B-157180, SEP. 15, 1965

B-157180: Sep 15, 1965

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TO SCULLY-WALTON: REFERENCE IS MADE TO YOUR LETTER OF JULY 2. INSURANCE: SATISFACTORY INSURANCE COVERAGE IS A CONDITION PRECEDENT TO AWARD OF A CONTRACT. WHICHEVER ARE THE GREATER. WORKMEN'S COMPENSATION AND EMPLOYER'S LIABILITY COVERAGE WILL CONFORM TO APPLICABLE STATE LAW REQUIREMENTS FOR THE SERVICE CONTEMPLATED. STATE APPROVED SOURCES OF INSURANCE COVERAGE ORDINARILY WILL BE DEEMED ACCEPTABLE TO THE VETERANS ADMINISTRATION INSTALLATION. SEVEN BIDS WERE RECEIVED AND OPENED ON JUNE 29. THE AMBULANCES PROPOSED TO BE FURNISHED BY REILLY WERE INSPECTED ON JUNE 30. WERE FOUND ACCEPTABLE BY THE INSPECTION TEAM. AWARD WAS MADE TO REILLY ON JUNE 30. YOU POINT OUT THAT THE AMBULANCES PROPOSED TO BE USED WERE IMPROPERLY LICENSED AND THAT REILLY'S MAIN BASE OF OPERATION IS 24 MILES FROM DOWNTOWN CHICAGO.

B-157180, SEP. 15, 1965

TO SCULLY-WALTON:

REFERENCE IS MADE TO YOUR LETTER OF JULY 2, 1965, PROTESTING AGAINST AWARD OF CONTRACT TO ANOTHER BIDDER FOR AMBULANCE SERVICE UNDER INVITATION FOR BIDS NO. 66-17 ISSUED BY THE VETERANS ADMINISTRATION HOSPITAL, HINES, ILLINOIS, ON JUNE 21, 1965.

THE SUBJECT INVITATION REQUESTED BIDS FOR AMBULANCE SERVICE WITHIN A SPECIFIED AREA FOR THE PERIOD JULY 1, 1965, TO JUNE 30, 1966. PARAGRAPH 7 OF THE SPECIAL CONDITIONS OF THE INVITATION PROVIDED WITH RESPECT TO INSURANCE THAT:

"7. INSURANCE: SATISFACTORY INSURANCE COVERAGE IS A CONDITION PRECEDENT TO AWARD OF A CONTRACT. IN GENERAL, A SUCCESSFUL BIDDER MUST PRESENT SATISFACTORY EVIDENCE OF FULL COMPLIANCE WITH STATE AND LOCAL REQUIREMENTS, OR THOSE BELOW STIPULATED, WHICHEVER ARE THE GREATER. MORE SPECIFICALLY, WORKMEN'S COMPENSATION AND EMPLOYER'S LIABILITY COVERAGE WILL CONFORM TO APPLICABLE STATE LAW REQUIREMENTS FOR THE SERVICE CONTEMPLATED, WHEREAS GENERAL LIABILITY AND AUTOMOBILE LIABILITY COVERAGE, OF COMPREHENSIVE TYPE, SHALL, IN THE ABSENCE OF HIGHER STATUTORY MINIMUMS, BE REQUIRED IN AMOUNT PER VEHICLE USED OF NOT LESS THAN $100,000 PER PERSON AND $500,000 PER ACCIDENT, THE CORRESPONDING PROPERTY DAMAGE LIABILITY INSURANCE COVERAGE (COMPREHENSIVE AUTOMOBILE LIABILITY POLICY) TO BE NOT LESS THAN $10,000. STATE APPROVED SOURCES OF INSURANCE COVERAGE ORDINARILY WILL BE DEEMED ACCEPTABLE TO THE VETERANS ADMINISTRATION INSTALLATION, SUBJECT TO TIMELY CERTIFICATIONS BY SUCH SOURCES OF THE TYPES AND LIMITS OF THE COVERAGES AFFORDED BY THE SOURCES TO THE BIDDER.'

SEVEN BIDS WERE RECEIVED AND OPENED ON JUNE 29, 1965, AND IT APPEARED THAT REILLY'S WEST SURBURBAN AMBULANCE AND OXYGEN SERVICE SUBMITTED THE LOWEST AGGREGATE BID. PURSUANT TO PARAGRAPH 2 OF THE SPECIAL CONDITIONS OF THE INVITATION, THE AMBULANCES PROPOSED TO BE FURNISHED BY REILLY WERE INSPECTED ON JUNE 30, 1965, AND WERE FOUND ACCEPTABLE BY THE INSPECTION TEAM. AWARD WAS MADE TO REILLY ON JUNE 30, 1965, AS THE LOWEST RESPONSIBLE, RESPONSIVE BIDDER.

YOU PROTEST ON THE BASIS THAT REILLY HAD NOT COMPLIED WITH PARAGRAPH 7, ABOVE, AT THE DATE OF AWARD OR FOR SOMETIME THEREAFTER. ALSO, YOU POINT OUT THAT THE AMBULANCES PROPOSED TO BE USED WERE IMPROPERLY LICENSED AND THAT REILLY'S MAIN BASE OF OPERATION IS 24 MILES FROM DOWNTOWN CHICAGO, OR OVER 30 MILES FROM THE MAJORITY OF AMBULANCE PICK UPS.

THE INVITATION REQUIREMENT FOR SATISFACTORY INSURANCE COVERAGE WAS NOT AN OBLIGATION WHICH BIDDERS HAD TO MEET AT THE TIME BIDS WERE OPENED. RATHER, EVIDENCE AS TO INSURANCE COVERAGE PROPERLY COULD BE FURNISHED BY A BIDDER UP TO THE DATE OF AWARD AS A REQUIREMENT GOING TO THE RESPONSIBILITY, AS DISTINGUISHED FROM THE RESPONSIVENESS OF THE BIDDER. THE RECORD BEFORE US, HOWEVER, SHOWS THAT EVIDENCE OF INSURANCE COVERAGE WAS NOT FINALLY SUBMITTED BY REILLY UNTIL SUBSEQUENT TO DATE OF AWARD. THE LIGHT OF THESE FACTS, IT WOULD SEEM THAT THE PROCUREMENT AGENCY ACTED PREMATURELY IN MAKING AN AWARD PRIOR TO RECEIPT OF EVIDENCE OF COMPLETE INSURANCE COVERAGE. BUT THERE IS ALSO FOR CONSIDERATION THE FACT THAT REILLY DID FURNISH THE REQUIRED INFORMATION WITHIN A REASONABLE TIME AFTER AWARD.

CONSIDERING THAT THE PURPOSE OF THE INSURANCE REQUIREMENT WAS TO HOLD THE GOVERNMENT HARMLESS AGAINST RISKS ARISING FROM CONTRACT PERFORMANCE, TOGETHER WITH THE FACT THAT THE ABILITY TO SATISFY THE INSURANCE REQUIREMENT WAS AN ELEMENT OF RESPONSIBILITY, WE FIND NO LEGAL BASIS TO QUESTION THE AWARD. 38 COMP. GEN. 131; 37 ID. 430.

WITH REGARD TO LICENSE PLATE IRREGULARITIES ALLEGED BY YOU, WHICH ARE MATTERS GOVERNED BY STATE LAW, IT IS REPORTED BY THE CONTRACTING OFFICER THAT:

"A. HE HAS NO KNOWLEDGE OF THE LICENSE PLATE IRREGULARITIES ALLEGED IN PARAGRAPH 3 OF THE PROTESTER'S LETTER. HE IS AWARE THAT LICENSE PLATES ARE ISSUED ONLY IN COMPLIANCE WITH THE STATE LAW ON INSURANCE. HE HAD NO REASON TO QUESTION THE LICENSING AS THE COMPANY HAD BEEN A SATISFACTORY CONTRACTOR FOR THE HINES HOSPITAL DURING FISCAL YEAR 1964 AND WAS KNOWN TO HAVE BEEN A SATISFACTORY CONTRACTOR WITH THE CHICAGO WEST SIDE HOSPITAL IN FISCAL YEAR 1965.

"B. HE VISITED THE MAYWOOD ADDRESS AND WAS TOLD BY THE ANSWERING SERVICE THAT VEHICLES WERE DISPATCHED FROM THAT ADDRESS. HE WAS ALSO TOLD THE SAME THING BY THE CONTRACTOR. A SPOT CHECK WILL BE MADE TO ASSURE COMPLIANCE WITH THAT PROVISION OF THE CONTRACT.'