by including it. The initial number of proposals considered Although the procurement involved in this case occurred prior to the effective date of DPC #110, the Navy argues that our holding cannot be applied prospectively without coming into conflict with the revised ASPR 3-805.2(a), which does not explicitly require submission of a revised proposal as a condition precedent to eliminating an offeror from the competitive range. We understand that ASPR 3-805.2 (a) was promulgated partially in response to our decision reported at 52 Comp. Gen. 198 (1972), in which we held that a contracting agency should not be required to hold discussions with an offeror once it is determined that the offeror's proposal, initially within the competitive range, is no longer within the acceptable range. However, as we pointed our in our prior decision in this case, it was the examination of the protester's revised proposal which revealed serious deficiencies and which led the contracting agency to view the proposal as no longer in the competitive range. We did not hold then, nor do we now believe, that contracting officials in general should be free to reject proposals once considered acceptable without providing the offeror an opportunity to submit revised proposals. However, in view of DPC #110, we agree with the Navy that under certain circumstances it would not be inappropriate for contracting officers to eliminate proposals from the competitive range without the benefit of submission of revised proposals. We are in favor of the broad approach expressed in DPC #110, which calls for the resolution of doubts in favor of allowing proposals into the competitive range, because it tends to maximize competition. Under this approach, we understand that proposals may be considered to be in the compettitive range because they may be susceptible to being made acceptable or because doubts as to whether the proposals should be in the competitive range are to be resolved in favor of the proposals. However, in the course of written or oral discussions, it may well become clear that the proposals do not belong in the competitive range. As the Navy points out, "the discussion process itself is frequently far more revealing than a bare reading of technical proposals, and can demonstrate that a determination to include a given proposal within the competitive range was erroneous * * *." Accordingly, in those situations where discussions relating to an ambiguity or omission make clear that a proposal should not have been in the competitive range initially, we believe it would be proper to drop the proposal from the competitive range without allowing the submission of a revised proposal. In all such cases, the reasons for the revised determination should be made clear to the offerors whose proposals are eliminated. To the extent of the foregoing, our decision at 53 Comp. Gen. 14, 1974) is modified. (B-178001, February However, we remain of the view that in general a proposal initially included in the competitive range should not be rejected without giving the offeror an opportunity to submit a revised or best and final proposal to serve as the basis for award or establishing a new competitive range. Section 4. Small Business 8(a) Set-Aside. RAY BAILLIE TRASH HAULING, INC. V. Thomas S. Kleppe, Admr, S.B.A. C.A. (5th Circuit) Case No. 72-1163 (1973) WISDOM, Circuit Judge: On reconsideration sua sponte, we withdraw our opinion dated January 5, 1973 and issue the following opinion. In this case the plaintiffs attack the Small Business Administration's program for awarding government procurement contracts to small business concerns owned by "socially or economically disadvantaged persons". 13 C. F. R. § 124.8-1(c). The district court held that the section 8(a) program is not authorized by statute and denies due process and equal protection in violation of the Fifth and Fourteenth Amendments. We reverse. I. The plaintiffs-appellees, Ray Baillie Trash Hauling, Inc., Leonard Santo, d/b/a/ L & J Waste Service, and C. Lewis Jones, d/b/a Southern Florida Sanitation Company of Dade County, Inc., are engaged in the business of collecting and hauling refuse to disposal sites. They qualify as small business concerns under both the Small Business Act, 15, U. S. C. § 631 et. seq., and the applicable regulations of the Small Business Administration. All American Waste, Inc., named as a defendant, is a black-owned firm that competes with the plaintiffs in the business of collecting and hauling refuse and also qualifies as a small business concern. The dispute in the present case relates to a contract for the collection and removal of refuse from Homestead Air Force Base in Homestead, Florida. In 1968 and 1969, the Small Business Administration and the Department of the Air Force, pursuant to a joint program, set aside the contracts for placement with small business concerns The Air Force awarded the contracts after formal advertising and competitive bidding restricted to small business concerns. Jones and Santo successfully bid for the contract in 1968 and 1969 respectively. In 1970, the Small Business Administration promulgated new regulations establishing a "section 8(a) program" providing for assistance to small business concerns owned by disadvantaged persons. 13 C. F. R. § 124.8-1. As part of the program, the SBA secured a prime contract from the Air Force for the collection and removal of refuse from the Homestead base for a two-year period commencing July 1, 1970. The SBA then negotiated a similar subcontract with All American for the performance of the services in the prime contract between the SBA and the Air Force for a one-year period commencing July 1, 1970 at $65,000. Upon being advised that the SBA intended to enter into a second subcontract with All American for the performance of the prime contract services at Homestead for the fiscal year 1971, the plaintiffs demanded an opportunity to compete for the contract. They did not apply for participation in the program and they did not contend that they were eligible. The SBA rejected the demand and later executed the second subcontract with A11 American. On June 29, 1971, the plaintiffs commenced the present action for injunctive and declaratory relief in the District Court for the Southern District of Florida. The defendants were the Administrator of the Small Business Administration, the Secretary of the Department of the Air Force, the Contracting Officer assigned to Homestead Air Force Base, and All American Waste, Inc. In the complaint, the plaintiffs sought a permanent injunction enjoining the SBA from letting the Homestead contract under the section 8(a) program without competitive bidding. At the same time, they filed a motion for a temporary restraining order and a preliminary injunction. With the consent of the parties, the district court issued an order directing that the second subcontract be held in abeyance for thirty days and that the prior contract with All American be extended until further order. Later orders of the court extended this period until judgment on the merits. On October 29, 1971, the district court entered its judgment 334 F. Supp. 194. The court found that the SBA's section 8(a) program, providing for assistance to small business concerns owned by disadvantaged persons, was not authorized by the Small Business Act and violated the federal statutes requiring competitive bidding in government procurement. The court also found that the primary criterion for the program was race, color, and ethnic origin, that whites were ineligible for program benefits except on a token basis, and that the plaintiffs, as "nonminority" owned firms, were denied due process and equal protection of the laws. The court concluded that the subcontract awarded to All American was illegal and ordered that the Homestead contract be awarded as soon as possible on the basis of the maximim competitive bidding practicable among the plaintiffs and other similarly situated small business concerns. The defendants appealed. III. As stated in the regulations promulgated by the SBA, the purpose of the section 8(a) program is "to assist small business concerns owned by disadvantaged persons to become self-sufficient, viable businesses capable of competing effectively in the market place." 13 C. F. R. § 124.8-1(b). Authority for the program is derived from section 8(a) of the Small Business Act, 15 U. S. C. 637(a) empowering the SBA to enter into all types of contracts (including contracts for supplies, services, construction, research, and development) with other departments and agencies of the federal government and to arrange for the performance of such contracts by negotiating or otherwise letting subcontracts to small business concerns. In awarding subcontracts under the section 8(a) program, the SBA limits eligibility to small businesses "owned or destined to be owned by socially or economically disadvantaged persons." 13 C. F. R. § 124.8-1 (c). As the regulations recognize, this "often includes, but is not restricted to, Black Americans Indians, Spanish Americans, Oriental Americans, Eskimos and Aleuts." Id. American The district court held that the SBA's section 8(a) program was statutorily unauthorized, that the SBA's powers under section 8(a) of the Small Business Act are limited to periods of emergency, and that the SBA was bound by other statutes requiring government procurement contracts to be awarded competitively. We disagree. A. The declared policy of the Small Business Act is to "aid, counsel, assist, and protect. the interest of small business concerns in order to preserve free competitive enterprise [and] to insure that a fair proportion of the total purchases and contracts or subcontracts for the property and services of the Government . be placed with small businesses enterprises." The Act is premised on the idea that "the essence of the American economic system is free competition," "that the preservation and expansion of such competition is basic not only to the economic well-being cannot be realized unless the actual and potential capacity of small business is encouraged and developed." 15 U. S. C. § 631. To accomplish this goal, Congress vested the Small Business Administration with broad powers and responsibility over the economic life of small business concerns. The SBA is authorized to make loans to small business concerns, to provide technical and managerial aids, and to assist small business concerns in obtaining government contracts. 15 U. S. C. §§ 636, 638,644. Most importantly in section 8(a) of the Act the SBA is authorized to enter into procurement contracts with other federal agencies and to arrange for the performance of those contracts by subcontracting with small business concerns, 15 U. S. C. §§ 637(a). This section unequivocally states that the SBA is empowered to let subcontracts to "small business concerns or other. 15 U. S. C. § 637 (a) (2). In accordance with this statutory mandate, the SBA adopted its section 8(a) program through which government procurement contracts are awarded to small business concerns owned by disadvantaged persons. |