B-162943, JANUARY 10, 1968, 47 COMP. GEN. 360

B-162943, JANUARY 10, 1968, 47 COMP. GEN. 360

CONTRACTS - AWARDS - SMALL BUSINESS CONCERNS - SUBCONTRACTING LIMITATION THE REFUSAL OF THE SMALL BUSINESS ADMINISTRATION (SBA) TO GRANT A CERTIFICATE OF COMPETENCY TO A BIDDER PROPOSING TO PERFORM ONLY THE MANAGERIAL AND SUPERVISORY FUNCTIONS UNDER A CONSTRUCTION CONTRACT AND TO SUBCONTRACT THE ACTUAL CONSTRUCTION WORK BECAUSE OF INABILITY TO MEET THE REQUIREMENTS OF A SBA DIRECTIVE TO PERFORM "A SIGNIFICANT PORTION OF THE CONTRACT, MEASURED IN DOLLAR VALUE, WITH ITS OWN FACILITIES AND PERSONNEL ON ITS OWN PAYROLL" IS PERSUASIVE WITH RESPECT TO THE NONRESPONSIBILITY OF THE BIDDER AND UNDER 15 U.S.C. 637 (B), THE DETERMINATION MUST BE GIVEN LEGAL FINALITY, AND THE BIDDER'S OFFER TO FURNISH A PERFORMANCE BOND MAY NOT BE ACCEPTED AS A USBSTITUTE FOR THE FAITHFUL PERFORMANCE OF THE CONTRACT.

TO A. GERIS, INC., JANUARY 10, 1968:

REFERENCE IS MADE TO YOUR TELEGRAM OF NOVEMBER 17, AND LETTER OF DECEMBER 5, 1967, PROTESTING AGAINST THE REFUSAL OF THE SMALL BUSINESS ADMINISTRATION TO GRANT YOU A CERTIFICATE OF COMPETENCY IN CONNECTION WITH YOUR BID, UNDER INVITATION FOR BIDS NO. EA 7-20027, ISSUED BY THE FEDERAL AVIATION AGENCY (FAA), AIRWAY FACILITIES BRANCH, ROCKY RIVER, OHIO.

YOUR BID IN THE AMOUNT OF $588,000 WAS THE ONLY BID SUBMITTED IN RESPONSE TO THE INVITATION. SINCE FAA HAD DOUBT AS TO YOUR ABILITY TO PERFORM THE RESULTING CONTRACT, IT REQUESTED THE SMALL BUSINESS ADMINISTRATION (SBA) TO DETERMINE YOUR CAPACITY AND CREDIT FOR THE PURPOSES OF THIS PROCUREMENT UNDER THE CERTIFICATE OF COMPETENCY PROCEDURES. SBA CONDUCTED AN IN-DEPTH SURVEY OF YOUR COMPETENCE TO PERFORM THE CONTRACT. AFTER A CAREFUL INVESTIGATION, SBA DETERMINED THAT THERE WAS INSUFFICIENT EVIDENCE TO DEMONSTRATE THAT YOU HAD THE NECESSARY CAPACITY TO PERFORM. ON NOVEMBER 15, 1967, YOU WERE NOTIFIED THAT YOUR APPLICATION FOR A CERTIFICATE OF COMPETENCY (COC) WAS DENIED. BY TELEGRAM OF NOVEMBER 17, 1967, YOU PROTESTED THAT DENIAL TO OUR OFFICE.

IT IS YOUR CONTENTION THAT THE REFUSAL OF SBA TO ISSUE A COC WAS ARBITRARY, CAPRICIOUS AND CONTRARY TO SUBSTANTIAL EVIDENCE. FURTHERMORE,YOU SAY THAT THIS REFUSAL TO ISSUE THE COC DOES NOT CONFORM TO THE REALITIES OF BID PREPARATION AND IS CONTRARY TO THE DEFINITION OF RESPONSIBILITY AS LAID DOWN BY PRIOR DECISIONS OF THIS OFFICE (B 144614, JANUARY 5, 1961; B-146348, APRIL 5, 1962; 38 COMP. GEN. 778, MAY 19, 1959; 26 COMP. GEN. 676, MARCH 14, 1947). YOU SUBMITTED EVIDENCE INDICATING THE AVAILABILITY AND RESPONSIBILITY OF SUBCONTRACTORS FOR THE PROJECT ADVERTISED. LASTLY, YOU STATE THAT YOU HAVE MET THE FINANCIAL REQUIREMENTS AND HAVE THE ABILITY TO PROVIDE A BID AND PERFORMANCE BOND AS REQUIRED BY OUR DECISION 33 COMP. GEN. 549, MAY 12, 1954.

WE HAVE BEEN ADVISED THAT YOUR FIRM PROPOSED TO PERFORM ONLY THE MANAGERIAL AND SUPERVISORY FUNCTIONS AND TO SUBCONTRACT ALL OF THE ACTUAL CONSTRUCTION. IN THIS REGARD, PARAGRAPH 4 (B) OF SBA NATIONAL DIRECTIVE (ND) 615-1A STATES: (B) A MANUFACTURING, CONSTRUCTION, OR SERVICE CONCERN SHALL NOT BE ELIGIBLE FOR A COC UNLESS IT PERFORMS A SIGNIFICANT PORTION OF THE CONTRACT, MEASURED IN DOLLAR VALUE, WITH ITS OWN FACILITIES AND PERSONNEL ON ITS OWN PAYROLL.

UNDER THESE CIRCUMSTANCES, SBA CONCLUDED THAT YOU WOULD NOT BE PERFORMING "A SIGNIFICANT PORTION OF THE CONTRACT, MEASURED IN DOLLAR VALUE, WITH ITS OWN FACILITIES AND PERSONNEL ON ITS OWN PAYROLL.' YOUR FIRM THEREFORE WAS INELIGIBLE FOR A COC UNDER SBA PROCEDURES.

WE HAVE HELD THAT THE REFUSAL OF SBA TO ISSUE A COC AS TO THE COMPETENCE OF A SMALL BUSINESS OFFEROR MUST BE REGARDED AS PERSUASIVE WITH RESPECT TO THE NONRESPONSIBILITY OF THE BIDDER. 39 COMP. GEN. 705. INSOFAR AS IS HERE PERTINENT, SECTION 8 (B) OF THE SMALL BUSINESS ACT OF 1958, AS AMENDED, 15 U.S.C. 637 (B), PROVIDES AS FOLLOWS:

IT SHALL ALSO BE THE DUTY OF THE (SMALL BUSINESS) ADMINISTRATION AND IT IS EMPOWERED, WHENEVER IT DETERMINES SUCH ACTION IS NECESSARY--

(7) TO CERTIFY TO GOVERNMENT PROCUREMENT OFFICERS, AND OFFICERS ENGAGED IN THE SALE AND DISPOSAL OF FEDERAL PROPERTY, WITH RESPECT TO THE COMPETENCY, AS TO CAPACITY AND CREDIT, OF ANY SMALL-BUSINESS CONCERN OR GROUP OF SUCH CONCERNS TO PERFORM A SPECIFIC GOVERNMENT CONTRACT. IN ANY CASE IN WHICH A SMALL-BUSINESS CONCERN OR GROUP OF SUCH CONCERNS HAS BEEN CERTIFIED BY OR UNDER THE AUTHORITY OF THE ADMINISTRATION TO BE A COMPETENT GOVERNMENT CONTRACTOR WITH RESPECT TO CAPACITY AND CREDIT AS TO A SPECIFIC GOVERNMENT CONTRACT, THE OFFICERS OF THE GOVERNMENT HAVING PROCUREMENT OR PROPERTY DISPOSAL POWERS ARE DIRECTED TO ACCEPT SUCH CERTIFICATES AS CONCLUSIVE, AND ARE AUTHORIZED TO LET SUCH GOVERNMENT CONTRACT TO SUCH CONCERN OR GROUP OF CONCERNS WITHOUT REQUIRING IT TO MEET ANY OTHER REQUIREMENT WITH RESPECT TO CAPACITY AND CREDIT;

IN VIEW OF THE ABOVE STATUTORY PROVISION, WE HAVE CONCLUDED IT WOULD BE IMPROPER FOR THIS OFFICE TO REVIEW DETERMINATIONS OF THE SMALL BUSINESS ADMINISTRATION AS TO A FIRM'S CAPACITY OR CREDIT. B 151977, OCTOBER 3, 1963; B-152831, JANUARY 8, 1964; B-155392, NOVEMBER 9, 1964.

THE DECISIONS OF OUR OFFICE CITED BY YOU TO SUPPORT YOUR VIEWPOINT ARE NOT INCONSISTENT WITH OUR HOLDING HERE. THOSE DECISIONS DEALT WITH ADMINISTRATIVE DECISIONS BY EITHER THE CONTRACTING OFFICER OR SBA. EACH CASE, WE DECLINED TO TAKE ISSUE WITH THE ADMINISTRATIVE DETERMINATION OF NONRESPONSIBILITY WHICH WE HAVE RECOGNIZED TO BE A PROCUREMENT PREROGATIVE NOT ORDINARILY SUBJECT TO OUR REVIEW, ESPECIALLY WHEN IT HAS BEEN AFFIRMED BY SBA. OUR DECISION 33 COMP. GEN. 549, MAY 12, 1954, HELD THAT A PERFORMANCE BOND IS ONLY A FACTOR FOR CONSIDERATION IN DETERMINING THE RESPONSIBILITY OF THE CONTRACTOR. HOWEVER, WE HAVE NEVER REGARDED A PERFORMANCE BOND AS A SATISFACTORY SUBSTITUTE FOR THE FAITHFUL PERFORMANCE OF THE CONTRACT. ACCORDINGLY, AN OFFER TO FURNISH SUCH A BOND DOES NOT MAKE A BIDDER RESPONSIBLE WITHIN THE MEANING OF THE APPLICABLE STATUTE AND REGULATIONS.

ACCORDINGLY, WE ARE REQUIRED TO ACCORD LEGAL FINALITY TO THE REFUSAL OF SBA TO ISSUE COC'S IN YOUR CASE.