Allen M. Campbell Co. Gen. Con., Inc. v. Lloyd Wood Const. Co., 30518 Summary Calendar.

• Decision Date: 09 July 1971
• Docket Number: No. 30518 Summary Calendar.,30518 Summary Calendar.
• Citation: 446 F.2d 261
• Parties: ALLEN M. CAMPBELL COMPANY GENERAL CONTRACTORS, INC., Defendant-Appellant, v. LLOYD WOOD CONSTRUCTION CO., Inc., Plaintiff-Appellee, and Hilary J. Sandoval et al., Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

446 F.2d 261 (1971)

ALLEN M. CAMPBELL COMPANY GENERAL CONTRACTORS, INC., Defendant-Appellant, v. LLOYD WOOD CONSTRUCTION CO., Inc., Plaintiff-Appellee, and Hilary J. Sandoval et al., Defendant-Appellee.

No. 30518 Summary Calendar.^*

United States Court of Appeals, Fifth Circuit.

July 9, 1971.

Luther P. House, Jr., Aubrey L. Coleman, Jr., Smith, Currie & Hancock, Atlanta, Ga., for defendant-appellant.

Olin Zeanah, Zeanah, Donald & Lee, Tuscaloosa, Ala., for plaintiff-appellee.

Wayman G. Sherrer, U. S. Atty., Birmingham, Ala., Alan S. Rosenthal, Michael C. Farrar, Attys., Dept. of Justice, Washington, D. C., L. Patrick Gray, III, Asst. Atty. Gen., Washington, D. C., for the federal appellees.

Before JOHN R. BROWN, Chief Judge, and INGRAHAM and RONEY, Circuit Judges.

JOHN R. BROWN, Chief Judge:

We deal here with a judicial challenge to administrative action — more precisely, with an order of the District Court invalidating a Small Business Administration (SBA) size determination. After carefully reviewing the record and dispelling the aura of confusion that enshrouds this case, we have concluded that the judgment must be reversed.

The facts are largely undisputed. The Allen M. Campbell Company was the low bidder on a government contract set aside under the Small Business Act¹ for the construction of Air Force housing in Florida. Lloyd Wood Construction Company, the second lowest bidder, protested the award on the theory that Campbell was not a "small business" under applicable SBA size standards² because its receipts had been computed under a "completed contracts" rather than a cash accounting method. The SBA Area Administrator rejected this contention and the Size Appeals Board³ affirmed, explicitly holding that Campbell's receipts "do not exceed the $7.5 million size standard" and implicitly adopting the earlier size appeals decision in Pierre Aircon Co. No. 130, March 1, 1965 which found the "completed contracts" accounting method "acceptable under the applicable definition of a small business concern," App. pp. 183, 287-88.⁴

Before the Air Force and Campbell could sign the contract Wood filed suit in the District Court against Campbell, the Air Force contracting officer, and the Administrator of the Small Business Administration, seeking declaratory relief voiding the size determination and injunctive relief against the award to Campbell. The Air Force withheld action pending a judicial decision.

Following a hearing the Trial Court held that although neither the Air Force nor the SBA could be enjoined the award to Campbell was erroneous as a matter of law because the "completed contracts" method was unacceptable for size computation. The award to Campbell was set aside, but there was no order redirecting it to anyone else. Faced with a critical housing shortage, the Air Force revoked its initial award and gave the contract to Wood. Construction is now substantially completed.

Our decision must necessarily be influenced by the declared Congressional policy embodied in the Small Business Act to "aid, counsel, assist, and protect, insofar as is possible, the interests of small-business concerns in order to preserve free competitive enterprise." 15 U.S.C.A. § 631. This broad aim is supplemented by programs providing for special financing through Small Business Investment Companies, 15 U.S.C.A. § 661 et seq. and preferred tax treatment for small business corporations, 26 U.S.C.A. § 1371 et seq. Inherent in the statutory plan is a legislative aim to provide small businesses with significant competitive advantages not available to others, as indicated by the Administrator's authority to insure that small businesses receive any award or contract or any part thereof after determining such action "to be in the interest of assuring that a fair proportion of the total purchases and contracts for property and services for the Government are placed with small-business concerns," 15 U.S.C.A. § 644(3). The preferred treatment accorded to small businesses under the Act and the latitude given the Administrator to to achieve it are thus primary components in our analysis.

Initially we reject Wood's motion to dismiss the appeal on grounds of mootness. Despite the fact that construction is well underway, the question of whether the initial award was rightly or wrongly set aside still has substantial significance for the rights and liabilities of the parties, including Campbell's suit for bid preparation costs now pending in the Court of Claims. Also, there is still the hypothetical (but admittedly unlikely) possibility that the Air Force will terminate the contract with Wood and reaward the project to Campbell.

In considering the merits of the controversy, we need not directly confront the still unsettled problem of whether a disappointed bidder on a government contract has standing to sue the contracting agency (e. g., the Air Force) for injunctive relief.⁵ The Small Business Administration's regulations provide a detailed and comprehensive procedure by which an aggrieved bidder and others can administratively contest a size determination. This is an elaborate structure which takes into account the privileges accorded to a "small business" and the decisive consequence of a size determination not only on competing "small" businesses but "large" ones not qualifying as "small" under the standards.⁶ Whatever vestigial restrictions the standing doctrine may impose in government procurement cases generally, they cannot be twisted to preclude judicial review in this context, though court intrusion may be circumspect and infrequent. All we decide is that, although Wood had standing to challenge the size determination, there was a substantial basis in the record to support the Small Business Administration's initial decision and the District Court was in error when it found otherwise.

From the statute itself we learn nothing about size standards because a small business is defined only as one "independently owned and operated and which is not dominant in its field of operation," 15 U.S.C.A. § 632. However, the Administrator is empowered to effectuate Congressional policy by making "such rules and regulations as he deems necessary to carry out the authority vested in him by or pursuant to this chapter," 15 U.S.C.A. § 634(b) (6). The specific determination of which businesses are to be the beneficiaries of the Act is thus primarily committed by the legislative branch to the administrative agency.

Of course, once having exercised this broad rule-making authority, the agency cannot thereafter arbitrarily construe or apply its rules in a manner inconsistent with fundamental procedural fairness. Greene v. McElroy, 360 U.S. 474, 507-508, 79 S.Ct. 1400, 1419, 3 L. Ed.2d 1377, 1397. But it is an axiom of judicial review that an administrative agency's interpretation of its own regulations must be accorded the greatest deference. Udall v. Tallman, 1965, 380 U.S. 1, 16-17, 85 S.Ct. 792, 801, 13 L.Ed.2d 616, ...