B-160085, OCTOBER 18, 1966, 46 COMP. GEN. 326

B-160085: Oct 18, 1966

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THE FACT THAT BIDDERS OFFERING TO PURCHASE RADIOACTIVE MACHINE TOOLS WERE NOT LICENSED TO DECONTAMINATE THE TOOLS BEFORE SUBMITTING BIDS DID NOT PRECLUDE CONSIDERATION OF THE BIDS UNDER AN INVITATION PROVIDING THAT "IF SUCCESSFUL" A BIDDER MUST POSSESS A LICENSE AUTHORIZING HIM TO RECEIVE THE BY-PRODUCT MATERIAL. THE AWARDS MADE UNDER THE INVITATION ARE VALID. QUANTITY AND QUALITY OF THE PROCUREMENT AND WHICH ARE NOT PREJUDICIAL TO OTHER BIDDERS MAY BE FURNISHED AFTER BID OPENING IS EQUALLY APPLICABLE IN A SURPLUS SALES DISPOSAL WHERE THE STATUTORY AUTHORITY FOR THE SALE IS SIMILAR TO THE STATUTORY AUTHORITY FOR PROCUREMENT OF SUPPLIES AND SERVICES. IN THE EVENT THE CONDITION IS NOT MET THE CONTRACT IS VOID AB INITIO.

B-160085, OCTOBER 18, 1966, 46 COMP. GEN. 326

BIDDERS - QUALIFICATIONS - LICENSE REQUIREMENT - BIDDERS NOT LICENSED PRIOR TO BIDDING. THE FACT THAT BIDDERS OFFERING TO PURCHASE RADIOACTIVE MACHINE TOOLS WERE NOT LICENSED TO DECONTAMINATE THE TOOLS BEFORE SUBMITTING BIDS DID NOT PRECLUDE CONSIDERATION OF THE BIDS UNDER AN INVITATION PROVIDING THAT "IF SUCCESSFUL" A BIDDER MUST POSSESS A LICENSE AUTHORIZING HIM TO RECEIVE THE BY-PRODUCT MATERIAL, AND THE REQUIREMENT CONCERNING THE RESPONSIBILITY OF PROSPECTIVE CONTRACTORS AND NOT THE RESPONSIVENESS OF BIDS, THE AWARDS MADE UNDER THE INVITATION ARE VALID. HOWEVER, THE LICENSE REQUIREMENT MUST BE MET BY THE SUCCESSFUL BIDDERS PRIOR TO THE REMOVAL OF THE EQUIPMENT. SALES - BIDS - INFORMATION - AFTER BID OPENING. THE RULE THAT MATTERS RELATING TO THE RESPONSIBILITY OF A BIDDER WHICH DO NOT AFFECT THE PRICES, QUANTITY AND QUALITY OF THE PROCUREMENT AND WHICH ARE NOT PREJUDICIAL TO OTHER BIDDERS MAY BE FURNISHED AFTER BID OPENING IS EQUALLY APPLICABLE IN A SURPLUS SALES DISPOSAL WHERE THE STATUTORY AUTHORITY FOR THE SALE IS SIMILAR TO THE STATUTORY AUTHORITY FOR PROCUREMENT OF SUPPLIES AND SERVICES. THEREFORE, UNDER A SALES INVITATION REQUIRING PURCHASERS OF RADIOACTIVE MACHINE TOOLS TO BE LICENSED TO DECONTAMINATE THE TOOLS---A REQUIREMENT CONCERNING RESPONSIBILITY---THE TIME FOR COMPLIANCE WITH THE LICENSE REQUIREMENT MAY BE AS LATE AS TIME FOR PERFORMANCE. HOWEVER, THE AWARD CONDITIONED ON THE PURCHASER OBTAINING A LICENSE PRIOR TO REMOVAL OF THE EQUIPMENT, IN THE EVENT THE CONDITION IS NOT MET THE CONTRACT IS VOID AB INITIO. CONTRACTS - SUBCONTRACTORS - LICENSED - IN LIEU OF PRIME CONTRACTOR. UNDER AN INVITATION FOR THE SALE OF RADIOACTIVE MACHINE TOOLS REQUIRING BIDDERS "IF SUCCESSFUL" TO BE LICENSED TO DECONTAMINATE THE TOOLS, PROSPECTIVE PURCHASERS WHO ARRANGE FOR THE PERFORMANCE OF THE DECONTAMINATION PROCESS BY LICENSED SUBCONTRACTORS PRIOR TO BIDDING ARE QUALIFIED AND RESPONSIBLE BIDDERS THAT ARE ELIGIBLE FOR CONTRACT AWARDS IN THE ABSENCE OF EITHER A STATUTORY OR CONTRACTUAL PROHIBITION PRECLUDING SUBCONTRACTING TO MEET THE LICENSE REQUIREMENT, AND WHETHER THE DECONTAMINATION PROCESS IS AFFECTED BY THE PRIME CONTRACTOR OR THROUGH THE SERVICES OF A SUBCONTRACTOR, THE PRIME CONTRACTOR IS RESPONSIBLE TO THE GOVERNMENT FOR THE PERFORMANCE OF THE CONTRACT.

TO THE ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION, OCTOBER 18, 1966:

REFERENCE IS MADE TO A LETTER DATED SEPTEMBER 14, 1966, WITH ENCLOSURES, FROM YOUR GENERAL COUNSEL, REQUESTING A DECISION WITH RESPECT TO A QUESTION WHICH HAS BEEN RAISED AS TO THE PROPRIETY OF AWARDS MADE PURSUANT TO INVITATION FOR BIDS NO. 8 UPS-67-44, DATED AUGUST 4, 1966, UNDER WHICH THE UTILIZATION AND DISPOSAL SERVICE, DENVER FEDERAL CENTER, ADVERTISED FOR SALE SIX ITEMS OF MACHINE TOOLS IN THE CUSTODY OF THE DOW CHEMICAL COMPANY OF ROCKY FLATS (GOLDEN), COLORADO, WHICH APPARENTLY HAD BEEN ENGAGED IN THE PERFORMANCE OF CONTRACTS WITH THE ATOMIC ENERGY COMMISSION (AEC).

NINETEEN BIDS WERE RECEIVED AND FOUR AWARDS WERE MADE ON THE BASIS OF THE HIGHEST BID ON EACH OF THE SIX ITEMS. ITEM 1 WAS AWARDED TO HOWE MACHINE AND SUPPLY COMPANY, INCORPORATED, DENVER, COLORADO. ITEM 3 WAS AWARDED TO TEXAS TOOL TRADERS, DALLAS, TEXAS, ITEM 4 WAS AWARDED TO ABLE MACHINERY MOVERS, DALLAS, TEXAS, AND ITEMS 2, 5 AND 6 WERE AWARDED TO GREER MACHINERY COMPANY, INCORPORATED, LOS ANGELES, CALIFORNIA. THE SALE PRICES OF THE FOUR AWARDS AGGREGATED THE SUM OF $37,490.50.

THE ROCKY MOUNTAIN MACHINE TOOL COMPANY, BOULDER, COLORADO, SUBMITTED BIDS ON ALL SIX ITEMS, WITH ITS TOTAL BID PRICES AMOUNTING TO THE SUM OF $24,670. THAT COMPANY HAS PROTESTED THE SUBJECT AWARDS FOR THE STATED REASON THAT THE PARTICULAR CONCERNS WERE NOT QUALIFIED IN ACCORDANCE WITH INSTRUCTIONS TO BIDDERS WHICH REQUIRED THAT A BIDDER BE PROPERLY LICENSED BY THE ATOMIC ENERGY COMMISSION TO DECONTAMINATE THE RADIOACTIVE MACHINE TOOLS WHICH WERE BEING SOLD. THE ROCKY MOUNTAIN MACHINE TOOL COMPANY ALLEGES THAT IT HAD GONE TO CONSIDERABLE EXPENSE IN OBTAINING THE NECESSARY AND CORRECT LICENSE AND IN SECURING THE FACILITIES FOR PERFORMING THE DECONTAMINATION; AND IT IS CONTENDED THAT A BIDDER WHO HAD NOT GONE TO THE EXPENSE AND RISK OF OBTAINING DECONTAMINATION FACILITIES AND LICENSE COULD UNFAIRLY OFFER MORE FOR THE ITEMS.

THE SPECIAL SALE TERMS AND CONDITIONS OF THE INVITATION PROVIDE ON PAGE 3 THAT,"IF SUCCESSFUL", A BIDDER MUST POSSESS AN ADEQUATE LICENSE AND SIGN A WARRANTY SHOWING THE NUMBER AND EXPIRATION DATE OF EITHER AN ATOMIC ENERGY COMMISSION LICENSE OR A SPECIAL LICENSE ISSUED BY THE ATOMIC ENERGY COMMISSION OR A STATE UNDER THE AUTHORITY OF PART 150, TITLE 10, CODE OF FEDERAL REGULATIONS, AUTHORIZING HIM TO RECEIVE THE BY-PRODUCT MATERIAL. ON PAGE 6 OF THE INVITATION APPEARS A STATEMENT THAT THE ITEMS MAY BE SOLD "ONLY" TO PURCHASERS HAVING APPROPRIATE LICENSES FOR POSSESSION OF URANIUM.

THE RECORD SHOWS THAT THE HIGH BIDDERS ON ITEMS 3 AND 4, TEXAS TOOL TRADERS AND ABLE MACHINERY MOVERS, STATED IN LETTERS ACCOMPANYING THEIR BIDS THAT THEY HAD MADE ARRANGEMENTS FOR DECONTAMINATION TO BE PERFORMED BY GENERAL NUCLEAR, INCORPORATED, HOUSTON, TEXAS, HOLDER OF TEXAS LICENSE NO. 4-735. UNDER SUCH ARRANGEMENTS, SHIPMENTS WERE TO BE MADE TO GENERAL NUCLEAR, INCORPORATED, AND, AFTER DECONTAMINATION, THE MACHINE TOOLS WERE TO BE DELIVERED TO THE BIDDERS. THE HIGH BIDDER ON ITEM 1, HOWE MACHINE AND SUPPLY COMPANY, INCORPORATED, REPORTEDLY APPLIED FOR A LICENSE TO THE ATOMIC ENERGY COMMISSION PRIOR TO BID OPENING, BUT WAS INFORMED THAT IT WAS IMPRACTICAL AND TOO EXPENSIVE TO ISSUE A LICENSE UNLESS IT WAS A SUCCESSFUL BIDDER. THE COMPANY RENEWED ITS APPLICATION WHEN IT WAS NOTIFIED THAT IT WAS A SUCCESSFUL BIDDER, IT HAS BEEN ISSUED A LICENSE BY THE ATOMIC ENERGY COMMISSION, AND AWARD TO IT HAS BEEN MADE ON THIS BASIS. THE HIGH BIDDER ON ITEMS 2, 5 AND 6, GREER MACHINERY COMPANY, INCORPORATED, EXPERIENCED SIMILAR DIFFICULTY IN AN ATTEMPT TO OBTAIN A CALIFORNIA STATE LICENSE AND, AS OF SEPTEMBER 14, 1966, IT HAD NOT YET OBTAINED A LICENSE, ALTHOUGH THERE IS NO INDICATION THAT IT WILL NOT, AND THE AWARD TO IT IS CONDITIONED UPON ITS SECURING SUCH A LICENSE.

IT IS REPORTED THAT WHEN THE INVITATION FOR BIDS WAS ISSUED, IT WAS NOT THE INTENTION OF THE CONTRACTING OFFICER TO REQUIRE ALL BIDDERS TO HAVE OBTAINED LICENSES AT THE TIME OF SUBMITTING THEIR BIDS, BUT THAT IF SUCCESSFUL, THE HIGH BIDDERS WOULD THEN BE REQUIRED TO SECURE THE NECESSARY LICENSES. THIS PROCEDURE HAD BEEN REQUESTED BY THE ATOMIC ENERGY COMMISSION BECAUSE OF THE ADMINISTRATIVE BURDEN AND EXPENSE INVOLVED IN ISSUING LICENSES TO ALL PROSPECTIVE BIDDERS. IT IS THE VIEW OF YOUR GENERAL COUNSEL THAT THE INVITATION CLEARLY INFORMED PROSPECTIVE BIDDERS THAT A LICENSE WOULD ONLY BE REQUIRED IF A BIDDER WAS SUCCESSFUL BY EMPHASIZING THE WORDS "IF SUCCESSFUL" BY UNDERSCORING IN THE PROVISION ON PAGE 3 OF THE INVITATION. IT IS ALSO HIS VIEW THAT THE LICENSE REQUIREMENT IS NOT DETERMINATIVE OF THE RESPONSIVENESS OF THE BIDS, OTHERWISE YOUR AGENCY WOULD HAVE HAD TO NEGOTIATE THE SALE OF THE PROPERTY SINCE ONLY ROCKY MOUNTAIN POSSESSED A LICENSE PRIOR TO BID OPENING. ALSO CONSIDERS THE REQUIREMENT ONE FOR THE PROTECTION OF THE GOVERNMENT, THE ENFORCEMENT OF WHICH IS OF NO CONCERN TO COMPETING BIDDERS.

IN SUBMITTING THE QUESTION OF THE VALIDITY OF THE AWARDS IN THIS CASE TO OUR OFFICE FOR A DECISION, YOUR GENERAL COUNSEL MENTIONS OUR DECISION AT 34 COMP. GEN. 175, FROM WHICH THE FOLLOWING LANGUAGE IS QUOTED:

* * * WHERE IN A PARTICULAR AREA THERE ARE NO PERMIT HOLDERS, ANY OFFER BY A COMPETING CARRIER COULD NOT RIPEN INTO A BINDING CONTRACT SIMPLY BY ITS ACCEPTANCE BY YOUR DEPARTMENT BECAUSE, WITHOUT THE PERMIT, THE CARRIER COULD NOT PERFORM THE TRANSPORTATION SERVICE INVOLVED. ACCORDINGLY, WHILE IT WOULD APPEAR PROPER TO SOLICIT BIDS IN SUCH CASES CONDITIONED UPON THE BIDDERS OBTAINING THE NECESSARY PERMIT PRIOR TO AWARD OF CONTRACT, NO CONTRACT SHOULD BE AWARDED TO ANY SUCH BIDDER UNTIL THE PERMIT IS OBTAINED.

THE DECISION IN 34 COMP. GEN. 175 INVOLVED THE GENERAL QUESTION WHETHER BIDDERS WERE REQUIRED TO HOLD APPROPRIATE PERMITS AT THE TIME OF SUBMITTING THEIR BIDS. THE SITUATION IN 34 COMP. GEN. 175 CONCERNED A NEED FOR INTERSTATE CONTRACT CARRIER SERVICES. WE THEN SAID "THERE APPEARS TO BE A SUBSTANTIAL BASIS FOR THE VIEW THAT THE ONLY RESPONSIBLE BIDDERS WOULD BE SUCH PERMIT HOLDERS" AND THAT WE "WOULD NOT BE REQUIRED TO OBJECT TO PAYMENTS DUE UNDER A CONTRACT RESULTING FROM SOLICITATION OF OFFERS ONLY FROM SUCH PERMIT HOLDERS;, IN EFFECT, WE HELD THAT, IN JUSTIFIABLE CIRCUMSTANCES, THE SOLICITATION OF BIDS CONDITIONED UPON THE ACQUISITION OF A NECESSARY PERMIT, CERTIFICATE OR LICENSE BY THE SUCCESSFUL BIDDER WOULD NOT BE LEGALLY QUESTIONABLE.

AS IN THE CASE OF THE PROCUREMENT OF SUPPLIES AND SERVICES BY THE GOVERNMENT AGENCIES PURSUANT TO THE STATUTORY REQUIREMENTS GOVERNING FORMAL ADVERTISING, THE STATUTE GOVERNING THE DISPOSITION OF SURPLUS GOVERNMENT PROPERTY, 40 U.S.C. 484, REQUIRES THAT ADVERTISEMENTS FOR BIDS BE MADE THROUGH SUCH METHODS, AND ON SUCH TERMS, AS SHALL PERMIT THAT FULL AND FREE COMPETITION WHICH IS CONSISTENT WITH THE VALUE AND NATURE OF THE PROPERTY, AND THAT AN AWARD BE MADE ONLY TO THE RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED.

THE BASIC ISSUE DETERMINATIVE OF THE VALIDITY OF THE AWARDS IS WHETHER THE LICENSE REQUIREMENT OF THE INVITATION IS A REQUIREMENT CONCERNING THE RESPONSIBILITY OF PROSPECTIVE CONTRACTORS OR A REQUIREMENT AFFECTING THE RESPONSIVENESS OF BIDS. IT IS CLEAR THAT IF THE INVITATION CONTAINED ANY UNNECESSARY OR UNREASONABLE RESTRICTIONS WITH RESPECT TO EITHER THE POSSESSION OF A LICENSE FOR RECEIPT OF THE EQUIPMENT BEFORE ITS DECONTAMINATION OR THE PERMISSIBILITY OF SUBCONTRACTING, THE STATUTORY REQUIREMENT OF FULL AND FREE COMPETITION WOULD BE THWARTED. THERE IS NO APPARENT REASON WHY THE LICENSE MUST HAVE BEEN ISSUED AT THE TIME THE BIDS WERE SUBMITTED, AND IT WAS NOT THE INTENTION OF THE DISPOSAL ACTIVITY OR THE AEC TO REQUIRE ALL PROSPECTIVE BIDDERS TO FIRST OBTAIN THE LICENSE. THE LANGUAGE ON PAGE 3 OF THE INVITATION CLEARLY INDICATES THAT THE LICENSE WILL BE REQUIRED OF THE BIDDER ONLY "IF SUCCESSFUL", WHICH FACT CAN ONLY BE KNOWN AFTER BIDS ARE OPENED. THE LANGUAGE ON PAGE 6 OF THE INVITATION DOES NOT CONTRADICT OR QUALIFY THE PROVISION ON PAGE 3 SINCE "PURCHASER-S" LEGAL AUTHORIZATION TO PERFORM THE CONTRACT, WHICH IS A MATTER OF RESPONSIBILITY AND IS NOT RELATED TO AN EVALUATION OF THE BID.

IN CASES INVOLVING PROCUREMENTS WE HAVE HELD THAT MATTERS RELATIVE TO THE RESPONSIBILITY OF A BIDDER WHICH DO NOT AFFECT THE PRICE, QUANTITY AND QUALITY OF THE PROCUREMENT AND WHICH ARE NOT PREJUDICIAL TO OTHER BIDDERS MAY BE FURNISHED AFTER BID OPENING. 39 COMP. GEN. 655. THIS RULE IS EQUALLY APPLICABLE IN A SURPLUS SALES DISPOSAL WHERE THE STATUTORY AUTHORITY FOR THE SALE IS SIMILAR TO THE STATUTORY AUTHORITY FOR PROCUREMENT OF SUPPLIES AND SERVICES. SINCE THE CRITICAL TIME FOR ACTUAL COMPLIANCE WITH A REQUIREMENT CONCERNING RESPONSIBILITY, THE ABILITY TO PERFORM, COULD BE AS LATE AS THE TIME PERFORMANCE IS REQUIRED, WHICH IN THE INSTANT CASE IS WITHIN 10 CALENDAR DAYS AFTER NOTICE OF ACCEPTANCE BY THE GOVERNMENT, AWARD OF A CONTRACT PRIOR TO OBTAINING THE REQUIRED LICENSE IS, IN EFFECT, CONDITIONED UPON THE PURCHASER OBTAINING THE LICENSE. IN THE EVENT THE CONDITION IS NOT MET, THE CONTRACT IS VOID AB INITIO. THEREFORE, WE ARE NOT REQUIRED TO OBJECT TO THE AWARDS TO HOWE AND GREER SO LONG AS COMPLIANCE WITH THE LICENSE REQUIREMENT IS MET PRIOR TO REMOVAL OF THE EQUIPMENT.

SINCE THE BIDS OF TEXAS TOOL AND ABLE MACHINERY WERE SUBMITTED ON A DIFFERENT BASIS, THE QUESTION OF THE VALIDITY OF THESE AWARDS REQUIRES DIFFERENT CONSIDERATIONS. BOTH OF THESE BIDS WERE SUBMITTED WITH THE QUALIFICATION THAT THE DECONTAMINATION PROCESS WOULD BE ACCOMPLISHED BY A SUBCONTRACTOR HOLDING TEXAS LICENSE NO. 4-735. THE ISSUE THEREFORE PRESENTED IS WHETHER THESE BIDDERS QUALIFY AS RESPONSIBLE PROSPECTIVE CONTRACTORS THROUGH THE USE OF SUBCONTRACTORS POSSESSING THE REQUIRED LICENSE. IT IS OUR OPINION THAT THEY CAN. WHILE IT WOULD HAVE BEEN WITHIN THE PROVINCE OF YOUR AGENCY TO PRECLUDE SUBCONTRACTING IN MEETING THE LICENSE REQUIREMENTS, NO SUCH PROHIBITION WAS INCLUDED IN THE INVITATION. IN THE ABSENCE OF SUCH A PROHIBITION, EITHER STATUTORY OR CONTRACTUAL, WE PRECEIVE OF NO REASON WHY THE REQUIREMENT MAY NOT BE COMPLIED WITH THROUGH A SUBCONTRACT. WHETHER THE DECONTAMINATION IS EFFECTED THROUGH THE CONTRACTOR DIRECTLY OR QUALIFIED SUBCONTRACTOR IS IMMATERIAL SINCE THE DESIRED RESULT WILL BE ACCOMPLISHED AND THE PRIME CONTRACTOR WILL BE RESPONSIBLE TO THE GOVERNMENT FOR THE DECONTAMINATION IN ANY EVENT. THEREFORE, IF THESE TWO BIDDERS HAVE VALID CONTRACTS WITH QUALIFIED FIRMS AND ARE OTHERWISE RESPONSIBLE AND RESPONSIVE OUR OFFICE WILL NOT OBJECT TO THE AWARDS TO THEM.

ACCORDINGLY, IT IS OUR DECISION THAT THE AWARDS WERE PROPER AND THE PROTEST OF ROCKY MOUNTAIN MACHINE TOOL COMPANY SHOULD BE DENIED. THE ENCLOSURES WITH THE LETTER OF SEPTEMBER 14, 1966, ARE RETURNED.