B-179669, MAR 13, 1974

B-179669: Mar 13, 1974

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DETERMINATION WHETHER TO INITIATE SET ASIDE UNDER SECTION 8(A) IS MATTER WITHIN SOUND DISCRETION OF SBA AND CONTRACTING AGENCY. IT CONTENDS THAT IT WAS VERBALLY PROMISED THE AWARD UNDER THE SMALL BUSINESS ADMINISTRATION'S (SBA) SECTION 8(A) PROGRAM. THAT IT WAS DEPRIVED OF THE ANTICIPATED BENEFITS OF THE PROSPECTIVE CONTRACT BY VIRTUE OF WRONGFUL AND COERCIVE INTERFERENCE BY THE EVENTUAL SUCCESSFUL OFFEROR UNDER THE COMPETITIVE PROCUREMENT. THE PROTEST IS DENIED. WAS ADVISED THAT WHILE NO ANTICIPATED REQUIREMENT EXISTED FOR THAT PARTICULAR AIRCRAFT. A REQUIREMENT FOR A LEAR JET MODEL 25 WAS ANTICIPATED. ALPINE'S FACILITIES WERE INSPECTED IN JUNE 1973 IN ORDER TO DETERMINE ITS GENERAL OPERATIONAL CAPABILITIES.

B-179669, MAR 13, 1974

ALTHOUGH FAA CONDUCTED PRELIMINARY INVESTIGATION AND ENGAGED IN DISCUSSIONS WITH ALLEGED MINORITY OWNED BUSINESS ENTERPRISE CONCERNING FEASIBILITY OF SETTING ASIDE PROCUREMENT UNDER SECTION 8(A) OF SMALL BUSINESS ACT, GAO FINDS NO BASIS FOR CONCLUDING THAT A CONTRACT OR OTHER LEGAL OBLIGATION RESULTED. DETERMINATION WHETHER TO INITIATE SET ASIDE UNDER SECTION 8(A) IS MATTER WITHIN SOUND DISCRETION OF SBA AND CONTRACTING AGENCY.

TO ALPINE AIRCRAFT CHARTERS, INC.:

ALPINE AIRCRAFT CHARTERS, INC., AN ALLEGED MINORITY OWNED BUSINESS ENTERPRISE PROTESTS THE AWARD OF A CONTRACT TO THE LOW OFFEROR UNDER REQUEST FOR PROPOSALS (RFP) NO. AC-73-4-1616, ISSUED JULY 30, 1973, BY THE FEDERAL AVIATION ADMINISTRATION'S (FAA) AERONAUTICAL CENTER IN OKLAHOMA CITY, OKLAHOMA, FOR RENTAL OF A LEAR JET MODEL 25 AIRCRAFT. IT CONTENDS THAT IT WAS VERBALLY PROMISED THE AWARD UNDER THE SMALL BUSINESS ADMINISTRATION'S (SBA) SECTION 8(A) PROGRAM, SUBJECT ONLY TO REDUCTION OF THE AGREEMENT TO WRITING; THAT IT RELIED UPON THIS ORAL REPRESENTATION TO ITS DETRIMENT; AND THAT IT WAS DEPRIVED OF THE ANTICIPATED BENEFITS OF THE PROSPECTIVE CONTRACT BY VIRTUE OF WRONGFUL AND COERCIVE INTERFERENCE BY THE EVENTUAL SUCCESSFUL OFFEROR UNDER THE COMPETITIVE PROCUREMENT. THE PROTESTING CONCERN THEREFORE REQUESTS THAT THE AWARD BE CANCELLED AND AWARD MADE TO IT UNDER SECTION 8(A). FOR REASONS DISCUSSED BELOW, THE PROTEST IS DENIED.

AS BACKGROUND, PRIOR TO THE ISSUANCE OF THE SUBJECT RFP, ALPINE CONTACTED THE FAA IN JANUARY 1972 TO APPRISE THE AGENCY OF ITS FACILITIES AND CAPABILITIES, AND MAINTAINED SUCH CONTACT THROUGH APRIL 1973. IN MAY 1973, ALPINE INQUIRED ABOUT THE POSSIBILITY OF AN FAA LEASE CONTRACT FOR A LEAR JET MODEL 24 AIRCRAFT UNDER SBA SECTION 8(A) PROCEDURES, BUT WAS ADVISED THAT WHILE NO ANTICIPATED REQUIREMENT EXISTED FOR THAT PARTICULAR AIRCRAFT, A REQUIREMENT FOR A LEAR JET MODEL 25 WAS ANTICIPATED, SUBJECT TO FUNDING AVAILABILITY AND TRAINING REQUIREMENTS.

THE FAA STATES THAT IN ACCORDANCE WITH AGENCY POLICY TO SUPPORT THE SBA 8(A) PROGRAM, ALPINE'S FACILITIES WERE INSPECTED IN JUNE 1973 IN ORDER TO DETERMINE ITS GENERAL OPERATIONAL CAPABILITIES. AT THIS TIME, ALPINE PERSONNEL ADVISED THAT IT HAD A LEAR JET MODEL 25 ON ORDER FOR DELIVERY IN EARLY JULY. ACCORDING TO FAA, NO COMMITMENT WAS MADE BY IT AT THAT TIME. HOWEVER, THE FAA STATES THAT THE 8(A) PROCEDURES WERE EXPLAINED TO ALPINE PERSONNEL, AND THAT THEY WERE ADVISED THAT ANY COMMITMENT THEREUNDER MUST BE MADE BY THE SBA, AND ALSO THEY WERE TOLD NOT TO ALTER THEIR PLANS IN ANTICIPATION OF ANY POTENTIAL 8(A) AWARD.

ON OR ABOUT JULY 1, 1973, ALPINE OBTAINED A LEAR JET MODEL 25. (IT IS NOT CLEAR FROM THE RECORD WHETHER ALPINE LEASED OR PURCHASED THIS AIRCRAFT.) ALPINE CONTENDS THAT IN EARLY JULY, ITS EXECUTIVE VICE PRESIDENT WAS CONTACTED BY THE FAA AND ADVISED THAT THE FAA HAD AGREED TO LEASE THE LEAR JET UNDER AN SBA 8(A) CONTRACT, SUBJECT ONLY TO THE REDUCTION OF THE AGREEMENT TO A FORMAL CONTRACT. THE FAA, WHILE ADMITTING COMMUNICATION WITH ALPINE AT THE STATED TIME, DENIES HAVING MADE THE ALLEGED REPRESENTATION, STATING THAT IT ONLY ADVISED ALPINE THAT THE FAA WAS STILL EVALUATING THE REQUIREMENT TO DETERMINE WHETHER SUFFICIENT TIME EXISTED TO PROCEED UNDER THE 8(A) PROGRAM AND, IF SUCH WAS IN FACT THE CASE, THE REQUIREMENT WOULD BE FURNISHED TO THE SBA FOR ACTION.

THERE WAS CONTACT BETWEEN THE PROCURING ACTIVITY AND THE SBA REGIONAL OFFICE IN DENVER LATER THAT MONTH. THE FAA STATES THAT THE CONVERSATIONS INVOLVED A REVIEW WITH SBA OF THE PROCEDURES INVOLVED IN DEVELOPING AND NEGOTIATING AN 8(A) CONTRACT. ADDITIONALLY, FAA EXPRESSED CONCERN THAT BECAUSE OF CONTACTS FROM OTHER FIRMS IT FEARED THAT POTENTIAL PROTESTS TO SBA BY COMPETITORS FOR THE LEASE REGARDING ALPINE'S 8(A) ELIGIBILITY WOULD PREVENT IT FROM OBTAINING THE AIRCRAFT THROUGH 8(A) PROCEDURES BY THE SEPTEMBER 15, 1973 DATE NECESSARY TO MEET ITS IMMEDIATE TRAINING PROGRAM.

ALPINE ALSO REFERS TO ITS CONTACTS WITH SBA, BOTH BEFORE AND AFTER ISSUANCE OF THE RFP, AND HAS FURNISHED A LETTER FROM SBA ATTESTING TO ITS ELIGIBILITY FOR 8(A) ASSISTANCE.

THE FAA REPORTS THAT BECAUSE OF ITS NEED FOR DELIVERY BY SEPTEMBER 15, THE FACT THAT ALPINE'S AIRCRAFT WAS NOT YET PROPERLY EQUIPPED, AND BECAUSE OF THE TIME INHERENT BOTH IN FAA AND SBA CONTRACTING CYCLES, THE REQUIREMENT WAS NOT SENT TO THE SBA FOR ACTION UNDER THE 8(A) PROGRAM, BUT WAS INSTEAD ISSUED ON A COMPETITIVE BASIS UNDER THE RFP OF JULY 30. HOWEVER, IN ORDER TO RETAIN THE OPTION OF AN 8(A) PROCUREMENT IF CIRCUMSTANCES PERMITTED, THE SUBJECT RFP WAS ISSUED WITH A NOTICE TO PROSPECTIVE OFFERORS THAT CONSIDERATION WAS BEING GIVEN TO PLACING THE REQUIREMENT WITH THE SBA AS AN 8(A) CONTRACT WITH THE PROVISO THAT THE SOLICITATION "MAY" BE CANCELLED IF IT WAS DETERMINED PRIOR TO DATE OF OPENING THAT A QUALIFIED 8(A) CONTRACTOR WAS AVAILABLE. UPON BEING ADVISED BY THE SBA ON AUGUST 9 THAT IT WOULD CONSIDER A PLACEMENT OF THE FAA REQUIREMENT WITH ALPINE AIRCRAFT UNDER THE 8(A) PROGRAM ONLY IF THE "CURRENT SOLICITATION IS PUBLICLY WITHDRAWN AND REQUIREMENT PACKAGE IS AMENDED SUFFICIENTLY TO DISTINGUISH IT FROM CURRENT SOLICITATION," THE FAA INFORMED PROSPECTIVE OFFERORS THAT THE NOTICE TRANSMITTED WITH THE JULY 30 SOLICITATION, REGARDING THE POSSIBILITY OF AN 8(A) PROCUREMENT, WAS RESCINDED AND THAT COMPETITIVE NEGOTIATIONS WOULD BE CONDUCTED WITH ALL OFFERORS. THE FAA REPORTS THAT IT COULD NOT COMPLY WITH THE SBA CONDITIONS BECAUSE NO BASIS EXISTED FOR JUSTIFYING ALTERATION OF THE REQUIREMENT AS SPECIFIED IN THE RFP AND, ADDITIONALLY, TIME WOULD NOT PERMIT DEVELOPMENT OF A NEW REQUIREMENT AND EFFECTIVE PERFORMANCE OF ITS TRAINING PROGRAM. ALPINE SUBMITTED AN OFFER UNDER THE RFP AND WAS INCLUDED IN THE NEGOTIATIONS CONDUCTED WITH THOSE FIRMS SUBMITTING OFFERS, BUT FAILED TO SECURE THE ENSUING AWARD BECAUSE ITS PRICE WAS MORE THAN $42,000 HIGHER THAN THAT OF THE SUCCESSFUL OFFEROR. IN SUBMITTING ITS PROPOSAL, ALPINE STATED THAT IT DID NOT WAIVE ITS RIGHTS TO CLAIM AGAINST THE FAA BECAUSE OF THE FAILURE TO AWARD THE CONTRACT UNDER THE 8(A) PROGRAM.

ALPINE'S ARGUMENT IS, IN SUBSTANCE, THAT IT WAS "LEAD TO BELIEVE THAT THE JUNE 1973 VISITATION" OF CERTAIN FAA REPRESENTATIVES TO ITS FACILITIES WAS FOR THE PURPOSE OF EVALUATING ITS ELIGIBILITY FOR AN 8(A) AWARD; THAT IT WAS TOLD IN JULY 1973 BY AN FAA REPRESENTATIVE THAT FAA "AGREED TO LEASE ALPINE'S LEAR JET 25 UNDER SBA 8(A), THE ONLY REQUIREMENT TO BE COMPLETED BEING ... THE WRITTEN CONTRACT" AND FORWARDING THEREOF TO SBA; AND THAT BASED UPON THESE REPRESENTATIONS ALPINE DID NOT BID THE LEAR JET 25 ON OTHER POSSIBLE CONTRACTS. IN THESE CIRCUMSTANCES, ALPINE CONTENDS THAT THE GOVERNMENT IS ESTOPPED TO DENY THE EXISTENCE OF A VALID CONTRACT, CITING UNITED STATES V. CERTAIN PARCELS OF LAND, 131 F. SUPP. 65 (1955).

WHILE FAA ADMITS CONDUCTING CERTAIN PRELIMINARY INVESTIGATIONS AND DISCUSSIONS CONCERNING THE FEASIBILITY OF SETTING ASIDE THIS PROCUREMENT UNDER SECTION 8(A), IT DENIES THAT ANY DEFINITIVE PROMISE IN THIS CONNECTION WAS MADE. FURTHERMORE, AS NOTED ABOVE, FAA HAS POINTED OUT SEVERAL REASONS WHY IT ULTIMATELY CONCLUDED THAT IT WOULD NOT BE FEASIBLE TO CONDUCT THIS PROCUREMENT UNDER SECTION 8(A) PROCEDURES.

SECTION 8(A) OF THE SMALL BUSINESS ACT (15 U.S.C. 637(A)) AUTHORIZES THE SBA TO ENTER INTO CONTRACTS WITH ANY GOVERNMENT AGENCY HAVING PROCUREMENT POWERS, AND THE CONTRACTING OFFICER OF SUCH AGENCY IS AUTHORIZED "IN HIS DISCRETION" TO LET THE CONTRACT TO SBA UPON SUCH TERMS AND CONDITIONS AS MAY BE AGREED UPON BETWEEN SBA AND THE PROCURING AGENCY. IT IS CLEAR, THEREFORE, THAT THE DETERMINATION TO INITIATE A SET-ASIDE UNDER SECTION 8(A) IS A MATTER WITHIN THE SOUND DISCRETION OF THE SBA AND THE CONTRACTING AGENCY.

FROM OUR EXAMINATION OF THE RECORD, IT APPEARS THAT FAA'S DECISION NOT TO SET ASIDE THE PROCUREMENT WAS A REASONABLE EXERCISE OF ADMINISTRATIVE DISCRETION. FURTHERMORE, IN VIEW OF THE UNRESOLVED DISPUTE CONCERNING THE CONTEXT AND EFFECT OF THE DISCUSSIONS BETWEEN FAA AND ALPINE, WE ARE UNABLE TO CONCLUDE THAT A CONTRACT OR ANY OTHER LEGAL OBLIGATION RESULTED FROM SUCH DISCUSSIONS. FINALLY, IT SHOULD BE NOTED THAT THE RECORD IS DEVOID OF ANY EVIDENCE TO SUPPORT THE ALLEGATION THAT ALPINE SUFFERED A PECUNIARY LOSS AS A RESULT OF ITS BELIEF THAT IT WOULD RECEIVE THE CONTRACT. IN THESE CIRCUMSTANCES, THE PRINCIPLE OF ESTOPPEL ENUNCIATED IN UNITED STATES V. CERTAIN PARCELS OF LAND, SUPRA, CITED BY THE PROTESTER, IS NOT APPLICABLE AS ALPINE HAS FAILED TO ESTABLISH THE EXISTENCE OF ANY ORAL COMMITMENT BY FAA OR ANY PECUNIARY LOSS.

ALPINE ALSO CONTENDS THAT IT WAS DEPRIVED OF THE CONTRACT AS A RESULT OF WRONGFUL AND COERCIVE INTERFERENCE BY THE SUCCESSFUL OFFEROR UNDER THE COMPETITIVE PROCUREMENT. WHILE IT APPEARS THAT THE SUCCESSFUL OFFEROR DID CHALLENGE ALPINE'S ELIGIBILITY FOR AN 8(A) AWARD, WE DO NOT VIEW SUCH ACTION AS AFFECTING THE PROPRIETY OF FAA'S DECISION NOT TO SET ASIDE THE PROCUREMENT OR THE VALIDITY OF THE AWARD. IN ANY CASE ONLY THE SBA HAS THE AUTHORITY TO AWARD A SUBCONTRACT PURSUANT TO SECTION 8(A).