B-135444, APRIL 14, 1958, 37 COMP. GEN. 676

B-135444: Apr 14, 1958

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CONTRACTS - AWARDS - SMALL BUSINESS CONCERNS - CONCLUSIVENESS OF CERTIFICATIONS OF COMPETENCE SMALL BUSINESS COMPETENCY CERTIFICATIONS WHICH ARE MADE CONCLUSIVE ON PROCUREMENT OFFICERS OF THE GOVERNMENT BY SECTION 213 OF THE SMALL BUSINESS ACT OF 1953. ARE FINAL ONLY WITH RESPECT TO THE CAPACITY OR CREDIT OF THE BIDDER AND ARE NOT CONTROLLING WHERE A BIDDER IS DETERMINED NOT TO BE QUALIFIED FOR OTHER REASONS. 1958: FURTHER REFERENCE IS MADE TO YOUR LETTER OF MARCH 6. INSOFAR AS THE MILITARY ESTABLISHMENT IS CONCERNED. THE REQUIREMENTS FOR ELIGIBILITY OF A PROSPECTIVE GOVERNMENT CONTRACTOR ARE SET FORTH IN THE ARMED SERVICES PROCUREMENT REGULATION. OR EQUIPMENT OF THE GENERAL CHARACTER DESCRIBED BY THE SPECIFICATIONS AND REQUIRED UNDER THE CONTRACT ARE BOUGHT.

B-135444, APRIL 14, 1958, 37 COMP. GEN. 676

CONTRACTS - AWARDS - SMALL BUSINESS CONCERNS - CONCLUSIVENESS OF CERTIFICATIONS OF COMPETENCE SMALL BUSINESS COMPETENCY CERTIFICATIONS WHICH ARE MADE CONCLUSIVE ON PROCUREMENT OFFICERS OF THE GOVERNMENT BY SECTION 213 OF THE SMALL BUSINESS ACT OF 1953, 15 U.S.C. 642, ARE FINAL ONLY WITH RESPECT TO THE CAPACITY OR CREDIT OF THE BIDDER AND ARE NOT CONTROLLING WHERE A BIDDER IS DETERMINED NOT TO BE QUALIFIED FOR OTHER REASONS, SUCH AS LACK OF INTEGRITY; CONSISTENT RECORD OF DEFAULT UNDER PRIOR CONTRACTS; NOT A MANUFACTURER OR DEALER; DEBARMENT UNDER THE WALSH-HEALEY OR DAVIS-BACON ACTS.

TO THE CHAIRMAN, MILITARY OPERATIONS SUBCOMMITTEE, COMMITTEE ON GOVERNMENT OPERATIONS, HOUSE OF REPRESENTATIVES, APRIL 14, 1958:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MARCH 6, 1958, CONCERNING THE AUTHORITY OF THE SMALL BUSINESS ADMINISTRATION TO DETERMINE BIDDER QUALIFICATIONS IN RELATION TO OTHER PROCUREMENT STATUTES, SUCH AS THE WALSH-HEALEY PUBLIC CONTRACTS ACT, 41 U.S.C. 35, THE ARMED SERVICES PROCUREMENT ACT, 10 U.S.C. 2305, THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT, 41 U.S.C. 253.

SPECIFICALLY, YOU REFER TO THE STATUTORY AUTHORITY OF THE SMALL BUSINESS ADMINISTRATION TO CERTIFY TO GOVERNMENT PROCUREMENT OFFICERS WITH RESPECT TO THE COMPETENCY, AS TO "CAPACITY AND CREDIT," OF A SMALL BUSINESS CONCERN TO PERFORM A SPECIFIC GOVERNMENT CONTRACT, AS PROVIDED IN SECTION 212 (D), AND TO SECTION 213 OF THE ACT, 15 U.S.C. 642, WHICH MAKES THE ADMINISTRATION'S CERTIFICATION OF A BIDDER'S COMPETENCY "CONCLUSIVE" UPON THE PROCUREMENT OFFICERS OF THE GOVERNMENT. YOU REQUEST OUR OPINION AS TO WHETHER THIS LATTER STATUTORY PROVISION HAS THE EFFECT OF SUPERSEDING OR OVERRIDING DETERMINATIONS BY GOVERNMENT PROCUREMENT OFFICERS PURSUANT TO THE STATUTORY REQUIREMENTS FOR BIDDER AND CONTRACTOR QUALIFICATIONS.

WHILE BOTH THE ARMED SERVICES PROCUREMENT ACT, 10 U.S.C. 2305, AND THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT, 41 U.S.C. 253, REQUIRE THAT AWARDS OF GOVERNMENT CONTRACTS BE MADE TO ,RESPONSIBLE" BIDDERS, NEITHER ACT DEFINES THE WORD "RESPONSIBLE.' HOWEVER, INSOFAR AS THE MILITARY ESTABLISHMENT IS CONCERNED, THE REQUIREMENTS FOR ELIGIBILITY OF A PROSPECTIVE GOVERNMENT CONTRACTOR ARE SET FORTH IN THE ARMED SERVICES PROCUREMENT REGULATION, AS FOLLOWS:

ASPR 1-201.9. SOURCES OF SUPPLIES.

(A) SOURCES OF SUPPLIES SHALL INCLUDE ONLY (I) MANUFACTURERS, (II) CONSTRUCTION CONTRACTORS, AND (III) REGULAR DEALERS IN THE SUPPLIES TO BE PROCURED. A "REGULAR DEALER" SHALL BE DEEMED TO BE ANY ONE OF THE FOLLOWING:

(1) A PERSON OR FIRM WHO OWNS, OPERATES, OR MAINTAINS A STORE, WAREHOUSE, OR OTHER ESTABLISHMENT IN WHICH THE MATERIALS, SUPPLIES, ARTICLES, OR EQUIPMENT OF THE GENERAL CHARACTER DESCRIBED BY THE SPECIFICATIONS AND REQUIRED UNDER THE CONTRACT ARE BOUGHT, KEPT IN STOCK, AND SOLD TO THE PUBLIC IN THE USUAL COURSE OF BUSINESS.

ASPR 1-307 RESPONSIBLE PROSPECTIVE CONTRACTOR.

PRIOR TO THE AWARD OF ANY CONTRACT FOR SUPPLIES OR SERVICES THE CONTRACTING OFFICER SHALL DETERMINE THAT THE PROSPECTIVE CONTRACTOR IS RESPONSIBLE. * * * A RESPONSIBLE CONTRACTOR IS ONE WHICH MEETS ALL OF THE REQUIREMENTS SET FORTH BELOW:

(A) IS A MANUFACTURER, CONSTRUCTION CONTRACTOR, OR REGULAR DEALER, IF THE CONTRACT OR ORDER CALLS FOR SUPPLIES;

(B) HAS ADEQUATE FINANCIAL RESOURCES, OR ABILITY TO SECURE SUCH RESOURCES;

(C) HAS THE NECESSARY EXPERIENCE, ORGANIZATION, AND TECHNICAL QUALIFICATIONS * * * TO PERFORM THE PROPOSED CONTRACT;

(D) IS ABLE TO COMPLY WITH THE REQUIRED DELIVERY OR PERFORMANCE SCHEDULE (TAKING INTO CONSIDERATION ALL EXISTING BUSINESS COMMITMENTS);

(E) HAS A SATISFACTORY RECORD OF PERFORMANCE, INTEGRITY, JUDGMENT, AND SKILLS.

THE CRITERIA FOR DETERMINING THE ELIGIBILITY OF A PROPOSED CONTRACTOR WITH THE GENERAL SERVICES ADMINISTRATION ARE SET FORTH IN SECTION 209.23, MANUAL GS 5, VOLUME GS 5-1, PURCHASE OPERATIONS, AS FOLLOWS:

DETERMINING THE RESPONSIBILITY OF BIDDERS. THE CONTRACTING OFFICER SHALL DETERMINE PRIOR TO AWARD OF CONTRACT, WHETHER THE BIDDER QUALIFIES AS A RESPONSIBLE BIDDER WITH RESPECT TO THE CONTRACT BEING CONSIDERED. * * *

A. CRITERIA FOR DETERMINING IF A BIDDER IS RESPONSIBLE.

1. IN DETERMINING WHETHER THE BIDDER IS A "RESPONSIBLE BIDDER," THE CONTRACTING OFFICER MUST CONSIDER WHETHER THE BIDDER SATISFIES ALL OF THE FOLLOWING REQUIREMENTS:

(A) HAS ADEQUATE FINANCIAL RESOURCES TO COMPLETE THE PROPOSED

CONTRACT;

(B) HAS THE NECESSARY EXPERIENCE, ORGANIZATION, TECHNICAL

QUALIFICATIONS, AND FACILITIES TO PERFORM THE CONTEMPLATED CONTRACT;

AND

(C) IS OTHERWISE QUALIFIED AND ELIGIBLE UNDER APPLICABLE LAW AND

REGULATIONS.

2. THE CONTRACTING OFFICER SHALL ALSO CONSIDER OTHER PERTINENT FACTORS SUCH AS REPUTATION, INDICATED LACK OF INTEGRITY, OR FAILURE TO FULFILL PREVIOUS CONTRACTUAL OBLIGATIONS OF A SIMILAR OR COMPARABLE NATURE * * *.

IN THAT CONNECTION, WE CONSISTENTLY HAVE HELD THAT THE QUESTION OF THE QUALIFICATIONS OF A PROPOSED CONTRACTOR PRIMARILY IS FOR DETERMINATION BY THE ADMINISTRATIVE OFFICERS CONCERNED, AND SUCH DETERMINATION WILL NOT BE QUESTIONED BY US IN THE ABSENCE OF A CLEAR SHOWING OF BAD FAITH OR LACK OF A REASONABLE BASIS THEREFOR. 37 COMP. GEN. 430; 36 ID. 42. ALSO, WE HAVE HELD--- AS HAVE THE COURTS--- THAT THE WORD "RESPONSIBLE" IMPORTS SOMETHING MORE THAN PECUNIARY ABILITY, AND IN THE SELECTION OF THE LOWEST RESPONSIBLE BIDDER PUBLIC OFFICERS ARE REQUIRED TO CONSIDER NOT ONLY THE FINANCIAL RESOURCES OF THE BIDDER BUT ALSO HIS INTEGRITY, FITNESS, CAPACITY AND ABILITY TO PERFORM. SEE 34 COMP. GEN. 86; 30 ID. 235; 28 ID. 662; 26 ID. 676.

THE WALSH-HEALEY PUBLIC CONTRACTS ACT OF JUNE 30, 1936, 49 STAT. 2036, 41 U.S.C. 35, REQUIRES THAT THERE BE INCORPORATED INTO GOVERNMENT CONTRACTS EXCEEDING $10,000 IN AMOUNT A STIPULATION THAT THE CONTRACTOR EITHER IS THE "MANUFACTURER" OF OR A "REGULAR DEALER" IN THE ARTICLES OF SALE. HIS " RULINGS AND INTERPRETATIONS NO. 3 ( WALSH-HEALEY PUBLIC CONTRACTS ACT)," ISSUED APRIL 30, 1953, THE SECRETARY OF LABOR CAUSED TO BE PROMULGATED THE FOLLOWING RULE:

SEC. 29 (A). THE RESPONSIBILITY OF DETERMINING WHETHER OR NOT A BIDDER IS QUALIFIED AS A MANUFACTURER OR AS A REGULAR DEALER UNDER THE PUBLIC CONTRACTS ACT RESTS IN THE FIRST INSTANCE WITH THE CONTRACTING AGENCY. HOWEVER, ANY DECISION WHICH THE CONTRACTING OFFICER MIGHT MAKE IS SUBJECT TO REVIEW BY THE DEPARTMENT OF LABOR WHICH IS CHARGED WITH THE ADMINISTRATION OF THE ACT. * * * ( ITALICS SUPPLIED.)

ALSO, THE WALSH-HEALEY ACT PROVIDES IN SECTION 3 (41 U.S.C. 37) FOR THE DEBARMENT FROM GOVERNMENT CONTRACTS OF PERSONS OR FIRMS FOUND BY THE SECRETARY OF LABOR TO HAVE BREACHED ANY OF THE AGREEMENTS OR REPRESENTATIONS REQUIRED BY THE ACT. MOREOVER, UNDER SECTION 3 OF THE DAVIS-BACON ACT (40 U.S.C. 276A-2 (A) (, PERSONS OR FIRMS FOUND BY THE COMPTROLLER GENERAL OF THE UNITED STATES TO HAVE DISREGARDED THEIR OBLIGATIONS TO EMPLOYEES AND SUBCONTRACTORS LIKEWISE ARE DEBARRED FROM GOVERNMENT CONTRACTS.

SINCE BY ITS TERMS SECTION 213 OF THE SMALL BUSINESS ACT, 15 U.S.C. 642, MAKES CONCLUSIVE THE ADMINISTRATION'S CERTIFICATION OF A SMALL BUSINESS CONCERN AS COMPETENT WITH RESPECT TO "CAPACITY AND CREDIT," WE THINK SUCH PROVISION MUST BE CONSTRUED AS CONTROLLING ONLY INSOFAR AS IT CONFLICTS WITH A DETERMINATION BY A PROCUREMENT OFFICER AS TO THE "CAPACITY OR CREDIT" OF A BIDDER. HOWEVER, IF A BIDDER IS FOUND NOT TO BE QUALIFIED FOR OTHER REASONS, AS FOR EXAMPLE LACK OF INTEGRITY OR A CONSISTENT RECORD OF DEFAULT UNDER PRIOR CONTRACTS; OR IF HE IS FOUND NOT TO BE A "MANUFACTURER" OR "REGULAR DEALER," OR IS DEBARRED FROM GOVERNMENT CONTRACTS UNDER THE STATUTES ABOVE CITED, IN OUR VIEW THE CERTIFICATE OF COMPETENCY, BEING LIMITED BY STATUTE TO "CAPACITY AND CREDIT," WOULD NOT BE DETERMINATIVE OF THE AWARD TO BE MADE.