B-181873, JAN 28, 1975

B-181873, JAN 28, 1975

1. PROTEST 19 DAYS AFTER BID OPENING ALLEGING ERRONEOUS CENSUS CLASSIFICATION CODE IN IFB, A TOTAL SMALL BUSINESS SET-ASIDE, WAS UNTIMELY FILED WITH CONTRACTING OFFICER UNDER ASPR SEC. 1-703(C)(2)(II) (1974 ED.). 2. DETERMINATION WHETHER FIRM IS SMALL BUSINESS CONCERN IS MATTER FOR CONSIDERATION BY SMALL BUSINESS ADMINISTRATION UNDER 15 U.S.C. SEC. 637(B)(6) (1974) AND DETERMINATION IS CONCLUSIVE UPON PROCUREMENT AGENCY INVOLVED. 3. UNDER A SMALL BUSINESS SET-ASIDE, REQUIREMENT THAT END ITEM BE MANUFACTURED OR PRODUCED BY SMALL BUSINESS CONCERN IS NOT APPLICABLE TO CONSTRUCTION CONTRACT ENVISIONED BY SOLICITATION.

NANAKULI PAVING & ROCK CO.:

THIS MATTER CONCERNS A PROTEST BY NANAKULI PAVING & ROCK CO. (NANAKULI) (A DIVISION OF GRACE BROTHERS, LTD.), AGAINST THE AWARD OF A CONTRACT TO ANY OTHER FIRM UNDER INVITATION FOR BIDS (IFB) NO. DAGA01 74-B-0315, ISSUED BY THE UNITED STATES ARMY PROCUREMENT AGENCY, HAWAII.

THE SUBJECT IFB, A TOTAL SMALL BUSINESS SET-ASIDE, CALLED FOR BIDS TO PROVIDE REPAIR AND OVERLAY WITH ASPHALTIC CONCRETE OF ROADS AND PARKING AREA IN THE CAPEHART HOUSING AREA, SCHOFIELD BARRACKS, HAWAII. THE RECORD INDICATES THAT NANAKULI SUBMITTED THE LOW BID OF THE THREE BIDS RECEIVED.

HOWEVER, THE SECOND LOW BIDDER, ALVIN D. JOHNSON, DBA ALSON HAWAII, QUESTIONED THE SMALL BUSINESS STATUS OF NANAKULI. THE SMALL BUSINESS ADMINISTRATION (SBA) DISTRICT DIRECTOR RULED THAT NANAKULI WAS NOT A SMALL BUSINESS WITHIN THE MEANING OF THE REGULATIONS OF THE SMALL BUSINESS ADMINISTRATION (13 C.F.R. SEC. 121.3-8) AND THEREFORE WAS INELIGIBLE FOR AWARD. NANAKULI REQUESTED THE CONTRACTING OFFICER TO RECONSIDER THE DETERMINATION BY THE SBA DISTRICT DIRECTOR. BASED UPON A WRITTEN DETERMINATION THAT NANAKULI WAS NONRESPONSIBLE AND THAT IT WAS NECESSARY TO MAKE AN AWARD NOTWITHSTANDING THE PROTEST, THE CONTRACT WAS AWARDED TO ALSON HAWAII ON JUNE 28, 1974.

BY LETTER DATED JULY 17, 1974, FROM NANAKULI AND SUBSEQUENT CORRESPONDENCE FROM ITS COUNSEL, NANAKULI CONTENDS THAT ITS FIRM IS A SMALL BUSINESS CONCERN AND THAT THE SBA DECISION TO THE CONTRARY IS ERRONEOUS. NANAKULI ALSO CONTENDS THAT THE IFB ERRONEOUSLY LIMITED THE ELIGIBLE SMALL BUSINESS CONCERNS TO THOSE OF SPECIAL TRADE INDUSTRY UNDER CENSUS CLASSIFICATION CODE 1794. FURTHER, NANAKULI CONTENDS THAT ONLY ITS FIRM OR HAWAIIAN BITUMULS AND PAVING CO., LTD., ARE ABLE TO PERFORM THE WORK CALLED FOR IN THE IFB AND THAT AN AWARD TO ANY OTHER COMPANY WOULD REQUIRE THAT COMPANY TO SUBCONTRACT THE WORK TO A LARGE BUSINESS IN CONTRAVENTION OF THE SPIRIT AND INTENT OF THE STATUTES PROVIDING FOR SMALL BUSINESS PARTICIPATION IN GOVERNMENT CONTRACTS AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER.

THE IFB INDICATES THAT THE TOTAL SMALL BUSINESS SET-ASIDE WAS RESTRICTED TO FIRMS IN CENSUS CLASSIFICATION CODE 1794. THE DETERMINATION WAS DISCLOSED ON THE FACE OF STANDARD FORM 21 WHICH WAS PART OF THE IFB WHICH REMAINED OPEN FOR 20 DAYS. IT IS REPORTED THAT NO APPEAL WAS TAKEN PRIOR TO BID OPENING AND THE RECORD INDICATES THAT NANAKULI DID NOT RAISE THE ISSUE OF CLASSIFICATION UNTIL THEIR LETTER DATED JUNE 25, 1974, OR ALMOST 19 DAYS AFTER BID OPENING. UNDER THE PROVISIONS OF PARAGRAPH 1-703 (C)(2)(II) (1974 ED.) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), AN APPEAL FROM A PRODUCT OR SERVICE CLASSIFICATION DETERMINATION BY THE CONTRACTING OFFICER MUST BE TAKEN NOT LESS THAN 5 WORKING DAYS BEFORE BID OPENING WHERE THE SOLICITATION PERIOD IS 30 DAYS OR LESS. SUCH AN APPEAL IS MADE TO THE SBA'S SIZE APPEALS BOARD AND IS NOT FOR CONSIDERATION BY OUR OFFICE. SEE MATTER OF NATIONAL ELECTRICAL CONTRACTORS ASSOCIATION, B-181511, JULY 15, 1974.

SUBPARAGRAPH (B) OF THE CLAUSE ENTITLED "NOTICE OF TOTAL SMALL BUSINESS SET-ASIDE" WHICH WAS ATTACHED TO STANDARD FORM 22 CONTAINED THE FOLLOWING DEFINITION OF A SMALL BUSINESS:

"(B) DEFINITION. A 'SMALL BUSINESS CONCERN' IS A CONCERN, INCLUDING ITS AFFILIATES, WHICH IS INDEPENDENTLY OWNED AND OPERATED, IS NOT DOMINANT IN THE FIELD OF OPERATION IN WHICH IT IS OFFERING ON GOVERNMENT CONTRACTS, AND CAN FURTHER QUALIFY UNDER THE CRITERIA SET FORTH IN THE REGULATIONS OF THE SMALL BUSINESS ADMINISTRATION (CODE OF FEDERAL REGULATIONS, TITLE 13, SECTION 121.3-8). IN ADDITION TO MEETING THESE CRITERIA, A MANUFACTURER OR A REGULAR DEALER SUBMITTING OFFERS IN HIS OWN NAME MUST AGREE TO FURNISH IN THE PERFORMANCE OF THE CONTRACT END ITEMS MANUFACTURED OR PRODUCED BY SMALL BUSINESS CONCERNS: PROVIDED, THAT THIS ADDITIONAL REQUIREMENT DOES NOT APPLY IN CONNECTION WITH CONSTRUCTION OR SERVICE CONTRACTS."

THE SECOND TIER RESTRICTION TO SMALL BUSINESS FIRMS SET OUT IN THE ABOVE- QUOTED SUBPARAGRAPH DOES NOT APPLY TO CONSTRUCTION OR SERVICE CONTRACTS. EVEN IF NANAKULI AND HAWAIIAN BITUMULS AND PAVING CO., LTD., ARE THE ONLY TWO FIRMS MANUFACTURING ASPHALTIC CONCRETE IN HONOLULU AND ARE LARGE BUSINESS FIRMS UNDER SBA REGULATIONS, THE QUOTED EXEMPTION WOULD PERMIT THESE FIRMS TO SUBCONTRACT UNDER A CONSTRUCTION CONTRACT WHICH WAS AWARDED UNDER A TOTAL SMALL BUSINESS SET-ASIDE. SEE MATTER OF UNITED PAINT MANUFACTURING, INC., B-181163, JUNE 25, 1974.

NANAKULI'S CONTENTION THAT IT IS A "SMALL BUSINESS" FOR PURPOSES OF THE SUBJECT PROCUREMENT WAS A MATTER FOR CONSIDERATION BY THE SBA. UNDER 15 U.S.C. SEC. 637(B)(6) (1970), IT IS THE DUTY OF SBA, RATHER THAN GAO, TO DETERMINE WHETHER A CONCERN IS SMALL BUSINESS FOR PURPOSES OF A PARTICULAR PROCUREMENT, AND SBA'S DETERMINATION IS CONCLUSIVE UPON THE PROCUREMENT AGENCY INVOLVED. SEE MATTER OF OLD ATLANTIC SERVICES, INC., B-182559, DECEMBER 12, 1974.

IN VIEW OF THE ABOVE, THE PROTEST IS DENIED.