Colsa, Inc., No. 3425 (February 22, 1991) Docket Nos. SIC-90-12-12-154, SIC-90-12-12-155, SIC-90-12-12-156, SIC-90-12-12-157, SIC-90-12-14-158 UNITED STATES OF AMERICA SMALL BUSINESS ADMINISTRATION OFFICE OF HEARINGS AND APPEALS WASHINGTON, D.C. 20416 SIC APPEALS OF: ) ) Colsa, Inc. ) Nichols Research Corporation ) CAS, Inc. ) Hilton Systems, Inc. ) Docket Nos. SIC-90-12-12-154 SRS Technologies, Inc. ) SIC-90-12-12-155 ) SIC-90-12-12-156 Appellants ) SIC-90-12-12-157 ) SIC-90-12-14-158 Solicitation No. ) DAAH01-91-R-0004 ) Department of the Army ) Army Missile Command ) Redstone Arsenal, Alabama ) DIGEST Upon reconsideration, we reaffirm that a solicitation for systems engineering support and technical services for the development of an Army air defense system is most appropriately classified under Standard Industrial Classification (SIC) code 8711 rather than SIC code 8731. ORDER GRANTING PETITIONS FOR RECONSIDERATION AND DECISION February 22, 1991 BLAZSIK, Administrative Judge, Presiding: Jurisdiction These Petitions for Reconsideration are decided pursuant to the Small Business Act of 1958, 15 U.S.C. 631 et seq., and the regulations codified at 13 CFR Part 121. Issue Whether the correct classification to be assigned to the instant solicitation is SIC code 8711 or SIC code 8731. Backqround In SIC Appeal of Ouantum Research Inc., No. 3381 (1990), we found that a solicitation calling for systems engineering support and technical services for the development of an Army air defense system is appropriately classified under Standard Industrial Classification (SIC) code 8711 (Engineering Services: Military and Aerospace Equipment and Military Weapons), with a $13.5 million average annual receipts size standard. In so holding, we considered whether other SIC codes were appropriate to the solicitation, including SIC code 3761 (Guided Missiles and Space Vehicles), having a 1,000-employee size standard. SIC code 3761 had been designated by the Contracting Officer for the solicita tion at issue. Thereafter, five companies, who had not been parties in SIC Appeal of Ouantum Research. Inc., filed SIC appeals arguing that we erroneously applied SIC code 8711 to the solicitation. After consideration of the arguments raised by the five companies, we issued SIC ApPeals of Colsa. Inc.. et al., No. 3402 (decided January 15, 1991), where we noted that in our prior decision in SIC Appeal of Ouantum Research. Inc., we considered the arguments set forth by the Contracting Officer in support of SIC code 3761 and, upon a complete examination of the different SIC code classifications available, concluded that SIC code 8711 best describes the services sought in the solicitation. Thus, since our decision in SIC Appeal of Ouantum Research. Inc. had resolved the correct SIC code for this solicitation, we concluded in SIC Appeals of Colsa. Inc., et al., that the precedent of the prior case controls in later-filed appeals by other appellants, not parties in the previous proceeding, regarding the same solicitation. On February 1, 1991, Hilton Systems, Inc. (Hilton) and SRS Technologies (SRS)(collectively called Petitioners), who had been two of the five companies filing appeals in SIC Appeals of Colsa. Inc.~ et al., here filed separate Petitions for Reconsideration, each arguing that they had specifically requested the assignment of SIC code 8731 (Commercial Physical and Biological Research Space Vehicles and Guided Missiles, their Propulsion Units, their Propulsion Units Parts, and their Auxiliary Equipment and Parts), which also has a l,000-employee size standard, but that SIC code 8731 is nowhere mentioned in our decision. Accordingly, Petitioners request that we reopen our prior decision and, as Hilton asserts, "meaningfully consider the applicability of SIC code 8731 to this solicitation." On February 13, 1991, Quantum Research, Inc. (Quantum) filed a reply, asserting that even a cursory reading of our decision in SIC Appeals of Colsa. Inc.. et al.. indicates that, " as set forth in the last paragraph of page three of the decision, this Office conducted a complete examination of the different SIC code classifications available," and concluded that SIC code 8711 best describes the services sought in the solicitation. In conse quence, Quantum argues that the petitions for reconsideration have no merit and should be denied. Although it appears that specific reference as to the applica bility of SIC code 8731, indeed, was not set forth in our prior decision, we did, as the above quoted paragraph points out, consider all other applicable SIC code designations, including SIC code 8731. Nonetheless, since we did not specifically reference SIC code 8731 requested by Petitioners, we are granting reconsideration and reviewing our previous decision specifically to reassess whether SIC code 8731 is more appropriate to this solicitation than any other classification. Facts In our decision in SIC Appeal of Ouantum Research. Inc., supra, we provided an extensive synopsis of the solicitation and stated that the purpose of the solicitation is to acquire specialized services to implement a successful combination of the individual missile systems for the Air Defense System. The services to be supplied are described in the Statement of Work summary of the solicitation and required the contractor to provide services in the areas of program evaluation and program management analysis, integration and production support associated with the missile systems that comprise the Air Defense System. The contractor is required to perform evaluation analysis in the areas of program management, planning, programming, costing, and is required to maintain an overall air defense integration management plan. Additionally, the contractor is required to design and establish an automated data network system that must be compatible with the existing systems being developed. The contractor must provide all special communications hardware and software needed for the project. Further, the contractor is responsible for a monthly report summarizing executive level issues including program status, problem definition, solution recommendations, achievements, and future plans. Finally, the contractor must review and assess logistics plans, provide engineering support for coordination with other programs, and assist the government in assessing modifications to existing models and simulations. The executive summary for the solicitation describes the successful contractor's background and qualifications, thus: Air Defense Integration Support Services are required from a contractor experienced in acquisition management, system engineering, analysis and assessment, test, production, and sustainment of weapons to assist the Air Defense PEO in the integration, acquisition, and fielding of the overall and programmatic support.... The Air Defense integration contract will serve as a means to assist, monitor, assess, coordinate, and integrate the various groups which perform Air Defense activities. The integration contractor will coordinate and interface with the Project Management Offices and their prime contractors, as well as with the other functional offices and government agencies which support the Air Defense programs.... Discussion SIC code 8731 advocated by Petitioners as applicable to this solicitation is described, with examples, in the SIC Manual, as follows: */ Establishments primarily engaged in commercial physical and biological research and development on a contract or fee basis. Noncommercial research establishments funded by endowments, grants, or contributions are classified in Industry 8733. Separate establishments of aircraft, guided missile, or spacecraft manufacturers primarily engaged in research and development on these products are classified in Manufacturing, Major Group 37. Examples shown under SIC code 8731 include agricultural research, biological research, engineering laboratories, (commercial research: except testing), research and development, physical and biological. Hilton points out that footnote 18 to 13 CFR 121.601 further defines SIC code 8731 thus: Research and development for guided missiles and space vehicles includes evaluation and simulation, and other services requiring thorough knowledge of complete missiles and spacecraft. Hilton argues that an examination of the solicitation establishes that the purpose of the solicitation is to "obtain support services" and is much broader in scope than mere professional engineering services. Hilton selectively quotes from the solicitation to support its assertion that the scope of work requires that the contractor be thoroughly versed and have professional qualifications in missiles and spacecraft. According to this Petitioner, SIC code 8711 does not encompass the broader concept of "thorough knowledge of complete missiles and spacecraft." Upon consideration of both Hilton's and SRS's arguments and further reexamination of the available classifications, we see no reason to disturb our prior decision that SIC code 8711 is the correct SIC designation for this solicitation. We disagree with Hilton that the principal thrust of the solicitation calls for services requiring knowledge of complete missiles and spacecraft. On the contrary, the solicitation's work statement supports the conclusion that the principal nature of the work to be performed by the successful contractor will be primarily systems engineer ing services and services in support of highly complex engineer ing functions as they relate to the development of an integrated air defense system. As we noted in SIC Apseal of Ouantum Research Inc., supra, these functions are more appropriately, if not exactly, described under SIC code 8711. Moreover, all the specific tasks described in the statement of work are engineering- oriented, requiring both engineering and systems engineering expertise. See SIC Apseal of Dynamic Science Inc., No. 3187 (1989) and cases cited in SIC Appeal of Ouantum Researchg Inc., supra, at page 5. Thus, because the solicitation involves engineering services for a military air defense system, the appropriate SIC code is 8711, with a $13.5 million average annual receipts size standard. Conclusion The Petitions for Reconsideration are GRANTED. The decision issued on January 15, 1991, is AFFIRMED and it constitutes the final decision of the Small Business Administration. See 13 CFR 121.1720(a), (b), and (c). __________________________________ Gloria E. Blazsik (Presiding) Administrative Judge __________________________________ Elwin H. White (Concurring) Administrative Judge __________________________________ G. Stephen Wright (Concurring) Administrative Judge ______________ */ Standard Industrial Classification Manual, Executive Office of the President, Office of Management and Budget, 1987 Edition.