B-167223, SEP. 4, 1969

B-167223: Sep 4, 1969

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LOW BIDDER WHO WAS DETERMINED TO BE INELIGIBLE FOR AWARD BECAUSE OF STATUS AS LARGE BUSINESS CONCERN ON DATE OF BID OPENING AND WHO WAS DETERMINED TO LACK RESPONSIBILITY FOR AWARD FOR CONTRACT THAT COULD NOT BE DELAYED MAY NOT HAVE AWARD OBJECTED TO ALTHOUGH AFTER AWARD SMALL BUSINESS ADMINISTRATION APPEALS BOARD FOUND THAT LOW BIDDER WAS SMALL BUSINESS AT TIME OF BID SUBMISSION. TO ASSOCIATED GRAPHICS: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF JUNE 13. WAS BELIEVED TO BE A LARGE BUSINESS CONCERN. THE SBA REGIONAL OFFICE DETERMINED ON THE BASIS OF INFORMATION SUBMITTED BY YOU AND APPEARING ON YOUR APPLICATION FOR SIZE DETERMINATION THAT YOUR COMPANY WAS LARGE BUSINESS AT THE TIME OF OPENING OF THE BIDS.

B-167223, SEP. 4, 1969

BID PROTEST - BIDDER RESPONSIBILITY - SMALL BUSINESS CONCERNS DECISION TO ASSOCIATED GRAPHICS, LOW BIDDER, DENYING PROTEST AGAINST SMALL BUSINESS SET-ASIDE CONTRACT TO SECOND LOW BIDDER FOR MANAGEMENT OF AIR FORCE PRINTING PLANT FOR FISCAL YEAR 1970 ON BASIS THAT PROTESTANT LACKED RESPONSIBILITY. LOW BIDDER WHO WAS DETERMINED TO BE INELIGIBLE FOR AWARD BECAUSE OF STATUS AS LARGE BUSINESS CONCERN ON DATE OF BID OPENING AND WHO WAS DETERMINED TO LACK RESPONSIBILITY FOR AWARD FOR CONTRACT THAT COULD NOT BE DELAYED MAY NOT HAVE AWARD OBJECTED TO ALTHOUGH AFTER AWARD SMALL BUSINESS ADMINISTRATION APPEALS BOARD FOUND THAT LOW BIDDER WAS SMALL BUSINESS AT TIME OF BID SUBMISSION.

TO ASSOCIATED GRAPHICS:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF JUNE 13, 1969, AND LETTERS OF JUNE 12 AND 13, 1969, PROTESTING THE AWARD OF A CONTRACT UNDER INVITATION FOR BIDS NO. F04693-69-B-0020, ISSUED BY THE BASE PROCUREMENT BRANCH, 6592D SUPPORT GROUP, AIR FORCE UNIT POST OFFICE, LOS ANGELES, CALIFORNIA.

THE INVITATION REQUESTED BIDS, ON A 100-PERCENT SMALL BUSINESS SET ASIDE BASIS, FOR SERVICES REQUIRED TO MANAGE AND OPERATE THE AIR FORCE FIELD PRINTING PLANT AT LOS ANGELES AIR FORCE STATION, CALIFORNIA, FOR FISCAL YEAR 1970. YOUR COMPANY, THE FISCAL YEAR 1969 CONTRACTOR, SUBMITTED THE LOWEST BID AT THE OPENING DATE OF MAY 28, 1969. HOWEVER, DUE TO YOUR UNSATISFACTORY PERFORMANCE UNDER THE FISCAL YEAR 1969 CONTRACT, THE CONTRACTING OFFICER MADE A DETERMINATION THAT YOUR COMPANY DID NOT MEET THE MINIMUM STANDARDS FOR A RESPONSIBLE PROSPECTIVE CONTRACTOR PRESCRIBED BY PARAGRAPH 1-903.1 (III) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) AND PROPOSED TO REJECT THE BID OF YOUR COMPANY FOR LACK OF RESPONSIBILITY.

HOWEVER, UPON REVIEW BY THE LOS ANGELES REGIONAL OFFICE, SMALL BUSINESS ADMINISTRATION (SBA) PURSUANT TO ASPR 1-703, A QUESTION AROSE AS TO YOUR SMALL BUSINESS SIZE STATUS BECAUSE PHIPPS AND BECKER, INC., WHICH DOES BUSINESS AS ASSOCIATED GRAPHICS, WAS BELIEVED TO BE A LARGE BUSINESS CONCERN. ON JUNE 19, 1969, THE SBA REGIONAL OFFICE DETERMINED ON THE BASIS OF INFORMATION SUBMITTED BY YOU AND APPEARING ON YOUR APPLICATION FOR SIZE DETERMINATION THAT YOUR COMPANY WAS LARGE BUSINESS AT THE TIME OF OPENING OF THE BIDS. YOU WERE ADVISED ON THAT DATE BY THE SBA REGIONAL OFFICE THAT ON THE DATE OF THE OPENING OF BIDS, MAY 28, 1969, PHIPPS AND BECKER WAS OWNED 50 PERCENT BY THE SASS-WIDDERS CORPORATION, AN AFFILIATE OF COMPREHENSIVE DESIGNERS, INC. YOU WERE ADVISED ALSO THAT THE LATTER CONCERN WAS NOT SMALL BUSINESS AND THAT, THEREFORE, SASS-WIDDERS CORPORATION, TOO, WAS OTHER THAN SMALL AND AT THAT TIME HAD THE POWER TO CONTROL PHIPPS AND BECKER. THIS DECISION UPON APPEAL WAS UPHELD ON JULY 1, 1969, BY THE SBA SIZE APPEALS BOARD. IT HELD:

"E. SUBPARAGRAPH 121.3-15 (C) (3) (I) OF THE SMALL BUSINESS SIZE STANDARDS REGULATION PROVIDES THAT: "-A PARTY IS CONSIDERED TO CONTROL OR HAVE THE POWER TO CONTROL A CONCERN IF HE CONTROLS OR HAS THE POWER TO CONTROL 50 PERCENT OR MORE OF ITS VOTING STOCK.- "IN VIEW OF THE FACT THAT SASS-WIDDERS CORPORATION OWNED 50 PERCENT OF THE VOTING STOCK OF PHIPPS AND BECKER, INC., ON MAY 28, 1969, IT HAD AT LEAST NEGATIVE POWER TO CONTROL PHIPPS AND BECKER, INC., ON THE DATE OF BID OPENING. THEREFORE, PHIPPS AND BECKER, INC., AND SASS-WIDDERS CORPORATION AND/OR COMPREHENSIVE DESIGNERS, INC., WERE AFFILIATED ON THAT DATE. ACCORDINGLY, PHIPPS AND BECKER, INC., WAS NOT A SMALL CONCERN. HOWEVER, ASSUMING THAT THE ATTEMPTED SALE PRIOR TO OBTAINING THE REQUIRED PERMISSION WAS NOT VOID AB INITIO, PHIPPS AND BECKER, INC., BECAME A SMALL BUSINESS ON JUNE 6, 1969, WHICH WAS THE EARLIEST DATE IT COULD HAVE EFFECTED A TRANSFER OF 50 PERCENT OF THE STOCK TO GERALD BECKER.

"F. IN VIEW OF THE FOREGOING, THE BOARD FINDS THAT PHIPPS AND BECKER, INC., NOW QUALIFIES AS A SMALL BUSINESS CONCERN, ALTHOUGH IT DID NOT SO QUALIFY ON THE DATE OF BID OPENING.'

PRIOR TO THE DATE OF THE APPEALS BOARD DECISION, THE CONTRACTING OFFICER DETERMINED ON JUNE 13, 1969, THAT AWARD OF THE CONTRACT COULD NOT BE DELAYED BEYOND JUNE 23, 1969, TO ASSURE UNINTERRUPTED PRINTING SERVICES ON AND AFTER JULY 1, 1969. THIS DETERMINATION WAS MADE PURSUANT TO ASPR 2- 407.9 (B) (3) PROVIDING FOR THE AWARD OF CONTRACTS NOTWITHSTANDING PROTESTS AGAINST AWARDS IF THE URGENCY OF THE SITUATION DEMANDS A PROMPT AWARD. AWARD WAS MADE TO THE SECOND LOW BIDDER ON OR ABOUT JUNE 23, 1969, IN VIEW OF THE ADVERSE SIZE DETERMINATION MADE ON JUNE 19, 1969.

UPON REVIEW OF THIS PROCUREMENT, IT DOES NOT APPEAR TO BE NECESSARY TO CONSIDER THE MATTER OF YOUR RESPONSIBILITY AS A PROSPECTIVE CONTRACTOR SINCE THAT AWARD FACTOR HAS BEEN RENDERED ACADEMIC BY THE DECISION OF SBA THAT YOUR FIRM WAS INELIGIBLE TO RECEIVE AN AWARD BECAUSE OF ITS STATUS AS A LARGE BUSINESS CONCERN ON THE DATE OF BID OPENING. ALTHOUGH THE APPEALS BOARD FOUND THAT YOU WERE A SMALL BUSINESS CONCERN ON JUNE 6, 1969, THAT FINDING WAS NOT MADE UNTIL JULY 1, 1969, OR AFTER THE AWARD WAS MADE TO ANOTHER BIDDER ON AN URGENCY BASIS. THE AWARD THUS MADE WAS BASED ON THE ADVERSE DETERMINATION OF THE SBA REGIONAL OFFICE AND WAS AUTHORIZED UNDER ASPR 1-703 (B) (3) WHICH PROVIDES IN PART:

"/3) DETERMINATION BY SBA REGIONAL DIRECTOR. THE SBA REGIONAL DIRECTOR WILL DETERMINE THE SMALL BUSINESS STATUS OF THE QUESTIONED BIDDER OR OFFEROR AND NOTIFY THE CONTRACTING OFFICER AND THE BIDDER OR OFFEROR OF HIS DETERMINATION, AND AWARD MAY BE MADE ON THE BASIS OF THAT DETERMINATION. * * *.'

AS A GENERAL RULE, A BIDDER UNDER A SMALL BUSINESS SET-ASIDE MUST QUALIFY AS A SMALL BUSINESS BOTH AT THE TIME OF SUBMISSION OF THE BID AND AT THE TIME OF AWARD. 42 COMP. GEN. 108.

UNDER 15 U.S.C. 637 (B) (6), SBA IS AUTHORIZED TO DETERMINE WHICH FIRMS WITHIN ANY INDUSTRY ARE TO BE DESIGNATED AS SMALL BUSINESS CONCERNS FOR THE PURPOSE OF GOVERNMENT PROCUREMENT. THIS PROVISION OF LAW FURTHER PROVIDES THAT "OFFICES OF THE GOVERNMENT HAVING PROCUREMENT OR LENDING POWERS * * * SHALL ACCEPT AS CONCLUSIVE THE ADMINISTRATION'S DETERMINATION AS TO WHICH ENTERPRISES ARE TO BE DESIGNATED -SMALL BUSINESS CONCERNS-, AS AUTHORIZED AND DIRECTED UNDER THIS PARAGRAPH.' SINCE THE DECISION OF SBA, BY STATUTE, IS "CONCLUSIVE," WE FIND NO LEGAL BASIS TO QUESTION ITS DETERMINATION THAT YOUR FIRM WAS NOT A SMALL BUSINESS CONCERN AT THE DATE OF BID OPENING. SEE 44 COMP. GEN. 271.

YOUR ALLEGATIONS THAT THE CONTRACTING OFFICER IMPROPERLY ASSUMED SUPERVISION AND DIRECTION OF YOUR EMPLOYEES AND THAT THERE WAS COLLUSION BETWEEN AN EMPLOYEE OF THE SECOND LOW BIDDER AND THE CONTRACTING OFFICER IN DETERMINING YOUR FIRM TO BE A NONRESPONSIBLE BIDDER HAS BEEN INVESTIGATED BY THE DEPARTMENT OF THE AIR FORCE AND FOUND TO BE WITHOUT VALID BASIS. IN THE ABSENCE OF SUBSTANTIATING EVIDENCE OF YOUR CHARGES IN THIS REGARD, OUR OFFICE MUST ACCEPT THE ADMINISTRATIVE STATEMENT OF DENIAL.