B-141138, DECEMBER 23, 1959, 39 COMP. GEN. 468

B-141138: Dec 23, 1959

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OF AN INDIVIDUAL WHO SUBMITS A BID FOR OTHER CONTRACTS AFFECTS THE INDIVIDUAL'S DEPENDABILITY AS A GOVERNMENT CONTRACTOR AND IS ADEQUATE TO SUPPORT THE ADMINISTRATIVE DETERMINATION THAT THE BIDDER LACKS THE INTEGRITY TO BE CONSIDERED A RESPONSIBLE BIDDER. WHO NOT ONLY IS PRESIDENT AND DIRECTOR OF A CORPORATION WHICH HAS SUBMITTED A BID FOR A GOVERNMENT CONTRACT BUT WHO ALSO OWNS APPROXIMATELY 43.3 PERCENT OF THE CORPORATION STOCK. ALTHOUGH A LACK OF UNIFORMITY AMONG PROCUREMENT AGENCIES WITH RESPECT TO BIDDERS' QUALIFICATION DETERMINATIONS IS UNDESIRABLE. THE STATUTES WHICH REQUIRE ADVERTISING AND AWARD BASED UPON THE MOST ADVANTAGEOUS BID SUBMITTED BY A RESPONSIBLE BIDDER WERE ENACTED FOR THE BENEFIT AND PROTECTION OF THE GOVERNMENT AND DO NOT CONFER ANY ENFORCEABLE RIGHTS UPON BIDDERS.

B-141138, DECEMBER 23, 1959, 39 COMP. GEN. 468

BIDDERS - QUALIFICATIONS - LACK OF INTEGRITY - JOINT VENTURES A CONVICTION FOR FEDERAL INCOME TAX EVASION, INCIDENT TO PERFORMANCE OF GOVERNMENT CONTRACTS, OF AN INDIVIDUAL WHO SUBMITS A BID FOR OTHER CONTRACTS AFFECTS THE INDIVIDUAL'S DEPENDABILITY AS A GOVERNMENT CONTRACTOR AND IS ADEQUATE TO SUPPORT THE ADMINISTRATIVE DETERMINATION THAT THE BIDDER LACKS THE INTEGRITY TO BE CONSIDERED A RESPONSIBLE BIDDER. AN INDIVIDUAL CONVICTED OF FEDERAL INCOME TAX EVASION, WHO NOT ONLY IS PRESIDENT AND DIRECTOR OF A CORPORATION WHICH HAS SUBMITTED A BID FOR A GOVERNMENT CONTRACT BUT WHO ALSO OWNS APPROXIMATELY 43.3 PERCENT OF THE CORPORATION STOCK, MUST BE REGARDED AS HAVING A DOMINANT AND CONTROLLING POSITION IN THE CORPORATION AND THE LACK OF INTEGRITY OF SUCH INDIVIDUAL BASED ON THE CONVICTION, WHICH WOULD PRECLUDE HIS CONSIDERATION AS A RESPONSIBLE BIDDER, MAY BE IMPUTED TO THE CORPORATION, THE INTEGRITY OF THE CORPORATION BEING NO GREATER THAN THE INTEGRITY OF THE INDIVIDUALS WHO CONTROL ITS OPERATIONS. ALTHOUGH A LACK OF UNIFORMITY AMONG PROCUREMENT AGENCIES WITH RESPECT TO BIDDERS' QUALIFICATION DETERMINATIONS IS UNDESIRABLE, THE STATUTES WHICH REQUIRE ADVERTISING AND AWARD BASED UPON THE MOST ADVANTAGEOUS BID SUBMITTED BY A RESPONSIBLE BIDDER WERE ENACTED FOR THE BENEFIT AND PROTECTION OF THE GOVERNMENT AND DO NOT CONFER ANY ENFORCEABLE RIGHTS UPON BIDDERS; THEREFORE, THE DETERMINATION OF A BIDDER'S RESPONSIBILITY BY ONE AGENCY MAY NOT BE INVOKED IN REFUTATION OF A PRIOR DETERMINATION BY A DIFFERENT AGENCY THAT THE SAME BIDDER IS LACKING IN RESPONSIBILITY. AN ADMINISTRATIVE FINDING OF LACK OF INTEGRITY OF ONE PARTY TO A JOINT VENTURE FORMED TO BID ON A GOVERNMENT PROCUREMENT, BASED ON A FEDERAL INCOME TAX EVASION CONVICTION INCIDENT TO THE PERFORMANCE OF OTHER GOVERNMENT CONTRACTS, NOT ONLY IS PROPER FOR CONSIDERATION IN THE DETERMINATION OF THE RESPONSIBILITY OF THE JOINT VENTURE WHEN THE OBLIGATIONS OF ALL VENTURES ARE EQUAL BUT SUCH FINDING OF LACK OF INTEGRITY IN ONE VENTURER IS SUFFICIENT TO SUPPORT A DETERMINATION THAT THE JOINT VENTURE IS NOT A RESPONSIBLE BIDDER. ALTHOUGH THE RESIGNATION OF AN INDIVIDUAL WHO HAD BEEN CONVICTED OF FEDERAL INCOME TAX EVASION FROM A DOMINANT AND CONTROLLING POSITION IN A CORPORATION WHICH JOINED WITH ANOTHER AS A JOINT VENTURE TO BID ON A GOVERNMENT PROCUREMENT AND THE DISPOSAL OF THE INDIVIDUAL'S STOCK IN THE CORPORATION WOULD BE PROPERLY FOR CONSIDERATION BY THE CONTRACTING OFFICER IN REEVALUATING THE INTEGRITY OF THE JOINT VENTURERS IF NOTICE OF SUCH ACTION WAS COMMUNICATED TO THE PROCUREMENT AGENCY PRIOR TO AWARD, IN THE ABSENCE OF ANY EVIDENCE THAT THE CONTRACTING AGENCY WAS AWARE OF THE RESIGNATION ACTION AT THE TIME OF AWARD TO THE SECOND LOW BIDDER, THE LEGALITY OF SUCH AWARD WILL NOT BE QUESTIONED.

TO DORSEY, OWEN, SCOTT, BARBER AND MARQUART, DECEMBER 23, 1959:

REFERENCE IS MADE TO YOUR TELEGRAM OF OCTOBER 29, 1959, AND SUBSEQUENT CORRESPONDENCE PROTESTING AGAINST THE ACTION OF THE GENERAL SERVICES ADMINISTRATION IN REJECTING THE LOW BID SUBMITTED BY A JOINT VENTURE COMPOSED OF JOHNSON, DRAKE AND PIPER, INC., AND H. A. LOTT, INC., FOR CONSTRUCTION OF A UNITED STATES COURT HOUSE AND FEDERAL OFFICE BUILDING AT HOUSTON, TEXAS.

THE RECORD BEFORE US INDICATES THAT THE BID IN QUESTION WAS REJECTED BY THE GENERAL SERVICES ADMINISTRATION FOLLOWING A DETERMINATION THAT THE JOINT VENTURE WAS NOT A RESPONSIBLE BIDDER. SUCH DETERMINATION WAS IN TURN BASED UPON INFORMATION FROM THE DEPARTMENT OF JUSTICE TO THE EFFECT THAT MR. H. A. LOTT, INC., TOGETHER WITH OTHERS, WAS INDICTED IN HOUSTON, TEXAS, IN 1958, FOR CONSPIRACY AND WILLFUL ATTEMPT TO EVADE FEDERAL INCOME TAXES DUE FROM FARNSWORTH AND CHAMBERS, INC., OF WHICH CORPORATION MR. LOTT WAS THEN VICE PRESIDENT AND GENERAL SUPERINTENDENT. OUR INFORMATION INDICATES THAT THE TAX EVASIONS ON WHICH THE INDICTMENT AGAINST MR. LOTT WAS FOUNDED INVOLVED THE PERFORMANCE OF GOVERNMENT CONTRACTS BY FARNSWORTH AND CHAMBERS, INC., AND THAT THE GOVERNMENT'S CASE WAS BASED UPON THE USE OF CORPORATE FUNDS FOR PERSONAL GAIN BY VARIOUS OFFICIALS OF THE CORPORATION, INCLUDING MR. LOTT, AND THE CHARGE BACK OF SUCH FUNDS AS COSTS OF CONSTRUCTION BEING PERFORMED CHIEFLY UNDER CONTRACTS WITH THE GOVERNMENT. MR. LOTT PLEADED NOLO CONTENDERE TO THE CHARGE, AND ON JUNE 22, 1959, HE WAS SENTENCED TO PAY A FINE OF $20,000 AND TO IMPRISONMENT FOR A PERIOD OF TWO YEARS. WHILE THIS SENTENCE WAS APPEALED AND AND MR. LOTT WAS FREE ON BAIL AT THE TIME OF BID OPENING IN THE PRESENT CASE, IT WAS THE OPINION OF THE CONTRACTING OFFICIALS THAT THE ABOVE RECORD INDICATED A LACK OF INTEGRITY ON HIS PART. IT WAS THEIR FURTHER OPINION THAT MR. LOTT'S OWNERSHIP OF APPROXIMATELY 43.3 PERCENT OF THE STOCK OF H. A. LOTT, INC., MADE HIM THE PRINCIPAL STOCKHOLDER AND CONSTITUTED HIM THE DOMINANT PERSONALITY IN CONTROL OF THE CORPORATION. LACK OF INTEGRITY ON THE PART OF MR. LOTT WAS, THEREFORE, IMPUTED TO H. A. LOTT, INC., AND IN TURN IMPUTED TO THE JOINT VENTURE. THE LOW BID SUBMITTED BY THE JOINT VENTURE WAS REJECTED ON THAT BASIS.

YOUR PROTEST AGAINST THE REJECTION IS BASED UPON TWO PRIMARY CONTENTIONS. FIRST, THAT THE ACTION OF THE GENERAL SERVICES ADMINISTRATION IN IMPUTING A LACK OF PERSONAL INTEGRITY ON THE PART OF MR. LOTT TO H. A. LOTT, INC., AND THENCE TO THE JOINT VENTURE, WAS IMPROPER, SINCE NO QUESTION HAS BEEN RAISED WITH RESPECT TO THE INTEGRITY OF JOHNSON, DRAKE AND PIPER, INC., AND SINCE H. A. LOTT, INC., HAS A SATISFACTORY RECORD OF PERFORMANCE ON GOVERNMENT CONTRACTS AND HAS BEEN AWARDED ADDITIONAL GOVERNMENT CONTRACTS BY OTHER FEDERAL AGENCIES SUBSEQUENT TO SUBMISSION AND REJECTION OF THE BID IN THE INSTANT CASE. SECOND, THAT MR. LOTT RESIGNED HIS POSITIONS AS PRESIDENT AND DIRECTOR OF H. A. LOTT, INC., ON OCTOBER 3, 1959, AND HAD DIVESTED HIMSELF OF ALL STOCKHOLDINGS IN THE CORPORATION BY OCTOBER 22, 1959. YOU ADVISE THAT WHILE THESE ACTIONS WERE ACCOMPLISHED PARTIALLY AS A RESULT OF CONFERENCES WITH THE CONTRACTING OFFICIALS AND IN AN ATTEMPT TO ACHIEVE A CORPORATE STRUCTURE IN H. A. LOTT, INC., WHICH WOULD BE ACCEPTABLE TO THE GENERAL SERVICES ADMINISTRATION, AND WHILE IT IS PRESUMED THAT THE CONTRACTING OFFICIALS WERE AWARE OF EFFORTS ALONG SUCH LINES, THE CONTRACT WAS AWARDED TO THE SECOND LOW BIDDER ON OCTOBER 22, 1959, WITHOUT PRIOR NOTICE TO, OR FURTHER ATTEMPT TO REACH AGREEMENT WITH, THE LOW BIDDER. YOU, THEREFORE, ASK THIS OFFICE TO CONCLUDE THAT REJECTION OF THE JOINT VENTURE'S LOW BID WAS IMPROPER, AND TO DIRECT THE GENERAL SERVICES ADMINISTRATION TO CANCEL THE CONTRACT AWARDED TO THE SECOND LOW BIDDER.

IN VIEW OF THE ABOVE THE FIRST QUESTION TO BE CONSIDERED AND DECIDED UNDER YOUR APPEAL WOULD APPEAR TO BE WHETHER THE GENERAL SERVICES ADMINISTRATION WAS JUSTIFIED IN ITS DETERMINATION THAT MR. LOTT LACKED THE INTEGRITY OF A RESPONSIBLE BIDDER AND, IF SO, WHETHER HIS POSITION IN, AND ASSOCIATION WITH, H. A. LOTT, INC., WAS SUCH AS TO IMPUTE A CORRESPONDING LACK OF INTEGRITY TO THAT CORPORATION.

SECTION 303 OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, 41 U.S.C. 253 (B), PROVIDES THAT CONTRACT AWARDS UNDER ADVERTISED PROCUREMENTS SHALL BE MADE TO THAT RESPONSIBLE BIDDER WHOSE BID WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. THE RULE IS SETTLED THAT THE PHRASE "RESPONSIBLE BIDDER" IN THIS AND SIMILAR STATUTES DENOTES SOMETHING MORE THAN THE ABILITY OR CAPACITY OF A BIDDER TO PERFORM THE CONTRACT, AND A CONTRACTING AGENCY, THEREFORE, MAY ALSO CONSIDER A BIDDER'S RECORD OF INTEGRITY IN DECIDING WHETHER HE IS, IN FACT, A RESPONSIBLE BIDDER. O BRIEN V. CARNEY, 6 F.1SUPP. 761, 762; 26 COMP. GEN. 676; 30 ID. 235. AS STATED IN THE CASE OF ARTHUR VENNERI CO. V. PATERSON HOUSING AUTHORITY, 149 A.2D 228, 234,"ALTHOUGH RESPONSIBILITY MAY INVOLVE EXPERIENCE, FINANCIAL ABILITY AND FACILITIES NECESSARY TO PERFORM THE CONTRACT, * * * IT MAY ALSO INVOLVE THE MORAL INTEGRITY OF THE BIDDER.' APPLICATION OF THIS PRINCIPLE IS MADE MANDATORY UPON THE NONDEFENSE AGENCIES OF THE GOVERNMENT BY THE PROVISIONS OF SECTION 1 1.310-5 (A) (5) OF THE FEDERAL PROCUREMENT REGULATIONS, WHICH PROVIDE THAT A PROSPECTIVE CONTRACTOR MUST, IN THE OPINION OF THE CONTRACTING OFFICER, HAVE A SATISFACTORY RECORD OF INTEGRITY IN ORDER TO QUALIFY AS A RESPONSIBLE BIDDER.

THE PLEA AND CONVICTION OF MR. LOTT IS, IN OUR OPINION, SUFFICIENT EVIDENCE TO SUPPORT THE DETERMINATION BY THE CONTRACTING AGENCY THAT MR. LOTT, IN HIS INDIVIDUAL CAPACITY, LACKED THE INTEGRITY REQUIRED IN A RESPONSIBLE BIDDER. THE CRIME FOR WHICH HE WAS CONVICTED WAS ALLEGED TO HAVE BEEN COMMITTED IN THE PERFORMANCE OF GOVERNMENT CONTRACTS, AND SECTION 1-1.605 (A) (1) OF THE FEDERAL PROCUREMENT REGULATIONS SPECIFICALLY PROVIDES FOR THE PENALTY OF DEBARMENT AGAINST BIDDERS SO CONVICTED. IT FOLLOWS THAT SUCH CONVICTION IS MORE THAN ADEQUATE TO SUPPORT THE LESSER FINDING THAT A BIDDER IS NOT A RESPONSIBLE BIDDER. WE, THEREFORE, CONCUR IN THE OPINION OF THE CONTRACTING AGENCY THAT MR. LOTT'S PERSONAL RECORD WAS SUFFICIENTLY INDICATIVE OF A LACK OF INTEGRITY TO JUSTIFY A DETERMINATION THAT HE, IN HIS INDIVIDUAL CAPACITY, WAS NOT A RESPONSIBLE BIDDER. VIEWED IN THE LIGHT OF THE REPORTED FACT THAT THE CONVICTION HERE UNDER CONSIDERATION RELATED TO MATTERS ARISING IN CONNECTION WITH PERFORMANCE OF GOVERNMENT CONTRACTS, AND THE FURTHER FACT THAT SUCH MATTERS REASONABLY COULD BE CONSIDERED AS AFFECTING MR. LOTT'S DEPENDABILITY AS A GOVERNMENT CONTRACTOR, WE DO NOT BELIEVE THIS CONCLUSION IS CONTRARY TO THE PRINCIPLE STATED IN OUR DECISION OF SEPTEMBER 18, 1951, B-105082.

CONCERNING THE QUESTION WHETHER SUCH LACK OF PERSONAL INTEGRITY ON THE PART OF MR. LOTT COULD PROPERLY BE IMPUTED TO H. A. LOTT, INC., THE RECORD INDICATES THAT MR. LOTT, IN ADDITION TO OCCUPYING THE POSITIONS OF PRESIDENT AND DIRECTOR OF THE CORPORATION, WAS ALSO THE OWNER OF APPROXIMATELY 43.3 PERCENT OF THE STOCK OF THE CORPORATION. THE DISTRIBUTION OF THE REMAINING SHARES OF STOCK APPEARS TO HAVE BEEN SUCH AS TO ADEQUATELY SUPPORT THE CONCLUSION OF THE CONTRACTING AGENCY THAT MR. LOTT WAS IN A DOMINANT AND CONTROLLING POSITION IN THE CORPORATION. THE QUESTION, THEREFORE, PRESENTED IS WHETHER A FEDERAL AGENCY SHOULD BE REQUIRED TO CONTRACT WITH A CORPORATION WHICH IT HAS REASONABLE GROUNDS TO BELIEVE IS DOMINATED AND CONTROLLED BY AN INDIVIDUAL WHOSE RECORD INDICATES A SUFFICIENT LACK OF INTEGRITY TO JUSTIFY THE AGENCY IN REFUSING TO CONTRACT WITH THE INDIVIDUAL HIMSELF. WHILE IT IS TRUE THAT A CORPORATION GENERALLY IS TO BE VIEWED AS SEPARATE AND DISTRICT FROM ITS STOCKHOLDERS, IT IS EQUALLY TRUE THAT A CORPORATION CAN OPERATE ONLY THROUGH THE INDIVIDUALS WHO, AS OFFICER, DIRECTORS, OR STOCKHOLDERS, CONTROL THE ACTIVITIES, POLICIES, AND MANAGEMENT OF THE CORPORATION. FOLLOWS THAT THE INTEGRITY OF A CORPORATION CAN BE NO GREATER THAN THE INTEGRITY OF THE INDIVIDUALS WHO CONTROL ITS OPERATION. WHETHER EVIDENCE OF A BIDDER'S LACK OF INTEGRITY IS SUFFICIENT TO WARRANT A FINDING IN ANY PARTICULAR CASE THAT THE BIDDER IS NOT RESPONSIBLE IS A MATTER PRIMARILY FOR EVALUATION BY THE PROCURING AGENCY, AND, BECAUSE REASONABLE MEN MAY WELL DISAGREE IN SUCH EVALUATION, THIS OFFICE HAS ADOPTED THE RULE THAT WE WILL NOT SUBSTITUTE OUR JUDGMENT FOR THAT OF THE CONTRACTING AGENCY UNLESS IT IS SHOWN THAT THE AGENCY'S DETERMINATION WAS NOT BASED ON SUBSTANTIAL EVIDENCE DEMONSTRATING THE BIDDER'S LACK OF RESPONSIBILITY. 36 COMP. GEN. 42; 37 ID. 798; 38 ID. 131; ID. 778. ON THE BASIS OF THE PRESENT RECORD WE ARE UNABLE TO SAY THAT THE EVIDENCE OF LACK OF INTEGRITY ON THE PART OF MR. LOTT WAS NOT SUBSTANTIAL OR THAT THE EVIDENCE WAS INSUFFICIENT TO SUPPORT THE CONTRACTING AGENCY'S DETERMINATION THAT SUCH LACK OF INTEGRITY COULD AND SHOULD BE IMPUTED TO H. A. LOTT, INC.

CONCERNING YOUR ADVICE THAT GOVERNMENT CONTRACTS HAVE BEEN AWARDED TO H. A. LOTT, INC., BY A DIFFERENT FEDERAL AGENCY SINCE SUBMISSION OF THE BID IN THIS CASE AND WITH KNOWLEDGE OF MR. LOTT'S CONVICTION, WE ARE IN AGREEMENT WITH THE PROPOSITION THAT SUCH LACK OF UNIFORMITY IN DETERMINATIONS BY THE VARIOUS CONTRACTING AGENCIES IS UNDESIRABLE. HOWEVER, THE STATUTES REQUIRING ADVERTISING FOR BIDS AND AWARD BASED UPON THE MOST ADVANTAGEOUS BID SUBMITTED BY A RESPONSIBLE BIDDER WERE ENACTED FOR THE BENEFIT AND PROTECTION OF THE GOVERNMENT, AND CONFER NO ENFORCEABLE RIGHTS UPON BIDDERS. PERKINS V. LUKENS STEEL CO., 310 U.S. 113. IN VIEW THEREOF, WE SEE NO SOUND BASIS UPON WHICH A DETERMINATION OF RESPONSIBILITY UNDER SUCH STATUTE BY ONE AGENCY MAY BE INVOKED IN REFUTATION OF A PRIOR DETERMINATION BY A DIFFERENT AGENCY THAT THE SAME BIDDER IS LACKING IN RESPONSIBILITY. DETERMINATIONS BY EACH AGENCY IN CONNECTION WITH EACH AWARD MUST BE JUDGED UPON THEIR INDIVIDUAL MERITS AND THE MOST THAT CAN BE REQUIRED IN ANY CASE IS THAT THE DETERMINATION MADE BE BASED UPON SUBSTANTIAL EVIDENCE. AS INDICATED ABOVE, WE ARE UNABLE TO SAY THAT THE DETERMINATION OF LACK OF RESPONSIBILITY IN THE INSTANT CASE WAS NOT SUPPORTED BY THE EVIDENCE OF RECORD. ANY FURTHER CONSIDERATION OF SUBSEQUENT ADMINISTRATIVE DETERMINATIONS BY OTHER FEDERAL AGENCIES THAT H. A. LOTT, INC., WAS A RESPONSIBLE BIDDER WOULD, THEREFORE, BE NECESSARILY LIMITED TO THE QUESTION WHETHER CONTRACTS AWARDED TO THE CORPORATION AS A RESULT OF SUCH DETERMINATIONS WERE VALID, WITHOUT REFERENCE TO THE VALIDITY OF THE AWARD IN THE INSTANT CASE.

NOR ARE WE ABLE TO AGREE WITH YOUR CONTENTION THAT THE CONTRACTING AGENCY WAS IN ERROR IN IMPUTING THE LACK OF INTEGRITY ON THE PART OF H. A. LOTT, INC., TO THE JOINT VENTURE. CONCEDING THAT THE INTEGRITY OF JOHNSON, DRAKE AND PIPER, INC., IS OF THE HIGHEST ORDER AND THAT THIS CORPORATION WAS ABLE AND WILLING TO PERFORM ALL OF THE WORK WITHOUT THE ASSISTANCE OF H. A. LOTT, INC., IT IS OUR OPINION THAT LACK OF INTEGRITY IN ONE PARTY TO A JOINT VENTURE IS NOT A CIRCUMSTANCE WHICH, LIKE LACK OF CAPACITY OR ABILITY TO PERFORM THE CONTRACT, MAY BE CURED BY ASSOCIATION WITH ANOTHER VENTURER. IT, THEREFORE, FOLLOWS THAT A CONTRACTING AGENCY'S CONSIDERATION OF THE INTEGRITY OF A JOINT VENTURE SHOULD PROPERLY INCLUDE CONSIDERATION OF THE INTEGRITY OF EACH VENTURER, AND WHERE, AS IN THE INSTANT CASE, THE OBLIGATIONS OF ALL VENTURERS ARE EQUAL, A FINDING OF LACK OF INTEGRITY IN ONE MAY BE CONSIDERED A SUFFICIENT BASIS TO SUPPORT A DETERMINATION THAT THE JOINT VENTURE IS NOT A RESPONSIBLE BIDDER.

CONCERNING YOUR ADVICE THAT MR. LOTT HAD RESIGNED HIS POSITIONS AS PRESIDENT AND DIRECTOR OF H. A. LOTT, INC., PRIOR TO THE DATE OF THE AWARD TO THE SECOND LOW BIDDER, AND THAT HE ALSO DIVESTED HIMSELF OF OWNERSHIP OF ALL STOCK IN THE CORPORATION ON THE SAME DAY THAT AN AWARD WAS MADE TO THE SECOND LOW BIDDER, WE ARE INCLINED TO AGREE THAT SUCH ACTION ON THE PART OF MR. LOTT PRIOR TO AWARD AND WITH KNOWLEDGE OF THE CONTRACTING AGENCY MIGHT WELL HAVE BEEN SUFFICIENT TO REQUIRE A REEVALUATION OF THE INTEGRITY OF H. A. LOTT, INC. HOWEVER, THE RECORD IS DEVOID OF ANY EVIDENCE THAT THE CONTRACTING AGENCY WAS AWARE, AT THE TIME OF AWARD, THAT MR. LOTT HAD RESIGNED AS PRESIDENT AND DIRECTOR OR THAT HE HAD DIVESTED HIMSELF OF HIS SHAREHOLDINGS. WHILE IT IS TRUE THAT THE TIME FOR ACCEPTANCE OF BIDS HAD BEEN EXTENDED WELL BEYOND OCTOBER 22, THERE WAS NO OBLIGATION ON THE PART OF THE CONTRACTING AGENCY TO DELAY THE AWARD UNTIL SUCH PERIOD WAS ABOUT TO EXPIRE. THE RECORD DOES INDICATE THAT SEVERAL PLANS TO ELIMINATE H. A. LOTT, INC., FROM PARTICIPATION IN THE CONTRACT HAD BEEN ADVANCED BY JOHNSON, DRAKE AND PIPER, INC., AND HAD BEEN REJECTED BY THE AGENCY, BUT THE TIME WHEN NEGOTIATIONS OF THIS NATURE SHOULD CEASE IS A MATTER PRIMARILY WITHIN THE DISCRETION OF THE AGENCY. WHETHER THE AGENCY EXERCISED SOUND DISCRETION IN TERMINATING SUCH NEGOTIATIONS ON OCTOBER 20 NEED NOT BE CONSIDERED. AN AWARD TO THE SECOND LOW BIDDER WAS MADE ON OCTOBER 22 AND THE RECORD BEFORE THIS OFFICE CONTAINS NOTHING TO SUGGEST THAT SUCH AWARD WAS NOT MADE IN GOOD FAITH. RIGHTS AND OBLIGATIONS OF THE CONTRACTING PARTIES HAVE, THEREFORE, VESTED AND, IN OUR OPINION, NO BASIS EXISTS UPON WHICH THE LEGALITY OF THE AWARD MAY BE QUESTIONED. IN VIEW THEREOF YOUR PROTEST AND REQUEST THAT THIS OFFICE DIRECT CANCELLATION OF THE CONTRACT AWARDED TO THE SECOND LOW BIDDER MUST BE DENIED.