Incobrasa Industries, Ltd., No. 4557 (May 7, 2003)
Docket No. SIZ-2003-03-18-19


                                
                    UNITED STATES OF AMERICA
                  SMALL BUSINESS ADMINISTRATION
                 OFFICE OF HEARINGS AND APPEALS
                        WASHINGTON, D.C.



                                )      
SIZE APPEAL OF:                 )      
                                )   Docket No. SIZ-2003-03-18-19   
Incobrasa Industries, Ltd.      )      
                                )   Decided:  May 7, 2003
     Appellant                  )
                                )
Announcement VP6                )
Invitation No. 13               )
U.S. Department of Agriculture  )
USDA/KCCO/DNDOD/GPB             )
Kansas City, Missouri           )
                                )


                           APPEARANCES
                                
                Renato Bastos Ribeiro, President
                          for Appellant

                                
                             DIGEST
                                
The  Area  Office  may  presume  family  members  have  identical
interests  and  treat  them  as one person  for  the  purpose  of
determining  size.  The presumption arises from the fact  of  the
family relationship itself.

Business  concerns  with a common owner are affiliated,  even  if
they are in different lines of business.

A  size  appeal  that attempts to challenge the underlying  NAICS
code  classification must be dismissed as an untimely NAICS  code
appeal.

                            DECISION
                                
HOLLEMAN, Administrative Judge:

                          Jurisdiction
                                
This  appeal is decided under the Small Business Act of 1958,  15
U.S.C.  Section  631 et seq., and 13 C.F.R.  Parts  121  and  134
(2003).

                             Issues
                                
     Whether  the  Area  Office may presume family  members  have
identical interests and treat them as one person for the  purpose
of determining size.

     Whether   business   concerns  with  a  common   owner   are
affiliated, when they are in different lines of business.

     Whether a size appeal may challenge the underlying NAICS
code classification.

                         I.  BACKGROUND
                                
                       A.  The Procurement
                                
     On May 7, 2002, the Farm Service Agency of the Department of
Agriculture  (USDA) issued Domestic Announcement VP6,  announcing
that  it would from time to time issue invitations for offers  to
purchase  vegetable oil products (packaged and/or bulk  vegetable
oil,  packaged vegetable oil shortening, liquid shortening, salad
dressing, and reduced calorie salad dressing) for use in domestic
programs.   The  announcement designated North American  Industry
Classification  System (NAICS) codes 311222, Soybean  Processing,
[1]  as  to  the first three commodities, and NAICS code  311941,
Mayonnaise,  Dressing and Other Prepared Sauce Manufacturing,  as
to the last two.

     On January 10, 2003, USDA issued Invitation No. 13 under the
announcement, seeking March or April delivery of 4,950,815 pounds
of  packaged  and/or bulk vegetable oil, packaged  vegetable  oil
shortening,  and liquid shortening, with 3,173,088 pounds  to  be
provided  by  small businesses.  Offers were due on  January  21,
2003.   On  January  22,  2003, USDA awarded  the  small-business
portion of the procurement to Columbus Foods Company (Columbus).

                         B.  The Protest
                                
     On January 29, 2003, the Contracting Officer (CO) received a
timely  size protest from Cal Western Packaging Corporation  (Cal
Western),  against  the award to Columbus.  Cal  Western  alleged
that  Columbus  would  be  supplying  refined  soybean  oil  from
Incobrasa  Industries, Ltd. (Appellant), and that  Appellant  was
other  than small due to its affiliation with other firms in  the
United States and Brazil.

     On  January  30,  2003, the CO referred the protest  to  the
Small  Business Administration (SBA) Area IV Office of Government
Contracting  in Chicago, Illinois (Area Office).   On  that  same
day,  the  Area  Office  informed Columbus  of  the  protest  and
requested that it and Appellant, the manufacturer of the  product
it  intended  to supply, each submit a completed  SBA  Form  355,
together  with certain other information.  On February 12,  2003,
Columbus submitted a package of information regarding itself  and
Appellant.    On   February  14th,  the  Area  Office   requested
additional   information  from  Appellant.   On  February   19th,
Appellant responded to the Area Office's request.

                   C.  The Size Determination
                                
     On   March  3,  2003,  the  Area  Office  issued  the   size
determination.  The Area Office determined that CFC, Inc.,  doing
business  as Columbus, was an eligible small business.  The  Area
Office further determined that Columbus was a nonmanufacturer who
intended   to  meet  the  procurement  by  supplying  Appellant's
product.   The Area Office, relying on 13 C.F.R. Section 121.406,
asserted  that,  to  be eligible for a small business  set  aside
procurement, a nonmanufacturer must supply the product of another
small business concern..  It then examined Appellant's size.

     The  Area  Office found Appellant is owned 100% by Incobrasa
North  American Ltd., which also owns 100% of three other  firms:
Augusta  Farms,  Ltd., Incobrasa Illinois,  Ltd.,  and  Incobrasa
Farms Ltd.  Incobrasa North America Ltd. is in turn owned 100% by
Incobrasa  Cayman  Ltd., which is in turn owned  by  a  Brazilian
firm,  Industrial  e Comercial Brasileira Ltda-Incobrasa,  itself
owned  by  Oleos Vegetais Tarquarusso Ltda (Oleos).   Oleos  also
owns  100%  of  Industrial e Comercial Brasileira Ltda-Incobrasa.
Oleos  also  owns 100% of Coronel Pedro Osorio SA  and  Incobrasa
Agricola  Ltda.  Oleos is in turn owned by Renato B. Ribeiro  and
his  four children, Aluizio M. Ribeiro, Carla M. Ribeiro,  Marcia
Ribeiro, and Rogrio Ribeiro.  Appellant failed to submit to  the
Area  Office information as to what portion of Oleos's stock each
member of the Ribeiro family owns.

     Renato  Ribeiro also owns, without the participation of  his
children, a newspaper, Empresa Jornalistica Caldas Junior  Ltda.;
a  radio station, Radio Guaiba S.A.; and a television station, TV
Guaiba  [hereinafter, the media enterprises].   Though  Appellant
failed  to provide a breakdown of all persons employed by all  of
Mr.  Ribeiro's  enterprises during each  pay  period  during  the
relevant  year, it did provide employment figures for  the  media
enterprises.

     The  Area  Office found that Mr. Ribeiro, together with  his
children,  owned and controlled the Incobrasa group of companies,
and  that  he  alone owned and controlled the media  enterprises.
Because a father and his children have a presumptive identity  of
interest,  the Area Office viewed them as a single party.   Thus,
Mr.  Ribeiro owns all the named businesses, including  Appellant;
they  thus  are affiliated with one another; and their employees,
taken    together,   exceed   the   applicable   size   standard.
Accordingly, the Area Office determined Appellant was other  than
small, and that Columbus thus did not qualify as small because it
would  not  be  providing the product of another  small  business
concern.    On  March  5,  2003,  Appellant  received  the   size
determination.

                         D.  The Appeal
                                
     On March 18, 2003, Appellant filed the instant appeal.
Appellant concedes that, in the size determination, "Every
statement of facts regarding the companies of the group is
correct."  Appellant asserts that Mr. Ribeiro owns about 80%, and
his children together the remaining 20%, of Appellant. [2]
Appellant further asserts he is sole owner of the media
enterprises.

     Appellant  asserts it does not have an identity of  interest
with  the  media enterprises, because the firms are in  different
lines  of  business:   Appellant is  in  the  soybean  processing
business,  and  the  media enterprises are in the  communications
field.   Appellant further asserts that it has only between  1.2%
and  1.5% of the United States soybean oil refining market, which
is  dominated  by  three major firms, Cargill,  ADM,  and  Bunge.
Appellant  argues that the radio and television  stations  should
not be considered, because they have so few employees.  Appellant
further  states that, although fewer than 200 employees  work  at
producing  its  newspaper, more than 1,000  help  distribute  it.
Appellant  argues  that, because almost all the  other  Brazilian
newspaper companies outsource their distribution, these employees
should  not  be  counted  against it.  Further,  the  newspaper's
profits  are  small.  Finally, Appellant argues that the  correct
NAICS  code for this procurement should be 311225, Fats and  Oils
Refining and Blending, with a 1,000-employee size standard.

                         II.  DISCUSSION
                                
     The  instant  appeal was filed within 15 days of Appellant's
receipt  of  the size determination and is thus timely.   See  13
C.F.R. Section 134.304(a)(1).

     To prevail on the merits in this size appeal, Appellant must
establish,  by  a preponderance of the evidence,  that  the  Area
Office   made  a  clear  error  of  fact  or  law  in  its   size
determination.   See Size Appeal of Rebmar, Inc.,  SBA  No.  SIZ-
4173,  at 4 (1996); 13 C.F.R. Sections 134.224, 134.314.  Because
Appellant  has conceded that the Area Office's size determination
is  factually  correct, the only remaining issue is  whether  the
Area Office made any clear error of law.

     Appellant's  contention  it does not  have  an  identity  of
interest  with  Mr.  Ribeiro's media  enterprises  is  meritless.
First, the Area Office found an identity of interest between  Mr.
Ribeiro  and his children, who also were shareholders  in  Oleos.
This is because, in determining affiliation, individuals, such as
family   members,  with  identical  or  substantially   identical
business  or economic interests may be treated as one party  with
interests aggregated.  See 13 C.F.R. Section 121.103(a)(3).   The
Area  Office may presume family members have identical  interests
and treat them as one person, unless other evidence indicates the
family members are estranged or are uninvolved with one another's
business  affairs.   See  Size Appeal  of  Gallagher  Transfer  &
Storage  Co.,  Inc.,  SBA  No.  SIZ-4295,  at  6  (1998).    This
presumption  arises  from  the fact of  the  family  relationship
itself,  not  from  the type of businesses in  which  the  family
members  are engaged.  See id.  Here, Mr. Ribeiro's children  are
shareholders  with him in Appellant's parent company;  thus,  the
Area  Office  was  clearly justified in finding  an  identity  of
interest  between Mr. Ribeiro and his children and treating  them
as one entity for the purpose of finding affiliation.

     In   examining  Appellant's  affiliation  with   the   other
businesses considered here, the regulation provides that business
concerns  are  affiliated when one concern controls  or  has  the
power to control the other, or a third party controls or has  the
power  to control them all.  See 13 C.F.R. Section 121.103(a)(1).
Here,  Appellant is part of a group of companies,  all  owned  by
Oleos,  which  is in turn owned by Mr. Ribeiro and his  children,
whose  interests are aggregated in determining affiliation.   Mr.
Ribeiro owns all of the media enterprises.  It is therefore clear
that  all  the  concerns Mr. Ribeiro and  his  children  own  and
control,  including Appellant, Oleos, and the media  enterprises,
are  affiliated, and they must be treated as one entity  for  the
purposes of determining Appellant's size.  That the concerns  are
in  different  lines of business is irrelevant to  this  finding;
they are affiliated because Mr. Ribeiro and his children own  and
control  all  of them.  See Size Appeal of Ridge Instrument  Co.,
Inc., SBA No. SIZ-4207, at 5-7 (1996).

     Because  all  these  concerns  are  affiliated,  all   their
employees must be aggregated to determine Appellant's size.   See
13  C.F.R.  Section 121.106(b).  That some of the affiliates  are
foreign,  some  of the employees are part-time, or  some  of  the
employees do work normally outsourced (but not in fact outsourced
in  this instance) does not affect the calculation; all employees
must  be  counted.  See id.  That some firms have a small  market
share  or  others  barely  make a profit  is  irrelevant  to  the
calculation  of whether Appellant, together with its  affiliates,
is small.  See Size Appeal of Mid-Columbia Engineering, Inc., SBA
No.  SIZ-4134,  at  5 (1996) (profits are irrelevant  to  a  size
determination).  Based on the information Appellant submitted and
cites  on  appeal,  the  aggregate number  of  employees  of  the
affiliated  concerns exceeds the applicable  size  standard,  and
Appellant is other than small. [3]

     Finally,    the   Administrative   Judge   cannot   consider
Appellant's  challenge  to the NAICS code  designation.   A  size
appeal  that  attempts  to challenge the  underlying  NAICS  code
classification  must  be  dismissed as  an  untimely  NAICS  code
appeal.   See Size Appeal of L. Freedman & Associates, P.C.,  SBA
No. SIZ-4247, at 6 (1997).

     Accordingly, because Appellant has failed to demonstrate any
clear  error  of  fact  or  law in the  size  determination,  the
Administrative  Judge concludes he must deny the  instant  appeal
and affirm the size determination.

                             
                        III.  CONCLUSION
                                
     For  the above reasons, the Administrative Judge AFFIRMS the
Area Office size determination and DENIES the instant appeal.

     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 announcement incorrectly stated a corresponding size
standard  of  750  employees.  On February 7, 2003,  USDA  issued
Amendment 2, stating the correct, 500-employee size standard.
     2   Given the ownership scheme described by the Area  Office
and admitted by Appellant, Appellant apparently means Mr. Ribeiro
owns 80%, and his children 20%, of Oleos.
     3   Under  a "number of employees" size standard,  the  size
determination  is  not a "snapshot," but the  average  number  of
employees  over  the twelve months preceding the concern's  self-
certification  date.  See Size Appeal of EER Systems,  Inc.,  SBA
No.  SIZ-4318,  at  7  (1998); 13 C.F.R.  Section  121.106(b)(1).
Appellant failed to produce these detailed figures for  the  Area
Office,  but submitted only one figure for the employee count  of
each  firm.   Because Appellant concedes that these  figures  are
correct, and because the Area Office has the authority to draw an
adverse  inference absent complete information, the Area Office's
reliance  on  these figures was not clear error.  See  13  C.F.R.
Section 121.1008(d).

                                               Posted: June, 2003