B-164734, SEPT. 9, 1968

B-164734: Sep 9, 1968

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TO RTT ELECTRONICS: REFERENCE IS MADE TO YOUR LETTER OF JUNE 25. YOU CONTEND THAT YOU WERE ENTITLED TO AWARD AS THE LOWEST RESPONSIVE. THE SUBJECT INVITATION WAS ISSUED ON MAY 9. THREE BIDS WERE RECEIVED AS FOLLOWS: BIDDER BID ON ITEM NO. 1 RTT ELECTRONICS $72. BIDDERS WERE REQUIRED TO INDICATE ON THEIR BIDS THAT THEY WERE EITHER A MANUFACTURER OF. YOU REPRESENTED AND CERTIFIED IN YOUR BID THAT RTT ELECTRONICS WAS A REGULAR DEALER IN THE SUPPLIES OFFERED. A PREAWARD SURVEY WAS CONDUCTED TO DETERMINE WHETHER YOUR COMPANY QUALIFIED AS A REGULAR DEALER WITHIN THE MEANING OF THE WALSH-HEALEY PUBLIC CONTRACTS ACT AND FEDERAL PROCUREMENT REGULATIONS (FPR) SECTION 1-12.603-2. HE DETERMINED THAT RTT ELECTRONICS WAS NOT A REGULAR DEALER OF THE SUPPLIES OFFERED FOR THE FOLLOWING REASONS: "1.

B-164734, SEPT. 9, 1968

TO RTT ELECTRONICS:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 25, 1968, PROTESTING AGAINST THE AWARD OF A CONTRACT TO ANY OTHER BIDDER UNDER INVITATION FOR BIDS NO. WA5M -8-0382B1, ISSUED BY THE FEDERAL AVIATION ADMINISTRATION. YOU CONTEND THAT YOU WERE ENTITLED TO AWARD AS THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER.

THE SUBJECT INVITATION WAS ISSUED ON MAY 9, 1968, AND SOLICITED BIDS FOR 138 TELEVISION MONITORS AND ANCILLARY SUPPORT ITEMS. THREE BIDS WERE RECEIVED AS FOLLOWS:

BIDDER BID ON ITEM NO. 1

RTT ELECTRONICS $72,588

COHU ELECTRONICS, INC. 74,796

MIRATEL DIVISION, BALL BROTHERS RESEARCH

CORPORATION 82,110

PURSUANT TO THE WALSH-HEALEY ACT, 41 U.S.C. 35-45, BIDDERS WERE REQUIRED TO INDICATE ON THEIR BIDS THAT THEY WERE EITHER A MANUFACTURER OF, OR A REGULAR DEALER IN, THE ITEMS BID UPON. YOU REPRESENTED AND CERTIFIED IN YOUR BID THAT RTT ELECTRONICS WAS A REGULAR DEALER IN THE SUPPLIES OFFERED. IN THIS RESPECT, A PREAWARD SURVEY WAS CONDUCTED TO DETERMINE WHETHER YOUR COMPANY QUALIFIED AS A REGULAR DEALER WITHIN THE MEANING OF THE WALSH-HEALEY PUBLIC CONTRACTS ACT AND FEDERAL PROCUREMENT REGULATIONS (FPR) SECTION 1-12.603-2. BASED ON THE INFORMATION MADE AVAILABLE TO THE CONTRACTING OFFICER, HE DETERMINED THAT RTT ELECTRONICS WAS NOT A REGULAR DEALER OF THE SUPPLIES OFFERED FOR THE FOLLOWING REASONS: "1. THE COMPANY WAS A NEWLY ORGANIZED PARTNERSHIP (APRIL 4, 1968) WHICH HAD APPLIED FOR, BUT HAD NOT YET RECEIVED, A CORPORATE CHARTER FROM THE STATE OF OHIO. "2. THE COMPANY HAD NEVER PRODUCED OR STOCKED THE EQUIPMENT SPECIFIED IN THE IFB. FURTHER, SUBASSEMBLIES, OR BASIC COMPONENTS WHICH COULD BE ASSEMBLED TO MANUFACTURE TELEVISION MONITORS, WERE NOT IN EVIDENCE. THEREFORE, IT FAILED TO QUALIFY AS A REGULAR DEALER UNDER FEDERAL PROCUREMENT REGULATIONS (FPR) 1-12.603-2 (A) (1), (2), AND (3). "3. THE COMPANY COULD NOT PRODUCE ANY EVIDENCE OF PRIOR SALES OF TELEVISION MONITOR EQUIPMENT. THEREFORE, IT FAILED TO QUALIFY AS A REGULAR DEALER UNDER FPR 1-12.603-2 (A) (4) AND (5). "4. THE COMPANY PLANNED TO HAVE THE MIRATEL DIVISION OF BALL BROTHERS RESEARCH CORPORATION PERFORM ALL OF THE REQUIREMENTS OF THE IFB. RTT PERSONNEL WERE UNABLE TO INFORM US AS TO WHAT FUNCTIONS RTT WOULD PERFORM, IF AWARDED THE CONTRACT.'

MOREOVER, IT IS REPORTED THAT THE PREAWARD SURVEY OF YOUR FIRM INDICATED INADEQUATE FINANCIAL CAPABILITY, TECHNICAL COMPETENCE AND PLANT FACILITIES FOR PERFORMANCE UNDER THE CONTRACT. ON JUNE 27, 1968, AWARD OF CONTRACT NO. FA68WA-1959 WAS MADE TO THE NEXT LOW BIDDER, COHU ELECTRONICS, INC. WE FIND NO LEGAL BASIS TO QUESTION THAT AWARD.

UNDER 41 U.S.C. 38, THE SECRETARY OF LABOR IS AUTHORIZED AND DIRECTED TO ADMINISTER THE PROVISIONS OF THE WALSH-HEALEY ACT AND TO MAKE SUCH RULES AND REGULATIONS AS MAY BE NECESSARY TO THAT END. PURSUANT TO THIS STATUTORY AUTHORITY, THE SECRETARY OF LABOR HAS ISSUED REGULATIONS WHICH ARE PROMULGATED IN TITLE 41, CHAPTER 50, OF THE CODE OF FEDERAL REGULATIONS. SECTION 201.101 OF THOSE REGULATIONS PROVIDES IN PERTINENT PART AS FOLLOWS:

"A BIDDER OR CONTRACTOR SHALL BE DEEMED TO BE A * * * -REGULAR DEALER- WITHIN THE MEANING OF THE STIPULATION REQUIRED BY SECTION 1 (A) OF THE ACT AND SEC. 50-201.1 (A) IF HE FALLS WITHIN ONE OF THE FOLLOWING CATEGORIES:

"/B) A REGULAR DEALER IS A PERSON WHO OWNS, OPERATES, OR MAINTAINS A STORE, WAREHOUSE, OR OTHER ESTABLISHMENT IN WHICH THE MATERIALS, SUPPLIES, ARTICLES, OR EQUIPMENT OF THE GENERAL CHARACTER DESCRIBED BY THE SPECIFICATIONS AND REQUIRED UNDER THE CONTRACT ARE BOUGHT, KEPT IN STOCK, AND SOLD TO THE PUBLIC IN THE USUAL COURSE OF BUSINESS.

"/C) (1) EXCEPT AS HEREINAFTER PROVIDED, EVERY BID RECEIVED FROM ANY BIDDER WHO DOES NOT FALL WITHIN ONE OF THE FOREGOING CATEGORIES SHALL BE REJECTED BY THE CONTRACTING OFFICER.'

IN THE WALSH-HEALEY PUBLIC CONTRACTS ACT "RULINGS AND INTERPRETATIONS NO. 3," PUBLISHED BY THE DEPARTMENT OF LABOR, SECTION 29 STATES AS FOLLOWS:

"/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.'

FPR SEC. 1-12.603-2 PROVIDES THAT IN ORDER TO QUALIFY AS A REGULAR DEALER A BIDDER MUST SHOW BEFORE THE AWARD:

"/1) THAT HE HAS AN ESTABLISHMENT OR LEASED OR ASSIGNED SPACE IN WHICH HE REGULARLY MAINTAINS A STOCK OF GOODS IN WHICH HE CLAIMS TO BE A DEALER; IF THE SPACE IS IN A PUBLIC WAREHOUSE, IT MUST BE MAINTAINED ON A CONTINUING, AND NOT ON A DEMAND, BASIS;

"/2) THAT THE STOCK MAINTAINED IS A TRUE INVENTORY FROM WHICH SALES ARE MADE; THE REQUIREMENT IS NOT SATISFIED BY A STOCK OF SAMPLE OR DISPLAY GOODS, OR BY A STOCK CONSISTING OF SURPLUS GOODS REMAINING FROM PRIOR ORDERS, OR BY A STOCK UNRELATED TO THE SUPPLIES WHICH ARE THE SUBJECT OF THE BID, OR BY A STOCK MAINTAINED PRIMARILY FOR THE PURPOSE OF TOKEN COMPLIANCE WITH THE ACT FROM WHICH FEW, IF ANY, SALES ARE MADE;

"/3) THAT THE GOODS STOCKED ARE OF THE SAME GENERAL CHARACTER AS THE GOODS TO BE SUPPLIED UNDER THE CONTRACT; TO BE OF THE SAME GENERAL CHARACTER THE ITEMS TO BE SUPPLIED MUST BE EITHER IDENTICAL WITH THOSE IN STOCK OR BE GOODS FOR WHICH DEALERS IN THE SAME LINE OF BUSINESS WOULD BE AN OBVIOUS SOURCE;

"/4) THAT SALES ARE MADE REGULARLY FROM STOCK ON A RECURRING BASIS; THEY CANNOT BE ONLY OCCASIONAL AND CONSTITUTE AN EXCEPTION TO THE USUAL OPERATIONS OF THE BUSINESS; THE PROPORTION OF SALES FROM STOCK THAT WILL SATISFY THE REQUIREMENTS WILL DEPEND UPON THE CHARACTER OF THE BUSINESS;

"/5) THAT SALES ARE MADE REGULARLY IN THE USUAL COURSE OF BUSINESS TO THE PUBLIC, I.E., TO PURCHASERS OTHER THAN FEDERAL, STATE, OR LOCAL GOVERNMENT AGENCIES; THIS REQUIREMENT IS NOT SATISFIED IF THE CONTRACTOR MERELY SEEKS TO SELL TO THE PUBLIC BUT HAS NOT YET MADE SUCH SALES; IF GOVERNMENT AGENCIES ARE THE SOLE PURCHASERS, THE BIDDER WILL NOT QUALIFY AS A REGULAR DEALER; THE NUMBER AND AMOUNT OF SALES WHICH MUST BE MADE TO THE PUBLIC WILL NECESSARILY VARY WITH THE AMOUNT OF TOTAL SALES AND THE NATURE OF THE BUSINESS; AND

"/6) THAT HIS BUSINESS IS AN ESTABLISHED AND GOING CONCERN; IT IS NOT SUFFICIENT TO SHOW THAT ARRANGEMENTS HAVE BEEN MADE TO SET UP SUCH A BUSINESS.'

IT IS THUS CLEAR THAT UNDER THE ACT CITED, AND THE REGULATIONS OF THE SECRETARY OF LABOR AUTHORIZED BY THE ACT, THE CONTRACTING OFFICER WAS ACTING PROPERLY AND WITHIN THE SCOPE OF HIS AUTHORITY IN DETERMINING YOUR LACK OF QUALIFICATIONS AS A "REGULAR DEALER.' THE POWER TO REVIEW THAT DETERMINATION RESTS IN THE DEPARTMENT OF LABOR, RATHER THAN IN OUR OFFICE. IN THE EVENT YOU STILL DESIRE A REVIEW OF THE CONTRACTING OFFICER'S DETERMINATION, IT WOULD APPEAR THAT YOU SHOULD ADDRESS A REQUEST FOR SUCH REVIEW TO THE DEPARTMENT OF LABOR. SEE B-163457, MARCH 29, 1968.

IN VIEW OF THE FOREGOING, WE MUST CONCLUDE THAT THE AWARD MADE UNDER THE INSTANT INVITATION IS NOT SUBJECT TO LEGAL OBJECTION BY OUR OFFICE.