Jefferson Associates, Inc., No. 3744 (February 24, 1993).
Docket No. SIZ-93-1-22-5


                     UNITED STATES OF AMERICA

                    SMALL BUSINESS ADMINISTRATION

                   OFFICE OF HEARINGS AND APPEALS

                          WASHINGTON, D.C.



SIZE APPEAL OF:                    )
                                   )
Jefferson Associates, Inc.         )
                                   )
     Appellant                     )
                                   )
Re: Eagle Technical Services,      )
    Inc.                           ) Docket No. SIZ-93-1-22-5
Solicitation No.                   )
9-BC28-99-1-12P                    )
National Aeronautics and Space     )
  Administration                   )
Lyndon B. Johnson Space Center     )
Houston, Texas                     )

                             DIGEST

The Appellant has the burden of proof, by a preponderance of the
evidence, in a size appeal proceeding.
Signed, sworn statements on its SBA Form 355 concerning a firm's
average annual receipts, corroborated by its income tax returns
and financial statements, will be accorded greater evidentiary
weight than information from third-party financial reporting
services.

                            DECISION

                        February 24, 1993

WHITE, Administrative Judge, Presiding:

Jurisdiction

This appeal of a size determination is decided pursuant to the
Small Business Act of 1958, 15 U.S.C. 631 et seq., and the
regulations codified at 13 CFR Part 121.

Issue

Does Eagle Technical Services, Inc. qualify as a small business
concern under the $14.5 million average annual receipts size
standard assigned to this solicitation?

Facts

On July 24, 1992, the National Aeronautics and Space
Administration, Lyndon B. Johnson Space Center, Houston, Texas,
issued the above-referenced solicitation (RFP) for "Program
Office Support Services Effort." This was a total small business
set aside with a size standard of $14.5 million or less in
average annual receipts under Standard Industrial Classification
(SIC) code 7379 (Computer Related Services, Not Elsewhere
Classified). Pursuant to Amendment No. 3, proposals were due on
September 8, 1992. The Apparent successful offeror was Eagle
Technical Services, Inc. (Eagle Technical).

By letter dated December 23, 1992, Jefferson Associates, Inc.
(Jefferson Associates or Appellant) filed a size protest with the
Contracting Officer which stated, in part, that:

Pursuant to SBA rules, Eagle Aerospace is clearly affiliated by
ownership or control with at least three domestic concerns. [1/]
More specifically, Eagle Aerospace directly owns and controls the
outstanding stock of both Eagle Technical Services, Inc. ("Eagle
Technical") (See Attachment 1, Dun & Bradstreet report on Eagle
Technical) and Eagle Engineering, Inc. ("Eagle Engineering") (See
Attachment 2, Dun & Bradstreet report on Eagle Engineering).
Accordingly Eagle Aerospace controls and is thus far affiliated
with both Eagle Technical and Eagle Engineering.

     In addition, there is very clear indication that Eagle
     Aerospace is also affiliated with another business known as
     Eagle Partners, Ltd. ("Eagle Partners"). Note that D&B
     expressly identifies Eagle Aerospace as affiliated with
     Eagle Partners through common ownership and/or financial
     interest. See Attachment 3, Dun & Bradstreet report on Eagle
     Aerospace.
     
     The attachments hereto demonstrate that the known annual
     receipts of Eagle Aerospace, Eagle Engineering and Eagle
     Technical consistently exceed $14.5 million annually.
     
     We do not as yet have financial information on Eagle
     Partners....

On December 28, 1992, the Contracting Officer forwarded the
protest to the Dallas Regional Office of the Small Business
Administration (SBA), and the Regional Office accepted it as
valid for size determination purposes. After advising Eagle
Technical of the protest and receiving its response, the Regional
Office issued a formal size determination on January 13, 1993,
which stated that the average annual receipts for Eagle Technical
and its affiliates did not exceed the applicable size standard
for this solicitation. 2/ Pertinent portions of this
determination state as follows:
     
     Based on information contained in the SBA Form 355,
     Application for Small Business Size Determination, Eagle
     Aerospace is a Texas corporation serving as a holding
     company for two wholly owned subsidiaries, Eagle
     Engineering, Inc. and Eagle Technical Services, Inc. Eagle
     Aerospace generates no receipts except those provided by
     these two subsidiary companies. Eagle Partners, Ltd.
     actually constitutes three limited partnerships formed for
     the purpose of stock purchases at three different times with
     separate investment groups. Eagle Partners' only income is
     the dividend income provided from its investments in Eagle
     Aerospace.

     Financial records and income tax returns for both Eagle
     Engineering and Eagle Technical Services are maintained as
     consolidated documents by Eagle Aerospace, the parent
     company. Copies of these documents for the appropriate three
     fiscal year period were provided with the application. These
     documents coincide with and support the figures provided on
     the SBA Form 355. Based on these data, Eagle Aerospace and
     its subsidiaries, Eagle Technical Services and Eagle
     Engineering, had revenues substantially less than the $I4.5
     [million] size standard applicable to this solicitation.

Jefferson Associates filed a timely Notice of Appeal with this
Office on January 21, 1993. Jefferson Associates contends that,
in addition to the companies that it identified in its protest
letter and were considered by the Regional Office in its
determination, Eagle Aerospace is affiliated with Eagle Advance
Products (Eagle Products). It further submits that the Regional
Office failed to properly weigh and consider the information
contained in the Dun & Bradstreet reports pertaining to the
receipts of Eagle Technical and its affiliates. Accordingly, in
conclusion, the Appellant argues as follows:

     ETSI [Eagle Technical] is presumptively other than a small
     business concern for the purpose of this procurement because
     it failed to identify to SBA all business interests with
     which it is properly affiliated under SBA regulations.
     Moreover, based on JAI's [Jefferson Associates'] prima facia
     [sic] proof [Dun & Bradstreet reports] of ETSI business
     affiliations, which the Regional Office decision confirmed,
     ETSI and its affiliates exceed the $14.5 million receipts
     standard applicable to the subject procurement. [3/]

Emphasis in original.

On February 8, 1993, the record closing date, Eagle Technical
filed a "Statement Opposing Size Appeal Of Jefferson Associates,
Inc." (Statement). 4/ Pertinent portions of this Statement
concerning the calculation of its average annual receipts state
as follows:

     The only evidence JAI [Jefferson Associates, Inc.] offered
     the Regional Office to support its allegations was a
     misinterpretation of an erroneous Dun & Bradstreet report on
     ETSI [Eagle Technical Services, Inc]. Specifically, the
     report correctly listed consolidated 1991 annual
     receipts...for Eagle Aerospace and correctly listed the 1991
     annual receipts for Eagle Engineering. However, the 1991
     annual receipts listed for ETSI were erroneous. Based on the
     erroneous ETSI figure, JAI argued that the consolidated
     Eagle Aerospace figure was incorrect. Additionally, JAI
     argued that the income from another affiliate, Eagle
     Partners, should be added to total revenue. In response,
     ETSI submitted extensive documentation establishing that it
     is a small business under SIC code 7379 and meets the
     applicable $14.5 million AAR standard. ETSI also explained
     that JAI had misinterpreted the Dun & Bradstreet report and
     demonstrated the correct figures for ETSI through extensive
     documentation.
     
     Based upon the more accurate information contained in the
     SBA Form 355, financial records, and income tax returns
     provided by ETSI, the Regional Office correctly concluded
     that Eagle Aerospace acts as a holding company for two
     wholly owned subsidiaries, Eagle
     
     Engineering and ETSI, and that Eagle Aerospace generates no
     receipts except those provided by its two wholly-owned
     subsidiaries. In addition, the Regional Office correctly
     concluded that the only income of Eagle Partners, another
     affiliate, is dividend income provided from its investments
     in Eagle Aerospace. Based upon the foregoing, the Regional
     Office determined that the total of these receipts was
     substantially less than the applicable $14.5 million AAR
     standard. Thus, JAI's allegation that the total revenues of
     Eagle Aerospace, Eagle Engineering, Eagle Partners, and ETSI
     exceed the applicable 14.5 million AAR standard was
     demonstrated to be unsubstantiated.

Eagle Technical also argues that the Regional Office properly
weighed the foregoing evidence that it submitted more heavily
than the general unsupported allegation of Jefferson Associates,
which were based entirely on an erroneous Dun & Bradstreet
report. Eagle Technical also contends that the Appellant has not
met its burden of proof in this matter. In addition, it further
notes that:

     ETSI [Eagle Technical Services, Inc.], in its letter of
     January 8, 1993 to the Regional Office, pointed out the
     error in the Dun & Bradstreet report and explained the
     correct figures, which were supported by the attached
     documents. ETSI had previously identified this error and
     brought it to the attention of Dun & Bradstreet. The
     corrected Dun & Bradstreet Substitute Report (Exhibit 1) is
     in the process of being sent to all parties who requested
     information on Eagle Aerospace during the past twelve
     months, including JAI [Jefferson Associates, Inc.]. Thus,
     even JAI's "prima facia" [sic] case has been removed.
     
As for the allegation by Jefferson Associates that Eagle
Aerospace is affiliated with Eagle Products, which was raised for
the first time on appeal, Eagle Technical submits that "JAI
cannot rely upon facts and issues which were not alleged at the
Regional Office level." However, it did proceed to address this
issue and stated that, over the years, Eagle Aerospace had formed
several wholly-owned corporations for different specific business
purposes. One of these firms was Eagle Products, which was
inactive, with no staff or revenue, from 1988 to the present.
Another concern in this same category is Eagle Satellite, Inc.
Therefore, neither concern generated any receipts during the
applicable 1989, 1990, and 1991 fiscal years.

Eagle Technical also states that another subsidiary which was not
identified by Jefferson Associates in its protest or on appeal,
Eagle Aerospace (Europe), Ltd. (Eagle Europe), was formed by
Eagle Aerospace in 1990. It obtained one small contract that
year, which was subcontracted to Eagle Engineering, and Eagle
Engineering recorded all but a nominal amount of the proceeds on
its books. 5/ We were also advised of an agreement between Eagle
Aerospace and a small disadvantaged business concern, which was
entered into in March 1992, after the applicable time period
pertaining to this solicitation. 6/

In addition, Eagle Technical argues that any omission on its part
was inadvertent, and had no impact on its size determination. It
further contends that these omissions do not constitute a refusal
or failure to provide the requested information, and do not give
rise to the presumption in 13 CFR 121.1606(e).

Jefferson Associates filed a reply to Eagle Technical's response
to its Notice of Appeal on February 10, 1993. Eagle Technical
filed a supplemental response to this reply on February 12, 1993.
7/

Discussion

Prior to addressing the primary issue in this case, the average
annual receipts of Eagle Technical and its affiliates, we will
first dispose of other, preliminary issues raised by the parties.
Jefferson Associates contends that Eagle Technical's failure to
disclose all of its affiliates to the Regional Office warrants
the application of the "adverse inference rule" codified at 13
CFR 121.1606(e). We disagree. None of the omissions by Eagle
Technical had any substantive impact on the amount of its average
annual receipts as reported to the Regional Office or to this
Office. The allegation by Jefferson Associates that Eagle
Aerospace is affiliated with Eagle Products, raised for the first
time on appeal, will also be considered. Rather than being a new
issue, it is directly related on the primary issue in this case.

As for the primary issue, pursuant to 13 CFR 121.1707, the
Appellant has the burden of proof, by a preponderance of the
evidence, in a size appeal proceeding. The regulation codified at
13 CFR 121.1606(e) also provides that "specific signed factual
evidence will be weighed more heavily by SBA than general
unsupported allegations or opinions." In addition, extensive case
law holds that signed, certified statements are accorded more
evidentiary weight than information from sources such as third
party financial reporting services. Size Appeal of Advance
Support Systems Management. Inc., No. 3421 (February 19, 1991).

In this case, Jefferson Associates relies upon Dun & Bradstreet
reports to support its allegation that Eagle Technical's average
annual receipts exceed the $14.5 million size standard assigned
to this solicitation. It appears that the Appellant
misinterpreted this information. As previously noted, Eagle
Aerospace, the parent company, generates no revenue. Yet, the
Appellant added the amount of receipts reported by Dun &
Bradstreet for Eagle Aerospace to the receipts reported by Dun &
Bradstreet for its affiliates, thereby, in essence, doubling the
actual receipts for these concerns. Eagle Technical has submitted
extensive documentation, which includes the SBA Form
355, financial statements, and tax returns, all of which were
submitted under oath and threat of criminal penalty, which
clearly reflect, as stated by the Regional Office, that Eagle
Technical and its affiliates "had revenues substantially less"
than $14.5 million. Accordingly, we find that the Appellant has
not met its burden of proof in this proceeding and that Eagle
Technical is a small business concern for the purpose of this
procurement.

Conclusion

The Regional Office determination that Eagle Technical Services,
Inc. is a small business concern for the purpose of this
procurement is AFFIRMED.

This constitutes the final decision of the Small Business
Administration. See 13 CFR 121.1720(a), (b), and (c).


                    __________________________________
                    Elwin H. White (Presiding)
                    Administrative Judge
                    
                    
                    __________________________________
                    Michael S. Cole (Concurring)
                    Administrative Judge
                    
                    
                    __________________________________
                    G. Stephen Wright (Concurring)
                    Administrative Judge


_______________

     1/ The protest questioned the size status of Eagle
Aerospace, Inc. (Eagle Aerospace), not Eagle Technical, the
apparent successful offeror. However, since Eagle Aerospace is
the parent company of Eagle Technical, the protest was
subsequently forwarded to the SBA Regional Office by the
Contracting Officer for a formal size determination.
     2/ The Regional Office also considered the protest to be
both timely and specific for the purpose of this procurement.
     3/ Since Eagle Aerospace generates no receipts, the receipts
reported by Dun & Bradstreet for Eagle Aerospace represent a
consolidated figure for its affiliates. Adding this amount to the
receipts of each affiliate, as did Jefferson Associates, would,
in essence, double the receipts actually generated by Eagle
Aerospace.
     4/ Eagle Technical also filed a request for in camera
treatment of certain documents, which has been addressed by
separate order.
     5/ A revised SBA Form 355 reflecting this information was
submitted to the Regional Office and to this Office, but it did
not materially affect Eagle Technical's average annual receipts.
     6/ Substantial historical data was provided by Eagle
Technical concerning each of the noted affiliates.
     7/ Both filings were received after the record closed and
will not be considered. 13 CFR 121.1708.