B-157700, B-157292, NOV. 15, 1965

B-157700, B-157292, NOV. 15, 1965

TO THE SECRETARY OF THE AIR FORCE:

REFERENCE IS MADE TO A LETTER DATED SEPTEMBER 28, 1965, YOUR DESIGNATION AFSPPCA, FORWARDING A REPORT ON THE PROTESTS OF MR. LEO F. SULLIVAN AND MR. ROBERT CECIL HOKE AGAINST THE AWARD OF A CONTRACT UNDER INVITATION FOR BIDS NO. 04-602-65-143 TO COMMERCIAL BUILDING MAINTENANCE COMPANY. THE CONTRACT, IN THE AMOUNT OF $73,776, COVERS THE PERFORMANCE OF CUSTODIAL SERVICES FOR 55 BUILDINGS LOCATED AT HAMILTON AIR FORCE BASE, CALIFORNIA, DURING THE PERIOD FROM JULY 1, 1965, THROUGH JUNE 30, 1966. THE PROCUREMENT WAS A TOTAL SET-ASIDE FOR SMALL BUSINESS CONCERNS.

THE RECORD SHOWS THAT BIDS WERE OPENED ON JUNE 3 AND THE THREE LOWEST QUOTATIONS ON ALTERNATE A, WHICH WAS AWARDED, WERE AS FOLLOWS:

CHART

BIDDER PRICE

LEO F. SULLIVAN $ 58,454.76

COMMERCIAL BUILDING MAINTENANCE COMPANY 73,776.00

ROBERT CECIL HOKE 99,127.20

A NEGATIVE FACILITY CAPABILITY REPORT WAS RENDERED BY THE SAN FRANCISCO CONTRACT MANAGEMENT DISTRICT AGAINST THE LOWEST BIDDER ON JUNE 28. CERTIFICATE DATED JUNE 29 THE CONTRACTING OFFICER DETERMINED THAT TIME DID NOT PERMIT WITHHOLDING OF AWARD PENDING A DECISION BY THE SMALL BUSINESS ADMINISTRATION WITH RESPECT TO THE ISSUANCE OF A CERTIFICATE OF COMPETENCY.

MR. ROBERT CECIL HOKE, BY LETTERS DATED JULY 21 AND AUGUST 3 FROM HIS ATTORNEYS ADDRESSED TO THE CONTRACTING OFFICER, PROTESTED, IN ACCORDANCE WITH ARMED SERVICES PROCUREMENT REGULATION 1-703 (B) (1), THAT COMMERCIAL BUILDING MAINTENANCE COMPANY WAS NOT A SMALL BUSINESS CONCERN. THE CONTRACTING OFFICER REFUSED TO ENTERTAIN THE PROTEST BECAUSE IT HAD NOT BEEN LODGED WITHIN FIVE WORKING DAYS AFTER BID OPENING. NONETHELESS THE SMALL BUSINESS ADMINISTRATION, APPARENTLY ON THE BASIS OF A DIRECT APPLICATION BY MR. HOKE, HAS DETERMINED IN A DECISION DATED JULY 13, AFFIRMED IN A LETTER OF AUGUST 31, THAT THE CONTRACTOR IS NOT A SMALL BUSINESS CONCERN. YOUR REPORT STATES IN THIS REGARD:

"7. COMMERCIAL BUILDING MAINTENANCE COMPANY'S FAILURE TO FILE AN APPLICATION FOR SIZE STATUS, TOGETHER WITH ITS TACIT ADMISSION ON 12 JULY 1965 TO THE SBA THAT IT WAS A LARGE BUSINESS, INDICATES THAT THERE WAS BAD FAITH ON ITS PART IN MAKING THE REPRESENTATION THAT IT WAS A SMALL BUSINESS.

"8. IT IS RECOMMENDED THAT CONTRACT AF 04 (602/-3751 WITH COMMERCIAL BUILDING MAINTENANCE COMPANY BE CANCELLED AS VOID AND ILLEGAL.

"9. IT IS ALSO THE AIR FORCE'S RECOMMENDATION TO PROCURE THE SERVICES RATHER THAN MAKE AN AWARD TO MR. ROBERT HOKE BECAUSE HIS BID PRICE IS NOT CONSIDERED TO BE FAIR AND REASONABLE.'

SECTION 8 (B) (6) OF THE SMALL BUSINESS ACT, AS AMENDED BY PUBLIC LAW 85- 536, 72 STAT. 390, 15 U.S.C. 637 (B) (6), EMPOWERS THE SMALL BUSINESS ADMINISTRATION TO RENDER SIZE STATUS DETERMINATIONS WHICH ARE CONCLUSIVE UPON AGENCIES OF THE GOVERNMENT HAVING PROCUREMENT POWERS. CF. 38 COMP. GEN. 328, 331. IT IS WELL SETTLED THAT A BIDDER MUST QUALIFY AS A SMALL BUSINESS IN ORDER TO BE ELIGIBLE TO BID ON AN INVITATION CONTAINING A TOTAL SMALL BUSINESS SET-ASIDE, AND HE MUST ALSO QUALIFY AS SMALL BUSINESS AT THE TIME OF RECEIVING THE AWARD. 42 COMP. GEN. 108, 112; 42 ID. 219, 221; 41 ID. 252; 40 ID. 550. SEE ALSO ARMED SERVICES PROCUREMENT REGULATION 1-703 (B). IN ITS BID COMMERCIAL BUILDING MAINTENANCE COMPANY EXPRESSLY REPRESENTED THAT IT WAS A SMALL BUSINESS CONCERN AS DEFINED ON PAGE 4 OF THE INVITATION. CLEARLY, THE BIDDER SHOULD HAVE ASSURED ITSELF REGARDING SIZE STATUS PRIOR TO BID SUBMISSION. 41 COMP. GEN. 47, 54; CF. ASPR 1-703 (A) WHICH INSTRUCTS CONTRACTING OFFICERS TO ACCEPT AT FACE VALUE A REPRESENTATION BY THE BIDDER THAT IT IS A SMALL BUSINESS. BELIEVE THAT THE CIRCUMSTANCES SUPPORT THE ADMINISTRATIVE CONCLUSION OF BAD FAITH.

IN 41 COMP. GEN. 47 WE DIRECTED THE CANCELLATION OF AN AWARD UNDER A TOTAL SMALL BUSINESS SET-ASIDE TO A BIDDER WHO, BOTH AT THE TIME THE BID WAS SUBMITTED AND AT THE DATE OF AWARD, HAD NO REASONABLE GROUNDS TO BELIEVE HIS COMPANY WOULD QUALIFY AS A SMALL BUSINESS CONCERN. ON THE BASIS OF THIS PRECEDENT, OUR OFFICE WOULD NOT BE OBLIGED TO OBJECT TO THE CANCELLATION OF THE AWARD IN THIS CASE.

THE LETTER ACCOMPANYING YOUR REPORT STATES THAT THE PRICE QUOTED BY THE THIRD LOWEST BIDDER, MR. ROBERT CECIL HOKE IS UNREASONABLE. IF THERE IS A STRONG POSSIBILITY OF OBTAINING A LOWER PRICE UPON READVERTISEMENT OF THE REQUIREMENT IT WOULD NOT BE IN THE BEST INTEREST OF THE GOVERNMENT TO MAKE AWARD TO MR. HOKE ON THE BASIS OF THIS BID. THE SECRETARY OF THE AIR FORCE IS EMPOWERED BY 10 U.S.C. 2305 (C) TO REJECT ALL BIDS UPON THE DETERMINATION THAT SUCH COURSE OF ACTION IS IN THE PUBLIC INTEREST. ARMED SERVICES PROCUREMENT REGULATION 2-404.1 (B) (VI) AUTHORIZES A CONTRACTING OFFICER TO CANCEL AN INVITATION WHERE ALL OTHERWISE ACCEPTABLE BIDS RECEIVED ARE AT UNREASONABLE PRICES.

IN LIGHT OF THE FOREGOING OUR OFFICE WOULD NEITHER BE REQUIRED TO OBJECT TO THE CANCELLATION OF THE AWARD TO COMMERCIAL BUILDING MAINTENANCE COMPANY NOR TO THE READVERTISEMENT OF THE REQUIREMENT. THE INCUMBENT CONTRACTOR MAY BE PAID ON A QUANTUM MERUIT BASIS FOR SERVICES RENDERED UNTIL THE TIME WHEN A REPROCUREMENT MAY REASONABLY BE EFFECTUATED AND A NEW CONTRACTOR BECOMES AVAILABLE TO UNDERTAKE THE OBLIGATION OF PERFORMANCE.

WE ENCLOSE A COPY OF OUR LETTER OF TODAY TO THE SMALL BUSINESS ADMINISTRATION AND COPIES OF DECISIONS TO MR. LEO SULLIVAN AND THE ATTORNEYS REPRESENTING MR. ROBERT CECIL HOKE, DENYING THEIR RESPECTIVE PROTESTS FOR THE REASONS SET FORTH THEREIN.