B-152081, OCT. 23, 1963

B-152081, OCT. 23, 1963

TO ELMER T. JONES, INC.:

REFERENCE IS MADE TO YOUR TWO LETTERS DATED JULY 18, 1963, AND LETTER OF SEPTEMBER 9, 1963, PROTESTING THE REFUSAL OF THE BOSTON REGIONAL OFFICE, POST OFFICE DEPARTMENT, TO RENEW YOUR CONTRACT COVERING MAIL TRANSPORTATION SERVICE ON STAR ROUTE NO. 24109-T FROM BOSTON, MASSACHUSETTS, TO ALBANY, NEW YORK.

IT APPEARS THAT THE CONTRACT COVERING STAR ROUTE NO. 24109-T ORIGINALLY WAS AWARDED TO JOHN R. MOTT, INC., FOR THE PERIOD OCTOBER 27, 1959, THROUGH JUNE 30, 1963. CERTAIN DELINQUENCIES SUBSEQUENTLY OCCURRED WHICH RESULTED IN THE CORPORATION BEING REMOVED FROM THE CONTRACT FOR UNSATISFACTORY SERVICE. THE SURETIES, WHO WERE CALLED UPON TO ASSUME CHARGE OF THE ROUTE, FURNISHED THE NAME OF MR. ELMER T. JONES AS A SUBCONTRACTOR TO WHICH THE POST OFFICE DEPARTMENT AGREED. IN THE DEPARTMENTAL ORDER OF JULY 25, 1960, RECOGNIZING MR. JONES AS THE SUBCONTRACTOR AT THE THEN EXISTING ANNUAL RATE OF $23,016.95 IT WAS EXPRESSLY STATED THAT JOHN R. MOTT WOULD NOT BE ALLOWED TO PERSONALLY OPERATE THE ROUTE. THE POST OFFICE DEPARTMENT HAS BEEN ADVISED THAT MR. ELMER T. JONES IS THE BROTHER-IN-LAW OF MR. MOTT. ON JULY 19, 1960, MR. JONES HAD FORMED ELMER T. JONES, INC., OF WHICH HE WAS, AND STILL IS, PRESIDENT. ON AUGUST 28, 1961, MR. JONES TERMINATED HIS SUBCONTRACT TO BECOME EFFECTIVE SEPTEMBER 28, 1961. UPON THE SUGGESTION OF THE PERSONAL SURETIES THAT YOUR CORPORATION, ELMER T. JONES, INC., THEN BE ACCEPTED AS THE SUBCONTRACTOR FOR STAR ROUTE NO. 24109-T THE POST OFFICE DEPARTMENT APPROVED THE SUBCONTRACT WITH YOU, ALSO AT THE ANNUAL CONTRACT RATE OF $23,016.95. ULTIMATELY, BY A LETTER DATED APRIL 23, 1963, THE DEPARTMENT ADVISED YOU THAT BECAUSE OF SERVICE CHANGES THAT HAD OCCURRED SINCE THE CONTRACT HAD BEEN AWARDED ON OCTOBER 27, 1959, IT HAD BEEN DECIDED NOT TO RENEW THE CONTRACT WITH YOU BUT TO FORMALLY ADVERTISE FOR THE SERVICE.

IN YOUR LETTERS YOU ADVISE THAT YOU HAD SUBMITTED THE SECOND LOW BID BUT THE CONTRACT WAS AWARDED TO A HIGHER BIDDER. NOTWITHSTANDING THIS, HOWEVER, YOUR PROTEST APPEARS TO BE BASED PRIMARILY ON THE CONTENTION THAT THE RENEWAL OF THE SERVICE WAS UNJUSTLY ADVERTISED AND THAT YOU SHOULD NOT HAVE HAD TO BID UPON IT NOR SHOULD YOU HAVE BEEN DENIED THE CONTRACT.

IN THE FIRST INSTANCE, IT IS NOTED THAT WHILE YOU HAVE PROTESTED THE ACTION TAKEN BY THE POST OFFICE DEPARTMENT IN AWARDING THE CONTRACT YOU HAD NOT SUBMITTED THE LOWEST BID RECEIVED. BE THAT AS IT MAY, SENATE REPORT NO. 1839, ACCOMPANYING H.R. 8270, WHICH BILL UPON ENACTMENT BECAME PUBLIC LAW NO. 577, 81ST CONGRESS, WHICH FIRST GAVE THE POSTMASTER GENERAL AUTHORITY TO ENTER INTO REGULAR CONTRACTS WITH SUBCONTRACTORS PROVIDED, IN PERTINENT PART, THAT:

"* * * THE POSTMASTER GENERAL CAN ONLY DEAL WITH THE SUBCONTRACTOR ON THE SAME BASIS AS A PRIME CONTRACTOR * * * AND THE INTERESTS OF THE SERVICE AND THE PUBLIC ARE FULLY PROTECTED UNDER EXISTING LAW AND THE FIRST PART OF THIS BILL BY LEAVING TO THE DISCRETION OF THE POSTMASTER GENERAL WHETHER THE EXPIRING CONTRACT SHALL BE LET BY NONCOMPETITIVE NEGOTIATION WITH THE CONTRACTOR OR AS A RESULT OF COMPETITIVE BIDDING.'

THUS, IT READILY MAY BE SEEN THAT THE FOREGOING SENATE REPORT SETS

FORTH, IN UNEQUIVOCAL LANGUAGE, THE FACT THAT WHETHER THE POST OFFICE DEPARTMENT RENEWS AN EXISTING CONTRACT WITH A SUBCONTRACTOR OR WHETHER THE DEPARTMENT SOLICITS COMPETITIVE BIDS BY FORMAL ADVERTISING FOR SUCH CARRIER SERVICE IS SOLELY WITHIN THE DISCRETION OF THE POSTMASTER GENERAL. MOREOVER, SUCH DISCRETIONARY AUTHORITY WAS EMPHASIZED WHEN THE CONGRESS PASSED PUBLIC LAW 572, 83RD CONGRESS, REGARDING THE PERIOD OF TIME THAT A SUBCONTRACTOR MUST HAVE PREVIOUSLY SERVED. IN THIS REGARD, IT WAS PROVIDED, IN PERTINENT PART, IN THE RELATED HOUSE REPORT 2327 THAT:

"THE PROPOSED LEGISLATION IS STRICTLY PERMISSIVE IN NATURE, AND WOULD NOT IN ANY WAY INCREASE THE OBLIGATIONS OF THE POST OFFICE DEPARTMENT OR RESTRICT THE DISCRETION OF THE DEPARTMENT IN THE RENEWAL OF CONTRACTS.'

IN THIS CASE THE POSTMASTER GENERAL HAD DECIDED THAT BECAUSE OF THE SERVICE CHANGES WHICH HAD OCCURRED SINCE THE ORIGINAL CONTRACT HAD BEEN AWARDED TO JOHN R. MOTT, INC., FOR THE PERIOD OCTOBER 27, 1959, THROUGH JUNE 30, 1963, AND IN VIEW OF THE RESULTING DESIRE TO SEEK A COMPETITIVE RATE FOR THE SERVICE, AS CHANGED, THAT THE SERVICE COVERED BY STAR ROUTE NO. 24109-T FOR THE REGULAR 4-YEAR TERM COMMENCING JULY 1, 1963, SHOULD BE OBTAINED ONLY BY THE SOLICITATION OF COMPETITIVE BIDS PURSUANT TO SECTION 6412 OF TITLE 39, UNITED STATES CODE. IN VIEW OF THIS, AND SINCE THERE CAN BE NO DOUBT THAT THE POST OFFICE DEPARTMENT HAD THE STATUTORY AUTHORITY TO ADVERTISE FOR BIDS FOR THE RENEWAL OF THE SAID POSTAL SERVICE FOR THE 4-YEAR TERM BEGINNING JULY 1, 1963, THE PROCEDURE FOLLOWED BY THAT DEPARTMENT APPEARS TO HAVE BEEN COMPLETELY PROPER.

REGARDING THE ACCEPTANCE OF A HIGHER BID THAN THAT SUBMITTED BY YOU UNDER THE ADVERTISED SPECIFICATIONS THE POST OFFICE DEPARTMENT REPORTS THAT IT WAS NOT SATISFIED WITH THE MANNER IN WHICH YOU WERE PERFORMING YOUR SUBCONTRACTUAL OBLIGATIONS. THE DEPARTMENT ADVISES THAT NOTWITHSTANDING THAT JOHN R. MOTT, INC., WAS REMOVED UNDER THE ORIGINAL CONTRACT FOR UNSATISFACTORY SERVICE YOU ENTERED INTO AN AGREEMENT ON AUGUST 15, 1960, WITH THAT CORPORATION THAT COVERED, AMONG OTHERS, THE LEASING OF TRUCKS AND DRIVERS BY YOU AT CERTAIN SPECIFIED RATES AND PROVIDED FOR OTHER TYPES OF PAYMENTS TO BE MADE BY YOU TO THE MOTT CORPORATION FOR CERTAIN OTHER SERVICES PERFORMED BY IT, ALL OF WHICH FOR ALL PRACTICAL PURPOSES AMOUNTED TO, AS ADMITTED BY YOU, THE MOTT CORPORATION OPERATING THE MAIL TRANSPORTATION ROUTE. MOREOVER, THE POST OFFICE DEPARTMENT REPORTS FURTHER THAT SUCH DELEGATION OF AUTHORITY BY YOU WAS CLEARLY IMPROPER AND THAT YOU REFUSED TO CORRECT THIS CONDITION EVEN THOUGH YOU WERE ADVISED THAT SUCH DELEGATION OF RESPONSIBILITY TO THE MOTT CORPORATION MUST CEASE. IN VIEW OF THIS, THE POST OFFICE DEPARTMENT DETERMINED THAT YOU WERE NOT A RESPONSIBLE BIDDER, AT LEAST IN SO FAR AS STAR ROUTE 24109-T IS CONCERNED.

ACCORDINGLY, WE FIND NO LEGAL BASIS FOR QUESTIONING THE ACTION TAKEN BY THE POST OFFICE DEPARTMENT IN THE MATTER.