B-164677, APR. 16, 1969

B-164677, APR. 16, 1969

TO SURREY, KARASIK, GOULD AND GREENE:

FURTHER REFERENCE IS MADE TO YOUR PROTEST ON BEHALF OF ELECTROSPACE CORPORATION AGAINST THE FAILURE OF THE UNITED STATES ARMY ELECTRONICS COMMAND TO MAKE AN AWARD TO YOUR CLIENT PURSUANT TO INVITATION FOR BIDS NO. DAAB07-68-B-0348, FOR THE PROCUREMENT OF A QUANTITY OF AN/TVS 2 CREW- SERVED WEAPON NIGHT VISION SIGHTS AND ANCILLARY EQUIPMENT.

THE SUBJECT INVITATION WAS ISSUED ON MAY 25, 1968, AS A 2-YEAR, MULTIYEAR PROCUREMENT AND WAS A 100-PERCENT SMALL BUSINESS SET-ASIDE. THE DATE SPECIFIED FOR RECEIPT OF BIDS, AS AMENDED, WAS JUNE 19, 1968. ELECTROSPACE AGREED, AS PROVIDED IN THE INVITATION, THAT ITS OFFER WAS VALID FOR A PERIOD 60 DAYS FROM THE DATE SPECIFIED FOR RECEIPT OF OFFERS AND CERTIFIED ITSELF A SMALL BUSINESS FIRM. ELECTROSPACE WAS DETERMINED THE LOW RESPONSIVE BIDDER FOR THE FULL QUANTITY ON A MULTIYEAR BASIS AT A UNIT PRICE OF $692 FOR A TOTAL BID OF $1,763,400.83. THE NEXT LOW RESPONSIVE BIDDER IS APPROXIMATELY $970,000 HIGHER. ALTHOUGH THE BIDS WERE OPENED ON JUNE 19, 1968, AS SCHEDULED, NO AWARD HAS YET BEEN MADE BECAUSE OF SEVERAL DELAYS. ELECTROSPACE HAS TWICE EXTENDED ITS BID, THE LAST BEING GOOD THROUGH FEBRUARY 28, 1969.

THE FIRST DELAY IN MAKING AN AWARD UNDER THE SUBJECT INVITATION WAS OCCASIONED BY A PROTEST FROM THE SECOND LOW BIDDER THAT THE INVITATION WAS DEFECTIVE AND NO VALID AWARD COULD BE MADE. THIS PROTEST WAS DENIED BY OUR OFFICE ON SEPTEMBER 13, 1968, B-164677. IN THE MEANTIME, A PREAWARD SURVEY OF ELECTROSPACE HAD BEEN CONDUCTED AND A NEGATIVE RECOMMENDATION WAS MADE ON SEPTEMBER 13, 1968. THEREAFTER, THE CONTRACTING OFFICER RECEIVED INFORMATION THAT THERE HAD BEEN IMPROVEMENTS IN AREAS PREVIOUSLY FOUND DEFICIENT AND HE REQUESTED ANOTHER SURVEY. ON NOVEMBER 13, 1968, A NEGATIVE RECONSIDERATION WAS AGAIN MADE. IT IS REPORTED THAT ON NOVEMBER 18, 1968, WHILE AT THE ELECTROSPACE PLANT IN CONNECTION WITH OTHER CONTRACTS, GOVERNMENT PERSONNEL NOTED CONSIDERABLE PHYSICAL AND FINANCIAL IMPROVEMENTS. THEREFORE, IT WAS DECIDED TO MAKE ANOTHER SURVEY. THE SURVEY WAS BEGUN ON JANUARY 3 AND COMPLETED ON JANUARY 10, 1969. THE REPORT DATED JANUARY 17, 1969, RECOMMENDED AWARD.

THEREAFTER, THE CONTRACTING OFFICER RECEIVED INFORMATION THAT ELECTROSPACE HAD BEEN DETERMINED NOT TO BE A SMALL BUSINESS CONCERN IN CONNECTION WITH ANOTHER PROCUREMENT. THEREFORE, HE REQUESTED A DETERMINATION FROM THE SMALL BUSINESS ADMINISTRATION (SBA) AS TO ELECTROSPACE'S ELIGIBILITY FOR THE SUBJECT AWARD. ON FEBRUARY 4, 1969, THE SBA NEW YORK REGIONAL OFFICE DETERMINED THAT ELECTROSPACE IS NOT A SMALL BUSINESS CONCERN FOR THE SUBJECT PROCUREMENT. AN APPEAL OF THIS DETERMINATION WAS DENIED BY THE SBA SIZE APPEALS BOARD ON FEBRUARY 25, 1969. IT APPEARS THAT AT THE TIME ITS BID WAS SUBMITTED AND OPENED THE NUMBER OF PERSONS EMPLOYED BY ELECTROSPACE WAS WITHIN ESTABLISHED LIMITS TO QUALIFY AS A SMALL BUSINESS CONCERN. HOWEVER, THE NUMBER OF EMPLOYEES WAS INCREASED BEYOND THE PERMISSIBLE NUMBER BY THE ACQUISITION OF TWO AFFILIATES ON AUGUST 19 (1 DAY AFTER THE ORIGINAL DATE FOR EXPIRATION OF OFFERS) AND SEPTEMBER 25, 1968.

IT IS YOUR CONTENTION THAT THE DETERMINATION OF ELECTROSPACE'S SIZE AS OF FEBRUARY 4, 1969, IS CONTRARY TO THE LANGUAGE AND SPIRIT OF PARAGRAPH 1- 703 (B) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) WHICH PROVIDES, IN PERTINENT PART, AS FOLLOWS:

"* * * THE CONTROLLING POINT IN TIME FOR A DETERMINATION CONCERNING THE SIZE STATUS OF A QUESTIONED BIDDER OR OFFEROR SHALL BE THE DATE OF AWARD * * *" IT IS YOUR POSITION THAT THE "DATE OF AWARD" SHOULD BE EITHER THE ACTUAL DATE OF AWARD WHERE A CONTRACT HAS BEEN AWARDED OR -

"* * * IN THOSE CASES WHERE A CONTRACT HAS NOT BEEN AWARDED, AND WHERE A PRE-AWARD SURVEY IS BEING CONDUCTED, THEN THE DETERMINATIVE DATE MUST BE THE -DATE OF AWARD- AS SPECIFIED IN THE IFB, SINCE OBVIOUSLY THERE IS NO ACTUAL DATE OF AWARD TO LOOK TO, NOR IS THERE ANY OTHER GUIDEPOST THAT MAY BE APPLIED WHICH IS BOTH FIXED IN POINT OF TIME (AND THEREFORE SUSCEPTIBLE TO UNIFORM AND EQUITABLE APPLICATION), AND IN KEEPING WITH THE LANGUAGE OF SECTION 1-703 (B) OF ASPR, AS SET FORTH ABOVE.'

YOU CONTEND THAT ANY OTHER INTERPRETATION OF THE "DATE OF AWARD" IS UNFAIR AND INEQUITABLE SINCE ELECTROSPACE WAS "INDUCED TO INCUR MUCH TIME AND EXPENSE IN BIDDING ON THIS IFB BY THE IMPLICIT REPRESENTATION THAT, IF IT WERE A SMALL BUSINESS CONCERN AS OF THE DATE OF BID OPENING, AND MORE ESPECIALLY THE -DATE OF AWARD- AS SPECIFIED IN THE IFB," THEN IT WOULD BE ELIGIBLE FOR AWARD. IN THIS CONNECTION YOU ALSO STATE THAT AS THE MONTHS HAVE GONE BY WITHOUT AWARD BEING MADE ELECTROSPACE HAS BEEN EXPECTED TO EXTEND ITS BID TIME AFTER TIME WITHOUT EVER BEING INFORMED THAT ITS SIZE STATUS MIGHT BE QUESTIONED OR THAT, IF QUESTIONED, ANY DATE WOULD BE DETERMINATIVE OTHER THAN THE "DATE OF AWARD" SPECIFIED IN THE INVITATION FOR BIDS,"NAMELY AUGUST 18, 1968.'

THE SETTING ASIDE OF THIS PROCUREMENT FOR THE EXCLUSIVE PARTICIPATION OF SMALL BUSINESS CONCERNS IS IN KEEPING WITH THE CONGRESSIONAL MANDATE ENUNCIATED IN THE SMALL BUSINESS ACT, 15 U.S.C. 631, ET SEQ., TO PLACE A FAIR PROPORTION OF THE GOVERNMENT'S TOTAL PURCHASES WITH SMALL BUSINESS CONCERNS. SECTION I, PART 7, OF ASPR SETS FORTH THE POLICIES AND PROCEDURES TO IMPLEMENT THE ACT. ASPR 1 703 REQUIRES THE CONTRACTING OFFICER TO ACCEPT THE SELF-CERTIFICATION OF A BIDDER THAT IT IS A SMALL BUSINESS CONCERN UNLESS SBA DETERMINES OTHERWISE PURSUANT TO A TIMELY PROTEST FROM ANOTHER BIDDER RECEIVED PRIOR TO AWARD OR WHERE "ANY TIME PRIOR TO AWARD" THE CONTRACTING OFFICER HAS QUESTIONED THE BIDDER'S SMALL BUSINESS STATUS. WHEN SBA MAKES SUCH A DETERMINATION IT IS CONCLUSIVE UPON THE PROCUREMENT AGENCY. 15 U.S.C. 637 (B) (6). THE REGULATION PROVIDES THAT THE CONTROLLING POINT IN TIME FOR SUCH DETERMINATION BY SBA SHALL BE THE "DATE OF AWARD.' FURTHERMORE, THE REGULATION PROVIDES THAT AWARD MAY BE MADE ON THE BASIS OF THE SBA DETERMINATION OF THE QUESTIONED BIDDER'S STATUS. WHEN SBA'S DETERMINATION IS FINAL, THE CONTRACTING OFFICER IS PRECLUDED BY LAW FROM MAKING AN AWARD TO THE FIRM DETERMINED NOT TO BE SMALL BUSINESS.

THE POLICIES AND PROCEDURES PRESCRIBED BY THE REGULATIONS ARE INTENDED TO BOTH FACILITATE TIMELY PROCUREMENT AND CARRY OUT THE CONGRESSIONAL MANDATE TO PLACE A FAIR PROPORTION OF THE GOVERNMENT'S PURCHASES WITH SMALL BUSINESS CONCERNS. IN ORDER TO GIVE EFFECT TO THESE PURPOSES, WHERE A SELF-CERTIFIED SMALL BUSINESS FIRM'S STATUS HAS BEEN QUESTIONED PRIOR TO AWARD, THE FIRM'S STATUS AT THE TIME AWARD IS OR WILL BE MADE MUST GOVERN. THIS IS THE GENERAL RULE WITH REGARD TO THE PARTICULAR POINT IN TIME AT WHICH A BIDDER'S STATUS AS TO SIZE IS HELD TO BE DETERMINATIVE, AND WE SEE NO JUSTIFICATION FOR DEPARTING FROM THE GENERAL RULE WHERE, AS HERE, THE CIRCUMSTANCES PREVENT AN AWARD FROM BEING MADE WITHIN THE ORIGINAL BID ACCEPTANCE PERIOD AND THE BIDDER'S STATUS CHANGES THEREAFTER.

TO HOLD, AS YOU CONTEND, THAT WHERE NO AWARD HAS BEEN MADE THE "DATE OF AWARD" SHOULD BE CONSTRUED AS THE FINAL DAY OF THE BID ACCEPTANCE PERIOD IS UNREASONABLE AND WOULD THWART THE VERY PURPOSE OF THE ACT. MOREOVER, WE DO NOT AGREE WITH YOUR ARGUMENT THAT ELECTROSPACE WAS INDUCED TO INCUR MUCH TIME AND EXPENSE ON THE IMPLIED REPRESENTATION THAT IT WOULD BE ELIGIBLE FOR AWARD IF IT REMAINED A SMALL BUSINESS CONCERN THROUGH THE BID ACCEPTANCE PERIOD STATED IN ITS BID. IT IS COMMON KNOWLEDGE THAT CIRCUMSTANCES SOMETIMES CAUSE DELAYS IN THE PROCUREMENT PROCESS AND FOR THIS REASON BIDDERS ARE PERMITTED TO LIMIT THE TIME WITHIN WHICH THEIR OFFERS MAY BE ACCEPTED AND THE GOVERNMENT HAS THE ASSURANCE THAT THE OFFER MAY BE ACCEPTED FOR THE STATED LENGTH OF TIME. THIS PROVISION IS NOT INTENDED FOR ANY OTHER PURPOSE AND WE DO NOT BELIEVE IT MAY REASONABLY BE CONSTRUED AS CONVEYING ANY OTHER MEANING.

FINALLY, YOU CITE OUR DECISION OF AUGUST 10, 1964, B-153267, IN SUPPORT OF YOUR POSITION AND STATE THAT IT IS AN ANALOGOUS CONVERSE OF THE INSTANT CASE. IN THAT CASE WE APPROVED AN AWARD TO A FIRM THAT HAD INITIALLY BEEN FOUND BY SBA TO BE LARGE BUSINESS AFTER BIDS HAD BEEN OPENED. HOWEVER, AT THE TIME THE AWARD WAS MADE SBA HAD ISSUED A DETERMINATION THAT A SUBSEQUENT CHANGE IN ITS REGULATIONS RESULTED IN THAT FIRM BEING ELIGIBLE AS A SMALL BUSINESS. WE POINTED OUT THAT THE BIDDER HAD IN GOOD FAITH CERTIFIED ITSELF AS SMALL BUSINESS AND HAD MADE NO CHANGE IN ITS STATUS TO QUALIFY AS A SMALL BUSINESS. THE CITED CASE IS READILY DISTINGUISHABLE FROM THE INSTANT CASE SINCE IT HAS BEEN DETERMINED BY SBA THAT AS OF FEBRUARY 25, 1969, ELECTROSPACE IS NOT ELIGIBLE FOR AWARD AS A SMALL BUSINESS CONCERN.

IN THESE CIRCUMSTANCES, THE CONTRACTING OFFICER MAY NOT PROPERLY MAKE AN AWARD TO ELECTROSPACE UNDER THIS 100-PERCENT SMALL BUSINESS SET-ASIDE.