B-125564, OCTOBER 26, 1955, 35 COMP. GEN. 233

B-125564, OCTOBER 26, 1955, 35 COMP. GEN. 233

CONTRACTS - AWARDS - SMALL BUSINESS CONCERNS - PROTEST BY FIRM NOT DESIGNATED AS SMALL BUSINESS CONCERN WHERE THE LEASING OF A DRYDOCK BY THE NAVY DEPARTMENT UNDER AUTHORITY IN 34 U.S.C. 522A, WHICH DOES NOT REQUIRED COMPETITIVE BIDDING, WAS RESTRICTED TO SMALL BUSINESS CONCERNS, A PROTEST BY A FIRM WHICH WAS NOT DESIGNATED AS A SMALL BUSINESS CONCERN PROVIDES NO BASIS FOR DECLARING THE AWARD TO A CERTIFIED SMALL BUSINESS INVALID; THE ONLY REMEDY FOR THE PROTESTING BIDDER WOULD BE AN APPEAL TO THE SMALL BUSINESS ADMINISTRATION.

TO DAVIES, RICHBERG, TYDINGS, BEEBE AND LANDA, OCTOBER 26, 1955:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 21, 1955, WHEREIN ON BEHALF OF THE DADE DRYDOCK CORPORATION YOU PROTEST THE AWARD MADE TO RAWLS BROTHERS CONTRACTORS, INC., FOR THE LEASE OF FLOATING DRY DOCK AFDL-41.

THE LEASING OF THE DRY DOCK WAS RESTRICTED TO SMALL BUSINESS CONCERNS. SEALED BIDS WERE INVITED ON JUNE 22, 1955, FROM SOME 74 CONCERNS. FOUR BIDS WERE RECEIVED AND OPENED ON AUGUST 15, 1955. TWO OF THE BIDS, FOR A MONTHLY RENTAL OF $23,750 MINIMUM, WERE SUBMITTED BY THE DADE DRYDOCK CORPORATION ON ALTERNATE BASES. THE OTHER TWO BIDDERS WERE SOUTHERN SHIPBUILDING, INC., $32,500 A MONTH, AND RAWLS BROTHERS CONTRACTORS, INC., $11,240 A MONTH. BY LETTER DATED AUGUST 25, 1955, THE SMALL BUSINESS ADMINISTRATION ADVISED THE NAVY DEPARTMENT THAT IT COULD NOT CERTIFY SOUTHERN SHIPBUILDING OF DADE DRYDOCK AS SMALL BUSINESS CONCERNS SINCE THEIR TOTAL NUMBER OF EMPLOYEES, INCLUDING AFFILIATES, EXCEEDED 500, ALTHOUGH IT DID CERTIFY RAWLS BROTHERS AS A SMALL BUSINESS CONCERN. AWARD WAS MADE TO RAWLS ON SEPTEMBER 13, 1955.

YOUR PROTEST IS BASED CHIEFLY ON THE CONTENTION THAT DADE DRYDOCK WAS A SMALL BUSINESS CONCERN AT THE TIME OF ITS BID OR AT LEAST PRIOR TO THE TIME OF AWARD. ADDITIONAL GROUNDS OF PROTEST HAVE TO DO WITH THE ALLEGEDLY INADEQUATE PRICE BID BY RAWLS AND THE PRESUMED DETRIMENT TO THE NATIONAL DEFENSE RESULTING FROM THE LOCATION OF THE DRY DOCK AT JACKSONVILLE RATHER THAN MIAMI, FLORIDA.

THE NATIONAL DEFENSE ASPECT OF THE LOCATION OF THE DRY DOCK IS, OF COURSE, A MATTER FOR DETERMINATION BY THE DEPARTMENT OF THE NAVY.

THE REASONABLENESS OF THE AMOUNT BID BY RAWLS WAS CONSIDERED BY THE CHIEF OF THE BUREAU OF YARDS AND DOCKS, THE DEPUTY CHIEF OF NAVAL OPERATIONS, THE DEPUTY CHIEF OF THE BUREAU OF SHIPS, THE CHIEF OF NAVAL MATERIAL, AND THE ASSISTANT SECRETARY OF THE NAVY ( MATERIAL BEFORE AWARD WAS MADE. HAVE NO BASIS UPON WHICH TO QUESTION THEIR JUDGMENT THAT THE BID PRICE WAS REASONABLE. YOU DO NOT CONTEND THAT EITHER THE RENTAL PRICE FOR OR THE LOCATION OF THE DRY DOCK WOULD AFFECT THE VALIDITY OF THE AWARD MADE. MAY BE NOTED IN THIS CONNECTION THAT THE LEASE OF THE DRY DOCK WAS MADE UNDER THE AUTHORITY OF SECTION 522A, TITLE 34, U.S. CODE, WHICH AUTHORIZES THE SECRETARY OF THE NAVY TO MAKE SUCH LEASES "TO SUCH LESSEE OR LESSEES AND UPON SUCH TERMS AND CONDITIONS AS IN HIS JUDGMENT WILL PROMOTE THE NATIONAL DEFENSE OR WILL BE IN THE PUBLIC INTEREST.'

WITH RESPECT TO YOUR CONTENTION THAT DADE DRYDOCK IS SMALL BUSINESS, IT APPEARS THAT THE CONTRARY OPINION OF THE SMALL BUSINESS ADMINISTRATION WAS BASED ON THE FACT THAT SOME DEGREE OF AFFILIATION EXISTED BETWEEN IT AND THE MERRILL STEVENS COMPANIES. IT IS REPORTED BY THE ASSISTANT SECRETARY OF THE NAVY ( MATERIAL) THAT BY LETTER OF AUGUST 25, 1955, YOU OFFERED TO CHANGE THE INTERRELATIONSHIP BETWEEN THE COMPANIES IN ORDER TO QUALIFY AS A SMALL BUSINESS CONCERN. IN YOUR LETTER OF SEPTEMBER 21, 1955, YOU STATE YOU DISAGREE WITH THE SMALL BUSINESS ADMINISTRATION DETERMINATION THAT DADE DRYDOCK WAS NOT SMALL BUSINESS AT THE TIME OF ITS BID, AND THAT IN ANY EVENT THE PURPORTED DISQUALIFICATION WAS COMPLETELY AND PERMANENTLY REMOVED PRIOR TO THE TIME OF AWARD.

FROM THE FOREGOING, IT APPEARS THAT A CHANGE WAS MADE IN THE CORPORATE AFFILIATIONS OF DADE DRYDOCK SOMETIME AFTER BIDS WERE OPENED AND BEFORE AWARD. IT MIGHT BE ARGUED THAT SUCH ACTION IS TANTAMOUNT TO A MODIFICATION OF YOUR BID AFTER OPENING WHICH COULD NOT BE PERMITTED UNDER THE LAW GOVERNING COMPETITIVE BIDDING. WHILE THIS QUESTION IS NOT FREE FROM DOUBT, IT APPEARS UNNECESSARY TO DECIDE IT IN THE PRESENT CASE IN VIEW OF THE FACT THAT THE AWARD WAS MADE UNDER A STATUTE WHICH DOES NOT REQUIRE COMPETITIVE BIDDING. HOWEVER, SO FAR AS APPEARS FROM THE RECORD BEFORE US, THE SMALL BUSINESS ADMINISTRATION HAD REFUSED TO CERTIFY DADE DRYDOCK AS A SMALL BUSINESS CONCERN, AND THEIR DETERMINATION HAD NOT BEEN CHANGED PRIOR TO THE AWARD. THUS, WHEN AWARD WAS MADE, DADE DRYDOCK HAD BEEN REFUSED A DESIGNATION AS SMALL BUSINESS BY THE SMALL BUSINESS ADMINISTRATION.

SECTION 212 OF THE SMALL BUSINESS ACT OF 1953, 67 STAT. 238, 15 U.S.C. 641, PROVIDES, IN PART, AS FOLLOWS:

THE ADMINISTRATION SHALL HAVE POWER, AND IT IS HEREBY DIRECTED, WHENEVER IT DETERMINES SUCH ACTION IS NECESSARY---

(C)TO DETERMINE WITHIN AN INDUSTRY THE CONCERNS, FIRMS, PERSONS,CORPORATIONS, PARTNERSHIPS, COOPERATIVES, OR OTHER BUSINESS ENTERPRISES, WHICH ARE TO BE DESIGNATED "SMALL-BUSINESS CONCERNS" FOR THE PURPOSE OF EFFECTUATING THE PROVISIONS OF THIS TITLE * * *.

THE AUTHORITY TO DETERMINE WHETHER OR NOT DADE DRYDOCK WAS A "SMALL BUSINESS CONCERN" WAS VESTED EXCLUSIVELY IN THE SMALL BUSINESS ADMINISTRATION, AND THEIR REFUSAL TO DESIGNATE DADE DRYDOCK AS SMALL BUSINESS, WHETHER RIGHT OR WRONG, NECESSARILY HAD TO BE ACCEPTED BY THE NAVY DEPARTMENT. IF DADE DRYDOCK BELIEVED THE DETERMINATION OF THE SMALL BUSINESS ADMINISTRATION WAS ERRONEOUS, ITS REMEDY WAS TO PURSUE THE MATTER FURTHER WITH THAT AGENCY IN ACCORDANCE WITH ITS ADMINISTRATIVE APPEALS PROCEDURE.

THE AWARD MADE ON SEPTEMBER 13, 1955, TO RAWLS BROTHERS CONTRACTORS, INC., WAS MADE TO A SMALL BUSINESS CONCERN AS CERTIFIED BY THE SMALL BUSINESS ADMINISTRATION. DESPITE THE FACT THAT THE BID OF DADE DRYDOCK WAS FINANCIALLY MORE ADVANTAGEOUS TO THE GOVERNMENT, IT HAD, UP TO THAT TIME, BEEN REFUSED CERTIFICATION AS SMALL BUSINESS BY THE AGENCY HAVING EXCLUSIVE AUTHORITY TO MAKE SUCH CERTIFICATIONS. UNDER THESE CIRCUMSTANCES, NO BASIS EXISTS FOR DECLARING THE AWARD MADE TO BE INVALID.