B-158534, APR. 4, 1966

B-158534: Apr 4, 1966

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

TO THE NEW MEXICO EQUIPMENT AND SALVAGE COMPANY: REFERENCE IS MADE TO YOUR PROTEST BY TELEGRAM DATED FEBRUARY 16. BIDDERS WERE PERMITTED TO SUBMIT "TIE IN" AND "ALL OR NONE" BIDS. THE QUANTITY OF ANY ITEM ON WHICH HE BIDS HAVE BEEN ARRIVED AT UNILATERALLY AND WITHOUT COLLUSION. THE CONTENTS OF THE BID SUBMITTED HAVE NOT BEEN COMMUNICATED BY THE BIDDER OR ANY EMPLOYEE OR AGENT OF THE BIDDER TO ANY PERSON NOT AN EMPLOYEE OR AGENT OF THE BIDDER. WILL NOT BE COMMUNICATED TO ANY SUCH PERSON PRIOR TO PUBLIC DISCLOSURE OF THE BID BY THE GOVERNMENT: CAUTION: A FALSE REPRESENTATION CAN SUBJECT THE BIDDER TO CRIMINAL PROSECUTION.'. WHEN THE ACQUISITION COST IS $3. BIDS WERE OPENED AS SCHEDULED AT 2:30 P.M.

B-158534, APR. 4, 1966

TO THE NEW MEXICO EQUIPMENT AND SALVAGE COMPANY:

REFERENCE IS MADE TO YOUR PROTEST BY TELEGRAM DATED FEBRUARY 16, 1966, AND SUPPLEMENTARY CORRESPONDENCE, AGAINST CONSIDERATION BY THE DEFENSE SUPPLY AGENCY (DSA) OF A BID SUBMITTED BY E. E. ANDERSON COMPANY (ANDERSON) ON CERTAIN SURPLUS GOVERNMENT PROPERTY ADVERTISED FOR SALE UNDER SEALED BID SALE INVITATION FOR BIDS (IFB) NO. 01-6018, ISSUED JANUARY 13, 1966, BY THE DEFENSE LOGISTICS SERVICES CENTER (DLSC), BATTLE CREEK, MICHIGAN.

THE IFB SOLICITED BIDS ON NINE LINE ITEMS, EACH COMPRISING NUMEROUS SUBITEMS, OF SURPLUS PROPERTY AND EQUIPMENT LOCATED AT NINE WALKER AIR FORCE BASE AUXILIARY MISSILE SITES NEAR ROSWELL, NEW MEXICO. IN ADDITION TO INDIVIDUAL LINE ITEM BIDS, BIDDERS WERE PERMITTED TO SUBMIT "TIE IN" AND "ALL OR NONE" BIDS.

ARTICLE D OF THE SPECIAL CONDITIONS OF THE IFB READS AS FOLLOWS:

"REPRESENTATION OF NON-COLLUSION. THE BIDDER, REPRESENTS THAT THE PRICE OR PRICES BID, THE ITEM OR ITEMS BID UPON, AND THE QUANTITY OF ANY ITEM ON WHICH HE BIDS HAVE BEEN ARRIVED AT UNILATERALLY AND WITHOUT COLLUSION. THE BIDDER FURTHER REPRESENTS THAT THE INTENTION TO BID THESE PRICES, ITEMS AND QUANTITIES, AND THE CONTENTS OF THE BID SUBMITTED HAVE NOT BEEN COMMUNICATED BY THE BIDDER OR ANY EMPLOYEE OR AGENT OF THE BIDDER TO ANY PERSON NOT AN EMPLOYEE OR AGENT OF THE BIDDER, AND WILL NOT BE COMMUNICATED TO ANY SUCH PERSON PRIOR TO PUBLIC DISCLOSURE OF THE BID BY THE GOVERNMENT: CAUTION: A FALSE REPRESENTATION CAN SUBJECT THE BIDDER TO CRIMINAL PROSECUTION.'

ARTICLE U OF THE SPECIAL CONDITIONS STIPULATED THAT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 207 OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED (40 U.S.C. 488), RELATING TO PROPERTY OFFERED FOR SALE, WHEN THE ACQUISITION COST IS $3,000,000 OR MORE OR IN OTHER CIRCUMSTANCES NOT HERE PERTINENT, ANTI TRUST CLEARANCE OF THE SUCCESSFUL BIDDER BY THE DEPARTMENT OF JUSTICE WOULD BE NECESSARY.

ON FEBRUARY 15, 1966, BIDS WERE OPENED AS SCHEDULED AT 2:30 P.M., EASTERN STANDARD TIME, AT THE DLSC. TEN BIDS WERE RECEIVED, FOUR ON AN "ALL OR NONE" BASIS FOR ALL NINE LINE ITEMS AND SIX ON AN INDIVIDUAL LINE ITEM BASIS COVERING FROM ONE TO NINE LINE ITEMS. OF THE "ALL OR NONE" BIDS, ANDERSON WAS HIGHEST AT $335,000; YOU WERE SECOND HIGHEST AT $332,000; THE THIRD HIGHEST BID WAS $12,000; AND THE FOURTH HIGHEST WAS $5,252.18. THE INDIVIDUAL LINE ITEM BIDS, THE HIGHEST SINGLE BID COVERING ALL NINE LINE ITEMS WAS $100,017, AND THE HIGHEST COMBINATION OF BIDS ON ALL NINE LINE ITEMS WAS $102,538.97.

IMMEDIATELY AFTER BID OPENING, YOUR REPRESENTATIVES PROTESTED TO THE CONTRACTING OFFICER AGAINST AWARD TO ANDERSON, CHARGING THAT ANDERSON WAS GUILTY OF FRAUD AND COLLUSION. BY WAY OF EXPLANATION, THE CONTRACTING OFFICER WAS ADVISED THAT THREE DAYS PRIOR TO BID OPENING, ANDERSON HAD MET WITH OFFICIALS OF YOUR FIRM TO DISCUSS THE POSSIBILITY OF ANDERSON'S PARTICIPATION IN A JOINT VENTURE WITH YOU FOR THE PURCHASE OF THE PROPERTY IN QUESTION; THAT AT THAT TIME YOU DISCLOSED TO ANDERSON YOUR BID PRICE AND OTHER CONFIDENTIAL BID INFORMATION IN THE EXPECTATION THAT ANDERSON WOULD ARRANGE FOR THE "BID AND PERFORMANCE BOND; " BUT THAT ANDERSON SUBSEQUENTLY DECLINED TO PARTICIPATE IN THE VENTURE ON THE BASIS THAT PRIOR COMMITMENTS PRECLUDED SUCH ACTION.

IN YOUR PROTEST TO OUR OFFICE, YOU FURTHER STATE THAT AS EARLY AS FEBRUARY 6, IN EFFORTS TO OBTAIN A BOND, YOU DISCLOSED YOUR INTENDED BID PRICE TO A REPRESENTATIVE OF SUPERIOR CONSTRUCTION COMPANY (SUPERIOR), PHOENIX, ARIZONA; THAT ON FEBRUARY 11, THE SUPERIOR REPRESENTATIVE INFORMED YOU THAT SUPERIOR COULD NOT PROVIDE THE BOND BUT THE REPRESENTATIVE WOULD ARRANGE A MEETING WITH A THIRD PARTY WHO "COULD AND WOULD" PROVIDE THE BOND; AND THAT ANDERSON WAS THE THIRD PARTY IN QUESTION. IT IS FURTHER EXPLAINED THAT WHEN ANDERSON DECLINED TO PARTICIPATE IN THE JOINT VENTURE, IT SPECIFICALLY STATED THAT IT WOULD NOT BID ON THE PROPERTY IN QUESTION AND THAT ANDERSON'S JUSTIFICATION TO YOU FOR SUBMITTING A BID WAS THE ALLEGED RECEIPT FROM THE SUPERIOR REPRESENTATIVE OF ADVICE THAT YOU WOULD NOT BE BIDDING UNDER THE IFB.

OTHER THAN STATEMENTS OF YOUR OWN REPRESENTATIVES, THE ONLY EVIDENCE FURNISHED BY YOU IN SUPPORT OF YOUR CHARGES AGAINST ANDERSON IS A PHOTOCOPY OF A HANDWRITTEN AGREEMENT ON A LETTERHEAD BEARING THE NAME OF SOUTHWEST OFFICE SUPPLY, INC., OKLAHOMA CITY, OKLAHOMA, READING AS FOLLOWS:

"THIS AGREEMENT ENTERED INTO THIS DATE FEBRUARY 12, 1966 BY AND BETWEEN LLOYD DURENSKY, O. O. BARNES, BOB CLAYTON, ALLEN HART, AND SUPERIOR CONSTRUCTION CO., INC. OR ITS DESIGNEES OR ASSIGNS IS AGREED AS FOLLOWS: AS RESPECTS TO THE SUCCESSFUL BID BEING SUBMITTED ON A CERTAIN GOVERNMENT CONTRACT IFB 01-6018 IT IS AGREED AS FOLLOWS: EACH OF THE ABOVE NAMED PARTIES WILL PARTICIPATE EQUALLY (20 PERCENT EACH) IN THE PROFIT OR LOSS OF THE ABOVE-MENTIONED VENTURE.

"THIS AGREEMENT IS A PRELUDE TO A FORMAL AGREEMENT TO BE ENTERED INTO ON/OR AFTER FEBRUARY 15, 1966.

"THE SIGNATURE OF EACH OF THE PARTIES INVOLVED SIGNIFIES OUR ACCEPTANCE AND AGREEMENT TO THIS ARRANGEMENT.

ROSWELL, N.M.

15 FEB 1966

ALLEN HART SUPERIOR CONST. CO., INC.

BY W. W. JOHNSON PRES.'

BOB CLAYTON

O. O. BARNES

L. J. DURENSKY

IT IS OUR UNDERSTANDING THAT THE INDIVIDUALS WHOSE NAMES APPEAR ON THE ABOVE AGREEMENT ARE MEMBERS OF YOUR FIRM, AND THAT NO REPRESENTATIVE OF THE ANDERSON COMPANY WAS INVOLVED THEREIN.

BASED ON THE ALLEGATIONS SET FORTH IN YOUR PROTEST, IT IS URGED BY YOU AND BY YOUR ATTORNEY THAT AWARD TO ANDERSON WOULD NOT BE IN THE BEST INTEREST OF THE GOVERNMENT, AND, FURTHER, THAT AWARD SHOULD BE MADE TO YOU.

WE ALSO UNDERSTAND THAT YOUR CHARGES AGAINST ANDERSON WERE BROUGHT TO THE ATTENTION OF THE DEPARTMENT OF JUSTICE IN CONNECTION WITH THE REQUEST BY DLSC FOR ANTI-TRUST CLEARANCE ON ANDERSON, AS REQUIRED BY LAW AND BY THE IFB PROVISIONS, AND THAT THE DEPARTMENT OF JUSTICE WAS OF THE OPINION THAT THERE HAD BEEN NO VIOLATION OF THE ANTI-TRUST STATUTES. FURTHER, WE ARE ADVISED BY DSA THAT THE ATTORNEY GENERAL HAS SINCE ISSUED ANTI-TRUST CLEARANCE ON ANDERSON.

IT IS THE POSITION OF DLSC THAT WHILE YOUR CHARGES GO TO THE QUESTION OF ANDERSON'S INTEGRITY, AN IMPORTANT FACTOR FOR CONSIDERATION IN DETERMINING WHETHER A BIDDER IS RESPONSIBLE AND THUS QUALIFIES FOR AWARD UNDER SECTION 203 OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, 40 U.S.C. 484, YOU HAVE NOT FURNISHED CLEAR AND CONVINCING EVIDENCE, OR EVEN SUBSTANTIAL EVIDENCE, OF FRAUD AND/OR COLLUSION ON THE PART OF ANDERSON. THEREFORE, DLSC DOES NOT RECOMMEND THAT ANDERSON BE DEEMED A NON RESPONSIBLE BIDDER. DSA HEADQUARTERS CONCURS WITH THE POSITION OF DLSC AND RECOMMENDS THAT YOUR PROTEST BE DENIED.

SECTION 203 OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, READS, IN PERTINENT PART, AS FOLLOWS:

"/1) ALL DISPOSALS OR CONTRACTS FOR DISPOSAL OF SURPLUS PROPERTY (OTHER THAN BY ABANDONMENT, DESTRUCTION, DONATION, OR THROUGH CONTRACT BROKERS) MADE OR AUTHORIZED BY THE ADMINISTRATOR SHALL BE MADE AFTER PUBLICLY ADVERTISING FOR BIDS, * * *.

"/2) WHENEVER PUBLIC ADVERTISING FOR BIDS IS REQUIRED UNDER PARAGRAPH (1) OF THIS SUBSECTION---

"/A) THE ADVERTISEMENT FOR BIDS SHALL BE MADE AT SUCH TIME PREVIOUS TO THE DISPOSAL OR CONTRACT, THROUGH SUCH METHODS, AND ON SUCH TERMS AND CONDITIONS AS SHALL PERMIT THAT FULL AND FREE COMPETITION WHICH IS CONSISTENT WITH THE VALUE AND NATURE OF THE PROPERTY INVOLVED;

"/B) ALL BIDS SHALL BE PUBLICLY DISCLOSED AT THE TIME AND PLACE STATED IN THE ADVERTISEMENT;

"/C) AWARD SHALL BE MADE WITH REASONABLE PROMPTNESS BY NOTICE TO THE RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED: PROVIDED, THAT ALL BIDS MAY BE REJECTED WHEN IT IS IN THE PUBLIC INTEREST TO DO SO.'

THE TERM "RESPONSIBILITY," AS USED IN STATUTES REQUIRING AWARD OF PUBLIC CONTRACTS TO THE LOWEST RESPONSIBLE BIDDER, HAS BEEN HELD TO EMBRACE, IN ADDITION TO FACTORS RELATING TO PECUNIARY ABILITY AND PHYSICAL CAPABILITY TO PERFORM, MORE PERSONAL ATTRIBUTES OF CHARACTER OR INTEGRITY. SEE 43 COMP. GEN. 257, AND COURT CASES THEREIN CITED. FURTHER, OUR OFFICE HAS HELD THAT THE CAUSES FOR DEBARMENT OF BIDDERS OR THE CAUSES FOR SUSPENSION OF BIDDERS ENUMERATED IN ARMED SERVICES PROCUREMENT REGULATION 1-604.1 AND 1-605.1, RESPECTIVELY, MAY BE APPLIED IN DETERMINING A BIDDER'S INTEGRITY AND BUSINESS ETHICS. WE HAVE FURTHER HELD, HOWEVER, THAT THOSE REGULATIONS AND THE DECISIONS OF OUR OFFICE CONTEMPLATE THAT AN ADMINISTRATIVE DETERMINATION OF LACK OF INTEGRITY OR BUSINESS ETHICS SHALL BE BASED ON CLEAR AND CONVINCING EVIDENCE OF SUCH DEFICIENCIES ON THE PART OF THE BIDDER. 39 COMP. GEN. 868, 872.

INASMUCH AS THE LANGUAGE IN THE DISPOSAL STATUTE REQUIRING THAT A BIDDER BE "RESPONSIBLE" TO QUALIFY FOR AWARD OF SURPLUS PROPERTY CONTRACTS IS SIMILAR TO THE LANGUAGE USED IN THE ADVERTISED PROCUREMENT STATUTES, IT MAY BE ARGUED THAT THE PRINCIPLES SET FORTH IN OUR DECISIONS CONCERNING DETERMINATIONS OF A BIDDER'S LACK OF INTEGRITY IN ADVERTISED PROCUREMENTS ARE EQUALLY FOR APPLICATION TO ADVERTISED SALES OF SURPLUS GOVERNMENT PROPERTY. ON THE OTHER HAND, THE GOVERNMENT AS A SELLER OF SURPLUS PROPERTY IS ORDINARILY INTERESTED ONLY IN OBTAINING THE BEST PRICE AVAILABLE, AND IT MAY BE QUESTIONED WHETHER THE REQUIRED "RESPONSIBILITY" OF A BIDDER IN SUCH A CASE INCLUDES ANYTHING OTHER THAN ABILITY TO PAY THE BID PRICE.

IN ANY EVENT, SINCE YOUR CHARGES ARE NOT SUPPORTED BY SUBSTANTIATING EVIDENCE IN COMPLIANCE WITH THE REQUIREMENTS OF THE ASPR AND OF OUR DECISIONS, NOR IS THERE ANY EVIDENCE THAT ANDERSON HAS MADE A FALSE REPRESENTATION AS CONTEMPLATED BY ARTICLE D OF THE SPECIAL PROVISIONS OF THE IFB, IT IS OUR VIEW THAT NO LEGAL BASIS HAS BEEN PRESENTED FOR JUSTIFYING AN ADMINISTRATIVE DETERMINATION THAT ANDERSON IS NOT A RESPONSIBLE BIDDER WITHIN THE CONTEMPLATION OF THE DISPOSAL STATUTE. THE CIRCUMSTANCES, AND IN THE LIGHT OF THE GRANT BY THE ATTORNEY GENERAL OF ANTI-TRUST CLEARANCE ON ANDERSON, WE MUST CONCUR WITH THE VIEW OF THE ADMINISTRATIVE AGENCY THAT ANDERSON'S BID, OFFERING THE HIGHEST PRICE FOR THE PROPERTY, MAY BE CONSIDERED FOR AWARD, AND, THEREFORE, YOUR PROTEST IS DENIED.