BNUMBER:  B-274450.2 
DATE:  October 14, 1997
TITLE: Tri-Ark Industries, Inc.--Declaration of Entitlement, B-
274450.2, October 14, 1997
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Matter of:Tri-Ark Industries, Inc.--Declaration of Entitlement

File:     B-274450.2

Date:October 14, 1997

Kevin P. Connelly, Esq., Seyfarth, Shaw, Fairweather & Geraldson, for 
the requester.
Joel D. Malkin, Esq., General Services Administration, and David R. 
Kohler, Esq., Small Business Administration, for the agencies.
John L. Formica, Esq., and James A. Spangenberg, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

1.  Protest that procurement was improperly accepted into the Small 
Business Administration's (SBA) 8(a) program (because the SBA had not 
performed the required analysis of impact on small business concerns) 
was timely filed prior to the closing time for receipt of proposals 
under the competitive 8(a) solicitation, notwithstanding that the SBA 
had advised the protester prior to the solicitation's issuance that it 
believed that there was no adverse impact.
 
2.  Protester is entitled to recover the costs of filing and pursuing 
its protest of the General Services Administration's (GSA) decision to 
acquire janitorial services under the Small Business Administration's 
(SBA) section 8(a) program, where GSA did not take corrective action 
until after the submission of the agency report in response to the 
timely protest and the protester's comments on the report, even though 
the SBA had informed GSA prior to the submission of GSA's agency 
report that the adverse impact analysis required by law had not been 
performed.

DECISION

Tri-Ark Industries, Inc. requests that we recommend that it be 
reimbursed the costs of filing and pursuing its protest of the General 
Services Administration's (GSA) decision to acquire janitorial and 
other services for the Metcalfe Federal Building in Chicago, Illinois, 
under the Small Business Administration's (SBA) section 8(a) program.  

We recommend that Tri-Ark be reimbursed the reasonable costs of filing 
and pursuing its protest, including reasonable attorneys' fees.

Section 8(a) of the Small Business Act authorizes the SBA to enter 
into contracts with government agencies and to arrange for performance 
through subcontracts with socially and economically disadvantaged 
small business concerns.  15 U.S.C.  sec.  637(a) (1994).  Under its 
implementing regulations, the SBA may not accept any requirement into 
the 8(a) program if doing so "would have an adverse impact on other 
small business programs or on an individual small business."  13 
C.F.R.  sec.  124.309(c) (1997).  SBA's regulations require it to execute a 
written impact statement before accepting a requirement into the 8(a) 
program.  Id.; Atlantic Coast Contracting, Inc., B-260686, July 13, 
1995, 95-2 CPD  para.  19 at 3.   

Tri-Ark, a small business concern which was awarded a contract by GSA 
in April 1993 to provide janitorial and other services at the Metcalfe 
Building, protested GSA's decision to acquire the services under the 
section 8(a) program to our Office on September 3, 1996.  Tri-Ark 
argued in its protest that the government had failed to perform the 
required adverse impact determination, with respect to either Tri-Ark 
or other small businesses.  In accordance with our requests, GSA and 
the SBA filed reports with our Office in response to the protest on 
October 15 and October 16, respectively, and the protester timely 
filed its comments on the reports with our Office on October 28.  

Because neither agency report contained a written impact statement, 
our Office requested, by teleconference with attorneys for GSA, the 
SBA, and the protester, that either agency furnish a copy of the 
statement to our Office and the protester by November 1.  During this 
teleconference it was also agreed that the agencies could submit 
comments on the statement by November 5, and the protester could 
submit comments by November 7.

On October 31, our Office received a document from the SBA, but our 
review indicated that the document was not an impact statement.  When 
our Office contacted the SBA on November 1, the SBA advised that it 
could not provide a statement because no impact analysis had been 
performed.   

On November 4, GSA notified our Office that GSA had

     determined that an adverse impact analysis be performed for both 
     Tri-Ark and other small business concerns prior to proceeding 
     with the Metcalfe Building procurement as an 8(a) set aside.  As 
     provided in applicable Federal law and regulation, the SBA will 
     perform the adverse impact analysis.

Upon receipt of this letter, our Office dismissed Tri-Ark's protest as 
academic, and on November 7, the protester filed this request that we 
find that it should be reimbursed the reasonable costs of filing and 
pursuing its protest, including reasonable attorneys' fees.

Our Bid Protest Regulations provide that where the contracting agency 
decides to take corrective action in response to a protest, we may 
recommend that the protester be reimbursed the costs of filing and 
pursuing its protest, including reasonable attorneys' fees.  4 C.F.R.  sec.  
21.8(e) (1997).  This does not mean that costs should be reimbursed in 
every case in which an agency decides to take corrective action; 
rather, a protester should be reimbursed its costs where an agency 
unduly delayed its decision to take corrective action in the face of a 
clearly meritorious protest.  Griner's-A-One Pipeline Servs., 
Inc.--Entitlement to Costs, B-255078.3, July 22, 1994, 94-2 CPD  para.  41 
at 5; LB&M Assocs., Inc.,--Entitlement to Costs, B-256053.4, Oct. 12, 
1994, 94-2 CPD  para.  135 at 4.  A clearly meritorious protest is one that 
clearly would have been successful--that is, it must involve a matter 
over which our Office has jurisdiction, be filed by an interested 
party in a timely manner and otherwise comply with the requirements of 
our Bid Protest Regulations, and the record must establish that the 
agency prejudicially violated a procurement statute or regulation.  
Allied Materials & Equip. Co.--Entitlement to Costs, B-243631.3, Oct. 
31, 1991, 91-2 CPD  para.  412 at 2.  This rule is intended to prevent 
inordinate delay in investigating the merits of a protest and taking 
corrective action once an error is evident, so that a protester will 
not incur the unnecessary effort and expense in pursuing its remedies 
before our Office.  David Weisberg--Entitlement to Costs, 71 Comp. 
Gen. 498, 501 (1992), 92-2 CPD  para.  91 at 4.

GSA and the SBA first assert that the award of costs is unwarranted 
because Tri-Ark's protest to our Office was not timely filed, and 
therefore was not "clearly meritorious."  In this regard, by letter 
dated October 2, 1995, the SBA informed the protester that it was 
considering this requirement for the 8(a) program, and requested 
information regarding the potential adverse impact on Tri-Ark.  In 
response, the SBA received information in this regard from Tri-Ark, 
and, by letter dated February 16, 1996, advised Tri-Ark that "based on 
[Tri-Ark's] own analysis adverse impact does not exist in this 
situation."  The agencies argue that Tri-Ark should have protested 
GSA's decision to acquire the services under the section 8(a) program 
within 10 days of its receipt of the SBA's February 16 letter, and 
that Tri-Ark's protest, filed on September 3, 1996, 2 days prior to 
the closing date for receipt of proposals, was thus untimely. 

We disagree.  The Competition in Contracting Act of 1984 (CICA) 
provides that our Office shall decide protests concerning alleged 
violations of procurement statutes or regulations.  31 U.S.C.  sec.  3552 
(1994).  A protest is defined by CICA as

     a written objection . . . to any of the following:
     (A)  A solicitation or other request by a Federal agency for 
     offers for a contract for the procurement of property or 
     services.
     (B)  The cancellation of a such solicitation or other request.
     (C)  An award or proposed award of such a contract.
     (D)  A termination or cancellation of an award of such a 
     contract, if the written objection contains an allegation that 
     the termination or cancellation is based in whole or in part on 
     improprieties concerning the award of the contract.

31 U.S.C.  sec.  3551(1) (1994).
        
The protested competitive 8(a) solicitation was issued on July 30, 
1996.  Because there was no solicitation for, or award or proposed 
award of, a contract for the services at the time of Tri-Ark's receipt 
of the SBA's February 16 letter, any protest filed by Tri-Ark at our 
Office within 10 days of its receipt of that letter could not have 
been considered by our Office as a protest as defined in CICA.  A. Moe 
& Co., Inc., 64 Comp. Gen. 755, 756 (1985), 85-2 CPD  para.  144 at 2; 
Aeronautical Components, Inc., et al., B-253719 et al.; June 16, 1993, 
93-1 CPD  para.  467; Brazil Van & Storage Corp., B-241327.2, Oct. 26, 1990, 
90-2 CPD  para.  342.  Thus, Tri-Ark's protest of the alleged defective 
solicitation was timely filed prior to the time set for receipt of 
proposals.  4 C.F.R.  sec.  21.2(a)(1).

GSA also argues that it did not unduly delay its decision to take 
corrective action.  Counsel for GSA concedes that "prior to GSA's 
submission of its agency report, [counsel for SBA] informed me that in 
his opinion, the SBA had not performed an adverse impact analysis 
required by law."  Counsel for GSA states, however, that "it was not 
until GSA received the SBA's submission of October 31, 1996 that I saw 
first-hand that the SBA had in fact rendered no such adverse impact 
analysis."   

GSA and the SBA had an obligation to promptly and adequately 
investigate the validity of the protester's position that SBA had 
failed to perform an adequate adverse impact analysis.  LB&M Assoc., 
Inc.--Entitlement to Costs, supra; David Weisberg--Entitlement to 
Costs, 71 Comp. Gen. 498, 501 (1992), 92-2 CPD  para.  91 at   3-4.  Here, 
even though the counsel for GSA was told by counsel for the SBA, prior 
to the submission of the agency report, that the "SBA had not 
performed an adverse impact analysis as required by law," GSA did not 
at that time further investigate the matter to ascertain if corrective 
action was appropriate; instead, GSA and SBA proceeded to submit 
agency reports on the protest.  

GSA's delay in taking corrective action until weeks later--after the 
submission of its agency report and the protester's comments--was not 
justified.  GSA has failed to explain why, after being orally informed 
by counsel for the SBA that an adverse impact analysis had not been 
performed, GSA waited until after the protester had expended legal 
fees and other corporate resources to respond to the agency report 
before GSA took corrective action.  This delay frustrated the intent 
of CICA by impeding the economic and expeditious resolution of the 
protest.  Griner's-A-One Pipeline Servs., Inc.--Entitlement to Costs, 
supra, at 6.

Accordingly, we recommend that Tri-Ark be reimbursed the costs of 
filing and pursuing its protest, including reasonable attorneys' fees.  
Tri-Ark should submit its certified claim for costs, detailing and 
certifying the time expended and costs incurred, directly to the 
agency within 60 days of receipt of this decision.  4 C.F.R.  sec.  
21.8(f)(1).

Comptroller General
of the United States