B-167841, DEC. 18, 1969

B-167841: Dec 18, 1969

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DISCRETION IS VESTED IN SECRETARIES OF INTERIOR AND HEALTH. DEFINITE POLICY AND SPECIFIC GUIDELINES SHOULD BE PROMULGATED AND ESTABLISHED WITH RESPECT TO CIRCUMSTANCES IN WHICH NEGOTIATING AUTHORITY OF ACT WILL BE EXERCISED. INC.: WE HAVE YOUR LETTERS OF JUNE 24 AND AUGUST 26. YOUR CORRESPONDENCE TAKES THE POSITION THAT THE "BUY INDIAN ACT OF 1910" SHOULD HAVE APPLIED IN THESE PROCUREMENTS AND YOUR COMPANY SHOULD HAVE BEEN OFFERED THE OPPORTUNITY TO OBTAIN THE SUBJECT CONTRACTS FOR THE AREA IN WHICH IT IS LOCATED BY NEGOTIATING ITS BID PRICE DOWNWARD TO MEET THE PRICE OFFERED BY THE LOW BIDDER WHOSE OPERATIONS ARE LOCATED ELSEWHERE. THE "BUY INDIAN ACT" REFERRED TO IS SECTION 23 OF THE ACT OF JUNE 25.

B-167841, DEC. 18, 1969

INDIAN AFFAIRS--CONTRACTING WITH GOVERNMENT--PREFERENCE TO INDIAN CONCERNS REGARDING APPLICATION OF "BUY INDIAN ACT," 25 U.S.C. 47, IN PROCUREMENT OF LAUNDRY SERVICES IN INDIAN AREA FOR SCHOOLS AND HOSPITALS, DISCRETION IS VESTED IN SECRETARIES OF INTERIOR AND HEALTH, EDUCATION AND WELFARE, WHETHER OR NOT TO INVOKE AUTHORITY OF ACT BY CLEARLY SPELLING OUT RESTRICTION TO PROSPECTIVE BIDDERS, SINCE OTHERWISE IT WOULD BE DETRIMENTAL TO INTEGRITY OF COMPETITIVE BIDDING SYSTEM TO REJECT NON- INDIAN'S LOW BID FOR SOLE PURPOSE OF MAKING AWARD TO INDIAN FIRM. HOWEVER, DEFINITE POLICY AND SPECIFIC GUIDELINES SHOULD BE PROMULGATED AND ESTABLISHED WITH RESPECT TO CIRCUMSTANCES IN WHICH NEGOTIATING AUTHORITY OF ACT WILL BE EXERCISED.

TO ELITE LAUNDRY COMPANY, INC.:

WE HAVE YOUR LETTERS OF JUNE 24 AND AUGUST 26, 1969, PROTESTING THE ACTIONS BY THE DEPARTMENT OF THE INTERIOR, BUREAU OF INDIAN AFFAIRS, AND BY THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, PUBLIC HEALTH SERVICE, IN AWARDING SEVERAL CONTRACTS FOR LAUNDRY SERVICES FOR VARIOUS SCHOOLS AND HOSPITALS FOR INDIANS IN THE GALLUP, NEW MEXICO, AREA.

YOUR CORRESPONDENCE TAKES THE POSITION THAT THE "BUY INDIAN ACT OF 1910" SHOULD HAVE APPLIED IN THESE PROCUREMENTS AND YOUR COMPANY SHOULD HAVE BEEN OFFERED THE OPPORTUNITY TO OBTAIN THE SUBJECT CONTRACTS FOR THE AREA IN WHICH IT IS LOCATED BY NEGOTIATING ITS BID PRICE DOWNWARD TO MEET THE PRICE OFFERED BY THE LOW BIDDER WHOSE OPERATIONS ARE LOCATED ELSEWHERE.

THE "BUY INDIAN ACT" REFERRED TO IS SECTION 23 OF THE ACT OF JUNE 25, 1910, 36 STAT. 861 (25 U.S.C. 47), WHICH PROVIDES AS FOLLOWS:

"SO FAR AS MAY BE PRACTICABLE INDIAN LABOR SHALL BE EMPLOYED, AND PURCHASES OF THE PRODUCTS OF INDIAN INDUSTRY MAY BE MADE IN THE DISCRETION OF THE SECRETARY OF THE INTERIOR."

IN A REPORT TO THIS OFFICE THE DEPARTMENT OF THE INTERIOR HAS ADVISED THAT UNDER THE AUTHORITY DELEGATED TO HIM BY THE SECRETARY OF THE INTERIOR, THE COMMISSIONER OF INDIAN AFFAIRS HAS DIRECTED THAT WHENEVER IT IS POSSIBLE TO DO SO, PRODUCTS AND SERVICES SHALL BE ACQUIRED FROM INDIVIDUAL INDIANS OR ORGANIZATIONS WHICH QUALIFY AS "INDIAN INDUSTRY." HOWEVER, WHERE THE PRODUCT OR SERVICE IS AVAILABLE FROM MORE THAN ONE FIRM QUALIFYING AS AN "INDIAN INDUSTRY," THE DEPARTMENT STATES THAT COMPETITIVE CONTRACTING PROCEDURES ARE REQUIRED TO BE FOLLOWED, AND AWARD TO BE BASED ON THE BEST OFFER.

WITH RESPECT TO THE PROTESTED CONTRACTS AWARDED BY THE BUREAU OF INDIAN AFFAIRS, WE HAVE BEEN ADVISED THAT IT WAS ADMINISTRATIVELY DETERMINED NOT TO EXERCISE THE AUTHORITY TO NEGOTIATE UNDER THE "BUY INDIAN ACT" SINCE TWO LAUNDRIES IN THE GALLUP AREA WERE KNOWN TO QUALIFY FOR PREFERENCE UNDER THE ACT.

A REPORT IN THIS MATTER WAS ALSO REQUESTED FROM THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE WITH RESPECT TO THE PROTESTED HOSPITAL LAUNDRY SERVICE CONTRACTS. THAT DEPARTMENT'S REPORT STATES THAT THE AUTHORITY PROVIDED IN THE "BUY INDIAN ACT" IS ALSO VESTED IN THE SECRETARY OF HEALTH, EDUCATION, AND WELFARE BY VIRTUE OF VARIOUS STATUTES AND REORGANIZATION PLANS UNDER WHICH RESPONSIBILITY FOR MAINTAINING AND OPERATING HOSPITAL AND HEALTH FACILITIES FOR INDIANS HAS BEEN TRANSFERRED TO HIM. (CF. 42 U.S.C. 2001 AND 42 U.S.C. 202). WITH RESPECT TO THE PROTESTED PROCUREMENTS, HOWEVER, THE DEPARTMENT HAS TAKEN THE POSITION THAT IT IS ENTIRELY WITHIN THE DEPARTMENT'S DISCRETION WHETHER OR NOT TO INVOKE THE AUTHORITY IN THE "BUY INDIAN ACT."

IT IS CLEAR THAT THE ABOVE QUOTED STATUTE INVOLVES A POWER, THE USE OF WHICH IS DISCRETIONARY WITH THE SECRETARIES OF THE INTERIOR AND HEALTH, EDUCATION, AND WELFARE. IN THE ABSENCE OF CLEAR ABUSE OF SUCH DISCRETION THEIR ACTIONS WITH RESPECT TO SUCH POWER DO NOT PERMIT OF A RULING IN TERMS OF STRICT LEGAL RIGHTS AND OBLIGATIONS. WHERE IT HAS BEEN DETERMINED NOT TO EMPLOY THE AUTHORITY TO NEGOTIATE, WE BELIEVE THAT ONCE BIDS ARE FREELY SOLICITED WITHOUT A "BUY INDIAN" RESTRICTION EXPRESSLY PROVIDED IN THE SOLICITATION AND SUCH BIDS ARE OPENED, IT WOULD BE DETRIMENTAL TO THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM, AND THEREFORE UNAUTHORIZED, TO REJECT A NON-INDIAN'S LOW BID FOR THE SOLE PURPOSE OF MAKING AN AWARD TO AN INDIAN FIRM. IN OUR OPINION THE AUTHORITY VESTED PURSUANT TO THE "BUY INDIAN ACT" MAY PROPERLY BE EXERCISED ONLY WHERE THE RESTRICTION IS CLEARLY SPELLED OUT TO PROSPECTIVE BIDDERS PRIOR TO THE SUBMISSION OF BIDS OR OFFERS. ACCORDINGLY, WE FIND NO LEGAL BASIS FOR OBJECTING TO THE AWARDS MADE IN THIS CASE.

WE HAVE TAKEN NOTE, HOWEVER, THAT THE ACTION TAKEN IN THIS INSTANCE BY THE BUREAU OF INDIAN AFFAIRS MAY HAVE BEEN BASED UPON A MISINTERPRETATION OF ITS COMMISSIONER'S INSTRUCTION DATED AUGUST 22, 1968, WHICH PROVIDES, IN EFFECT, THAT, WHENEVER POSSIBLE, BUREAU PERSONNEL ENGAGED IN PURCHASING AND CONTRACTING SHOULD EXERCISE INITIATIVE IN EXPANDING THE BUY INDIAN PROGRAM AND WHERE PRODUCT OR SERVICE IS AVAILABLE FROM MORE THAN ONE FIRM QUALIFYING AS INDIAN INDUSTRY, COMPETITIVE NEGOTIATION SHALL BE FOLLOWED AND AWARD BASED ON THE BEST INDIAN OFFER. THE DEPARTMENT'S REPORT MERELY STATES THAT THE AUTHORITY TO NEGOTIATE UNDER THE "BUY INDIAN ACT" WAS NOT EXERCISED IN THIS CASE SINCE TWO LAUNDRIES IN THE GALLUP AREA WERE KNOWN TO QUALIFY FOR PREFERENCE UNDER THE ACT. IN VIEW OF THE COMMISSIONER'S INSTRUCTION, THE EXISTENCE OF COMPETITION BETWEEN INDIAN FIRMS NEED NOT HAVE BARRED THE EXERCISE OF AUTHORITY GRANTED BY THE "BUY INDIAN ACT." ARE THEREFORE BRINGING THIS OBSERVATION TO THE ATTENTION OF THE SECRETARY OF THE INTERIOR WITH THE SUGGESTION THAT REMEDIAL ACTION BE TAKEN TO INSURE THAT THE COMMISSIONER'S STATED POLICY IN THIS MATTER BE IMPARTIALLY PUT INTO EFFECT OR REVISED TO REFLECT ANY CHANGE OF POLICY IN THIS MATTER.

WE ALSO RECOGNIZE THAT THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE HAS NOT PROMULGATED SPECIFIC GUIDELINES FOR UNIFORM APPLICATION OF THE "BUY INDIAN ACT" AND THAT THIS FAILURE MAY BE CONFUSING TO YOUR FIRM AND OTHER PROSPECTIVE BIDDERS AS WELL AS TO GOVERNMENT CONTRACTING OFFICERS. WE HAVE, THEREFORE, SUGGESTED BY LETTER OF TODAY TO THE SECRETARY OF HEALTH, EDUCATION, AND WELFARE THAT A DEFINITE POLICY BE ESTABLISHED PARTICULARLY WITH RESPECT TO THE CIRCUMSTANCES IN WHICH THE NEGOTIATING AUTHORITY OF THE "BUY INDIAN ACT" WILL BE EXERCISED, AND TO DEFINE MORE CLEARLY THE STANDARDS OF ELIGIBILITY FOR SUCH PREFERENCE.

WE HAVE ALSO TAKEN NOTE OF YOUR SUGGESTION THAT NEW PROCUREMENT

WE HAVE ALSO TAKEN NOTE OF YOUR SUGGESTION THAT NEW PROCUREMENT PROCEDURES BE ESTABLISHED WHEREBY "PERFORMANCE RATINGS" OF BIDDERS MAY BE CONSIDERED PRIOR TO AWARD OF GOVERNMENT CONTRACTS. IN THIS REGARD, WE WISH TO POINT OUT FOR YOUR INFORMATION THAT PROCUREMENT STATUTES DO REQUIRE GOVERNMENT CONTRACTS TO BE AWARDED ONLY TO RESPONSIBLE BIDDERS. SEE FOR EXAMPLE, 41 U.S.C. 253 (B) AND 10 U.S.C. 2304 (G) AND 2305 (C). IN ADDITION, APPLICABLE PROCUREMENT REGULATIONS PROVIDE THAT CONTRACTING OFFICERS MUST SATISFY THEMSELVES PRIOR TO AWARD AND MAKE AN AFFIRMATIVE DETERMINATION IN EACH CASE THAT THE PARTY TO WHOM A CONTRACT IS AWARDED MEETS DETAILED MINIMUM STANDARDS OF RESPONSIBILITY. AMONG SUCH STANDARDS ARE THE REQUIREMENTS THAT A PROSPECTIVE CONTRACTOR HAVE A SATISFACTORY RECORD OF PERFORMANCE AND THE NECESSARY EXPERIENCE, ORGANIZATION, TECHNICAL QUALIFICATIONS, SKILLS, AND FACILITIES, OR HAVE THE ABILITY TO OBTAIN THEM. SEE FEDERAL PROCUREMENT REGULATIONS SEC. 1-1.310-4, ET. SEQ.