B-152081, DEC. 9, 1963

B-152081: Dec 9, 1963

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INC.: REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 21. WHEREIN IT WAS HELD THAT THERE IS NO LEGAL BASIS FOR QUESTIONING THE ACTION TAKEN BY THE POST OFFICE DEPARTMENT IN REFUSING TO RENEW YOUR CONTRACT COVERING MAIL TRANSPORTATION SERVICE ON STAR ROUTE NO. 24109-T FROM BOSTON. IN YOUR LETTER YOU STATE THAT THE DEPARTMENT FAILED TO ACT ON A REQUEST BY YOU FOR A "PAY ADJUSTMENT" TO WHICH YOU CONSIDERED THAT YOU WERE ENTITLED. WAS THE SECOND LOW BID BUT WAS IMPROPERLY REJECTED IN FAVOR OF A HIGHER BID. THE MATTERS REFERRED TO IN YOUR RECENT LETTER WERE FULLY DISCUSSED BY THE DEPARTMENT IN ITS LETTER OF AUGUST 23. WAS THE LOW BIDDER ON THAT INVITATION AND YOU WERE THE SECOND LOW BIDDER. BOTH BIDS WERE REJECTED BECAUSE "THE DEPARTMENT DID NOT BELIEVE THE TWO LOWEST BIDDERS WERE RESPONSIBLE.

B-152081, DEC. 9, 1963

TO ELMER T. JONES, INC.:

REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 21, 1963, REQUESTING RECONSIDERATION OF OUR DECISION OF OCTOBER 23, 1963, WHEREIN IT WAS HELD THAT THERE IS NO LEGAL BASIS FOR QUESTIONING THE ACTION TAKEN BY THE POST OFFICE DEPARTMENT IN REFUSING TO RENEW YOUR CONTRACT COVERING MAIL TRANSPORTATION SERVICE ON STAR ROUTE NO. 24109-T FROM BOSTON, MASSACHUSETTS, TO ALBANY, NEW YORK.

IN YOUR LETTER YOU STATE THAT THE DEPARTMENT FAILED TO ACT ON A REQUEST BY YOU FOR A "PAY ADJUSTMENT" TO WHICH YOU CONSIDERED THAT YOU WERE ENTITLED. ALSO, YOU STATE THAT YOUR BID SUBMITTED IN RESPONSE TO AN INVITATION FOR BIDS COVERING A 4-YEAR TERM OF SERVICE BEGINNING JULY 1, 1963, WAS THE SECOND LOW BID BUT WAS IMPROPERLY REJECTED IN FAVOR OF A HIGHER BID.

THE MATTERS REFERRED TO IN YOUR RECENT LETTER WERE FULLY DISCUSSED BY THE DEPARTMENT IN ITS LETTER OF AUGUST 23, 1963, TO OUR OFFICE IN REGARD TO THE PROTEST OF JOHN R. MOTT, INC., AGAINST THE REFUSAL OF THE DEPARTMENT TO AWARD A CONTRACT TO IT UNDER AN INVITATION FOR BIDS ISSUED ON MAY 6, 1963. MOTT, INC., WAS THE LOW BIDDER ON THAT INVITATION AND YOU WERE THE SECOND LOW BIDDER. BOTH BIDS WERE REJECTED BECAUSE "THE DEPARTMENT DID NOT BELIEVE THE TWO LOWEST BIDDERS WERE RESPONSIBLE, AT LEAST IN SO FAR AS THIS ROUTE IS CONCERNED.' IN SUPPORT OF THIS ACTION THE DEPARTMENT FURNISHED OUR OFFICE WITH A CHRONOLOGICAL SUMMARY OF THE FACTS IN THIS CASE AND SOME OF THESE FACTS WERE SET OUT IN THE SECOND PARAGRAPH OF OUR DECISION OF OCTOBER 23, 1963.

WITH REGARD TO THE FAILURE OF THE DEPARTMENT TO ACT FAVORABLY ON YOUR REQUEST FOR A READJUSTMENT OF COMPENSATION PURSUANT TO 39 U.S.C. 6423, THE DEPARTMENT STATED THAT---

"THE PROPER FORMS WERE SENT TO MR. JONES WHO RETURNED THEM PRACTICALLY BLANK. A CONTROVERSY EXISTS BETWEEN MR. JONES AND OUR BOSTON REGIONAL OFFICIALS CONCERNING THIS READJUSTMENT MATTER. MR. JONES HAS STATED THAT THE BOSTON REGIONAL OFFICIALS HAD PROMISED HIM SUCH AN ADJUSTMENT DURING A MEETING HELD ON JULY 6, 1960, PRIOR TO HIS APPROVAL AS SUBCONTRACTOR. THE BOSTON REGIONAL OFFICIALS DENY ANY SUCH COMMITMENT. IT IS POSSIBLE A MISUNDERSTANDING EXISTS WITH MR. JONES BELIEVING OUR BOSTON OFFICIALS HAD DEFINITELY DECIDED TO GIVE HIM AN ADJUSTMENT, WHEREAS, OUR BOSTON REGIONAL OFFICIALS INTENDED TO INDICATE TO HIM THAT IF AN INCREASE WERE FACTUALLY WARRANTED, AND LEGALLY PERMISSIBLE, AN APPROPRIATE ADJUSTMENT WOULD BE MADE. DURING A MEETING HELD ON OCTOBER 22, 1962, WHICH RELATED TO THE CONTROVERSY OVER THE READJUSTMENT, MR. JONES FURNISHED OUR BOSTON REGIONAL OFFICIALS WITH A COPY OF AN AGREEMENT ENTERED INTO ON AUGUST 15, 1960. THE BOSTON REGIONAL OFFICIALS HAD NOT KNOWN OF THE EXISTENCE OF THE AGREEMENT BEFORE THIS TIME. UNDER THAT AGREEMENT, JONES, INC. LEASED FROM MOTT, INC. TRUCKS AT THE RATE OF 13 CENTS PER MILE AND DRIVERS AT THE RATE OF $23.43 PER TRIP. IN ADDITION, MOTT, INC. WOULD BE PAID ON ACCOUNT OF PAYROLL TAXES AT THE RATE OF $2.42 PER TRIP, AND AT THE RATE OF $4.50 PER TRIP ON ACCOUNT OF HIGHWAY TOLLS. IT ALSO APPEARS FROM THE AGREEMENT THAT ANY INCREASES IN WAGES, TAXES, TOLLS, LODGINGS, ETC., AND ANY COSTS IN EXCESS OF THE SUBCONTRACTOR'S INCOME WOULD BE ASSUMED BY MOTT, INC. PENDING AN ADJUSTMENT IN COMPENSATION. AFTER SUCH ADJUSTMENT WAS RECEIVED, THE AGREEMENT WOULD TERMINATE. IT ALSO APPEARS THAT MR. JONES HAD A FULL TIME JOB; THAT MR. JONES WOULD TURN OVER THE CHECKS RECEIVED FROM THE DEPARTMENT TO MR. MOTT; THAT MR. MOTT PAID THE DRIVERS, PAYROLL TAXES, ETC.; THAT ALL RECORDS CONCERNING COSTS OF OPERATIONS WERE KEPT BY MR. MOTT; AND, THAT MR. JONES DID NOT HAVE ANY. IN ADDITION, MR. JONES TURNED OVER CORRESPONDENCE CONCERNING IRREGULARITIES, ETC., TO MR. MOTT. IN A LETTER TO HIM DATED OCTOBER 26, 1962, OUR BOSTON OFFICIALS REFERRED TO THE OCTOBER 12, 1962, MEETING AND STATED THAT HE, MR. JONES, HAD SAID THAT UNDER THE AGREEMENT OF AUGUST 15, 1960, FOR ALL PRACTICAL PURPOSES MR. MOTT WAS OPERATING THE ROUTE. BY A LETTER DATED NOVEMBER 5, 1962, MR. JONES WAS ADVISED THAT THE DELEGATION OF RESPONSIBILITY TO MR. MOTT MUST CEASE. HOWEVER, IN A LETTER TO THE BOSTON REGIONAL DIRECTOR DATED JANUARY 9, 1963, WHILE MR. JONES IMPLICITLY ADMITTED THE SUPERVISION WAS EXERCISED BY USING JOHN R. MOTT AT ALBANY AS THE RESIDENT AGENT, SPARE DRIVER, AND EMERGENCY MAN, HE CLEARLY IMPLIED THAT THAT WAS ALL THE SUPERVISION THAT WAS NECESSARY, AND THAT HE DID NOT INTEND TO CHANGE THE SITUATION.

"BY LETTER DATED JANUARY 25, 1963, THE BOSTON REGIONAL DIRECTOR ADVISED JONES, INC. THAT (1) THE PRACTICAL EFFECT OF THE AUGUST 15, 1960, AGREEMENT WAS THAT MOTT, INC., WHICH HAD BEEN REMOVED FOR UNSATISFACTORY SERVICE LESS THAN A MONTH BEFORE THE AGREEMENT WAS ENTERED INTO, WAS THE OPERATOR OF THE ROUTE; (2) JONES, INC., BY VIRTUE OF THAT AGREEMENT, HAD FAILED TO LIVE UP TO ITS OBLIGATIONS TO PERFORM THE SERVICE, BUT HAD IMPROPERLY DELEGATED RESPONSIBILITY FOR OPERATION, INCLUDING THE ASSUMPTION OF INCREASED COSTS, TO MOTT, INC.; AND, (3) THE SECTION 6423 READJUSTMENT REQUEST WAS DENIED BECAUSE JONES, INC. DID NOT INCUR OR ASSUME ANY INCREASED COSTS.'

WITH REGARD TO THE DETERMINATION OF THE DEPARTMENT THAT YOU WERE NOT A RESPONSIBLE BIDDER, THE FACTS ON WHICH THIS DETERMINATION WAS BASED WERE SET OUT IN OUR DECISION OF OCTOBER 23. THE MAIN POINT INVOLVED IN THIS DETERMINATION WAS THE FACT THAT JOHN R. MOTT, WHO CONTROLLED JOHN R. MOTT, INC., THE ORIGINAL CONTRACTOR, HAD BEEN REMOVED FOR UNSATISFACTORY SERVICE AND THAT YOU HAD DELEGATED THE SUPERVISION OF THE CONTRACT WORK TO HIM AFTER YOU HAD ASSUMED THE CONTRACT WORK. DESPITE THE FACT THAT YOU WERE DIRECTED TO CEASE THIS DELEGATION YOU TOOK NO ACTION TO CHANGE THE SITUATION. YOU HAVE NOT FURNISHED ANY SATISFACTORY EVIDENCE THAT THESE REPORTED FACTS ARE NOT CORRECT.

IN VIEW OF THE FOREGOING WE MUST ADHERE TO OUR CONCLUSION THAT THERE IS NO LEGAL BASIS FOR QUESTIONING THE ACTION TAKEN BY THE POST OFFICE DEPARTMENT IN THIS MATTER.

THE 18 CHECKS TRANSMITTED WITH YOUR LETTER OF NOVEMBER 21 ARE RETURNED HEREWITH.

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