B-167269-1, SEP. 26, 1969

B-167269-1, SEP. 26, 1969

BID PROTEST - SMALL BUSINESS SIZE DECISION DENYING PROTEST OF AUTOMATIC MAINTENANCE AND SPRINKLER CORPORATION AGAINST AWARD TO ARNOLD M. DIAMOND, INC. FOR SHIP FIRE PROTECTION AT BOSTON NAVAL SHIPYARD ON BASIS OF SMALL BUSINESS SIZE STATUS. WHERE SMALL BUSINESS SIZE STATUS OF SUCCESSFUL BIDDER WAS QUESTIONED BY COMPETITOR BUT BECAUSE OF FAILURE TO SUPPLY SPECIFIC EVIDENCE CASE WAS NOT PROCESSED AS FORMAL SIZE ACTION AND SUBSEQUENTLY ON APPEAL SUCCESSFUL BIDDER WAS DETERMINED TO BE SMALL BUSINESS, NEITHER COMPTROLLER GENERAL NOR EXECUTIVE AGENCY CAN IGNORE A SIZE STATUS DETERMINATION BY SMALL BUSINESS ADMINISTRATION.

TO MR. IRVING MANESS:

REFERENCE IS MADE TO A TELEGRAM DATED JUNE 19, 1969, FROM YOUR CLIENT, THE AUTOMATIC MAINTENANCE AND SPRINKLER CORPORATION (AUTOMATIC), AND YOUR LETTERS OF JULY 1, JULY 15, AND AUGUST 25, 1969, AND TELEGRAM OF JUNE 27, 1969, CONCERNING AUTOMATIC'S PROTEST AGAINST AN AWARD OF A CONTRACT UNDER INVITATION FOR BIDS NO. N62464-67-B-0282, ISSUED BY THE NAVAL FACILITIES ENGINEERING COMMAND, FOR SHIP FIRE PROTECTION AT THE BOSTON NAVAL SHIPYARD, TO ARNOLD M. DIAMOND, INC. (DIAMOND).

THE SUBJECT SOLICITATION, A TOTAL SMALL BUSINESS SET-ASIDE, ISSUED ON APRIL 9, 1969, AND BIDS WERE OPENED ON APRIL 25, 1969. THE CONTRACTING OFFICER DETERMINED THE LOW BIDDER TO BE ARNOLD M. DIAMOND, INC., WHICH HAD CERTIFIED ITSELF TO BE A SMALL BUSINESS CONCERN IN ITS BID, FOLLOWED IN BID PRIORITY BY THE BIDS OF HART ENGINEERING COMPANY, AUTOMATIC, AND ROBERT LACENTRA COMPANY. BY LETTER DATED APRIL 25, 1969, AUTOMATIC CONTENDED THAT THE TWO LOW BIDDERS WERE OPERATING WELL BEYOND THE LIMITS OF SMALL BUSINESS. IN ACCORDANCE WITH APPLICABLE PROCUREMENT REGULATIONS ON APRIL 30, 1969, AUTOMATIC'S PROTEST WAS FORWARDED TO THE SMALL BUSINESS ADMINISTRATION (SBA), NEW YORK REGIONAL OFFICE. BY LETTER DATED MAY 6, 1969, THE SBA REGIONAL OFFICE ADVISED THE CONTRACTING OFFICER THAT IT HAD NOT INITIATED FORMAL SIZE ACTION SINCE AUTOMATIC'S PROTEST WAS CONSIDERED TO BE INVALID, CITING 13 CODE OF FEDERAL REGULATIONS 121.3-2 (T) AND ARMED SERVICES PROCUREMENT REGULATION 1-703 (B) (1) IN THAT AUTOMATIC FAILED TO SUPPLY SPECIFIC DETAILED EVIDENCE SUPPORTING ITS CLAIM THAT ARNOLD M. DIAMOND, INC., AND HART ENGINEERING COMPANY WERE NOT SMALL BUSINESSES. THE LETTER CONCLUDED BY STATING THAT ON APRIL 4, 1969, THE SBA JACKSONVILLE, FLORIDA REGIONAL OFFICE, HAD MADE A SIZE DETERMINATION ON ONE OF DIAMOND'S AFFILIATES AND DETERMINED THE AFFILIATE TO BE A SMALL BUSINESS CONCERN UNDER A SIMILAR CONSTRUCTION SIZE STANDARD. NEITHER THE CONTRACTING OFFICER NOR THE SBA REGIONAL OFFICE ADVISED AUTOMATIC OF THE DENIAL OF ITS SIZE PROTEST; NOR WAS A FORMAL SIZE DETERMINATION MADE. JUNE 9, 1969, AWARD OF THE CONTRACT WAS MADE TO DIAMOND.

IN RESPONSE TO YOUR REQUESTS FOR A FORMAL SIZE DETERMINATION OF DIAMOND, SBA'S NEW YORK REGIONAL OFFICE WAS REQUESTED TO INITIATE A FORMAL SIZE DETERMINATION; WHEREUPON, ON JULY 10, 1969, DIAMOND WAS DETERMINED TO BE A SMALL BUSINESS CONCERN FOR PURPOSES OF THE INSTANT PROCUREMENT. NO NOTICE OF THE SIZE DETERMINATION WAS GIVEN AUTOMATIC OR TO YOU AS ITS COUNSEL. YOU, HOWEVER, SUBSEQUENTLY LEARNED OF THIS DECISION, AND APPEALED THIS DETERMINATION ON JULY 22, 1969. THE SBA SIZE APPEALS BOARD ENTERTAINED THE APPEAL, APPARENTLY DUE TO THE FAILURE OF AUTOMATIC TO BE NOTIFIED OF THE DECISION. EXERCISING THEIR DISCRETION, THE BOARD REFUSED TO GRANT AN ORAL HEARING TO AUTOMATIC, BUT DID ACCEPT WRITTEN STATEMENTS SUBMITTED BY YOU AS ITS COUNSEL. THE SIZE APPEALS BOARD, IN A SEPTEMBER 11, 1969, DECISION, STATED THAT "ON THE BASIS OF THE ENTIRE RECORD BEFORE IT AND IN THE ABSENCE OF OTHER EVIDENCE TO THE CONTRARY, THE BOARD FINDS THAT ARNOLD M. DIAMOND, INC. IS AN ELIGIBLE SMALL BUSINESS CONCERN FOR THE PROCUREMENT IN QUESTION. ACCORDINGLY, THE APPEAL IS IED.'

15 U.S.C. 637 (B) (6) AUTHORIZES THE SBA TO DETERMINE WHICH FIRMS WITHIN ANY INDUSTRY ARE TO BE DESIGNATED AS SMALL BUSINESS CONCERNS FOR PURPOSES OF GOVERNMENT PROCUREMENT. THE PROVISION FURTHER STATES THAT "* * * OFFICES OF THE GOVERNMENT HAVING PROCUREMENT * * * 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.' NEITHER OUR OFFICE NOR ANY EXECUTIVE AGENCY OF THE GOVERNMENT MAY IGNORE A DETERMINATION BY SBA AS TO THE SIZE STATUS OF A PARTICULAR CONCERN. 46 COMP. GEN. 102; 44 COMP. GEN. 271; 41 COMP. GEN. 649; B-166879, MAY 27, 1969; B-164796, JULY 18, 1968; B-166355, APRIL 23, 1969; B-167021, AUGUST 19, 1969; B 166633, JULY 2, 1969; AMERICAN ELECTRIC COMPANY LTD. V UNITED STATES, 270 F.SUPP. 689 (1967); SPRINGFIELD WHITE CASTLE COMPANY V FOLEY, 230 F.SUPP. 77 (1964).

ACCORDINGLY, YOUR PROTEST IS DENIED.

THERE IS ENCLOSED FOR YOUR INFORMATION A COPY OF OUR LETTERS OF TODAY TO THE ADMINISTRATOR, SMALL BUSINESS ADMINISTRATION, AND TO THE SECRETARY OF THE NAVY CONCERNING THE PROCEDURES UTILIZED IN THE HANDLING OF YOUR PROTEST AGAINST THE SMALL BUSINESS STATUS OF THE TWO LOW BIDDERS.