B-160186, NOV. 8, 1966

B-160186: Nov 8, 1966

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JENKINS: FURTHER REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 30. GRAHAM ENGINEERING IS A PRIME CONTRACTOR OF THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION UNDER COST-TYPE CONTRACT NO. PARAGRAPH 3 OF THE GENERAL CONDITIONS OF THE INVITATION PROVIDED THAT ONLY THOSE BIDDERS WHO HAVE SATISFACTORILY MAINTAINED ELEVATORS OF SIMILAR GRADE AND COMPLEXITY TO THE DEGREE INCLUDED IN THE SPECIFICATIONS FOR A PERIOD OF NOT LESS THAN 2 YEARS WOULD BE CONSIDERED FOR AWARD. BIDS RECEIVED IN RESPONSE TO THE INVITATION WERE AS FOLLOWS: BIDDER AMOUNT (9 MONTHS) COX ELEVATOR COMPANY. WAS NOT RESPONSIBLE TO PERFORM THE SUBCONTRACT BECAUSE IT HAD LESS THAN 2 YEARS EXPERIENCE AS REQUIRED BY THE INVITATION.

B-160186, NOV. 8, 1966

TO MR. JOHN H. JENKINS:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 30, 1966, TO GRAHAM ENGINEERING PROTESTING ON BEHALF OF COX ELEVATOR COMPANY, INC., THE AWARD OF A CONTRACT ON SEPTEMBER 28, 1966, TO HUNTER-HAYES ELEVATOR COMPANY.

GRAHAM ENGINEERING IS A PRIME CONTRACTOR OF THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION UNDER COST-TYPE CONTRACT NO. NAS9-1383 FOR MAINTENANCE AND OPERATIONS OF FACILITIES AT THE MANNED SPACECRAFT CENTER, HOUSTON, TEXAS. ON SEPTEMBER 13, 1966, GRAHAM ISSUED AN INVITATION FOR BIDS COVERING ELEVATOR MAINTENANCE SERVICES FOR THE PERIOD FROM OCTOBER 1, 1966, THROUGH JUNE 30, 1967, WITH AN OPTION TO RENEW FOR 5 ADDITIONAL MONTHS.

PARAGRAPH 3 OF THE GENERAL CONDITIONS OF THE INVITATION PROVIDED THAT ONLY THOSE BIDDERS WHO HAVE SATISFACTORILY MAINTAINED ELEVATORS OF SIMILAR GRADE AND COMPLEXITY TO THE DEGREE INCLUDED IN THE SPECIFICATIONS FOR A PERIOD OF NOT LESS THAN 2 YEARS WOULD BE CONSIDERED FOR AWARD.

BIDS RECEIVED IN RESPONSE TO THE INVITATION WERE AS FOLLOWS:

BIDDER AMOUNT (9 MONTHS)

COX ELEVATOR COMPANY, INC. $13,562.50

HUNTER-HAYES ELEVATOR COMPANY 17,730.25

ESCO ELEVATORS, INC. 18,828.00

HOUSTON ELEVATOR SERVICE COMPANY 20,987.10 GRAHAM DETERMINED THAT COS ELEVATOR COMPANY, THE LOW BIDDER, WAS NOT RESPONSIBLE TO PERFORM THE SUBCONTRACT BECAUSE IT HAD LESS THAN 2 YEARS EXPERIENCE AS REQUIRED BY THE INVITATION, HAD MARGINAL FINANCING, VERY LIMITED WORKING SPACE AND EQUIPMENT AND LIMITED PERSONNEL. ACCORDINGLY, GRAHAM AWARDED A SUBCONTRACT ON SEPTEMBER 28, 1966, TO HUNTER-HAYES ELEVATOR COMPANY, THE NEXT LOWEST RESPONSIVE AND RESPONSIBLE BIDDER.

ALTHOUGH PROCUREMENTS BY NATIONAL AERONAUTICS AND SPACE ADMINISTRATION COST-TYPE CONTRACTORS ARE NOT GOVERNED BY THE STATUTES AND REGULATIONS RELATING TO DIRECT GOVERNMENT PROCUREMENT CONDUCTED UNDER COMPETITIVE BIDDING STATUTES THEY ARE USED AS GUIDELINES BY SUCH CONTRACTORS IN DETERMINING THE QUALIFICATIONS OF PROSPECTIVE SUBCONTRACTORS. MOREOVER, THERE IS NO STATUTE WHICH PROHIBITS A GOVERNMENT PRIME CONTRACTOR FROM AWARDING A SUBCONTRACT TO OTHER THAN THE LOW BIDDER. THE ONLY LEGAL INTERDICTION IMPOSED BY THIS OFFICE IS THAT THE CONTRACTING OFFICER MAY NOT APPROVE A SUBCONTRACT WHICH IS PREJUDICIAL TO THE INTERESTS OF THE UNITED STATES. 41 COMP. GEN. 424.

IN THE INSTANT CASE THE MANNED SPACECRAFT CENTER REVIEWED THE CIRCUMSTANCES LEADING TO THE AWARD BY GRAHAM TO HUNTER-HAYES ELEVATOR COMPANY AND DETERMINED ON THE BASIS OF NASA PROCUREMENT REGULATIONS AND DECISIONS OF OUR OFFICE THAT THE PRIME CONTRACTOR'S ACTION WAS PROPER. IS REPORTED THAT COX ELEVATOR COMPANY WAS INCORPORATED IN AUGUST 1965 AND ACTIVATED ON NOVEMBER 15, 1965; THAT THE COMPANY HAS ONLY ONE TRUCK TO SERVE ALL ITS CUSTOMERS, HAS NO ELEVATOR REPAIR EQUIPMENT OTHER THAN SMALL HAND TOOLS, AND HAS A LIMITED AMOUNT OF SPARE PARTS; THAT THE COMPANY WORKSHOP IS IN ONE-HALF OF A TWO-CAR GARAGE AND HAS NO TEST EQUIPMENT; AND THAT ACCORDING TO A DUN AND BRADSTREET REPORT HAS CURRENT ASSETS OF APPROXIMATELY $3,200. CONSIDERING THESE FACTS, WE THINK THAT THE EXECUTION OF THE SUBCONTRACT WAS NOT PREJUDICIAL TO THE GOVERNMENT'S INTEREST AND THAT GRAHAM WAS JUSTIFIED IN AWARDING THE SUBCONTRACT TO HUNTER-HAYES ELEVATOR COMPANY.

IT HAS BEEN HELD UNDER PUBLIC ADVERTISING STATUTES THAT UPON A PROPER DETERMINATION BY THE PROCURING ACTIVITY THAT THE INTERESTS OF THE GOVERNMENT WOULD THEREBY BE SERVED, THE INVITATION MAY PROPERLY REQUIRE AS A CONDITION OF ELIGIBILITY FOR AWARD SPECIFIC EXPERIENCE REQUIREMENTS IN A SPECIALIZED FIELD. SEE 37 COMP. GEN. 196; ID. 420, AND DECISIONS CITED THEREIN. DETERMINATIONS WITH RESPECT TO TYPES OF EXPERIENCE, EXTENT OF SUCH EXPERIENCE AND THE METHOD OF PROVING EXPERIENCE ARE, IN THE FIRST INSTANCE, SOLELY WITHIN THE PROVINCE OF THE PROCURING ACTIVITY. IN THE ABSENCE OF CONVINCING EVIDENCE THAT THE REQUIREMENTS IMPOSED BY THE PROCURING AGENCY IN THIS AREA ARE CLEARLY UNNECESSARY TO MEET AN AGENCY'S NEEDS AND ADEQUATELY PROTECT THE INTERESTS OF THE GOVERNMENT OR ARE SO RESTRICTIVE AS TO LIMIT COMPETITION TO THE EXTENT THAT THE GOVERNMENT IS DEPRIVED OF THE BENEFITS OF COMPETITIVE BIDDING, OUR OFFICE WILL NOT SUBSTITUTE ITS JUDGMENT FOR THAT OF THE PROCURING AGENCY.

WHILE WE HAVE HELD THAT REJECTION OF BIDS OF RESPONSIBLE BIDDERS IS NOT PROPER SOLELY BECAUSE AS A TECHNICAL MATTER THEY DO NOT MEET THE PRESCRIBED EXPERIENCE QUALIFICATION, WHERE, AS HERE, THE RECORD SHOWS THAT THE BIDDER IS OTHERWISE NONRESPONSIBLE, WE SEE NO BASIS FOR QUESTIONING THE PRIME CONTRACTOR'S ACTION IN REFUSING TO AWARD A SUBCONTRACT TO COX ELEVATOR COMPANY, INC. ..END :