B-140506, SEP. 10, 1959

B-140506: Sep 10, 1959

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WE HAVE BEEN ADVISED BY THE DEPARTMENT OF THE AIR FORCE THAT ONLY THE FORMER FIRM IS UNDER CONSIDERATION FOR AWARD AND OUR DISCUSSION WILL BE LIMITED ACCORDINGLY. FUNDS AVAILABLE FOR THE COMPENSATION OF THE CONTRACTOR ARE SUBJECT TO SECTION 631 OF THE DEPARTMENT OF DEFENSE APPROPRIATION ACT. MEAN THE CARRIAGE BY AIRCRAFT OF PERSONS OR PROPERTY AS A COMMON CARRIER FOR COMPENSATION OR HIRE OR THE CARRIAGE OF MAIL BY AIRCRAFT * * *" IT IS YOUR CONTENTION THAT THE DEFINITIONS IN THE FEDERAL AVIATION ACT APPLY TO THE LANGUAGE OF SECTION 631 AND THEREFORE THAT THE LOW RESPONSIBLE BIDDER. IS NOT ELIGIBLE FOR A CONTRACT USING FUNDS WITHIN THE LIMITATION STATED IN SECTION 631. WHICH WAS IDENTICAL IN PERTINENT LANGUAGE WITH SECTION 631 QUOTED ABOVE.

B-140506, SEP. 10, 1959

TO THE LAW OFFICES, DEWITT T. YATES:

WE REFER AGAIN TO YOUR LETTER OF AUGUST 13, 1959, PROTESTING ON BEHALF OF AIRLINE TRANSPORT CARRIERS D/B/A CALIFORNIA-HAWAIIAN AIRLINES, AGAINST THE POSSIBLE AWARD OF CONTRACTS TO AMERICAN INTERNATIONAL AIRWAYS OR HOLIDAY AIRWAYS PURSUANT TO ITEMS NOS. 5 AND 8 OF INVITATION FOR BIDS NO. 11-626- 59-11, ISSUED JULY 8, 1959, BY THE MILITARY AIR TRANSPORT SERVICE FOR THE TRANSPORTATION OF CARGO AND PASSENGERS BY AIR. WE HAVE BEEN ADVISED BY THE DEPARTMENT OF THE AIR FORCE THAT ONLY THE FORMER FIRM IS UNDER CONSIDERATION FOR AWARD AND OUR DISCUSSION WILL BE LIMITED ACCORDINGLY.

FUNDS AVAILABLE FOR THE COMPENSATION OF THE CONTRACTOR ARE SUBJECT TO SECTION 631 OF THE DEPARTMENT OF DEFENSE APPROPRIATION ACT, 1960, 73 STAT. 383, WHICH PROVIDES:

"OF THE FUNDS MADE AVAILABLE BY THIS ACT FOR THE SERVICES OF THE MILITARY AIR TRANSPORT SERVICE, $85,000,000 SHALL BE AVAILABLE ONLY FOR PROCUREMENT OF COMMERCIAL AIR TRANSPORTATION SERVICE; AND THE SECRETARY OF DEFENSE SHALL UTILIZE THE SERVICES OF CIVIL AIR CARRIERS WHICH QUALIFY AS SMALL BUSINESSES TO THE FULLEST EXTENT FOUND PRACTICABLE.'

THE FEDERAL AVIATION ACT OF 1958, 72 STAT. 737, CONTAINS THE FOLLOWING DEFINITIONS:

"SECTION 101 (3) "AIR CARRIER" MEANS ANY CITIZEN OF THE UNITED STATES WHO UNDERTAKES, WHETHER DIRECTLY OR INDIRECTLY OR BY A LEASE OR ANY OTHER ARRANGEMENT, TO ENGAGE IN AIR TRANSPORTATION * * *.

"SECTION 101 (10) "AIR TRANSPORTATION" MEANS INTERSTATE, OVERSEAS, OR FOREIGN AIR TRANSPORTATION OR THE TRANSPORTATION OF MAIL BY AIRCRAFT.

"SECTION 101 (21) "INTERSTATE AIR TRANSPORTATION," "OVERSEAS AIR TRANSPORTATION," AND "FOREIGN AIR TRANSPORTATION," RESPECTIVELY, MEAN THE CARRIAGE BY AIRCRAFT OF PERSONS OR PROPERTY AS A COMMON CARRIER FOR COMPENSATION OR HIRE OR THE CARRIAGE OF MAIL BY AIRCRAFT * * *"

IT IS YOUR CONTENTION THAT THE DEFINITIONS IN THE FEDERAL AVIATION ACT APPLY TO THE LANGUAGE OF SECTION 631 AND THEREFORE THAT THE LOW RESPONSIBLE BIDDER, A PART 45 CARRIER WHO DOES NOT MEET THE DEFINITIONS, IS NOT ELIGIBLE FOR A CONTRACT USING FUNDS WITHIN THE LIMITATION STATED IN SECTION 631.

IN OUR DECISION, B-139296, MAY 29, 1959, WE HELD THAT SECTION 634 OF THE DEPARTMENT OF DEFENSE APPROPRIATION ACT, 1959, 72 STAT. 729, WHICH WAS IDENTICAL IN PERTINENT LANGUAGE WITH SECTION 631 QUOTED ABOVE, COULD NOT BE CONSTRUED TO HAVE ADOPTED THE DEFINITIONS IN THE FEDERAL AVIATION ACT IN THE ABSENCE OF SOME AFFIRMATIVE INDICATION IN THE LANGUAGE OR THE LEGISLATIVE HISTORY OF THE ACT THAT SUCH DEFINITIONS WERE INTENDED TO APPLY.

YOU POINT OUT THAT THE CHAIRMAN OF THE SENATE SUBCOMMITTEE ON DEPARTMENT OF DEFENSE APPROPRIATIONS IN DISCUSSING ON THE FLOOR OF THE SENATE SECTION 631 IN THE FORM FINALLY ADOPTED STATED (105 CONGRESSIONAL RECORD 13761 (DAILY EDITION AUGUST 4, 1959) ):

"WITH REFERENCE TO SECTION 631, THE SENATE LANGUAGE AS AMENDED ON THE FLOOR WAS UNACCEPTABLE TO THE CONFERENCE COMMITTEE. INSTEAD THE CONFERENCE ACCEPTED THE HOUSE VERSION OF SECTION 631, WHICH USES THE TERMS "AIR TRANSPORTATION" AND "AIR CARRIER" IN ACCORDANCE WITH THE FEDERAL AVIATION ACT OF 1958. IT WAS AGREED THAT $85,000,000 WOULD BE EARMARKED FROM MATS FUNDS FOR EXPENDITURE WITH SUCH AIR CARRIERS.

"MY POINT IS THAT THE CONFEREES AGREED THAT SECTION 631, WHICH USES THE TERMS "AIR TRANSPORTATION" AND "AIR CARRIER," WILL BE INTERPRETED AND APPLIED IN ACCORDANCE WITH THE FEDERAL AVIATION ACT OF 1958.' 105 CONG.REC. 13761 (DAILY ED., AUG. 4, 1959).

H.R. 7454, 86TH CONGRESS, A BILL MAKING APPROPRIATIONS FOR THE DEPARTMENT OF DEFENSE FOR THE FISCAL YEAR ENDING JUNE 30, 1960, AND FOR OTHER PURPOSES, CONTAINED A SECTION 631 IDENTICAL WITH SECTION 634 OF THE DEPARTMENT OF DEFENSE APPROPRIATION ACT OF 1959. SECTION 631 WAS AMENDED BY THE SENATE COMMITTEE ON APPROPRIATIONS TO READ:

"OF THE FUNDS MADE AVAILABLE BY THIS ACT FOR THE SERVICES OF THE MILITARY AIR TRANSPORT SERVICE, $100,000,000 SHALL BE AVAILABLE ONLY FOR PROCUREMENT OF COMMERCIAL AIR TRANSPORTATION SERVICE FROM CARRIERS CERTIFICATED BY THE CIVIL AERONAUTICS BOARD AS SCHEDULED OR SUPPLEMENTAL AIR CARRIERS; AND THE SECRETARY OF DEFENSE SHALL UTILIZE THE SERVICES OF SUCH CIVIL AIR CARRIERS WHICH QUALIFY AS SMALL BUSINESSES TO THE FULLEST EXTENT FOUND PRACTICABLE.'

SENATE REPORT NO. 476, 86TH CONGRESS, AT PAGE 24, WITH RESPECT TO THE SECTION, AS AMENDED, STATED:

"THE TERM "CERTIFICATED SUPPLEMENTAL AIR CARRIERS" INCLUDES ALL CARRIERS WHICH THE CAB HAS CERTIFICATED AS SUCH; ALL TO WHICH THE CAB HAS AWARDED A HEARING IN ORDER TO QUALIFY FOR SUCH CERTIFICATION; AND THOSE WHOSE CERTIFICATED STATUS IS PENDING BEFORE THE U.S. COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT. IT IS NOT THE INTENTION OF THE COMMITTEE TO INCLUDE ANY CARRIER NOT SUBJECT TO ECONOMIC REGULATION BY THE CAB.'

THIS VERSION OF SECTION 631 MET WITH CONSIDERABLE OPPOSITION ON THE FLOOR OF THE SENATE (SEE PP. 12009; 12027-34; 12105-13; 12115-30; 12132 OF THE CONGRESSIONAL RECORDS FOR JULY 13 AND 14, 1959) WITH RESPECT TO THE LIMITATION ON THE QUALIFICATION OF CONTRACTORS. PRESUMABLY AS A REFLECTION OF THE OPPOSITION, THE SECTION WAS FURTHER AMENDED ON THE FLOOR OF THE SENATE TO BROADEN ELIGIBILITY FOR AWARD OF CONTRACTS BY THE ADDITION OF THE FOLLOWING PROVISO:

"PROVIDED SUCH TRANSPORTATION MAY BE PROCURED FROM LICENSED AIR CARRIERS NOT HOLDING CERTIFICATES AS SUPPLEMENTAL AIR CARRIERS THAT HAVE AVAILABLE EQUIPMENT QUALIFIED FOR THE CIVIL RESERVE AIRFLEET.' 105 CONG.REC. 12132 (DAILY ED., JULY 14, 1959).

THE CONFERENCE COMMITTEE ADOPTED THE HOUSE VERSION OF THE SECTION EXCEPT FOR A CHANGE IN THE DOLLAR AMOUNT TO $85 MILLION AND THE PROVISION BECAME LAW IN THAT FORM.

THE CONGRESS COULD HARDLY BE CONSIDERED TO HAVE BEEN UNAWARE OF OUR DECISION WITH RESPECT TO THE INTERPRETATION OF SECTION 634 OF THE DEFENSE APPROPRIATION ACT, 1959, OR OF THE CONSISTENT ADMINISTRATIVE INTERPRETATION OF THAT SECTION, AND SECTIONS TO THE SAME EFFECT IN EARLIER APPROPRIATION ACTS, UNDER WHICH PART 45 CARRIERS HAVE BEEN REGARDED AS ELIGIBLE FOR AWARD. IN VIEW THEREOF, ENACTMENT OF SECTION 631 IN ITS PRESENT FORM, AND ESPECIALLY THE REJECTION OF THE SENATE VERSION OF THE SECTION WHICH IN ITS INITIAL FORM WOULD HAVE REQUIRED THE LIMITING OF CONTRACT AWARDS ON THE BASIS PUT FORWARD BY YOU, WE MUST CONCLUDE THAT SECTION 631 CANNOT BE INTERPRETED TO PRECLUDE AWARDS TO PART 45 CARRIERS.

WE ARE AWARE OF THE STATEMENT MADE BY SENATOR CHAVES CITED BY YOU; HOWEVER, WE NOTE ALSO A STATEMENT BY SENATOR SALTONSTALL WHICH APPEARS IMMEDIATELY AFTER THE STATEMENT BY SENATOR CHAVES AT PAGE 13764 OF THE CONGRESSIONAL RECORD FOR AUGUST 4, 1959:

"LAST YEAR $80,000,000 WAS SO EARMARKED. EXCEPT FOR THE DOLLAR CHANGE, THE PROVISION THIS YEAR IS IDENTICAL TO THE 1959 ACT AND TO THE HOUSE BILL.'

IN ADDITION, THE FOLLOWING STATEMENTS WERE MADE ON THE FLOOR OF THE HOUSE OF REPRESENTATIVES WITH RESPECT TO THE FINAL VERSION OF THE SECTION IN DEBATE BETWEEN QUESTIONERS AND MR. MAHON, FLOOR MANAGER OF THE BILL IN THE HOUSE (PAGE 13792 ET SEQ., CONGRESSIONAL RECORD FOR AUGUST 4, 1959):

"MR. LANKFORD. THEN THE TERM "AIR CARRIER" HAS THE SAME MEANING IN THIS BILL AS IT HAS IN THE FEDERAL AVIATION ACT OF 1958?

"MR. MAHON. I BELIEVE IT WOULD NOT.

"MR LANKFORD. WOULD THE GENTLEMAN SAY THAT THIS LANGUAGE MEANS THAT ANY OPERATOR WHO IS NOT QUALIFIED AS AN AIR CARRIER AS DEFINED IN THE FEDERAL AVIATION ACT OF 1958 IS INELIGIBLE TO BID ON THE MATS COMMERCIAL ORGANIZATION? IN OTHER WORDS, IN ORDER TO BID ON THIS MATS ORGANIZATION, WOULD HE HAVE TO BE QUALIFIED AS AN AIR CARRIER AS DEFINED IN THE FEDERAL AVIATION ACT OF 1958?

"MR. MAHON. I DO NOT UNDERSTAND THAT HE WOULD HAVE TO BE SO QUALIFIED. I WOULD LIKE TO ELABORATE A LITTLE MORE ON THIS ANSWER. WE HAVE THE COMMON CARRIER PEOPLE. NOW, THE COMMON CARRIER PEOPLE WOULD LIKE TO GET ALL POSSIBLE BUSINESS THAT IS AVAILABLE THROUGH THIS SECTION, BUT THERE IS WIDE LATITUDE IN THE DEPARTMENT OF DEFENSE IN THE SELECTION OF CONTRACTS. AS LONG AS THE AIR CARRIER CAN MEET THE REQUIREMENTS OF SAFETY LAID DOWN BY THE FAA AND OTHER REQUIREMENTS LAID DOWN BY THE DEPARTMENT OF DEFENSE, THEN HE IS PERMITTED TO UNDERTAKE TO GET PART OF THIS BUSINESS.

"MR. ROONEY. MR. SPEAKER, WILL THE GENTLEMEN YIELD?

"MR. MAHON. I YIELD TO THE GENTLEMAN FROM NEW YORK.

"MR. ROONEY. WHEN THE GENTLEMAN USES THE WORDS "AIR CARRIER" AND "TRANSPORTATION," THE GENTLEMAN MEANS TO INCLUDE CARGO CARRIERS CERTIFICATED BY THE CAB AS WELL?

"MR. MAHON. CARGO CARRIERS CERTIFICATED BY CAB ARE INCLUDED. THE LITTLE CARRIERS, THE BIG CARRIERS, THE CERTIFICATED CARRIERS, THE NONCERTIFICATED CARRIERS ARE INCLUDED IN THIS BROAD LANGUAGE.'

YOU ALSO CONTEND THAT THE LOW BIDDER TO WHOM AWARD IS PROPOSED DOES NOT QUALIFY AS A RESPONSIBLE BIDDER UNDER SECTION 1.307 OF THE AIR FORCE PROCUREMENT INSTRUCTION. IT HAS LONG BEEN RECOGNIZED THAT THE DETERMINATION OF A BIDDER'S RESPONSIBILITY IS PRIMARILY WITHIN THE PROVINCE OF THE CONTRACTING AGENCY. WE ARE ADVISED BY THE DEPARTMENT THAT AN EXTENSIVE SURVEY HAS BEEN MADE WITH RESPECT TO THE QUALIFICATION OF AMERICAN INTERNATIONAL AIRWAYS AND IT HAS BEEN CONCLUDED THAT THE FIRM IS CAPABLE OF PERFORMING ITEMS 5 AND 8 UNDER THE INVITATION AND IS IN ALL RESPECTS A RESPONSIBLE BIDDER ON THOSE ITEMS. IT HAS BEEN FURTHER DETERMINED THAT AMERICAN INTERNATIONAL HAS ESTABLISHED A BASE OF OPERATIONS AT SHERMAN OAKS, CALIFORNIA. IN VIEW OF THE CONCLUSION OF THE AIR FORCE WITH RESPECT TO THE BIDDER'S RESPONSIBILITY AND IN THE ABSENCE OF ANY SHOWING THAT THE DETERMINATION IS NOT REASONABLY SUPPORTED BY THE FACTS, WE MUST CONCLUDE THAT THERE HAS BEEN PRESENTED NO LEGAL BASIS TO SUPPORT A CONCLUSION THAT THE PROPOSED AWARD TO AMERICAN INTERNATIONAL SHOULD BE REGARDED AS INVALID.