B-167382, OCTOBER 16, 1969, 49 COMP. GEN. 251

B-167382, OCTOBER 16, 1969, 49 COMP. GEN. 251

BIDS -- DISCARDING ALL BIDS -- BIDDING IRREGULARITIES THE DISCLOSURE BY AN EMPLOYEE OF THE CONTRACTING AGENCY TO A PROSPECTIVE BIDDER UNDER AN INVITATION FOR STEVEDORE AND RELATED SERVICES OF INFORMATION RELATING TO THE PERFORMANCE AND COST DATA OF THE INCUMBENT CONTRACTOR VIOLATED PARAGRAPH 1-329.3(C)(4)(A) OF THE ARMED SERVICES PROCUREMENT REGULATION, WHICH EXEMPTS CERTAIN INFORMATION FROM PUBLIC DISCLOSURE, AND THE DISCLOSURE WAS PREJUDICIAL TO THE INCUMBENT CONTRACTOR'S COMPETITIVE POSITION IN BIDDING ON A NEW CONTRACT, AND A SUSPICION OF FAVORITISM HAVING BEEN CREATED BY THE DISMISSAL OF THE EMPLOYEE, THE INVITATION SHOULD BE CANCELED AND READVERTISED TO AVOID JEOPARDIZING THE INTEGRITY OF THE COMPETITIVE SYSTEM. THE ALLEGATION THE INFORMATION COULD HAVE OBTAINED OR CONSTRUCTED FROM OTHER SOURCES IS NEGATED BY THE FACT IT WAS FURNISHED BY AN UNAUTHORIZED SOURCE TO THE PREJUDICE OF OTHER BIDDERS, AND THE RESOLICITATION SHOULD INCLUDE THE INFORMATION CONSIDERED ESSENTIAL TO INTELLIGENT BIDDING.

TO THE SECRETARY OF THE ARMY, OCTOBER 16, 1969:

WE REFER TO REPORTS DATED AUGUST 18 AND 29, 1969, FILE REFERENCE: MA S, FROM YOUR DIRECTOR OF MATERIEL ACQUISITION, ON THE PROTEST OF RYAN STEVEDORING COMPANY, INC. (RYAN), AGAINST THE PROPOSED AWARD OF A CONTRACT TO INTERNATIONAL TERMINAL OPERATING COMPANY, INC. (ITO), FOR STEVEDORE AND RELATED TERMINAL SERVICES AT MILITARY OCEAN TERMINAL, SUNNY POINT, SOUTHPORT, NORTH CAROLINA, UNDER DEPARTMENT OF THE ARMY INVITATION FOR BIDS NO. DAHC 21-68-B-0224. BIDS ON THE SUBJECT SOLICITATION WERE OPENED ON JUNE 11, 1969, AND ITO WAS DETERMINED TO BE LOW WITH RYAN BEING SECOND- LOW.

THE PROTEST IS PREMISED ON THE GROUNDS THAT RYAN, THE INCUMBENT CONTRACTOR, WAS PREJUDICED IN ITS COMPETITIVE POSITION BY THE MISCONDUCT OF ONE OF YOUR DEPARTMENT'S CIVILIAN EMPLOYEES AT THE INSTALLATION, IN THAT SUCH EMPLOYEE MADE KNOWN TO ITO CERTAIN SECRET, CONFIDENTIAL, AND PROPRIETARY INFORMATION CONCERNING RYAN'S PARTICULAR METHODS OF OPERATION AND EFFICIENCY IN PERFORMING SIMILAR WORK REQUIREMENTS UNDER ITS CONTRACT. RYAN SUBMITTED NUMEROUS AFFIDAVITS TO YOUR DEPARTMENT IN SUPPORT OF ITS ALLEGATIONS AS TO THE IMPROPER AND UNAUTHORIZED ACTIVITIES OF THE PARTICULAR EMPLOYEE, AND REQUESTED AN INVESTIGATION OF SUCH ALLEGATIONS.

AFTER AN INVESTIGATION BY YOUR DEPARTMENT, BASED UPON CHARGES OF CONDUCT CONTRARY TO THE PROVISIONS OF PARAGRAPH 3, AR 600-50 AND EXECUTIVE ORDER NO. 11222, PRESCRIBING STANDARDS OF ETHICAL CONDUCT FOR GOVERNMENT OFFICERS AND EMPLOYEES, AND SPECIFICALLY OF REPRESENTING HIMSELF IN A MANNER AS TO APPEAR TO BE AN AGENT FOR ITO, AND PROVIDING AN ITO REPRESENTATIVE WITH INFORMATION RELATIVE TO TRANSPORTATION OPERATING DATA AT SUNNY POINT, THE EMPLOYEE WAS GIVEN A SEPARATION NOTICE. A FORMAL GRIEVANCE HEARING WAS HELD PURSUANT TO AN APPEAL OF THE SEPARATION, AND THE APPEAL WAS DENIED BY THE COMMANDING OFFICER OF THE INSTALLATION. UNDERSTAND THAT A FURTHER APPEAL OF THE SEPARATION IS NOW PENDING IN THE OFFICE OF THE SECRETARY OF THE ARMY.

IT IS REPORTED IN THE FINDINGS OF THE CONTRACTING OFFICER THAT ITO DENIED ALL ALLEGATIONS OF ANY WRONGFUL ACTION OR CONNECTION WITH THE EMPLOYEE IN QUESTION EXCEPT THAT IT ADMITTED RECEIVING CARGO WEIGHT AND CUBE DATA, AND TYPE OF CARGO INFORMATION, FROM THE EMPLOYEE. THE CONTRACTING OFFICER STATES THAT SUCH DATA IS NOT SECRET, CONFIDENTIAL OR PROPRIETARY AND, WHILE THE DATA WAS NOT REQUESTED FROM THE CONTRACTING OFFICER, IT WOULD HAVE BEEN MADE AVAILABLE HAD IT BEEN REQUESTED BY ITO, OR BY ANY OTHER BIDDER, FROM THE CONTRACTING OFFICER. IT IS FURTHER REPORTED THAT THE OTHER INFORMATION ALLEGEDLY IMPARTED TO ITO BY THE EMPLOYEE (NUMBER OF TONS OF CARGO LOADED BY RYAN PER HOUR, AND THE PERFORMANCE, MAKEUP AND EFFICIENCY OF RYAN'S STEVEDORE GANGS) COULD HAVE BEEN FORMULATED BY ITO THROUGH INFORMATION PROPERLY AVAILABLE TO ITO FROM OTHER SOURCES. THE CONTRACTING OFFICER ALSO STATES THAT "THE INFORMATION ALLEGEDLY MADE AVAILABLE DOES NOT COME WITHIN THE SPECIFIC CATEGORIES OF MATTERS WHICH ARE EXEMPT FROM PUBLIC DISCLOSURE UNDER PUBLIC LAW 89-487."

INSOFAR AS RYAN'S HOURLY LOADING RATE AND THE PERFORMANCE, MAKEUP AND EFFICIENCY OF ITS GANGS ARE CONCERNED, WE CONSIDER THE VIEW ADVANCED BY THE CONTRACTING OFFICER (THAT GOVERNMENT DATA OR KNOWLEDGE CONCERNING RYAN'S COST ELEMENTS AND PERFORMANCE IN CONNECTION WITH ITS CONTRACT COULD PROPERLY BE DISCLOSED TO THE PUBLIC BY GOVERNMENT PERSONNEL) TO BE SERIOUSLY QUESTIONABLE. PARAGRAPH 1-329.3(C)(4)(A) OF THE ARMED SERVICES PROCUREMENT REGULATIONS, ISSUED IN IMPLEMENTATION OF PUBLIC LAW 89-487, 5 U.S.C. 552, SPECIFICALLY EXEMPTS FROM PUBLIC DISCLOSURE INFORMATION INCLUDING "STATISTICAL DATA OR INFORMATION CONCERNING CONTRACT PERFORMANCE, INCOME, PROFITS, LOSSES AND EXPENDITURES RECEIVED FROM CONTRACTORS OR POTENTIAL CONTRACTORS." ADDTIONALLY, THE CONTRACTING OFFICER'S VIEWS THAT SUCH INFORMATION COULD BE FORMULATED BY THE EXPERIENCE OF COMPETITIVE CONTRACTORS IN SUCH WORK, UNION INFORMATION, AND ON-SITE INSPECTION, IS EMPHATICALLY DISPUTED BY RYAN ON THE BASIS THAT THE NUMBER OF CONTRACTORS WITH EXPERIENCE IN AMMUNITION STEVEDORING IS VERY SMALL; THAT NO OTHER COMPETING CONTRACTOR (AND ITO IN PARTICULAR) HAS COMPARABLE EXPERIENCE IN AMMUNITION HANDLING AND LOADING SUCH AS RYAN POSSESSES; THAT THE OPERATIONS AT SUNNY POINT ARE UNIQUE AND RYAN HAS HELD THE CONTRACT FOR THE LAST 5 CONSECUTIVE YEARS; THAT A MAJOR COST FACTOR IS THE CARPENTERS USED WITH THE STEVEDORE GANGS IN THE HOLDS OF THE SHIPS WHICH CANNOT BE DETERMINED FROM A GANG COMPOSITION OR AN ON-SITE INSPECTION OF THE FACILITIES; AND THAT DIFFERENT TYPES OF AMMUNITION REQUIRE DIFFERENT GANG SIZES FROM THOSE SPECIFIED IN COLLECTIVE BARGAINING AGREEMENTS.

WHETHER ITO COULD HAVE ACCURATELY ESTIMATED RYAN'S COST ELEMENTS AND TONS OF CARGO LOADED PER HOUR, DOES NOT NEGATE THE FACT THAT REPRESENTATIVES OF ITO DID CONTACT A SOURCE OTHER THAN THAT SPECIFIED IN THE INVITATION, AND NOT OTHERWISE AUTHORIZED, FOR ADDITIONAL INFORMATION WHICH WAS CONSIDERED NECESSARY FOR BIDDING PURPOSES. IF SUCH ADDITIONAL INFORMATION WAS, IN FACT, ESSENTIAL TO, OR HELPFUL IN, THE SUBMISSION OF AN INTELLIGENT BID, AND IF SUCH INFORMATION COULD PROPERLY HAVE BEEN MADE AVAILABLE TO ITO, IT SHOULD HAVE BEEN FURNISHED TO ALL CONCERNED UNDER PARAGRAPH 3 OF THE SOLICITATION INSTRUCTIONS AND CONDITIONS (SF-33A, JULY 1966) WHICH REQUIRES THAT "ANY INFORMATION GIVEN TO A PROSPECTIVE OFFEROR CONCERNING A SOLICITATION WILL BE FURNISHED TO ALL PROSPECTIVE OFFERORS AS AN AMENDMENT OF THE SOLICITATION, IF SUCH INFORMATION IS NECESSARY TO OFFERORS IN SUBMITTING OFFERS ON THE SOLICITATION OR IF THE LACK OF SUCH INFORMATION WOULD BE PREJUDICIAL TO UNINFORMED OFFERORS."

AN AFFIDAVIT HAS BEEN SUBMITTED TO THIS OFFICE BY THE REPRESENTATIVE OF ITO WHO CONTACTED (AND THEREAFTER RECEIVED VARIOUS CALLS FROM) THE CIVILIAN EMPLOYEE IN QUESTION AT SUNNY POINT. IT IS STATED THEREIN THAT, WHILE THE REPRESENTATIVE HAD KNOWN THE EMPLOYEE DURING PRIOR YEARS, HE WAS NOT AWARE THAT THE EMPLOYEE WAS AT SUNNY POINT, AND THAT THE CALL TO OBTAIN TECHNICAL MANUALS CONTAINING SHIPPING INFORMATION ON THE VARIOUS TYPES OF AMMUNITION WAS MADE AT THE SUGGESTION OF AN ARMY OFFICIAL AT THE PORT OF BALTIMORE, MARYLAND, WHO ALSO KNEW THE EMPLOYEE AND THAT HE WAS EMPLOYED AT SUNNY POINT. IT IS FURTHER STATED THAT THE AND THAT HE WAS EMPLOYED AT SUNNY POINT. IT IS FURTHER STATED THAT THE REPRESENTATIVE ASKED THE EMPLOYEE ONLY FOR PACKAGING INFORMATION WITH RESPECT TO AMMUNITION, AND THAT HE NEVER ASKED THE EMPLOYEE TO OBTAIN ANY INFORMATION RELATING IN ANY WAY TO RYAN AND ITS PERFORMANCE AT SUNNY POINT. IN SUCH CONNECTION, HOWEVER, WE CANNOT IGNORE THE AFFIDAVIT SUBMITTED BY RYAN'S GENERAL COUNSEL, SUBMITTED AS EXHIBIT NO. 13 OF THE PROTEST, STATING THAT DURING THE COURSE OF A TELEPHONE CONVERSATION ON JUNE 26, 1969, THE EMPLOYEE ADMITTED TO HAVING GIVEN INFORMATION TO ITO, PRIOR TO BIDDING, CONCERNING THE NUMBER OF TONS OF CARGO LOADED BY RYAN PER HOUR, THE TYPES OF CARGO LOADED, THE CUBE OF THE CARGO LOADED, AND THE PERFORMANCE, MAKEUP AND EFFICIENCY OF RYAN'S STEVEDORE GANGS.

WE ALSO CONSIDER IT PERTINENT TO NOTE THAT IN ANOTHER AFFIDAVIT SUBMITTED TO THIS OFFICE BY THE ITO OFFICIAL WHO RECEIVED THE MATERIAL FROM THE EMPLOYEE, IT IS STATED THAT THE TRANSMITTAL ENVELOPE ALSO INCLUDED A SHEET CONTAINING SOME TWELVE OR THIRTEEN PRICING ITEMS WHICH WERE NOT SPECIFICALLY IDENTIFIED, AND APPENDED TO THAT SHEET WAS A NOTE WHICH THE OFFICIAL REMEMBERS AS HAVING STATED IN SUBSTANCE "MAYBE THIS WILL BE OF SOME USE TO YOU." IT IS FURTHER STATED THAT THE ITEMS WERE ASSUMED BY THE RECIPIENT TO HAVE BEEN COPIED FROM THE 1967 RYAN CONTRACT WITH THE GOVERNMENT, AND INASMUCH AS ITO HAD RECEIVED A COPY OF THE CONTRACT FROM THE CONTRACTING OFFICER SUCH ITEMS WERE NOT FORWARDED TO THE ITO PERSONNEL ENGAGED IN PREPARING ITS BID.

IN ADDITION TO ASSURING THAT ESSENTIAL INFORMATION IS SUPPLIED TO ALL CONCERNED, ANOTHER PURPOSE FOR DESIGNATING IN A SOLICITATION THAT PROSPECTIVE BIDDERS SHALL CALL A DESIGNATED OFFICIAL FOR INFORMATION CONCERNING THE PROCUREMENT IS TO PREVENT ANY SUSPICION OF FAVORITISM AND TO MAINTAIN THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM. WHEN A GOVERNMENT EMPLOYEE, WHO BY VIRTUE OF HIS EMPLOYMENT IS IN A POSITION TO OBTAIN CONFIDENTIAL INFORMATION CONCERNING A CONTRACTOR'S OPERATIONS WHICH WOULD PREJUDICE ITS COMPETITIVE POSITION FOR A PROCUREMENT, IS DETERMINED TO BE GUILTY OF IMPROPER ACTIONS WITH A COMPETING BIDDER IN MATTERS REGARDING THAT PROCUREMENT, THE SUSPICION OF FAVORITISM IMMEDIATELY ARISES, AND THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM IS PLACED IN JEOPARDY.

WHILE WE FORM NO JUDGMENT IN THIS DECISION AS TO WHETHER ITO DID, IN FACT, RECEIVE CONFIDENTIAL INFORMATION FROM THE GOVERNMENT EMPLOYEE AT SUNNY POINT CONCERNING RYAN'S OPERATIONS WHICH PUT ITO IN AN ADVANTAGEOUS AND UNFAIR POSITION OVER RYAN IN THE COMPUTATION OF BIDS, WE BELIEVE THE RECORD ADEQUATELY DEMONSTRATES THAT AN AWARD TO ITO PURSUANT TO THE SUBJECT SOLICITATION COULD ONLY BE MADE UNDER SUCH A CLOUD OF SUSPICION AND MISTRUST AS TO BE CLEARLY DETRIMENTAL TO, AND RESULT IN A LACK OF CONFIDENCE IN, THE COMPETITIVE BIDDING SYSTEM.

ACCORDINGLY, THE PROCUREMENT SHOULD BE READVERTISED WITH SPECIAL EFFORTS BEING MADE TO ASSURE THAT THE INVITATION CONTAINS ALL ESSENTIAL INFORMATION NEEDED BY BIDDERS FOR INTELLIGENTLY COMPUTING THEIR BIDS. THIS CONNECTION WE HAVE BEEN INFORMALLY ADVISED BY REPRESENTATIVES OF RYAN THAT SUCH FIRM WOULD NOT ADVANCE ITS BELIEF THAT CONFIDENTIAL INFORMATION WAS RELEASED IN THE INSTANT PROCUREMENT AS THE BASIS FOR A FURTHER PROTEST IN THE EVENT THE PROCUREMENT IS READVERTISED.

THE FILES FORWARDED WITH THE REPORTS OF AUGUST 18 AND 29, AND LETTER OF SEPTEMBER 22, 1969, FROM CHIEF, PROCEDURES AND REGULATIONS DIVISION, ARE RETURNED.