B-125260, NOV. 7, 1955

B-125260, NOV. 7, 1955

TO MR. I. E. NARIGAN, OWNER, POSTAL TRANSPORTATION:

REFERENCE IS MADE TO YOUR TELEGRAM OF AUGUST 19, 1955, AND LETTER OF AUGUST 18, WITH ENCLOSURES, AND TO THE DOCUMENTS SUBMITTED BY YOU THROUGH THE LEGAL AND MONETARY AFFAIRS SUBCOMMITTEE OF THE COMMITTEE ON GOVERNMENT OPERATIONS, HOUSE OF REPRESENTATIVES, RELATIVE TO YOUR PROTEST AGAINST CONSIDERATION OF THE BID OF GENERAL HIGHWAY SERVICES, INC., FOR A HIGHWAY POST OFFICE CONTRACT ON THE ROUTE BETWEEN PITTSBURGH, PENNSYLVANIA, AND PARKERSBURG, WEST VIRGINIA.

A REPORT HAS BEEN RECEIVED FROM THE SOLICITOR, POST OFFICE DEPARTMENT, RELATIVE TO YOUR PROTEST, WHICH DISCLOSES THAT THE GENERAL HIGHWAY SERVICES, INC., SUBMITTED THE LOWEST BID OF $27,989 PER ANNUM FOR THE PITTSBURGH-PARKERSBURG ROUTE AND THAT YOUR BID OF $30,906 WAS THE THIRD LOWEST BID RECEIVED, HOWEVER, YOU CONTEND THAT NEITHER THE LOW BID OF GENERAL HIGHWAY SERVICES, INC., NOR THE SECOND LOW BID OF VIRGINIA STAGE LINES, SHOULD BE CONSIDERED FOR THE REASON THAT THEY DO NOT MEET THE REQUIREMENTS OF SECTION 3 OF THE ACT OF MAY 31, 1940, 39 U.S.C. 425A, WHICH PROVIDES, IN PERTINENT PART, AS FOLLOWS:

"NO PROPOSAL FOR A CONTRACT FOR STAR ROUTE SERVICE (OR HIGHWAY POST OFFICE SERVICE) SHALL BE CONSIDERED UNLESS THE BIDDER IS A LEGAL RESIDENT OF THE COUNTY OR COUNTIES TRAVERSED BY THE ROADS OVER WHICH THE MAILS ARE TO BE CARRIED, OR A LEGAL RESIDENT WITHIN THE COUNTIES ADJOINING SUCH COUNTY OR COUNTIES; EXCEPT THAT PROPOSALS FOR CARRYING THE MAIL TENDERED BY FIRMS, COMPANIES, OR CORPORATIONS SHALL BE CONSIDERED: PROVIDED, THAT SUCH FIRMS, COMPANIES, OR CORPORATIONS ARE ACTUALLY ENGAGED IN BUSINESS WITHIN THE COUNTIES IN WHICH INDIVIDUALS ARE HEREIN RESTRICTED AS TO RESIDENCE: * * *.'

THE GENERAL HIGHWAY SERVICES, INC., IS CURRENTLY ENGAGED IN THE TRANSPORTATION OF MAIL BETWEEN PITTSBURGH (ALLEGHENY COUNTY) AND ERIE, PENNSYLVANIA, PURSUANT TO A CONTRACT AWARDED TO IT BY THE POST OFFICE DEPARTMENT ON JULY 23, 1954. IT IS REPORTED THAT THE CONTRACT (ON WHICH YOU WERE NOT A BIDDER) WAS AWARDED TO THAT FIRM AS THE LOWEST OF FIVE BIDDERS, WITHOUT PROTEST FROM ANY PARTY. INASMUCH AS THAT ROUTE HAS A COMMON TERMINUS WITH THE ADVERTISED PITTSBURGH-PARKERSBURG ROUTE, THE GENERAL HIGHWAY SERVICES, INC., IS ACTUALLY ENGAGED IN BUSINESS WITHIN A COUNTY (ALLEGHENY) TRAVERSED BY THE ROADS OVER WHICH THE MAILS ARE TO BE CARRIED UNDER THE CURRENT INVITATION. YOU PROTEST, HOWEVER, AGAINST CONSIDERING THAT FIRM'S ACTIVITY ON THE PITTSBURGH-ERIE ROUTE AS QUALIFYING IT TO BID ON THE PITTSBURGH PARKERSBURG ROUTE ON THE GROUND THAT IT WAS NOT QUALIFIED TO RECEIVE THE CONTRACT FOR THE FORMER AT THE TIME OF ITS AWARD.

IN ADDITION TO ITS CURRENT BUSINESS ACTIVITIES AS A CONTRACT MAIL CARRIER, OFFICIALS OF THE GENERAL HIGHWAY SERVICES, INC.,HAVE ASSERTED IN LETTERS DATED AUGUST 17 AND 22, 1955, THAT THE FIRM, PURSUANT TO AN AGREEMENT OF JUNE 14, 1954, WITH THE AMERICAN BUSLINES, INC., (PRIOR TO THE INVITATION FOR BIDS ON THE PITTSBURGH-ERIE ROUTE) INSTALLED AND MAINTAINED CERTAIN COIN VENDING MACHINES ON A COMMISSION BASIS IN THE LATTER'S BUS GARAGE AT 1011 REEDSDALE STREET IN PITTSBURGH AND HAS MAINTAINED AN OFFICE IN THAT CITY SINCE JUNE 1954. THE POST OFFICE DEPARTMENT REPORTS THAT IT HAS NOT DISQUALIFIED CORPORATE BIDDERS FOR STAR ROUTE OR HIGHWAY POST OFFICE CONTRACTS BY REASON OF THEIR BUSINESS ACTIVITIES BEING OTHER THAN TRANSPORTATION. THE DEPARTMENT'S POSITION MAY NOT BE QUESTIONED SINCE NEITHER THE LANGUAGE NOR THE LEGISLATIVE HISTORY OF THE ABOVE-QUOTED STATUTORY PROVISION INDICATES ANY INTENTION TO IMPOSE ANY LIMITATION EITHER AS TO THE TYPE OF BUSINESS IN WHICH A BIDDER MUST BE ENGAGED OR AS TO THE EXTENT OF SUCH BUSINESS.

AT OUR REQUEST, AN INVESTIGATION WAS MADE BY THE POST OFFICE DEPARTMENT AND BY LETTER OF OCTOBER 18, THERE WAS TRANSMITTED A REPORT FROM THE REGIONAL TRANSPORTATION MANAGER, PITTSBURGH, CONFIRMING THE FACT THAT THE GENERAL HIGHWAY SERVICES, INC., HAD INSTALLED AND OPERATED VENDING MACHINES IN PITTSBURGH PRIOR TO ITS BID ON THE PITTSBURGH-ERIE ROUTE. WAS ALSO REPORTED THAT GENERAL HIGHWAY SERVICES PURCHASED A VACANT LOT AT 1006-08-10 STRONG STREET, PITTSBURGH, ADJOINING 1011 REEDSDALE STREET, ON APRIL 18, 1954, WHICH WAS LEASED TO AMERICAN BUSLINES, INC. THE LATTER IMPROVED THE LOT FOR PARKING FACILITIES AND NOW CHARGES GENERAL HIGHWAY SERVICES FOR THE PARKING OF ITS HIGHWAY POST OFFICE BUSES THEREON. EVEN IF IT BE ESTABLISHED THAT THE INSTALLATION OF VENDING MACHINES WAS FOR THE PRIMARY OR SOLE PURPOSE OF QUALIFYING THE FIRM TO BID ON THE INVITATION FOR THE PITTSBURGH-ERIE ROUTE, THERE WAS NO VIOLATION OF THE STATUTORY PROVISION INVOLVED WHICH WOULD PROVIDE A LEGAL BASIS FOR DECLARING THE AWARD OF THAT CONTRACT INVALID. MOREOVER, AS STATED BY THE POST OFFICE DEPARTMENT, THERE IS NO JUDICIAL BASIS FOR CONSIDERING SUCH ACTION AS CONSTITUTING FRAUD IN PROCURING THE CONTRACT. CONSEQUENTLY, THERE WOULD BE NO LEGAL BASIS FOR DENYING THAT FIRM COMPENSATION FOR THE SERVICES RENDERED SINCE AUGUST 1954 UNDER THE PITTSBURGH-ERIE CONTRACT AND IT MUST BE CONSIDERED AS NOW ACTUALLY ENGAGED IN BUSINESS IN PITTSBURGH PURSUANT TO VALID AUTHORIZATION THEREFOR BY THE COMMONWEALTH OF PENNSYLVANIA. WITH RESPECT TO THE ABSENCE OF A CITY LICENSE FOR THE OPERATION OF VENDING MACHINES, WE HAVE HELD THAT THE MERE FACT THAT THE LOW BIDDER HAS NOT YET PAID WHATEVER TAXES AND LICENSE FEES ARE REQUIRED BY A STATE OR MUNICIPALITY AS A PREREQUISITE TO DOING BUSINESS THEREIN IS NOT A SUFFICIENT EXCUSE FOR REJECTION OF HIS BID, IF OTHERWISE PROPER. 19 COMP. GEN. 735; 27 ID. 782.

REGARDING YOUR SUGGESTION THAT THE TEXAS CHARTER OF THE GENERAL HIGHWAY SERVICES, INC. (ORIGINALLY THE LONE STAR TRAILWAYS, INC.) DOES NOT EXTEND TO THE CARRYING OF FREIGHT AND THAT THE PERFORMANCE OF ANY HIGHWAY POSTAL AWARD MAY BE ULTRA VIRES, IT APPEARS FROM THE CHARTER THAT THE CORPORATION WAS FORMED "TO ESTABLISH AND MAINTAIN A LINE OF STAGES" AND "FOR THE PURPOSE OF OPERATING BUS MOTOR VEHICLES OVER THE ROADS AND PUBLIC HIGHWAYS IN THE CARRIAGE OF PERSONS FOR HIRE, AND SUCH CORPORATION IS FORMED AND CREATED FOR DOING SUCH OTHER THINGSAND CONDUCTING SUCH OTHER BUSINESS AS MAY BE LAWFULLY INCIDENTAL TO THE PURPOSE" (OF ESTABLISHING AND MAINTAINING A LINE OF STAGES). THE GENERAL RULE IS THAT THE QUESTION WHETHER A CORPORATION HAS ACTED IN EXCESS OF ITS LAWFUL POWERS CAN ONLY BE RAISED BY ONE INTERESTED IN, OR DEALING WITH, THE CORPORATION, OR IN A DIRECT PROCEEDING BROUGHT BY THE STATE EITHER TO FORFEIT THE CHARTER OR TO SUBJECT IT TO PUNISHMENT FOR THE UNLAWFUL ACT. 13 AM.JUR.SEC. 759. IN THE ABSENCE OF ANY EVIDENCE THAT THE CARRYING OF MAILS IS NOT LAWFULLY INCIDENTAL TO THE CORPORATION'S AUTHORITY TO OPERATE STAGE LINES AND PASSENGER BUSES, AND CONSIDERING THAT THE "CERTIFICATE OF AUTHORITY" ISSUED BY THE COMMONWEALTH OF PENNSYLVANIA TO THE GENERAL HIGHWAY SERVICES, INC., SPECIFICALLY AUTHORIZES THE ,OPERATION OF * * * VEHICLES FOR HANDLING OF U.S. MAIL, AS A CONTRACT CARRIER ONLY," THE AUTHORITY OF THE FIRM APPEARS SUFFICIENTLY BROAD TO COVER THE SUBJECT POST OFFICE CONTRACT.

WITH RESPECT TO YOUR PROTEST THAT THE CERTIFICATION ON THE GENERAL HIGHWAY SERVICES, INC., BID OF JULY 7, 1954, WAS NOT VALID BECAUSE MADE BY AN ASSISTANT POSTMASTER, THE FUNCTION OF CERTIFYING TO THE ACCEPTABILITY OF SURETIES ON BIDS, WHICH ORIGINALLY WAS IMPOSED ON POSTMASTERS BY 39 U.S.C. 426, WAS TRANSFERRED TO THE POSTMASTER GENERAL BY SECTION 1 (A) OF REORGANIZATION PLAN NO. 3 OF 1949 (3 CFR 1949 SUPP., P. 137) AND IS SUBJECT TO REDELEGATION UNDER SECTION 1 (B) OF THE REORGANIZATION PLAN TO OTHER OFFICERS AND EMPLOYEES. THUS, NO STATUTE NOW REQUIRES THAT THE INVITATION'S REQUIREMENT IN THAT REGARD, BEING SOLELY FOR THE BENEFIT OF THE GOVERNMENT, DOES NOT GO TO THE SUBSTANCE OF THE BID AND MAY BE WAIVED SINCE TO DO SO WOULD NOT PREJUDICE THE RIGHTS OF OTHER BIDDERS. CF. 31 COMP. GEN. 20; 30 ID. 170; 20 ID. 4; 16 ID. 493; 14 ID. 305.

IN VIEW OF THE FOREGOING, WE PERCEIVE NO PROPER LEGAL BASIS UPON WHICH WE MAY TAKE EXCEPTION TO THE CONCLUSION OF THE ADMINISTRATIVE OFFICIALS THAT THE CONTRACTOR'S PRESENT ACTIVITIES QUALIFY IT AS A PROPER BIDDER ON THE PITTSBURGH-PARKERSBURG ROUTE WITHIN THE MEANING OF SECTION 3 OF THE ACT OF MAY 31, 1940, QUOTED ABOVE. INASMUCH AS THE LOW BIDDER, GENERAL HIGHWAY SERVICE, INC., IS NOT DISQUALIFIED FROM BIDDING ON THE PITTSBURGH- PARKERSBURG ROUTE, IT IS UNNECESSARY TO CONSIDER THE QUALIFICATIONS OF THE NEXT LOW BIDDER, VIRGINIA STAGE LINES.