B-150161, B-150164, DEC. 17, 1962

B-150161,B-150164: Dec 17, 1962

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INC.: REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 26. THE NEW ENGLAND TANK CLEANING COMPANY SUBMITTED THE LOWEST BID UNDER EACH OF THE INVITATIONS BUT ITS BIDS WERE REJECTED AND AWARDS WERE MADE TO THE SECOND LOWEST BIDDERS BECAUSE THE CONTRACTING OFFICER WAS UNABLE TO MAKE AN AFFIRMATIVE DETERMINATION. THAT THE NEW ENGLAND TANK CLEANING COMPANY WAS A RESPONSIBLE PROSPECTIVE CONTRACTOR. THE DEFENSE SUPPLY AGENCY HAS FURNISHED US A DOCUMENTED REPORT OF THE CONTRACTING OFFICER IN SUPPORT OF HIS FINDING THAT THERE IS SUBSTANTIAL EVIDENCE TO SHOW THAT THE NEW ENGLAND TANK CLEANING COMPANY DOES NOT POSSESS A SATISFACTORY RECORD OF INTEGRITY. THE SERIOUSNESS OF THE PERFORMANCE DEFICIENCIES AT THAT TERMINAL IS EXEMPLIFIED BY A REPORTED DELAY OF SEVERAL HOURS IN TAKING ACTION ON AN ORDER ISSUED TO THE COMPANY AT THE HEIGHT OF THE CUBAN CRISIS.

B-150161, B-150164, DEC. 17, 1962

TO MR. ELIOT W. DENAULT, SR., PRESIDENT, NEW ENGLAND TANK INDUSTRIES, INC.:

REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 26, 1962, AND PRIOR CORRESPONDENCE, PROTESTING THE REJECTIONS OF BIDS SUBMITTED BY THE NEW ENGLAND TANK CLEANING COMPANY TO THE DEFENSE PETROLEUM SUPPLY CENTER UNDER INVITATIONS FOR BIDS NOS. DSA 6-62-164, DSA 6-62-167, DSA 6-63 18, DSA 6- 63-19 AND DSA 6-63-33, ISSUED IN JUNE, JULY AND AUGUST 1962, COVERING PROPOSED CONTRACTS WITH ONE OR MORE SMALL BUSINESS CONCERNS FOR THE OPERATION AND MAINTENANCE OF GOVERNMENT-OWNED PETROLEUM TERMINAL FACILITIES AT TIVERTON, RHODE ISLAND, SEARSPORT, MAINE, TACOMA, WASHINGTON, WUKILTEO, WASHINGTON, AND TAMPA, FLORIDA.

THE NEW ENGLAND TANK CLEANING COMPANY SUBMITTED THE LOWEST BID UNDER EACH OF THE INVITATIONS BUT ITS BIDS WERE REJECTED AND AWARDS WERE MADE TO THE SECOND LOWEST BIDDERS BECAUSE THE CONTRACTING OFFICER WAS UNABLE TO MAKE AN AFFIRMATIVE DETERMINATION, AS REQUIRED BY SECTION 1 904.1 OF THE ARMED SERVICES PROCUREMENT REGULATION, THAT THE NEW ENGLAND TANK CLEANING COMPANY WAS A RESPONSIBLE PROSPECTIVE CONTRACTOR.

THE DEFENSE SUPPLY AGENCY HAS FURNISHED US A DOCUMENTED REPORT OF THE CONTRACTING OFFICER IN SUPPORT OF HIS FINDING THAT THERE IS SUBSTANTIAL EVIDENCE TO SHOW THAT THE NEW ENGLAND TANK CLEANING COMPANY DOES NOT POSSESS A SATISFACTORY RECORD OF INTEGRITY, ONE OF THE MINIMAL STANDARDS WHICH MUST BE MET FOR QUALIFICATION AS A RESPONSIBLE PROSPECTIVE CONTRACTOR WITHIN THE MEANING OF SECTIONS 1-902 AND 1-903 OF THE ARMED SERVICES PROCUREMENT REGULATION.

THE CONTRACTING OFFICER'S REPORT AND ITS ENCLOSURES DISCLOSE A CONSISTENT PATTERN OF OBJECTIONABLE PRACTICES ON THE PART OF THE NEW ENGLAND TANK CLEANING COMPANY AND NEW ENGLAND TANK INDUSTRIES, INC.

THE RECORD INDICATES THAT ON VARIOUS OCCASIONS THE NEW ENGLAND TANK CLEANING COMPANY FAILED TO MEET ITS OBLIGATIONS TO SUPPLIERS AND EMPLOYEES; THAT IN SOME INSTANCES THE COMPANY ENGAGED IN THE PRACTICE OF KNOWINGLY ISSUING WORTHLESS CHECKS TO EMPLOYEES AND VENDORS; THAT AS A GENERAL RULE THE COMPANY'S PERFORMANCE UNDER GOVERNMENT CONTRACTS HAS NOT BEEN COMPLETELY SATISFACTORY; AND THAT THE GOVERNMENT HAS BEEN PLACED IN THE POSITION OF DEVOTING THE EFFORTS OF A CONSIDERABLE AND DISPROPORTIONATE NUMBER OF ITS EMPLOYEES TO INSURE AT LEAST MARGINAL PERFORMANCE BY THE NEW ENGLAND TANK CLEANING COMPANY OF ITS CONTRACTS WITH THE GOVERNMENT.

AS AN EXAMPLE OF THE COMPANY'S GENERALLY INADEQUATE PERFORMANCE AND ITS DISREGARD OF RESPONSIBILITY SHOWING A FRIVOLOUS ATTITUDE TOWARD GOVERNMENT CONTRACTS, OUR ATTENTION HAS BEEN INVITED TO CONTINUING PERFORMANCE DEFICIENCIES IN THE COMPANY'S OPERATION OF THE TERMINAL AT THE CHARLESTON AIR FORCE BASE. THE SERIOUSNESS OF THE PERFORMANCE DEFICIENCIES AT THAT TERMINAL IS EXEMPLIFIED BY A REPORTED DELAY OF SEVERAL HOURS IN TAKING ACTION ON AN ORDER ISSUED TO THE COMPANY AT THE HEIGHT OF THE CUBAN CRISIS.

YOU CONTENDED, AND IT IS NOT DENIED, THAT THE NEW ENGLAND TANK CLEANING COMPANY RENDERED SATISFACTORY SERVICE UNDER PREVIOUS CONTRACTS COVERING THE OPERATION AND MAINTENANCE OF THE TERMINALS AT TACOMA AND MUKILTEO, WASHINGTON. NO DEROGATORY FIELD REPORTS WERE RECEIVED WITH REFERENCE TO THOSE CONTRACTS ALTHOUGH IT HAD BEEN INDICATED AT ONE TIME THAT THERE WERE UNPAID BILLS ASSOCIATED WITH THE COMPANY'S OPERATIONS AT MUKILTEO, WASHINGTON.

THE CONTRACTING OFFICER HAS CONSIDERED THE ALLEGATIONS CONTAINED IN YOUR LETTER OF OCTOBER 23, 1962, TO OUR OFFICE. HE HAS DENIED AND CONSIDERS AS UNSUPPORTED YOUR STATEMENTS TO THE EFFECT THAT THE NEW ENGLAND TANK CLEANING COMPANY AND NEW ENGLAND TANK INDUSTRIES, INC., HAVE BEEN TREATED UNFAIRLY AND THAT THE DEFENSE PETROLEUM SUPPLY CENTER DELIBERATELY FURNISHED ERRONEOUS INFORMATION TO YOU. HE ADMITS THAT TWO OF THE FORMER EMPLOYEES OF THE NEW ENGLAND TANK CLEANING COMPANY WERE HIRED BY A SUCCEEDING CONTRACTOR BUT STATES THAT SUCH EMPLOYEES WERE ASSIGNED DUTIES OF LIMITED RESPONSIBILITY COMMENSURATE WITH THEIR EXPERIENCE, INSTEAD OF HAVING FULL RESPONSIBILITY FOR THE OPERATION WHICH WAS THE SITUATION WHEN THE TERMINAL INVOLVED WAS BEING OPERATED BY THE NEW ENGLAND TANK CLEANING COMPANY.

THE CONTRACTING OFFICER ALSO EXPLAINED THE CIRCUMSTANCES RELATING TO THE BREACH OF THE AGREEMENT OF NEW ENGLAND TANK INDUSTRIES, INC., TO MAKE INSTALLMENT PAYMENTS ON AN AMOUNT DETERMINED TO BE DUE THE UNITED STATES FOR LOSS OF FUEL WHICH OCCURRED DURING THE PERFORMANCE OF AN AIR FORCE CONTRACT WITH NEW ENGLAND TANK INDUSTRIES, INC.

IN YOUR LETTER OF NOVEMBER 26, 1962, YOU COMPLAIN THAT WE DID NOT UNDERTAKE AN INDEPENDENT INVESTIGATION OF THE PROTESTS WHICH YOU MADE ON BEHALF OF THE NEW ENGLAND TANK CLEANING COMPANY, AND SUGGEST THAT IN A PREVIOUS CASE WE ERRONEOUSLY CONCLUDED THAT TWO OF THE GOVERNMENT'S CONTRACTS WITH THE NEW ENGLAND TANK CLEANING COMPANY WERE PROPERLY TERMINATED FOR DEFAULT. IT IS ALLEGED THAT A CHANGE ORDER WAS ISSUED ON OCTOBER 29, 1962,"CHANGING THE DEFAULT TERMINATION TO A TERMINATION FOR CONVENIENCE AT GLENVIEW; " AND THAT "THE SAME THING TOOK PLACE AT ANDREWS A.F. BASE.'

WE ARE ADVISED BY THE DEFENSE SUPPLY AGENCY THAT THE TWO DEFAULT TERMINATIONS WERE CONVERTED TO TERMINATIONS FOR THE CONVENIENCE OF THE GOVERNMENT, NOT BECAUSE OF ANY FINDING THAT THE CONTRACTOR WAS NOT IN DEFAULT BUT, RATHER, BECAUSE THE GOVERNMENT HAD NOT INCURRED EXCESS COSTS AS THE RESULT OF THE CONTRACT DEFAULTS AND IT WAS ADMINISTRATIVELY DESIRED TO DISPOSE OF THE CONTRACTOR'S APPEALS AS EXPEDITIOUSLY AS POSSIBLE. ANY EVENT, AS THE CONTRACTING OFFICER HAS SUGGESTED IN HIS DISCUSSION OF THE CONTRACTOR'S OPERATIONS AT TACOMA AND MUKILTEO, WASHINGTON, WE ARE OF THE OPINION THAT A DETERMINATION OF SATISFACTORY PERFORMANCE RELATING TO SOME OF THE GOVERNMENT'S CONTRACTS WITH THE NEW ENGLAND TANK CLEANING COMPANY DOES NOT ESTABLISH, BY ITSELF, AN ACCEPTABLE RECORD OF INTEGRITY FOR THE COMPANY.

THE DEFENSE SUPPLY AGENCY HAS ALSO ADVISED US THAT THE SUPREME COURT OF THE UNITED STATES DENIED CERTIORARI IN THE CASE OF N.L.R.B. NEW ENGLAND TANK INDUSTRIES, INC., 302 F.2D 273, IN WHICH THE UNITED STATES COURT OF APPEALS, FIRST CIRCUIT, STATED THAT: "DESPITE THE PRESENCE OF A POOL OF EXPERIENCED WORKERS, RESPONDENT WENT TO CONSIDERABLE LENGTH TO REPLACE THE UNION EMPLOYEES WITH ENTIRELY NEW WORKERS--- MOST OF WHOM HAD NO PREVIOUS EXPERIENCE ON PIPELINE OPERATIONS.' THIS FINDING BY THE COURT WAS CONSIDERED BY THE DEFENSE SUPPLY AGENCY AS DEMONSTRATING THE TYPE OF POOR MANAGEMENT PRACTICES WHICH WERE EMPLOYED DURING THE PAST FEW YEARS BY THE PRINCIPALS OF BOTH THE NEW ENGLAND TANK CLEANING COMPANY AND NEW ENGLAND TANK INDUSTRIES, INC.

ALTHOUGH YOU HAVE ARGUED THAT THE TWO FIRMS ARE SEPARATE ENTITIES, IT IS BELIEVED CLEAR FROM THE RECORD THAT MEMBERS OF THE SAME FAMILY CONTROLLED BOTH COMPANIES. SINCE THEIR BUSINESS PRACTICES ARE ESSENTIALLY HERE INVOLVED, IT FOLLOWS THAT THE ACTS OF BOTH COMPANIES WERE PROPERLY FOR CONSIDERATION WHEN DETERMINING THE QUESTION AS TO WHETHER THE NEW ENGLAND TANK CLEANING COMPANY POSSESSES A SATISFACTORY RECORD OF INTEGRITY FOR QUALIFICATION AS A RESPONSIBLE BIDDER ON CURRENT GOVERNMENT CONTRACTS.

WE HAVE CONSISTENTLY TAKEN THE POSITION THAT THE QUESTION AS TO THE RESPONSIBILITY OF A PROSPECTIVE GOVERNMENT CONTRACTOR IS PRIMARILY FOR DETERMINATION BY THE ADMINISTRATIVE AGENCY CONCERNED, AND SUCH DETERMINATION WILL NOT BE QUESTIONED BY OUR OFFICE IN THE ABSENCE OF A CLEAR SHOWING OF BAD FAITH OR LACK OF A REASONABLE BASIS THEREFOR. SINCE THE REPORTED FACTS AND CIRCUMSTANCES OF THIS CASE DO NOT REFLECT ANY ARBITRARY ACTION ON THE PART OF THE DEFENSE PETROLEUM SUPPLY CENTER, WE WOULD NOT BE WARRANTED IN TAKING EXCEPTION TO THE REJECTIONS OF THE FIVE BIDS SUBMITTED BY THE NEW ENGLAND TANK CLEANING COMPANY.

ACCORDINGLY, AS RECOMMENDED BY THE DEFENSE SUPPLY AGENCY, YOUR PROTESTS TO OUR OFFICE IN THE MATTER MUST BE DENIED.