B-191231, AUG 15, 1978

B-191231, AUG 15, 1978

DIGEST: 1. LOW BIDDER WHICH DID NOT HAVE INTRASTATE OPERATING RIGHTS REQUIRED BY IFB FOR PERFORMANCE OF CONTRACT WAS PROPERLY FOUND NONRESPONSIBLE. 2. UNDER SECTION 1-904.1 OF ASPR NO CONTRACT MAY BE AWARDED TO ANY PERSON OR FIRM UNLESS CONTRACTING OFFICER FIRST MAKES AFFIRMATIVE DETERMINATION THAT PROSPECTIVE CONTRACTOR IS RESPONSIBLE.

MINORITY TRUCKING - TRANSPORTATION DEVELOPMENT CORPORATION; WARD SMITH TRANSFER & STORAGE COMPANY:

ON SEPTEMBER 19, 1977, THE PROCUREMENT DIVISION OF OFFUTT AIR FORCE BASE, NEBRASKA, ISSUED INVITATION FOR BID (IFB) NO. F25600-77-B0122 FOR PACKING AND CRATING SERVICES IN THE OFFUTT AIR FORCE BASE, NEBRASKA, AREA. THE IFB PROVIDED THREE SCHEDULES IN FIVE AREAS.

BID OPENING DATE WAS ESTABLISHED BY AMENDMENT AS 3:00 P.M. JANUARY 11, 1978. WARD SMITH TRANSFER & STORAGE (SMITH) BID ONLY FOR SCHEDULE III, AREA I. SECTION SP-03, PAGE J2 OF THE IFB DEFINES AREA I AS INCLUDING A NUMBER OF NEBRASKA COUNTIES BUT IN PARENTHESIS PROVIDES: "(SCHEDULE III ONLY: IOWA: METROPOLITAN COUNCIL BLUFFS AREA ONLY)". SIX CONTRACTORS BID ON SCHEDULE III, AREA I. SMITH WAS LOW BIDDER; ACE MOVING AND STORAGE (ACE) WAS SECOND LOW BIDDER; AND GORDON MOVING & STORAGE (GORDON) WAS THIRD LOW BIDDER.

THE CONTRACTING OFFICER'S REPORT, RECEIVED HERE MARCH 31, 1978, STATES THAT THE REQUIREMENTS OF PARAGRAPH 38C ON PAGE C-6 OF THE IFB, REQUIRING SUBMISSION OF EVIDENCE OF OPERATING AUTHORITIES, WERE WAIVED AS A MINOR INFORMALITY WHEN SUCH EVIDENCE WAS NOT SUBMITTED WITH THE BIDS. IT WAS DETERMINED, HOWEVER, THAT SUBMISSION OF THE REQUIRED EVIDENCE OF OPERATING AUTHORITIES MUST BE PRESENTED TO THE CONTRACTOR'S OFFICE PRIOR TO CONTRACT AWARD OR A BID WOULD BE RENDERED NONRESPONSIVE AND WOULD BE REJECTED. JANUARY 13, 1978, SEVERAL FIRMS, INCLUDING SMITH, WERE CONTACTED AND REQUESTED TO SUBMIT EVIDENCE THAT THEY POSSESSED ALL REQUIRED OPERATING AUTHORITY. ALL FIRMS EXCEPT SMITH INDICATED THAT SUCH EVIDENCE WOULD BE SENT. SUBPARAGRAPH A AND B OF PARAGRAPH 38 OF THE IFB RELATE TO THE POSSESSION OF OPERATING AUTHORITY FROM THE INTERSTATE COMMERCE COMMISSION. SUBPARAGRAPH C, PERTINENT HERE, PROVIDES:

"EACH BIDDER SHALL SUBMIT, WITH HIS BID, EVIDENCE SATISFACTORY TO THE CONTRACTING OFFICER THAT HE POSSESSES THE REQUIRED AUTHORITY AS SPECIFIED ABOVE. THIS EVIDENCE ALSO SHALL INCLUDE A CERTIFICATION THAT HE POSSESSES ANY REQUIRED STATE AND LOCAL AUTHORITY FOR THE PERFORMANCE OF THE CONTRACT. FAILURE TO FURNISH SUCH EVIDENCE SHALL BE SUFFICIENT GROUNDS FOR A FINDING OF NONRESPONSIVENESS, AND WILL RESULT IN REJECTION OF THE BID."

THE CONTRACTING OFFICER DETERMINED THAT INTERSTATE OPERATING AUTHORITY WAS NOT REQUIRED TO PERFORM UNDER SCHEDULE III, AREA I. HOWEVER, THE CONTRACTING OFFICER WAS ADVISED BY AN OFFICIAL OF THE NEBRASKA PUBLIC SERVICE COMMISSION THAT INTRASTATE OPERATING AUTHORITY IS REQUIRED FOR OPERATION OUTSIDE THE COMMERCIAL ZONE. THE OMAHA, NEBRASKA, COMMERCIAL ZONE IS DEFINED AS THE CITY LIMITS OF OMAHA PLUS FIVE MILES AND THE CITY OF COUNCIL BLUFFS, IOWA. OFFUTT A.F.B. CAPEHART HOUSING AREA IS NOT WITHIN THE OMAHA COMMERCIAL ZONE. PERFORMANCE OF THE SCHEDULE III, AREA I, PART OF THE CONTRACT WOULD THEREFORE REQUIRE INTRASTATE OPERATING AUTHORITY.

ON JANUARY 27, 1978, THE OFFICIAL ADVISED THE CONTRACTING OFFICER THAT SMITH DID NOT POSSESS INTRASTATE OPERATING AUTHORITY AND HAD NOT APPLIED FOR SUCH AUTHORITY. THE INTRASTATE OPERATING AUTHORITY OF ACE WAS RESTRICTED SO THAT PERFORMANCE OF SCHEDULE III, AREA I WOULD NOT BE POSSIBLE. THEREFORE, BOTH SMITH AND ACE WERE DETERMINED TO BE NONRESPONSIBLE. THE CONTRACTING OFFICER STATES:

"DUE TO THE INABILITY OF *** (SMITH) *** TO PROVIDE THE CONTRACTING OFFICER WITH SATISFACTORY EVIDENCE THAT HE POSSESSED THE REQUIRED OPERATING AUTHORITY, A DETERMINATION WAS MADE THAT THE BID SUBMITTED BY *** (SMITH) *** WAS NONRESPONSIVE AND AWARD WOULD BE MADE TO THE NEXT LOW RESPONSIBLE OFFEROR. A DETERMINATION OF NONRESPONSIVENESS WAS ALSO MADE ON *** (ACE) *** WHEN SATISFACTORY EVIDENCE WAS NOT PRESENTED TO THE CONTRACTING OFFICER THAT THEY POSSESSED AN OPERATING AUTHORITY ENABLING THEM TO PERFORM THE SERVICES REQUIRED UNDER SCHEDULE III, AREA I, OF THE IFB."

AWARD WAS THEREFORE MADE ON JANUARY 31, 1978, TO THE THIRD LOW BIDDER, GORDON, WHICH BEGAN SERVICE ON FEBRUARY 1, 1978.

BY LETTER OF FEBRUARY 6, 1978, MINORITY TRUCKING - TRANSPORTATION DEVELOPMENT CORPORATION (MINORITY) FILED A PROTEST WITH OUR OFFICE ON BEHALF OF SMITH ON THE GROUNDS THAT THE CONTRACT WAS NOT AWARDED TO THE APPARENT LOW BIDDER. MINORITY CONTENDED AMONG OTHER THINGS THAT, THE LACK OF OPERATING AUTHORITY NOTWITHSTANDING, THE BEST OF THE GOVERNMENT AND OF THE AMERICAN TAXPAYERS COULD HAVE BEEN SERVED HAD BIDS BEEN OTHERWISE EVALUATED.

IN ITS REPORT, THE CONTRACTING ACTIVITY CONTENDS THAT ANY CHALLENGE TO THE SPECIFICATIONS OF THE IFB WERE NOT TIMELY MADE, BUT EVEN IF TIMELY, THE SPECIFICATIONS WERE NOT TOO RESTRICTIVE BECAUSE INTRASTATE OPERATING AUTHORITY IS REQUIRED FOR PERFORMANCE OF SCHEDULE III, AREA I. OUR DECISION IN LOFTIN'S TRANSFER AND STORAGE COMPANY, INC., 47 COMP.GEN. 539, 541 (1968), IS CITED FOR THE PROPOSITION THAT THE POSSESSION OF THE NECESSARY PERMITS, OR OPERATING RIGHTS IS AN ESSENTIAL CONDITION TO A VALID AWARD OF A TRANSPORTATION SERVICE CONTRACT AND THE CONTRACTING ACTIVITY ALLEGED THAT WHETHER THE LACK OF OPERATING AUTHORITY RELATES TO RESPONSIVENESS OR RESPONSIBILITY IS IRRELEVANT HERE, BECAUSE SMITH NOT ONLY DID NOT HAVE, BUT HAD NOT APPLIED FOR THE REQUIRED INTRASTATE OPERATING AUTHORITY, AND BECAUSE OF ITS FAILURE TO OBTAIN SUCH AUTHORITY SMITH'S BID WAS PROPERLY REJECTED. THE CONTRACTING ACTIVITY CONCLUDES THAT THE PROTEST IS WITHOUT MERIT, AND RECOMMENDS DISMISSAL.

MINORITY AGREED WITH THE REPORT OF THE CONTRACTING ACTIVITY AND WITHDREW ITS PROTEST ON BEHALF OF SMITH. SMITH, HOWEVER, IN A LETTER DATED MAY 2, 1978, INDICATED AN INTEREST IN CONTINUING ITS PROTEST CONTENDING, IN EFFECT, THAT THE PROVISIONS OF THE IFB AS APPLIED WERE UNDULY RESTRICTIVE OF COMPETITION AND RESULTED IN INFLATIONARY COST TO THE GOVERNMENT.

IN AETNA AMBULANCE SERVICE, INC., G & L AMBULANCE SERVICE, B-190187, MARCH 31, 1978, 78-1 CPD 258, OUR OFFICE RECOGNIZED THE DIFFERENCE BETWEEN A GENERAL REQUIREMENT THAT A BIDDER OR CONTRACTOR BE IN COMPLIANCE WITH ANY APPLICABLE LOCAL LICENSING OR PERMIT REQUIREMENTS, WHICH IS NOT A BAR TO AWARD BUT MAKES POSSESSION OF THE LICENSE OR PERMIT A MATTER BETWEEN THE BIDDER AND THE LICENSING AUTHORITY, AND A LICENSING REQUIREMENT SPECIFICALLY ESTABLISHED FOR THE PROCUREMENT, COMPLIANCE WITH WHICH IS A MATTER OF BIDDER RESPONSIBILITY. PARAGRAPH 38 ON PAGE C-6 OF THE IFB CLEARLY ESTABLISHES POSSESSION OF THE LOCAL LICENSE OR PERMIT AS A MATTER OF BIDDER RESPONSIBILITY.

ALTHOUGH THE PROVISION STATES IN SUBPARAGRAPH C THAT FAILURE TO FURNISH EVIDENCE OF LOCAL OPERATING AUTHORITY WOULD CONSTITUTE SUFFICIENT GROUNDS FOR A FINDING OF NONRESPONSIVENESS, THE FAILURE WAS NOT, IN FACT, TREATED AS A MATTER OF RESPONSIVENESS. NOTWITHSTANDING THE LANGUAGE OF RESPONSIVENESS OUR OFFICE HAS RECOGNIZED AND APPROVED SIMILAR PROVISIONS AFFECTING RESPONSIBILITY. SEE 53 COMP.GEN. 51, 54 (1973), CITING B-174348, DECEMBER 29, 1971. SEE ALSO RELIABLE BUILDING MAINTENANCE CO., B-190167, FEBRUARY 17, 1978, 78-1 CPD 139, CITING HAUGHTON ELEVATOR DIVISION, RELIANCE ELECTRIC COMPANY, 55 COMP.GEN. 1051 (1976), 76-1 CPD 294.

WHERE THE CONTRACTING OFFICER IS AWARE OF AND FAMILIAR WITH THE LOCAL REQUIREMENTS, HE MAY PROPERLY TAKE REASONABLE STEPS TO ASSURE THAT A BIDDER IS LEGALLY ABLE TO PERFORM A CONTRACT BY REQUIRING THE BIDDER COMPLY WITH A SPECIFIC KNOWN STATE OR LOCAL LICENSE REQUIREMENT IN ORDER TO ESTABLISH RESPONSIBILITY, SINCE IT IS REASONABLE FOR THE CONTRACTING OFFICER TO BE MORE CONCERNED WITH PROPER PERFORMANCE THAN WITH ULTIMATE SUCCESS IN LITIGATION. SEE 53 COMP.GEN. SUPRA. SECTION 75-309 OF THE NEBRASKA STATUTES, RRS 1943 75-309, PROVIDES THAT IT SHALL BE UNLAWFUL FOR ANY COMMON OR CONTRACT CARRIER BY MOTOR VEHICLE TO ENGAGE IN ANY INTRASTATE OPERATIONS ON ANY PUBLIC HIGHWAY IN NEBRASKA UNLESS THERE IS IN FORCE WITH RESPECT TO SUCH COMMON CARRIER A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY, OR A PERMIT TO SUCH CONTRACT CARRIER, ISSUED BY THE PUBLIC SERVICE COMMISSION AUTHORIZING SUCH OPERATIONS. AND SECTION 1- 904.1 OF THE ARMED SERVICES PROCUREMENT REGULATION STATES THAT NO CONTRACT SHALL BE AWARDED TO ANY PERSON OR FIRM UNLESS THE CONTRACTING OFFICER FIRST MAKES AN AFFIRMATIVE DETERMINATION THAT THE PROSPECTIVE CONTRACTOR IS RESPONSIBLE.

THE IFB INDICATES THAT THIS PROCUREMENT IS A SMALL BUSINESS SET ASIDE. SECTION 2(A) OF THE SMALL BUSINESS ACT, 72 STAT. 389, AS AMENDED BY SECTION 501 OF PUB. L. 95-89, AUGUST 4, 1977, 15 U.S.C. 637(B)(7)(A), PROVIDES THAT IT IS THE DUTY OF THE SMALL BUSINESS ADMINISTRATION (SBA) AND IT IS EMPOWERED TO CERTIFY TO GOVERNMENT PROCUREMENT OFFICERS WITH RESPECT TO ALL ELEMENTS OF RESPONSIBILITY AND A GOVERNMENT PROCUREMENT OFFICER MAY NOT, FOR ANY REASON OF RESPONSIBILITY, PRECLUDE ANY SMALL BUSINESS CONCERN OR GROUP OF SUCH CONCERNS FROM BEING AWARDED A CONTRACT WITHOUT REFERRING THE MATTER FOR A FINAL DISPOSITION TO THE SBA. THERE IS NO INDICATION IN THE REPORT OF THE CONTRACTING ACTIVITY OR IN THE CONTRACTING OFFICER'S STATEMENT OR ANYWHERE IN THE RECORD THAT THE NONRESPONSIBILITY OF EITHER SMITH OR ACE WAS REFERRED TO THE SBA AS REQUIRED BY THE LAW, NOR IS THERE INDICATION OF JUSTIFICATION FOR NONREFERRAL. SEE ASPR SECTION 1-705.4C SUBPARAGRAPHS IV, V AND VI. HOWEVER, THE CONTRACT HAS BEEN AWARDED AND THE CONTRACTUAL PERIOD HAS BEEN HALF PERFORMED. NO PROTEST HAS BEEN MADE TO A FAILURE TO REFER THE DETERMINATION OF RESPONSIBILITY. THEREFORE, AND SINCE FOR THE REASONS INDICATED, THE CONTRACTING OFFICER REASONABLY BELIEVED THAT HE WAS DEALING WITH AN ISSUE OF RESPONSIVENESS, OUR OFFICE WILL NOT NOW QUESTION THAT DETERMINATION.

ACCORDINGLY, THE PROTEST IS DENIED.