B-124557, OCT. 10, 1955

B-124557: Oct 10, 1955

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INC.: FURTHER REFERENCE IS MADE TO YOUR LETTER OF JULY 5. ITS OFFER WAS NOT ACCEPTED FOR THE FOLLOWING REASONS. IT WAS DISCOVERED THAT MR. WAS. STILL IS . KUSNER STATES THAT HE WAS ON ACTIVE DUTY WITH THE AIR FORCE FROM 1942 TO 1946 AND THAT HE IS NOW A RESERVE COLONEL. WHERE HE IS NOW CHIEF. IS STILL ITS PRINCIPAL STOCKHOLDER. THE ALPHA INSTRUMENT COMPANY WAS DISQUALIFIED FROM RECEIVING THE AWARD IN LINE WITH PARAGRAPH 1 2003.3/B)OF THE AIR FORCE PROCUREMENT INSTRUCTION WHICH PROVIDES THAT "IT IS A GENERAL RULE OF PUBLIC POLICY THAT THE GOVERNMENT SHOULD NOT CONTRACT WITH ITS OWN PERSONNEL UNLESS THE NEEDS OF THE GOVERNMENT CANNOT REASONABLY BE MET OTHERWISE.'. AWARD WAS MADE TO THE AMERICAN INSTRUMENT COMPANY ON 14 APRIL 1955 IN THE REDUCED AMOUNT OF $2.

B-124557, OCT. 10, 1955

TO ALPHA INSTRUMENT COMPANY, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JULY 5, 1955, PROTESTING THE ACTION OF THE DEPARTMENT OF THE AIR FORCE IN MAKING AWARD OF A CONTRACT TO ANOTHER BIDDER FOR RENDERING SERVICES REQUIRED IN THE MAINTENANCE AND OPERATION OF A PHOTOELECTRIC ANALOG COMPUTER PURSUANT TO PURCHASE REQUEST NO. PR DDT-55-5 AF, ISSUED AT BOLLING FIELD AIR FORCE BASE UNDER DATE OF SEPTEMBER 3, 1954.

WITH RESPECT TO YOUR PROTEST THE ASSISTANT SECRETARY, DEPARTMENT OF THE AIR FORCE, IN A REPORT DATED SEPTEMBER 20, 1955, STATES:

"ALTHOUGH ALPHA INSTRUMENT COMPANY SUBMITTED THE LOWEST QUOTATION, ITS OFFER WAS NOT ACCEPTED FOR THE FOLLOWING REASONS. IT WAS DISCOVERED THAT MR. J. H. KUSNER, THE PRESIDENT AND PRINCIPAL STOCKHOLDER OF THIS COMPANY, WAS--- AND, AS A MATTER OF FACT, STILL IS -- AN EMPLOYEE OF THE UNITED STATES GOVERNMENT. MR. KUSNER STATES THAT HE WAS ON ACTIVE DUTY WITH THE AIR FORCE FROM 1942 TO 1946 AND THAT HE IS NOW A RESERVE COLONEL. SINCE 1953 HE HAS BEEN EMPLOYED IN THE OFFICE, CHIEF OF ORDNANCE, DEPARTMENT OF THE ARMY, WHERE HE IS NOW CHIEF, PROGRAM REVIEW AND ANALYSIS SECTION, INDUSTRIAL DIVISION, AT GRADE GS-15. MR. KUSNER, ALTHOUGH PRESUMABLY NO LONGER AN OFFICER OF THIS COMPANY, IS STILL ITS PRINCIPAL STOCKHOLDER.

"IN VIEW OF THE ABOVE FACTS, THE ALPHA INSTRUMENT COMPANY WAS DISQUALIFIED FROM RECEIVING THE AWARD IN LINE WITH PARAGRAPH 1 2003.3/B)OF THE AIR FORCE PROCUREMENT INSTRUCTION WHICH PROVIDES THAT "IT IS A GENERAL RULE OF PUBLIC POLICY THAT THE GOVERNMENT SHOULD NOT CONTRACT WITH ITS OWN PERSONNEL UNLESS THE NEEDS OF THE GOVERNMENT CANNOT REASONABLY BE MET OTHERWISE.' AWARD WAS MADE TO THE AMERICAN INSTRUMENT COMPANY ON 14 APRIL 1955 IN THE REDUCED AMOUNT OF $2,000.00, TO COVER THE BALANCE OF THE FISCAL YEAR. HOWEVER, THE CONTRACT EXPIRED ON 30 JUNE 1955 WITHOUT ANY ORDER FOR WORK HAVING BEEN AUTHORIZED THEREUNDER.'

CONTRACTS BETWEEN THE GOVERNMENT AND ITS EMPLOYEES ARE NOT PROHIBITED BY STATUTE EXCEPT WHERE AN EMPLOYEE OF THE GOVERNMENT ACTS AS AGENT BOTH FOR THE GOVERNMENT AND THE CONTRACTOR IN THE PARTICULAR TRANSACTION OR WHERE THE SERVICE TO BE RENDERED UNDER THE CONTRACT IS SUCH AS COULD HAVE BEEN REQUIRED OF THE CONTRACTOR IN HIS CAPACITY AS AN EMPLOYEE. 18 U.S.C. 93; 5 ID. 69, 70; 27 COMP. GEN. 735. HOWEVER, ASIDE FROM ANY STATUTORY PROHIBITION, CONTRACTS BETWEEN THE GOVERNMENT AND ITS EMPLOYEES ARE OPEN TO CRITICISM ON THE GROUNDS OF POSSIBLE FAVORITISM OR PREFERENTIAL TREATMENT AND WE HAVE FREQUENTLY HELD THAT THEY SHOULD NOT BE ENTERED INTO EXCEPT FOR THE MOST COGENT REASONS. SEE 5 COMP. GEN. 93; 21 ID. 705; 25 ID. 690; 27 ID. 735.

IN THE INSTANT CASE YOUR BID WAS REJECTED ON THE BASIS OF AN ADMINISTRATIVE DETERMINATION UNDER APPLICABLE PROCUREMENT INSTRUCTIONS, THAT ITS ACCEPTANCE WOULD HAVE BEEN AGAINST THE GENERAL RULE OF PUBLIC POLICY REGARDING CONTRACTING BY THE GOVERNMENT WITH ITS EMPLOYEES. THIS CONNECTION, SEE 40 OP.ATTY.GEN. 187, IN WHICH IT WAS STATED (PAGE 190):

"* * * THE HEAD OF ANY EXECUTIVE DEPARTMENT OR AGENCY WITHIN THE GOVERNMENT HAS THE POWER TO PRESCRIBE SUCH RULES AND REGULATIONS GOVERNING THE CONDUCT OF PRIVATE BUSINESS AFFAIRS BY HIS SUBORDINATES AS HE MAY DETERMINE. SEE TITLE 5, U.S.C., SECTION 22. THIS POWER IS THE NORMAL ATTRIBUTE OF ANY EXECUTIVE CHARGED WITH THE RESPONSIBILITY OF ADMINISTERING A PUBLIC OR PRIVATE BUSINESS THROUGH SUBORDINATES. * * *"

IN THE CIRCUMSTANCES, YOUR PROTEST FURNISHES NO PROPER BASIS ON WHICH WE WOULD BE JUSTIFIED IN HOLDING THAT THE ADMINISTRATIVE ACTION WAS ILLEGAL OR IMPROPER.