B-198644, OCT 9, 1980

B-198644: Oct 9, 1980

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" CONTRACTING OFFICER MAY FIND UNLICENSED BIDDER NONRESPONSIBLE WHERE HE HAS REASONABLE BASIS FOR BELIEVING PERFORMANCE IS LIKELY TO BE FRUSTRATED BECAUSE OF STATE'S INTENTION TO ENFORCE LICENSING REQUIREMENT APPLICABLE TO CONTRACT PERFORMANCE. VERNON WAS FOUND TO BE NONRESPONSIBLE BECAUSE IT DOES NOT HOLD AN INTRASTATE OPERATING PERMIT ISSUED BY THE LOUISIANA PUBLIC SERVICE COMMISSION (PSC). SINCE VERNON IS A SMALL BUSINESS. THIS FINDING WAS REFERRED TO THE SMALL BUSINESS ADMINISTRATION (SBA) PURSUANT TO DEFENSE ACQUISITION REGULATION (DAR) SEC. 1-705.4 (1976 ED.). ANY WORK THAT CANNOT BE PERFORMED BY SUCH FIRMS SHOULD BE ORDERED FROM LICENSED CARRIERS WHO HAVE TENDERED DEPARTMENT OF DEFENSE TARIFFS.

B-198644, OCT 9, 1980

DIGEST: NOTWITHSTANDING THAT IFB ONLY REQUIRED THAT LOW BIDDER SECURE "ANY NECESSARY LICENSES AND PERMITS PRIOR TO AWARD," CONTRACTING OFFICER MAY FIND UNLICENSED BIDDER NONRESPONSIBLE WHERE HE HAS REASONABLE BASIS FOR BELIEVING PERFORMANCE IS LIKELY TO BE FRUSTRATED BECAUSE OF STATE'S INTENTION TO ENFORCE LICENSING REQUIREMENT APPLICABLE TO CONTRACT PERFORMANCE.

VERNON MOVING & STORAGE COMPANY:

VERNON MOVING & STORAGE COMPANY (VERNON) PROTESTS AWARD TO ANY FIRM BUT ITSELF UNDER SCHEDULE II OF INVITATION FOR BIDS (IFB) DAK24-80-B 0003 ISSUED BY THE DEPARTMENT OF THE ARMY AT FORT POLK, LOUISIANA (ARMY). SCHEDULE II SOLICITED BIDS TO FURNISH MOVING AND STORAGE SERVICES TO MEET ARMY REQUIREMENTS WITHIN 25 MILES OF LEESVILLE, LOUISIANA. VERNON SUBMITTED THE LOWEST SCHEDULE II PRICES OF THE TWO FIRMS WHICH BID. HOWEVER, VERNON WAS FOUND TO BE NONRESPONSIBLE BECAUSE IT DOES NOT HOLD AN INTRASTATE OPERATING PERMIT ISSUED BY THE LOUISIANA PUBLIC SERVICE COMMISSION (PSC). SINCE VERNON IS A SMALL BUSINESS, THIS FINDING WAS REFERRED TO THE SMALL BUSINESS ADMINISTRATION (SBA) PURSUANT TO DEFENSE ACQUISITION REGULATION (DAR) SEC. 1-705.4 (1976 ED.). THE SBA HAS DELAYED ISSUING A CERTIFICATE OF COMPETENCY (COC) PENDING VERNON'S RECEIPT OF LOUISIANA OPERATING AUTHORITY.

VERNON COMPLAINS THAT THE INTRASTATE PERMIT REQUIREMENT IMPOSES AN UNDUE RESTRICTION ON COMPETITION, BECAUSE MOST OF THE WORK WHICH CAN BE ORDERED UNDER SCHEDULE II CAN BE PERFORMED BY LOCAL (LEESVILLE) FIRMS WITHOUT INTRASTATE PERMITS. IN VERNON'S OPINION, ANY WORK THAT CANNOT BE PERFORMED BY SUCH FIRMS SHOULD BE ORDERED FROM LICENSED CARRIERS WHO HAVE TENDERED DEPARTMENT OF DEFENSE TARIFFS. VERNON IS LOCATED IN LEESVILLE, HOLDS INTERSTATE COMMERCE COMMISSION (ICC) OPERATING AUTHORITY, AND HAS APPLIED FOR A LOUISIANA PERMIT.

VERNON ALSO COMPLAINS THAT ONE FORT POLK TRANSPORTATION OFFICER RECENTLY RETIRED FROM THE ARMY AND ACCEPTED EMPLOYMENT WITH WILLIAMS TRANSPORTATION AND STORAGE (WILLIAMS), THE SECOND LOW BIDDER AND INCUMBENT CONTRACTOR, AND THAT TWO OTHER WILLIAMS EMPLOYEES ARE RELATIVES OF FORT POLK TRANSPORTATION OFFICE PERSONNEL. IN VERNON'S VIEW, THE INTRASTATE PERMIT REQUIREMENT IS BUT ONE INCIDENT IN A HISTORY OF PROCUREMENT ACTIONS EXTENDING OVER MANY YEARS WHICH VERNON CHARGES WERE CONTRIVED TO ASSURE THAT CONTRACTS OF THIS TYPE WOULD BE AWARDED TO WILLIAMS.

VERNON'S PROTEST IS DENIED.

INITIALLY, WE POINT OUT THAT THIS OFFICE GENERALLY WILL NOT REVIEW A NONRESPONSIBILITY DETERMINATION ONCE SBA HAS ISSUED OR DENIED A COC PURSUANT TO ITS STATUTORY AUTHORITY AT 15 U.S.C. SEC. 637(B)(7) (1976 AND SUPP. I 1977). A-P BUSINESS MACHINES CORPORATION, DALE BUSINESS MACHINES, B-195206.8, NOVEMBER 6, 1979, 79-2 CPD 330, AFF'D., FEBRUARY 29, 1980, 80-1 CPD 164; JBS CONSTRUCTION COMPANY, B-187574, JANUARY 31, 1977, 77-1 CPD 79. NEVERTHELESS, WE BELIEVE THAT A LIMITED REVIEW IS APPROPRIATE WHERE THE ISSUE PRESENTED IS WHETHER THE CONTRACTING OFFICER SHOULD SUBMIT A DETERMINATION TO THE SBA, I.E., WHETHER "RESPONSIBILITY" IN FACT IS AT ISSUE, AND WHERE AS HERE THE SBA HAS DEFERRED COMPLETING A COC DETERMINATION PENDING THE BIDDER'S COMPLIANCE WITH A CRITERION INSISTED UPON BY THE CONTRACTING ACTIVITY. IN SUCH CASES, WE WILL EXAMINE WHETHER THE CRITERION WAS PROPERLY IMPOSED AS A RESPONSIBILITY FACTOR, OR IF NOT, WHETHER THERE WAS SOME OTHER BASIS THAT COULD HAVE JUSTIFIED A DETERMINATION OF NONRESPONSIBILITY AND REFERRAL TO SBA. SEE CAREER CONSULTANTS, INC., B-195913, MARCH 25, 1980, 80-1 CPD 215.

HERE THE ARMY RELIED UPON PARAGRAPH C-37 OF THE IFB, "OPERATING AUTHORITY," AS ESTABLISHING A DEFINITIVE REQUIREMENT FOR PROOF OF INTRASTATE OPERATING AUTHORITY, WHICH IN TURN WAS CITED AS JUSTIFYING VERNON'S DISQUALIFICATION. PARAGRAPH C-37 PROVIDES:

"EACH BIDDER MUST SUBMIT TO THE CONTRACTING OFFICER PRIOR TO AWARD BUT NO LATER THAN 31 JANUARY 1980 VALID EVIDENCE OF AN INTERSTATE COMMERCE COMMISSION (ICC) OPERATING AUTHORITY. *** ICC AUTHORITY WILL NOT BE REQUIRED FOR SCHEDULE III IF THE AREA OF RESPONSIBILITY IS LOCATED WHOLLY WITHIN A SINGLE STATE SO THAT ALL SHIPMENTS WILL MOVE WITH ORIGIN AND DESTINATION ENTIRELY WITHIN THE BOUNDARIES OF A SINGLE STATE. FOR SUCH WHOLLY INTRASTATE PERSONAL PROPERTY MOVEMENTS, THE BIDDER MUST HOLD, IN HIS OWN NAME, VALID OPERATING AUTHORITY FROM THE APPROPRIATE STATE REGULATORY BODY. *** FAILURE TO FURNISH ICC CERTIFICATE OR OTHER ACCEPTABLE REGULATORY OPERATING AUTHORITIES OR CERTIFICATES NOT LATER THAN THE DATE SPECIFIED ABOVE SHALL BE SUFFICIENT GROUNDS FOR A FINDING OF NONRESPONSIBILITY."

WE HAVE CONSISTENTLY VIEWED LICENSING PROVISIONS AS RELATING TO A BIDDER'S RESPONSIBILITY, AND HAVE INDICATED THAT A CONTRACTING OFFICER MAY REJECT A BIDDER AS NONRESPONSIBLE BASED ON THE FAILURE TO MEET AN EXPRESS LICENSING REQUIREMENT INCLUDED IN THE SOLICITATION AS A DEFINITIVE RESPONSIBILITY CRITERION. WASHINGTON PATROL SERVICE, INC., B-195900, AUGUST 19, 1980, 80-2 CPD 132.

HOWEVER, ALTHOUGH PARAGRAPH C-37 STATES THAT A BIDDER MUST HOLD VALID STATE OPERATING AUTHORITY FOR "SUCH WHOLLY INTRASTATE PERSONAL PROPERTY MOVEMENTS," THE WORD "SUCH" APPEARS TO REFER TO THE IMMEDIATELY PRECEDING SENTENCE WHICH APPLIES ONLY WITH REGARD TO SCHEDULE III. VERNON'S PROTEST, AS WE HAVE INDICATED, CONCERNS SCHEDULE II. THUS, EVEN IF WE WERE TO ACCEPT THE ARMY'S VIEW THAT PARAGRAPH C-37 ESTABLISHED A DEFINITIVE CRITERION, THE AGENCY'S RELIANCE ON THE PARAGRAPH WAS MISPLACED IN THIS CASE.

NONETHELESS, IFB PARAGRAPH C-36, "LICENSES AND PERMITS," PROVIDES:

"OFFERORS WITHOUT NECESSARY OPERATING AUTHORITY MAY SUBMIT OFFERS, BUT THE OFFERORS SHALL, WITHOUT ADDITIONAL EXPENSE TO THE GOVERNMENT, BE RESPONSIBLE FOR OBTAINING ANY NECESSARY LICENSES AND PERMITS PRIOR TO AWARD *** AND FOR COMPLYING WITH ALL LAWS, ORDINANCES, STATUTES AND REGULATIONS IN CONNECTION WITH THE FURNISHING OF SERVICES ***."

IN OUR DECISION IN MCNAMARA-LUNZ VANS & WAREHOUSE, INC., B-185803, JULY 8, 1976, 76-2 CPD 20, WE CONCLUDED THAT THIS LANGUAGE IN ITSELF IS NOT SUFFICIENT TO REQUIRE INTERSTATE OR INTRASTATE LICENSES AS A CONDITION WHICH MUST BE MET BEFORE AWARD. THE NEED TO COMPLY WITH STATE OR LOCAL LAW IS A MATTER NORMALLY OF CONCERN TO THE OFFEROR AND STATE OR LOCAL AUTHORITIES, BUT NOT TO THE FEDERAL GOVERNMENT. SEE ALSO WHAT-MAC CONTRACTORS, INC., 58 COMP.GEN. 767 (1979), 79-2 CPD 179.

HOWEVER, OUR DECISIONS RECOGNIZE THAT A CONTRACTING OFFICER MAY MAKE A DETERMINATION OF NONRESPONSIBILITY WHERE IT APPEARS THAT CONTRACT PERFORMANCE WILL BE PREVENTED OR DELAYED BY STATE OR LOCAL INTERVENTION. THUS, IN WHAT-MAC CONTRACTORS, INC., SUPRA, WE CONCLUDED THAT THE AIR FORCE ACTED PROPERLY IN DETERMINING THAT THE PROTESTER WAS NONRESPONSIBLE FOR FAILURE TO HOLD A CALIFORNIA LICENSE IN THE FACE OF A LETTER FROM THE CALIFORNIA BUREAU OF COLLECTION AND INVESTIGATIVE SERVICES INDICATING THAT IT WOULD ENFORCE LOCAL LICENSING REQUIREMENTS AGAINST THE PROTESTER IF THAT FIRM PROVIDED SECURITY SERVICES IN CALIFORNIA. IN ADDITION, THE CONTRACTING OFFICER WAS AWARE OF AN AIR FORCE JUDGE ADVOCATE GENERAL'S OPINION THAT CALIFORNIA WOULD HAVE A GOOD CHANCE OF ENFORCING ITS LICENSING REQUIREMENTS, THEREBY FRUSTRATING PERFORMANCE IF A CONTRACT WAS AWARDED. SEE ALSO CAREER CONSULTANTS, INC., SUPRA.

THE RECORD HERE SHOWS THAT THE ARMY INQUIRED OF PSC OFFICIALS WHETHER VERNON COULD PROVIDE SCHEDULE II INTRASTATE SERVICES WITHOUT LOUISIANA OPERATING AUTHORITY. IN RESPONSE, THE ARMY WAS ADVISED THAT LOUISIANA OPERATING AUTHORITY WAS NOT NECESSARY FOR SERVICES PERFORMED WITHIN 10 MILES OF LEESVILLE OR IN FURTHERANCE OF INTERSTATE COMMERCE. ON THAT BASIS, THE ARMY CONCLUDED THAT AT LEAST SOME SERVICES COULD NOT BE PERFORMED WITHOUT POSSIBLE STATE INTERFERENCE SINCE CONTRACT PERFORMANCE WOULD INCLUDE SERVICES WITHIN 25 MILES OF LEESVILLE.

UNDER THE CIRCUMSTANCES, VERNON'S LACK OF A LOUISIANA INTRASTATE PERMIT PROPERLY WAS CONSIDERED A MATTER OF THE PROTESTER'S RESPONSIBILITY AND THE ARMY'S SUBMISSION TO THE SBA WAS APPROPRIATE.

REGARDING VERNON'S ALLEGATION OF MISCONDUCT BY ARMY PERSONNEL, IT SEEMS CLEAR THAT EVENTS OUTSIDE THE CONTROL OF FORT POLK CONTRACTING AND TRANSPORTATION OFFICIALS WERE THE IMMEDIATE REASONS FOR VERNON'S REJECTION IN THIS INSTANCE. THE REFERRAL TO THE SBA UNDER THE COC PROCEDURE, WHICH IMPORTS A DETERMINATION THAT VERNON'S BID IS OTHERWISE ACCEPTABLE (DAR SEC. 1-705.4(C)(I)), WAS "CAUSED" BY THE ADVICE OF THE LOUISIANA PSC THAT LOUISIANA INTRASTATE OPERATING AUTHORITY WOULD BE REQUIRED OF THE CONTRACTOR BY THE STATE, AND THE CONTRACTING OFFICER'S REASONABLE BELIEF THAT ABSENT SUCH AUTHORITY CONTRACT PERFORMANCE WOULD BE IMPEDED. WE THUS SEE NO DIRECT CAUSAL LINK BETWEEN THE FORT POLK/WILLIAMS RELATIONSHIP ALLEGED BY VERNON AND THE FINDING OF NONRESPONSIBILITY AND REFERRAL TO SBA HERE.

THE PROTEST IS DENIED.