B-163129, AUG 1, 1968

B-163129: Aug 1, 1968

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TO COMPONENT PARTS CORPORATION: REFERENCE IS MADE TO YOUR TELEGRAM OF MAY 15. BIDS WERE OPENED ON NOVEMBER 2. WAS FOUND TO HAVE SUBMITTED THE LOWEST BID ON ITEM NO. 1. THE CONTRACTING OFFICER MADE A DETERMINATION THAT THE FIRM WAS NOT A RESPONSIBLE SUPPLIER. LONG ISLAND WAS REQUESTED TO RECONSIDER YOUR STATUS AS A MANUFACTURER OR REGULAR DEALER. OR OTHER ESTABLISHMENT WHERE SUCH SUPPLIES ARE BOUGHT. AFFIRMED HIS ORIGINAL DETERMINATION THAT COMPONENT PARTS WAS NOT A RESPONSIBLE BIDDER. THE DEFENSE SUPPLY AGENCY HAD REQUESTED A DECISION FROM THE DEPARTMENT OF LABOR AS TO WHETHER YOUR FIRM WAS ELIGIBLE TO RECEIVE SUPPLY CONTRACTS AS A MANUFACTURER OR REGULAR DEALER UNDER THE WALSH HEALEY ACT.

B-163129, AUG 1, 1968

TO COMPONENT PARTS CORPORATION:

REFERENCE IS MADE TO YOUR TELEGRAM OF MAY 15, 1968, AND THE LETTER OF MAY 21, 1968, FROM YOUR ATTORNEY PROTESTING AGAINST REJECTION OF YOUR BID UNDER ITEM NO. 1 OF INVITATION FOR BIDS NO. DSA-700-68-B-0858 ISSUED BY THE DEFENSE SUPPLY AGENCY, DEFENSE CONSTRUCTION SUPPLY CENTER, COLUMBUS, OHIO, ON SEPTEMBER 29, 1967, FOR OUTER TRACK GUIDES AND THE AWARD OF A CONTRACT THEREFOR TO HENRY PRODUCTS COMPANY, INC.

BIDS WERE OPENED ON NOVEMBER 2, 1967. COMPONENT PARTS, WHICH DID NOT BID ON ITEM NO. 2, WAS FOUND TO HAVE SUBMITTED THE LOWEST BID ON ITEM NO. 1. IT HAD REPRESENTED ITSELF TO BE A SMALL BUSINESS CONCERN AND A MANUFACTURER OF THE SUPPLIES BID UPON. IN CHECKING THE RESPONSIBILITY OF COMPONENT PARTS, THE DEFENSE CONTRACT ADMINISTRATION SERVICES REGION (DCASR), NEW YORK, NEW YORK, HOWEVER, ADVISED THE PROCURING OFFICE THAT SUCH FIRM DID NOT QUALIFY AS A MANUFACTURER OR REGULAR DEALER WITHIN THE MEANING OF THE WALSH-HEALEY ACT, 41 U.S.C. 35 ET SEQ., AND BASED ON THIS INFORMATION, THE CONTRACTING OFFICER MADE A DETERMINATION THAT THE FIRM WAS NOT A RESPONSIBLE SUPPLIER. BY LETTER OF DECEMBER 22, 1967, YOU PROTESTED THE REJECTION OF YOUR BID AND PURSUANT THERETO ON JANUARY 18, 1968, THE DCAS DISTRICT OFFICE IN GARDEN CITY, LONG ISLAND WAS REQUESTED TO RECONSIDER YOUR STATUS AS A MANUFACTURER OR REGULAR DEALER. THE DCAS DISTRICT OFFICE REPLIED BY LETTER DATED JANUARY 30, 1968, THE ENCLOSURES TO WHICH CONCLUDED THAT YOU DID NOT QUALIFY AS A MANUFACTURER OR REGULAR DEALER BECAUSE YOUR FIRM DOES NOT OWN, OPERATE, OR MAINTAIN A FACTORY OR ESTABLISHMENT THAT PRODUCES SUPPLIES OF THE GENERAL CHARACTER DESCRIBED BY THE SPECIFICATIONS OF THE INVITATION AND THAT YOUR FIRM DOES NOT OWN, OPERATE, OR MAINTAIN A STORE, WAREHOUSE, OR OTHER ESTABLISHMENT WHERE SUCH SUPPLIES ARE BOUGHT, KEPT IN STOCK, AND SOLD TO THE GENERAL PUBLIC. VIEW OF THIS INFORMATION, THE CONTRACTING OFFICER, ON FEBRUARY 5, 1968, AFFIRMED HIS ORIGINAL DETERMINATION THAT COMPONENT PARTS WAS NOT A RESPONSIBLE BIDDER.

BY LETTER DATED FEBRUARY 23, 1968, YOUR ATTORNEY REQUESTED RECONSIDERATION OF THE CONTRACTING OFFICER'S ADVERSE DETERMINATION ON THE BASIS THAT YOU EITHER QUALIFIED AS A MANUFACTURER OR AS A FIRM NEWLY ENTERING INTO SUCH MANUFACTURING ACTIVITY.

IT APPEARS THAT BY LETTERS OF DECEMBER 28, 1967, AND FEBRUARY 7, 1968, THE DEFENSE SUPPLY AGENCY HAD REQUESTED A DECISION FROM THE DEPARTMENT OF LABOR AS TO WHETHER YOUR FIRM WAS ELIGIBLE TO RECEIVE SUPPLY CONTRACTS AS A MANUFACTURER OR REGULAR DEALER UNDER THE WALSH HEALEY ACT. THE WAGE AND HOUR AND PUBLIC CONTRACTS DIVISIONS OF THE DEPARTMENT OF LABOR ANSWERED ON MARCH 12, 1968, IN PART, AS FOLLOWS: "BASED SOLELY ON THE MATERIAL YOU SUPPLIED THIS OFFICE, WE WOULD FIND NO REASON TO QUESTION YOUR AGENCY'S OPINION THAT THE FIRM DOES NOT QUALIFY AS A MANUFACTURER OR A REGULAR DEALER. HOWEVER, IT IS UNDERSTOOD THAT THE FIRM'S ATTORNEY HAS SUBMITTED FURTHER INFORMATION FOR YOUR CONSIDERATION. THEREFORE, NO DEFINITIVE DECISION WOULD APPEAR TO BE MERITED UNTIL SUCH TIME AS THIS INFORMATION HAS BEEN EVALUATED BY YOUR AGENCY. SHOULD THE FIRM PROTEST YOUR FINDING AT THAT TIME, THE ENTIRE CASE SHOULD BE RESUBMITTED TO THE WHPC DIVISIONS.'

BY LETTER DATED MARCH 15, 1968, ADDRESSED TO THE OFFICE OF COUNSEL, YOUR ATTORNEY REQUESTED THAT THE DEFENSE SUPPLY AGENCY EVALUATE THE INFORMATION CONTAINED IN HIS LETTER OF FEBRUARY 23, 1968, AS SUGGESTED BY THE DEPARTMENT OF LABOR. ON MARCH 21, 1968, YOUR ATTORNEY WAS ADVISED THAT HIS RECENT LETTER WAS BEING REFERRED TO THE CONTRACTING OFFICER FOR CONSIDERATION. ON APRIL 3, 1968, THE CONTRACTING OFFICER REAFFIRMED HIS DETERMINATION THAT YOUR FIRM WAS NOT RESPONSIBLE BECAUSE IT DID NOT QUALIFY AS A MANUFACTURER OR REGULAR DEALER UNDER THE WALSH-HEALEY ACT. THEREAFTER, ON MAY 7, 1968, THE CONTRACTING OFFICER AWARDED A CONTRACT FOR ITEMS NOS. 1 AND 2 TO HENRY PRODUCTS COMPANY, INC. ON THE SAME DAY HE NOTIFIED YOUR ATTORNEY OF THE AWARD TO HENRY PRODUCTS AND OF THE AFFIRMATION OF THE DETERMINATION THAT YOUR FIRM WAS NOT CONSIDERED A REGULAR DEALER OR MANUFACTURER WITHIN THE MEANING OF THE WALSH-HEALEY ACT. IN THIS CONNECTION THE RECORD CONTAINS A LETTER DATED JULY 15, 1968, TO THE DEFENSE SUPPLY AGENCY FROM THE DEPARTMENT OF LABOR WHICH READS, IN PERTINENT PART, AS FOLLOWS: "A REVIEW OF THE INFORMATION YOU SUBMITTED, INCLUDING COUNSEL'S LETTER OF FEBRUARY 23, 1968, DOES NOT PROVIDE ANY GROUNDS TO REVERSE YOUR AGENCY'S DECISION THAT THE FIRM DID NOT QUALIFY AS A MANUFACTURER AT THE TIME OF INVESTIGATION. IN ORDER TO QUALIFY AS A MANUFACTURER, A FIRM MUST -OWN, OPERATE, OR MAINTAIN A FACTORY OR OTHER ESTABLISHMENT.- COMPONENT PARTS CORPORATION HAS NOT SHOWN THAT IT MET THIS REQUIREMENT. MOREOVER, IN ORDER TO BE CONSIDERED -NEWLY ENTERING INTO BUSINESS' THE COMPANY MUST HAVE MADE DEFINITE COMMITMENTS TO ENTER INTO BUSINESS, AS A MANUFACTURER, WHICH WOULD LATER QUALIFY IT TO RECEIVE AWARDS.'

YOUR ATTORNEY CONTENDS THAT NOT ONLY WAS THE REJECTION OF YOUR BID IMPROPER, BUT THAT THE AWARD TO HENRY PRODUCTS IS LEGALLY AND EQUITABLY INVALID ON THE BASIS THAT AWARD WAS MADE PRIOR TO A FINAL DECISION BY THE DEPARTMENT OF LABOR ON YOUR STATUS AS A MANUFACTURER OR REGULAR DEALER. HE CITES ASPR 12-604 WHICH PROVIDES THAT WHEN THE ELIGIBILITY OF A BIDDER UNDER THE WALSH-HEALEY ACT IS CHALLENGED BEFORE AWARD, IT SHOULD BE TREATED IN A MANNER SIMILAR TO A PROTEST BEFORE AWARD AND THAT THE CONTRACTING OFFICER SHOULD MAKE AN INITIAL DETERMINATION AND SHOULD PROCESS THE PROTEST IN ACCORDANCE WITH APPLICABLE PROCEDURES FOR SUBMISSION TO THE DEPARTMENT OF LABOR FOR A FINAL DETERMINATION.

THE WALSH-HEALEY ACT PROVIDES THAT, WITH CERTAIN EXCEPTIONS, NOT HERE MATERIAL, EVERY CONTRACT EXCEEDING $10,000 IN AMOUNT ENTERED INTO BY ANY GOVERNMENT AGENCY FOR THE PROCUREMENT OF SUPPLIES SHALL CONTAIN A STIPULATION THAT THE CONTRACTOR IS A MANUFACTURER OR REGULAR DEALER IN SUCH SUPPLIES AND THAT ANY BREACH OF SUCH STIPULATION SHALL CONSTITUTE GROUNDS FOR CANCELLATION OF THE CONTRACT. THE ACT FURTHER PROVIDES 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.

UNDER THE ACT AND IMPLEMENTING REGULATIONS, A BIDDER TO BE ELIGIBLE FOR AWARD OF A CONTRACT EXCEEDING $10,000 MUST ESTABLISH THAT IT IS A MANUFACTURER OF, OR A REGULAR DEALER IN, THE SUPPLIES TO BE FURNISHED UNDER THE INVITATION. THE SECRETARY OF LABOR HAS VESTED IN THE PROCUREMENT AGENCY THE INITIAL RESPONSIBILITY TO DETERMINE WHETHER A BIDDER QUALIFIES AS A MANUFACTURER OR REGULAR DEALER, SUBJECT TO REVIEW BY THE DEPARTMENT OF LABOR WHICH HAS FINAL AUTHORITY. SECTION 29 OF "WALSH- HEALEY PUBLIC CONTRACTS ACT RULINGS AND INTERPRETATIONS NO. 3.' THEREUNDER THE AUTHORITY TO REVIEW AGENCY DETERMINATIONS AS TO WHETHER PARTICULAR FIRMS ARE MANUFACTURERS OR REGULAR DEALERS IN THE DEPARTMENT OF LABOR AND NOT IN OUR OFFICE (B-162807, DECEMBER 27, 1967) AND, AS STATED EARLIER THAT DEPARTMENT HAS SUSTAINED THE CONTRACTING OFFICER'S DETERMINATION IN THIS INSTANCE.

FURTHERMORE, WE HAVE HELD THAT ASPR 12-604 DOES NOT REQUIRE THE CONTRACTING OFFICER IN SITUATIONS SUCH AS WE ARE CONCERNED WITH HERE TO NOTIFY A DISQUALIFIED BIDDER OF THE ADVERSE DETERMINATION SO THAT HE CAN REQUEST LABOR DEPARTMENT REVIEW BEFORE MAKING AN AWARD TO ANOTHER BIDDER. B-163741, JUNE 28, 1968, 47 COMP. GEN. ---.

IN VIEW OF THE FOREGOING, THERE APPEARS TO BE NO BASIS UPON WHICH OUR OFFICE MAY PROPERLY DISTURB THE CONTRACT AWARDED TO HENRY PRODUCTS COMPANY, INC.

INASMUCH AS WE BELIEVE THAT THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM REQUIRES THAT EACH BIDDER HAVE HIS BID AND ELIGIBILITY FAIRLY AND COMPLETELY CONSIDERED, WE HAVE SUGGESTED TO THE SECRETARY OF DEFENSE, IN CONNECTION WITH THE CASE CITED ABOVE, THAT CONSIDERATION BE GIVEN TO AN AMENDMENT OF THE REGULATION TO REQUIRE THAT A BIDDER BE NOTIFIED OF AN ADVERSE DETERMINATION, AND OF THE AVAILABILITY OF A REVIEW OF SUCH DETERMINATION BY THE DEPARTMENT OF LABOR, PRIOR TO AWARD WHERE PRACTICABLE.