B-211073.3, AUG 20, 1984

B-211073.3, AUG 20, 1984

CONTRACTS - SMALL BUSINESS CONCERNS - AWARDS - SIZE STATUS - RECERTIFICATION - ELIGIBILITY FOR AWARD DIGEST: AIR FORCE PROPERLY AWARDED CONTRACT SET-ASIDE FOR SMALL BUSINESS TO A FIRM THE SMALL BUSINESS ADMINISTRATION (SBA) SIZE APPEALS BOARD HAD FOUND WAS LARGE THE PREVIOUS YEAR, SINCE THE APPROPRIATE SBA REGIONAL OFFICE RECERTIFIED THE FIRM AS A SMALL BUSINESS, BASED ON EFFORTS TO RESTRUCTURE OWNERSHIP AND MANAGEMENT, AFTER THE SIZE APPEALS BOARD FINDING.

THE HONORABLE STEVE SYMMS UNITED STATES SENATOR BOX 1190 BOISE, IDAHO 83701:

THIS RESPONDS TO YOUR LETTER DATED FEBRUARY 9, 1984, IN WHICH YOU REQUESTED OUR OFFICE TO INVESTIGATE SMALL BUSINESS SET-ASIDE CONTRACTS FOR AIRFIELD AND STREET MARKING AWARDED TO STRIPE-A-ZONE, INC. (SAZ) BY THE AIR FORCE. YOUR LETTER WAS SUBMITTED ON BEHALF OF RICHARD BRIGGS FOR ETERNA-LINE CORPORATION. MR. BRIGGS' CONCERN IS THAT SAZ HAS BEEN AWARDED CONTRACTS IN 1982, 1983 AND 1984 THAT WERE SET ASIDE FOR SMALL BUSINESSES, EVEN THOUGH THE FIRM ALLEGEDLY DID NOT MEET THE ELIGIBILITY REQUIREMENTS FOR SUCH CONCERNS.

WE ASKED BOTH THE AIR FORCE AND THE SMALL BUSINESS ADMINISTRATION (SBA) TO SUBMIT DOCUMENTED REPORTS ON THIS MATTER. BOTH DID SO, THE SBA BY LETTER OF MAY 11, AND THE AIR FORCE BY LETTERS OF MAY 18 AND JULY 19 (COPIES ENCLOSED), AND OUR RESPONSE IS BASED ON THEIR SUBMISSIONS. THEY INDICATE THAT THE AWARDS TO SAZ WERE PROPER.

THE AIR FORCE EXPLAINS THAT IN FISCAL YEAR 1982, IT ISSUED AN INVITATION FOR BIDS SETTING ASIDE THE SERVICES FOR SMALL BUSINESSES, AND RECEIVED FOUR BIDS, INCLUDING ONE FROM SAZ; ETERNA-LINE CORPORATION DID NOT BID. THE CONTRACTING OFFICER THEN RECEIVED PROTESTS OF THE SIZE STATUS OF SAZ AND TWO OF THE OTHER BIDDERS. WHILE THE PROTESTS WERE PENDING BEFORE THE SBA, THE AIR FORCE DETERMINED THAT THE FOURTH FIRM'S BID PRICE WAS UNREASONABLE, AND SOLICITED PROPOSALS FROM THE OTHER THREE BIDDERS TO PERFORM THE SERVICES ON A SHORT-TERM, EMERGENCY BASIS. THIS SOLICITATION ALSO WAS SET ASIDE FOR SMALL BUSINESSES, AND RESULTED IN A 1-MONTH CONTRACT AWARD TO SAZ PRIOR TO ANY RULING FROM SBA ON SAZ'S SIZE STATUS. THE SBA DALLAS REGIONAL OFFICE SUBSEQUENTLY DETERMINED SAZ AND THE TWO OTHER ORIGINAL BIDDERS ALL TO BE OTHER THAN SMALL. SAZ APPEALED THE REGIONAL OFFICE'S DETERMINATION TO THE SBA SIZE APPEALS BOARD, WHICH DENIED THE APPEAL.

SAZ NEVERTHELESS OBTAINED CONTRACTS FOR THE DURATION OF FISCAL YEAR 1982 BECAUSE THE AIR FORCE CANCELED THE INVITATION SET ASIDE FOR SMALL BUSINESSES AND ISSUED UNRESTRICTED COMPETITIVE SOLICITATIONS, UNDER WHICH SAZ WAS THE LOW OFFEROR. THE REASON THESE CONTRACTS WERE NOT SET ASIDE WAS THAT, IN VIEW OF THE SBA'S SIZE DETERMINATIONS, THE AIR FORCE WAS AWARE OF ONLY ONE SMALL BUSINESS CONCERN AVAILABLE TO PERFORM THE SERVICES. IN THIS RESPECT, DEFENSE ACQUISITION REGULATION (DAR), SEC. 1- 706.5(A)(1), REPRINTED IN 32 C.F.R. PTS. 1-39 (1983), PROVIDES THAT A PROCUREMENT MAY BE SET ASIDE FOR SMALL BUSINESS CONCERNS ONLY IF THERE IS A REASONABLE EXPECTATION OF SUFFICIENT COMPETITION SO THAT AN AWARD WILL BE MADE AT A REASONABLE PRICE.

IN BOTH FISCAL YEARS 1983 AND 1984, THE AIR FORCE AGAIN SET ASIDE THE PROCUREMENTS FOR SMALL BUSINESSES. THE AGENCY AWARDED EACH CONTRACT TO SAZ EVEN THOUGH THE SBA SIZE APPEALS BOARD HAD DETERMINED SAZ TO BE OTHER THAN SMALL FOR THE PURPOSE OF THE PRIOR YEAR'S PROCUREMENT. THE AIR FORCE'S REASON WAS THAT SUBSEQUENT TO EACH SIZE APPEALS BOARD DETERMINATION AND PRIOR TO EACH AWARD, THE SBA DALLAS REGIONAL OFFICE RECERTIFIED SAZ TO BE SMALL UNDER THE APPLICABLE SIZE STANDARD AND THUS ELIGIBLE FOR THE SET-ASIDE AWARD. (THE RECERTIFICATION POSSIBILITY IS REFERENCED IN THE DAR AT SEC. 1-703, AND IN THE SBA'S REGULATIONS AT 13 C.F.R. SEC. 121.3 (1984)). THE RECORD SHOWS THAT THE RECERTIFICATIONS WERE BASED ON SAZ'S EFFORTS TO RESTRUCTURE ITS CORPORATE OWNERSHIP AND MANAGEMENT TO SATISFY SBA'S ELIGIBILITY REQUIREMENTS, AND THERE IS NOTHING TO INDICATE THAT SAZ'S EFFORTS WERE IN BAD FAITH OR THAT THE REGIONAL OFFICE LACKED A REASONABLE BASIS FOR ITS DETERMINATIONS.

FINALLY, WE NOTE THAT WHILE COMPETING BIDDERS FILED SIZE PROTESTS UNDER BOTH THE 1983 AND 1984 PROCUREMENTS, THE AIR FORCE AWARDED THE CONTRACTS BEFORE THE PROTESTS' RESOLUTIONS BASED ON DETERMINATIONS THAT THE CONTRACTS MUST BE AWARDED WITHOUT DELAY TO PROTECT THE PUBLIC INTEREST. SEE DAR, SEC. 1-703(B)(3)(IV). WE FURTHER POINT OUT THAT NONE OF THE PARTIES TO THE 1984 SIZE PROTEST, WHICH INCLUDED ETERNA LINE CORPORATION, APPEALED THE REGIONAL OFFICE'S RESPONSE THAT SAZ WAS SMALL FOR THE PURPOSE OF THAT PROCUREMENT.

THUS, THE AIR FORCE AND THE SBA SUBMISSIONS ESTABLISH THAT SAZ WAS ELIGIBLE FOR EACH CONTRACT RECEIVED AT THE TIME OF EACH AWARD. THEREFORE SEE NO LEGAL BASIS TO OBJECT TO THE AWARDS.