B-179509, B-179518, NOV 6, 1973

B-179509,B-179518: Nov 6, 1973

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ARE NOT SUBJECT TO QUESTION BY GAO SINCE RESPONSIBILITY FOR APPLYING CRITERIA OF WALSH-HEALEY ACT IS VESTED IN CONTRACTING OFFICER AND DEPARTMENT OF LABOR. TO INSCOM ELECTRONICS CORPORATION: THIS IS IN RESPONSE TO YOUR LETTERS OF AUGUST 16. THE SUBJECT INVITATIONS WERE FOR THE PROCUREMENT OF PRINTED CIRCUIT BOARDS. EACH OF ITS BIDS WAS IN AN AMOUNT IN EXCESS OF $10. THE QUESTION OF WHETHER INSCOM WAS A MANUFACTURER WITHIN THE PROVISIONS OF THE WALSH HEALEY ACT. WHICH IS APPLICABLE TO CONTRACTS FOR SUPPLIES IN EXCESS OF $10. WAS RAISED WITH REGARD TO BOTH PROCUREMENTS. THAT IT DID NOT HAVE THE PRODUCTION EQUIPMENT TO MANUFACTURE THE BID ITEM. THE REPORT FURTHER STATED THAT: "INSCOM ELECTRONICS CORPORATION IS NEWLY ENTERING INTO THE MANUFACTURING OF BLANK PRINTED CIRCUIT BOARDS.

B-179509, B-179518, NOV 6, 1973

CONTRACTING OFFICERS' DETERMINATIONS, BASED UPON ON-SITE VISITS BY DEFENSE CONTRACT ADMINISTRATION SERVICES DISTRICT (DCASD), THAT LOW BIDDER IN TWO PROCUREMENTS DID NOT QUALIFY AS MANUFACTURER OF SUPPLIES BEING PROCURED WITHIN MEANING OF WALSH-HEALEY ACT AND ARMED SERVICES PROCUREMENT REGULATION AFTER REFERRAL AND FINAL DETERMINATION BY DEPARTMENT OF LABOR, ARE NOT SUBJECT TO QUESTION BY GAO SINCE RESPONSIBILITY FOR APPLYING CRITERIA OF WALSH-HEALEY ACT IS VESTED IN CONTRACTING OFFICER AND DEPARTMENT OF LABOR. SEE COMP. GEN DECISIONS CITED.

TO INSCOM ELECTRONICS CORPORATION:

THIS IS IN RESPONSE TO YOUR LETTERS OF AUGUST 16, 1973, PROTESTING AGAINST THE AWARD OF TWO CONTRACTS TO ANY FIRMS OTHER THAN INSCOM ELECTRONICS CORPORATION (INSCOM) UNDER IFB N00197-73-B-0266, ISSUED BY THE NAVAL ORDNANCE STATION, LOUISVILLE, KENTUCKY, AND IFB N00156-73-B 0438, ISSUED BY THE NAVAL AIR ENGINEERING CENTER, PHILADELPHIA, PENNSYLVANIA.

THE SUBJECT INVITATIONS WERE FOR THE PROCUREMENT OF PRINTED CIRCUIT BOARDS. IN BOTH PROCUREMENTS, INSCOM SUBMITTED THE LOW BID. FURTHERMORE, EACH OF ITS BIDS WAS IN AN AMOUNT IN EXCESS OF $10,000.

THE DEFENSE CONTRACT ADMINISTRATION SERVICES DISTRICT (DCASD) CONDUCTED TWO PREAWARD SURVEYS OF INSCOM AND THE PREAWARD SURVEY REPORTS RECOMMENDED AWARD OF BOTH CONTRACTS. HOWEVER, THE QUESTION OF WHETHER INSCOM WAS A MANUFACTURER WITHIN THE PROVISIONS OF THE WALSH HEALEY ACT, WHICH IS APPLICABLE TO CONTRACTS FOR SUPPLIES IN EXCESS OF $10,000, WAS RAISED WITH REGARD TO BOTH PROCUREMENTS. CONSEQUENTLY, DCASD CONDUCTED AN ON-SITE VISIT TO INSCOM ON JUNE 27, 1973, TO DETERMINE ITS QUALIFICATIONS AS A MANUFACTURER OF PRINTED CIRCUIT BOARDS UNDER THE WALSH-HEALEY PUBLIC CONTRACTS ACT, 41 U.S.C. 35-45, AND ARMED SERVICES PROCUREMENT REGULATION (ASPR) 12-603.1.

BY MEMORANDA DATED JUNE 27 AND JULY 6, 1973, THE CHIEF, INDUSTRIAL LABOR RELATIONS OFFICE, DIRECTORATE OF PRODUCTION, DCASD, REPORTED THAT INSCOM INTENDED TO SUBCONTRACT THE ENTIRE PRODUCTION EFFORT; THAT IT DID NOT HAVE THE PRODUCTION EQUIPMENT TO MANUFACTURE THE BID ITEM; AND THAT IT WOULD ONLY PERFORM THE INSPECTION, PACKAGING AND SHIPPING OF THE BID ITEM. THE REPORT FURTHER STATED THAT:

"INSCOM ELECTRONICS CORPORATION IS NEWLY ENTERING INTO THE MANUFACTURING OF BLANK PRINTED CIRCUIT BOARDS. THE FACT THAT THE BIDDER PERFORMS CUSTOM SUB-ASSEMBLIES OF ELECTRONICS IS IRRELEVANT TO THE FIELD IN WHICH IT WOULD LIKE TO ESTABLISH ITSELF. AS A COMPANY ATTEMPTING TO ESTABLISH ITSELF, IT IS REQUIRED TO MEET THE REQUIREMENTS OF ASPR 12-603.1(II). SPECIFICALLY THE BIDDER MUST BE ABLE TO SHOW BEFORE THE AWARD IF IT IS NEWLY ENTERING INTO SUCH MANUFACTURING ACTIVITY, THAT IT HAS MADE ALL PRIOR ARRANGEMENTS FOR SPACE, EQUIPMENT, AND PERSONNEL TO PERFORM THE MANUFACTURING OPERATIONS REQUIRED FOR FULFILLMENT OF THE CONTRACT.

"IN SUBJECT CASE, BIDDER HAS FAILED TO MAKE NECESSARY ARRANGEMENTS FOR EQUIPMENT AND PERSONNEL."

THE CHIEF OF THE INDUSTRIAL LABOR RELATIONS OFFICE CONCLUDED THAT, IN VIEW OF THE ABOVE, INSCOM WAS NOT QUALIFIED AS A MANUFACTURER OF PRINTED CIRCUIT BOARDS AS DEFINED BY THE WALSH-HEALEY PUBLIC CONTRACTS ACT AND ASPR 12-603.1. EACH OF THE CONTRACTING OFFICERS CONCURRED IN THIS REPORT AND INFORMED INSCOM OF THEIR DETERMINATIONS THAT IT WAS NOT A MANUFACTURER UNDER THE ACT AND, THEREFORE, NOT ELIGIBLE FOR THE AWARD OF THE CONTRACTS IN QUESTION. INSCOM WAS PROVIDED WITH AN OPPORTUNITY TO PROTEST THESE DETERMINATIONS. IN BOTH INSTANCES, DCASD WAS REQUESTED TO CONDUCT A RESURVEY OF INSCOM AND THE SUPPLEMENTAL INFORMATION SUBMITTED BY INSCOM WAS REFERRED TO DCASD FOR THAT PURPOSE. IN ADDITION TO CONDUCTING THE RESURVEYS, DCASD MADE A SECOND ON-SITE VISIT TO INSCOM ON AUGUST 8, 1973, WITH REGARD TO IFB N00156-73 B-0438. DCASD REAFFIRMED ITS ORIGINAL DETERMINATIONS THAT INSCOM WAS NOT QUALIFIED AS A MANUFACTURER AND THE RESPECTIVE CONTRACTING OFFICERS CONCURRED WITH THESE FINDINGS. THESE CONCLUSIONS WERE THEN SUBMITTED TO THE DEPARTMENT OF LABOR FOR A FINAL DETERMINATION OF INSCOM'S ELIGIBILITY TO RECEIVE CONTRACTS UNDER SOLICITATIONS N00197-73-B-0266 AND N00156-73-B-0438. BY LETTERS DATED AUGUST 29, 1973, THE DEPARTMENT OF LABOR ADVISED THE CONTRACTING OFFICERS THAT IT COULD FIND NO REASON TO QUESTION THE INITIAL FINDINGS THAT INSCOM WAS NOT ELIGIBLE FOR AWARD AS A MANUFACTURER WITHIN THE MEANING OF THE WALSH-HEALEY PUBLIC CONTRACTS ACT SINCE THE BIDDER HAS NOT SHOWN THAT IT MADE ALL NECESSARY DEFINITE PRIOR ARRANGEMENTS FOR EQUIPMENT AND PERSONNEL TO PERFORM THE MANUFACTURING OPERATIONS REQUIRED FOR CONTRACT FULFILLMENT.

FOR REASONS SET OUT BELOW, WE MUST CONCLUDE THAT THE REJECTION OF YOUR BIDS IS NOT SUBJECT TO QUESTION BY OUR OFFICE. THE WALSH-HEALEY ACT, PROVIDES THAT, WITH CERTAIN EXCEPTIONS NOT HERE MATERIAL, EVERY CONTRACT EXCEEDING $10,000 IN AMOUNT ENTERED INTO BY ANY GOVERNMENT AGENCY FOR THE PROCUREMENT OF SUPPLIES SHALL CONTAIN A STIPULATION THAT THE CONTRACTOR IS A MANUFACTURER OF OR REGULAR DEALER IN SUCH SUPPLIES. THE ACT, AS AMENDED, PROVIDES AT 41 U.S.C. 38 THAT THE SECRETARY OF LABOR SHALL HAVE AUTHORITY TO ADMINISTER THE PROVISIONS OF THAT ACT AND TO MAKE SUCH RULES AND REGULATIONS AS MAY BE NECESSARY TO THAT END. THE "WALSH-HEALEY PUBLIC CONTRACTS ACT RULINGS AND INTERPRETATIONS NO. 3," PUBLISHED BY THE DEPARTMENT OF LABOR, STATES AT SECTION 29:

"(A) THE RESPONSIBILITY OF DETERMINING WHETHER OR NOT A BIDDER IS QUALIFIED AS A MANUFACTURER OR AS A REGULAR DEALER UNDER THE PUBLIC CONTRACTS ACT RESTS IN THE FIRST INSTANCE WITH THE CONTRACTING AGENCY. HOWEVER, ANY DECISION WHICH THE CONTRACTING OFFICER MIGHT MAKE IS SUBJECT TO REVIEW BY THE DEPARTMENT OF LABOR WHICH IS CHARGED WITH THE ADMINISTRATION OF THE ACT. THE DEPARTMENT OF LABOR MAY DETERMINE THE QUALIFICATIONS OF A BIDDER IN THE FIRST INSTANCE IN THE ABSENCE OF ANY DECISION BY THE CONTRACTING OFFICER."

THUS, RESPONSIBILITY FOR APPLYING THE CRITERIA OF THE WALSH-HEALEY ACT IS VESTED IN THE CONTRACTING OFFICER AND THE DEPARTMENT OF LABOR. OUR OFFICE IS NOT AUTHORIZED TO REVIEW DETERMINATIONS AS TO WHETHER PARTICULAR FIRMS ARE REGULAR DEALERS OR MANUFACTURERS WITHIN THE PURVIEW OF THE WALSH- HEALEY ACT AND WE HAVE DENIED JURISDICTION IN THIS AREA BECAUSE SUCH DETERMINATIONS REST WITH THE CONTRACTING OFFICER SUBJECT TO FINAL REVIEW BY THE DEPARTMENT OF LABOR. B-173808, OCTOBER 26, 1971; B-173298, AUGUST 3, 1971; B-171426, APRIL 27, 1971; B-166905, JULY 24, 1969.

IN VIEW OF THE FOREGOING, NO FURTHER ACTION WILL BE TAKEN BY OUR OFFICE IN CONNECTION WITH YOUR PROTESTS.