B-164770, SEPT. 3, 1968

B-164770: Sep 3, 1968

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ERSKINE AND STEWART: FURTHER REFERENCE IS MADE TO YOUR LETTER OF JULY 2. EACH KIT WAS TO CONSIST OF ONE GUITAR. ALL OF THE ITEMS WERE TO BE PACKED TOGETHER INSIDE THE GUITAR CASE. THE EIGHT BIDS RECEIVED WERE OPENED ON MAY 24. THE CONTRACTING OFFICER SUSPECTED THAT THE LOW BIDDER MAY HAVE MADE A MISTAKE IN THE PREPARATION AND SUBMISSION OF ITS BID AND IT WAS REQUESTED TO VERIFY ITS BID PRICE. ARTICLES OR EQUIPMENT OF GENERAL CHARACTER DESCRIBED BY THE SPECIFICATIONS AND REQUIRED UNDER THE BID ARE BOUGHT. THE CONTRACTING OFFICER MADE A FORMAL DETERMINATION THAT THE VICTOR-BERNARD COMPANY WAS NOT A REGULAR DEALER IN MUSICAL INSTRUMENTS AND ACCESSORIES AND WAS NOT ENTITLED TO AN AWARD IN ACCORDANCE WITH THE WALSH-HEALEY PUBLIC CONTRACTS ACT.

B-164770, SEPT. 3, 1968

TO RASPIN, ESPENSHADE, HEINS, ERSKINE AND STEWART:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JULY 2, 1968, PROTESTING, ON BEHALF OF VICTOR-BERNARD INDUSTRIES, INC., AGAINST THE AWARD OF A CONTRACT TO ANOTHER BIDDER UNDER INVITATION FOR BIDS NO. DSA-400-68-B-6328, ISSUED BY THE DEFENSE SUPPLY AGENCY (DSA), RICHMOND, VIRGINIA.

THE INVITATION ISSUED ON MAY 8, 1968, SOLICITED BIDS FOR 550 "HOOTENANNY MUSIC KITS.' EACH KIT WAS TO CONSIST OF ONE GUITAR, ONE GUITAR CASE, ONE GUITAR STRAP, 46 GUITAR STRINGS OF VARIOUS TYPES, FOUR DOZEN GUITAR PICKS, ONE PITCH PIPE, ONE HARMONICA, ONE JAW HARP AND FOUR SONG BOOKS. ALL OF THE ITEMS WERE TO BE PACKED TOGETHER INSIDE THE GUITAR CASE. THE SPECIFIED GUITAR, STRINGS AND CASE ACCOUNT FOR THE GREAT BULK OF THE COST OF THE KIT.

THE EIGHT BIDS RECEIVED WERE OPENED ON MAY 24, 1968. VICTOR-BERNARD INDUSTRIES, INC., SUBMITTED THE LOW BID OF $74.20 PER UNIT. THE REMAINING SEVEN BIDS RANGED FROM $83.10 TO $90. THE FIVE BIDS NEXT TO LOWEST RANGED FROM $83.10 TO $85.75. CONSIDERING THE DISPARITY BETWEEN THE PRICES OFFERED BY VICTOR-BERNARD AND THAT OF THE REMAINING BIDS, THE CONTRACTING OFFICER SUSPECTED THAT THE LOW BIDDER MAY HAVE MADE A MISTAKE IN THE PREPARATION AND SUBMISSION OF ITS BID AND IT WAS REQUESTED TO VERIFY ITS BID PRICE. VICTOR-BERNARD CONFIRMED ITS BID BY LETTER OF JUNE 17, 1968.

IN ITS BID, VICTOR-BERNARD CERTIFIED ITSELF AS A REGULAR DEALER IN THE SUPPLIES OFFERED. ON MAY 29, 1968, THE CONTRACTING OFFICER REQUESTED THAT THE DEFENSE CONTRACT ADMINISTRATION SERVICES REGION (DCASR), PHILADELPHIA, PERFORM A PREAWARD SURVEY ON THE COMPANY TO DETERMINE WHETHER IT QUALIFIED AS A REGULAR DEALER IN MUSICAL INSTRUMENTS AND SUPPLIES IN ACCORDANCE WITH THE WALSH-HEALEY ACT (41 U.S.C. 35-45) AND THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) 12 603.2 (A). BY TELEGRAM OF JUNE 20, 1968, DCASR REPORTED THAT VICTOR BERNARD DID NOT QUALIFY AS A REGULAR DEALER OF MUSICAL INSTRUMENTS SINCE UNDER THE CITED REGULATION IT DID NOT OWN, OPERATE OR MAINTAIN A STORE, WAREHOUSE OR OTHER ESTABLISHMENT IN WHICH THE MATERIALS, SUPPLIES, ARTICLES OR EQUIPMENT OF GENERAL CHARACTER DESCRIBED BY THE SPECIFICATIONS AND REQUIRED UNDER THE BID ARE BOUGHT, KEPT IN STOCK AND/OR SOLD TO THE PUBLIC IN THE USUAL COURSE OF BUSINESS.

ON JUNE 21, 1968, THE CONTRACTING OFFICER MADE A FORMAL DETERMINATION THAT THE VICTOR-BERNARD COMPANY WAS NOT A REGULAR DEALER IN MUSICAL INSTRUMENTS AND ACCESSORIES AND WAS NOT ENTITLED TO AN AWARD IN ACCORDANCE WITH THE WALSH-HEALEY PUBLIC CONTRACTS ACT, 41 U.S.C. 35-45, AS SUPPLEMENTED BY ASPR 12-601, WHICH PROVIDES AS FOLLOWS: "STATUTORY REQUIREMENT. IN ACCORDANCE WITH THE REQUIREMENTS OF THE WALSH-HEALEY PUBLIC CONTRACTS ACT (41 U.S.C. 35-45), ALL CONTRACTS SUBJECT TO SAID ACT ENTERED INTO BY ANY DEPARTMENT FOR THE MANUFACTURE OR FURNISHING OF SUPPLIES IN ANY AMOUNT EXCEEDING $10,000 (I) WILL BE WITH MANUFACTURERS OR REGULAR DEALERS, AND (II) SHALL INCORPORATE BY REFERENCE THE REPRESENTATIONS AND STIPULATIONS REQUIRED BY SAID ACT PERTAINING TO SUCH MATTERS AS MINIMUM WAGES, MAXIMUM HOURS, CHILD LABOR, CONVICT LABOR, AND SAFE AND SANITARY WORKING CONDITIONS.'

YOU PROTEST ON THE BASIS THAT VICTOR-BERNARD HAS BEEN PREVIOUSLY AWARDED CONTRACTS FOR MUSICAL INSTRUMENTS BY THE GOVERNMENT; THAT IT WAS THE LOWEST RESPONSIBLE BIDDER, AND THAT DSA HAS ACTED CAPRICIOUSLY AND ARBITRARILY IN AWARDING THE CONTRACT TO A HIGHER BIDDER.

IT IS REPORTED THAT OF THE TWO CONTRACTS AWARDED BY DEFENSE GENERAL SUPPLY CENTER, RICHMOND, VIRGINIA, TO VICTOR-BERNARD, ONLY ONE WAS FOR AN AMOUNT IN EXCESS OF $10,000, AND HENCE SUBJECT TO THE WALSH-HEALEY PUBLIC CONTRACTS ACT. THAT CONTRACT WAS AWARDED BY A CONTRACTING OFFICER OTHER THAN THAT CONDUCTING THE INSTANT PROCUREMENT AND WAS AWARDED ON JUNE 4, 1968, UTILIZING FORMAL ADVERTISING PROCEDURES. IN ITS BID UNDER THAT INVITATION, IT IS REPORTED THAT VICTOR-BERNARD FAILED TO CERTIFY WHETHER IT WAS A REGULAR MANUFACTURER OR DEALER. NO PREAWARD SURVEY WAS MADE AND IT MAY BE FOUND, UPON FURTHER INVESTIGATION, THAT SUCH CONTRACT WAS ERRONEOUSLY AWARDED AS WELL AS THE OTHER CONTRACT AWARDED BY CAMP SAN LUIS OBISPO, CALIFORNIA, IN THE AMOUNT OF $13,641.68.

HOWEVER, IMPROPER AND ERRONEOUS AWARDS DO NOT ESTOP THE GOVERNMENT FROM TAKING APPROPRIATE MEASURES IN SUCCEEDING PROCUREMENTS TO PRECLUDE A REPETITION OF SUCH ERRONEOUS AWARDS. FURTHER, ASPR 12 603.2 (A) (V) PROVIDES THAT SALES MADE TO GOVERNMENT AGENCIES DO NOT QUALIFY THE BIDDER AS A REGULAR "DEALER.'

IT IS FURTHER REPORTED THAT IN THE COURSE OF MEETINGS WITH DSA OFFICIALS THE BIDDER'S PRESIDENT UNEQUIVOCALLY STATED, PRIOR TO AWARD, THAT HIS COMPANY MAINTAINED NO STOCK OF MUSICAL INSTRUMENTS OR ACCESSORIES FOR SALE TO THE PUBLIC IN THE USUAL COURSE OF BUSINESS. AT THAT TIME, HE WAS INFORMED THAT INASMUCH AS HE FULLY CONCEDED THAT HIS FIRM MAINTAINED NO STOCK OF THE ITEM CALLED FOR, IT COULD ONLY BE CONCLUDED THAT IT WAS NOT A REGULAR DEALER WITHIN THE AMBIT OF THE WALSH-HEALEY ACT AND THAT THE AWARD WOULD BE MADE TO THE LOWEST QUALIFIED BIDDER. THE AWARD WAS MADE ON JUNE 28, 1968, TO CARY GEE, INC., A REGULAR DEALER IN MUSICAL INSTRUMENTS AND VICTOR-BERNARD WAS SO NOTIFIED BY LETTER OF SAME DATE.

YOU STATE IN THE ALTERNATIVE THAT IF NOT A REGULAR DEALER THEN THE BIDDER QUALIFIES AS A MANUFACTURER BECAUSE IT "ASSEMBLES" THE PRODUCT. DEPARTMENT OF LABOR REGULATION NO. 3 (PRESUMABLY WALSH-HEALEY PUBLIC CONTRACTS ACT RULINGS AND INTERPRETATIONS NO. 3) REFERRED TO IN YOUR JULY 2 LETTER PROVIDES IN SECTION 5:

"ASSEMBLING (A) A CONTRACT FOR AN ARTICLE WHICH IS PRODUCED BY ASSEMBLING MISCELLANEOUS PARTS PURCHASED BY THE CONTRACTOR FROM OTHERS IS A CONTRACT TO MANUFACTURE AN ARTICLE IN THE SENSE IN WHICH THAT TERM IS USED IN THE PUBLIC CONTRACTS ACT.'

IT IS THE ADMINISTRATIVE POSITION, WITH WHICH WE CONCUR, THAT THE "ASSEMBLING" REQUIRES SOMETHING MORE THAN MERELY PACKING IN A GUITAR CASE MISCELLANEOUS ITEMS WHICH DO NOT INTERFACE OR FIT TOGETHER AS A UNIT. "ASSEMBLING" IN ITS COMMON MEANING IS TO BRING TOGETHER VARIOUS PARTS SO AS TO MAKE INTO AN OPERATIVE WHOLE.

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.'

OUR OFFICE DOES NOT HAVE THE JURISDICTION TO REVIEW DETERMINATIONS AS TO WHETHER PARTICULAR BIDDERS ARE REGULAR DEALERS OR MANUFACTURERS. 147620, JANUARY 22, 1962. RATHER, WE HAVE CONSIDERED THAT SUCH DETERMINATIONS REST WITH THE CONTRACTING OFFICER SUBJECT TO THE REVIEW OF THE DEPARTMENT OF LABOR WHICH HAS THE FINAL AUTHORITY. SEE 41 U.S.C. 35- 45. ALSO, SEE B-148715, JUNE 25, 1962.

IN VIEW OF THE FOREGOING, WE FIND NO LEGAL OBJECTION TO THE AWARD MADE TO CARY GEE, INC., AND YOUR PROTEST IS THEREFORE DENIED.