B-174212(1), JAN 28, 1972

B-174212(1): Jan 28, 1972

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SINCE THE HELICOPTER SERVICES WERE URGENTLY REQUIRED. A CONTRACT AWARDED IN GOOD FAITH TO A BIDDER SUBSEQUENTLY FOUND TO BE NONRESPONSIVE IS NOT VOID. IS VOIDABLE AT THE GOVERNMENT'S OPTION. INC.: FURTHER REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 28. WHICH WAS ISSUED BY THE U.S. THE IFB WAS FOR THE FURNISHING OF HELICOPTER SERVICES IN CONNECTION WITH THE DEPARTMENT'S INSPECTION OF OIL PLATFORMS IN THE GULF OF MEXICO FOR THE PERIOD COMMENCING ON JULY 1. WHICHEVER WAS LATER. THE DEPARTMENT STATES THAT A PRIOR PROCUREMENT FOR SIMILAR SERVICES WAS ISSUED ON AUGUST 18. THAT BIDS WERE RECEIVED FROM THREE SMALL BUSINESS CONCERNS. IT WAS DETERMINED THAT ADEQUATE COMPETITION EXISTED FOR A TOTAL SMALL BUSINESS SET-ASIDE UNDER THE SUBJECT PROCUREMENT.

B-174212(1), JAN 28, 1972

BID PROTEST - SMALL BUSINESS SET-ASIDE - NONRESPONSIVENESS DECISION DENYING PROTEST OF ARIZONA HELICOPTERS, INC., AGAINST THE AWARD OF A CONTRACT TO PETROLEUM HELICOPTERS, INC., UNDER AN IFB ISSUED BY THE U.S. GEOLOGICAL SURVEY AS A TOTAL SMALL BUSINESS SET-ASIDE FOR THE FURNISHING OF HELICOPTER SERVICES IN CONNECTION WITH THE INSPECTION OF OIL PLATFORMS IN THE GULF OF MEXICO. SINCE IT APPEARED THAT PETROLEUM'S SIZE DETERMINATION WOULD NOT BE IMMEDIATELY FORTHCOMING FROM THE SMALL BUSINESS ADMINISTRATION, AND SINCE THE HELICOPTER SERVICES WERE URGENTLY REQUIRED, THE CONTRACTING OFFICER MADE THE AWARD NOTWITHSTANDING THE PENDING PROTEST. A CONTRACT AWARDED IN GOOD FAITH TO A BIDDER SUBSEQUENTLY FOUND TO BE NONRESPONSIVE IS NOT VOID, BUT IS VOIDABLE AT THE GOVERNMENT'S OPTION. FURTHERMORE, ALTHOUGH THE CONTRACTING OFFICER ACTED IN VIOLATION OF FPR 1-1.703-2(D) WHICH REQUIRES 10 WORKING DAYS FOR AN SBA SIZE DETERMINATION, THIS DOES NOT AFFORD A SUFFICIENT LEGAL BASIS FOR DISTURBING THE AWARD.

TO ARIZONA HELICOPTERS, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 28, 1971, CONCERNING YOUR PROTEST UNDER INVITATION FOR BIDS (IFB) NO. 4843, WHICH WAS ISSUED BY THE U.S. GEOLOGICAL SURVEY, DEPARTMENT OF INTERIOR, ON MAY 13, 1971. THE IFB WAS FOR THE FURNISHING OF HELICOPTER SERVICES IN CONNECTION WITH THE DEPARTMENT'S INSPECTION OF OIL PLATFORMS IN THE GULF OF MEXICO FOR THE PERIOD COMMENCING ON JULY 1, 1971, OR WITHIN FIFTEEN CALENDAR DAYS AFTER CONTRACTOR'S RECEIPT OF NOTICE OF AWARD, WHICHEVER WAS LATER, THROUGH JUNE 30, 1972, OR JUNE 30, 1973.

THE DEPARTMENT STATES THAT A PRIOR PROCUREMENT FOR SIMILAR SERVICES WAS ISSUED ON AUGUST 18, 1970; THAT BIDS WERE RECEIVED FROM THREE SMALL BUSINESS CONCERNS, INCLUDING YOUR COMPANY AND PETROLEUM; AND, THEREFORE, IT WAS DETERMINED THAT ADEQUATE COMPETITION EXISTED FOR A TOTAL SMALL BUSINESS SET-ASIDE UNDER THE SUBJECT PROCUREMENT.

ACCORDINGLY, A NOTICE OF TOTAL SMALL BUSINESS SET-ASIDE PROVISION WAS SET FORTH IN THE SUBJECT SOLICITATION. BIDDERS WERE FURTHER ADVISED THAT A SMALL BUSINESS CONCERN WAS DEFINED AS FOLLOWS:

"DEFINITION. A 'SMALL BUSINESS CONCERN' IS A CONCERN, INCLUDING ITS AFFILIATES, WHICH IS INDEPENDENTLY OWNED AND OPERATED, IS NOT DOMINANT IN THE FIELD OF OPERATION IN WHICH IT IS BIDDING ON GOVERNMENT CONTRACTS, AND CAN FURTHER QUALIFY UNDER THE CRITERIA SET FORTH IN REGULATIONS OF THE SMALL BUSINESS ADMINISTRATION (13 CFR 121.3-8). *** "

THE APPLICABLE SMALL BUSINESS SIZE STANDARD FOR THE PROCUREMENT WAS NOT SET FORTH IN THE SCHEDULE OF THE IFB IN ACCORDANCE WITH FEDERAL PROCUREMENT REGULATIONS (FPR) 1-1.706-5(C). HOWEVER, THE DEPARTMENT STATES THAT IT HAD PREVIOUSLY BEEN INFORMED BY THE WASHINGTON OFFICE OF THE SMALL BUSINESS ADMINISTRATION (SBA) THAT THE REQUIRED HELICOPTER SERVICES WERE CLASSIFIED UNDER THE AIR TRANSPORTATION SIZE STANDARD OF THE SBA'S REGULATIONS WHICH IS SET FORTH IN THE CODE OF FEDERAL REGULATIONS (CFR) AT 13 CFR 121.3-8(F) AS FOLLOWS:

"121.3-8 DEFINITION OF SMALL BUSINESS FOR GOVERNMENT PROCUREMENT.

"(F) TRANSPORTATION. ANY CONCERN BIDDING ON A CONTRACT FOR PASSENGER OR FREIGHT TRANSPORTATION, NOT ELSEWHERE DEFINED IN THIS SECTION, IS CLASSIFIED:

"(2) AS SMALL IF IT IS BIDDING ON A CONTRACT FOR AIR TRANSPORTATION AND ITS NUMBER OF EMPLOYEES DOES NOT EXCEED 1,000 PERSONS."

THE DEPARTMENT ALSO POINTS OUT THAT THE SIZE STANDARD FOR AIR TRANSPORTATION SERVICES WAS INCREASED FROM 1000 TO 1500 EMPLOYEES BY AN AMENDMENT WHICH WAS EFFECTIVE WHEN PUBLISHED IN THE FEDERAL REGISTER ON MAY 11, 1971.

WHEN BIDS WERE OPENED ON JUNE 10, 1971, THE DEPARTMENT NOTED THAT PETROLEUM'S LOW BID FOR THE SERVICES WAS NEARLY $67,000 LOWER THAN YOUR BID AND THAT THE CONCERN HAD CERTIFIED IT WAS SMALL BUSINESS. ON JUNE 11, 19718 YOU INFORMED THE CONTRACTING OFFICER THAT PETROLEUM EMPLOYED IN EXCESS OF 500 PERSONS; THAT THE CONCERN WAS DOMINANT IN THE FIELD OF OFF- SHORE TRANSPORTATION; AND, THEREFORE, SHOULD NOT BE CONSIDERED A SMALL BUSINESS CONCERN FOR THE PROCUREMENT.

ON JUNE 15, 1971, THE PROCUREMENT AGENT FOR THE DEPARTMENT SENT A COPY OF YOUR PROTEST TO THE NEW ORLEANS OFFICE OF THE SBA AND REQUESTED THE OFFICE TO ISSUE A PROMPT DECISION ON THE SIZE STATUS OF PETROLEUM. HE ALSO INFORMED THE SBA OF THE SCHEDULED BEGINNING OF PERFORMANCE UNDER THE CONTRACT ON JULY 1.

ON JUNE 17, 1971, THE SBA RECEIVED THE DEPARTMENT'S LETTER AND PROCEEDED TO CONDUCT ITS INVESTIGATION OF PETROLEUM'S SIZE.

ON JUNE 30, 1971, THE CONTRACTING OFFICER WAS ADVISED BY THE SBA THAT PETROLEUM'S SIZE DETERMINATION WAS NOT IMMEDIATELY FORTHCOMING. SEVERAL CALLS HAD BEEN MADE TO SBA AND IT APPEARED THAT A SUBSTANTIAL TIME PERIOD WOULD BE INVOLVED IN THE DECISION. IN VIEW THEREOF, AND SINCE THE SERVICES WERE URGENTLY REQUIRED BY JULY 1, HE DETERMINED AS FOLLOWS, THAT AWARD OF THE SUBJECT CONTRACT SHOULD BE MADE TO PETROLEUM, NOTWITHSTANDING THE PENDING PROTEST:

"AS THE SERVICES UNDER PROPOSED CONTRACT ARE REQUIRED TO BEGIN JULY 1, 1971 TO POLICE AND INSPECT OIL PLATFORMS SITUATED IN THE GULF OF MEXICO FOR SAFETY AND POLLUTION CONTROL AND IS TO BE AWARDED TO THE LOWEST PRICE RESPONSIVE AND RESPONSIBLE BIDDER BY APPROXIMATELY $67,000.00, PETROLEUM HELICOPTERS, INC., IN ACCORDANCE WITH FPR 1-1.703 2, SECTION D AND E, ENTITLED, 'PROTEST REGARDING SMALL BUSINESS STATUS.'

"I HEREBY DETERMINE THAT AWARD OF THE SUBJECT CONTRACT, AT THIS TIME, CONSISTENT WITH THE REQUIREMENTS OF THE FEDERAL PROCUREMENT REGULATIONS, IS IN THE BEST INTEREST OF THE GOVERNMENT AS:

HELICOPTER TRANSPORTATION IS REQUIRED ON A CONTINUOUS BASIS FOR THE GOVERNMENT INSPECTION OF OFFSHORE DRILLING PLATFORMS AND THEIR OPERATIONS TO ASSURE THE HEALTH AND SAFETY OF THE CREWS ON DRILLING PLATFORMS AND ANY ASSOCIATED INDIVIDUALS AS WELL AS THE ENVIRONMENTAL PROTECTION OF RESOURCES AND WILDLIFE AND ITS ASSOCIATED ECONOMIC AND WELFARE FACTORS. ANY LAPSE IN SUCH COVERAGE COULD RESULT IN A CATASTROPHIC EXPLOSION OR MAJOR OIL SPILLAGE ADVERSELY AFFECTING A WIDESPREAD AREA THEIR SAFETY AND ECONOMIC WELFARE.

BIDS WERE SOLICITED ON AN ALL OR NONE BASIS, SO PARTIAL AWARD IS NOT IN ACCORDANCE WITH THE INVITATION FOR BID OR OFFERS RECEIVED. IF THE CURRENT CONTRACT IS EXTENDED, AWARD CANNOT BE MADE ON THE CURRENT IFB, SINCE BEING ON AN 'ALL OR NONE' BASIS, LESS THAN THE FULL REQUIREMENT CANNOT BE AWARDED. THUS, EXTENSION OF THE CURRENT CONTRACT WOULD REQUIRE CANCELLATION AND READVERTISEMENT.

THE ALTERNATIVES TO AWARD OF THIS CONTRACT ARE NOT ACCEPTABLE OR IN THE BEST INTEREST OF THE GOVERNMENT CONSIDERING THE OPERATIONAL, TIME, AND COST FACTORS INVOLVED."

ON JULY 6, 1971, THE NEW ORLEANS DISTRICT OFFICE OF THE SBA DETERMINED THAT PETROLEUM WAS NOT A SMALL BUSINESS UNDER THE AIR TRANSPORTATION SIZE STANDARD SINCE PETROLEUM WAS DOMINANT IN THE FIELD OF OFFSHORE OPERATIONS, AND EMPLOYED 1,011 INDIVIDUALS, OR ELEVEN ABOVE THE STANDARD'S PREVIOUS MAXIMUM WHICH HAD BEEN AMENDED WITHOUT THE KNOWLEDGE OF THAT OFFICE.

PETROLEUM APPEALED THIS DETERMINATION TO THE SIZE APPEALS BOARD OF THE SBA ON JULY 9, 1971. ON AUGUST 11, 1971, THE BOARD HELD THAT THE HELICOPTER SERVICES SHOULD NOT HAVE BEEN CLASSIFIED UNDER THE AIR TRANSPORTATION SIZE STANDARD, BUT AS A SERVICE FOR WHICH NO SPECIFIC SIZE STANDARD HAS BEEN SET FORTH. ACCORDINGLY, THE BOARD NOTED THAT SECTION 121.3-8 OF THE SIZE REGULATION GOVERNED SUCH CIRCUMSTANCE AS FOLLOWS:

" ... IF NO STANDARD FOR AN INDUSTRY, FIELD OF OPERATION OR ACTIVITY ... HAS BEEN SET FORTH IN THIS SECTION, A CONCERN BIDDING ON A GOVERNMENT CONTRACT IS SMALL BUSINESS, IF INCLUDING ITS AFFILIATES, IT IS INDEPENDENTLY OWNED AND OPERATED, IS NOT DOMINANT IN THE FIELD OF OPERATION IN WHICH IT IS BIDDING ON GOVERNMENT CONTRACTS, AND HAS 500 EMPLOYEES OR LESS."

SINCE PETROLEUM, TOGETHER WITH ITS AFFILIATES, EMPLOYED MORE THAN 500 INDIVIDUALS THE BOARD HELD THAT THE CONCERN WAS NOT SMALL BUSINESS AND DENIED THE APPEAL.

YOU MAINTAIN THAT PETROLEUM'S AWARD SHOULD BE VOIDED BECAUSE OF THIS SIZE DECISION AND A CONTRACT FOR THE SERVICES AWARDED TO YOUR CONCERN.

WHEN A SMALL BUSINESS SET-ASIDE IS AWARDED IN GOOD FAITH ON THE BASIS OF A BIDDER'S CERTIFICATION THAT IT IS A SMALL BUSINESS AND IT IS SUBSEQUENTLY DETERMINED THAT THE CONTRACTOR WAS NOT A SMALL BUSINESS AT THE TIME OF AWARD, IT HAS BEEN OUR POSITION THAT THE CONTRACT IS NOT VOID, BUT VOIDABLE AT THE OPTION OF THE GOVERNMENT. B-173194, SEPTEMBER 22, 1971. SIMILARLY, WE HAVE HELD THAT A CONTRACT AWARDED TO A LARGE BUSINESS CONCERN WAS NOT VOID, BUT VOIDABLE, WHERE THE CONTRACTOR'S SMALL BUSINESS CERTIFICATION WAS MADE IN GOOD FAITH, EVEN THOUGH THERE MAY HAVE BEEN A TECHNICAL VIOLATION BY THE CONTRACTING OFFICER OF THE REGULATIONS PROVIDING FOR A 10-DAY WAITING PERIOD FOR A DECISION BY SBA ON A PROTEST AGAINST A PROSPECTIVE CONTRACTOR'S SMALL BUSINESS STATUS. 49 COMP. GEN. 369 (1969).

THERE IS NO EVIDENCE IN THE RECORD TO INDICATE THAT PETROLEUM CERTIFIED ITS SMALL BUSINESS SIZE STATUS IN BAD FAITH. CONVERSELY, WE BELIEVE THE RECORD INDICATES PETROLEUM CERTIFIED THAT IT WAS A SMALL BUSINESS CONCERN IN GOOD FAITH PURSUANT TO ITS BELIEF THAT THE AIR TRANSPORTATION SIZE STANDARD OF THE SBA REGULATIONS GOVERNED THIS PROCUREMENT. WE CANNOT CONCLUDE THAT PETROLEUM WAS REMISS IN ITS BELIEF, IT BEING NOTED THAT BOTH THE DEPARTMENT AND THE DISTRICT OFFICE OF THE SBA ALSO UNDERSTOOD THAT THE AIR TRANSPORTATION STANDARD APPLIED HERE.

REGARDING THE PROPRIETY OF THE CONTRACTING OFFICER'S DECISION TO AWARD ON JUNE 30, THE FPR 1-1.703-2(E) WHICH WAS IN EFFECT AT THE TIME OF THE AWARD PROVIDED THAT A CONTRACTING OFFICER COULD PROCEED WITH AN AWARD, NOTWITHSTANDING THE PENDENCY OF A TIMELY SIZE PROTEST BEFORE THE SBA, AS FOLLOWS:

"PROCUREMENT ACTION SHALL BE SUSPENDED PENDING SBA'S DETERMINATION OR EXPIRATION OF THE 10-DAY PERIOD, WHICHEVER IS EARLIER, UNLESS UNUSUAL CONDITIONS MAKE IT NECESSARY THAT AN AWARD BE MADE. IF SBA'S DETERMINATION IS NOT RECEIVED BY THE CONTRACTING OFFICER WITHIN 10 WORKING DAYS AFTER SBA'S RECEIPT OF THE PROTEST, THE CONTRACTING OFFICER SHALL ASCERTAIN WHEN SUCH DETERMINATION CAN BE EXPECTED. IN CASES WHERE FURTHER DELAY IN AWARDING THE CONTRACT WOULD BE DISADVANTAGEOUS TO THE GOVERNMENT, IT SHALL BE PRESUMED THAT THE QUESTIONED BIDDER OR OFFEROR IS A SMALL BUSINESS CONCERN."

ALTHOUGH THERE APPEARS TO HAVE BEEN A TECHNICAL VIOLATION OF THE 10 WORKING DAYS ALLOTTED TO THE SBA FOR ITS DETERMINATION UNDER FPR 1 1.703- 2(D), IT IS CLEAR THAT WAITING THE FULL PERIOD WOULD HAVE SERVED NO USEFUL PURPOSE SINCE THE REGIONAL OFFICE'S DETERMINATION WAS NOT ISSUED UNTIL JULY 6, 1971. ADDITIONALLY, THE CONTRACTING OFFICER KNEW AT THE TIME HE MADE THE AWARD THAT HE COULD NOT EXPECT A DECISION ON PETROLEUM'S SIZE WITHIN THE SPECIFIED TIME. UNDER FPR 1-1.703-2(E), QUOTED ABOVE, THE CONTRACTING OFFICER WAS AUTHORIZED TO PRESUME THE SMALL BUSINESS STATUS OF A SELF-CERTIFIED BIDDER AFTER EXPIRATION OF 10 DAYS ONCE HE HAD ASCERTAINED WHEN A DETERMINATION COULD BE EXPECTED FROM SBA AND WHERE FURTHER DELAY WOULD HAVE BEEN "DISADVANTAGEOUS" TO THE GOVERNMENT. NOTED ABOVE, THE CONTRACTING OFFICER MADE REASONABLE INQUIRIES TO ASCERTAIN WHEN SBA'S DETERMINATION COULD BE EXPECTED, AND DETERMINED THAT THE ANTICIPATED DELAY IN AWARD, IF ACTION WAS FURTHER SUSPENDED PENDING THE DECISION, WOULD BE TO THE GOVERNMENT'S DISADVANTAGE.

IN THIS REGARD, WE QUESTION THE CONTRACTING OFFICER'S DETERMINATION THAT AN EXTENSION OF THE PRIOR CONTRACT PENDING RESOLUTION OF THE SIZE PROTEST WOULD HAVE PRECLUDED AN AWARD UNDER THE IFB. WHILE THE IFB PROVIDED FOR EVALUATION AND AWARD ON AN "ALL OR NONE" BASIS, WE THINK THE PERIOD OF PERFORMANCE PROVISION OF THE IFB, WHICH INCLUDED THE STATEMENT THAT PERFORMANCE WOULD COMMENCE ON JULY 1, OR WITHIN 15 DAYS AFTER CONTRACTOR'S RECEIPT OF NOTICE, WHICHEVER WAS LATER, CLEARLY ADVISED BIDDERS THAT AWARD MIGHT BE MADE FOR A PERIOD COMMENCING AFTER JULY 1, 1971, AND THEREFORE COULD INVOLVE PERFORMANCE FOR LESS THAN THE FULL YEAR OR TWO CONTEMPLATED. HOWEVER, WE CANNOT CONCLUDE THAT FURTHER DELAY AFTER JUNE 30, 1971, IN MAKING THE AWARD WOULD NOT HAVE BEEN TO THE GOVERNMENT'S DISADVANTAGE, AS DETERMINED BY THE CONTRACTING OFFICER, SINCE HE HAS ADVISED THIS OFFICE THAT EXTENDING THE PREVIOUS CONTRACT OR OTHERWISE PROCURING THE SERVICES PENDING THE RESOLUTION OF YOUR SIZE PROTEST WOULD HAVE BEEN MORE COSTLY TO THE GOVERNMENT THAN THE ACTION TAKEN. SEE 49 COMP. GEN. 369 (1969), SUPRA.

ACCORDINGLY, WE DO NOT BELIEVE THE RECORD ESTABLISHES THAT THE AWARD WAS CLEARLY ILLEGAL AND, SINCE PETROLEUM'S CERTIFICATION APPEARS TO HAVE BEEN MADE IN GOOD FAITH, IT IS OUR VIEW THAT THE CONTRACT IS, AT MOST, MERELY VOIDABLE AT THE GOVERNMENT'S OPTION. IN THIS REGARD, IT IS THE POSITION OF THE DEPARTMENT THAT IT IS NOT IN THE GOVERNMENT'S INTEREST TO TERMINATE PETROLEUM'S CONTRACT FOR REASONS INCLUDING ADDITIONAL COSTS INVOLVED IN PROVIDING THE SERVICES AND EQUIPMENT FROM OTHER SOURCES; SUBSTANTIAL TERMINATION COSTS; AND THE NECESSITY FOR UNINTERRUPTED SERVICE. WE DO NOT FIND SUCH OVERRIDING CONSIDERATIONS WHICH WOULD REQUIRE A DIFFERENT POSITION BY THIS OFFICE.

IN VIEW THEREOF, YOUR PROTEST MUST BE DENIED.