B-161410, SEP. 26, 1967

B-161410, SEP. 26, 1967

BIDS - MULTIPLE DECISION RE PROTEST OF GUITON'S CHARTER BUS SERVICE AGAINST AWARD BY WESTERN AREA MILITARY TRAFFIC MANAGEMENT AND TERMINAL SERVICE, OAKLAND ARMY BASE. REAFFIRMATION OF DECISION OF AUGUST 25, 1967, IN WHICH IT WAS HELD THAT FAILURE OF CONTRACTING OFFICER TO SET LIMITING DATE FOR SUBMISSION OF PROTEST WOULD NOT AFFECT VALIDITY OF AWARD TO ANOTHER. CERTIFICATION THAT TWO COMPANIES WERE NOT OWNED OR CONTROLLED BY PARENT COMPANY MAY NOT BE REGARDED AS IMPROPER ON THE BASIS THAT SAME INDIVIDUAL IS OWNER OF BOTH CORPORATIONS. PROTEST IS AGAIN DENIED.

TO BERKLEY, RANDALL AND HARVEY, ATTORNEYS AT LAW:

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 29, 1967, COMMENTING ON OUR DECISION TO YOU OF AUGUST 25, 1967, WHICH DENIED THE PROTEST MADE ON BEHALF OF MR. ANDRE GUITON, D/B/A GUITON'S CHARTER BUS SERVICE, BERKELEY, CALIFORNIA, AGAINST THE AWARD OF A CONTRACT TO CALIFORNIA SIGHTSEEING TOURS, INCORPORATED, HARBOR CITY, CALIFORNIA, PURSUANT TO INVITATION FOR BIDS NO. DAHC23-67-B-0015, ISSUED DECEMBER 2, 1966, BY THE WESTERN AREA MILITARY TRAFFIC MANAGEMENT AND TERMINAL SERVICE, OAKLAND ARMY BASE, OAKLAND, CALIFORNIA.

YOU INDICATE THAT YOU ARE PREPARED TO ACCEPT THE DECISION WITH TWO EXCEPTIONS WITH RESPECT TO WHICH YOU REQUEST A CLARIFICATION OR FURTHER COMMENT.

YOUR FIRST EXCEPTION HAS REFERENCE TO OUR ONSIDERATION OF YOUR CONTENTION THAT YOUR CLIENT WAS NOT ADVISED BY THE CONTRACTING OFFICER OF ANY TIME LIMITATION FOR THE SUBMISSION OF A WRITTEN PROTEST. THE RECORD SHOWS THAT THE CONTRACTING OFFICER WAS ORALLY INFORMED ON JANUARY 25, 1967, THAT YOUR CLIENT INTENDED TO PROTEST IF AN AWARD WAS MADE OTHER THAN TO GUITON'S CHARTER BUS SERVICE. YOU WERE ADVISED THAT IT WAS YOUR CLIENT'S PREROGATIVE TO SUBMIT A PROTEST AND THAT THE PROTEST SHOULD BE SUBMITTED IN THE FORM OF A LETTER SIGNED BY MR. GUITON. WE CONCLUDED THAT A TIME LIMITATION FOR SUBMISSION OF A WRITTEN PROTEST SHOULD HAVE BEEN SPECIFIED IN ACCORDANCE WITH THE PROVISIONS OF SUBSECTION 2-407.9, ARMED SERVICES PROCUREMENT REGULATION (ASPR). HOWEVER, WE STATED THAT IT WOULD APPEAR THAT A WRITTEN PROTEST SHOULD HAVE BEEN SUBMITTED PROMPTLY AFTER THE MEETING OF JANUARY 25, 1967, SINCE IT WAS CONTEMPLATED THAT THE PERIOD OF THE PROPOSED CONTRACT WOULD COMMENCE ON FEBRUARY 1, 1967. OUR DECISION OTHERWISE INDICATED THAT THE FAILURE OF THE CONTRACTING OFFICER TO SET A LIMITING DATE FOR THE SUBMISSION OF A WRITTEN PROTEST WOULD NOT AFFECT IN ANY MANNER THE VALIDITY OF THE CONTRACT WHICH WAS AWARDED TO CALIFORNIA SIGHTSEEING TOURS, INCORPORATED.

YOU SUGGEST THAT, IN CONCLUDING THAT A WRITTEN PROTEST SHOULD HAVE BEEN SUBMITTED PROMPTLY AFTER THE MEETING OF JANUARY 25, 1967, WE FAILED TO TAKE INTO ACCOUNT THE EVIDENCE SHOWING THAT ON JANUARY 25, 1967, YOU DELIVERED TO MR. CAMPOS, THE CONTRACTING OFFICER, A STATEMENT WHEREIN MR. GUITON AGREED TO AN EXTENSION OF HIS CONTRACT FOR A PERIOD OF 30 DAYS. YOU STATE THAT THE CONTRACTING OFFICER ADVISED YOU THAT MR. GUITON WOULD HAVE THE CONTRACT FOR AT LEAST 30 MORE DAYS. HOWEVER, IN A DEPARTMENTAL MEMORANDUM DATED APRIL 27, 1967, A COPY OF WHICH WAS FURNISHED TO YOU PRIOR TO THE DATE OF OUR DECISION, IT WAS STATED THAT THE CONTRACTING OFFICER ASKED WHETHER MR. GUITON WOULD BE WILLING TO EXTEND HIS CONTRACT FOR ONE MONTH, IF SO REQUESTED, BECAUSE THE LOW BIDDER HAD REQUESTED PERMISSION TO WITHDRAW HIS BID AND THE REQUEST WAS BEING PROCESSED BY HIGHER HEADQUARTERS. THE MEMORANDUM ALSO STATED THAT "MR. CAMPOS DID NOT EVER REQUEST THE EXTENSION BECAUSE IT PROVED UNNECESSARY.'

AS EXPLAINED IN THE DECISION OF AUGUST 25, 1967, THE BIDDER WHO SUBMITTED THE LOWEST OF THE EIGHT BIDS RECEIVED IN RESPONSE TO THE INVITATION FOR BIDS WAS PERMITTED TO WITHDRAW HIS BID AFTER REVIEW OF THE FACTS AND CIRCUMSTANCES CONCERNING THE MISTAKE WHICH WAS ALLEGED TO HAVE BEEN MADE IN SUCH BID. A CONTRACT WAS AWARDED ON JANUARY 30, 1967, TO CALIFORNIA SIGHTSEEING TOURS, INCORPORATED, AS THAT RESPONSIBLE BIDDER WHOSE BID WAS THE LOWEST OF THE SEVEN BIDS WHICH REMAINED FOR CONSIDERATION AFTER IT WAS DETERMINED THAT THE LOWEST BIDDER PROPERLY COULD WITHDRAW HIS BID.

THE RECORD BEFORE US SHOWS THAT THE MISTAKE IN BID QUESTION WAS SUBMITTED TO HIGHER HEADQUARTERS BY A COMMUNICATION OF JANUARY 24, 1967, AND IT APPEARS THAT THE DECISION AUTHORIZING A WITHDRAWAL OF THE LOW BID WAS NOT FURNISHED TO THE CONTRACTING OFFICER PRIOR TO THE MEETING OF JANUARY 25, 1967. IT IS THEREFORE A MATTER OF CONSIDERABLE DOUBT WHETHER THE CONTRACTING OFFICER WOULD HAVE BEEN WARRANTED IN ADVISING YOU ON JANUARY 25, 1967, THAT MR. GUITON'S CURRENT BUS SERVICE CONTRACT, WHICH WAS TO EXPIRE ON JANUARY 31, 1967, WOULD BE EXTENDED FOR A PERIOD OF 30 DAYS. THERE MAY HAVE BEEN A MISUNDERSTANDING WITH RESPECT TO THE CIRCUMSTANCES UNDER WHICH MR. GUITON AGREED TO CONTINUE PERFORMANCE FOR AN ADDITIONAL PERIOD OF ONE MONTH, BUT THE RECORD BEFORE US REASONABLY SUPPORTS THE OPINION EXPRESSED IN OUR DECISION OF AUGUST 25, 1967, THAT A WRITTEN PROTEST SHOULD HAVE BEEN SUBMITTED PROMPTLY AFTER THE MEETING OF JANUARY 25, 1967.

YOUR SECOND EXCEPTION HAS REFERENCE TO THE STATEMENT AT PAGE 4 OF THE DECISION THAT WE DO NOT AGREE WITH YOUR SUGGESTION THAT, BECAUSE OF THE ELEMENT OF COMMON OWNERSHIP, NEITHER THE SUCCESSFUL BIDDER NOR M AND M CHARTER LINES, INCORPORATED, PROPERLY COULD HAVE CERTIFIED THAT IT WAS NOT OWNED OR CONTROLLED BY A PARENT COMPANY. YOU TAKE EXCEPTION TO THAT STATEMENT AS NOT BEING CONSISTENT WITH PARAGRAPH 13 OF STANDARD FORM 33-A, WHICH WAS MADE A PART OF INVITATION FOR BIDS NO. DAHC23-67-B-0015.

PARAGRAPH 13 OF STANDARD FORM 33-A PROVIDES AS FOLLOWS:

"PARENT COMPANY. - A PARENT COMPANY FOR THE PURPOSE OF THIS BID IS A COMPANY WHICH EITHER OWNS OR CONTROLS THE ACTIVITIES AND BASIC BUSINESS POLICIES OF THE BIDDER. TO OWN ANOTHER COMPANY MEANS THE PARENT COMPANY MUST OWN AT LEAST A MAJORITY (MORE THAN 50 PERCENT) OF THE VOTING RIGHTS IN THAT COMPANY. TO CONTROL ANOTHER COMPANY, SUCH OWNERSHIP IS NOT REQUIRED; IF ANOTHER COMPANY IS ABLE TO FORMULATE, DETERMINE, OR VETO BASIC BUSINESS POLICY DECISIONS OF THE BIDDER, SUCH OTHER COMPANY IS CONSIDERED THE PARENT COMPANY OF THE BIDDER. THIS CONTROL MAY BE EXERCISED THROUGH THE USE OF DOMINANT MINORITY VOTING RIGHTS, USE OF PROXY VOTING, CONTRACTUAL ARRANGEMENTS OR OTHERWISE.'

OUR DECISION OF AUGUST 25, 1967, SETS FORTH THAT THE BID SUBMITTED BY CALIFORNIA SIGHTSEEING TOURS, INCORPORATED, THE SECOND LOWEST BIDDER, WAS SIGNED BY MR. W. B. SAWYER, VICE PRESIDENT AND MANAGER OF THE COMPANY; AND THAT THE BID SUBMITTED BY M AND M CHARTER LINES, INCORPORATED, THE SIXTH LOWEST BIDDER, WAS SIGNED BY MR. D. A. MANNINO, PRESIDENT OF THAT COMPANY. THE DECISION ALSO STATES THAT MR. MANNINO IS THE PRINCIPAL OWNER OF BOTH CORPORATIONS AND THAT THE FACILITIES OF THE TWO CORPORATIONS ARE INTERRELATED TO A CONSIDERABLE EXTENT.

YOU CONTEND THAT THE STATEMENT AT PAGE 4 OF OUR DECISION IS OBVIOUSLY ERRONEOUS SINCE MR. MANNINO, BEING THE PRINCIPAL OWNER OF BOTH CORPORATIONS, CAN FORMULATE, DETERMINE OR VETO BASIC POLICY DECISIONS OF THE TWO CORPORATIONS BY THE EXERCISE OF HIS "MAJORITY" OR "DOMINANT MINORITY VOTING RIGHTS.' HOWEVER, IT IS A GENERALLY ACCEPTED RULE THAT A CORPORATION IS AN ENTITY DISTINCT FROM ITS SHAREHOLDERS OR MEMBERS AND THAT THE FICTION OF CORPORATE ENTITY SHOULD NOT BE DISREGARDED EXCEPT WHEN NECESSARY TO PROMOTE JUSTICE IN SUCH CASES AS FRAUD, VIOLATION OF LAW OR CONTRACT, OR PUBLIC WRONG, OR TO WORK OUT THE EQUITIES AMONG MEMBERS OF THE CORPORATION INTERNALLY AND INVOLVING NO RIGHTS OF THE PUBLIC OR THIRD PERSONS. SEE SECTION 25 OF THE 1963 REVISED VOLUME 1, FLETCHER CYCLOPEDIA CORPORATION, PERMANENT EDITION. ALSO, SEE SCHENLEY CORPORATION V. UNITED STATES, 326 U.S. 432, WHEREIN THE SUPREME COURT STATED THAT CORPORATE ENTITIES "WILL NOT BE DISREGARDED WHERE THOSE IN CONTROL HAVE DELIBERATELY ADOPTED THE CORPORATE FORM IN ORDER TO SECURE ITS ADVANTAGES AND WHERE NO VIOLENCE TO THE LEGISLATIVE PURPOSE IS DONE BY TREATING THE CORPERATE ENTITY AS A SEPARATE LEGAL PERSON.'

PARAGRAPH 13 OF STANDARD FORM 33-A DEFINES A PARENT COMPANY AS ONE WHICH EITHER OWNS OR CONTROLS THE ACTIVITIES AND BASIC BUSINESS POLICIES OF THE BIDDER, AND THERE IS NOTHING IN THE SUPPLEMENTARY LANGUAGE OF THAT PARAGRAPH TO INDICATE THAT THE RELATIONSHIP OF PARENT AND SUBSIDIARY COMPANY WAS TO BE DETERMINED IN A PARTICULAR CASE ON THE BASIS OF THE OWNERSHIP OR CONTROL OF TWO CORPORATIONS BY THE SAME INDIVIDUALS. PARAGRAPH 13 SPECIFICALLY REFERS TO ,COMPANY" OWNERSHIP AND CONTROL AND, SINCE A CORPORATION IS AN ENTITY DISTINCT FROM ITS SHAREHOLDERS OR MEMBERS, IT IS REASONABLE TO CONCLUDE THAT THE CERTIFICATIONS MADE BY CALIFORNIA SIGHTSEEING TOURS, INCORPORATED, AND M AND M CHARTER LINES, INCORPORATED, THAT THEY WERE NOT OWNED OR CONTROLLED BY A PARENT COMPANY CANNOT BE SAID TO HAVE BEEN IMPROPER SIMPLY BECAUSE MR. MANNINO IS THE PRINCIPAL OWNER OF BOTH CORPORATIONS. IN OUR OPINION, IF IT WAS INTENDED THAT COMMON OWNERSHIP OF THE CAPITAL STOCK IN TWO CORPORATIONS WAS TO BE CONSIDERED AS AMOUNTING TO A PARENT AND SUBSIDIARY COMPANY RELATIONSHIP, PARAGRAPH 13, DEFINING THE TERM "PARENT COMPANY," SHOULD HAVE INCLUDED A PROVISION TO THAT EFFECT. IN ANY EVENT, THE PURPOSE OF THE REQUIREMENT FOR DISCLOSURE OF PARENT COMPANY CONTROL IS TO OBTAIN INFORMATION TO AID IN THE ENFORCEMENT OF THE ANTI-TRUST LAWS (SEE 41 U.S.C.A., APPENDIX, 41 CFR SEC. 1-1.1605-1) AND MR. MANNINO'S CONTROL OVER BOTH CORPORATIONS WAS KNOWN TO THE CONTRACTING OFFICER BEFORE THE AWARD.

ACCORDINGLY, AND SINCE YOU HAVE NOT QUESTIONED OUR BASIC CONCLUSION THAT WE WOULD NOT BE WARRANTED IN TAKING EXCEPTION TO THE CONTRACT WHICH WAS AWARDED TO CALIFORNIA SIGHTSEEING TOURS, INCORPORATED, THE DECISION DENYING THE PROTEST MADE ON BEHALF OF MR. GUITON IN THE MATTER IS HEREBY AFFIRMED.