B-182403, APR 3, 1975

B-182403: Apr 3, 1975

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FAILURE OF SMALL BUSINESS TO SUBMIT BUSINESS PLAN TO SBA FOR DETERMINATION OF ELIGIBILITY UNDER 8(A) PROGRAM IS PROPER BASIS FOR SBA TO NOT CONSIDER PARTICULAR FIRM FOR AWARD IN QUESTION. 2. DECISION TO TERMINATE CONCERN FROM SBA'S 8(A) PROGRAM IS DISCRETIONARY WITHIN SBA AND SUBJECT TO REVIEW ONLY IF SBA HAS NOT FOLLOWED ITS REGULATIONS. 3. PROTEST AGAINST AWARD OF CONTRACT UNDER SECTION 8(A) OF SMALL BUSINESS ACT IS DENIED SINCE THERE IS NO EVIDENCE IN RECORD THAT 20 PERCENT SET- ASIDE LIMIT SET FORTH IN SBA POLICY NO. 60-40 WAS EXCEEDED BY SBA AND. GAO WILL NOT OBJECT TO 8(A) CONTRACTING IN INSTANT CASE. THEIR PROTESTS WILL BE DISCUSSED INDIVIDUALLY. SEARCH PATROL HAS STATED THAT IT WAS NOT GIVEN FAIR CONSIDERATION FOR AWARD IN THIS MATTER.

B-182403, APR 3, 1975

1. FAILURE OF SMALL BUSINESS TO SUBMIT BUSINESS PLAN TO SBA FOR DETERMINATION OF ELIGIBILITY UNDER 8(A) PROGRAM IS PROPER BASIS FOR SBA TO NOT CONSIDER PARTICULAR FIRM FOR AWARD IN QUESTION. 2. DECISION TO TERMINATE CONCERN FROM SBA'S 8(A) PROGRAM IS DISCRETIONARY WITHIN SBA AND SUBJECT TO REVIEW ONLY IF SBA HAS NOT FOLLOWED ITS REGULATIONS. 3. PROTEST AGAINST AWARD OF CONTRACT UNDER SECTION 8(A) OF SMALL BUSINESS ACT IS DENIED SINCE THERE IS NO EVIDENCE IN RECORD THAT 20 PERCENT SET- ASIDE LIMIT SET FORTH IN SBA POLICY NO. 60-40 WAS EXCEEDED BY SBA AND, THEREFORE, GAO WILL NOT OBJECT TO 8(A) CONTRACTING IN INSTANT CASE.

SEARCH PATROL AGENCY, INC., COASTAL SERVICES, INC.:

BY LETTERS DATED OCTOBER 21 AND 31, 1974, COASTAL SERVICES, INC. (COASTAL), AND SEARCH PATROL AGENCY, INC. (SEARCH PATROL), RESPECTIVELY, PROTESTED AWARD OF ANY 8(A) CONTRACTS TO FIRMS OTHER THAN THEMSELVES FOR THE PROVISION OF CUSTODIAL AND SECURITY GUARD SERVICES TO THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION FACILITIES IN THE NEW ORLEANS AREA. EACH HAS PROTESTED ON A DIFFERENT BASIS, AND THEREFORE, THEIR PROTESTS WILL BE DISCUSSED INDIVIDUALLY.

SEARCH PATROL HAS STATED THAT IT WAS NOT GIVEN FAIR CONSIDERATION FOR AWARD IN THIS MATTER. THE SMALL BUSINESS ADMINISTRATION (SBA) HAS ANSWERED THIS ALLEGATION BY STATING THAT SEARCH PATROL HAD NOT SUBMITTED A BUSINESS PLAN WHICH IS A PREREQUISITE FOR CONSIDERATION OF ELIGIBILITY IN THE 8(A) PROGRAM. SEE 13 C.F.R. SECS. 124.8-1 AND 124.8 2 (1974). SINCE SEARCH PATROL HAS SUBMITTED NO FURTHER COMMENTS ON ITS PROTEST, WE FIND NO BASIS TO CONCLUDE THAT SBA IMPROPERLY EXCLUDED SEARCH PATROL FOR THIS AWARD.

COASTAL HAS BASED ITS PROTEST ON TWO GROUNDS. FIRST, COASTAL CONTENDS THAT IT WAS ARBITRARILY TERMINATED FROM SBA'S 8(A) PROGRAM DUE TO THE FACT THAT IT WAS IN THE 8(A) PROGRAM FOR 3 YEARS. COASTAL STATES THAT NO CONSIDERATION WAS GIVEN TO ITS BUSINESS COMPETITIVENESS, FINANCIAL STATUS, MARKET CONDITIONS OR THE AVAILABILITY OF A FAVORABLE MARKET FROM WHICH IT COULD SOLICIT AND OBTAIN CONTRACTS.

SBA, ON THE OTHER HAND, STATES THAT IT DETERMINED THAT COASTAL HAD SUBSTANTIALLY ACHIEVED THE OBJECTIVES OF ITS APPROVED BUSINESS PLAN. THEREFORE, PURSUANT TO 13 C.F.R. SEC. 124.8-2(E) (1974), ENTITLED "PROGRAM COMPLETION AND TERMINATION," SBA NOTIFIED COASTAL BY LETTER DATED SEPTEMBER 13, 1973, THAT ITS PARTICIPATION IN THE 8(A) PROGRAM WAS COMPLETED.

IN OUR OPINION, SEC. 124.8-2(E) PLACES WITHIN SBA THE DISCRETIONARY AUTHORITY TO DETERMINE WHEN A CONCERN HAS SUBSTANTIALLY ACHIEVED THE OBJECTIVE OF ITS BUSINESS PLAN. OUR OFFICE WILL NOT QUESTION THIS DETERMINATION UNLESS IT APPEARS THAT SBA HAS NOT FOLLOWED ITS REGULATIONS GOVERNING MATTERS OF THIS NATURE. BASED UPON THE RECORD BEFORE OUR OFFICE, WE FIND NO BASIS TO QUESTION SBA'S DETERMINATION, AS IT APPEARS THAT SBA CONFORMED TO THE REQUIREMENT OF SEC. 124.8-2(E) WARRANTING TERMINATION FROM THE 8(A) PROGRAM.

SECONDLY, COASTAL QUESTIONS WHETHER THE SUBJECT AWARD MAY PROPERLY BE SET ASIDE UNDER THE SBA 8(A) PROGRAM.

SECTION 8(A) OF THE SMALL BUSINESS ACT (15 U.S.C. SEC. 637(A) (1970)) EMPOWERS THE SMALL BUSINESS ADMINISTRATION (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. UNDER REGULATIONS ISSUED PURSUANT TO THE ABOVE STATUTORY AUTHORITY, THE SBA HAS DETERMINED THAT FIRMS WHICH ARE OWNED OR CONTROLLED BY ECONOMICALLY OR SOCIALLY DISADVANTAGED PERSONS SHOULD BE THE BENEFICIARIES OF THE 8(A) PROGRAM.

SECTION 124.8-2(B) OF TITLE 13 OF THE CODE OF FEDERAL REGULATIONS SETS FORTH THE CRITERIA FOR THE SELECTION OF 8(A) CONTRACTS. THAT SECTION READS AS FOLLOWS:

"(B) SELECTION OF POTENTIAL CONTRACTS -

SBA WILL, IN CONSULTATION AND COOPERATION WITH OTHER GOVERNMENT DEPARTMENTS AND AGENCIES, SELECT PROPOSED PROCUREMENTS SUITABLE FOR PERFORMANCE BY SECTION 8(A) CONCERNS. IN MAKING THESE SELECTIONS, AMONG THE FACTORS GIVEN CONSIDERATION WILL BE THE PERCENTAGE OF ALL SIMILAR CONTRACTS AWARDED UNDER THE SECTION 8(A) PROGRAM OVER A RELEVANT PERIOD OF TIME, ISSUANCE OF PRIOR PUBLIC SOLICITATION OF THE PROCUREMENT UNDER A SMALL BUSINESS SET-ASIDE, THE PROBABILITY THAT AN ELIGIBLE CONCERN COULD OBTAIN A COMPETITIVE AWARD OF THE CONTRACT, AND THE EXTENT TO WHICH OTHER SMALL CONCERNS HAVE HISTORICALLY BEEN DEPENDENT UPON THE CONTRACT IN QUESTION FOR A SIGNIFICANT PERCENTAGE OF THEIR SALES."

THE SELECTION PROCESS HAS BEEN FURTHER DEFINED BY A POLICY STATEMENT OF SBA (SBA POLICY NO. 60-40, EFFECTIVE NOVEMBER 9, 1971), WHICH STATES THAT NO QUANTITY IN EXCESS OF 20 PERCENT MAY BE REQUESTED TO BE SET ASIDE WITHOUT APPROVAL BY THE ASSOCIATE ADMINISTRATOR FOR PROCUREMENT AND MANAGEMENT ASSISTANCE OF SBA. SBA ADVISES THAT PROJECTIONS ARE MADE WHEN THERE IS A POSSIBILITY OF THE 20-PERCENT FIGURE BEING EXCEEDED AND SUCH PROJECTIONS WILL BE MADE IN THIS CASE ONCE A SUFFICIENT NUMBER OF AWARDS FOR CUSTODIAL AND SECURITY GUARD SERVICES HAVE BEEN MADE. THEREFORE, SINCE THERE IS NO EVIDENCE TO SUGGEST THAT THE 20-PERCENT LIMITATION HAS BEEN EXCEEDED, IT APPEARS THAT SBA IS COMPLYING WITH ITS REGULATIONS AND POLICY, AND OUR OFFICE WILL NOT OBJECT TO 8(A) CONTRACTING IN THE INSTANT CASE. B-178752, OCTOBER 11, 1973.

ACCORDINGLY, THE PROTESTS OF SEARCH PATROL AND COASTAL ARE DENIED.