B-204093.2,L/M, SEP 4, 1981, OFFICE OF GENERAL COUNSEL

B-204093.2,L/M: Sep 4, 1981

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1981 YOU REQUESTED THAT WE REVIEW THE SMALL BUSINESS ADMINISTRATION (SBA) SIZE APPEALS BOARD DETERMINATION THAT FORTEC CONSTRUCTORS IS A SMALL BUSINESS UNDER SBA REGULATIONS AND THUS ELIGIBLE FOR AWARD OF A CONTRACT BY THE ARMY CORPS OF ENGINEERS UNDER A SMALL BUSINESS SET-ASIDE. ENCLOSED FOR YOUR INFORMATION IS A COPY OF OUR DECISION ON A PROTEST MADE BY ROY ANDERSON. WE DO NOT REVIEW SBA DETERMINATIONS REGARDING A BIDDER'S SIZE STATUS BECAUSE SBA IS EMPOWERED UNDER 15 U.S.C. 637(B)(6) (1976) TO MAKE CONCLUSIVE DETERMINATIONS REGARDING BIDDER SIZE STATUS. WE POINT OUT THAT SBA'S RELIANCE ON FORTEC'S TAX RETURNS TO ESTABLISH ITS SIZE IS CONTEMPLATED BY THE SBA REGULATIONS AND THAT THE REGULATIONS ALSO PERMIT A FIRM TO USE THE "COMPLETED CONTRACTS" ACCOUNTING METHOD OBJECTED TO BY THE PROTESTER.

B-204093.2,L/M, SEP 4, 1981, OFFICE OF GENERAL COUNSEL

PRECIS-UNAVAILABLE

TRENT LOTT, HOUSE OF REPRESENTATIVES:

BY LETTER OF JULY 20, 1981 YOU REQUESTED THAT WE REVIEW THE SMALL BUSINESS ADMINISTRATION (SBA) SIZE APPEALS BOARD DETERMINATION THAT FORTEC CONSTRUCTORS IS A SMALL BUSINESS UNDER SBA REGULATIONS AND THUS ELIGIBLE FOR AWARD OF A CONTRACT BY THE ARMY CORPS OF ENGINEERS UNDER A SMALL BUSINESS SET-ASIDE.

ENCLOSED FOR YOUR INFORMATION IS A COPY OF OUR DECISION ON A PROTEST MADE BY ROY ANDERSON, JR., INC., REGARDING THE SIZE APPEALS BOARD'S DETERMINATION. AS NOTED IN THE DECISION, WE DO NOT REVIEW SBA DETERMINATIONS REGARDING A BIDDER'S SIZE STATUS BECAUSE SBA IS EMPOWERED UNDER 15 U.S.C. 637(B)(6) (1976) TO MAKE CONCLUSIVE DETERMINATIONS REGARDING BIDDER SIZE STATUS. HOWEVER, WE POINT OUT THAT SBA'S RELIANCE ON FORTEC'S TAX RETURNS TO ESTABLISH ITS SIZE IS CONTEMPLATED BY THE SBA REGULATIONS AND THAT THE REGULATIONS ALSO PERMIT A FIRM TO USE THE "COMPLETED CONTRACTS" ACCOUNTING METHOD OBJECTED TO BY THE PROTESTER. SEE 13 C.F.R. SEC. 121.3-2(B) (1981).

ENCLOSURE

DIGEST:

GAO WILL NOT CONSIDER PROTEST WHICH OBJECTS TO SMALL BUSINESS ADMINISTRATION (SBA) SIZE DETERMINATION BECAUSE SBA IS EMPOWERED UNDER 15 U.S.C. SEC. 637(B)(6) TO MAKE CONCLUSIVE DETERMINATION REGARDING SIZE OF STATUS OF BIDDERS.

ROY ANDERSON, JR., INC. PROTESTS THE SMALL BUSINESS ADMINISTRATION (SBA) SIZE APPEALS BOARD'S DETERMINATION THAT FORTEC CONSTRUCTORS IS A SMALL BUSINESS UNDER APPLICABLE SIZE STANDARDS ESTABLISHED BY SBA. ANDERSON ALLEGES THAT THE SIZE APPEALS BOARD FAILED TO CONSIDER INFORMATION WHICH INDICATES THAT FORTEC WAS AWARDED CONTRACTS TOTALING OVER $58 MILLION OVER THE PAST THREE YEARS BY THE DEPARTMENT OF DEFENSE ALONE, EVEN THOUGH THE APPLICABLE SIZE STANDARD PROVIDED THAT AVERAGE ANNUAL RECEIPTS COULD NOT EXCEED $12 MILLION PER YEAR OVER THE PAST THREE YEARS. SEE 13 C.F.R. SEC. 121.3-8(A) (1981). INSTEAD, ANDERSON ASSERTS, THE SIZE APPEALS BOARD RELIED ON FORTEC'S TAX RETURNS TO DETERMINE FORTEC'S SIZE. ANDERSON STATES THAT UNDER SBA REGULATIONS A FIRM'S ANNUAL RECEIPTS MUST BE ESTABLISHED IN ACCORDANCE WITH GENERAL PRINCIPLES OF ACCOUNTING AND ARGUES THAT ANY "COMPLETED OPERATIONS ACCOUNTING METHOD THAT BLATANTLY UNDERSTATES THE GROSS RECEIPTS OF A COMPANY" IS NOT IN ACCORDANCE WITH SUCH PRINCIPLES.

OUR OFFICE GENERALLY DOES NOT REVIEW SIZE STATUS DETERMINATIONS BECAUSE SBA IS EMPOWERED UNDER 15 U.S.C. SEC. 637(B)(6) (1976) TO CONCLUSIVELY DETERMINE THE SIZE STATUS OF BIDDERS. GMP SCIENTIFIC CORPORATION, B-201356, JANUARY 6, 1981, 81-1 CPD 8. ALTHOUGH THE PROTESTER ALLEGES THAT THE SIZE APPEALS BOARD MISAPPLIED ITS OWN REGULATIONS AND THUS OUR OFFICE SHOULD REVIEW THIS MATTER, THE PROTESTER'S OBJECTIONS ESSENTIALLY RELATE TO THE SIZE APPEALS BOARD'S APPLICATION OF A SIZE STANDARD AND THE BOARD'S DECISION THAT FORTEC SATISFIES THE STANDARD. IN THIS REGARD, WE NOTE THAT THE SBA REGULATIONS PERMIT THE USE OF A "COMPLETED CONTRACTS" ACCOUNTING METHOD AND ALSO CONTEMPLATE THE CONSIDERATION OF A FIRM'S TAX RETURNS IN DETERMINING ANNUAL RECEIPTS. SEE 13 C.F.R. SEC. 121.3-2(B). THUS, IT APPEARS THAT THE PROTESTER'S OBJECTIONS DO NOT RELATE TO ANY FAILURE OF THE SIZE APPEALS BOARD TO FOLLOW ITS OWN PUBLISHED REGULATIONS.

SINCE THE PROTESTER OTHERWISE HAS NOT MADE A PRIMA FACIE SHOWING OF BAD FAITH OR FRAUD, SEE WYLE LABORATORIES, B-186526, SEPTEMBER 7, 1976, 76-2 CPD 223, WE WILL NOT CONSIDER THE MATTER.

THE PROTEST IS DISMISSED.