B-162881, APR. 10, 1968

B-162881, APR. 10, 1968

TO WEISLER AND WEISLER:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 8, 1968, AND PRIOR CORRESPONDENCE, PROTESTING, ON BEHALF OF BERN KANE PRODUCTS, INC., AGAINST THE NEGOTIATION PROCEDURES FOLLOWED WITH RESPECT TO THE LABOR SURPLUS SET- ASIDE PORTION OF INVITATION FOR BIDS NO. DSA100-67-B-2224, ISSUED BY THE DEFENSE SUPPLY AGENCY, DEFENSE PERSONNEL SUPPORT CENTER.

THE INVITATION, ISSUED JUNE 14, 1967, SOLICITED BIDS FOR THE PURCHASE OF A TOTAL OF 332,306 FOOTLOCKERS ON AN UNRESTRICTED BASIS TO FOUR DESTINATIONS AND A TOTAL SET-ASIDE OF 242,306 FOOTLOCKERS FOR LABOR SURPLUS AREA CONCERNS TO TWO OF THE SPECIFIED DESTINATIONS.

WITH RESPECT TO THE SET-ASIDE PORTION, THE INVITATION PROVIDED THAT NEGOTIATIONS WOULD BE CONDUCTED ONLY WITH RESPONSIBLE LABOR SURPLUS AREA CONCERNS (AND SMALL BUSINESS CONCERNS TO THE EXTENT INDICATED) WHICH SUBMITTED RESPONSIVE BIDS ON THE NON-SET-ASIDE PORTION AT A UNIT PRICE WITHIN 120 PERCENT OF THE HIGHEST AWARD MADE ON THE NON-SET ASIDE PORTION IN THE FOLLOWING ORDER OF PRIORITY:

GROUP 1 - SMALL BUSINESS CONCERNS WHICH ARE ALSO PERSISTENT LABOR

SURPLUS AREA CONCERNS.

GROUP 2 - OTHER PERSISTENT LABOR SURPLUS AREA CONCERNS.

GROUP 3 - SMALL BUSINESS CONCERNS WHICH ARE ALSO SUBSTANTIAL LABOR

SURPLUS AREA CONCERNS.

GROUP 4 - OTHER SUBSTANTIAL LABOR SURPLUS AREA CONCERNS.

GROUP 5 - SMALL BUSINESS CONCERNS WHICH ARE NOT LABOR SURPLUS

AREA CONCERNS.

THE INVITATION FURTHER PROVIDED THAT ANY BIDDER DESIRING TO BE CONSIDERED FOR AWARD AS A LABOR SURPLUS AREA CONCERN UNDER THE SET ASIDE PORTION OF THE PROCUREMENT MUST IDENTIFY IN HIS BID THE GEOGRAPHICAL AREAS IN WHICH HE PROPOSES TO PERFORM, OR CAUSE TO BE PERFORMED, A SUBSTANTIAL PROPORTION OF THE CONTRACT.

PURSUANT TO OUR DECISION B-162881, JANUARY 9, 1968, BERN KANE WAS DETERMINED TO BE THE LOW EVALUATED BIDDER ON THE NON-SET-ASIDE PORTION OF THE PROCUREMENT TO THE MECHANICSBURG DEFENSE DEPOT. HOWEVER, SINCE BERN KANE INDICATED IN ITS BID THAT IT WOULD PERFORM THE SET-ASIDE PORTION OF THE CONTRACT AT ITS BROOKLYN, NEW YORK, FACILITY, WHICH, WE ARE ADVISED, IS NOT LISTED AS A LABOR SURPLUS AREA ON THE DEPARTMENT OF LABOR "AREA LABOR MARKET TRENDS," BERN KANE IS CONSIDERED FOR PURPOSES OF NEGOTIATION OF THE SET-ASIDE PORTION TO MECHANICSBURG TO BE IN PRIORITY CATEGORY 5 (SMALL BUSINESS CONCERNS WHICH ARE NOT LABOR SURPLUS AREA CONCERNS). ACCORDINGLY, NEGOTIATIONS FOR THE AWARD OF THE SET-ASIDE PORTION TO MECHANICSBURG WERE CONDUCTED WITH OTHERWISE ELIGIBLE BIDDERS WHICH WERE IN THE HIGHER PRIORITY CATEGORIES.

BY LETTER DATED JANUARY 24, 1968, YOU REQUESTED THAT AWARD OF THE SET ASIDE QUANTITIES BE DELAYED UNTIL BERN KANE HAS BEEN CERTIFIED AS AN ELIGIBLE CONCERN UNDER DEFENSE MANPOWER REGULATION (POLICY) NO. 4 (DMP 4), AS REVISED. ON JANUARY 30, 1968, BERN KANE WAS CERTIFIED BY THE DEPARTMENT OF LABOR FOR PREFERENCE "IN PROCUREMENT OF FEDERAL GOVERNMENT CONTRACT NO. IFB DSA100-67-B-2224 UNDER DEFENSE MANPOWER POLICY NO. 4.' POLICY NO. 4, OR DMP 4, AS REFERENCED IN THE TELEGRAM, CONCERNED THE REVISION PUBLISHED IN THE FEDERAL REGISTER OF OCTOBER 18, 1967. THE REVISION OF DMP 4, AT 32 FEDERAL REGISTER 14387 AND 14388, ESTABLISHED A NEW ORDER OF PREFERENCE FOR THE PLACEMENT OF CONTRACTS IN LABOR SURPLUS AREAS. THE REGULATIONS ISSUED BY THE DIRECTOR OF THE OFFICE OF EMERGENCY PLANNING PROVIDED, IN PART, AT PAGE 14389 OF THE CITED FEDERAL REGISTER AS FOLLOWS:

"4. IMPLEMENTATION. BY VIRTUE OF THE AUTHORITY VESTED IN ME BY EXECUTIVE ORDER NO. 10480 AND EXECUTIVE ORDER NO. 11051, AS AMENDED, AND TO CARRY OUT THE PURPOSE AND POLICY OBJECTIVES SET FORTH ABOVE, THE FOLLOWING ASSIGNMENTS OF RESPONSIBILITIES ARE MADE TO THE SPECIFIED OFFICIALS OF THE GOVERNMENT:

"/C) THE SECRETARY OF LABOR SHALL:

"/1) CLASSIFY SECTIONS OF CONCENTRATED UNEMPLOYMENT OR UNDEREMPLOYMENT, AND AREAS HAVING A PERSISTENT OR SUBSTANTIAL SURPLUS OF LABOR UNDER STANDARDS TO BE ESTABLISHED BY THE SECRETARY OF LABOR.

"/5) CERTIFY EMPLOYING ESTABLISHMENTS WHICH HAVE AGREED TO PERFORM CONTRACTS IN OR NEAR SECTIONS OF CONCENTRATED UNEMPLOYMENT OR UNDEREMPLOYMENT AND WHICH HAVE AGREED TO COMPLY WITH REGULATIONS OF THE SECRETARY OF LABOR WITH RESPECT TO THE EMPLOYMENT OF DISADVANTAGED APPLICANTS.

"/6) PRESCRIBE REGULATIONS ESTABLISHING THE ORDER OF PREFERENCE IN WHICH PROCUREMENT CONTRACTS SHALL BE AWARDED WITH RESPECT TO SECTIONS OF CONCENTRATED UNEMPLOYMENT AND UNDEREMPLOYMENT AND AREAS OF PERSISTENT OR SUBSTANTIAL LABOR SURPLUS.

"/B) ALL PROCUREMENT AGENCIES SHALL:

"/1) USE THEIR BEST EFFORTS TO AWARD NEGOTIATED PROCUREMENT CONTRACTS TO CONTRACTORS WHO WILL PERFORM A SUBSTANTIAL PROPORTION OF THE PRODUCTION ON THOSE CONTRACTS WITHIN OR NEAR SECTIONS OF CONCENTRATED UNEMPLOYMENT OR UNDEREMPLOYMENT OR WITHIN LABOR SURPLUS AREAS, GIVING PREFERENCE TO CONTRACTORS IN ACCORDANCE WITH REGULATIONS PRESCRIBED BY THE SECRETARY OF LABOR TO THE EXTENT THAT PROCUREMENT OBJECTIVES WILL PERMIT; PROVIDED, THAT IN NO CASE SHALL PRICE DIFFERENTIALS BE PAID FOR THE PURPOSE OF CARRYING OUT THIS POLICY.

"/2) WHERE DEEMED APPROPRIATE, SET-ASIDE PORTIONS OF PROCUREMENTS FOR NEGOTIATIONS AT PRICES NO HIGHER THAN THOSE PAID ON THE BALANCE OF THESE PROCUREMENTS EXCLUSIVELY WITH FIRMS WHICH HAVE AGREED TO PERFORM OR CAUSE TO BE PERFORMED A SUBSTANTIAL PROPORTION OF THE PRODUCTION ON THESE CONTRACTS WITHIN OR NEAR SECTIONS OF CONCENTRATED UNEMPLOYMENT OR UNDEREMPLOYMENT OR WITHIN LABOR SURPLUS AREAS, GIVING PREFERENCE TO FIRMS IN ACCORDANCE WITH REGULATIONS PRESCRIBED BY THE SECRETARY OF LABOR: PROVIDED FURTHER, THAT FIRMS WHICH HAVE AGREED TO PERFORM IN AREAS NOT MEETING THE MINIMUM SIZE QUALIFICATIONS FOR CLASSIFICATION BY THE SECRETARY OF LABOR SHALL BE ELIGIBLE FOR PARTICIPATION IN SET ASIDES, IF THESE FIRMS SUBMIT A CERTIFICATE ISSUED BY THE SECRETARY OF LABOR THAT A PERSISTENT OR SUBSTANTIAL LABOR SURPLUS EXISTS IN THE AREA IN ACCORDANCE WITH STANDARDS AND PROCEDURES PRESCRIBED BY THE SECRETARY OF LABOR.

"/6) THE PREFERENTIAL ACTIONS DESCRIBED IN THIS POLICY SHALL BE IN ADDITION TO OTHER SUCH ACTIONS TO WHICH FIRMS MAY BE ENTITLED BECAUSE OF PERFORMANCE IN SUBSTANTIAL LABOR SURPLUS AREAS, SUCH AS ADDITIONAL PREFERENCE UNDER THE -BUY AMERICAN ACT.-

"EFFECTIVE DATE. THIS REVISED POLICY SHALL TAKE EFFECT UPON THE DATE THIS DOCUMENT IS FILED WITH THE OFFICE OF THE FEDERAL REGISTER.'

IN ACCORDANCE WITH THE FOREGOING, THE SECRETARY OF LABOR ISSUED THE FOLLOWING AMENDMENTS AT 32 FEDERAL REGISTER 14387-88, EFFECTIVE IMMEDIATELY, TO 29 CFR PART 8 DEALING WITH AREAS OF SUBSTANTIAL OR PERSISTENT UNEMPLOYMENT UNDER DMP 4:

"SEC. 8.7 CLASSIFICATION OF SECTIONS OF CONCENTRATED

UNEMPLOYMENT OR UNDEREMPLOYMENT AND CERTIFICATION OF

ELIGIBLE FIRMS.

"/A) THE SECRETARY OF LABOR WILL CLASSIFY AS SECTIONS OF CONCENTRATED UNEMPLOYMENT OR UNDEREMPLOYMENT APPROPRIATE SECTIONS OF STATES OR -LABOR AREAS.-

"/B) FIRMS IN OR NEAR SUCH CLASSIFIED SECTIONS OF CONCENTRATED UNEMPLOYMENT OR UNDEREMPLOYMENT SHALL BE CERTIFIED BY THE SECRETARY AS ELIGIBLE FOR PREFERENCE IN THE PLACEMENT OF FEDERAL GOVERNMENT CONTRACTS OR SUBCONTRACTS UNDER DEFENSE MANPOWER POLICY NO. 4, PROVIDED THAT SUCH FIRMS HAVE AGREED TO EMPLOY IN THE PERFORMANCE OF SUCH CONTRACTS OR SUBCONTRACTS, IN ACCORDANCE WITH PLANS APPROVED BY THE SECRETARY OF LABOR, A PROPORTIONATE NUMBER OF DISADVANTAGED PERSONS RESIDING WITHIN THE CLASSIFIED SECTIONS AND WHO HAVE EITHER BEEN IDENTIFIED OR REFERRED TO THE EMPLOYER BY A STATE EMPLOYMENT SERVICE OR CONSTITUENT LOCAL PUBLIC EMPLOYMENT OFFICE AFFILIATED WITH THE U.S. EMPLOYMENT SERVICE OF THE DEPARTMENT OF LABOR. FIRMS SO CERTIFIED WHICH WILL PERFORM A SUBSTANTIAL PORTION OF A FEDERAL GOVERNMENT CONTRACT, OR OTHER FIRMS WHICH WILL PLACE A SUBSTANTIAL PORTION OF THE FEDERAL GOVERNMENT CONTRACT WITH SUCH CERTIFIED FIRMS SHALL OBTAIN PREFERENCE IN ACCORDANCE WITH SEC. 8.8.

"6. A NEW SEC. 8.8 IS ESTABLISHED TO READ AS FOLLOWS:

"SEC. 8.8 ORDER OF PREFERENCE.

"THE ORDER OF PREFERENCE FOR THE PLACEMENT OF CONTRACTS UNDER DEFENSE MANPOWER POLICY NO. 4 IS AS FOLLOWS:

"/A) FIRMS ELIGIBLE FOR PREFERENCE IN ACCORDANCE WITH PARAGRAPH (B) OF SEC. 8.7;

"/B) FIRMS WHICH WILL PERFORM A SUBSTANTIAL PORTION OF A CONTRACT IN AN AREA OF PERSISTENT UNEMPLOYMENT.'

YOUR LETTER OF MARCH 8 STATES "THAT THE CONTRACTING OFFICER MUST AWARD THE SET-ASIDE PORTION TO THE LOWEST RESPONSIBLE BIDDER WHO QUALIFIES AT THE TIME OF AWARD FOR THE SET-ASIDE PORTION AS THE MOST ELIGIBLE CONCERN AS CERTIFIED TO BY THE UNITED STATES DEPARTMENT OF LABOR. IT IS SUBMITTED THAT SUCH CONCERN IS BERN KANE, THE SUCCESSFUL BIDDER IN THE NON SET-ASIDE PORTION.' IN SUPPORT THEREOF YOU STATED ON PAGE 11 OF YOUR LETTER THAT "EVERY REFERENCE MADE IN THE IFS AND ASPR TO THE SET-ASIDE REFERS TO THE SITUATION AS TO THE SET-ASIDE AS OF THE TIME OF AWARD; (IN NO PLACE IS THERE ANY REFERENCE TO THE BID-OPENING DATE AS CONTROLLING * * *.).' IS YOUR VIEW THAT THE PROCUREMENT ACTIVITY SHOULD ACCORD BERN KANE PREFERENTIAL TREATMENT ON THE BASIS OF A CHANGE IN THE RULES OF DETERMINING THE PRIORITY OF NEGOTIATIONS, WHICH WAS NOT IN EXISTENCE AT THE TIME OF BID OPENING.

THE ADMINISTRATOR OF SMALL BUSINESS BY LETTER OF MARCH 15, 1968, TO OUR OFFICE, ADVISES THAT BERN KANE AND ANOTHER FIRM ALSO CERTIFIED ELIGIBLE UNDER THE PROVISION OF IMP 4, REVISED, SHOULD RECEIVE FIRST CONSIDERATION FOR NEGOTIATION OF THE SET-ASIDE PORTION OF THE PROCUREMENT. SPECIFICALLY, THE SMALL BUSINESS ADMINISTRATION (SBA) IS OF THE OPINION THAT SINCE THE INVITATION EXPRESSLY PROVIDED THAT BIDDERS MIGHT CHANGE THEIR GEOGRAPHICAL AREAS OF PERFORMANCE PRIOR TO AWARD OF THE SET-ASIDE PORTION IF THE DEPARTMENT OF LABOR CLASSIFICATION OF LABOR SURPLUS AREAS CHANGES AFTER SUBMISSION OF BIDS, AND SINCE PRIORITY FOR NEGOTIATION WILL BE BASED ON THE LABOR SURPLUS CLASSIFICATION OF THE DESIGNATED AREAS AS OF THE TIME OF AWARD, THOSE FIRMS DESIGNATED AS "CERTIFIED ELIGIBLE" AT THE TIME OF AWARD OF THE SET-ASIDE PORTION SHOULD BE ACCORDED PREFERENTIAL TREATMENT.

IN ADDITION, SBA POINTS TO DECISIONS OF OUR OFFICE THAT HAVE ESTABLISHED THE GENERAL RULE THAT THE FINAL DETERMINATION OF THE ELIGIBILITY OF A BIDDER AS A SMALL BUSINESS CONCERN UNDER A SMALL BUSINESS SET-ASIDE IS MADE AT THE TIME OF AWARD, AND THAT THE RATIONALE OF THOSE DECISIONS IS ANALOGOUS TO THE PRESENT CASE. IN OTHER WORDS, THE DATE OF AWARD CLEARLY SHOULD DETERMINE THE PRIORITY OF NEGOTIATIONS FOR AWARD OF THE LABOR SURPLUS SET-ASIDE PORTION OF THE PROCUREMENT (CITING B-143630, OCTOBER 13, 1960; B-153267, AUGUST 10, 1964; B-157700, NOVEMBER 15, 1965; B-158227, JANUARY 28, 1966; B 159301, JULY 15, 1966; 40 COMP. GEN. 550; 41 ID. 252; 42 ID. 108; ID. 219).

MOREOVER, SBA BELIEVES THAT THE ELIGIBILITY OF A FIRM FOR CONSIDERATION FOR AWARD OF LABOR SURPLUS SET-ASIDE IS A MATTER OF RESPONSIBILITY WHICH IS TO BE DETERMINED AS OF THE TIME OF AWARD, REFERRING TO 39 COMP. GEN. 655; 39 ID. 881; 41 ID. 302; ID. 555.

IT IS THE POSITION OF THE PURCHASING AGENCY THAT BERN KANE CANNOT BE ACCORDED PREFERENCE AS A CERTIFIED ELIGIBLE CONCERN SINCE DMP 4, REVISED, WAS ISSUED SUBSEQUENT TO BID OPENING AND IS THEREFORE INAPPLICABLE TO THE PROCUREMENT. IN THE ALTERNATIVE, IT IS OBSERVED THAT THE ARMED SERVICES PROCUREMENT REGULATION PROVISIONS IMPLEMENTING DMP 4, REVISED, WHEN INCLUDED IN AN INVITATION, REQUIRE THAT A BIDDER SEEKING PREFERENCE AS A CERTIFIED ELIGIBLE CONCERN MUST SUBMIT EVIDENCE OF SUCH CERTIFICATION WITH ITS BID.

WE ARE OF THE OPINION THAT BERN KANE MAY NOT BE GIVEN PREFERENCE OF NEGOTIATION UNDER DMP 4, AS REVISED FOR THE REASONS SET FORTH BELOW. THE INVITATION CLEARLY PROVIDED THAT PRIORITY FOR NEGOTIATION OF THE SET-ASIDE WILL BE DETERMINED BY APPLICATION OF THE CRITERIA SET FORTH IN THE LABOR SURPLUS SET-ASIDE CLAUSE INCLUDED IN THE INVITATION. THUS, THE PRIORITY TO BE ESTABLISHED BY THE LABOR SURPLUS CATEGORY, AT THE TIME OF AWARD, IS THE GEOGRAPHICAL LOCATION ELECTED BY THE BIDDER IN ITS BID AS THE SITE OF PERFORMANCE OF A SUBSTANTIAL PROPORTION OF THE SET-ASIDE WORK. IT IS WELL ESTABLISHED THAT THE CONTRACT AWARDED AFTER FORMAL ADVERTISING MUST BE THE IDENTICAL CONTRACT OFFERED TO ALL BIDDERS IN THE INVITATION, THAT IS, THE CONTRACT TO BE AWARDED MUST BE THE SAME ONE ADVERTISED. 40 COMP. GEN. 447; ID. 644. THE SET-ASIDE PORTION IS, OF COURSE, A NEGOTIATED PROCUREMENT AND IS NOT SUBJECT TO THE STRICT RULES GOVERNING PROCUREMENT BY FORMAL ADVERTISING. NEVERTHELESS, IT HAS BEEN OUR POSITION THAT REQUIREMENTS FOR AND LIMITATIONS UPON ELIGIBILITY FOR AWARD UNDER THE SET- ASIDE, WHICH ARE STATED IN AN ADVERTISED INVITATION, MUST BE FOLLOWED IN THE AWARD OF THE SET-ASIDE. SEE 41 COMP. GEN. 417, 418. THE REVISIONS TO DMP 4 ARE NOT SELF-EXECUTING OR RETROACTIVELY EFFECTIVE AS TO INVITATIONS ISSUED PRIOR THERETO OR TO BIDS OPENED THEREUNDER. THE REVISIONS MAY NOT BE REGARDED, AS A MATTER OF LAW, AS HAVING BEEN INCORPORATED INTO THE INVITATION. IN 42 COMP. GEN. 692, WE CONSIDERED THE QUESTION WHETHER AN EXECUTIVE ORDER PUBLISHED IN THE FEDERAL REGISTER IS BINDING UPON A SUCCESSFUL BIDDER WHO RESPONDED TO AN INVITATION WHICH CONTAINED PROVISIONS DISSIMILAR TO THE EXECUTIVE ORDER. THE FOLLOWING EXCERPTS FROM PAGES 694 AND 695 OF THAT DECISION ILLUSTRATE, IN OUR OPINION, THE NONAPPLICABILITY OF THE REVISIONS OF DMP 4 TO THE SUBJECT INVITATION: "UNDER 44 U.S.C. 307, PUBLICATION OF AN ORDER IN THE FEDERAL REGISTER IS NOTICE THEREOF TO -ANY PERSON SUBJECT OR AFFECTED THEREBY.- HOWEVER, SINCE THE ABOVE MANDATORY REQUIREMENT IS DIRECTED TO GOVERNMENT CONTRACTING AGENCIES, WE DO NOT BELIEVE THAT BIDDERS OR OFFERORS ARE ON NOTICE THAT IF THEY ARE SUCCESSFUL IN THEIR BIDDING OR NEGOTIATIONS, THEIR RESULTING CONTRACTS WILL CONTAIN THE PRESCRIBED NONDISCRIMINATION PROVISIONS, UNLESS THE INVITATION OR REQUEST FOR PROPOSALS INCLUDES, OR INCORPORATES BY REFERENCE, SUCH PROVISIONS. LIKE ANY OTHER CONTRACT PROVISION, THE NONDISCRIMINATION PROVISIONS MUST BE AGREED TO BY THE BIDDER OR OFFEROR EITHER IN HIS BID OR OFFER OR BY KNOWINGLY EXECUTING A CONTRACT CONTAINING SUCH PROVISIONS. SUCH MANDATORY PROVISIONS ARE REQUIRED TO BE INCLUDED IN -CONTRACTS' BY EACH -CONTRACTING AGENCY.- IT IS HARDLY TO BE CONCEIVED THAT THE ORDER IS AUTOMATICALLY BINDING UPON A BIDDER UNDER AN INVITATION WHICH DOES NOT CONTAIN ITS PROVISIONS OR A REFERENCE THERETO. SEE 20 COMP. GEN. 890; 40 ID. 565; 63 COL. L. REV. 243, 255-257.

"* * * ALSO, THERE IS NO DOUBT THAT LEASING OF GAS AND OIL DEPOSITS UNDER 43 U.S.C. 1337 (A) MUST BE AWARDED PURSUANT TO COMPETITIVE BIDDING PROCEDURES. THAT BEING SO, THE CONTRACT AWARDED AFTER SUCH COMPETITIVE BIDDING MUST BE THE IDENTICAL CONTRACT OFFERED TO ALL BIDDERS RESPONDING TO THE ADVERTISEMENT. DIAMOND V CITY OF MANKATO, 93 N.W. 911; 61 L.R.A. 448; 40 COMP. GEN. 447.

"THE ADVERTISEMENT OFFERING TO LEASE GAS AND OIL SUBMERGED LANDS ADVISED INTERESTED BIDDERS THAT LEASES WOULD BE EXECUTED, PURSUANT TO REGULATIONS ISSUED IN ADVANCE ON A FORM WHICH WOULD OBLIGATE THE LEASEE NOT -TO DISCRIMINATE AGAINST ANY EMPLOYEE, OR APPLICANT FOR EMPLOYMENT, BECAUSE OF RACE, CREED, COLOR OR NATIONAL ORIGIN, AND TO REQUIRE AN IDENTICAL PROVISION TO BE INCLUDED IN ALL SUBCONTRACTS RELATING TO OPERATIONS UNDER THIS LEASE.- THIS WAS THE KIND OF NONDISCRIMINATION PROVISION WHICH BIDDERS UNDER THE INSTANT SOLICITATION AGREED TO WHEN THEY SUBMITTED THEIR BIDS AND UPON WHICH THEY AGREED TO BECOME BOUND IF THEIR BIDS WERE ACCEPTED AS TENDERED. WE DO NOT AGREE THAT SUBSTANTIALLY DIFFERENT NONDISCRIMINATION PROVISIONS PROPERLY MAY BE IMPOSED UPON MR. HAMMONDS WHO HAD RESPONDED TO AN INVITATION CONTAINING MUCH LESS STRINGENT PROVISIONS.

THE ATTEMPT TO INCORPORATE DMP 4, AS REVISED, INTO THE INVITATION APPEARS TO BE FOR NO OTHER PURPOSE THAN TO PLACE BERN KANE IN A HIGHER PRIORITY WHICH WAS NOT INCLUDED IN THE INVITATION SO AS TO DISPLACE OTHER BIDDERS WHO QUALIFIED IN THE MANNER ADVERTISED IN THE INVITATION. WE BELIEVE THAT THE ADDITION OF THE "CERTIFIED ELIGIBLE" CATEGORY WOULD BE DETRIMENTAL TO THE ADMINISTRATION AND EFFECTIVENESS OF THE LABOR SURPLUS SET-ASIDE PROGRAM AND PREJUDICIAL TO THE INTERESTS OF BIDDERS WHO SUBMITTED THEIR BIDS IN COMPLIANCE WITH THE ADVERTISED LABOR SURPLUS AREA PROVISIONS. MOREOVER, IT WOULD BE CONTRARY TO SOUND PROCUREMENT PRACTICES TO PERMIT, AS A CONDITION AFFECTING THE ELIGIBILITY OF A BIDDER FOR NEGOTIATION OPPORTUNITY TO PARTICIPATE IN THE SET-ASIDE PORTION OF THE INVITATION, THE CONSIDERATION OF AN EXTRANEOUS FACTOR WHICH NO BIDDER COULD HAVE CONTEMPLATED AT THE TIME OF BID PREPARATION OR BID OPENING. THE UNILATERAL IMPOSITION OF DMP 4, AS REVISED, ON THE PROCUREMENT WOULD TEND TO FOSTER CONFUSION AND CHAOS AND UNREASONABLY DISRUPT THE ORDERLY PROCESS OF THE GOVERNMENT'S PROCUREMENT.

AS INDICATED, BERN KANE WAS ENTIRELY RESPONSIVE TO THE INVITATION. UNFORTUNATELY, THE GEOGRAPHICAL SITE IDENTIFIED IN ITS BID UNDER THE DEFINITIONS AND PRIORITIES PRESCRIBED IN THE INVITATION MAKES IT ELIGIBLE FOR NEGOTIATION CONSIDERATION ONLY AS A SMALL BUSINESS CONCERN.

WE HAVE CAREFULLY CONSIDERED YOUR ARGUMENTS AND THOSE ADVANCED BY SBA, BUT WE CONCLUDE THAT THEY DO NOT SUPPORT THE CONCLUSION SUGGESTED. THEREFORE, WE WILL NOT OBJECT TO THE CONTRACTING OFFICER'S DETERMINATION TO MAINTAIN BERN KANE IN PRIORITY GROUP 5 OF THE LABOR SURPLUS SET-ASIDE CLAUSE OF THE INVITATION.