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A firm protested an Army contract award for asbestos removal, contending that the: (1) Army improperly determined that it was nonresponsible; and (2) Small Business Administration (SBA) improperly denied it a certificate of competency (COC) because it did not possess a license that the solicitation did not require. GAO held that: (1) SBA denied COC based on other responsibility factors; and (2) the protester lacked one required license and did not indicate any intention to subcontract to meet the license requirement. Accordingly, the protest was denied.

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B-238890, Jul 6, 1990, 69 Comp.Gen. 584

PROCUREMENT - Socio-Economic Policies - Small businesses - Competency certification - Adequacy Protest is denied where, although the Small Business Administration's denial of a certificate of competency (COC) references a basis for COC denial ultimately determined to be incorrect, it also references a correct, independent basis for denial.


Kim Van Company, Inc.:

Kim Van Company, Inc. protests the Department of the Army's award of a contract to National Abatement Contracting Corporation under invitation for bids (IFB) No. DAAA21-89-B-0514, issued as a total small business set- aside for the removal of all asbestos contaminated materials at Picatinny Arsenal, New Jersey. Kim Van, which was found nonresponsible by the Army, alleges that misinformation from the contracting agency led the Small Business Administration (SBA) mistakenly to believe that a New Jersey asbestos removal license not then held by Kim Van was required for performance of the contract and, as a result, caused the SBA to decline to issue Kim Van a certificate of competency (COC).

We deny the protest.

Fourteen bids were received by the October 25, 1989, bid opening. After withdrawal of the apparent low bid on the basis of a mistake in bid, Kim Van's bid of $5,671,560 became low, while National Abatement's bid of $6,314,381 was next in line. In subsequently requesting a pre award survey (PAS) on Kim Van, the contracting officer noted that the prospective "contractor is required to submit an appropriate license for asbestos removal, transportation and disposal." In this regard, the solicitation provided specifically that the "prospective contractor must comply with any special provisions of the State of New Jersey Regulations and applicable State laws for asbestos removal and transportation."

The PAS report rated Kim Van unsatisfactory with respect to production and financial capability, and on this basis included a recommendation against award. While the PAS report indicated that Kim Van had not been determined unsatisfactory due to its lack of an asbestos removal license in New Jersey, it recommended that the contracting officer assure that a license would be issued if award ultimately were made to Kim Van. The contracting officer subsequently found Kim Van to be nonresponsible and, since Kim Van is a small business concern, referred the matter to SBA for consideration of issuance of a COC.

On December 28, during its consideration of Kim Van's COC application, the SBA COC review committee was advised by New Jersey state officials that approval of Kim Van's state asbestos transportation license would take "at least another six to eight weeks," which would necessitate a delay in commencing contract performance. As a result, the committee recommended against issuance of a COC, citing Kim Van's lack of the required transportation license. In its January 10 notice to Kim Van that a COC would not be issued, SBA explained that all information and data supplied had been reviewed, and that the COC was denied on the basis that Kim Van would not be able to obtain New Jersey "asbestos removal licenses" in time for the scheduled contract performance date. In its January 10 notice to the Army, the SBA explained that the decision not to issue a COC to Kim Van was based on a comprehensive analysis of all available information; it did not set forth any specific reason for the denial.

Kim Van argues that SBA denied the COC based solely on misinformation from contracting officials as to the necessity for a New Jersey asbestos removal license. In this regard, Kim Van notes that contracting officials were advised in March by New Jersey officials that the state asbestos removal licensing requirement did not apply to work performed on federal property. Kim Van claims that if SBA had been aware that the license was not required, it would have issued the COC.

SBA, not our Office, has the statutory authority to review a contracting officer's findings of nonresponsibility and to conclusively determine a small business concern's responsibility through the COC process. Fastrax, Inc., B-232251.3, Feb. 9, 1989, 89-1 CPD Para. 132. Our review is limited to determining whether bad faith or fraudulent actions on the part of government officials resulted in a denial of the protester's opportunity to seek SBA review, or whether SBA's denial of a COC was made as a result of bad faith or a failure to consider vital information bearing upon a firm's responsibility. Id.

We find that SBA's denial of the COC here was not improper; Kim Van has not demonstrated that the denial of a COC resulted from bad faith or SBA's failure to consider vital information concerning the firm's responsibility. Although SBA apparently mistakenly believe that a New Jersey asbestos removal license was required (and incorrectly advised Kim Van of the COC denial on this basis), the record shows that SBA also relied on an independent ground for denial of a COC. Specifically, the solicitation required the contractor to possess the required licenses for "asbestos removal and transportation" (emphasis added), and the record shows that an asbestos transportation license is necessary for the contract. The COC review committee was advised on December 28 by New Jersey state officials that approval of the required asbestos transportation license for Kim Van would require "at least six to eight weeks." This was a specified basis on which the committee recommended against issuance of a COC. SBA officials have confirmed to the Army, in connection with this protest, that the lack of a hauling (transportation) license was equal in importance to the lack of a removal license in leading to denial of a COC. Thus, notwithstanding SBA's references to an asbestos removal license, SBA properly denied Kim Van's COC application based on its finding that the firm would not be able to obtain the transportation license in time to perform. /1/

Kim Van questions why its lack of an asbestos transportation license should be a basis for rejection of its proposal when National Abatement also lacks a transportation license. However, National Abatement's proposed subcontractor for the transportation of asbestos possesses the requisite transportation license. While Kim Van maintains it could easily have hired a qualified subcontractor, it did not indicate an intent to do so in its bid, and apparently did not advise SBA that this was its intent if it received the award.

The protest is denied.

/1/ Although the report of the SBA COC review committee referred to Kim Van's lack of an "asbestos handling license," it is clear from SBA's subsequent explanation that the reference in the report encompassed the requirement for a New Jersey license permitting the hauling or transportation of asbestos away from Picatinny Arsenal.

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