B-152334, SEP. 17, 1963, 43 COMP. GEN. 275

B-152334: Sep 17, 1963

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NOT LESS THAN 3-YEAR" SERVICE REQUIREMENT OF THE INVITATION WAS NOT REQUIRED. THE CONTRACTOR HAVING SUCCESSFULLY PERFORMED THE PRIOR YEAR CONTRACT WAS CONSIDERED A QUALIFIED AND RESPONSIBLE BIDDER EXCEPT FOR THE 3-YEAR SERVICE LIMITATION REQUIREMENT. UNDER A PURPORTED AWARD MADE TO A SECOND LOW BIDDER FOR MORTUARY SERVICES SUBSEQUENT TO AN ERRONEOUSLY CANCELED VALID AWARD WHICH WAS REINSTATED. THE PAYMENTS MADE WILL NOT BE QUESTIONED. THERE BEING SO LITTLE DIFFERENCE BETWEEN THE BID PRICES OF THE TWO BIDDERS THE EXPENSE OF THE COMPUTATIONS REQUIRED TO RESTRICT PAYMENT TO THE AMOUNT THE SERVICE WOULD HAVE COST ON THE BASIS OF THE LOW BID IS NOT WARRANTED. 1963: REFERENCE IS MADE TO YOUR LETTER OF AUGUST 20.

B-152334, SEP. 17, 1963, 43 COMP. GEN. 275

BIDDERS - QUALIFICATIONS - EXPERIENCE - SPECIALIZED, ETC. PAYMENTS - ABSENCE OR UNENFORCEABILITY OF CONTRACTS - CONTRACT CANCELLATION - BID PRICE BASIS ALTHOUGH A CONTRACT MAY BE LIMITED TO BIDDERS MEETING SPECIFIED QUALITATIVE AND QUANTITATIVE EXPERIENCE REQUIREMENTS IN A SPECIALIZED FIELD WHERE THE BIDDING CONDITIONS SO PROVIDE AND A DETERMINATION HAS BEEN MADE THAT THE INTERESTS OF THE GOVERNMENT WOULD BE SERVED, THE CANCELLATION OF A VETERANS ADMINISTRATION AWARD FOR MORTUARY SERVICES BECAUSE THE CONTRACTOR HAD ONLY 31 MONTHS OF SUCCESSFUL OPERATING SERVICE UNDER THE STATE HEALTH AND VEHICLE LAWS THEREFORE NOT MEETING THE ,NOT LESS THAN 3-YEAR" SERVICE REQUIREMENT OF THE INVITATION WAS NOT REQUIRED, THE CONTRACTOR HAVING SUCCESSFULLY PERFORMED THE PRIOR YEAR CONTRACT WAS CONSIDERED A QUALIFIED AND RESPONSIBLE BIDDER EXCEPT FOR THE 3-YEAR SERVICE LIMITATION REQUIREMENT, AND A STRICT CONSTRUCTION OF THE SERVICE REQUIREMENT BEING UNREASONABLE AND RESTRICTIVE OF COMPETITION, THE CANCELED AWARD SHOULD BE REINSTATED. UNDER A PURPORTED AWARD MADE TO A SECOND LOW BIDDER FOR MORTUARY SERVICES SUBSEQUENT TO AN ERRONEOUSLY CANCELED VALID AWARD WHICH WAS REINSTATED, THE PAYMENTS MADE WILL NOT BE QUESTIONED, AND THE PAYMENTS DUE FOR SERVICES MAY BE MADE ON THE BASIS THAT THE BID PRICES REPRESENT THE REASONABLE VALUE OF THE SERVICES PERFORMED, THERE BEING SO LITTLE DIFFERENCE BETWEEN THE BID PRICES OF THE TWO BIDDERS THE EXPENSE OF THE COMPUTATIONS REQUIRED TO RESTRICT PAYMENT TO THE AMOUNT THE SERVICE WOULD HAVE COST ON THE BASIS OF THE LOW BID IS NOT WARRANTED.

TO THE ADMINISTRATOR, VETERANS ADMINISTRATION, SEPTEMBER 17, 1963:

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 20, 1963, FORWARDING FOR OUR CONSIDERATION THE PROTEST OF MORTUARY SERVICE, INC., AGAINST THE PURPORTED CANCELLATION OF CONTRACT NO. V5226P-515 AWARDED TO IT ON JUNE 21, 1963.

BY INVITATION NO. 64-10 THE VETERANS ADMINISTRATION HOSPITAL, INDIANAPOLIS, INDIANA, REQUESTED BIDS FOR FURNISHING, AS ORDERED, AMBULANCE SERVICE DURING THE PERIOD JULY 1, 1963, THROUGH JUNE 30, 1964.

THE BASIC QUESTION HERE INVOLVED RELATES TO THE QUALIFICATION OF BIDDERS AND IN THIS CONNECTION THE INVITATION CONTAINED TWO "SPECIAL CONDITIONS" AND ONE "SUPPLEMENTAL GENERAL PROVISION" AS FOLLOWS:

SPECIAL CONDITIONS

2. QUALIFICATIONS: PROPOSALS WILL BE CONSIDERED ONLY FROM BIDDERS WHO ARE REGULARLY ESTABLISHED IN THE BUSINESS CALLED FOR AND WHO ARE FINANCIALLY RESPONSIBLE AND HAVE THE NECESSARY EQUIPMENT AND PERSONNEL TO FURNISH SERVICE IN THE VOLUME CALLED FOR IN THE CONTRACT.

3. INSPECTION: THE RIGHT IS RESERVED TO THOROUGHLY INSPECT AND INVESTIGATE THE ESTABLISHMENT, FACILITIES, BUSINESS REPUTATION AND OTHER QUALIFICATIONS OF ANY BIDDER AND TO REJECT ANY BID, IRRESPECTIVE OF PRICE, IF IT SHALL BE ADMINISTRATIVELY DETERMINED LACKING IN ANY OF THE ESSENTIALS NECESSARY TO ASSURE ACCEPTABLE STANDARDS OF PERFORMANCE. NEW AMBULANCE EQUIPMENT IS ADDED AFTER INSPECTION, SUBSEQUENT TO AWARD OF CONTRACT, IT SHALL BE INSPECTED AND APPROVED BY BOARD OF INSPECTION BEFORE BEING PLACED IN USE UNDER THIS CONTRACT.

SUPPLEMENTAL GENERAL PROVISIONS

3. CONTRACTOR SHALL BE REQUIRED TO FURNISH A VEHICLE EQUIPPED WITH OXYGEN APPARATUS AND OTHER MEDICAL NECESSITIES NORMALLY USED TO PROVIDE AMBULANCE SERVICE. HE SHALL ALSO BE REQUIRED TO SHOW EVIDENCE OF SUCCESSFUL OPERATION OF SUCH A SERVICE UNDER THE HEALTH AND VEHICLE LAWS OF THE STATE OF INDIANA AND THE CITY OF INDIANAPOLIS FOR A PERIOD OF NOT LESS THAN THREE YEARS.

THE THREE BIDS RECEIVED IN RESPONSE TO THE INVITATION WERE OPENED ON JUNE 18, 1963. THE LOW BID WAS SUBMITTED BY MORTUARY SERVICE, INC., CLAYTON AUTO LIVERY WAS THE SECOND LOW BIDDER AND A THIRD BID (HIGHER) WAS RECEIVED FROM JACKSON'S AMBULANCE SERVICE.

THE FACTS AND REASONS FOR THE ACTION TAKEN WITH RESPECT TO THE BIDS ARE SET FORTH IN A STATEMENT BY THE CONTRACTING OFFICER IN PART AS FOLLOWS: PRIOR TO BID OPENING, CONTACT HAD BEEN MADE BY CLAYTON AUTO LIVERY SERVICE WITH DR. VERNE K. HARVEY, DIRECTOR OF THIS HOSPITAL, INDICATING THAT MORTUARY SERVICES, INC. WAS NOT ELIGIBLE TO BID, BASED UPON THE FACT THEY DID NOT MEET THE REQUIREMENTS PARAGRAPH 3 OF THE SUPPLEMENTAL GENERAL PROVISIONS QUOTED BELOW.

"CONTRACTOR SHALL BE REQUIRED TO SHOW EVIDENCE OF SUCCESSFUL OPERATION OF SUCH A SERVICE UNDER THE HEALTH AND VEHICLE LAWS OF THE STATE OF INDIANA AND THE CITY OF INDIANAPOLIS FOR A PERIOD OF NOT LESS THAN THREE YEARS.'

THIS INFORMATION WAS CONVEYED TO THE UNDERSIGNED FOR CONSIDERATION PRIOR TO AWARD. HOWEVER, THE PROPOSALS HAD BEEN EVALUATED BY AN ACTING ASSISTANT AND AN AWARD WAS INADVERTENTLY MADE IN ADMINISTRATIVE ERROR BY THE LATTER TO MORTUARY SERVICES, INC. WITHOUT CONSIDERATION OF THE KNOWN PROTEST.

UPON REVELATION OF THE LATTER ACTION, THE CONTRACTING OFFICER CONTACTED MR. L. THOMPSON, PRESIDENT OF MORTUARY SERVICES, AND EXPLAINED THE AWARD AS BEING ERRONEOUS UNDER THE CIRCUMSTANCES AND REQUESTING RETURN OF A NOTICE OF AWARD DATED JUNE 21, 1963, PENDING RECONSIDERATION, THEREBY EFFECTING WITHDRAWAL OF THE AWARD. MR. THOMPSON READILY COMPLIED (SEE EXHIBIT A ATTACHED).

REEVALUATION OF ALL PROPOSALS WAS THEN MADE BY THE CONTRACTING OFFICER AND EVIDENCE EXPERIENCE WAS REQUESTED OF MORTUARY SERVICES, INC. THIS RESULTED IN THE SUBMISSION OF DOCUMENTARY EVIDENCE IN THE FORM OF A GENERAL AFFIDAVIT WHICH REVEALED THAT ONLY 31 MONTHS EXPERIENCE COULD BE AUTHENTICATED (SEE EXHIBIT B ATTACHED).

IT ALSO CAME TO MY ATTENTION THAT CLAYTON AUTO LIVERY WAS SOLD TO CHARLES O. BUTLER ON OCTOBER 1, 1962, AND ALTHOUGH THE OWNERSHIP CHANGED THE COMPANY HAS BEEN IN CONTINUOUS OPERATION FOR SOME FIFTEEN YEARS. THE CHANGE OF OWNERSHIP WAS NOT CONSTRUED TO LIMIT LENGTH OF OPERATION AS A FIRM OR RENDER PREVIOUS EXPERIENCE UNACCEPTABLE UNDER THE REQUIREMENT IN PARAGRAPH 3 OF THE SUPPLEMENTAL GENERAL PROVISIONS OF THE BID.

CONSIDERATION WAS GIVEN TO DECLARING THE LACK OF FIVE MONTHS EXPERIENCE A MINOR INFORMALITY UNDER THE PROVISIONS OF PARAGRAPH 1 2.405 OF FEDERAL PROCUREMENT REGULATIONS, THUS PERMITTING AWARD TO BE MADE TO MORTUARY SERVICES, INC., ESPECIALLY IN VIEW OF THE FACT THAT THROUGH AN ADMINISTRATIVE OVERSIGHT THIS PROVISION HAD NOT BEEN NOTED THE PREVIOUS YEAR, AND MORTUARY SERVICES, INC. HAD BEEN GIVEN THE AWARD; HOWEVER, AT THAT TIME NO PROTEST WAS MADE BY OTHER BIDDERS. IN THAT THE PROVISION IN QUESTION WAS TO ENSURE RESPONSIBILITY ON THE PART OF THE BIDDER IT WOULD FOLLOW THAT A YEAR'S SATISFACTORY SERVICE WAS THE BEST GUARANTEE. ADDITION, IT WAS THE LOWEST PRICE PROPOSAL.

CONVERSELY, HOWEVER, IT WAS NECESSARY TO ENTERTAIN THE PROBABILITY THAT THERE COULD HAVE BEEN OTHER BIDDERS WHO DID NOT RESPOND BECAUSE OF THE THREE-YEAR PROVISO; ALSO IT IS CONCEIVABLE THAT THEY MIGHT HAVE OFFERED A LOWER PRICE. BASED THEREON, IT WAS CONSTRUED THAT TO WAIVE THE PROVISION AS STATED IN THE INVITATION FOR BID WOULD BE PREJUDICIAL TO OTHER BIDDERS.

NORMALLY SUCH A PROTEST WOULD HAVE BEEN PRESENTED FOR A DECISION PRIOR TO AWARD. HOWEVER, BECAUSE AMBULANCE SERVICE IS A MANDATORY ADJUNCT TO OUR HOSPITALIZATION OF VETERANS AND THIS SERVICE MUST BE GUARANTEED, I APPLIED THE AUTHORITY PROVIDED UNDER PARAGRAPH 1-2.407-8 (B) (3) (I) OF FPR PENDING DECISION. THIS WAS DEEMED ESSENTIAL TO PROVIDE AUTHORIZED SERVICES TO BENEFICIARIES.

ALTHOUGH SEVERAL ERRORS EXIST IN HANDLING OF THE AWARD, WE HOLD THAT THE EXPERIENCE PROVISION IS NOT EXCESSIVELY RESTRICTIVE AND IS A REASONABLE REQUIREMENT. ALSO, SINCE WAIVING OF THIS REQUIREMENT WOULD NOT HAVE BEEN FAIR TO OTHER AND POTENTIAL BIDDERS, THE AWARD TO CLAYTON AUTO LIVERY IS BELIEVED TO BE PROPER.

APPARENTLY THE "ACTING ASSISTANT" (ACTING CHIEF, SUPPLY DIVISION) HAD AUTHORITY TO ISSUE THE LETTER OF JUNE 21, 1963, NOTIFYING MORTUARY SERVICE, INC., "THAT YOU HAVE BEEN AWARDED THE CONTRACT FOR AMBULANCE SERVICE FOR THE PERIOD JULY 1, 1963 THROUGH JUNE 30, 1964, PER OUR BID INVITATION 64-10.' THEREFORE THE MERE FACT THAT THE CORPORATION, UPON REQUEST, RETURNED SUCH LETTER WOULD NOT RENDER THE AWARD INEFFECTIVE, IF THE AWARD WAS OTHERWISE LEGALLY PROPER. MORTUARY SERVICE, INC., HAS NOT ACQUIESCED IN THE PURPORTED WITHDRAWAL OR CANCELLATION.

SINCE MORTUARY SERVICE, INC., PERFORMED THE SERVICES HERE INVOLVED DURING THE PRIOR FISCAL YEAR AND SINCE AN AWARD WAS MADE TO THAT CORPORATION FOR THE CURRENT FISCAL YEAR, IT APPEARS CLEAR THAT THE CORPORATION WAS CONSIDERED A QUALIFIED AND RESPONSIBLE BIDDER CAPABLE OF PERFORMING THE SERVICE, EXCEPT FOR THE 3-YEAR OPERATION REQUIREMENT SET FORTH IN SUPPLEMENTAL GENERAL PROVISION 3. IN THIS CONNECTION IT IS STATED IN A LETTER DATED JUNE 28, 1963, FROM THE ATTORNEY FOR MORTUARY SERVICE TO THE VETERANS ADMINISTRATION HOSPITAL, ATTENTION TO MR. M. F. BLACK, SUPPLY OFFICER, THAT "WE APPRECIATE THE CANDOR OF YOUR MR. M. F. BLACK BY SAYING TO THE UNDERSIGNED BY TELEPHONE, TODAY, THAT MORTUARY SERVICE, INC. HAD "DONE A GOOD JOB, NO DOUBT ABOUT IT.'" THERE IS NOTHING IN THE RECORD DENYING SUCH STATEMENT. ALSO THERE ARE OF RECORD AFFIDAVITS BY WILLIAM E. THOMPASON, STOCKHOLDER, VICE PRESIDENT GENERAL MANAGER OF MORTUARY SERVICE, INC., CERTIFYING THAT BOTH HE AND HIS BROTHER LARRY A. THOMPSON, A STOCKHOLDER AND PRESIDENT, HAVE HAD CONSIDERABLE EXPERIENCE IN AMBULANCE AND MORTUARY WORK PRIOR TO ESTABLISHING MORTUARY SERVICE, C., IN NOVEMBER 1960 AS A PARTNERSHIP AND INCORPORATED IN JULY 1961.

WE HAVE HELD THAT AWARD OF A CONTRACT MAY BE LIMITED TO THOSE BIDDERS MEETING SPECIFIED QUALITATIVE AND QUANTITATIVE EXPERIENCE REQUIREMENTS IN A SPECIALIZED FIELD WHERE THE BIDDING CONDITIONS SO PROVIDE AND A DETERMINATION HAS BEEN MADE THAT THE INTERESTS OF THE GOVERNMENT WOULD BE SERVED THEREBY. SEE 37 COMP. GEN. 196; ID. 420 AND DECISIONS CITED THEREIN. HOWEVER, IN 39 COMP. GEN. 173 WE INDICATED THAT OUR OFFICE DOES NOT CONDONE THE REJECTION OF BIDS OF RESPONSIBLE BIDDERS BECAUSE AS A TECHNICAL MATTER THEY DO NOT MEET PRESCRIBED EXPERIENCE QUALIFICATIONS. IN THAT CONNECTION, IT WAS SAID AT PAGE 178 THAT "THE STATEMENT OF SUCH QUALIFICATIONS SHOULD NOT BE CONSIDERED AS HAVING THE EFFECT OF TRANSFORMING THE PURELY FACTUAL QUESTION OF RESPONSIBILITY INTO A LEGAL QUESTION OF CONFORMITY TO THE INVITATION.'

WITH RESPECT TO CLAYTON AUTO LIVERY, WHOSE BID WAS SIGNED BY "CHARLES O. BUTLER, PRES.' THE RECORD CONTAINS A COPY OF A BILL OF SALE DATED OCTOBER 1, 1962, SHOWING THAT JERRY A. CLAYTON, DOING BUSINESS AS CLAYTON AUTO LIVERY AND ELPENN GARAGE, 1101 N. PENNSYLVANIA STREET, INDIANAPOLIS, INDIANA, SOLD TO CHARLES O. BUTLER THE BUSINESS KNOWN AS CLAYTON AUTO LIVERY AND ELPENN GARAGE AND CERTAIN LISTED CHATTELS AND PERSONAL PROPERTY. THUS, IT APPEARS THAT THE BIDDER IS ACTUALLY CHARLES O. BUTLER, THE ONLY LEGAL ENTITY, AND THAT THERE MAY BE DOUBT AS TO WHETHER HE TECHNICALLY QUALIFIED UNDER THE REQUIREMENT OF THE INVITATION THAT THE CONTRACTOR "SHALL ALSO BE REQUIRED TO SHOW EVIDENCE OF SUCCESSFUL OPERATION OF SUCH A SERVICE UNDER THE HEALTH AND VEHICLE LAWS OF THE STATE OF INDIANA AND THE CITY OF INDIANAPOLIS FOR A PERIOD OF NOT LESS THAN THREE YEARS.' HOWEVER, FOR REASONS STATED ABOVE WE AGREE WITH THE CONTRACTING OFFICER THAT NORMALLY THE OPERATION OF A FIRM FOR AN EXTENDED PERIOD OF TIME PROPERLY COULD BE TAKEN INTO CONSIDERATION IN DETERMINING WHETHER A BIDDER IS RESPONSIBLE. THERE IS ALSO SOME INDICATION IN THE RECORD THAT THE BUSINESS OF THE THIRD BIDDER, JACKSON'S AMBULANCE SERVICE, MAY HAVE BEEN ACQUIRED BY THE BIDDER SHORTLY PRIOR TO THE BID DATE.

ON THE BASIS OF THE FACTS OF RECORD AND CONSIDERING THE TYPE OF SERVICE INVOLVED, IT IS NOT SEEN HOW THE 3-YEAR OPERATION REQUIREMENT OF THE INVITATION WOULD INSURE RESPONSIBILITY ON THE PART OF A BIDDER OR THAT THE LACK THEREOF WOULD AUTOMATICALLY RENDER A BIDDER NOT RESPONSIBLE. IN OUR OPINION, THE REQUIREMENT, IF STRICTLY CONSTRUED, IS UNREASONABLE AND RESTRICTIVE OF COMPETITION. FURTHERMORE, IT APPEARS DOUBTFUL THAT SUCH PROVISION ACTUALLY PREVENTED ANY POTENTIAL BIDDER FROM BIDDING.

IN THE CIRCUMSTANCES INVOLVED IN THIS CASE, SINCE MORTUARY SERVICE, INC., WAS THE LOW AND APPARENTLY QUALIFIED BIDDER, WE BELIEVE THAT THE AWARD MADE TO IT ON JUNE 21, 1963, CONSTITUTED A VALID AWARD AND THAT THE SUBSEQUENT AWARD TO CLAYTON AUTO LIVERY WAS NOT EFFECTIVE. THEREFORE, THE AWARD MADE TO MORTUARY SERVICE, INC., SHOULD BE REINSTATED AND THE PURPORTED SUBSEQUENT AWARD TO CLAYTON AUTO LIVERY CANCELED.

WITH RESPECT TO THE SERVICES PERFORMED BY CLAYTON AUTO LIVERY PRIOR TO TAKING THE ABOVE ACTION, PAYMENTS ALREADY MADE FOR SUCH SERVICE ON THE BASIS OF ITS BID PRICES WILL NOT BE QUESTIONED FOR THIS OFFICE. ALSO FOR ANY SERVICE RENDERED BY CLAYTON AUTO LIVERY FOR WHICH PAYMENT HAS NOT BEEN MADE, PAYMENT MAY BE MADE THEREFOR ON THE BASIS OF ITS BID PRICE AS REPRESENTING THEIR REASONABLE VALUE, SINCE THERE IS SO LITTLE, IF ANY, DIFFERENCE BETWEEN ITS BID PRICES AND THOSE OF THE LOW BIDDER, DEPENDING ON THE TYPE OF SERVICE ACTUALLY RENDERED, THAT IT WOULD NOT BE WORTH THE EXPENSE OF THE COMPUTATIONS INVOLVED IN RESTRICTING PAYMENT TO THE AMOUNT THAT SUCH SERVICE WOULD HAVE COST ON THE BASIS OF THE LOW BID.