B-157581, MAR. 2, 1966

B-157581, MAR. 2, 1966

TO GLOBE INDUSTRIES, INCORPORATED:

FURTHER REFERENCE IS MADE TO YOUR LETTERS DATED DECEMBER 10, 1965, AND FEBRUARY 15, 1966, REQUESTING RECONSIDERATION OF OUR DECISION B 157581 OF NOVEMBER 22, 1965, WHICH DENIED YOUR PROTEST OF AWARD UNDER INVITATION FOR BIDS NO. AMC/T) 23-204-65-319. YOU STATE THAT THE PROTEST WAS BASED UPON FOUR PREMISES AND THESE WERE, THAT THE SOLICITATION SHOULD HAVE BEEN A SMALL BUSINESS SET-ASIDE IN ITS ENTIRETY, THAT THE SIZE STANDARD WAS INCORRECTLY STATED AS 500 WHEN IT SHOULD HAVE BEEN 1,000, THAT THE SOLICITATION SHOULD HAVE PERMITTED A PARTIAL SET-ASIDE, AND THAT A PARTIAL SMALL BUSINESS SET-ASIDE SHOULD HAVE BEEN ADDED AFTER BID OPENING, WHEN THE FAILURE TO PROVIDE FOR SMALL BUSINESS WAS CLEARLY MADE OBVIOUS. YOU OFFER SEVERAL BASES TO SUPPORT YOUR CONCLUSIONS, ALLEGING BAD FAITH OF THE CONTRACTING OFFICER AND CITING DECISION B-147016, DATED NOVEMBER 17, 1961, AS SUPPORTING YOUR REQUEST THAT THE INVITATION BE CANCELLED AND READVERTISED AS A SMALL BUSINESS SET-ASIDE, OR, THAT AT LEAST SUCH ACTION BE TAKEN WITH REGARD TO ITEMS 2 AND 3 OF THE INVITATION.

A FURTHER ADMINISTRATIVE REPORT HAS BEEN RECEIVED SETTING FORTH IN MORE DETAIL THE REASONS FOR THE ACTION TAKEN ADMINISTRATIVELY IN NOT SETTING ASIDE ANY PORTION OF THE PROCUREMENT. PROCEEDING TO YOUR FIRST QUESTION, THE STATED ADMINISTRATIVE VIEW IS THAT ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-706.1/C) (III) PROHIBITS A TOTAL SET ASIDE FOR A QUALIFIED PRODUCTS LIST (QPL) ITEM UNLESS IT HAS BEEN CONFIRMED THAT NO LARGE BUSINESS DESIRES TO BID ON THE PROCUREMENT. CIRCUMSTANCES OF THE INSTANT PROCUREMENT, AS VERIFIED BY THE FACT THAT TWO LARGE BUSINESS FIRMS SUBMITTED THE LOWEST BIDS, CLEARLY SHOWS THAT A TOTAL SET-ASIDE FOR SMALL BUSINESS WOULD BE COMPLETELY UNWARRANTED AND CONTRARY TO THE ASPR.

THE SIZE STANDARD WAS INCORRECTLY DETERMINED AS 500 RATHER THAN 1,000 ACCORDING TO THE SMALL BUSINESS ADMINISTRATION DECISION OF OCTOBER 18, 1965. THIS WAS ACKNOWLEDGED AND CONSIDERED IN OUR DECISION OF NOVEMBER 22, 1965. YOUR REEMPHASIS OF THIS ERROR INDICATES THAT IT IS THE PRIMARY BASIS OF YOUR CONTINUING CONTENTION THAT THE PROCUREMENT SHOULD BE SET ASIDE FOR SMALL BUSINESS EITHER IN WHOLE OR IN PART. WHILE THE SMALL BUSINESS ADMINISTRATION'S DETERMINATION IS NOW BINDING AND APPLICABLE ON ALL FUTURE PROCUREMENTS OF THIS ITEM, THE FACT REMAINS THAT THE CONTRACTING OFFICER AT THE TIME WAS REQUIRED TO MAKE A JUDGMENT, AND IT WAS MADE IN THIS CASE IN GOOD FAITH AFTER CONSIDERING ALL THE FACTS AVAILABLE. ALTHOUGH YOU CONTINUE TO PROTEST THAT THE PROCUREMENT HISTORY OF THE ITEM IN QUESTION SUBSTANTIATES YOUR POSITION THAT THE CONTRACTING OFFICE ACTED IN BAD FAITH, IT REMAINS THE ADMINISTRATIVE POSITION THAT THE PRIOR PROCUREMENT HISTORY OF THIS ITEM DOES NOT DISCLOSE THAT ANY PARTIAL SET-ASIDES HAD EVER BEEN MADE BY EITHER THE ARMY OR THE AIR FORCE. FURTHER, IT IS POINTED OUT THAT THE DEFECT IN THE APPLICABLE SIZE STANDARD WAS AS RECOGNIZABLE AND SUSCEPTIBLE TO AN APPEAL BEFORE THE BID OPENING AS IT WAS FOLLOWING THAT EVENT, AND YOUR COMPANY IS DEEMED TO HAVE NOTICE OF THE PROVISIONS IN ASPR 1-703/B) (6) WHICH REQUIRED THAT IT TAKE ACTION NOT LESS THAN TEN DAYS BEFORE BID OPENING. WITH FURTHER REGARD TO THE SIZE STANDARD IT IS NOTED THAT OTHER THAN BEING RESTRICTED TO QPL ITEMS, THE INVITATION WAS ISSUED ON THE BASIS OF FULL, FREE AND OPEN COMPETITION. PARTICULAR THE INVITATION DID NOT PROVIDE FOR SET-ASIDES, PARTIALLY OR ENTIRELY, AND DID NOT RESTRICT BIDDING TO THOSE INDUSTRIES HAVING NOT MORE THAN 500 EMPLOYEES.

FURTHER RESPECTING A PARTIAL SET-ASIDE, IT IS REPORTED THAT ITEMS 1 AND 2 WERE SEPARATELY IDENTIFIED SOLELY FOR ADMINISTRATIVE CONVENIENCE. THESE ITEMS HAVE DIFFERENT PACKAGING REQUIREMENTS, FOR WHICH DIFFERING BID PRICES WERE EXPECTED AND DIFFERENT DESTINATIONS, FOR WHICH DIFFERING SHIPPING COST EVALUATIONS APPLY. AS INCREASED IN QUANTITY ON AMENDMENT NO. 1 TO THE INVITATION, THE ESTIMATED VALUE OF ITEMS 1 AND 2 WAS $116,050. THE SET-ASIDE DECISION WAS NOT ADMINISTRATIVELY RECONSIDERED AFTER BID OPENING BECAUSE THE ORIGINAL DECISION HAD BEEN BASED NOT ON VALUE BUT RATHER THE EXISTENCE OF WHAT WAS BELIEVED TO BE BUT ONE SMALL BUSINESS CONCERN ON THE QUALIFIED PRODUCTS LIST. A PARTIAL SET-ASIDE OF ITEM 3, THE REQUIREMENTS PORTION, WAS NEVER CONSIDERED APPROPRIATE BECAUSE OF THE NATURE OF A REQUIREMENTS CONTRACT AS DEFINED IN ASPR 3-409.2. CONTINUES TO BE THE ADMINISTRATIVE VIEW THAT IN RECONSIDERING THE SET- ASIDE DECISION ON THE BASIS THAT THERE WERE TWO SMALL BUSINESS CONCERNS QUALIFIED UNDER THE 1,000 EMPLOYEE STANDARD, IT IS STILL FELT THAT THE PROCUREMENT SHOULD NOT HAVE BEEN SET ASIDE.

IT IS FURTHER STATED THAT THE BASIC PURPOSE OF THE SOLICITATION IS TO ENTER INTO A TWO-YEAR REQUIREMENTS CONTRACT FOR ESTIMATED USAGE AT THE TIME OF ACTUAL PROCUREMENT OF THE MAXIMUM AMOUNT OF NEEDED AND FUNDED QUANTITIES AND THAT THE FUNDED QUANTITY OBVIOUSLY ENABLES A BIDDER TO MORE COMPETITIVELY PRICE THE ESTIMATED REQUIREMENTS QUANTITY. EVEN A 50 PERCENT SET-ASIDE SPLIT OF THE FUNDED QUANTITY OBVIOUSLY LESSENS COMPETITIVE PRICING BY A LARGE BUSINESS CONCERN OF THE REQUIREMENTS QUANTITY. THEREFORE, THERE APPEARS NO REAL BASIS FOR AN ASSUMPTION THAT A DIFFERENT CONCLUSION WOULD HAVE BEEN REACHED HAD THE FACT AS TO SIZE STANDARD BEEN OTHERWISE CORRECTLY STATED AT THE TIME THE DETERMINATION NOT TO SET ASIDE ANY PORTION OF THE PROCUREMENT WAS MADE.

OUR DECISION IN THE COSDON PETROLEUM CORPORATION CASE, 41 COMP. GEN. 306, CITED BY YOU AS AUTHORITY TO NEGOTIATE DIRECTLY WITH SMALL BUSINESS ON A PARTIAL SET-ASIDE, INVOLVED A SITUATION WHERE IT HAD BEEN PREVIOUSLY ADMINISTRATIVELY DETERMINED THAT A SMALL BUSINESS SET ASIDE WAS IN ORDER. IT WAS TO THE PROCEDURES EMPLOYED IN CARRYING OUT THIS DETERMINATION AND TO THE EVALUATION AND APPLICATION OF A PROPERLY AUTHORIZED AND DESIGNATED SMALL BUSINESS BID THAT THE DECISION ADDRESSED ITSELF. THE ONLY ISSUE PRESENTED BY YOUR PROTEST IS WHETHER A PARTICULAR PROCUREMENT SHOULD BE SET ASIDE FOR SMALL BUSINESS.

THE SMALL BUSINESS ACT OF 1958 (15 U.S.C. 631) DECLARES IT TO BE THE POLICY OF THE CONGRESS THAT THE GOVERNMENT SHOULD ASSIST SMALL BUSINESS CONCERNS IN ORDER TO INSURE THAT A "FAIR PROPORTION" OF THE TOTAL PURCHASES AND CONTRACTS FOR PROPERTY AND SERVICES FOR THE GOVERNMENT BE PLACED WITH SMALL BUSINESS ENTERPRISES. SECTION 15 OF THE ACT (15 U.S.C. 644) IMPLEMENTS THIS CONGRESSIONAL POLICY BY PROVIDING, INTER ALIA, THAT:

" * * * SMALL BUSINESS CONCERNS * * * SHALL RECEIVE ANY AWARD OF A CONTRACT OR ANY PART THEREOF * * * AS TO WHICH IT IS DETERMINED BY THE ADMINISTRATION AND THE CONTRACTING PROCUREMENT * * * AGENCY * * * (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 * * *.'

THERE IS NO PROVISION IN EITHER THE SMALL BUSINESS ACT OR IN THE IMPLEMENTING PROCUREMENT REGULATIONS GRANTING TO SBA THE AUTHORITY TO DECIDE, OTHER THAN AS AUTHORIZED IN SECTION 8/B) (7) OF THE ACT AND ASPR 1 -705.4/B) RELATING TO CAPACITY AND CREDIT, THAT, CONTRARY TO THE DETERMINATION OF THE CONTRACTING AGENCY, A SMALL BUSINESS CONCERN SHALL BE AWARDED A SPECIFIC GOVERNMENT CONTRACT. SEE ASPR 1-706.1.

THE ONLY ADMINISTRATIVE ACT COMPLAINED OF PERTINENT TO YOUR PROTEST WAS AN INADVERTENCE IN THE DETERMINATION OF THE APPLICABLE SIZE STANDARD INVOLVING JUDGMENT WHICH WAS REQUIRED TO BE EXERCISED WITHIN THE ADMINISTRATIVE PROCUREMENT AUTHORITY. IN THIS RESPECT ASPR 1 703/3) (6), GOVERNING SIZE DETERMINATION, CLEARLY WRITTEN IN THE INTERESTS OF THE BIDDER, WAS INTENDED TO COVER JUST SUCH A SITUATION AND WAS THE PROPER CHANNEL FOR MAKING TIMELY PROTEST.

THEREFORE, WE FIND THAT THE DETERMINATION NOT TO SET ASIDE THE PROCUREMENT WAS AND IS BASICALLY AN ADMINISTRATIVE MATTER, WAS MADE WITHIN THE FRAMEWORK OF THE PERTINENT LAWS AND REGULATIONS, AND WE FIND NO LEGAL BASIS TO QUESTION EITHER THE FAILURE TO MAKE A SET-ASIDE OR THE VALIDITY OF A RESULTING AWARD. ACCORDINGLY, OUR DECISION OF NOVEMBER 22, 1965, DENYING YOUR PROTEST IS HEREBY AFFIRMED.