BNUMBER:  B-281004 
DATE:  December 18, 1998
TITLE: GLR-CMC A Joint Venture, B-281004, December 18, 1998
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Matter of:GLR-CMC A Joint Venture

File:     B-281004

Date:December 18, 1998

Brian C. Quist, Esq., Jenkins & Jenkins, for the protester.
William A. Roberts, III, Esq., Howrey & Simon, for Intersteel, Inc., 
an intervenor.
Larry E. Beall, Esq., U.S. Army Corps of Engineers, and Audrey H. 
Liebross, Esq., Small Business Administration, for the agencies.
Jennifer Westfall-McGrail, Esq., and Christine Melody, Esq., Office of 
the General Counsel, GAO, participated in the preparation of the 
decision.

DIGEST

1.  While General Accounting Office will not review substantive Small 
Business Administration (SBA) determination regarding a section 8(a) 
program participant's eligibility for a particular award, GAO will 
consider protest against eligibility determination where it is alleged 
that SBA violated or misapplied regulations in making the 
determination.

2.  Under applicable Small Business Administration regulations, 
section 8(a) concern must be eligible program participant on the date 
it submits its bid, as well as on the date of contract award.

3.  Addition of Standard Industrial Classification code required by 
invitation for bids to section 8(a) concern's approved business plan 
after submission of bid does not constitute a late modification of an 
otherwise successful bid that the government may accept pursuant to 
Federal Acquisition Regulation  sec.  52.214-7(f).

DECISION

GLR-CMC A Joint Venture protests the rejection of its bid and the 
selection for award of Intersteel, Inc. under invitation for bids 
(IFB) No. DACA01-98-B-0031, issued by the U.S. Army Corps of Engineers 
for construction of an Army Reserve Training Center in Knoxville, 
Tennessee.  The IFB was issued as a competitive small disadvantaged 
business set-aside under section 8(a) of the Small Business Act, 15 
U.S.C.  sec.  637(a) (1994).[1]  The Army rejected GLR-CMC's bid after the 
Small Business Administration (SBA) notified it that the joint venture 
was not eligible for award under the solicitation.  The protester 
takes issue with SBA's determination.

We deny the protest.

Competition under the IFB was restricted to firms which had been 
certified by SBA for participation in the 8(a) program and which had 
Standard Industrial Classification (SIC) Code 1542 (General 
Contractors--Nonresidential Buildings, Other Than Industrial Buildings 
and Warehouses) included in their approved business plans.[2]  IFB, at 
00100-13.

Three bids were opened on the June 11, 1998 opening date.  GLR-CMC's 
bid of $7,627,000 was low, and Intersteel's bid of $8,622,000 was 
second low.  In accordance with SBA regulations, 13 C.F.R.  sec.  
124.311(e)(4)(i), and Federal Acquisition Regulation (FAR)  sec.  
19.805-2(c)(1), the contracting officer forwarded to SBA a list of the 
bidders for a determination regarding their eligibility for award.[3]  
SBA responded that GLR-CMC was not eligible for award because the 
joint venturer with 8(a) certification, GLR, did not have SIC code 
1542 in its approved business plan.[4]  SBA then considered the 
eligibility of Intersteel for award and determined that it was 
eligible.  By letters dated August 31, the Corps of Engineers notified 
both the protester and Intersteel that the latter company had been 
selected for award.  GLR filed an agency-level protest on September 4 
and protested to our Office on September 9.[5]

The protester takes issue with SBA's determination of ineligibility, 
arguing that (1) SBA regulations no longer restrict competition under 
an 8(a) set-aside to those firms that have the SIC code identified in 
the solicitation in their approved business plans; (2) one of the 
joint venturers, CMC, had the correct SIC code; thus the joint venture 
had the correct code; (3) GLR was eligible for assignment of SIC code 
1542 prior to issuance of the solicitation, but was assigned code 1541 
instead by mistake, so that code 1542 should be assigned to it 
retroactively; (4) GLR was assigned code 1542 on June 29 and thus was 
an eligible Program Participant under that code on the date of 
contract award, which is all that is required by 13 C.F.R.  sec.  
124.307(f); and (5) the addition of code 1542 to its approved business 
plan after submission of its bid constituted a late modification to an 
otherwise successful bid that the government was required to consider 
pursuant to FAR  sec.  52.214-7(f).

As a preliminary matter, SBA argues that it has exclusive authority to 
determine the eligibility of an 8(a) firm for award and that our 
Office therefore lacks the authority to review GLR-CMC's protest.  In 
support of its argument, SBA cites 13 C.F.R.  sec.  124.311(f), which 
provides:

     The eligibility of a Program Participant for a competitive 8(a) 
     award may not be challenged by another Program Participant or any 
     other party to SBA or to any other administrative forum as part 
     of a bid or other contract protest.  Anyone with information 
     concerning the eligibility of a Program Participant to continue 
     participation in the 8(a) program may submit such information to 
     SBA in accordance with  sec.  124.111(c).

See also FAR  sec.  19.805-2(e).

We have interpreted this section as barring our review of substantive 
determinations by the SBA regarding a program participant's 
eligibility for a particular award.  Premier Cleaning Sys., Inc., 
B-249179.3, July 27, 1992, 92-2 CPD  para.  51 at 2-3; Little Susitna, Inc., 
B-244228, July 1, 1991, 91-2 CPD  para.  6 at 2-3.  We do not view it as 
precluding our review of allegations that regulations have been 
violated or misapplied in the making of such determinations, however.  
Gutierrez-Palmenberg, Inc., B-255797.3 et al., Aug. 11, 1994, 94-2 CPD  para.  
158 at 7-10.  Since all of the protester's arguments are premised, at 
least in part, on allegations that SBA has misapplied its own 
regulations or the FAR, we will consider them.

First, the protester argues that it should not have been determined 
ineligible for award on the ground that it did not have SIC code 1542 
in its approved business plan because SBA regulations no longer 
restrict competition under an 8(a) set-aside to those firms that have 
the SIC code identified in the solicitation in their approved business 
plans.  In this regard, the protester notes that prior to award of the 
contract to Intersteel, SBA had amended its regulations to delete the 
requirement that the SIC code designated in the solicitation be listed 
in the 8(a) firm's approved business plan.

The protester is correct that on June 30, 1998, SBA amended its 
regulations to delete the requirement that the SIC code specified in 
the solicitation appear in the firm's business plan.  63 Fed. Reg. 
35,726, 35,752-53, 35,758-59 (1998) (to be codified at 13 C.F.R.  sec.  
124.402 and 124.507).  The new regulations are inapplicable to the 
requirement at issue here, which was accepted into the 8(a) program on 
March 2, 1998, however, since they apply only to 8(a) procurement 
requirements accepted by SBA on or after July 30, 1998.  63 Fed. Reg. 
35,726.

Regarding the protester's argument that CMC--and thus the joint 
venture--had the correct SIC code, SBA responds that CMC is not an 
8(a) program participant, and, as a consequence, has no approved 
business plan identifying SIC codes.  In other words, CMC did not have 
the SIC code for the requirement in its approved business plan, as 
required by 13 C.F.R.  sec.  124.311(g)(2).

GLR-CMC argues thirdly that, since it was eligible for SIC code 1542 
prior to issuance of the IFB, that SIC code should be assigned to it 
retroactively.

The SBA regulations in effect at the time this procurement was 
conducted permitted participants to request changes in the SIC code 
designations stated in their business plans and provided that such 
requests were to be approved where the 8(a) firm had demonstrated the 
capacity and capability to perform in the requested SIC code and was 
otherwise eligible, or where the SBA had erred in omitting a 
previously requested and supported SIC code, improperly classifying a 
business industry, or making a typographical or other error in its 
letter of approval to the 8(a) concern.  13 C.F.R.  sec.  124.302(c).  
Thus, if the SIC code designated in an IFB did not appear in a 
particular bidder's approved business plan, and the bidder believed 
that it was capable of performing under the code, it was the bidder's 
responsibility to request that the code be added to its business plan, 
and it had to do so sufficiently in advance of submitting its bid to 
permit SBA to process the request prior to bid submission.[6]  The 
regulations did not provide for the retroactive assignment of codes 
for which a participant was eligible, but which it had failed to 
obtain.  Here, GLR did not request that SIC code 1542 be added to its 
business plan until late June, more than 2 weeks after the June 11 
opening date; thus, due to its own lack of diligence, it did not have 
the required SIC code at the time it submitted its bid and was 
correctly determined ineligible for award.

Next, GLR-CMC argues that it was assigned SIC code 1542 on June 29 and 
thus was an eligible program participant under that code prior to the 
date of award (i.e., August 31), as required by 13 C.F.R.  sec.  
124.307(f).

13 C.F.R.  sec.  124.307(f) requires that an 8(a) concern be an eligible 
program participant on the date of contract award.  This does not mean 
that the date of award is the only date on which the firm must be an 
eligible program participant, however; the concern must also be an 
eligible program participant on the date it submits its bid, 13 C.F.R.  sec.  
124.311(e)(4)(iii), which, as previously discussed, GLR-CMC was not.

Finally, GLR-CMC contends that the addition of SIC code 1542 to its 
approved business plan after submission of its bid constituted a late 
modification to an otherwise successful bid that the government was 
required to consider pursuant to  FAR  sec.  52.214-7 (Late Submissions, 
Modifications, and Withdrawals of Bids).  This section provides, at 
subsection (f), that:

     a late modification of an otherwise successful bid that makes its 
     terms more favorable to the Government will be considered at any 
     time it is received and may be accepted.

An "otherwise successful bid" is a bid already in line for award prior 
to its modification.  The W.H. Smith Hardware Co., B-219405.2, Oct. 
25, 1985, 85-2 CPD  para.  460 at 3.  GLR-CMC's bid was not in line for 
award prior to its modification because the protester had been 
determined ineligible for award.  Thus, the clause does not apply to 
it.

The protest is denied.

Comptroller General
of the United States  

1. Section 8(a) of the Small Business Act authorizes SBA to enter into 
contracts with government agencies and to arrange for performance 
through subcontracts with small businesses that are owned and 
controlled by socially and economically disadvantaged individuals.

2. Under the SBA regulations in effect at the time this requirement 
was accepted into the 8(a) program, i.e., March 2, 1998, each program 
participant was required to develop (and submit to SBA for approval) a 
comprehensive business plan setting forth its business targets, 
objectives, and goals, and identifying the SIC codes under which it 
had the capacity and capability to perform.  13 C.F.R.  sec.  124.301(a), 
(b) (1998).  The regulations provided that a concern would only be 
permitted to perform 8(a) contracts classified under the SIC codes in 
its approved business plan.  13 C.F.R.  sec.  124.301(b).  See also 13 
C.F.R.  sec.  124.311(g)(2) ("Only those Participants that have in their 
approved business plan the SIC code identified in the solicitation may 
submit offers for the requirement.  A participant will be deemed 
ineligible for award by SBA if it submits an offer for a requirement 
for which it does not have an approved SIC code.").

3. Under the procedures set out in FAR  sec.  19.805-2(c)(1) and 13 C.F.R.  sec.  
124.311(e),  SBA determines the eligibility of the firms for award of 
the contract.  In sealed bid acquisitions, SBA is first to consider 
the eligibility of the low bidder.  If that firm is ineligible for 
award, SBA is to consider the eligibility of the next low bidder, and 
so on, until an eligible firm is identified or the list of bidders 
provided by the contracting agency is exhausted.  

4. At the time the IFB was issued, GLR had nine SIC codes, including 
1541 (General Contractors--Industrial Buildings and Warehouses) in its 
approved business plan.  It did not have SIC code 1542.

5. The protester also filed an appeal with SBA's Office of Hearings 
and Appeals on September 10.  SBA dismissed the appeal on October 7.

6. 13 C.F.R.  sec.  124.311(e)(4)(iii) provides that a participant's 
eligibility for an award will be determined "as of the date of [the] 
Participant's submission of its initial offer which includes price."