B-165420, JAN. 15, 1969

B-165420: Jan 15, 1969

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TO ZIPMARK CORPORATION: REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 11. WAS A REQUIREMENT CONTRACT FOR ONE YEAR COMMENCING ON JULY 1. THE AWARD WAS MADE PURSUANT TO FORMALLY ADVERTISED INVITATION FOR BIDS NO. THAT SUPPLIER WAS NO LONGER ABLE TO MAKE ANY SHIPMENTS. UNLESS AN ALTERNATE SUPPLIER WAS FOUND BY ALPERSTEIN WITHIN 10 DAYS. ALPERSTEIN FOUND DURO PEN COMPANY AS ITS NEW SUPPLIER WHICH WAS APPROVED BY GSA. BECAUSE IT MISREPRESENTED ITSELF TO BE A REGULAR DEALER WHENALPERSTEIN IS ONLY A MANUFACTURERS' REPRESENTATIVE. WHICH STATES IN PART THAT ALPERSTEIN'S "* * * MAJOR SIDELINE IS ACTING AS MANUFACTURERS REPRESENTATIVE FOR BALLPOINT AND MARKING PENS.'. 000 IN AMOUNT ENTERED INTO BY THE GOVERNMENT 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.

B-165420, JAN. 15, 1969

TO ZIPMARK CORPORATION:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 11, WITH ENCLOSURES, AND SUPPLEMENTAL CORRESPONDENCE, WHICH PROTESTS CERTAIN ACTIONS OF THE GENERAL SERVICES ADMINISTRATION WITH RESPECT TO CONTRACT NO. GS-00S 63145 WITH ALPERSTEIN BROTHERS EQUIPMENT COMPANY (ALPERSTEIN).

THE SUBJECT CONTRACT, AWARDED ON JUNE 5, 1968, WAS A REQUIREMENT CONTRACT FOR ONE YEAR COMMENCING ON JULY 1, 1968, FOR FSC CLASS 7520, TUBE-TYPE, FINE-TIP MARKERS. THE AWARD WAS MADE PURSUANT TO FORMALLY ADVERTISED INVITATION FOR BIDS NO. FPNSO-E6-0237-A AND AFTER THE ISSUANCE OF A CERTIFICATE OF COMPETENCY BY THE SMALL BUSINESS ADMINISTRATION TO ALPERSTEIN. ALPERSTEIN, AS LOW BIDDER AT $0.744 PER DOZEN MARKERS, STATED THAT ALL ITEMS WOULD BE MANUFACTURED BY SNAP-BACK PEN AND PENCIL COMPANY.

BY LETTER DATED SEPTEMBER 26, 1968, TO ALPERSTEIN, THE CONTRACTING OFFICER ADVISED THAT DUE TO THE LIQUIDATION OF SNAP-BACK PEN AND PENCIL COMPANY, THAT SUPPLIER WAS NO LONGER ABLE TO MAKE ANY SHIPMENTS, AND UNLESS AN ALTERNATE SUPPLIER WAS FOUND BY ALPERSTEIN WITHIN 10 DAYS, THE SUBJECT CONTRACT WOULD BE TERMINATED FOR DEFAULT. THEREAFTER, ALPERSTEIN FOUND DURO PEN COMPANY AS ITS NEW SUPPLIER WHICH WAS APPROVED BY GSA. SINCE THE SUBSTITUTION OF DURO PEN COMPANY, GSA REPORTS THAT ALPERSTEIN HAS SATISFACTORILY PERFORMED THE SUBJECT CONTRACT.

FIRSTLY, YOU ALLEGE THAT THE AWARD TO ALPERSTEIN SHOULD BE RESCINDED, BECAUSE IT MISREPRESENTED ITSELF TO BE A REGULAR DEALER WHENALPERSTEIN IS ONLY A MANUFACTURERS' REPRESENTATIVE. YOU BASE THIS ALLEGATION ON A DUN AND BRADSTREET ANALYTICAL REPORT DATED FEBRUARY 28, 1968, WHICH STATES IN PART THAT ALPERSTEIN'S "* * * MAJOR SIDELINE IS ACTING AS MANUFACTURERS REPRESENTATIVE FOR BALLPOINT AND MARKING PENS.'

THE WALSH-HEALEY ACT, 41 U.S.C. 35-45, PROVIDES THAT EVERY CONTRACT EXCEEDING $10,000 IN AMOUNT ENTERED INTO BY THE GOVERNMENT 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. UNDER THIS LAW, THE AUTHORITY TO REVIEW DETERMINATIONS AS TO WHETHER A PARTICULAR FIRM IS A REGULAR DEALER RESTS WITH THE DEPARTMENT OF LABOR AND NOT OUR OFFICE. SEE B-163741, JUNE 28, 1968, B-163457, MARCH 29, 1968, AND B-164989, SEPTEMBER 11, 1968. CONSEQUENTLY, ANY DISAGREEMENT YOU MAY HAVE WITH THE CONTRACTING OFFICER'S DETERMINATION THAT ALPERSTEIN IS A REGULAR DEALER SHOULD BE TAKEN UP WITH THE DEPARTMENT OF LABOR. IN THIS REGARD, GSA ADVISES US THAT IT WILL INVESTIGATE THIS MATTER AND TAKE SUCH ACTION AS MAY BE NECESSARY IN FUTURE PROCUREMENTS OF MARKERS.

SECONDLY, YOU CONTEND THAT THE SUBSTITUTION OF DURO PEN COMPANY FOR SNAP- BACK PEN AND PENCIL COMPANY AS THE NEW SUPPLIER AMOUNTED TO AWARDING THE SUBJECT CONTRACT TO OTHER THAN THE LOW BIDDER, AND THAT THE CONTRACT SHOULD HAVE BEEN AWARDED TO YOU INSTEAD OF PERMITTING THE SUBSTITUTION OF ALPERSTEIN'S SUPPLIER.

THE FACT THAT DURO PEN COMPANY WAS SUBSTITUTED AS THE NEW SUPPLIER, DOES NOT RESULT IN A NEW CONTRACT FOR THE MARKERS. ALPERSTEIN IS STILL LEGALLY BOUND TO PERFORM THE SUBJECT CONTRACT AT $0.744 PER DOZEN MARKERS, AND THE CHOICE OF A SUPPLIER MAY BE DECIDED BY ALPERSTEIN SO LONG AS IT IS CAPABLE OF DELIVERING SUPPLIES CONFORMING TO THE SPECIFICATIONS. ALTHOUGH GSA MIGHT HAVE TERMINATED THE SUBJECT CONTRACT PURSUANT TO THE DEFAULT ARTICLE UPON ALPERSTEIN'S FIRST FAILURE TO FILL AN ORDER UNDER THE CONTRACT, GSA BELIEVED THAT CANCELLATION AND REPROCUREMENT OF THE MARKERS WOULD NOT HAVE BEEN IN THE BEST INTEREST OF THE GOVERNMENT, BECAUSE IT APPEARED THAT SUCH AN ACTION WOULD HAVE DELAYED BADLY NEEDED SUPPLIES AND COULD HAVE INCREASED THE COSTS TO THE GOVERNMENT. THEREFORE, WE MUST CONCUR WITH GSA'S ACTION IN PERMITTING THE SUBSTITUTION OF A NEW SUPPLIER BY ALPERSTEIN.