B-174911, JUL 6, 1973

B-174911: Jul 6, 1973

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YOU ASK "WHETHER OR NOT A VIOLATION OF THE DEFENSE APPROPRIATION ACT OCCURS WHEN THE DEPARTMENT OF DEFENSE CONTRACTS FOR SERVICES FROM THE SBA AT A PRICE WHICH IS HIGHER THAN THE SERVICES COULD BE OBTAINED IF THE GOVERNMENT CONTRACTED WITH PRIVATE PARTIES BY EITHER WAY OF NEGOTIATION OR COMPETITIVE BIDDING.". WE BELIEVE THAT WE HAVE ALREADY RESPONDED TO YOUR QUESTION IN OUR DECISION OF APRIL 6. WE STATED THAT SINCE THE MATERIAL ISSUES INVOLVED IN THIS PROTEST WERE ALSO INVOLVED IN LITIGATION IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WASHINGTON (PACIFIC COAST UTILITIES SERVICE. WE RESPONDED TO THIS CONTENTION AS FOLLOWS: WE HAVE EXAMINED COPIES OF VARIOUS PLEADINGS FILED ON BEHALF OF YOUR CLIENT IN CONNECTION WITH THE REFERENCED LITIGATION.

B-174911, JUL 6, 1973

DENIAL OF REQUEST FOR REVIEW OF OUR LETTER OF MARCH 8, 1973, DENYING PROTEST WRITTEN ON BEHALF OF PACIFIC COAST UTILITIES SERVICE, INC. QUESTION OF PROPRIETY OF APPLICATION OF SECTION 8(A) OF THE SMALL BUSINESS ACT IN LIGHT OF DEFENCE APPROPRIATION ACT SETTLED BY U.S. COURT OF APPEALS FOR THE FIFTH CIRCUIT IN RAY BAILL TRASH HAULING, INC. V. KLEPPE, NO. 72-1163.

TO JEPPSON AND BERMAN:

WE REFER TO YOUR LETTER DATED MARCH 20, 1973, CONTENDING THAT OUR DECISION B-174911, MARCH 8, 1973, ON BEHALF OF YOUR CLIENT PACIFIC COAST UTILITIES SERVICE, INCORPORATED (PACIFIC), DID NOT RESPOND TO YOUR BASIC PROTEST FOR A DETERMINATION AS TO WHETHER OR NOT SECTION 8(A) OF THE SMALL BUSINESS ACT VIOLATED THE DEFENSE APPROPRIATION ACT. SPECIFICALLY, YOU ASK "WHETHER OR NOT A VIOLATION OF THE DEFENSE APPROPRIATION ACT OCCURS WHEN THE DEPARTMENT OF DEFENSE CONTRACTS FOR SERVICES FROM THE SBA AT A PRICE WHICH IS HIGHER THAN THE SERVICES COULD BE OBTAINED IF THE GOVERNMENT CONTRACTED WITH PRIVATE PARTIES BY EITHER WAY OF NEGOTIATION OR COMPETITIVE BIDDING."

WE BELIEVE THAT WE HAVE ALREADY RESPONDED TO YOUR QUESTION IN OUR DECISION OF APRIL 6, 1972. BRIEFLY, BY LETTER DATED JANUARY 5, 1972, YOU PROTESTED IN BEHALF OF PACIFIC AGAINST THE AWARD OF A JANITORIAL SERVICES CONTRACT AT THE PUGET SOUND NAVAL SHIPYARD, BREMERTON, WASHINGTON, TO THE SBA UNDER SECTION 8(A) OF THE SMALL BUSINESS ACT. ON FEBRUARY 14, 1972, B -174911, WE STATED THAT SINCE THE MATERIAL ISSUES INVOLVED IN THIS PROTEST WERE ALSO INVOLVED IN LITIGATION IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WASHINGTON (PACIFIC COAST UTILITIES SERVICE, INC. V. MELVIN LAIRD, SECRETARY OF DEFENSE, CIVIL ACTION FILE NO. 329-71C2), WE WOULD NOT RENDER A DECISION ON THE MERITS OF THE PROTEST.

ON MARCH 10, 1972, YOU REQUESTED RECONSIDERATION OF OUR DECISION ON THE GROUND THAT THE PACIFIC PROTEST RELATED TO THE PROPRIETY OF THE DEPARTMENT OF THE NAVY AWARD TO THE SBA, WHEREAS THE COURT ACTION INVOLVED THE PROPRIETY OF SBA AWARDING A SUBCONTRACT UNDER THE AUTHORITY OF THE SMALL BUSINESS ACT. IN OUR DECISION OF APRIL 6, 1972, WE RESPONDED TO THIS CONTENTION AS FOLLOWS:

WE HAVE EXAMINED COPIES OF VARIOUS PLEADINGS FILED ON BEHALF OF YOUR CLIENT IN CONNECTION WITH THE REFERENCED LITIGATION. WHILE THE MAIN THRUST OF THE ARGUMENTS RELATE TO THE SBA'S MINORITY ENTERPRISE PROGRAM UNDER SECTION 8(A) OF THE SMALL BUSINESS ACT, 15 U.S.C. 637(A)(2), IT IS ALSO CLEAR THAT SEVERAL AVERMENTS RELATE TO THE PROPRIETY OF THE NAVY'S AWARD OF A "REPLACEMENT CONTRACT TO THE SMALL BUSINESS ADMINISTRATION, TO THE EXCLUSION OF ALL OTHERS, AND WITHOUT ACCEPTING ANY COMPETITIVE BIDS THEREON OR PUBLICLY ADVERTISING SAID REPLACEMENT CONTRACT." SEE, FOR EXAMPLE, AVERMENTS NOS. 17 AND 18 IN THE COMPLAINT FOR PERMANENT INJUNCTION. THEREFORE, WE BELIEVE THAT THE AWARD BY THE NAVY TO SBA IS A MATERIAL ISSUE IN THE PENDING LITIGATION.

IN ANY CASE, 15 U.S.C. 637(A)(1) AUTHORIZES SBA TO ENTER INTO CONTRACTS WITH ANY GOVERNMENT AGENCY WITH PROCUREMENT POWERS AND THE PROCURING OFFICER IS AUTHORIZED TO LET THE CONTRACT TO SBA "UPON SUCH TERMS AND CONDITIONS" AS MAY BE AGREED BETWEEN SBA AND THE PROCURING AGENCY. SUCH A PROVISION IS INCONSISTENT WITH THE CONCEPT THAT THE SBA SIMPLY HAS THE RIGHT TO COMPETE FOR THE PROCUREMENT TOGETHER WITH AND ON THE SAME TERMS AS OTHER BIDDERS OR OFFERORS. ON THE CONTRARY, THE PROVISION CLEARLY CONTEMPLATES AWARD TO SBA WITHOUT COMPETITION.

THE PURPOSE OF OUR LETTER OF MARCH 8, 1973, WAS FURTHER TO ADVISE YOU THAT ON JANUARY 5, 1973, THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT RULED THAT THE SBA MAY ACCEPT CONTRACT AWARDS FROM OTHER GOVERNMENT AGENCIES AND SUBCONTRACT THE WORK TO SOCIALLY OR ECONOMICALLY DISADVANTAGED PERSONS UNDER THE PROCEDURES ADOPTED BY SBA (RAY BAILLIE TRASH HAULING, INCORPORATED V. KLEPPE, NO. 72-1163).

ACCORDINGLY, WE FIND NO REASON TO REOPEN THE MATTER AT THIS TIME.

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