B-153978, AUG. 13, 1964

B-153978, AUG. 13, 1964

TO RMF, INC.:

REFERENCE IS MADE TO YOUR TELEGRAM OF MARCH 17, 1964, AND TO LETTERS DATED APRIL 22, MAY 18 AND 30, 1964, FROM YOUR FIRM PROTESTING AGAINST AN AWARD OF A SET-ASIDE FOR LABOR SURPLUS AREA CONCERNS TO ANY OTHER BIDDER UNDER INVITATION FOR BIDS NO. 600-546-64, ISSUED BY THE NAVY PURCHASING OFFICE, WASHINGTON, D.C., ON JANUARY 23, 1964, AND AMENDED ON FEBRUARY 19, 1964.

THE INVITATION SOLICITED BIDS--- TO BE OPENED FEBRUARY 27, 1964--- FOR FURNISHING CERTAIN QUANTITIES OF CONTAINERS, FIBERBOARD PACKING, AND METAL PALLETS UNDER LOT 1. THE INVITATION ALSO STATED THAT EQUAL QUANTITIES OF THOSE ITEMS HAD BEEN SET ASIDE FOR AWARD TO A LABOR SURPLUS AREA CONCERN. WITH RESPECT TO THE LATTER THE INVITATION CONTAINED DEFINITIONS AS FOLLOWS:

"1. "PERSISTENT LABOR SURPLUS AREA" MEANS AN AREA WHICH (A) IS CLASSIFIED BY THE DEPARTMENT OF LABOR AS AN "AREA OF SUBSTANTIAL AND PERSISTENT LABOR SURPLUS" (ALSO CALLED "AREA OF SUBSTANTIAL AND PERSISTENT UNEMPLOYMENT") AND IS LISTED AS SUCH BY THAT DEPARTMENT IN CONJUNCTION WITH ITS PUBLICATION "AREA LABOR MARKET TRENDS," OR (B) IS CERTIFIED AS AN AREA OF SUBSTANTIAL AND PERSISTENT LABOR SURPLUS BY THE DEPARTMENT OF LABOR PURSUANT TO A REQUEST BY A PROSPECTIVE CONTRACTOR.

"2. "SUBSTANTIAL LABOR SURPLUS AREA" MEANS AN AREA WHICH (A) IS CLASSIFIED BY THE DEPARTMENT OF LABOR AS AN "AREA OF SUBSTANTIAL LABOR SURPLUS" (ALSO CALLED "AREA OF SUBSTANTIAL NEMPLOYMENT") AND WHICH IS LISTED AS SUCH BY THAT DEPARTMENT IN CONJUNCTION WITH ITS PUBLICATION ,AREA LABOR MARKET TRENDS," OR (B) IS CERTIFIED AS AN AREA OF SUBSTANTIAL LABOR SURPLUS BY THE DEPARTMENT OF LABOR PURSUANT TO A REQUEST BY A PROSPECTIVE CONTRACTOR.

"/B) THE TERM "LABOR SURPLUS AREA CONCERN" INCLUDES PERSISTENT LABOR SURPLUS AREA CONCERNS AND SUBSTANTIAL LABOR SURPLUS AREA CONCERNS AS DEFINED BELOW:

"1. "PERSISTENT LABOR SURPLUS AREA CONCERN" MEANS A CONCERN THAT AGREES TO PERFORM, OR CAUSE TO BE PERFORMED, A SUBSTANTIAL PROPORTION OF A CONTRACT IN PERSISTENT LABOR SURPLUS AREAS. A CONCERN SHALL BE DEEMED TO PERFORM A SUBSTANTIAL PROPORTION OF A CONTRACT IN PERSISTENT LABOR SURPLUS AREAS IF THE COSTS THAT THE CONCERN WILL INCUR ON ACCOUNT OF MANUFACTURING OR PRODUCTION PERFORMED IN SUCH AREAS (BY ITSELF OR ITS FIRST-TIER SUBCONTRACTORS) AMOUNT TO MORE THAN 50 PERCENT OF THE CONTRACT PRICE.

"2. "SUBSTANTIAL LABOR SURPLUS AREA CONCERN" MEANS A CONCERN THAT AGREES TO PERFORM, OR CAUSE TO BE PERFORMED, A SUBSTANTIAL PROPORTION OF A CONTRACT IN SUBSTANTIAL LABOR SURPLUS AREAS. A CONCERN SHALL BE DEEMED TO PERFORM A SUBSTANTIAL PROPORTION OF A CONTRACT IN SUBSTANTIAL LABOR SURPLUS AREAS IF THE COSTS THAT THE CONCERN WILL INCUR ON ACCOUNT OF MANUFACTURING OR PRODUCTION PERFORMED IN SUBSTANTIAL LABOR SURPLUS AREAS OR IN SUBSTANTIAL AND PERSISTENT LABOR SURPLUS AREAS (BY ITSELF OR ITS FIRST-TIER SUBCONTRACTORS) AMOUNT TO MORE THAN 50 PERCENT OF THE CONTRACT CE.'

THE FOLLOWING PROVISIONS ALSO APPEARED IN THE INVITATION:

"AGREEMENT TO PERFORM AS A LABOR SURPLUS AREA CONCERN:

"/1) A BIDDER OR OFFEROR DESIRING TO BE CONSIDERED FOR AWARD AS A LABOR SURPLUS AREA CONCERN MUST (A) MAKE AN AFFIRMATIVE REPRESENTATION THAT HE IS A LABOR SURPLUS AREA CONCERN AND (B) IDENTIFY IN HIS BID, OR OFFER PRIOR TO THE TIME OF OPENING OF AWARD, THE GEOGRAPHICAL AREAS IN WHICH HE PROPOSES TO PERFORM OR CAUSE TO BE PERFORMED A SUBSTANTIAL PROPORTION OF THE PRODUCTION OF THE CONTRACT. IF THE DEPARTMENT OF LABOR CLASSIFICATION OF ANY SUCH AREA CHANGES AFTER THE BIDDER OR OFFEROR HAS SUBMITTED HIS BID OR OFFER, THE BIDDER OR OFFEROR MAY CHANGE THE AREAS IN WHICH HE PROPOSES TO PERFORM, PROVIDED THAT HE SO NOTIFIES THE CONTRACTING OFFICER BEFORE THE CONTRACT AWARD. ANY PREFERENCE FOR AWARD WILL BE BASED UPON THE LABOR SURPLUS CLASSIFICATION OF THE DESIGNATED PRODUCTION AREAS AS OF THE TIME OF THE PROPOSED AWARD.

"/2) THE BIDDER OR OFFEROR AGREES THAT IF AWARDED A CONTRACT FOR WHICH HE WOULD NOT HAVE QUALIFIED HAD HE NOT BEEN A PERSISTENT LABOR SURPLUS AREA CONCERN, HE WILL PERFORM, OR CAUSE TO BE PERFORMED, A SUBSTANTIAL PROPORTION OF THE PRODUCTION IN AREAS CLASSIFIED AT THE TIME OF AWARD OR AT THE TIME OF PERFORMANCE OF THE CONTRACT, AS PERSISTENT LABOR SURPLUS AREAS; FURTHER THAT IF AWARDED A CONTRACT AS A SUBSTANTIAL LABOR SURPLUS AREA CONCERN, HE WILL PERFORM OR CAUSE TO BE PERFORMED A SUBSTANTIAL PROPORTION OF THE PRODUCTION IN AREAS CLASSIFIED AT THE TIME OF AWARD OR AT THE TIME OF PERFORMANCE OF THE CONTRACT AS SUBSTANTIAL OR PERSISTENT LABOR SURPLUS AREAS.'

CLAUSE 6.10 OF THE INVITATION PROVIDES AS FOLLOWS:

"/A) GENERAL. A PORTION OF THIS PROCUREMENT, AS IDENTIFIED ELSEWHERE IN THE SCHEDULE, HAS BEEN SET ASIDE FOR AWARD ONLY TO ONE OR MORE LABOR SURPLUS AREA CONCERNS, AND TO A LIMITED EXTENT, TO SMALL BUSINESS CONCERNS WHICH DO NOT QUALIFY AS LABOR SURPLUS AREA CONCERNS. NEGOTIATIONS FOR AWARD OF THE SET-ASIDE PORTION WILL BE CONDUCTED ONLY WITH RESPONSIBLE LABOR SURPLUS AREA CONCERNS (AND SMALL BUSINESS CONCERNS TO THE EXTENT INDICATED BELOW) WHO HAVE SUBMITTED RESPONSIVE BIDS OR PROPOSALS ON THE NON-SET-ASIDE PORTION AT A UNIT PRICE NO GREATER THAN 120 PERCENT OF THE HIGHEST AWARD MADE ON THE NON SET-ASIDE PORTION. NEGOTIATIONS FOR THE SET -ASIDE PORTION WILL BE CONDUCTED WITH SUCH BIDDERS IN THE FOLLOWING ORDER OF PRIORITY:

GROUP 1. PERSISTENT LABOR SURPLUS AREA CONCERNS WHICH ARE ALSO SMALL BUSINESS CONCERNS.

GROUP 2. OTHER PERSISTENT LABOR SURPLUS AREA CONCERNS.

GROUP 3. SUBSTANTIAL LABOR SURPLUS AREA CONCERNS WHICH ARE ALSO SMALL BUSINESS CONCERNS.

GROUP 4. OTHER SUBSTANTIAL LABOR SURPLUS AREA CONCERNS.

GROUP 5. SMALL BUSINESS CONCERNS WHICH ARE NOT LABOR SURPLUS AREA CONCERNS.

"WITHIN EACH OF THE ABOVE GROUPS, NEGOTIATIONS WITH SUCH CONCERNS WILL BE IN THE ORDER OF THEIR BIDS ON THE NON-SET-ASIDE PORTION BEGINNING THE LOWEST RESPONSIVE BID/PROPOSAL. THE SET-ASIDE PORTION SHALL BE AWARDED AT THE HIGHEST UNIT PRICE AWARDED ON THE NON-SET ASIDE PORTION, ADJUSTED TO REFLECT TRANSPORTATION AND OTHER COST FACTORS WHICH WERE CONSIDERED IN EVALUATING BIDS/PROPOSALS ON THE NON SET-ASIDE PORTION. HOWEVER, THE GOVERNMENT RESERVES THE RIGHT NOT TO CONSIDER TOKEN BIDS/PROPOSALS OR OTHER DEVICES DESIGNED TO SECURE AN UNFAIR ADVANTAGE OVER OTHER BIDDERS/OFFERORS ELIGIBLE FOR THE SET-ASIDE PORTION.'

ON FEBRUARY 27, 1964, THE BIDS WERE OPENED AND IT WAS FOUND THAT THE LOWEST RESPONSIVE BID ON LOT 1 WAS SUBMITTED BY FAB-WELD CORPORATION. TELEGRAM OF MARCH 8, 1964, YOU PROTESTED AWARD TO THAT FIRM, ON THE GROUND OF OBVIOUS MISTAKE IN BID OR RIDICULOUSLY LOW PRICE, AND MISREPRESENTATION OF QUALIFICATIONS OF FAB-WELD'S PROPOSED SUPPLIERS AS LABOR SURPLUS AREA CONCERNS. IN VIEW OF YOUR PROTEST FAB-WELD CORPORATION WAS REQUESTED TO CONFIRM ITS BID PRICE IN WRITING. BY LETTER OF MARCH 25, 1964, FAB-WELD CONFIRMED ITS BID PRICE. THE CONTRACTING OFFICER THEREFORE DETERMINED THAT FAB-WELD WAS THE LOW RESPONSIVE AND RESPONSIBLE BIDDER AND MADE AN AWARD TO IT OF THE NON SET-ASIDE PORTION OF THE PROCUREMENT.

WITH RESPECT TO THE SET-ASIDE PORTION OF THE PROCUREMENT, FAB-WELD REPRESENTED THAT IT WAS A SMALL BUSINESS CONCERN; THAT IT WAS BOTH A PERSISTENT AND A SUBSTANTIAL LABOR SURPLUS AREA CONCERN, AND THAT 100 PERCENT OF THE CONTRACT PRICE WOULD BE MANUFACTURED IN SIMPSON (LACKAWANNA COUNTY), PENNSYLVANIA. WHILE SIMPSON IS LOCATED IN A PERSISTENT AND SUBSTANTIAL LABOR SURPLUS AREA, IT WAS DETERMINED BY THE NAVY DEPARTMENT THAT THE BREAKDOWN OF COSTS AND SUPPLIES SUBMITTED BY FAB-WELD REVEALS THAT IT DID NOT QUALIFY AS A LABOR SURPLUS AREA CONCERN IN A PERSISTENT LABOR SURPLUS AREA, BUT DID QUALIFY AS A LABOR SURPLUS AREA CONCERN IN A SUBSTANTIAL LABOR SURPLUS AREA. YOUR FIRM ALSO QUALIFIES AS A SUBSTANTIAL LABOR SURPLUS AREA CONCERN. NO BID WAS RECEIVED FROM A CONCERN WHICH QUALIFIES FOR THE AWARD AS A PERSISTENT LABOR AREA CONCERN. UNDER THE CIRCUMSTANCES, THE FACT THAT FAB-WELD INDICATED THAT IT WAS BOTH A PERSISTENT AND A SUBSTANTIAL LABOR SURPLUS AREA CONCERN DOES NOT APPEAR TO HAVE RESULTED IN AN UNFAIR ADVANTAGE OVER OTHER BIDDERS.

SINCE FAB-WELD IS THE LOW RESPONSIVE AND RESPONSIBLE BIDDER ON THE NON- SET-ASIDE PORTION, AND HAS ALSO BEEN FOUND BY THE PROCURING AGENCY TO QUALIFY AS A SUBSTANTIAL LABOR AREA CONCERN, WE DO NOT SEE ANY OBJECTION TO THE AWARD TO THAT FIRM OF THE SET-ASIDE PORTION OF THE PROCUREMENT.