Sonag Company, Inc., No. 4335 (December 18, 1998)
Docket No. SIZ-98-09-18-42

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

________________________________
                                )
SIZE APPEAL OF:                 )
                                )
Sonag Company, Inc.             )
                                )  Docket No. SIZ-98-09-18-42
     Appellant                  )  
                                )  Decided: December 18, 1998
Solicitation No.                )
F11623-97-R-0004                )
Department of the Air Force     )
375 CONS/LGC                    )
Scott Air Force Base, Illinois  )
________________________________)

                         APPEARANCES

                        for Appellant
                              
                    John J. Fausti, Esq.
                  Stephanie L. Buser, Esq.
                              
                              
                      for Rayco Venture
                              
                     Paralee White, Esq.
                    Gadsby & Hannah, LLP
                              
                              
                           DIGEST
                              
This  Office  will  dismiss as moot  an  appeal  of  a  size
determination concluding the challenged firm was other  than
small,  even though a pending lawsuit seeks to overturn  the
award,  where the appeal involves a contract-specific issue,
and the procuring agency previously awarded the contract  to
the  challenged firm; and the court neither has remanded the
case  to  this Office nor ordered it to decide the issue  of
the challenged firm's size.

This  Office  does  not have jurisdiction  to  rule  on  the
validity of a small business set aside contract award,  even
if the Area Office has found the awardee other than small.

                          DECISION

HOLLEMAN, Administrative Judge:

                        Jurisdiction

      This appeal is decided under the Small Business Act of
1958,  15  U.S.C. Sections 631 et seq., and 13 C.F.R.  Parts
121 and 134 (1996). [1]

                            Issue

     Whether this Office will dismiss as moot an appeal of a
size  determination concluding the challenged firm was other
than  small, even though a pending lawsuit seeks to overturn
the  award,  where  the appeal involves a  contract-specific
issue,  and  the  procuring agency  previously  awarded  the
contract  to the challenged firm; and the court neither  has
remanded  the case to this Office nor ordered it  to  decide
the issue of the challenged firm's size.

  Whether  this  Office  has jurisdiction  to  rule  on  the
validity  of a small business set aside contract  award,  if
the Area Office has found the awardee other than small.

                       I.   BACKGROUND

      On  March  21, 1997, the Department of the Air  Force,
375th  Contracting Squadron, Scott Air Force Base,  Illinois
(Air   Force),  issued  the  subject  solicitation   as   an
Indefinite Delivery-Indefinite Quantity (IDIQ) contract  for
multi-discipline construction projects, under its Simplified
Acquisition   of   Base  Engineering  Requirements   (SABER)
program.   The  term of the proposed contract was  one  base
year, with four one-year options.
     
     The   Contracting   Officer  (CO)   assigned   to   the
procurement  Standard Industrial Classification  (SIC)  code
1542,  General  Contractors-Nonresidential Buildings,  Other
Than   Industrial   Buildings   and   Warehouses,   with   a
corresponding  $17  million  average  annual  receipts  size
standard.   The CO limited competition to participant  firms
in  the  Small Business Administration's (SBA) 8(a) program.
Initial offers were due on April 21, 1997.

      On  April 10, 1997, the CO issued Amendment  1,  which
made  technical changes to the solicitation.   On  July  24,
1997,  the  CO  issued Amendment 2, incorporating  new  wage
rates  into  the  solicitation.  On July 30, 1997,  offerors
submitted Best and Final Offers (BAFOs) to the Air Force.

      On  September 8, 1997, the CO awarded the contract  to
Sonag   Company,   Inc.  (Appellant),   and   notified   the
unsuccessful   offerors.    Rayco   Venture   (Rayco),    an
unsuccessful  offeror, timely protested this  award  to  the
General  Accounting Office (GAO).  On October 6,  1997,  the
Air Force suspended work on the contract pending the outcome
of  the GAO case.  As a result of the protest, the Air Force
re-evaluated  the  award.  GAO then dismissed  the  protest.
Rayco  Venture,  B-278109,  B-278109.2  (October  21,  1997)
(unpublished).   On  December  29,  1997,  the   Air   Force
determined  once again Appellant was the successful  offeror
and, on January 24, 1998, lifted the work suspension.

      In  January 1998, Rayco again protested the  award  to
GAO,  amending its protest after receiving the CO's  Report.
In  March  1998,  Rayco  also filed  in  the  United  States
District  Court  for  the District  of  Columbia  a  lawsuit
challenging the award to Appellant.  On March 31, 1998,  GAO
dismissed the protest because the matter was pending  before
a  court  of  competent  jurisdiction.   Rayco  Venture,  B-
278109.3, B-278109.4 (March 31, 1998) (unpublished).

     On  May  29,  1998,  the District  Judge  solicited  an
advisory  opinion from GAO.  On June 15, 1998,  GAO  held  a
conference with the parties.  After the conference, the  Air
Force  requested a size determination from the SBA  Area  IV
Office  of Government Contracting (Area Office) in  Chicago,
Illinois.  On July 20, 1998, GAO informed the District Judge
it  would  not render an opinion because the request  for  a
size determination made its opinion moot.  Rayco Venture, B-
278109.5 (July 20, 1998) (unpublished).
     
     The  Area Office denied the Air Force's request  for  a
size  determination, because the size regulation  applicable
to 8(a) procurements does not authorize the procuring agency
to   request  a  size  determination.   13  C.F.R.   Section
121.1001(b)(2)(ii).
     
     On  July 17, 1998, as authorized by the regulation, the
Milwaukee  District Director requested a size determination.
13  C.F.R.  Section 121.1001(b)(2)(ii)(C).   On  August  24,
1998,  the  District Court Judge held a hearing  on  Rayco's
motion  for a preliminary injunction, at which he stated  he
was   "anxiously  awaiting"  the  size  determination;   and
continued the hearing to September 24th.

     On  September  1, 1998, the Area Office issued  a  size
determination  finding Appellant unduly  reliant  upon,  and
thus  affiliated with, its ostensible subcontractor on  this
procurement,  R&R International, Inc. (R&R), an  other  than
small  business.   The Area Office then concluded  Appellant
was  other than small for of this procurement.  On September
3, 1998, Appellant received the size determination.

      On  September  18, 1998, Appellant filed  the  instant
appeal  with  this  Office, asserting the  Area  Office  had
misread and misinterpreted its teaming agreement with R&R.

     On  September  24,  1998, the  District  Judge  held  a
hearing  on  Rayco's  motion for a  preliminary  injunction,
which   he  continued  to  January,  pending  this  Office's
decision on the instant appeal.  The District Judge  neither
stated he was awaiting an advisory opinion from this Office,
nor that he was formally remanding the case to this Office.
     
     On  October 9, 1998, the day the record closed in  this
case,  Rayco filed a Response to the appeal.  Rayco  asserts
the  contract award to Appellant is void ab initio,  because
Appellant was not eligible to receive it.

     On October 16, 1998, Appellant filed a Motion for Leave
to  Reply  to  Rayco's Response.  On October 19,  1998,  the
Administrative  Judge granted this Motion.  On  October  20,
1998, Rayco filed a Motion to Intervene in which it asserts,
inter  alia,  that  proceedings in the  District  Court  are
stayed pending this Office's decision.  On October 21, 1998,
the Air Force filed a Reply to Rayco's Response.

     Also  on  October 21st, Appellant filed its  Reply,  in
which  it asserts, inter alia, that the District Court Judge
has  declined  to rule on Rayco's request for a  preliminary
injunction  pending this Office's decision.  Appellant  also
filed  a Motion to Strike Rayco's exhibits.  On October  22,
1998,  Appellant  filed  a Response  to  Rayco's  Motion  to
Intervene.   Appellant  does  not  oppose  the  motion,  but
disputes some of the assertions in it.
     
     On October 23, 1998, the Administrative Judge issued an
Order  to  Show Cause why he should not dismiss the  instant
appeal as moot.
     
     On  November 9, 1998, Appellant responded to the  Order
agreeing   that,   under   this  Office's   precedent,   the
Administrative  Judge should dismiss this  appeal  as  moot,
because  the  issue here is contract-specific  and  the  Air
Force  has  awarded  the  contract.   Conversely,  Appellant
asserts that, because Rayco's pending action in the District
Court  might disturb the award, this Office might  not  find
this  appeal  moot.  However, Appellant asserts this  Office
does not have the authority to declare the contract void  ab
initio.
     
      Also  on  November 9th, Rayco responded to the  Order,
asserting  the  Administrative  Judge  should  dismiss  this
appeal  as  moot, for the same reasons stated above.   Rayco
further  asserts dismissal is appropriate because there  are
no  pending  GAO  proceedings; the  District  Court  is  not
awaiting this Office's decision on the merits; and that  the
District  Court properly should decide the question  of  the
contract's nullity.

                       II.  DISCUSSION

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

       The  parties  agree,  and  the  Administrative  Judge
concludes, he must dismiss this appeal as moot, because  the
issue   is   contract-specific:  whether  on   the   subject
procurement,   Appellant  is  affiliated   with   R&R,   its
ostensible subcontractor.  This Office's precedent  supports
this  conclusion.  Specifically, this Office has held  that,
once  a  contract  is awarded, it must dismiss  as  moot  an
appeal that raises contract-specific issues.  Size Appeal of
Resource Applications, Inc., No. 4252 (1997).  The Air Force
already awarded the contract, on September 8, 1997,  and  it
never has canceled or withdrawn the award.

     While  the  CO  or the District Court may terminate  or
cancel  the  contract in the future, this Office  previously
has  determined this possibility is too speculative a  basis
on  which  to avoid a finding of mootness.  Size  Appeal  of
Merdan Group, Inc., No. 4287 (1998).  Further, the fact that
options  remain to be exercised does not preclude a  finding
of mootness.  Resource Applications, supra.
     
     Moreover, none of the factors that might constitute  an
exception to the precedent exists here.  Specifically, under
Merdan,  supra  at  fn.  1 (pending proceedings  in  another
forum,  which might disturb a contract award, could  prevent
this   Office  from  holding  a  case  moot).    Thus,   the
Administrative  Judge  finds Merdan inapposite  under  these
facts.  First, unlike Size Appeal of Griffin Services, Inc.,
No.  4311  (1998), the District Court Judge has not directed
this  Office  to issue a decision on Appellant's eligibility
as  a small business for this procurement.  He also has  not
stated  he is awaiting an SBA final decision on the  merits.
Nor has he remanded the complaint to this Office.
     
     Hence,  the  District  Court  here  merely  awaits  the
exhaustion of Appellant's administrative remedies before SBA
prior to proceeding with the case before it.  Accordingly, a
pending  District  Court  lawsuit seeking  to  overturn  the
award,  by  itself,  does not save the instant  appeal  from
mootness.   The Administrative Judge notes the parties  have
presented no authority supporting the proposition  the  mere
fact of a pending lawsuit can save an otherwise moot case.
     
     Second,  the  parties' filings establish there  are  no
pending  proceedings at GAO, which might affect the contract
award and, thus, obviate the mootness here.
     
     Third,   the   Administrative  Judge  rejects   Rayco's
assertion that the contract should be cancelled because  the
award  to Appellant under the 8(a) program is void ab initio
in  light  of  Appellant's other  than  small  status.   The
Administrative  Judge  concludes the  mere  possibility  the
District  Court may void the instant contract in the  future
is  too  speculative to prevent this Office from  concluding
the  instant Appeal is moot.  This is consistent  with  this
Office's prior holding that the mere possibility of contract
termination is too speculative to prevent its concluding  an
appeal is moot.  Merdan, supra.
     
     Further,  it is well settled that no decision  by  this
Office  can affect the instant procurement.  Size Appeal  of
Spectrum  Landscape Services, Inc., No. 4313  at  6  (1998),
citing  48  C.F.R.  Section 19.302(i).   Similarly,  federal
court precedent has upheld contract awards even though  this
Office subsequently determined the awardees were other  than
small.  See, e.g. Marwais Steel Co. v. Department of the Air
Force,  871  F. Supp. 1448, 1455-57 (D.D.C. 1994).   Because
this   Office's   decision   cannot   affect   the   instant
procurement,  neither  Appellant  nor  Rayco  is  prejudiced
before the District Court as to their claims concerning  the
nullity of the contract.  In addition, since the issues here
clearly are contract-specific, this Office's decision cannot
affect any future procurements.
     
     Finally,  the  argument that the contract  is  void  ab
initio  does  not preclude a conclusion that the  appeal  is
moot.  First, this Office has no jurisdiction to rule on the
validity  of  the  contract.   13  C.F.R.  Section  134.102.
Instead,  Rayco must make that argument before the  District
Court.   Second,  Rayco's chance of  prevailing  before  the
District  Court  on that issue is too speculative  for  this
Office  to  rely  upon  in determining whether  the  instant
appeal is moot.
     
     Because  the  contract has been awarded, this  Office's
decision cannot apply to the instant procurement.  Moreover,
because it involves a contract-specific issue, this Office's
decision  can  have  no  future  effect.   Accordingly,  the
Administrative Judge concludes the instant appeal is moot.
                                                            
                      III.  CONCLUSION

       For  the  above  reasons,  the  Administrative  Judge
DISMISSES the instant appeal as MOOT. [2]

     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  Small Business Administration  has  amended
certain of its size regulations.  63 Fed. Reg. 35726, 35738-
39   (June   30,  1998)  (to  be  codified  at   13   C.F.R.
Sections 121.103, 121.1001, 121.1103).  Nonetheless, because
the  Contracting  Officer  issued the  instant  solicitation
before   the  June  30,  1998  effective  date,  the   prior
regulations apply here.
       [2]  The  Administrative Judge thus need not  address
Appellant's Motion to Strike.

                                       Posted: January, 1999