A-92620, MARCH 19, 1938, 17 COMP. GEN. 751

A-92620: Mar 19, 1938

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A CREDIT AGENCY MUST HAVE MAINTAINED FOR AN UNBROKEN PERIOD. * * *" IS RESTRICTIVE OF THE COMPETITION CONTEMPLATED BY SECTION 3709. AS FOLLOWS: REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 18. WE HAD A LARGE SUPPLY OF FORMS PRINTED ON BOTH SIDES TO MEET SPECIFICATIONS AND IMMEDIATELY HAD OUR CONTRACT CANCELLED AND THE LOWEST AND BEST BID REJECTED BECAUSE "WE WERE NOT OPERATING IN MIAMI AS A CREDIT BUREAU ON JULY 1. TO WHICH THEY REFER WAS ENTERED INTO AS A RESULT OF PROPOSALS RECEIVED IN CONNECTION WITH INVITATION NO. 289. THIS CONTRACT WAS LATER CANCELLED AS WERE ALL CONTRACTS THAT RESULTED FROM PROPOSALS RECEIVED AT THE INSTANCE OF THIS INVITATION. CANCELLATION OF THESE CONTRACTS WAS BROUGHT ABOUT BY THE NECESSITY OF REDUCING OPERATING COSTS OF OUR FIELD OFFICES AND IT WAS BELIEVED THAT BY CHANGING THE SPECIFICATIONS AND ELIMINATING THE REAL ESTATE SEARCH AND COURT RECORD OF MORTGAGES.

A-92620, MARCH 19, 1938, 17 COMP. GEN. 751

CONTRACTS - RESTRICTIVE CREDIT REPORT SPECIFICATIONS - GOVERNMENT LIABILITY THE INCLUSION IN ADVERTISED SPECIFICATIONS FOR CREDIT REPORTS OF A PROVISION "IN ORDER TO SUBMIT AN ELIGIBLE BID, A CREDIT AGENCY MUST HAVE MAINTAINED FOR AN UNBROKEN PERIOD, FROM JULY 1, 1927, TO THE DATE OF THE BID, AT LEAST ONE OFFICE IN EACH STATE COVERED BY THE BID, * * *" IS RESTRICTIVE OF THE COMPETITION CONTEMPLATED BY SECTION 3709, REVISED STATUTES, AND PAYMENT IN EXCESS OF THE LOW BID PRICE MAY NOT BE MADE UNDER CONTRACTS AWARDED TO OTHER THAN THE LOW BIDDER ON THE BASIS OF THIS REQUIREMENT.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE ADMINISTRATOR, FEDERAL HOUSING ADMINISTRATION, MARCH 19, 1938:

THERE HAS BEEN RECEIVED YOUR REPORT OF MARCH 5, 1938, AS FOLLOWS:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 18, A-92620, REGARDING THE PROTEST OF CREDIT SERVICE, INC., OF MIAMI, FLORIDA, WITH RESPECT TO THE AWARD OF CONTRACTS FOR FACTUAL DATA REPORTS FOR MIAMI, FLORIDA.

CREDIT SERVICE, INC., RELATES THAT "IN JULY, 1937, THE AWARD HAD BEEN MADE TO THIS AGENCY AT A BID OF 50 PERCENT LOWER THAN THE NEXT LOWEST BID. WE HAD A LARGE SUPPLY OF FORMS PRINTED ON BOTH SIDES TO MEET SPECIFICATIONS AND IMMEDIATELY HAD OUR CONTRACT CANCELLED AND THE LOWEST AND BEST BID REJECTED BECAUSE "WE WERE NOT OPERATING IN MIAMI AS A CREDIT BUREAU ON JULY 1, 1927.'"

CONTRACT FH-427 OF THE DATE OF JUNE 29, 1937, TO WHICH THEY REFER WAS ENTERED INTO AS A RESULT OF PROPOSALS RECEIVED IN CONNECTION WITH INVITATION NO. 289. THIS CONTRACT WAS LATER CANCELLED AS WERE ALL CONTRACTS THAT RESULTED FROM PROPOSALS RECEIVED AT THE INSTANCE OF THIS INVITATION. CANCELLATION OF THESE CONTRACTS WAS BROUGHT ABOUT BY THE NECESSITY OF REDUCING OPERATING COSTS OF OUR FIELD OFFICES AND IT WAS BELIEVED THAT BY CHANGING THE SPECIFICATIONS AND ELIMINATING THE REAL ESTATE SEARCH AND COURT RECORD OF MORTGAGES, LIENS, BONDS, DEEDS OF TRUST, JUDGMENTS, AND OTHER LIENS, A MUCH CHEAPER RATE PER REPORT COULD BE OBTAINED FOR THE OFFICES IN GENERAL. ATTACHED HERETO, AND IDENTIFIED AS "EXHIBIT A," IS COPY OF INVITATION NO. 289 AND THE SPECIFICATIONS WHICH WERE A PART OF THIS INVITATION.

THE STATEMENT IS ALSO MADE BY CREDIT SERVICE, INC., THAT: "HOWEVER, WE HAD NOT OPERATED ON JULY 1, 1927, WHEN THE JULY 1937 AWARD WAS MADE AND HAVE OPERATED IN MIAMI AS A CREDIT BUREAU LONGER THAN THE SUCCESSFUL BIDDERS. NONE OF THEM WERE IN EXISTENCE IN THE STATE OF FLORIDA JULY 1, 1927.'

INVITATION NO. 289, AS WELL AS INVITATION NO. 289A, CONTAINED WITHIN THE SPECIFICATIONS THE FOLLOWING QUALIFYING CLAUSE: "IN ORDER TO SUBMIT AN ELIGIBLE BID, A CREDIT AGENCY MUST HAVE MAINTAINED FOR AN UNBROKEN PERIOD, FROM JULY 1, 1927, TO THE DATE OF THE BID, AT LEAST ONE OFFICE IN EACH STATE COVERED BY THE BID, AND SHALL AT THE DATE OF THE BID MAINTAIN AT LEAST ONE OFFICE IN EACH CITY, OR METROPOLITAN AREA, IN WHICH A FEDERAL HOUSING ADMINISTRATION INSURING OFFICE IS LOCATED IN EACH SUCH STATE. EACH SUCH OFFICE SHALL BE STAFFED WITH A FULL TIME SALARIED PERSONNEL, EXPERIENCED IN GIVING REPORTS FOR ALL SECTIONS COVERED BY THE BID AND SHALL BE USED EXCLUSIVELY FOR CREDIT AGENCY SERVICES.'

THE PROPOSAL WHICH WAS SUBMITTED BY CREDIT SERVICE, INC., IN CONNECTION WITH INVITATION NO. 289 AND AS A RESULT OF WHICH CONTRACT FH-427 WAS ENTERED INTO WAS ACCEPTED BY THE COMMITTEE ON QUALIFICATIONS AND AWARDS IN THE BELIEF THAT IT WAS IN ACCORDANCE WITH THE SPECIFICATIONS. INVESTIGATIONS WHICH WERE CONDUCTED BY THIS COMMITTEE AT THE TIME PROPOSALS RECEIVED AS A RESULT OF OUR INVITATION NO. 289A WERE BEING CONSIDERED BROUGHT OUT THE INFORMATION THAT THE NATIONAL CONSUMER CREDIT REPORTING CORPORATION THROUGH ITS AFFILIATES HAD BEEN OPERATING IN FLORIDA AND WITHIN MIAMI AND JACKSONVILLE FOR MORE THAN FIFTEEN YEARS; THE HOOPER- HOLMES BUREAU, INC., IN JACKSONVILLE AND MIAMI SINCE 1928 AND IN ORLANDO SINCE 1926. THE RETAIL CREDIT COMPANY OPENED OFFICES IN JACKSONVILLE IN MARCH 1923 AND OPERATED IN MIAMI AS A BRANCH OFFICE UP TO APRIL 1928 AND LATER AS A SUB-OFFICE. THESE AGENCIES, ACCORDINGLY, RECEIVED JOINT AWARD UNDER THE NEW SPECIFICATIONS FOR FURNISHING OUR MIAMI INSURING OFFICE WITH FACTUAL DATA REPORTS FOR THE PERIOD ENDING JUNE 30, 1938. ORIGINALS OF THESE CONTRACTS, TOGETHER WITH ABSTRACTS OF AWARD, HAVE BEEN FILED IN YOUR OFFICE AND MAY BE IDENTIFIED AS CONTRACTS FH-453, FH-451, AND FH-452, RESPECTIVELY.

THE NEED IN THE INSTANCE IS FOR A COMPLETE, ACCURATE, AND THEREFORE DEPENDABLE REPORT ON THE INDIVIDUAL WHO IS THE MORTGAGOR IN THE MORTGAGE ON WHICH APPLICATION HAS BEEN MADE FOR INSURANCE UNDER THE PROVISIONS OF TITLE II OF THE NATIONAL HOUSING ACT AND IT HAS BEEN OUR EXPERIENCE IN THE PAST THAT "COLLECTION" AGENCIES WRITING REPORTS AS A SIDE LINE AND AGENCIES WHICH HAVE BEEN IN BUSINESS FOR A FEW YEARS DO NOT HAVE THE TRAINED PERSONNEL AND THEREFORE LACK THAT PROFICIENCY IN INVESTIGATION AND REPORTING TECHNIQUE WHICH AN AGENCY DEVOTING ITS FULL TIME TO CREDIT REPORTS AND OPERATING SUCCESSFULLY OVER A GREATER PERIOD OF TIME WOULD POSSESS. IN ADDITION, THE YOUNGER AGENCIES HAVE NOT HAD THE OPPORTUNITY TO DEVELOP THAT BACKGROUND OF FILE INFORMATION WHICH WOULD MAKE IT POSSIBLE TO INCLUDE NOT ONLY THE PRESENT ACTIVITY AND CREDIT STANDING OF THE INDIVIDUAL ON WHOM THE INQUIRY IS MADE BUT TO SUPPLY ALSO AN ANTECEDENT HISTORY COVERING A PERIOD SUFFICIENT TO REFLECT FULLY THE TRUE CHARACTER AND CREDIT BEHAVIOR OF THE APPLICANT.

IT IS RECOMMENDED THAT OUR ACTION IN MAKING THE AWARDS AS STATED IN THE FOREGOING BE APPROVED.

SECTION 3709, REVISED STATUTES, REQUIRES ALL CONTRACTS WITH THE UNITED STATES TO BE ADVERTISED AND LET TO THE LOWEST RESPONSIBLE BIDDER. IN THIS INSTANCE THE CONTRACT WAS ADVERTISED IN ACCORDANCE WITH THE ABOVE REPORT. THREE CONTRACTS WERE ENTERED INTO WITH THE NATIONAL CONSUMER CREDIT REPORTING CORPORATION, HOOPER-HOLMES BUREAU, INC., AND THE RETAIL CREDIT COMPANY SUBMITTING IDENTICAL BIDS OF $1 FOR EACH SUCH REPORTS FURNISHED AS MAY BE ORDERED DURING THE CURRENT FISCAL YEAR, BUT THERE WAS REJECTED THE BID OF 75 CENTS FOR EACH REPORT SUBMITTED BY CREDIT SERVICE, INC.--- THE REJECTION BEING DUE TO THE ADMINISTRATIVE CONCLUSION THAT CREDIT SERVICE, INC., HAD NOT MAINTAINED FOR AN UNBROKEN PERIOD FROM JULY 1, 1927, TO THE DATE OF THE BID AT LEAST ONE OFFICE IN THE STATE OF FLORIDA. THE CREDIT SERVICE, INC., HAS DISPUTED THE CONCLUSION THAT IT HAD NOT MAINTAINED FOR AN UNBROKEN PERIOD FROM JULY 1, 1927, AN OFFICE IN SAID STATE AND THE REJECTION OF ITS BID UPON SUCH BASIS IS MADE MORE ARBITRARY AND CAPRICIOUS DUE TO THE FACT THAT THE FEDERAL HOUSING ADMINISTRATION DID ENTER INTO A CONTRACT ON JUNE 29, 1937, WITH THIS SAME COMPANY FOR FURNISHING SIMILAR SERVICE. NO FACTS OR REASONS HAVE BEEN SHOWN WHY THAT COMPANY SHOULD HAVE BEEN QUALIFIED ON JUNE 29, 1937, TO RENDER THE SERVICE AND NOT QUALIFIED WHEN THE SUBSEQUENT CONTRACT WAS ENTERED INTO. SUCH DISQUALIFICATION CANNOT BE ACCOMPLISHED BY THE INCLUSION IN THE ADVERTISED SPECIFICATIONS OF A REQUIREMENT THAT THE COMPANY MUST HAVE BEEN IN CONTINUOUS OPERATION SINCE JULY 1, 1927. SUCH REQUIREMENT APPEARS NOT TO HAVE BEEN NECESSARY IN CONNECTION WITH THE CONTRACT OF JUNE 29, 1937, AND ITS USE WOULD OPERATE TO PREVENT YOUNGER AND POSSIBLY MORE COMPETENT COMPANIES FROM EVER CONTRACTING WITH THE UNITED STATES UNTIL THEY HAD BEEN IN BUSINESS FOR SOME ARBITRARY PERIOD.

THE RECORD IS SUCH THAT THIS OFFICE WOULD NOT BE JUSTIFIED IN APPROVING CHARGES AGAINST APPROPRIATED MONEYS FOR CREDIT REPORTS IN THE STATE OF FLORIDA AT ANY PRICE IN EXCESS OF THE LOW BID OF 75 CENTS EACH SUBMITTED BY CREDIT SERVICE, INC. SEE 17 COMP. GEN. 312, 315.