PI Construction Company

PI Construction Company BNUMBER: B-272174; B-272177 DATE: October 2, 1996 TITLE: PI Construction Company ********************************************************************** Matter of:PI Construction Company File: B-272174; B-272177 Date:October 2, 1996 Paralee White, Esq., and Joseph A. Zillo, Esq., Cohen & White, for the protester. David R. Kohler, Esq., Small Business Administration, Marian E. Sullivan, Esq., Department of the Air Force, and Maj. Michael J. O'Farrell, Jr., Department of the Army, for the agencies. Linda S. Lebowitz, Esq., and Michael R. Golden, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST Small Business Administration failed to follow its published regulatory implementation of the statutory requirement that 8(a) construction contracts be awarded to 8(a) concerns located within the county or state where the work will be performed by imposing geographic restrictions linking the eligibility of an 8(a) concern to compete for such contracts with the location at which the 8(a) concern maintains its principal place of business, as opposed to a branch office. DECISION PI Construction Company protests as unduly restrictive of competition the geographic restriction contained in request for proposals (RFP) No. F04626-96-R-0105, issued by Travis Air Force Base, Department of the Air Force, in California, and RFP No. DABT31-96-R-0003, issued by Fort Leonard Wood, Department of the Army, in Missouri. We sustain the protests. The RFPs were issued by the Air Force and Army as competitive small disadvantaged business set-asides under section 8(a) of the Small Business Act, 15 U.S.C. sec. 637(a) (1994), for construction requirements. In accepting the respective Air Force and Army requirements for competition in the 8(a) program, the SBA directed that competition under the Air Force procurement be limited to 8(a) concerns serviced by eight SBA District Offices and one SBA Branch Office in Arizona, California, Nevada, and Hawaii (SBA Region IX), and that competition under the Army procurement be limited to 8(a) concerns serviced by two SBA District Offices in Missouri (SBA Region VII). The SBA stated that "[a]ll other firms [would be] deemed ineligible to submit offers." In accordance with the SBA's direction, the Air Force and Army included the specified geographic restrictions in the synopses published in the Commerce Business Daily. The protester, an 8(a) concern with its principal place of business in Denver, Colorado, but which also maintains a branch office with at least one full-time employee in the appropriate geographic areas in California and Missouri, recognizes that the Small Business Act, 15 U.S.C. sec. 637(a)(11), requires "[t]o the maximum extent practicable" that 8(a) construction contracts "be awarded within the county or State where the work is to be performed." In this regard, the protester does not question the regulatory authority of the SBA to impose geographic restrictions for construction requirements. However, the protester argues that the SBA's regulatory implementation of this statutory provision provides no basis for the SBA to restrict 8(a) competitions for construction requirements according to an 8(a) concern's principal place of business, defined at 13 C.F.R. sec. 124.100 (1996) as "the location at which the business records of the [8(a)] concern are maintained and the location at which the individual who manages the concern's day-to-day operations spends the majority of his/her working hours." In this regard, the protester points out that in June 1995, the SBA promulgated new regulations governing the 8(a) program. These regulations provide as follows: "Construction competitions. Where a construction requirement offered to the 8(a) program exceeds the $3 million competitive threshold, SBA will determine, based on its knowledge of the 8(a) portfolio, whether the competition should be limited only to those Program Participants located within the geographical boundaries of one or more SBA district offices, an entire SBA regional office, or adjacent SBA regional offices. Only those Participants located within the appropriate geographical boundaries are eligible to submit offers." 13 C.F.R. sec. 124.311(g)(3). (Emphasis added.) The SBA does not define in its new regulations the basis upon which an 8(a) program participant would be considered "located within the appropriate geographical boundaries" in order to be deemed eligible to compete.[1] The protester also references the SBA's preamble to its regulations, as published in the Federal Register, 60 Fed. Reg.