Dun-Well Services, Inc., No. 3941 (July 12, 1994) Docket No. SIZ-94-4-21-55 UNITED STATES OF AMERICA SMALL BUSINESS ADMINISTRATION OFFICE OF HEARINGS AND APPEALS WASHINGTON, D.C. SIZE APPEAL OF: ) ) Dun-Well Services, Inc. ) ) Appellant ) Docket No. SIZ-94-4-21-55 ) Solicitation No. ) DECA01-93-R-0055 ) Defense Commissary Agency ) Ft. Lee, Virginia ) DIGEST In calculating whether a challenged firm meets the applicable size standard for size determination purposes, the challenged firm's average annual receipts for its last three completed fiscal years prior to its self certification must be utilized. A size determination will be remanded to a Regional Office where incorrect fiscal years were used by that office to calculate the challenged firm's average annual receipts. DECISION July 12, 1994 BLAZSIK, Administrative Judge, Presiding: Jurisdiction This appeal is decided under the Small Business Act of 1958, 15 U.S.C. 632 et seq., and the regulations codified at 13 CFR Part 121. Issue Whether the Regional Office utilized the proper fiscal years of a challenged firm to calculate that firm's average annual receipts for size determination purposes. Facts On June 25, 1993, the Defense Commissary Agency, Ft. Lee, Virginia, issued this negotiated solicitation for "Shelf Stocking and Custodial Services" and classified it under Standard Industrial Classification code 7389 (Business Services, Not Elsewhere Classified), having a $3.5 average annual receipts size standard. The solicitation was totally set aside for small businesses, and initial offers were due on August 9, 1993. Best and final offers were due on February 2, 1994. On February 16, 1994, all unsuccessful offerors were notified that the successful offeror was Dun-Well Services, Inc. (Dun-Well or Appellant). Subsequently, on February 23, 1994, Sylvan Service Corp. (Sylvan), one of the unsuccessful offerors, filed a timely oral protest with the Contracting Officer within five business days of the notification, challenging the small business size status of Dun-Well. Sylvan alleged that, based upon a Dun and Bradstreet report, Dun-Well's average annual receipts exceed the applicable size standard. The oral protest was confirmed in writing by a letter dated and postmarked February 23, 1994, and received by the Contracting Officer on February 24, 1994. 1/ On February 25, 1994, the Contracting Officer forwarded the protest to the Chicago Regional Office of the Small Business Administration (SBA) for a size determination. On April 13, 1994, the Regional Office issued its determination. The Regional Office noted that, based upon a review of Dun-Well's SBA Form 355 and an attachment thereto, the firm's average annual receipts for the applicable period on an unadjusted basis, exceeded the $3.5 million size standard and concluded, therefore, that Dun-Well is an other-than-small business for the instant solicitation. 2/ The Regional Office noted that it did not include the revenues of Dun-Well's affiliate, Dun-Well Security, in its calculations. Dun-Well received the Regional Office's determination on April 19, 1994, and by letter postmarked April 23, 1994, timely filed an appeal from the determination. 3/ Dun-Well acknowledges that its average annual receipts exceed the $3.5 million size standard at issue, but asserts that the increase in its revenues was the result of the Desert Shield/Desert Storm troop build-up in 1991. At that time, Dun-Well had a food service contract at Fort McCoy, Wisconsin. That location was a transfer base for troops mobilized for service. As a result, Dun-Well's workload increased and Dun- Well's receipts for that year also increased. Dun-Well argues that this increase in revenues was a one-time, unique, and unplanned event and that Dun-Well should not be penalized for doing its patriotic duty. Finally, Dun-Well requests an oral hearing. 4/ Discussion The SBA regulation codified at 13 CFR 121.904(a) provides that: ...the size status of a concern (including its affiliates) is determined as of the date of its written self- certification as a small business. The concern shall certify that it is a small business for the purpose of performing a particular contract at the time it submits its initial offer which includes price to the procuring agency for that contract.... * * * * * * (d) For purposes of determining compliance with the prime contractor performance of work requirements set forth in 15 U.S.C. 644(o)(1), the size of a concern shall be determined as of the following date-- (2) In a negotiated procurement, compliance shall be determined as of the date the concern submits its best and final offer. If a concern is determined not to be in compliance at the time it submits its best and final offer, it may not thereafter come into compliance for that procurement by revising its subcontracting plant. The definition of annual receipts, promulgated at 13 CFR 121.402 states: (a) In size determinations where the standard is annual receipts, size eligibility requires that the concern may not exceed the annual receipts in that standard. * * * * * * (b)(2) Receipts is defined to include all revenue in whatever form received or accrued from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees, or commissions.... * * * * * * (c) Period of measurement. Annual Receipts of a concern which has been in business for 3 or more completed fiscal years means the arithmetic annual average revenue of the concern over its last 3 completed fiscal years..... Pursuant to these regulations, Appellant's size status must be determined as of August 9, 1993, the date Appellant self certified as a small business and submitted its initial offer. Since this proceeding does not involve compliance with 15 U.S.C. 644(o)(1), the date of measurement is not calculated from the receipt of best and final offers. See Size Appeals of Research Analysis and Maintenance. Inc. and Advanced Systems Technology. Inc., No. 3372 (1990) and 13 CFR 121.904(d)(2), supra. Under the clear terms of the regulation, Appellant's last complete fiscal year ended on December 31, 1992. The record shows that the Regional Office incorrectly accepted and calculated Appellant's annual receipts for fiscal years 1991, 1992, and 1993, rather than Appellant's annual receipts for fiscal years 1990, 1991, and 1992. In other words, Appellant should have shown its revenues for fiscal years 1990, 1991, 1992, and not included revenues for 1993. There is no indication on this record that the Regional Office used the calculation for a short period set forth at 13 CFR 121.402(d)(3). 5/ Finally, the Regional Office did not as it was required to do, include the earnings of Appellant's acknowledged affiliate in its calculations of Appellant's average annual receipts. Conclusion Because Appellant's average annual receipts for the applicable period were not properly calculated, the proceeding is remanded to the Regional Office for a new size determination consistent with the discussion noted above. ________________________________ Gloria E. Blazsik (Presiding) Administrative Judge ________________________________ Elwin H. White (Concurring) Administrative Judge ________________________________ G. Stephen Wright (Concurring) Administrative Judge ________________ 1/ The protest is timely filed pursuant to 13 CFR 121.1603(a)(2) and (3) since February 21, 1994 was a Federal holiday. 2/ Dun-Well's SBA Form 355 showed that its fiscal year ends on December 3lst of each year. It also showed annual receipts for fiscal years 1991, 1992, and 1993, less certain adjustments for investment income. On this basis, DunWell's average annual receipts fell below the applicable size standard. However, in an attachment to its SBA Form 355, Dun- Well showed its unadjusted receipts, taking into consideration its investment income. On that basis, the firm's average annual receipts exceeded the $3.5 million size standard. 3/ See 13 CFR 121.1705(a)(2). 4/ Because there is no genuine dispute as to any material fact of decisional significance which cannot be resolved except by confrontation of witnesses, the request for an oral hearing is denied. See 13 CFR 121.1714(a). 5/ The record fails to show Appellant's revenues for fiscal year 1990.