B-174807, MAR 23, 1972, 51 COMP GEN 595

B-174807: Mar 23, 1972

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FOR ALTHOUGH THE BIDDER MET THE APPROPRIATE SIZE STANDARD AT THE TIME THE BID WAS PREPARED. SINCE THE STANDARD OF "GOOD FAITH" IS NOT NECESSARILY LIMITED TO AN INCIDENT OF INTENTIONAL MISREPRESENTATION. 1972: REFERENCE IS MADE TO YOUR LETTER DATED FEBRUARY 2. THE PROTEST IS DENIED. YOUR FIRM BECAME THE APPARENT LOW RESPONSIVE BIDDER AFTER THE LOW BID WAS REJECTED AS NONRESPONSIVE. IT WAS INELIGIBLE FOR A CERTIFICATE OF COMPETENCY. WAS 521. WAS 488. WAS 498. WAS 444. THE SPCC CONTRACTING OFFICER REJECTED YOUR BID SINCE IT WAS DETERMINED THAT YOUR COMPANY WAS NOT RESPONSIVE "BECAUSE IT WAS LARGE BUSINESS AT THE TIME IT SUBMITTED ITS BID ON A SOLICITATION WHICH WAS SET-ASIDE FOR SMALL BUSINESS CONCERNS.".

B-174807, MAR 23, 1972, 51 COMP GEN 595

CONTRACTS - AWARDS - SMALL BUSINESS CONCERNS - SELF-CERTIFICATION - "GOOD FAITH" CERTIFICATION THE LOW BIDDER UNDER A TOTAL SMALL BUSINESS SET-ASIDE FOR TOOL SETS WHO ON THE DATE OF BID OPENING DID NOT QUALIFY AS A SMALL BUSINESS CONCERN UNDER THE INVITATION FOR BIDS OR THE SMALL BUSINESS ADMINISTRATION (SBA) REGULATIONS MAY NOT BE CONSIDERED FOR A CONTRACT AWARD ON THE BASIS OF ITS ERRONEOUS SELF-CERTIFICATION ALLEGEDLY MADE IN GOOD FAITH, FOR ALTHOUGH THE BIDDER MET THE APPROPRIATE SIZE STANDARD AT THE TIME THE BID WAS PREPARED, THE SBA REQUIREMENT THAT THE NUMBER OF EMPLOYEES BE BASED ON THE AVERAGE FOR THE FOUR QUARTERS PRECEDING BID PREPARATION HAD BEEN OVERLOOKED. SINCE THE STANDARD OF "GOOD FAITH" IS NOT NECESSARILY LIMITED TO AN INCIDENT OF INTENTIONAL MISREPRESENTATION, THE BIDDER APPRISED OF THE APPLICABLE SMALL BUSINESS SIZE HAVING FAILED TO EXERCISE PRUDENCE AND CARE TO ASCERTAIN ITS SIZE UNDER PRESCRIBED GUIDELINES HAS NOT CERTIFIED ITSELF TO BE A SMALL BUSINESS CONCERN IN GOOD FAITH.

TO THE ALLIED RESEARCH ASSOCIATES, INC., MARCH 23, 1972:

REFERENCE IS MADE TO YOUR LETTER DATED FEBRUARY 2, 1972, AND PRIOR CORRESPONDENCE, PROTESTING AGAINST THE PROPOSED AWARD OF A CONTRACT TO ANOTHER FIRM, UNDER INVITATION FOR BIDS (IFB) NO. N00104-71-B-2013, ISSUED BY THE NAVY SHIPS PARTS CONTROL CENTER (SPCC), MECHANICSBURG, PENNSYLVANIA.

FOR THE REASONS HEREINAFTER STATED, THE PROTEST IS DENIED.

THE IFB, AS AMENDED, A TOTAL SMALL BUSINESS SET-ASIDE, SOLICITED BIDS FOR TOOL SETS. BID OPENING OCCURRED ON AUGUST 10, 1971, AND YOUR FIRM BECAME THE APPARENT LOW RESPONSIVE BIDDER AFTER THE LOW BID WAS REJECTED AS NONRESPONSIVE. HOWEVER, THE PREAWARD SURVEY REPORT RECOMMENDED AGAINST AND AWARD TO YOUR FIRM BECAUSE OF UNSATISFACTORY FINANCIAL CAPABILITY TO PERFORM UNDER THE CONTRACT. IN VIEW THEREOF, SPCC INITIATED CERTIFICATE OF COMPETENCY ACTION WITH THE SMALL BUSINESS ADMINISTRATION (SBA) ON SEPTEMBER 15, 1971. BY LETTER DATED OCTOBER 7, 1971, THE SBA PHILADELPHIA REGIONAL OFFICE INFORMED YOUR FIRM THAT, SINCE IT DID NOT QUALIFY AS A SMALL BUSINESS CONCERN UNDER THE IFB OR SBA REGULATIONS ON THE DATE OF BID OPENING, IT WAS INELIGIBLE FOR A CERTIFICATE OF COMPETENCY. YOUR FIRM FILED A TIMELY APPEAL WITH THE SIZE APPEALS BOARD. THE BOARD, BY MESSAGE DATED NOVEMBER 24, 1971, ADVISED SPCC AS FOLLOWS:

THE SBA SIZE APPEALS BOARD FINDS THAT ALLIED ASSOCIATES DID NOT QUALIFY AS A SMALL BUSINESS AT THE TIME OF BID OPENING OF IFB N00104-71 B-2013 NOR FOR THE FOUR QUARTERS ENDING JUNE 30, 1971. HOWEVER, THE BOARD DOES FIND THAT THE NUMBER OF EMPLOYEES OF ALLIED FOR THE FOUR QUARTERS ENDING SEPTEMBER 30, 1971 (52 DAYS AFTER BID OPENING) AS WITHIN THE SIZE STANDARD FOR SUBJECT PROCUREMENT AND AT PRESENT TIME QUALIFIES AS A SMALL BUSINESS.

THE FORMAL DECISION OF THE SIZE APPEALS BOARD, DATED NOVEMBER 23, 1971, SET FORTH THE FOLLOWING FACTS:

THE RECORD REVEALS THAT THE AVERAGE NUMBER OF EMPLOYEES OF ALLIED FOR THE FOUR QUARTERS ENDING JUNE 30, 1971 (41 DAYS BEFORE BID OPENING), WAS 521, THAT THE ACTUAL NUMBER OF EMPLOYEES ON JUNE 30, 1971, WAS 488, THAT THE AVERAGE NUMBER OF EMPLOYEES FOR THE FOUR QUARTERS ENDING SEPTEMBER 30, 1971, WAS 498, AND THAT THE ACTUAL NUMBER OF EMPLOYEES ON SEPTEMBER 30, 1971, WAS 444.

THE SPCC CONTRACTING OFFICER REJECTED YOUR BID SINCE IT WAS DETERMINED THAT YOUR COMPANY WAS NOT RESPONSIVE "BECAUSE IT WAS LARGE BUSINESS AT THE TIME IT SUBMITTED ITS BID ON A SOLICITATION WHICH WAS SET-ASIDE FOR SMALL BUSINESS CONCERNS." YOU DISAGREE WITH THE REJECTION AND CONTEND THAT THE AWARD SHOULD BE MADE TO YOU SINCE YOUR COMPANY IS NOW A SMALL BUSINESS AND YOU STATE THAT THE CERTIFICATION OF SUCH STATUS WAS MADE IN GOOD FAITH, ALBEIT ERRONEOUSLY, IN THE BID. OUR ATTENTION IS INVITED TO THE PROVISIONS OF PARAGRAPHS 1-703(B) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), WHICH READS, IN PERTINENT PART, AS FOLLOWS:

*** THE CONTROLLING POINT IN TIME FOR A DETERMINATION CONCERNING THE SIZE STATUS OF A QUESTIONED BIDDER OR OFFEROR SHALL BE THE DATE OF AWARD, EXCEPT THAT NO BIDDER OR OFFEROR SHALL BE ELIGIBLE FOR AWARD AS A SMALL BUSINESS CONCERN UNLESS HE HAS *** IN GOOD FAITH REPRESENTED HIMSELF AS SMALL BUSINESS PRIOR TO THE OPENING OF BIDS OR CLOSING DATE FOR SUBMISSION OF OFFERS *** .

IN CONSIDERATION OF THAT ASPR SECTION, THE THRESHOLD QUESTION IS WHETHER YOUR FIRM DID, IN GOOD FAITH, REPRESENT AND CERTIFY ITSELF TO BE A SMALL BUSINESS CONCERN IN THE BID. THAT PORTION OF THE IFB IN WHICH YOUR COMPANY REPRESENTED AND CERTIFIED THAT IT WAS A SMALL BUSINESS CONCERN ADVISED OFFERORS TO "(SEE PAR. 14 ON SF 33-A.)." THAT REFERENCE, A PART OF THE INSTRUCTIONS AND CONDITIONS OF THE IFB, READS AS FOLLOWS:

14. SMALL BUSINESS CONCERN. A SMALL BUSINESS CONCERN FOR THE PURPOSE OF GOVERNMENT PROCUREMENT IS A CONCERN, INCLUDING ITS AFFILIATES, WHICH IS INDEPENDENTLY OWNED AND OPERATED, IS NOT DOMINANT IN THE FIELD OF OPERATION IN WHICH IT IS SUBMITTING OFFERS ON GOVERNMENT CONTRACTS, AND CAN FURTHER QUALIFY UNDER THE CRITERIA CONCERNING NUMBER OF EMPLOYEES, AVERAGE ANNUAL RECEIPTS, OR OTHER CRITERIA, AS PRESCRIBED BY THE SMALL BUSINESS ADMINISTRATION. (SEE CODE OF FEDERAL REGULATIONS TITLE 13, PART 121, AS AMENDED, WHICH CONTAINS DETAILED INDUSTRY DEFINITIONS AND RELATED PROCEDURES.)

IN ADDITION, PARAGRAPH 30.87 OF THE IFB PRESCRIBES THAT, TO QUALIFY AS A SMALL BUSINESS CONCERN, THE NUMBER OF EMPLOYEES OF A CONCERN AND ITS AFFILIATES MUST NOT EXCEED 500 EMPLOYEES. SEE, ALSO, 13 CFR 121.3 8(B)(3), TO WHICH BIDDERS WERE REFERRED IN THE IFB'S INSTRUCTIONS AND CONDITIONS QUOTED, SUPRA. FURTHERMORE, THE PHRASE "NUMBER OF EMPLOYEES," AS USED IN SBA REGULATIONS, IN SPECIFICALLY DEFINED AS "THE AVERAGE EMPLOYMENT OF ANY CONCERN, INCLUDING THE EMPLOYEES OF ITS DOMESTIC AND FOREIGN AFFILIATES, BASED ON THE NUMBER OF PERSONS EMPLOYED ON A FULL- TIME, PART-TIME, TEMPORARY, OR OTHER BASIS DURING THE PAY PERIOD ENDING NEAREST THE LAST DAY OF THE THIRD MONTH IN EACH CALENDAR QUARTER FOR THE PRECEDING FOUR QUARTERS." SEE 13 CFR 121.3 2(S).

IN A CONFERENCE WITH REPRESENTATIVES OF OUR OFFICE ON FEBRUARY 1, 1972, IT WAS INDICATED THAT THE SMALL BUSINESS CERTIFICATION WAS MADE BECAUSE THE NUMBER OF PERSONS ACTUALLY EMPLOYED AT THE TIME THE BID WAS PREPARED WAS LESS THAN 500 AND THE SBA REQUIREMENT THAT THE NUMBER BE BASED ON THE AVERAGE FOR THE PRECEDING FOUR QUARTERS WAS INADVERTENTLY OVERLOOKED. THEREFORE, IT WAS ASSERTED THAT THE CERTIFICATION WAS MADE IN GOOD FAITH AND THAT NO INTENTIONAL MISREPRESENTATION CAN BE IMPUTED TO THE FIRM. ALSO, IN A LETTER TO OUR OFFICE, IT IS STATED THAT:

THE FLUCTUATIONS IN NUMBER OF EMPLOYEES HAVE BEEN FORTUITOUS AND ARE THE DIRECT RESULT OF BUSINESS CONDITIONS AT OUR BALTIMORE DIVISION.

THE STANDARD OF "GOOD FAITH" WHEN APPLIED TO A CERTIFICATION AS A SMALL BUSINESS IN A BID IS NOT NECESSARILY LIMITED TO AN INCIDENT OF INTENTIONAL MISREPRESENTATION. IN OUR OPINION, WHERE, AS HERE, A BIDDER IS FULLY APPRISED IN AN IFB, AND REFERENCED REGULATIONS, OF AN APPLICABLE SMALL BUSINESS SIZE STANDARD BUT FAILS TO TAKE THE NECESSARY STEPS TO ASCERTAIN ITS SIZE STATUS UNDER THE REFERENCED GUIDELINES, IT MAY BE CONCLUDED THAT IT HAS NOT CERTIFIED ITSELF TO BE A SMALL BUSINESS CONCERN IN GOOD FAITH. AS WE HAVE STATED IN PREVIOUS DECISIONS, BIDDERS ARE USUALLY IN A GOOD POSITION TO KNOW THEIR SIZE STATUS AND THEY SHOULD NOT BE PERMITTED TO CASUALLY OR NEGLIGENTLY UTILIZE THE SELF-CERTIFICATION PROCESS WITHOUT USING A HIGH MEASURE OF PRUDENCE AND CARE. SEE 41 COMP. GEN. 47, 55 (1961), AND 49ID. 369, 376 (1969). CF. B-156882, JULY 28, 1965. WE CAN UNDERSTAND YOUR BELIEF THAT YOUR CERTIFICATION WAS MADE IN GOOD FAITH. HOWEVER, WE BELIEVE THAT IN THESE CASES, SINCE SELF-CERTIFICATIONS USUALLY ARE NOT QUESTIONED, BIDDERS MUST BE HELD TO A HIGHER THAN USUAL DEGREE OF CARE IN DETERMINING WHETHER THEY ARE OR ARE NOT SMALL BUSINESS. IN THE PRESENT CASE, IF YOUR COMPANY HAD EXERCISED SUCH PRUDENCE AND CARE PRECEDING THE ERRONEOUS CERTIFICATION, IT WOULD HAVE KNOWN THAT IT WAS NOT ELIGIBLE TO CERTIFY ITSELF AS SMALL BUSINESS. THEREFORE, WE FIND THAT EVEN THOUGH, AS OF THE PRESENT, ALLIED IS A SMALL BUSINESS, IT IS NOT ELIGIBLE FOR AWARD UNDER THE ABOVE-CITED ASPR.