B-174083, DEC 21, 1971, 51 COMP GEN 377

B-174083: Dec 21, 1971

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LICENSING REQUIREMENTS THE FAILURE OF THE LOW BIDDER UNDER A SOLICITATION FOR SECURITY GUARD SERVICES TO MEET THE STATE AND LOCAL LICENSING AND REGISTRATION REQUIREMENTS OF THE INVITATION FOR BIDS PRIOR TO AWARD DOES NOT AFFECT THE LEGALITY OF THE CONTRACT AS THE MATTER IS ONE BETWEEN BIDDER AND STATE AND LOCAL AUTHORITIES AND IS NOT A FACTOR CONTROLLING BIDDER ELIGIBILITY TO OBTAIN GOVERNMENT CONTRACTS. UPON DETERMINATION THAT A LICENSE OR PERMIT IS A PREREQUISITE TO BEING LEGALLY CAPABLE OF PERFORMING FOR THE FEDERAL GOVERNMENT WITHIN ITS BOUNDARIES. 1971: REFERENCE IS MADE TO YOUR LETTER DATED SEPTEMBER 13. THE INVITATION WAS ISSUED FOR THE PROCUREMENT OF SECURITY GUARD SERVICES AT THREE MISSILE SITES.

B-174083, DEC 21, 1971, 51 COMP GEN 377

BIDDERS - QUALIFICATIONS - STATE, ETC., LICENSING REQUIREMENTS THE FAILURE OF THE LOW BIDDER UNDER A SOLICITATION FOR SECURITY GUARD SERVICES TO MEET THE STATE AND LOCAL LICENSING AND REGISTRATION REQUIREMENTS OF THE INVITATION FOR BIDS PRIOR TO AWARD DOES NOT AFFECT THE LEGALITY OF THE CONTRACT AS THE MATTER IS ONE BETWEEN BIDDER AND STATE AND LOCAL AUTHORITIES AND IS NOT A FACTOR CONTROLLING BIDDER ELIGIBILITY TO OBTAIN GOVERNMENT CONTRACTS. UPON DETERMINATION THAT A LICENSE OR PERMIT IS A PREREQUISITE TO BEING LEGALLY CAPABLE OF PERFORMING FOR THE FEDERAL GOVERNMENT WITHIN ITS BOUNDARIES, A STATE OR LOCAL AUTHORITY MAY ENFORCE THE REQUIREMENTS IF NOT IN CONFLICT WITH FEDERAL POLICIES OR LAWS, OR THE EXECUTION OF FEDERAL POWERS. HOWEVER, IN THE EVENT OF ENFORCEMENT OF STATE OR LOCAL LICENSING REQUIREMENTS, SHOULD A CONTRACTOR NOT PERFORM, HE MAY BE FOUND IN DEFAULT AND THE CONTRACT TERMINATED WITH PREJUDICE.

TO COLLINS AND ABRAMSON, DECEMBER 21, 1971:

REFERENCE IS MADE TO YOUR LETTER DATED SEPTEMBER 13, 1971, PROTESTING THE AWARD OF A CONTRACT TO H. L. YOH COMPANY, DIVISION OF DAY & ZIMMERMAN, INC. (YOH), UNDER INVITATION FOR BIDS (IFB) DABE03-71-B 0107, ISSUED AT FORT SHERIDAN, ILLINOIS.

THE INVITATION WAS ISSUED FOR THE PROCUREMENT OF SECURITY GUARD SERVICES AT THREE MISSILE SITES. EACH SITE WAS LISTED AS A LINE ITEM ON THE BIDDING SCHEDULE. PINKERTON SECURITY SERVICES, INC., WAS LOW BIDDER ON LINE ITEM 1, WHICH REPRESENTED A SITE IN WISCONSIN. YOH WAS LOW BIDDER ON LINE ITEMS 2 AND 3, WHICH REPRESENTED SITES IN MINNESOTA. THE SOLICITATION CONTAINED A CLAUSE CONCERNING LICENSING AND REGISTRATION WHICH PROVIDED AS FOLLOWS:

LICENSING AND REGISTRATION. THE CONTRACTOR AND EACH OF HIS EMPLOYEES PROVIDED UNDER THIS CONTRACT SHALL MEET STATE AND LOCAL REQUIREMENTS FOR THE TYPE SERVICES REQUIRED BY THIS CONTRACT.

THE STATE OF MINNESOTA, BY MINNESOTA STATUTE 326.331, PROHIBITS ANY PERSON TO ENGAGE WITHIN THE STATE IN THE BUSINESS OF PROTECTIVE AGENT FOR FEE OR REWARD UNLESS PREVIOUSLY LICENSED BY THE STATE. THE BASIS FOR YOUR PROTEST IS THE UNCONTESTED FACT THAT YOH DID NOT POSSESS A MINNESOTA STATE CERTIFICATE TO PERFORM SECURITY GUARD SERVICES WITHIN THE STATE AT THE TIME OF ITS BID, NOR AT THE TIME OF CONTRACT AWARD. YOU CONTEND THAT SINCE YOH DID NOT COMPLY WITH MINNESOTA LAW, IT COULD NOT COMPLY WITH THE PROVISIONS OF THE IFB, AND, THEREFORE, SHOULD NOT HAVE BEEN AWARDED THE CONTRACT FOR GUARD SERVICES IN MINNESOTA.

IT IS WELL ESTABLISHED BY THE DECISIONS OF THIS OFFICE THAT FAILURE TO SUBMIT PERMITS OR LICENSES BY THE TIME OF AWARD OR AT THE VERY LATEST BY THE TIME OF CONTRACT PERFORMANCE, PLUS ANY LEAD TIME WHICH MAY BE NECESSARY IN THE PARTICULAR CASE, SHALL AFFECT THE RESPONSIBILITY OF A CONTRACTOR IN CASES WHERE THE PERMIT OR LICENSE IS A REQUIREMENT OF THE FEDERAL GOVERNMENT. SEE 34 COMP. GEN. 175 (1954), WHEREIN A PERMIT FROM THE INTERSTATE COMMERCE COMMISSION WAS REQUIRED; 39 COMP. GEN. 655 (1960), WHEREIN OPERATING AUTHORITY FROM THE FEDERAL AVIATION ADMINISTRATION WAS REQUIRED; AND 46 COMP. GEN. 326 (1966) WHEREIN A LICENSE FROM THE ATOMIC ENERGY COMMISSION WAS REQUIRED.

WITH RESPECT TO THE EFFECT OF A STATE LAW REQUIRING A LICENSE OR PERMIT AS A PREREQUISITE TO PERFORMING THE TYPE OF SERVICES REQUIRED BY A FEDERAL CONTRACT, IN OUR DECISION B-125577, OCTOBER 11, 1955, WE CONSIDERED AN IFB FOR A FEDERAL CONSTRUCTION CONTRACT TO BE PERFORMED IN TENNESSEE, UNDER WHICH THE CONTRACTOR WAS TO OBTAIN ALL LICENSES AND PERMITS REQUIRED FOR THE PROSECUTION OF THE WORK. WE HELD THEREIN THAT:

STATE AND MUNICIPAL TAX, PERMIT, AND LICENSE REQUIREMENTS VARY ALMOST INFINITELY IN THEIR DETAILS AND LEGAL EFFECT. THE VALIDITY OF A PARTICULAR STATE TAX OR LICENSE AS APPLIED TO THE ACTIVITIES OF FEDERAL CONTRACTOR OFTEN CANNOT BE DETERMINED EXCEPT BY THE COURTS, AND IT WOULD BE IMPOSSIBLE FOR THE CONTRACTING AGENCIES OF THE GOVERNMENT TO MAKE SUCH DETERMINATIONS WITH ANY ASSURANCE THAT THEY WERE CORRECT. IT IS PRECISELY BECAUSE OF THIS, IN OUR OPINION, THAT THE STANDARD GOVERNMENT CONTRACT FORMS IMPOSE UPON THE CONTRACTOR THE DUTY OF ASCERTAINING BOTH THE EXISTENCE AND THE APPLICABILITY OF LOCAL LAWS WITH REGARD TO PERMITS AND LICENSES. IN OUR OPINION, THIS IS AS IT SHOULD BE.

NO GOVERNMENT CONTRACTING OFFICER IS COMPETENT TO PASS UPON THE QUESTION WHETHER A PARTICULAR LOCAL LICENSE OR PERMIT IS LEGALLY REQUIRED FOR THE PROSECUTION OF FEDERAL WORK, AND FOR THIS VERY REASON THE MATTER IS MADE THE RESPONSIBILITY OF THE CONTRACTOR. NO STATUTE HAS BEEN BROUGHT TO OUR ATTENTION WHICH WOULD AUTHORIZE THE INCLUSION OF A CONDITION IN FEDERAL CONTRACTS OR BID INVITATIONS THAT LOCAL PERMITS OR LICENSES MUST BE OBTAINED, REGARDLESS OF THEIR NECESSITY AS APPLIED TO THE WORK TO BE DONE. ACCORDINGLY, WE ARE OF THE OPINION THAT THE OBTAINING OF A GENERAL CONTRACTOR'S LICENSE FOR PERFORMING GOVERNMENT WORK IN TENNESSEE IS A MATTER WHICH MUST BE SETTLED BETWEEN THE LOCAL AUTHORITIES AND THE CONTRACTORS, EITHER BY AGREEMENT OR BY JUDICIAL DETERMINATION.

IN A LATER DECISION WE CONSIDERED THE POSITION OF GOVERNMENT COUNSEL, WHO CITED OUR OPINION IN B-125577, SUPRA, AND CONTENDED THAT WHERE IFB PROVISIONS REQUIRED A SUCCESSFUL BIDDER TO COMPLY WITH STATE LAWS, THE CONTRACTING OFFICER WAS IN ERROR IN INTERPRETING SUCH A REQUIREMENT AS A BASIS FOR REJECTION OF A LOW BID BECAUSE IT WAS NOT ACCOMPANIED BY A STATE PERMIT. NEVERTHELESS, GOVERNMENT COUNSEL CONTENDED THAT THE LOW BID WAS PROPERLY REJECTED, SINCE THERE WAS NOT ENOUGH TIME FROM THE TIME OF AWARD FOR THE LOW BIDDER TO COMPLY WITH STATE LAW PRIOR TO COMMENCEMENT OF PERFORMANCE PURSUANT TO THE CONTRACT WORK SCHEDULE. IT WAS THE OPINION OF THIS OFFICE THAT THE LOW BID WAS IMPROPERLY REJECTED UNDER THIS PROPOSED RATIONALE AS WELL, BECAUSE STATE AND LOCAL REQUIREMENTS MAY NOT BE REGARDED AS CONTROLLING THE ELIGIBILITY OF BIDDERS TO OBTAIN GOVERNMENT CONTRACTS. B-165274, MAY 8, 1969.

IF A STATE DETERMINES THAT UNDER ITS LAWS A BIDDER ON A FEDERAL CONTRACT MUST HAVE A LICENSE OR A PERMIT AS A PREREQUISITE TO ITS BEING LEGALLY CAPABLE OF PERFORMING THE REQUIRED SERVICES FOR THE FEDERAL GOVERNMENT WITHIN THE STATE'S BOUNDARIES, THE STATE MAY ENFORCE ITS REQUIREMENTS AGAINST THE BIDDER, PROVIDED THE APPLICATION OF THE STATE'S LAW IS NOT OPPOSED TO OR IN CONFLICT WITH FEDERAL POLICIES OR LAWS, OR DOES NOT IN ANY WAY INTERFERE WITH THE EXECUTION OF FEDERAL POWERS. SEE LESLIE MILLER, INC. V ARKANSAS, 352 U.S. 187 (1956); UNITED STATES V GEORGIA PUBLIC SERVICE COMMISSION, 371 U.S. 285 (1963); CHARLES PAUL V UNITED STATES, 371 U.S. 245 (1963). IN THOSE INSTANCES WHERE THE REQUIREMENTS OF A STATE LAW DO NOT VIOLATE THIS PROVISO, THE STATE MAY PROCEED TO ENFORCE ITS REQUIREMENTS AGAINST A CONTRACTOR WHO FAILED TO COMPLY. HOWEVER, IF AS A RESULT OF ENFORCEMENT BY THE STATE THE CONTRACTOR CHOOSES NOT TO PERFORM THE CONTRACT OR IS PROHIBITED FROM DOING SO BY AN INJUNCTION WON BY THE STATE, THE CONTRACTOR MAY BE FOUND IN DEFAULT AND THE CONTRACT TERMINATED TO ITS PREJUDICE.

IN THE INSTANT CASE, THE MINNESOTA LAW REQUIRES A LICENSE BEFORE COMMENCEMENT OF SERVICES AS A PROTECTIVE AGENT, BUT WHETHER THIS LAW IS APPLICABLE TO THE PARTICULAR WORK TO BE DONE UNDER THIS FEDERAL CONTRACT IS A DECISION TO BE MADE BY STATE AUTHORITIES. THE RECORD EVIDENCES THAT YOH FILED AN APPLICATION FOR SUCH A LICENSE ON SEPTEMBER 9, AND A LICENSE WAS GRANTED ON OCTOBER 19. HOWEVER, THE RECORD DOES NOT EVIDENCE THAT MINNESOTA AUTHORITIES HAVE DETERMINED THAT THE LICENSE IS NECESSARY FOR THE SERVICES TO BE PERFORMED BY YOH, AND IT DOES NOT APPEAR THAT SUCH A DETERMINATION WILL BE MADE NOW THAT A LICENSE HAS BEEN ISSUED TO YOH.

UNDER THE CIRCUMSTANCES WE ARE UNABLE TO CONCLUDE THAT YOH'S FAILURE TO OBTAIN A LICENSE PRIOR TO PERFORMANCE PRECLUDED IT FROM BEING AWARDED A VALID CONTRACT, OR THAT ANY LEGAL BASIS EXISTS FOR OBJECTING TO THE AWARD MADE TO YOH.

ACCORDINGLY, YOUR PROTEST IS DENIED.