Sonag Company, Inc., No. 4335 (December 18, 1998) Docket No. SIZ-98-09-18-42 UNITED STATES OF AMERICA SMALL BUSINESS ADMINISTRATION OFFICE OF HEARINGS AND APPEALS WASHINGTON, D.C. ________________________________ ) SIZE APPEAL OF: ) ) Sonag Company, Inc. ) ) Docket No. SIZ-98-09-18-42 Appellant ) ) Decided: December 18, 1998 Solicitation No. ) F11623-97-R-0004 ) Department of the Air Force ) 375 CONS/LGC ) Scott Air Force Base, Illinois ) ________________________________) APPEARANCES for Appellant John J. Fausti, Esq. Stephanie L. Buser, Esq. for Rayco Venture Paralee White, Esq. Gadsby & Hannah, LLP DIGEST This Office will dismiss as moot an appeal of a size determination concluding the challenged firm was other than small, even though a pending lawsuit seeks to overturn the award, where the appeal involves a contract-specific issue, and the procuring agency previously awarded the contract to the challenged firm; and the court neither has remanded the case to this Office nor ordered it to decide the issue of the challenged firm's size. This Office does not have jurisdiction to rule on the validity of a small business set aside contract award, even if the Area Office has found the awardee other than small. 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). [1] Issue Whether this Office will dismiss as moot an appeal of a size determination concluding the challenged firm was other than small, even though a pending lawsuit seeks to overturn the award, where the appeal involves a contract-specific issue, and the procuring agency previously awarded the contract to the challenged firm; and the court neither has remanded the case to this Office nor ordered it to decide the issue of the challenged firm's size. Whether this Office has jurisdiction to rule on the validity of a small business set aside contract award, if the Area Office has found the awardee other than small. I. BACKGROUND On March 21, 1997, the Department of the Air Force, 375th Contracting Squadron, Scott Air Force Base, Illinois (Air Force), issued the subject solicitation as an Indefinite Delivery-Indefinite Quantity (IDIQ) contract for multi-discipline construction projects, under its Simplified Acquisition of Base Engineering Requirements (SABER) program. The term of the proposed contract was one base year, with four one-year options. The Contracting Officer (CO) assigned to the procurement Standard Industrial Classification (SIC) code 1542, General Contractors-Nonresidential Buildings, Other Than Industrial Buildings and Warehouses, with a corresponding $17 million average annual receipts size standard. The CO limited competition to participant firms in the Small Business Administration's (SBA) 8(a) program. Initial offers were due on April 21, 1997. On April 10, 1997, the CO issued Amendment 1, which made technical changes to the solicitation. On July 24, 1997, the CO issued Amendment 2, incorporating new wage rates into the solicitation. On July 30, 1997, offerors submitted Best and Final Offers (BAFOs) to the Air Force. On September 8, 1997, the CO awarded the contract to Sonag Company, Inc. (Appellant), and notified the unsuccessful offerors. Rayco Venture (Rayco), an unsuccessful offeror, timely protested this award to the General Accounting Office (GAO). On October 6, 1997, the Air Force suspended work on the contract pending the outcome of the GAO case. As a result of the protest, the Air Force re-evaluated the award. GAO then dismissed the protest. Rayco Venture, B-278109, B-278109.2 (October 21, 1997) (unpublished). On December 29, 1997, the Air Force determined once again Appellant was the successful offeror and, on January 24, 1998, lifted the work suspension. In January 1998, Rayco again protested the award to GAO, amending its protest after receiving the CO's Report. In March 1998, Rayco also filed in the United States District Court for the District of Columbia a lawsuit challenging the award to Appellant. On March 31, 1998, GAO dismissed the protest because the matter was pending before a court of competent jurisdiction. Rayco Venture, B- 278109.3, B-278109.4 (March 31, 1998) (unpublished). On May 29, 1998, the District Judge solicited an advisory opinion from GAO. On June 15, 1998, GAO held a conference with the parties. After the conference, the Air Force requested a size determination from the SBA Area IV Office of Government Contracting (Area Office) in Chicago, Illinois. On July 20, 1998, GAO informed the District Judge it would not render an opinion because the request for a size determination made its opinion moot. Rayco Venture, B- 278109.5 (July 20, 1998) (unpublished). The Area Office denied the Air Force's request for a size determination, because the size regulation applicable to 8(a) procurements does not authorize the procuring agency to request a size determination. 13 C.F.R. Section 121.1001(b)(2)(ii). On July 17, 1998, as authorized by the regulation, the Milwaukee District Director requested a size determination. 13 C.F.R. Section 121.1001(b)(2)(ii)(C). On August 24, 1998, the District Court Judge held a hearing on Rayco's motion for a preliminary injunction, at which he stated he was "anxiously awaiting" the size determination; and continued the hearing to September 24th. On September 1, 1998, the Area Office issued a size determination finding Appellant unduly reliant upon, and thus affiliated with, its ostensible subcontractor on this procurement, R&R International, Inc. (R&R), an other than small business. The Area Office then concluded Appellant was other than small for of this procurement. On September 3, 1998, Appellant received the size determination. On September 18, 1998, Appellant filed the instant appeal with this Office, asserting the Area Office had misread and misinterpreted its teaming agreement with R&R. On September 24, 1998, the District Judge held a hearing on Rayco's motion for a preliminary injunction, which he continued to January, pending this Office's decision on the instant appeal. The District Judge neither stated he was awaiting an advisory opinion from this Office, nor that he was formally remanding the case to this Office. On October 9, 1998, the day the record closed in this case, Rayco filed a Response to the appeal. Rayco asserts the contract award to Appellant is void ab initio, because Appellant was not eligible to receive it. On October 16, 1998, Appellant filed a Motion for Leave to Reply to Rayco's Response. On October 19, 1998, the Administrative Judge granted this Motion. On October 20, 1998, Rayco filed a Motion to Intervene in which it asserts, inter alia, that proceedings in the District Court are stayed pending this Office's decision. On October 21, 1998, the Air Force filed a Reply to Rayco's Response. Also on October 21st, Appellant filed its Reply, in which it asserts, inter alia, that the District Court Judge has declined to rule on Rayco's request for a preliminary injunction pending this Office's decision. Appellant also filed a Motion to Strike Rayco's exhibits. On October 22, 1998, Appellant filed a Response to Rayco's Motion to Intervene. Appellant does not oppose the motion, but disputes some of the assertions in it. On October 23, 1998, the Administrative Judge issued an Order to Show Cause why he should not dismiss the instant appeal as moot. On November 9, 1998, Appellant responded to the Order agreeing that, under this Office's precedent, the Administrative Judge should dismiss this appeal as moot, because the issue here is contract-specific and the Air Force has awarded the contract. Conversely, Appellant asserts that, because Rayco's pending action in the District Court might disturb the award, this Office might not find this appeal moot. However, Appellant asserts this Office does not have the authority to declare the contract void ab initio. Also on November 9th, Rayco responded to the Order, asserting the Administrative Judge should dismiss this appeal as moot, for the same reasons stated above. Rayco further asserts dismissal is appropriate because there are no pending GAO proceedings; the District Court is not awaiting this Office's decision on the merits; and that the District Court properly should decide the question of the contract's nullity. II. DISCUSSION Appellant filed the instant appeal within 15 days of receiving the size determination, and the appeal thus is timely for this procurement. 13 C.F.R. Section 134.304(a)(1). The parties agree, and the Administrative Judge concludes, he must dismiss this appeal as moot, because the issue is contract-specific: whether on the subject procurement, Appellant is affiliated with R&R, its ostensible subcontractor. This Office's precedent supports this conclusion. Specifically, this Office has held that, once a contract is awarded, it must dismiss as moot an appeal that raises contract-specific issues. Size Appeal of Resource Applications, Inc., No. 4252 (1997). The Air Force already awarded the contract, on September 8, 1997, and it never has canceled or withdrawn the award. While the CO or the District Court may terminate or cancel the contract in the future, this Office previously has determined this possibility is too speculative a basis on which to avoid a finding of mootness. Size Appeal of Merdan Group, Inc., No. 4287 (1998). Further, the fact that options remain to be exercised does not preclude a finding of mootness. Resource Applications, supra. Moreover, none of the factors that might constitute an exception to the precedent exists here. Specifically, under Merdan, supra at fn. 1 (pending proceedings in another forum, which might disturb a contract award, could prevent this Office from holding a case moot). Thus, the Administrative Judge finds Merdan inapposite under these facts. First, unlike Size Appeal of Griffin Services, Inc., No. 4311 (1998), the District Court Judge has not directed this Office to issue a decision on Appellant's eligibility as a small business for this procurement. He also has not stated he is awaiting an SBA final decision on the merits. Nor has he remanded the complaint to this Office. Hence, the District Court here merely awaits the exhaustion of Appellant's administrative remedies before SBA prior to proceeding with the case before it. Accordingly, a pending District Court lawsuit seeking to overturn the award, by itself, does not save the instant appeal from mootness. The Administrative Judge notes the parties have presented no authority supporting the proposition the mere fact of a pending lawsuit can save an otherwise moot case. Second, the parties' filings establish there are no pending proceedings at GAO, which might affect the contract award and, thus, obviate the mootness here. Third, the Administrative Judge rejects Rayco's assertion that the contract should be cancelled because the award to Appellant under the 8(a) program is void ab initio in light of Appellant's other than small status. The Administrative Judge concludes the mere possibility the District Court may void the instant contract in the future is too speculative to prevent this Office from concluding the instant Appeal is moot. This is consistent with this Office's prior holding that the mere possibility of contract termination is too speculative to prevent its concluding an appeal is moot. Merdan, supra. Further, it is well settled that no decision by this Office can affect the instant procurement. Size Appeal of Spectrum Landscape Services, Inc., No. 4313 at 6 (1998), citing 48 C.F.R. Section 19.302(i). Similarly, federal court precedent has upheld contract awards even though this Office subsequently determined the awardees were other than small. See, e.g. Marwais Steel Co. v. Department of the Air Force, 871 F. Supp. 1448, 1455-57 (D.D.C. 1994). Because this Office's decision cannot affect the instant procurement, neither Appellant nor Rayco is prejudiced before the District Court as to their claims concerning the nullity of the contract. In addition, since the issues here clearly are contract-specific, this Office's decision cannot affect any future procurements. Finally, the argument that the contract is void ab initio does not preclude a conclusion that the appeal is moot. First, this Office has no jurisdiction to rule on the validity of the contract. 13 C.F.R. Section 134.102. Instead, Rayco must make that argument before the District Court. Second, Rayco's chance of prevailing before the District Court on that issue is too speculative for this Office to rely upon in determining whether the instant appeal is moot. Because the contract has been awarded, this Office's decision cannot apply to the instant procurement. Moreover, because it involves a contract-specific issue, this Office's decision can have no future effect. Accordingly, the Administrative Judge concludes the instant appeal is moot. III. CONCLUSION For the above reasons, the Administrative Judge DISMISSES the instant appeal as MOOT. [2] This is the final decision of the Small Business Administration. See 13 C.F.R. Section 134.316(b). _________________________________ CHRISTOPHER HOLLEMAN Administrative Judge _________________________ [1] The Small Business Administration has amended certain of its size regulations. 63 Fed. Reg. 35726, 35738- 39 (June 30, 1998) (to be codified at 13 C.F.R. Sections 121.103, 121.1001, 121.1103). Nonetheless, because the Contracting Officer issued the instant solicitation before the June 30, 1998 effective date, the prior regulations apply here. [2] The Administrative Judge thus need not address Appellant's Motion to Strike. Posted: January, 1999