B-164115, AUG. 30, 1968

B-164115, AUG. 30, 1968

TO MR. SECRETARY:

REFERENCE IS MADE TO THE LETTER OF JULY 22, 1968, WITH ATTACHMENTS, FURNISHING A REPORT WITH RESPECT TO THE PROTEST BY DEMAC MANUFACTURING COMPANY, INCORPORATED, AGAINST THE AWARD OF THE SET-ASIDE PORTION OF ADVERTISED SOLICITATION NO. F33657-68-B-0712, TO ANOTHER BIDDER.

THE INVITATION WAS ISSUED BY THE CONTRACTUAL INSTRUMENTS DIVISION, AFSC, AERONAUTICAL SYSTEMS DIVISION, WRIGHT-PATTERSON AIR FORCE BASE, OHIO, FOR THE PROCUREMENT OF 46,105 CARTONS OF RR-125/AL CHAFF COUNTERMEASURES IN ACCORDANCE WITH APPLICABLE SPECIFICATIONS. ALSO INCLUDED IN THE INVITATION WERE OPTION REQUIREMENTS NOT TO EXCEED 200 PERCENT OF THE QUANTITIES INITIALLY AWARDED. A TOTAL OF 23,052 OF THE CARTONS WERE SET ASIDE FOR AWARD TO RESPONSIBLE LABOR SURPLUS AREA CONCERNS AND, TO A LIMITED EXTENT TO SMALL BUSINESS CONCERNS WHICH SUBMITTED RESPONSIVE BIDS ON THE SET-ASIDE PORTION WITHIN 120 PERCENT OF THE AWARD PRICE ON THE NON- SET-ASIDE PORTION.

THE INVITATION UNDER THE HEADING "NOTICE OF LABOR SURPLUS AREA SET ASIDE" PROVIDED IN PART:

"/A) * * * NEGOTIATIONS FOR THE SET-ASIDE PORTION WILL BE CONDUCTED WITH SUCH BIDDERS IN THE FOLLOWING ORDER OF PRIORITY:

GROUP 2 - OTHER CERTIFIED-ELIGIBLE CONCERNS.

GROUP 4 - OTHER PERSISTENT LABOR SURPLUS AREA CONCERNS.

GROUP 7 - SMALL BUSINESS CONCERNS WHICH ARE NOT LABOR SURPLUS AREA CONCERNS.'

BIDS WERE RECEIVED FROM THREE FIRMS AND OPENED ON APRIL 17, 1968, AS SCHEDULED IN THE INVITATION. BID PRICES PER CARTON WERE AS FOLLOWS:

FIRMS PRICE

REYNOLDS METALS COMPANY (REYNOLDS) $38.95

REVERE COPPER AND BRASS (REVERE) $40.88

DEMAC MANUFACTURING CO., INC. (DEMAC) $41.38 YOUR LETTER ADVISES THAT REYNOLDS QUALIFIES AS THE LOW RESPONSIVE AND RESPONSIBLE BIDDER FOR THE NON-SET-ASIDE PORTION. REYNOLDS DID NOT PROPOSE PERFORMANCE IN A LABOR SURPLUS AREA AND IS NOT ELIGIBLE FOR AWARD ON THE SET-ASIDE PORTION.

THE COVER LETTER WITH REVERE'S BID DATED APRIL 15, 1968, STATES THAT REVERE QUALIFIES AS A PERSISTENT LABOR SURPLUS AREA CONCERN IN PRIORITY GROUP 4. THIS LETTER INDICATES THAT THE ALUMINUM FOIL WILL BE MANUFACTURED AT REVERE'S MILL FACILITY LOCATED AT NEWPORT, JACKSON COUNTY, ARKANSAS, AND THAT THE MANUFACTURING COST OF THE ALUMINUM FOIL REPRESENTS 50.83 PERCENT OF THE PROPOSED CONTRACT SELLING PRICE. IT IS ALSO INDICATED IN THE COVER LETTER THAT THE BARRIER BAGS WILL BE MANUFACTURED BY A FIRST-TIER SUBCONTRACTOR LOCATED IN NEWARK, NEW JERSEY, AND THAT THE COST OF THE BARRIER BAGS REPRESENTS 1.20 PERCENT OF THE PROPOSED CONTRACT SELLING PRICE. THESE TWO SITES ARE SAID IN THE LETTER TO QUALIFY AS PERSISTENT LABOR SURPLUS AREAS. THE ABOVE INFORMATION IS ALSO SET FORTH ON PAGE 7 OF REVERE'S BID. WITH RESPECT TO "INSPECTION AND ACCEPTANCE" , PAGE 12 OF REVERE'S BID INDICATES THAT THIS POINT WILL BE REVERE'S FOIL DIVISION, BROOKLYN, NEW YORK.

BY LETTER DATED MAY 14, 1968, DEMAC, A SMALL BUSINESS CONCERN IN PRIORITY GROUP 7, PROTESTED AGAINST AN AWARD TO REVERE ALLEGING THAT REVERE DOES NOT QUALIFY AS A PERSISTENT LABOR SURPLUS AREA CONCERN FOR PURPOSES OF THIS PROCUREMENT. PURSUANT TO AIR FORCE'S REQUEST, REVERE FURNISHED THE FOLLOWING COST BREAKDOWN IN ITS LETTER OF MAY 24, 1968:

"PURCHASED RAW MATERIAL $11.67

MATERIAL HANDLING .39

LABOR CHARGES 4.07

MILL BURDEN 4.16

G AND A EXPENSE .49

TOTAL COST $20.78 REPRESENTS 50.8 PERCENT OF THE CONTRACT PRICE.' LETTER FROM REVERE DATED MAY 9, 1968, STATES THAT THE FOIL DIVISION OF WHICH THE NEWPORT PLANT IS AN INTEGRAL PART, PURCHASES AN AVERAGE OF 3 MILLION POUNDS OF REROLL STOCK PER MONTH ON THE OPEN MARKET FROM SEVERAL SOURCES. THE LETTER OF MAY 24, 1968, FROM REVERE, STATES THAT THE SHEET METAL FOR THE INSTANT PROCUREMENT PURCHASED AS RAW MATERIAL FROM THE SOURCES INDICATED IN THE LETTER OF MAY 9 WILL BE LESS THAN 1 MILLION POUNDS; THAT REVERE PURCHASES SOME 36 MILLION POUNDS OF METAL DURING A YEAR'S PERIOD AND THAT IT IS IMPOSSIBLE TO IDENTIFY THE PARTICULAR SOURCE OR SOURCES FOR THE METAL WHICH WILL BE USED FOR THE INSTANT PROCUREMENT. A LETTER DATED AUGUST 2, 1968, FROM REVERE TO OUR OFFICE CONFIRMS THAT THE SOURCES FOR THE RAW MATERIAL CANNOT BE SPECIFICALLY IDENTIFIED.

REVERE'S FIRST CONTENTION WHICH WAS REITERATED IN ITS LETTER TO OUR OFFICE, IS THAT THE COST OF THE PURCHASED RAW MATERIALS SHOULD BE CONSIDERED IN DETERMINING WHETHER REVERE QUALIFIES AS A PERSISTENT LABOR SURPLUS AREA CONCERN DESPITE THE FACT THAT THE SOURCES OF THE MATERIALS CANNOT BE SPECIFICALLY IDENTIFIED SINCE THE RAW MATERIALS MUST BE PROCESSED AFTER RECEIPT AT REVERE'S ARKANSAS FACILITY. SECONDLY, REVERE CONTENDS THAT IN ANY EVENT IT SHOULD BE CONSIDERED AS AN ,OTHER CERTIFIED- ELIGIBLE" CONCERN IN PRIORITY GROUP 2. WITH RESPECT TO THIS CONTENTION, REVERE RECEIVED A CERTIFICATE OF ELIGIBILITY FOR PREFERENCE IN FEDERAL PROCUREMENT UNDER DEFENSE MANPOWER POLICY NO. 4 FROM THE DEPARTMENT OF LABOR ON MAY 3, 1968. REVERE ALLEGES THAT ON APRIL 16, 1968, PRIOR TO BID OPENING, REVERE WAS ADVISED THAT IT WAS ELIGIBLE FOR CERTIFICATION AND THAT IT BEGAN THE PROCESS OF OBTAINING A CERTIFICATE OF ELIGIBILITY PRIOR TO BID OPENING; HOWEVER, THE CERTIFICATE WAS NOT ISSUED UNTIL AFTER BID OPENING. IT IS THE AIR FORCE'S POSITION THAT IN VIEW OF PARAGRAPH 4 (D) OF THE SCHEDULE OF THE INSTANT INVITATION REVERE MAY NOT BE CONSIDERED AS A ,CERTIFIED-ELIGIBLE CONCERN" FOR THIS PROCUREMENT SINCE EVIDENCE OF ITS CERTIFICATE WAS NOT FURNISHED WITH ITS BID. PARAGRAPH 4 (D) OF THE SCHEDULE OF THE INVITATION PROVIDES:

"/D) ELIGIBILITY BASED ON CERTIFICATION. WHERE ELIGIBILITY FOR PREFERENCE IS BASED UPON THE STATUS OF THE BIDDER OR BIDDER'S SUBCONTRACTORS AS A -CERTIFIED-ELIGIBLE CONCERN,- THE BIDDER SHALL FURNISH WITH HIS BID EVIDENCE OF CERTIFICATION BY THE SECRETARY OF LABOR.' PARAGRAPH 4 (D) OF THE SCHEDULE IN THE INVITATION IS SUBSTANTIALLY THE SAME AS THE PROVISION IN SUBPARAGRAPH (D) OF THE NOTICE OF LABOR SURPLUS AREA SET-ASIDE SET FORTH UNDER ASPR 1-804.2 (B) (1). REVERE URGES THAT THE ABOVE PARAGRAPH IS NOT CONTROLLING BUT THAT CONSIDERATION MUST ALSO BE GIVEN TO PARAGRAPH 4 (C) OF THE SCHEDULE. THIS PARAGRAPH PROVIDES:

"/C) IDENTIFICATION OF AREAS OF PERFORMANCE. EACH BIDDER DESIRING TO BE CONSIDERED FOR AWARD AS A LABOR SURPLUS AREA CONCERN ON THE SET ASIDE PORTION OF THIS PROCUREMENT SHALL IDENTIFY IN HIS BID THE GEOGRAPHICAL AREAS IN WHICH HE PROPOSES TO PERFORM, OR CAUSE TO BE PERFORMED, A SUBSTANTIAL PROPORTION OF THE PRODUCTION OF THE CONTRACT. IF THE DEPARTMENT OF LABOR CLASSIFICATION OF ANY SUCH AREA CHANGES AFTER THE BIDDER HAS SUBMITTED HIS BID, THE BIDDER MAY CHANGE THE AREAS IN WHICH HE PROPOSES TO PERFORM, PROVIDED, THAT HE SO NOTIFIES THE CONTRACTING OFFICER BEFORE AWARD OF THE SET-ASIDE PORTION. PRIORITY FOR NEGOTIATION WILL BE BASED UPON THE LABOR SURPLUS CLASSIFICATION OF THE DESIGNATED PRODUCTION AREAS AS OF THE TIME OF THE PROPOSED AWARD.' REVERE URGES THAT PARAGRAPH 4 (C) SHOULD BE CONSTRUED AS PERMITTING A CONCERN TO BE CONSIDERED AS A "CERTIFIED ELIGIBLE CONCERN" IF THE CONTRACTING OFFICER IS NOTIFIED OF SUCH ELIGIBILITY PRIOR TO AWARD. REVERE HAS FURNISHED A COST-BREAKDOWN WHICH INDICATES THAT EVEN EXCLUDING THE COST OF MATERIALS MORE THAN 30 PERCENT OF THE CONTRACT PRICE FOR THE INSTANT PROCUREMENT WILL BE INCURRED IN SECTIONS OF "CONCENTRATED UNEMPLOYMENT OR UNDEREMPLOYMENT" IN ACCORDANCE WITH THE REQUIREMENTS OF ASPR 1-801.1 (I). REVERE HAS ALSO FURNISHED OUR OFFICE WITH ITS PRODUCTION PLAN FOR THIS PROCUREMENT WHICH INDICATES THAT EXCLUDING THE COST OF RAW MATERIALS AND PROFIT, SOME 61.5 PERCENT OF REVERE'S CONTRACT PRICE WILL BE INCURRED IN AREAS OF PERSISTENT LABOR SURPLUS (22.3 PERCENT) AND "HARD CORE" AREAS (39.2 PERCENT).

ON THE QUESTION WHETHER THE COSTS OF RAW MATERIAL MAY AFFECT QUALIFICATION AS A LABOR SURPLUS AREA CONCERN, WE MADE THE FOLLOWING OBSERVATION IN B-145942, B-146040, SEPTEMBER 6, 1961:

"* * * UNDER THE ASPR DEFINITION OF A CONCERN WHICH WILL PERFORM (EITHER BY ITSELF OR OTHERS), SUBSTANTIALLY ALL THE WORK (MORE THAN 50 PERCENT OF THE CONTRACT PRICE) IN A DISTRESSED LABOR AREA, COSTS OF PERFORMANCE INCLUDE THE AMOUNTS INCURRED -IN MANUFACTURING OR PRODUCTION-. ONE OF THE COSTS OF -PRODUCTION- IS THE COST OF PURCHASED MATERIALS, AND THE EXAMPLES GIVEN IN ASPR RECOGNIZE SUCH COSTS ALONE AS SUFFICIENT TO QUALIFY A FIRM OR DISQUALIFY IT AS A LABOR SURPLUS AREA CONCERN. THEREFORE, WHILE IT MAY BE DETERMINED FROM THE INVITATION CLAUSE THAT THE BIDDER WILL -PERFORM THE WORK- AT A CERTAIN PLANT, THAT INFORMATION IS NOT NECESSARILY DISPOSITIVE OF THE QUESTION WHETHER MORE THAN 50 PERCENT OF THE TOTAL COSTS OF MANUFACTURE AND PRODUCTION WILL BE INCURRED IN THAT AREA. * * *" SEE ALSO 41 COMP. GEN. 160 AND B-158002, FEBRUARY 28, 1966.

THE CITED DECISIONS OF OUR OFFICE ARE CLEAR THAT THE COST OF PURCHASED MATERIAL MUST BE CONSIDERED A COST OF PRODUCTION WITHIN ASPR 1-801.1 (II). OUR DECISION B-158002, FEBRUARY 28, 1966, INDICATES THAT IN ORDER FOR PURCHASED MATERIALS TO QUALIFY AS A COST INCURRED BY THE BIDDER OR ITS FIRST-TIER SUBCONTRACTOR ON ACCOUNT OF MANUFACTURING OR PRODUCTION IN A LABOR SURPLUS AREA, THE MATERIALS MUST BE PURCHASED FROM A MANUFACTURER OR PRODUCER LOCATED IN A LABOR SURPLUS AREA. THIS WOULD APPLY EVEN THOUGH IT IS NECESSARY FOR A CONCERN TO FURTHER PROCESS PURCHASED RAW MATERIALS AFTER RECEIPT AT ITS FACILITY.

THE RAW MATERIALS MAY BE INCLUDED IN REVERE'S COST OF PRODUCTION FOR THE PURPOSE OF QUALIFYING AS A PERSISTENT LABOR SURPLUS AREA CONCERN ONLY UPON A SHOWING WHICH HAS NOT BEEN MADE, THAT THEY WERE MANUFACTURED OR PRODUCED IN SUCH AN AREA. IF THE COSTS OF RAW MATERIALS ARE NOT SO INCLUDED, REVERE DOES NOT MEET THE REQUIREMENTS OF ASPR 1-801.1 (II) SINCE THE COSTS INCURRED IN AREAS OF PERSISTENT LABOR SURPLUS WOULD NOT BE MORE THAN 50 PERCENT OF THE CONTRACT PRICE. IN THE CIRCUMSTANCES WE AGREE WITH THE DETERMINATION BY YOUR DEPARTMENT THAT REVERE DOES NOT QUALIFY AS A PERSISTENT LABOR SURPLUS AREA CONCERN IN PRIORITY GROUP 4.

NEXT FOR CONSIDERATION IS WHETHER REVERE QUALIFIES AS A "CERTIFIED ELIGIBLE" CONCERN FOR THIS PROCUREMENT IN PRIORITY GROUP 2. WE HAVE PREVIOUSLY CONSIDERED AN ARGUMENT SIMILAR TO THE ONE ADVANCED BY REVERE THAT PARAGRAPH 4 (D) OF THE SCHEDULE IS QUALIFIED BY PARAGRAPH 4 (C) OF THE SCHEDULE. OUR DECISION, B-162881, APRIL 10, 1968, INVOLVED A SITUATION WHERE A CONCERN BECAME A ,CERTIFIED-ELIGIBLE" CONCERN AFTER BID OPENING. THE INVITATION IN THAT CASE DID NOT CONTAIN A PROVISION SUCH AS PARAGRAPH 4 (D) OF THE SCHEDULE IN THE INSTANT INVITATION. IT WAS URGED THAT SINCE THE INVITATION EXPRESSLY PROVIDED THAT BIDDERS MIGHT CHANGE THEIR GEOGRAPHICAL AREAS OF PERFORMANCE (ANALOGOUS TO PARAGRAPH 4 (C) IN THE SCHEDULE IN THE INSTANT INVITATION) PRIOR TO AWARD OF THE SET-ASIDE PORTION IF THE DEPARTMENT OF LABOR CLASSIFICATION OF LABOR SURPLUS AREAS CHANGED AFTER SUBMISSION OF BIDS, AND SINCE PRIORITY FOR NEGOTIATION WAS TO BE BASED ON THE LABOR SURPLUS CLASSIFICATION OF THE DESIGNATED AREAS AS OF THE TIME OF AWARD, THOSE FIRMS DESIGNATED AS ,CERTIFIED-ELIGIBLE"AT THE TIME OF AWARD OF THE SET-ASIDE PORTION SHOULD BE ACCORDED PREFERENTIAL TREATMENT. THIS ARGUMENT WAS REJECTED IN OUR DECISION OF APRIL 10, 1968. AN ANALOGOUS SITUATION WAS CONSIDERED IN B-163652, APRIL 12, 1968, 47 COMP. GEN. ----. AFTER BID OPENING ONE OF THE OFFERORS ADVISED THE CONTRACTING OFFICER THAT IT EXPECTED MOMENTARILY TO BE ,CERTIFIED- ELIGIBLE" FOR PREFERENCE IN ACCORDANCE WITH THE LABOR SURPLUS AREA PROVISIONS OF THE SOLICITATIONS. WE CONSIDERED AT LENGTH WHETHER AN OFFEROR MAY QUALIFY FOR THE PRIORITY AFFORDED A "CERTIFIED ELIGIBLE" CONCERN IN THE SITUATION WHERE EVIDENCE OF THE CERTIFICATION IS NOT FURNISHED WITH THE BID OR OFFER, STATING IN PART:

"IN LINE WITH THAT VIEW, OUR DECISIONS HAVE STATED THAT INVITATIONS INVOLVING LABOR SURPLUS SET-ASIDES SHOULD STATE THE INFORMATION WHICH BIDDERS ARE TO FURNISH IN THEIR BIDS AND THE EFFECT OF THE FAILURE TO FURNISH IT. 44 COMP. GEN. 34; 41 ID. 160. WE NOTE THAT IN THE PRESENT CASE THE INVITATIONS DID NOT SPECIFICALLY ADVISE PROSPECTIVE BIDDERS OF THE EFFECT OF THEIR FAILURE TO SUBMIT THE CERTIFICATE OF ELIGIBILITY WITH THEIR BIDS; HOWEVER, WE HELD IN B-156374, SEPTEMBER 3, 1965, THAT -WHILE IT MIGHT HAVE BEEN PREFERABLE TO AFFIRMATIVELY ADVISE BIDDERS OF THE CONSEQUENCES OF THEIR FAILURE TO INDICATE SITES OF PERFORMANCE * * *, THE ENTIRE CONTEXT OF THE SET-ASIDE NOTICE IS CLEARLY OF MATERIAL SIGNIFICANCE IN BID EVALUATION.- SEE ALSO, 44 COMP. GEN. 34. "THE GENERAL RULE IS WELL ESTABLISHED THAT IN ADVERTISED PROCUREMENTS A BIDDER'S FAILURE TO SUPPLY INFORMATION IN THE BID WHICH IS NECESSARY FOR A FULL AND COMPLETE EVALUATION OF THE BID WILL RENDER THE BID NONRESPONSIVE TO THE INVITATION FOR BIDS. MOREOVER, WHERE SUCH MATERIAL INFORMATION IS OMITTED FROM A BID IT MAY NOT BE SUPPLIED AFTER BID OPENING. 44 COMP. GEN. 34. SINCE BIDDERS WERE WARNED THAT THEIR ELIGIBILITY FOR CONSIDERATION AS A CERTIFIED ELIGIBLE CONCERN, FOR THE PURPOSE OF PRIORITY IN THE NEGOTIATION OF THE SET-ASIDE PORTIONS, WAS PREDICATED UPON THE SUBMISSION OF A PROPER CERTIFICATION WITH THEIR BIDS, OUR OFFICE WOULD NOT BE WARRANTED IN DISAGREEING WITH A DETERMINATION TO CONSIDER A BIDDER WHICH DID NOT SUBMIT THE REQUIRED CERTIFICATE AS ONE WHICH HAS NOT BEEN QUALIFIED AS A - CERTIFIED-ELIGIBLE- CONCERN.

"IT MAY BE SAID THAT THE LABOR SURPLUS AREA PROVISIONS CARRY A CONNOTATION OF RESPONSIBILITY RATHER THAN RESPONSIVENESS IN THAT THEY STATE THAT -PRIORITY FOR NEGOTIATION WILL BE BASED UPON THE LABOR SURPLUS CLASS OF THE DESIGNATED PRODUCTION AREAS AS OF THE TIME OF THE PROPOSED AWARD.- HOWEVER, WE DO NOT REGARD THE QUOTED LANGUAGE AS INDICATIVE OF RESPONSIBILITY ON THE BASIS THAT EVIDENCE OF SURPLUS LABOR AREA CLASS MAY BE FURNISHED AFTER BID OPENING BUT PRIOR TO AWARD. IN THE CONTEXT OF THE ENTIRE PARAGRAPH, WHICH IS ENTITLED IDENTIFICATION OF AREAS OF PERFORMANCE,- THE QUOTED LANGUAGE MUST BE READ IN THE LIGHT OF THE PRECEDING SENTENCE: -IF THE DEPARTMENT OF LABOR CLASSIFICATION OF ANY SUCH AREA (THE GEOGRAPHIC AREA IDENTIFIED IN THE BID) CHANGES AFTER THE BIDDER HAS SUBMITTED HIS BID, THE BIDDER MAY CHANGE THE AREA IN WHICH HE PROPOSES TO PERFORM, PROVIDED, THAT HE SO NOTIFIES THE CONTRACTING OFFICER BEFORE AWARD OF THE SET-ASIDE PORTION.-

"HENCE, UNDER THE LABOR SURPLUS AREA PROVISIONS, A BIDDER MAY CHANGE HIS AREA OF PERFORMANCE ORIGINALLY CERTIFIED IF THE CLASSIFICATION OF THAT AREA IS CHANGED BY THE DEPARTMENT OF LABOR BUT THE CHANGE MUST NOT RESULT IN AN ADVANCEMENT IN PRIORITY PREFERENCE. SEE B-156374, SEPTEMBER 3, 1965. IN OTHER WORDS, AN AUTHORIZED CHANGE IS PERMITTED PROVIDED THE BIDDER WILL PERFORM IN THE SAME CATEGORY STATED IN HIS BID, BUT NOT IF THE CHANGE WOULD IMPROVE HIS POSITION IN ORDER OF PRIORITY. WE THEREFORE REGARD THESE PROVISIONS AS UNRELATED TO RESPONSIBILITY SINCE THE BIDDER IS PRECLUDED FROM TAKING UNILATERAL ACTION AFFECTING HIS PREVIOUSLY STATED AREA OF PERFORMANCE AND ANY CHANGE, IF AUTHORIZED, IS ONE NOT AFFECTING HIS RELATIVE POSITION OF PRIORITY VIS-A-VIS OTHER BIDDERS.

"IN VIEW THEREOF, IT IS OUR OPINION THAT THE REQUIREMENT IN THE INVITATIONS AND THE RFP RESPECTING THE SUBMISSION OF EVIDENCE OF CERTIFICATION AS A -CERTIFIED-ELIGIBLE CONCERN- IS ONE OF RESPONSIVENESS AS TO WHICH THE CRITICAL TIME IS BID OPENING OR THE DATE FIXED FOR RECEIPT OF PROPOSALS.'

THERE IS NOTHING ON THE FACE OF REVERE'S BID AS SUBMITTED WHICH WOULD INDICATE THAT REVERE CONTEMPLATED BIDDING AS ANYTHING OTHER THAN A PERSISTENT LABOR SURPLUS AREA CONCERN IN PRIORITY GROUP 4. AFTER BID OPENING IT WAS FOUND THAT REVERE DID NOT MEET THE PREREQUISITES TO QUALIFY AS A PERSISTENT LABOR SURPLUS AREA CONCERN; CONSEQUENTLY, ON THE BASIS OF ITS BID AS SUBMITTED, REVERE DOES NOT QUALIFY FOR THE NEGOTIATION OF THE SET-ASIDE PORTION OF THE INSTANT INVITATION. DEMAC ON THE OTHER HAND QUALIFIES FOR NEGOTIATION OF THE SET-ASIDE PORTION AS A SMALL BUSINESS CONCERN IN PRIORITY GROUP 7.

IF THE REQUIREMENT THAT THE CERTIFICATE OF ELIGIBILITY MUST BE FURNISHED WITH THE BID WERE WAIVED IN REVERE'S FAVOR, IT WOULD RESULT IN REVERE BEING GIVEN A GROUP 2 PRIORITY THUS DISPLACING DEMAC WHICH IS OTHERWISE ENTITLED TO NEGOTIATION OF THE SET-ASIDE PORTION ON THE BASIS OF ITS BEING A SMALL BUSINESS CONCERN. TO PERMIT A BIDDER WHICH HAS IDENTIFIED A CERTAIN AREA OF PERFORMANCE IN ITS BID GIVING THE BIDDER A CERTAIN PRIORITY FOR THE SET-ASIDE NEGOTIATION TO TAKE AFFIRMATIVE ACTION AFTER BID OPENING TO PRODUCE EVIDENCE OF A CERTIFICATE OF ELIGIBILITY FOR THE PURPOSE OF MEETING CRITERIA ESTABLISHED FOR THE HIGHER PRIORITY GROUP AND THUS DISPLACING ANOTHER BIDDER, WOULD BE TOTALLY INCONSISTENT WITH THE PRECEDENT SET OUT ABOVE. REVERE, THEREFORE, CANNOT BE CONSIDERED AS QUALIFYING AS A "CERTIFIED-ELIGIBLE" CONCERN FOR PURPOSES OF THIS PROCUREMENT SINCE EVIDENCE OF ITS CERTIFICATE OF ELIGIBILITY WAS NOT FURNISHED UNTIL AFTER BID OPENING. IN OUR VIEW, IT IS NOT RELEVANT THAT REVERE MAY HAVE BEGUN THE PROCESS OF OBTAINING A CERTIFICATE OF ELIGIBILITY ON APRIL 16, 1968, WHICH WAS ONE DAY BEFORE BID OPENING. THE PRODUCTION PLAN FURNISHED BY REVERE WOULD NOT QUALIFY IT FOR ANY OF THE LISTED PRIORITIES IN ACCORDANCE WITH THE REQUIREMENTS OF ASPR AND THE SOLICITATION.

IN VIEW OF THE ABOVE, IT IS OUR CONCLUSION THAT NEGOTIATION FOR THE SET- ASIDE PORTION SHOULD BE CONDUCTED WITH DEMAC.