Metropolex Corporation, No. 3889 (March 7, 1994) Docket No. SIZ-93-11-23-130 UNITED STATES OF AMERICA SMALL BUSINESS ADMINISTRATION OFFICE OF HEARINGS AND APPEALS WASHINGTON, D.C. SIZE APPEAL OF: ) ) Metroplex Corporation ) ) Appellant ) ) RE: Tri-State Design ) Docket No. SIZ-93-11-23-130 Construction Co., Inc. ) ) Solicitation No. ) N62472-93-B-4031 ) Department of the Navy ) Naval Facilities Engineering ) Command ) Colts Neck, New Jersey ) DIGEST Where a Regional Office makes a formal size determination lacking a sufficient description of the facts relied upon and its reasoning therefrom, such determination fails to comply with the requirements of 13 CFR 121.1606(f) and provides neither adequate notice to interested parties nor an appropriate basis for review by this Office, and it will be remanded to the Regional Office. DECISION March 7, 1994 WRIGHT, Administrative Judge, Presiding: Jurisdiction This appeal is resolved in accordance with 15 U.S.C. 632 et seq., and the regulations codified at 13 CFR 121. Issue Whether the Philadelphia Regional Office sizer determination in this case complied with the requirements of 13 CFR 121.1606(f). Facts On August 2, 1993, the Department of the Navy, Naval Facilities Engineering Command, Colts Neck, New Jersey issued the captioned solicitation for Preventive Maintenance and Repair of the Railroad Systems at the Naval Weapons Station, Colts Neck, New Jersey, set it entirely aside for Small Disadvantaged Businesses, and classified it under Standard Industrial Classification (SIC) code 1629, which bears a size standard not to exceed $17.0 million in average annual receipts. On September 21, 1993, a timely protest, pursuant to 13 CFR 121.1603(a)(3), was lodged against D&K/Sharp Construction Company, Inc. (D&K) 1/, a joint venture and the lowest bidder, and Tri-State Design Construction Co., Inc. (Tri-State), the second lowest bidder by the third lowest bidder, Metroplex Corporation (Metroplex or Appellant). Pursuant to the protest, a size determination was rendered by the Small Business Administration (SBA) Philadelphia Regional Office on November 10, 1993 and received by the Appellant on November 16, 1993. That determination found that Tri-State Design Construction Company, Inc. is a small business concern within the assigned size standard, concluding "that Tri-State is not unusually reliant upon its subcontractor, Railroad Construction Corporation, for the primary and vital portions of this effort." The only analysis proffered in support of its conclusion is as follows: Tri-State will be providing supervision, equipment, bonding, and the vast majority of the labor. Although Railroad Construction Corporation will be furnishing all of the material, it will be responsible for only about 25 percent of the labor required. In its timely appeal 2/ filed with this Office, Metroplex challenges the Regional Office's conclusion. Appellant directs our attention to the inexperience of Tri-State regarding railroad repair and maintenance and the comparatively broad experience of its subcontractor, Railroad Construction Company. Thus it argues that [a]s set forth below, the Regional Office's findings of fact and conclusion were erroneous and failed to follow well- established SBA case law. In addition, the Regional Office failed to conduct a proper investigation into Metroplex's allegations and failed to provide an adequate basis for its findings and conclusion. Metroplex also submitted additional argument and evidence, on December 9, 1993, demonstrating the specialized and complex nature of railroad construction and repair contracts; argued that the successful bidder lacked technical expertise in the field of railroad construction; and suggests that the proposed subcon tractor, Railroad Construction Company, Inc., had prior disputed involvement with contracts set aside for small disadvantaged business and Section 8(a) business concerns. No response was received by this Office from Tri-State or the Contracting Officer. Discussion We are not convinced that the Regional Office conducted a comprehensive investigation into allegations raised by the protest, as is required by the pertinent regulations and as applied by the case law of the Office of Hearings and Appeals. See Size Appeal of Breiner Construction Comsans Inc., No. 3316 (1990). SBA's regulation at 13 CFR 121.1606(f) provides that SBA shall base its formal size determination upon the record, including reasonable inferences therefrom, and shall state in writing the basis for its findings and conclusions. Thus, regarding whether a contractor has "unusual reliance" on a subcontractor, this question should be resolved by an assessment of the totality of the circumstances present in the case, and the Agency is required, in writing, to state the basis for its finding and conclusions. In Size Appeal of Ideal Services, No. 3317 (1990), this Office enumerated seven evaluative criteria which it identified as appropriate to the rendering of that assessment. In the present case, the Regional Office made no reference to these criteria, or any others, as a basis for its finding and conclusion. Its failure of analysis, we conclude, deprives Appellant of a sufficient basis for the formulation of a meaningful appeal. See Size Appeal of Knowledge Base Engineering, No. 3666 (1992). 3/ In consequence, we are compelled to remand this appeal to the Philadelphia Regional Office for further investigation, substantiation, and analysis of the allegations of the protest. Conclusion The question of Tri-State's size status is REMANDED to the Philadelphia Regional Office for a determination in accordance with the foregoing opinion. __________________________________ G. Stephen Wright (Presiding) Administrative Judge ___________________________________ Gloria E. Blazsik (Concurring) Administrative Judge ____________________________________ Elwin H. White (Concurring) Administrative Judge _______________ 1/ The protest against D&K/Sharp Joint Venture was referred to SBA's Region II Regional Office for a size determination. 2/ The present appeal was received by the Office of Hearings and Appeals on November 23, 1993, within five days of Appellant's receipt of the determination, and, for this reason is timely within the meaning of 13 CFR 121.1705(a)(2). 3/ For example, Section M.1 of the solicitation requires the contractor to provide evidence that its "personnel have experience in railroad maintenance and repair to ensure the safety and welfare of Railroad systems at Naval Weapons Station Earle" and that it provide reference lists of two successfully completed contracts in the last three years for similar projects. No basis is given by the Regional Office's apparent conclusion that Tri-State possessed the requisite qualifications.