Adams Industrial Services, Inc., B-280186, August 28, 1998

B-280186 Aug 28, 1998 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights DIGEST Where a timely size protest was filed after small business set-aside award. The awardee was found by the Small Business Administration to be other than a small business. Should have terminated the contract and made award to the protester. Maintains that ATL is ineligible for award because it is not a small business. Background The RFQ was issued on April 16. Required offerors to certify whether they are small business concerns and to certify their average annual gross revenues for the last 3 fiscal years. ATL's quotation was low and AIS's quotation was second low. ATL stated that it was a small business under SIC code 8734. That the firm's average annual gross revenues attributable to that SIC code for the last 3 fiscal years were below $5 million. View Decision Matter of: Adams Industrial Services, Inc. File: B-280186 Date: August 28, 1998 DIGEST Attorneys DECISION Adams Industrial Services, Inc. (AIS) protests the decision of the Saint Lawrence Seaway Development Corporation (SLSDC) to cancel a purchase order issued to AIS and the subsequent issuance of a purchase order to Atlantic Testing Laboratories (ATL) under request for quotations (RFQ) No. DTSL55-98-Q-PO414, issued as a small business set-aside by the SLSDC for nondestructive testing of fracture-critical welds on 34 stoplogs /1/ and inspection of repair work at the Eisenhower and Snell Locks near Massena, New York. The protester argues that, after receipt of quotations, the SLSDC improperly permitted ATL to correct an alleged error in its certification concerning its small business status, and maintains that ATL is ineligible for award because it is not a small business. We sustain the protest. Background The RFQ was issued on April 16, 1998, as a total small business set-aside, and contained Standard Industrial Classification (SIC) code 8734, with a size standard of $5 million. RFQ at 1. Section K of the RFQ contained the clause found at Federal Acquisition Regulation (FAR) Sec. 52.212-3, which, among other things, required offerors to certify whether they are small business concerns and to certify their average annual gross revenues for the last 3 fiscal years. Eight firms, including AIS and ATL, responded to the RFQ by the time set on May 19 for receipt of quotations; ATL's quotation was low and AIS's quotation was second low. ATL certified itself as a small business, but also certified that it had average annual gross revenues for the last 3 fiscal years ranging between $5 and $10 million, which exceeded the $5 million size standard stated in the RFQ. On May 21, the contracting officer contacted ATL regarding its size status. In response to the contracting officer's inquiry, ATL stated that it was a small business under SIC code 8734, and that the firm's average annual gross revenues attributable to that SIC code for the last 3 fiscal years were below $5 million. ATL further explained, however, that it did not qualify as a small business concern if all its affiliates were included in the calculation of gross revenues. Based on ATL's explanation, the contracting officer determined that ATL was not eligible to receive award under the RFQ and issued the purchase order to AIS. Subsequently, by letter dated May 26, ATL informed the contracting officer that its quotation should have reflected average annual gross revenues attributable to SIC code 8734 of between $3.5 and $5 million, thus making ATL an eligible small business under the RFQ. The contracting officer then contacted the Department of Transportation (DOT), Acquisition and Grant Management Office, and the DOT Office of Small and Disadvantaged Business Utilization for a clarification of the term "affiliates" as used in FAR Sec. 52.219-6, Notice of Total Small Business Set-Aside, /2/ which was incorporated by reference in the RFQ. According to the SLSDC, on May 27, both offices responded that only a firm's average receipts attributable to the activities covered by the SIC code applicable to the procurement should be counted, and that the receipts of affiliates in a different line of business should not be included. On May 27, the contracting officer canceled AIS's purchase order and issued the purchase order to ATL. On May 29, AIS filed this protest in our Office. /3/ By letter dated May 30, AIS protested ATL's size status to the contracting officer, who forwarded the matter to the Small Business Administration (SBA). On June 19, the SBA determined that ATL is other than small; the SLSDC received SBA's determination on June 23. In its size determination, SBA stated that in computing a firm's average annual receipts, all revenues should be counted, not merely those attributable to the activities covered by the SIC code applicable to the procurement.