Distributed Information Systems, Inc., No. 4189 (June 13, 1996)
Docket No. SIC-96-5-10-39


                    UNITED STATES OF AMERICA

                  SMALL BUSINESS ADMINISTRATION

                 OFFICE OF HEARINGS AND APPEALS

                        WASHINGTON, D.C.


______________________________
                              )
SIC APPEAL OF:                )
                              )
Distributed Information       )
Systems, Inc.                 )
                              )
     Appellant                )  Docket No. SIC-96-5-10-39
                              )
Solicitation No.              )
DAAH01-96-R-0022              )
Department of the Army        )
Acquisition Center            )
Redstone Arsenal, Alabama     )
______________________________)



                             DIGEST

While the Office of Hearings and Appeals (OHA) will consider the
Standard Industrial Classification (SIC) code classifications for
previous procurements of the same products or services, a
previous classification will not, by itself, be dispositive. 

A SIC code designation must describe the actual products or
services the Government is procuring, and not the activities the
procurement is supporting. 

The appropriate SIC code for a procurement of Information Mission
Area Support Services is SIC code 7379, Computer Related
Services, Not Elsewhere Classified. 

                            DECISION

                          June 13, 1996

HOLLEMAN, Administrative Judge:

                          Jurisdiction

     This appeal is decided under the Small Business Act,
15 U.S.C. Sections 631 et seq., and 13 C.F.R. Part 121.[1]

                             Issues

     How much weight should the Office of Hearings and Appeals
(OHA) give to the Standard Industrial Classification (SIC) code
classifications for previous procurements of the same products or
services. 

     Whether a SIC code designation for a services procurement
may be based upon the activities the procurement is supporting. 

     Whether the appropriate Standard Industrial Classification
(SIC) code for this procurement is 3761, Guided Missiles and
Space Vehicles, or 7379, Computer Related Services, Not Elsewhere
Classified.


                          I. BACKGROUND

                       A. The Solicitation

     On May 1, 1996, the Department of the Army, U.S. Army
Missile Command at Redstone Arsenal, Alabama (MICOM), issued the
subject Solicitation for Information Mission Area Support
Services (IMA) as a 100% set-aside for small business.  Proposals
are due on June 17, 1996.  The Contracting Officer (CO) assigned
to the procurement Standard Industrial Classification (SIC) code
3761, Guided Missiles and Space Vehicles, with a corresponding
size standard of 1,000 employees. 

     The CO's formal SIC code determination states that the
requirement is to provide Federal Information Processing (FIP)
services to support MICOM's mission activities.[2]  IMA consists
of support services for automation, telecommunications, visual
information, and records management.  The services will support
MICOM's Corporation Information Center (CIC), which provides a
wide range of services to a large number of customers including
Department of Defense activities other than MICOM, other federal,
state and local government agencies, tenant activities at the
Redstone Arsenal, and other agencies world-wide requiring the
services.  MICOM anticipates that new missions and new customers
will continually expand its requirements for IMA.

     The Statement of Work (SOW) requires the contractor to 
provide: technical support services for MICOM's automated
systems; onsite support for IMA at MICOM; support in the
utilization of microcomputer hardware, software, and tele-
communications; operations support for MICOM's computer;
telecommunications and laser printing services; programming and
systems administrations for computer operating systems; software
development and maintenance; requirements analysis; systems
analysis, computer training of federal personnel; and computer
support of MICOM's Evaluation and Test Center.

     The Solicitation includes a roster of positions the
contractor will be required to fill, together with qualifications
for those positions.  Nearly all the of qualifications include
experience in information management, automated data processing,
or telecommunications.  None of the qualifications includes any
mention of guided missile training or experience.  The senior
positions require engineering, technical, or business degrees. 
Many of the lower-level positions require degrees in Computer
Science or Management Information Systems, and experience with
particular types of computer hardware and software.  A three-page
attachment has an extensive list described as "IMA Hardware and
Software Environment".  The list identifies a large number of
pieces of computer equipment and software programs, which the
contractor must use in performance of the contract. 
 
                          B. The Appeal

     On May 10, 1996, Distributed Information Systems, Inc.
(Appellant) filed the instant appeal, by commercial delivery,
with this Office.  Appellant asserts the appropriate SIC code for
this procurement is 7379, Computer Related Services, Not
Elsewhere Classified, with a corresponding average annual
receipts size standard of $18 million.  Appellant asserts the
services sought are computer-related support services, and do not
appear related to the manufacture of guided missiles and space
vehicles.

     Appellant requests this Office to (1) direct the CO to
designate SIC code 7379 as the appropriate SIC code for this
procurement; (2) direct the CO to postpone the proposal due date
until after the instant appeal is decided; and (3) direct the CO
to revise the solicitation to include provisions for multiple
awards, delivery order or task order contracts.  

                C. Contracting Officer's Response

     On May 20, 1996, the CO filed a Response to the appeal.  The
CO asserts the SIC code designation is proper under the general
description of the Services Division in the SIC Manual[3]:

     Establishments which provide specialized services
     closely allied to activities covered in other divisions
     are classified in such divisions.

SIC Manual, p. 353.

Since these services are supporting guided missile programs, they
are properly classified with guided missile programs.  The CO
further asserts since this requirement has been classified under
this SIC code in the past, this classification should continue.

     The CO also asserts her actions were proper because when
acquiring a product or service which could be classified in two
or more size standards, a contracting officer must apply the size
standard for the industry accounting for the greatest percentage
of the contract price.  She cites Federal Acquisition Regulation
(FAR) Section 19.102(d).  The CO asserts since the great majority
of the services required are in support of specialized guided
missile programs, 3761 is the appropriate SIC code.

     Further, the CO relies upon this Office's precedent to
justify her decision.  She cites SIC Appeal of Rothe Development,
Inc., No. 2613 (1987), which affirmed a contracting officer's
decision to classify a procurement for testing services under SIC
code 3761, because it was servicing missile acquisition, as
controlling.  The CO asserts because of the unique nature of
guided missile system procurement, this Office should affirm her
SIC code determination.

     The CO also asserts if this SIC code is not affirmed, the
set-aside will be dropped and the contract will be awarded by
full and open competition.  Finally, the CO asserts this Office
has no power to order the procurement stayed or the form of the
contract modified.

                     D. Additional Pleadings

     On May 28, 1996, Appellant filed a Reply to the CO's
Response.  Appellant reasserts MICOM clearly is acquiring
computer-related services.  Appellant asserts, despite the CO's
SIC code determination, only one sentence in the entire SOW and
attachments refers to weapons systems, and there are no
references to rockets or guided missiles.  Appellant disputes the
CO's assertion the majority of services in this procurement will
support guided missiles acquisition.  Rather, Appellant asserts
the portion of the Solicitation the CO refers to represents man-
hours which will be delivered under Technical Delivery Orders,
which cover a wide range of services used by many Federal
agencies.  Appellant further asserts MICOM is procuring services
largely associated with the acquisition, use, and support of
commercial, off-the shelf computer hardware and software. 
Finally, Appellant withdraws its request this Office order the CO
to change the contract form.

     On June 4, 1996, the Presiding Judge issued an Order
directing the CO to clarify apparent discrepancies between her
Response and the Solicitation.

     On June 5, 1996, the CO responded to Appellant's Reply. 
This Response reasserted the positions the CO took in her earlier
Response, denied the services under the contract were available
to any government agency, and asserted the primary users of the
services are MICOM's Program Managers and Program Executive
Officers, whose mission is the acquisition and maintenance of
guided missiles.

     On June 7, 1996, the CO responded to the Presiding Judge's
Order.  The CO admits her Response contained errors in the
calculations and breakdowns of the man-hours required in the
Solicitation, and corrects them in her June 7th Response.  The CO
identifies a "base effort" of 230,400 man-hours of service.  The
CO asserts that 20% of this base effort is in support of the
Engineering Data Management System Program Management Office,
which provides services in direct support of Army missile
systems.  The CO identifies the remaining 6,209,105 man-hours
required by the Solicitation as "surge effort".  The CO further
asserts most of the surge effort historically supports MICOM's
Program Managers and Program Executive Officers, whose mission is
the acquisition and maintenance of guided missiles, and MICOM's
expectation is this will continue to be the case.  Therefore,
under FAR Section 19.102(b), the CO asserts it is proper to
classify the procurement under the 3761 SIC code as a majority of
the effort will support guided missile acquisition and
maintenance.  Finally, the CO asserts, in support of her 3761 SIC
code determination, the contractor would be unable to provide the
required services to MICOM without some knowledge of missile
systems and programs.

     On June 11, 1996, Appellant filed a reply to the CO's
June 5th and 7th pleadings asserting that the CO had failed to
comply with the June 4th Order.
 
                         II. DISCUSSION

     Because Appellant filed this appeal within ten days of the
issuance of the solicitation, the appeal was timely.  13 C.F.R. 
Section 134.304(a)(3).

     The Presiding Judge will exercise his discretion to accept
the Appellant's Reply into the record, as it was filed promptly
and removes the issue of the proper contract form from the
instant appeal.  The Presiding Judge also accepts the CO's June
5th and 7th pleadings, as they are responsive to the June 4th
Order and clarify matters left ambiguous by the first Response. 
Appellant's June 11th pleading is accepted, as it was filed
timely in response to the CO's June 5th and 7th pleadings. 
13 C.F.R. Section 134.207(b).

     The Appellant's request that this Office direct the CO to
postpone the proposal due date is DENIED, as this Office has no
jurisdiction to do so.  See 13 C.F.R. Section 134.102.

     The correct SIC code for a procurement is that which best
describes the principal purpose of the services being procured,
in light of the industry description in the SIC Manual, the
description in the solicitation, and the relative weight of each
element of the solicitation.  See 13 C.F.R. Section 121.402(b);
SIC Appeal of Jack Faucett Associates, No. 4071 at 3 (1995).  The
standard of review is whether the SIC code designation is based
on a clear error of fact or law.  13 C.F.R. Section 134.314.

     In a SIC code appeal proceeding, the appellant has the
burden of proof, by a preponderance of the evidence, to show
error in the contracting officer's SIC code designation.  SIC
Appeal of The Scientific Consulting Group, Inc., No. 4186 (1996).

     The SIC code designated by the CO, 3761, Guided Missiles and
Vehicles, applies as follows:

     Establishments primarily engaged in manufacturing
     complete guided missiles and space vehicles.  This
     industry also includes establishments owned by guided
     missiles and space vehicle manufacturers and primarily
     engaged in research and development on these products,
     whether from enterprise funds or on a contract or fee
     basis.

SIC Manual, p. 240.

     Appellant asserts 7379 is the proper SIC code.  This code
applies as follows:

     Establishments primarily engaged in supplying computer
     related services, not elsewhere classified.  Computer
     consultants operating on a contract or fee basis are
     classified in this industry.

SIC Manual, p. 367.

     In light of the SIC Manual descriptions, and the description
of the services MICOM seeks to procure in the Solicitation, the
correct SIC code for this procurement is 7379.  The SOW deals at
length with the computer services the contractor must provide;
requires the personnel the contractor provides be well-qualified
in computers; provides an extensive list of the computer hardware
and software that will be used in performing the contract; and
the CO's own determination describes the requirement as
information processing services.  The Solicitation mentions
weapons systems only once, and does not mention rockets or guided
missiles at all.  Nothing in the Solicitation indicates the
contractor will be involved in the design, procurement or testing
of guided missiles.  This procurement is clearly for computer
services.

     The CO's reliance on the general description of the Services
Division in the SIC Manual is misplaced.  First, the SIC Manual
requires the services procurement be "closely allied" to the
activity serviced in order to be classified under it.  The
Presiding Judge interprets this description as requiring that the
services procurement must be inextricably intertwined with the
activity serviced so that it is an intrinsic part of it, before
the procurement may be found "closely allied", and thus
classified under serviced activity's SIC code.  Since nothing in
the Solicitation refers to procurement of, production of, or
research on, missiles, such intertwining is not established here.

     Second, this very general language cannot overcome the
specific language of the SIC code descriptions, and of the
Solicitation itself which compels a finding that the appropriate
SIC code is 7379.  Indeed, this Solicitation is significantly
more specific in its description of computer services than
several which this Office has previously ruled were properly
classified under 7379.  See SIC Appeal of Jack Faucett
Associates, No. 4071 (1995); SIC Appeal of Information Ventures,
Inc., No. 3731 (1993); and SIC Appeal of Challenger Engineering,
Inc., No. 3684 (1992).

     The CO's reliance upon the previous classification of the
procurement also is misplaced.  While it is true this Office
gives consideration to the previous SIC code classifications for
the same services, they are by no means dispositive.  See SIC
Appeal of Oregon Iron Works, Inc., No. 2938 (1988).  The previous
classification is certainly not dispositive here, where the
correct SIC code is clear from the text of the Solicitation
itself.

     Further, the CO's reliance upon FAR Section 19.102(d) is
misplaced.  The CO's statement and the Solicitation support the
assertion that the majority of the services here procured,
measured both by man-hours and price, are supporting activities
to acquire and maintain missiles.  However, that is not relevant
here.  A SIC code designation must describe the actual services
(or products) the Government is procuring, and not the activities
the procurement is supporting.  The instant Solicitation seeks to
procure computer services to support MICOM in its missile
acquisition program.  The proper SIC code is thus for computer
services, and not missiles.     

     Under the CO's reasoning, almost any MICOM procurement for
services could be characterized as a procurement for missiles,
and this would render the SIC system meaningless.  This Office
declines to reach such a result on as slender a reed as one
sentence in the general description of the Services Division of
the SIC Manual.

     The CO's citation of Rothe Development, supra is inapposite. 
The procurement in Rothe was for research laboratory services for
space and missile programs.  Since research on missiles is
explicitly included in the description of SIC code 3761, the
procurement was properly classified under that code.  The instant
procurement is for computer services, which are not included in
the description of SIC code 3761.

     Further, the fact that some familiarity with missile systems
is required does not justify assigning to the procurement the
3761 SIC code.  The required level of experience can be included
as an evaluation factor in the Solicitation, both for the firm
and for the individuals offered as part of its proposal.  This
would ensure that MICOM receives the expertise it needs, without
assigning an inappropriate SIC code.

     Finally, the CO's regrettable threat to remove this
procurement from the small business set-aside program, in the
event it is reclassified, cannot and should not affect this
Office's decision.  This Office must render its decisions based
upon the record before it and the law, and not upon unsupported
and unverifiable predictions of future actions by the procuring
agency, which may directly pervert the intent and the spirit of
the small business set-aside program.

     This Office therefore concludes Appellant has met its burden
of proof and demonstrated clear error in the CO's SIC code
determination and the appropriate SIC code for this procurement
is 7379.

                           Conclusion

     This Office's clear precedent commands the holding that the
proper SIC code for this procurement is 7379.  The relief sought
in the appeal is GRANTED as to the request to reclassify the
procurement, and DENIED as to the other relief requested, and the
Contracting Officer's SIC code designation is REVERSED.

     This constitutes 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's Size and SIC
regulations, and the procedural regulations for this Office, have
been revised.  See 13 C.F.R. Parts 121 and 134 (1996).  The
instant solicitation was issued, and the instant appeal was
filed, after the effective date of the new procedural and
substantive regulations.  Thus, the new regulations, both
procedural and substantive, will apply to this proceeding.

 [2] The CO prepared a formal SIC code determination for this
procurement.  The regulations make no provision for this, but
they do not prohibit it.

 [3] Standard Industrial Classification Manual, Office of        
Management and Budget, 1987 edition.