Transcontinental Enterprises Inc., No. 3273 (March 27, 1990) Docket No. SIC-90-2-21-18 UNITED STATES OF AMERICA SMALL BUSINESS ADMINISTRATION OFFICE OF HEARINGS AND APPEALS WASHINGTON, D.C. 20416 SIC APPEAL OF: ) ) Transcontinental Enterprises, ) Inc. ) ) Appellant ) Docket No.SIC-90-2-21-18 ) Solicitation No. ) DAAD05-88-R-5974 ) Department of the Army ) Aberdeen Proving Ground, ) Maryland ) DIGEST A solicitation for warehousing in support of a specific government activity is classified under SIC code 4226, "Special Warehousing and Storage, Not Elsewhere Classified," not SIC code 8744, "Facilities Support Management Services." DECISION March 27, 1990 PHILLIPS, Administrative Judge, Presiding: Jurisdiction This decision is rendered pursuant to the provisions of the Small Business Act of 1958, 15 U.S.C. 632 et seq., and the regulations codified at 13 CFR Part 121. Issue Whether the proper Standard Industrial Classification (SIC) code for this solicitation is SIC code 8744, assigned by the Contracting Officer, or SIC codes 4225 or 4226, advocated by Appellant. Facts On February 9, 1990, the Department of the Army issued Solicitation No. DAAD05-88-R-5974 for "Warehousing Support for U.S. Army Combat Systems Test Activity" for the Aberdeen Proving Ground in Maryland. The solicitation was wholly set aside for small business under SIC code 8744, "Facilities Support Management Services," to which a $3.5 million average annual receipts size standard applies, and a bid opening date of March 12, 1990 was established. On February 16, 1990, Transcontinental Enterprises, Inc. (TEI) filed a timely appeal of the Contracting Officer's SIC code designation contending that the solicitation should be classified under SIC code 4225, "General Warehousing and Storage," or SIC code 4226, "Special Warehousing and Storage, Not Elsewhere Classified," to both of which a $12.5 million average annual receipts size standard applies. Appellant argues as follows in support: 1. The title of the Solicitation is: "Warehousing Support for U.S. Army Combat Systems Test Activity [USACSTA]". 2. Section B, Supplies and Services, Bid Schedule list [sic] the following bid items for the base year: A. Project Manager2000 Hours B. Warehouse Worker Leader3000 Hours C. Warehouse Worker31000 Hours D. Overtime hours for the above and second shift E. Monthly lease charge for equipment F. Monthly Charge for an office trailer 3. Section C - Scope of Work C.3 Scope of Work states the following: "The contractor as an independent contractor, and not as an agent of the government, shall provide all personnel, services, supplies and materials unless otherwise specified, to perform warehouse functions in connection with the accountability of tools, parts and equipment." C.3.1 General requirements states the following: "The contractor shall provide mission support personnel to accomplish warehousing functions for USACSTA." C.3.2 Requirements/task states the following: "The contractor shall receive, pick up, inspect, classify, and temporarily store expendable and nonexpendable test and test-support supplies, equipment, material and repair parts." C.3.2.5 This section states: "The contractor shall conduct periodic inventory of nonexpendable supplies and equipment and maintain related hand receipt." C.3.2.8 "The contractor shall initiate requisitions." C.3.2.9 States that the contractor shal thru receive, test, inventory and issue C.3.2.10 reports for POL [petroleum, oil and lubricant] products. C.3.6 Lists the required equipment and vehicles as stated in this section "To perform warehousing functions". C.3.11.1.2 States the project manager must have the following: an educational background, above the High School level, either college or military which is directly related to both supply and Integrated Logistics Systems procedures and activities. C.3.11.1.3 States the project manager must have four years experience of [sic] training in management and coordination of supply and parts support. C.3.11.2.3 Requests that the warehouse worker leader must have two years experience in any area of warehousing and supervisory work which would provide knowledge of warehousing procedures and practices and how they are applied. C.3.11.3.3 Requirement that the warehouse worker be knowledgeable in overall warehouse methods, planning, procedures and techniques. 4. Section I.93, page 56 lists the classification of employees and pay rates if government performed. A. Warehouse Foreman B. Warehousemen C. Supply Clerk D. Supervisory Supply Technician 5. Attachment I Department of Defense contract security classification specifications, Block 10a General identification of the procedure is as follows. "CSTA Warehousing Supply Support" 6. Attachment #5 Job Descriptions. Lists all classifi cations of employees used on the procurement and all are warehouse function personnel. As you can see from the proceeding facts, this contract is for warehousing. The government has classified this contract as SIC Code 8744 - Facilities Support Management Services. Footnote 20 [*/] for SIC 8744 states: "Facilities Management, a component of SIC-8744, has the following definition: Establishments, not elsewhere classified, which provide overall management and the personnel to perform a variety of related support services in operating a complete facility in or around a specific building or within another business or government establishment." My interpretation of this definition would be, to operate a welcome center on base or an information office and to supply personnel to perform the following duties: Secretarial Services, typists, telephone answering, copier operations, etc. This solicitation does NOT fall under this classification because the first sentence of footnote 20 states not "elsewhere classified". These services are covered under SIC 4225 or SIC - 4226. On February 28, 1990, the Contracting Officer submitted the following response to TEI's appeal: I oppose the appeal submitted by Transcontinental Enterprises, Inc. claiming that SIC Code 8744, with a size standard of $3.5 is inappropriate for the above referenced solicitation. The services required are warehousing functions in support of one test directorate. The successful contractor will be required to provide the personnel to support CSTA operations providing a variety of functions. Responsibilities will include, but are not limited to, maintaining locator control files, control registers, custodial accountability, property accountability and general clerical duties in the accountability of tools, parts and equipment. The contractor will also be responsible for the integrated logistic support of initial production test vehicles as well as the receipt, storage and issuance of parts for wheeled track and fleet vehicles as necessary. The contractor will be working with Government peculiar and contractor sensitive items not considered to be standard commercial items or fall into the parameters of general warehousing functions. The SIC Code 4225, General Warehousing and Storage or SIC Code 4226, Special Warehousing and Storage, Not Elsewhere Coded [sic] in [sic] which Mr. Carroll indicated is [sic] a more appropriate selection is suited towards [sic] local or long-distance trucking or transfer services, storage of farm products, or goods at foreign trade zones, automobiles, household or commercial goods. The Statement of Work describes the scope of work and general requirements as follows: The contractor as an independent contractor, and not as an agent of the Government, shall provide all personnel, services, supplies and materials unless otherwise specified, to perform warehouse functions in connection with the accountability of tools, parts and equipment. This workload shall be in support of the U.S. Army Combat Systems Test Activity (USACSTA), Aberdeen Proving Ground (APG), MD as set forth below.. The contractor shall provide Mission Support personnel to accomplish warehousing functions for USACSTA. The contractor's primary location for performance shall be Building 501 and adjacent storage areas. Contractor shall maintain locator files and control registers on all materials and supplies received, stocked, issued and turned- in for disposal. Contractor shall receive, store and deliver equipment, materials, lubricants, and rsolvents, and assume custodial and property accountability responsibilities for all stock handled.. In this connection, the contractor is required to conduct periodic inventories of supplies and equipment and furnish information on their availability, to initiate certain requisitions and administer a testing program for certain supplies and to initiate disposal actions, when appropriate. In performing the contract the contractor must furnish certain vehicles and equipment, including pick-up trucks and forklifts. The storage building, computers and associated equipment are to be furnished by the government. Award of the contract is pending. Discussion SIC code 8744, "Facilities Support Management Services," is described in the 1987 edition of the Standard Industrial Classification Manual as follows: Establishments primarily engaged in furnishing personnel to perform a range of services in support of the operations of other establishments or in providing a number of different continuing services, on a contract or fee basis, within another establishment. Included in the industry are establishments primarily engaged in the private operation of jails and adult correctional facilities, whether or not providing both management and supporting staff. Establishments primarily engaged in operating juvenile correctional homes are classified in Industry 8361. Establishments which provide management and staff to operate a business are classified according to the type of activity of the business. Establishments primarily providing one specialized service, such as janitorial services or guard services, are classified in the specialized industry. Janitorial services are classified in Industry 7349, and guard services are classified in Industry 7381. Establishments primarily engaged in providing management services only, except agricultural, are classified in Industry 8741. Computer facilities management services are classified in Industry 7376. Establishments primarily supplying temporary or continuing help are classified in Industry 7363. Establishments primarily engaged in providing temporary or continuing help for agricultural purposes and agricultural management services are classified in Agriculture, Industry Group 076. Footnote 19 to 121.601 further defines "Facilities Management" as follows: Facilities Manaqement. a component of SIC code 8744, has the following definition: Establishments, not elsewhere classified, which provide overall management and the personnel to perform a variety of related support services in operating a complete facility in or around a specific building, or within another business or Government establishment. Facilities management means furnishing three or more personnel supply services which may include, but are not limited to, secretarial services, typists, telephone answering, reproduction or mimeograph service, mailing service, financial or business management, public relations, conference planning, travel arrangements, word processing, maintaining files and/or libraries, switchboard operation, writers, bookkeeping, minor office equipment maintenance and repair, use of information systems (not programming), etc. SIC codes 4225 and 4226, advocated by TEI, are described in the SIC Manual as follows: 4225 General Warehousing and Storaae Establishments primarily engaged in the warehousing and storage of a general line of goods. The warehousing of goods at foreign trade zones is classified in Industry 4226. Field warehousing is classified in Services, Industry 7389. General warehousing and storage Miniwarehouse warehousing Warehousing, self-storage 4226 Special Warehousing and Storage. Not Elsewhere Classified Establishments primarily engaged in the warehousing and storage of special products, not elsewhere classified, such as household goods, automobiles (dead storage only), furs (for the trade), textiles, whiskey, and goods at foreign trade zones. Warehouses primarily engaged in blending wines are classified in Wholesale Trade, Industry 5182. Automobile dead storage Fur storage for the trade Furniture storage, without local trucking Household goods warehousing and storage, without local trucking Lumber terminals, storage for hire Oil and gasoline storage caverns for hire Petroleum and chemical bulk stations and terminals for hire Storage of goods at foreign trade zones Storage, special: except farm products and cold storage Textile warehousing Warehousing of goods at foreign trade zones Warehousing, special: except farm products and cold storage Whiskey warehousing The Contracting Officer argues that SIC code 8744 is applicable because the "warehousing functions [are] in support of one test directorate," because the functions to be performed are "varied," and because the items to be stored are not "standard commercial items" and the warehousing functions not "general warehousing." TEI, on the other hand, focuses on the duties to be performed, i.e., traditional warehousing functions, and the provision in footnote 19 that only those establishments "not elsewhere classified" are to be classified under SIC code 8744. The operative words in the SIC Manual definition of "Facilities Support Management Services" are: "Establishments primarily providing one specialized service...are classified in the specialized industry." This concept is reflected in the language of footnote 19, which includes in "Facilities Management" only those "[e]stablishments, not elsewhere classified" and further provides that "[f]acilities management means furnishing three or more personnel supply services...." While it is true that the warehousing functions to be performed are in support of a particular government organization, the Combat Systems Test Activity, this may be said of many government warehouses and is not the determinative factor in classifying the solicitation. The work to be performed constitutes "one specialized service," warehousing, rather than work consisting of "three or more personnel supply services." That the items to be handled are not "commercial" is questionable and, more importantly, irrelevant, r since neither SIC code 4225 nor SIC code 4226 speaks in such terms. However, since the goods to be stored are "special products, not elsewhere classified" in Industry Group 422, "Public Warehousing and Storage," the solicitation should be classified under SIC code 4226, to which a $12.5 million average annual receipts size standard applies. Conclusion The solicitation should be classified under SIC code 4226 and the $12.5 million average annual receipts size standard. The appeal is GRANTED, and the Contracting Officers designation is REVERSED. This constitutes the final decision of the Small Business Administration. See 13 CFR 121.1720(b). ______________________________ Jane E. Phillips (Presiding) Administrative Judge ________________________________ Gloria E. Blazsik (Concurring) Administrative Judge _________________________________ Joseph K. Riotto (Concurring) Administrative Judge ________________ */ Recodified effective January 1, 1990 as footnote 19. Solicitations issued on or after January 1, 1990, are regulated by 13 CFR Part 121 published in 54 Fed. Reg. 52634, et seq. on December 21, 1989, effective January 1, 1990.