B-175961(1), NOV 3, 1972

B-175961(1): Nov 3, 1972

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A DECISION OF THE SMALL BUSINESS ADMINISTRATION REGARDING THE SIZE STATUS OF A PARTICULAR CONCERN IS CONCLUSIVE. THE PROTEST IS DENIED. INC.: REFERENCE IS MADE TO YOUR LETTER OF JUNE 7. WHILE THE PROTEST WAS PENDING. AWARD OF THE CONTRACT WAS MADE PURSUANT TO ASPR 1-703(B)(3)(IV) DUE TO THE URGENCY OF THE PROCUREMENT. YOU CONTEND THAT THE AWARD TO MARSHALL WAS IMPROPER FOR SEVERAL REASONS. YOU ALLEGE THAT WHEREAS YOUR FIRM AND THE OTHER BIDDERS RECEIVED PRICE QUOTATIONS FOR ALREADY ASSEMBLED KITS ONLY WHEN QUOTATIONS WERE REQUESTED OF THE DEUTSCH COMPANY. MARSHALL WAS ABLE TO BID ON THE BASIS OF DEUTSCH QUOTATIONS FOR THE UNASSEMBLED PARTS OF THE KITS. WAS ABLE TO RECEIVE PART QUOTATIONS BECAUSE IT IS THE DISTRIBUTOR OF DEUTSCH CONNECTOR KITS.

B-175961(1), NOV 3, 1972

BID PROTEST - SMALL BUSINESS SIZE DETERMINATION - CONCLUSIVENESS - SUBCONTRACTOR/CONTRACTOR DENIAL OF PROTEST BY INTERNATIONAL TRADE OPERATIONS, INC., AGAINST THE AWARD TO THE G. S. MARSHALL COMPANY OF A SMALL BUSINESS SET-ASIDE CONTRACT FOR ENVIRONMENTAL CONNECTOR MODIFICATION KITS UNDER AN RFP ISSUED AT HILL AFB, UTAH. UNDER 15 U.S.C. 637(B)(6), A DECISION OF THE SMALL BUSINESS ADMINISTRATION REGARDING THE SIZE STATUS OF A PARTICULAR CONCERN IS CONCLUSIVE, 46 COMP. GEN. 898, AND GAO MAY NOT IGNORE THAT DETERMINATION. FURTHER, GAO HAS RECOGNIZED IT TO BE A LEGITIMATE BUSINESS INTEREST FOR A SUBCONTRACTOR TO CONSIDER THE PROSPECTS OF DEALING WITH ONE BIDDER OVER ANOTHER. B-164767, OCTOBER 2, 1968. ACCORDINGLY, THE PROTEST IS DENIED.

TO INTERNATIONAL TRADE OPERATIONS, INC.:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 7, 1972, AND PRIOR CORRESPONDENCE, PROTESTING AGAINST THE AWARD TO THE G. S. MARSHALL COMPANY OF A SMALL BUSINESS SET-ASIDE CONTRACT FOR ENVIRONMENTAL CONNECTOR MODIFICATION KITS UNDER REQUEST FOR PROPOSALS (RFP) NO. F42600-72-R-4501, ISSUED AT HILL AIR FORCE BASE, UTAH.

WHILE THE PROTEST WAS PENDING, AWARD OF THE CONTRACT WAS MADE PURSUANT TO ASPR 1-703(B)(3)(IV) DUE TO THE URGENCY OF THE PROCUREMENT.

YOU CONTEND THAT THE AWARD TO MARSHALL WAS IMPROPER FOR SEVERAL REASONS. FIRST, YOU ALLEGE THAT WHEREAS YOUR FIRM AND THE OTHER BIDDERS RECEIVED PRICE QUOTATIONS FOR ALREADY ASSEMBLED KITS ONLY WHEN QUOTATIONS WERE REQUESTED OF THE DEUTSCH COMPANY, MARSHALL WAS ABLE TO BID ON THE BASIS OF DEUTSCH QUOTATIONS FOR THE UNASSEMBLED PARTS OF THE KITS. MARSHALL, YOU CONTEND, WAS ABLE TO RECEIVE PART QUOTATIONS BECAUSE IT IS THE DISTRIBUTOR OF DEUTSCH CONNECTOR KITS. YOU BELIEVE THE CIRCUMSTANCES CONSTITUTE DISCRIMINATORY PRICING, RESTRAINT OF TRADE, BID STRUCTURING, AND UNFAVORABLE TREATMENT BY A GOVERNMENT APPROVED SOURCE FOR THE KITS. SECONDLY, YOU CONTEND THAT BECAUSE MARSHALL IS THE EXCLUSIVE AGENT FOR DEUTSCH CONNECTOR MODIFICATION KITS THAT FIRM MAY NOT PROPERLY BE CLASSIFIED AS SMALL BUSINESS SO AS TO QUALIFY FOR AWARD OF THE CONTRACT.

BY DECISION OF JULY 19, 1972, THE SMALL BUSINESS ADMINISTRATION (SBA) SIZE APPEALS BOARD CONSIDERED THE APPEAL OF YOUR COMPANY AND OTHERS THAT MARSHALL WAS NOT A SMALL BUSINESS CONCERN IN VIEW OF ITS RELATIONSHIP WITH DEUTSCH. IN DENYING THE APPEAL, THE BOARD STATED IN PERTINENT PART:

"THE FACTS INDICATE THAT THE RELATIONSHIP BETWEEN MARSHALL AND DEUTSCH IS THAT OF A PURCHASER-SUPPLIER IN WHICH MARSHALL PURCHASES VARIOUS PARTS FROM DEUTSCH AND THEN ASSEMBLES THEM. MARSHALL DOES NOT HAVE AN EXPRESS OR EXCLUSIVE TRADE AGREEMENT WITH DEUTSCH, BUT RATHER MARSHALL HAS EVOLVED OVER A PERIOD OF YEARS AS THE SOLE AUTHORIZED ASSEMBLY POINT FOR DEUTSCH'S CONNECTORS. UNDER THIS ARRANGEMENT, MARSHALL HAS NO RETURN PRIVILEGES ON THE PURCHASED INVENTORY, AND DOES NOT RECEIVE PRODUCTS ON CONSIGNMENT BUT RATHER PAYS FOR ALL OF ITS ORDERS ON 30 DAYS TERMS. FURTHERMORE, OTHER PURCHASERS CAN BUY RAW MATERIALS FROM DEUTSCH IN THE SAME MANNER AND AT THE SAME PRICE AS MARSHALL DOES. MARSHALL DISTRIBUTES A NUMBER OF COMMODITIES FOR OTHER COMPANIES, AND IN THIS WAY ALSO COMPETES WITH DEUTSCH. NO OFFICE SPACE OR PERSONNEL IS COMMONLY SHARED BY THESE TWO FIRMS. SINCE THESE FACTS INDICATE THAT THERE IS NO FORMAL CONTRACTUAL RELATIONSHIP BETWEEN DEUTSCH AND MARSHALL, SUCH AS TO CONFER UPON DEUTSCH THE POWER TO CONTROL MARSHALL, NO AFFILIATION EXISTS BETWEEN THESE TWO FIRMS."

UNDER 15 U.S.C. 637(B)(6), A DECISION OF SBA REGARDING THE SIZE STATUS OF A PARTICULAR CONCERN IS "CONCLUSIVE." 46 COMP. GEN. 898, 900 (1967) AND 44 ID. 271, 273 (1964). MOREOVER, OUR OFFICE MAY NOT IGNORE A DETERMINATION BY SBA OF THE SIZE STATUS OF A PARTICULAR CONCERN. 173301, JUNE 28, 1972.

WE NOTE THAT IN THE SBA DECISION, IT IS STATED THAT "OTHER PURCHASERS CAN BUY RAW MATERIALS FROM DEUTSCH IN THE SAME MANNER AND AT THE SAME PRICE AS MARSHALL DOES." THUS, WHILE YOU AND OTHER BIDDERS MAY HAVE RECEIVED QUOTATIONS FROM DEUTSCH ON AN ASSEMBLED KIT BASIS, IT IS NOT APPARENT THAT QUOTATIONS WERE REQUESTED ON A RAW MATERIAL BASIS OR THAT QUOTATIONS WOULD NOT HAVE BEEN PROVIDED ON SUCH BASIS IF REQUESTED. IN ANY EVENT, OUR OFFICE HAS RECOGNIZED IT TO BE A LEGITIMATE BUSINESS INTEREST FOR A SUBCONTRACTOR TO CONSIDER THE PROSPECTS OF DEALING WITH ONE BIDDER OVER ANOTHER. B-164767, OCTOBER 2, 1968. FURTHER, WHILE THE PROCUREMENT ACTIVITY MAY HAVE INDICATED THAT DEUTSCH WAS AN APPROVED SOURCE FOR THE ITEM INVOLVED, THAT DID NOT OBLIGATE THE GOVERNMENT TO SUPERVISE THAT FIRM'S SUBMISSION OF QUOTATIONS TO PROSPECTIVE CONTRACTORS, THERE BEING NO PRIVITY BETWEEN THE UNITED STATES AND THE APPROVED SOURCE UNDER THE CONTRACT THAT IS THE SUBJECT OF THE PROTEST.

ACCORDINGLY, THE PROTEST IS DENIED.