BNUMBER:  B-278929.7           
DATE:  February 11, 1999
TITLE: Jensco Marine, Inc., B-278929.7, February 11, 1999
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Matter of:Jensco Marine, Inc.

File:B-278929.7          
        
Date:February 11, 1999

James M. Jacobs for the protester. 
John A. Douglas, Esq., for General Offshore Corporation, an 
intervenor.
Arthur I. Rettinger, Esq., and William P. McGinnies, Esq., U.S. 
Customs Service, for the agency.
David R. Kohler, Esq., and Kenneth Dodds, Esq., for the Small Business 
Administration.
Adam Vodraska, Esq., and Christine S. Melody, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Contracting agency's failure to give notice to unsuccessful offerors 
of an impending small business set-aside award prior to the actual 
award provides no basis for disturbing the award where the protester 
was not prejudiced by this procedural deficiency because it was able 
to file a timely size status protest with the Small Business 
Administration (SBA), which determined the awardee to be a small 
business concern.  Although, on appeal, the SBA's Office of Hearing 
and Appeals (OHA) reversed the size determination, finding the awardee 
to be other than a small business due to its affiliation with a large 
business, such OHA rulings received after award do not apply to that 
acquisition and the protester has not shown that, even if the agency 
had provided the required pre-award notice, the agency would likely 
have been precluded from awarding the contract pending the issuance of 
the OHA ruling.

DECISION

Jensco Marine, Inc. protests the award of a contract to General 
Offshore Corporation under request for proposals (RFP) No. CS-97-012, 
issued as a total small business set-aside by the U.S. Customs 
Service, Department of the Treasury, for marine vessel maintenance.

We deny the protest.

BACKGROUND

Customs operates a fleet of marine vessels located throughout the 
United States engaging in drug interdiction and other law enforcement 
activities.  The RFP, issued on February 26, 1997, is for marine 
vessel maintenance and related services and equipment in connection 
with this marine enforcement program.  The RFP contemplated the award 
of a cost-plus-fixed-fee contract for a base period, with four option 
periods, to the offeror whose proposal represented the best value to 
the government, certain technical factors and cost/price considered.

Seven proposals were received in response to the RFP by the July 31, 
1997 closing date.  Each offeror self-certified its eligibility for 
award as a small business concern.  Based on the initial evaluation, 
five offerors' proposals were included in the competitive range:  
those of Jensco, General Offshore, WHECO Corporation, MAR, Inc., and 
Seaward Services.  Following discussions and the receipt of best and 
final offers, the agency found the proposals to be technically equal.  
The agency's source selection official determined that General 
Offshore's proposal represented the best value on the basis of its 
lower evaluated cost/price.  Customs awarded the contract to General 
Offshore on June 12, 1998, and notified the other unsuccessful 
offerors of the award 3 days later, on June 15.

Jensco, MAR, and Seaward filed timely size protests with the 
contracting officer on June 17, alleging that General Offshore was 
ineligible for award because it was not a small business.  The 
following day, the contracting officer referred the size protests to 
the cognizant regional office of the Small Business Administration 
(SBA), which has conclusive authority to determine matters of small 
business size status for federal procurement.  See 15 U.S.C.  sec.  
637(b)(6) (1994).  Concurrently with the size protests, Jensco, MAR, 
and WHECO filed timely bid protests in our Office against the award of 
the contract to General Offshore on various grounds involving the 
agency's evaluation of proposals and resulting source selection 
decision.  Based on the timely filing of the bid protests in our 
Office, Customs stayed performance of the awarded contract, as 
required by 31 U.S.C.  sec.  3553(d)(3)(A) (1994).

On July 10, the SBA regional office issued a size determination which 
concluded that General Offshore was a small business as of the date of 
its self-certification, and was thus eligible for award.  Jensco 
timely appealed the size determination to the SBA's Office of Hearings 
and Appeals (OHA) on July 23.

Two months later, our Office denied the bid protests, including the 
bid protest filed by Jensco, in Mar, Inc. et al., B-278929.2 et al., 
Sept. 28, 1998, 98-2 CPD  para.  92.  We found that Customs properly made 
award to General Offshore in accordance with the evaluation scheme set 
out in the RFP.  Id. at 10.  On September 29, based on our disposition 
of the bid protests, Customs authorized General Offshore to commence 
the transition phase of the contract.  On October 23, General Offshore 
began performance under the contract.

On October 27, the OHA reversed the size determination of the SBA 
regional office, concluding that General Offshore was not an eligible 
small business because of its affiliation with a large business 
minority shareholder (a subsidiary of Cable and Wireless (Marine)), an 
undisputed large business.  Based on the OHA decision, Jensco 
requested Customs to terminate the contract with General Offshore and 
make award to Jensco, which would be next in line for award based on 
its price.  Customs, however, did not disturb the award to General 
Offshore and Jensco filed this protest in our Office on November 3.

ANALYSIS

Jensco asserts in its protest that the agency's failure to provide it 
prior written notice of the award was improper, and that it resulted 
in circumvention of the small business size status procedures by 
precluding the firm from obtaining the remedy contemplated under those 
procedures, namely, prohibition of award of a contract to a business 
that is ineligible for award under a small business set-aside.  
Specifically, Jensco maintains that it was prejudiced because it was 
denied the opportunity to submit a timely pre-award size protest so 
that the subsequent OHA determination, when rendered, would apply to 
this procurement.  Accordingly, Jensco states that the appropriate 
remedy is termination of General Offshore's contract and award to 
Jensco.

Under Federal Acquisition Regulation (FAR)  sec.  15.503(a)(2) (formerly   sec.  
15.1003(a)(2) (June 1997)), in a small business set-aside, except 
where the contracting officer determines in writing that the urgency 
of the requirement necessitates award without delay, the contracting 
agency is required to inform each unsuccessful offeror in writing, 
prior to award, of the name and address of the apparent successful 
offeror, in order to permit challenges of the small business size 
status of that offeror.  Generally, small business size status 
protests may be filed by an offeror within 5 days of the written 
notification.  FAR  sec.  19.302(d)(1); 13 C.F.R.  sec.  121.1004(a)(2) (1998).  
After receiving a timely size protest, the contracting officer 
generally must withhold award of the contract until the SBA has made a 
size determination, or until 10 business days have elapsed since the 
SBA's receipt of the size protest, whichever occurs first.  FAR  sec.  
19.302(h)(1).

Here, the agency's failure to notify Jensco of the award until after 
it had been made clearly was contrary to the FAR requirements.  
However, such a failure to provide pre-award notice is only procedural 
in nature and we will not sustain a protest of an agency's failure to 
comply with this pre-award notification requirement absent prejudice 
to the protester.  See FKW Inc. Sys.; ColeJon Mechanical Corp., 
B-235989, B-235989.2, Oct. 23, 1989, 89-2 CPD  para.  370 at 7; Automation 
Management Consultants, Inc., B-231540, Aug. 12, 1988, 88-2 CPD  para.  145 
at 4-5. 

We conclude that Jensco was not prejudiced by the fact that it did not 
receive pre-award notice of the contract award, since it was able to 
file a timely size protest with the SBA, which was denied by the 
regional office.  Such a size determination "becomes effective 
immediately and remains in full force and effect unless and until 
reversed by OHA."  13 C.F.R.  sec.  121.1009(g)(1).  Although the regional 
office's determination was later reversed by OHA, Customs was not 
required by the FAR or SBA regulations to withhold award or 
performance on the contract while waiting for the appeal process to be 
completed.  McCaffery & Whitener, Inc., B-250843, Feb. 23, 1993, 93-1 
CPD  para.  168 at 5; Verify, Inc., B-244401.2, Jan. 24, 1992, 92-1 CPD  para.  
107 at 5.

The OHA's reversal of the regional office's earlier size determination 
likewise does not require termination of the contract with General 
Offshore.  There is no requirement that an agency terminate an award 
made on the basis of an SBA regional office size determination in 
circumstances where SBA later determines that the regional office was 
in error and the awardee is not a small business concern. FAR  sec.  
19.302(i) ("[OHA] rulings received after award shall not apply to that 
acquisition"); Valley Constr. Co., B-234292, Feb. 8, 1989, 89-1 CPD  para.  
130 at 2, aff'd, B-234292.2, Mar. 2, 1989, 89-1 CPD  para.  227; Ultra Tech. 
Corp., B-230309.6, Jan. 18, 1989, 89-1 CPD  para.  42 at 7-8.  Despite the 
fact that in this case the award was made before the initial size 
determination, the result is the same and termination of the contract 
is not required.  McCaffery & Whitener, Inc., supra.

The SBA argues that, although Jensco was able to file a timely 
post-award size status protest, the failure of Customs to provide the 
pre-award notice, and its premature award of the contract, may have 
been prejudicial to Jensco because Jensco was thereby denied the 
opportunity to file a bid protest in our Office of the proposed award, 
which, under 31 U.S.C.  sec.  3553(c)(1), would have precluded Customs from 
awarding the contract while the protest was pending.  According to 
SBA, "[i]f there were a pre-award protest at GAO that stayed award 
pending a GAO decision, OHA may well have expedited its review of the 
size appeal and decided it before GAO decided the protest before it 
[on September 28]."  SBA Dec. 11, 1998 Comments at 3.  The OHA 
decision would thus have applied to this procurement under FAR  sec.  
19.302(i) ("[OHA] decision, if received before award, will apply to 
the pending acquisition").

However, it is unclear on what basis Jensco could have filed a 
pre-award bid protest in our Office and thus triggered a stay of award 
by the agency.  The contentions in Jensco's post-award bid protest 
were based upon information it learned at the post-award debriefing it 
requested and Jensco does not claim to have had a basis to challenge 
the proposed award to General Offshore.  Moreover, even if Jensco did 
have a basis for a pre-award bid protest, we decline to speculate as 
to whether the OHA decision likely would have been rendered more 
promptly than it actually was and thus during the pendency of the bid 
protest before our Office.  Since there is no time limit for an OHA 
decision on a size appeal, there simply is no basis to reliably 
predict when the OHA decision would have been issued.  In any event, 
the purpose of the pre-award notice requirement is to provide 
unsuccessful offerors an opportunity to challenge the prospective 
awardee's size status for the procurement at hand, and the stay of 
award requirement of 31 U.S.C.  sec.  3553(c)(1) is for purposes of our bid 
protest process.  Neither requirement is for the purpose of assisting 
in delaying award of a contract pending an OHA ruling on a size 
appeal.

Finally, the protester contends that the contracting officer should 
have filed a pre-award size protest on her own after Jensco alleged to 
her in October 1997 and February or March 1998 that General Offshore 
was affiliated with, and had been purchased by, Cable and Wireless 
(Marine), an undisputed large business.

A contracting officer may properly rely on an offeror's 
self-certification that it is a small business unless she had 
information prior to award that would reasonably impeach the 
certification.  13 C.F.R.  sec.  121.405(b) (1998); Adams Indus. Servs., 
Inc., B-280186, Aug. 28, 1998, 98-2 CPD  para.  56 at 3.  In the absence of 
a size protest from an offeror, there is no requirement that the 
contracting officer refer size status questions to the SBA.  Rather, 
this is a matter of discretion, the exercise of which must be measured 
against a standard of reasonableness in the particular case.  Adams 
Indus. Servs., Inc., supra.  Here, the contracting officer did take 
steps to investigate the question of General Offshore's size status, 
specifically by filing a challenge with the SBA (which was dismissed 
as premature) and later consulting with SBA as to the validity of 
General Offshore's self-certification.  We think the contracting 
officer's actions were reasonable in these circumstances.[1]

In sum, we have no legal basis upon which to conclude that the award 
of the contract to General Offshore is invalid.

The protest is denied.

Comptroller General
of the United States

1. Jensco did not bring the information that formed the basis of its 
successful OHA size appeal to the attention of the contracting officer 
prior to award, but discovered this information only after its own 
size protest was denied and after it then requested a copy of General 
Offshore's certificate of incorporation and bylaws.