BNUMBER:  B-270708; B-270708.2; B-270708.3
DATE:  April 15, 1996
TITLE:  Systems Research and Applications Corporation; Infotec
Development, Incorporated

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Matter of:Systems Research and Applications Corporation; Infotec  
            Development, Incorporated

File:     B-270708; B-270708.2; B-270708.3

Date:April 15, 1996

Alfred M. Wurglitz, Esq., Lisa H. Marino, Esq., Matthew B. Pachman, 
Esq., and Michael K. Powell, Esq., O'Melveny & Myers, for Systems 
Research and Applications Corp.; Charles A. Patrizia, Esq., and Sarah 
M. McWilliams, Esq., Paul, Hastings, Janofsky & Walker, for Infotec 
Development, Inc., the protesters.
William A. Roberts III, Esq., Lee P. Curtis, Esq., Brian A. Darst, 
Esq., and Gayle R. Girod, Esq., Howrey & Simon, for Cordant, Inc., an 
intervenor.
Richard P. Castiglia, Jr., Esq., Department of the Air Force, and John 
Klein, Esq., Small Business Administration, for the agencies.
Peter A. Iannicelli, Esq., and Michael R. Golden, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Contracting officer properly awarded a contract more than 10 working 
days after the Small Business Administration (SBA) received a size 
status protest against the prospective awardee where the SBA did not 
issue a decision on the protest within the 10-day time period 
prescribed in the Federal Acquisition Regulation and in the SBA's 
regulations, even though a government furlough that affected SBA 
personnel contributed to the delay.

DECISION

Systems Research and Applications Corporation (SRA) and Infotec 
Development, Inc. protest the award of a contract to Cordant, Inc., 
pursuant to request for proposals (RFP) No. F19628-94-R-0016, which 
was set aside for exclusive small business participation.  The 
protesters contend that Cordant was ineligible for contract award 
because the Small Business Administration (SBA) determined that 
Cordant was other than a small business offeror for purposes of this 
procurement.  

We deny the protests.

Issued on November 14, 1994, the RFP sought proposals for providing 
the Defense intelligence community with the capability to accomplish 
requirements analysis, engineering design, and integration services 
for off-the-shelf commercial hardware and software in support of the 
Air Force's Integration for Command, Control, Communication, 
Computers, and Intelligence (IC4I) Program.  The RFP contemplated 
award of two indefinite delivery/indefinite quantity contracts to two 
different offerors; each contract would be for a base period of 2 
years with options for 3 additional years.[1]  The RFP was intended to 
provide the systems for intercommunication among the different IC4I 
functions and their underlying information systems to handle, process, 
share, and disseminate intelligence data.  Among other things, the RFP 
contemplated that delivery orders would be issued to the contractors 
for various engineering services and is intended to provide the 
intelligence community with new systems and upgrades as new 
technologies become available.  

Initial proposals were received in January 1995 and, after evaluation, 
four were included in the competitive range.[2]  After discussions 
were held and best and final offers received and evaluated, the Air 
Force notified offerors on October 31 that it had selected BTG and 
Cordant for award.  

On November 7, Infotec, the incumbent contractor, filed a protest with 
the contracting officer asserting that Cordant was other than a small 
business for purposes of this procurement and therefore ineligible for 
award.[3]  The contracting officer referred the matter to the SBA for 
a size status determination.  On December 1, before receiving the 
SBA's written determination on Cordant's size, the Air Force awarded a 
contract to Cordant.  On December 5, the SBA issued a written 
determination that Cordant was other than small for purposes of this 
procurement.  SRA was debriefed by the Air Force on December 7.  
Shortly thereafter, SRA and Infotec filed protests in our Office.  
Performance under the contract has been held in abeyance pending 
resolution of the protests. 

The crux of the protests is that Cordant was ineligible for award 
because Cordant was not a small business for purposes of this 
procurement.  The protesters allege that the contracting officer 
awarded the contract to Cordant after the SBA decided, and notified 
the contracting officer, that Cordant was not an eligible small 
business offeror.  Therefore, the protesters argue that the Air Force 
should terminate Cordant's contract.  Infotec requests that our Office 
recommend that the Air Force conduct a new evaluation to determine 
whether Infotec or SRA should be awarded the contract based upon its 
offer representing the best value to the government, while SRA 
requests that we recommend that the Air Force award the contract to it 
under the original evaluation.

The Air Force's position is relatively simple.  The agency states that 
the contracting officer was willing to abide by the SBA's ruling 
concerning Cordant's eligibility for award; however, the SBA's 
determination that Cordant was other than small was issued late (i.e., 
more than 10 business days after the SBA received the protest) and was 
received by the contracting officer after he had already awarded the 
contract to Cordant.  Thus, it is the Air Force's opinion that the 
contract properly was awarded to Cordant.

The SBA's has a contrary opinion.[4]  The SBA states that its Area 2 
Size Program Manager determined that Cordant was other than small 
within the 10-day period allowed by applicable regulations and 
verbally informed the contracting officer of her determination prior 
to the contracting officer's awarding the contract to Cordant.  In 
this regard, the SBA contends that the 10-day period was extended to 
account for 4 days during which all nonessential SBA employees, 
including the Area 2 Size Program Manager, were furloughed when SBA's 
appropriations lapsed during November 1995.  The SBA contends that the 
Air Force was bound by the SBA's timely verbal notification that 
Cordant was other than small and ineligible for award.

The Air Force and the SBA have submitted a number of declarations, 
affidavits, notes of telephone conversations, memoranda, and other 
documents from which the following chronology emerged.[5]  

On November 8, the contracting officer telephoned the Area 2 Size 
Program Manager to notify her of the size protest and to ascertain 
what documentation he should forward to her with the protest.  Later 
that day, the contracting officer telecopied the protest and other 
required information to the Area 2 Size Program Manager.[6]  Thus, 
allowing for federal holidays (i.e., Veterans Day and Thanksgiving 
Day), the 10th business day following SBA's receipt of the protest was 
November 24.  On November 9, the contracting officer spoke with the 
Area 2 Size Program Manager who confirmed receipt of the protest and 
accompanying documentation; the Area 2 Size Program Manager declined 
to give her opinion to the merits of the protest, explaining that a 
final determination, signed by the SBA Area Director, would be sent 
him via certified mail.

From November 14 to November 17, all nonessential SBA employees, 
including the Area 2 Size Program Manager, were furloughed.  On 
November 20, the first workday following the furlough, the contracting 
officer called the SBA regarding the status of the protest and spoke 
to a subordinate of the Area 2 Size Program Manager who explained the 
Area 2 Size Program Manager was on annual leave from November 20 
through November 27 (the week including Thanksgiving).  The SBA 
representative also explained that, because of the furlough and 
because the Area 2 Size Program Manager was on leave, the SBA would 
not be able to issue a size determination on Cordant by the November 
24 deadline.  The contracting officer objected to extending the time 
limit because the Air Force had been open for business during the 
November 14 to 17 furlough period.  Nonetheless, the SBA 
representative told the contracting officer that a final decision 
would be made by November 29 or 30, at the latest.  Upon the Area 2 
Size Program Manager's return from leave (on November 27), the 
contracting officer again spoke with the Area 2 Size Program Manager 
who stated that she was just beginning to review the voluminous 
material and, therefore, no decision would be made until the end of 
the week (approximately November 30).[7]  

On November 30, the contracting officer and the Area 2 Size Program 
Manager had yet another telephone conversation.  The contracting 
officer's and the Area 2 Size Program Manager's recollections of that 
conversation differ greatly.[8]  

The Area 2 Size Program Manager recalls telling the contracting 
officer:

     "I told him we had grave concerns over Cordant's proposed 
     distribution of work as the firm appeared to be unduly reliant 
     upon its subcontractors for performance of the primary and vital 
     portions of the effort.  Additionally, I stated that, based on 
     its Cost Proposal, Cordant would be responsible for only 21 
     percent of the 'cost incurred for personnel' for the two-year 
     base contract period.  Thus, Cordant was in violation of 15 
     U.S.C. 644(o)(1) [FAR 19.508 and FAR 52.219-14], commonly 
     referred to as the '50% rule.'"

The Area 2 Size Program Manager also recollects that she and the 
contracting officer discussed whether the base period only or the base 
period plus the option periods should be used to determined whether 
Cordant met the 50-percent requirement, and that the contracting 
officer asked her to refrain from issuing a decision until after he 
discussed the matter with someone on the proposal review committee and 
got back to her.  The Area 2 Size Program Manager states that she told 
the contracting officer that "absent the submission of any additional 
data which would contradict the information I had reviewed, SBA would 
find Cordant to be ineligible as a small business for this 
procurement."  The Area 2 Size Program Manager also recalls telling 
the contracting officer that it would take her "more than a day or so" 
to write the final decision.

The contracting officer's recollection of the November 30 conversation 
is substantially different from the Area 2 Size Program Manager's.  He 
reports that the Area 2 Size Program Manager told him that the 
decision on Cordant's size was only 50 percent complete, would not be 
done by December 1, and would be completed by December 4 or 5 at the 
earliest.  He also reports that the Area 2 Size Program Manager told 
him, among other things, that she was "on the fence" regarding 
Cordant's size and was concerned about Cordant's pooling of effort 
which could indicate unusual reliance on subcontractors.  The 
contracting officer states that:

     "I expressed to her my concern that the completion date continues 
     to slip one or two days at a time with no concrete end date.  I 
     also mentioned to her that even if furlough days are not counted 
     as business days, we were at the end of the 10 business day 
     period.  She did not disagree with my assessment, explaining that 
     it was the Air Force's decision on how to proceed."

At approximately 6 p.m. on December 1, the contracting officer awarded 
the contract to Cordant.  

On December 5, the SBA issued its determination that Cordant was not a 
small business and therefore was ineligible for award of a contract 
under this total small business set-aside procurement.  Essentially, 
the SBA found that--even though Cordant is, in fact, a small 
business--Cordant would be unusually reliant upon its large business 
subcontractors to perform the required work.  The SBA also found that 
Cordant would perform only 21 percent of the effort during the base 
contract period and would not achieve more than 50 percent of the work 
with its own employees until all option periods were completed; thus, 
the SBA concluded that Cordant would be in violation of 15 U.S.C.  sec.  
644(o)(1) (1994), which requires a small business set-aside contractor 
to perform work for at least 50 percent of the manufacturing costs.  
The SBA decision contained a footnote stating that the completion date 
for the size determination had been established as December 1, due in 
part to the 4-day government furlough in November; the footnote also 
stated that the Area 2 Size Program Manager had verbally notified the 
contracting officer of the SBA's adverse finding on Cordant's size in 
the November 30 telephone conversation.  On December 8, the 
contracting officer received a telefaxed copy of the SBA's written 
determination.[9] 

Under SBA regulations, the SBA is required to make a formal size 
determination within 10 working days after receipt of a size status 
protest.  See 13 C.F.R.  sec.  121.1606(a) (1995).  The formal size 
determination is to be made by the SBA Regional Administrator or his 
delegate (13 C.F.R.  sec.  121.1602(a)) and is to be in writing (13 C.F.R.  sec.  
121.1606(f)).  When a size status protest has been filed and forwarded 
to the SBA, a contracting officer may not make an award until either 
the SBA resolves the matter or 10 business days elapse after the SBA's 
receipt of the protest without any decision having been made by the 
SBA, whichever occurs first.  Federal Acquisition Regulation (FAR)  sec.  
19.302(h)(1); Priscidon Enters., Inc., B-230035, Mar. 18, 1988, 88-1 
CPD  para.  290.   

Here, the SBA received the size status protest and all of the 
supporting documents it requested from the contracting officer (except 
for the RFP which was mailed as directed) on November 8.  Therefore, 
allowing for the 2 federal holidays, the 
10-day period within which a decision was to be issued expired on 
November 24,[10] and absent the Air Force's agreement to wait for a 
longer period, the contracting officer was free to award Cordant the 
contract after that date.  FAR  sec.  19.302(h)(1).  The SBA unilaterally 
tried to extend the size determination due date because of the 
furlough and because the Area 2 Size Program Manager was on annual 
leave for several other days during this period.  However, the record 
clearly shows that the contracting officer never agreed, and in fact 
objected, to an extension of the deadline.  

The SBA and the protesters argue that the deadline was automatically 
extended because of the 4-day furlough.  Even if the time period for 
an SBA decision were extended 4 additional days (i.e., to November 
30), the SBA's formal size determination would still have been issued 
in an untimely manner; the actual decision was not signed by the SBA's 
Acting Area 2 Director until December 5, and was not transmitted to 
the contracting officer until December 8--1 week after the contract 
was awarded.  We recognize that there is a dispute regarding whether 
the Area 2 Size Program Manager told the contracting officer on 
November 30 that the SBA would issue a determination that Cordant was 
not small.  However, the Area 2 Size Program Manager's statement to 
the contracting officer was not a formal size determination.  The 
SBA's regulations specify that a size determination must be "in 
writing," 13 C.F.R.  sec.  121.1606(f), and must be signed by the Regional 
Administrator or his delegate.  13 C.F.R.  sec.  121.1602(a).  The Area 2 
Size Program Manager's November 30 statement was oral and it is 
unrefuted that the Area 2 Size Program Manager was not authorized to 
make the final size determination; the authority to make the formal 
determination apparently resided in the Acting Area Director.  

In addition, the Area 2 Size Program Manager's declaration submitted 
to our Office states that she had "grave concerns" about Cordant's 
reliance upon its large business subcontractors and that, absent 
submission of additional data, SBA "would find Cordant ineligible."  
Moreover, the Area 2 Size Program Manager told the contracting officer 
at that time that she had not even begun to write the actual 
determination.  In these circumstances, we can see how the contracting 
officer reasonably construed the Area 2 Size Program Manager's 
statement as a preliminary rather than a final determination.  In 
other words, the Area 2 Size Program Manager's oral statement to the 
contracting officer was an indication that the Area 2 Size Program 
Manager was going to recommend to the Acting Area Director that he 
find Cordant to be other than small for purposes of this procurement.  
In any event, while we believe that the Area 2 Size Program Manager's 
oral advice reasonably could be construed as an indication that a 
negative determination would likely be made on Cordant's eligibility, 
the advice was not proper notice in accord with the SBA's own 
regulations, and, as the oral statement was subject to review and 
agreement by the Acting Area Director, was not binding on the 
contracting officer.  See Ken Com, Inc., 59 Comp. Gen. 417 (1980), 
80-1 CPD  para.  294.  Because the 10-day size determination period had 
expired, the award to Cordant was proper.  Priscidon Enters., Inc., 
supra.[11]

The protest is denied.

Comptroller General
of the United States

1. Each contract has a ceiling price of $929 million.

2. The competitive range included proposals submitted by SRA, Infotec, 
Cordant, and BTG, Inc.

3. Infotec filed size status protests regarding both BTG and Cordant.  
However, the protests filed in our Office concern only the award to 
Cordant, and, therefore, our discussion of events will be limited to 
those associated with the Cordant size determination. 

4. At our request, the SBA submitted comments on the Air Force's 
report on the protest including, among other things, its version of 
the facts, a legal opinion on the merits of the protests, and 
affidavits from cognizant SBA representatives.  

5. The protesters, agencies, and the awardee have pointed out many 
facts that each of them believes are significant to resolution of the 
protests and have made numerous arguments in support of their various 
positions.  We have reviewed the entire record and considered all of 
the arguments, but will recount here only those facts and arguments 
that we believe both are significant and relevant to resolving the 
protests in this decision.

6. As the RFP was too voluminous, it was sent by regular mail as 
directed by the Area 2 Size Program Manager. 

7. According to the contracting officer, this telephone conversation 
occurred on November 28, and the Area 2 Size Program Manager told him 
that the Cordant decision would not be made until December 1.

8. The contracting officer and the Area 2 Size Program Manager each 
submitted affidavits and notes to support their versions of the large 
number of telephone calls (including some that have not been discussed 
in this decision) between them.

9. Cordant appealed the Area 2 Office's adverse size determination to 
the SBA's Office of Hearings and Appeals which, as of this date, has 
not reached a determination on the appeal.

10. The contracting officer states that that he and the Area 2 Size 
Program Manager agreed that November 24 was the deadline for a 
decision; the Area 2 Size Program Manager states that they agreed upon 
November 27.

11. Contrary to the protesters' assertions, although the contracting 
officer must make a finding that the award is necessary to protect the 
public interest in order to award a contract before the 10-day period 
expires, FAR  sec.  19.302(h)(1), the contracting officer need not make 
such a finding once the 10 days have elapsed.  See JRR Constr. Co., 
Inc., B-220592, Oct. 4, 1985, 85-2 CPD  para.  383.