUSINESS ADMINISTRATION (SBA) FOR CONSIDERATION AS TO WHETHER A CERTIFICATE OF COMPETENCY (COC) SHOULD BE ISSUED TO AERO-TECH. BY LETTER DATED MAY 17, 1971, THE SBA REGIONAL OFFICE IN LOS ANGELES, CALIFORNIA, ADVISED THE CONTRACTING OFFICER THAT SINCE AERO-TECH'S ANNUAL GROSS SALES FOR THE PRECEDING THREE YEARS WERE IN EXCESS OF THE $1 MILLION SIZE CRITERION PROVIDED IN THE SOLICITATION, IT HAD DETERMINED THE FIRM TO BE A LARGE BUSINESS FOR THE REPAIR AND OVERHAUL WORK AND, THEREFORE, INELIGIBLE FOR CERTIFICATE OF COMPETENCY CONSIDERATION. BY LETTER DATED MAY 27, 1971, YOU APPEALED THE DECISION OF THE SBA REGIONAL OFFICE IN LOS ANGELES TO THE CHAIRMAN, SIZE APPEALS BOARD, SBA, WASHINGTON, D.C.

THE NEXT LOWEST PROPOSAL WAS SUBMITTED BY U.S. DYNAMICS CORPORATION. ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH 2-407.8(B)(2) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), OUR OFFICE WAS INFORMALLY ADVISED BY THE DEPARTMENT OF THE AIR FORCE, ON JULY 23, 1971, THAT DUE TO THE URGENT NEED TO HAVE THE GYROS REPAIRED, THE CONTRACTING OFFICER WAS AUTHORIZED TO PROCEED WITH AN IMMEDIATE AWARD TO THE U.S. DYNAMICS CORPORATION.

YOU CONTEND THAT SIC CODE NO. 7699 AND THE SIZE STANDARD OF $1,000,000 SPECIFIED IN THE RFP ARE ERRONEOUS. YOU STATE THAT THE WORK TO BE PERFORMED UNDER THE TERMS OF THE SOLICITATION PROPERLY SHOULD COME UNDER THE CLASSIFICATION OF "REBUILDING TO MANUFACTURER'S EQUIVALENT" AND THAT, UNDER SUCH A CLASSIFICATION, AERO-TECH WOULD BE ELIGIBLE TO APPLY TO SBA FOR THE ISSUANCE OF A CERTIFICATE OF COMPETENCY.

ASPR 1-904.1 PRECLUDES AN AWARD UNLESS THE CONTRACTING OFFICER FIRST MAKES AN AFFIRMATIVE DETERMINATION THAT THE PROSPECTIVE CONTRACTOR IS RESPONSIBLE UNDER THE CRITERIA SET OUT AT ASPR 1-903. SUBPARAGRAPH (II) IN ASPR 1-903.1 STATES THAT A PROSPECTIVE CONTRACTOR MUST "BE ABLE TO COMPLY WITH THE REQUIRED OR PROPOSED DELIVERY OR PERFORMANCE SCHEDULE, TAKING INTO CONSIDERATION ALL EXISTING BUSINESS COMMITMENTS, COMMERCIAL AS WELL AS GOVERNMENTAL."

WITH REGARD TO THE DETERMINATIONS OF THE RESPONSIBILITY, OFFICERS IN WHOM THE DISCRETION IS VESTED TO DETERMINE THE RESPONSIBILITY OF BIDDERS OR OFFERORS MUST DETERMINE THE FACTS AND SUCH DETERMINATION CANNOT BE SET ASIDE UNLESS THE ACTION CONSTITUTES AN ABUSE OF DISCRETION. SEE MCQUILLIN, MUNICIPAL CORPORATIONS, 3D ED., VOL. 10, SEC 29.73, AND THE CASES THEREIN CITED; 38 COMP. GEN. 131 (1958); 37 ID. 430, 435 (1957); BROWN V CITY OF PHOENIX, 272 P. 2D 358; MCNICHOLS V CITY AND COUNTY OF DENVER, 274 P. 2D 317.

WITH RESPECT TO DETERMINATIONS OF RESPONSIBILITY, OUR OFFICE WILL NOT SUBSTITUTE ITS JUDGMENT FOR THAT OF THE CONTRACTING OFFICERS UNLESS IT IS SHOWN BY CONVINCING EVIDENCE THAT THE FINDING OF NONRESPONSIBILITY WAS ARBITRARY, CAPRICIOUS OR NOT SUPPORTED BY SUBSTANTIAL EVIDENCE, 45 COMP. GEN. 4 (1965); 43 ID. 257 (1963). WE HAVE CAREFULLY REVIEWED AND CONSIDERED THE INFORMATION RELIED UPON BY THE CONTRACTING OFFICER IN MAKING THE DETERMINATION THAT AERO-TECH WAS NONRESPONSIBLE AND WE FIND NO BASIS UPON WHICH OUR OFFICE WOULD BE JUSTIFIED IN CONCLUDING THAT THERE WAS AN ABUSE OF THE ADMINISTRATIVE DISCRETION. CONSEQUENTLY, WE MAY INTERPOSE NO LEGAL OBJECTION TO THE CONTRACTING OFFICER'S DETERMINATION THAT AERO-TECH WAS NOT RESPONSIBLE FOR PURPOSES OF THIS PROCUREMENT.

IT IS REPORTED THAT UPON RECEIPT OF AERO-TECH'S PROTEST THE CONTRACTING OFFICER AND THE SMALL BUSINESS REPRESENTATIVE AT THE PROCURING ACTIVITY REVIEWED THE SMALL BUSINESS DEFINITION UTILIZED IN THIS PROCUREMENT AND THAT THEY HAVE DETERMINED THAT SUCH DEFINITION IS PROPER FOR THE PROCUREMENT. THE RECORD INDICATES THAT BY LETTER DATED MAY 27, 1971, YOU FILED A NOTICE OF APPEAL WITH THE SBA SIZE APPEALS BOARD AND THAT BY LETTER DATED JULY 26, 1971, YOU SUBMITTED ADDITIONAL INFORMATION IN SUPPORT OF YOUR APPEAL WITH RESPECT TO THE PRODUCT CLASSIFICATION AND SIZE STANDARD OF $1,000,000 FOR THIS PROCUREMENT.

IN REGARD TO SMALL BUSINESS PRODUCT CLASSIFICATIONS, PARAGRAPH 1 703(C) OF THE ARMED SERVICES PROCUREMENT REGULATION PROVIDES AS FOLLOWS:

"(C) PRODUCT CLASSIFICATION.

"(1) DETERMINATION BY CONTRACTING OFFICER. THE CONTRACTING OFFICER SHALL DETERMINE THE APPROPRIATE CLASSIFICATION OF A PRODUCT ESTABLISHING THE SMALL BUSINESS DEFINITION TO BE USED IN A SPECIFIC PROCUREMENT. DIFFERENT PRODUCTS ARE BEING PROCURED ON THE SAME SOLICITATION, AN APPROPRIATE SMALL BUSINESS SIZE STANDARD SHALL BE ESTABLISHED FOR EACH PRODUCT. BOTH THE CLASSIFICATION AND THE APPLICABLE SIZE STANDARD (NUMBER OF EMPLOYEES, AVERAGE ANNUAL RECEIPTS, ETC.), PURSUANT TO 1-701, SHALL BE SET FORTH IN THE SCHEDULE OF EACH SOLICITATION WHICH ANTICIPATES AN EXPENDITURE IN EXCESS OF $2,500. THE CONTRACTING OFFICER'S DETERMINATION SHALL BE FINAL UNLESS APPEALED IN ACCORDANCE WITH (2) BELOW.

"(2) APPEAL FROM CLASSIFICATION. AN APPEAL FROM A PRODUCT CLASSIFICATION DETERMINATION BY A CONTRACTING OFFICER MUST BE TAKEN:

"(I) NOT LESS THAN 10 WORKING DAYS BEFORE THE BID OPENING DATE OR THE DEADLINE FOR SUBMITTING PROPOSALS ON QUOTATIONS WHERE THIS DATE OR DEADLINE IS MORE THAN 30 DAYS AFTER THE ISSUANCE OF THE INVITATION FOR BIDS OR REQUEST FOR PROPOSALS OR QUOTATIONS; OR

"(II) NOT LESS THAN FIVE WORKING DAYS BEFORE THE BID OPENING DATE OR THE DEADLINE FOR SUBMITTING PROPOSALS OR QUOTATIONS WHERE THIS DATE OR DEADLINE IS 30 OR LESS DAYS AFTER THE ISSUANCE OF THE INVITATION FOR BIDS OR REQUEST FOR PROPOSALS OR QUOTATIONS.

SUCH APPEALS SHALL BE DIRECTED TO THE CHAIRMAN, SIZE APPEALS BOARD, SMALL BUSINESS ADMINISTRATION, WASHINGTON, D.C. 20416."

YOUR APPEAL ON THE PRODUCT CLASSIFICATION HAS BEEN FILED WITH THE SBA SIZE APPEALS BOARD. UNDER SECTION 8(B)(6) OF THE SMALL BUSINESS ACT OF 1958, 15 U.S.C. 637(B)(6), A DECISION OF THE SBA REGARDING THE SIZE STATUS OF A PARTICULAR CONCERN IS CONCLUSIVE ON THE PROCUREMENT AGENCY INVOLVED. SINCE THE DECISION OF THE SBA REGARDING SIZE STATUS OF A COMPANY, BY STATUTE, IS "CONCLUSIVE," WE HAVE NO ALTERNATIVE BUT TO DENY YOUR PROTEST ON THIS GROUND. SEE 46 COMP. GEN. 102 (1966); 44 ID. 271, 273 (1964); B- 166663, MAY 21, 1969.

MOREOVER, THE FAILURE OF AERO-TECH TO TIMELY FILE AN APPEAL RENDERED THE CONTRACTING OFFICER'S DECISION AS TO PRODUCT CLASSIFICATION FINAL IN THIS PROCUREMENT. SEE ASPR 1-703(C)(1)(2). SEE, ALSO, B-170713, OCTOBER 6, 1970. FURTHERMORE, IF THE SBA SIZE APPEALS BOARD'S DECISION SUSTAINS YOUR APPEAL, SUCH DECISION WOULD AFFECT ONLY SIMILAR FUTURE PROCUREMENTS AND WOULD NOT AFFECT THE VALIDITY OF THE AWARD MADE TO U.S. DYNAMICS CORPORATION UNDER THE SUBJECT SOLICITATION. SEE B 167282, MARCH 10, 1970.

UNDER THE CIRCUMSTANCES, THERE IS NO ACTION WHICH PROPERLY MAY BE TAKEN BY OUR OFFICE ON THE PROTEST. ACCORDINGLY, WE HAVE CLOSED OUR FILE ON THE MATTER TODAY.