B-181778, OCT 17, 1974

B-181778: Oct 17, 1974

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WAS NOT ABUSE OF DISCRETION SINCE NAVY DID NOT POSSESS PERSONAL KNOWLEDGE OF ALL EVIDENCE CONCERNING BUSINESS RELATIONSHIP OF LOW BIDDER AS TOLD TO IT DURING ORAL PROTEST. SECOND REQUEST FOR SIZE DETERMINATION RECEIVED AFTER AWARD WAS PROPERLY FORWARDED BY NAVY TO SBA FOR CONSIDERATION IN FUTURE PROCUREMENTS PURSUANT TO ASPR 1-703(B)(1)(C) (1974 ED.). INVITATION FOR BIDS (IFB) N62474-73-C-5220 WAS ISSUED BY THE WESTERN DIVISION. BIDS WERE OPENED ON JUNE 20. EMSCO WAS THE APPARENT LOW BIDDER. MORRILL ALLEGED THAT EMSCO IS A SUBSIDIARY OF ANOTHER LARGER CONSTRUCTION COMPANY. IT WAS MORRILL'S CONTENTION THAT THIS INTERLOCKING MANAGEMENT RELATIONSHIP DEPRIVED EMSCO OF ITS CLAIMED SMALL BUSINESS STATUS.

B-181778, OCT 17, 1974

1. NAVY CONTRACTING OFFICER'S FAILURE TO FURNISH EVIDENCE OR REQUEST ON OWN INITIATIVE SBA INVESTIGATION OF LOW BIDDER'S SIZE STATUS PURSUANT TO ASPR 1-703(B)(2) (1974 ED.) WAS NOT ABUSE OF DISCRETION SINCE NAVY DID NOT POSSESS PERSONAL KNOWLEDGE OF ALL EVIDENCE CONCERNING BUSINESS RELATIONSHIP OF LOW BIDDER AS TOLD TO IT DURING ORAL PROTEST; ASPR 1-703 (B)(1) (1974 ED.) MAKES IT PROTESTER'S RESPONSIBILITY TO SUPPLY DETAILED EVIDENCE TO SUPPORT REQUEST FOR SIZE DETERMINATION; AND ASPR 2-407.8 (A)(1) (1974 ED.) REQUIRES WRITTEN CONFIRMATION OF ORAL PROTEST BE SUBMITTED TO ENABLE AGENCY TO TAKE APPROPRIATE ACTION. 2. SECOND REQUEST FOR SIZE DETERMINATION RECEIVED AFTER AWARD WAS PROPERLY FORWARDED BY NAVY TO SBA FOR CONSIDERATION IN FUTURE PROCUREMENTS PURSUANT TO ASPR 1-703(B)(1)(C) (1974 ED.)

E. H. MORRILL COMPANY:

THIS PROTEST INVOLVES THE PROCEDURES FOLLOWED BY THE PROCURING ACTIVITY IN TRANSMITTING TO THE SMALL BUSINESS ADMINISTRATION (SBA) A PROTEST AGAINST THE LOW BIDDER'S SMALL BUSINESS STATUS UNDER A TOTAL SMALL BUSINESS SET-ASIDE PURSUANT TO THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-703(B)(1) (1974 ED.).

INVITATION FOR BIDS (IFB) N62474-73-C-5220 WAS ISSUED BY THE WESTERN DIVISION, NAVAL FACILITIES ENGINEERING COMMAND (NAVY) FOR SHIP WASTEWATER COLLECTION AT THE NAVAL AIR STATION, ALAMEDA, CALIFORNIA. BIDS WERE OPENED ON JUNE 20, 1974, AND EMSCO WAS THE APPARENT LOW BIDDER.

IN A TELEPHONE CONVERSATION OF JUNE 21, 1974, WITH AN OFFICIAL AT NAVY, COUNSEL FOR E. H. MORRILL COMPANY (MORRILL), THE SECOND LOW BIDDER, PROTESTED AGAINST ANY AWARD TO EMSCO, ALLEGING THAT THE LOW BIDDER DID NOT QUALIFY AS A SMALL BUSINESS. SPECIFICALLY, MORRILL ALLEGED THAT EMSCO IS A SUBSIDIARY OF ANOTHER LARGER CONSTRUCTION COMPANY, MCGUIRE & HESTER COMPANY, AND THAT THE TWO FIRMS MAINTAINED THE SAME BUSINESS ADDRESS. MOREOVER, MORRILL ADVISED NAVY THAT AN OFFICIAL OF MCGUIRE & HESTER HAD SIGNED EMSCO'S BID. IT WAS MORRILL'S CONTENTION THAT THIS INTERLOCKING MANAGEMENT RELATIONSHIP DEPRIVED EMSCO OF ITS CLAIMED SMALL BUSINESS STATUS.

IN THE COURSE OF THE ABOVE TELEPHONE CONVERSATION, MORRILL WAS ADVISED TO FILE A FORMAL PROTEST OF EMSCO'S SMALL BUSINESS STATUS PURSUANT TO ASPR 1- 703(B)(1) (1974 ED.). THIS SECTION PORVIDES IN PERTINENT PART:

"ANY BIDDER, OFFEROR, OR ANY OTHER INTERESTED PARTY MAY, IN CONNECTION WITH A CONTRACT INVOLVING A SMALL BUSINESS SET ASIDE OR OTHERWISE INVOLVING SMALL BUSINESS PREFERENTIAL CONSIDERATION, QUESTION THE SMALL BUSINESS STATUS OF ANY APPARENTLY SUCESSFUL BIDDER OR OFFEROR BY SENDING A WRITTEN PROTEST TO THE CONTRACTING OFFICER RESPONSIBLE FOR THE PARTICULAR PROCUREMENT. THE PROTEST SHALL CONTAIN THE BASIS FOR THE PROTEST TOGETHER WITH SPECIFIC DETAILED EVIDENCE SUPPORTING THE PROTESTANT'S CLAIM THAT SUCH BIDDER OR OFFEROR IS NOT A SMALL BUSINESS. ***"

ON JUNE 21, 1974, MORRILL FILED A WRITTEN PROTEST WHICH NAVY TRANSMITTED TO THE SBA ON JUNE 26, 1974. HOWEVER, MORRILL'S LETTER OF JUNE 21, 1974, DID NOT CONTAIN THE SPECIFIC ALLEGATIONS OF THE BUSINESS RELATIONSHIP OF EMSCO AND MCGUIRE & HESTER WHICH HAD BEEN COMMUNICATED TO NAVY BY TELEPHONE.

BY LETTER OF JUNE 28, 1974 SBA INFORMED MORRILL THAT ITS PROTEST HAD BEEN DENIED SINCE ITS PROTEST LETTER OF JUNE 21, 1974, DID NOT CONTAIN "SPECIFIC DETAILED EVIDENCE" AS REQUIRED BY ASPR 1-703(B)(1) (1974 ED.). AFTER RECEIVING NOTIFICATION OF SBA'S DENIAL OF THE PROTEST LODGED BY MORRILL, NAVY AWARDED THE CONTRACT OF EMSCO.

AFTER AWARD WAS MADE TO EMSCO, MORRILL AGAIN REQUESTED A FORMAL SIZE DETERMINATION, THIS TIME INCLUDING THE DETAILED EVIDENCE LACKING IN ITS PREVIOUS PROTEST. PURSUANT TO ASPR 1-703(B)(1)(C) (1974 ED.), NAVY FORWARDED THE PROTEST TO SBA FOR ITS CONSIDERATION. BY LETTER OF JULY 26, 1974, SBA NOTIFIED MORRILL THAT EMSCO HAD BEEN DETERMINED NOT TO BE A SMALL BUSINESS DUE TO THE INTERLOCKING MANAGEMENT RELATIONSHIP BETWEEN EMSCO AND MCGUIRE & HESTER. SINCE MORRILL'S REQUEST WAS RECEIVED AFTER THE AWARD TO EMSCO, SBA'S DETERMINATION AFFECTED ONLY FUTURE PROCUREMENTS AS PROVIDED IN THE ABOVE REGULATION.

MORRILL NOW CONTENDS THAT ITS FIRST SIZE DETERMINATION APPEAL WAS REJECTED BY SBA DUE TO THE NAVY'S FAILURE TO TRANSMIT TO SBA THE "DETAILED EVIDENCE" NECESSARY TO SUPPORT THE GENERAL ALLEGATIONS CONTAINED IN MORRILL'S PROTEST LETTER OF JUNE 21, 1974. MORRILL CONTENDS THAT AS A RESULT OF ITS TELEPHONE CONVERSATION WITH NAVY ON JUNE 21, 1974, NAVY HAD KNOWLEDGE OF THE SPECIFIC FACTS CONCERNING THE BUSINESS RELATIONSHIP OF EMSCO AND MCGUIRE & HESTER AND SHOULD HAVE TRANSMITTED SUCH INFORMATION TO SBA. MORRILL STATES THAT IT INCLUDED ONLY GENERAL ALLEGATIONS IN ITS LETTER OF JUNE 21, 1974, BECAUSE IT ASSUMED THAT NAVY WOULD SUPPLY THE DETAILED SUPPORTING EVIDENCE.

THE PROCEDURES FOR QUESTIONING THE SMALL BUSINESS STATUS OF A BIDDER IN A TOTAL SMALL BUSINESS SET-ASIDE PROCUREMENT ARE SET FORTH IN ASPR 1 703(B)(1) (1974 ED.). THE REGULATION CLEARLY REQUIRES THAT DETAILED EVIDENCE BE SET FORTH IN A LETTER PROTESTING THE SMALL BUSINESS STATUS OF A BIDDER IN A SMALL BUSINESS SET-ASIDE. FURTHERMORE, IT MIGHT BE NOTED THAT THE RECORD INDICATES THAT DURING THE TELEPHONE CONVERSATION OF JUNE 21, 1974, THE NAVY OFFICIAL READ THE ASPR PROVISION TO MORRILL'S COUNSEL AND ADVISED HIM THAT SPECIFIC INFORMATION AND EVIDENCE SHOULD BE INCLUDED IN ITS PROTEST LETTER.

WHILE THE CONTRACTING AGENCY, ON ITS OWN INITIATIVE, MAY NOTIFY SBA OF ANY BASIS FOR QUESTIONING A BIDDER'S SIZE STATUS AND MAY REQUEST RESOLUTION OF THE MATTERASPR 1-703(B)(2) (1974 ED.)), THE DECISION TO TAKE SUCH ACTION IS WITHIN THE CONTRACTING OFFICER'S GOOD FAITH DISCRETION. 165847, FEBRUARY 24, 1969. IN THIS CASE THE BASIS FOR QUESTIONING THE BIDDER'S SIZE STATUS WAS NOT DEVELOPED BY THE AGENCY BUT WAS BROUGHT TO NAVY'S ATTENTION BY MORRILL'S ORAL PROTEST. IT DOES NOT APPEAR THAT NAVY PROSSESSED PERSONAL KNOWLEDGE OF ALL THE EVIDENCE CONCERNING THE BUSINESS RELATIONSHIP BETWEEN EMSCO AND MCGUIRE & HESTER TOLD TO IT BY MORRILL. IF, AS HERE, SUCH AN ORAL PROTEST CANNOT BE RESOLVED, WRITTEN CONFIRMATION OF THE PROTEST IS REQUIRED TO ENABLE THE AGENCY TO TAKE APPROPRIATE ACTION. ASPR 2-407.8(A)(1) (1974 ED.).

BASED ON THE ABOVE, WE FEEL THAT THE NAVY ACTED IN ACCORDANCE WITH THE REGULATIONS IN TRANSMITTING ONLY THE PROTEST LETTER OF MORRILL TO SBA. FIND NOTHING IN THE REGULATIONS WHICH WOULD REQUIRE THE PROCURING ACTIVITY TO EXAMINE THE CONTENTS OF THE PROTESTER'S LETTER AND THEN SUPPLEMENT THE LETTER WITH MISSING INFORMATION OR EVIDENCE WHICH WAS ORALLY COMMUNICATED BEFORE FORWARDING THE PROTEST TO SBA. ON THE CONTRARY, ASPR 1-703(B)(1) (1974 ED.) PROVIDES THAT IT IS THE RESPONSIBILITY OF THE PROTESTER TO INCLUDE THE DETAILED EVIDENCE NECESSARY TO SUPPORT A REQUEST FOR A SIZE DETERMINATION. FOR THESE REASONS WE REJECT MORRILL'S CONTENTION THAT NAVY SHOULD HAVE SUPPLIED SBA WITH THE DETAILED EVIDENCE WHICH MORRILL OMITTED FROM ITS LETTER OF JUNE 21, 1974, AND IN VIEW OF SBA'S INITIAL REJECTION OF THE PROTEST WE ARE UNABLE TO OBJECT TO NAVY'S AWARD OF THE CONTRACT TO EMSCO.

FINALLY, IN CONNECTION WITH MORRILL'S PROTEST LETTER WRITTEN AFTER AWARD TO EMSCO CONTAINING SPECIFIC DETAILED EVIDENCE, WE NOTE THAT ASPR 1- 703(B)(1)(C) (1974 ED.) DIRECTS THE CONTRACTING OFFICER TO TAKE THE FOLLOWING ACTION ON PROTESTS RECEIVED AFTER AWARD:

"A PROTEST RECEIVED BY A CONTRACTING OFFICER AFTER AWARD OF A CONTRACT SHALL BE FORWARDED TO THE SMALL BUSINESS ADMINISTRATION DISTRICT OFFICE SERVING THE AREA IN WHICH THE PROTESTED CONCERN IS LOCATED WITH A NOTATION THEREON THAT AWARD HAS BEEN MADE. THE PROTESTANT SHALL BE NOTIFIED THAT AWARD HAS BEEN MADE AND THAT HIS PROTEST HAS BEEN FORWARDED TO SBA FOR ITS CONSIDERATION IN FUTURE ACTIONS."

NAVY'S FORWARDING OF MORRILL'S SECOND PROTEST TO THE SBA FOR ITS CONSIDERATION IN FUTURE ACTIONS WAS IN ACCORDANCE WITH THE ABOVE QUOTED REGULATION.

ACCORDINGLY, MORRILL'S PROTEST IS DENIED.