B-136095, MAY 23, 1958

B-136095: May 23, 1958

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DEPARTMENT OF THE NAVY: REFERENCE IS MADE TO YOUR LETTER OF MAY 9. THE REFERRED-TO INVITATION WAS DATED MARCH 24. OTHER BIDS RECEIVED WERE IN THE AMOUNTS OF $306. THE LOW BID OF SHORELINE OIL COMPANY WAS ACCOMPANIED BY A LETTER DATED APRIL 20. IT IS NOT KNOWN BY ME WHETHER MY PARTICIPATION AS A CONTRACTOR BIDDING ON A GOVERNMENT CONTRACT AND AS A GOVERNMENT EMPLOYEE IS IN CONFLICT WITH EXISTING LAWS OR STATUTES AND THE LOCAL DISTRICT ATTORNEY HAS BEEN UNABLE TO ADVISE ME IN THIS RESPECT. "IT IS MY INTENTION TO RESIGN FROM CIVIL SERVICE EMPLOYMENT IN THE EVENT CONTRACT AWARD TO THE SHORELINE OIL CO. "IF THIS BID IS IN CONFLICT WITH EXISTING LAWS OR STATUTES OR OTHER RULES OR REGULATIONS IT IS REQUESTED THAT I BE NOTIFIED ACCORDINGLY AND THAT THE BID SUBMITTED HEREUNDER BE CONSIDERED NULL AND VOID.'.

B-136095, MAY 23, 1958

TO COMMANDER P. M. LINDSAY, SC, USN, DIRECTOR, PURCHASE OPERATIONS DIVISION, DEPARTMENT OF THE NAVY:

REFERENCE IS MADE TO YOUR LETTER OF MAY 9, 1958, WITH ITS ENCLOSURES, INCLUDING A LETTER DATED MAY 6, 1958, FROM SHORELINE OIL COMPANY, JACKSONVILLE, FLORIDA, PROTESTING THE ACTION OF THE CONTRACTING OFFICER, U.S. NAVY PURCHASING OFFICE, WASHINGTON, D.C., REGARDING THE SAID COMPANY'S ELIGIBILITY FOR AWARD UNDER INVITATION NO. 600-1468-58. YOU REQUEST A DECISION AS TO THE APPROPRIATE ACTION TO BE TAKEN IN THE MATTER.

THE REFERRED-TO INVITATION WAS DATED MARCH 24, 1958, REQUESTING BIDS -- TO BE OPENED APRIL 22, 1958--- FOR FURNISHING CERTAIN SERVICES INCIDENT TO AIRCRAFT REFUELING AND DEFUELING AT THE NAVAL AIR STATION JACKSONVILLE, FLORIDA, AND THE NAVAL AIR STATION, CECIL FIELD, FLORIDA, FROM JULY 1, 1958, THROUGH JUNE 30, 1959. THE SHORELINE OIL COMPANY SUBMITTED A BID DATED APRIL 20, 1958, SIGNED BY F. L. COFER, JR., IN THE AMOUNT OF $298,200. OTHER BIDS RECEIVED WERE IN THE AMOUNTS OF $306,720, $349,500, $358,353.50 AND $437,360.

THE LOW BID OF SHORELINE OIL COMPANY WAS ACCOMPANIED BY A LETTER DATED APRIL 20, 1958, SIGNED BY F. L. COFER, JR., AS FOLLOWS:

"I WISH TO STATE THAT I, AS A PRINCIPAL STOCKHOLDER IN THE SHORELINE OIL CO. SUBMITTING A BID ON IFB600-1468-58, AM EMPLOYED BY THE U.S. NAVY FUEL DEPOT IN CIVIL SERVICE CAPACITY. IT IS NOT KNOWN BY ME WHETHER MY PARTICIPATION AS A CONTRACTOR BIDDING ON A GOVERNMENT CONTRACT AND AS A GOVERNMENT EMPLOYEE IS IN CONFLICT WITH EXISTING LAWS OR STATUTES AND THE LOCAL DISTRICT ATTORNEY HAS BEEN UNABLE TO ADVISE ME IN THIS RESPECT.

"IT IS MY INTENTION TO RESIGN FROM CIVIL SERVICE EMPLOYMENT IN THE EVENT CONTRACT AWARD TO THE SHORELINE OIL CO., APPEARS IMMINENT AND I AM NOTIFIED TO THAT EFFECT.

"IF THIS BID IS IN CONFLICT WITH EXISTING LAWS OR STATUTES OR OTHER RULES OR REGULATIONS IT IS REQUESTED THAT I BE NOTIFIED ACCORDINGLY AND THAT THE BID SUBMITTED HEREUNDER BE CONSIDERED NULL AND VOID.'

IN HIS LETTER DATED APRIL 30, 1958, TO THE U.S. NAVY PURCHASING OFFICE, MR. COFER STATED THAT THE SHORELINE OIL COMPANY WAS INCORPORATED APRIL 12, 1954, WITH A CAPITALIZATION OF $20,000, AND THAT AT THE TIME OF SUBMISSION OF THE BID THE STOCK HELD BY HIM "WAS IN THE FORM OF A SUBSCRIPTION FOR 5 SHARES OUT OF A TOTAL OF 15 SUBSCRIPTIONS," FIVE SHARES BEING ALLOTTED TO HIS WIFE AND FIVE SHARES TO HIS ATTORNEY. WITH RESPECT TO HIS DUTIES AS A CIVIL SERVICE EMPLOYEE HE STATED IN THE SAID LETTER:

"AS SUPERINTENDENT OF THE NAVY FUEL DEPOT, JACKSONVILLE, FLA., I SUPERVISED THE FUNCTIONS OF OPERATIONS INVOLVING THE LOADING AND DISCHARGING OF TANKS, BARGES; THE LOADING AND SHIPPING OF ALL TYPES OF JET FUEL (JP-3, JP-4, JP-5) AVIATION GASOLINE, DIESEL AND NAVY SPECIAL FUEL OIL BY TRUCK TANK CARS AND BARGES, DEVELOPED OPERATING AND SAFETY PROCEDURES FOR ALL TYPES OF FUEL OPERATIONS, ORGANIZED AND DEVELOPED ALL TRAFFIC PROCEDURES FOR SHIPPING AND RECEIVING OF FUEL BY THE DEPOT, RESPONSIBLE FOR PLANNING AND ESTIMATING AND BUDGETING OF FUNDS FOR THE OPERATION AND MAINTENANCE OF THE DEPOT. ESTABLISHED, ORGANIZED AND TRAINED PERSONNEL IN THE DEPOT LABORATORY, MAINTAINING QUALITY CONTROL TESTS FOR THE FUEL HANDLED AT THE DEPOT AND CONDUCTED FUEL ANALYSES FOR THE OTHER NAVY INSTALLATIONS IN THE AREA UPON REQUEST. ORGANIZED AND SUPERVISED THE MAINTENANCE BRANCH OF THE DEPOT WHICH IS RESPONSIBLE FOR MAINTENANCE OF DEPOT BUILDING GROUNDS AND FUEL FACILITIES, INCLUDING TWO PUMP STATIONS, TWO TRUCK LOADING STANDS, TWO TANK CAR LOADING STANDS AND THE ATTENDANT METERS, FILTERS AND CLARIFIERS USED IN THE FUEL STORAGE AND DISTRIBUTION SYSTEM.'

IN A SUPPLEMENTARY LETTER ALSO DATED APRIL 30, 1958, MR. COFER STATED:

"PHYSICALLY, THE DEPOT AT WHICH I AM EMPLOYED IS LOCATED ABOUT 25 MILES FROM THE NAVAL AIR STATION, JACKSONVILLE AND ABOUT 30 MILES FROM THE NAVAL AIR STATION CECIL FIELD. WORK FOR WHICH I AM RESPONSIBLE INVOLVES THE RECEIPT, STORAGE AND DISTRIBUTION OF BULK FUELS AND IS IN NO WAY CONNECTED TO THE STORAGE AND SUBSEQUENT ISSUE OF SUCH FUEL INTO THE REFUELING TRUCKS LOCATED AT THE NAVAL AIR STATIONS JACKSONVILLE AND CECIL FIELD.

"THE NAVY FUEL DEPOT IS A SEPARATE ACTIVITY UNDER THE COMMAND OF AN OFFICER IN CHARGE AND IN MY DEPOT CAPACITY I HAVE NEITHER A SUPERVISORY OR SUBORDINATE RELATIONSHIP WITH CIVIL SERVICE PERSONNEL EMPLOYED AT EITHER OF THE TWO NAVAL AIR STATIONS.'

IN 27 COMP. GEN. 735, IT IS STATED:

"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; 21 COMP. GEN. 705. HOWEVER, AS POINTED OUT IN 14 COMP. GEN. 403, REFERRED TO BY YOU, THIS OFFICE HAS HELD THAT CONTRACTS BETWEEN THE GOVERNMENT AND ITS EMPLOYEES ARE OPEN TO CRITICISM ON THE GROUNDS OF POSSIBLE FAVORITISM OR PREFERENTIAL TREATMENT AND SHOULD NOT BE ENTERED INTO EXCEPT FOR THE MOST COGENT REASONS. ALSO, SEE 5 COMP. GEN. 93; 21 ID. 705; 25 ID. 690.'

IN THE INSTANT MATTER, THE CONTRACT WOULD BE MADE WITH A CORPORATION FOR ITS GENERAL BENEFIT. FURTHER, THE AWARD TO THE SHORELINE OIL COMPANY WOULD BE ON THE BASIS OF COMPETITIVE BIDS SUBMITTED IN RESPONSE TO AN OPEN INVITATION. THE INDIVIDUAL CONCERNED IS NOT ACTING AS AGENT OF THE UNITED STATES IN THE TRANSACTION, AND THERE APPEARS TO BE NO CONFLICT OF INTEREST BETWEEN THE EMPLOYEE'S POSITION AS CONTRACTOR AND HIS OFFICIAL POSITION, NOR DOES IT APPEAR THAT HE HAS MADE IMPROPER USE OF KNOWLEDGE GAINED AS AN EMPLOYEE OF THE GOVERNMENT. SEE 21 COMP. GEN. 705; 25 ID. 690.

SO, WHILE WE HAVE APPROVED ADMINISTRATIVE REGULATIONS PROHIBITING THE MAKING OF CONTRACTS WITH INDIVIDUAL EMPLOYEES OF THE GOVERNMENT, AS A MATTER OF GENERAL POLICY, WE WOULD NOT BE REQUIRED TO OBJECT TO AN AWARD IN THE PRESENT CASE TO MR. COFER'S CORPORATION IN THE ABSENCE OF SUCH A REGULATION APPLICABLE TO THE DEPARTMENT OF THE NAVY. THIS CONCLUSION IS STRENGTHENED BY THE FACT THAT THE BIDDER HAS FRANKLY INVITED ATTENTION TO THE FACTS OF THE MATTER AND HAS EXPRESSED HIS INTENTION TO RESIGN FROM HIS GOVERNMENT EMPLOYMENT IF AWARDED THE CONTRACT.

THE PAPERS TRANSMITTED WITH YOUR LETTER ARE RETURNED HEREWITH, EXCEPTING THE BIDDER'S LETTER OF MAY 6, 1958, AND THE CONTRACTING OFFICER'S STATEMENT OF FACTS.