B-167287, SEP. 4, 1969

B-167287: Sep 4, 1969

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LOW BIDDER WHO OBTAINED FINANCIAL ASSISTANCE UNDER THE POVERTY PROGRAM BUT WHO IS SUBJECT TO FAIR LABOR STANDARDS ACT AND REQUIRED MINIMUM WAGES IS NOT REQUIRED TO HAVE OBJECTION TAKEN TO AWARD. WAS DISTRIBUTED TO 60 FIRMS. 17 BIDS WERE RECEIVED BY GSA. WHICHEVER IS LATER. BIDDERS WERE REQUIRED TO SUBMIT PRICES FOR 1. 000 CARD UNITS ON EACH OF THREE ITEMS TO WHICH WEIGHT FACTORS WERE ASSIGNED FOR PURPOSES OF AWARD. AWARD IS TO BE MADE ON AN AGGREGATE BASIS FOR THE THREE ITEMS. THE LOW AGGREGATE BIDDER IS TO BE DETERMINED BY MULTIPLYING THE PRICE BID FOR EACH ITEM BY ITS WEIGHT FACTOR AND ADDING THE RESULTANT EXTENSIONS. THE ITEMS AND THEIR RESPECTIVE WEIGHT FACTORS ARE AS FOLLOWS: ITEM NO.

B-167287, SEP. 4, 1969

BID PROTEST - SUBSTANTIALLY LOWER PRICES DECISION TO GENERAL COMPUTATION, INC. DENYING PROTEST AGAINST LOW BID OF INTERNATIONAL COMPUTER GRAPHICS, INC., FOR AWARD OF REQUIREMENTS TYPE CONTRACT FOR PUNCHED CARDS FOR GENERAL SERVICES ADMINISTRATION. LOW BIDDER WHO OBTAINED FINANCIAL ASSISTANCE UNDER THE POVERTY PROGRAM BUT WHO IS SUBJECT TO FAIR LABOR STANDARDS ACT AND REQUIRED MINIMUM WAGES IS NOT REQUIRED TO HAVE OBJECTION TAKEN TO AWARD.

TO GENERAL COMPUTATION, INC.:

WE REFER TO YOUR PROTEST, BY LETTER DATED JUNE 11, 1969, AND ENCLOSURES, ADDRESSED TO A MEMBER OF CONGRESS, AGAINST CONSIDERATION OF A LOW BID SUBMITTED BY INTERNATIONAL COMPUTER GRAPHICS, INC. (ICG), UNDER INVITATION FOR BIDS (IFB) 2HM-739-70, ISSUED BY THE NEW YORK REGIONAL OFFICE OF THE FEDERAL SUPPLY SERVICE, GENERAL SERVICES ADMINISTRATION (GSA).

THE IFB, DATED MAY 6, 1969, WAS DISTRIBUTED TO 60 FIRMS, AND 17 BIDS WERE RECEIVED BY GSA. THE FACE SHEET OF THE IFB DESCRIBED THE PROCUREMENT AS A REQUIREMENTS CONTRACT FOR KEY-PUNCHING AND VERIFYING PUNCHED CARDS FOR THE PERIOD JULY 1, 1969, OR DATE OF AWARD, WHICHEVER IS LATER, THROUGH JUNE 30, 1970. PAGE 9 OF THE IFB FURTHER IDENTIFIED THE SERVICES AS EXCESS DATA PROCESSING REQUIREMENTS OF THE GSA AUTOMATED DATA MANAGEMENT SERVICES DIVISION, 26 FEDERAL PLAZA, NEW YORK.

BIDDERS WERE REQUIRED TO SUBMIT PRICES FOR 1,000 CARD UNITS ON EACH OF THREE ITEMS TO WHICH WEIGHT FACTORS WERE ASSIGNED FOR PURPOSES OF AWARD. AWARD IS TO BE MADE ON AN AGGREGATE BASIS FOR THE THREE ITEMS, AND THE LOW AGGREGATE BIDDER IS TO BE DETERMINED BY MULTIPLYING THE PRICE BID FOR EACH ITEM BY ITS WEIGHT FACTOR AND ADDING THE RESULTANT EXTENSIONS. THE ITEMS AND THEIR RESPECTIVE WEIGHT FACTORS ARE AS FOLLOWS:

ITEM NO. DESCRIPTION WEIGHT FACTOR

1 ALL ALPHABETICAL 5

2 ALL NUMERICAL 5

3 COMBINATION, 90

ALPHABETICAL/NUMERICAL

PAGE 10 OF THE IFB CARRIES A NOTATION ADVISING BIDDERS THAT IT IS ESTIMATED THAT 90 PERCENT OF THE WORK WILL BE ALPHABETICAL/NUMERICAL (ITEM 3).

ON MAY 27, BIDS WERE OPENED AS SCHEDULED. THE BID OF ICG, WITH PRICES OF $0.30 FOR ITEM 1, $0.30 FOR ITEM 2, AND $0.72 FOR ITEM 3, WAS LOW AS TO EACH ITEM AS WELL AS IN THE AGGREGATE EVALUATION. THE COMPETING BIDS WERE SUBSTANTIALLY HIGHER WITH THE GREATER NUMBER QUOTING PRICES RANGING FROM $0.95 TO $2.50 FOR ITEM 1, FROM $0.85 TO $2.40 FOR ITEM 2, AND FROM $0.90 TO $2.60 ON ITEM 3. YOUR BID RANKED SIXTH WITH PRICES OF $1.30 FOR ITEM 1, $1.20 FOR ITEM 2 AND $1.50 FOR ITEM 3.

REFERENCE TO THE CONTRACT FOR SIMILAR SERVICES FOR THE PERIOD JANUARY 23, 1969, TO JUNE 30, 1969, WHICH HAD BEEN AWARDED TO ICG, DISCLOSED HIGHER INDIVIDUAL ITEM PRICES OF $0.51 FOR ITEM 1 AND $0.50 FOR ITEM 2, AND A LOWER PRICE OF $0.52 FOR ITEM 3, RESULTING IN A LOWER WEIGHTED AGGREGATE THAN ICG'S CURRENT BID.

IN A LETTER DATED AUGUST 6, GSA HAS ADVISED OUR OFFICE THAT THE CONTRACT HELD BY ICG FOR THE PERIOD ENDING JUNE 30, 1969, WAS AWARDED AFTER RECEIPT FROM ICG OF WRITTEN VERIFICATION OF ITS BID AND AFTER GSA HAD OBTAINED SATISFACTORY PLANT FACILITY AND FINANCIAL REPORTS ON ICG, DATED JANUARY 16 AND 20, 1969, RESPECTIVELY. ACCORDINGLY, AND SINCE THE CONTRACT HAD BEEN PERFORMED IN A COMPLETELY SATISFACTORY MANNER, CONFIRMATION BY ICG OF ITS CURRENT BID, WHICH GSA ACKNOWLEDGES IS WELL BELOW THE OTHER BIDS, WAS NOT REQUESTED TO BE SUBMITTED IN WRITTEN FORM, BUT VERIFICATION WAS REQUESTED AND FURNISHED BY TELEPHONE. (FEDERAL PROCUREMENT REGULATION (FPR) 1-2.406 -1, RELATING TO APPARENT OR SUSPECTED MISTAKES IN BID, DOES NOT PRESCRIBE ANY PARTICULAR FORM OF BID VERIFICATION.)

WITH YOUR LETTER OF JUNE 11, YOU HAVE FURNISHED COPIES OF THE ABSTRACT OF BIDS RECEIVED UNDER THE CURRENT IFB; A CREDIT REPORT ON ICG REFLECTING RECEIPT OF A GOVERNMENT GRANT OF $1 MILLION AS STARTING CAPITAL AND OPERATION BY ICG AS A TRAINING ORGANIZATION; AND A COPY OF AN ADVERTISEMENT BY ICG INCLUDING THE STATEMENT,"WE HAVE NEVER BEEN UNDERBID** **"

THE SUBSTANCE OF YOUR PROTEST IS THAT THE USE OF TRAINEE PERSONNEL, WHO, IT IS CLAIMED, ARE PAID VERY MINIMAL SALARIES, IF ANY, MAKES ICG'S COST OF OPERATION SO LOW THAT IT CAN AFFORD TO QUOTE PRICES WHICH COULD NEVER BE MATCHED BY ANY LIKE SERVICE BUREAU. IN THIS CONNECTION, YOU STATE THAT YOU UNDERSTAND THAT ICG HAS CONSISTENTLY BEEN THE LOW BIDDER ON GOVERNMENT WORK FOR THE ARMY AND THE NAVY.

THE FILE FORWARDED BY GSA TO OUR OFFICE INCLUDES A COPY OF THE EARLIER CONTRACT WITH ICG, SHOWING AN AWARD DATE OF JANUARY 23, 1969, AND BEARING NO. GS-02S-24069. INCORPORATED BY REFERENCE IN THE TERMS OF THE CONTRACT WAS GSA FORM 2166, JANUARY 1966 EDITION, ENTITLED "SERVICE CONTRACT ACT OF 1965," SETTING FORTH THE CLAUSE PRESCRIBED BY THE DECEMBER 1965 EDITION OF FPR 1-12.904.1 AND REGULATIONS ISSUED BY THE DEPARTMENT OF LABOR AT 29 CFR 4.6. THE CLAUSE, WHICH PROVIDED FOR PAYMENT TO SERVICE EMPLOYEES OF MINIMUM WAGES AS DETERMINED BY THE SECRETARY OF LABOR, ALSO INCLUDED A PROVISION FOR PAYMENT OF THE MINIMUM WAGE SPECIFIED BY SECTION 6 (A) (1) OF THE FAIR LABOR STANDARDS ACT OF 1938, 29 U.S.C. 206 (A) (1), IN THE ABSENCE OF A MINIMUM WAGE DETERMINATION UNDER THE SERVICE CONTRACT ACT FOR THE PARTICULAR CONTRACT.

WITH REFERENCE TO THE CURRENT PROCUREMENT, GSA REPORTS THAT THROUGH INADVERTENCE THE SERVICE CONTRACT ACT CLAUSE WAS OMITTED FROM THE IFB; THAT AFTER BID OPENING THE CLAUSE WAS ADDED TO ICG'S LOW BID WITH THE BIDDER'S CONSENT; AND THAT THE DEPARTMENT OF LABOR HAS NOT ISSUED ANY WAGE DETERMINATION WHICH WOULD BE APPLICABLE TO THE PROCUREMENT. NOTWITHSTANDING THE OMISSION OF THE CLAUSE, ANY CONTRACT AWARDED PURSUANT TO THE IFB WOULD APPEAR TO BE SUBJECT TO THE MINIMUM WAGE REQUIREMENTS SPECIFIED BY SECTION 2 (B) (1) OF THE SERVICE CONTRACT ACT, 41 U.S.C. 351 (B) (1), BY VIRTUE OF THE REGULATION ISSUED BY THE SECRETARY OF LABOR THEREUNDER, 29 CFR 4.159, WHICH STATES THAT SUCH PROVISION APPLIES TO A CONTRACTOR OR SUBCONTRACTOR WITHOUT REGARD TO WHETHER IT IS INCORPORATED IN THE CONTRACT. IN THIS CONNECTION, IT MAY BE NOTED, SECTION 2 (B) (1) OF THE SERVICE CONTRACT ACT PROHIBITS THE PAYMENT UNDER SERVICE CONTRACTS SUBJECT TO THE ACT OF LESS THAN THE MINIMUM WAGE SPECIFIED IN SECTION 6 (A) (1) OF THE FAIR LABOR STANDARDS ACT, SUPRA.

WITH RESPECT TO THE FINANCIAL ASSISTANCE RECEIVED BY ICG FROM THE GOVERNMENT, YOU EXPRESS CONCERN ABOUT THE SURVIVAL OF SMALL BUSINESS CONCERNS SUCH AS YOU "WHO TRY TO MAKE IT ON OUR OWN MERITS WITHOUT ASKING ANYTHING FROM THE GOVERNMENT OTHER THAN AN OPPORTUNITY TO BE EQUAL WITH ALL GROUPS WHO SEEK THE BUSINESS AVAILABLE FROM THE GOVERNMENT.' FURTHER, YOU INQUIRE ABOUT POSSIBLE GOVERNMENT ASSISTANCE "IN ORDER TO STAY IN BUSINESS AND HOPEFULLY PROSPER.'

THE GSA RECORD INCLUDES A FAVORABLE PRE-AWARD SURVEY REPORT, WHICH INDICATES THAT ICG STARTED BUSINESS IN MAY 1968 PERFORMING ONLY COMMERICAL WORK AND HAD NO HISTORY IN GOVERNMENT WORK PRIOR TO THE JANUARY 1969 GSA PROCUREMENT. THE REPORT IDENTIFIES THE SOURCE OF FEDERAL ASSISTANCE TO ICG AS THE DEPARTMENT OF LABOR.

THE DEPARTMENT OF LABOR HAS VERIFIED THAT ICG WAS THE RECIPIENT OF A CONTRACT IN THE AMOUNT OF $1 MILLION INCIDENT TO THE ESTABLISHMENT OF A PLANT IN THE BEDFORD-STUYVESANT AREA OF NEW YORK CITY FOR THE TRAINING OF PERSONNEL PURSUANT TO THE SPECIAL IMPACT PROGRAMS PROVISIONS OF TITLE I-D OF THE ECONOMIC OPPORTUNITY ACT OF 1964, AS AMENDED, 42 U.S.C. 2763-2771. SUCH PROGRAMS ARE DIRECTED TO, AMONG OTHER THINGS, THE SOLUTION OF THE CRITICAL PROBLEMS EXISTING IN PARTICULAR COMMUNITIES OR NEIGHBORHOODS WITHIN THOSE URBAN AREAS WITH ESPECIALLY LARGE CONCENTRATIONS OF LOW- INCOME PERSONS (42 U.S.C. 2763) AND MAY INCLUDE ECONOMIC AND BUSINESS DEVELOPMENT PROGRAMS WHICH PROVIDE FINANCIAL AND OTHER INCENTIVES TO BUSINESS TO LOCATE IN OR NEAR THE AREAS SERVED AS WELL AS MANPOWER TRAINING PROGRAMS FOR UNEMPLOYED OR LOW-INCOME PERSONS WHICH SUPPORT AND COMPLEMENT ECONOMIC, BUSINESS, AND COMMUNITY DEVELOPMENT PROGRAMS (42 U.S.C. 2764).

THE REGULATIONS ISSUED BY THE DEPARTMENT OF LABOR IN IMPLEMENTATION OF THE STATUTORY PROVISIONS ARE PUBLISHED AT 29 CFR, PART 51. OF PERTINENCE TO YOUR PROTEST ARE THE FOLLOWING PROVISIONS OF 29 CFR 51.3:

"NO PROJECT WILL BE APPROVED UNDER THIS PART UNLESS:

"/A) IT WILL NOT RESULT IN THE DISPLACEMENT OF OTHER WORKERS OR IMPAIR EXISTING CONTRACTS FOR SERVICES;

"/K) HOURLY WAGES PAID TO ENROLLEES SHALL BE NOT LESS THAN THE FEDERAL MINIMUM RATE PRESCRIBED IN SECTION 6 (A) (1) OF THE FAIR LABOR STANDARDS ACT OF 1938, AS AMENDED, OR THE RATE REQUIRED UNDER THE STATE MINIMUM WAGE LAW, WHICHEVER IS HIGHER.'

IN ADDITION TO THE STANDARDS SET FORTH IN 29 CFR 51.3, PROJECTS UNDER TITLE I-D OF THE ECONOMIC OPPORTUNITY ACT OF 1964, AS AMENDED, ARE REQUIRED BY 29 CFR 51.4 (B) TO BE UNDERTAKEN BY A PUBLIC AGENCY OR NONPROFIT ORGANIZATION OR A COMBINATION THEREOF, WITH THE SPONSOR BEARING A PERCENTAGE OF THE COST OF THE PROJECT IN ACCORDANCE WITH CRITERIA SET FORTH IN 29 CFR 51.4 (C).

THE DEPARTMENT'S CONTRACT WITH ICG, WE ARE INFORMED, INCLUDES A REQUIREMENT FOR COMPLIANCE BY THE CONTRACTOR WITH ALL APPLICABLE FEDERAL, STATE AND LOCAL LAWS, RULES AND REGULATIONS WHICH DEAL WITH, OR RELATE TO, THE EMPLOYMENT OF PERSONS WHO PERFORM WORK, OR ARE TRAINED, UNDER THE CONTRACT, AND SPECIFICALLY PROVIDES THAT THE CONTRACT IN NO WAY RELIEVES THE CONTRACTOR OF RESPONSIBILITY FOR COMPLIANCE WITH THE FAIR LABOR STANDARDS ACT. THE CONTRACT IS ALSO REPORTED TO INCLUDE PROVISIONS FOR THE PAYMENT TO PERMANENT EMPLOYEES, WHO ARE DEFINED AS EMPLOYEES FOR WHOM EMPLOYMENT FOR A PERIOD OF AT LEAST SIX MONTHS IS CONTEMPLATED, OF AN HOURLY WAGE RATE OF $2.25 AFTER THE FIRST 90 DAYS OF EMPLOYMENT AND A RATE OF $2.50 AFTER THE NEXT 90 DAYS OF EMPLOYMENT. SUCH RATES, IT MAY BE NOTED, ARE CONSIDERABLY HIGHER THAN THE $1.60 HOURLY MINIMUM WAGE PAYABLE EFFECTIVE FEBRUARY 1, 1968, UNDER SECTION 6 (A) (1) OF THE FAIR LABOR STANDARDS ACT, SUPRA. SEE 29 CFR 4.159.

FOR INFORMATION CONCERNING PARTICIPATION IN THE SPECIAL IMPACT PROGRAMS IN THE NEW YORK AREA, INQUIRY SHOULD BE DIRECTED TO THE REGIONAL MANPOWER ADMINISTRATOR, UNITED STATES DEPARTMENT OF LABOR, 340 NINTH AVENUE, NEW YORK, NEW YORK, ZIP CODE 10001.

AS TO THE BASIS FOR THE WIDE DISPARITY BETWEEN ICG'S BID PRICE AND THE PRICES QUOTED BY YOU AND BY THE REMAINING BIDDERS, IT WOULD APPEAR, IN LIGHT OF THE ABOVE-MENTIONED PROVISIONS OF ICG'S TRAINING CONTRACT, AND THE APPLICABILITY OF THE FAIR LABOR STANDARDS ACT, THAT THE ICG TRAINEE WAGES DO NOT APPEAR TO BE A DETERMINING FACTOR IN ICG'S LOW PRICE, SINCE ITS OBLIGATIONS ARE NO LESS THAN THOSE OF ALL OTHER BIDDERS. WHILE IT MAY WELL BE THAT THE LOW BIDDING BY ICG HAS TO SOME EXTENT RESULTED FROM AN ADVANTAGE GAINED BY ICG'S RECEIPT OF FINANCIAL ASSISTANCE FROM THE GOVERNMENT AS OPPOSED TO FINANCING ITS OPERATIONS THROUGH COMMERCIAL MEANS, WE HAVE NO REASON TO SUSPECT THAT SUCH FINANCIAL ASSISTANCE WAS NOT RENDERED IN ACCORDANCE WITH THE PROVISIONS OF THE ECONOMIC OPPORTUNITY ACT OF 1964, AS AMENDED, AND THE IMPLEMENTING REGULATIONS PROMULGATED BY THE DEPARTMENT OF LABOR.

IN ANY EVENT, IN CIRCUMSTANCES SUCH AS THESE, WHERE AN APPARENTLY RESPONSIBLE BIDDER HAS VERIFIED ITS BID, THE FACT THAT THE BID IS SUBSTANTIALLY LOWER THAN OTHER BIDS DOES NOT OF ITSELF LEGALLY JUSTIFY QUESTIONING OF ITS VALIDITY BY OUR OFFICE. B-159422, AUGUST 15, 1966. FURTHER, THE FACT THAT ICG'S CURRENT BID PRICES ARE REASONABLY CLOSE TO THE PRICES FOR WHICH IT SATISFACTORILY PERFORMED SIMILAR SERVICES UNDER A CONTRACT COMPLETED ONLY TWO MONTHS AGO SUPPORTS SUCH VIEW WITH RESPECT TO THIS PROCUREMENT.

FOR THE REASONS STATED, WE SEE NO LEGAL BASIS FOR OBJECTION TO CONSIDERATION OF THE ICG BID AND ACCEPTANCE THEREOF BY THE GOVERNMENT PROVIDED THAT THE BID IS FOUND BY GSA TO BE OTHERWISE RESPONSIVE AND THAT ICG IS ALSO DETERMINED TO BE RESPONSIBLE. YOUR PROTEST IS THEREFORE DENIED.