B-182004, DEC 13, 1974, 54 COMP GEN 480

B-182004: Dec 13, 1974

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NONPROFIT ORGANIZATIONS FACT THAT LOWELL TECHNOLOGICAL INSTITUTE RESEARCH FOUNDATION IS NONPROFIT. STATE-CREATED INSTITUTION AFFILIATED WITH EDUCATIONAL INSTITUTION DOES NOT PRECLUDE IT FROM COMPETING FOR GOVERNMENT CONTRACT INVOLVING OTHER THAN RESEARCH AND DEVELOPMENT IN COMPETITION WITH COMMERCIAL CONCERNS SINCE UNRESTRICTED COMPETITION ON ALL GOVERNMENT CONTRACTS IS REQUIRED BY LAWS GOVERNING FEDERAL PROCUREMENT IN ABSENCE OF ANY LAW OR REGULATION INDICATING A CONTRARY POLICY. STATE-CREATED INSTITUTION AFFILIATED WITH EDUCATIONAL INSTITUTION IN BIDDING FOR OTHER THAN RESEARCH AND DEVELOPMENT CONTRACT WAS ULTRA VIRES IN VIOLATION OF MASSACHUSETTS LAW ENABLING ITS ESTABLISHMENT. IS FOR RESOLUTION BETWEEN THE BIDDER AND STATE.

B-182004, DEC 13, 1974, 54 COMP GEN 480

BIDS - COMPETITIVE SYSTEM - PROFIT V. NONPROFIT ORGANIZATIONS FACT THAT LOWELL TECHNOLOGICAL INSTITUTE RESEARCH FOUNDATION IS NONPROFIT, STATE-CREATED INSTITUTION AFFILIATED WITH EDUCATIONAL INSTITUTION DOES NOT PRECLUDE IT FROM COMPETING FOR GOVERNMENT CONTRACT INVOLVING OTHER THAN RESEARCH AND DEVELOPMENT IN COMPETITION WITH COMMERCIAL CONCERNS SINCE UNRESTRICTED COMPETITION ON ALL GOVERNMENT CONTRACTS IS REQUIRED BY LAWS GOVERNING FEDERAL PROCUREMENT IN ABSENCE OF ANY LAW OR REGULATION INDICATING A CONTRARY POLICY. LICENSES - STATES AND MUNICIPALITIES - GOVERNMENT CONTRACTORS WHETHER ACTION OF NONPROFIT, STATE-CREATED INSTITUTION AFFILIATED WITH EDUCATIONAL INSTITUTION IN BIDDING FOR OTHER THAN RESEARCH AND DEVELOPMENT CONTRACT WAS ULTRA VIRES IN VIOLATION OF MASSACHUSETTS LAW ENABLING ITS ESTABLISHMENT, LIKE MATTER OF GENERAL COMPLIANCE WITH STATE AND LOCAL LICENSING REQUIREMENTS, IS FOR RESOLUTION BETWEEN THE BIDDER AND STATE. FURTHERMORE, BIDDER'S AUTHORITY TO PERFORM WORK IN VARIOUS STATES IS MATTER FOR DETERMINATION BY THOSE JURISDICTIONS.

IN THE MATTER OF E.I.L. INSTRUMENTS, INC., DECEMBER 13, 1974:

BY LETTER OF AUGUST 7, 1974, E.I.L. INSTRUMENTS, INC. (EIL), PROTESTS THE UNITED STATES COAST GUARD'S AWARD OF A CONTRACT FOR CALIBRATION AND MINOR REPAIRS OF ELECTRONIC TEST EQUIPMENT UNDER SOLICITATION 03-6192 74 TO THE LOWELL TECHNOLOGICAL INSTITUTE RESEARCH FOUNDATION (LOWELL). THE BASIS FOR EIL'S PROTEST, AS AMPLIFIED BY ITS LETTER OF OCTOBER 18, 1974, IS THREE-FOLD. FIRST, EIL CONTENDS THAT LOWELL, AS A NONPROFIT ENTITY AFFILIATED WITH THE LOWELL TECHNOLOGICAL INSTITUTE OF MASSACHUSETTS, IS INELIGIBLE TO BID ON GOVERNMENT CONTRACTS FOR OTHER THAN RESEARCH AND DEVELOPMENT (R&D) EFFORT. SECONDLY, EIL MAINTAINS THAT LOWELL'S ACTION IN BIDDING ON A CONTRACT TO PERFORM OTHER THAN R&D WORK IS AN ULTRA VIRES ACT. LASTLY, THE PROTESTER QUESTIONS LOWELL'S AUTHORITY TO PERFORM WORK OUTSIDE THE STATE OF MASSACHUSETTS AS CALLED FOR BY THE SOLICITATION.

CITING 10 U.S.C. 2358, EIL CLAIMS THAT WHILE R&D CONTRACTS MAY BE AWARDED TO STATE OR FEDERALLY SUBSIDIZED INSTITUTIONS IN COMPETITION WITH PRIVATE INDUSTRY, SUCH INSTITUTIONS CANNOT BID ON OTHER THAN R&D WORK. EIL FURTHER ASSERTS THAT IT IS UNFAIR TO EXPECT PRIVATE COMMERCIAL CONCERNS TO COMPETE WITH NONPROFIT ORGANIZATIONS GIVEN THE ADVANTAGEOUS TAX POSTURE AND THE LACK OF A NEED FOR PROFIT ON THE PART OF THE LATTER.

SECTION 2358 OF THE U.S. CODE, TITLE 10, AUTHORIZES THE SECRETARY OF DEFENSE TO PERFORM RESEARCH AND DEVELOPMENT PROJECTS BY VARIOUS SPECIFIED MEANS, INCLUDING CONTRACTING WITH EDUCATIONAL OR RESEARCH INSTITUTIONS. THE STATUTE IN QUESTION DOES NOT DEAL WITH EDUCATIONAL INSTITUTIONS AS SUCH AND, INDEED, IT DOES NOT PROHIBIT SUCH INSTITUTIONS FROM RECEIVING CONTRACTS FOR ANY CATEGORY OF WORK. IN FACT, EIL HAS NOT CITED ANY FEDERAL PROCUREMENT STATUTE OR PROCUREMENT REGULATION WHICH PROHIBITS INSTITUTIONS OF THE STATE INVOLVED HERE FROM BIDDING ON GOVERNMENT CONTRACTS.

AS STATED BY EIL, THE ENTITLEMENT OF STATE UNIVERSITIES AND THEIR AFFILIATES TO COMPETE FOR R&D CONTRACTS HAS BEEN CONSIDERED BY THIS OFFICE. IN B-156838, JULY 13, 1965, B-160640, MARCH 7, 1967, AND B 164715, OCTOBER 24, 1968, WE CONSIDERED THE MATTER OF SUCH NONPROFIT INSTITUTIONS' COMPETITION WITH COMMERCIAL CONCERNS AND CONCLUDED THAT THERE IS NO LEGAL PROHIBITION AGAINST SUCH COMPETITION BY NONPROFIT INSTITUTIONS IN THE ABSENCE OF A STATUTORY OR REGULATORY POLICY TO THAT EFFECT.

IN THE ABSENCE OF ANY LEGISLATIVE OR ADMINISTRATIVE ENACTMENT INDICATING A CONTRARY POLICY, WE BELIEVE THAT UNRESTRICTED COMPETITION ON ALL GOVERNMENT CONTRACTS BETWEEN COMMERCIAL CONCERNS AND NONPROFIT EDUCATIONAL INSTITUTIONS IS REQUIRED BY THE STATUTES GOVERNING FEDERAL PROCUREMENT. SEE 10 U.S.C. 2305(A) AND 41 U.S.C. 253(A).

AS ITS SECOND BASIS FOR PROTEST, EIL QUESTIONS THE LEGAL AUTHORITY OF LOWELL TO PERFORM THE CALIBRATION AND MINOR REPAIR WORK REQUIRED UNDER THE COAST GUARD'S CONTRACT AND CONTENDS THAT LOWELL'S ACTION IN BIDDING FOR THE SPECIFIC CONTRACT WAS AN ULTRA VIRES ACT. IN THIS CONNECTION, IT IS ARGUED THAT THE MASSACHUSETTS STATUTE UNDER WHICH LOWELL WAS CREATED INDICATES THAT ITS FUNCTION IS LIMITED TO RESEARCH.

WE HAVE GENERALLY REGARDED QUESTIONS CONCERNING A BIDDER'S LEGAL CAPACITY TO PERFORM UNDER STATE OR LOCAL LAW A MATTER FOR RESOLUTION BETWEEN THE STATE OR LOCAL AUTHORITY AND THE POTENTIAL CONTRACTOR. THE ISSUE HAS IN THE PAST ARISEN CHIEFLY IN THE AREA OF STATE OR LOCAL LICENSING OR OTHER SUCH REQUIREMENTS. IN THIS CONTEXT WE HAVE HELD THAT WHETHER A PARTICULAR LICENSE IS REQUIRED IS A MATTER TO BE SETTLED BY THE CONTRACTOR BY AGREEMENT WITH STATE OR LOCAL OFFICIALS OR BY JUDICIAL DETERMINATION IF NECESSARY. IN 51 COMP. GEN. 377 (1971), WE CONSIDERED A PROTESTER'S CONTENTION THAT A SUCCESSFUL BIDDER HAD NOT COMPLIED WITH THE STATE OF MINNESOTA'S REQUIREMENT FOR LICENSING OF PROTECTIVE AGENTS. THERE WE EXPLAINED:

IF A STATE DETERMINES THAT UNDER ITS LAWS A BIDDER ON A FEDERAL CONTRACT MUST HAVE A LICENSE OR 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 STATES, THE CONTRACTOR MAY BE FOUND IN DEFAULT AND THE CONTRACT TERMINATED TO ITS PREJUDICE.

MORE RECENTLY, IN 53 COMP. GEN. 51 (1973), WE DISTINGUISHED THE CASE IN WHICH A SOLICITATION REQUIRES OFFERORS TO MEET A SPECIFIC LICENSING REQUIREMENT FROM THAT IN WHICH THE ISSUE INVOLVES GENERAL COMPLIANCE WITH STATE OR LOCAL LICENSING REQUIREMENTS THAT MAY OR MAY NOT BE APPLICABLE. WE THERE RECOGNIZED THAT WHILE AN OFFEROR'S COMPLIANCE WITH A SPECIFIC LICENSNNG REQUIREMENT MAY BE MADE A MATTER OF RESPONSIBILITY FOR DETERMINATION BY THE CONTRACTING OFFICER, THE CONTRACTING OFFICER SHOULD NOT HAVE TO DETERMINE WHAT STATE OR LOCAL REQUIREMENTS GENERALLY MAY PERTAIN AND WHETHER AN OFFEROR HAS COMPLIED THEREWITH. PREVIOUSLY, WE STATED IN B-125577, OCTOBER 11, 1955, THAT "NO GOVERNMENT CONTRACTING OFFICER IS COMPETENT TO PASS UPON THE QUESTION OF 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." IN GENERAL, THEREFORE, WE BELIEVE THAT QUESTIONS RELATING TO THE LEGAL CAPACITY OF STATE CREATED OR CHARTERED INSTITUTIONS ARE FOR RESOLUTION BETWEEN THE INSTITUTION AND STATE.

EIL'S FINAL CONTENTION IS THAT LOWELL IS NOT EMPOWERED TO PERFORM WORK IN STATES OTHER THAN MASSACHUSETTS AS CALLED FOR UNDER THE CONTRACT. THE MATTER OF LOWELL'S AUTHORITY TO PERFORM WORK IN NEW YORK, NEW JERSEY AND CONNECTICUT IS FOR DETERMINATION BY THOSE JURISDICTIONS. IN THIS REGARD, WE REFER GENERALLY TO OUR DISCUSSION, ABOVE, WITH RESPECT TO STATE AND LOCAL LICENSING LAWS AND SPECIFICALLY TO OUR HOLDINGS THAT MATTERS RELATING TO THE APPLICABILITY OF OR COMPLIANCE WITH STATE REQUIREMENTS ARE FOR DETERMINATION BETWEEN THE POTENTIAL CONTRACTOR AND THE STATE.

FOR THE REASONS DISCUSSED ABOVE, THE PROTEST OF E.I.L. INSTRUMENTS, INC., IS DENIED.