Technology Applications and Service Co., No. 3877 (January 11, 1994) Docket No. SIZ-93-11-9-125 UNITED STATES OF AMERICA SMALL BUSINESS ADMINISTRATION OFFICE OF HEARINGS AND APPEALS WASHINGTON, D.C. SIZE APPEAL OF: ) ) Technology Applications and ) Service Co. ) ) Appellant ) ) Docket No. SIZ-93-11-9-125 Solicitation No. ) N00189-91-D-0497 ) Department of the Navy ) Naval Supply Center ) Norfolk, Virginia ) DIGEST A Regional Office does not err when it relies on an adverse inference, pursuant to 13 CFR 121.1606(e), when a protested concern fails or refuses to provide requested information necessary for a proper size determination in a timely manner. When a concern fails to provide information necessary for a proper size determination when requested by a Regional Officef that failure cannot be remedied by information supplied on appeal. DECISION January 11, 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 Part 121. Issues Whether the Appellant carried its burden of persuasion regarding the Regional Office's lack of clarity in requesting information and whether such information can be submitted on appeal. Facts On August 23, 1991, the Department of the Navy, Regional Contracting Department, Naval Supply Center, Norfolk, Virginia, issued the captioned unrestricted procurement for engineering, analytical and technical support and classified it under Standard Industrial Classification (SIC) code 8711, which bears a size standard not to exceed $13.5 million in average annual receipts. On August 30, 1991, Technology Applications and Service Co. (TAS or Appellant) was awarded the contract. On August 13, 1993, TAS notified the Contracting Officer that it had reviewed its contract and noticed that the section including the Small Business Concern Representations, pursuant to FAR 52.219, incorrectly indicated its status to be other than a small business concern. Consequently, TAS requested that the "contract be modified to reflect our appropriate status," in order to not be burdened with certain requirements imposed upon concerns that are not small businesses." Pursuant to this request, the Contracting Officer requested the Small Business Administration (SBA) Philadelphia Regional Office to render a size determina tion, in accordance with 13 CFR 121.1601(a)(5)(ii). An adverse determination that Appellant was other than small was received by TAS on October 28, 1993. This conclusion made by the Regional Office derived from Appellant's failure, despite various requests, to provide information necessary to determine Appellant's size at the time of self-certification. Among other matters, the Regional Office size determination indicates that the burden of proof was upon TAS to show that it and its predecessor [at the time of self-certification], LDR [Logistics Data Research Corporation or LDR], qualify as a [sic] small business concern. TAS acknowledged in a phone conversation of October 12, 1993 that it originally had an affiliation with Norden [1] and that LDR was established as a transition company. TAS' current Financial Statements show that TAS was established to acquire the assets of NCS. No. information was received on this company and this office can only assume that it was an affiliate of Norden. Diagnostic's agreement also implied an affiliation with Norden as it put restriction on TAS' shareholders, but exempted Norden shareholders. LDR's tax returns show that it was established in March 1984 and TAS' Financial Reports show that LDR merged with TAS in May 1991. This office considers a company that exists for seven years to be more than a transition company. In a phone conversation with this office on October 12, 1993, TAS claimed that it is no longer affiliated with Norden; however, it never provided information as to when the affiliation ceased, nor has it provided any explanation, written or verbal, as to what its relationship was with Norden. Despite the multiple requests for the correct information, the most this office received were two years of usable evidence, i.e., LDR's first page of its Federal Income Tax Returns for its Fiscal Year 1988 and 1989. Even the information on LDR's SBA Form 355 was not correct. It showed the combined annual receipts as of its Fiscal Year 1991, and the owners as of May 9,1991. This information is not considered relevant as it pertains to LDR Fiscal Years ending in 1991, not 1989. Considering that LDR was an acknowledged affiliate of Norden, and that there still exists information showing that the affiliation may have existed at that time [presumably, at self-certification] and continued to exist with TAS, i.e. financial statements and the Diagnostic agreement, and that it self-certified on the subject solicitation as other than small; this office is compelled to find TAS other than a small business. In the timely appeal of the present adverse size determination 2/ filed by Appellant with this Office on November 4, 1993, TAS urges us to overturn the Regional Office's determination both because its request for information was unclear and confusing and misconstrued by TAS and because certain information, now submitted on appeal, demonstrates that LDR was a small business concern at the time of self-certification for the captioned contract. The record indicates that the Regional Office requested TAS in writing to submit financial data as of the date of self certification of the solicitation. Reviewing the information initially submitted, the Regional Office realized that the initial bidder was LDR, not TAS, and that the financial data submitted did not cover the correct fiscal years. The Regional Office then requested, twice by telephone, financial information on LDR for fiscal years 1989, 1988, and 1987. A representative of TAS called the Regional Office on October 20, 1993 to discuss the requirements and request blank SBA Forms 355 and 1340 and was reminded that the requested information was due on October 22, 1993. A letter, dated October 20, 1993, detailing the require ments and the SBA forms were faxed to TAS on October 21, 1993. The SBA Form 355 sent to TAS was received by the Regional Office on October 27, 1993 and the financial data submitted were for incorrect fiscal years. Discussion The regulations found at 13 CFR 121.1606(c), (d), and (e) provide as follows: (c) Basis for determination. Once the protest or request for a formal size determination is found to be sufficiently specific, such size determination may be based on other grounds not raised in the protest/request. The size determination shall be based primarily on facts and allegations supplied by the protestor and protested concern (or by the entity requesting the size determination). If deemed necessary or appropriate, SBA may utilize other information in its files and may make inquiries including request to the protestor, the protested concern and any alleged affiliates, or other persons for additional specific information. (d) Burden of persuasion. The burden of establishing its small business size by submitting full information to SBA shall be upon the concern whose size is under consideration. (e) Weight of evidence. Specific signed factual evidence will be weighed more heavily by SBA than general unsupported allegations or opinions. In the case of refusal or failure to furnish requested information within a required time period, SBA may assume that disclosure would be contrary to the interests of the party failing to make disclosure. We conclude that the information requested by the SBA Philadelphia Regional Office, but not provided by the Appellant, was necessary as a basis for the present size determination. See Size Appeal of TVT Associates, Inc., No. 3814 (1993). Moreover, we are not persuaded that TAS was in any significant way misled by the Regional Office regarding information sought from Appellant in order to complete the size determination requested by the Contracting Officer. Accordingly, we conclude that, with respect to its errors in the requested SBA Form 355, incomplete tax return submissions, and lack of information regarding an acknowledged affiliate, the Appellant failed to carry its burden of persuasion under the foregoing regulation. Failure to furnish requested material may not be remedied on appeal. See Size Appeal of Dillon SupPly Company, No. 3691 (1992). Furthermore, we are unable to conclude that the Regional Office erred in assuming that disclosure of the requested information would be contrary to the Appellant's interests and weighing the evidence available against the Appellant. We have consistently upheld reliance by the Regional Office upon an adverse inference which results from a concern's failure or refusal to timely provide requested information necessary for a proper size determination. See Size Appeal of Contracting Service & Supplies. Inc., No. 3765 (1993). Accordingly, we conclude that the Regional Office was correct in determining that Appellant is not small under the pertinent size standard. Conclusion The decision of the Philadelphia Regional Office is AFFIRMED; the relief sought in the present appeal is DENIED. This constitutes the final decision of the Small Business Administration. See 13 CFR 121.1720(b). _________________________________ G. Stephen Wright (Presiding) Administrative Judge __________________________________ Gloria E. Blazsik (Concurring) Administrative Judge ____________________________________ Jane E. Phillips (Concurring) Administrative Judge ________________ 1 The record indicates Norden to be a well known large business, Norden Systems of United Technology. The record indicates that the Regional Office requested written information on LDR's and TAS' relationship with Norden, which was not received. Although the issue of possible affiliation with Norden is clearly indicated in the Regional Office size determination, no reference to it is made by TAS in its pleading in the present appeal. 2 The appeal was timely within the meaning of 13 CFR 121.1705(a)(2) and applies to Appellant's size regarding the present procurement and all future procurements which bear the same size standard.