Johnson Controls, Inc., No. 2906 (June 23, 1988) Docket No. SIC-88-5-23-64 UNITED STATES OF AMERICA SMALL BUSINESS ADMINISTRATION OFFICE OF HEARINGS AND APPEALS WASHINGTON, D.C. 20416 SIC APPEAL OF: ) ) Johnson Controls, Inc., ) ) Appellant ) ) ) Docket No. SIC-88-5-23-64 Solicitation No. ) 5PM-lW-3514-7 ) General Services Administration ) Milwaukee, Wisconsin ) DIGEST The correct Standard Industrial Classification code for maintenance and repair of a building's mechanical systems is SIC code 7699. DECISION June 23, 1988 ANDRETTA, Administrative Judge, Presiding: Jurisdiction This appeal of a service classification is decided pursuant to the Small Business Act of 1958, 15 U.S.C. 632 et seq., and the regulations codified at 13 CFR Part 121 Issue The issue is to determine the correct Standard Industrial Classification code for maintenance and repair of a building's mechanical systems. Facts On May 16, 1988, the General Services Administration (GSA) issued the above-cited solicitation for preventive maintenance and minor repairs of the mechanical equipment in the federal courthouse, Madison, Wisconsin. The solicitation does not contain a Standard Industrial Classification (SIC) code, but it states at page 24 that "the services covered by this solicitation are classified as Mechanical Maintenance," and sets the size standard at $7 million. This means that to be eligible for award of the contract, a concern and any affiliates would be limited to combined average annual receipts for their preceding three fiscal years (aar) of no more than $7 million. Bid opening was set for June 17, 1988. The solicitation specifications call for cooling systems to maintain building temperatures between 78 and 80 degrees Fahrenheit (F) during working hours whenever office space temperatures would otherwise rise above 80 degrees F. Whenever office space temperatures drop below 65 degrees F during working hours, the heating system must maintain between 65 and 68 degrees F, and not more than 55 degrees F during nonworking hours. outside air intake during both heating and cooling seasons must be restricted to a maximum of 10 percent. During working hours, overhead lighting must be maintained at 50 foot-candles in work stations and 10 foot-candles in nonworking areas. Hot water must be supplied at 105 degrees F. The prospective contractor must perform all incidental repairs necessary to prevent a breakdown or failure of any of the building's mechanical equipment and must make any repairs not expected to cost more than $600, as well as the first $600 worth of repairs in emergency situations. Work on higher-cost repairs will not be performed until the Contracting officer's representative has reached an agreement on price. Finally, the prospective contractor must be prepared to provide up to 20 man-hours per month to accomplish small miscellaneous jobs requested by the Contracting officer's representative; e.g., making door keys, hanging pictures, changing directory boards, replacing windows, patching the roof, and painting. On May 20, 1988, Johnson Controls, Inc. (JCI) filed this timely appeal of the service classification of the solicitation, based on its assumption that the SIC code used by the Contracting Officer is 1711. This assumption is based upon a prior solicitation for the same services by the same agency. The prior solicitation (5PM-lW-87-09), issued in May 1987, had also been for preventive maintenance and minor repairs of the mechanical equipment in the Madison Federal courthouse. Originally, the May 1987 solicitation contained no SIC code, but had been classified as "mechanical maintenance" with a size standard of $3.5 million. The contract was awarded to General Heating & Air Conditioning, Inc. (GHAC). JCI protested this award on the basis of its view that GHAC exceeded the size standard. By notice of July 6, 1987, GSA advised JCI of a post-award revision in the size standard to $7 million. In answer to inquiries of JCI regarding reasons and justification for this change, JCI was told that GSA's Regional Office in Chicago had determined that SIC code 1711 was the appropriate classification. This code stands for Construction -Special Trade Contractors - Plumbing, Heating and Air-Conditioning, and bears a size standard of $7 million. JCI argues that SIC code 1711 is inappropriate because the work involved is maintenance and service, not construction. JCI suggests that GSA originally assigned the correct size standard ($3.5 million) in 1987, but modified it to be able to award the contract to GHAC which, it states, qualifies under a $7 million size standard, but not a $3.5 million size standard. JCI argues that the assignment of SIC code 1711 to the current solicitation is a "continuation of the erroneous and arguably improper post award revision in 1987...." JCI suggests that the solicitation should more properly be classified under SIC code 7389 l/ (Business Services, Not Elsewhere Classified) or SIC code 8999 (Services, Not Elsewhere Classified), both of which bear a $3.5 million size standard. On June 9, 1988, the Contracting Officer confirmed by phone that this solicitation is classified under SIC code 1711 and declined to submit a rationale for the classification or a response to the JCI appeal. Discussion The SIC Manual 2/ describes code 1711, under Major Group 17 (Construction - Special Trade Contractors) as follows. Some, but not all, of the provided examples follow the description. 1711 Plumbing, Heating and Air-Conditioning Special trade contractors primarily engaged in plumbing, heating, air-conditioning, and similar work. Sheet metal work performed by plumbing, heating, and air-conditioning contractors in conjunction with the installation of plumbing, heating, and air-conditioning equipment is included here, but roofing and sheet metal work contractors are classified in Industry 1761. Special trade contractors primarily engaged in electrical work are classified in Industry 1731. Air-conditioning, with or without sheetmetal work Boiler erection and installation Drainage system installation Fuel oil burner installation and servicing Furnace repair Heating equipment installation Heating, with or without sheetmetal work Mechanical contractors Piping, plumbing - contractors Plumbing and heating - contractors Plumbing repair Plumbing, with or without sheetmetal work Refrigeration and freezer work Sheet metal work combined with heating or air conditioning Solar heating operator Water pump installation and servicing -contractor Water system balancing and testing -contractors Although it may, at first review, appear to be inappropriate to use a construction SIC code for a maintenance and repair contract, it is apparent that some maintenance and repair of equipment, as well as its installation, is contemplated under SIC code 1711. In fact, some of the specific work sought under the GSA's solicitation would appear to be included in the examples of trades listed as examples under this SIC description. Moreover, it is not unreasonable to say that many of the functions required for installation of mechanical systems in buildings are the same as those required for their later maintenance and repair, e.g., pipe fitting, plumbing, ducting, and electrical connections. JCI's first recommended SIC classification is described in the Manual as follows. Some of the examples provided, are also listed. 7389 Business Services, Not Elsewhere Classified Establishments primarily engaged in furnishing business services, not elsewhere classified, such as bondspersons, drafting services, lecture bureaus, notaries public, sign painting, speakers' bureaus, water softening services, and auctioneering services, on a commission or fee basis. Auctions of used cars and agricultural commodities, such as livestock and produce, are classified in Wholesale Trade. Agents and brokers for authors and nonperforming artists Appraisers, except real estate appraisers Arbitration and conciliation services Automobile shows, flower shows, home shows: promoters of Bondspersons Check validation services Convention decorators Embroidering of advertisements on shirts Handwriting analysis Laminating photographs Speakers' bureaus Styling wigs for the trade Tax collection agencies It is plain from the examples given that individual professional, semi-professional, business oriented, and even artistic services are contemplated under SIC code 7389. Not one of the very long list of examples in the Manual is even remotely analogous to the maintenance and repair of a building's mechanical systems. JCI's second recommended SIC classification is described in the Manual as follows. Again, some of the examples provided are also listed. 8999 Services, Not Elsewhere Classified Establishments primarily providing services, not elsewhere classified, such as authors, lecturers, radio commentators, song writers, weather forecasters, writers, and artists working on their own account. Establishments primarily providing commercial art services are classified in Industry 7336. Actuaries, consulting Advertising copy, writers of Announcers, radio and television service Art restoration Artists, except commercial and medical Authors Entomologists, consulting Ghost writing Inventors Lecturers Music arrangers Psychologists, industrial Song writers Stained glass artists Writers Again, the SIC code suggested by the Appellant would appear, by comparison to the given examples, to be totally inappropriate for inclusion of maintenance and repair of mechanical systems. The Manual also lists Major Group 76 (Miscellaneous Repair Services). This group is described as covering "establishments engaged in miscellaneous repair services." The following SIC code, with its description and examples, is found within this group. 7623 Refrigeration and Air-Conditioning Services and Repair Shops Establishments primarily engaged in servicing and repairing household and commercial electrical refrigerators and air-conditioning and refrigeration equipment. Establishments primarily engaged in servicing and repairing gas refrigeration equipment are classified in Industry 7699, and those repairing automobile air-conditioning equipment are classified in Industry 7539. Air-conditioner repair, self-contained units: except automotive Refrigeration repair service, electric Refrigerator repair service, electric Neither the heading nor the examples include specific references to heating or other, non-air conditioning systems. SIC code 7699 (Repair Shops and Related Services, Not Elsewhere Classified) includes in its examples boiler cleaning, furnace cleaning, medical equipment repair, repair of service station equipment, stove repair, and thermostat repair. Its description is as follows: 7699 Repair Shops and Related Services, Not Elsewhere Classified Establishments primarily engaged in specialized repair services.... This last named SIC code is also listed in the Manual as part of Major Group 76 and has been assigned the same size standard as SIC code 7623; i.e., $3.5 million. While we have found SIC code 1711 to be not totally inappropriate in this case, repair work under that SIC code is only incidentally envisioned. The true cast of SIC code 1711 takes in construction and installation. In contrast, the solicitation in this case calls for maintenance along with some repair, and therefore it is best classified within Major Group 76 (Miscellaneous Repair Services.) It remains to decide which Industry Number from Major Group 76 is most appropriate for classification of this solicitation. Even though SIC code 7623 specifically covers this solicitation's requirements for air conditioning equipment, it says nothing about heating or other mechanical systems. SIC code 7699, while less specific with regard to any of the mechanical systems, is broadly based and includes examples of services needed in this procurement. Thus, we believe it is the correct classification for this solicitation. Conclusion We find that the GSA solicitation is best described by SIC code 7699 (Repair Shops and Related Services, Not Elsewhere Classified) with a size standard of $3.5 million. The appeal is GRANTED, provided SIC code 7699, and not those suggested by Appellant, is substituted for SIC code 1711 as the classification of the solicitation in question. This constitutes the final decision of the Small Business Administration. See 13 CFR 121.11(t), (u) and (v). Robert A. Andretta (Presiding) Administrative Judge Gloria E. Blazsik (Concurring) Administrative Judge Jane E. Phillips (Concurring) Administrative Judge ______________ l/ JCI actually suggests SIC code 7399, which was renumbered as 7389 in the 1987 edition of the Standard Industrial Classification Manual. 2/ Standard Industrial Classification Manual, Office of Management and Budget, 1987 edition.