B-160374, JAN. 4, 1967

B-160374: Jan 4, 1967

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TO TRINER SCALE AND MANUFACTURING COMPANY: REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 4. THE BID OF CHATILLON WAS LOW FOR ITEM I. STAFFORD'S BID WAS LOW ON ITEMS II AND IV. THE TWO FIRMS WERE TIED FOR LOW BID ON ITEM III. THE DETECTO SCALE AND MANUFACTURING COMPANY BID LOW ON ITEM V AND WAS AWARDED THAT PORTION WITHOUT QUESTION. THE TIE BID FOR ITEM III WAS DECIDED BY LOT IN ACCORDANCE WITH FEDERAL PROCUREMENT REGULATION 1-2.407.6. IV ON AN "ALL OR NONE" BASIS AND WAS IN LINE FOR CONSIDERATION FOR AWARD OF THESE ITEMS ONLY IF BOTH CHATILLON AND STAFFORD WERE TO BE ELIMINATED. YOUR PROTEST LETTER CONTENDS CHATILLON'S BID ON ITEM I IS NON RESPONSIVE BECAUSE CHATILLON IS A DEALER RATHER THAN A MANUFACTURER OF THE ITEM IN VIOLATION OF THE WALSH-HEALEY ACT.

B-160374, JAN. 4, 1967

TO TRINER SCALE AND MANUFACTURING COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 4, 1966, PROTESTING AWARD TO EITHER JOHN CHATILLON AND SONS, DIVISION OF AERO-CHATILLON CORPORATION (CHATILLON) AND/OR TO STAFFORD MANUFACTURING COMPANY, INCORPORATED (STAFFORD), UNDER INVITATION FOR BIDS NO. 143, ISSUED OCTOBER 10, 1966, BY THE BUREAU OF FACILITIES, POST OFFICE DEPARTMENT, TO PROCURE PARCEL POST CHARTS.

PUBLIC LAW 89-593, 89TH CONGRESS, PASSED SEPTEMBER 20, 1966, INCREASED THE PARCEL POST RATES AS OF JANUARY 15, 1967, NECESSITATING THE PROCUREMENT OF NEW POSTAL RATE CHARTS REFLECTING THE INCREASED RATE STRUCTURE FOR INSTALLATION ON POSTAL SCALES THROUGHOUT THE COUNTRY.

BECAUSE OF THE TIME LIMITATION, THE INVITATION REQUIRED DELIVERY OF THE COMPLETED CHARTS WITHIN FIFTY CALENDAR DAYS FROM THE DATE OF AWARD. BID OPENING DATE, OCTOBER 20, 1966, THE BID OF CHATILLON WAS LOW FOR ITEM I, STAFFORD'S BID WAS LOW ON ITEMS II AND IV, AND THE TWO FIRMS WERE TIED FOR LOW BID ON ITEM III. THE DETECTO SCALE AND MANUFACTURING COMPANY BID LOW ON ITEM V AND WAS AWARDED THAT PORTION WITHOUT QUESTION. THE TIE BID FOR ITEM III WAS DECIDED BY LOT IN ACCORDANCE WITH FEDERAL PROCUREMENT REGULATION 1-2.407.6, WITH STAFFORD WINNING THE AWARD. YOUR FIRM BID UPON ITEMS I, II, AND IV ON AN "ALL OR NONE" BASIS AND WAS IN LINE FOR CONSIDERATION FOR AWARD OF THESE ITEMS ONLY IF BOTH CHATILLON AND STAFFORD WERE TO BE ELIMINATED. ALTHOUGH YOUR LETTER OF NOVEMBER 4, 1966, PROTESTED AGAINST AWARD TO EITHER OF THE TWO FIRMS, THE POST OFFICE DEPARTMENT BECAUSE OF THE JANUARY 15, 1967, RATE INCREASE DEADLINE, FOUND IT NECESSARY TO AWARD ITEM I TO STAFFORD AND ITEMS II AND IV TO CHATILLON PURSUANT TO THE AUTHORITY CONTAINED IN FPR 1-2.407-8 (B) (3) (I) AND (II) PRIOR TO THE RESOLUTION OF YOUR PROTEST.

YOUR PROTEST LETTER CONTENDS CHATILLON'S BID ON ITEM I IS NON RESPONSIVE BECAUSE CHATILLON IS A DEALER RATHER THAN A MANUFACTURER OF THE ITEM IN VIOLATION OF THE WALSH-HEALEY ACT, 41 U.S.C. 35, AND BECAUSE CHATILLON IS NOT A SMALL BUSINESS DESPITE ITS INDICATING OTHERWISE ON ITS BID.

IT IS THE OPINION OF THE OF THE POST OFFICE DEPARTMENT THAT CHATILLON IS A MANUFACTURER OF POSTAL SCALE CHARTS AND ITS REPORT TO THIS OFFICE OF NOVEMBER 29, 1966, CONTAINS A DETERMINATION WITH RESPECT TO CHATILLON'S ELIGIBILITY AS A MANUFACTURER WHICH STATES IN PART:

"JOHN CHATILLON AND SONS CATALOG 200C DESCRIBED VARIOUS TYPES OF SCALES WHICH IT MANUFACTURERS. MAIL AND PARCEL POST SCALES ARE FOUND ON PAGES 25 AND 26 OF THIS CATALOG. THE POST OFFICE DEPARTMENT HAS IN SERVICE A NUMBER OF CHATILLON PARCEL POST SCALES SIMILAR TO MODEL U.S. 4 PICTURED ON PAGE 26 OF THE CATALOG WHICH WERE PURCHASED FROM THAT FIRM. ITEM NO. III OF THE SUBJECT INVITATION FOR BIDS COVERED THE PURCHASE OF CHARTS FOR THIS TYPE OF SCALE.

"SCALE CHARTS OR SCALE DIALS MADE UP OF ONE OF THE COMPONENTS OF THE FINISHED SCALE. THIS BIDDER HAS INFORMED US THAT IT PERFORMS A MINIMUM OF 75 PERCENT OF THE MANUFACTURING PROCESSES OF THE CHARTS FOR ITS MODEL U.S. 4. LITHOGRAPHY IS PERFORMED BY A SUBCONTRACTOR SINCE CHATILLON IS NOT EQUIPPED TO DO THIS PARTICULAR OPERATION.'

FEDERAL PROCUREMENT REGULATION 1-12.603-1, WHICH IMPLEMENTS 41 U.S.C. 35, THE STATUTE YOU CONTEND PROHIBITS AWARD TO CHATILLON, REQUIRES ONLY THAT, TO BE A MANUFACTURER, A BIDDER MUST BE ONE WHO:

"* * * OWNS, OPERATES, OR MAINTAINS A FACTORY OR ESTABLISHMENT THAT PRODUCES ON THE PREMISES THE MATERIALS, SUPPLIES, ARTICLES, OR EQUIPMENT REQUIRED UNDER THE CONTRACT AND OF THE GENERAL CHARACTER DESCRIBED BY THE SPECIFICATIONS.'

AS SHOWN ABOVE, CHATILLON OPERATES A PLANT WHICH MANUFACTURES THE RATE CHARTS USED IN ITS MODEL U.S. 4 POSTAL SCALE, THEREBY SATISFYING THE REQUIREMENTS OF THE WALSH-HEALEY ACT. THE FACT THAT CHATILLON MAY SUBCONTRACT THE BULK OF THE INSTANT PROCUREMENT IS THEREFORE NOT PERTINENT WHEN DETERMINING COMPLIANCE WITH SAID ACT. SEE 34 COMP. GEN. 595, B- 149781 OF OCTOBER 29, 1962, AND B-148155 OF MAY 17, 1962.

THE POST OFFICE DEPARTMENT FURTHER INFORMS US THE SMALL BUSINESS ADMINISTRATION, NEW YORK, NEW YORK, HAS FOUND THAT CHATILLON QUALIFIES AS A SMALL BUSINESS CONCERN:

ON THIS BASIS THE POST OFFICE DEPARTMENT DETERMINED CHATILLON IS A SMALL BUSINESS CONCERN FOR THE PROCUREMENT WITHIN THE MEANING OF FPR 1 1.701.1.

PAST DETERMINATIONS THAT CHATILLON DID NOT SATISFY THE SMALL BUSINESS CRITERIA ARE NOT A BAR TO THE OPPOSITE DETERMINATION HERE, WHERE A RECENT EVALUATION BY THE SMALL BUSINESS ADMINISTRATION USING THE CURRENT STANDARDS AND PRESENT CORPORATE STATISTICS CONCLUDES THAT CHATILLON IS A SMALL BUSINESS. SINCE THE CURRENT DETERMINATION DISPOSES OF OBJECTIONS BASED UPON PAST DETERMINATIONS TO THE CONTRARY AND WE HAVE NO OTHER REASON TO BELIEVE CHATILLON DOES NOT MEET THE SMALL BUSINESS CRITERIA, WE ARE UNABLE TO AGREE WITH YOUR CONTENTION THAT CHATILLON MISREPRESENTED ITSELF WHEN IT STATED IT WAS A SMALL BUSINESS. THEREFORE, WE HOLD THAT AWARD OF ITEM I TO CHATILLON WAS PROPER.

YOU FURTHER MAINTAIN ITEMS II AND IV SHOULD NOT HAVE BEEN AWARDED TO STAFFORD BECAUSE OF ITS UNSATISFACTORY RECORD OF PERFORMANCE AND LACK OF INTEGRITY WHEN SUPPLYING SIMILAR ITEMS TO THE POST OFFICE DEPARTMENT UNDER AN EARLIER CONTRACT, BECAUSE STAFFORD HAS INADEQUATE FINANCIAL RESOURCES TO PERFORM THE CONTRACT, AND BECAUSE IT LACKS THE FACILITIES AND TECHNICAL COMPETENCE NECESSARY TO PERFORM THE CONTRACT IN A TIMELY FASHION.

THE FACTUAL GROUNDS FOR YOUR CONTENTION REGARDING STAFFORD'S LACK OF INTEGRITY HAVE NOT BEEN QUESTIONED IN THE POST OFFICE DEPARTMENT'S REPORT, SO WE HAVE NO REASON TO DOUBT THAT STAFFORD'S CORPORATE PREDECESSORS DEFAULTED ON A SIMILAR CONTRACT, WHICH DEFAULT WAS THE BASIS FOR A DECISION OF THE POST OFFICE DEPARTMENT TO REJECT STAFFORD'S BID IN ANOTHER PROCUREMENT. HOWEVER, BECAUSE THIS PRIOR REJECTION OF A BID OF STAFFORD'S OCCURRED IN 1951, AND THE DEFAULT ON WHICH IT WAS PREMISED WAS SOME TWO YEARS BEFORE, WE CANNOT SAY THAT A REFUSAL TO REJECT STAFFORD'S PRESENT BID FOR THE SAME REASON WAS ARBITRARY OR CAPRICIOUS. TO THE CONTRARY, IT IS THE OPINION OF THIS OFFICE THAT A SINGLE INSTANCE OF DEFAULT SOME 18 YEARS AGO WOULD FURNISH A RATHER DUBIOUS RATIONALE FOR REJECTION OF STAFFORD'S PRESENT BID. IN ANY CASE, A PRIOR DEFAULT IS NOT PER SE A BASIS FOR REJECTION OF A BID, AND THIS OFFICE WILL DEFER TO THE JUDGMENT OF THE CONTRACTING AGENCY, ABSENT ARBITRARINESS OR CAPRICIOUSNESS. SEE 37 COMP. GEN. 705, 711.

REGARDING STAFFORD'S FINANCIAL RESOURCES, STAFFORD, BY LETTER OF OCTOBER 31, 1966, HAS FURNISHED THE POST OFFICE DEPARTMENT A FINANCIAL STATEMENT AND A STATEMENT OF INCOME AND EXPENSES COVERING THE PERIOD MARCH 1, 1966, TO AUGUST 31, 1966. ON THE BASIS OF THESE STATEMENTS, TOGETHER WITH A DUNN AND BRADSTREET REPORT, THE POST OFFICE DEPARTMENT HAS DETERMINED THAT STAFFORD'S FINANCES ARE ADEQUATE FOR THE PURPOSES OF THIS CONTRACT.

IN B-153478 OF JANUARY 18, 1965, WE CONSIDERED THE QUESTION OF A PROPOSED AWARD TO A FIRM WHICH WAS OPERATING UNDER CHAPTER XI OF THE BANKRUPTCY ACT AND HELD THAT THIS OFFICE IS NOT JUSTIFIED IN OBJECTING TO A DETERMINATION CONCERNING THE FINANCIAL ABILITY OF A PROPOSED CONTRACTOR IN THE ABSENCE OF ANY SHOWING OF BAD FAITH OR LACK OF A REASONABLE BASIS FOR THE DETERMINATION. SIMILARLY, WE CAN FIND NO BASIS FOR OBJECTION TO THE PROPOSED AWARD HERE, IN LIGHT OF THE FINANCIAL STATEMENTS AND REPORTS IN THE RECORD.

YOUR FINAL CONTENTION, THAT STAFFORD IS INCAPABLE OF PRODUCING SATISFACTORILY WITHIN THE TIME PERMITTED, HAS BEEN THOROUGHLY INVESTIGATED AND EVALUATED BY THE POST OFFICE DEPARTMENT. ON THE BASIS OF TWO SEPARATE INSPECTIONS OF STAFFORD'S PRODUCTION FACILITIES, THE DEPARTMENT DETERMINED THAT STAFFORD POSSESSES THE TECHNICAL COMPETENCE AND THE PRODUCTION CAPABILITY NECESSARY FOR SUCCESSFUL IN-HOUSE COMPLETION OF THE ITEMS AWARDED IT. PART OF THIS EVALUATION STEMMED FROM BUSINESS REFERENCES, WHO REPORTED THAT STAFFORD PRODUCED GOOD WORK AND DELIVERED ON TIME. THEREFORE, IT IS THE OPINION OF THIS OFFICE THAT THE POST OFFICE DEPARTMENT'S FAVORABLE DETERMINATION REGARDING STAFFORD'S PRODUCTION ABILITY IS SUPPORTABLE BY THE RECORD. SINCE THE QUESTION OF THE QUALIFICATIONS OF A PROPOSED CONTRACTOR IS PRIMARILY THE FUNCTION OF THE ADMINISTRATIVE OFFICERS CONCERNED, AND THIS DETERMINATION HAS A REASONABLE BASIS, WE FIND NO REASON TO OBJECT TO AN AWARD TO STAFFORD. SEE 37 COMP. GEN. 430 AND B-154956 OF JUNE 21, 1966.

FOR THE ABOVE REASONS, THERE APPEARS TO BE NO LEGAL OBJECTION TO AWARD OF ITEMS II AND IV UNDER THE INVITATION TO STAFFORD. SINCE THE ALLEGATIONS MADE IN YOUR LETTER OF NOVEMBER 4, 1966, HAVE ..END :