B-150791, B-150861, APR. 25, 1963

B-150791, B-150861, APR. 25, 1963

TO POLETTI, FREIDIN, PRASHKER AND HARNETT:

REFERENCE IS MADE TO YOUR LETTER DATED MARCH 12, 1963, AND SUBSEQUENT CORRESPONDENCE, WRITTEN IN BEHALF OF S. S. SILBERBLATT, INC., PROTESTING AGAINST THE ACTION OF THE GENERAL SERVICES ADMINISTRATION IN DETERMINING THAT THE COMPANY COULD NOT BE CONSIDERED A RESPONSIBLE BIDDER ON PROJECTS NOS. 23907 AND 30905, AND IN REJECTING THE COMPANY'S LOW BIDS ON THESE PROJECTS.

AS INDICATED BY THE REPORT OF THE GENERAL SERVICES ADMINISTRATION TO THIS OFFICE, A COPY OF WHICH WAS FURNISHED TO YOU, THE DETERMINATION THAT S. S. SILBERBLATT, INC., COULD NOT BE CONSIDERED A RESPONSIBLE BIDDER FOR PURPOSES OF THESE PROCUREMENTS WAS BASED UPON (1) LACK OF INTEGRITY AND (2) LACK OF A SATISFACTORY RECORD OF PERFORMANCE AND THE NECESSARY EXPERIENCE TO PERFORM WORK OF THE CHARACTER AND QUALITY REQUIRED.

WITH RESPECT TO THE BIDDER'S INTEGRITY, THE RECORDS INDICATE THAT ONE SHEPARD S. SILBERBLATT OWNS 60 PERCENT OF THE STOCK OF S. S. SILBERBLATT, INCORPORATED; THAT HE IS PRESIDENT OF THE CORPORATION; AND THAT HE IS ALSO A MEMBER OF ITS BOARD OF DIRECTORS. THE RECORDS FURTHER SHOW THAT IN APRIL 1962 SHEPARD S. SILBERBLATT AND SEYMOUR KAPLAN, WHO OCCUPIED THE POSITION OF PROJECT SUPERINTENDENT WITH S. S. SILBERBLATT, INC., WERE INDICTED BY A GRAND JURY, BRONX COUNTY, NEW YORK, FOR VIOLATION OF SECTION 378 OF THE NEW YORK PENAL LAW, A FELONY, FOR BRIBERY OF PUBLIC OFFICIALS IN CONNECTION WITH THE PERFORMANCE OF WORK UNDER A CONTRACT FOR CONSTRUCTION OF THE MONROE AND ROSEDALE HOUSES, A PROJECT OF THE NEW YORK CITY HOUSING AUTHORITY. ON DECEMBER 11, 1962, BOTH DEFENDANTS WERE PERMITTED TO PLEAD GUILTY TO THE LESSER MISDEMEANOR CHARGE OF AIDING AND ABETTING IN THE RECEIPT BY A PUBLIC OFFICIAL OF A FEE OR COMPENSATION FOR OFFICIAL SERVICES NOT ACTUALLY RENDERED (SECTIONS 1930 AND 1936 OF THE NEW YORK PENAL LAW). ON FEBRUARY 8, 1963, BOTH DEFENDANTS WERE SENTENCED TO ONE YEAR IN THE PENITENTIARY--- EXECUTION STAYED--- NO PROBATION. PRIOR TO JANUARY 9, 1963, AND IMMEDIATELY AFTER RECEIPT OF A COPY OF THE STATEMENT FILED BY THE DISTRICT ATTORNEY SETTING OUT HIS REASONS FOR RECOMMENDING ACCEPTANCE OF THE DEFENDANTS' PLEA OF GUILTY TO A LESSER OFFENSE, THE NEW YORK CITY HOUSING AUTHORITY DISQUALIFIED S. S. SILBERBLATT, INC., FROM FURTHER BIDDING ON AUTHORITY CONTRACTS.

YOUR PROTEST AGAINST REJECTION OF THE BIDS SUBMITTED BY S. S. SILBERBLATT, INCORPORATED, INSOFAR AS SUCH PROTEST IS DIRECTED TO THE DETERMINATION THAT THE COMPANY LACKED THE REQUISITE INTEGRITY TO BE CONSIDERED A RESPONSIBLE BIDDER, IS BASED UPON YOUR BELIEF (1) THAT THE GENERAL SERVICES ADMINISTRATION HAS ADVANCED DIFFERENT AND INCONSISTENT BASES FOR REJECTION OF SUCH BIDS, AND THAT THE DETERMINATION OF "LACK OF INTEGRITY" BY THE GENERAL SERVICES ADMINISTRATION WAS IMPROPERLY BASED, EITHER WHOLLY OR IN PART, UPON THE INDICTMENT OF SHEPARD S. SILBERBLATT FOR VIOLATION OF SECTION 378 OF THE PENAL LAW AND RELATED INDICTMENTS OF VARIOUS PUBLIC OFFICERS FOR VIOLATION OF SECTION 372 OF THE PENAL LAW; AND (2) THAT THE CONVICTION OF SHEPARD S. SILBERBLATT FOR VIOLATION OF SECTION 1830 OF THE PENAL LAW, WHEN VIEWED IN THE LIGHT OF THE ACTS ADMITTED BY THE DEFENDANT IN HIS PLEA OF GUILTY, IS INSUFFICIENT BASIS TO SUPPORT THE ADMINISTRATOR'S DETERMINATION THAT HE LACKED THE INTEGRITY OF A RESPONSIBLE BIDDER.

YOUR BELIEF THAT THE GENERAL SERVICES ADMINISTRATION HAS ADVANCED DIFFERENT AND INCONSISTENT GROUNDS FOR REJECTING EACH OF THE LOW BIDS SUBMITTED BY S. S. SILBERBLATT, INC., IS BASED IN PART UPON THE DIFFERENCE IN THE LANGUAGE OF THE NOTICES OF REJECTION FURNISHED THE COMPANY. THUS, BY LETTER DATED FEBRUARY 8, 1963, THE CONTRACTING OFFICER NOTIFIED THE COMPANY AS FOLLOWS:

"IN ACCORDANCE WITH THE RIGHTS RESERVED IN PARAGRAPH 10 (B) OF INSTRUCTIONS TO BIDDER, STANDARD FORM 22, YOUR BID RECEIVED JANUARY 10, 1963, FOR THE CONSTRUCTION OF A NEW FEDERAL OFFICE BUILDING, KANSAS CITY, MISSOURI, IS HEREBY REJECTED.'

WITH RESPECT TO THE COMPANY'S BID ON THE NEW YORK CITY FEDERAL OFFICE BUILDING, THE COMPANY WAS ADVISED OF REJECTION OF ITS LOW BID BY LETTER DATED FEBRUARY 20, 1963, AS FOLLOWS:

"IN OUR OPINION, S. S. SILBERBLATT, INC., DOES NOT HAVE A SATISFACTORY RECORD OF INTEGRITY AND PERFORMANCE AND THE NECESSARY EXPERIENCE FOR THE PARTICULAR CONTRACT, AS REQUIRED BY SECTION 1-1.310 5 OF THE FEDERAL PROCUREMENT REGULATIONS.'

SECTION 10 OF THE INSTRUCTIONS TO BIDDERS READS AS FOLLOWS:

"10. AWARD OF CONTRACT. (A) AWARD OF CONTRACT WILL BE MADE TO THAT RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, IS MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED.

"/B) THE GOVERNMENT MAY, WHEN IN ITS INTEREST, REJECT ANY OR ALL BIDS OR WAIVE ANY INFORMALITY IN BIDS RECEIVED.'

IT IS YOUR POSITION THAT THE ADMINISTRATION'S FAILURE TO REFER TO SECTION 10 (A) IN ITS FEBRUARY 8 LETTER NOTIFYING S. S. SILBERBLATT, INC., OF REJECTION OF ITS BID ON THE KANSAS CITY BUILDING, INDICATES THAT THE ADMINISTRATION HAD NOT MADE A FINDING AS OF FEBRUARY 8 THAT THE CORPORATION WAS NOT A "RESPONSIBLE BIDDER.' HOWEVER, WE FIND THAT RECORDS OF THE ADMINISTRATION DO, IN FACT, INDICATE THAT A DETERMINATION WAS MADE AS OF FEBRUARY 8, 1963, THAT THE CORPORATION DID NOT QUALIFY AS A RESPONSIBLE BIDDER, AND THAT THE FINDINGS OF FACT BY THE ADMINISTRATION SET OUT BOTH LACK OF INTEGRITY AND LACK OF EXPERIENCE AS BASES FOR SUCH DETERMINATION.

IN VIEW OF THE REQUIREMENT, AS SET OUT IN SECTION 5-1.310-6 OF THE GSA PROCUREMENT REGULATIONS, THAT BIDDERS BE ADVISED OF THE REASON FOR REJECTION OF THEIR BIDS WHEN SUCH REJECTION IS BASED UPON A DETERMINATION THAT THE BIDDER DOES NOT QUALIFY AS A RESPONSIBLE BIDDER, IT WOULD APPEAR THAT THE LETTER OF FEBRUARY 8 DID NOT COMPLY WITH SUCH REGULATORY REQUIREMENTS. HOWEVER, IN VIEW OF THE FACT THAT S. S. SILBERBLATT, INC., MADE A TIMELY PROTEST AGAINST THE AWARD TO THE SECOND LOW BIDDER AND NOTICE TO PROCEED HAS BEEN WITHHELD BY THE ADMINISTRATION PENDING DETERMINATION OF THE MERTIS OF SUCH PROTEST, WE SEE NO BASIS UPON WHICH THE ADMINISTRATION'S FAILURE TO COMPLY WITH SUCH REGULATORY REQUIREMENT COULD, IN ITSELF, AFFECT THE VALIDITY OF THE CONTRACT AWARDED.

WITH RESPECT TO WHETHER THE ADMINISTRATION'S DETERMINATION OF "LACK OF INTEGRITY" WAS IMPROPERLY BASED, EITHER WHOLLY OR IN PART, UPON THE INDICTMENT OF SHEPARD S. SILBERBLATT FOR VIOLATION OF SECTION 378 OF THE PENAL LAW, AND UPON RELATED INDICTMENTS OF VARIOUS PUBLIC OFFICERS FOR VIOLATION OF SECTION 372, YOUR BELIEF THAT SUCH WAS THE CASE APPEARS TO BE BASED UPON THE FACT THAT THE REPORT WHICH THE ADMINISTRATION SUBMITTED TO THIS OFFICE ON YOUR PROTEST INCLUDED INFORMATION AND DOCUMENTS RELATIVE TO ALLEGED BUT UNPROVEN ACTS ON WHICH THE INDICTMENT OF SHEPARD S. SILBERBLATT FOR VIOLATION OF THE FINDINGS OF FACT DATED FEBRUARY 8 REFERRED TO ABOVE, WHICH STATED THE BELIEF THAT "THIS PLEA OF GUILTY BY THE PRINCIPAL OFFICER OF THE BIDDER SHOWS LACK OF INTEGRITY OF THE BIDDER AND HAS A BEARING ON ITS RESPONSIBILITY," THE FACTS OF RECORD DO NOT SUPPORT YOUR POSITION. BE THAT AS IT MAY, IT WOULD APPEAR THAT CONSIDERATION OF SHEPARD S. SILBERBLATT'S INTEGRITY, INSOFAR AS IT IS RELATED TO HIS VIOLATION OF SECTION 1830 OF THE PENAL LAW, SHOULD PROPERLY BE LIMITED TO THE ESSENTIAL ELEMENTS OF THE OFFENSE DESCRIBED IN THAT STATUTE (SEE PEOPLE V. VAN ORDEN, 19 N.Y.S. 2D 938) AND TO THOSE FACTS WHICH MAY PROPERTY BE CONSIDERED AS ESTABLISHED BY HIS PLEA OF GUILTY TO A VIOLATION OF THAT STATUTE (SEE PEOPLE V. GRIFFIN, 199 N.Y.S. 2D 674). OUR CONSIDERATION OF WHETHER SHEPARD S. SILBERBLATT'S CONVICTION CONSTITUTES A SUFFICIENT BASIS TO SUPPORT THE ADMINISTRATION'S DETERMINATION THAT HE LACKED THE INTEGRITY OF A RESPONSIBLE BIDDER WILL THEREFORE BE ON THAT BASIS.

YOUR BELIEF THAT THE RECORD, IF SO LIMITED, IS INSUFFICIENT TO JUSTIFY A FINDING THAT THE DEFENDANT LACKED THE INTEGRITY OF A RESPONSIBLE BIDDER IS BASED UPON THE FOLLOWING:

1. THAT SECTION 1830 OF THE PENAL LAW IS NOT A PART OF ARTICLE 34, BRIBERY AND CORRUPTION, AND THAT A VIOLATION OF SECTION 1830 DOES NOT IMPORT A CORRUPT BARGAIN, SINCE IT IS NOT AN ELEMENT OF THE VIOLATION THAT A PUBLIC OFFICER AGREES TO BE INFLUENCED, IS INTENDED TO BE INFLUENCED, OR IS INFLUENCED BY THE RECEIPT OF FEES OR COMPENSATION FOR SERVICES NOT ACTUALLY RENDERED.

2. THAT A VIOLATION OF SECTION 1830 IS A MISDEMEANOR, WHILE A VIOLATION OF SECTION 378 IS A FELONY.

3. THAT SHEPARD S. SILBERBLATT'S PLEA OF GUILTY TO A VIOLATION OF SECTION 1830 WAS BASED SOLELY UPON HIS ADMISSION THAT DURING THE PERIODS OF THANKSGIVING AND CHRISTMAS OF 1959 AND 1960 HE CAUSED "LIQUOR, TURKEYS, AND OTHER SIMILAR COMMODITIES" TO BE DISTRIBUTED AMONG PUBLIC OFFICERS WHO WERE INSPECTORS ON THE MONROE AND ROSEDALE HOUSING PROJECTS, AND THAT NO INTENT TO INFLUENCE, OR EVIDENCE THAT SUCH ACTS DID INFLUENCE, SUCH INSPECTORS WAS ESTABLISHED BY THE RECORD OF THE DEFENDANT'S PLEA OF GUILTY.

BEFORE CONSIDERING THE MERITS OF THESE CONTENTIONS IT WOULD APPEAR TO BE PROPER TO CONSIDER THE NECESSITY FOR DETERMINING A BIDDER'S RESPONSIBILITY, AND THE PROPRIETY OF CONSIDERING A BIDDER'S INTEGRITY IN MAKING SUCH DETERMINATION.

UNDER SECTION 303 (B) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT, 41 U.S.C. 253 (B), CONTRACTING AGENCIES ARE REQUIRED TO AWARD FORMALLY ADVERTISED CONTRACTS ONLY TO RESPONSIBLE BIDDERS, AND IT IS WELL ESTABLISHED BY RULE OF COURT AND OF THIS OFFICE THAT A BIDDER'S INTEGRITY IS A PROPER MATTER FOR CONSIDERATION IN DETERMINING A BIDDER'S RESPONSIBILITY. O-BRIEN V. CARNEY, 6 F.SUPP. 761, 762; ARTHUR VENNERI CO. V. PATERSON HOUSING AUTHORITY, 149 A. 2D 228, 234, AND CASES CITED THEREIN; 30 COMP. GEN. 235, 238; 39 ID. 868, 872. CONSIDERATION OF A BIDDER'S INTEGRITY IS MADE MANDATORY UPON THE NONDEFENSE AGENCIES OF THE GOVERNMENT BY THE PROVISIONS OF SECTION 1 1.310-5 (A) (5) OF THE FEDERAL PROCUREMENT REGULATIONS, WHICH PROVIDE THAT A PROSPECTIVE CONTRACTOR MUST, IN THE OPINION OF THE CONTRACTING OFFICER, HAVE A SATISFACTORY RECORD OF INTEGRITY IN ORDER TO QUALIFY AS A RESPONSIBLE BIDDER. THE PRINCIPLE HAS BEEN FURTHER RECOGNIZED IN SECTION 1-1.605 (A) (1) OF THE REGULATIONS, WHICH AUTHORIZES DEBARMENT OF A FIRM OR INDIVIDUAL IF SUCH FIRM OR INDIVIDUAL IS CONVICTED OF THE COMMISSION OF A CRIMINAL OFFENSE AS AN INCIDENT TO OBTAINING A CONTRACT, OR IN AN ATTEMPT TO OBTAIN A CONTRACT, OR IN THE PERFORMANCE THEREOF.

THE PROVISIONS OF SECTION 1-1.605 (A) OF THE FEDERAL PROCUREMENT REGULATIONS ARE, IN ALL MATERIAL RESPECTS, IDENTICAL WITH THOSE OF PARAGRAPH 1-604.1 (A) OF THE ARMED SERVICES PROCUREMENT REGULATION. THIS CONNECTION, IT SHOULD BE NOTED THAT IN 39 COMP. GEN. 868, 872, THIS OFFICE HELD THAT, FOR PURPOSES OF DETERMINING THE RESPONSIBILITY OF A BIDDER, HIS INTEGRITY AND BUSINESS ETHICS MAY PROPERLY BE DETERMINED BY APPLYING THE "CAUSES FOR DEBARMENT" ENUMERATED IN ASPR 1 604.1. ON THIS BASIS WE THINK THAT CIVILIAN AGENCIES OF THE GOVERNMENT, WHO PROCURE SUPPLIES AND SERVICES SUBJECT TO THE PROVISIONS OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT AND THE FEDERAL PROCUREMENT REGULATIONS ISSUED THEREUNDER, MAY PROPERLY GIVE CONSIDERATION TO A BIDDER'S CONVICTION FOR THE COMMISSION OF A CRIMINAL OFFENSE INCIDENT TO PERFORMANCE OF A CONTRACT, AS SET OUT IN SECTION 1-1.605 (A) (1) OF THE FEDERAL PROCUREMENT REGULATIONS, IN DETERMINING WHETHER SUCH BIDDER IS TO BE CONSIDERED A RESPONSIBLE BIDDER AS REQUIRED BY 41 U.S.C. 253 (B) AND SECTION 1-1.310 OF THE FEDERAL PROCUREMENT REGULATIONS.

THERE CAN BE NO QUESTION THAT A PLEA OF GUILTY WHICH IS BASED UPON THE ADMISSION OF ACTS CONSTITUTING A CRIMINAL OFFENSE IS, FOR ALL PRACTICAL PURPOSES, IDENTICAL WITH A CONVICTION FOR COMMISSION OF THE SAME OFFENSE BASED UPON PROOF OF THE SAME ACTS. APPLYING THEN, THE RULES SET OUT ABOVE, IT WOULD APPEAR TO BE CLEARLY ESTABLISHED THAT THE OFFENSE TO WHICH SHEPARD S. SILBERBLATT PLEADED GUILTY, THOUGH CLASSIFIED AS A MISDEMEANOR, WAS A CRIMINAL OFFENSE WITHIN THE MEANING OF SECTION 1-1.605 (A) (1) OF THE FEDERAL PROCUREMENT REGULATIONS. SEE, IN THIS CONNECTION, SECTION 2, ARTICLE 1, OF THE PENAL LAW OF NEW YORK, WHICH PROVIDES THAT A CRIME IS EITHER A FELONY OR A MISDEMEANOR; THAT A FELONY IS A CRIME WHICH IS OR MAY BE PUNISHABLE BY DEATH OR IMPRISONMENT IN A STATE PRISON; AND THAT ANY OTHER CRIME IS A MISDEMEANOR.

IT IS OUR FURTHER OPINION THAT THE ACTS TO WHICH SHEPARD S. SILBERBLATT PLEADED GUILTY ARE ADEQUATELY ESTABLISHED AS HAVING BEEN COMMITTED IN THE PERFORMANCE OF A PUBLIC CONTRACT, AND THAT BOTH THE EXPRESSED AND IMPLIED CRITERIA SET OUT IN SECTION 1-1.605 (A) (1) OF THE FEDERAL PROCUREMENT REGULATIONS HAVE THEREFORE BEEN MET BY SUCH PLEA. WE THEREFORE HOLD THAT CONSIDERATION BY THE CONTRACTING AGENCY OF SHEPARD S. SILBERBLATT'S PLEA OF GUILTY, IN DETERMINING WHETHER HE LACKED THE INTEGRITY OF A RESPONSIBLE BIDDER, WAS A PROPER EXERCISE OF ADMINISTRATIVE DISCRETION. THERE REMAINS FOR CONSIDERATION WHETHER THE RECORD OF SUCH PLEA OF GUILTY, AND SUBSEQUENT JUDGMENT THEREON, WAS SUFFICIENT TO SUPPORT THE ADMINISTRATION'S DETERMINATION THAT SHEPARD S. SILBERBLATT, IN HIS INDIVIDUAL CAPACITY, LACKED THE INTEGRITY OF A RESPONSIBLE BIDDER AND, IF SO, WHETHER SUCH LACK OF INTEGRITY COULD PROPERLY BE IMPUTED TO THE BIDDER, S. S. SILBERBLATT, INC.

SECTIONS 1830, 1936 AND 1937 OF THE NEW YORK PENAL LAW PROVIDE AS FOLLOWS:

"1830--- TAKING FEES FOR SERVICES NOT RENDERED.--- AN EXECUTIVE OFFICER WHO ASKS OR RECEIVES ANY FEE OR COMPENSATION FOR ANY OFFICIAL SERVICE WHICH HAS NOT BEEN ACTUALLY RENDERED, EXCEPT IN CASES OF CHARGES FOR PROSPECTIVE COSTS, OR OF FEES DEMANDABLE IN ADVANCE IN THE CASES ALLOWED BY LAW, IS GUILTY OF A MISDEMEANOR.'

"1936--- PUNISHMENT OF ACCESSORY TO MISDEMEANOR.--- WHEN AN ACT OR OMISSION IS DECLARED BY STATUTE TO BE A MISDEMEANOR, AND NO PUNISHMENT FOR AIDING OR ABETTING IN THE DOING THEREOF IS EXPRESSLY PRESCRIBED, EVERY PERSON WHO AIDS, OR ABETS ANOTHER IN SUCH ACT OROMISSION IS ALSO GUILTY OF MISDEMEANOR.'

"1937--- PUNISHMENT OF MISDEMEANORS WHEN NOT FIXED BY STATUTE.--- A PERSON CONVICTED OF A CRIME DECLARED TO BE A MISDEMEANOR, FOR WHICH NO OTHER PUNISHMENT IS SPECIFICALLY PRESCRIBED BY THIS CHAPTER, OR BY ANY OTHER STATUTORY PROVISION IN FORCE AT THE TIME OF THE CONVICTION AND SENTENCE, IS PUNISHABLE BY IMPRISONMENT IN A PENITENTIARY, OR COUNTY JAIL, FOR NOT MORE THAN ONE YEAR, OR BY A FINE OF NOT MORE THAN FIVE HUNDRED DOLLARS, OR BY BOTH.'

THE ESSENTIAL ELEMENTS OF THE CRIME DESCRIBED BY SECTION 1830 WOULD APPEAR TO BE AS FOLLOWS:

1. A DUTY ON THE PART OF A PUBLIC OFFICER TO RENDER AN OFFICIAL SERVICE.

2. A FAILURE TO RENDER SUCH SERVICE.

3. A REQUEST FOR, OR THE RECEIPT OF, COMPENSATION BY SUCH OFFICER FOR RENDITION OF SUCH SERVICE, NOTWITHSTANDING HIS FAILURE TO RENDER IT.

AS INDICATED IN PEOPLE V. VAN ORDEN, SUPRA, A PLEA OF GUILTY TO A LESSER OFFENSE THAN THAT CHARGED ADMITS ALL OF THE ESSENTIAL ELEMENTS OF THE OFFENSE OF WHICH THE ACCUSED PLEADS GUILTY. THE PLEA BY SHEPARD S. SILBERBLATT THEREFORE ADMITS THAT A PUBLIC OFFICER OR OFFICERS HAD THE DUTY TO PERFORM AN OFFICIAL SERVICE; THAT SUCH OFFICER OR OFFICERS FAILED TO PERFORM SUCH SERVICE; THAT SUCH OFFICER OR OFFICERS RECEIVED COMPENSATION FOR SUCH SERVICE; AND THAT SHEPARD S. SILBERBLATT AIDED AND ABETTED SUCH OFFICER OR OFFICERS IN THE RECEIPT OF COMPENSATION FOR A SERVICE WHICH WAS NOT ACTUALLY RENDERED.

WHILE THERE DOES NOT APPEAR TO BE ANY DOUBT OR DISPUTE THAT THE PUBLIC OFFICERS WHOM SHEPARD S. SILBERBLATT PLEADED GUILTY TO AIDING AND ABETTING WERE BUILDING INSPECTORS EMPLOYED ON THE MONROE-ROSEDALE HOUSES, IT WOULD APPEAR THAT ANY DOUBT ON THESE LIMITED POINTS CAN PROPERLY BE RESOLVED BY REFERENCE TO THE INDICTMENT. SEE PEOPLE V. GRIFFIN, SUPRA.

FURTHER, THE TRANSCRIPT OF SHEPARD S. SILBERBLATT'S PLEA OF GUILTY TO A VIOLATION OF SECTION 1830 INCLUDES, AMONG OTHER THINGS, THE FOLLOWING STATEMENTS:

"THE COURT: I WANT TO ASK MR. SILBERBLATT A FEW QUESTIONS FIRST, AND THEN I-LL TALK TO THE DISTRICT ATTORNEY, THEN I-LL TALK TO MR. SILBERBLATT AGAIN. AS I-VE INDICATED, IF YOU ARE INNOCENT THE COURT WILL DO EVERYTHING IN ITS POWER TO HELP ESTABLISH YOUR INNOCENCE. ON THE OTHER HAND, IF YOU ARE GUILTY, THE COURT WANTS YOU TO SAY SO AND THE COURT WANTS TO KNOW WHY, AND THE COURT WILL ACT ACCORDINGLY.

"NOW MR. SILBERBLATT, YOUR LAWYER SAYS THAT YOU WANT TO WITHDRAW YOUR PLEA OF NOT GUILTY AND THAT YOU WANT TO PLEAD GUILTY TO A VIOLATION OF SECTION 1830 OF THE PENAL LAW. SECTION 1830 OF THE PENAL LAW, STRICTLY SPEAKING, DOES NOT APPLY TO YOU. IT APPLIES TO AN EXECUTIVE OFFICER; HOWEVER, IT HAS BEEN EXPLAINED TO ME IN A CONFERENCE BETWEEN THE DISTRICT ATTORNEY AND YOUR ATTORNEY THAT YOU AIDED AND ABETTED THE EXECUTIVE OFFICER IN RECEIVING THE GRATUITY OR THE COMPENSATION OR THE FEE. NOW DO YOU UNDERSTAND WHAT YOU ARE PLEADING GUILTY TO, MR. SILBERBLATT?

"DEFENDANT SILBERBLATT: YES, SIR.

"THE COURT: WHAT YOU ARE PLEADING GUILTY TO IS A MISDEMEANOR. YOU UNDERSTAND THAT?

"DEFENDANT SILBERBLATT: YES, SIR.

"THE COURT: NOW MR. DISTRICT ATTORNEY. HE'S GOING TO TELL ME WHAT THE FACTS OF THE CASE ARE, AND THEN I WANT TO ASK YOU SOME QUESTIONS, BUT FIRST I WANT TO KNOW, ARE YOU PLEADING GUILTY OF YOUR OWN FREE WILL?

"DEFENDANT SILBERBLATT: I AM, SIR.

" THE COURT: ARE YOU?

"DEFENDANT SILBERBLATT: I AM.

"THE COURT: HAS YOUR LAWYER, OR THE DISTRICT ATTORNEY OR ANYONE, PROMISED YOU ANY SENTENCE OR ANY PARTICULAR SENTENCE, OR TOLD YOU WHAT YOUR SENTENCE WILL BE?

"DEFENDANT SILBERBLATT: NO, YOUR HONOR.

"THE COURT: BECAUSE I DON-T KNOW MYSELF. NO ONE CAN TELL YOU. ALL RIGHT.

"MR. ANOLIK: YOUR HONOR, THE INDICTMENT HEREIN CHARGED THAT THE DEFENDANT AND SEYMOUR KAPLAN, AS THE PRESIDENT OF THE GENERAL CONTRACTOR, S. S. SILBERBLATT, INCORPORATED, AND AS SUPERVISOR AT THAT PROJECT, NAMELY MR. KAPLAN, SUPERVISOR AT A PROJECT BEING RUN BY THE GENERAL CONTRACTOR, NAMELY THE MONROE ROSEDALE HOUSING PROJECT, DID PAY CERTAIN GRATUITIES OR DISBURSE CERTAIN GRATUITIES TO PUBLIC OFFICIALS OR EXECUTIVE OFFICERS AT THE MONROE ROSEDALE HOUSING PROJECT TO COURT FAVOR OR TO ENGENDER FEELINGS OF GOOD WILL, AND TO COURT FAVOR WITH PUBLIC OFFICIALS.

"NOW BY THIS PLEA MR. SILBERBLATT IS ADMITTING THAT DURING THE PERIOD OF THANKSGIVING AND CHRISTMAS OF 1959 AND 1960 HE CAUSED TO BE DISTRIBUTED AMONG PUBLIC OFFICIALS AT THAT JOB ITEMS SUCH AS LIQUOR, TURKEYS AND SIMILAR COMMODITIES FOR THE AFORESAID PURPOSE, AND THE PEOPLE FEEL THAT IN VIEW OF THE FACT THAT MR. SILBERBLATT HIMSELF WAS A VICTIM HERE TO SOME EXTENT, NAMELY A LARCENY THAT WAS COMMITTED AGAINST HIS ORGANIZATION, THAT MR. SILBERBLATT WAS COOPERATIVE WITH THE PEOPLE, THAT HE HAS NO PRIOR RECORD AND HAS AN EXEMPLARY REPUTATION, THAT THIS IS A FAIR DISPOSITION OF THE CHARGES AGAINST HIM, AND ACCORDINGLY THE PEOPLE RECOMMEND ITS ACCEPTANCE. WE WILL OF COURSE FILE A STATEMENT PURSUANT TO LAW.

"THE COURT: ALL RIGHT. MR. SILBERBLATT, IS IT TRUE THAT YOU GAVE GRATUITIES OR FEES OR PRESENTS TO THIS OFFICIAL---

"MR. ANOLIK: OFFICIALS.

"THE COURT: OR THESE OFFICIALS IN THIS---

" MR. ANOLIK: MONROE ROSEDALE HOUSING PROJECT.

"THE COURT: MONROE ROSEDALE PROJECT:

"DEFENDANT SILBERBLATT: IT'S TRUE THAT I GAVE PRESENTS AT THANKSGIVING AND AT CHRISTMAS TIME.

"THE COURT: ALL RIGHT, I-LL TAKE THE PLEA.

"COURT CLERK MACDONALD: SHEPARD S. SILBERBLATT AND SEYMOUR KAPLAN, DO YOU AND EACH OF YOU---

"THE COURT: I DON-T KNOW ABOUT KAPLAN. WE DIDN-T GET TO KAPLAN, JUST SILBERBLATT.

"COURT CLERK MACDONALD: MR. SILBERBLATT, DO YOU WITHDRAW YOUR PLEA OF NOT GUILTY HERETOFORE ENTERED, AND DO YOU NOW PLEAD GUILTY TO VIOLATION OF SECTION 1830 OF THE PENAL LAW AS A MISDEMEANOR UNDER INDICTMENT NUMBER 537 OF 1962? DO YOU PLEAD GUILTY TO THAT SECTION?

"DEFENDANT SILBERBLATT: YES, I PLEAD GUILTY TO COVER THE INDICTMENT.'

APPLYING NO MORE THAN THE ORAL ADMISSIONS OF SHEPARD S. SILBERBLATT QUOTED ABOVE TO THE MATERIAL ELEMENTS OF A VIOLATION OF SECTION 1830 WHICH, AS SET OUT ABOVE, ARE ALSO ADMITTED BY THE PLEA OF GUILTY, WE MUST CONCLUDE THAT THE RECORD ESTABLISHES BEYOND ANY REASONABLE DOUBT THAT HIS CONVICTION WAS BASED UPON HIS ADMISSION, BOTH EXPRESS AND IMPLIED BY LAW, THAT BY GIVING PRESENTS AT THANKSGIVING AND CHRISTMAS TO CERTAIN PUBLIC OFFICERS WHO WERE ASSIGNED TO PERFORM OFFICIAL DUTIES IN CONNECTION WITH THE CONSTRUCTION OF THE MONROE AND ROSEDALE HOUSING PROJECTS, HE AIDED AND ABETTED SUCH OFFICERS IN RECEIVING COMPENSATION FOR OFFICIAL DUTIES WHICH SUCH OFFICIALS DID NOT ACTUALLY RENDER. IT IS OUR OPINION THAT THE INTEGRITY OF ONE WHO SO AIDS AND ABETS A PUBLIC OFFICIAL IS SUBJECT TO QUESTION. WHERE, AS IN THE INSTANT CASE, IT IS ADMITTED THAT SUCH GIFTS WERE MADE TO OFFICIALS WHO FAILED TO PERFORM DUTIES IN CONNECTION WITH THE PERFORMANCE OF WORK ON A PUBLIC CONTRACT, IT IS OUR OPINION THAT SUCH ADMISSIONS CONSTITUTE SUBSTANTIAL EVIDENCE THAT THE ONE SO AIDING AND ABETTING LACKED INTEGRITY.

WHETHER EVIDENCE OF A BIDDER'S LACK OF INTEGRITY IS SUFFICIENT TO WARRANT A FINDING IN ANY PARTICULAR CASE BY THE BIDDER IS NOT RESPONSIBLE IS A MATTER PRIMARILY FOR EVALUATION BY THE PROCURING AGENCY AND, BECAUSE REASONABLE MEN MAY WELL DIFFER IN SUCH EVALUATION, THIS OFFICE HAS ADOPTED THE RULE THAT WE WILL NOT SUBSTITUTE OUR JUDGMENT FOR THAT OF THE CONTRACTING AGENCY UNLESS IT IS SHOWN THAT THE AGENCY'S DETERMINATION WAS NOT BASED UPON SUBSTANTIAL EVIDENCE DEMONSTRATING THE BIDDER'S LACK OF RESPONSIBILITY. 36 COMP. GEN. 42; 37 ID. 798; 38 ID. 131; ID. 778; 39 ID. 468; CF. 39 ID. 868. BASED UPON THE PRESENT RECORD, WE MUST CONCLUDE THAT THERE WAS SUBSTANTIAL EVIDENCE TO SUPPORT THE ADMINISTRATION'S DETERMINATION THAT SHEPARD S. SILBERBLATT LACKS THE INTEGRITY OF A RESPONSIBLE BIDDER.

WHETHER A CONVICTION WHICH REFLECTS UPON THE INTEGRITY OF A CORPORATE OFFICIAL MAY BE IMPUTED TO THE CORPORATION ITSELF WAS DISCUSSED AT LENGTH IN OUR DECISION OF DECEMBER 23, 1959, 39 COMP. GEN. 468. IN THAT CASE, WHILE RECOGNIZING THAT A CORPORATION GENERALLY IS TO BE VIEWED AS SEPARATE AND DISTINCT FROM ITS STOCKHOLDERS, WE POINTED OUT THAT A CORPORATION CAN OPERATE ONLY THROUGH THE INDIVIDUALS WHO, AS OFFICERS, DIRECTORS, OR STOCKHOLDERS, CONTROL THE ACTIVITIES, POLICIES AND MANAGEMENT OF THE CORPORATION, AND THAT THE INTEGRITY OF A CORPORATE BIDDER CAN THEREFORE BE NO GREATER THAN THE INTEGRITY OF THE INDIVIDUALS WHO CONTROL ITS OPERATIONS. WE THEREFORE HELD THAT WHERE THE PRESIDENT OF A CORPORATION, WHO WAS ALSO A MEMBER OF ITS BOARD OF DIRECTORS AND THE OWNER OF A CONTROLLING PORTION OF ITS STOCK, LACKED THE INTEGRITY OF A RESPONSIBLE BIDDER, NO GREATER INTEGRITY COULD REASONABLY BE IMPUTED TO THE CORPORATION ITSELF, AND NO FEDERAL AGENCY SHOULD BE REQUIRED TO CONTRACT WITH SUCH CORPORATION.

THE INSTANT CASE CLEARLY FALLS WITHIN THE FOREGOING PRINCIPLES. SHEPARD S. SILBERBLATT IS THE PRESIDENT OF S. S. SILBERBLATT, INC., A MEMBER OF ITS BOARD OF DIRECTORS, AND THE OWNER OF 60 PERCENT OF ITS OUTSTANDING STOCK. CLEARLY HE MUST BE RECOGNIZED AS A DOMINANT AND CONTROLLING FIGURE IN ITS OPERATIONS. WE MUST THEREFORE CONCUR IN THE ADMINISTRATION'S POSITION THAT LACK OF INTEGRITY ON THE PART OF SHEPARD S. SILBERBLATT MAY PROPERLY BE IMPUTED TO S. S. SILBERBLATT, C., AND WITH THE DETERMINATION THAT SUCH LACK OF INTEGRITY CONSTITUTES A SUFFICIENT BASIS FOR CONCLUDING THAT S. S. SILBERBLATT, INC., SHOULD NOT BE CONSIDERED A RESPONSIBLE BIDDER FOR THE PURPOSE OF AWARDING CONTRACTS ON PROJECTS NOS. 23907 AND 30905.

UNDER DATE OF APRIL 10, 1963, YOU FORWARDED A COPY OF A LETTER OF THE SAME DATE FROM THE CHAIRMAN OF THE NEW YORK HOUSING AUTHORITY ADVISING THAT S. S. SILBERBLATT, INC., HAS NOW BEEN REINSTATED AS A FULLY QUALIFIED BIDDER ON AUTHORITY CONTRACTS. WHILE THE FINDINGS OF FACT BY THE GENERAL SERVICES ADMINISTRATION UNDER DATE OF FEBRUARY 8, 1963, STATE THAT THE CORPORATION WAS DISQUALIFIED FROM FURTHER BIDDING BY THE AUTHORITY, THE EXTENT, IF ANY, TO WHICH THE ADMINISTRATION'S DETERMINATION MAY HAVE BEEN INFLUENCED BY SUCH INFORMATION IS NOT APPARENT. BE THAT AS IT MAY, THE PRIMARY QUESTION FOR DETERMINATION BY THIS OFFICE IS THE VALIDITY AND LEGALITY OF THE CONTRACTS AWARDED FOLLOWING REJECTION OF THE LOWER BIDS SUBMITTED BY S. S. SILBERBLATT, INC. THE RESOLUTION OF THIS QUESTION IS DEPENDENT UPON WHETHER THE CONTRACTING OFFICER WAS ACTING WITHIN, OR OUTSIDE OF, THE SCOPE OF HIS AUTHORITY AT THE TIME CONTRACTS WERE AWARDED TO HIGHER BIDDERS ON BOTH THE KANSAS CITY AND NEW YORK PROJECTS, AND IT NECESSARILY FOLLOWS THAT THIS QUESTION MUST BE DECIDED UPON THE FACTS AND CIRCUMSTANCES AS THEY EXISTED AT THAT TIME. SINCE THE CONTRACTS ON THE KANSAS CITY AND NEW YORK PROJECTS WERE AWARDED ON FEBRUARY 8 AND 15, RESPECTIVELY, THE CHANGE IN POSITION BY THE NEW YORK HOUSING AUTHORITY ON APRIL 10 IS NOT A MATTER WHICH CAN PROPERLY BE CONSIDERED IN DETERMINING THE QUESTION BEFORE THIS OFFICE.

IN VIEW OF THE FOREGOING, AND SINCE SECTION 1-1.310-5/A) (5) OF THE FEDERAL PROCUREMENT REGULATIONS REQUIRES A DETERMINATION THAT A BIDDER HAS A SATISFACTORY RECORD OF INTEGRITY AS A PREREQUISITE TO A DETERMINATION THAT HE IS A RESPONSIBLE BIDDER, IT WOULD APPEAR TO BE UNNECESSARY TO CONSIDER THE BASES FOR THE ADMINISTRATION'S CONCLUSIONS, AS SET OUT ABOVE, THAT S.S. SILBERBLATT, INC., LACKED A SATISFACTORY RECORD OF PERFORMANCE AND THE NECESSARY EXPERIENCE TO PERFORM WORK OF THE CHARACTER AND QUALITY REQUIRED ON EITHER PROJECT.

IN THE CIRCUMSTANCES WE CONCLUDE THAT REJECTION OF THE BIDS SUBMITTED BY S.S. SILBERBLATT, NC., ON PROJECTS NOS. 23907 AND 30905 WAS A PROPER EXERCISE OF DISCRETION ON THE PART OF THE CONTRACTING AGENCY. ACCORDINGLY, THE PROTEST AGAINST SUCH ACTION MUST BE DENIED.

A COPY OF OUR LETTER OF TODAY TO THE ADMINISTRATOR OF GENERAL SERVICES, MAKING CERTAIN RECOMMENDATIONS WITH RESPECT TO FUTURE PROCUREMENTS, IS ENCLOSED.