B-174361, B-173622, FEB 9, 1972, 51 COMP GEN 494

B-173622,B-174361: Feb 9, 1972

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CORPORATIONS - CORPORATE ENTITY - BID UNDER TRADE NAME ACCEPTABILITY THE FACT THAT THE BID OF A CORPORATION TO FURNISH GUARD SERVICES WAS SUBMITTED UNDER ITS TRADE NAME DOES NOT REQUIRE REJECTION OF THE BID ON THE BASIS THE CORPORATION LACKS LEGAL ENTITY SINCE THE RECOGNIZED PRINCIPLE IS THAT A CORPORATION MAY CONDUCT BUSINESS UNDER AN ASSUMED NAME. IN THE DISTRICT OF COLUMBIA WHERE THE CORPORATION IS LOCATED. A CONTRACT EXECUTED IN AN ASSUMED NAME IS VALID IF UNAFFECTED BY FRAUD AND. PERSONAL SERVICES - DETECTIVE EMPLOYMENT PROHIBITION - APPLICABILITY A BIDDER WHO WAS AUTHORIZED TO OPERATE AS A DETECTIVE AGENCY AT THE TIME ITS BID WAS SUBMITTED AND WAS UNDER CONSIDERATION FOR AWARD. " BUT WHO IS NOT NOW SUBJECT TO THE PROHIBITION AGAINST EMPLOYMENT BY THE GOVERNMENT OF DETECTIVE AGENCIES - A PROHIBITION THAT APPLIES REGARDLESS OF THE ACTUAL SERVICES PERFORMED - SINCE ITS DETECTIVE AGENCY LICENSE HAS EXPIRED.

B-174361, B-173622, FEB 9, 1972, 51 COMP GEN 494

CORPORATIONS - CORPORATE ENTITY - BID UNDER TRADE NAME ACCEPTABILITY THE FACT THAT THE BID OF A CORPORATION TO FURNISH GUARD SERVICES WAS SUBMITTED UNDER ITS TRADE NAME DOES NOT REQUIRE REJECTION OF THE BID ON THE BASIS THE CORPORATION LACKS LEGAL ENTITY SINCE THE RECOGNIZED PRINCIPLE IS THAT A CORPORATION MAY CONDUCT BUSINESS UNDER AN ASSUMED NAME, OR UNDER A NAME DIFFERING FROM ITS TRUE CORPORATE NAME, AND IN THE DISTRICT OF COLUMBIA WHERE THE CORPORATION IS LOCATED, A CONTRACT EXECUTED IN AN ASSUMED NAME IS VALID IF UNAFFECTED BY FRAUD AND, THEREFORE, THE BID MAY BE CONSIDERED AS BEING SUBMITTED IN THE TRUE NAME OF THE ORGANIZATION WHICH HAD A CORPORATE ENTITY AT THE TIME OF BID OPENING. PERSONAL SERVICES - DETECTIVE EMPLOYMENT PROHIBITION - APPLICABILITY A BIDDER WHO WAS AUTHORIZED TO OPERATE AS A DETECTIVE AGENCY AT THE TIME ITS BID WAS SUBMITTED AND WAS UNDER CONSIDERATION FOR AWARD, AND DURING PART OF THE PERIOD OF ITS PERFORMANCE OF INTERIM GUARD SERVICE PENDING DETERMINATION OF ITS "LEGAL ENTITY," BUT WHO IS NOT NOW SUBJECT TO THE PROHIBITION AGAINST EMPLOYMENT BY THE GOVERNMENT OF DETECTIVE AGENCIES - A PROHIBITION THAT APPLIES REGARDLESS OF THE ACTUAL SERVICES PERFORMED - SINCE ITS DETECTIVE AGENCY LICENSE HAS EXPIRED, SHOULD NOT BE ELIMINATED FROM CONSIDERATION FOR AN AWARD OF THE PROPOSED SERVICE CONTRACT, IN VIEW OF THE FACT THAT THE BID DESCRIBING THE CORPORATE BUSINESS OF THE BIDDER "AS GUARD SERVICE TO COMMERCIAL AND RESIDENTIAL ESTABLISHMENTS," WITH NO MENTION OF ITS DETECTIVE SERVICE WAS MADE IN GOOD FAITH.

TO THE SECRETARY OF HOUSING AND URBAN DEVELOPMENT, FEBRUARY 9, 1972:

WE REFER TO LETTERS DATED NOVEMBER 8, 1971, GMM:PHS:MMS:ECE, AND JANUARY 6, 1972, GMM:PHS:MMS, FROM THE ASSOCIATE GENERAL COUNSEL FOR HOUSING MANAGEMENT AND PROPERTY INSURANCE AND SALES, CONCERNING A PROTEST BY THE LAW FIRM OF FRIED, FRANK, HARRIS, SHRIVER & KAMPELMAN, ATTORNEYS FOR INTERSEC. INC. (INTERSEC), AGAINST THE PROPOSED REJECTION OF A BID BY INTERNATIONAL SECURITY CORPORATION UNDER SOLICITATION 71-592, ISSUED MAY 20, 1971, BY THE OFFICE OF PROPERTY DISPOSITION, CONTRACTING AND RECONDITIONING DIVISION, OF YOUR DEPARTMENT. THE PROCUREMENT INVOLVES THE FURNISHING OF SECURITY GUARD SERVICE AT ENVOY TOWERS, WASHINGTON, D.C., FOR A PERIOD OF ONE YEAR COMMENCING ON THE DATE SPECIFIED IN THE NOTICE OF AWARD, AND IT IS OUR UNDERSTANDING THAT PENDING AWARD UNDER THE IFB THE SERVICE IS BEING OBTAINED FROM INTERSEC UNDER AN OPEN MARKET PURCHASE ARRANGEMENT WHICH COMMENCED JUNE 1, 1971.

ON JUNE 3, 1971, BIDS WERE OPENED AS SCHEDULED. CLEO SECURITY SERVICES, INC. (CLEO) WAS LOW BIDDER, AND INTERNATIONAL SECURITY CORPORATION WAS SECOND LOW BIDDER. ON AUGUST 3, 1971, HOWEVER, CLEO WAS ELIMINATED FROM CONSIDERATION FOR AWARD DUE TO THE EXPIRATION OF THE PERIOD FOR ACCEPTANCE OF ITS BID.

IN RESPONSE TO A REQUEST BY THE CONTRACTING OFFICER FOR EVIDENCE OF ITS CORPORATE STATUS INTERNATIONAL SECURITY CORPORATION FURNISHED A COPY OF A CORPORATE CHARTER ISSUED ON MAY 13, 1969, TO INTERNATIONAL ENTERPRISES LIMITED, TOGETHER WITH A COPY OF AN AMENDMENT DATED JUNE 1, 1971, AND FILED ON JULY 19, 1971, WITH THE RECORDER OF DEEDS FOR THE DISTRICT OF COLUMBIA, CHANGING THE CORPORATE NAME TO INTERSEC, INC. IN ADDITION, THE BIDDER FURNISHED A COPY OF AN ANNUAL REPORT FILED IN THE NAME OF INTERNATIONAL ENTERPRISES LTD. WITH THE RECORDER OF DEEDS, DESCRIBING THE BUSINESS AS "PROVISION OF GUARD SECURITY SERVICE," AND A REPRODUCTION OF A PAID BANK CHECK DATED MARCH 2, 1971, DRAWN BY INTERNATIONAL SECURITY CORPORATION TO THE ORDER OF THE D.C. TREASURER, WHICH BEARS THE ENDORSEMENT OF THE PAYEE. THE BID, THE CHARTER AMENDMENT, THE ANNUAL REPORT AND THE CHECK ALL SHOW 4429 WISCONSIN AVENUE, N.W., WASHINGTON, D.C., AS THE BUSINESS ADDRESS. FURTHER, THE SIGNATURE OF THEODORE MANOUSAKIS OVER THE TITLE "PRESIDENT" APPEARS ON THE BID AND ON THE CORPORATE CHARTER AMENDMENT, THE CORPORATION'S ANNUAL REPORT LISTS MR. MANOUSAKIS AS PRESIDENT OF INTERNATIONAL ENTERPRISES LIMITED, AND THE ORIGINAL CORPORATE CHARTER LISTS MR. MANOUSAKIS AS AN OFFICIAL AND REGISTERED AGENT OF INTERNATIONAL ENTERPRISES LIMITED.

THE CONTRACTING OFFICER'S PROPOSAL TO REJECT THE BID IS BASED ON THE VIEW THAT IN THE ABSENCE OF EVIDENCE THAT INTERNATIONAL SECURITY CORPORATION IS A LEGAL ENTITY, IT IS DOUBTFUL WHETHER AN AWARD BASED ON ITS BID WOULD RESULT IN A BINDING CONTRACT. INTERSEC'S ATTORNEYS STATE, HOWEVER, THAT THE SIGNATURE OF MR. MANOUSAKIS ON THE BID WOULD BIND INTERSEC TO ANY CONTRACT BASED ON THE BID. IN THIS CONNECTION, THE ATTORNEYS STATE THAT THE NAME INTERNATIONAL SECURITY CORPORATION IS THE RECOGNIZED TRADE NAME WHICH BOTH INTERNATIONAL ENTERPRISES LIMITED AND INTERSEC, INC., HAVE USED IN THE DISTRICT OF COLUMBIA AND THAT THE TRADE NAME HAS BEEN USED FOR OPERATIONS UNDER A DETECTIVE AGENCY LICENSE ISSUED BY THE GOVERNMENT OF THE DISTRICT OF COLUMBIA IN THE NAME OF INTERNATIONAL ENTERPRISES LIMITED FOR THE PERIOD NOVEMBER 1, 1970, TO OCTOBER 31, 1971. OUR EXAMINATION OF THE APPLICATION FOR THAT LICENSE REVEALS THAT INTERNATIONAL SECURITY CORPORATION IS SHOWN AS A TRADE NAME THEREON.

IN SUPPORT OF THEIR POSITION, THE ATTORNEYS CITE 56 ALR 450 FOR THE UNIVERSALLY RECOGNIZED PRINCIPLE THAT A CORPORATION MAY CONDUCT BUSINESS UNDER AN ASSUMED NAME, OR UNDER A NAME DIFFERING FROM ITS TRUE CORPORATE NAME, AND RESNICK V. ABNER B. COHEN ADVERTISING, 104 A. 2D 254 (1954), AND SORIVI V. BALDI, 48 ID. 462 (1946), FOR THE PROPOSITION THAT IN THE DISTRICT OF COLUMBIA A CONTRACT EXECUTED BY A PERSON OR CORPORATION IN AN ASSUMED NAME WILL BE VALID IF UNAFFECTED BY FRAUD. IN 18 AM. JUR. 2D, CORPORATIONS, SEC. 143, IT IS NOTED THAT ACCORDING TO SOME CASES A CORPORATION, AS WELL AS INDIVIDUALS, MAY HAVE OR BE KNOWN BY SEVERAL NAMES IN THE TRANSACTION OF ITS GENERAL BUSINESS SO THAT IT MAY ENFORCE, AS WELL AS BE BOUND BY, CONTRACTS ENTERED INTO IN AN ADOPTED NAME, OTHER THAN THE REGULAR NAME UNDER WHICH IT WAS INCORPORATED. IT IS ALSO NOTED THAT A CORPORATION MAY DO BUSINESS UNDER AN ASSUMED NAME OR UNDER A NAME DIFFERING FROM ITS TRUE CORPORATE NAME AND THAT SOME STATUTES MAY EXPRESSLY PERMIT A CORPORATION TO DO SO.

AT 18 C.J.S. 166, IT IS STATED THAT IN THE ABSENCE OF A CONTRARY STATUTE, ACCORDING TO SOME AUTHORITIES, A CORPORATION MAY ASSUME A NAME BY WHICH TO DO BUSINESS, EVEN WHEN A NAME IS STATED IN ITS CHARTER, AND CONTRACTS MADE UNDER SUCH ASSUMED NAME ARE BINDING ON BOTH PARTIES.

REFERENCE TO TITLE 29 OF THE DISTRICT OF COLUMBIA (D.C.) CODE, WHICH SETS FORTH THE LAWS GOVERNING CORPORATIONS DOING BUSINESS IN WASHINGTON, D.C., SHOWS THAT PURSUANT TO SECTION 103 A CORPORATION, UNDER ITS NEW NAME, HAS THE SAME RIGHTS, POWERS AND PRIVILEGES AND IS SUBJECT TO THE SAME DUTIES, OBLIGATIONS AND LIABILITIES AS BEFORE AND MAY SUE AND BE SUED IN ITS NEW NAME. THERE IS NO PROVISION PROHIBITING USE BY A CORPORATION OF A TRADE OR ASSUMED NAME IN THE CONDUCT OF ITS BUSINESS. FURTHER, UNDER SECTION 3-401(2), TITLE 28 OF THE D.C. CODE, A SIGNATURE BY USE OF A TRADE OR ASSUMED NAME IS RECOGNIZED AS A VALID SIGNATURE IN LIEU OF A WRITTEN SIGNATURE FOR A COMMERCIAL INSTRUMENT.

IN LINE WITH THE FOREGOING, IT IS OUR VIEW THAT THE BID SUBMITTED IN THE NAME OF INTERNATIONAL SECURITY CORPORATION SHOULD BE CONSIDERED AS THE BID OF INTERNATIONAL ENTERPRISES LIMITED, WHICH WAS A CORPORATE ENTITY AT THE TIME OF BID OPENING. IT IS OUR FURTHER VIEW THAT THE SUBSEQUENT CHANGE OF THE TRUE CORPORATE NAME OF THE BIDDER FROM INTERNATIONAL ENTERPRISES LIMITED TO INTERSEC, INC., WHICH WAS DULY RECORDED WITH THE GOVERNMENT OF THE DISTRICT OF COLUMBIA AND INVOLVED NO INTERRUPTION OF THE CORPORATE AFFAIRS, HAS NO EFFECT UPON THE OBLIGATIONS WHICH WOULD BE ATTENDANT UPON ACCEPTANCE OF THE BID BY THE GOVERNMENT. ACCORDINGLY, WE ARE UNABLE TO CONCUR WITH THE POSITION OF THE CONTRACTING OFFICER THAT THE BID IS REQUIRED TO BE REJECTED SOLELY BECAUSE THE NAME IN WHICH IT WAS SUBMITTED IS A TRADE NAME RATHER THAN THE TRUE NAME OF AN EXISTING LEGAL ENTITY.

WE ARE, HOWEVER, CONCERNED WITH ANOTHER FACTOR IN THIS CASE WHICH WE CALLED TO YOUR ATTENTION IN OUR LETTER OF DECEMBER 29, 1971. WE REFER TO APPLICATION OF THE PROHIBITION IN 5 U.S.C. 3108 AGAINST EMPLOYMENT BY THE GOVERNMENT OF DETECTIVE AGENCIES, IN LIGHT OF THE FACT THAT THE BIDDER WAS AUTHORIZED TO OPERATE AS A DETECTIVE AGENCY AT THE TIME THE BID WAS SUBMITTED AND WAS UNDER CONSIDERATION FOR AWARD AND DURING PART OF THE PERIOD OF ITS PERFORMANCE OF INTERIM GUARD SERVICE PENDING OUR DECISION ON THE "LEGAL ENTITY" ISSUE.

WITH OUR LETTER OF DECEMBER 29 TO YOU WE FURNISHED COPIES OF 38 COMP. GEN. 881 (1959) AND B-167723, SEPTEMBER 12, 1969, IN WHICH WE HELD THAT THE STATUTORY PROHIBITION APPLIES TO A DETECTIVE AGENCY REGARDLESS OF THE SERVICE PERFORMED, OR TO BE PERFORMED, FOR THE GOVERNMENT. PURSUANT TO THOSE DECISIONS, AND THE OTHER DECISIONS OF OUR OFFICE THEREIN CITED, IT IS OUR OPINION THAT EMPLOYMENT OF THE BIDDER IN THE INSTANT CASE WAS PRECLUDED UNTIL AFTER THE EXPIRATION ON OCTOBER 31, 1971, OF THE DETECTIVE AGENCY LICENSE ISSUED IN THE NAME OF INTERNATIONAL ENTERPRISES LIMITED.

HOWEVER, AS TO THE EFFECT OF THE ERRONEOUS CERTIFICATION IN THE BID ON ITS QUALIFICATION FOR CONSIDERATION AT THIS TIME, THE DESCRIPTION OF THE CORPORATE BUSINESS WHICH APPEARED IN THE 1971 CORPORATE REPORT OF INTERNATIONAL ENTERPRISES LIMITED TO THE GOVERNMENT OF THE DISTRICT OF COLUMBIA INDICATES THAT THE CORPORATION REGARDED ITS BUSINESS AS THE PROVISION OF SECURITY GUARD SERVICE, AND IN THE AMENDMENT TO THE CORPORATE CHARTER, WHICH CHANGED THE CORPORATE NAME TO INTERSEC, INC., "SECURITY SERVICE TO COMMERCIAL AND RESIDENTIAL ESTABLISHMENTS" WAS SPECIFICALLY LISTED AS A PURPOSE OF THE CORPORATION, BUT NO MENTION WAS MADE OF DETECTIVE SERVICES. IN LIGHT OF SUCH FACTORS, WE DO NOT BELIEVE THAT THE BID IS REQUIRED TO BE CONSIDERED AS HAVING BEEN SUBMITTED IN OTHER THAN GOOD FAITH. ACCORDINGLY, AND SINCE THE BIDDER DOES NOT NOW HAVE AUTHORITY TO OPERATE AS A DETECTIVE AGENCY IN THE DISTRICT OF COLUMBIA, WE DO NOT BELIEVE THAT THE BID SHOULD NOW BE ELIMINATED FROM CONSIDERATION FOR AWARD OF THE PROPOSED CONTRACT. B 172587, JUNE 21, 1971.

IN THE CIRCUMSTANCES, YOU ARE ADVISED THAT WE SEE NO LEGAL BASIS FOR OBJECTION TO ACCEPTANCE OF THE BID IN THE NAME SUBMITTED, PROVIDED THAT INTERSEC, INC., IS DETERMINED TO BE RESPONSIBLE AS WELL AS RESPONSIVE. SUGGEST, HOWEVER, THAT THE NOTICE OF AWARD AND THE CONTRACT INDICATE THAT THE NAME INTERNATIONAL SECURITY CORPORATION IS A TRADE NAME OF INTERSEC, INC.

THE ATTORNEYS FOR INTERSEC, INC., ARE BEING FURNISHED A COPY OF THIS DECISION BY OUR LETTER OF TODAY.