Improper Small Business Set-Aside Contract Award

PSAD-78-139: Published: Aug 25, 1978. Publicly Released: Aug 25, 1978.

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Award of a refuse disposal contract at the Long Beach Naval Shipyard in California to Approved Disposal Company, Inc., was investigated to determine whether Approved Disposal was eligible to compete for the contract set aside for small businesses. The investigation indicated a long-term affiliation between Approved Disposal and Western Refuse Hauling, Inc. The combined annual average receipts of the two affiliates exceeded $10 million for the preceding 3 fiscal years, disqualifying Approved Disposal from participation in a small business set-aside. The Small Business Administration officially determined that Approved Disposal did not meet the size standards applicable to the shipyard's contract but took no position on whether Approved Disposal had inadvertently or fraudently misrepresented itself as a small business prior to the contract award. The contracting officer at the shipyard advised that the Navy will not exercise the renewal option in the current contract and will solicit bids later this year for a new contract. The officer also noted that he has experienced difficulties in obtaining responses from small businesses. This may be caused, in part, by the 50 percent performance-bond requirement.

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