B-162895, JAN. 11, 1968

B-162895: Jan 11, 1968

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A BIDDER WHO WAS FOUND. THAT HE WAS NOT A REGULAR DEALER UNDER WALSH-HEALEY PUBLIC CONTRACTS ACT AND ASPR 12 603.2 BECAUSE HE DID NOT MAINTAIN INVENTORY MUST HAVE PROTEST DENIED. TO GENERAL INDUSTRIES: FURTHER REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 7. THE ASPECT OF THE PROCUREMENT IN QUESTION IS FOR THE ANNUAL REQUIREMENT. BIDS WERE OPENED ON JULY 20. YOUR BID WAS LOW FOR GEOGRAPHICAL AREAS I AND II. IT WAS ESTIMATED THAT AN AWARD FOR THESE AREAS WOULD EXCEED $10. THE CONTRACTING OFFICER DID NOT HAVE SUFFICIENT INFORMATION TO MAKE AN AFFIRMATIVE DETERMINATION REGARDING YOUR RESPONSIBILITY. A PREAWARD SURVEY WAS REQUESTED. THE CONTRACTING OFFICER FOUND THAT YOU ARE NOT A REGULAR DEALER UNDER THE WALSH-HEALEY PUBLIC CONTRACTS ACT OF 1936.

B-162895, JAN. 11, 1968

BIDDERS - RESPONSIBILITY - REGULAR DEALER, MANUFACTURER - DETERMINATION DECISION TO GENERAL INDUSTRIES DENYING PROTEST AGAINST REJECTION OF BID BY D.S.A. FOR PROCUREMENT OF "SODIUM CARBONATE ANHYDROUS TECHNICAL". A BIDDER WHO WAS FOUND, ON BASIS OF PREAWARD SURVEY, THAT HE WAS NOT A REGULAR DEALER UNDER WALSH-HEALEY PUBLIC CONTRACTS ACT AND ASPR 12 603.2 BECAUSE HE DID NOT MAINTAIN INVENTORY MUST HAVE PROTEST DENIED. ALSO, DEPT. OF LABOR DID NOT QUESTION DETERMINATION. THEREFORE NO BASIS FOR ACTION BY GAO EXISTS.

TO GENERAL INDUSTRIES:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 7, 1967, PROTESTING AGAINST THE REJECTION OF YOUR BID UNDER INVITATION FOR BIDS NO. DSA-400-67 -B-8645, ISSUED JUNE 19, 1967, BY THE DEFENSE SUPPLY AGENCY (DSA), DIRECTORATE OF PROCUREMENT AND PRODUCTION, DEFENSE GENERAL SUPPLY CENTER, RICHMOND, VIRGINIA. THE ASPECT OF THE PROCUREMENT IN QUESTION IS FOR THE ANNUAL REQUIREMENT, ESTIMATED AT 2,200 DRUMS, OF "SODIUM CARBONATE ANHYDROUS TECHNICAL" FOR GEOGRAPHICAL AREAS I AND II IN ACCORDANCE WITH APPLICABLE SPECIFICATIONS.

BIDS WERE OPENED ON JULY 20, 1967, AND YOUR BID WAS LOW FOR GEOGRAPHICAL AREAS I AND II. IT WAS ESTIMATED THAT AN AWARD FOR THESE AREAS WOULD EXCEED $10,000. THE CONTRACTING OFFICER DID NOT HAVE SUFFICIENT INFORMATION TO MAKE AN AFFIRMATIVE DETERMINATION REGARDING YOUR RESPONSIBILITY. CONSEQUENTLY, A PREAWARD SURVEY WAS REQUESTED. ON THE BASIS OF THE INFORMATION IN THE PREAWARD SURVEY, THE CONTRACTING OFFICER FOUND THAT YOU ARE NOT A REGULAR DEALER UNDER THE WALSH-HEALEY PUBLIC CONTRACTS ACT OF 1936, AS AMENDED, 41 U.S.C. 35, SINCE YOU DID NOT MEET THE REQUIREMENTS OF PARAGRAPH 12-603.2 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) AND, THEREFORE, THAT YOU WERE NOT ELIGIBLE FOR AN AWARD. SPECIFICALLY, IT WAS FOUND THAT YOU DID NOT MAINTAIN A STOCK OF ITEMS OF THE GENERAL CHARACTER REQUIRED BY THE CONTRACT.

ON SEPTEMBER 1, 1967, THE CONTRACTING OFFICER ADVISED YOU OF HIS DETERMINATION THAT YOU WERE NOT A REGULAR DEALER. THIS LETTER ALSO QUOTED THE REQUIREMENTS FOR A REGULAR DEALER WHICH ARE SET FORTH IN ASPR 12- 603.2. ON SEPTEMBER 12, 1967, YOU PROTESTED THE CONTRACTING OFFICER'S DETERMINATION. BY LETTER OF SEPTEMBER 21, 1967, DSA REFERRED THE MATTER TO THE DEPARTMENT OF LABOR SPECIFICALLY ADVISING OF THE CONTRACTING OFFICER'S FINDING THAT YOU DID NOT MAINTAIN A STOCK OF ITEMS OF THE GENERAL CHARACTER REQUIRED BY THE CONTRACT. ON OCTOBER 26, 1967, THE DEPARTMENT OF LABOR ADVISED DSA THAT IT FOUND NO REASON TO QUESTION THE DECISION OF THE CONTRACTING OFFICER. BY LETTER OF OCTOBER 31, 1967, THE CONTRACTING OFFICER ADVISED YOU OF THE DEPARTMENT OF LABOR'S CONCLUSION. HE ALSO ADVISED THAT YOUR PROTEST WAS DENIED AND THAT AWARD WOULD BE MADE TO THE LOW RESPONSIVE, RESPONSIBLE BIDDER. ON NOVEMBER 6, 1967, AN AWARD WAS MADE TO THE NEXT LOW BIDDER, OCTAGON PROCESS, INC.

IN YOUR LETTER OF PROTEST TO OUR OFFICE YOU CONTEND THAT THERE IS NO REQUIREMENT IN THE WALSH-HEALEY PUBLIC CONTRACTS ACT, AS AMENDED, 41 U.S.C. 35, OR THE APPLICABLE ASPR PROVISION, THAT A REGULAR DEALER MUST MAINTAIN AN INVENTORY OF GOODS IN WHICH HE CLAIMS TO BE A DEALER. YOU CONTEND THAT DSA SHOULD HAVE PETITIONED THE DEPARTMENT OF LABOR FOR AN EXCEPTION TO THE REGULAR DEALER REQUIREMENT SINCE AWARD TO YOUR FIRM WOULD HAVE RESULTED IN A SAVING OF $10,000.

YOU ALSO ALLEGE GENERALLY THAT MANY SUPPLIERS ARE NOT GIVING THE GOVERNMENT EITHER ITEMS OR PACKAGING AS REQUIRED BY THE SPECIFICATIONS AND THAT FOREIGN MATERIALS AND SURPLUS GOODS ARE BEING FURNISHED WITHOUT BEING IDENTIFIED AS SUCH.

THE WALSH-HEALEY PUBLIC CONTRACTS ACT, AS AMENDED, PROVIDES AT 41 U.S.C. 38, THAT THE SECRETARY OF LABOR SHALL HAVE AUTHORITY TO ADMINISTER THE PROVISIONS OF THE ACT, AND TO MAKE SUCH RULES AND REGULATIONS AS MAY BE NECESSARY TO THAT END. THE "WALSH-HEALEY PUBLIC CONTRACTS ACT RULINGS AND INTERPRETATIONS NO. 3," PUBLISHED BY THE DEPARTMENT OF LABOR, STATES AT SECTION 29:

"/A) THE RESPONSIBILITY OF DETERMINING WHETHER OR NOT A BIDDER IS QUALIFIED AS A MANUFACTURER OR AS A REGULAR DEALER UNDER THE PUBLIC CONTRACTS ACT RESTS IN THE FIRST INSTANCE WITH THE CONTRACTING AGENCY. HOWEVER, ANY DECISION WHICH THE CONTRACTING OFFICER MIGHT MAKE IS SUBJECT TO REVIEW BY THE DEPARTMENT OF LABOR WHICH IS CHARGED WITH THE ADMINISTRATION OF THE ACT. THE DEPARTMENT OF LABOR MAY DETERMINE THE QUALIFICATIONS OF A BIDDER IN THE FIRST INSTANCE IN THE ABSENCE OF ANY DECISION BY THE CONTRACTING OFFICER.'

DETERMINATIONS AS TO WHETHER PARTICULAR FIRMS ARE REGULAR DEALERS OR MANUFACTURERS UNDER THE WALSH-HEALEY PUBLIC CONTRACTS ACT ARE THE RESPONSIBILITY OF THE CONTRACTING OFFICER SUBJECT TO THE REVIEW OF THE DEPARTMENT OF LABOR WHICH HAS THE FINAL AUTHORITY. SEE B-148715, JUNE 25, 1962. IN THE INSTANT CASE THE CONTRACTING OFFICER DETERMINED THAT YOU WERE NOT A REGULAR DEALER PURSUANT TO THE CRITERIA IN ASPR AND THE DEPARTMENT OF LABOR, AFTER BEING FULLY INFORMED OF THE CIRCUMSTANCES, DID NOT QUESTION THE DETERMINATION. THIS SITUATION PROVIDES NO BASIS FOR ANY FURTHER ACTION BY OUR OFFICE.

WITH RESPECT TO APPLICATIONS FOR AN EXCEPTION TO THE REGULAR DEALER REQUIREMENT, THE DEPARTMENT OF LABOR HAS PROMULGATED THE FOLLOWING REGULATION AT 41 CFR 50-201.601:

"/A) (1) REQUEST FOR THE EXCEPTION OR EXEMPTION OF A CONTRACT OR CLASS OF CONTRACTS FROM THE INCLUSION OR APPLICATION OF ONE OR MORE OF THOSE STIPULATIONS REQUIRED BY SEC. 50-201.1 MUST BE MADE BY THE HEAD OF A CONTRACTING AGENCY OR DEPARTMENT AND SHALL BE ACCOMPANIED WITH A FINDING BY HIM SETTING FORTH REASONS WHY SUCH INCLUSION OR APPLICATION WILL SERIOUSLY IMPAIR THE CONDUCT OF GOVERNMENT BUSINESS.' THERE IS NOTHING IN THE RECORD WHICH WOULD INDICATE THAT A SITUATION EXISTS WHICH WOULD IMPAIR THE CONDUCT OF GOVERNMENT BUSINESS IF THE REGULAR DEALER REQUIREMENT WERE NOT REMOVED. THEREFORE, WE SEE NO BASIS TO YOUR ALLEGATION THAT DSA SHOULD HAVE PETITIONED THE DEPARTMENT OF LABOR FOR AN EXCEPTION TO THE REGULAR DEALER REQUIREMENT.

DSA HAS BEEN ADVISED OF YOUR ALLEGATIONS THAT THE GOVERNMENT IS PURCHASING INFERIOR GOODS OR FOREIGN MATERIAL AND SURPLUS GOODS NOT IDENTIFIED AS SUCH. DSA HAS ADVISED US THAT YOU WILL BE ASKED TO FURNISH ANY SPECIFIC INFORMATION RELATING TO PROCUREMENTS BY DSA AFTER WHICH THE AGENCY WILL MAKE ANY NECESSARY INVESTIGATION AND TAKE ANY APPROPRIATE CORRECTIVE ACTION.