B-145698, JUN. 1, 1961

B-145698, JUN. 1, 1961

TO ANCHOR POST PRODUCTS, INC.:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 21, 1961, PROTESTING THE TOTAL SMALL BUSINESS SET-ASIDE UNDER INVITATION NO. 1-3448B1 ISSUED BY THE FEDERAL AVIATION AGENCY FOR THE ERECTION OF FENCING AT DULLES INTERNATIONAL AIRPORT NEAR CHANTILLY, VIRGINIA.

IN YOUR LETTER OF APRIL 26, TO THE CONTRACTING AGENCY, YOU STATE THAT YOU ARE WITHDRAWING YOUR PROTEST AGAINST AN AWARD UNDER THE ABOVE INVITATION BUT THAT YOU WOULD LIKE TO HAVE A REPLY TO THE QUESTIONS PRESENTED IN YOUR LETTER OF APRIL 21.

YOU REFER TO SECTION 15 OF THE ACT OF JULY 18, 1959, 72 STAT. 395, 15 U.S.C. 644 AND STATE THAT THE CONDITIONS FOR PROPER SET-ASIDE HAVE NOT BEEN DETERMINED. PARTICULARLY YOU POINT TO THE FOUR CONDITIONS SET OUT THEREIN AS REQUIRED TO BE DETERMINED AS ESSENTIAL FOR A PROPER SET-ASIDE.

15 U.S.C. 644 PROVIDES AS FOLLOWS:

"TO EFFECTUATE THE PURPOSES OF THIS CHAPTER, SMALL-BUSINESS CONCERNS WITHIN THE MEANING OF THIS CHAPTER SHALL RECEIVE ANY AWARD OF 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; * * *. THESE DETERMINATIONS MAY BE MADE FOR INDIVIDUAL AWARDS OR CONTRACTS OR FOR CLASSES OF AWARDS OR CONTRACTS. WHENEVER THE ADMINISTRATION AND THE CONTRACTING PROCUREMENT AGENCY FAIL TO AGREE, THE MATTER SHALL BE SUBMITTED FOR DETERMINATION TO THE SECRETARY OR THE HEAD OF THE APPROPRIATE DEPARTMENT OR AGENCY BY THE ADMINISTRATOR.'

IT WILL BE NOTED THAT ONLY ONE OF THE FOUR CONDITIONS NEEDS TO BE PRESENT IN ANY CASE TO SUPPORT A DETERMINATION FOR SET-ASIDE. IN THAT CONNECTION THE FEDERAL AVIATION AGENCY HAS REPORTED, WITH RESPECT TO THE DULLES AIRPORT PROJECT, THAT:

"* * * BECAUSE OF THE MAGNITUDE AND COMPLEXITY OF MUCH OF THE BASIC CONSTRUCTION WORK, NO SMALL BUSINESS SET-ASIDES HAD BEEN MADE TO THAT DATE. AS A PRELIMINARY TO THIS JOINT AGREEMENT WITH THE SMALL BUSINESS ADMINISTRATION, THE SCOPE OF ALL CURRENT AND PENDING PLANS FOR THE CONSTRUCTION OF THE AIRPORT WERE CONSIDERED. IT WAS THE CONCERN OF THE SMALL BUSINESS ADMINISTRATION THAT IN THIS TOTAL PROGRAM OF ABOUT $80,000,000.00, SOME PORTION BE ALLOCATED TO SMALL BUSINESS. WE SHARED THIS CONCERN, AND AFTER JOINT CONSIDERATION OF THE FACTORS INVOLVED, I.E., SMALL BUSINESS CAPABILITY AND CAPACITY, AND THE ADEQUACY OF COMPETITION, WE DETERMINED THAT THE PROJECTS LISTED ON THE CLASS SET ASIDE COULD SATISFACTORILY BE ACCOMPLISHED BY SUCH FIRMS, AND THAT THIS REPRESENTED A FAIR AND REASONABLE ALLOCATION OF WORK TO SMALL BUSINESS. * * *"

UNDER THE CIRCUMSTANCES THUS RECITED WE THINK THE DETERMINATION MADE REASONABLY COMPLIED WITH THE REQUIREMENTS OF THE THIRD CONDITION SET FORTH IN 15 U.S.C. 644. IN ANY EVENT, UNDER THE PERTINENT STATUTORY PROVISIONS AND REGULATIONS ISSUED PURSUANT THERETO, THE DETERMINATION TO SET ASIDE AN AWARD FOR SMALL BUSINESS IS PLACED WITHIN THE AMBIT OF SOUND ADMINISTRATIVE DISCRETION. THE AUTHORITY IS VERY BROAD AND AN ADMINISTRATIVE DETERMINATION MADE PURSUANT TO SUCH AUTHORITY IS NOT ORDINARILY SUBJECT TO REVIEW BY OUR OFFICE.

WITH REGARD TO YOUR STATEMENT THAT SET-ASIDES FOR SMALL BUSINESS INCREASE THE COST OF CONSTRUCTION ON GOVERNMENT PROJECTS BY REDUCING COMPETITION AND THAT THE SET-ASIDES FOR SMALL BUSINESS WILL INCREASE THE COST OF SUPERVISION BY THE GOVERNMENT, IT MAY BE POINTED OUT THAT THE SMALL BUSINESS ADMINISTRATION ACT DOES NOT MAKE THE SET-ASIDES FOR SMALL BUSINESS CONTINGENT UPON A DETERMINATION THAT THE COSTS TO THE GOVERNMENT WILL NOT BE INCREASED THEREBY.

WITH REGARD TO THE CONTENTION THAT THE LAW PERMITTING SET-ASIDES IS DISCRIMINATORY AND THEREFORE, IN EFFECT, UNCONSTITUTIONAL, IT IS THE SETTLED RULE OF THIS OFFICE NOT TO PASS UPON THE CONSTITUTIONALITY OF A STATUTE, SUCH QUESTIONS BEING RESERVED FOR DECISION BY THE COURTS.

SINCE THE DETERMINATION TO SET ASIDE THIS PROCUREMENT FOR SMALL BUSINESS APPEARS TO HAVE BEEN MADE WITHIN THE FRAMEWORK OF APPLICABLE LAW, WE FIND NO BASIS TO QUESTION SUCH DETERMINATION.