B-169465, JUN. 19, 1970

B-169465, JUN. 19, 1970

CONTRACTS--AWARDS--SMALL BUSINESS CONCERNS--SIZE--CONCLUSIVENESS OF DETERMINATION SECOND LOW BIDDER'S PROTEST AGAINST AWARD TO LOW BIDDER ON BASIS AWARDEE IS NOT SMALL BUSINESS AND COULD NOT PERFORM CONTRACT AT ITS BID PRICE IS DENIED, SINCE UNDER 15 U.S.C. 637(B)(6), DETERMINATION DECISION, OF SMALL BUSINESS STATUTS IS FOR SMALL BUSINESS ADMINISTRATION, AND ITS UNLESS APPEALED WITHIN 5 DAYS, IS CONCLUSIVE ON NATIONAL AERONAUTICS AND SPACE ADMINISTRATION AND GAO. ALSO, SINCE LOW BID WAS ONLY SLIGHTLY LESS THAN GOVERNMENT ESTIMATE AND LOW BIDDER CHECKED HIS BID FIGURE BEFORE CONFIRMING IT, THERE IS NO LEGAL PRINCIPLE KNOWN ON WHICH AWARD MAY BE DISTURBED MERELY BECAUSE LOW BIDDER SUBMITTED UNPROFITABLE PRICE. SEE COMP. GEN. DECS. CITED. CONTRACTS--COST-PLUS--CONTRACTOR'S DUTY RESPONSIBILITY AS TO COSTS SECOND LOW BIDDER'S PROTEST AGAINST AWARD REQUESTING LOW BIDDER BE REQUIRED TO SUBMIT BUILDING-BY-BUILDING COST BREAKDOWN FOR PAINTING PROJECT, AND ASSERTING IT UNFAIR TO ALLOW AWARDEE TO CONCURRENTLY WORK ON "COST PLUS" AND COMPETITIVE BID BASIS ON SAME BUILDINGS IS DENIED SINCE NO LAW IS KNOWN REQUIRING BIDDERS TO SUBMIT REQUESTED DATA AND ALTHOUGH BASIS OF THIS OBJECTION IS NOT UNDERSTOOD, BIDDER HAS GIVEN ADEQUATE ASSURANCE THAT COSTS UNDER TWO CONTRACTS WILL BE KEPT SEPARATE, AND NATIONAL AERONAUTICS AND SPACE ADMINISTRATION REGULATIONS PRECLUDE ALLOCATION OF ANY EXCESS COSTS OVER INCOME UNDER ANY OTHER CONTRACT TO COST UNDER COST- REIMBURSEMENT CONTRACT.

TO JOHN F. PAPSIDERO:

REFERENCE IS MADE TO YOUR TELEGRAM OF APRIL 2, 1970, AND LETTER DATED APRIL 3, 1970, WITH ENCLOSURES, PROTESTING ON BEHALF OF THE C. S. LOUIS COMPANY, INC. (LOUIS), AGAINST ANY AWARD OF A PAINTING CONTRACT TO MANAGEMENT SERVICES INC. OF TENNESSEE (MSI) UNDER INVITATION FOR BIDS MSFC -70-67, ISSUED BY THE GEORGE C. MARSHALL SPACE FLIGHT CENTER (MSFC), HUNTSVILLE, ALABAMA, ON FEBRUARY 13, 1970.

THE PROCUREMENT WAS SET ASIDE FOR SMALL BUSINESS CONCERNS ONLY, AND BID OPENING WAS ON MARCH 18, 1970. THE FOLLOWING BIDS WERE RECEIVED:

BIDDER AMOUNT

MANAGEMENT SERVICES INC. OF TENNESSEE $156,466

C. S. LOUIS COMPANY, INC. 251,350

ROBERT MCMULLAN AND SON, INC. 268,986

BEAVER VALLEY PAINTING, INC. 389,155 THE GOVERNMENT ESTIMATE FOR THE WORK WAS $160,000.

THE CONTRACTING OFFICER RECEIVED A TELEGRAM ON MARCH 23, 1970, AND SUBSEQUENT COMMUNICATIONS FROM LOUIS PROTESTING THE POSSIBLE AWARD TO MSI, ON THE BASIS OF THE SMALL BUSINESS STATUS OF MSI, AND THE POSSIBILITY OF NONPERFORMANCE DUE TO THE DIFFERENCE BETWEEN MSI'S BID AND THE PRICES OF THE OTHER BIDDERS. THE CONTRACTING OFFICER WAS ALSO REQUESTED TO REQUIRE MSI TO FURNISH A COST BREAKDOWN, BUILDING BY BUILDING, OF THE PROJECT TO DETERMINE IF AN ERROR HAD BEEN MADE.

MSI WAS ADVISED OF THE PROTEST AND REQUESTED TO CAREFULLY CHECK ITS BID FOR POSSIBLE ERROR. THE SMALL BUSINESS ADMINISTRATION (SBA) WAS REQUESTED TO FURNISH A DETERMINATION OF THE SIZE STATUS OF MSI. BY LETTER OF MARCH 23, 1970, MSI CONFIRMED ITS BID PRICE OF $156,466, AND THE SBA REGIONAL DIRECTOR NOTIFIED THE CONTRACTING OFFICER ON APRIL 3, 1970, OF HIS DETERMINATION THAT MSI WAS A SMALL BUSINESS CONCERN FOR THE PURPOSES OF THIS PROCUREMENT.

IN A LETTER OF MARCH 31, 1970, ADDRESSED TO BOTH NASA AND THIS OFFICE, LOUIS REITERATED ITS ALLEGATION THAT MSI COULD NOT PERFORM THE CONTRACT AT ITS BID PRICE AND, IN ADDITION, ALLEGED THAT IT WOULD BE UNFAIR TO ALLOW MSI, WHO IS PRESENTLY WORKING ON A "COST-PLUS" CONTRACT, TO PERFORM WORK OF THE SAME TYPE IN THE SAME BUILDINGS UNDER A CONTRACT AWARDED ON A COMPETITIVE BID BASIS. BY TELEGRAM OF MAY 26, 1970, TO THE CONTRACTING OFFICER AND TO THIS OFFICE, LOUIS REQUESTED A NEW SIZE DETERMINATION BE MADE OF MSI'S SMALL BUSINESS STATUS.

UNDER 15 U.S.C. 637(B)(6) SBA IS AUTHORIZED TO DETERMINE WHICH FIRMS ARE TO BE DESIGNATED SMALL BUSINESS CONCERNS FOR PURPOSES OF GOVERNMENT PROCUREMENT, AND THE DETERMINATION OF THE SBA REGIONAL DIRECTOR OF APRIL 3 IS CONCLUSIVE BOTH AS TO OUR OFFICE AND NASA UNLESS APPEALED WITHIN FIVE WORKDAYS TO THE SBA SIZE APPEALS BOARD. SINCE LOUIS DID NOT APPEAL THAT DETERMINATION WITHIN THE SPECIFIED FIVE DAYS, IT IS DEEMED TO HAVE WAIVED ITS RIGHTS OF APPEAL INSOFAR AS THE SUBJECT PROCUREMENT IS CONCERNED. SEE NASA PR 1.703(B)(4).

IN REGARD TO LOUIS' ALLEGATION THAT MSI CANNOT PERFORM THE CONTRACT AT ITS BID PRICE, SINCE MSI'S BID PRICE IS SUBSTANTIALLY BELOW PRICES OF THE OTHER BIDDERS, WE NOTE THAT MSI'S BID PRICE IS ONLY SLIGHTLY LESS THAN THE GOVERNMENT'S ESTIMATE. WE FURTHER NOTE THAT A SIMILAR DISPARITY EXISTED BETWEEN LOUIS' LOW BID AND THE OTHER BIDS FOR THE 1968 FISCAL YEAR PAINTING CONTRACT, AND THAT LOUIS PERFORMED THE CONTRACT AT ITS BID PRICE. IN VIEW OF THE FACT THAT MSI CONFIRMED ITS BID PRICE, WE FIND NO BASIS ON WHICH TO CONCLUDE THAT THE PRICE WAS COMPUTED IN ERROR. FURTHER, EVEN IF MSI CANNOT PERFORM THE CONTRACT AT ITS BID PRICE, WE ARE AWARE OF NO LEGAL PRINCIPLE ON WHICH AN AWARD MAY BE PRECLUDED OR DISTURBED MERELY BECAUSE THE LOW BIDDER SUBMITTED AN UNPROFITABLE PRICE. B-149551, AUGUST 16, 1962; B-150318, MARCH 25, 1963.

CONCERNING LOUIS' REQUEST THAT THE CONTRACTING OFFICER REQUIRE MSI TO FURNISH A COST BREAKDOWN SUPPORTING ITS BID PRICE, MSI WAS REQUESTED TO FURNISH SUCH DATA. HOWEVER, MSI DECLINED TO FURNISH THE INFORMATION ON THE BASIS THAT THE COMPANY'S BIDDING PRACTICES ARE PRIVILEGED INFORMATION, AND MSI REITERATED THAT ITS BID PRICE AS SUBMITTED WAS CORRECT AND THAT THE COMPANY WOULD DO THE WORK AT THAT PRICE. WE ARE AWARE OF NO REGULATION OR STATUTE REQUIRING BIDDERS ON A FORMALLY ADVERTISED PROCUREMENT TO SUBMIT SUCH DATA.

CONCERNING YOUR ALLEGATION THAT IT WOULD BE UNFAIR TO ALLOW MSI, WHO PRESENTLY HAS A COST-PLUS-AWARD-FEE (CPAF) CONTRACT FOR THE SAME AND OTHER TYPES OF WORK, TO PERFORM THIS WORK IN THE SAME AREAS AND BUILDINGS UNDER A CONTRACT AWARDED ON A COMPETITIVE BID BASIS, IT IS NOT APPARENT TO US WHAT THE BASIS FOR YOUR OBJECTION IS IN THIS RESPECT. IF YOU BELIEVE THAT THERE MIGHT BE A PLANNED ACCOUNTING IMPROPRIETY BETWEEN THE CPAF CONTRACT AND THE SUBJECT PROJECT, THERE IS NO EVIDENCE OF RECORD TO SUGGEST SUCH AN IMPROPRIETY. PART 15 OF THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION PROCUREMENT REGULATION (NASA PR) SETS OUT GENERAL PRINCIPLES AND PROCEDURES FOR THE DETERMINATION AND ALLOWANCE OF COSTS IN CONNECTION WITH THE NEGOTIATION AND ADMINISTRATION OF COST-REIMBURSEMENT TYPE CONTRACTS, WHICH INCLUDES CPAF CONTRACTS. THAT PART ESTABLISHES GUIDE LINES FOR THE ADMINISTERING OFFICIALS IN DETERMINING THE COSTS ALLOCABLE TO A PARTICULAR CONTRACT, AND TO PREVENT COSTS INCURRED UNDER ANOTHER CONTRACT FROM BEING ALLOCATED TO THE COST-REIMBURSEMENT CONTRACT. IN THIS REGARD, SEE NASA PR 15.202(A), RELATING TO DIRECT COSTS CHARGEABLE TO COST-REIMBURSEMENT CONTRACTS, WHEREIN IT STATES, "A DIRECT COST IS ANY COST WHICH CAN BE IDENTIFIED SPECIFICALLY WITH A PARTICULAR COST OBJECTIVE. *** . COSTS IDENTIFIED SPECIFICALLY WITH OTHER WORK OF THE CONTRACTOR ARE DIRECT COSTS OF THAT WORK AND ARE NOT TO BE CHARGED TO THE CONTRACT DIRECTLY OR INDIRECTLY. *** " ALSO, SEE NASA PR 15.205-19 WHEREIN IT IS STATED THAT AN EXCESS OF COSTS OVER INCOME UNDER ANY OTHER CONTRACT IS UNALLOWABLE AS A COST UNDER A COST REIMBURSEMENT CONTRACT.

MSI HAS GIVEN THE FOLLOWING ASSURANCES CONCERNING THESE TWO CONTRACTS:

1. THE PERSONNEL (WORKING LEVEL AND MANAGEMENT) WILL NOT BE CONNECTED IN ANY WAY WITH THE PERSONNEL WORKING UNDER THE CPAF CONTRACT FOR GENERAL SUPPORT SERVICES.

2. MATERIAL AND EQUIPMENT FOR THE COMPETITIVE BID CONTRACT, WHICH WILL BE PERFORMED ON REDSTONE ARSENAL, WILL BE BOUGHT IN OAK RIDGE AND SHIPPED TO HUNTSVILLE SPECIFICALLY FOR THIS JOB. ALL EQUIPMENT WILL HAVE IDENTIFICATION THAT WILL DISTINGUISH THE EQUIPMENT FROM THAT BEING USED ON THE CPAF CONTRACT.

3. ACCOUNTING RECORDS FOR THE COMPETITIVE BID CONTRACT WILL BE KEPT IN THE OAK RIDGE, TENNESSEE, OFFICE WHEREAS ACCOUNTING RECORDS FOR THE CPAF CONTRACT WILL BE KEPT IN THE HUNTSVILLE OFFICE.

4. THERE WILL BE NO COMMINGLING OF ADMINISTRATIVE EFFORT REQUIRED TO SUPPORT THE TWO JOBS.

ADDITIONALLY, WE HAVE BEEN ADVISED THAT MSFC WILL:

1. PROVIDE FOR SEPARATE AND DISTINCT AREAS FOR EQUIPMENT STORAGE AT MSFC.

2. THE DEFENSE CONTRACT AUDIT AGENCY WILL BE REQUESTED TO MAINTAIN NECESSARY SURVEILLANCE TO ASSURE SEPARATION OF COST ACCUMULATIONS.

3. CONTRACTING OFFICER'S REPRESENTATIVES WILL BE ASKED TO MAKE SPOT CHECKS TO ASSURE SEPARATION OF EQUIPMENT AND PERSONNEL.