B-163652, APRIL 12, 1968, 47 COMP. GEN. 543

B-163652: Apr 12, 1968

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WAS IN THE THIRD PRIORITY PREFERENCE GROUP. - AND WHO ONLY AFTER BIDS AND PROPOSALS WERE OPENED FURNISHED A CERTIFICATE OF ELIGIBILITY TO OBTAIN FIRST PRIORITY PREFERENCE. AS THE "CERTIFIED ELIGIBLE" SMALL BUSINESS CONCERN CERTIFICATION IS ONE OF RESPONSIVENESS AND NOT RESPONSIBILITY. THE PREFERENCE INFORMATION WAS REQUIRED TO BE SUBMITTED WITH THE CONCERN'S BIDS AND BEFORE THE DATE FIXED FOR RECEIPT OF PROPOSALS. A BIDDER MAY CHANGE HIS AREA OF PERFORMANCE IF THE CLASSIFICATION OF THE AREA IS CHANGED BY THE LABOR DEPARTMENT. THE FACT THAT A BIDDER IS PRECLUDED FROM TAKING UNILATERAL ACTION AFFECTING HIS PREVIOUSLY STATED AREA OF PERFORMANCE AND THAT AN AUTHORIZED CHANGE DOES NOT AFFECT HIS RELATIVE POSITION OF PRIORITY.

B-163652, APRIL 12, 1968, 47 COMP. GEN. 543

CONTRACTS - AWARDS - LABOR SURPLUS AREAS - QUALIFICATION OF BIDDER - PRIORITY CHANGES A CONCERN WHO AT THE TIME OF RESPONDING TO A REQUEST FOR PROPOSALS AND TWO INVITATIONS FOR BIDS, EACH SOLICITATION CONTAINING A LABOR SURPLUS AREA SET-ASIDE, WAS IN THE THIRD PRIORITY PREFERENCE GROUP--- A SMALL BUSINESS CONCERN IN A PERSISTENT LABOR SURPLUS AREA--- AND WHO ONLY AFTER BIDS AND PROPOSALS WERE OPENED FURNISHED A CERTIFICATE OF ELIGIBILITY TO OBTAIN FIRST PRIORITY PREFERENCE, MAY NOT BE CONSIDERED FOR AWARD UNDER ANY OF THE SOLICITATIONS, AS THE "CERTIFIED ELIGIBLE" SMALL BUSINESS CONCERN CERTIFICATION IS ONE OF RESPONSIVENESS AND NOT RESPONSIBILITY. THEREFORE, THE PREFERENCE INFORMATION WAS REQUIRED TO BE SUBMITTED WITH THE CONCERN'S BIDS AND BEFORE THE DATE FIXED FOR RECEIPT OF PROPOSALS, FOR NOTWITHSTANDING THE FLEXIBILITY INHERENT IN NEGOTIATION, THE ABILITY AND WILLINGNESS TO PERFORM A SET-ASIDE CANNOT BE CONTRIBUTED TO "NEGOTIATION" IN THE USUAL SENSE OF THE WORD. CONTRACTS - AWARDS - LABOR SURPLUS AREAS - CLASSIFICATION CHANGES ALTHOUGH UNDER LABOR SURPLUS AREA PROVISIONS, A BIDDER MAY CHANGE HIS AREA OF PERFORMANCE IF THE CLASSIFICATION OF THE AREA IS CHANGED BY THE LABOR DEPARTMENT, THE CHANGE DOES NOT RESULT IN A PRIORITY PREFERENCE. THE FACT THAT A BIDDER IS PRECLUDED FROM TAKING UNILATERAL ACTION AFFECTING HIS PREVIOUSLY STATED AREA OF PERFORMANCE AND THAT AN AUTHORIZED CHANGE DOES NOT AFFECT HIS RELATIVE POSITION OF PRIORITY, THE LABOR SURPLUS AREA PROVISIONS ARE CONSIDERED UNRELATED TO RESPONSIBILITY.

TO THE DIRECTOR, DEFENSE SUPPLY AGENCY, APRIL 12, 1968:

REFERENCE IS MADE TO LETTER DSAH-G, DATED FEBRUARY 23, 1968, FROM THE ASSISTANT COUNCIL, SUBMITTING FOR OUR DECISION THE PROTEST OF THE MEARL CORPORATION, RELATING TO THE LABOR SURPLUS SET-ASIDE PORTIONS OF DEFENSE CONSTRUCTION SUPPLY CENTER REQUEST FOR PROPOSALS DSA-700-68-R 3324 AND INVITATIONS FOR BIDS DSA-700-68-B-1664 AND DSA-700-68-B-1685, ALL OF WHICH WERE AMENDED TO INCLUDE THE REVISED PROVISIONS OF DEFENSE MANPOWER REGULATION (POLICY) NO. 4 (DMP 4) AND ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-804.2 RELATING TO LABOR SURPLUS SET ASIDE PROCEDURES.

WITH REFERENCE TO THE LABOR SURPLUS AREA SET-ASIDE PORTIONS OF THE PROCUREMENTS, EACH SOLICITATION CONTAINS THE FOLLOWING PROVISIONS: IT IS THE POLICY OF THE GOVERNMENT TO PLACE CONTRACTS WITH CONCERNS WHICH WILL PERFORM SUCH CONTRACTS SUBSTANTIALLY IN OR NEAR SECTIONS OF CONCENTRATED UNEMPLOYMENT OR UNDEREMPLOYMENT AS A CERTIFIED-ELIGIBLE CONCERN OR IN AREAS OF PERSISTENT OR SUBSTANTIAL LABOR SURPLUS WHERE THIS CAN BE DONE, CONSISTENT WITH THE EFFICIENT PERFORMANCE OF THE CONTRACT, AT PRICES NO HIGHER THAN ARE OBTAINABLE ELSEWHERE. * * *(I/- - NOTICE OF LABOR SURPLUS AREA SET-ASIDE (NOV. 1967)

(A) GENERAL. A PORTION OF THIS PROCUREMENT, AS IDENTIFIED ELSEWHERE IN THE SCHEDULE, HAS BEEN SET ASIDE FOR AWARD ONLY TO ONE OR MORE LABOR SURPLUS AREA CONCERNS, AND, TO A LIMITED EXTENT, TO SMALL BUSINESS CONCERNS WHICH DO NOT QUALIFY AS LABOR SURPLUS AREA CONCERNS. NEGOTIATIONS FOR AWARD OF THE SET-ASIDE PORTION WILL BE CONDUCTED ONLY WITH RESPONSIBLE LABOR SURPLUS AREA CONCERNS (AND SMALL BUSINESS CONCERNS TO THE EXTENT INDICATED BELOW) WHO HAVE SUBMITTED RESPONSIVE BIDS OR PROPOSALS ON THE NON-SET-ASIDE PORTION AT A UNIT PRICE NO GREATER THAN 120 PERCENT OF THE HIGHEST UNIT PRICE AT WHICH AN AWARD IS MADE ON THE NON-SET -ASIDE PORTION. NEGOTIATIONS FOR THE SET-ASIDE PORTION WILL BE CONDUCTED ONLY WITH RESPONSIBLE LABOR SURPLUS AREA CONCERNS (AND SMALL BUSINESS CONCERNS TO THE EXTENT INDICATED BELOW) WHO HAVE SUBMITTED RESPONSIVE BIDS OR PROPOSALS ON THE NON-SET-ASIDE PORTION AT A UNIT PRICE NO GREATER THAN 120 PERCENT OF THE HIGHEST UNIT PRICE AT WHICH AN AWARD IS MADE ON THE NON -SET-ASIDE PORTION. NEGOTIATIONS FOR THE SET-ASIDE PORTION WILL BE CONDUCTED WITH SUCH BIDDERS IN THE FOLLOWING ORDER OF PRIORITY:

GROUP 1. CERTIFIED-ELIGIBLE CONCERNS WHICH ARE ALSO SMALL BUSINESS CONCERNS.

GROUP 2. OTHER CERTIFIED-ELIGIBLE CONCERNS.

GROUP 3. PERSISTENT LABOR SURPLUS AREA CONCERNS WHICH ARE ALSO SMALL BUSINESS CONCERNS.

GROUP 4. OTHER PERSISTENT LABOR SURPLUS AREA CONCERNS.

GROUP 5. SUBSTANTIAL LABOR SURPLUS AREA CONCERNS WHICH ARE ALSO SMALL BUSINESS CONCERNS.

GROUP 6. OTHER SUBSTANTIAL LABOR SURPLUS AREA CONCERNS.

GROUP 7. SMALL BUSINESS CONCERNS WHICH ARE NOT LABOR SURPLUS AREA CONCERNS.

THE LABOR SURPLUS AREA PROVISIONS STIPULATED THAT WITHIN EACH OF THE ABOVE PRIORITY GROUPS, NEGOTIATIONS WITH SUCH CONCERNS "WILL BE IN THE ORDER OF THEIR BIDS ON THE NON-SET-ASIDE PORTION BEGINNING WITH THE LOWEST RESPONSIVE BID.' IT FURTHER PROVIDED THAT "THE SET-ASIDE PORTION SHALL BE AWARDED AT THE HIGHEST UNIT PRICE AWARDED ON THE NON SET-ASIDE PORTION," AND THAT:

(1) THE TERM "LABOR SURPLUS AREA" MEANS A GEOGRAPHICAL AREA WHICH IS A SECTION OF CONCENTRATED UNEMPLOYMENT OR UNDEREMPLOYMENT, A PERSISTENT LABOR SURPLUS AREA, OR A SUBSTANTIAL LABOR SURPLUS AREA, AS DEFINED BELOW:

(I) "SECTION OF CONCENTRATED UNEMPLOYMENT OR UNDEREMPLOYMENT" MEANS APPROPRIATE SECTIONS OF STATES OR "LABOR AREAS" SO CLASSIFIED BY THE SECRETARY OF LABOR.

(2) THE TERM "LABOR SURPLUS AREA CONCERN" INCLUDES CERTIFIED-ELIGIBLE CONCERNS, PERSISTENT LABOR SURPLUS AREA CONCERNS, AND SUBSTANTIAL LABOR SURPLUS AREA CONCERNS, AS DEFINED BELOW:

(I) "CERTIFIED-ELIGIBLE CONCERN" MEANS A CONCERN (A) LOCATED IN OR NEAR A SECTION OF CONCENTRATED UNEMPLOYMENT BY UNDEREMPLOYMENT WHICH HAS BEEN CERTIFIED BY THE SECRETARY OF LABOR IN ACCORDANCE WITH 29 CFR 8.7 (B) WITH RESPECT TO THE EMPLOYMENT OF DISADVANTAGED PERSONS RESIDING WITHIN SUCH SECTIONS, AND (B) WHICH WILL AGREE TO PERFORM, OR CAUSE TO BE PERFORMED BY A CERTIFIED CONCERN, A SUBSTANTIAL PROPORTION OF A CONTRACT IN OR NEAR SUCH SECTIONS; IT INCLUDES A CONCERN WHICH, THOUGH NOT SO CERTIFIED, AGREES TO HAVE A SUBSTANTIAL PROPORTION OF A CONTRACT PERFORMED BY CERTIFIED CONCERNS IN OR NEAR SUCH SECTIONS. A CONCERN SHALL BE DEEMED TO PERFORM A SUBSTANTIAL PROPORTION OF A CONTRACT IN OR NEAR SECTIONS OF CONCENTRATED UNEMPLOYMENT OR UNDEREMPLOYMENT IF THE COSTS THAT THE CONCERN WILL INCUR ON ACCOUNT OF MANUFACTURING OR PRODUCTION IN OR NEAR SUCH SECTIONS (BY ITSELF IF A CERTIFIED CONCERN, OR BY CERTIFIED CONCERNS ACTING AS FIRST-TIER SUBCONTRACTORS) AMOUNT TO MORE THAN 30 PERCENT OF THE CONTRACT PRICE.

(C) IDENTIFICATION OF AREAS OF PERFORMANCE. EACH BIDDER DESIRING TO BE CONSIDERED FOR AWARD AS A LABOR SURPLUS AREA CONCERN ON THE SET ASIDE PORTION OF THIS PROCUREMENT SHALL IDENTIFY IN HIS BID THE GEOGRAPHICAL AREAS IN WHICH HE PROPOSES TO PERFORM, OR CAUSE TO BE PERFORMED, A SUBSTANTIAL PROPORTION OF THE PRODUCTION OF THE CONTRACT. IF THE DEPARTMENT OF LABOR CLASSIFICATION OF ANY SUCH AREA CHANGES AFTER THE BIDDER HAS SUBMITTED HIS BID, THE BIDDER MAY CHANGE THE AREAS IN WHICH HE PROPOSES TO PERFORM, PROVIDED, THAT HE SO NOTIFIES THE CONTRACTING OFFICER BEFORE AWARD OF THE SET-ASIDE PORTION. PROPRIETY FOR NEGOTIATION WILL BE BASED UPON THE LABOR SURPLUS CLASSIFICATION OF THE DESIGNATED PRODUCTION AREAS AS OF THE TIME OF THE PROPOSED AWARD.

(D) ELIGIBILITY BASED ON CERTIFICATION. WHERE ELIGIBILITY FOR PREFERENCE IS BASED UPON THE STATUS OF THE BIDDER OR BIDDER'S SUBCONTRACTORS AS A "CERTIFIED-ELIGIBLE CONCERN," THE BIDDER SHALL FURNISH WITH HIS BID EVIDENCE OF CERTIFICATION BY THE SECRETARY OF LABOR.

(E) AGREEMENT. THE BIDDER AGREES THAT: (I) IF AWARDED A CONTRACT AS A CERTIFIED-ELIGIBLE CONCERN UNDER THE SET-ASIDE PORTION OF THIS PROCUREMENT HE WILL PERFORM, OR CAUSE TO BE PERFORMED, A SUBSTANTIAL PROPORTION OF THE CONTRACT IN OR NEAR SECTIONS OF CONCENTRATED UNEMPLOYMENT OR UNDEREMPLOYMENT AND IN THE PERFORMANCE OF SUCH CONTRACT OR SUBCONTRACTS, WILL EMPLOY A PROPORTIONATE NUMBER OF DISADVANTAGED PERSONS RESIDING WITHIN SECTIONS OF CONCENTRATED UNEMPLOYMENT OR UNDEREMPLOYMENT IN ACCORDANCE WITH PLANS APPROVED BY THE SECRETARY OF LABOR; * * *.

THE RECORD INDICATES THAT MEARL WAS NOT THE LOWEST RESPONSIVE BIDDER OR OFFERER UNDER ANY OF THE NON-SET-ASIDE PORTIONS OF THE SOLICITATIONS, BUT ITS PRICES APPEAR TO BE WITHIN 120 PERCENT OF THE HIGHEST UNIT PRICES TO BE AWARDED UNDER THE NON-SET-ASIDE PORTIONS. WITH RESPECT TO THE LABOR SURPLUS SET-ASIDE PORTIONS OF THE SOLICITATIONS, MEARL INDICATED THAT IT IS A SMALL BUSINESS CONCERN AND THAT 60 PERCENT OF THE WORK WILL BE PERFORMED IN EASTPORT, MAINE, A SITE CURRENTLY CLASSIFIED AS A PERSISTENT LABOR SURPLUS AREA. THEREFORE, FOR PURPOSES OF NEGOTIATING THE SET- ASIDES, MEARL IS CONSIDERED BY THE PROCUREMENT ACTIVITY TO BE IN GROUP 3 (SMALL BUSINESS PERSISTENT LABOR SURPLUS AREA CONCERN) OF THE PRIORITY CLASSIFICATIONS QUOTED ABOVE.

THE RECORD ALSO INDICATES THAT THE BIDS AND PROPOSAL OF ANOTHER PROSPECTIVE CONTRACTOR, CHEMICAL CONCENTRATES CORPORATION (CCC), IN RESPONSE TO THE THREE SOLICITATIONS, EACH INCLUDED A CERTIFICATE ISSUED BY THE DIRECTOR, UNITED STATES EMPLOYMENT SERVICE, DEPARTMENT OF LABOR, STATING THAT CCC IS A CERTIFIED-ELIGIBLE CONCERN (LARGE BUSINESS) AND IS THEREFORE CONSIDERED TO BE IN PRIORITY GROUP 2.

BY LETTER DATED JANUARY 30, 1968, AFTER OPENING OF BIDS AND PROPOSALS SUBMITTED IN RESPONSE TO THE THREE SOLICITATIONS, MEARL ADVISED THE CONTRACTING OFFICER THAT APPROXIMATELY 40 PERCENT OF ITS PRODUCTION COSTS WOULD BE INCURRED CLOSE TO A GEOGRAPHICAL AREA OF "CONCENTRATED UNEMPLOYMENT OR UNDEREMPLOYMENT," AND THAT IT EXPECTED MOMENTARILY TO BE CERTIFIED-ELIGIBLE FOR PREFERENCE IN ACCORDANCE WITH THE LABOR SURPLUS AREA PROVISIONS OF THE SOLICITATIONS. ON FEBRUARY 1, 1968, MEARL SUBMITTED, TO THE PROCUREMENT ACTIVITY, A COPY OF A TELEGRAM FROM THE DIRECTOR, UNITED STATES EMPLOYMENT SERVICE, DEPARTMENT OF LABOR, STATING THAT MEARL "HAS AN APPROVED PLAN OF EMPLOY DISADVANTAGED WORKERS RESIDING IN CLASSIFIED SECTIONS OF NEWARK, NEW JERSEY," AND IS THEREFORE ,CERTIFIED FOR PREFERENCE IN PROCUREMENT OF FEDERAL GOVERNMENT CONTRACT NUMBERS DA 700-68-R-3324, IFB DSA 700-68-B-1664, IFB DSA 700-68-B-1685 UNDER DEFENSE MANPOWER POLICY NO. 4 AS OF JANUARY 31, 1968.' ON FEBRUARY 9, 1968, MEARL REQUESTED THAT IT BE CONSIDERED BY THE PROCUREMENT ACTIVITY AS A CERTIFIED -ELIGIBLE SMALL BUSINESS CONCERN IN PRIORITY GROUP 1 AND, AS SUCH, ENTITLED TO FIRST PRIORITY NEGOTIATION FOR AWARD OF THE LABOR SURPLUS SET- ASIDE PORTIONS OF THE THREE SOLICITATIONS.

THE LABOR SURPLUS AREA SET-ASIDE PROVISIONS OF THE INVITATIONS AND THE REQUEST FOR PROPOSALS REQUIRE, WHEN ELIGIBILITY FOR NEGOTIATION PREFERENCE IS BASED UPON THE STATUS OF THE BIDDER/OFFEROR AS A "CERTIFIED-ELIGIBLE" CONCERN, THAT EVIDENCE OF THE CERTIFICATION BY THE SECRETARY OF LABOR BE FURNISHED WITH THE BID/PROPOSAL.

WE STATED AT 41 COMP. GEN. 417, 418, AS FOLLOWS:

THE SET ASIDE PORTION IS, OF COURSE, A NEGOTIATED PROCUREMENT AND, THEREFORE, IS NOT SUBJECT TO THE STRICT RULES GOVERNING PROCUREMENT BY FORMAL ADVERTISING. NEVERTHELESS, IT IS OUR POSITION THAT REQUIREMENTS FOR AND LIMITATIONS ON ELIGIBILITY FOR AWARD UNDER THE SET-ASIDE WHICH ARE STATED IN AN INVITATION SHOULD BE FOLLOWED IN THE AWARD OF THE SET ASIDE PORTION. * * *

IN LINE WITH THAT VIEW, OUR DECISIONS HAVE STATED THAT INVITATIONS INVOLVING LABOR SURPLUS SET-ASIDES SHOULD STATE THE INFORMATION WHICH BIDDERS ARE TO FURNISH IN THEIR BIDS AND THE EFFECT OF THE FAILURE TO FURNISH IT. 44 COMP. GEN. 34; 41 ID. 160. WE NOTE THAT IN THE PRESENT CASE THE INVITATIONS DID NOT SPECIFICALLY ADVISE PROSPECTIVE BIDDERS OF THE EFFECT OF THEIR FAILURE TO SUBMIT THE CERTIFICATE OF ELIGIBILITY WITH THEIR BIDS; HOWEVER, WE HELD IN B-156374, SEPTEMBER 3, 1965, THAT "WHILE IT MIGHT HAVE BEEN PREFERABLE TO AFFIRMATIVELY ADVISE BIDDERS OF THE CONSEQUENCES OF THEIR FAILURE TO INDICATE SITES OF PERFORMANCE * * * THE ENTIREC ON TEXT OF THE SET-ASIDE NOTICE IS CLEARLY OF MATERIAL SIGNIFICANCE IN BID EVALUATION.' SEE, ALSO, 44 COMP. GEN. 34.

THE GENERAL RULE IS WELL ESTABLISHED THAT IN ADVERTISED PROCUREMENTS A BIDDER'S FAILURE TO SUPPLY INFORMATION IN THE BID WHICH IS NECESSARY FOR A FULL AND COMPLETE EVALUTION OF THE BID WILL RENDER THE BID NONRESPONSIVE TO THE INVITATION FOR BIDS. MOREOVER, WHERE SUCH MATERIAL INFORMATION IS OMITTED FROM A BID IT MAY NOT BE SUPPLIED AFTER BID OPENING. 44 COMP. GEN. 34. SINCE BIDDERS WERE WARNED THAT THEIR ELIGIBILITY FOR CONSIDERATION AS A CERTIFIED-ELIGIBLE CONCERN, FOR THE PURPOSE OF PRIORITY IN THE NEGOTIATION OF THE SET-ASIDE PORTIONS, WAS PREDICATED UPON THE SUBMISSION OF A PROPER CERTIFICATION WITH THEIR BIDS, OUR OFFICE WOULD NOT BE WARRANTED IN DISAGREEING WITH A DETERMINATION TO CONSIDER A BIDDER WHICH DID NOT SUBMIT TO THE REQUIRED CERTIFICATE AS ONE WHICH HAS NOT BEEN QUALIFIED AS A "CERTIFIED ELIGIBLE" CONCERN.

AS INDICATED, MEARL WAS RESPONSIVE TO THE TWO INVITATIONS. HOWEVER, UNDER ITS BID, IT IS ELIGIBLE ONLY FOR CONSIDERATION AS A PERSISTENT LABOR SURPLUS AREA CONCERN. IN THIS CONTEXT, THE FURNISHING OF CERTIFICATES OF ELIGIBILITY AFTER BID OPENING TO OBTAIN FIRST-PRIORITY PREFERENCE WOULD, IF PERMITTED, DISPLACE A BIDDER OTHERWISE ENTITLED TO FIRST-PRIORITY PREFERENCE BY VIRTUE OF ITS CERTIFICATE OF ELIGIBILITY WHICH ACCOMPANIED ITS BID AS REQUIRED BY THE TERMS OF THE INVITATIONS.

IT IS ARGUED BY THE ATTORNEY FOR MEARL THAT THE REQUIREMENT FOR FURNISHING THE CERTIFICATE OF ELIGIBILITY WITH THE BID IS ONE INVOLVING RESPONSIBILITY AND NOT RESPONSIVENESS AND, THEREFORE, SUCH CERTIFICATE MAY BE FURNISHED SUBSEQUENT TO BID OPENING. HOWEVER, WE DO NOT FEEL THAT THIS VIEW SHOULD GOVERN HERE TO PERMIT A BIDDER TO IDENTIFY IN ITS BID AN AREA OF PERFORMANCE WHICH IS SUBJECT TO A CERTAIN LABOR SURPLUS PRIORITY GROUP AND THEN TAKE AFFIRMATIVE ACTION AFTER OPENING OF BIDS TO OBTAIN EVIDENCE OF ENTITLEMENT TO A HIGHER PRIORITY GROUP FOR THE SOLE PURPOSE OF MEETING THE CRITERIA ESTABLISHED FOR THAT HIGHER PRIORITY GROUP. ANY OTHER VIEW WOULD BE DESTRUCTIVE OF THE COMPETITIVE BIDDING PROCESS EVEN THOUGH IT MAY BE LIMITED TO LABOR SURPLUS CONCERNS.

IN VIEW OF THE FOREGOING, WE FIND NO BASIS TO OBJECT TO THE CONTRACTING OFFICER'S DECISION TO CONSIDER MEARL AS REMAINING IN PRIORITY GROUP 3 FOR THE PURPOSES OF ACCOMPLISHING AN AWARD OF THE LABOR SURPLUS SET-ASIDE PORTIONS OF THE TWO INVITATIONS FOR BIDS.

THERE REMAINS FOR CONSIDERATION THE QUESTION WHETHER OUR CONCLUSION RELATING TO THE TWO ADVERTISED PROCUREMENTS APPLIES ALSO TO THE PROCUREMENT UNDER REQUEST FOR PROPOSALS NO. DSA-700-68-R-3324 WHICH IS BEING NEGOTIATED PURSUANT TO 10 U.S.C. 2304 (A) (2/--- THE PUBLIC EXIGENCY EXCEPTION--- BECAUSE OF THE URGENT DIRECT DELIVERY REQUIREMENT FOR OVERSEAS DESTINATIONS UNDER AN ISSUE PRIORITY SYSTEM DESIGNATOR OF 05. STATED ABOVE, MEARL IS CONSIDERED TO BE IN PRIORITY GROUP 3 OF THE LABOR SURPLUS AREA CLASSIFICATION AND CCC, BY VIRTUE OF ITS SUBMISSION OF A CERTIFICATE OF ELIGIBILITY WITH ITS PROPOSAL, IS CONSIDERED TO BE IN PRIORITY GROUP 2. THE REPORT OF FEBRUARY 23, 1968, ADVISED THAT THE EVALUATION OF OFFERS ON THE NON-SET-ASIDE PORTION OF THE RFP HAS BEEN COMPLETED. WE ASSUME THEREFORE THAT NEGOTIATIONS, AS CONTEMPLATED BY ASPR 3-805.1, HAVE BEEN CONDUCTED LOOKING TO THE AWARD OF THE NON-SET-ASIDE PORTION. WE HAVE RECENTLY STATED THAT THE RULES OF COMPETITIVE BIDDING ARE NOT GENERALLY APPLICABLE, ALTHOUGH THEY MAY SERVE AS GENERAL GUIDELINES IN CASES WHERE THEIR APPLICATION SERVES THE BEST INTERESTS OF THE GOVERNMENT. IN 47 COMP. GEN. 279, NOVEMBER 21, 1967, WE HELD:

* * * NEGOTIATION PROCEDURES, UNLIKE THOSE REQUIRED FOR FORMAL ADVERTISING, ARE DESIGNED TO BE FLEXIBLE AND INFORMAL. THESE PROCEDURES PROPERLY PERMIT THE CONTRACTING OFFICER TO DO THINGS IN THE AWARDING OF A NEGOTIATED CONTRACT THAT WOULD BE A RADICAL VIOLATION OF THE LAW IF THE PROCUREMENT WERE BEING ACCOMPLISHED BY FORMAL ADVERTISING. * * *

HOWEVER, WE DO NOT BELIEVE THAT THE ABOVE RATIONALE PROPERLY IS APPLICABLE TO THIS CASE INVOLVING THE QUESTION WHETHER THE "NEGOTIATION" OF THE LABOR SURPLUS AREA PORTION OF THE PROCUREMENT IS REQUIRED TO BE CONDUCTED IN STRICT ACCORDANCE WITH THE PERTINENT TERMS OF RFP.

WHILE THE FLEXIBILITY INHERENT IN NEGOTIATION PROCEDURES CONSTITUTES ONE OF THE MORE SIGNIFICANT DEPARTURES FROM FORMAL ADVERTISING, THE "NEGOTIATION" CONTEMPLATED BY THE LABOR SURPLUS AREA PROVISIONS OF THE RFP IS NOT AMENABLE TO THIS GENERAL CONCEPT OF MUTUAL, INFORMAL BARGAINING WHICH MAY BE CONDUCTED SOMEWHAT OUTSIDE THE TERMS AND CONDITIONS OF THE RFP.

THE "NEGOTIATION" CONTEMPLATED BY THE LABOR SURPLUS AREA SET-ASIDE PROVISIONS IS NOT CONCERNED WITH THE PRICE OF THE ARTICLES COVERED BY THE SET-ASIDE BUT ONLY WHETHER THE OFFEROR WHO IS ENTITLED TO FIRST PRIORITY WILL ACCEPT AN AWARD OF THE SET-ASIDE. IN THIS REGARD, IT IS SIGNIFICANT TO POINT OUT THAT AWARD OF THE SET-ASIDE PORTION MUST BE MADE TO THE ELIGIBLE OFFEROR "AT THE HIGHEST UNIT PRICE AWARDED ON THE NON-SET-ASIDE PORTION.' THUS, THE ONLY NEGOTIATION THAT MAY BE INVOLVED IS THE ABILITY AND WILLINGNESS OF THE ELIGIBLE OFFEROR TO PERFORM THE SET-ASIDE. THEREFORE CANNOT ATTRIBUTE "NEGOTIATION," IN THE USUAL SENSE OF THAT TERM, TO THE SET-ASIDE PORTION OF THE PROCUREMENT. SEE 41 COMP. GEN. 230, 233- 234. IN THIS CONTEXT, AND SINCE ALL OFFERORS WERE ADMONISHED BY THE SPECIFIC TERMS OF THE RFP THAT, WHEN ELIGIBILITY FOR PREFERENCE IS BASED UPON THE STATUS OF THE OFFEROR AS A "CERTIFIED-ELIGIBLE CONCERN," THE OFFEROR "SHALL FURNISH WITH HIS BID EVIDENCE OF CERTIFICATION BY THE SECRETARY OF LABOR," WE MUST CONCLUDE THAT THE FURNISHING OF SUCH EVIDENCE AFTER THE DATE FIXED FOR RECEIPT OF PROPOSALS HAS NO EFFECT TO CHANGE THE PRIORITY CLASSIFICATION OF MEARL FROM GROUP 3 TO GROUP 1.

MEARL WAS ON NOTICE, LIKE OTHER OFFERORS, OF THE EXISTENCE OF THE FIRST- PRIORITY CATEGORY OF ,CERTIFIED-ELIGIBLE CONCERN, BEFORE IT SUBMITTED ITS PROPOSAL. IT CHOSE TO PLACE ITSELF IN A LESSER CATEGORY OF PREFERENCE AND, UNDER THE TERMS OF THE RFP, THIS IS THE CATEGORY WHICH DETERMINES ITS ELIGIBILITY TO PARTICIPATE IN THE SET-ASIDE. FROM THE RECORD BEFORE US, MEARL APPARENTLY MADE NO ATTEMPT TO SECURE CERTIFICATION BY THE SECRETARY OF LABOR PRIOR TO THE SCHEDULED OPENING OF PROPOSALS. THIS IS A CASE WHERE AN OFFEROR--- ALTHOUGH OTHERWISE RESPONSIVE--- TOOK AFFIRMATIVE ACTION AFTER RECEIPT OF PROPOSALS TO IMPROVE ITS OPPORTUNITY FOR SET-ASIDE CONSIDERATION TO THE DISADVANTAGE OF THE OTHER ELIGIBLE OFFEROR WHO COMPLIED WITH THE TERMS OF THE RFP. TO PERMIT MEARL TO HAVE A SECOND CHANCE AT THE AWARD OF THE SET-ASIDE WOULD BE IN DEROGATION OF THE PLAIN TERMS OF THE RFP AND DISRUPTIVE OF THE ORDERLY PROCESS OF THE PROCUREMENT WHICH WAS CONTEMPLATED BY THE RFP.

IT MAY BE SAID THAT THE LABOR SURPLUS AREA PROVISIONS CARRY A CONNOTATION OF RESPONSIBILITY RATHER THAN RESPONSIVENESS IN THAT THEY STATE THAT "PRIORITY FOR NEGOTIATION WILL BE BASED UPON THE LABOR SURPLUS CLASS OF THE DESIGNATED PRODUCTION AREAS AS OF THE TIME OF THE PROPOSED AWARD.' HOWEVER, WE DO NOT REGARD THE QUOTED LANGUAGE AS INDICATIVE OF RESPONSIBILITY ON THE BASIS THAT EVIDENCE OF SURPLUS LABOR AREA CLASS MAY BE FURNISHED AFTER BID OPENING BUT PRIOR TO AWARD. IN THE CONTEXT OF THE ENTIRE PARAGRAPH, WHICH IS ENTITLED "IDENTIFICATION OF AREAS OF PERFORMANCE," THE QUOTED LANGUAGE MUST BE READ IN THE LIGHT OF THE PRECEDING SENTENCE: "IF THE DEPARTMENT OF LABOR CLASSIFICATION OF ANY SUCH AREA (THE GEOGRAPHIC AREA IDENTIFIED IN THE BID) CHANGES AFTER THE BIDDER HAS SUBMITTED HIS BID, THE BIDDER MAY CHANGE THE AREAS IN WHICH HE PROPOSES TO PERFORM, PROVIDED, THAT HE SO NOTIFIES THE CONTRACTING OFFICER BEFORE AWARD OF THE SET-ASIDE PORTION.'

HENCE, UNDER THE LABOR SURPLUS AREA PROVISIONS, A BIDDER MAY CHANGE HIS AREA OF PERFORMANCE ORIGINALLY CERTIFIED IF THE CLASSIFICATION OF THAT AREA IS CHANGED BY THE DEPARTMENT OF LABOR BUT THE CHANGE MUST NOT RESULT IN AN ADVANCEMENT IN PRIORITY PREFERENCE. SEE B-156374, SEPTEMBER 3, 1965. IN OTHER WORDS, AN AUTHORIZED CHANGE IS PERMITTED PROVIDED THE BIDDER WILL PERFORM IN THE SAME CATEGORY STATED IN HIS BID, BUT NOT IF THE CHANGE WOULD IMPROVE HIS POSITION IN ORDER OF PRIORITY. WE THEREFORE REGARD THESE PROVISIONS AS UNRELATED TO RESPONSIBILITY SINCE THE BIDDER IS PRECLUDED FROM TAKING UNILATERAL ACTION AFFECTING HIS PREVIOUSLY STATED AREA OF PERFORMANCE AND ANY CHANGE, IF AUTHORIZED, IS ONE NOT AFFECTING HIS RELATIVE POSITION OF PRIORITY VIS-A-VIS OTHER BIDDERS.

IN VIEW THEREOF, IT IS OUR OPINION THAT THE REQUIREMENT IN THE INVITATIONS AND THE RFP RESPECTING THE SUBMISSION OF EVIDENCE OF CERTIFICATION AS A "CERTIFIED-ELIGIBLE CONCERN" IS ONE OF RESPONSIVENESS AS TO WHICH THE CRITICAL TIME IS BID OPENING OR THE DATE FIXED FOR RECEIPT OF PROPOSALS.