Pride International, LLC, No. 4648 (July 28, 2004)
Docket No. SIZ-2004-06-17-38

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


                                )  
SIZE APPPEAL OF:                )  
                                )  
Pride International, LLC        )  Docket No. SIZ-2004-06-17-38
                                )  
Appellant                       )  Decided:  July 28, 2004
                                )
Solicitation No. MS-04-R-005    )
United States Marshals Service  )
Judicial Security Contracts     )
Washington, DC                  )
                                )


                         APPEARANCES
                              
                  David M. Hernandez, Esq.
                   Pillsbury Winthrop LLP
                        for Appellant
                              
                  James P. Flynn, President
               for Aviation Enterprises, Inc.
                              
                           DIGEST
                              
A  size  appeal  which challenges the subject procurement's
underlying NAICS code designation must be dismissed  as  an
untimely NAICS code appeal.

This Office has no jurisdiction to revise a solicitation as
part of a size appeal.

The  nonmanufacturer rule does not apply to a concern which
intends  to  provide  an  item  manufactured  by  a   large
business.


                          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.

                           Issues

      Whether  a  size  appeal may  challenge  the  subject
procurement's underlying NAICS code designation.

      Whether  this  Office has jurisdiction  to  revise  a
solicitation as part of a size appeal.

      Whether the nonmanufacturer rule applies to a concern
which  intends to provide an item manufactured by  a  large
business.


                       I.  BACKGROUND

                     A.  The Procurement

     On January 9, 2004, the United States Marshals Service
of  the  Department  of Justice (USMS) issued  the  subject
solicitation  for  the short term lease  of  narrow  bodied
(single  aisle) large passenger/transport jet  aircraft  to
perform  its  missions  of  moving  federal  prisoners  and
illegal  aliens.   The solicitation seeks  to  award  three
contracts,  one  at  each  of three  different  operational
sites.   The  sites  are  Oklahoma  City,  Oklahoma;  Mesa,
Arizona;  and  Alexandria, Louisiana.  The contractor  will
lease the aircraft to USMS, and be responsible for aircraft
maintenance and logistics.  USMS will operate the aircraft.

     The Contracting Officer (CO) set the procurement aside
for  small business, and designated North American Industry
Classification System (NAICS) code 532411, Commercial  Air,
Rail,   and  Water  Transportation  Equipment  Rental   and
Leasing,  with  a corresponding $6 million annual  receipts
size  standard,  as  the  applicable  NAICS  code  for  the
procurement.   However,  the  solicitation  also   contains
Federal  Acquisition Regulation (FAR or 48  C.F.R.)  clause
52.212-1,  stating the small business size standard  for  a
firm  which  intends to furnish an item which  it  did  not
itself  manufacture is 500 employees.   48  C.F.R.  Section
52.212-1.

      Offers  were due on February 19, 2004.  Amendment  1,
issued  on  February  9, 2004, extended  the  due  date  to
February  26,  2004.  Amendment 2 was issued  on  March  3,
2004.  Amendment 3, issued on April 2, 2004, announced  the
conclusion  of discussions, and set April 9, 2004,  as  the
due date for final proposal revisions.


                  B.  Protest and Response

      On  May  6,  2004,  the CO issued  notices  that  the
apparent successful offerors were Pride International,  LLC
(Appellant) for the Oklahoma City and Alexandria contracts,
and Metscan Technologies, LLC d/b/a Prisoner Transportation
Services  (Metscan) for the Mesa contract.   On  that  same
day,  Aviation Enterprises, Inc. (AEI) filed a size protest
with  the CO, alleging that Appellant was other than small,
and  identifying several alleged affiliates.  On  May  7th,
the   CO  forwarded  the  protest  to  the  Small  Business
Administration  (SBA)  Office of Government  Contracting  -
Area V, in Dallas, Texas (Dallas Area Office).  On May  14,
2004,  the  Dallas  Area Office informed Appellant  of  the
protest,  and  requested it to submit  a  response  to  the
protest, together with a completed SBA Form 355 and certain
other information.

      On  May 19, 2004, Appellant responded to the protest.
Appellant  identified  three affiliates:  Cenla  FTZ,  LLC;
Cenla  Intermodal Transportation Group, and Rice and  Rice,
LLC.   None  of  these three firms has ever  generated  any
revenue.   Appellant further asserted it had been adversely
affected  by  the  drop in air travel after  the  terrorist
attacks of September 11, 2001.  Appellant alleged its  book
value  and  number of employees are well  under  the  small
business  size standards.  Appellant asserted that  correct
size  standard  for  the  procurement  was  500  employees,
because  the solicitation included the clause at 48  C.F.R.
Section 52.212-1.

      On  May 26th, the Dallas Area Office transferred  the
case to the SBA Office of Government Contracting - Area  IV
in Chicago, Illinois (Chicago Area Office) for completion.

                 C.  The Size Determination

     On May 27, 2004, the Chicago Area Office issued a size
determination  finding  Appellant  an  other   than   small
business.  The Chicago Area Office found that Appellant  is
47.5% owned by Frank B. Rice, its President; 47.5% by Carol
B.  Rice; and 5% by Tom Welch, its Vice-President.  Mr. and
Ms.  Rice are divorced.  Mr. and Ms. Rice also each own 50%
of  Pride  Flight Services, Inc. (Flight),  located  at  an
address  adjacent  to Appellant.  Flight  provides  airport
services  in  Alexandria, Louisiana.  The three  affiliates
identified  by Appellant above are dormant and  have  never
generated  any  revenue.   The Chicago  Area  Office  found
Appellant  affiliated  with  Flight,  as  well  the   three
identified affiliates, due to common ownership.

      The  Chicago Area Office also found that the  correct
size  standard for the procurement was $6 million in annual
receipts,  as  the  procurement was for  the  lease  of  an
aircraft, and not the furnishing of a manufactured product.
After  review  of  the tax returns for  Appellant  and  its
affiliates, the Chicago Area Office concluded Appellant was
other   than   small.    Appellant   received   the    size
determination on June 2, 2004.

                       D.  The Appeal

      On June 17, 2004, Appellant filed the instant appeal.
First,   Appellant  asserts  the  solicitation  lacks   the
commercial  service  related clauses  found  at  48  C.F.R.
Section 52.212-5, Contract Terms and Conditions Required to
Implement Statutes or Executive Orders - Commercial  Items;
48 C.F.R. Section 52.219-14, Limitations on Subcontracting;
48  C.F.R. Section 52.219-6, Notice of Total Small Business
Set-Aside; or 48 C.F.R. Section 52.219-7, Notice of Partial
Small  Business  Set-Aside.  The absence of  these  clauses
means   the  procurement  is  not  a  commercial   services
contract,  and  not a small business set-aside.   Appellant
argues  this  procurement is not a  set-aside  due  to  the
absence of the clauses it identifies.

      Second, Appellant asserts the inclusion of FAR clause
48  C.F.R. Section 52.212-1 means the non-manufacturer rule
is  applicable  to the instant procurement,  and  thus  the
correct  size standard is 500 employees.  Appellant  argues
this  is  a  contract for supplies, not services.   At  the
least,  this  creates an ambiguity which the CO  failed  to
resolve  despite  three  amendments  and  a  questions  and
answers session.

     Appellant also argues that a bidder may not be awarded
a  contract as a small business unless the firm agrees that
at  least  50% of the cost of contract performance incurred
for  personnel  shall  be expended  for  employees  of  the
concern,  citing  15  U.S.C.  Section  644(o)(1)(A).   This
required  the  CO  to insert the clause 48  C.F.R.  Section
52.219-14  into  the  solicitation, and  the  Chicago  Area
Office should not have ignored the failure to do so.

     Appellant asserts it is a small business and, further,
the solicitation is fatally flawed, and requests this
Office order the CO to issue a new solicitation. [*]

                     E.  AEI's Response

      On  July  2, 2004, AEI Responded to the appeal.   AEI
argues  that the instant appeal should be dismissed  as  an
untimely  NAICS code appeal.  AEI further argues  that  the
nonmanufacturer rule is not applicable here,  as  Appellant
does  not seek to provide a product manufactured by a small
business,  but  an  aircraft  manufactured  by  the  Boeing
Aircraft Company, a large business.  Accordingly, AEI urges
that this Office dismiss or deny the appeal.


                       II.  DISCUSSION

      Appellant filed the instant appeal within 15 days  of
receiving  the size determination, and thus the  appeal  is
timely.  13 C.F.R. Section 134.304(a)(1).

       Appellant   has  the  burden  of   proving,   by   a
preponderance of the evidence, all elements of its  appeal.
Specifically,   it   must  prove  the  Area   Office   size
determination is based on a clear error of fact or law.  13
C.F.R. Section 134.314; Size Appeal of Procedyne Corp., SBA
No. SIZ-4354, at 4-5 (1999).

      A  review of the solicitation reveals that it clearly
states  in its cover sheet that the procurement is a  small
business set-aside and the applicable NAICS code is 532411,
with a $6 million size standard.  The Notice of Total Small
Business  Set-Aside clause (48 C.F.R. Section 52.219-5)  is
included at page 12, contrary to Appellant's assertion.  If
Appellant  disagreed with that classification,  or  thought
there was any ambiguity in the solicitation, it had 10 days
in  which to file a NAICS code appeal to challenge it.   13
C.F.R.  Section  134.304(a)(3).  Having failed  to  do  so,
Appellant  cannot  now  challenge the solicitation's  NAICS
code  designation in its size appeal.  A size appeal  which
challenges the subject procurement's underlying NAICS  code
designation  must  be dismissed as an untimely  NAICS  code
appeal.  Size Appeal of Incobrasa Industries, Ltd., SBA No.
SIZ-4557, at 5 (2003).  Appellant had an additional  chance
to  challenge ambiguities in the solicitation through three
amendments  and the discussion process.  It  cannot  do  so
now,  after  the  CO  has selected the apparent  successful
offeror.

      Similarly, Appellant's argument that the solicitation
should have included the clause at 48 C.F.R. Section 52.219-
14  is  again  a  challenge  to the  solicitation,  and  is
inapposite to the issues in this size appeal, which reviews
the  determination  by  the Chicago Area  Office,  not  the
solicitation.   This Office has no jurisdiction  to  review
and     revise     solicitations.     See     13     C.F.R.
Section  134.102(k).   Further, the  issue  of  whether  an
offeror has complied with the Limitations on Subcontracting
rule   (13   C.F.R.  Section  125.6)  is  not  within   the
jurisdiction  of the size determination program,  and  thus
not  of  this  Office.  Size Appeal of  SDS  International,
Inc., SBA No. SIZ-4541, at 2 fn.3 (2003).

      The  nonmanufacturer rule is not applicable  to  this
procurement.    While  the  clause  is  included   in   the
solicitation,   it   applies   only   in    very    limited
circumstances.   The  concern  must  have  less  than   500
employees;  be  primarily engaged in wholesale  and  retail
trade  and  normally sell the item supplied to the  general
public;  and  supply  the  end item  of  a  small  business
manufacturer  in  the  United States.   13  C.F.R.  Section
121.406(b).   This is not a procurement for a  manufactured
item, but for the lease of an aircraft.  Here, as noted  by
AEI,  Appellant will be providing an airplane  manufactured
by  a  large  business.   Therefore,  even  if  Appellant's
challenge  to the NAICS code were timely, its  argument  is
without  merit, as it would not meet the standard  for  the
nonmanufacturer rule.

      A  review of the record clearly establishes Appellant
is  other than small under the applicable size standard for
this procurement.  Appellant's own arguments assert it is a
small  business based upon its number of employees  or  its
book  value,  and  do  not  address  its  size  under   the
applicable annual receipts size standard.  Thus,  Appellant
has  failed  to  establish that the size  determination  is
based on any error of fact or law.

      Appellant has failed to establish clear error of fact
or  law  on  the  part  of the Area Office,  and  thus  the
Administrative  Judge must AFFIRM the  Area  Office's  size
determination.

                      III.  CONCLUSION

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

     This  is  the  final  decision of the  Small  Business
Administration.  13 C.F.R. Section 134.316(b).




                             
                             CHRISTOPHER HOLLEMAN
                             Administrative Judge


_________________________

      *  Appellant  also mentions its protest  of  Metscan's
size.  Issues related to that protest will be addressed  in
Appellant's appeal of the dismissal of that protest.   Size
Appeal  of  Pride  International,  LLC,  SBA  No.  SIZ-4649
(2004).



                                       Posted: August, 2004