B-166879, MAY 27, 1969

B-166879, MAY 27, 1969

TO C-R-K AND ASSOCIATES, INCORPORATED:

FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST THE AWARD OF A CONTRACT TO LEO WALSH AND COMPANY, INCORPORATED, BY THE NAVAL FACILITIES ENGINEERING COMMAND PURSUANT TO INVITATION FOR BIDS NO. N62476-69-0030, FOR THE CONSTRUCTION OF A HOSPITAL AND DENTAL CLINIC IN ADAK, ALASKA.

THE SUBJECT INVITATION, A TOTAL SMALL BUSINESS SET-ASIDE, WAS ISSUED ON JANUARY 14, 1969, AND BIDS WERE OPENED ON MARCH 5, 1969. THE TWO BIDS RECEIVED AND THE GOVERNMENT ESTIMATE ARE AS FOLLOWS:

C-R-K $2,254,985

WALSH $2,356,958

GOVERNMENT ESTIMATE $2,450,000 ON MARCH 11, 1969, PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION 1-703 (B) (2), THE PROCURING ACTIVITY REQUESTED A SIZE DETERMINATION OF YOUR FIRM BY THE SMALL BUSINESS ADMINISTRATION REGIONAL OFFICE, SEATTLE, WASHINGTON. ON MARCH 28, 1969, THE SBA REGIONAL OFFICE ADVISED YOU OF ITS DETERMINATION THAT YOUR FIRM WAS NOT A SMALL BUSINESS CONCERN FOR PURPOSES OF THE SUBJECT PROCUREMENT. THIS DETERMINATION WAS APPEALED, AND ON MAY 2, 1969, THE SBA SIZE APPEALS BOARD DENIED THE APPEAL. ALTHOUGH YOU PROTESTED TO OUR OFFICE PRIOR TO AWARD, WE WERE ADVISED ON MAY 6, 1969, PURSUANT TO ASPR 2-407.9, THAT AN IMMEDIATE AWARD WAS BEING MADE BECAUSE OF THE LIMITED CONSTRUCTION SEASON IN ALASKA.

YOU PROTEST THE NEGATIVE DETERMINATION OF YOUR SMALL BUSINESS STATUS AND FURTHER CONTEND THAT IF THIS DETERMINATION IS SUSTAINED THE INVITATION SHOULD BE CANCELLED AND READVERTISED ON AN UNRESTRICTED BASIS. THE BASIS FOR YOUR SECOND CONTENTION IS THAT THERE IS DOUBT WHETHER THERE WAS A REASONABLE EXPECTATION OF RECEIVING SUFFICIENT SMALL BUSINESS COMPETITION, AND THE ONLY RESPONSIVE BID IS UNREASONABLE AS TO PRICE AS IT IS $102,000 MORE THAN YOUR BID.

THE SBA DECISION THAT C-R-K AND ASSOCIATES, INCORPORATED - B-E-C-K CONSTRUCTORS IS NOT A SMALL BUSINESS CONCERN FOR THIS PROCUREMENT IS BASED ON ITS FINDING THAT THE AVERAGE ANNUAL RECEIPTS OF THE JOINT VENTURE FOR THE PRECEDING THREE FISCAL YEARS EXCEEDED $9,375,000, THE APPLICABLE SIZE STANDARD ESTABLISHED BY SECTIONS 121.3-7 AND 121.3-8 OF THE SMALL BUSINESS SIZE STANDARDS REGULATIONS. PURSUANT TO SECTIONS 3 AND 8 (B) (6) OF THE SMALL BUSINESS ACT, 15 U.S.C. 632 AND 637 (B) (6), RESPECTIVELY,SBA IS AUTHORIZED TO PRESCRIBE SIZE STANDARDS FOR INDUSTRY AND DETERMINE WHICH ENTERPRISES QUALIFY UNDER THOSE STANDARDS AS SMALL BUSINESS CONCERNS. SECTION 637 (B) (6) FUTHER STATES THAT "OFFICES OF THE GOVERNMENT HAVING PROCUREMENT OR LENDING POWERS . . . SHALL ACCEPT AS CONCLUSIVE THE ADMINISTRATION'S DETERMINATION AS TO WHICH ENTERPRISES ARE TO BE DESIGNATED -SMALL BUSINESS CONCERNS,- AS AUTHORIZED AND DIRECTED UNDER THIS PARAGRAPH.' SINCE THE DECISION OF SBA IS "CONCLUSIVE" BY STATUTE, WE FIND NO LEGAL BASIS TO QUESTION THE DETERMINATION THAT YOUR JOINT VENTURE IS NOT A SMALL BUSINESS CONCERN FOR PURPOSES OF THIS PROCUREMENT. COMP. GEN. 102; 44 ID. 271, AND 41 ID. 649.

WITH REGARD TO YOUR SECOND CONTENTION, SECTION 15 OF THE SMALL BUSINESS ACT, 15 U.S.C. 644, PROVIDES THAT SMALL BUSINESS CONCERNS SHALL RECEIVE ANY AWARD OR CONTRACT OR ANY PART THEREOF AS TO WHICH IT IS DETERMINED 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. UNDER SECTION 15 OF THE ACT, THE DETERMINATION AS TO WHETHER A PARTICULAR PROCUREMENT SHOULD BE SET ASIDE FOR SMALL BUSINESS IS ORDINARILY WITHIN THE JURISDICTION OF THE PROCURING AGENCY. SEE ASPR 1-706.1/A). WITH RESPECT TO TOTAL SET-ASIDES, ASPR 1- 706.5 PROVIDES IN PERTINENT PART AS FOLLOWS: "1-706.5 TOTAL SET-ASIDES

(A) (1) SUBJECT TO ANY APPLICABLE PREFERENCE FOR LABOR SURPLUS AREA SET- ASIDES AS PROVIDED IN 1-803 (A) (II), THE ENTIRE AMOUNT OF AN INDIVIDUAL PROCUREMENT OR A CLASS OF PROCUREMENTS, INCLUDING BUT NOT LIMITED TO CONTRACTS FOR MAINTENANCE, REPAIR, AND CONSTRUCTION, SHALL BE SET ASIDE FOR EXCLUSIVE SMALL BUSINESS PARTICIPATION (SEE 1-701.1) IF THE CONTRACTING OFFICER DETERMINES THAT THERE IS REASONABLE EXPECTATION THAT BIDS OR PROPOSALS WILL BE OBTAINED FROM A SUFFICIENT NUMBER OF RESPONSIBLE SMALL BUSINESS CONCERNS SO THAT AWARDS WILL BE MADE AT REASONABLE PRICES. TOTAL SET-ASIDES SHALL NOT BE MADE UNLESS SUCH A REASONABLE EXPECTATION EXISTS. * * *"

OUR OFFICE HAS HELD THAT THE DETERMINATION AS TO WHETHER SUCH A REASONABLE EXPECTATION EXISTS IS WITHIN THE AMBIT OF ADMINISTRATIVE DISCRETION, AND WE WILL NOT SUBSTITUTE OUR JUDGMENT FOR THAT OF THE CONTRACTING OFFICER IN THE ABSENCE OF A CLEAR SHOWING OF ABUSE OF THE DISCRETION PERMITTED HIM. 45 COMP. GEN. 228. ALSO, WE HAVE STATED THAT THE FACT THAT LOWER BIDS MAY BE EXPECTED FROM LARGE BUSINESS CONCERNS IS NOT A SIGNIFICANT FACTOR IN DETERMINING WHETHER A PROCUREMENT SHOULD BE SET ASIDE FOR SMALL BUSINESS PARTICIPATION ONLY. 43 COMP. GEN. 497. HAVE ALSO HELD THAT THE RECEIPT OF ONLY ONE RESPONSIVE BID DOES NOT PRECLUDE AWARD OF A CONTRACT OR NULLIFY AN AWARD WHERE THE SET-ASIDE APPEARS TO HAVE BEEN MADE WITHIN THE FRAMEWORK OF PERTINENT LAWS AND REGULATIONS ON THE BASIS OF A DETERMINATION AUTHORIZED TO BE MADE BY THE CONTRACTING OFFICER. B 164635, DECEMBER 24, 1968, AND CASES CITED.

IN THE PRESENT CASE, WE ARE ADVISED THAT THE DECISION TO MAKE THIS PROCUREMENT A TOTAL SET-ASIDE WAS BASED UPON THE CONTRACTING OFFICER'S KNOWLEDGE OF PAST SMALL BUSINESS INTEREST IN SIMILAR CONSTRUCTION IN ALASKA. THE PROCUREMENT WAS SYNOPSIZED IN THE COMMERCE BUSINESS DAILY AS A 100 PERCENT SMALL BUSINESS SET-ASIDE. THE INVITATION FOR BIDS, IDENTIFYING THE PROCUREMENT AS A SMALL BUSINESS SET-ASIDE WAS MAILED TO 195 FIRMS. EIGHT OF THESE FIRMS PICKED UP A COPY OF THE PLANS AND SPECIFICATIONS FOR THE CONSTRUCTION FROM THE PROCURING ACTIVITY. ALTHOUGH ONLY TWO FIRMS CHOSE TO SUBMIT BIDS, THIS FACT DOES NOT IN OUR VIEW INDICATE THAT THE REQUISITE BASIS FOR A SET-ASIDE WAS NOT PRESENT.

ALTHOUGH THE BROADER COMPETITION ANTICIPATED BY THE PROCURING ACTIVITY DID NOT MATERIALIZE IN THE INSTANT CASE, THE PURPOSE OF SUCH COMPETITION, AS STATED IN ASPR 1-706.5 (A), IS TO INSURE THAT AWARD IS MADE AT A REASONABLE PRICE. THE PROCURING ACTIVITY CONCLUDED THAT WALSH'S BID, BEING $93,000 BELOW THE GOVERNMENT'S ESTIMATE OF THE COST OF THE CONSTRUCTION, WAS REASONABLE. WE DO NOT BELIEVE THE FACT THAT WALSH'S BID WAS ALMOST 5 PERCENT HIGHER THAN YOUR BID REQUIRES A DIFFERENT CONCLUSION.

ACCORDINGLY, WE FIND NO BASIS TO QUESTION THE VALIDITY OF THE SET ASIDE AND AWARD OF THE CONTRACT THEREUNDER.