B-132740, OCTOBER 2, 1969, 49 COMP. GEN. 219

B-132740, OCTOBER 2, 1969, 49 COMP. GEN. 219

CONTRACTS -- AWARDS -- SMALL BUSINESS CONCERNS -- CONSTRUCTION CONTRACTS THE AUTHORITY OF THE SMALL BUSINESS ADMINISTRATION PURSUANT TO SECTION 8(A) OF THE SMALL BUSINESS ACT (15 U.S.C. 637(A)) TO ENTER INTO CONTRACTS WITH GOVERNMENT AGENCIES AND OFFICERS HAVING PROCUREMENT POWERS TO FURNISH ARTICLES, EQUIPMENT, SUPPLIES, OR MATERIALS, AND TO SUBCONTRACT THE PRIME CONTRACTS TO SMALL CONCERNS, AS WELL AS THE AUTHORITY IN SECTION 15 TO MAKE DIRECT CONTRACT AWARDS, MAY BE EXTENDED TO CONSTRUCTION CONTRACTS UNDER AN EXPANDED INTERPRETATION OF THE PARENTHETICAL PHRASE "INCLUDING BUT NOT LIMITED TO CONTRACTS FOR MAINTENANCE, REPAIR, AND CONSTRUCTION" APPEARING IN SECTION 2(A), PROVIDING FOR THE PLACEMENT OF A FAIR PROPORTION OF THE TOTAL PURCHASES AND CONTRACTS FOR PROPERTY AND SERVICES FOR THE GOVERNMENT WITH SMALL BUSINESS ENTERPRISES, THUS CARRYING OUT THE INTENT OF CONGRESS THAT SMALL BUSINESS CONCERNS OBTAIN A FAIR PROPORTION OF ALL TYPES OF GOVERNMENT CONTRACTS. STATUTORY CONSTRUCTION -- OMISSION OF EXPRESS LANGUAGE WHERE AN EXPANDED INTERPRETATION OF A STATUE WILL ACCOMPLISH BENEFICIAL RESULTS, SERVE THE PURPOSE FOR WHICH THE STATUTE WAS ENACTED, IS A NECESSARY INCIDENTAL TO A POWER OR RIGHT, OR IS THE ESTABLISHED CUSTOM, USAGE OR PRACTICE, THE MAXIM FORMING THE BASIS FOR AN INFERENCE THAT ALL AMISSIONS WERE INTENDED WILL BE REFUTED. THEREFORE, IT IS NECESSARY TO GIVE AN EXPANDED STATUTORY CONSTRUCTION TO THE PARENTHETICAL PHRASE "INCLUDING" BUT NOT LIMITED TO CONTRACTS FOR MAINTENANCE, REPAIR, AND CONSTRUCTION" APPEARING IN SECTION 2(A) OF THE SMALL BUSINESS ACT TO INCLUDE CONSTRUCTION CONTRACTS IN THE ADMINISTRATION OF THE SUBCONTRACTING AUTHORITY IN SECTION 8(A) AND THE DIRECT CONTRACT AUTHORITY IN SECTION 15, IN ORDER TO CARRY OUT THE CONGRESSIONAL INTENT THAT SMALL BUSINESS CONCERNS OBTAIN A FAIR PROPORTION OF ALL TYPES OF GOVERNMENT CONTRACTS.

TO THE ADMINISTRATOR, SMALL BUSINESS ADMINISTRATION, OCTOBER 2, 1969:

REFERENCE IS MADE TO A LETTER DATED SEPTEMBER 5, 1969, FROM MR. LEONARD S. ZARTMAN, GENERAL COUNSEL, REQUESTING AN OPINION WITH RESPECT TO A PROPOSED EXTENSION INTO CONSTRUCTION CONTRACTS OF THE PROCUREMENT ACTIVITIES OF THE SMALL BUSINESS ADMINISTRATION UNDER SECTION 8(A) OF THE SMALL BUSINESS ACT, AS AMENDED, 15 U.S.C. 637(A).

PUBLIC LAW 85-536, H.R. 7963, APPROVED JULY 18, 1958, 72 STAT. 384, KNOWN AS THE SMALL BUSINESS ACT, COMPLETELY REVISED THE SMALL BUSINESS ACT OF 1953, TITLE II OF PUBLIC LAW 163, 83D CONGRESS, 67 STAT. 232, AS AMENDED. SECTION 8(A)(1) OF THE NEW ACT, 15 U.S.C. 637(A)(1), AUTHORIZES THE SMALL BUSINESS ADMINISTRATION TO ENTER INTO CONTRACTS WITH THE UNITED STATES GOVERNMENT AND ANY DEPARTMENT, AGENCY OR OFFICER THEREOF HAVING PROCUREMENT POWERS OBLIGATING THE ADMINISTRATION TO FURNISH ARTICLES, EQUIPMENT, SUPPLIES OR MATERIALS TO THE GOVERNMENT. SECTION 8(A)(2), 15 U.S.C. 637(A)(2), AUTHORIZES THE SMALL BUSINESS ADMINISTRATION TO ARRANGE FOR THE PERFORMANCE OF SUCH CONTRACTS BY NEGOTIATING OR OTHERWISE LETTING SUBCONTRACTS TO SMALL BUSINESS CONCERNS OR OTHERS FOR THE MANUFACTURE, SUPPLY, OR ASSEMBLY OF SUCH ARTICLES, EQUIPMENT, SUPPLIES OR MATERIALS, OR PARTS THEREOF, OR SERVICING OR PROCESSING IN CONNECTION THEREWITH, OR SUCH MANAGEMENT SERVICES AS MAY BE NECESSARY TO ENABLE THE ADMINISTRATION TO PERFORM SUCH CONTRACTS.

SECTION 15 OF THE ACT, 15 U.S.C. 644, PROVIDES IN PART THAT:

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 *** AS TO WHICH IT IS DETERMINED *** (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 *** .

SECTIONS 207(C) AND 207(D) AND SECTION 214 OF THE SMALL BUSINESS ACT OF 1953 CONTAIN SOMEWHAT SIMILAR PROVISIONS. THE 1953 AND 1958 STATUTES ALSO CONTAIN IN SECTIONS 202 AND 2(A), RESPECTIVELY, SIMILAR DECLARATIONS OF POLICY EXCEPT THAT THE FORMER DOES NOT INCLUDE ANY INDICATION THAT THE CONGRESS INTENDED TO MAKE THE PROVISIONS OF SECTION 214 APPLICABLE TO CONTRACTS FOR CONSTRUCTION, WHEREAS THE POLICY DECLARATION OF THE 1958 STATUTE STATES IN PART THAT--

*** IT IS THE DECLARED POLICY OF THE CONGRESS THAT THE GOVERNMENT SHOULD AID, COUNSEL, ASSIST, AND PROTECT, INSOFAR AS IS POSSIBLE, THE INTERESTS OF SMALL-BUSINESS CONCERNS IN ORDER TO PRESERVE FREE COMPETITIVE ENTERPRISE TO INSURE THAT A FAIR PROPORTION OF THE TOTAL PURCHASES AND CONTRACTS FOR PROPERTY AND SERVICES FOR THE GOVERNMENT (INCLUDING BUT NOT LIMITED TO CONTRACTS FOR MAINTENANCE, REPAIR, AND CONSTRUCTION) BE PLACED WITH SMALL-BUSINESS ENTERPRISES *** .

THE GENERAL COUNSEL'S LETTER STATES THAT THE EXERCISE OF THE SECTION 8(A) AUTHORITY HAS BEEN LIMITED TO SUPPLY AND SERVICE CONTRACTS, THAT IT IS NOW PROPOSED TO EXTEND THOSE ACTIVITIES TO CONSTRUCTION CONTRACTS AND THAT SOME OF THE GOVERNMENT AGENCIES WITH WHICH THE SMALL BUSINESS ADMINISTRATION PROPOSES TO CONTRACT HAVE QUESTIONED WHETHER SECTION 8(A) APPLIES TO CONSTRUCTION CONTRACTS. ALTHOUGH SECTION 8(A) DOES NOT SPECIFICALLY LIST CONSTRUCTION CONTRACTS, THE VIEW IS EXPRESSED THAT SECTION 8(A) COULD BE INTERPRETED AS INCLUDING CONSTRUCTION CONTRACTS ON THE BASIS OF THE PARENTHETICAL PHRASE APPEARING IN SECTION 2(A)- "INCLUDING BUT NOT LIMITED TO CONTRACTS FOR MAINTENANCE, REPAIR, AND CONSTRUCTION." THE LETTER CITES COURT CASES AND SECTION 4703, SUTHERLAND STATUTORY CONSTRUCTION, THIRD EDITION, TO THE EFFECT THAT ALL PARTS OF A STATUTE SHOULD BE CONSIDERED TOGETHER IN DETERMINING THE LEGISLATIVE INTENT. THE LETTER ALSO CITES H. REPT. NO. 555, 85TH CONG., 1ST SESS., ACCOMPANYING H.R. 7963, AND DECISIONS OF OUR OFFICE DATED OCTOBER 23, 1957, AND OCTOBER 22, 1958, 37 COMP. GEN. 271, 38 ID. 326.

IN 37 COMP. GEN. 271 WE EXPRESSED DOUBT THAT SECTION 214 OF THE SMALL BUSINESS ACT OF 1953 WAS INTENDED TO APPLY TO CONSTRUCTION CONTRACTS SINCE THE ACT CONTAINED NO REFERENCE TO SUCH CONTRACTS AND CONTRACTS FOR CONSTRUCTION OF PUBLIC BUILDINGS AND WORKS HAVE TRADITIONALLY BEEN TREATED AS SEPARATE AND DISTINCT SUBJECTS IN STATUTES, REGULATIONS, AND DECISIONS OF ACCOUNTING OFFICERS. SUBSEQUENTLY, IT WAS CONCLUDED IN 38 COMP. GEN. 326, ON THE BASIS OF THE POLICY DECLARATION IN SECTION 2(A) OF THE 1958 STATUTE AND A REVIEW OF ITS LEGISLATIVE HISTORY, THAT A SET ASIDE OF A FAIR PROPORTION OF CONSTRUCTION PROJECTS FOR SMALL BUSINESS CONTRACT AWARD PURPOSES UNDER SECTION 15 WOULD NOT BE LEGALLY OBJECTIONABLE.

SECTION 2(A) OF THE NEW SMALL BUSINESS ACT COULD BE CONSIDERED IN ITSELF AS EVIDENCING AN INTENTION OF THE CONGRESS THAT A FAIR PROPORTION OF VARIOUS TYPES OF CONTRACTS, INCLUDING CONTRACTS FOR SERVICES AND CONSTRUCTION, SHOULD BE AWARDED TO SMALL BUSINESS CONCERNS IN ACCORDANCE WITH REGULATIONS ISSUED PURSUANT TO SECTION 15 OF THE ACT. THAT THIS WAS, IN FACT, THE INTENTION OF THE CONGRESS IS EVIDENCED BY THE STATEMENT AT PAGE 5 OF H. REPT. NO. 555, SUPRA, WHICH IS QUOTED IN THE GENERAL COUNSEL'S LETTER AND IN 38 COMP. GEN. 326 (1958). IN THAT STATEMENT, THE LANGUAGE OF SECTION 2(A) OF H.R. 7963 WAS REFERRED TO AS A PROPOSED REVISION OF THE POLICY DECLARATION OF THE SMALL BUSINESS ACT OF 1953 "TO MAKE ABSOLUTELY CLEAR THAT IT IS THE INTENT OF CONGRESS THAT SMALL- BUSINESS CONCERNS SHALL OBTAIN A FAIR PROPORTION OF ALL TYPES OF GOVERNMENT CONTRACTS."

THE CITED DECISIONS OF OUR OFFICE DO NOT CONSIDER THE EXTENT TO WHICH THE SMALL BUSINESS ADMINISTRATION IS AUTHORIZED TO ENTER INTO CONTRACTS WITH OTHER GOVERNMENT AGENCIES AND TO SUBCONTRACT THE COMPLETE PERFORMANCE THEREOF. THE DECISIONS RELATED TO CAPEHART HOUSING CONSTRUCTION CONTRACTS TO WHICH THE SMALL BUSINESS ADMINISTRATION WAS NOT AND DID NOT INTEND TO BECOME A PARTY.

SECTION 8(A) OF THE NEW SMALL BUSINESS ACT PROVIDES A METHOD FOR FURNISHING ADDITIONAL ASSISTANCE TO SMALL BUSINESS CONCERNS CAPABLE OF PERFORMING SUPPLY CONTRACTS OR PORTIONS THEREOF INSTEAD OF RELYING SOLELY UPON SECTION 15 AND APPLICABLE REGULATIONS WHICH CONCERN THE MAKING OF CONTRACT AWARDS DIRECTLY TO RESPONSIBLE SMALL BUSINESS CONCERNS BY PROCURING AGENCIES. THE SECTION DOES NOT INCLUDE ANY SPECIFIC AUTHORITY ON THE PART OF THE SMALL BUSINESS ADMINISTRATION TO ENTER INTO SERVICE AND CONSTRUCTION CONTRACTS AND TO MAKE THE NECESSARY ARRANGEMENTS FOR THEIR PERFORMANCE. IT IS NEVERTHELESS APPARENT THAT THE CONGRESS DID NOT INTEND TO LIMIT THE SECTION 8(A) AUTHORITY TO SUPPLY CONTRACTS. UNDER SECTIONS 2(A) AND 15 SMALL BUSINESS CONCERNS WERE INTENDED TO OBTAIN A FAIR PROPORTION OF "ALL TYPES OF GOVERNMENT CONTRACTS."

IN OUR OPINION, THERE IS NO VALID REASON FOR SUPPOSING THAT THE CONGRESS WOULD NOT HAVE INCLUDED IN SECTION 8(A) A GRANT OF AUTHORITY TO THE SMALL BUSINESS ADMINISTRATION TO ENTER INTO SERVICE AND CONSTRUCTION CONTRACTS WITH OTHER AGENCIES OF THE GOVERNMENT TO OBTAIN FOR SMALL BUSINESS CONCERNS A FAIR PROPORTION OF "ALL TYPES OF GOVERNMENT CONTRACTS." WOULD BE UNREASONABLE TO CONCLUDE THAT THE SMALL BUSINESS ADMINISTRATION DOES NOT HAVE THE AUTHORITY UNDER SECTION 4(A), 15 U.S.C. 633, AND REGULATIONS ISSUED PURSUANT TO SECTION 5(B) (6) OF THE SMALL BUSINESS ACT, 15 U.S.C. 634, TO ENTER INTO ALL TYPES OF CONTRACTS WITH PROCURING AGENCIES FOR THE PURPOSE OF PROVIDING ASSISTANCE TO SMALL BUSINESS ENTERPRISES SO LONG AS THE METHOD OF CONTRACTING AND PERFORMING SUCH CONTRACTS DOES NOT CONFLICT WITH THE PROVISIONS OF SECTION 8(A) OR WITH ANY SPECIAL STATUTORY PROVISIONS GOVERNING THE AWARD OF CONTRACTS FOR SERVICES OR CONSTRUCTION OTHER THAN GIVING PREFERENTIAL TREATMENT TO SMALL BUSINESS ENTERPRISES.

WITH REFERENCE TO THE OMISSION OF ANY REFERENCE TO SERVICE CONTRACTS AND CONSTRUCTION CONTRACTS IN SECTION 8(A), AND TO THE MAXIM THAT THE STATEMENT OF ONE THING IS THE EXCLUSION OF OTHERS, SECTION 4915, SUTHERLAND STATUTORY CONSTRUCTION, THIRD EDITION, STATES IN PART THAT "THERE IS AN INFERENCE THAT ALL OMISSIONS WERE INTENDED BY THE LEGISLATURE." HOWEVER, IN SECTION 4917, IT IS STATED THAT "WHERE AN EXPANDED INTERPRETATION WILL ACCOMPLISH BENEFICIAL RESULTS, SERVE THE PURPOSE FOR WHICH THE STATUTE WAS ENACTED, IS A NECESSARY INCIDENTAL TO A POWER OR RIGHT, OR IS THE ESTABLISHED CUSTOM, USAGE OR PRACTICE," THE MAXIM FORMING THE BASIS FOR AN INFERENCE THAT ALL OMISSIONS WERE INTENDED BY THE LEGISLATURE "WILL BE REFUTED, AND AN EXPANDED MEANING GIVEN."

IT APPEARS THAT AN "EXPANDED INTERPRETATION" OF THE STATUTE HERE INVOLVED WOULD BE PROPER. WE THEREFORE AGREE WITH THE POSITION TAKEN BY THE GENERAL COUNSEL OF YOUR ADMINISTRATION THAT, FOR ALL PRACTICAL PURPOSES, IT MAY PROPERLY BE CONCLUDED THAT THE PARENTHETICAL PHRASE APPEARING IN THE SECTION 2(A) POLICY DECLARATION OF THE SMALL BUSINESS ACT WAS INTENDED BY THE CONGRESS TO BE EQUALLY APPLICABLE TO THE MAKING OF DIRECT CONTRACT AWARDS TO RESPONSIBLE SMALL BUSINESS CONCERNS UNDER THE PROVISIONS OF SECTION 15 AND TO THE CONTRACTING ACTIVITIES OF THE SMALL BUSINESS ADMINISTRATION UNDER SECTION 8(A).

HOWEVER, SINCE THE CONTRACTING ACTIVITIES OF YOUR ADMINISTRATION UNDER SECTION 8(A) OF THE SMALL BUSINESS ACT ALREADY INCLUDE THE ENTERING INTO AND PERFORMING SUPPLY AND SERVICE CONTRACTS WITH OTHER GOVERNMENT AGENCIES, AND IT IS NOW PROPOSED TO EXTEND SUCH ACTIVITIES TO THE PERFORMANCE OF CONSTRUCTION CONTRACTS WITH OTHER GOVERNMENT AGENCIES, IT APPEARS THAT SECTIONS 124.8-1 AND 124.8-2 OF TITLE 13, CODE OF FEDERAL REGULATIONS, SHOULD BE MODIFIED SO AS TO SHOW CLEARLY THAT THE AUTHORIZED ACTIVITIES UNDER SECTION 8(A) INCLUDE THE ENTERING INTO AND PERFORMANCE OF ALL TYPES OF GOVERNMENT CONTRACTS FOR THE PURPOSE OF PROTECTING THE INTERESTS OF SMALL BUSINESS CONCERNS.