B-157384, OCT. 28, 1965

B-157384, OCT. 28, 1965

TO HAYES-KAUFMANN ASSOC., INC:

REFERENCE IS MADE TO YOUR TELEGRAM OF AUGUST 2, 1965, AND YOUR LETTER OF AUGUST 3, 1965, PROTESTING AGAINST AWARD OF CONTRACT TO LAYNE TEXAS COMPANY, INC., UNDER INVITATION FOR BIDS NO. CIVENG-41-443 66-4, ISSUED BY THE UNITED STATES ARMY ENGINEER DISTRICT, FORT WORTH, CORPS OF ENGINEERS.

THE SUBJECT INVITATION DATED JULY 15, 1965, REQUESTED BIDS FOR RELIEF WELL SYSTEM AT THE SAM RAYBURN DAM AND RESERVOIR, ANGELINA RIVER, TEXAS, AND SUCH INVITATION WAS ADVERTISED AS A 100-PERCENT SET ASIDE FOR SMALL BUSINESS CONCERNS. THREE BIDS WERE RECEIVED AND ON BID OPENING ON JULY 29, 1965, THE FOLLOWING PRICES WERE SHOWN:

CHART

LAYNE TEXAS COMPANY, HOUSTON, TEXAS $212,308

HAYES-KAUFMANN ASSOC., INC., HOUSTON, TEXAS 217,470

CHANEY AND HOPE, INC., ADDISON, TEXAS 224,800

IT IS REPORTED THAT ON JULY 30 AND AUGUST 2, 1965, TELEPHONE CALLS WERE RECEIVED FROM YOUR FIRM PROTESTING THE SMALL BUSINESS STATUS OF THE LOW BIDDER, LAYNE TEXAS COMPANY, INC. ALSO, TELEGRAPHIC NOTIFICATION OF SUCH PROTEST WAS RECEIVED ON AUGUST 2, 1965. IT IS REPORTED THAT THERE WERE DISCUSSIONS OF THE MATTER OF YOUR PROTEST BETWEEN MR. KAUFMANN OF YOUR FIRM AND LIEUTENANT COLONEL W. E. HOLLAND, JR., DEPUTY DISTRICT ENGINEER, ON AUGUST 2 AND 3, 1965, AND THE MANNER OF PRESENTING A SMALL BUSINESS PROTEST WAS EXPLAINED TO MR. KAUFMANN, AS WAS THE SERIOUSNESS OF THE SEEPAGE CONDITION BENEATH THE DAM. THEREAFTER, YOUR PROTEST LETTER DATED AUGUST 3, 1965 (WHICH WAS RECEIVED BY THE PROCURING AGENCY ON AUGUST 5, 1965), WAS FORWARDED TO THE SMALL BUSINESS ADMINISTRATION ON AUGUST 6, 1965. HOWEVER, ON AUGUST 2, 1965, THE CONTRACTING OFFICER HAD MADE A DETERMINATION UNDER THE PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1 703 (B) (3) THAT THE WORK INVOLVED WAS OF AN URGENT NATURE AND MUST BE AWARDED WITHOUT DELAY IN ORDER TO PROTECT THE PUBLIC INTEREST. YOUR PROTEST TO OUR OFFICE AGAINST THE AWARD OF CONTRACT MADE ON AUGUST 4, 1965, TO LAYNE TEXAS IS BASED ON YOUR ALLEGATION THAT LAYNE TEXAS IS NOT A SMALL BUSINESS AND THUS WAS INELIGIBLE FOR AWARD UNDER THE SUBJECT PROCUREMENT. TO THIS END, YOU HAVE PRESENTED EVIDENCE IN THE FORM OF DUN AND BRADSTREET REPORTS, ETC., TO SHOW AN AFFILIATION AND INTERRELATIONSHIP BETWEEN LAYNE TEXAS COMPANY, INC., AND LAYNE AND BOWLER, INC.

IN RESPONSE TO OUR REQUEST FOR A FULL REPORT IN THIS MATTER FROM THE PROCURING AGENCY, PARTICULARLY WITH RESPECT TO THE EMERGENCY CONDITIONS WHICH NECESSITATED THE URGENT NATURE OF THE SUBJECT AWARD, IT IS REPORTED THAT DANGEROUS UNDERSEEPAGE CONDITIONS NOW EXIST AT SAM RAYBURN DAM. THE RESERVOIR LEVEL IS AT ELEVATION 130, AND SEEPAGE HAS DEVELOPED AT THE DOWNSTREAM TOE BETWEEN STATIONS 138 AND 145. PIEZOMETRIC LEVELS IN THIS AREA ARE NOW ABOVE THE GROUND LEVEL AND ANY INCREASE IN RESERVOIR LEVEL WILL SPREAD THIS AREA OF EXCESS PRESSURE BEYOND STATIONS 138 AND 145. EXCESS PRESSURE COULD CAUSE BOILS, PIPING AND AN UNSTABLE FOUNDATION FOR THE EMBANKMENT. IN OTHER AREAS DOWNSTREAM FROM THE TOE INCIPIENT BOILS EXIST. THESE INCIPIENT BOILS MIGRATE THROUGHOUT A DOWNSTREAM BORROW AREA WHERE SAND IS EXPOSED. AN INCREASE IN RESERVOIR LEVEL WILL PROBABLY CAUSE BOILS AND PIPING OF FOUNDATION MATERIAL IN THIS BORROW AREA. THE ADVENT OF THE HURRICANE SEASON PLACES THE PROJECT IN THE ADDED DANGER OF THE RESERVOIR LEVEL BEING INCREASED BY RAINS RESULTING FROM SUCH HURRICANES BEFORE THE RELIEF WELLS ARE INSTALLED. ANY INCREASE IN THE LEVEL OF THE RESERVOIR NOT ONLY WOULD RESULT IN CONDITIONS LEADING TO AN UNSTABLE FOUNDATION, BUT WOULD RESULT IN INCREASED DIFFICULTY AND EXPENSE IN INSTALLATION OF RELIEF WELLS. DISCHARGE OF WATER FROM THE RESERVOIR MAY BE NECESSARY TO MAINTAIN THE PRESENT RESERVOIR LEVEL AND TO PREVENT ADDITIONAL DANGER TO THE SAFETY OF THE DAM. IF IT IS NOT POSSIBLE TO PREVENT A RISE IN RESERVOIR LEVEL, IT WILL BE NECESSARY TO CONSTRUCT BERMS ON AN EMERGENCY BASIS TO CONTAIN THE BOILS AND TO COUNTERACT THE HYDROSTATIC UPLIFT PRESSURES. IT IS ALSO REPORTED THAT DUE TO THE URGENT NEED FOR INSTALLATION OF THE RELIEF WELLS, THE ADVERTISING PERIOD WAS HELD TO A MINIMUM.

IN VIEW OF THE FOREGOING EMERGENCY CONDITIONS AND PURSUANT TO THE AUTHORITY DELEGATED TO HIM BY ASPR 1-703 (B) (3), THE CONTRACTING OFFICER DETERMINED AND CERTIFIED THE SUBJECT WORK TO BE OF AN URGENT NATURE WHICH MUST, IN ORDER TO PROTECT THE PUBLIC INTEREST, BE AWARDED WITHOUT DELAY, AND ON SUCH BASIS THE AWARD WAS AUTHORIZED TO BE MADE TO THE LAYNE TEXAS COMPANY, INC.

ASPR 1-703 PROVIDES, IN PERTINENT PART, AS FOLLOWS:

"1-703 DETERMINATION OF STATUS AS SMALL BUSINESS CONCERN.

"/A) EXCEPT AS PROVIDED IN (B) BELOW, THE CONTRACTING OFFICER SHALL ACCEPT AT FACE VALUE FOR THE PARTICULAR PROCUREMENT INVOLVED, A REPRESENTATION BY THE BIDDER OR OFFEROR THAT IT IS A SMALL BUSINESS CONCERN (SEE 1-701.1).

"/B) REPRESENTATION BY A BIDDER OR OFFEROR THAT IT IS A SMALL BUSINESS CONCERN SHALL BE EFFECTIVE, EVEN THOUGH QUESTIONED IN ACCORDANCE WITH THE TERMS OF THIS SUBPARAGRAPH (B), UNLESS THE SBA, IN RESPONSE TO SUCH QUESTION AND PURSUANT TO THE PROCEDURES IN (3) BELOW, DETERMINES THAT THE BIDDER OR OFFEROR IN QUESTION IS NOT A SMALL BUSINESS CONCERN. THE CONTROLLING POINT IN TIME FOR A DETERMINATION CONCERNING THE SIZE STATUS OF A QUESTIONED BIDDER OR OFFEROR SHALL BE THE DATE OF AWARD, EXCEPT THAT NO BIDDER OR OFFEROR SHALL BE ELIGIBLE FOR AWARD AS A SMALL BUSINESS CONCERN UNLESS HE HAS IN GOOD FAITH REPRESENTED HIMSELF AS SMALL BUSINESS PRIOR TO THE OPENING OF BIDS OR CLOSING DATE FOR SUBMISSION OF OFFERS (SEE 2-405 (II) WITH RESPECT TO MINOR INFORMALITIES AND IRREGULARITIES IN BIDS).

"/3) THE SBA REGIONAL DIRECTOR WILL DETERMINE THE SMALL BUSINESS STATUS OF THE QUESTIONED BIDDER OR OFFEROR AND NOTIFY THE CONTRACTING OFFICER AND THE BIDDER OR OFFEROR OF HIS DETERMINATION, AND AWARD MAY BE MADE ON THE BASIS OF THAT DETERMINATION. SUCH DECISION IS FINAL UNLESS APPEAL IN ACCORDANCE WITH SUBPARAGRAPH (4) BELOW AND THE PROCURING ACTIVITY IS NOTIFIED OF THE APPEAL PRIOR TO AWARD. IF AN AWARD WAS MADE PRIOR TO THE TIME THE CONTRACTING OFFICER RECEIVES NOTICE OF THE APPEAL, THE CONTRACT SHALL BE PRESUMED TO BE VALID AND ANY DETERMINATION RENDERED SHALL BE CONSIDERED IN FUTURE PROCUREMENTS. IF THE SBA REGIONAL DIRECTOR'S DETERMINATION IS NOT RECEIVED BY THE CONTRACTING OFFICER WITHIN TEN WORKING DAYS AFTER SBA'S RECEIPT OF THE PROTEST OR NOTICE QUESTIONING SMALL BUSINESS STATUS, IT SHALL BE PRESUMED THAT THE QUESTIONED BIDDER OR OFFEROR IS A SMALL BUSINESS CONCERN. THIS PRESUMPTION WILL NOT BE USED AS A BASIS FOR MAKING AN AWARD TO THE QUESTIONED BIDDER OR OFFEROR WITHOUT FIRST ASCERTAINING WHEN A SIZE DETERMINATION CAN BE EXPECTED FROM SBA, AND WHERE PRACTICABLE, WAITING FOR SUCH DETERMINATION, UNLESS FURTHER DELAY IN AWARD WOULD BE DISADVANTAGEOUS TO THE GOVERNMENT. PENDING SBA DETERMINATION OR EXPIRATION OF THE TEN-DAY PERIOD, WHICHEVER IS EARLIER, PROCUREMENT ACTION SHALL BE SUSPENDED PROVIDED THAT SUCH TEN DAY SUSPENSION PERIOD SHALL NOT APPLY TO ANY URGENT PROCUREMENT ACTION WHICH, AS DETERMINED BY THE CONTRACTING OFFICER, MUST, IN ORDER TO PROTECT THE PUBLIC INTEREST, BE AWARDED WITHOUT DELAY AND AS TO WHICH HE INSERTS IN THE CONTRACT FILE A STATEMENT SIGNED BY HIM JUSTIFYING THIS DETERMINATION.'

UNDER THESE REGULATIONS A SMALL BUSINESS SELF-CERTIFICATION MADE IN GOOD FAITH IS EFFECTIVE, EVEN THOUGH QUESTIONED, UNLESS THE SMALL BUSINESS ADMINISTRATION DETERMINES, AS PROVIDED IN SUBPARAGRAPH (B) (3), ABOVE, THAT THE QUESTIONED BIDDER IS NOT A SMALL BUSINESS CONCERN. THE RECORD BEFORE US DOES NOT INDICATE THAT THE CERTIFICATION MADE BY LAYNE WAS IMPRUDENT OR LACKING IN GOOD FAITH SO AS TO REQUIRE ITS REJECTION BY THE CONTRACTING OFFICER. CF. 41 COMP. GEN. 252. IN THIS CONNECTION SEE SECTION 8 (B) (6) OF THE SMALL BUSINESS ACT AS AMENDED BY PUBLIC LAW 85- 536, 72 STAT. 384, 390, 15 U.S.C. 637 (B) (6) AUTHORIZING THE SMALL BUSINESS ADMINISTRATION TO DETERMINE WHICH BUSINESS ENTERPRISES ARE TO BE DESIGNATED AS SMALL BUSINESS CONCERNS AND MAKING ITS DETERMINATIONS IN THESE MATTERS CONCLUSIVE. HOWEVER, WHILE YOUR LETTER SETTING OUT THE BASIS OF YOUR PROTEST AGAINST THE SIZE STATUS OF THE LAYNE TEXAS COMPANY WAS RECEIVED BY THE PROCURING AGENCY AFTER AWARD WAS MADE, EVEN IF A WRITTEN PROTEST WITH ALL SUPPORTING DATA HAD BEEN RECEIVED PRIOR TO AWARD, THE URGENT NATURE OF THE WORK TO BE ACCOMPLISHED SUPPORTS THE ACTION OF THE CONTRACTING OFFICER IN MAKING AWARD PRIOR TO A FINAL DECISION BY THE SMALL BUSINESS ADMINISTRATION. THE PROPRIETY OF SUCH AWARD ACTION IS FURTHER DEMONSTRATED BY THE FACT THAT AN ,INFORMAL OPINION" BY THE SMALL BUSINESS ADMINISTRATION WAS NOT MADE UNTIL AUGUST 17, 1965, AND A FORMAL DETERMINATION HAS NOT BEEN MADE TO DATE.

THE CONTRACTING OFFICER HAS FULLY DOCUMENTED THE CIRCUMSTANCES GIVING RISE TO HIS CERTIFICATION OF THE URGENCY OF THE PROCUREMENT AND IN OUR OPINION THE RECORD BEFORE US AMPLY SUPPORTS THE DETERMINATION OF URGENCY. WE MUST, THEREFORE, CONCLUDE THAT NO LEGAL BASIS EXISTS FOR DISTURBING THE AWARD MADE UNDER THE SUBJECT INVITATION. ACCORDINGLY, YOUR PROTEST AGAINST SUCH AWARD MUST BE DENIED.