B-178121, JUL 31, 1973, 53 COMP GEN 58

B-178121: Jul 31, 1973

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OF A NAVAL INSTALLATION'S DISREGARD OF THE RECOMMENDATION TO RESTRICT THE SOLICITATION FOR MESS ATTENDANT SERVICES TO SMALL BUSINESS CONCERNS WAS UPHELD. THE AMENDMENT - AFTER DUE NOTICE TO OFFERORS - OF THE UNRESTRICTED SOLICITATION TO RESTRICT THE PROCUREMENT TO SMALL BUSINESS WAS PROPER SINCE THE REVERSAL OF THE INITIAL DETERMINATION THAT THERE WAS NO REASONABLE EXPECTATION THAT AN AWARD COULD BE MADE TO A SMALL BUSINESS CONCERN AT A REASONABLE PRICE (ASPR 1 706.5(A)(1)). IMMATERIAL TO THE SBA AUTHORITY TO APPEAL WAS THE LACK OF CONTROVERSY BETWEEN THE CONTRACTING OFFICER AND THE SMALL BUSINESS SPECIALIST. THE REQUEST FOR PROPOSALS WAS ISSUED BY THE SUPPLY DEPARTMENT. YOUR PROTEST RELATES TO RESTRICTION OF THE PROCUREMENT TO SMALL BUSINESS CONCERNS AFTER THE SOLICITATION WAS INITIALLY ISSUED ON AN UNRESTRICTED BASIS.

B-178121, JUL 31, 1973, 53 COMP GEN 58

CONTRACTS - AWARDS - SMALL BUSINESS CONCERNS - SET-ASIDES - DISPUTES WHEN THE APPEAL BY THE ADMINISTRATOR OF THE SMALL BUSINESS ADMINISTRATION (SBA) TO THE SECRETARY OF THE NAVY, PURSUANT TO 15 U.S.C. 644, OF A NAVAL INSTALLATION'S DISREGARD OF THE RECOMMENDATION TO RESTRICT THE SOLICITATION FOR MESS ATTENDANT SERVICES TO SMALL BUSINESS CONCERNS WAS UPHELD, THE AMENDMENT - AFTER DUE NOTICE TO OFFERORS - OF THE UNRESTRICTED SOLICITATION TO RESTRICT THE PROCUREMENT TO SMALL BUSINESS WAS PROPER SINCE THE REVERSAL OF THE INITIAL DETERMINATION THAT THERE WAS NO REASONABLE EXPECTATION THAT AN AWARD COULD BE MADE TO A SMALL BUSINESS CONCERN AT A REASONABLE PRICE (ASPR 1 706.5(A)(1)), AS WELL AS AWARDING A FIAR PROPORTION OF GOVERNMENT PURCHASES TO A SMALL BUSINESS CONCERN (ASPR 1-702(A)) GAVE EFFECT TO 15 U.S.C. 644. IMMATERIAL TO THE SBA AUTHORITY TO APPEAL WAS THE LACK OF CONTROVERSY BETWEEN THE CONTRACTING OFFICER AND THE SMALL BUSINESS SPECIALIST, AND THE FACT THAT THE UNRESTRICTED SOLICITATION HAD BEEN RELEASED TO THE PUBLIC.

TO TRUITT & FABRIKANT, JULY 31, 1973:

BY LETTER DATED MARCH 14, 1973, AND PRIOR CORRESPONDENCE, YOU PROTESTED ON BEHALF OF MANPOWER, INCORPORATED, THE AWARD OF A CONTRACT UNDER SOLICITATION NO. N00128-73-R-0110.

THE REQUEST FOR PROPOSALS WAS ISSUED BY THE SUPPLY DEPARTMENT, NAVAL ADMINISTRATION COMMAND, NAVAL TRAINING CENTER (NTC), GREAT LAKES, ILLINOIS, ON JANUARY 16, 1973. THE SOLICITATION INVITED PROPOSALS FOR SUPPLYING NECESSARY LABOR AND MATERIAL TO PERFORM CERTAIN MESS ATTENDANT SERVICES IN TWO SUBSISTENCE BUILDINGS LOCATED AT THE NAVAL TRAINING CENTER (NTC), GREAT LAKES, ILLINOIS. YOUR PROTEST RELATES TO RESTRICTION OF THE PROCUREMENT TO SMALL BUSINESS CONCERNS AFTER THE SOLICITATION WAS INITIALLY ISSUED ON AN UNRESTRICTED BASIS.

THE FOLLOWING EVENTS AS REPORTED BY NAVY ARE RELEVANT TO CONSIDERATION OF YOUR PROTEST:

ON 27 DEC 1972, A TOTAL SMALL BUSINESS SET ASIDE, *** WAS INITIATED BY A REPRESENTATIVE OF SBA, CHICAGO REGION. ON 2 JAN 1973, THE NTC SMALL BUSINESS SPECIALIST AND THE CONTRACTING OFFICER MADE A JOINT FORMAL DETERMINATION NOT TO SET ASIDE THE TOTAL PROCUREMENT FOR SMALL BUSINESS, BELIEVING THERE WAS NO REASONABLE EXPECTATION WITHIN THE MEANING OF ASPR 1 -706.5(A)(1), THAT AN AWARD COULD BE MADE TO A SMALL BUSINESS FIRM AT A REASONABLE PRICE. *** AFTER REAFFIRMING THIS POSITION ON 15 JAN 1973, NTC FORMALLY ENDORSED THE REQUEST FOR TOTAL SMALL BUSINESS SET ASIDE, *** AND RETURNED IT TO THE SBA, CHICAGO. BY LETTER OF 15 JAN 1973, *** MR. E. A. GOODBOUT, ACTING CHIEF, PROCUREMENT MANAGEMENT ASSISTANCE DIVISION, CHICAGO REGION OF THE SMALL BUSINESS ADMINISTRATION, APPEALED THE REJECTION OF THE SMALL BUSINESS SET ASIDE TO THE DIRECTOR OF THE SUPPLY DEPARTMENT AT NTC. HOWEVER, ON 16 JAN 1973, PRIOR TO RECEIPT OF THE ABOVE NOTED APPEAL, NTC ISSUED AN UNRESTRICTED SOLICITATION FOR THESE MESS ATTENDANT SERVICES (THE RFP PRESENTLY UNDER PROTEST) THEREBY INADVERTENTLY FAILING TO COMPLY WITH ASPR 1-706.3(D), WHICH REQUIRES THAT SBA BE GIVEN THE OPPORTUNITY TO APPEAL A REJECTION OF A SMALL BUSINESS SET-ASIDE TO THE HEAD OF THE PROCURING ACTIVITY AND FURTHER TO THE SECRETARY OF THE NAVY BEFORE THE SOLICITATION IS ISSUED. BY LETTER OF 22 JAN 1973, ENCLOSURE (8), THE DIRECTOR OF THE SUPPLY DEPARTMENT, NTC, REJECTED THE SBA APPEAL FOR ESSENTIALLY THE SAME REASONS PREVIOUSLY CITED BY THE CONTRACTING OFFICER WHEN HE DETERMINED NOT TO SET-ASIDE THE PROCUREMENT INITIALLY.

ON 23 JAN 1973, IT WAS DETERMINED AFTER DISCUSSIONS WITH MR. MORRIS QUESTAL, OFFICE OF ASSISTANT SECRETARY OF THE NAVY (INSTALLATION AND LOGISTICS), THAT NTC HAD IN FACT MISINTERPRETED AND THEREBY FAILED TO COMPLY, AS NOTED ABOVE, WITH ASPR 1-706.3(D). IN ORDER TO CORRECT THE INADVERTENT CURTAILMENT OF THE RIGHT OF SBA TO APPEAL THE SET-ASIDE REJECTION TO THE SECRETARY OF THE NAVY, THE RFP WAS AMENDED ON 24 JAN 1973 TO INDICATE TO ALL PROSPECTIVE OFFERORS THAT A TOTAL SMALL BUSINESS SET- ASIDE WAS NOW BEING CONSIDERED. *** ON THE SAME DATE THE DIRECTOR OF THE SUPPLY DEPARTMENT, NTC, NOTIFIED SBA OF THE CORRECTIVE ACTION TAKEN. *** IN ACCORDANCE WITH ASPR 1-706.3(D), ON 29 JAN 1973, THE CHICAGO REGIONAL OFFICE OF SBA REQUESTED THE DIRECTOR OF THE SUPPLY DEPARTMENT, NTC, TO SUSPEND PROCUREMENT ACTION PENDING AN APPEAL BY THE ADMINISTRATOR OF SBA TO THE SECRETARY OF THE NAVY. *** ON 2 FEB 1973, SBA, WASHINGTON, ADVISED THE CONTRACTING OFFICER THAT SBA WAS, IN FACT, TAKING APPEAL ACTION WITH THE SECRETARY OF THE NAVY, *** AND SUCH APPEAL WAS TAKEN ON 6 FEB 1973. *** SUCH APPEAL CITED THE FACT THAT 18 SMALL BUSINESS FIRMS HAD INDICATED THEIR INTENTION TO SUBMIT OFFERS IN RESPONSE TO THE MESS ATTENDANT SOLICITATION, INCLUDING SOME FIRMS WHICH WERE ALREADY PROVIDING THE SAME SERVICE AT OTHER MILITARY BASES IN A SATISFACTORY MANNER. ON 14 FEB 1973, THE ASSISTANT SECRETARY OF THE NAVY (INSTALLATION AND LOGISTICS) DIRECTED NTC TO INITIATE A TOTAL SMALL BUSINESS SET-ASIDE FOR THE MESS ATTENDANT PROCUREMENT AND PROVIDED THE RATIONALE FOR THE DECISION. ***

THEREAFTER, AS PREVIOUSLY NOTED ABOVE, ON 15 FEB 1973, NTC AMENDED THE SOLICITATION TO PROVIDE FOR A TOTAL SMALL BUSINESS SET-ASIDE.

YOU CONTEND THAT THE DECISION BY THE ASSISTANT SECRETARY OF THE NAVY TO AFFIRM THE TOTAL SMALL BUSINESS SET-ASIDE OF THE MESS ATTENDANT PROCUREMENT WAS ARBITRARY, CAPRICIOUS AND ILLEGAL.

OUR REVIEW OF THE FACTS, HOWEVER, LEADS US TO AGREE WITH THE NAVY THAT SUCH ALLEGATION IS WITHOUT MERIT. THE NAVY REPORT DOCUMENTS THE SEVERAL MEETINGS AND DISCUSSIONS BETWEEN MANPOWER'S REPRESENTATIVES, NAVY PROCUREMENT OFFICIALS, AND THE ASSISTANT SECRETARY'S STAFF, AND THE PROCEDURES FOLLOWED BY THE NAVY LEADING TO ITS DECISION TO SET ASIDE THE PROCUREMENT. FURTHERMORE, IT IS CLEAR FROM THE RECORD THE NAVY'S DECISION TO SET ASIDE THE PROCUREMENT WAS BASED UPON THE DETERMINATION THAT THERE WAS A REASONABLE EXPECTATION THAT AWARD COULD BE MADE TO A SMALL BUSINESS CONCERN AT A REASONABLE PRICE (ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-706.5(A)(1)), AND TO COMPLY WITH THE DEPARTMENT OF DEFENSE POLICY TO PLACE A FAIR PROPORTION OF ITS TOTAL PURCHASES WITH SMALL BUSINESS CONCERNS (ASPR 1-702(A)). IN THIS CONNECTION, THE DETERMINATION THAT PROPOSALS WOULD BE OBTAINED FROM A SUFFICIENT NUMBER OF SMALL BUSINESS CONCERNS TO INSURE REASONABLE PRICES WAS BASED UPON INFORMATION FROM SBA THAT 18 SMALL BUSINESS FIRMS EXPERIENCED IN THE SERVICES CALLED FOR IN THE SUBJECT PROCUREMENT HAD EXPRESSED INTEREST. THE VALIDITY OF THIS DETERMINATION WAS CONFIRMED BY THE RECEIPT OF 19 PROPOSALS. IN THESE CIRCUMSTANCES, WE SEE NO BASIS FOR CONCLUDING THAT THE NAVY'S ACTIONS WERE ARBITRARY, CAPRICIOUS, OR ILLEGAL.

YOU ALSO CONTEND THAT VARIOUS CITED PROVISIONS OF ASPR 1-706.3 PERMIT THE SMALL BUSINESS ADMINISTRATION (SBA) TO APPEAL A CONTRACTING OFFICER'S DISAGREEMENT WITH THE SET-ASIDE RECOMMENDATION OF THE SBA REPRESENTATIVES ONLY WHEN THERE IS AN EXISTING CONTROVERSY AS TO SUCH SET-ASIDE BETWEEN THE CONTRACTING OFFICER AND THE SMALL BUSINESS SPECIALIST (NAVY REPRESENTATIVE). YOU MAINTAIN THAT SINCE THE CONTRACTING OFFICER AND THE NAVY'S SMALL BUSINESS SPECIALIST WERE IN COMPLETE AGREEMENT THAT THE PROCUREMENT SHOULD NOT BE A TOTAL SMALL BUSINESS SET-ASIDE, THE SBA HAD NO AUTHORITY TO APPEAL THAT DECISION.

IN IMPLEMENTING THE POLICY OF THE SMALL BUSINESS ACT THAT A FAIR PROPORTION OF THE GOVERNMENT'S PURCHASES BE PLACED WITH SMALL BUSINESS CONCERNS, 15 U.S.C. 644 PROVIDES:

TO EFFECTUATE THE PURPOSES OF THIS CHAPTER, SMALL-BUSINESS CONCERNS WITHIN THE MEANING OF THIS CHAPTER SHALL RECEIVE ANY AWARD OR CONTRACT OR ANY PART THEREOF, AND BE AWARDED ANY CONTRACT FOR THE SALE OF GOVERNMENT PROPERTY, AS TO WHICH IT IS DETERMINED BY THE ADMINISTRATION AND THE CONTRACTING PROCUREMENT OR DISPOSAL AGENCY (1) TO BE IN THE INTEREST OF MAINTAINING OR MOBILIZING THE NATION'S FULL PRODUCTIVE CAPACITY, (2) TO BE IN THE INTEREST OF WAR OR NATIONAL DEFENSE PROGRAMS, (3) TO BE IN THE INTEREST OF ASSURING THAT A FAIR PROPORTION OF THE TOTAL PURCHASES AND CONTRACTS FOR PROPERTY AND SERVICES FOR THE GOVERNMENT ARE PLACED WITH SMALL-BUSINESS CONCERNS, OR (4) TO BE IN THE INTEREST OF ASSURING THAT A FAIR PROPORTION OF THE TOTAL SALES OF GOVERNMENT PROPERTY BE MADE TO SMALL -BUSINESS CONCERNS; BUT NOTHING CONTAINED IN THIS CHAPTER SHALL BE CONSTRUED TO CHANGE ANY PREFERENCES OR PRIORITIES ESTABLISHED BY LAW WITH RESPECT TO THE SALE OF ELECTRICAL POWER OR OTHER PROPERTY BY THE GOVERNMENT OR ANY AGENCY THEREOF. THESE DETERMINATIONS MAY BE MADE FOR INDIVIDUAL AWARDS OR CONTRACTS OR FOR CLASSES OF AWARDS OF CONTRACTS. WHENEVER THE ADMINISTRATION AND THE CONTRACTING PROCUREMENT AGENCY FAIL TO AGREE, THE MATTER SHALL BE SUBMITTED FOR DETERMINATION TO THE SECRETARY OR THE HEAD OF THE APPROPRIATE DEPARTMENT OR AGENCY BY THE ADMINISTRATOR.

AS INDICATED BY THE ABOVE-QUOTED PROVISION OF THE ACT, IT IS INTENDED THAT SBA SHALL HAVE THE RIGHT TO APPEAL DISAGREEMENTS WITH AGENCY CONTRACTING OFFICIALS TO THE SECRETARY OF THE DEPARTMENT CONCERNED. IT IS CLEAR THAT THE CITED PROVISIONS OF ASPR ARE INTENDED, AND SHOULD SO BE INTERPRETED, TO GIVE EFFECT TO THIS STATUTORY MANDATE. IT IS OUR VIEW THAT YOUR INTERPRETATION OF THE REGULATION WOULD HAVE THE EFFECT OF VITIATING ITS INTENDED PURPOSE. WE BELIEVE THE NAVY HAS PROPERLY CONSTRUED THE REGULATION AND APPLIED THE PROCEDURES PRESCRIBED THEREIN AND, THEREFORE, WE HAVE NO BASIS FOR OBJECTING TO THE GRANTING OF SBA'S APPEAL.

FINALLY, YOU CONTEND THAT NO APPEAL IS PROPER ONCE THE SOLICITATION HAS BEEN RELEASED TO THE PUBLIC. NOWHERE IN THE SMALL BUSINESS ACT OR IN THE ASPR IS THERE ANY PROHIBITION TO THIS EFFECT. ADDITIONALLY, WE NOTE THAT ON JANUARY 24, 1973, PRIOR TO THE ORIGINAL CLOSING DATE, THE SOLICITATION WAS AMENDED TO INDICATE THAT A SMALL BUSINESS SET-ASIDE WAS BEING CONSIDERED. THUS, ALL BIDDERS WERE ON NOTICE THAT SUCH ACTION MIGHT BE TAKEN. FURTHERMORE, THE AMENDMENT RESTRICTING THE PROCUREMENT WAS ISSUED PRIOR TO THE CLOSING DATE FOR RECEIPT OF PROPOSALS.

BASED ON THE FOREGOING, YOUR PROTEST IS DENIED.