Upon receipt of this advice the Cleveland Small Business Regional Director investigated the status of the Johnson Corporation and determined that Johnson was not a small business for the purpose of Government procurement under the subject IFB. Johnson Corporation appealed from this determination and on May 31, 1967, the Small Business Size Appeals Board upheld the Regional Director's determination. The contracting officer was furnished the preaward survey report on May 1, 1967, containing the advice that the Johnson Corporation due to a merger with another company might no longer be a small business concern.

In your letter of June 9, 1967, you state that Armed Services Procurement Regulation (ASPR) 1-703 (b) (1) provides that any bidder in connection with a contract involving a small business set-aside may question the small business status of any bidder on the same procurement by protesting to the contracting officer prior to the close of business on the fifth working day, exclusive of Saturday, Sunday, and legal holidays, after the bid opening date. You point out, however, that ASPR 1-703 (b) (1) (ii) provides that an untimely protest received by a contracting officer shall not be considered in connection with the instant procurement and shall be forwarded to the Small Business Administration for consideration in any future procurement. You also state that ASPR 1-703 (b) (2) provides that a contracting officer may at any time prior to award question the small business status of the apparently successful bidder. Therefore, you contend that since the contracting officer forwarded the untimely protest to SBA under the provisions of ASPR 1-703 (b) (1) (ii) rather than the provisions of ASPR 1-703 (b) (2), the SBA had no authority to determine that the Johnson Corporation was ineligible for award of a contract under the subject invitation because it was a large business concern. In other words, you contend that the SBA determination can only affect future procurements.

The general rule with regard to the particular point in time at which a bidder's status as to size is held to be determinative is the time of award and we perceive no cogent reasons for departing from the general rule in the instant case. At the time the Johnson Corporation submitted its bid it could in good faith certify itself as a small business concern. However, on March 31, 1967, after submitting its bid and prior to bid opening the Johnson Corporation by affirmative action acquired the W. H. Olsen Mfg. Company resulting in its becoming a large business concern. In such circumstances, we think that Johnson,

as a prudent bidder, should have notified the contracting officer of such change in its status. Had this been done the contracting officer could have exercised his judgment as to whether in the light of such information he should accept Johnson's self certification that it was a small business concern.

Furthermore, while it may be that the contracting officer, at the time of his April 21 request for a determination of the small business status of Johnson, intended that the SBA determine Johnson's small business status for future procurements only we think that upon receipt of the advice contained in the preaward survey the contracting officer in the exercise of good judgment had the duty to question the status of Johnson for the instant procurement inasmuch as no award had been made. Since the small business status of Johnson was already being considered by SBA we do not believe that it was necessary for the contracting officer to have made another request citing a different provision of the ASPR in order to follow literally a procedural requirement of the regulation.

Accordingly, irrespective of the provisions of the regulation which were cited in requesting SBA to make a determination of the small business status of Johnson, since it has now been determined that Johnson is a large business concern an award to it would be contrary to the purposes of the Small Business Act, 15 U.S.C. 631 note. In that connection, the rationale in our decision of March 19, 1962, B-148023, appears to be for application. In that case a small business restricted invitation was issued and bids were opened on October 13, 1961. The low bidder's eligibility as a small business firm was dependent upon the additional 25 percent factor in employment number which was available to firms located in labor surplus areas. On the bid opening date the low bidder was in fact a small business firm. However, on October 31, 1961, Springfield, Ohio, where the low bidder was located, was removed from the listing of persistent and substantial labor surplus areas. The low bidder thus became a large business concern for purposes of the procurement. It was held that since the date of award governed the final determination of the eligibility of a bidder as a small business concern the low bidder was no longer eligible for award under the invitation and the award, which was subsequently made to the next lowest bidder at a substantially higher price, was upheld.

Accordingly, since the decision of SBA regarding the size status of a company, by statute, is "conclusive," 44 Comp. Gen. 271, we have no alternative but to deny your protest and therefore the bid of Johnson may not be considered for award.

INDEX DIGEST

July 1, 1966-June 30, 1967

Page

ABSENCES

Leaves of absence. (See Leaves of Absence)

ACCOUNTABLE OFFICERS

Accounts

Payments subject to review

Legal propriety of payments made by public officers in transaction
of Govt.'s business is subject to determination of Comptroller General
under Budget and Accounting Act, 1921, 31 U.S.C. 41, and such pay-
ments are not final until settled by GAO which may disallow credit in
accounts of accountable officers for certification and disbursement of
public funds not in accordance with law_
Certification of disputed payment

Question of law

Question of propriety of accountable officer certifying voucher for
contract payment ordered pursuant to contract disputes clause proce-
dure is question of law and, although under contract disputes clause
procedure and Wunderlich Act of May 11, 1954, 41 U.S.C. 321-322,
determinations as to disputes of fact must be accepted as conclusive,
unless fraudulent or capricious, or arbitrary or so grossly erroneous as
necessarily to imply bad faith or is not supported by substantial evidence,
such determination by contracting agency does not preclude Comptroller
General from rendering decision as to whether payment to contractor is
proper..

Certifying officers. (See Certifying Officers)

ADMINISTRATIVE DETERMINATIONS

Bidders' qualifications. (See Bidders, qualifications, administrative

determinations)

Conclusiveness

Contract disputes

Determination under contract disputes clause by hearing examiner,
as modified by administrative agency, that contractor was entitled to
time extensions, equitable adjustment of certain claims-denied by
contracting officer-and to payment of amounts withheld as set off for
debts is matter reviewable by Comptroller General of U.S. under
authority in Budget and Accounting Act, 1921, 31 U.S.C. 41, and when
such administrative determination is not supported by substantial
evidence to meet standards of Wunderlich Act, 41 U.S.C. 321-322, and
contains errors of law, contractor does not have claim against Govt.
and payment pursuant to administrative determination may not be
made...

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901

ADMINISTRATIVE DETERMINATIONS-Continued

Conclusiveness-Continued

Contract disputes-Continued

Question of propriety of accountable officer certifying voucher for
contract payment ordered pursuant to contract disputes clause pro-
cedure is question of law and, although under contract disputes clause
procedure and Wunderlich Act of May 11, 1954, 41 U.S.C. 321-322,
determinations as to disputes of fact must be accepted as conclusive,
unless fraudulent or capricious, or arbitrary or so grossly erroneous as
necessarily to imply bad faith or is not supported by substantial evi-
dence, such determination by contracting agency does not preclude
Comptroller General from rendering decision as to whether payment
to contractor is proper--

Although GAO is not "court of competent jurisdiction" within
meaning of that phrase as used in standard disputes clause in Govt.
contracts so as to require acceptance of administrative determinations
as final and conclusive, it is Wunderlich Act, 41 U.S.C. 321–322, and
not language of disputes clause which governs matter. See Langenfelder
& Son, Inc. v. U.S., 169 Ct. Cl. 465 (1965)----

Before Wunderlich decision, 342 U.S. 98 (1951), limiting review of
contract dispute determinations to fraudulent standard, administrative
determinations on questions of fact or law under standard disputes clause
provisions in Govt. contracts had been consistently regarded as not
binding on GAO, if under judicial precedents, such determinations were
not binding on courts, and that such determinations were reviewable by
GAO under same standards applied by courts__

Legislative history of Wunderlich Act, 41 U.S.C. 321-322, not only
recognizes that GAO had authority to review administrative determina-
tions on questions of law and fact under disputes clause provisions in
Govt. contracts both prior and subsequent to Wunderlich decision, 342
U.S. 98 in 1951, but clearly indicates that such jurisdiction of GAO was
not to be affected by act and that in exercising jurisdiction after enact-
ment, same standards for review of factual determinations that courts
used would be applied by GAO...........

Standards of review of administrative decisions on contract disputes
which are granted to courts under Wunderlich Act, 41 U.S.C. 321-322,
and which legislative history makes clear are to be exercised by GAO,
are for application solely to decisions of fact, and, therefore, such stand-
ards (fraud, capriciousness, arbitrariness, grossly erroneous or not sup-
ported by substantial evidence) are standards to be applied by GAO in
review of factual determinations under contract dispute clauses...

Contract disputes clause which provides that decisions of contracting
agency as to disputes are final and conclusive "unless determined by
court of competent jurisdiction" not only goes beyond literal and govern-
ing provisions of Wunderlich Act, 41 U.S.C. 321-322, which does not
limit review to "courts," but is also contrary to legislative history that
recognized jurisdiction of GAO with respect to review of such determina-
tions and, therefore, language "court of competent jurisdiction" in contract
does not affect authority of Comptroller General to review and question
determinations of fact made by contracting office----

The fact that GAO is not equipped to conduct administrative hearings
in contract disputes clause cases would not affect authority of GAO to

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441

441

441

441

441

ADMINISTRATIVE DETERMINATIONS-Continued

Conclusiveness-Continued

Contract disputes-Continued

review administrative determination of fact since under rule in Bianchi
case, 373 U.S. 709 (1963), review of such administrative determinations
must, under Wunderlich Act, 41 U.S.C. 321-322, be confined to con-
sideration of record and no new evidence is permitted__.

Hearing examiner's determination under contract disputes clause pro-
ceeding that contractor is entitled to time extensions for work delays
due to unusually severe weather that was unforeseeable, when evidence
in these respects was erroneous, as matter of law, and when extensions
allowed were not supported by substantial evidence must be regarded
as determination that does not meet standards of Wunderlich Act,
41 U.S.C. 321-322__

Contracts

Payment claims

Contractors who feel that they are entitled to additional amounts
under contractual agreements with Govt. may present claims to GAO
for settlement, regardless of administrative action taken in matter.---
Preproduction sample requirement

Under invitation requiring submission of preproduction samples and
reserving right to waive requirement in case of prior producers who
furnish evidence that prior Govt. approval of their products was appro-
priate for current procurement, determination whether or not to waive
preproduction samples is essentially administrative function, and
determination will not be disturbed unless contracting officer's deter-
mination that samples should not be waived is shown to be arbitrary,
capricious, or without substantial basis of fact....

Veterans matters

Insurance

Administrator of Veterans Admin. having established Sept. 29, 1965,
as effective date for Servicemen's Group Life Ins. benefits and provided
that all members of uniformed services on active duty for period of 31
days or more were automatically covered with $10,000 life insurance
until written notice of waiver or reduction is filed, waiver or reduction
to be effective as of month received-final and conclusive determination
pursuant to 38 U.S.C. 785-officer waiving insurance coverage in Oct.
1965 is nevertheless liable for cost of October premium, and law not
requiring premium deduction be made from pay for month during which
insurance is provided, fact that deduction was made from November
pay of officer does not entitle him to refund of premium___
Contract performance adequacy. (See Contracts, performance, adequacy,
administrative determination)

Definiteness

Hearing examiner findings

A hearing examiner's finding under disputes clause proceeding that
claim for extra work was only matter of quantum and, therefore, not
within his jurisdiction, as he limited it, is not definite determination as
to whether he was remanding claim to contracting officer for further
negotiation or whether no further action was to be taken and, therefore,
since examiner took no action and record is incomplete, amount allowed
on claim by contracting officer must be accepted as correct--

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