B-153691, APR. 16, 1964

B-153691, APR. 16, 1964

TO THE SECRETARY OF THE TREASURY:

BY CORRESPONDENCE DATED MARCH 6, 1964, THE ASSISTANT SECRETARY OF THE TREASURY REQUESTED OUR VIEWS AS TO WHETHER IT WOULD BE APPROPRIATE FOR THE BUREAU OF ENGRAVING AND PRINTING TO REFUSE TO AWARD CONTRACTS FOR DISTINCTIVE CURRENCY PAPER TO ANY PERSON OR FIRM WHICH DOES NOT QUALIFY AS A MANUFACTURER.

THE LETTER STATES THAT WHILE THERE HAS PREVIOUSLY BEEN ONLY ONE COMPANY TECHNICALLY CAPABLE OF PRODUCING DISTINCTIVE CURRENCY PAPER, THE BUREAU NOW CONTEMPLATES THAT ANOTHER FIRM MAY HAVE ACQUIRED THE NECESSARY TECHNICAL SKILLS WHICH WOULD ENABLE IT TO QUALIFY AS A MANUFACTURER. APPARENTLY, WHILE THE BUREAU HAS NO OBJECTION TO DEALING WITH QUALIFIED MANUFACTURERS DIRECTLY, THERE IS OBJECTION TO DEALING WITH ANY COMPANY WHICH ACTS MERELY AS AN INTERMEDIARY SUCH AS A DEALER OR DISTRIBUTOR. THE BASIS FOR THIS RELUCTANCE IS THAT THE SPECIAL PROCESSES AND DYES NECESSARY TO PRODUCE THE COLORS REQUIRED FOR THE DISTINCTIVE COLORED FIBERS IN THE PAPER MUST NECESSARILY BE CLOSELY GUARDED AND THEREFORE CONFINED TO AS LIMITED A GROUP AS POSSIBLE.

IN HIS MEMORANDUM DATED NOVEMBER 22, 1963, ADDRESSED TO THE BUREAU OF ENGRAVING AND PRINTING, MR. JAMES J. ROWLEY, CHIEF OF THE UNITED STATES SECRET SERVICE STATES:

"ONE OF THE MAJOR RESPONSIBILITIES OF THE UNITED STATES SECRET SERVICE IS THE SUPPRESSION OF COUNTERFEITING. IN ORDER TO CARRY OUT THIS FUNCTION, ACHIEVE MAXIMUM SECURITY, AND RESTRICT COUNTERFEITING TO A MINIMUM, IT IS ABSOLUTELY ESSENTIAL THAT THE PRODUCTION OF CURRENCY RIGHT FROM THE BEGINNING (THAT IS, AT THE PAPER-MAKING STAGE) UNTIL IT IS DELIVERED TO THE BANKS FOR ISSUANCE INTO CIRCULATION SHOULD BE UNDER GOVERNMENTAL CONTROL.

"DISTINCTIVE CURRENCY PAPER, AS YOU KNOW, IS ONE OF THE MAJOR ELEMENTS WHICH THE UNITED STATES SECRET SERVICE UTILIZES IN THE DETECTION AND/OR SUPPRESSION OF COUNTERFEITING. IT IS MY FIRM CONVICTION THAT IN ORDER TO ACHIEVE THE MAXIMUM SECURITY POSSIBLE, KNOWLEDGE REGARDING THE MANUFACTURE OF CURRENCY PAPER, INCLUDING THE DISTINCTIVE FEATURES INCORPORATED THEREIN, SHOULD BE CONFINED TO AS FEW PEOPLE AS POSSIBLE. THE INTRODUCTION OF A THIRD PARTY OR FIRM INTO A CONTRACT FOR THIS PAPER WOULD SERVE TO WEAKEN THIS PRINCIPLE.'

THIS OFFICE HAS FREQUENTLY POINTED OUT THAT THE FORMAL ADVERTISING STATUTES WERE DESIGNED SPECIFICALLY TO GIVE ALL RESPONSIBLE PARTIES EQUAL RIGHT TO COMPETE FOR GOVERNMENT BUSINESS, TO SECURE FOR THE GOVERNMENT THE OBVIOUS BENEFITS WHICH FLOW FROM FULL AND FREE COMPETITION, TO PREVENT UNJUST FAVORITISM BY REPRESENTATIVES OF THE GOVERNMENT AND TO PREVENT COLLUSION AND FRAUD IN PROCURING SUPPLIES OR LETTING CONTRACTS. 34 COMP. GEN. 551. IT WOULD SEEM EQUALLY TRUE, HOWEVER, THAT IN APPROPRIATE CIRCUMSTANCES THE GOVERNMENT CAN IMPOSE A QUALIFICATION LIMITATIONS UPON PROSPECTIVE BIDDERS PROVIDED IT BE BOTH REASONABLE AND NECESSARY. 150703, FEBRUARY 15, 1963.

THE ADVERTISING STATUTES REQUIRE THAT CONTRACTS BE AWARDED TO RESPONSIBLE PROSPECTIVE CONTRACTORS. FPR 1-1.310-4, WHICH REITERATES THIS REQUIREMENT, PROVIDES THAT A RESPONSIBLE PROSPECTIVE CONTRACTOR IS ONE WHO IS FOUND BY THE CONTRACTING OFFICER TO MEET THE MINIMUM STANDARDS SET FORTH IN FPR 1-1.310-5 AND SUCH ADDITIONAL STANDARDS AS MAY BE PRESCRIBED FOR SPECIFIC PROCUREMENTS BY THE AGENCY CONCERNED. ONE OF THE MINIMUM STANDARDS REQUIRED TO BE MET UNDER FPR 1-1.310-5 IS THAT THE SUCCESSFUL BIDDER BE A MANUFACTURER, REGULAR DEALER, SERVICE CONTRACTOR, OR CONSTRUCTION CONTRACTOR, OR SUCH OTHER PERSON OR FIRM AS MAY BE FOUND BY THE AGENCY CONCERNED TO BE QUALIFIED AND RESPONSIBLE AS A SOURCE OF SUPPLY. WHILE IT MAY BE THAT A PARTICULAR BIDDER COULD QUALIFY AS A REGULAR DEALER WITHIN THE MEANING OF FPR 1 1.310-5 AND SECTION 1 (A) OF THE WALSH-HEALEY ACT, 41 U.S.C. 35 (A), THIS FACT WOULD NOT COMPEL THE AWARD OF A CONTRACT TO SUCH BIDDER AS A RESPONSIBLE PROSPECTIVE CONTRACTOR IF IN FACT HE DID NOT MEET THE OTHER REQUIRED MINIMUM STANDARDS OR ANY ADDITIONAL STANDARDS DETERMINED TO BE NECESSARY BY THE PROCURING AGENCY, AS CONTEMPLATED BY FPR 1-1.310 4.

IT APPEARS FROM YOUR LETTER THAT THE SPECIAL PROCESSES AND DYES NECESSARY TO PRODUCE THE COLORS REQUIRED FOR THE DISTINCTIVE COLORED FIBERS IN THE PAPER HERE INVOLVED MUST BE CLOSELY GUARDED FOR SECURITY PURPOSES AND TO RESTRICT COUNTERFEITING TO A MINIMUM. IT APPEARS FURTHER THAT FOR THESE REASONS YOUR DEPARTMENT HAS DETERMINED THAT CONTRACTS FOR SUCH DISTINCTIVE PAPER SHOULD BE LIMITED TO MANUFACTURERS. IN OUR OPINION THIS DETERMINATION--- WHICH IS TANTAMOUNT TO A FINDING THAT A REGULAR DEALER WOULD NOT QUALIFY AS A RESPONSIBLE CONTRACTOR FOR SUCH DISTINCTIVE PAPER-- - APPEARS TO BE JUSTIFIED UNDER THE FACTS OF THIS CASE AND THE APPLICABLE REGULATIONS REFERRED TO. ..END :