B-180196, JUN 4, 1974, 53 COMP GEN 904

B-180196: Jun 4, 1974

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

CONTRACTS - AWARDS - SMALL BUSINESS CONCERNS - SIZE - STANDARD USED IN INVITATION ERRONEOUS REQUIREMENT IN ARMED SERVICES PROCUREMENT REGULATION 1-701.1(A)(2A THAT ELIGIBILITY FOR AWARD OF SMALL BUSINESS SET-ASIDE DREDGING CONTRACT IS DEPENDENT ON USE OF SMALL BUSINESS DREDGE FOR AT LEAST 40 PERCENT OF DREDGING WORK IS AN UNAUTHORIZED SIZE STANDARD SINCE SMALL BUSINESS ADMINISTRATION HAS EXCLUSIVE STATUTORY JURISDICTION IN SMALL BUSINESS SIZE MATTERS. 1974: THIS PROTEST PRESENTS THE QUESTION WHETHER THE REQUIREMENT IN ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-701.1(A)(2A THAT AT LEAST 40 PERCENT OF THE YARDAGE ADVERTISED IN SMALL BUSINESS TOTAL SET-ASIDES MUST BE PERFORMED WITH DREDGING EQUIPMENT OWNED BY SMALL BUSINESS IS A PROPER EXERCISE OF PROCUREMENT RESPONSIBILITY.

B-180196, JUN 4, 1974, 53 COMP GEN 904

CONTRACTS - AWARDS - SMALL BUSINESS CONCERNS - SIZE - STANDARD USED IN INVITATION ERRONEOUS REQUIREMENT IN ARMED SERVICES PROCUREMENT REGULATION 1-701.1(A)(2A THAT ELIGIBILITY FOR AWARD OF SMALL BUSINESS SET-ASIDE DREDGING CONTRACT IS DEPENDENT ON USE OF SMALL BUSINESS DREDGE FOR AT LEAST 40 PERCENT OF DREDGING WORK IS AN UNAUTHORIZED SIZE STANDARD SINCE SMALL BUSINESS ADMINISTRATION HAS EXCLUSIVE STATUTORY JURISDICTION IN SMALL BUSINESS SIZE MATTERS. CONTRACTS - AWARDS - SMALL BUSINESS CONCERNS - SET-ASIDES - RESTRICTIVE OF COMPETITION PROVISION IN ARMED SERVICES PROCUREMENT REGULATION 1-701.1(A)(2A THAT SMALL BUSINESS DREDGING WORK BE ACCOMPLISHED WITH SMALL BUSINESS DREDGE FOR AT LEAST 40 PERCENT OF WORK CONSTITUTES AN IMPROPER RESTRICTION ON COMPETITION.

IN THE MATTER OF THE ATKINSON DREDGING COMPANY, JUNE 4, 1974:

THIS PROTEST PRESENTS THE QUESTION WHETHER THE REQUIREMENT IN ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-701.1(A)(2A THAT AT LEAST 40 PERCENT OF THE YARDAGE ADVERTISED IN SMALL BUSINESS TOTAL SET-ASIDES MUST BE PERFORMED WITH DREDGING EQUIPMENT OWNED BY SMALL BUSINESS IS A PROPER EXERCISE OF PROCUREMENT RESPONSIBILITY. FOR THE REASONS SET FORTH BELOW, WE HAVE CONCLUDED THAT THE CITED ASPR IMPOSES A SIZE STANDARD IN ADDITION TO THAT PROMULGATED BY THE SMALL BUSINESS ADMINISTRATION (SBA) AND IS, CONSEQUENTLY, UNAUTHORIZED. THEREFORE, ITS INCLUSION IN THE INVITATION FOR BIDS (IFB) REPRESENTS AN UNDUE RESTRICTION ON COMPETITION. IN VIEW OF THIS CONCLUSION, IT IS UNNECESSARY TO DISCUSS THE CONTENTIONS WHETHER THE LOW BIDDER'S FAILURE TO COMMIT ITSELF TO MEET THE ASPR REQUIREMENT CONSTITUTES A MATTER OF RESPONSIVENESS OR RESPONSIBILITY. AS NECESSARY FOR OUR RESOLUTION OF THIS QUESTION, THE FACTS ARE AS FOLLOWS:

IFB DACW 65-74-B-0004 WAS ISSUED BY THE UNITED STATES ARMY CORPS OF ENGINEERS, NORFOLK DISTRICT, AS A TOTAL SMALL BUSINESS SET-ASIDE FOR MAINTENANCE DREDGING OF NORFOLK HARBOR. GAHAGAN DREDGING ASSOCIATES, INC. (GAHAGAN) SUBMITTED THE LOW BID OF $567,511, WHILE THE ATKINSON DREDGING COMPANY (ATKINSON) SUBMITTED THE NEXT LOW BID OF $696,129. IN ADDITION TO THE SBA SIZE STANDARDS APPLICABLE FOR DREDGING, PARAGRAPH 2.2 OF THE ADDITIONAL TERMS AND CONDITIONS OF THE IFB PROVIDED:

*** ALSO, IN ORDER TO BE ELIGIBLE FOR A SMALL BUSINESS, SET-ASIDE AWARD ON DREDGING CONTRACTS, THE FIRMS MUST PERFORM THE DREDGING OF AT LEAST 40% OF THE YARDAGE ADVERTISED IN THE PLANS AND SPECIFICATIONS WITH DREDGING EQUIPMENT OWNED BY THE BIDDER OR OBTAINED FROM ANOTHER SMALL BUSINESS DREDGING CONCERN. (ASPR 1-701.1(A)(2)).

ENG FORM 1619-R (1 MAY 1959), PLANT AND EQUIPMENT SCHEDULE, ATTACHED TO THE IFB, REQUIRED INFORMATION FROM BIDDERS CONCERNING THE DREDGE OR DREDGES TO BE USED.

IN RESPONSE TO ENG FORM 1619-R, GAHAGAN INDICATED THAT IT INTENDED TO USE THE DREDGE PHILADELPHIA, WHICH WAS LOCATED IN NORFOLK. BY LETTER OF NOVEMBER 7, 1973, ATKINSON PROTESTED CONSIDERATION OF GAHAGAN'S BID ON THE BASIS THAT THE PHILADELPHIA WAS OWNED BY LARGE BUSINESS, THEREBY RENDERING GAHAGAN'S BID IN VIOLATION OF SECTION 2.2, QUOTED ABOVE. THEREAFTER, ON NOVEMBER 9, 1973, THE DISTRICT ENGINEER FORWARDED THE REQUISITE INFORMATION TO THE COGNIZANT SBA REGIONAL OFFICE FOR DETERMINATION OF GAHAGAN'S SIZE STATUS. BY LETTER DATED NOVEMBER 26, 1973, THE SBA REGIONAL OFFICE DETERMINED GAHAGAN TO BE A SMALL BUSINESS CONCERN FOR PURPOSES OF THE PROCUREMENT.

ON NOVEMBER 27, 1973, THE CONTRACTING OFFICER WROTE GAHAGAN REQUESTING INFORMATION CONCERNING: (1) THE REQUIREMENT THAT 40 PERCENT OF THE WORK BE PERFORMED WITH A DREDGE OWNED BY SMALL BUSINESS; (2) PREVIOUS EXPERIENCE ON SIMILAR WORK; AND (3) A DESCRIPTION OF THE PLANT PROPOSED TO BE USED. GAHAGAN RESPONDED BY LETTER OF DECEMBER 3, 1973:

*** SINCE THE SIZE OF THE OWNER OF THE DREDGE WE USE IS IN NO WAY RELATED TO THE NEEDS OF THE CORPS OF ENGINEERS, WE WOULD VIEW THE PROVISIONS OF PARAGRAPH 2.2, PAGE IV OF THE INVITATION AS IMMATERIAL REQUIREMENTS WHICH MAY BE WAIVED AND WHICH, IN THE LIGHT OF THE DECISION OF THE SMALL BUSINESS ADMINISTRATION, MUST BE WAIVED BY THE CONTRACTING OFFICE IN AWARDING THE CONTRACT.

GAHAGAN FURTHER INDICATED THAT INASMUCH AS IT WAS NEWLY FORMED IT HAD NO PRIOR RELATED EXPERIENCE. WHILE ITS CAPITALIZATION AS OF THAT DATE WAS MINIMAL ($1,000), GAHAGAN STATED THAT IT WOULD INCREASE ITS CAPITALIZATION BY $150,000 UPON ADVICE OF AWARD. IT WAS INDICATED THAT A FIRM AGREEMENT FOR LEASE OF THE DREDGE PHILADELPHIA WAS ALSO DEPENDENT UPON NOTICE OF CONTRACT AWARD TO GAHAGAN.

ON NOVEMBER 29, 1973, ATKINSON SUBMITTED AN APPEAL FROM THE REGIONAL SIZE DETERMINATION TO THE SBA SIZE APPEALS BOARD. ON THE SAME DAY, ATKINSON PROTESTED ANY AWARD TO GAHAGAN TO OUR OFFICE.

ON DECEMBER 13, 1973, THE CORPS' DISTRICT COUNSEL WROTE GAHAGAN THAT ITS DECEMBER 3, 1973, LETTER IN RESPONSE TO THE CONTRACTING OFFICER'S NOVEMBER 27, 1973, LETTER, REQUESTING CERTAIN INFORMATION, WAS NOT RESPONSIVE TO THE INQUIRY. ACCORDINGLY, GAHAGAN WAS AGAIN REQUESTED TO PROVIDE THE INFORMATION WHICH WOULD SHOW HOW GAHAGAN INTENDED TO COMPLY WITH THE 40- PERCENT SMALL BUSINESS SUBCONTRACTING REQUIREMENT. GAHAGAN RESPONDED WITH A DECEMBER 29 LETTER AGAIN TO THE EFFECT THAT THE REQUESTED INFORMATION WAS IMMATERIAL.

ON JANUARY 24, 1974, THE SBA SIZE APPEALS BOARD RENDERED ITS DECISION ON ATKINSON'S APPEAL AFFIRMING THAT GAHAGAN WAS SMALL BUSINESS. PERTINENT PORTIONS OF THE DECISION STATED:

THE JURISDICTION OF THE SIZE APPEALS BOARD EXTENDS ONLY TO A REVIEW OF SIZE DECISIONS BY SBA FIELD OFFICES OR OF CONTRACTING OFFICERS WITH REGARD TO PRODUCT OR SERVICE CLASSIFICATIONS, SECTION 121.3-16(G), SBA REGULATIONS. IT HAS NO AUTHORITY TO PASS UPON QUESTIONS OF RESPONSIVENESS OR RESPONSIBILITY TO PERFORM A PARTICULAR GOVERNMENT CONTRACT. IT HAS ONLY THE JURISDICTION CONFERRED UPON IT BY THE SMALL BUSINESS ACT OR THE REGULATIONS PROMULGATED UNDER ITS AUTHORITY. IT HAS NO AUTHORITY TO ENFORCE A PROVISION OF THE ARMED SERVICES PROCUREMENT REGULATION ENLARGING THE DEFINITION OF A SMALL BUSINESS FOR PURPOSES OF BIDDERS AND RECEIVING AWARD OF DREDGING PROCUREMENTS. THEREFORE, THE BOARD HOLDS THAT WHETHER GAHAGAN DREDGING ASSOCIATES, INC., WILL PERFORM AT LEAST 40 PERCENT OF THE YARDAGE ADVERTISED WITH ITS OWN DREDGING EQUIPMENT OR EQUIPMENT OBTAINED FROM ANOTHER SMALL BUSINESS IS A MATTER OF RESPONSIVENESS OR RESPONSIBILITY TO BE RESOLVED BY THE CONTRACTING OFFICER, AND NOT ONE OF SIZE COGNIZABLE BY THE BOARD.

IN THE INTERIM, ON DECEMBER 20, 1973, THE CONTRACTING OFFICER REFERRED THE MATTER OF GAHAGAN'S RESPONSIBILITY, I.E., CAPACITY AND CREDIT, TO THE COGNIZANT SBA REGIONAL OFFICE FOR CERTIFICATE OF COMPETENCY (COC) PROCEEDINGS. HOWEVER, SINCE THE ATKINSON PROTEST HAD ALREADY BEEN FILED WITH OUR OFFICE BY THIS TIME, THE SBA REGIONAL OFFICE ADVISED THAT THE COC ACTION WOULD BE HELD IN ABEYANCE PENDING THIS DECISION.

SBA HAS SINCE FURTHER STATED ITS POSITION CONCERNING THE EFFECT TO BE ACCORDED THE 40-PERCENT SUBCONTRACTING REQUIREMENT OF THE ASPR. IN A LETTER DATED APRIL 12, 1974, FROM THE SBA GENERAL COUNSEL, RESPONDING TO A GAO INQUIRY, IT WAS STATED:

UNDER THE REGULATIONS OF THE SMALL BUSINESS ADMINISTRATION, A CONCERN WHICH IS BIDDING ON A CONTRACT FOR DREDGING IS DEFINED AS SMALL IF ITS AVERAGE ANNUAL RECEIPTS FOR ITS PRECEDING THREE (3) FISCAL YEARS DOES NOT EXCEED $5 MILLION. (SEE 13 C.F.R. 121.3-8(A)(2).) IT IS THIS STANDARD THAT MUST BE MET IN ORDER FOR A CONCERN TO BE DETERMINED SMALL BY THIS AGENCY. THE PROVISIONS OF ASPR 1-701.1(A)(2) THAT FURTHER REQUIRE A BIDDER TO PERFORM 40 PERCENT OF THE DREDGING WITH ITS OWN EQUIPMENT, OR THE EQUIPMENT OF ANOTHER SMALL BUSINESS CONCERN, MAY BE A QUESTION OF THE RESPONSIVENESS OR RESPONSIBILITY OF THE BIDDER TO PERFORM THE CONTRACT. IN ANY EVENT HOWEVER, IN VIEW OF THE FOREGOING, IT IS OUR OPINION THAT THIS 40 PERCENT REQUIREMENT IS NOT PART OF THE APPLICABLE SIZE STANDARD.

AS STATED IN THE CORPS OF ENGINEERS' REPORT ON THE PROTEST, IT IS THE OPINION OF THE CONTRACTING OFFICER THAT GAHAGAN IS NONRESPONSIBLE SINCE IT REPEATEDLY CONFIRMED THAT IT INTENDS TO PERFORM 100 PERCENT OF THE WORK WITH THE LARGE BUSINESS DREDGE PHILADELPHIA. GAHAGAN'S INTENT WAS EVIDENCED BY ITS COMPLETED ENG FORM 1619-R, AS WELL AS AFFIRMATIVE POST BID-OPENING STATEMENTS OF ITS INTENT TO UTILIZE THE PHILADELPHIA, AS STATED IN GAHAGAN'S LETTERS OF DECEMBER 3 AND 29, 1973. THEREFORE, THE CONTRACTING OFFICER RECOMMENDED THAT GAHAGAN BE DETERMINED TO BE NONRESPONSIBLE PURSUANT TO ASPR 1-903.1(V), WHICH REQUIRES THAT A PROSPECTIVE CONTRACTOR BE OTHERWISE QUALIFIED AND ELIGIBLE TO RECEIVE AN AWARD UNDER APPLICABLE LAW AND REGULATION. FURTHER, UNDER ASPR 1 705.4(C)(V), IT IS THE CONTRACTING OFFICER'S OPINION THAT THE MATTER OF GAHAGAN'S RESPONSIBILITY NEED NOT BE REFERRED TO SBA FOR POSSIBLE COC PROCEDURES SINCE HE RECOMMENDED THAT GAHAGAN BE DETERMINED TO BE NONRESPONSIBLE UNDER ASPR 1-903.1(V). THE REPORT FROM THE GENERAL COUNSEL, OFFICE OF THE CHIEF OF ENGINEERS, CONCURS IN THIS RECOMMENDATION OF NONRESPONSIBILITY.

GAHAGAN MAINTAINS THAT THE SUBCONTRACTING REQUIREMENT OF ASPR IS, IN EFFECT, A SIZE DETERMINATION BY THE DEPARTMENT OF DEFENSE THAT HAS NO FORCE OR EFFECT. GAHAGAN MAINTAINS THAT ONLY SBA IS EMPOWERED BY STATUTE TO MAKE SIZE DETERMINATIONS. GAHAGAN POINTS OUT THAT SINCE THE 40-PERCENT REQUIREMENT IS CONTAINED ONLY IN THAT PORTION OF ASPR CONCERNING SMALL BUSINESS SIZE STANDARDS, ITS ONLY PURPOSE IS TO ESTABLISH ELIGIBILITY FOR PARTICIPATION IN SMALL BUSINESS SET-ASIDES FOR DREDGING WORK. GAHAGAN REFERS TO THE SAME LEGISLATIVE HEARINGS AND STUDIES AS DO ATKINSON AND THE CORPS, TO REINFORCE ITS POSITION THAT THE PURPOSE OF THE 40-PERCENT REQUIREMENT RELATES SOLELY TO THE EFFECTUATION OF THE PURPOSES OF THE SMALL BUSINESS ACT. IT IS OBSERVED THAT THE INTENDED PURPOSE WAS TO PREVENT SMALL BUSINESS FROM ACTING AS BROKERS IN OBTAINING SMALL BUSINESS SET-ASIDE AWARDS AND SUBCONTRACTING SUBSTANTIALLY ALL OF THE WORK TO LARGE BUSINESS. THEREFORE, COUNSEL FOR GAHAGAN URGES THAT THIS ASPR IS BEYOND THE DEPARTMENT OF DEFENSE'S AUTHORITY, HAS NO FORCE AND EFFECT, AND MAY BE WAIVED BECAUSE THE 40 PERCENT REQUIREMENT DOES NOT AFFECT PRICE, QUALITY, QUANTITY OR TIME OF PERFORMANCE, AND IS, IN THE END RESULT, IMMATERIAL AND OF NO CONSEQUENCE.

TOTAL SMALL BUSINESS SET-ASIDES ARE BY THEIR VERY NATURE RESTRICTIVE OF COMPETITION BECAUSE AN ENTIRE SEGMENT OF AN INDUSTRY IS EXCLUDED FROM PARTICIPATION, I.E., LARGE BUSINESS. HOWEVER, THE CONGRESS HAS EXPRESSED ITS INTENT THAT A FAIR PROPORTION OF PURCHASES AND CONTRACTS FOR PROPERTY AND SERVICES FOR THE GOVERNMENT BE PLACED WITH SMALL BUSINESS. 15 U.S.C. 631. IN FURTHERANCE OF THIS DECLARED NATIONAL POLICY, THE CONGRESS HAS COUNTENANCED THE SMALL BUSINESS SET-ASIDE PROGRAM AS A VALID RESTRICTION ON COMPETITION (15 U.S.C. 644) AND HAS DELEGATED CONCLUSIVE AUTHORITY TO SBA TO DETERMINE MATTERS OF SMALL BUSINESS SIZE FOR PROCUREMENT PURPOSES (15 U.S.C. 637(B)(6)).

IN DISCHARGE OF THIS RESPONSIBILITY, SBA HAS PROMULGATED SMALL BUSINESS SIZE REGULATIONS FOUND AT PART 121 OF CHAPTER I OF TITLE 13 OF THE CODE OF FEDERAL REGULATIONS, WHICH HAVE THE FORCE AND EFFECT OF LAW. SEE 15 U.S.C. 634(B)(6); OTIS STEEL PRODUCTS CORP. V. UNITED STATES, 161 CT. CL. 694 (1963); 53 COMP. GEN. 434 (1973). SECTION 121.3-4 OF 13 CFR AUTHORIZES THE SBA REGIONAL DIRECTOR TO ISSUE INITIAL DETERMINATIONS AS TO SIZE. SECTION 121.3-6(A) PROVIDES THAT THE SIZE APPEALS BOARD SHALL REVIEW APPEALS FROM SIZE DETERMINATIONS MADE PURSUANT TO SECTION 121.3-4, AND SHALL MAKE FINAL DECISIONS AS TO WHETHER THE DETERMINATION SHOULD BE AFFIRMED, REVERSED OR MODIFIED. THIS PROCESS WAS EXHAUSTED BY THE JANUARY 24, 1974, DECISION OF THE SIZE APPEALS BOARD DETERMINING GAHAGAN TO BE SMALL BUSINESS CONCERN.

NOTWITHSTANDING THIS SIZE DETERMINATION BY SBA, THE INCLUSION OF THIS ASPR IN THE SOLICITATION PLACED A FURTHER ADMINISTRATIVE OBSTACLE IN THE PATH OF GAHAGAN TO BE ELIGIBLE FOR AWARD OF THIS SMALL BUSINESS SET ASIDE CONTRACT. WE BELIEVE IT SIGNIFICANT THAT THE 40-PERCENT REQUIREMENT IS FOUND IN SUBPART "G" OF CHAPTER "I" OF ASPR, ENTITLED "SMALL BUSINESS CONCERNS" AND ASPR 1-701.1(A)(2A CONTAINS DEFINITIONS OF SMALL BUSINESS FOR THE CONSTRUCTION AND DREDGING INDUSTRY.

IN OUR VIEW, THE CLEAR EFFECT OF THE 40-PERCENT PROVISION IS TO IMPOSE REQUIREMENTS BEYOND THOSE OF SBA TO RECEIVING AWARDS AS SMALL BUSINESS. THE ASPR PROVISION IS AN ADMINISTRATIVE REFINEMENT WHICH GOES SIGNIFICANTLY BEYOND THAT PROMULGATED BY SBA. IT IS URGED THAT SINCE SBA WAS AWARE OF THE ASPR REQUIREMENT AND PARTICIPATED IN ITS FORMATION, THAT SBA HAS SANCTIONED IT. WE DO NOT BELIEVE THAT SBA CAN ABDICATE ITS EXCLUSIVE ROLE IN THIS SIZE AREA MANDATED BY THE CONGRESS BY ACQUIESCENCE OR INACTION. SBA ADVANCES THE VIEW THAT THE DEPARTMENT OF DEFENSE POSSESSES THE AUTHORITY TO REGULATE THE AMOUNT OF PERMISSIBLE SUBCONTRACTING. SEE H.R. NO. 2341, 89TH CONGRESS, 2D SESSION 31, 150 (1966); SUBCOMMITTEE ON GOVERNMENT PROCUREMENT, SELECT COMMITTEE ON SMALL BUSINESS OF THE HOUSE OF REPRESENTATIVES, IMPROVEMENTS IN GOVERNMENT SMALL BUSINESS PROCUREMENT PRACTICES (COMM. PRINT 1970). AS A GENERAL PROPOSITION, WE AGREE. HOWEVER, THE DEPARTMENT OF DEFENSE CANNOT EXERCISE ITS AUTHORITY TO REGULATE THE AMOUNT OF SUBCONTRACTING THROUGH THE DEVICE OF A SIZE STANDARD.

THE CORPS CONTENDS THAT THE 40-PERCENT REQUIREMENT EFFECTS A SOCIO ECONOMIC GOAL IN FURTHERANCE OF THE SMALL BUSINESS ACT TO PREVENT SMALL BUSINESS FROM ACTING AS A BROKER FOR LARGE BUSINESS DREDGING CONTRACTORS. WHILE WE RECOGNIZE THE LEGITIMACY OF ITS CONCERN, THE PARTICULAR ASPR REQUIREMENT ENCROACHES ON SBA'S EXCLUSIVE JURISDICTION.

IN OTHER INSTANCES, SBA HAS EXERCISED ITS STATUTORY PREROGATIVE TO LIMIT THE EXTENT OF SUBCONTRACTING PERMISSIBLE TO LARGE BUSINESS. SEE 13 CFR SECTIONS 121.3-16(1) CONCERNING KIT ASSEMBLIES; 121.3-8(C) CONCERNING NONMANUFACTURERS, AND 121.3-9(B) FOR SUBCONTRACTING LIMITATION IN TIMBER SALES. WE BELIEVE THAT SIMILAR REGULATORY ACTION SHOULD BE TAKEN BY SBA IN THIS SITUATION. WITHOUT THE UNDERLYING STATUTORY AUTHORITY OF SBA TO RESTRICT COMPETITION, ASPR 1-701.1(A)(2A CONSTITUTES AN UNDUE RESTRICTION ON COMPETITION.

THEREFORE, WE CONCLUDE THE IFB IS LEGALLY DEFECTIVE. CONSEQUENTLY, WE RECOMMEND THAT THE DREDGING REQUIREMENTS BE RESOLICITED WITHOUT THE 40- PERCENT SUBCONTRACTING LIMITATION. ALSO, BY SEPARATE LETTERS WE ARE BRINGING OUR CONCLUSIONS TO THE ATTENTION OF THE SECRETARY OF DEFENSE AND ADMINISTRATOR, SMALL BUSINESS ADMINISTRATION, FOR THEIR CORRECTIVE ACTION.