B-157217, OCT. 11, 1965

B-157217: Oct 11, 1965

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TO INSTRUMENT SYSTEMS CORPORATION: FURTHER REFERENCE IS MADE TO YOUR LETTER DATED SEPTEMBER 3. YOUR LETTER QUESTIONS THE PROPRIETY OF THE AWARD BECAUSE ASTRONAUTICS CORPORATION DID NOT HAVE IN BEING OPERATING AND QUALIFIED FIRMS WHICH WERE CAPABLE OF PERFORMING IN THE LABOR SURPLUS AREA AND COULD NOT SUBCONTRACT 50 PERCENT OF THE CONTRACT PRICE TO HURLEY. YOU ALSO RAISE THE QUESTION AS TO WHETHER IT IS THE INTENT OF THE REGULATIONS TO PROVIDE WORK TO EXISTING FACILITIES LOCATED IN LABOR SURPLUS AREAS OR TO BUILD ADDITIONAL FACILITIES IN THOSE AREAS. YOU STATE FURTHER THAT ASTRONAUTICS IS A DOMINANT FACTOR IN THE AREA OF THE PROCUREMENT ITEM AND AS SUCH DOES NOT QUALIFY AS A SMALL BUSINESS CONCERN AS DESCRIBED IN THE ARMED SERVICES PROCUREMENT REGULATION.

B-157217, OCT. 11, 1965

TO INSTRUMENT SYSTEMS CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED SEPTEMBER 3, 1965, REQUESTING REVIEW OF DECISION B-157217, DATED AUGUST 26, 1965, WHICH DENIED YOUR PROTEST OF AWARD TO ASTRONAUTICS CORPORATION OF AMERICA OF THE SET-ASIDE PORTION UNDER NAVY INVITATION FOR BIDS NO. IFB 600-246 65. YOUR LETTER QUESTIONS THE PROPRIETY OF THE AWARD BECAUSE ASTRONAUTICS CORPORATION DID NOT HAVE IN BEING OPERATING AND QUALIFIED FIRMS WHICH WERE CAPABLE OF PERFORMING IN THE LABOR SURPLUS AREA AND COULD NOT SUBCONTRACT 50 PERCENT OF THE CONTRACT PRICE TO HURLEY, WISCONSIN, OR BLOOMSBURG, PENNSYLVANIA. YOU ALSO RAISE THE QUESTION AS TO WHETHER IT IS THE INTENT OF THE REGULATIONS TO PROVIDE WORK TO EXISTING FACILITIES LOCATED IN LABOR SURPLUS AREAS OR TO BUILD ADDITIONAL FACILITIES IN THOSE AREAS. YOU STATE FURTHER THAT ASTRONAUTICS IS A DOMINANT FACTOR IN THE AREA OF THE PROCUREMENT ITEM AND AS SUCH DOES NOT QUALIFY AS A SMALL BUSINESS CONCERN AS DESCRIBED IN THE ARMED SERVICES PROCUREMENT REGULATION, PARAGRAPH 1- 701.1.

ASTRONAUTICS WAS A SMALL BUSINESS FIRM WHICH REPRESENTED THAT OVER 50 PERCENT OF THE CONTRACT COST WOULD BE INCURRED IN A LABOR SURPLUS AREA WHICH FACT WAS A SUFFICIENT PREREQUISITE TO AWARD. CONTRACTS MADE ON SUCH A BASIS ARE MONITORED AFTER AWARD TO INSURE COMPLIANCE.

THE PREFERENCE GIVEN TO LABOR SURPLUS AREA CONCERNS IN THE AWARD OF GOVERNMENT CONTRACTS HAD ITS INCEPTION IN THE POLICIES DECLARED IN THE DEFENSE PRODUCTION ACT OF 1950, AS AMENDED (50 U.S.C. 2061-2166). DEFENSE MANPOWER POLICY NO. 4 (REVISED), 32A CFR, CHAPTER 1 (DMP 4), ISSUED BY THE OFFICE OF CIVIL AND DEFENSE MOBILIZATION PURSUANT TO EXECUTIVE ORDERS NOS. 10480 AND 10773, AS AMENDED, DECLARES THAT IT IS THE POLICY OF THE GOVERNMENT "TO ENCOURAGE THE PLACING OF CONTRACTS AND FACILITIES IN AREAS OF PERSISTENT OR SUBSTANTIAL LABOR SURPLUS.' FURTHER, DMP 4 DIRECTS ALL PROCUREMENT AGENCIES "TO AWARD NEGOTIATED PROCUREMENT CONTRACTS TO CONTRACTORS WHO WILL PERFORM A SUBSTANTIAL PROPORTION OF THE PRODUCTION ON THOSE CONTRACTS WITHIN LABOR SUPRLUS AREAS.' THESE POLICIES HAVE BEEN IMPLEMENTED BY THE DEPARTMENT OF DEFENSE IN PART 8, ARMED SERVICES PROCUREMENT REGULATION (ASPR). IT APPEARS, THEREFORE, THAT THE REGULATIONS AUTHORIZE PREFERENCE BEING GIVEN TO FIRMS WHICH WILL PERFORM THE WORK IN LABOR SURPLUS AREAS IN EITHER EXISTING OR NEWLY BUILT FACILITIES.

THE BID OF ASTRONAUTICS MET THESE ADVERTISED AND REGULATORY REQUIREMENTS AND, THEREFORE, QUALIFIED ASTRONAUTICS AS A LABOR SURPLUS AREA CONCERN. -153267, JUNE 8, 1964.

WHILE THE CONTRACTING OFFICER HAS NOT MADE A DETERMINATION AS TO WHETHER A SUFFICIENT QUANTITY OF WORK CAN BE SUBCONTRACTED OR A SUFFICIENT QUANTITY OF SUPPLIES PURCHASED IN HURLEY AND BLOOMSBURG TO MAKE UP THE REQUIRED PERCENTAGE OF COST INCURRED, SUCH DETERMINATION IS NOT NECESSARY AT THE TIME THE CONTRACT IS AWARDED. B 146323,SEPTEMBER 18, 1961. SUCH A DETERMINATION MUST BE GUIDED BY THE PROVISIONS OF ASPR 1-801 (II) AND WE HAVE SAID THAT THE PURPOSE FOR WHICH AN AWARD IS LIMITED TO LABOR SURPLUS AREA CONCERNS IS SERVED AS LONG AS THE CONTRACTOR ABIDES BY ITS AGREEMENT AND PERFORMS IN AN AREA FALLING WITHIN THE SAME CATEGORY AS THE AREA OF PERFORMANCE SHOWN IN ITS BID B-153267, SUPRA.

THE CONTRACTING OFFICER IS, UNDER ASPR 1-703 (B) (1) (TIME LIMITATION), PRECLUDED FROM CONSIDERING YOUR ALLEGATIONS CONCERNING THE SMALL BUSINESS STATUS OF ASTRONAUTICS. FURTHERMORE, THE PROCEDURE LEADING TO THE ISSUANCE OF THE SMALL BUSINESS ADMINISTRATION (SBA) CERTIFICATE OF COMPETENCY ON JUNE 28, 1965, INCLUDED A DETERMINATION BY SBA THAT ASTRONAUTICS WAS NOT DOMINANT IN ITS FIELD OR OPERATION AND, CONSEQUENTLY, THAT ASTRONAUTICS WAS A SMALL BUSINESS CONCERN.

UNDER THE TERMS OF THE SMALL BUSINESS ACT, AS AMENDED, 15 U.S.C. 637 (B) (6), THE SMALL BUSINESS ADMINISTRATION IS EMPOWERED TO DETERMINE WHICH FIRMS WITHIN ANY INDUSTRY ARE TO BE DESIGNATED AS SMALL BUSINESS CONCERNS FOR PURPOSES OF GOVERNMENT PROCUREMENT, AND SUCH DETERMINATIONS ARE CONCLUSIVE UPON THE PROCUREMENT OFFICERS OF THE GOVERNMENT. WE HAVE CONSISTENTLY TAKEN THE POSITION THAT WE HAVE NO AUTHORITY TO QUESTION THE SIZE DETERMINATIONS OF THE SMALL BUSINESS ADMINISTRATION EXCEPT UPON CLEAR AND CONVINCING PROOF THAT THE FINDING IS ARBITRARY OR CLEARLY ERRONEOUS. B-149575, SEPTEMBER 12, 1962; B 136751, SEPTEMBER 25, 1958; B-130725, MAY 13, 1957. CF. 35 COMP. GEN. 233 AND 37 ID. 679. NO SUCH PROOF HAS BEEN SUBMITTED IN THIS INSTANCE.

IN VIEW OF THE FOREGOING, WE MUST CONCLUDE THAT THERE HAS BEEN PRESENTED NO BASIS WHICH WOULD JUSTIFY A DETERMINATION BY US THAT THE AWARD TO ASTRONAUTICS CORPORATION OF AMERICA BY THE DEPARTMENT OF THE NAVY WAS IMPROPER. ACCORDINGLY, THE DECISION OF AUGUST 26, 1965, IS AFFIRMED.

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