B-167725, OCT. 3, 1969

B-167725: Oct 3, 1969

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PROPRIETY FACT THAT TWO FURNITURE COMPANIES WERE OWNED AND CONTROLLED BY SAME CORPORATION AND SUBMITTED BIDS SIGNED BY SAME INDIVIDUAL PRESENTS NO BASIS FOR OBJECTING TO AWARDS MADE TO THEM. AS SUBMISSION OF SEPARATE BIDS BY AFFILIATED CONCERNS IS NOT PROHIBITED BY LAW. IT IS BELIEVED EACH BID WAS SUBMITTED STRICTLY ON BASIS OF COMPANY'S ABILITY TO MEET GOVERNMENT'S REQUIREMENT. WHERE SEPARATE BIDS HAVE BEEN SUBMITTED BY AFFILIATED CONCERNS FOR APPARENTLY LEGITIMATE BUSINESS REASONS. TO LETCHER MANUFACTURING COMPANY: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM DATED AUGUST 15. BIDS WERE SOLICITED FOR THE PURPOSE OF ENTERING INTO FEDERAL SUPPLY SCHEDULE CONTRACTS FOR FSC GROUP 71. THE RECORD SHOWS THAT BIDS RECEIVED IN RESPONSE TO THE INVITATION WERE OPENED ON JUNE 11.

B-167725, OCT. 3, 1969

BIDS--MULTIPLE--PROPRIETY FACT THAT TWO FURNITURE COMPANIES WERE OWNED AND CONTROLLED BY SAME CORPORATION AND SUBMITTED BIDS SIGNED BY SAME INDIVIDUAL PRESENTS NO BASIS FOR OBJECTING TO AWARDS MADE TO THEM, AS SUBMISSION OF SEPARATE BIDS BY AFFILIATED CONCERNS IS NOT PROHIBITED BY LAW; COMPANIES DID NOT BID ON SAME ITEMS, AND IT IS BELIEVED EACH BID WAS SUBMITTED STRICTLY ON BASIS OF COMPANY'S ABILITY TO MEET GOVERNMENT'S REQUIREMENT; AND WHERE SEPARATE BIDS HAVE BEEN SUBMITTED BY AFFILIATED CONCERNS FOR APPARENTLY LEGITIMATE BUSINESS REASONS, DISCUSSIONS OF PRICES THEY INTENDED TO QUOTE IN SUBMITTING SEPARATE BIDS WOULD NOT CONSTITUTE REASONABLE BASIS FOR CONCLUDING THEY HAD CONSPIRED TO ELIMINATE COMPETITION FROM SMALLER COMPANIES.

TO LETCHER MANUFACTURING COMPANY:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM DATED AUGUST 15, 1969, PROTESTING POSSIBLE AWARDS TO THE PATRICIAN FURNITURE COMPANY, HIGH POINT, NORTH CAROLINA, AND TO CAR-DAL FURNITURE COMPANY, A DIVISION OF CARSONS, INCORPORATED, HIGH POINT, NORTH CAROLINA, PURSUANT TO AN INVITATION FOR BIDS (ADVERTISED SOLICITATION NO. FPNFH-A-27804-A-6-11 69), ISSUED ON MAY 12, 1969, BY THE FEDERAL SUPPLY SERVICE, GENERAL SERVICES ADMINISTRATION.

BIDS WERE SOLICITED FOR THE PURPOSE OF ENTERING INTO FEDERAL SUPPLY SCHEDULE CONTRACTS FOR FSC GROUP 71, PART II, SECTION A, HOUSEHOLD FURNITURE, CLASS 7105-UPHOLSTERED LIVING ROOM FURNITURE, COVERING THE PERIOD NOVEMBER 15, 1969, THROUGH NOVEMBER 14, 1970. THE INVITATION FOR BIDS LISTED NUMEROUS ITEMS OF FURNITURE IN 28 SPECIFIED AWARD GROUPS.

THE RECORD SHOWS THAT BIDS RECEIVED IN RESPONSE TO THE INVITATION WERE OPENED ON JUNE 11, 1969, AND THAT THE BIDS OF YOUR COMPANY AND THOSE OF THE CAR-DAL AND PATRICIAN FURNITURE COMPANIES QUOTED THE LOWEST PRICES ON VARIOUS ITEMS. THE BID OF THE CAR-DAL FURNITURE COMPANY SHOWS THAT COMPANY TO BE A DIVISION OF CARSONS, INCORPORATED, AND IT WAS SIGNED BY MR. R. C. DONNELLY AS THE COMPANY'S GOVERNMENT SALES REPRESENTATIVE. THE BID OF THE PATRICIAN FURNITURE COMPANY DISCLOSED AT PAGE 2 OF THE SOLICITATION, OFFER AND AWARD FORM THAT THE PATRICIAN FURNITURE COMPANY IS OWNED AND CONTROLLED BY A PARENT COMPANY DESIGNATED AS CARSONS, INCORPORATED, AND THE BID WAS ALSO SIGNED BY MR. R. C. DONNELLY. THE BID OF THE CAR-DAL FURNITURE COMPANY CONTAINED QUOTATIONS ON ITEMS DESCRIBED IN AWARD GROUPS NOS. 1, 2, 3, 8, 9, 16, 17 AND 25, AND THE BID OF THE PATRICIAN FURNITURE COMPANY CONTAINED QUOTATIONS ON ITEMS DESCRIBED IN AWARD GROUPS NOS. 10, 11, 15, 18, 27 AND 28.

YOUR PROTEST AGAINST THE MAKING OF ANY AWARDS TO THE CAR-DAL AND PATRICIAN FURNITURE COMPANIES IS BASED UPON THE FACT THAT THEY ARE AFFILIATED COMPANIES, BOTH BEING OWNED AND CONTROLLED BY CARSONS, INCORPORATED, AND THE FACT THAT THE BIDS SUBMITTED ON BEHALF OF THOSE CONCERNS WERE SIGNED BY THE SAME INDIVIDUAL. IN A LETTER DATED JUNE 25, 1969, TO THE FEDERAL SUPPLY SERVICE, YOU REFERRED TO THE CERTIFICATE OF INDEPENDENT PRICE DETERMINATION AT PAGE 2 OF THE SOLICITATION, OFFER AND AWARD FORM AND STATED THAT, IF BOTH OF THESE COMPANIES ARE OWNED AND CONTROLLED BY CARSONS, INCORPORATED, AND BOTH BIDS WERE PREPARED AND SIGNED BY MR. DONNELLY, THERE MUST BE A CONSPIRACY TO ELIMINATE SMALLER COMPANIES. YOU REQUESTED THAT THE MATTER BE REFERRED TO OUR OFFICE FOR CONSIDERATION IF THE FEDERAL SUPPLY SERVICE BELIEVED THAT THE PROTEST SHOULD BE DENIED. HOWEVER, THE PROTEST WAS DENIED BY THE COMMISSIONER, FEDERAL SUPPLY SERVICES, IN A LETTER TO YOU OF AUGUST 8, 1969, STATING IN PART THAT THE FEDERAL SUPPLY SERVICE WAS PROCEEDING WITH AWARD TO THE LOW RESPONSIVE AND RESPONSIBLE OFFERORS.

WE WERE REQUESTED IN YOUR TELEGRAM OF AUGUST 15, 1969, TO PREVENT THE MAKING OF AWARDS TO THE CAR-DAL AND PATRICIAN FURNITURE COMPANIES. HOWEVER, THE REPORT WHICH WE RECEIVED FROM THE GENERAL SERVICES ADMINISTRATION IN THE MATTER STATES THAT AWARDS WERE MADE TO THOSE COMPANIES ON AUGUST 11, 1969. IT IS THE POSITION OF THE GENERAL SERVICES ADMINISTRATION THAT THE AWARDS WERE NOT IMPROPER AND THAT THE ACTION TAKEN BY THE FEDERAL SUPPLY SERVICE IS CONSISTENT WITH THE VIEWS EXPRESSED IN 39 COMP. GEN. 892 AND ANOTHER DECISION OF OUR OFFICE, B 166291, APRIL 16, 1969.

IN A 1934 DECISION OF OUR OFFICE, 14 COMP. GEN. 168, IT WAS DETERMINED THAT NO BIDDER SHOULD BE PERMITTED THE ADVANTAGE OF DOUBLE BIDDING AND THAT BIDS SUBMITTED BY TWO CORPORATIONS, ONE OF WHICH WAS OWNED AND CONTROLLED BY THE OTHER, SHOULD NOT BE CONSIDERED IN THE MAKING OF A CONTRACT AWARD. THAT DECISION WAS MODIFIED BY DECISION, 39 COMP. GEN. 892, IN WHICH IT WAS HELD THAT BIDS OF A CORPORATION AND AN AFFILIATED CONCERN SUBMITTED IN RESPONSE TO THE SAME INVITATION FOR BIDS WERE NOT REQUIRED TO BE REJECTED BECAUSE OF SUCH AFFILIATION. THE SUBJECT OF THE SUBMISSION OF SEPARATE BIDS BY AFFILIATED CONCERNS HAS BEEN CONSIDERED IN SEVERAL SUBSEQUENT DECISIONS OF OUR OFFICE, INCLUDING B-166291, APRIL 16, 1969, AND IT MAY BE STATED THAT, SINCE THE TIME OF RENDERING THE DECISION, 39 COMP. GEN. 892, IT HAS BEEN OUR POSITION THAT THE SUBMISSION OF SEPARATE BIDS BY AFFILIATED CONCERNS IS NOT PROHIBITED BY LAW.

THE CAR-DAL AND PATRICIAN FURNITURE COMPANIES DID NOT BID ON THE SAME ITEMS AND WE HAVE NO REASON TO BELIEVE OTHER THAN THAT EACH COMPANY'S BID WAS SUBMITTED STRICTLY ON THE BASIS OF THE QUANTITIES AND TYPES OF FURNITURE WHICH IT CONSIDERED THAT IT WAS CAPABLE OF FURNISHING TO THE GOVERNMENT DURING THE PERIOD NOVEMBER 15, 1969, THROUGH NOVEMBER 14, 1970.

WITH RESPECT TO YOUR REFERENCE TO THE CERTIFICATION OF INDEPENDENT PRICE DETERMINATION APPEARING AT PAGE 2 OF THE SOLICITATION OFFER AND AWARD FORM, THE RELATIONSHIP BETWEEN THE TWO COMPANIES WAS FULLY DISCLOSED AT THE TIME OF BIDDING AND IT IS OUR OPINION THAT THE CERTIFICATIONS OF THOSE CONCERNS SHOULD BE REGARDED ONLY AS INDICATING THAT THE PRICES QUOTED BY THEM WERE NOT DISCUSSED WITH OR COMMUNICATED TO ANY COMPETITOR OF THE AFFILIATED COMPANIES OR TO ANY PROSPECTIVE BIDDER OTHER THAN THEMSELVES, AND THAT NO ATTEMPT HAD BEEN MADE TO INDUCE ANY OTHER PERSON OR FIRM TO SUBMIT OR NOT TO SUBMIT AN OFFER FOR THE PURPOSE OF RESTRICTING COMPETITION.

THE GENERAL SERVICES ADMINISTRATION HAS STATED THAT THERE IS NO EVIDENCE TO SHOW THAT MR. DONNELLY DID, IN FACT, COMPUTE THE BID PRICES OF THE TWO COMPANIES WHICH HE REPRESENTS. IN ANY EVENT, SINCE THE AFFILIATION BETWEEN THE TWO COMPANIES WAS FULLY DISCLOSED AT THE TIME THEIR BIDS WERE SUBMITTED AND THERE IS NO LEGAL OBJECTION TO THE SUBMISSION OF SEPARATE BIDS BY AFFILIATED CONCERNS, NO USEFUL PURPOSE WOULD APPEAR TO HAVE BEEN SERVED IN AN ATTEMPT BY THE FEDERAL SUPPLY SERVICE TO ASCERTAIN WHETHER THE BID PRICES WERE COMPUTED BY ONE PERSON OR ARRIVED AT AS THE RESULT OF DISCUSSIONS BETWEEN THE OFFICIALS OF THE CAR-DAL AND PATRICIAN FURNITURE COMPANIES BEFORE THE SUBMISSION OF THEIR SEPARATE BIDS. WHERE SEPARATE BIDS HAVE BEEN SUBMITTED BY AFFILIATED CONCERNS FOR APPARENTLY LEGITIMATE BUSINESS REASONS, IT WOULD SEEM TO BE IMMATERIAL WHETHER THE PRICES WHICH THEY INTENDED TO QUOTE WERE DISCUSSED BETWEEN THEM BEFORE SUBMITTING SUCH SEPARATE BIDS, AND WE DO NOT BELIEVE THAT ANY SUCH DISCUSSIONS WOULD CONSTITUTE A REASONABLE BASIS FOR CONCLUDING THAT THE AFFILIATED CONCERNS HAD ENTERED INTO A CONSPIRACY TO ELIMINATE COMPETITION FROM SMALLER COMPANIES.

IN THE CIRCUMSTANCES, WE FIND NO PROPER BASIS FOR TAKING EXCEPTION TO THE AWARDS WHICH WERE MADE TO THE CAR-DAL AND PATRICIAN FURNITURE COMPANIES AND, ACCORDINGLY, YOUR PROTEST TO OUR OFFICE IN THE MATTER IS DENIED.