B-163399, JUL. 9, 1968

B-163399, JUL. 9, 1968

TO WILLIAM AINSWORTH AND SONS, INC.:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF JANUARY 23, 1968, PROTESTING THE AWARD OF A CONTRACT BY THE SANTA MONICA UNIFIED SCHOOL DISTRICT, SANTA MONICA, CALIFORNIA, TO ANOTHER BIDDER UNDER INVITATION FOR BIDS NO. 36, COVERING THE FURNISHING OF, AMONG OTHER ITEMS, LABORATORY DIGITAL ANALYTICAL BALANCES. THE AMOUNT OF THE CONTRACT WAS PARTIALLY FUNDED UNDER A GRANT MADE PURSUANT TO TITLE III OF THE NATIONAL DEFENSE EDUCATION ACT OF 1958 (20 U.S.C. 441).

THE RECORD INDICATES THAT THE AWARD IN QUESTION FOR DIGITAL ANALYTICAL BALANCES WAS IN THE AMOUNT OF $8,580. THESE BALANCES WERE A PORTION OF AN AWARD IN THE TOTAL AMOUNT OF $18,719, OF WHICH $5,409 REPRESENTED THE FEDERAL SHARE IN CONNECTION WITH THE TOTAL PROJECT. TITLE III OF THE NATIONAL DEFENSE EDUCATION ACT OF 1958 PROVIDES FOR STATE PLANS TO BE APPROVED BY THE UNITED STATES COMMISSIONER OF EDUCATION AND AUTHORIZES THE PURCHASE OF EQUIPMENT SUITABLE FOR PROVIDING EDUCATION IN CERTAIN SPECIFIED SUBJECTS (INCLUDING SCIENCE) AND FOR MINOR REMODELING. UNDER THAT TITLE, EACH STATE RECEIVES A SPECIFIED ALLOTMENT WHICH IS COMPUTED ON THE BASIS OF A STATUTORY FORMULA. TITLE III FUNDS ARE AVAILABLE WITHIN THE STATE'S ALLOTMENT FOR UP TO 50 PERCENT OF THE COST TO LOCAL EDUCATIONAL AGENCIES OF EQUIPMENT PURCHASED OR OF MINOR REMODELING, THE REMAINDER OF THE COSTS BEING BORNE BY FUNDS DERIVED FROM STATE OR LOCAL SOURCES. THE REGULATIONS UNDER TITLE III OF THAT ACT PROVIDE AT 45 CFR SECTION 141.25 AS FOLLOWS: "THE STATE PLAN SHALL DESCRIBE THE PROGRAM FOR THE ACQUISITION OF EQUIPMENT AND MINOR REMODELING FOR THE CRITICAL SUBJECTS TO BE SERVED.' THE REGULATIONS ALSO PROVIDE AT 45 CFR SECTION 141.29, RELATING TO STANDARDS, AS OLLOWS: "THE STATE EDUCATIONAL AGENCY SHALL ESTABLISH STANDARDS ON A STATE LEVEL FOR EQUIPMENT TO BE ACQUIRED, AND FOR MINOR REMODELING TO BE PERFORMED, WITH FEDERAL FINANCIAL ASSISTANCE UNDER TITLE III OF THE ACT. SUCH STANDARDS ARE TO BE RELATED TO THE STATE'S PROGRAMS FOR IMPROVING INSTRUCTION IN THE CRITICAL SUBJECTS AND WILL BE APPLIED BY THE STATE AGENCY IN APPROVING PROJECTS FOR THE ACQUISITION OF EQUIPMENT OR MINOR REMODELING.'

THE FEDERAL REGULATIONS UNDER TITLE III OF THE ACT DO NOT IMPOSE ANY FEDERAL REQUIREMENT FOR COMPETITIVE BIDDING IN CONNECTION WITH THE ACQUISITION OF EQUIPMENT OR MINOR REMODELING. INASMUCH AS TITLE III IS A MATCHING GRANT PROGRAM WITH PART OF THE COST BEING PAID OUT OF STATE OR LOCAL FUNDS, THE LOCAL EDUCATIONAL AGENCY MUST, OF COURSE, ABIDE BY STATE AND LOCAL REQUIREMENTS WITH RESPECT TO SUCH PURCHASES. SECTION 15951 OF THE CALIFORNIA EDUCATION CODE REQUIRES THE AWARDING OF A CONTRACT TO THE LOWEST RESPONSIBLE BIDDER IN THE CASE, AS HERE, OF AN AWARD IN EXCESS OF $4,000. CALIFORNIA STATE PROCEDURES REQUIRE THAT PURCHASES OF EQUIPMENT BE APPROVED BY THE STATE AND, IN CONNECTION WITH THAT APPROVAL, REQUIRE THAT THE LOCAL EDUCATIONAL AGENCY IDENTIFY BY BRAND NAME AND MODEL NUMBER THE EQUIPMENT TO BE PURCHASED SO THAT IT CAN BE DETERMINED THAT THE PURCHASE CONFORMS TO STATE STANDARDS.

IN YOUR TELEGRAM OF JANUARY 23, 1968, FIVE GROUNDS OF PROTEST ARE STATED.

THE FIRST GROUND FOR YOUR PROTEST IS THAT THE PROCUREMENT UNDULY RESTRICTS DOMESTIC MANUFACTURERS OF EQUAL PRODUCTS BY CALLING OUT BRAND NAME AND MODEL NUMBER AS THE ONLY ACCEPTABLE ITEM. IT IS REPORTED THAT WHILE THE INVITATION FOR BIDS DID SPECIFY "BALANCES, SARTORIUS MODEL 2743," THE BRAND NAME AND MODEL NUMBER WERE FOLLOWED BY DETAILED SPECIFICATIONS WHICH SET FORTH THE FEATURES WHICH THE SCHOOL DISTRICT DETERMINED WERE NECESSARY FOR THE SCHOOL'S INTENDED USE. MOREOVER, IT IS REPORTED THAT IN THE PRINTED INSTRUCTIONS ACCOMPANYING THE BID FORM IT WAS STATED: "BRANDS AS LISTED ON THE BID FORM ARE GIVEN FOR DESCRIPTIVE PURPOSES. * * * THE DISTRICT RESERVES THE RIGHT TO DETERMINE THE ACCEPTABILITY OF ALTERNATE ITEMS OFFERED.' SINCE THE INVITATION LISTED THE SALIENT CHARACTERISTICS OF THE LABORATORY BALANCES AND INDICATED THAT ALTERNATE ITEMS WOULD BE CONSIDERED, WE ARE OF THE OPINION THE SPECIFICATIONS ARE NOT UNDULY RESTRICTIVE. WE HAVE RECOGNIZED THE NECESSITY AT TIMES OF PROCURING ON A NAMED BRAND OR EQUAL BASIS. 39 COMP. GEN. 101, 108.

THE SECOND BASIS FOR YOUR PROTEST IS THAT THERE APPEARS TO HAVE BEEN NO COMPLIANCE BY THE SCHOOL DISTRICT WITH THE PROVISIONS OF THE BUY AMERICAN ACT, WHICH YOU FEEL ARE APPLICABLE WHERE FEDERAL FUNDS ARE INVOLVED. INSOFAR AS IT PERTAINS TO THE SUBJECT PROCUREMENT, THE BUY AMERICAN ACT, 47 STAT. 1520, AS CODIFIED IN 41 U.S.C. 10A-D, REQUIRES THAT ONLY SUCH MANUFACTURED ARTICLES AS HAVE BEEN "MANUFACTURED IN THE UNITED STATES SUBSTANTIALLY ALL FROM ARTICLES, MATERIALS, OR SUPPLIES MINED, PRODUCED, OR MANUFACTURED," IN THE UNITED STATES BE ACQUIRED "FOR PUBLIC USE" UNLESS THE HEAD OF THE AGENCY CONCERNED SHALL DETERMINE IT TO BE INCONSISTENT WITH THE PUBLIC INTEREST, OR THE COST TO BE UNREASONABLE. THE TERM "PUBLIC USE" IS DEFINED (10C (B) ( AS MEANING "USE BY * * * THE UNITED STATES.' SEE 46 COMP. GEN. 784, 786. IN VIEW OF THE DEFINITION IN THE ACT GIVEN TO THE TERM "PUBLIC USE" AND THE FACT THAT THE LABORATORY BALANCES BEING PROCURED ARE FOR USE BY AN EDUCATIONAL AGENCY OF THE STATE OF CALIFORNIA RATHER THAN FOR USE BY THE UNITED STATES, THE PROVISIONS OF THE BUY AMERICAN ACT DO NOT APPEAR TO BE APPLICABLE TO THE PROCUREMENT IN QUESTION.

THE THIRD GROUND FOR YOUR PROTEST IS THAT THE CONTRACTING OFFICER HAS VIOLATED THE PRINCIPLE OF FORMAL ADVERTISING BIDDING PROCEDURES BY REFUSING TO AWARD A CONTRACT TO YOUR FIRM WHICH, YOU STATE, IS THE APPARENT LOW RESPONSIVE BIDDER. IT SHOULD BE NOTED THAT WHILE YOUR COMPANY SUBMITTED THE LOWEST BID ON THE LABORATORY BALANCES, YOUR BID WAS NOT THE LOWEST RESPONSIVE BID RECEIVED FROM A RESPONSIBLE BIDDER. IT IS REPORTED THAT THE BID OF YOUR COMPANY WAS REJECTED BECAUSE THE BALANCES YOUR FIRM OFFERED TO FURNISH DID NOT HAVE AN AUTOMATIC PREWEIGHING SYSTEM. MOREOVER, THE RATHER RIGID PROCEDURES APPLICABLE TO FORMALLY ADVERTISED PROCUREMENTS BY THE FEDERAL GOVERNMENT DO NOT APPLY TO NON- FEDERAL PROCUREMENTS WHEREIN THE FEDERAL GOVERNMENT PARTICIPATES MERELY AS A GRANTEE OF FUNDS TO PARTIALLY SUPPORT THE PROCUREMENTSS WHICH ARE EFFECTED BY LOCAL AGENCIES OR INSTITUTIONS. IN THAT CONNECTION, WE HAVE HELD THAT WHEN FUNDS ARE AUTHORIZED BY LAW TO THE SEVERAL STATES FOR SPECIFIED PURPOSES, THE GRANTED FUNDS BECOME STATE FUNDS, SUBJECT, OF COURSE, TO THE CONDITIONS OF THE GRANT. 28 COMP. GEN. 54.

THE FOURTH BASIS FOR YOUR PROTEST IS THE FAILURE OF THE PROCURING AGENCY TO UTILIZE GENERAL SERVICES ADMINISTRATION (GSA) SUPPLY SCHEDULES WHICH, YOU STATE, WERE ESTABLISHED FOR THE BENEFIT OF PRIME CONTRACTORS AND SUBCONTRACTORS USING FEDERAL FUNDS. YOU STATE THAT YOUR FIRM IS A GSA SCHEDULE SUPPLIER. IT IS REPORTED THAT WHILE THE GSA DOES NOW PERMIT THE USE OF GSA SUPPLY SCHEDULES BY GRANTEES OF FEDERAL FUNDS, AT THE TIME OF THIS PURCHASE THE GSA SUPPLY SCHEDULES WERE NOT MADE AVAILABLE BY THE OFFICE OF EDUCATION, DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, TO STATE OR LOCAL EDUCATIONAL AGENCIES FOR USE IN CONNECTION WITH PURCHASES UNDER TITLE III OF THE NATIONAL DEFENSE EDUCATION ACT OF 1958.

THE FIFTH REASON FOR YOUR PROTEST IS THAT THE PROCUREMENT ADVERSELY AFFECTS THE BALANCE OF PAYMENTS PROGRAM. IN ITS REPORT TO OUR OFFICE, THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE ADVISES THAT WHILE THE OFFICE OF EDUCATION IS CONCERNED WITH THE BALANCE OF PAYMENTS PROBLEM, IT HAS NOT ADMINISTRATIVELY DETERMINED THAT THE PRINCIPLES EMBODIED IN THE BUY AMERICAN ACT OR SIMILAR LEGISLATION SHOULD BE APPLIED TO PURCHASES BY FEDERAL GRANTEES UNDER TITLE III OF THE NATIONAL DEFENSE EDUCATION ACT OF 1958.

THE OFFICE OF EDUCATION HAS DETERMINED THAT THE REFUSAL OF THE SANTA MONICA UNIFIED SCHOOL DISTRICT TO ACCEPT THE BID OF YOUR FIRM WAS NOT IN VIOLATION OF THE PROVISIONS OF TITLE III OF THE NATIONAL DEFENSE EDUCATION ACT OR OF THE REGULATIONS OF THE COMMISSIONER OF EDUCATION ISSUED PURSUANT THERETO.

WE BELIEVE THAT THE AUTHORITY OF THE COMMISSIONER OF EDUCATION WITH RESPECT TO GRANTS UNDER 20 U.S.C. 441, ET SEQ., IS SOMEWHAT SIMILAR TO THAT EXERCISED BY HIM IN ADMINISTERING GRANTS UNDER TITLE I OF THE HIGHER EDUCATION FACILITIES ACT OF 1963 (20 U.S.C. 711). WE HAVE HELD THAT THE PRIMARY AUTHORITY OF THE COMMISSIONER OF EDUCATION TO DETERMINE COMPLIANCE WITH THE REGULATIONS IMPOSED BY HIM UNDER THE HIGHER EDUCATION FACILITIES ACT OF 1963 MUST BE RECOGNIZED. SEE B 161570, JANUARY 29, 1968. SEE ALSO PADUCAH JUNIOR COLLEGE V SECRETARY OF HEALTH, EDUCATION, AND WELFARE, 255 F.SUPP. 147 (1966) AND CLEMENT MARTIN, INC. V. DICK CORP., 97 F.SUPP. 961, 964. WE LIKEWISE BELIEVE THAT RECOGNITION MUST BE GIVEN TO THE PRIMARY AUTHORITY OF THE COMMISSIONER OF EDUCATION TO DETERMINE COMPLIANCE WITH THE REGULATIONS PROMULGATED UNDER THE NATIONAL DEFENSE EDUCATION ACT OF 1958.