Weldon Rents Equipment, No. 4286 (January 13, 1998). Docket No. SIC-97-12-18-51 UNITED STATES OF AMERICA SMALL BUSINESS ADMINISTRATION OFFICE OF HEARINGS AND APPEALS WASHINGTON, D.C. _______________________________ ) SIC APPEAL OF: ) ) Weldon Rents Equipment ) ) Docket No. SIC-97-12-18-51 Appellant ) ) Decided: January 13, 1998 Solicitation No. ) IFB-ACL-8-0003 ) Department of Justice ) Immigration and Naturalization ) Service ) Laguna Niguel, California ) ______________________________ ) DIGEST The appropriate SIC code for a procurement seeking to lease equipment is one which covers the lease of the particular type of equipment, rather than the manufacture or wholesale distribution of that equipment, unless one of the exceptions in the SIC Manual applies. The appropriate SIC code for a procurement seeking to lease portable light towers is 7359, Equipment Rental and Leasing, Not Elsewhere Classified. DECISION HOLLEMAN, Administrative Judge: Jurisdiction This appeal is decided under the Small Business Act of 1958, 15 U.S.C. Sections 631 et seq., and 13 C.F.R. Parts 121 and 134 (1996). Issues Whether the appropriate SIC code for a procurement seeking to lease equipment is one which covers the lease of the particular type of equipment, rather than the manufacture or wholesale distribution of that equipment. Whether the appropriate SIC code for a procurement seeking to lease portable light towers is 7359, Equipment Rental and Leasing, Not Elsewhere Classified; or 5063, Electrical Apparatus and Equipment, Wiring Supplies, and Construction Materials. I. BACKGROUND On December 2, 1997, the Contracting Officer (CO) for the Department of Justice, Immigration and Naturalization Service (INS), issued this small business set aside solicitation seeking to lease portable light towers for one year, with two one-year options. The CO classified the procurement under Standard Industrial Classification (SIC) code 5063, Electrical Apparatus and Equipment, Wiring Supplies, and Construction Materials, with a 100-employee size standard. INS seeks to lease 60 towers, each a self-contained unit with a diesel generator powering a bank of four 1,000-watt floodlights, mounted on a trailer and capable of functioning under desert conditions. Bids were originally due on December 17, 1997. The CO issued Amendment 1 to the solicitation on December 5th, which required that the contractor be responsible for normal preventive and scheduled maintenance; and the INS be responsible for repairs due to negligence of Government personnel and vandalism. The CO issued Amendment 2 on December 10th, which contained a form for offerors to submit their bids. On December 12, 1997, Weldon Rents Equipment (Appellant), filed the instant appeal. Appellant asserts the appropriate SIC code is 7359, Equipment Rental and Leasing, Not Elsewhere Classified, with a corresponding average annual receipts size standard of $5 million. Appellant asserts leasing equipment to the government clearly is a business service, and the procurement should be classified under a service SIC code. II. DISCUSSION Appellant filed this appeal within ten calendar days of the solicitation's issuance. Therefore, the instant appeal is timely. 13 C.F.R. Section 134.304(a)(3). In a SIC appeal, Appellant has the burden of proving, by a preponderance of the evidence, error in the CO's SIC code designation. SIC Appeal of the Scientific Consulting Group, Inc., No. 4186 (1996). The correct SIC code for a procurement is that which best describes the principal purpose of the services being procured, in light of the industry description in the SIC Manual, [1] the description in the solicitation, and the relative weight of each element of the solicitation. Id.; 13 C.F.R. Section 121.402(b). The standard of review is whether the SIC code designation is based on a clear error of fact or law. 13 C.F.R. Section 134.314; SIC Appeal of Information Ventures, Inc., No. 4266 (1997). SIC code 5063 is part of Major Group 50 - Wholesale Trade - Durable Goods, and covers establishments primarily engaged in the wholesale distribution of electrical power equipment, electrical construction materials, and electric light fixtures and bulbs. SIC Manual, pp. 289, 295. In contrast, SIC code 7359 is part of Major Group 73 - Business Services, and covers establishments primarily engaged in renting or leasing equipment not classified under other SIC codes, which includes leasing electronic equipment. SIC Manual, pp. 360, 364. When the purpose of a procurement is to lease, rather than purchase, equipment, this Office's precedent holds the appropriate SIC code is one which covers the leasing of the particular type of equipment, rather than the manufacturing or wholesale distribution of that equipment. SIC Appeals of Trico Rentals, Inc., No. 3619 (1992); Gell Service Industries, Inc., No. 3456 (1991); and Associate Administrator for Procurement Assistance, No. 1431 (1981) [2]. Exceptions to this rule are based on the SIC Manual's description of the 7359 code, which classifies certain types of equipment rental under other SIC codes. SIC Manual, p. 364. One such exception covers procurements for equipment manufactured by the firms which lease or sell their own products, where the statement of work requires the contractor to provide extensive maintenance and servicing for the equipment. These procurements are classified under the manufacturing SIC code appropriate for that equipment. SIC Appeal of Mobile Steam Boiler Rental Corporation, No. 4208 (1996). Here, however, the exception does not apply. INS does not intend to purchase the desired equipment from a manufacturer but, rather, to lease it: the solicitation does not require INS to lease it from a manufacturer of the equipment. Nor does it require the contractor to provide services, beyond routine maintenance. The facts here, therefore, are closer to the facts in the Trico Rentals, Inc., supra, line of cases than to Mobile Steam Boiler, supra. Further, SIC code 7359 explicitly covers electronic equipment leasing, while SIC code 5063 covers wholesalers. Accordingly, because INS wishes to rent electronic equipment, not to purchase it; the solicitation does not specify the rental be from a manufacturer of the equipment, and does not require extensive servicing, Appellant has met its burden of establishing clear error in the CO's SIC code designation. Therefore, the appropriate SIC code for the procurement is 7359. III. CONCLUSION The Administrative Judge REVERSES the CO's designation of SIC code 5063, Electrical Apparatus and Equipment, Wiring Supplies, and Construction Materials, for this procurement. The Administrative Judge concludes instead the appropriate SIC code is 7359, Equipment Rental and Leasing, Not Elsewhere Classified. This is the Small Business Administration's final decision. 13 C.F.R. Section 134.316(b). ____________________________ CHRISTOPHER HOLLEMAN Administrative Judge _________________________ [1] Standard Industrial Classification Manual, Office of Management and Budget, 1987 edition. [2] This Office has adopted as valid precedent, pursuant to the rule of stare decisis, the cases decided by its predecessor body, the Size Appeals Board. Size Appeal of Educational Planning and Advice, Inc., No. 4201 (1996). Posted: January, 1998