B-153584, MAY 21, 1964

B-153584: May 21, 1964

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EDUCATION AND WELFARE: REFERENCE IS MADE TO THE REPORTS OF THE CHIEF. IS AN EMPLOYEE OF THE UNITED STATES AT THE WALTER REED ARMY MEDICAL CENTER. IT ALSO IS URGED THAT ALTHOUGH MR. KHOURI IS EMPLOYED AT THE ARMY MEDICAL CENTER AND THE CONTRACTS WERE AWARDED TO BIOTRONICS BY THE NATIONAL INSTITUTES OF HEALTH. IT IS POSSIBLE THAT MR. KHOURI MAY HAVE INFLUENCED THE PROCUREMENT OF THE BIOTRONICS EQUIPMENT THROUGH HIS RELATIONS WITH MEMBERS OF THE MEDICAL PROFESSION WHO ALSO USE THIS TYPE OF EQUIPMENT. FIVE BIDS WERE RECEIVED IN RESPONSE TO THIS INVITATION WITH BIOTRONICS AGAIN THE LOWEST BIDDER. IT IS REPORTED THAT A SURVEY WAS CONDUCTED IN THE CLINICAL BIOPHYSICS SECTION OF THE CARDIOLOGY BRANCH.

B-153584, MAY 21, 1964

TO THE SECRETARY OF HEALTH, EDUCATION AND WELFARE:

REFERENCE IS MADE TO THE REPORTS OF THE CHIEF, PROCUREMENT SECTION, SUPPLY MANAGEMENT BRANCH, NATIONAL INSTITUTES OF HEALTH, DATED MARCH 6, 1964, AND APRIL 30, 1964, WITH ENCLOSURES, CONCERNING THE PROTEST OF MEDICON, DIVISION OF QUALITY PRECISION PRODUCTS, INC., LOS ANGELES, CALIFORNIA, AGAINST THE AWARD OF CONTRACTS TO BIOTRONICS LABORATORY, INCORPORATED, UNDER INVITATIONS FOR BIDS NOS. 169-2-17-64 AND 168-2-19 64, ISSUED BY THE NATIONAL INSTITUTES OF HEALTH. MEDICON PROTESTS THE AWARDS ON THE BASIS THAT THERE APPEARS TO BE A CONFLICT OF INTEREST AS MR. EDWARD KHOURI, VICE PRESIDENT OF BIOTRONICS, IS AN EMPLOYEE OF THE UNITED STATES AT THE WALTER REED ARMY MEDICAL CENTER. IT ALSO IS URGED THAT ALTHOUGH MR. KHOURI IS EMPLOYED AT THE ARMY MEDICAL CENTER AND THE CONTRACTS WERE AWARDED TO BIOTRONICS BY THE NATIONAL INSTITUTES OF HEALTH, IT IS POSSIBLE THAT MR. KHOURI MAY HAVE INFLUENCED THE PROCUREMENT OF THE BIOTRONICS EQUIPMENT THROUGH HIS RELATIONS WITH MEMBERS OF THE MEDICAL PROFESSION WHO ALSO USE THIS TYPE OF EQUIPMENT.

INVITATION FOR BIDS NO. 169-2-17-64 ADVERTISED A REQUIREMENT FOR A BLOOD FLOWMETER AND VARIOUS ACCESSORIES IN ACCORDANCE WITH MODEL BL 310 OF BIOTRONICS LABORATORY, OR EQUAL. BIOTRONICS SUBMITTED THE LOWEST OF THREE BIDS RECEIVED AND ENCLOSED EVIDENCE OF RESPONSIBILITY, INCLUDING STANDARD FORM 129,"BIDDER'S MAILING LIST APPLICATION.'

INVITATION FOR BIDS NO. 168-2-19-64 ADVERTISED FOR A BLOOD FLOWMETER AND VARIOUS ACCESSORIES WITH SPECIFICATIONS TO BE IN ACCORDANCE WITH AVIONICS RESEARCH PRODUCTS CORPORATION PART NUMBERS, OR EQUAL. FIVE BIDS WERE RECEIVED IN RESPONSE TO THIS INVITATION WITH BIOTRONICS AGAIN THE LOWEST BIDDER.

IT IS REPORTED THAT A SURVEY WAS CONDUCTED IN THE CLINICAL BIOPHYSICS SECTION OF THE CARDIOLOGY BRANCH, NATIONAL INSTITUTES OF HEALTH, OF THE VARIOUS ELECTROMAGNET FLOWMETERS THAT ARE COMMERCIALLY AVAILABLE AND, ALTHOUGH FINAL RESULTS OF THE STUDY ARE NOT YET AVAILABLE, IT APPEARED THAT ALL THE UNITS TESTED WERE RELATIVELY SATISFACTORY IN PERFORMANCE.

IT IS REPORTED THAT AT NO TIME WAS THERE ANY EXCHANGE BETWEEN MEMBERS OF THE NIH STAFF AND MR. KHOURI, AND THE CHIEF, CARDIOVASCULAR DIAGNOSIS SECTION, CARDIOLOGY BRANCH, NATIONAL INSTITUTES OF HEALTH, STATES QUITE EMPHATICALLY THAT HE HAS NEVER PERSONALLY MET MR. KHOURI, AND THAT THEIR DECISION TO USE BIOTRONICS EQUIPMENT WAS IN NO WAY INFLUENCED BY MR. KHOURI. IT IS FURTHER REPORTED THAT THE CENTER JUDGE ADVOCATE, WALTER REED ARMY MEDICAL CENTER ADVISED MR. KHOURI THAT HIS FIRM (BIOTRONICS) COULD SELL BLOOD FLOWMETERS TO THE NATIONAL INSTITUTES OF HEALTH PROVIDED THE DESIGN THEREFOR HAD BEEN MADE AVAILABLE FOR OTHER FIRMS TO COPY. IS STATED THAT MR. KHOURI'S REPORT, CONTAINED IN THE JOURNAL OF APPLIED PHYSIOLOGY, VOLUME 18, NUMBER 1, DATED JANUARY 1963, CLEARLY SHOWS THAT HE HAS MADE AVAILABLE SUFFICIENT INFORMATION FOR OTHER FIRMS TO COPY THE BLOOD FLOWMETER. IT IS ALSO REPORTED THAT ALTHOUGH MR. KHOURI AND HIS WIFE OWN A SUBSTANTIAL INTEREST IN BIOTRONICS, BUT LESS THAN A MAJORITY INTEREST, AND ARE OFFICERS OF THE COMPANY, HIS PARTICIPATION IS STRICTLY OF A TECHNICAL NATURE; AND THAT HE DID NOT SOLICIT BUSINESS, AUTHORIZE CONTRACTS OR ENGAGE IN ANY SALES OR SALES PROMOTION ACTIVITY.

IN 27 COMP. GEN. 735 IT IS STATED:

"CONTRACTS BETWEEN THE GOVERNMENT AND ITS EMPLOYEES ARE NOT PROHIBITED BY STATUTE EXCEPT WHERE AN EMPLOYEE OF THE GOVERNMENT ACTS AS AGENT BOTH FOR THE GOVERNMENT AND THE CONTRACTOR IN THE PARTICULAR TRANSACTION OR WHERE THE SERVICE TO BE RENDERED UNDER THE CONTRACT IS SUCH AS COULD HAVE BEEN REQUIRED OF THE CONTRACTOR IN HIS CAPACITY AS AN EMPLOYEE. 18 U.S.C. 93; 5 ID. 69, 70; 21 COMP. GEN. 705. HOWEVER, AS POINTED OUT IN 14 COMP. GEN. 403, REFERRED TO BY YOU, THIS OFFICE HAS HELD THAT CONTRACTS BETWEEN THE GOVERNMENT AND ITS EMPLOYEES ARE OPEN TO CRITICISM ON THE GROUNDS OF POSSIBLE FAVORITISM OR PREFERENTIAL TREATMENT AND SHOULD NOT BE ENTERED INTO EXCEPT FOR THE MOST COGENT REASONS. ALSO, SEE 5 COMP. GEN. 93; 21 ID. 705; 25 ID. 690.'

IN THE PRESENT MATTER, THE AWARDS TO BIOTRONICS WOULD BE ON THE BASIS OF COMPETITIVE BIDS SUBMITTED IN RESPONSE TO OPEN INVITATIONS. MR. KHOURI IS NOT ACTING AS AGENT OF THE UNITED STATES IN THE TRANSACTION, AND THERE APPEARS TO BE NO CONFLICT OF INTEREST BETWEEN HIS POSITION AS STOCKHOLDER AND VICE PRESIDENT OF BIOTRONICS AND HIS OFFICIAL POSITION AS AN EMPLOYEE AT THE WALTER REED ARMY MEDICAL CENTER, NOR DOES IT APPEAR THAT HE MADE IMPROPER USE OF ANY KNOWLEDGE GAINED AS AN EMPLOYEE OF THE GOVERNMENT. SEE 21 COMP. GEN. 705; 25 ID. 690.

HENCE, WHILE WE HAVE APPROVED ADMINISTRATIVE REGULATIONS PROHIBITING THE MAKING OF CONTRACTS WITH INDIVIDUAL EMPLOYEES OF THE GOVERNMENT, AS A MATTER OF GENERAL POLICY, WE WOULD NOT BE REQUIRED TO OBJECT TO AN AWARD IN THE PRESENT CASE TO BIOTRONICS. THIS CONCLUSION IS STRENGTHENED BY THE FACT THAT THE ARMY MEDICAL CENTER APPROVED THE SALE OF BIOTRONICS BLOOD FLOWMETERS TO THE NATIONAL INSTITUTES OF HEALTH.

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