B-153741, JUN. 3, 1964

B-153741, JUN. 3, 1964

TO SHAMPAINE INDUSTRIES, INC.:

BY LETTER DATED MARCH 19, 1964, WITH ENCLOSURES, YOU PROTESTED AGAINST THE INCLUSION OF LABOR SURPLUS AREA SET-ASIDE PROVISIONS IN INVITATION FOR BIDS NO. DSA-2-64-787, ISSUED ON FEBRUARY 27, 1964, BY THE DEFENSE MEDICAL SUPPLY CENTER, DEFENSE SUPPLY AGENCY, FOR HOSPITAL PEDESTAL OPERATING TABLES. YOU CONTEND THAT THE USE OF LABOR SURPLUS AREA SET-ASIDE PROVISIONS IN THE PROCUREMENT OF THESE OPERATING TABLES VIOLATES BOTH THE SPIRIT OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) AND THE POLICY OF THE DEPARTMENT OF DEFENSE IN THAT THE SET ASIDE WILL ULTIMATELY ESTABLISH A SOLE SOURCE OF SUPPLY. ALSO, YOU CONTEND THAT THE SET-ASIDE AIDS A BIDDER--- AMERICAN STERILIZER COMPANY--- WHICH DOES NOT REQUIRE GOVERNMENT PROCUREMENT ASSISTANCE THROUGH THE LABOR-SURPLUS-AREA PROGRAM.

THE INVITATION REQUESTED BIDS ON F.O.B. ORIGIN OR F.O.B. DESTINATION BASIS, OR BOTH, FOR 19 OPERATING TABLES. AN ADDITIONAL 19 UNITS WERE SET ASIDE FOR AWARD TO LABOR-SURPLUS-AREA CONCERNS. BIDS WERE OPENED ON MARCH 19, 1964, AND IT APPEARED THAT YOUR COMPANY AND AMERICAN STERILIZER WERE THE ONLY BIDDERS. ON APRIL 6, 1964, AWARD OF THE UNRESTRICTED QUANTITY OF 19 UNITS WAS MADE TO YOU AT $1,683.23 EACH,F.O.B. ORIGIN. SINCE AMERICAN STERILIZER WAS THE ONLY BIDDER IN A LABOR SURPLUS AREA AND SINCE IT BID WITHIN 120 PERCENT OF THE AWARD PRICE, IT IS PROPOSED TO AWARD THE RESTRICTED PORTION TO THAT BIDDER. WE SEE NO OBJECTION TO SUCH AN AWARD.

WE HAVE CONSIDERED THE VIEWS ADVANCED BY YOU TO DEMONSTRATE THE IMPROPRIETY OF THE LABOR SET-ASIDE PROGRAM BUT WE ARE UNABLE TO AGREE WITH YOUR BASES OF OBJECTION. THE INVITATION CLEARLY ADVISED ALL BIDDERS ON PAGES 26 AND 27 THEREOF THAT 19 UNITS WERE SET ASIDE FOR AWARD TO A LABOR SURPLUS AREA FIRM ONLY. AS PROVIDED IN ASPR 1-800, THE POLICY AND PROCEDURES PRESCRIBED THEREIN TO AID AREAS OF PERSISTENT OR SUBSTANTIAL LABOR SURPLUS ARE IN IMPLEMENTATION OF DEFENSE MANPOWER POLICY NO. 4 (REVISED) DATED JUNE 14, 1960, 32A CFR, CHAPTER 1, PAGES 32-34. THIS POLICY DOES NOT REQUIRE THE ELIMINATION OF A LABOR SURPLUS AREA BECAUSE THE ONLY FIRM PARTICIPATING IN THE BIDDING FROM THAT AREA EITHER MAY BE A DOMINANT COMMERCIAL SUPPLIER OR MAY BE OPERATING AT FULL CAPACITY. ASPR 1 -804.1 (B) PROVIDES THAT THE FACT THAT A LARGE PART OF PREVIOUS PROCUREMENTS OF THE ITEM HAS BEEN PLACED WITH A LABOR-SURPLUS-AREA CONCERN OR THAT A LABOR-SURPLUS AREA CONCERN IS ALREADY RECEIVING A FAIR PROPORTION OF CONTRACTS ARE NOT SUFFICIENT CAUSES FOR NOT MAKING A LABOR SURPLUS SET-ASIDE. BOTH ASPR 1-800 AND DEFENSE MANPOWER POLICY NO. 4 CLEARLY INDICATE THAT IT IS THE PURPOSE OF THE PROGRAM TO IMPROVE THE OVERALL SITUATION OF AREAS HAVING A SURPLUS OF LABOR.

SINCE 1961, WHEN SET-ASIDES WERE FIRST USED TO PROCURE THIS ITEM, EIGHT PROCUREMENTS HAVE BEEN MADE. FIVE OF THESE HAVE INVOLVED LABOR SURPLUS SET-ASIDES AND IN ALL EIGHT PROCUREMENTS YOUR COMPANY AND AMERICAN STERILIZER WERE THE ONLY BIDDERS. YOUR FIRM RECEIVED SIX AWARDS AS AGAINST FIVE FOR AMERICAN STERILIZER.

IN VIEW OF THE FOREGOING, IT WOULD NOT APPEAR THAT YOU HAVE BEEN PREJUDICED BY REASON OF THE LABOR-SURPLUS-AREA PROGRAM OR THAT THE USE OF THE PROGRAM WAS OTHERWISE IMPROPER.