B-167282, MAR. 10, 1970

B-167282, MAR. 10, 1970

CONTRACTS--AWARDS--SMALL BUSINESS CONCERNS--SIZE--APPEAL--HOLD-UP OF AWARD PENDING APPEAL UPON RECONSIDERATION OF DECISION, B-167282, AUG. 11, 1969, QUESTION INVOLVED IS WHETHER CONTRACTING OFFICER WAS AUTHORIZED UNDER CIRCUMSTANCES TO MAKE VALID AWARD NOTWITHSTANDING TIMELY APPEAL FROM SIZE STANDARD USED. WHILE ASPR 1-703 (C) (3) PROVIDES WHERE DECISION OF SBA IS RECEIVED AFTER OPENING DATE AND ITS RULING WILL NOT APPLY TO CURRENT PROCUREMENT, THERE IS NO PROVISION IN REGULATIONS REQUIRING STAY OF AWARD PENDING OUTCOME OF APPEAL TO SIZE APPEALS BOARD (SAB). THEREFORE, CONTRACTING OFFICER CONSUMMATED BINDING AND VALID AWARD TO LOW BIDDER, VALIDITY OF AWARD NOT BEING AFFECTED BY RULING OF SAB BUT, IN VIEW OF SAB'S PRIOR RULINGS ON SUBJECT, CONTRACTING OFFICER SHOULD HAVE RECOGNIZED VALIDITY OF PROTESTANT'S COMPLAINT. SEE B-167297, MAR. 2, 1970.

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER DATED SEPTEMBER 18, 1969, FAC 0211C/RP: KAM, FROM THE NAVAL FACILITIES ENGINEERING COMMAND, FURNISHING A REPORT ON THE REQUEST OF THE BALDWIN TRASH COMPANY, INCORPORATED, FOR RECONSIDERATION OF OUR DECISION B-167282, DATED AUGUST 11, 1969, WHEREIN WE DENIED ITS PROTEST AGAINST THE CANCELLATION OF INVITATION FOR BIDS NO. N62477-69-B-0598, ISSUED BY THE NAVAL RESEARCH AND DEVELOPMENT CENTER, CARDEROCK, MARYLAND, FOR REFUSE COLLECTION AND DISPOSAL SERVICES, AND AGAINST A READVERTISEMENT FOR BIDS ON THE SAME PROCUREMENT UNDER INVITATION FOR BIDS NO. N62477-69-B 1129, ISSUED JUNE 17, 1969, WITH A CHANGE IN THE ORIGINALLY STATED SIZE STANDARD FOR QUALIFICATION AS AN ELIGIBLE SMALL BUSINESS CONTRACTOR.

IN OUR DECISION OF AUGUST 11, 1969, WITH REGARD TO THE CONTRACTING OFFICER'S DETERMINATION TO CANCEL ALL BIDS FOR THE REASON THAT THE PRICES WERE EXCESSIVE, WE STATED THAT THE ADMINISTRATIVE FILES DID NOT CONTAIN AN EXPLANATION OR BREAKDOWN OF THE GOVERNMENT'S CONSIDERED REASONABLE ESTIMATE AMOUNT OF $22,450.

THE ADMINISTRATIVE REPORT DATED SEPTEMBER 18, 1969, ADVANCES THE FOLLOWING EXPLANATION IN SUPPORT OF THE ACTIONS TAKEN BY THE CONTRACTING OFFICER:

THE GOVERNMENT ESTIMATE WAS DERIVED ON THE BASIS OF ENGINEERING TAKEOFFS OF CUBIC YARDAGE OF TRASH AND SAWDUST WITH AN ESTIMATED REDUCTION OF $6000 PREDICATED ON THE LANGUAGE CONTAINED IN AMENDMENT NO. 1 DATED JUNE 4, 1969, STATING: "THE PAYMENT OF ANY FEES CHARGED BY MONTGOMERY COUNTY FOR THE DISPOSAL OF TRASH COLLECTED PURSUANT TO THIS CONTRACT SHALL NOT BE THE RESPONSIBILITY OF THE CONTRACTOR, BUT SHALL BE PAID DIRECTLY TO MONTGOMERY COUNTY BY THE GOVERNMENT, IF TRASH IS TO BE DISPOSED OF IN MONTGOMERY COUNTY. IN ADDITION, THE AMENDMENT PROVIDED THAT THE LAST SENTENCE OF PARAGRAPH 7, ENTITLED "DEFINITION OF SMALL BUSINESS", SHOULD BE CHANGED TO READ "(C) WITH ITS AFFILIATES HAD AVERAGE ANNUAL RECEIPTS FOR THE PRECEDING THREE YEARS OF $1,000,000 OR MORE." THE RATIONALE USED WAS THAT IF THE $6,000 ESTIMATED FOR DUMPING FEES IS DEDUCTED FROM THE $29,000 BID BY BALDWIN TRASH COMPANY, THE RESULT WOULD APPROXIMATE THE AMOUNT OF THE GOVERNMENT'S ESTIMATE OF $22,450. IN ADDITION IT IS NOTED THAT IF THE SOLICITATION HAD NOT BEEN CANCELLED FOR THIS REASON, IT WOULD HAVE HAD TO BE CANCELLED IN ANY EVENT ON THE BASIS OF THE DEFECTIVE SIZE STANDARD OF $1,000,000 OR MORE".

WHILE WE CONCUR WITH THE VIEW THAT THE ERRONEOUS SIZE STANDARD WOULD HAVE REQUIRED CANCELLATION OF THE INVITATION, WE QUESTION THE CONCLUSION THAT THE NEW DUMPING FEE ARRANGEMENTS JUSTIFIED CONSIDERING THE PRICES QUOTED UNREASONABLE. THIS IS BECAUSE OF THE FACT THAT THE RECORD CONTAINS NO INDICATION THAT BALDWIN HAD BEEN REQUIRED TO PAY COMPARABLE FEES IN HIS PERFORMANCE OF THE 1968 CONTRACT.

FURTHERMORE, THE STATEMENT THAT THE SIZE STANDARD WAS CHANGED FROM $1,000,000 TO $3,000,000 TO OBTAIN INCREASED COMPETITION INDICATES SOME MISUNDERSTANDING ON THE PART OF THE CONTRACTING OFFICER AS TO HIS ROLE IN CONNECTION WITH SMALL BUSINESS SET-ASIDE PROCUREMENTS. SIZE STANDARDS ARE FIXED BY THE SMALL BUSINESS ADMINISTRATION, AND MAY NOT BE "CHANGED" BY CONTRACTING OFFICERS.

WHILE WE STATED IN OUR DECISION OF AUGUST 11, 1969, THAT IT WAS QUESTIONABLE WHETHER ANY AWARD COULD HAVE BEEN MADE TO THE BALDWIN TRASH COMPANY FOR THE REASON THAT ITS BID BOND WAS NOT SIGNED BY THE RECEIVER, WE DO NOT NOW BELIEVE THIS WOULD NECESSARILY REQUIRE REJECTION OF THE BALDWIN BID. SEE B-167297, MARCH 2, 1970.

WE HAVE REVIEWED THE ENTIRE MATTER IN THE LIGHT OF THE SEPTEMBER 18, 1969, REPORT AND THE FURTHER REPRESENTATIONS MADE BY THE BALDWIN TRASH COMPANY. THE RECORD SHOWS THAT AN APPEAL FROM THE $3,000,000 SIZE STANDARD WAS TAKEN BY BALDWIN TO THE SIZE APPEALS BOARD OF THE SMALL BUSINESS ADMINISTRATION, PURPORTEDLY IN ACCORDANCE WITH ASPR 1 703 (C). THERE WERE ONLY FIVE WORKING DAYS FROM BID ISSUANCE TO BID OPENING. ITS DECISION DATED JULY 24, 1969, THE SIZE APPEALS BOARD STATED THAT SINCE THE COMPANY WAS DILIGENT IN PROSECUTING THE APPEAL, WHICH COULD NOT POSSIBLY HAVE BEEN FILED FIVE DAYS BEFORE BID OPENING AS REQUIRED BY THE REGULATIONS, THE APPEAL SHOULD BE CONSIDERED AS TIMELY FILED FOR THE PURPOSES OF THIS PROCUREMENT.

WE THINK THE QUESTION TO BE DETERMINED HERE IS WHETHER THE CONTRACTING OFFICER WAS AUTHORIZED, IN THE CIRCUMSTANCES, TO MAKE A VALID AWARD TO SQUARE DEAL TRUCKING COMPANY, NOTWITHSTANDING A TIMELY APPEAL FROM THE SIZE STANDARD USED.

ASPR 1-703 (C) (3) PROVIDES THAT: "* * * THE SBA DECISION, IF RECEIVED PRIOR TO THE OPENING DATE, SHALL BE CONSIDERED FINAL, AND SOLICITATION WILL BE MODIFIED TO REFLECT SUCH DECISION, IF NECESSARY. WHERE APPROPRIATE, OPENING DATES MAY BE EXTENDED. SBA RULINGS RECEIVED AFTER THE OPENING DATE SHALL NOT APPLY TO THE CURRENT PROCUREMENT BUT SHALL APPLY IN FUTURE PROCUREMENTS OF THE PRODUCT".

THERE IS NOTHING IN THE ABOVE REGULATION THAT IS CONTRARY TO THE SBA REGULATIONS, AND THE REGULATION STATES THAT WHERE THE DECISION OF THE SBA IS RECEIVED AFTER THE OPENING DATE, ITS RULING WILL NOT APPLY TO THE CURRENT PROCUREMENT. THERE IS NO PROVISION IN ASPR OR IN THE SBA REGULATIONS REQUIRING A STAY OF AWARD PENDING THE OUTCOME OF AN APPEAL TO THE SIZE APPEALS BOARD. ABSENT SUCH REQUIREMENTS, IT IS OUR VIEW THAT THE CONTRACTING OFFICER CONSUMMATED A BINDING AND VALID AWARD TO THE LOW BIDDER, SQUARE DEAL TRUCKING COMPANY AND THE VALIDITY OF SUCH AN AWARD IS NOT AFFECTED BY THE RULING OF THE SIZE APPEALS BOARD IN THIS CASE. WE ARE OF THE OPINION, HOWEVER THAT IN VIEW OF THE SIZE APPEALS BOARD'S PRIOR RULINGS ON THIS VERY SUBJECT THE CONTRACTING OFFICER SHOULD HAVE RECOGNIZED THE VALIDITY OF BALDWIN'S COMPLAINT.

IN VIEW OF THE ABOVE, THE OPTION UNDER THE SQUARE DEAL CONTRACT SHOULD NOT BE EXERCISED BY THE PROCUREMENT ACTIVITY TO EXTEND THE PRESENT CONTRACT BEYOND JUNE 30, 1970.