B-173629, MAR 28, 1972

B-173629, MAR 28, 1972

BID PROTEST - TIMELINESS - SMALL BUSINESS STATUS DECISION DENYING THE PROTEST OF PINNACLE PRODUCTS CORPORATION AGAINST AWARD OF A SMALL BUSINESS SET-ASIDE TO TEXTILE MARKING MACHINE COMPANY, INC., UNDER AN IFB ISSUED BY THE DEFENSE GENERAL SUPPLY CENTER, RICHMOND, VA. PINNACLE'S PROTEST MIGHT BE DENIED SOLELY ON THE BASIS OF ITS UNTIMELINESS; HOWEVER, THE SUBSTANCE OF ITS OBJECTION IS ALSO WITHOUT MERIT. SO LONG AS A BIDDER'S SELF-CERTIFICATION REMAINS UNQUESTIONED UP UNTIL THE TIME OF AWARD, IT SHALL BE DEEMED A SMALL BUSINESS CONCERN FOR THE PURPOSE OF THE CONTRACT. OTIS STEEL PRODUCTS CORPORATION V UNITED STATES, 316 F.2D 937 (1963). ALTHOUGH PROTESTANT'S BID WAS LOWER THAN THAT OF TEXTILE, ITS FAILURE TO QUALIFY AS A SMALL BUSINESS CONCERN UNDER ASPR 1-701.1(A)(2)(C), APPEARS TO HAVE BEEN PROPERLY DETERMINED AND FAILS TO PROVIDE A BASIS FOR LEGAL OBJECTION. ACCORDINGLY, THE PROTEST MUST BE DENIED.

TO PINNACLE PRODUCTS CORPORATION:

WE REFER TO YOUR LETTER OF DECEMBER 14, 1971, IN RESPONSE TO OUR DECISION B-173629 OF NOVEMBER 30, 1971, DENYING THE PROTEST AGAINST AWARD OF A CONTRACT TO TEXTILE MARKING MACHINE COMPANY, INC. (TEXTILE), UNDER INVITATION FOR BIDS (IFB) NO. DSA400-71-B-6044, A TOTAL SMALL BUSINESS SET -ASIDE, ISSUED BY THE DEFENSE GENERAL SUPPLY CENTER, RICHMOND, VIRGINIA.

IN THE DECISION OF NOVEMBER 30, 1971, IT WAS STATED THAT YOU DID NOT PROTEST AGAINST TEXTILE'S SIZE STATUS UNTIL 70 DAYS AFTER BID OPENING AND 35 DAYS AFTER AWARD. YOU STATE THAT THE INITIAL PROTEST WAS FILED JULY 16, 1971, 46 DAYS AFTER BID OPENING AND 10 DAYS AFTER AWARD. HOWEVER, THE JULY 16, 1971, LETTER WAS A GENERAL PROTEST AGAINST THE AWARD. BY LETTER OF JULY 26, 1971, THE LAW FIRM REPRESENTING YOU ADVISED OUR OFFICE THAT THE PROTEST WAS BASED UPON THE APPLICATION OF THE BUY AMERICAN ACT AND THAT AFTER REVIEW OF THE INVITATION FOR BIDS, IT WAS DECIDED THAT YOU DID NOT HAVE A CASE AND THAT THERE WOULD BE NO FOLLOW-UP. IN ACCORDANCE WITH THAT ADVICE, BY LETTER OF AUGUST 9, 1971, TO THE LAW FIRM, OUR OFFICE ADVISED THAT THE FILE ON THE PROTEST WAS CLOSED. THEREAFTER, BY LETTER OF AUGUST 10, 1971, YOU RAISED FOR THE FIRST TIME THE ISSUE OF TEXTILE'S SMALL BUSINESS STATUS. AS STATED IN OUR DECISION OF NOVEMBER 30, 1971, THAT WAS 70 DAYS AFTER THE BID OPENING ON JUNE 1, 1971, AND 35 DAYS AFTER THE AWARD MADE ON JULY 6, 1971. IN ANY EVENT, EVEN IF THE JULY 16 LETTER WERE CONSIDERED THE DATE OF FIRST FILING A PROTEST AGAINST THE SIZE STATUS, THE PROTEST WAS FILED UNTIMELY.

YOU QUESTION WHAT INFORMATION TEXTILE FURNISHED WITH RESPECT TO ITS AFFILIATION WITH OTHER FIRMS (ITEM NO. 5 ON PAGE 2 OF STANDARD FORM 33). IN THE SPACE PROVIDED FOR SUCH INFORMATION, TEXTILE REPRESENTED THAT IT IS OWNED AND CONTROLLED BY THE ROSPATCH CORPORATION, 609 MYRTLE STREET, S.W., GRAND RAPIDS, MICHIGAN.

IN YOUR LETTER YOU STATE THAT IT IS IRONICAL TO FIND THAT IF A PROTEST AGAINST A BIDDER'S SMALL BUSINESS SIZE IS NOT MADE WITHIN A SPECIFIC TIME BEFORE AWARD, THE AWARD CAN STILL BE MADE EVEN IF THE BIDDER DOES NOT QUALIFY. UNDER THE SELF-CERTIFICATION PROCEDURE A BIDDER IS DEEMED TO QUALIFY UNTIL SUCH TIME AS THE SMALL BUSINESS ADMINISTRATION (SBA) RULES TO THE CONTRARY. HOWEVER, YOU OVERLOOK THE FACT THAT THE ASPR REGULATIONS PROVIDE THAT THE CONTRACTING OFFICER MAY, AT ANY TIME AFTER BID OPENING AND PRIOR TO AWARD, REFER TO THE SBA FOR DECISION THE SIZE STATUS OF ANY BIDDER WITH SUPPORTING FACTS THAT RAISE A QUESTION AS TO ITS STATUS. THUS, WHERE BEFORE AWARD THE CONTRACTING OFFICER HAS EVIDENCE THAT INDICATES THAT THE PROSPECTIVE CONTRACTOR DOES NOT QUALIFY AS A SMALL BUSINESS, IT IS REASONABLE TO ASSUME THAT THE CONTRACTING OFFICER WOULD REFER THE MATTER TO SBA FOR RESOLUTION WHEN TIME ALLOWS. WHERE SIZE STATUS IS NOT CONTESTED BEFORE AN AWARD, NO PROVISION IS MADE FOR RESOLUTION OF THE MATTER BY SBA AND, FOR PROCUREMENT PURPOSES, THE MATTER MAY REMAIN UNRESOLVED. THE COURT OF CLAIMS IN OTIS STEEL PRODUCTS CORPORATION V UNITED STATES, 316 F.2D 937 (1963), HAD BEFORE IT A SUIT BY A GOVERNMENT CONTRACTOR FOR RECOVERY OF EXCESS COSTS CHARGED AGAINST IT WHEN THE PLAINTIFF DEFAULTED UNDER ITS CONTRACT WHICH HAD BEEN AWARDED TO IT AS LOW BIDDER ON THE BASIS OF ITS SELF-CERTIFICATION THAT IT WAS A SMALL-BUSINESS CONCERN. THEREAFTER, RELYING ON ITS ADMITTED LARGE BUSINESS STATUS, THE PLAINTIFF SOUGHT TO VOID ITS CONTRACT UNILATERALLY. THE COURT HELD FOR THE GOVERNMENT AND IT MADE THE FOLLOWING OBSERVATIONS CONCERNING THE PROPRIETY OF THE AWARD (PAGE 940):

"THE ARMED SERVICES PROCUREMENT REGULATIONS ARE EVEN MORE PRECISE. ASPR 1-703 SAYS, 'EXCEPT AS PROVIDED IN (B) BELOW, THE CONTRACTING OFFICER SHALL ACCEPT AT FACE VALUE *** (II) A STATEMENT BY THE BIDDER OR OFFEROR THAT IT IS A SMALL BUSINESS CONCERN.' SUBSECTION (B) IS NOT IN POINT BECAUSE NO PROTEST WAS FILED BY ANYONE.

"WHEN THE TIME CAME FOR THE CONTRACTING OFFICER TO MAKE THE AWARD, THE ONLY THING THAT HE HAD BEFORE HIM WAS PLAINTIFF'S REPRESENTATION THAT IT WAS A SMALL BUSINESS CONCERN. THIS HAD NOT BEEN QUESTIONED BY ANYONE. THE REPRESENTATION HAD NOT BEEN WITHDRAWN. SO FAR AS THAT CONTRACT WAS CONCERNED, PLAINTIFF WAS A SMALL BUSINESS CONCERN AND ELIGIBLE TO RECEIVE THE CONTRACT. THE CONTRACTING OFFICER ACCORDINGLY AWARDED THE CONTRACT TO PLAINTIFF, AND THE PARTIES BECAME BOUND ACCORDING TO ITS TERMS.

"THERE SEEMS TO HAVE BEEN NO INTENTION ON PLAINTIFF'S PART TO MISLEAD THE DEFENDANT. ITS FAILURE TO NOTIFY THE CONTRACTING OFFICER OF THE CHANGE IN ITS STATUS SEEMS TO HAVE BEEN INADVERTENT, RATHER THAN DELIBERATE. IN THE ABSENCE OF FRAUD, DEFENDANT WAS EQUALLY BOUND ON THE CONTRACT WITH PLAINTIFF. THE REGULATION PROVIDES THAT IN THE ABSENCE OF A QUESTION ABOUT A BIDDER'S REPRESENTATION OF HIS STATUS, IT SHALL BE DEEMED TO BE A SMALL BUSINESS CONCERN FOR THE PURPOSE OF THAT CONTRACT. THIS MEANS IT SHALL BE DEEMED TO BE ONE, WHETHER IT WAS ONE IN FACT OR NOT. PLAINTIFF WAS A SMALL BUSINESS CONCERN, DEFENDANT IS OF COURSE BOUND ON ITS CONTRACT WITH IT. FOR THE PURPOSE OF THIS PROCUREMENT, PLAINTIFF WAS A SMALL BUSINESS CONCERN AS DEFINED IN THE ACT AND REGULATIONS.

"IF PLAINTIFF MEANT TO CONCEAL ITS CHANGE IN STATUS, IT CANNOT TAKE ADVANTAGE OF ITS OWN WRONG TO AVOID ITS OBLIGATION ON THE CONTRACT. DEFENDANT MIGHT SEEK INVALIDATION OF A CONTRACT ON THE GROUND OF FRAUD, BUT NOT HE WHO PRACTICES THE FRAUD. IN THIS CASE FRAUD IS NOT ALLEGED."

WE BELIEVE THAT THESE PRINCIPLES ARE EQUALLY APPLICABLE TO YOUR STATEMENT OF FACTS. COMPARE, AS TO THE AVENUES OF RELIEF OPEN TO AN UNSUCCESSFUL BIDDER, ROYAL SERVICES, INC. V MAINTENANCE, INC., 361 F.2D 86 (1966).

ALTHOUGH, AS YOU STATE, THE AWARD TO TEXTILE DID RESULT IN THE GOVERNMENT PAYING A HIGHER PRICE FOR THE MARKING MACHINES THAN IT WOULD HAVE PAID IF AN AWARD WERE MADE TO YOUR COMPANY, THE FACT REMAINS THAT YOU INDICATED IN YOUR BID THAT YOU WERE A REGULAR DEALER OF THE EQUIPMENT AND THAT THE COUNTRY OF ORIGIN WAS ENGLAND AND THE REASON FOR REJECTION OF YOUR OFFER WAS THAT YOU DID NOT QUALIFY AS A SMALL BUSINESS CONCERN UNDER ASPR 1- 701.1(A)(2)(C) WHICH FOLLOWS THE SBA REGULATIONS AT 13 C.F.R. 121.3-8(C). THE SBA REGULATIONS DEFINE A NONMANUFACTURING SMALL BUSINESS CONCERN AS ONE WHICH "FURNISHES IN THE PERFORMANCE OF THE CONTRACT THE PRODUCTS OF A SMALL BUSINESS MANUFACTURER OR PRODUCER WHICH PRODUCTS ARE MANUFACTURED OR PRODUCED IN THE UNITED STATES." UNDER 15 U.S.C. 637(B)(6), THE SBA IS EMPOWERED "TO DETERMINE WITHIN ANY INDUSTRY THE CONCERNS, FIRMS, PERSONS, CORPORATIONS, PARTNERSHIPS, COOPERATIVES OR OTHER BUSINESS ENTERPRISES WHICH ARE TO BE DESIGNATED 'SMALL BUSINESS CONCERNS.'" THUS, WHILE YOUR BID WAS LOWER THAN THAT OF TEXTILE, ITS REJECTION DOES NOT APPEAR TO HAVE BEEN IMPROPER AND DOES NOT AFFORD OUR OFFICE A BASIS FOR LEGAL OBJECTION.