B-162273, JAN. 9, 1968

B-162273, JAN. 9, 1968

BIDDERS - RESPONSIBILITY - EXPERIENCE DECISION TO RHOADES AND AUCLAIR, INC., REAFFIRMING DECISION OF NOVEMBER 6, 1967, DENYING PROTEST AGAINST AWARD OF CONTRACT TO PARTNERSHIP FOR TRANSPORTATION OF MAIL FROM DALLAS TO EL PASO, TEXAS. SINCE NO RECORD OF PRIOR EXPERIENCE IS NECESSARY FOR AN INDIVIDUAL BIDDER TO QUALIFY FOR TRANSPORTATION OF MAIL UNDER 39 U.S.C. 6420 (A) EXCEPT AS BASIS FOR CONSIDERING INDIVIDUAL TO BE RESPONSIBLE AT TIME OF AWARD, INDIVIDUAL BIDDER DOES NOT HAVE TO SHOW THAT IT WAS ENGAGED IN BUSINESS AT TIME OF SUBMISSION. ALTHOUGH INDIVIDUALS ASSOCIATED AS PARTNERSHIP MAY QUALIFY AS INDIVIDUAL A CORPORATION COULD NOT BE SANCTIONED AS AN INDIVIDUAL BIDDER UNDER 39 U.S.C. 6420 (A) ON BASIS OF RESIDENCE OF SUBSTANTIALLY INTERESTED SHAREHOLDERS.

TO MR. DONALD C. AUCLAIR:

ON NOVEMBER 16, 1967, YOU ASKED US TO CLARIFY CERTAIN MATTERS WHICH WERE SET FORTH IN OUR DECISION OF NOVEMBER 6, 1967, IN WHICH WE DENIED YOUR PROTEST AGAINST THE AWARD OF A CONTRACT TO THE PARTNERSHIP OF MRS. CLOVA HARRISON AND MR. JOHN H. THOMPSON, JR., FOR THE TRANSPORTATION OF MAIL FROM DALLAS TO EL PASO, TEXAS. YOU STATE THAT YOUR CORPORATION WAS DISQUALIFIED UNDER A PRIOR ADVERTISEMENT FOR STAR ROUTE DELIVERY SERVICE BECAUSE OF ITS FAILURE TO SHOW THAT IT WAS ENGAGED IN BUSINESS, OTHER THAN THE TRANSPORTATION OF MAIL, IN THE AREA SERVED BY THE PROPOSED ROUTE IN ACCORD WITH THE FOLLOWING UNDERLINED PROVISION OF THE INVITATION:

"IF THE BIDDER IS A FIRM, COMPANY OR CORPORATION

") ( I AM SATISFIED: (1) SAID BIDDER IS A REPUTABLE FIRM, COMPANY OR CORPORATION; (2) SAID BIDDER HAS THE PECUNIARY ABILITY TO PERFORM THE SERVICE REQUIRED BY THE ADVERTISEMENT; (3) SAID BIDDER SIGNED SAID BID AND BOND; (4) SAID BID IS MADE IN THE BIDDER'S OWN INTEREST, AND NOT ON BEHALF OF ANY OTHER PERSON OR ANY OTHER COMPANY; AND (5) SAID BIDDER IS ENGAGED IN BUSINESS, OTHER THAN IN THE TRANSPORTATION OF THE MAIL, IN -------- COUNTY, WHICH IS ONE OF THE COUNTIES IN WHICH THE ROUTE OPERATES OR IS A COUNTY ADJOINING ONE IN WHICH THE ROUTE OPERATES.' THIS PROVISION WAS INSERTED IN ADVERTISEMENTS FOR STAR ROUTE MAIL SERVICE AS A RESULT OF A PRIOR DECISION OF OUR OFFICE IN WHICH WE HELD THAT THE REQUIREMENT THAT BIDDERS ON SUCH SERVICES, IF A "FIRM, COMPANY OR CORPORATION" BE "ACTUALLY ENGAGED IN BUSINESS WITHIN THE COUNTY IN WHICH PART OF THE ROUTE S," AS SET OUT IN 39 U.S.C. 6420 (A), QUOTED ON PAGE TWO OF OUR DECISION, MUST BE CONSTRUED AS MEANING A BUSINESS OTHER THAN THAT OF PERFORMING CONTRACTS OF THE KIND DEALT WITH BY THE ACT. 35 COMP. GEN. 411. SINCE THE HARRISON- THOMPSON PARTNERSHIP WAS NOT ENGAGED IN SUCH BUSINESS AT THE TIME ITS BID WAS SUBMITTED, YOU CONTEND THE CONSIDERATION OF THEIR BID SHOULD HAVE BEEN REFUSED ON THE SAME BASIS THAT THE BID OF YOUR CORPORATION WAS REJECTED IN THE EARLIER ADVERTISEMENT.

IN OUR DECISION OF NOVEMBER 6 WE HELD THAT INDIVIDUALS ASSOCIATED IN A PARTNERSHIP MAY QUALIFY UNDER 39 U.S.C. 6420 (A) AS AN INDIVIDUAL BIDDER OR BIDDERS, WHERE SUCH INDIVIDUALS WERE JOINTLY AND SEVERALLY LIABLE AND RESPONSIBLE, WITHOUT LIMIT OR QUALIFICATION FOR UNDERTAKINGS OF THE PARTNERSHIP. IT IS APPARENT THAT THE MAIN PURPOSE OF CONGRESS IN PASSING THIS STATUTE WAS TO PROTECT COMMUNITIES FROM INEFFICIENT MAIL DELIVERY SERVICE, AND TO PROTECT LOCAL CONTRACTORS AND BIDDERS FROM IRRESPONSIBLE AND OPPRESSIVE COMPETITION, BY REQUIRING OPERATORS OF SUCH SERVICE TO HAVE A RESIDENTIAL OR BUSINESS CONNECTION WITH THE AREAS TO BE SERVED IN ORDER TO ENSURE RESPONSIBLE SERVICE. IT IS OUR UNDERSTANDING THAT UNDER TEXAS LAW EACH MEMBER OF A GENERAL AND UNLIMITED PARTNERSHIP IS PERSONALLY LIABLE FOR ALL DEBTS THAT ARE INCURRED BY THE PARTNERSHIP. IN A CORPORATION THERE IS NO SUCH LIABILITY ON ANY OFFICER, DIRECTOR OR SHAREHOLDER, THE CORPORATION HAVING A COMPLETELY SEPARATE LEGAL IDENTITY. SUTTON V REAGAN AND GEE (CIV. APP.) 405 S.W. 2D 828. WE BELIEVE THAT THE UNLIMITED PERSONAL LIABILITY OF A SUBSTANTIALLY INTERESTED RESIDENT PARTNER FOR ALL OBLIGATIONS OR UNDERTAKINGS OF THE PARTNERSHIP ENSURES THE RESPONSIVENESS OF THE PARTNERSHIP TO LOCAL DEMANDS FOR EFFICIENT SERVICE IN THE SAME MANNER AS THE UNLIMITED PERSONAL LIABILITY OF A RESIDENT SOLE PROPRIETOR ENSURES THE EFFICIENCY OF HIS SERVICE. UNDER THESE CIRCUMSTANCES IT APPEARED UNREASONABLE TO PREVENT A PARTNERSHIP FROM QUALIFYING AS AN INDIVIDUAL BIDDER, IF A SUBSTANTIALLY INTERESTED PARTNER WAS A RESIDENT OF THE AREA TO BE SERVED, AS WAS MRS. HARRISON HERE, MERELY BECAUSE OF THE ASSOCIATION OF ANOTHER INDIVIDUAL NOT MEETING THAT QUALIFICATION. IT WAS ON THIS BASIS, THEREFORE, THAT WE APPROVED THE DECISION OF THE POST OFFICE DEPARTMENT TO ALLOW THE HARRISON-THOMPSON PARTNERSHIP BID TO QUALIFY ON THE BASIS OF AN INDIVIDUAL BIDDER RATHER THAN AS A "FIRM, COMPANY OR CORPORATION.' SINCE NO PRIOR RECORD OR EXPERIENCE IS NECESSARY FOR AN INDIVIDUAL BIDDER EXCEPT AS A BASIS FOR CONSIDERING HIM TO BE A RESPONSIBLE PROSPECTIVE CONTRACTOR, AS OF THE TIME OF AWARD, WE ARE AWARE OF NO PROPER BASIS FOR REQUIRING THIS BIDDER TO SHOW THAT IT WAS ENGAGED IN BUSINESS AT THE TIME IT SUBMITTED ITS BID. BELIEVE THIS POSITION IS CONSISTENT WITH THE GENERAL CONGRESSIONAL PURPOSE IN ENACTING 39 U.S.C. 6420 (A) BY PROTECTING AGAINST INEFFICIENT SERVICE RESULTING FROM ABSENTEE OWNERSHIP AND OPERATION OF STAR ROUTE CONTRACTS. WE COULD NOT SANCTION THE QUALIFICATION OF YOUR CORPORATION AS AN INDIVIDUAL BIDDER UNDER 39 U.S.C. 6420 (A) THROUGH THE RESIDENCE OF SUBSTANTIALLY INTERESTED SHAREHOLDERS FOR THE REASONS PREVIOUSLY STATED, SINCE THE OBLIGATION OF THE CONTRACT WOULD REST SOLELY ON THE CORPORATION AS A LEGAL ENTITY, CONTROL AND OWNERSHIP OF WHICH COULD CHANGE AT ANY TIME. IN THIS PERSPECTIVE, WE DO NOT BELIEVE THAT THE REJECTION OF YOUR CORPORATION'S BID ON A PRIOR ADVERTISEMENT WAS INCONSISTENT WITH CONSIDERATION OF THE HARRISON-THOMPSON BID HERE.

WITH RESPECT TO YOUR STATEMENT CONCERNING THE IDENTITY OF THE LESSEE OF THE EQUIPMENT, IT APPEARS THAT OUR STATEMENT IN THAT RESPECT MAY HAVE BEEN BASED UPON ERRONEOUS INFORMATION. HOWEVER, WE DO NOT UNDERSTAND THAT THE FACT THAT PROPERTY MAY BE LEASED TO ONE INDIVIDUAL PARTNER WOULD AFFECT THE PROPRIETY OF ITS USE FOR PARTNERSHIP PURPOSES.