B-167433, DECEMBER 9, 1969, 49 COMP. GEN. 385

B-167433, DECEMBER 9, 1969, 49 COMP. GEN. 385

POST OFFICE DEPARTMENT -- STAR ROUTE CONTRACTS -- BIDDER QUALIFICATIONS NOTWITHSTANDING THE ABSENCE OF ADEQUATE DOCUMENTATION TO SUPPORT THAT A CORPORATE BIDDER AWARDED THREE STAR ROUTE CONTRACTS WAS "ACTUALLY ENGAGED IN BUSINESS WITHIN THE COUNTY IN WHICH PART OF THE ROUTE LIES OR IN AN ADJOINING COUNTY" AS REQUIRED BY 39 U.S.C. 6420, IN VIEW OF THE COMPLEX PROBLEMS ENCOUNTERED IN QUALIFYING A CORPORATE BIDDER, THE CONTRACTS MAY BE COMPLETED. THE AWARD OF ONE CONTRACT WAS NOT WITHOUT FOUNDATION AS THE CONTRACTOR ESTABLISHED A BUSINESS THAT SUBJECTED IT TO STATE LAWS AND JURISDICTION WITHIN THE RULE STATED IN 35 COMP. GEN. 411. HOWEVER, THE OTHER CONTRACTS HAVING BEEN AWARDED ON THE BASIS OF POSTMASTER CERTIFICATION AND UNDOCUMENTED EVIDENCE, CRITERIA FOR MEETING THE "ACTUALLY ENGAGED IN BUSINESS" REQUIREMENT SHOULD BE ESTABLISHED, AND CONTRACTING OFFICERS INFORMED PERSONAL CERTIFICATIONS DO NOT QUALIFY A CORPORATION TO BID ON STAR ROUTE CONTRACTS.

TO THE POSTMASTER GENERAL, DECEMBER 9, 1969:

THIS LETTER IS ADDRESSED TO YOU IN CONNECTION WITH A RECENT REVIEW BY OUR OFFICE OF THREE STAR ROUTE CONTRACTS IN THE STATE OF MISSISSIPPI, AWARDED BY YOUR DEPARTMENT TO WAYLAND DISTRIBUTING COMPANY (WAYLAND). THE STAR ROUTES AS INDICATED ON THE CONTRACT DOCUMENTS ARE ROUTE NO. 390-40 BETWEEN JACKSON AND NATCHEZ; ROUTE NO. 27136 BETWEEN JACKSON AND BILOXI, AND ROUTE NO. 390-15 BETWEEN JACKSON, MISSISSIPPI, AND NEW ORLEANS, LOUISIANA. THE CONTRACTS WERE IN THE AMOUNTS OF $23,900, $28,915, AND $37,700 RESPECTIVELY.

THE FACTS SURROUNDING THE AWARDS OF THESE CONTRACTS WERE ASCERTAINED BY AN INDEPENDENT FIELD INVESTIGATION BY OUR OFFICE AND A REVIEW OF YOUR DEPARTMENT'S DOCUMENTS CONCERNING THIS MATTER.

SECTION 6420 OF TITLE 39 OF THE U.S.C. PROVIDES IN PART THAT:

(A) THE POSTMASTER GENERAL MAY NOT CONSIDER THE BID OF AN INDIVIDUAL FOR A STAR ROUTE CONTRACT UNLESS THE BIDDER IS A LEGAL RESIDENT OF THE COUNTY IN WHICH PART OF THE ROUTE LIES OR OF AN ADJOINING COUNTY. HE MAY NOT CONSIDER THE BID OF A FIRM, COMPANY, OR CORPORATION FOR SUCH A CONTRACT UNLESS IT IS ACTUALLY ENGAGED IN BUSINESS WITHIN THE COUNTY IN WHICH PART OF THE ROUTE LIES OR IN AN ADJOINING COUNTY. SUBSTANTIALLY THE SAME PROVISION APPEARS IN 39 CODE OF FEDERAL REGULATIONS 521.3(C)(2)(A) AND PART 521.332(A)(2) OF THE POSTAL MANUAL EXCEPT THAT THE FURTHER QUALIFICATION IS ADDED THAT THE BUSINESS ENGAGED IN MUST BE OTHER THAN THE TRANSPORTATION OF MAIL.

WAYLAND IS A CORPORATION; CONSEQUENTLY, IT MUST QUALIFY UNDER THE ACTUALLY ENGAGED IN BUSINESS REQUIREMENT OF THE ABOVE STATUTE. SINCE THIS REQUIREMENT IS A PREREQUISITE TO BIDDING, IT FOLLOWS THAT WAYLAND MUST HAVE FULFILLED THE ACTUALLY ENGAGED IN BUSINESS REQUIREMENT AS OF THE TIME OF BID OPENING FOR EACH OF THE THREE STAR ROUTE CONTRACTS IN QUESTION.

THE SOLICITATION FOR THE JACKSON-NATCHEZ STAR ROUTE WAS ISSUED ON MARCH 10, 1969, WITH A CLOSING DATE OF APRIL 14, 1969, AND AN OPENING DATE OF APRIL 15, 1969. THE PRIMARY BASIS FOR THE DETERMINATION THAT WAYLAND WAS "ACTUALLY ENGAGED IN BUSINESS" AND THUS QUALIFIED TO BID ON THE JACKSON- NATCHEZ ROUTE WAS A SERVICE STATION LOCATED ON HIGHWAY 80 IN RANKIN COUNTY ON THE OUTSKIRTS OF THE CITY LIMITS OF JACKSON, MISSISSIPPI. THE LEASE FOR THE SERVICE STATION ON HIGHWAY 80 WAS ENTERED INTO ON NOVEMBER 27, 1968, BETWEEN WAYLAND AS LESSEE AND STANDARD OIL COMPANY, (INCORPORATED IN KENTUCKY) AS LESSOR. THE RENTAL UNDER THE LEASE WAS ONE DOLLAR THROUGH FEBRUARY 28, 1969, AND EFFECTIVE MARCH 1, 1969, THE RENTAL WAS TO BE 1 CENT PER GALLON ON ALL MOTOR FUEL PURCHASED AND RECEIVED BY THE LESSEE AND STORED IN UNDERGROUND TANKS AT THE LEASED PREMISES WITH A MINIMUM OF $175 PER MONTH. THE TERM OF THE LEASE WAS FROM NOVEMBER 27, 1968, TO NOVEMBER 27, 1969. ADDITIONAL FACTS REGARDING THE SERVICE STATION WHICH WERE ASCERTAINED BY OUR OFFICE IN ITS FIELD INVESTIGATION WILL BE DISCUSSED BELOW. THE CONTRACT FOR THE JACKSON-NATCHEZ STAR ROUTE WHICH WAS AWARDED TO WAYLAND WAS SIGNED BY THE CONTRACTING OFFICER ON JULY 16, 1969, AND THE CONTRACT TERM WAS FROM JULY 5, 1969, TO JUNE 30, 1970.

PRIOR TO THE SIGNING OF THE ABOVE CONTRACT, POD CONDUCTED AN INVESTIGATION INTO WHETHER WAYLAND WAS "ACTUALLY ENGAGED IN BUSINESS" IN A QUALIFYING COUNTY AND A REPORT PREPARED BY A POSTAL INSPECTOR DATED APRIL 24, 1969, QUESTIONED WAYLAND'S QUALIFICATION TO BID. AS A RESULT OF THE POSTAL INSPECTOR'S REPORT A REQUEST WAS MADE THROUGH CHANNELS THAT THE GENERAL COUNSEL FOR TRANSPORTATION REVIEW THE MATTER. THE OPINION OF THE ASSISTANT GENERAL COUNSEL FOR TRANSPORTATION EXPRESSED IN A MEMORANDUM DATED MAY 2, 1962, WAS THAT THE EVIDENCE PRESENTED DID NOT ESTABLISH THAT WAYLAND HAD MET THE REQUIREMENTS OF 39 U.S.C. 6420 AND THAT THIS CONCERN COULD NOT BE AWARDED A CONTRACT ON THE BASIS OF THE EVIDENCE AVAILABLE.

PURSUANT TO THE ASSISTANT GENERAL COUNSEL'S OPINION WAYLAND WAS REQUESTED TO SUBMIT FURTHER EVIDENCE TO SHOW THAT IT WAS ENGAGED IN BUSINESS IN A QUALIFYING COUNTY. CERTAIN ADDITIONAL INFORMATION WITH REGARD TO WAYLAND'S QUALIFICATIONS WAS OBTAINED IN THE NATURE OF REPRODUCTIONS OF EMPLOYEES' TIME CARDS; A COPY OF THE LEASE BETWEEN THE STANDARD OIL COMPANY AND WAYLAND DISTRIBUTING COMPANY; AND RECAPITULATIONS OF THE DAILY SALES REPORTS OF THE SERVICE STATION. INFORMATION WAS ALSO PROVIDED THAT WAYLAND OPERATES A TOTAL OF 349,828 MILES OF STAR ROUTE SERVICE IN THE STATE OF MISSISSIPPI; THAT WAYLAND USES FIVE DIESEL TRACTORS AND ONE STANDBY TRACTOR AND THAT THE ONLY GASOLINE BURNING VEHICLE OPERATED BY WAYLAND IN MISSISSIPPI IS A SMALL VAN-TYPE TRUCK WHICH CARRIES VARIOUS ITEMS THAT MIGHT BE NEEDED IN THE MAINTENANCE OF WAYLAND'S TRACTORS AND TRAILERS.

BASED ON THE ADDITIONAL INFORMATION FURNISHED BY THE CHIEF, HIGHWAY TRANSPORTATION BRANCH, THE GENERAL COUNSEL'S OFFICE RECONSIDERED ITS DECISION OF MAY 2, 1969, AND INA MEMORANDUM DATED MAY 27, 1969, THE ASSISTANT GENERAL COUNSEL, TRANSPORTATION, CONCLUDED THAT THE DAILY SALES REPORT INDICATED THAT WAYLAND'S SERVICE STATION MADE SALES TO THE PUBLIC; THEREFORE, THIS CONCERN WAS A QUALIFIED BIDDER.

THE SOLICITATION FOR THE JACKSON-BILOXI STAR ROUTE WAS ISSUED ON SEPTEMBER 20, 1967, WITH A CLOSING DATE OF OCTOBER 23, 1967. BIDS WERE OPENED ON OCTOBER 24, 1967, FIVE BIDS WERE RECEIVED AND THE BID FROM WAYLAND WAS LOW AT $28,915. THE BID FROM D. B. HARRIGILL & HAROLD FRENCH AT $36,873 WAS SECOND LOW.

THE BACKGROUND FOR THIS AWARD IS SUMMARIZED IN A MEMORANDUM DATED MAY 13, 1969, PREPARED BY THE CHIEF, HIGHWAY TRANSPORTATION BRANCH, MEMPHIS REGION. BASICALLY THE MEMORANDUM STATES THAT ON ACCOUNT OF DIFFICULTIES WHICH WERE BEING ENCOUNTERED WITH THE CONTRACT IN EFFECT IN 1967, BOTH HARRIGILL AND WAYLAND WERE SOLICITED FOR A TEMPORARY CONTRACT EVEN THOUGH IT WAS KNOWN THAT NEITHER OF THESE CONCERNS WOULD MEET THE TECHNICAL STATUTORY QUALIFICATIONS FOR BIDDING ON STAR ROUTE CONTRACTS. AWARD OF THE TEMPORARY CONTRACT WAS MADE TO WAYLAND SINCE THIS CONCERN SUBMITTED THE LOWER OFFER, AND THE MEMORANDUM STATES THAT IT WAS MADE CLEAR TO WAYLAND THAT IT WOULD HAVE TO QUALIFY TO BID ON THE REGULAR CONTRACT. WITH RESPECT TO WAYLAND'S QUALIFICATIONS FOR THE REGULAR CONTRACT, A MEMORANDUM DATED MAY 15, 1969, FROM THE CHIEF, HIGHWAY TRANSPORATION BRANCH, STATES AS FOLLOWS:

WE REQUESTED WAYLAND DISTRIBUTING COMPANY TO FURNISH US WITH DOCUMENTATION OF THE FACT THAT THEY WERE OPERATING A BUSINESS IN JACKSON, MISSISSIPPI, PRIOR TO THE TIME THEY BEGAN REGULAR STAR ROUTE SERVICE BETWEEN JACKSON AND BILOXI ON DECEMBER 1, 1967. WE ARE ATTACHING THE DOCUMENTATION WHICH THEY SUBMITTED. IT IS AS FOLLOWS:

EXHIBIT NO. 1. A STATEMENT FROM A MOTEL THAT FRANK NIX, WAYLAND'S LOCAL REPRESENTATIVE, RENTED A ROOM FROM THEM FROM AUGUST 1967 THROUGH JANUARY 1968. AFTER THAT TIME MR. NIX PURCHASED A HOME IN JACKSON.

EXHIBIT NO. 2. INVOICES FROM THE PHILLIPS PETROLEUM COMPANY SHOWING SALES OF SIZEABLE QUANTITIES OF GASOLINE TO WAYLAND DISTRIBUTING COMPANY LOCATED ON HIGHWAY 49 IN JACKSON, MISSISSIPPI. PLEASE NOTE THAT THESE INVOICES INDICATE THAT THE DISTRIBUTOR COLLECTED THE STATE AND FEDERAL TAX, AND ALSO THE SALES TAX FOR THE PURCHASE PRICE OF THE GASOLINE.

EXHIBIT NO. 3 IS A COPY OF THE LEASE AGREEMENT EXECUTED BY FRANK NIX FOR WAYLAND DISTRIBUTING COMPANY WITH A D. SHERMAN, FOR THE FILLING STATION.

EXHIBIT NO. 4 IS A STATEMENT FROM THE DEATON TRUCK LINE THAT WAYLAND HAD FOUR TRUCKS LEASED TO THEM AND THAT MR. NIX WAS WAYLAND'S REPRESENTATIVE.

THE CONTRACT FOR THIS STAR ROUTE WAS SIGNED BY THE CONTRACTING OFFICER ON FEBRUARY 9, 1968. THE TERM OF THIS CONTRACT IS FROM DECEMBER 1, 1967, TO JUNE 30, 1970.

THE ADVERTISEMENT FOR THE JACKSON-NEW ORLEANS STAR ROUTE WAS ISSUED ON NOVEMBER 1, 1968, WITH A CLOSING DATE OF NOVEMBER 21, 1968. BIDS WERE OPENED ON NOVEMBER 22, 1968, FOUR BIDS WERE RECEIVED AND THE BID FROM WAYLAND AT $37,700 WAS LOW. THE BID FROM D. B. HARRIGILL AT $59,490 WAS THIRD LOW.

WITH RESPECT TO WAYLAND'S QUALIFICATIONS TO BID ON THIS PROCUREMENT, A MEMORANDUM DATED MAY 12, 1969, FROM THE CHIEF, HIGHWAY TRANSPORTATION BRANCH, STATES AS FOLLOWS:

YOUR LETTER OF MAY 5 REQUESTED PROOF OF THE RESIDENCE REQUIREMENTS OF WAYLAND DISTRIBUTING COMPANY TO PROVIDE STAR ROUTE SERVICE BETWEEN JACKSON, MISSISSIPPI, AND NEW ORLEANS, LOUISIANA.

WE ARE ATTACHING COPY OF THE RANKIN COUNTY PRIVILEGE TAX LICENSE FOR WAYLAND TO CONDUCT A BUSINESS, ALSO COPY OF THE CERTIFICATE OF AUTHORITY FROM THE STATE OF MISSISSIPPI AUTHORIZING THE COMPANY TO TRANSACT BUSINESS IN THAT STATE, A COPY OF THE APPLICATION FOR PERMIT AS DISTRIBUTOR OF GASOLINE, DIESEL FUEL, KEROSENE OR OIL, AND A COPY OF THE PERMIT TO OPERATE AS A NON-STOP DEALER FOR MOTOR VEHICLES FROM THE MOTOR VEHICLE COMPTROLLER.

WE FELT THAT THESE DOCUMENTS WERE SUFFICIENT PROOF THAT WAYLAND DISTRIBUTING COMPANY WAS OPERATING A BUSINESS WHICH FULFILLED THE RESIDENCE REQUIREMENTS.

THE CONTRACT FOR THE JACKSON-NEW ORLEANS STAR ROUTE WAS SIGNED BY THE CONTRACTING OFFICER ON JANUARY 20, 1969. THE TERM OF THIS CONTRACT WAS TO BE FROM DECEMBER 7, 1968, TO JUNE 30, 1970.

OUR OFFICE CONDUCTED ITS OWN INVESTIGATION TO ASCERTAIN THE FACTS WITH REGARD TO THIS MATTER. ON AUGUST 26, 1969, REPRESENTATIVES OF OUR OFFICE VISITED THE SERVICE STATION ON HIGHWAY 80 IN RANKIN COUNTY. AT THE TIME OF THIS VISIT THE SERVICE STATION WAS FOUND TO BE OPEN AND THE ATTENDANT ON DUTY ADVISED THAT HE HAD BEEN EMPLOYED AT THE STATION SINCE AUGUST 7, 1969. THE PRESENT ATTENDANT DID NOT KNOW THE PRIOR ATTENDANT OR ANYTHING ABOUT WHAT THE INVENTORY OF THE SERVICE STATION MIGHT HAVE BEEN PRIOR TO APRIL 15, 1969, THE BID OPENING DATE FOR THE JACKSON-NATCHEZ STAR ROUTE AND THERE WERE NO RECORDS AVAILABLE TO ESTABLISH THE INVENTORY PRIOR TO APRIL 15, 1969. AS OF AUGUST 26, 1969, THE STATION WAS OPEN FROM 9:30 A.M. TO 5:30 P.M. 5 DAYS A WEEK WITH ONE ATTENDANT ON DUTY. WHILE OUR REPRESENTATIVES WERE AT THE SERVICE STATION ONE CAR DROVE UP AND MADE A PURCHASE. THE INVENTORY ON AUGUST 26, 1969, CONSISTED OF VARIOUS OFFICE EQUIPMENT AND VENDING MACHINES AND VARIOUS QUANTITIES OF GREASE AND OIL SUPPLIES. THE SERVICE STATION HAD THREE GASOLINE PUMPS, ONE DIESEL PUMP AND ONE PUMP WAS NOT USED.

OUR OFFICE PREPARED COMPREHENSIVE SUMMARY SCHEDULES FOR FEBRUARY, MARCH AND APRIL AND AUGUST 1969 BASED ON THE SERVICE STATION'S DAILY REPORTS. THESE DAILY REPORTS WERE NOT AVAILABLE FOR THE MONTHS OF NOVEMBER AND DECEMBER 1968 AND JANUARY, JUNE AND JULY OF 1969.

THE TOTAL SALES BASED ON THE DAILY REPORTS FOR THE MONTHS FOR WHICH THESE REPORTS WERE AVAILABLE WERE AS FOLLOWS:

FEBRUARY 1969 $888.84

MARCH 1969 489.01

APRIL 1969 288.00

MAY 1969 666.26

AUGUST 1969 700.47

THE TOTAL GALLONS OF GASOLINE SOLD WERE AS FOLLOWS:

FEBRUARY 1969 2191.4

MARCH 1969 1183.0

APRIL 1969 679.0

MAY 1969 1592.9

AUGUST 1969 1194.2

THE TOTAL GALLONS PURCHASED FROM STANDARD OIL WERE AS FOLLOWS:

NOVEMBER 1968 NONE

DECEMBER 19685,169

JANUARY 1969 NONE

FEBRUARY 1969 2,000

MARCH 1969 1,475

APRIL 1969 NONE

MAY 1969 1,000

JUNE 1969 3,000

JULY 19692,000

THE ABOVE FIGURES REGARDING GASOLINE SALES FROM STANDARD OIL TO WAYLAND WERE CONFIRMED BY STANDARD OIL.

OUR REVIEW INDICATED THAT WAYLAND'S TRUCKS WHICH ARE USED IN ITS MAIL TRANSPORTATION CONTRACTS ARE FUELED BY A TANKER TRUCK OWNED BY WAYLAND PARKED NEAR THE POST OFFICE IN JACKSON. THESE TRUCKS USE DIESEL FUEL EXCEPT FOR A SMALL GASOLINED DRIVEN PICK-UP TRUCK WHICH IS USED TO SERVICE WAYLAND'S DIESEL TRUCKS. OCCASIONALLY THIS PICK-UP TRUCK OBTAINS GAS FROM WAYLAND'S SERVICE STATION. IT DOES NOT SEEM THAT THE PICK-UP TRUCK WOULD HAVE USED ALL OF THE GASOLINE FUEL PURCHASED BY WAYLAND'S SERVICE STATION; THEREFORE, IT SEEMS REASONABLE TO CONCLUDE AS DID POD THAT AT LEAST SOME OF THE GASOLINE WHICH WAS SOLD DURING FEBRUARY, MARCH AND APRIL 1969, AS INDICATED ABOVE, WAS SOLD TO THE PUBLIC.

ON AUGUST 26, 1969, REPRESENTATIVES OF OUR OFFICE INTERVIEWED CERTAIN OTHER BUSINESS PEOPLE LOCATED IN THE VICINITY OF WAYLAND'S SERVICE STATION. THE PEOPLE INTERVIEWED COULD NOT VERIFY TO WHAT EXTENT THE SERVICE STATION WAS ENGAGED IN BUSINESS AS OF APRIL 15, 1969; HOWEVER, THE GENERAL CONSENSUS OF THE PEOPLE INTERVIEWED WAS THAT THERE WAS LITTLE ACTIVITY AT THE SERVICE STATION FOR THE PAST FEW MONTHS. ONE OF THE PEOPLE INTERVIEWED DID SAY THAT ACTIVITY AT THE SERVICE STATION HAD INCREASED DURING THE PAST TWO WEEKS. OUR OFFICE INTERVIEWED PERSONNEL OF DEATON TRUCK LINE IN BOTH JACKSON, MISSISSIPPI, AND IN BIRMINGHAM, ALABAMA. THE RENTAL AGREEMENT BETWEEN WAYLAND AND DEATON WAS FOR THE RENTAL BY WAYLAND TO DEATON OF FIVE TRACTORS AND THE AGREEMENT BEGAN IN JUNE OF 1967. DEATON'S STATEMENT OF MAY 12, 1969, STATED THAT THE LEASING AGREEMENT WAS IN EFFECT UNTIL JANUARY 1968. UNDER THE AGREEMENT EXECUTED IN BIRMINGHAM, WAYLAND WAS TO ACT AS A CONTRACTOR HAULING LESS THAN TRUCK LOTS (LTL) FREIGHT AS DIRECTED BY LOCAL DEATON TERMINAL DISPATCHERS. WAYLAND SUPPLIED AND PAID THE DRIVERS OF THE TRACTORS, REPAIRED THE TRACTORS, PROVIDED INSURANCE AND CARRIED THE LTL FREIGHT. WAYLAND'S LTL ACTIVITIES INVOLVED THREE STATES AND MOST OF THE ACTIVITIES WERE DISPATCHED FROM BIRMINGHAM. OUR REPRESENTATIVES HAVE NOT ASCERTAINED THE SPECIFIC ROUTES TRAVELLED BY WAYLAND'S TRUCKS UNDER THE LEASING ARRANGEMENT; HOWEVER, OUR REPRESENTATIVES WERE ADVISED THAT PURSUANT TO THESE AGREEMENTS WAYLAND WORKED BOTH OUT OF ATLANTA, GEORGIA, AND JACKSON, MISSISSIPPI.

OUR OFFICE INTERVIEWED REPRESENTATIVES OF VASSAR TRUCK LEASING, INCORPORATED, TO ASCERTAIN THE EXTENT OF WAYLAND'S FLAT FIXING SERVICE TO THAT CONCERN. OUR REPRESENTATIVES WERE ADVISED THAT THE OWNER OF VASSAR AND AN EMPLOYEE OF WAYLAND, LOCATED IN JACKSON HAD AN INFORMAL AGREEMENT WHEREBY WAYLAND'S EMPLOYEE AGREED TO FIX FLATS AND MAKE MINOR REPAIRS TO VASSAR'S TRUCKS IN JACKSON. THE REPAIRS WERE PERFORMED AT THE POST OFFICE IN JACKSON ON VASSAR'S TRUCKS CARRYING UNITED STATES MAIL TO AND FROM JACKSON. WAYLAND'S EMPLOYEE BILLED VASSAR DIRECTLY FOR THE SERVICES AND THE CHECKS FOR THE SERVICES WERE SENT FROM VASSAR'S CENTRAL OFFICE DIRECTLY TO WAYLAND'S EMPLOYEE IN JACKSON. THE AGREEMENT WAS IN EFFECT FROM ABOUT JUNE 1968 TO ABOUT FEBRUARY 1969.

OUR OFFICE INTERVIEWED THE CHIEF, HIGHWAY TRANSPORTATION BRANCH, MEMPHIS REGION, POD. THIS OFFICIAL ADVISED THAT WHETHER PROSPECTIVE CONTRACTORS QUALIFY FOR STAR ROUTE CONTRACTS IS DETERMINED PRIMARILY BY A SIGNED STATEMENT BY A POSTAL OFFICIAL CERTIFYING THAT THE BIDDER IS ENGAGED IN A BUSINESS IN A QUALIFYING COUNTY. ANOTHER MEANS FOR A CONTRACTING OFFICER TO DETERMINE A BIDDER'S QUALIFICATIONS IS BY PERSONAL KNOWLEDGE. THIS OFFICIAL FURTHER ADVISED THAT SINCE THE POSTAL REGULATIONS DID NOT REQUIRE DOCUMENTATION AS TO THE BIDDER'S QUALIFICATIONS AND SINCE THIS OFFICIAL HAD PERSONAL KNOWLEDGE OF MOST OF THE CONTRACTORS IN THE MEMPHIS REGION, DOCUMENTATION USUALLY WAS NOT REQUIRED IN PRIOR SOLICITATIONS.

WITH RESPECT TO THE JACKSON-BILOXI STAR ROUTE AWARD, THE CHIEF, HIGHWAY TRANSPORTATION BRANCH ADVISED OUR REPRESENTATIVES THAT HE WAS FURNISHED WITH A CERTIFICATION FROM A POSTMASTER FROM ROME, GEORGIA, THAT WAYLAND DISTRIBUTING COMPANY WAS ENGAGED IN BUSINESS IN JACKSON. MR. WAYLAND VERBALLY INFORMED THE CHIEF, HIGHWAY TRANSPORTATION BRANCH OF THE LEASE AGREEMENT WITH THE DEATON TRUCK LINE AND THAT WAYLAND DISTRIBUTING COMPANY HAD TAKEN OVER THE OPERATION OF A SERVICE STATION ON HIGHWAY 49 IN JACKSON, MISSISSIPPI. NO FURTHER DOCUMENTATION WAS REQUIRED AND AWARD WAS MADE TO WAYLAND DISTRIBUTING COMPANY FOR THE JACKSON-BILOXI ROUTE. WHEN QUESTIONS WERE RAISED IN MAY 1969 WITH RESPECT TO THE AWARD OF STAR ROUTE CONTRACTS TO WAYLAND DISTRIBUTING COMPANY, MR. WAYLAND WAS REQUESTED TO FURNISH ADDITIONAL DOCUMENTATION TO ESTABLISH THAT WAYLAND DISTRIBUTING COMPANY WAS A QUALIFIED BIDDER FOR THE JACKSON-BILOXI ROUTE. THE DOCUMENTATION FURNISHED BY MR. WAYLAND WAS SET FORTH ABOVE IN THE EXCERPT FROM THE CHIEF, HIGHWAY TRANSPORTATION BRANCH'S MEMORANDUM DATED MAY 15, 1969.

WITH REGARD TO THE JACKSON-NEW ORLEANS ROUTE, THE CHIEF, HIGHWAY TRANSPORTATION BRANCH STATED TO OUR REPRESENTATIVES THAT THE POSTMASTER IN BIRMINGHAM, ALABAMA, CERTIFIED THAT WAYLAND DISTRIBUTING COMPANY WAS ENGAGED IN A BUSINESS THAT MET THE BIDDER'S QUALIFICATIONS FOR THIS STAR ROUTE. MR. WAYLAND SHOWED THE CONTRACTING OFFICER A CERTIFICATE OF AUTHORITY GRANTING PERMISSION TO OPERATE A BUSINESS IN THE STATE OF MISSISSIPPI, A RANKIN COUNTY PRIVILEGE TAX LICENSE (STATE OF MISSISSIPPI), AN APPLICATION FOR A PERMIT AS A DISTRIBUTOR OF GASOLINE, DIESEL FUEL, KEROSENE OR OIL (STATE OF MISSISSIPPI) AND A TRUCK STOP DEALER PERMIT (STATE OF MISSISSIPPI). BASED ON THE POSTMASTER'S CERTIFICATION AND MR. WAYLAND'S EVIDENCE, AND THE PERSONAL KNOWLEDGE OF THE CHIEF, HIGHWAY TRANSPORTATION BRANCH REGARDING WAYLAND'S QUALIFICATIONS FOR THE JACKSON- BILOXI STAR ROUTE, NO FURTHER DOCUMENTATION WAS REQUIRED AND AWARD OF THE JACKSON-NEW ORLEANS STAR ROUTE WAS MADE TO WAYLAND.

REGARDING THE JACKSON-NATCHEZ ROUTE, THE CHIEF, HIGHWAY TRANSPORTATION BRANCH ADVISED OUR REPRESENTATIVES THAT HE DETERMINED THAT WAYLAND WAS A QUALIFIED BIDDER PURSUANT TO A CERTIFICATION FROM THE ASSISTANT POSTMASTER OF BIRMINGHAM, ALABAMA AND HIS PERSONAL KNOWLEDGE OF THE BASIS FOR THE AWARD OF THE PREVIOUS STAR ROUTES TO TO THAT CONCERN. ALSO, AS INDICATED, POD MADE AN INVESTIGATION REGARDING WAYLAND'S QUALIFICATIONS FOR THIS ROUTE.

OUR OFFICE INTERVIEWED THE ASSISTANT POSTMASTER IN BIRMINGHAM, ALABAMA, TO ASCERTAIN THE BASIS FOR THE CERTIFICATION BY HIM THAT WAYLAND WAS ACTUALLY ENGAGED IN BUSINESS IN JACKSON. THE ASSISTANT POSTMASTER ADVISED OUR REPRESENTATIVES THAT SINCE IT HAS BEEN QUITE SOME TIME SINCE HE MADE THIS CERTIFICATION, HE DOES NOT REMEMBER THE SPECIFIC SITUATION; THEREFORE, HE DOES NOT REMEMBER WHAT DOCUMENTATION WAS PROVIDED TO SUBSTANTIATE THAT WAYLAND WAS ENGAGED IN A BUSINESS IN RANKIN COUNTY. THE ASSISTANT POSTMASTER OF BIRMINGHAM ADVISED FURTHER THAT NORMALLY WHEN MAKING CERTIFICATIONS OF THIS NATURE, THE BIDDER IS REQUIRED TO FURNISH SUCH INFORMATION AS (1) BANK STATEMENTS; (2) CORRESPONDENCE; (3) BILLING STATEMENTS; (4) TAX STATEMENTS AND (5) STATE LICENSES, PERMISSION AND AUTHORITY TO OPERATE A BUSINESS.

REPRESENTATIVES OF OUR OFFICE ALSO INTERVIEWED MR. WAYLAND; HOWEVER, MR. WAYLAND ADVISED THAT HE CONSIDERED THE MATTER CLOSED AND MR. WAYLAND DID NOT APPEAR INTERESTED IN CONTRIBUTING FURTHER TO THE INVESTIGATION BY OUR OFFICE.

OUR OFFICE WAS ADVISED THAT ALL STAR ROUTE CONTRACTS ARE AWARDED FOR A PERIOD OF NOT MORE THAN 4 YEARS AND THE EXPIRATION DATES OF ALL CONTRACTS WITHIN A POST OFFICE REGION ARE THE SAME. WITHIN THE MEMPHIS REGION, THE NEXT STAR ROUTE EXPIRATION DATE IS JUNE 30, 1970, AND AT THAT TIME ALL STAR ROUTE CONTRACTS WILL BE RENEWED OR READVERTISED.

THE QUESTION WITH REGARD TO EACH OF THE ABOVE STAR ROUTES IS WHETHER WAYLAND WAS ENGAGED IN BUSINESS AS CONTEMPLATED BY 39 U.S.C. 6420 SO AS TO QUALIFY AS A CORPORATE BIDDER FOR THESE CONTRACTS.

THE QUESTION WHAT CONSTITUTES "ACTUALLY ENGAGED IN BUSINESS" UNDER THE STATUTE WAS CONSIDERED BY OUR OFFICE IN 35 COMP. GEN. 411 (1956) AND IN THIS RESPECT IT WAS STATED AS FOLLOWS:

AS TO THE TEST TO BE APPLIED IN DETERMINING WHETHER OR NOT A CORPORATION IS "ENGAGED" IN SUCH BUSINESS, WE ARE INCLINED TO THE VIEW THAT THE BUSINESS SHOULD BE OF SUCH NATURE AND EXTENT AS WOULD SUBJECT IT TO THE JURISDICTION OF COURTS OF THE STATE IN WHICH THE BUSINESS WAS CONDUCTED. THIS INTERPRETATION WOULD MAKE THE QUESTION ONE AS TO WHICH THE DECISIONS OF THE UNITED STATES SUPREME COURT ARE FINAL AND BINDING, BEING REFERABLE ULTIMATELY TO THE CONSTITUTIONAL REQUIREMENTS OF DUE PROCESS, WITHOUT REGARD TO LOCAL LAW OR STATUTORY CONSTRUCTION (28 AM. JUR. 341).

THE SUPREME COURT HAS NOT UNDERTAKEN TO LAY DOWN ANY ALL-EMBRACING RULE WHICH WOULD SERVE AS A YARDSTICK BY WHICH ANY GIVEN SITUATION MAY BE MEASURED; RATHER IT HAS BEEN DECIDED EVERY CASE ON THE BASIS OF THE PARTICULAR FACTS INVOLVED. SEE ST. LOUIS S. W. R. CO. V ALEXANDER, 227 U.S. 218; GREEN V C. B. & Q. R. CO., 205 U.S. 530; CONSOLIDATED TEXTILE CORP. V GREGORY, 289 U.S. 85; PEOPLES'S TOBACCO CO. V AMERICAN TOBACCO CO., 246 U.S. 79.

THE SERVICE STATION ON HIGHWAY 80 APPARENTLY WAS OPEN TO THE PUBLIC AT LEAST SOME OF THE TIME PRIOR TO THE BID OPENING FOR THE JACKSON NATCHEZ STAR ROUTE. THE LEASE FOR THIS SERVICE STATION WAS SIGNED ON BEHALF OF WAYLAND BY AN AGENT OF THIS COMPANY. APPLYING THE TEST FROM 35 COMP. GEN. 411 (1956), IT WOULD SEEM THAT THE BUSINESS CONDUCTED BY THE SERVICE STATION IN MISSISSIPPI WAS SUCH AS TO REASONABLY WARRANT THE INFERENCE THAT WAYLAND HAD SUBJECTED ITSELF TO THE JURISDICTION AND LAWS OF THE STATE OF MISSISSIPPI. IT WAS INDICATED IN 35 COMP. GEN. 411 (1956), THAT THE MOTIVE BEHIND ESTABLISHING A BUSINESS IS NOT CONTROLLING WITH RESPECT TO WHETHER FRAUD OR BAD FAITH ARE INVOLVED. WE THEREFORE FIND THAT THE POD'S DETERMINATION THAT WAYLAND WAS A QUALIFIED BIDDER FOR THE JACKSON- NATCHEZ STAR ROUTE WAS NOT WITHOUT FACTUAL FOUNDATION. OUR OFFICE HAS BEEN ADVISED THAT UPON EXPIRATION OF THE PRESENT CONTRACT THERE WILL BE A NEW ADVERTISED SOLICITATION FOR THIS ROUTE.

WITH RESPECT TO THE JACKSON-BILOXI AND JACKSON-NEW ORLEANS STAR ROUTES, MORE DIFFICULT QUESTIONS ARE PRESENTED. THE CHIEF OF HIGHWAY TRANSPORTATION BRANCH, MEMPHIS REGION, HAS READILY ADMITTED THAT THE DETERMINATIONS OF WAYLAND'S QUALIFICATIONS TO BID ON THESE ROUTES WERE BASED PRIMARILY ON THE CERTIFICATIONS FURNISHED BY POSTMASTERS LOCATED OUTSIDE THE JACKSON VICINITY.

WITH RESPECT TO WHETHER A STAR ROUTE CONTRACT SHOULD BE CANCELLED IN A SITUATION WHERE OUR OFFICE MIGHT DISAGREE WITH A DETERMINATION BY POD THAT A CORPORATION WAS "ACTUALLY ENGAGED IN BUSINESS", IT WAS STATED IN 35 COMP. GEN. 411 (1956):

WE MUST, HOWEVER, GIVE DUE CONSIDERATION TO THE FACT THAT THE DUTY AND RESPONSIBILITY OF DETERMINING THE QUALIFICATION OF BIDDERS IN THE FIRST INSTANCE IS LEGALLY IN THE POST OFFICE DEPARTMENT. THE AWARD MADE BY THE DEPARTMENT NECESSARILY CONSTITUTES A DETERMINATION THAT THE CORPORATION WAS "ENGAGED IN BUSINESS," AND WE DO NOT FEEL THAT WE SHOULD REFUSE TO ALLOW CREDIT FOR PAYMENTS MADE TO THE CONTRACTOR UNDER THE CONTRACT AWARDED, OR DIRECT CANCELLATION OF THE CONTRACT, EXCEPT FOR REASONS SO CLEAR THAT THEY WOULD REASONABLY BE EXPECTED TO CONSTITUTE A VALID DEFENSE TO AN ACTION BY THE CONTRACTOR FOR DAMAGES FOR BREACH OF CONTRACT.

IT DOES NOT SEEM THAT THE FACTS SURROUNDING THE AWARD OF THE JACKSON BILOXI STAR ROUTE PRESENT A CASE WHICH REQUIRES CANCELLATION OF THE AWARD. THE DOCUMENTATION SUPPORTING POD'S DETERMINATION THAT WAYLAND WAS QUALIFIED TO BID ON THE JACKSON-BILOXI STAR ROUTE APPARENTLY WAS NOT REQUESTED UNTIL SOMETIME IN 1969 WHEN QUESTIONS BEGAN TO BE RAISED WITH RESPECT TO THAT CONCERN'S QUALIFICATIONS TO BID ON STAR ROUTE CONTRACTS IN MISSISSIPPI. IN VIEW OF THE UNDOCUMENTED NATURE OF YOUR DEPARTMENT'S DETERMINATION REGARDING WAYLAND'S QUALIFICATIONS FOR THE JACKSON-BILOXI STAR ROUTE WE RECOMMEND THAT UPON EXPIRATION OF THE PRESENT CONTRACT, THERE BE A NEW ADVERTISED SOLICITATION FOR THIS STAR ROUTE.

THE DETERMINATION THAT WAYLAND WAS A QUALIFIED BIDDER FOR THE JACKSON NEW ORLEANS STAR ROUTE WAS MADE ON THE BASIS OF A CERTIFICATE BY A POSTMASTER LOCATED OUTSIDE OF THE JACKSON VICINITY, AND APPLICATIONS FOR VARIOUS PERMITS AND LICENSES, A CERTIFICATE OF AUTHORITY TO DO BUSINESS AND THE CHIEF OF HIGHWAY TRANSPORTATION BRANCH'S PERSONAL KNOWLEDGE OF WAYLAND'S BUSINESS ACTIVITIES. THESE CERTIFICATES, PERMITS, LICENSES AND APPLICATIONS WOULD NOT ESTABLISH THAT WAYLAND WAS ACTUALLY ENGAGED IN BUSINESS. WE HAVE SERIOUS QUESTIONS WHETHER THE FLAT FIXING AGREEMENT WITH VASSAR WOULD BE SUFFICIENT TO QUALIFY WAYLAND AS A BIDDER FOR THE JACKSON-NEW ORLEANS ROUTE. WAYLAND'S EMPLOYEE ENTERED INTO THIS AGREEMENT IN HIS OWN NAME AND PAYMENT WAS MADE DIRECTLY TO THIS EMPLOYEE IN HIS OWN NAME. IT COULD BE ARGUED THAT THIS EMPLOYEE WAS PROVIDING THE SERVICES TO VASSAR IN ORDER TO OBTAIN SOME ADDITIONAL INCOME FOR HIMSELF. MOREOVER, EVEN ASSUMING THAT IT COULD BE SHOWN THAT WAYLAND WAS A PARTY TO THE AGREEMENT WITH VASSAR SINCE VASSAR'S TRUCKS WERE ENGAGED IN THE TRANSPORTATION OF MAIL THERE WOULD BE A QUESTION WHETHER THE RENDERING OF SERVICES UNDER SUCH AN AGREEMENT COULD BE CONSIDERED AS BEING ENGAGED IN A BUSINESS OTHER THAN THE TRANSPORTATION OF MAIL. C.F. B-167738, DECEMBER 1, 1969.

IN VIEW OF WHAT WAS SAID IN 35 COMP. GEN. 411 (1956), CANCELLATION OF THE JACKSON-NEW ORLEANS CONTRACT WOULD NOT BE JUSTIFIED IN THE CIRCUMSTANCES OF THIS CASE. HOWEVER, CONSIDERING THE DOUBTFUL ASPECTS CONCERNING THE AWARD OF THIS CONTRACT WE RECOMMEND THAT THERE BE A NEW ADVERTISED SOLICITATION FOR THIS STAR ROUTE UPON EXPIRATION OF THE PRESENT CONTRACT.

THE ABOVE REVIEW INDICATES THE COMPLEX PROBLEMS THAT CAN BE ENCOUNTERED IN SITUATIONS WHERE A CORPORATION ATTEMPTS TO QUALIFY ITSELF AS BIDDER ON A STAR ROUTE CONTRACT. ONLY WITH RESPECT TO THE JACKSON-NATCHEZ STAR ROUTE WAS ADEQUATE DOCUMENTATION REGARDING THE QUALIFICATIONS OF THE PROSPECTIVE CONTRACTOR OBTAINED BY YOUR DEPARTMENT PRIOR TO AWARD. HAVE REVIEWED YOUR DEPARTMENT'S REGULATIONS AS PUBLISHED IN THE CODE OF FEDERAL REGULATIONS AND THE POSTAL MANUAL AND WE HAVE FOUND NOTHING THEREIN WHICH WOULD GIVE GUIDANCE TO CONTRACTING OFFICERS REGARDING THE NATURE AND EXTENT OF THE DOCUMENTATION THAT SHOULD BE REQUIRED TO ESTABLISH THAT A CONCERN HAS QUALIFIED AS A BIDDER FOR A STAR ROUTE CONTRACT.

IT IS OUR VIEW THAT CONTRACTING OFFICERS SHOULD BE GIVEN SOME SPECIFIC CRITERIA AS TO THE DOCUMENTATION WHICH MUST BE FURNISHED BY A PROSPECTIVE CORPORATE CONTRACTOR TO ESTABLISH THAT IT MEETS THE ACTUALLY ENGAGED IN BUSINESS REQUIREMENT. WITH REGARD TO THE USE OF CERTIFICATIONS OF POSTMASTERS TO ESTABLISH THAT A CONCERN IS ACTUALLY ENGAGED IN BUSINESS IN A QUALIFYING COUNTY, THOSE CERTIFICATIONS SHOULD BE SUPPORTED BY ADEQUATE DOCUMENTATION AND IN THIS REGARD WE RECOMMEND THAT CONTRACTING OFFICERS BE ADVISED THAT SUCH CERTIFICATIONS BY THEMSELVES DO NOT ESTABLISH THAT A CORPORATION IS QUALIFIED TO BID ON A STAR ROUTE CONTRACT.