BNUMBER: B-270708; B-270708.2; B-270708.3
DATE: April 15, 1996
TITLE: Systems Research and Applications Corporation; Infotec
Development, Incorporated
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Matter of:Systems Research and Applications Corporation; Infotec
Development, Incorporated
File: B-270708; B-270708.2; B-270708.3
Date:April 15, 1996
Alfred M. Wurglitz, Esq., Lisa H. Marino, Esq., Matthew B. Pachman,
Esq., and Michael K. Powell, Esq., O'Melveny & Myers, for Systems
Research and Applications Corp.; Charles A. Patrizia, Esq., and Sarah
M. McWilliams, Esq., Paul, Hastings, Janofsky & Walker, for Infotec
Development, Inc., the protesters.
William A. Roberts III, Esq., Lee P. Curtis, Esq., Brian A. Darst,
Esq., and Gayle R. Girod, Esq., Howrey & Simon, for Cordant, Inc., an
intervenor.
Richard P. Castiglia, Jr., Esq., Department of the Air Force, and John
Klein, Esq., Small Business Administration, for the agencies.
Peter A. Iannicelli, Esq., and Michael R. Golden, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Contracting officer properly awarded a contract more than 10 working
days after the Small Business Administration (SBA) received a size
status protest against the prospective awardee where the SBA did not
issue a decision on the protest within the 10-day time period
prescribed in the Federal Acquisition Regulation and in the SBA's
regulations, even though a government furlough that affected SBA
personnel contributed to the delay.
DECISION
Systems Research and Applications Corporation (SRA) and Infotec
Development, Inc. protest the award of a contract to Cordant, Inc.,
pursuant to request for proposals (RFP) No. F19628-94-R-0016, which
was set aside for exclusive small business participation. The
protesters contend that Cordant was ineligible for contract award
because the Small Business Administration (SBA) determined that
Cordant was other than a small business offeror for purposes of this
procurement.
We deny the protests.
Issued on November 14, 1994, the RFP sought proposals for providing
the Defense intelligence community with the capability to accomplish
requirements analysis, engineering design, and integration services
for off-the-shelf commercial hardware and software in support of the
Air Force's Integration for Command, Control, Communication,
Computers, and Intelligence (IC4I) Program. The RFP contemplated
award of two indefinite delivery/indefinite quantity contracts to two
different offerors; each contract would be for a base period of 2
years with options for 3 additional years.[1] The RFP was intended to
provide the systems for intercommunication among the different IC4I
functions and their underlying information systems to handle, process,
share, and disseminate intelligence data. Among other things, the RFP
contemplated that delivery orders would be issued to the contractors
for various engineering services and is intended to provide the
intelligence community with new systems and upgrades as new
technologies become available.
Initial proposals were received in January 1995 and, after evaluation,
four were included in the competitive range.[2] After discussions
were held and best and final offers received and evaluated, the Air
Force notified offerors on October 31 that it had selected BTG and
Cordant for award.
On November 7, Infotec, the incumbent contractor, filed a protest with
the contracting officer asserting that Cordant was other than a small
business for purposes of this procurement and therefore ineligible for
award.[3] The contracting officer referred the matter to the SBA for
a size status determination. On December 1, before receiving the
SBA's written determination on Cordant's size, the Air Force awarded a
contract to Cordant. On December 5, the SBA issued a written
determination that Cordant was other than small for purposes of this
procurement. SRA was debriefed by the Air Force on December 7.
Shortly thereafter, SRA and Infotec filed protests in our Office.
Performance under the contract has been held in abeyance pending
resolution of the protests.
The crux of the protests is that Cordant was ineligible for award
because Cordant was not a small business for purposes of this
procurement. The protesters allege that the contracting officer
awarded the contract to Cordant after the SBA decided, and notified
the contracting officer, that Cordant was not an eligible small
business offeror. Therefore, the protesters argue that the Air Force
should terminate Cordant's contract. Infotec requests that our Office
recommend that the Air Force conduct a new evaluation to determine
whether Infotec or SRA should be awarded the contract based upon its
offer representing the best value to the government, while SRA
requests that we recommend that the Air Force award the contract to it
under the original evaluation.
The Air Force's position is relatively simple. The agency states that
the contracting officer was willing to abide by the SBA's ruling
concerning Cordant's eligibility for award; however, the SBA's
determination that Cordant was other than small was issued late (i.e.,
more than 10 business days after the SBA received the protest) and was
received by the contracting officer after he had already awarded the
contract to Cordant. Thus, it is the Air Force's opinion that the
contract properly was awarded to Cordant.
The SBA's has a contrary opinion.[4] The SBA states that its Area 2
Size Program Manager determined that Cordant was other than small
within the 10-day period allowed by applicable regulations and
verbally informed the contracting officer of her determination prior
to the contracting officer's awarding the contract to Cordant. In
this regard, the SBA contends that the 10-day period was extended to
account for 4 days during which all nonessential SBA employees,
including the Area 2 Size Program Manager, were furloughed when SBA's
appropriations lapsed during November 1995. The SBA contends that the
Air Force was bound by the SBA's timely verbal notification that
Cordant was other than small and ineligible for award.
The Air Force and the SBA have submitted a number of declarations,
affidavits, notes of telephone conversations, memoranda, and other
documents from which the following chronology emerged.[5]
On November 8, the contracting officer telephoned the Area 2 Size
Program Manager to notify her of the size protest and to ascertain
what documentation he should forward to her with the protest. Later
that day, the contracting officer telecopied the protest and other
required information to the Area 2 Size Program Manager.[6] Thus,
allowing for federal holidays (i.e., Veterans Day and Thanksgiving
Day), the 10th business day following SBA's receipt of the protest was
November 24. On November 9, the contracting officer spoke with the
Area 2 Size Program Manager who confirmed receipt of the protest and
accompanying documentation; the Area 2 Size Program Manager declined
to give her opinion to the merits of the protest, explaining that a
final determination, signed by the SBA Area Director, would be sent
him via certified mail.
From November 14 to November 17, all nonessential SBA employees,
including the Area 2 Size Program Manager, were furloughed. On
November 20, the first workday following the furlough, the contracting
officer called the SBA regarding the status of the protest and spoke
to a subordinate of the Area 2 Size Program Manager who explained the
Area 2 Size Program Manager was on annual leave from November 20
through November 27 (the week including Thanksgiving). The SBA
representative also explained that, because of the furlough and
because the Area 2 Size Program Manager was on leave, the SBA would
not be able to issue a size determination on Cordant by the November
24 deadline. The contracting officer objected to extending the time
limit because the Air Force had been open for business during the
November 14 to 17 furlough period. Nonetheless, the SBA
representative told the contracting officer that a final decision
would be made by November 29 or 30, at the latest. Upon the Area 2
Size Program Manager's return from leave (on November 27), the
contracting officer again spoke with the Area 2 Size Program Manager
who stated that she was just beginning to review the voluminous
material and, therefore, no decision would be made until the end of
the week (approximately November 30).[7]
On November 30, the contracting officer and the Area 2 Size Program
Manager had yet another telephone conversation. The contracting
officer's and the Area 2 Size Program Manager's recollections of that
conversation differ greatly.[8]
The Area 2 Size Program Manager recalls telling the contracting
officer:
"I told him we had grave concerns over Cordant's proposed
distribution of work as the firm appeared to be unduly reliant
upon its subcontractors for performance of the primary and vital
portions of the effort. Additionally, I stated that, based on
its Cost Proposal, Cordant would be responsible for only 21
percent of the 'cost incurred for personnel' for the two-year
base contract period. Thus, Cordant was in violation of 15
U.S.C. 644(o)(1) [FAR 19.508 and FAR 52.219-14], commonly
referred to as the '50% rule.'"
The Area 2 Size Program Manager also recollects that she and the
contracting officer discussed whether the base period only or the base
period plus the option periods should be used to determined whether
Cordant met the 50-percent requirement, and that the contracting
officer asked her to refrain from issuing a decision until after he
discussed the matter with someone on the proposal review committee and
got back to her. The Area 2 Size Program Manager states that she told
the contracting officer that "absent the submission of any additional
data which would contradict the information I had reviewed, SBA would
find Cordant to be ineligible as a small business for this
procurement." The Area 2 Size Program Manager also recalls telling
the contracting officer that it would take her "more than a day or so"
to write the final decision.
The contracting officer's recollection of the November 30 conversation
is substantially different from the Area 2 Size Program Manager's. He
reports that the Area 2 Size Program Manager told him that the
decision on Cordant's size was only 50 percent complete, would not be
done by December 1, and would be completed by December 4 or 5 at the
earliest. He also reports that the Area 2 Size Program Manager told
him, among other things, that she was "on the fence" regarding
Cordant's size and was concerned about Cordant's pooling of effort
which could indicate unusual reliance on subcontractors. The
contracting officer states that:
"I expressed to her my concern that the completion date continues
to slip one or two days at a time with no concrete end date. I
also mentioned to her that even if furlough days are not counted
as business days, we were at the end of the 10 business day
period. She did not disagree with my assessment, explaining that
it was the Air Force's decision on how to proceed."
At approximately 6 p.m. on December 1, the contracting officer awarded
the contract to Cordant.
On December 5, the SBA issued its determination that Cordant was not a
small business and therefore was ineligible for award of a contract
under this total small business set-aside procurement. Essentially,
the SBA found that--even though Cordant is, in fact, a small
business--Cordant would be unusually reliant upon its large business
subcontractors to perform the required work. The SBA also found that
Cordant would perform only 21 percent of the effort during the base
contract period and would not achieve more than 50 percent of the work
with its own employees until all option periods were completed; thus,
the SBA concluded that Cordant would be in violation of 15 U.S.C. sec.
644(o)(1) (1994), which requires a small business set-aside contractor
to perform work for at least 50 percent of the manufacturing costs.
The SBA decision contained a footnote stating that the completion date
for the size determination had been established as December 1, due in
part to the 4-day government furlough in November; the footnote also
stated that the Area 2 Size Program Manager had verbally notified the
contracting officer of the SBA's adverse finding on Cordant's size in
the November 30 telephone conversation. On December 8, the
contracting officer received a telefaxed copy of the SBA's written
determination.[9]
Under SBA regulations, the SBA is required to make a formal size
determination within 10 working days after receipt of a size status
protest. See 13 C.F.R. sec. 121.1606(a) (1995). The formal size
determination is to be made by the SBA Regional Administrator or his
delegate (13 C.F.R. sec. 121.1602(a)) and is to be in writing (13 C.F.R. sec.
121.1606(f)). When a size status protest has been filed and forwarded
to the SBA, a contracting officer may not make an award until either
the SBA resolves the matter or 10 business days elapse after the SBA's
receipt of the protest without any decision having been made by the
SBA, whichever occurs first. Federal Acquisition Regulation (FAR) sec.
19.302(h)(1); Priscidon Enters., Inc., B-230035, Mar. 18, 1988, 88-1
CPD para. 290.
Here, the SBA received the size status protest and all of the
supporting documents it requested from the contracting officer (except
for the RFP which was mailed as directed) on November 8. Therefore,
allowing for the 2 federal holidays, the
10-day period within which a decision was to be issued expired on
November 24,[10] and absent the Air Force's agreement to wait for a
longer period, the contracting officer was free to award Cordant the
contract after that date. FAR sec. 19.302(h)(1). The SBA unilaterally
tried to extend the size determination due date because of the
furlough and because the Area 2 Size Program Manager was on annual
leave for several other days during this period. However, the record
clearly shows that the contracting officer never agreed, and in fact
objected, to an extension of the deadline.
The SBA and the protesters argue that the deadline was automatically
extended because of the 4-day furlough. Even if the time period for
an SBA decision were extended 4 additional days (i.e., to November
30), the SBA's formal size determination would still have been issued
in an untimely manner; the actual decision was not signed by the SBA's
Acting Area 2 Director until December 5, and was not transmitted to
the contracting officer until December 8--1 week after the contract
was awarded. We recognize that there is a dispute regarding whether
the Area 2 Size Program Manager told the contracting officer on
November 30 that the SBA would issue a determination that Cordant was
not small. However, the Area 2 Size Program Manager's statement to
the contracting officer was not a formal size determination. The
SBA's regulations specify that a size determination must be "in
writing," 13 C.F.R. sec. 121.1606(f), and must be signed by the Regional
Administrator or his delegate. 13 C.F.R. sec. 121.1602(a). The Area 2
Size Program Manager's November 30 statement was oral and it is
unrefuted that the Area 2 Size Program Manager was not authorized to
make the final size determination; the authority to make the formal
determination apparently resided in the Acting Area Director.
In addition, the Area 2 Size Program Manager's declaration submitted
to our Office states that she had "grave concerns" about Cordant's
reliance upon its large business subcontractors and that, absent
submission of additional data, SBA "would find Cordant ineligible."
Moreover, the Area 2 Size Program Manager told the contracting officer
at that time that she had not even begun to write the actual
determination. In these circumstances, we can see how the contracting
officer reasonably construed the Area 2 Size Program Manager's
statement as a preliminary rather than a final determination. In
other words, the Area 2 Size Program Manager's oral statement to the
contracting officer was an indication that the Area 2 Size Program
Manager was going to recommend to the Acting Area Director that he
find Cordant to be other than small for purposes of this procurement.
In any event, while we believe that the Area 2 Size Program Manager's
oral advice reasonably could be construed as an indication that a
negative determination would likely be made on Cordant's eligibility,
the advice was not proper notice in accord with the SBA's own
regulations, and, as the oral statement was subject to review and
agreement by the Acting Area Director, was not binding on the
contracting officer. See Ken Com, Inc., 59 Comp. Gen. 417 (1980),
80-1 CPD para. 294. Because the 10-day size determination period had
expired, the award to Cordant was proper. Priscidon Enters., Inc.,
supra.[11]
The protest is denied.
Comptroller General
of the United States
1. Each contract has a ceiling price of $929 million.
2. The competitive range included proposals submitted by SRA, Infotec,
Cordant, and BTG, Inc.
3. Infotec filed size status protests regarding both BTG and Cordant.
However, the protests filed in our Office concern only the award to
Cordant, and, therefore, our discussion of events will be limited to
those associated with the Cordant size determination.
4. At our request, the SBA submitted comments on the Air Force's
report on the protest including, among other things, its version of
the facts, a legal opinion on the merits of the protests, and
affidavits from cognizant SBA representatives.
5. The protesters, agencies, and the awardee have pointed out many
facts that each of them believes are significant to resolution of the
protests and have made numerous arguments in support of their various
positions. We have reviewed the entire record and considered all of
the arguments, but will recount here only those facts and arguments
that we believe both are significant and relevant to resolving the
protests in this decision.
6. As the RFP was too voluminous, it was sent by regular mail as
directed by the Area 2 Size Program Manager.
7. According to the contracting officer, this telephone conversation
occurred on November 28, and the Area 2 Size Program Manager told him
that the Cordant decision would not be made until December 1.
8. The contracting officer and the Area 2 Size Program Manager each
submitted affidavits and notes to support their versions of the large
number of telephone calls (including some that have not been discussed
in this decision) between them.
9. Cordant appealed the Area 2 Office's adverse size determination to
the SBA's Office of Hearings and Appeals which, as of this date, has
not reached a determination on the appeal.
10. The contracting officer states that that he and the Area 2 Size
Program Manager agreed that November 24 was the deadline for a
decision; the Area 2 Size Program Manager states that they agreed upon
November 27.
11. Contrary to the protesters' assertions, although the contracting
officer must make a finding that the award is necessary to protect the
public interest in order to award a contract before the 10-day period
expires, FAR sec. 19.302(h)(1), the contracting officer need not make
such a finding once the 10 days have elapsed. See JRR Constr. Co.,
Inc., B-220592, Oct. 4, 1985, 85-2 CPD para. 383.
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