B-152359, DEC. 5, 1963

B-152359, DEC. 5, 1963

TO THE SECRETARY OF THE NAVY:

WE REFER TO THE BID PROTEST OF M. STEINTHAL AND COMPANY, INC., AGAINST THE CONTRACTING OFFICER'S DECISION THAT IT IS NOT ELIGIBLE FOR NEGOTIATION OF THE LABOR SURPLUS AREA SET-ASIDE PORTION UNDER INVITATION FOR BIDS NO. 383-823-63, WHICH MATTER IS THE SUBJECT OF YOUR REPORT DATED OCTOBER 22, 1963 (REFERENCE: R1.2).

THIS PROCUREMENT COVERS A TOTAL QUANTITY OF 24,561 LIFE PRESERVERS, 12,281 OF WHICH WERE AWARDED PURSUANT TO ADVERTISED BIDDING ON AUGUST 15, 1963, TO SWITLIK PARACHUTE COMPANY, THE LOW BIDDER. THE REMAINING PORTION OF THE PROCUREMENT (12,280 UNITS) WAS RESERVED FOR AWARD UNDER A PARTIAL SET-ASIDE FOR LABOR SURPLUS AREA CONCERNS.

YOU REPORT THAT WHILE SWITLIK IS A SMALL BUSINESS CONCERN, IT IS NOT A LABOR SURPLUS AREA CONCERN; THAT M. STEINTHAL AND COMPANY, WHOSE BID PRICES ARE WITHIN 120 PERCENT OF THE AWARD PRICES, REPRESENTED ITSELF AS A LABOR SURPLUS AREA CONCERN WHICH WOULD MANUFACTURE THE REQUIRED SUPPLIES AT ITS PLANT IN ROXBORO, NORTH CAROLINA--- AN AREA THAT HAD BEEN A PERSISTENT AND SUBSTANTIAL LABOR SURPLUS AREA AT THE TIME OF BID OPENING, JUNE 7, 1963, BUT HAS SINCE BEEN REMOVED FROM AREAS OF SUBSTANTIAL UNEMPLOYMENT--- BUT THE BIDDER FAILED TO FURNISH THE COST INFORMATION REQUIRED BY THE INVITATION FOR BIDS. (THIS INFORMATION WAS SUBMITTED BY LETTER OF JULY 8, 1963--- AFTER THE BID OPENING.)

SPECIFICALLY, THE INVITATION PROVIDES IN PERTINENT PART AS FOLLOWS:

"MANUFACTURING LOCATIONS - LABOR SURPLUS AREA CONCERNS

"BIDDER REPRESENTS THAT HE ( ( IS, ( ( IS NOT A LABOR SURPLUS AREA CONCERN.

"IF A BIDDER IS A LABOR SURPLUS AREA CONCERN AS DEFINED IN 1-801 OF THE ARMED SERVICES PROCUREMENT REGULATION, AND THUS IS ELIGIBLE FOR A PREFERENCE IN THE EVENT OF A LABOR SURPLUS SET-ASIDE, EQUAL LOW BIDS, OR A BUY AMERICAN DETERMINATION, SMALL BUSINESS CONCERN SIZE DETERMINATION, OR OTHER SUCH PREFERENCES THAT MAY BE DESIGNATED BY THE ARMED SERVICES PROCUREMENT REGULATION, THE FOLLOWING INFORMATION MUST BE SUBMITTED WITH THE BID.

1. LOCATION OF PLANT AT WHICH THE SUPPLIES WILL BE MANUFACTURED.

2. IF MORE THAN ONE PLANT IS INVOLVED (EITHER ITS OWN OR ITS SUBCONTRACTOR-S) STATE WHAT PERCENT OF THE CONTRACT PRICE IS REPRESENTED BY THE COSTS INCURRED ON ACCOUNT OF MANUFACTURING OR PRODUCTION OF THE SUPPLIES AT EACH PLANT: NAME OF STREET CITY AND ITEM AMOUNT OF COST OF PERCENT OF PLANT ADDRESS STATE NO. QUANTITY MANUFACTURING OR CONTRACT

PRODUCTION PRICE

"FAILURE TO SUBMIT THE ABOVE INFORMATION WITH THE BID WILL PRECLUDE ANY CONSIDERATION AS A LABOR SURPLUS AREA CONCERN.

"THE BIDDER AGREES THAT, IF AWARDED A CONTRACT AS A LABOR SURPLUS AREA CONCERN, HE WILL PERFORM, OR CAUSE TO BE PERFORMED, THE CONTRACT REQUIREMENTS ALLOCATED TO THE LABOR SURPLUS AREAS DESIGNATED ABOVE IN THE AREAS AND AMOUNTS SO DESIGNATED. HOWEVER, IF AFTER BIDS HAVE BEEN OPENED BUT PRIOR TO THE TIME A CONTRACT IS AWARDED THE DEPARTMENT OF LABOR CLASSIFICATION OF ANY SUCH AREA CHANGES; THE BIDDER MAY CHANGE THE AREAS IN WHICH HE PROPOSES TO PERFORM, PROVIDED THAT HE SO NOTIFIES THE CONTRACTING OFFICER PRIOR TO AWARD OF THE CONTRACT. ELIGIBILITY FOR AWARD OF A CONTRACT AS A LABOR SURPLUS AREA CONCERN WILL BE FINALLY DETERMINED AT THE TIME OF THE PROPOSED AWARD; HOWEVER, IN NO EVENT WILL A BIDDER WHO IS NOT A LABOR SURPLUS AREA CONCERN AT THE TIME OF OPENING (BASED ON INFORMATION FURNISHED ABOVE) BE ALLOWED TO THEREAFTER BECOME ELIGIBLE FOR AWARD AS A LABOR SURPLUS AREA CONCERN BASED ON INFORMATION FURNISHED AFTER OPENING OF BIDS.'

STEINTHAL CHECKED THE BOX REPRESENTING THAT IT WAS A LABOR SURPLUS AREA CONCERN, AND STATED, UNDER PARAGRAPH 1 OF THE CLAUSE ABOVE, THAT THE SUPPLIES WOULD BE MANUFACTURED IN "ROXBORO, N.C.' NOTHING WAS FILLED IN UNDER PARAGRAPH 2 OF THE CLAUSE, WHICH CALLED FOR ADDITIONAL INFORMATION ,IF MORE THAN ONE PLANT IS INVOLVED (EITHER ITS OWN OR ITS SUBCONTRACTOR- S.)

YOUR CONTRACTING OFFICER REPORTS THAT A SUBSTANTIAL PORTION OF THE COST OF THE LIFE PRESERVER IS INCURRED IN THE PURCHASE OF THE CLOTH AND HARDWARE UTILIZED IN THE FABRICATION OF THE LIFE PRESERVERS; AND HE CONCLUDES, ON THE AUTHORITY OF OUR DECISION B-150676 OF FEBRUARY 7, 1963, THAT STEINTHAL'S FAILURE TO PROVIDE WITH ITS BID THE COST INFORMATION REQUIRED UNDER PARAGRAPH 2 OF THE INVITATION, DISQUALIFIES THE BIDDER FROM CONSIDERATION AS A LABOR SURPLUS AREA CONCERN.

STEINTHAL CONTENDS, ON THE OTHER HAND, THAT THE WORDING OF THE PARAGRAPH NUMBERED 2 OF THE ABOVE-QUOTED REQUIREMENTS WAS INTERPRETED BY IT TO APPLY ONLY IF A PART OF ITS MANUFACTURING OPERATIONS WAS TO BE PERFORMED BY A SUBCONTRACTOR, AS DISTINGUISHED FROM A VENDOR OR SUPPLIER OF MATERIALS.

A SUBCONTRACTOR HAS BEEN DEFINED BY THE COURTS AS ONE WHO ENTERS INTO A CONTRACT WITH A CONTRACTOR TO PERFORM A PART OR ALL OF THE LATTER'S CONTRACT. SEE 18 COMP. GEN. 633, 636, AND CASES THERE CITED. ASSUMING THAT THE CLOTH AND HARDWARE REQUIRED FOR MANUFACTURE OF THE LIFE PRESERVERS HERE INVOLVED ARE NOT UNIQUE ITEMS WHICH MUST BE SPECIALLY MADE TO MEET THE LIFE PRESERVER SPECIFICATIONS AND HAVING NO COMMERCIAL COUNTERPARTS, WE ARE INCLINED TO AGREE THAT THE INVITATION REQUIREMENTS CAN REASONABLY BE INTERPRETED AS NOT REQUIRING THE CONTEMPLATED SUPPLIERS OF SUCH MATERIALS TO BE CONSIDERED AS "SUBCONTRACTORS.'

THE ONLY LEGITIMATE PURPOSE OF THE INFORMATION REQUESTED IS TO ESTABLISH THE STATUS OF A BIDDER AS A "LABOR SURPLUS AREA CONCERN.' THE DEFINITION OF SUCH A CONCERN CITED IN THE INVITATION (ASPR 1-801) IS THAT IT IS ONE WHICH WILL INCUR IN MANUFACTURING OR PRODUCTION IN A LABOR SURPLUS AREA COSTS AMOUNTING TO MORE THAN 50 PERCENT OF THE CONTRACT PRICE. CONSIDERING THIS PURPOSE, THE WORDS "IF MORE THAN ONE PLANT IS INVOLVED" WOULD APPEAR TO REQUIRE THE ADDITIONAL INFORMATION SPECIFIED ONLY IF IT WERE NECESSARY TO CONSIDER THE COSTS INCURRED AT MORE THAN ONE PLANT IN ORDER TO REACH THE REQUIRED 50 PERCENT. IN OTHER WORDS, IF THE COSTS TO BE INCURRED AT THE PLANT NAMED IN ANSWER TO QUESTION NO. 1 AMOUNT TO MORE THAN 50 PERCENT OF THE CONTRACT PRICE,"MORE THAN ONE PLANT" WOULD NOT BE "INVOLVED," AND QUESTION NO. 2 WOULD NOT BE APPLICABLE, SINCE THE LOCATION OF ANY OTHER PLANT, WHETHER OF A SUBCONTRACTOR OR OF A SUPPLIER OR VENDOR, WOULD BE WHOLLY IMMATERIAL TO THE BIDDER'S ELIGIBILITY OR STATUS.

INTERPRETING THE INVITATION REQUIREMENTS AS WE DO, AND CONSIDERING THE SETTLED RULE THAT ANY AMBIGUITY IN THE LANGUAGE OF A CONTRACTUAL INSTRUMENT IS TO BE RESOLVED AGAINST THE PARTY RESPONSIBLE FOR IT, WE CONCLUDE THAT STEINTHAL'S BID MAY PROPERLY BE READ AS A REPRESENTATION THAT IT PROPOSED TO MEET THE 50 PERCENT REQUIREMENT BY MANUFACTURING OPERATIONS TO BE PERFORMED ENTIRELY AT ITS OWN PLANT IN ROXBORO, N.C., AND ITS FAILURE TO FURNISH ANY ADDITIONAL INFORMATION UNDER QUESTION NO. 2 WAS NEITHER A NONCOMPLIANCE WITH THE EXPRESS TERMS OF THE INVITATION NOR MATERIAL TO THE ESTABLISHMENT OF ITS STATUS.

IN B-150676, SUPRA, THE BIDDER HAD INDICATED THAT HE WAS A LABOR SURPLUS AREA CONCERN BUT HAD PROVIDED NO INFORMATION RELATIVE TO HIS PLANT LOCATIONS. THE BIDDER ALSO FAILED TO PROVIDE CERTAIN OTHER INFORMATION IN HIS BID WHICH APPEARED TO MAKE THE BID NONRESPONSIVE. WE CONCLUDED THAT THE BIDDER'S FAILURE TO PROVIDE ALL THIS INFORMATION PRECLUDED HIM FROM CONSIDERATION AS A LABOR SURPLUS AREA CONCERN. WE FIND THAT OUR PRIOR DECISIONS ARE NOT CONCLUSIVE ON THE MATTER NOW PRESENTED. SEE B-151051, MAY 2, 1963; ALSO B-151776, JULY 8, 1963 (PUBLISHED AT 43 COMP. GEN. --.)

IT IS REPORTED THAT ROXBORO, NORTH CAROLINA IS NO LONGER CLASSIFIED AS A LABOR SURPLUS AREA. THE INVITATION PROVIDES, HOWEVER, THAT IF THE BIDDER'S PROPOSED PRODUCTION LOCATION FURNISHED IN THE BID SHOULD LOSE ITS STATUS AS A LABOR SURPLUS AREA PRIOR TO AWARD, THE BIDDER MAY BE PERMITTED TO CHANGE THE AREA IN WHICH HE PROPOSES TO PERFORM.

ACCORDINGLY, WE CONCLUDE THAT STEINTHAL IS ELIGIBLE FOR THE SET ASIDE NEGOTIATION IF IT NOW PROPOSES TO SUBSTANTIALLY PERFORM THE CONTRACT IN A LABOR SURPLUS AREA. SEE B-150013, JANUARY 22, 1963.