B-143873, OCT. 12, 1960

B-143873, OCT. 12, 1960

TO MULTI ELECTRIC MFG. INC.:

WE REFER TO YOUR LETTER OF AUGUST 29, 1960, PROTESTING AGAINST AN AWARD OF A CONTRACT TO ANY LARGE BUSINESS FIRM UNDER FEDERAL AVIATION AGENCY INVITATION NO. 1-3013-B1, WHICH MATTER IS THE SUBJECT OF A REPORT, DATED SEPTEMBER 26, 1960, TO THIS OFFICE FROM THE FEDERAL AVIATION AGENCY.

THE RECORD SHOWS THAT INVITATION NO. 1-3013-B1 WAS ISSUED BY THE FEDERAL AVIATION AGENCY ON JULY 22, 1960, CALLING FOR BIDS ON QUANTITIES OF APPROACH LIGHTING FIXTURES AND COLOR SCREENS, WITH OPENING DATE SET FOR AUGUST 12, 1960. THE PROCUREMENT WAS A 100 PERCENT SET-ASIDE FOR SMALL BUSINESS. SEE, IN THIS CONNECTION, SECTION 15 OF THE SMALL BUSINESS ACT, PUBLIC LAW 85-536, 15 U.S.C. 644, WHICH PROVIDES IN PART AS FOLLOWS:

"SEC. 15. TO EFFECTUATE THE PURPOSES OF THIS ACT, SMALL-BUSINESS CONCERNS WITHIN THE MEANING OF THIS ACT SHALL RECEIVE ANY AWARD OR CONTRACT OR ANY PART THEREOF, AND BE AWARDED ANY CONTRACT FOR THE SALE OF GOVERNMENT PROPERTY, AS TO WHICH IT IS DETERMINED BY THE ADMINISTRATION AND THE CONTRACTING PROCUREMENT OR DISPOSAL AGENCY (1) TO BE IN THE INTEREST OF MAINTAINING OR MOBILIZING THE NATION'S FULL PRODUCTIVE CAPACITY, (2) TO BE IN THE INTEREST OF WAR OR NATIONAL DEFENSE PROGRAMS, (3) TO BE IN THE INTEREST OF ASSURING THAT A FAIR PROPORTION OF THE TOTAL PURCHASES AND CONTRACTS FOR PROPERTY AND SERVICES FOR THE GOVERNMENT ARE PLACED WITH SMALL-BUSINESS CONCERNS, OR (4) TO BE IN THE INTEREST OF ASSURING THAT A FAIR PROPORTION OF THE TOTAL SALES OF GOVERNMENT PROPERTY BE MADE TO SMALL-BUSINESS CONCERNS * * *.'

ON THE PRECEDING PROCUREMENT FOR THE SAME ITEMS THERE HAD BEEN NO SET- ASIDE FOR SMALL BUSINESS AND FOUR BIDS HAD BEEN RECEIVED. OF THESE FOUR, TWO BIDS WERE FROM SMALL BUSINESS CONCERNS AND THE AWARD HAD BEEN MADE TO MULTI ELECTRIC, A SMALL BUSINESS CONCERN. ON THIS BASIS, THE PROCURING AGENCY DECIDED TO SET-ASIDE THE CURRENT INVITATION FOR SMALL BUSINESS. BUT PRIOR TO THE DATE OF ISSUANCE, THE AGENCY CONCLUDED, UPON FURTHER ANALYSIS, THAT THE SET-ASIDE DETERMINATION ON THIS PROCUREMENT WAS IN ERROR SINCE, IN THE PRECEDING PROCUREMENT THE OTHER SMALL CONCERN HAD OFFERED PROHIBITIVE PRICES AND IN THE PROCUREMENT BEFORE THAT, MULTI ELECTRIC HAD BEEN THE ONLY SMALL BUSINESS CONCERN OFFERING A BID SO THAT UNDER THE SET-ASIDE ONLY MULTI ELECTRIC COULD REASONABLY BE EXPECTED TO SUBMIT A REALISTIC BID.

THE MATTER WAS DISCUSSED BETWEEN THE CONTRACTING OFFICER AND THE SMALL BUSINESS REPRESENTATIVE AT THE PROCURING AGENCY. THE SBA REPRESENTATIVE REQUESTED THAT THE SET ASIDE BE RETAINED IN ORDER THAT HE MIGHT MAKE A SURVEY OF THE FIELD TO OBTAIN MORE INTERESTED SMALL BUSINESS BIDDERS. PURSUANT TO THIS REQUEST THE SET ASIDE WAS RETAINED.

SUBSEQUENTLY, ON AUGUST 8, 1960, AFTER THE INVITATION WAS ISSUED, A PROTEST WAS RECEIVED FROM WESTINGHOUSE ELECTRIC CORPORATION (A LARGE BUSINESS BIDDER ON THE PRIOR PROCUREMENTS) WHICH ALLEGED THAT BY RESTRICTING THE BID TO SMALL BUSINESS, ONLY MULTI ELECTRIC COULD QUALIFY. ON THIS SAME DAY AN AMENDMENT CHANGING CERTAIN SPECIFICATIONS WAS ISSUED AND THE OPENING DATE WAS EXTENDED TO AUGUST 18, 1960.

BY AUGUST 9, AFTER IT WAS DETERMINED THAT NO BIDS HAD YET BEEN RECEIVED, THE CONTRACTING OFFICER ADVISED THE SBA REPRESENTATIVE THAT HE INTENDED TO TAKE ACTION TO WITHDRAW THE SET-ASIDE. AFTER FURTHER DISCUSSION BETWEEN THE CONTRACTING OFFICER AND THE SBA REPRESENTATIVE, IT WAS AGREED THAT IF NO BIDS WERE RECEIVED BY THE CLOSE OF BUSINESS ON AUGUST 15, 1960, THE SET -ASIDE WOULD BE WITHDRAWN. THE SBA REPRESENTATIVE TOOK STEPS TO NOTIFY THREE SMALL BUSINESS FIRMS OF THE PROVISION IMPOSED BY THE PROCURING AGENCY FOR THE MAINTENANCE OF THE SET ASIDE AND THESE FIRMS INDICATED THAT THEY WOULD BID. HOWEVER, NO BIDS WERE RECEIVED BY THE TIME OF THE LAST MAIL DELIVERY ON AUGUST 15, AND AN AMENDMENT WAS SENT OUT WITHDRAWING THE SET-ASIDE AND EXTENDING THE OPENING DATE TO AUGUST 26, 1960. A SUBSEQUENT CHECK REVEALED THAT NO SMALL BUSINESS BIDS WERE RECEIVED UP TO THE MORNING OF AUGUST 17, 1960. BASED ON THE FAILURE OF SMALL BUSINESS FIRMS TO SUBMIT BIDS BY THE SPECIFIED DATE, THE SBA REPRESENTATIVE CONCURRED IN THE FEDERAL AVIATION AGENCY'S RECOMMENDATION THAT THE SMALL BUSINESS SET ASIDE BE WITHDRAWN. IN THIS REGARD, PARAGRAPH 1-1.708 OF THE FEDERAL PROCUREMENT REGULATIONS, PROMULGATED PURSUANT TO THE PROVISIONS OF SECTION 15 OF PUBLIC LAW 85-536, PROVIDES THAT:

"IF, PRIOR TO AWARD OF A CONTRACT INVOLVING A SET-ASIDE FOR SMALL BUSINESS, THE CONTRACTING OFFICER CONSIDERS THAT PROCUREMENT OF THE SET- ASIDE FROM A SMALL BUSINESS CONCERN WOULD BE DETRIMENTAL TO THE PUBLIC INTEREST (E.G., BECAUSE OF UNREASONABLE PRICE), THE CONTRACTING OFFICER MAY INITIATE WITHDRAWAL OF THE SET-ASIDE DETERMINATION. IF THE SBA REPRESENTATIVE DOES NOT AGREE TO THE WITHDRAWAL, THE MATTER WILL BE REFERRED BY THE ADMINISTRATOR OF SBA TO THE AGENCY HEAD FOR FINAL RESOLUTION. A SIGNED MEMORANDUM OF ANY WITHDRAWAL OF A SET-ASIDE SHALL BE RETAINED IN THE CONTRACT FILE.'

AFTER THE SET ASIDE WITHDRAWAL, BIDS WERE RECEIVED FROM SIX BIDDERS, INCLUDING THREE SMALL BUSINESS CONCERNS. HOWEVER, OF THESE THREE LATTER CONCERNS, ONE INTENDED TO SUBCONTRACT A SUBSTANTIAL PART OF THE WORK TO A LARGE BUSINESS CONCERN, AND ONE OFFERED THE REQUIRED ITEMS AT CONSIDERABLY HIGHER PRICES FROM THE OTHER PRICES RECEIVED.

THE REGULATION GOVERNING THE WITHDRAWAL OF SET-ASIDES PROVIDES THAT WITHDRAWAL ACTION MAY BE INITIATED BY THE CONTRACTING OFFICER IF HE CONSIDERS THAT A PROCUREMENT UNDER THE SET ASIDE WOULD BE DETRIMENTAL TO THE PUBLIC INTEREST. IN THE EVENT OF A DISAGREEMENT BETWEEN THE CONTRACTING OFFICER AND SBA REPRESENTATIVE AS TO THE WITHDRAWAL, THE MATTER IS FOR REFERRAL TO THE AGENCY HEAD FOR FINAL RESOLUTION. HERE, THE CONTRACTING OFFICER AND SBA REPRESENTATIVE AGREED THAT WITHDRAWAL ACTION WAS PROPER AFTER EFFORTS HAD BEEN MADE TO OBTAIN THE COMPETITION BELIEVED NECESSARY TO SUSTAIN THE SET-ASIDE. THERE IS NO EVIDENCE TO INDICATE THAT SUFFICIENT COMPETITION AT REASONABLE PRICES WAS AVAILABLE UNDER THE SET ASIDE OR THAT ATTEMPTS WERE MADE BY THE CONTRACTING OFFICER OR SBA REPRESENTATIVE TO PREVENT SUCH COMPETITION. WE DEEM THE FACTS SUFFICIENT TO WARRANT THE DETERMINATION OF THE CONTRACTING OFFICER AND THE SBA REPRESENTATIVE THAT THE SET-ASIDE BE WITHDRAWN. SEE 37 COMP. GEN. 147.

YOU OBJECT TO THE ALLEGED IMPROPRIETY OF ISSUING THE WITHDRAWAL OF THE SET-ASIDE BEFORE THE AUGUST 16 DATE ESTABLISHED BY THE AGENCY. IT IS REPORTED THAT THE WITHDRAWAL AMENDMENT WAS SENT OUT AFTER DELIVERY OF THE LAST MAIL ON AUGUST 15, 1960. IT IS ALSO REPORTED THAT NO BIDS WERE RECEIVED AS OF THE MORNING OF AUGUST 17, 1960. THERE IS NO INDICATION, THEREFORE, THAT THE AMENDMENT WAS PREMATURELY ISSUED TO THE PREJUDICE OF SMALL BUSINESS CONCERNS BECAUSE IT WAS MAILED ON AUGUST 15 INSTEAD OF AUGUST 16.

ACCORDINGLY, WE SEE NO VALID LEGAL BASIS UPON WHICH WE WOULD OBJECT TO THE WITHDRAWAL OF THE SMALL BUSINESS SET ASIDE UNDER THE SUBJECT INVITATION AND YOUR PROTEST MUST BE DENIED.