B-153267, AUG. 10, 1964

B-153267, AUG. 10, 1964

TO POLAN INDUSTRIES, INC.:

REFERENCE IS MADE TO LETTERS OF JUNE 22 AND JULY 1, 1964, FROM YOUR ATTORNEYS, IN REGARD TO THE DELAY IN PROCEEDING WITH THE AWARD OF CONTRACT UNDER INVITATION FOR BIDS NO. AMC/A) 36-038-64-206/M) ISSUED BY THE FRANKFORD ARSENAL, PHILADELPHIA, PENNSYLVANIA, ON OCTOBER 4, 1963.

THE PROTEST SUBMITTED ON YOUR BEHALF IS CHIEFLY DIRECTED TO THE FACT THAT THERE WAS A DELAY IN THE AWARD OF A CONTRACT UNDER THE CITED INVITATION FOR BIDS AND THAT DURING THE PERIOD OF SUCH DELAY THE SMALL BUSINESS ADMINISTRATION REVISED ITS REGULATIONS WITH THE RESULT THAT VARO, INC., BECAME ELIGIBLE AS A SMALL BUSINESS CONCERN FOR AWARD OF A CONTRACT UNDER THE SET-ASIDE PROVISIONS OF THE INVITATION.

BIDS IN THIS CASE WERE OPENED ON NOVEMBER 4, 1963. AWARD OF THE NON-SET- ASIDE PORTION OF THE PROCUREMENT WAS MADE TO VARO, INC., ON DECEMBER 31, 1963. PRIOR THERETO, OR ON DECEMBER 19, 1963, THE CONTRACTING OFFICER REQUESTED A SIZE DETERMINATION FOR VARO, INC., WITH A VIEW TOWARD PROCEEDING WITH AWARD OF A CONTRACT UNDER THE SET ASIDE PORTION OF THE PROCUREMENT. SUCH A DETERMINATION WAS NECESSARY IN ORDER TO DETERMINE WHETHER VARO HAD GROUP 1 PRIORITY FOR AWARD AS A PERSISTENT LABOR SURPLUS AREA CONCERN AND A SMALL BUSINESS CONCERN. SBA'S DALLAS REGIONAL OFFICE MADE A DETERMINATION ON DECEMBER 24, 1963, THAT THE PRODUCT TO BE PROCURED (M18 BINOCULAR) WAS CLASSIFIED IN SIC INDUSTRY 3662 AND THAT SINCE VARO HAD LESS THAN 750 EMPLOYEES IT WAS A SMALL BUSINESS CONCERN FOR THE PURPOSE OF BIDDING ON M18 BINOCULARS. HOWEVER, IN VIEW OF THE COMPLEXITY OF THE M18 BINOCULAR AND SMALL BUSINESS CATEGORY, THE MATTER WAS REFERRED TO THE DIRECTOR OF THE SIZE STANDARDS DIVISION, SBA, FOR REVIEW. THE FINAL DECISION BY THE ADMINISTRATOR, SBA, ON FEBRUARY 20, 1964, RESULTED IN A DETERMINATION THAT UNDER THE INDUSTRY CLASSIFICATION AND SIZE STANDARD FOR EACH OF TWO INDUSTRY CLASSIFICATIONS INVOLVED, VARO HAD TO BE CLASSIFIED AS A LARGE BUSINESS CONCERN FOR THE PURPOSE OF THE INVOLVED PROCUREMENT. PRIOR TO THIS FINAL DECISION, VARO HAD PROTESTED TO OUR OFFICE ANY POSSIBLE AWARD OF THE SET-ASIDE PORTION TO YOUR FIRM. RECEIVED AN ADMINISTRATIVE REPORT OF THE FACTS IN REGARD TO THIS PROTEST ON MARCH 30, 1964. ON APRIL 27, 1964, WE RECEIVED THE REPORT OF SBA IN REGARD TO THIS MATTER. IN OUR DECISION OF JUNE 8, 1964, TO VARO, WE DENIED THEIR PROTEST AND SO ADVISED THE ADMINISTRATIVE OFFICE. ON THE LATTER DATE THE CONTRACTING OFFICER WAS INFORMED THAT A NEW SIZE STANDARD REGULATION HAD BEEN ISSUED BY SBA, PUBLISHED IN THE FEDERAL REGISTER ON JUNE 5, 1964, AND THAT UNDER THE REVISED REGULATION A PRODUCT WAS TO BE CLASSIFIED IN ONLY ONE INDUSTRY, FOR SIZE STANDARD PURPOSES. SBA INFORMED THE CONTRACTING OFFICER BY LETTER DATED JUNE 26, 1964, THAT THE M18 BINOCULAR PROCUREMENT WAS PROPERLY CLASSIFIED IN SIC INDUSTRY NO. 3662, HAVING A SMALL BUSINESS SIZE STANDARD OF NOT MORE THAN 750 EMPLOYEES. SINCE IT APPEARED THAT UNDER THE NEW REGULATION VARO CLASSIFIED AS A SMALL BUSINESS CONCERN, AWARD OF THE CONTRACT WAS MADE ON JUNE 30, 1964.

IN THE LETTER OF JULY 1, 1964, FROM YOUR ATTORNEYS, IT IS STATED THAT YOU HAD NOTIFIED THE CONTRACTING OFFICE ON JUNE 29, 1964, THAT AN APPEAL TO THE SBA SIZE APPEALS BOARD FROM THE DECISION OF JUNE 26 WOULD BE TAKEN AND AWARD OF THE CONTRACT SHOULD NOT HAVE BEEN MADE ON JUNE 30. IN THIS REGARD, WE HAVE BEEN INFORMALLY ADVISED BY A REPRESENTATIVE OF SBA THAT THE APPEAL IN THIS CASE WAS DENIED ON JULY 26, 1964.

IT IS THE GENERAL RULE THAT A BIDDER'S STATUS AS TO SIZE SHOULD BE DETERMINED AS OF THE DATE OF AWARD. IN OUR DECISION OF OCTOBER 26, 1962, 42 COMP. GEN. 219, WE POINTED OUT THAT WE HAVE RECOGNIZED SOME EXCEPTIONS TO THIS RULE. ONE OF THESE EXCEPTIONS WAS WHERE A BUSINESS CONCERN COULD NOT IN GOOD FAITH CERTIFY ITSELF AS A SMALL BUSINESS CONCERN WHEN IT SUBMITTED ITS BID. IT WAS NOT CONSIDERED PROPER TO PERMIT DELAY OF THE CONTRACT AWARD IN ORDER TO ALLOW TIME TO A LARGE BUSINESS BIDDER TO MAKE APPLICATION TO THE SBA FOR A SMALL BUSINESS CERTIFICATE ON THE BASIS THAT ITS STATUS MAY HAVE CHANGED SUFFICIENTLY IN THE INTERIM--- BETWEEN OPENING OF BIDS AND AWARD--- SO AS TO QUALIFY AS A SMALL BUSINESS CONCERN. SUCH WAS NOT THE CASE HERE. VARO CONSIDERED ITSELF SMALL BUSINESS WHEN IT SUBMITTED ITS BID AND THERE WAS SOME BASIS FOR THIS CERTIFICATION AS THE SBA REGIONAL OFFICE HAD ALSO CONSIDERED IT A SMALL BUSINESS CONCERN. WHATEVER DELAY THERE WAS IN THIS CASE DID NOT PERMIT VARO TO MAKE ANY CHANGE IN ITS ORGANIZATION, ETC., TO QUALIFY AS A SMALL BUSINESS CONCERN. THE CHANGE IN THE APPLICATION SIZE STANDARD WAS A MATTER OVER WHICH VARO EXERCISED NO CONTROL. THE OTHER EXCEPTION TO THE GENERAL RULE (41 COMP. GEN. 47) WAS WHERE A LOW BIDDER CERTIFIED ITSELF AS A SMALL BUSINESS CONCERN ALTHOUGH IT WAS ON NOTICE BY THE SBA PRIOR TO THE SUBMISSION OF ITS BID THAT ITS SIZE STATUS WAS SUBJECT TO QUESTION. AFTER BID OPENING THE BIDDER TOOK AFFIRMATIVE ACTION (REALIGNMENT OF ITS STOCK) FOR THE SOLE PURPOSE OF MEETING THE SMALL BUSINESS SIZE CRITERIA, THEREBY QUALIFYING FOR AWARD. WE HELD THAT THE LOW BIDDER HAD NOT UTILIZED THE SELF- CERTIFICATION PROCEDURE PRUDENTLY AS REQUIRED BY THE SMALL BUSINESS ACT AND ALSO THAT THE STOCK REALIGNMENT AFTER BID OPENING GAVE IT A SECOND CHANCE AND AN UNDUE ADVANTAGE OVER OTHER BIDDERS. AS STATED HEREINABOVE, VARO DID NOT EXERCISE ANY CONTROL OVER THE APPLICABLE SIZE STANDARD CHANGE. IN OUR DECISION (42 COMP. GEN. 219), WE CITED A CASE WHERE THERE WAS A CHANGE IN THE LOW BIDDER'S STATUS AFTER THE SUBMISSION OF ITS BID, FROM A SMALL BUSINESS CONCERN TO A LARGE BUSINESS CONCERN, BY REASON OF FACTORS BEYOND ITS CONTROL, AND WE HELD THAT THE DATE OF AWARD MUST NEVERTHELESS GOVERN THE FINAL DETERMINATION OF THE ELIGIBILITY FOR AWARD. ALSO, WE FELT THAT SINCE A GENERAL RULE WAS APPLIED IN THE CITED INSTANCE TO ELIMINATE A BIDDER, IT SHOULD ALSO BE APPLIED IN ANOTHER INSTANCE TO SUSTAIN A BIDDER'S ELIGIBILITY FOR AWARD.

SINCE THERE WAS NO CHANGE IN VARO'S STATUS BETWEEN THE OPENING OF BIDS AND THE DATE OF AWARD AND SINCE THE CHANGE IN THE ELIGIBILITY OF VARO FOR AWARD WAS DUE SOLELY TO THE CHANGE IN THE SBA REGULATIONS, WE FIND NO BASIS IN THIS CASE FOR DEPARTING FROM THE GENERAL RULE FOR DETERMINATION OF ELIGIBILITY AND YOUR PROTEST IS DENIED.