B-171194, DEC. 29, 1970

B-171194: Dec 29, 1970

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THE PRESIDENT'S CONTINUING RELATIONSHIP WITH PROTESTANT COMPANY WAS PROPERLY FOR CONSIDERATION IN DETERMINING A LACK OF BUSINESS INTEGRITY OR BUSINESS HONESTY. THE BIDDER'S INTEGRITY WERE PROPERLY DETERMINED ADMINISTRATIVELY. THERE IS NO BASIS TO DISTURB AN AWARD TO ANOTHER BIDDER. DENENBERG & LYONS: FURTHER REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 2. GSA REPORTS THAT WHEN BIDS SUBMITTED PURSUANT TO THE SOLICITATION WERE OPENED ON AUGUST 6. H-P WAS THE ONLY BIDDER ON ITEM 10 THEREOF. ITS BID WAS NOT CONSIDERED BECAUSE IT HAD BEEN SUSPENDED ON JULY 2. A CONTRACT WAS NEGOTIATED WITH AND AWARD MADE TO ANOTHER COMPANY ON OCTOBER 2. GSA ADVISES THAT EARLY IN 1970 THEY WERE INFORMED BY THE DEPARTMENT OF JUSTICE THAT PRESTON KOMINS.

B-171194, DEC. 29, 1970

BID PROTEST - SUSPENSION OF BIDDER DENIAL OF PROTEST BY H-P TOOL MANUFACTURING CORPORATION AGAINST THE AWARD OF A CONTRACT TO ANY OTHER BIDDER BY THE FEDERAL SUPPLY SERVICE, GSA, FOLLOWING SUSPENSION OF PROTESTANT FROM DOING BUSINESS WITH FEDERAL SUPPLY SERVICE. WHERE THE PRESIDENT OF PROTESTANT COMPANY HAS BEEN INDICTED BY A FEDERAL GRAND JURY ON PREJURY AND HE CONTINUES TO HOLD THE SAME AMOUNT OF STOCK, DRAWS THE SAME SALARY, AND MANAGES THE MANUFACTURING ASSEMBLING AND SHIPMENT OF THE COMPANY'S PRODUCTS, THE PRESIDENT'S CONTINUING RELATIONSHIP WITH PROTESTANT COMPANY WAS PROPERLY FOR CONSIDERATION IN DETERMINING A LACK OF BUSINESS INTEGRITY OR BUSINESS HONESTY, NOTWITHSTANDING HIS RESIGNATION FROM THE BOARD OF DIRECTORS AS WELL AS HIS POSITION AS PRESIDENT. THE BIDDER'S INTEGRITY WERE PROPERLY DETERMINED ADMINISTRATIVELY, AND THERE IS NO BASIS TO DISTURB AN AWARD TO ANOTHER BIDDER.

TO ABRAMSON, DENENBERG & LYONS:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 2, 1970, WITH ENCLOSURE, PROTESTING ON BEHALF OF THE H-P TOOL MANUFACTURING CORPORATION AGAINST THE AWARD OF A CONTRACT TO ANY OTHER BIDDER UNDER SOLICITATION NO. FPNTN-E2-18671-A, ISSUED ON JULY 6, 1970, BY THE FEDERAL SUPPLY SERVICE, GENERAL SERVICES ADMINISTRATION (GSA).

GSA REPORTS THAT WHEN BIDS SUBMITTED PURSUANT TO THE SOLICITATION WERE OPENED ON AUGUST 6, 1970, H-P WAS THE ONLY BIDDER ON ITEM 10 THEREOF. HOWEVER, ITS BID WAS NOT CONSIDERED BECAUSE IT HAD BEEN SUSPENDED ON JULY 2, 1970, IN ACCORDANCE WITH THE PROVISIONS OF SECTION 1-1.605 1(A) OF THE FEDERAL PROCUREMENT REGULATIONS. THEREFORE, A CONTRACT WAS NEGOTIATED WITH AND AWARD MADE TO ANOTHER COMPANY ON OCTOBER 2, 1970.

WITH REGARD TO THE SUSPENSION, GSA ADVISES THAT EARLY IN 1970 THEY WERE INFORMED BY THE DEPARTMENT OF JUSTICE THAT PRESTON KOMINS, THEN PRESIDENT OF H-P, HAD BEEN INDICTED BY A FEDERAL GRAND JULY FOR PERJURY IN VIOLATION OF 18 U.S.C. 1621 IN CONNECTION WITH TESTIMONY HE HAD GIVEN BEFORE THE GRAND JURY. FOLLOWING RECEIPT OF THIS INFORMATION, GSA INITIATED AN INVESTIGATION TO DETERMINE WHETHER MR. KOMINS AND H-P SHOULD BE PLACED ON THE LIST OF SUSPENDED BIDDERS IN ACCORDANCE WITH FPR 1-1.605. IT WAS DETERMINED THAT SUCH ACTION SHOULD BE TAKEN. ACCORDINGLY, BY LETTER DATED JULY 2, 1970, MR. KOMINS AND H-P WERE ADVISED THAT THEY WERE TEMPORARILY SUSPENDED FROM DOING BUSINESS WITH THE FSS, PENDING CONCLUSION OF THE LEGAL PROCEEDINGS.

BY LETTER DATED JULY 22, 1970, YOU ADVISED GSA THAT MR. KOMINS HAD RESIGNED HIS MEMBERSHIP ON THE BOARD OF DIRECTORS OF H-P, AS WELL AS HIS POSITION AS PRESIDENT OF THE FIRM, AND REQUESTED THAT THE SUSPENSION BE LIFTED. SUBSEQUENT INVESTIGATION BY GSA CONFIRMED THAT MR. KOMINS HAD SUBMITTED HIS RESIGNATION AS STATED. HOWEVER, IT WAS ALSO DISCLOSED THAT HE OWNED THE SAME AMOUNT OF STOCK AS OWNED PRIOR TO THE SUSPENSION, DREW THE SAME SALARY, AND MANAGED THE MANUFACTURING, ASSEMBLING, AND SHIPMENT OF THE COMPANY'S PRODUCTS. FOR THESE REASONS, IT WAS CONCLUDED THAT HE COULD STILL EXERT THE SAME INFLUENCE IN WHAT APPEARS TO BE A FAMILY CORPORATION. THEREFORE, YOU WERE ADVISED ON SEPTEMBER 24, 1970 THAT THERE WAS NO BASIS TO LIFT THE SUSPENSION PENDING OUTCOME OF THE LEGAL PROCEEDINGS.

YOU POINT OUT THAT THE APPLICABLE REGULATION STATES THAT SUSPENSION IS A "DRASTIC ACTION," AND CONTEND THAT H-P HAS NEVER COMMITTED ANY ACT WHICH WOULD WARRANT SUCH DRASTIC ACTION. IN THIS REGARD, IT IS YOUR CONTENTION THAT ALTHOUGH MR. KOMINS (WHO HAS RESIGNED) WAS INDICTED FOR PERJURY, HE HAS NEVER CHEATED THE GOVERNMENT AND HIS INDICTMENT IN NO WAY SERIOUSLY OR DIRECTLY AFFECTS THE RESPONSIBILITY OF H-P AS A GOVERNMENT CONTRACTOR.

SECTION 1-1.605-1(A)(III) OF FPR PROVIDES THAT AN AGENCY MAY SUSPEND A FIRM OR INDIVIDUAL SUSPECTED, UPON ADEQUATE EVIDENCE, OF COMMISSION OF SPECIFIED CRIMES, INCLUDING BRIBERY, OR ANY OTHER OFFENSE INDICATING A LACK OF BUSINESS INTEGRITY OR BUSINESS HONESTY, WHICH SERIOUSLY AND DIRECTLY AFFECTS THE QUESTION OF PRESENT RESPONSIBILITY AS A GOVERNMENT CONTRACTOR. MR. KOMINS WAS INDICTED FOR PERJURY ON THE GROUND THAT HIS TESTIMONY CONCERNING BRIBERY OF UNION OFFICIALS BEFORE THE GRAND JURY WAS CONTRARY TO EARLIER STATEMENTS CONCERNING THE BRIBERY CHARGES TO TWO INTERNAL REVENUE SERVICE AGENTS. WE SEE NO BASIS FOR OUR OFFICE TO SUBSTITUTE OUR JUDGMENT FOR THAT OF GSA IN CONCLUDING THAT THERE WAS ADEQUATE EVIDENCE TO SUSPECT MR. KOMINS OF COMMISSION OF AN OFFENSE INDICATING A LACK OF BUSINESS INTEGRITY OR BUSINESS HONESTY.

SECTION 1-1.310-5 OF THE FPR PROVIDES THAT IN ORDER TO QUALIFY AS RESPONSIBLE A PROSPECTIVE CONTRACTOR MUST, IN THE OPINION OF THE CONTRACTING OFFICER, MEET CERTAIN STANDARDS AS THEY RELATE TO THE PROCUREMENT INCLUDING A SATISFACTORY RECORD OF INTEGRITY. IT IS OUR VIEW THAT A COMPANY CAN OPERATE ONLY THROUGH THE INDIVIDUALS WHO CONTROL ACTIVITIES, POLICIES AND MANAGEMENT OF THE COMPANY. IT FOLLOWS THAT THE INTEGRITY OF A COMPANY CAN BE NO GREATER THAN THE INTEGRITY OF THE INDIVIDUALS WHO CONTROL ITS OPERATIONS. THEREFORE, THE QUESTION OF MR. KOMINS' INTEGRITY AND CONTINUING RELATIONSHIP WITH H-P WAS PROPERLY FOR CONSIDERATION IN DETERMINING TO ALSO SUSPEND H-P. WE HAVE STATED THAT, AS A GENERAL PROPOSITION, A BIDDER'S INTEGRITY AND BUSINESS ETHICS MAY PROPERLY BE DETERMINED ADMINISTRATIVELY BY APPLYING THE STANDARDS FOR SUSPENSION AS SET OUT IN FPR 1-1.605-1. 39 COMP. GEN. 468 (1959); ID. 868 (1960).

IN THESE CIRCUMSTANCES, WE SEE NO BASIS FOR OUR OFFICE TO DISTURB THE AWARD.