B-133883, OCT. 31, 1957

B-133883, OCT. 31, 1957

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO LETTER DATED SEPTEMBER 23, 1957, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY OF THE ARMY FOR LOGISTICS, REQUESTING A DECISION AS TO WHETHER OR NOT THE GOVERNMENT MAY ACCEPT AND PAY, ON A QUANTUM MERUIT BASIS, FOR TWO TRACTOR-MOWERS PROCURED BY THE G AND S EQUIPMENT COMPANY, INC., FOR FURNISHING UNDER CONTRACT NO. DA 44-046-913 TC-285, WHICH WAS ERRONEOUSLY AWARDED TO THAT CONCERN ON JUNE 17, 1957.

IN THE INVITATION FOR BIDS ON WHICH THE CONTRACT WAS BASED, BIDDERS WERE ADVISED THAT BIDS UNDER THE PROCUREMENT WERE RESTRICTED TO SMALL BUSINESS CONCERNS, AND THAT A SMALL BUSINESS CONCERN WAS DEFINED AS (I) ONE WHICH WAS NOT DOMINANT IN ITS FIELD OR OPERATION AND, WITH ITS AFFILIATES, EMPLOYED FEWER THAN 500 EMPLOYEES, OR (II) WAS CERTIFIED AS A SMALL BUSINESS CONCERN BY THE SMALL BUSINESS ADMINISTRATION. THE INVITATION STATED THAT, IN ADDITION TO MEETING ONE OF THESE CRITERIA, A DEALER SUBMITTING BIDS IN ITS OWN NAME WAS REQUIRED TO BE A REGULAR DEALER AND TO AGREE TO FURNISH THE PRODUCT OF A SMALL BUSINESS MANUFACTURER IN THE PERFORMANCE OF THE CONTRACT, AND THE BIDS RECEIVED FROM FIRMS NOT CLASSIFIED AS SMALL BUSINESS CONCERNS WOULD BE CONSIDERED AS UNRESPONSIVE. THE INVITATION ALSO CONTAINED THE FOLLOWING INFORMATIONAL AND QUESTIONAIRE FORM WHICH WAS FILLED OUT BY THE G AND S EQUIPMENT COMPANY AS INDICATED BY EXES:

"BIDDER REPRESENTS THAT IT (X) IS, ( ( IS NOT, A SMALL BUSINESS CONCERN. FOR THIS PURPOSE, A SMALL BUSINESS CONCERN IS A CONCERN THAT (I) IS NOT DOMINANT IN ITS FIELD OF OPERATION AND, WITH ITS AFFILIATES,EMPLOYES FEWER THAN 500 EMPLOYEES, OR (II) IS CERTIFIED AS A SMALL BUSINESS CONCERN BY THE SMALL BUSINESS ADMINISTRATION. (SEE CODE OF FEDERAL REGULATIONS, TITLE 13, CHAPTER II, PAR 103, 21 FED.REG. 9709, WHICH CONTAINS THE DETAILED DEFINITION AND RELATED PROCEDURES.)

"BIDDER REPRESENTS THAT IT ( ( HAS, ( X ( HAS NOT, PREVIOUSLY BEEN DENIED A SMALL BUSINESS CERTIFICATE BY THE SMALL BUSINESS ADMINISTRATION.

"IF BIDDER IS A REGULAR DEALER, IT ALSO REPRESENTS THAT ALL SUPPLIES TO BE FURNISHED HEREUNDER ( ( WILL, ( X ( WILL NOT, BE MANUFACTURED OR PRODUCED BY A SMALL BUSINESS CONCERN.'

THE RECORD SHOWS THAT THE INVITATION FOR BIDS, TO BE OPENED JUNE 10, 1957, WAS MAILED TO A LIST OF FIRMS WHICH QUALIFIED FROM THE STANDPOINT OF THE NUMBER OF PERSONS EMPLOYED AS SMALL BUSINESS CONCERNS AND, APPARENTLY THROUGH ERROR, TO THE NORFOLK, VIRGINIA, BRANCH OFFICE OF THE INTERNATIONAL HARVESTER COMPANY, A LARGE BUSINESS CONCERN. THE LATTER SUBMITTED A BID OF $3,234.80 FOR FURNISHING THE TWO TRACTOR MOWERS INVOLVED. THE ONLY OTHER BIDS WERE THOSE SUBMITTED BY G AND S EQUIPMENT COMPANY AND ONE OTHER COMPANY, IN THE AMOUNT OF $3,967.62 AND $4,456.46, RESPECTIVELY. THESE CONCERNS EMPLOYED FEWER THAN 500 PERSONS, BUT THEIR BIDS INDICATED THAT THE PRODUCT TO BE SUPPLIED WOULD BE MANUFACTURED BY A LARGE BUSINESS CONCERN.

BY TELEGRAM OF JUNE 7, 1957, INTERNATIONAL HARVESTER REQUESTED PERMISSION TO WITHDRAW THE BID WHICH HAD BEEN SUBMITTED BY ITS NORFOLK, VIRGINIA, BRANCH OFFICE IF THE PROCUREMENT WAS LIMITED TO SMALL BUSINESS CONCERNS. ALSO, BY TELEGRAM OF JUNE 27, 1957, INTERNATIONAL HARVESTER REQUESTED PERMISSION FROM THE PROCURING AGENCY TO WITHDRAW ITS QUOTATION UNCONDITIONALLY. IN A TELEGRAM OF JULY 18, 1957, EXPLAINING BASIS FOR THE LATEST REQUEST, THE COMPANY STATED, AMONG OTHER THINGS, THAT IT HAD NO DESIRE TO COMPETE UNFAIRLY WITH LOCAL DEALERS OFFERING TO FURNISH INTERNATIONAL HARVESTER EQUIPMENT. IT ALSO DREW ATTENTION TO THE FACT THAT THE OFFER CONTAINED IN ITS BID EXPIRED ON JULY 1.

THE CONTRACT WAS AWARDED TO THE G AND S EQUIPMENT COMPANY ON JUNE 17, 1957, THOSE IN CHARGE OF MAKING THE AWARD HAVING OVERLOOKED THE FACT THAT THE CONTRACTOR HAD INDICATED IN ITS BID THAT IT WOULD NOT FURNISH EQUIPMENT MANUFACTURED OR PRODUCED BY A SMALL BUSINESS CONCERN. INDEED, IT APPEARS THAT THE ORIGINAL SET-ASIDE OF THE PROCUREMENT FOR SMALL BUSINESS CONCERNS WAS IN ERROR BECAUSE THE PRODUCT INVOLVED IS ONLY MANUFACTURED BY LARGE BUSINESS CONCERNS, AND THE SET ASIDE HAS BEEN WITHDRAWN. THE G AND S EQUIPMENT COMPANY HAD, IN THE MEANTIME, PROCURED THE TRACTOR-MOWERS FROM ITS SUPPLIER AND HAS TENDERED THEM TO THE CONTRACTING AGENCY IN FULFILLMENT OF THE CONTRACT, BUT ACCEPTANCE THEREOF HAS BEEN SUSPENDED PENDING THE PRESENT DECISION.

IT IS RECOMMENDED ADMINISTRATIVELY THAT THE TRACTOR-MOWERS BE ACCEPTED AT THE PRICE OF $3,967.62 ON THE BASIS THAT THE PRICE IS A REASONABLE ONE; THAT THE CONTRACTOR ACTED IN ENTIRE GOOD FAITH IN MAKING ITS POSITION KNOWN TO THE GOVERNMENT THAT IT WOULD NOT BE SUPPLYING AN ITEM MANUFACTURED BY A SMALL BUSINESS CONCERN; AND THAT THE TRACTOR-MOWERS CANNOT NOW BE RETURNED TO THE CONTRACTOR'S SUPPLIER AND THE CONTRACTOR HAS STATED THAT IT DOES NOT KNOW WHEN IT WOULD BE ABLE TO DISPOSE OF THE EQUIPMENT ON THE REGULAR MARKET. DOUBT IS ALSO EXPRESSED THAT THE TRACTOR -MOWERS COULD NOT BE OBTAINED AT A BETTER PRICE THAN THAT QUOTED BY G AND S EQUIPMENT COMPANY, IF THE PROCUREMENT WERE TO BE READVERTISED.

UNDER THE CIRCUMSTANCES SET FORTH ABOVE, OUR OFFICE WILL NOT OBJECT TO ACCEPTANCE OF THE ..END :