B-140245, SEP. 10, 1959

B-140245, SEP. 10, 1959

TO THE STANDARD MATTRESS COMPANY:

FURTHER REFERENCE IS MADE TO COPY OF YOUR TELEFAX OF JULY 20, 1959, REQUESTING THAT YOUR BID ON INVITATION NO. QM/CTM/-36-243-59-925 ISSUED BY THE PHILADELPHIA QUARTERMASTER DEPOT BE CONSIDERED IN MAKING AWARD OF THE SET-ASIDE PORTION OF THE SUPPLIES TO BE FURNISHED.

THE INVITATION REQUESTED BIDS--- TO BE OPENED JULY 17, 1959--- FOR THE MANUFACTURE AND DELIVERY, F.O.B. VARIOUS DESTINATIONS, OF 1,172 MATRESSES, BED, FOAM RUBBER PADDING, TICK COVERING, WITH REMOVABLE COVER, 73 INCHES LONG, 24 INCHES WIDE, 29 LBS. WEIGHT. DELIVERIES ARE TO BE MADE DURING 5 MONTHLY PERIODS COMMENCING WITH JANUARY 1960, OR WITHIN 150 DAYS AFTER AWARD, WHICHEVER IS LATER. PAGE 16 OF THE INVITATION PROVIDES THAT AN ORDER FOR AN ADDITIONAL 1,173 MATTRESSES WILL BE CONSIDERED FOR POSSIBLE PLACEMENT IN LABOR SURPLUS AREAS IN ACCORDANCE WITH DEFENSE MANPOWER POLICY NO. 4. ALSO, IT PROVIDES THAT NEGOTIATION FOR AWARD OF THE SET- ASIDE PORTION OF THE PROCUREMENT WOULD PROCEED IN THE FOLLOWING ORDER:

"A. SMALL BUSINESS CONCERNS WILL PERFORM A SUBSTANTIAL PORTION OF THE CONTRACT IN LABOR SURPLUS AREAS, STARTING WITH THE LOWEST SUCH BIDDER OR OFFEROR.

"B. OTHER CONCERNS WHICH WILL PERFORM A SUBSTANTIAL PORTION OF THE CONTRACT IN LABOR SURPLUS AREAS, STARTING WITH THE LOWEST SUCH BIDDER OR OFFEROR.

"C. SMALL BUSINESS CONCERNS NOT IN LABOR SURPLUS AREAS, STARTING WITH LOWEST SUCH BIDDER OR OFFEROR (TO BE UTILIZED ONLY IN THE EVENT FULL COVERAGE IS NOT OBTAINED IN LABOR SURPLUS AREAS).'

THIRTY BIDDERS WERE SOLICITED AND THREE BIDS WERE RECEIVED. IN ADDITION TO YOUR BID, BIDS WERE RECEIVED FROM THE FIRESTONE TIRE AND RUBBER COMPANY AND TOYAD CORPORATION. ALL OF THE BIDS SUBMITTED REFLECT THAT A SUBSTANTIAL PORTION OF THE WORK WILL BE PERFORMED IN A LABOR SURPLUS AREA.

IN YOUR TELEFAX OF JULY 20, YOU DID NOT ADVANCE ANY REASON AS TO WHY YOU SHOULD BE AWARDED THE CONTRACT FOR THE SET-ASIDE PORTION BUT IN A LETTER OF JULY 22, 1959, TO THE CONTRACTING OFFICER--- COPY OF WHICH WAS FURNISHED OUR OFFICE--- YOUR MAIN CONTENTIONS ARE (1) THAT FIRESTONE HAD DEVELOPED AND ORIGINAL SPECIFICATIONS FOR THE MATRESSES AND COVERS TO BE FURNISHED AND THAT TOYAD AND FIRESTONE,A LARGE BUSINESS CONCERN, FIXED THEIR BIDS IN SUCH A MANNER THAT FIRESTONE WOULD OBTAIN AN AWARD UNDER THE UNRESTRICTED PORTION OF THE PROCUREMENT AND TOYAD WOULD RECEIVE AN AWARD UNDER THE RESTRICTED PORTION; AND (2) THAT THE SMALL BUSINESS ADMINISTRATION HAD MADE A MISTAKE IN CLASSIFYING YOU AS A DEALER FURNISHING THE PRODUCT OF A LARGE BUSINESS CONCERN AND THEREFORE YOU DID NOT QUALIFY AS A SMALL BUSINESS CONCERN. ALSO, YOU CALLED ATTENTION TO THE FACT THAT ONLY FOUR COMPANIES MANUFACTURE THE NEOPRENE WHICH IS THE CORE OF THE MATTRESSES HERE INVOLVED, NAMELY, FIRESTONE RUBBER AND LATEX PRODUCTS COMPANY, U.S. RUBBER COMPANY, TOYAD CORPORATION AND B. F. GOODRICH COMPANY. YOU STATE THAT GOODRICH AND U.S. RUBBER REFUSED TO SUPPLY THE NEOPRENE COMPONENT ON THE INSTANT PROCUREMENT BECAUSE OF PROBLEMS EXPERIENCED IN PRODUCING IT UNDER OTHER GOVERNMENT CONTRACTS. FURTHERMORE, TOYAD ALLEGEDLY DOES NOT SELL TO OTHER THAN AN ULTIMATE CONSUMER, LEAVING ONLY FIRESTONE, A LARGE BUSINESS CONCERN, AS THE SUPPLIER OF THE NEOPRENE CORE.

IT IS REPORTED THAT THE CONTRACTING OFFICER ON JULY 24, 1959, REQUESTED A SIZE DETERMINATION FROM THE SMALL BUSINESS ADMINISTRATION ON TOYAD AND YOUR COMPANY. THE CONTRACTING OFFICER WAS INFORMED ON JULY 29, 1959, THAT YOU DID NOT QUALIFY AS A SMALL BUSINESS CONCERN UNDER THE INSTANT PROCUREMENT FOR REASONS HERETOFORE GIVEN IN CONNECTION WITH A SIMILAR PROCUREMENT AND WHICH WAS THE SUBJECT OF OUR DECISION OF DECEMBER 16, 1958, B-137679 (38 COMP. GEN. 434). LATER, ON AUGUST 3, 1959, THE CONTRACTING OFFICER WAS INFORMED BY SMALL BUSINESS ADMINISTRATION THAT THE TOYAD CORPORATION DID QUALIFY AS A SMALL BUSINESS CONCERN.

AS TO YOUR ALLEGATION OF COLLUSION, IT IS ADMINISTRATIVELY REPORTED THAT SUBSTANTIAL COMPETITION HAS BEEN REFLECTED IN PREVIOUS PROCUREMENTS, ESTABLISHING NO PARTICULAR PATTERN OF BIDDING BY FIRESTONE AND TOYAD. SUPPORT OF THIS CONCLUSION, IT IS POINTED OUT THAT UNDER INVITATION NO. QM/CTM/-36-243-59-279, WHERE BIDS WERE OPENED ON NOVEMBER 10, 1958, FIVE BIDS WERE RECEIVED AND AWARD WAS MADE TO TOYAD AND TO YOUR COMPANY. FIRESTONE HAD BID HIGHER THAN TOYAD AND YOUR COMPANY. UNDER INVITATION NO. QM/CTM/-36-243-59-77, WHERE BIDS WERE OPENED ON AUGUST 19, 1958, FOUR BIDS WERE RECEIVED. FIRESTONE WAS THE SUCCESSFUL BIDDER WHILE YOUR COMPANY WAS SECOND LOW BIDDER. UNDER INVITATION NO. QM/CTM/-36-243-58-914 WHERE BIDS WERE OPENED ON JUNE 19, 1958, NINE BIDS WERE RECEIVED. YOUR COMPANY RECEIVED THE AWARD. TOYAD AND FIRESTONE ALSO HAD SUBMITTED BIDS. AS TO THE INSTANT PROCUREMENT INVOLVING THE UNRESTRICTED PORTION FIRESTONE IS LOW ON TWO OF THE THREE DESTINATIONS, WHILE TOYAD IS LOW AS TO THE THIRD DESTINATION. THESE FACTS DO NOT WARRANT THE CONCLUSION THAT THERE IS COLLUSION BETWEEN TOYAD AND FIRESTONE IN SUBMITTING THEIR BIDS.

WITH REGARD TO THE GENERAL QUESTION OF COMPETITION IN PROCUREMENTS OF FOAM RUBBER MATTRESSES, IT IS ADMINISTRATIVELY REPORTED THAT ONLY FOUR COMPANIES ARE INCLUDED ON THE APPLICABLE QUALIFIED PRODUCTS LIST AS BEING QUALIFIED TO MANUFACTURE THE 4 1/2 INCH FOAM RUBBER MATTRESS CORE IN ACCORDANCE WITH THE REQUIREMENTS OF THIS INVITATION. OF THESE FOUR COMPANIES, ONLY ONE, TOYAD CORPORATION, IS CLASSIFIED AS SMALL BUSINESS BY THE SMALL BUSINESS ADMINISTRATION. IT IS STATED IN THE REPORT THAT, IN THE ABSENCE OF ADDITIONAL SMALL BUSINESS CONCERNS QUALIFYING FOR THE MANUFACTURE OF THIS ITEM, OR CHANGES IN OTHER EXISTING CONDITIONS, EVERY EFFORT WILL BE MADE TO ACCOMPLISH FUTURE PROCUREMENTS ON AN UNRESTRICTED BASIS.

AS STATED IN OUR DECISION IN 38 COMP. GEN. 434, THE ADMINISTRATIVE AGENCY IS BOUND BY THE DETERMINATION OF THE SMALL BUSINESS ADMINISTRATION THAT YOUR COMPANY DOES NOT QUALIFY AS A SMALL BUSINESS CONCERN FOR THE PROCUREMENT HERE INVOLVED.

ACCORDINGLY, WE WOULD NOT BE WARRANTED IN OBJECTING TO THE PROPOSAL OF THE CONTRACTING OFFICER, BECAUSE OF THE SMALL BUSINESS ADMINISTRATION SIZE DETERMINATION, TO GRANT FIRST PRIORITY TO THE TOYAD CORPORATION IN NEGOTIATING A CONTRACT WITH RESPECT TO THE SET-ASIDE PORTION OF THE PROCUREMENT.