B-199392, JUL 23, 1980

B-199392: Jul 23, 1980

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DIGEST: PROTEST OF DECISION TO SET ASIDE PROCUREMENT UNDER SECTION 8(A) OF SMALL BUSINESS ACT IS DISMISSED SINCE SUCH DECISIONS ARE BY LAW FOR CONTRACTING AGENCY AND SMALL BUSINESS ADMINISTRATION. THE PROTESTER STATES THAT THE PROCUREMENT IS OF SUFFICIENT COMPLEXITY AND MAGNITUDE TO DEMAND LARGE BUSINESS INVOLVEMENT. THAT AWARD TO A SECTION 8(A) CONTRACTOR "IS NOT IN THE BEST INTERESTS OF THE GOVERNMENT IN LIGHT OF THE INCREASED COST OF PERFORMANCE ***. " AND THAT THE INTENDED AWARDEE DOES NOT HAVE THE "CAPACITY" TO PERFORM. AGENCY CONTRACTING OFFICERS IN TURN ARE AUTHORIZED TO LET THE CONTRACT TO SBA UPON SUCH TERMS AND CONDITIONS AS MAY BE AGREED UPON. THE FACT THAT AN AGENCY INITIALLY INTENDS TO CONDUCT AN UNRESTRICTED PROCUREMENT BUT SUBSEQUENTLY SETS THE PROCUREMENT ASIDE UNDER THE SECTION 8(A) PROGRAM IS NOT ITSELF LEGALLY OBJECTIONABLE.

B-199392, JUL 23, 1980

DIGEST: PROTEST OF DECISION TO SET ASIDE PROCUREMENT UNDER SECTION 8(A) OF SMALL BUSINESS ACT IS DISMISSED SINCE SUCH DECISIONS ARE BY LAW FOR CONTRACTING AGENCY AND SMALL BUSINESS ADMINISTRATION.

AMERICAN ELECTRONIC LABORATORIES, INC.:

AMERICAN ELECTRONIC LABORATORIES, INC. PROTESTS THE DECISION OF THE DEPARTMENT OF THE ARMY (ARMY) AND THE SMALL BUSINESS ADMINISTRATION (SBA) TO SET ASIDE A PROCUREMENT FOR COMMUNICATIONS EQUIPMENT UNDER THE SECTION 8(A) PROGRAM. THE PROTESTER STATES THAT THE PROCUREMENT IS OF SUFFICIENT COMPLEXITY AND MAGNITUDE TO DEMAND LARGE BUSINESS INVOLVEMENT, THAT AWARD TO A SECTION 8(A) CONTRACTOR "IS NOT IN THE BEST INTERESTS OF THE GOVERNMENT IN LIGHT OF THE INCREASED COST OF PERFORMANCE ***," AND THAT THE INTENDED AWARDEE DOES NOT HAVE THE "CAPACITY" TO PERFORM. ADDITIONALLY, THE PROTESTER STATES THAT, BASED UPON REPRESENTATIONS MADE BY AUTHORIZED GOVERNMENT INDIVIDUALS THAT THIS WOULD BE AN UNRESTRICTED PROCUREMENT, IT EXPENDED $100,000 OF ITS OWN FUNDS WHILE PREPARING TO MEET THIS ARMY REQUIREMENT.

SECTION 8(A) OF THE SMALL BUSINESS ACT AUTHORIZES THE SBA TO ENTER INTO CONTRACTS WITH ANY GOVERNMENT AGENCY WITH PROCUREMENT POWERS. 15 U.S.C. SEC. 637(A) (1976), AS AMENDED BY PUB. L. 95-507, OCT. 24, 1978, 92 STAT. 1757. AGENCY CONTRACTING OFFICERS IN TURN ARE AUTHORIZED TO LET THE CONTRACT TO SBA UPON SUCH TERMS AND CONDITIONS AS MAY BE AGREED UPON. LIGHT OF THE BROAD DISCRETION VESTED IN THE AGENCIES IN THIS RESPECT, WE GENERALLY DO NOT REVIEW DECISIONS TO ENTER INTO SECTION 8(A) CONTRACTS UNLESS IT APPEARS THAT THE DECISION RESULTED FROM FRAUD OR BAD FAITH. C-Z TIGHT, INC., 59 COMP.GEN. 122 (1979), 79-2 CPD 394. THE FACT THAT AN AGENCY INITIALLY INTENDS TO CONDUCT AN UNRESTRICTED PROCUREMENT BUT SUBSEQUENTLY SETS THE PROCUREMENT ASIDE UNDER THE SECTION 8(A) PROGRAM IS NOT ITSELF LEGALLY OBJECTIONABLE. FOR EXAMPLE, IN E-Z TIGHT WE UPHELD AN AGENCY'S CANCELLATION OF A SOLICITATION ONE DAY BEFORE BID OPENING SO THAT IT COULD MAKE AWARD TO SBA UNDER THE SECTION 8(A) PROGRAM, EVEN THOUGH THE PROTESTER ALLEGED THAT IT HAD INCURRED SUBSTANTIAL BIDDING COSTS IN PREPARING ITS BID.

IN THIS CASE, WE UNDERSTAND THAT THE 8(A) SET-ASIDE DECISION IS BASED ON THE SBA'S DECISION, PURSUANT TO SECTION 8(A)(1)(B) OF THE SMALL BUSINESS ACT, TO HAVE THE PROCUREMENT SET ASIDE. UNDER THAT PROVISION OF THE ACT AND AN IMPLEMENTING PRESIDENTIAL MEMORANDUM, ARMY CONTRACTING OFFICERS MAY NOT EXERCISE DISCRETION AND REFUSE TO MAKE A SECTION 8(A) AWARD, BUT MUST ENTER INTO AN 8(A) CONTRACT WITH SBA, ASSUMING TERMS AND CONDITIONS ARE AGREED UPON, WHENEVER THE SBA CERTIFIES THAT IT IS "COMPETENT AND RESPONSIBLE" TO PERFORM THE CONTRACT. UNDER THE CIRCUMSTANCES, WE FIND NO LEGAL BASIS TO OBJECT TO THE SET-ASIDE DECISION OR TO QUESTION THE CAPABILITY OF THE ELIGIBLE FIRM TO WHICH THE WORK WILL BE SUBCONTRACTED BY SBA.

WITH REGARD TO THE INCREASED COSTS INVOLVED IN THE PROPOSED AWARD, WE POINT OUT THAT UNDER THE 8(A) PROGRAM IT IS NOT UNUSUAL FOR CONTRACTS TO BE FUNDED IN AMOUNTS EXCEEDING PRICES OBTAINABLE THROUGH UNRESTRICTED COMPETITION. SEE KINGS POINT MFG. CO., 54 COMP.GEN. 913 (1975), 75-1 CPD 264. WHATEVER ADDITIONAL PRICE THE GOVERNMENT PAYS WHEN IT UTILIZES 8(A) SET-ASIDES REPRESENTS THE COST OF FURTHERING THE SOCIO-ECONOMIC GOAL OF THE 8(A) PROGRAM - HELPING 8(A) QUALIFIED FIRMS TO BECOME SELF- SUFFICIENT. LEO JOURNAGAN CONSTRUCTION CO., INC., B-197673, FEBRUARY 25, 1980, 80-1 CPD 158.

THE PROTEST IS DISMISSED.