B-226996, JUN 5, 1987, 87-1 CPD 576

B-226996: Jun 5, 1987

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CONTRACTING OFFICER'S DETERMINATION THAT A SMALL BUSINESS CONCERN IS NONRESPONSIBLE IS NOT FOR REVIEW WHERE THE PROTESTER HAS NOT SHOWN EITHER POSSIBLE FRAUD OR BAD FAITH ON THE PART OF GOVERNMENT OFFICIALS. THE PROTESTER BELIEVES THAT THE AGENCY SHOULD HAVE ACQUIRED THE SYSTEMS UNDER SECTION 8(A) OF THE SMALL BUSINESS ACT. SEC. 637(A) (1982). /1/ UNIVERSAL ALSO CONTENDS THAT THE NAVY FAILED TO FOLLOW APPLICABLE PROCEDURES WHEN INITIALLY DETERMINING THAT UNIVERSAL WAS NOT A RESPONSIBLE VENDOR TO PERFORM UNDER THE SUBJECT SOLICITATION. STATES THAT IT BELIEVED IT WAS IN LINE FOR AWARD WHEN THE LOW OFFEROR EITHER WITHDREW OR WAS DISQUALIFIED. UNIVERSAL STATES THAT IT WAS FOUND NONRESPONSIBLE BECAUSE IT WAS UNABLE TO FURNISH DCASMA WITH REQUESTED FINANCIAL INFORMATION.

B-226996, JUN 5, 1987, 87-1 CPD 576

PROCUREMENT - SOCIO-ECONOMIC POLICIES - SMALL BUSINESS 8(A) SUBCONTRACTING - CONTRACT AWARDS - ADMINISTRATIVE DISCRETION DIGEST: 1. APPLICABLE REGULATIONS GRANT AGENCIES BROAD DISCRETION TO DECIDE WHETHER TO ENTER INTO SECTION 8(A) CONTRACTS. THE REGULATIONS PRESCRIBE A RECOMMENDED COURSE OF ACTION TO BE FOLLOWED IN MAKING SUCH A DETERMINATION; THEY DO NOT, HOWEVER, REQUIRE SPECIFIC CONDUCT. PROCUREMENT - SOCIO-ECONOMIC POLICIES - SMALL BUSINESSES - RESPONSIBILITY - COMPETENCY CERTIFICATION - NEGATIVE DETERMINATION 2. CONTRACTING OFFICER'S DETERMINATION THAT A SMALL BUSINESS CONCERN IS NONRESPONSIBLE IS NOT FOR REVIEW WHERE THE PROTESTER HAS NOT SHOWN EITHER POSSIBLE FRAUD OR BAD FAITH ON THE PART OF GOVERNMENT OFFICIALS.

UNIVERSAL CANVAS, INC.:

UNIVERSAL CANVAS, INC., A SMALL BUSINESS CONCERN, PROTESTS THE DECISION OF THE NAVY AVIATION SUPPLY OFFICE, PHILADELPHIA, PENNSYLVANIA, TO CONDUCT A COMPETITIVE PROCUREMENT FOR WEAPONS-READY SERVICE SHELTER AND HANDLING SYSTEMS UNDER REQUEST FOR PROPOSALS NO. N00383-86-R-5778. THE PROTESTER BELIEVES THAT THE AGENCY SHOULD HAVE ACQUIRED THE SYSTEMS UNDER SECTION 8(A) OF THE SMALL BUSINESS ACT, 15 U.S.C. SEC. 637(A) (1982). /1/ UNIVERSAL ALSO CONTENDS THAT THE NAVY FAILED TO FOLLOW APPLICABLE PROCEDURES WHEN INITIALLY DETERMINING THAT UNIVERSAL WAS NOT A RESPONSIBLE VENDOR TO PERFORM UNDER THE SUBJECT SOLICITATION.

WE DISMISS THE PROTEST.

UNIVERSAL STATES THAT THE SMALL BUSINESS ADMINISTRATION (SBA) TWICE CONTACTED THE NAVY, ONCE ON OCTOBER 1, 1985 AND AGAIN ON JUNE 16, 1986, REQUESTING THAT THE PENDING PROCUREMENT FOR WEAPONS SHELTER SUBASSEMBLY UNITS BE RESERVED FOR NEGOTIATION UNDER SECTION 8(A). THE SBA MADE THIS REQUEST IN SUPPORT OF AN APPROVED BUSINESS PLAN SUBMITTED BY UNIVERSAL, WHICH HAD PREVIOUSLY PRODUCED THE ITEM FOR THE CONTRACTING ACTIVITY. ACCORDING TO THE PROTESTER, THE NAVY DID NOT RESPOND TO EITHER REQUEST.

DESPITE SBA'S INTEREST IN THE ACQUISITION, THE PROCURING ACTIVITY ON OCTOBER 22, 1986 ISSUED THE PROTESTED SOLICITATION. UNIVERSAL, WHICH APPARENTLY SUBMITTED THE SECOND-LOW OFFER, STATES THAT IT BELIEVED IT WAS IN LINE FOR AWARD WHEN THE LOW OFFEROR EITHER WITHDREW OR WAS DISQUALIFIED. IN ACCORD WITH APPLICABLE PROCEDURES, THE NAVY REQUESTED A PREAWARD SURVEY OF UNIVERSAL TO BE PERFORMED BY THE DEFENSE CONTRACT ADMINISTRATION SERVICES MANAGEMENT AREA (DCASMA), SAN ANTONIO, TEXAS. UNIVERSAL STATES THAT IT WAS FOUND NONRESPONSIBLE BECAUSE IT WAS UNABLE TO FURNISH DCASMA WITH REQUESTED FINANCIAL INFORMATION. SUBSEQUENTLY, THE MATTER WAS REFERRED TO THE SBA UNDER ITS CERTIFICATE OF COMPETENCY (COC) PROCEDURES, WHERE IT IS CURRENTLY PENDING.

AS FOR THE FIRST BASIS OF PROTEST, THAT ALLEGEDLY THE NAVY VIOLATED PROCUREMENT REGULATIONS BY IGNORING SBA'S REQUESTS FOR A SECTION 8(A) CONTRACT, UNIVERSAL ACKNOWLEDGES THAT IT IS UNTIMELY. MOREOVER, UNIVERSAL HAS NOT SHOWN THAT A VIOLATION OF REGULATIONS OCCURRED HERE.

CONTRACTING OFFICERS, IN THEIR DISCRETION, ARE AUTHORIZED TO AWARD SECTION 8(A) CONTRACTS TO THE SBA, BASED UPON MUTUALLY AGREEABLE TERMS AND CONDITIONS. FEDERAL ACQUISITION REGULATION (FAR), 48 C.F.R. SEC. 19.801(B)(1) (1986); WELBILT ELECTRONICS DIE CORP., B-210289, FEB. 1, 1983, 83-1 CPD PARA. 114. IN LIGHT OF THAT BROAD DISCRETION, OUR OFFICE WILL REVIEW A CONTRACTING OFFICER'S DECISION NOT TO ENTER INTO SUCH A CONTRACT ONLY IF THERE IS A SHOWING OF POSSIBLE BAD FAITH OR FRAUD ON THE PART OF GOVERNMENT OFFICIALS OR THAT SPECIFIC REGULATIONS HAVE BEEN VIOLATED. SPLENDID DRY CLEANERS, B-220141.2, DEC. 24, 1985, 85-2 CPD PARA. 711.

UNIVERSAL CONTENDS THAT THE CONTRACTING OFFICER HERE FAILED TO COMPLY WITH CERTAIN SPECIFIC PROCEDURES, SET FORTH IN SUBPART 19.8 OF THE FAR, TO BE FOLLOWED IN RESPONSE TO AN SBA REQUEST FOR A COMMITMENT TO ENTER INTO AN 8(A) CONTRACT FOR A PARTICULAR PROJECT. SPECIFICALLY, UNIVERSAL CONTENDS THAT THE CONTRACTING OFFICER DID NOT COMPLY WITH A REQUIREMENT, IMPLICIT IN SEC. 19.801, THAT PROCURING ACTIVITIES RESPOND TO AN SBA REQUEST FOR COMMITMENT. IN ADDITION, THE FIRM ALLEGES THAT IN VIOLATION OF SEC. 19.804(A), THE CONTRACTING OFFICER DID NOT PERFORM A CONTEMPORANEOUS EVALUATION OF THE REQUEST FOR COMMITMENT AND FAILED TO ABIDE BY THE TERMS OF SEC. 19.804(B), WHICH REQUIRES THE CONTRACTING OFFICER, UPON COMPLETION OF SUCH AN EVALUATION, TO NOTIFY THE SBA OF THE AGENCY'S PLANS TO PLACE AN 8(A) CONTRACT.

SECTION 19.801, HOWEVER, DOES NOT REQUIRE A CONTRACTING AGENCY TO RESPOND TO AN SBA REQUEST. FURTHER, SEC. 19.804(A) DOES NOT MANDATE THAT AN AGENCY FOLLOW RIGID GUIDELINES IN EVALUATING AN SBA REQUEST FOR A COMMITMENT. THIS SECTION PROVIDES IN PERTINENT PART THAT "THE AGENCY SHOULD EVALUATE" AN SBA REQUEST WITH REGARD TO SEVERAL LISTED FACTORS. GIVEN THE AGENCY'S BROAD DISCRETION TO DECIDE WHETHER TO ENTER INTO SECTION 8(A) CONTRACTS, THE WORD "SHOULD" SIMPLY PRESCRIBES A RECOMMENDED COURSE OF ACTION; IT DOES NOT REQUIRE SPECIFIC CONDUCT. CF. 48 C.F.R. SEC. 2.101 (DEFINING THE TERM "SHALL" AS DENOTING THE IMPERATIVE). THUS THE CONTRACTING OFFICER DID NOT VIOLATE APPLICABLE REGULATIONS IN DECIDING TO CONDUCT THIS PROCUREMENT ON A COMPETITIVE BASIS.

WITH REGARD TO UNIVERSAL'S REQUEST THAT OUR OFFICE REVIEW THE NAVY'S INITIAL NONRESPONSIBILITY DETERMINATION, THE SBA HAS CONCLUSIVE AUTHORITY TO REVIEW A CONTRACTING OFFICER'S NONRESPONSIBILITY DETERMINATION BY ISSUING OR REFUSING TO ISSUE A COC. 15 U.S.C. SEC. 637(B)(7). WE WILL NOT GENERALLY REVIEW A CONTRACTING OFFICER'S NONRESPONSIBILITY DETERMINATION RELATING TO A SMALL BUSINESS CONCERN, SINCE SUCH A REVIEW WOULD BE TANTAMOUNT TO SUBSTITUTION OF OUR BUSINESS JUDGMENT FOR THAT OF THE SBA. AERO ENGINEERING CORP., B-219745, SEPT. 24, 1985, 85-2 CPD PARA. 331. OUR OFFICE THEREFORE LIMITS ITS REVIEW TO INSTANCES WHERE THE PROTESTER SHOWS EITHER POSSIBLE FRAUD OR BAD FAITH ON THE PART OF THE GOVERNMENT OFFICIALS. ID. NEITHER HAS BEEN DEMONSTRATED HERE. ACCORDINGLY, WE WILL NOT CONSIDER THIS BASIS OF PROTEST.

THE PROTEST IS DISMISSED.

/1/ UNDER THE 8(A) PROGRAM, THE SMALL BUSINESS ADMINISTRATION ENTERS INTO CONTRACTS WITH GOVERNMENT AGENCIES AND ARRANGES FOR PERFORMANCE BY AWARDING SUBCONTRACTS TO SOCIALLY AND ECONOMICALLY DISADVANTAGED SMALL BUSINESS CONCERNS.