B-159966, FEB. 23, 1967

B-159966, FEB. 23, 1967

TO SELLERS, CONNER AND CUMEO:

REFERENCE IS MADE TO YOUR LETTERS DATED NOVEMBER 10 AND DECEMBER 29, 1966, PROTESTING ON BEHALF OF BALDWIN-LIMA-HAMILTON CORPORATION (BLH) AGAINST AWARD OF A CONTRACT TO MITSUI AND CO. (U.S.A.) INC., UNDER DEPARTMENT OF THE INTERIOR, BUREAU OF RECLAMATION, INVITATION FOR BIDS NO. DS-6440, ISSUED ON JULY 1, 1966, FOR THE FURNISHING OF THE VERTICAL BRINE CIRCULATION PUMP AND MOTOR FOR THE SAN DIEGO SALINE WATER TEST FACILITY, OFFICE OF SALINE WATER. WE ALSO HAVE BLH'S TELEGRAM OF AUGUST 26, 1966, WITH REFERENCE TO THE CONSIDERATION OF THE MITSUI AND CO. (U.S.A.) BID.

YOU HAVE NARROWED THE BLH PROTEST TO A SINGLE ISSUE, THAT IS, WHETHER MITSUI AND CO. (U.S.A.) INC. WAS A RESPONSIBLE BIDDER FOR THE PURPOSES OF THIS PROCUREMENT.

AWARD WAS MADE ON OCTOBER 26, 1966, TO MITSUI UNDER SCHEDULE NO. 1 OF THE SUBJECT INVITATION AS THE LOWEST RESPONSIBLE BIDDER. AS REQUIRED BY THE TERMS OF THE INVITATION, WHICH REQUESTED THAT BIDDERS STATE THE LOCATION OF PLANTS WHERE EQUIPMENT WOULD BE MANUFACTURED AND THE PERCENTAGE OF TOTAL BID COST REPRESENTED BY EACH PLANT, MITSUI INDICATED THROUGHOUT ITS BID THAT 100 PERCENT OF THE WORK UNDER THE INVITATION WAS TO BE DONE IN JAPAN. ON PAGE "C" OF THE INVITATION, MITSUI STATED THAT 50 PERCENT OF THE COST OF THE CONTRACT WORK (MOTOR) WOULD BE ASSUMED BY TOKYO SHIBAURA ELECTRIC CO., LTD. (TOSHIBA), IN YOKOHAMA, JAPAN, AND THE OTHER 50 PERCENT (PUMP) BY EBARA MANUFACTURING CO., LTD., IN TOKYO, JAPAN. PAGE "N" OF THE INVITATION REQUIRED EACH BIDDER TO SUBMIT EVIDENCE OF ITS OR ITS SUBCONTRACTORS' EXPERIENCE IN THE MANUFACTURE OF THE EQUIPMENT. IN THIS RESPECT, IT IS REPORTED THAT MITSUI SUBMITTED SUFFICIENT EVIDENCE OF THE EXPERIENCE OF BOTH TOKYO SHIBAURA ELECTRIC CO., LTD., AND EBARA MANUFACTURING CO., LTD. THE LAST PARAGRAPH OF PAGE "O" OF THE INVITATION REQUIRED THAT EACH BIDDER LIST THE NAME OF ITS PUMP MANUFACTURER AND MOTOR MANUFACTURER. AGAIN, MITSUI LISTED EBARA AND TOKYO SHIBAURA, RESPECTIVELY, AS ITS SUBCONTRACTORS. THIS PARAGRAPH ALSO PROVIDED THAT "IF THE BID IS ACCEPTED, THIS DATA WILL BECOME A PART OF THE CONTRACT.'

YOU POINT OUT IN YOUR LETTER OF NOVEMBER 10 THAT MITSUI INTENDS TO SUBCONTRACT 100 PERCENT OF THE WORK TO UNRELATED JAPANESE COMPANIES AND THAT MITSUI REPRESENTS THAT IT IS A NEW YORK CORPORATION WHICH IS NOT A SUBSIDIARY OF ANY OTHER COMPANY. YOU FURTHER STATE THAT BASED UPON ITS EXPERIENCE IN THE MANUFACTURE OF LARGE, CUSTOM-ENGINEERED PUMPS, BLH UNDERSTANDS THAT MITSUI HAS NO EXPERIENCE OR QUALIFICATIONS IN THE DESIGN OR MANUFACTURE OF SUCH EQUIPMENT NOR DOES IT POSSESS THE CAPABILITY OF MANUFACTURING THE PUMP OR ANY MAJOR COMPONENT OF THE PUMP. WHILE YOU ASSUME THAT MITSUI IS FINANCIALLY RESPONSIBLE, YOU URGE THAT ITS FINANCIAL RESPONSIBILITY CONSTITUTED THE SOLE BASIS FOR ESTABLISHING ITS CAPABILITY TO PERFORM THE CONTRACT. MOREOVER, YOU CONTEND THAT MITSUI IS NOT OBLIGATED TO UTILIZE THESE PARTICULAR SUBCONTRACTORS WHICH HAVE THE COMPETENCY THAT MITSUI DOES NOT HAVE IN PERFORMING THE CONTRACT. WITH REFERENCE TO THE FOREGOING, YOU CITE B 155022, SEPTEMBER 25, 1964; 40 COMP. GEN. 688; 39 ID. 655; ID. 247; AND 37 ID. 495 AS STANDING FOR THE PROPOSITION THAT MITSUI IS NOT OBLIGATED TO USE THESE QUALIFIED SUBCONTRACTORS BUT MAY ,BID SHOP" AFTER AWARD.

IN 40 COMP. GEN. 688, THE INVITATION REQUIRED BIDDERS TO FURNISH THE NAME OF THE MANUFACTURER OF EACH MAKE AND MODEL OF THE ITEM OFFERED. THE LOW BIDDER THERE SUBMITTED THE NAMES OF TWO MANUFACTURERS IN A SPACE PROVIDED FOR THE LISTING OF ONLY ONE MANUFACTURER. WE HELD THAT SUCH LISTING OF TWO PROSPECTIVE SUBCONTRACTORS WAS NOT PROHIBITED ON THE BASIS THAT THE CONTRACTOR MIGHT BE ABLE TO "BID SHOP.' HERE, THE NAMING OF THE TWO SUBCONTRACTORS BY MITSUI IN ITS BID OBLIGATED MITSUI UPON ACCEPTANCE TO USE THOSE NAMED SUBCONTRACTORS TO THE EXCLUSION OF OTHERS. SEE 44 COMP. GEN. 526; 45 ID. 84. THE OTHER OFFICE DECISIONS CITED BY YOU ARE DISTINGUISHABLE ON THE BASIS THAT THE INVITATION PROVISIONS PERTINENT TO THE DISPOSITION OF THOSE CASES WERE SIGNIFICANTLY DIFFERENT IN APPLICATION AND EFFECT THAN THE PROVISIONS PARTICULARLY INVOLVED IN THE INSTANT INVITATION. IN THIS RESPECT, THE PROCURING AGENCY HAS ADVISED THAT IT IS CONFIDENT THAT THE NAMED SUBCONTRACTORS, TOKYO SHIBAURA ELECTRIC CO., LTD., AND EBARA MANUFACTURING CO., LTD., ARE QUALIFIED TO DESIGN AND MANUFACTURE THE EQUIPMENT CALLED FOR UNDER THE CONTRACT. IN ADDITION, AS EVIDENCE OF MITSUI'S QUALIFICATIONS TO PERFORM THE CONTRACT THE FOLLOWING INFORMATION HAS BEEN FURNISHED BY THE DEPARTMENT OF THE INTERIOR:

CHART

FIRM "AWARD SPECS. EQUIPMENT

(PLANT CONTRACT

DATE NO. LOCATION) AMOUNT 12-23-63 DS-6034 72-INCH BUTTERLY VALVE MITSUI AND $ 24,821.00

FOR THE RIVER OUTLET CO., LTD.

WORKS AT SANFORD DAM--- SAN FRAN.

CANADIAN RIVER PROJECT CALIF.

MFR: SAKAI IRON WORKS (MFG: JAPAN)

CO., LTD., OSAKA,

JAPAN 100 PERCENT

1-8-64 DS-6038 200-TON TRAVELING CRANE DO. 111,100.00

FOR MILE 18 PUMPING PLANT,

SAN LUIS UNIT, CVP

MFR: ISHIKAWAJIMA-HARIMA

HEAVY IND. CO. LTD., TOKYO

JAPAN 64.4 PERCENT

REMAINDER U.S.

1-24-64 DS-6022 TWO 83,000 HP TURBINES FOR DO. 611,452.00

MORROW POINT POWERPLANT---

COLORADO RIVER STORAGE

PROJECT--- CURECANTI UNIT

MFR: KAMATA WORKS, TOKYO,

JAPAN 70 PERCENT AND

TSURUMI WORKS, YOKAHAMA

JAPAN 30 PERCENT

2-19-64 DS-5981 GENERATOR FOR FONTENELLE DO. 250,724.00

POWER-PLANT--- SEEDSKADEE

PROJECT MFR: TOSHIBA,

TSURUMI WORKS, YOKOHAMA,

JAPAN 100 PERCENT

6-10-66 DS-6408 GENERATORS FOR MORROW POINT MITSUI AND

POWERPLANT--- CURECANTI UNIT CO. 1,352,831.00

CRSP (U.S.A.)

MFR: TSURUMI WORKS,INC.

YOKOHAMA, JAPAN 100 465 CALIFORNIA

PERCENT ST. SAN

FRANCISCO

CALIF.

8-17-66 DS-6424 15-FOOT BY 16.83-FOOT MITSUI AND 53,447.00

FIXED-WHEEL GATES FOR CO./U.S.A.)

THE SPILLWAYS AT MORROW IND. 465

POINT DAM--- CURECANTI CALIFORNIA ST.

UNIT--- CRSP SAN FRANCISCO

MFR: IHI NO. 1, TOKYO CALIF.

JAPAN 100 PERCENT

9-22-66 DS-6449 POWER TRANSFORMER AND DO. 13,449,00"

VOLTAGE REGULATORS FOR

HAXTON SUBSTATION--- TRANS.

DIV., MISSOURI RIVER BASIN

PROJECT

MFR: TOSHIBA MIE WORKS, MIE

PREFECTURE, JAPAN 100 PERCENT

WITH REFERENCE TO THE RELATIONSHIP OF MITSUI (U.S.A.) AND MITSUI AND CO., LTD., WE ARE ADVISED AS FOLLOWS:

"IN THEIR LETTER OF DECEMBER 29, 1966, COUNSEL FOR BALDWIN-LIMA HAMILTON CORPORATION QUESTIONED THE RELATIONSHIP BETWEEN MITSUI AND CO., LTD. AND MITSUI AND CO. (U.S.A.), INC. THE LATTER ADVISES US THAT IT IS A WHOLLY OWNED SUBSIDIARY OF MITSUI AND COMPANY, LTD., A CORPORATION ORGANIZED UNDER THE LAWS OF JAPAN, AND LICENSED TO DO BUSINESS AS A FOREIGN CORPORATION IN CALIFORNIA; AND THAT THE EMPLOYER'S IDENTIFICATION NUMBER IS THE SAME AS THAT OF MITSUI AND CO. (U.S.A.), INC.

"WE ARE FURTHER INFORMED THAT THE CHANGE IN NAME WAS SOLELY A BUSINESS ARRANGEMENT TO ASSIST THE MITSUI INTERESTS TO BE BONDED IN THE UNITED STATES BY A DOMESTIC SURETY COMPANY. THE FIRMS HAVE THE SAME OFFICES AND PRINCIPAL OFFICERS IN SAN FRANCISCO. WE ARE FURTHER INFORMED THAT THE CERTIFICATION BY THE DOMESTIC CORPORATE BIDDER OF ITS INDEPENDENCE FROM A PARENT COMPANY IS ATTRIBUTABLE TO CARELESSNESS OF AN EMPLOYEE AND IS INCORRECT.'

WHETHER MITSUI AND CO. (U.S.A.) INC. IS A REGULAR DEALER IN THE END ITEMS COVERED BY THE INSTANT CONTRACT IS A QUESTION FOR DETERMINATION IN THE FIRST INSTANCE BY THE CONTRACTING OFFICER SUBJECT TO REVIEW BY THE SECRETARY OF LABOR. SEE 41 U.S.C. 35-45. NO AUTHORITY TO REVIEW THE CONTRACTING OFFICER'S DETERMINATION IN THAT REGARD RESTS WITH OUR OFFICE. B-144614, JANUARY 5, 1961; B-123889, MAY 20, 1955. MOREOVER, AN INCORRECT STATEMENT AS TO BUSINESS AFFILIATION DOES NOT REPRESENT A FATAL DEFECT IN THE BID SINCE IT RELATED TO THE BIDDER'S RESPONSIBILITY. CF. 39 COMP. GEN. 881.

YOU POINT TO OUR DECISION AT 34 COMP. GEN. 595 WHEREIN WE HELD THAT THERE IS NOTHING IN THE PROCUREMENT REGULATIONS OR ELSEWHERE WHICH PROHIBITS AN "OTHERWISE QUALIFIED" BIDDER WHO HAS THE NECESSARY EXPERIENCE AND TECHNICAL QUALIFICATIONS FROM SUBCONTRACTING THE ADVERTISED WORK. ON THE BASIS THAT MITSUI AND CO. (U.S.A.) APPEARS TO BE MERELY A BROKER, YOU CONTEND THAT IT IS NOT AN "OTHERWISE QUALIFIED" BIDDER WHICH IS ENTITLED TO AN AWARD OF A CONTRACT THAT IS TO BE 100 PERCENT SUBCONTRACTED. HOWEVER, THE PROCUREMENT AGENCY HAS DETERMINED THAT MITSUI AND CO. (U.S.A.) AND ITS SUBCONTRACTORS ARE QUALIFIED TO MEET ALL OF THE CONTRACT REQUIREMENTS. THERE APPEARS TO BE NO QUESTION BUT THAT THE NAMED SUBCONTRACTORS ARE QUALIFIED AND COMPETENT FOR THE PURPOSES OF THE PROCUREMENT. IN THIS CONNECTION, FPR SEC. 1-1.310-11 PROVIDES:

"GENERALLY, THE EVALUATION OF THE QUALIFICATIONS OF SUBCONTRACTORS IS A FUNCTION OF THE PRIME CONTRACTOR. HOWEVER, TO THE EXTENT THAT A PROSPECTIVE CONTRACTOR CANNOT MEET THE STANDARD IN SECS. 1-1.310-5 (A) (2) EXCEPT BY MEANS OF PROPOSED SUBCONTRACTING, THE PROSPECTIVE PRIME CONTRACTOR SHALL NOT BE CONSIDERED TO BE RESPONSIBLE UNLESS RECENT PERFORMANCE HISTORY INDICATES AN ACCEPTABLE PURCHASING AND SUBCONTRACTING SYSTEM OR PROSPECTIVE MAJOR SUBCONTRACTORS ARE DETERMINED BY THE CONTRACTING OFFICER TO SATISFY THAT STANDARD.' FPR SEC. 1-1.310-5 (A) (2), REFERRED TO ABOVE, PROVIDES THAT IN ORDER TO QUALIFY AS RESPONSIBLE, A PROSPECTIVE CONTRACTOR MUST HAVE THE NECESSARY EXPERIENCE, ORGANIZATION, TECHNICAL QUALIFICATIONS, SKILLS AND FACILITIES, OR HAVE THE ABILITY TO OBTAIN THEM (INCLUDING PROBABLE SUBCONTRACTOR ARRANGEMENTS). SINCE THE CONTRACTING OFFICER HAS DETERMINED, IN ACCORDANCE WITH FPR 1-1.310-6 (A), THAT MITSUI AND CO. (U.S.A.) IS A RESPONSIBLE CONTRACTOR, AND SINCE WE FIND NO LEGAL BASIS TO QUESTION THAT DETERMINATION ON THE GROUND OF 100 PERCENT SUBCONTRACTING, WE MUST CONCLUDE THAT THE AWARD AS MADE WAS PROPER.