B-148803, MAY 29, 1962

B-148803, MAY 29, 1962

TO WILLIAM A. SMITH CONTRACTING COMPANY, INCORPORATED:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM DATED MAY 2, 1962,PROTESTING AGAINST THE WITHDRAWAL OF THE SMALL BUSINESS SET-ASIDE FOR THE WORK COVERED BY INVITATION FOR BIDS NO. CIVENG 41-443-62-86, ISSUED BY THE FORT WORTH OFFICE, CORPS OF ENGINEERS.

THE RECORD DISCLOSES THAT THE WORK WAS SET ASIDE BY THE DISTRICT ENGINEER FOR SMALL BUSINESS FIRMS WITH THE EXPECTATION THAT SUFFICIENT COMPETITION AMONG SMALL CONCERNS WOULD BE OBTAINED TO ASSURE REASONABLE QUOTATIONS. THE LOWEST BID OF $1,109,625 WAS SUBMITTED BY R. G. LETOURNEAU, INCORPORATED; THE REMAINING FOUR BIDS RECEIVED RANGED FROM $1,389,430 TO $1,714,765. SUBSEQUENT TO THE OPENING OF BIDS IT WAS DETERMINED BY THE SMALL BUSINESS ADMINISTRATION THAT THE LOW BIDDER WAS NOT A SMALL BUSINESS CONCERN AND, THEREFORE WAS INELIGIBLE FOR AN AWARD. HOWEVER, THE ADMINISTRATION FURTHER ADVISED THE PROCUREMENT OFFICIALS THAT "IN VIEW OF THE WIDE DIFFERENCE IN BID PRICES, IT IS CONSIDERED IN THE BEST PUBLIC INTEREST TO WITHDRAW THIS SET-ASIDE.' THAT CONCLUSION WAS REFERRED TO THE ASSISTANT SECRETARY OF THE ARMY FOR CONSIDERATION, AND IT WAS DETERMINED THAT THE INVITATION IN QUESTION SHOULD BE CANCELLED AND THE WORK READVERTISED ON AN UNRESTRICTED BASIS. ACCORDINGLY, SUCH ACTION WAS TAKEN PURSUANT TO PARAGRAPH 1-706-3 (B) (1) OF THE ARMED SERVICES PROCUREMENT REGULATION, WHICH PROVIDES IN PERTINENT PART AS FOLLOWS:

"IF, PRIOR TO THE AWARD OF A CONTRACT INVOLVING AN INDIVIDUAL OR CLASS SET-ASIDE FOR SMALL BUSINESS, THE CONTRACTING OFFICER CONSIDERS THAT PROCUREMENT OF THE SET-ASIDE FROM A SMALL BUSINESS CONCERN WOULD BE DETRIMENTAL TO THE PUBLIC INTEREST (E.G., BECAUSE OF UNREASONABLE PRICE), THE CONTRACTING OFFICER MAY WITHDRAW A UNILATERAL SET-ASIDE DETERMINATION BY GIVING TO THE SBA REPRESENTATIVE WRITTEN NOTICE CONTAINING THE REASONS FOR WITHDRAWING A JOINT DETERMINATION.'

IN A SOMEWHAT SIMILAR CASE REPORTED IN 37 COMP. GEN. 147, WE HELD, QUOTING IN PART FROM THE SYNOPSIS, THAT--- "THE READVERTISEMENT OF A PROCUREMENT AND WITHDRAWAL OF A SMALL BUSINESS SET-ASIDE AFTER A PLANNED PRODUCER NO LONGER QUALIFIED AS A SMALL BUSINESS AND AN EVALUATION OF BIDS REVEALED A PRICE DIFFERENTIAL OF APPROXIMATELY 10 PERCENT BETWEEN THE LOW SMALL BUSINESS BID AND THE PRICE PAID FOR THE MATERIAL IN PRIOR PROCUREMENTS * * * WERE PROPER ACTIONS AND THE FACT THAT THE PRICES IN THE COURTESY BID OF THE FORMER SMALL BUSINESS FIRM WERE NOT REVEALED TO THE BIDDERS UNDER THE FIRST INVITATION DOES NOT AFFORD A BASIS TO VOID AN AWARD UNDER THE READVERTISEMENT.'

WE HAVE HELD THAT INVITATIONS SHOULD BE CANCELLED ONLY FOR THE MOST COGENT REASONS AFTER OPENING AND DISCLOSURE OF THE BIDDERS' QUOTATIONS BECAUSE OF THE OBVIOUS PREJUDICIAL EFFECTS FLOWING THEREFROM. HOWEVER, UNDER ONE OF THE PRINCIPAL EXCEPTIONS THERETO THE ACCOUNTING OFFICERS OF THE UNITED STATES HAVE INTERPOSED NO OBJECTION TO SUCH ACTION WHERE IT HAS BEEN ESTABLISHED THAT EVEN THE BID MOST ADVANTAGEOUS TO THE GOVERNMENT IS UNREASONABLE AND THEREFORE NOT IN THE GOVERNMENT'S INTEREST TO ACCEPT. THIS CASE THE DIFFERENCE OF $279,805 BETWEEN YOUR BID AND THE LOWER OFFER OF LETOURNEAU WAS DEEMED SUFFICIENT BY THE SBA TO WARRANT WITHDRAWAL OF THE PROJECT AS A SMALL BUSINESS SET-ASIDE. CONCURRENCE BY THE ADMINISTRATIVE OFFICE WAS BASED ON THE SAVING OF THAT AMOUNT AS CLEARLY IN THE PUBLIC INTEREST. THERE IS NOTHING IN THE RECORD TENDING TO INDICATE THAT SUCH ACTION WAS TAKEN PURSUANT TO POLITICAL PRESSURE AS YOU SUGGEST, NOR IS IT APPARENT TO US HOW THE BID OF LETOURNEAU COULD BE CONSIDERED AS UNFAIR COMPETITION. THE STATUS OF THAT FIRM AS A GENERAL OR CONSTRUCTION CONTRACTOR IS NOT GERMANE TO THE ISSUES RAISED BY YOUR PROTEST.

IN VIEW OF THE SUBSTANTIAL DISPARITY BETWEEN YOUR BID AND THAT OF THE LOWEST OFFER, WE HAVE NO ALTERNATIVE BUT TO CONCLUDE THE WITHDRAWAL OF THE SET-ASIDE FOR SMALL BUSINESS WAS PROPER AND, THEREFORE YOUR PROTEST MUST BE AND IS DENIED.