ENERGY AND ENVIRONMENTAL SERVICES CORPORATION, APPELLANT RE: ASRC CONTRACTING COMPANY, INC.
SBA No. 4043SBA No. 4043May 31, 1995
SBA No. 4043 (S.B.A.), SBA No. 4043, 1995 WL 355136
Small Business Administration (S.B.A.)
Office of Hearings and Appeals
*1 ENERGY AND ENVIRONMENTAL SERVICES CORPORATION, APPELLANT
*1 RE: ASRC CONTRACTING COMPANY, INC.
*1 Docket No. SIZ 94-8-11-107
*1 Solicitation No. DAAD01-93-R-0046
*1 Department of the Army
*1 Yuma Proving Ground, Arizona
*1 May 31, 1995
A Contracting Officer's decision not to require offerors, including the protested firm, to recertify is a matter outside this Office's jurisdiction.
Where a protested firm is a wholly-owned subsidiary of an Alaska Regional Corporation, the Regional Office properly considered only the protested firm's revenues in calculating its average annual revenues.
Whether an Alaska Regional Corporation that owns the protested firm is affiliated with more than one firm in a particular SIC code is irrelevant in a size determination that does not involve 8(a) eligibility.
MITNICK, Administrative Judge, Presiding:1
*1 This appeal is decided under the Small Business Act of 1958, 15 U.S.C. §§ 631 et seq., and 13 C.F.R. Part 121.
*1 Whether the Regional Office erred by failing to determine when ASRC Contracting Company Inc. self-certified that it was small and whether that self-certification had expired.
*1 Whether the Regional Office erred in calculating ASRC Contracting Company, Inc.'s average annual revenues without including those of an affiliated Alaska Regional Corporation, and in determining it was small.
*1 Whether the Regional Office erred in concluding that the Arctic Slope Regional Corporation did not own more than one small disadvantaged business or 8(a) firm in the 8744 Standard Industrial Classification code.
*1 On January 7, 1994, the Department of the Army, Directorate of Contracting, issued this solicitation for caretaker and environmental services. The Contracting Officer set it aside entirely for small businesses under Standard Industrial Classification (SIC) code 8744 (Base Maintenance), with an average annual receipts size standard of $13.5 million.
*1 Bids under the solicitation originally were due on March 16, 1994, but the Contracting Officer extended the due date to March 24, 1994. Offers were to be effective for 90 days, or until June 23, 1994. The protested firm, ASRC Contracting Company, Inc. (ACCI), self-certified that it was small in its March 24 offer. On June 20, 1994, the Contracting Officer requested that ACCI extend its bid for 30 days, which ACCI did until August 23, 1994. On June 23, 1994, the Contracting Officer requested that the other offerors extend their bids for 30 days. The Contracting Officer did not require any of the offerors to recertify. The Contacting Officer awarded the contract to ACCI on August 3, 1994.
*1 ACCI, a heavy construction business, was established in September 1990. It is a wholly-owned subsidiary of Arctic Slope Regional Corporation (ASRC), an Alaska Regional Corporation whose shareholders are the Alaska Native residents of eight villages along the northernmost part of Alaska. It is owned entirely by Native Americans. ACCI and ASRC were formed pursuant to the Alaska Native Claims Settlement Act, 43 U.S.C. §§ 1601 et seq.
*2 Energy & Environmental Services Corporation (EES) protested the intended award of the contract to ACCI in a July 22, 1994 letter. EES asserted that it had insufficient time to protest; ACCI's average annual revenues, which properly included its fiscal year 1994 projected and six months actual revenues, exceeded the applicable size standard; ACCI is a wholly-owned subsidiary of, and financed by, ASRC, a large business, a relationship prohibited by 13 C.F.R. §§ 124.109(e) and 112; and ASRC is prohibited by 13 C.F.R. § 124.112(c)(3) from owning more than one 8(a) or SDB firm with the same SIC code. The Contracting Officer forwarded the protest to the Small Business Administration (SBA) San Francisco Regional Office (Regional Office) on July 25, 1994.
*2 EES supplemented its original protest in a July 29, 1994 letter to the Regional Office, in which it asserted that all offerors were asked to renew their offers from June 23-July 22, 1994. It asserted further that ACCI should have self-certified on approximately June 23, 1994, the date on which it renewed all of the terms and certifications of its offer.
*2 In its August 1, 1994 size determination, the Regional Office found that ACCI is a wholly-owned subsidiary of ASRC and that, based on 13 C.F.R. § 121.401(b), ACCI is exempt from the affiliation requirements. Therefore, it is not affiliated with ASRC. In reliance on its exemption finding and on ACCI's SBA Form 355, the Regional Office concluded that ACCI's revenues by itself were within the applicable size standard and, therefore, that it was small.
*2 The Regional Office further determined that 13 C.F.R. § 124.112 authorizes ACCI's participation in programs for small and disadvantaged businesses (SDB) as ASRC's wholly-owned subsidiary.
*2 The Regional Office determined also that ACCI has not applied for 8(a) certification, and that the parent, ASRC, does not own more than one SDB or 8(a) firm primarily within SIC code 8744. Finally, the Regional Office noted the Contracting Officer's statement that all the offerors were asked to extend their offers for 30 days (ACCI extended its offer until August 23, 1994), and that none of the offerors was asked to recertify as to their size status.
*2 EES received the Regional Office determination on August 4, 1994, and appealed to this Office in a letter postmarked August 11, 1994. EES also filed a Motion for Remand or Extension of Time and a Motion to Produce Documents, which were received by this Office, respectively, on August 29, and 30, 1994.
Arguments on Appeal
*2 Appellant asserts that the Regional Office erred because it failed to consider the proper date of self-certification by ACCI and whether ACCI should have recertified because its certification had expired. Appellant asserts further that the Regional Office erred in not considering ACCI's fiscal year 1994 revenues in determining its average annual revenues, failed to explain the basis for calculating these revenues, and erred in concluding that ACCI was small. Finally, the Regional Office erred in determining that ASRC does not own more than one SDB or 8(a) firm claiming SIC code 8744 as a primary industry classification.
*3 Appellant's appeal and its various Motions were timely, and apply to this solicitation. 13 C.F.R. § 1705(a)(2).2
*3 In appealing a size determination, Appellant must demonstrate by a preponderance of the evidence that the Regional Office erred in its size determination. 13 C.F.R. § 121.1707. Appellant has failed to do so here.
*3 Appellant first argues that the Regional Office erred in failing to consider the date that ACCI self-certified, and that the Contracting Officer should have required it to recertify because its original self-certification had expired. Appellant's point is not entirely clear. If its point is that the Regional Office failed to discuss the date of self-certification, any error was not material. The record clearly shows that ACCI self-certified on March 24, 1994, and that the self-certification remained in effect because the Contracting Officer did not require any of the offerors to recertify. Therefore, Appellant's argument that this omission constituted error is both incorrect and irrelevant.
*3 If, however, Appellant's point is that the Contracting Officer's failure to require recertification was improper, either because the solicitation was modified significantly or because recertification was appropriate for other reasons, that is a matter for a recertification proceeding.3 As such, it is beyond this Office's purview, and is within the sole province of the contracting agency, here the Department of Army, Directorate of Contracting. See, e.g., Size Appeal of FLIR Systems, Inc., No. 3870 (1994); and Size Appeal of Affiliated Precision Services, Inc., No. 3826 (1993), citing Size Appeal of SelectTech Services Corporation, No. 3528 (1991); and Size Appeal of K&M Maintenance Services, Inc., No. 3472 (1991).
*3 Similarly, Appellant alleges several violations of the Federal Acquisition Regulations, over which this Office lacks jurisdiction. The Office's jurisdiction is expressly limited to formal size determinations and SIC appeals, and it has strictly construed that jurisdiction.4 See, e.g., Size Appeal of International Shelter Systems, Inc., No. 3344 (1990); Size Appeal of Technology Products Manufacturing Corporation, No. 3266 (1990); and Size Appeal of Oleketron Systems, Inc., No. 3253 (1990).
*3 Appellant's major challenge is to the Regional Office's methodology in computing ACCI's average annual revenues and the resulting determination that it was small. Appellant impliedly asserts that, because the Contracting Officer should have required ACCI to recertify on June 23, 1994, the applicable regulation (discussed below) required the Regional Office to use ACCI's fiscal year 1994 revenues as the last completed year. Appellant relies entirely on a July 22, 1994 Dun & Bradstreet report on ACCI, that purports to show that ACCI's fiscal year 1994 projected revenues were $46-56 million and its revenues for the first six months of the fiscal year were more than $7 million.
*3 Although the general rule in determining affiliation is that the applicant and all its affiliates must be included (13 C.F.R. §§ 121.401 and 402), the facts here fall within an express exception to that rule. Subsection 401(b), “Exclusion from affiliation coverage” states that--
*4 concerns owned and controlled by Alaska Regional or Village Corporations organized pursuant to the Alaska Native Claims Settlement Act (43 U.S.C. 1601, et seq.) are not considered affiliates of such...Alaska Regional or Village Corporations.
*4 Because ACCI's SBA Form 355 shows that it is such a concern, the regulations explicitly require its exclusion from the general affiliation rule. Therefore, the Regional Office properly considered ACCI a stand-alone concern and calculated its revenues independent of ASRC.
*4 As to whether the Regional Office used the correct fiscal years to calculate ACCI's revenues, the applicable regulation, 13 C.F.R. § 121.402, states in pertinent part:
*4 Annual receipts of a concern which has been in business for 3 or more completed fiscal years means the arithmetic annual average revenue of the concern over its last 3 completed fiscal years....
*4 The Regional Office is required to determine revenues as of the date of the applicant firm's self- certification. 13 C.F.R. § 121.904(a). ACCI self-certified on March 24, 1994. ACCI's SBA Form 355 states that it was formed in September 1990, and its Fiscal Year ends on June 30. The Regional Office properly based its computation on ACCI's revenues for Fiscal Years 1991-1993, which were the last three completed years prior to the March 24 self-certification. Therefore, the Regional Office properly concluded that ACCI was within the applicable size standard.5 Although Appellant correctly asserted that the Regional Office failed to explain its findings adequately, any error did not materially prejudice Appellant.
*4 In any event, the July 22, 1994 Dun and Bradstreet (D&B) Report proffered by Appellant as the sole support for its allegations, is entitled to less weight than ACCI's SBA Form 355. Appellant introduced no independent corroborating evidence.
*4 First, although the Regional Office made no explicit finding, 13 C.F.R. § 121.1606(e) expressly authorizes the Regional Office to give greater weight to a protested firm's SBA Form 355 than to such secondary sources or unsubstantiated hearsay as D&B Reports. See Size Appeal of Delta Food Services, Inc.; and Size Appeal of Transcontinental Enterprises, Inc., No. 3557 (1991). Second, the SBA Form 355, which contains ACCI President Joe Dan Ash's certification to the truth of the statements in the form and a conspicuous notice of the criminal penalties for false statements, is entitled to greater weight than the D&B report. See Size Appeal of Jefferson Associates, Inc., No. 3744 (1993).
*4 Third, this Office has explicitly held that merely submitting unsupported assertions from a third party, such as those contained in a D&B Report, do not satisfy an Appellant's burden of proof. Size Appeal of General Engineering Services, Inc., No. 3809 (1993). Finally, where as here, the Regional Office determines that it does not need additional information, it may rely upon the protested concern's Form 355. Size Appeal of Foam Design, Inc., No. 3673 (September 4, 1992). For all the above reasons, this Office concludes that the Regional Office correctly determined that ACCI's average annual receipts for the relevant period did not exceed the $13.5 million size standard.
*5 The remaining issue is whether the Regional Office erred by not examining ASRC's subsidiaries to determine whether Appellant correctly asserted, based on information and belief, that ASRC owned more than one SDB or 8(a) firm in the 8744 SIC code; that §§ 124.109(e) and 112(c)(3) prohibit such a relationship; and if ASRC is a small disadvantaged business (SDB) or a certified 8(a) firm, 13 C.F.R. §§ 124.103(g) and (h), and 112(c)(3) prohibit ASRC from holding more than 10% of ACCI.
*5 Appellant's arguments and the regulations it cites are not relevant under these facts. The issue here is solely ACCI's size, and not whether ACCI and ASRC are 8(a) firms or applicants, eligible for the 8(a) program and its benefits. Therefore, 13 C.F.R. Part 124 is not applicable.
*5 In summary, Appellant failed to prove by a preponderance of the evidence that the Regional Office erred in computing ACCI's average annual receipts, and in its determination that ACCI is small.
*5 The Regional Office size determination is AFFIRMED, and the appeal is DENIED.
*5 This constitutes the final decision of the Small Business Administration. 13 C.F.R. § 121.1720(b).
Administrative Judge Stephen Wright has left the Agency. As the Acting Assistant Administrator for Hearings and Appeals, I have designated myself as Administrative Judge, and am presiding in this matter for the Office of Hearings and Appeals, in accordance with 13 C.F.R. § 134.18(a).
Appellant's Motion for Remand is denied, because any error or omission by the Regional Office is not material. Its Motion for Extension is denied for lack of good cause shown. This Office need not rule on EES' Motion to Produce Documents in light of its conclusions on the merits, infra, in particular, that the Regional Office has no jurisdiction over Appellant's arguments on irregularities in the contracting process and on recertification; and its conclusion that the Regional Office was not required to consider ACCI's Fiscal Year 1994 revenues.
The applicable regulation, 13 C.F.R. § 121.904(a), explicitly provides that a contract modification, the existence of which is solely determined by the Contracting Officer, is the only explicit reason for recertification.
Appellant alleges other improprieties in the contracting process as well, e.g., the failure of the Source Evaluation Board to conduct an audit, the contracting agency's refusal to discuss its application of the selection criteria and the relative ranking of EES' proposal, and various discrepancies in dates of offerors' bids. As above, these also are within the sole province of the contracting agency.
ACCI did not submit the requested financial statements and tax returns to the Regional Office, because they already were on file with the Regional Office.
SBA No. 4043 (S.B.A.), SBA No. 4043, 1995 WL 355136
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