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B-160179, DEC. 12, 1966

B-160179 Dec 12, 1966
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TO SPEEDIE AIRCRAFT SUPPLY: REFERENCE IS MADE TO YOUR PROTEST AGAINST SEVERAL OF THE AWARDS MADE UNDER SCRAP SALES INVITATION FOR BIDS NO. 21-7014. SPEEDIE WAS AWARDED FOUR OF THE AFOREMENTIONED ITEMS. WHEREAS ITEMS NOS. 115 AND 119 WERE AWARDED TO TWO OF ITS COMPETITORS. RESULTS OF THE ADMINISTRATIVE INVESTIGATION INTO THE FACTS AND CIRCUMSTANCES SURROUNDING SPEEDIE'S PROTEST INDICATED THAT ITS BID WAS SIGNED BY MRS. BOTH OF WHOM ARE ON THE DEBARRED BIDDER LIST. ARE CONNECTED WITH THE FIRM. UNDERSTAND THAT SUCH A DEBARRED BIDDERS LIST IS MAINTAINED. KARTHAUSER WAS THEREUPON REQUESTED TO FURNISH AN AFFIDAVIT STATING THE INTEREST THAT THE DEBARRED BIDDERS HAD IN THE COMPANY. FAILED TO FULLY ESTABLISH WHAT THAT INTEREST WAS.

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B-160179, DEC. 12, 1966

TO SPEEDIE AIRCRAFT SUPPLY:

REFERENCE IS MADE TO YOUR PROTEST AGAINST SEVERAL OF THE AWARDS MADE UNDER SCRAP SALES INVITATION FOR BIDS NO. 21-7014, BY THE DEFENSE SURPLUS SALES OFFICE, FOREST PARK, GEORGIA.

ON AUGUST 30, 1966, SPEEDIE AIRCRAFT SUPPLY (SPEEDIE) SUBMITTED SIX INDIVIDUAL BIDS RESPONSIVE TO ITEMS NOS. 114, 115, 116, 118, 119 AND 121 OF THE INVITATION, TOTALING $9,350; AND ALSO AN ,ALL-OR-NONE" BID ON THE SAME ITEMS IN THE AMOUNT OF $9,600. AFTER BID OPENING, SPEEDIE WAS AWARDED FOUR OF THE AFOREMENTIONED ITEMS, WHEREAS ITEMS NOS. 115 AND 119 WERE AWARDED TO TWO OF ITS COMPETITORS. SPEEDIE THEREAFTER PROTESTED THE FACT THAT IT HAD NOT BEEN AWARDED ALL SIX OF THE ITEMS UNDER ITS ALLEGEDLY HIGH "ALL-OR-NONE" BID.

RESULTS OF THE ADMINISTRATIVE INVESTIGATION INTO THE FACTS AND CIRCUMSTANCES SURROUNDING SPEEDIE'S PROTEST INDICATED THAT ITS BID WAS SIGNED BY MRS. SYLVIA KARTHAUSER AS SOLE OWNER, BUT THAT HER HUSBAND, FREDERICK H. KARTHAUSER, AND SON, FREDERICK E. KARTHAUSER, BOTH OF WHOM ARE ON THE DEBARRED BIDDER LIST, ARE CONNECTED WITH THE FIRM. UNDERSTAND THAT SUCH A DEBARRED BIDDERS LIST IS MAINTAINED, CONSOLIDATED, AND DISTRIBUTED FOR THE GUIDANCE OF SALES CONTRACTING OFFICERS IN ACCORDANCE WITH PART I, CHAPTER II-24 OF THE DEFENSE DISPOSAL MANUAL. MRS. KARTHAUSER WAS THEREUPON REQUESTED TO FURNISH AN AFFIDAVIT STATING THE INTEREST THAT THE DEBARRED BIDDERS HAD IN THE COMPANY. HER WRITTEN RESPONSE, DATED OCTOBER 24, 1966, FAILED TO FULLY ESTABLISH WHAT THAT INTEREST WAS. A SECOND REQUEST WAS SIMILARLY NONRESPONSIVE, AND UPON HER RECEIPT OF THE THIRD REQUEST FOR THE SAME INFORMATION MRS. KARTHAUSER ADVISED THE AGENCY BY TELEPHONE THAT SHE WOULD NOT FURNISH ANY FURTHER INFORMATION IN REGARDS TO THIS MATTER. THE ADMINISTRATIVE REPORT CONCLUDED WITH THE FOLLOWING STATEMENT:

"SINCE MRS. KARTHAUSER HAS REFUSED TO MAKE A FRANK DISCLOSURE AS TO THE EXTENT OF THE INTEREST THE DEBARRED BIDDERS HAVE IN SPEEDIE AIRCRAFT SUPPLY IT IS BELIEVED THAT AN INFERENCE IS JUSTIFIED THAT THEY ARE MORE THAN JUST EMPLOYEES OF THE SPEEDIE AIRCRAFT SUPPLY AND DO HAVE A FINANCIAL INTEREST IN THE FIRM AND DO TAKE PART IN ITS MANAGEMENT.'

SECTION 203 OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, READS, IN PERTINENT PART, AS FOLLOWS:

"/1) ALL DISPOSALS OR CONTRACTS FOR DISPOSAL OF SURPLUS PROPERTY (OTHER THAN BY ABANDONMENT, DESTRUCTION, DONATION, OR THROUGH CONTRACT BROKERS) MADE OR AUTHORIZED BY THE ADMINISTRATOR SHALL BE MADE AFTER PUBLICLY ADVERTISING FOR BIDS, * * *.

"/2) WHENEVER PUBLIC ADVERTISING FOR BIDS IS REQUIRED UNDER PARAGRAPH (1) OF THIS SUBSECTION---

"/A) THE ADVERTISEMENT FOR BIDS SHALL BE MADE AT SUCH TIME PREVIOUS TO THE DISPOSAL OR CONTRACT, THROUGH SUCH METHODS, AND ON SUCH TERMS AND CONDITIONS AS SHALL PERMIT THAT FULL AND FREE COMPETITION WHICH IS CONSISTENT WITH THE VALUE AND NATURE OF THE PROPERTY INVOLVED;

"/B) ALL BIDS SHALL BE PUBLICLY DISCLOSED AT THE TIME AND PLACE STATED IN THE ADVERTISEMENT;

"/C) AWARD SHALL BE MADE WITH REASONABLE PROMPTNESS BY NOTICE TO THE RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED: PROVIDED, THAT ALL BIDS MAY BE REJECTED WHEN IT IS IN THE PUBLIC INTEREST TO DO SO.'

THE TERM "RESPONSIBILITY," AS USED IN STATUTES REQUIRING AWARD OF PUBLIC CONTRACTS TO THE LOWEST RESPONSIBLE BIDDER, HAS BEEN HELD TO EMBRACE, IN ADDITION TO FACTORS RELATING TO PECUNIARY ABILITY AND PHYSICAL CAPABILITY TO PERFORM, MORE PERSONAL ATTRIBUTES OF CHARACTER OR INTEGRITY. SEE 43 COMP. GEN. 257, AND COURT CASES THEREIN CITED. FURTHER, OUR OFFICE HAS HELD THAT THE CAUSES FOR DEBARMENT OF BIDDERS OR THE CAUSES FOR SUSPENSION OF BIDDERS ENUMERATED IN ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1- 604.1 AND 1-605.1, RESPECTIVELY, MAY BE APPLIED IN DETERMINING A BIDDER'S INTEGRITY AND BUSINESS ETHICS. WE HAVE FURTHER HELD, HOWEVER, THAT THOSE REGULATIONS AND THE DECISIONS OF OUR OFFICE CONTEMPLATE THAT AN ADMINISTRATIVE DETERMINATION OF LACK OF INTEGRITY OR BUSINESS ETHICS SHALL BE BASED ON CLEAR AND CONVINCING EVIDENCE OF SUCH DEFICIENCIES ON THE PART OF THE BIDDER. 39 COMP. GEN. 868, 872.

INASMUCH AS THE LANGUAGE IN THE DISPOSAL STATUTE REQUIRING THAT A BIDDER BE "RESPONSIBLE" TO QUALIFY FOR AWARD OF SURPLUS PROPERTY CONTRACTS IS SIMILAR TO THE LANGUAGE USED IN THE ADVERTISED PROCUREMENT STATUTES, THE PRINCIPLES SET FORTH IN OUR DECISIONS CONCERNING DETERMINATIONS OF A BIDDER'S LACK OF INTEGRITY IN ADVERTISED PROCUREMENTS ARE EQUALLY FOR APPLICATION TO ADVERTISED SALES OF SURPLUS GOVERNMENT PROPERTY.

PURSUANT TO PART 3, CHAPTER I-A 1, OF THE DEFENSE SUPPLY AGENCY MANUAL 4160.1 (DEFENSE DISPOSAL MANUAL), THE SALE CONTRACTING OFFICER IS PERMITTED TO UTILIZE PERTINENT PROVISIONS OF ASPR AS GUIDELINES IN ADMINISTERING SURPLUS PROPERTY SALES. UNDER ASPR 1-903.1, A PROSPECTIVE CONTRACTOR MUST HAVE, AMONG OTHERS, A SATISFACTORY RECORD OF INTEGRITY OR BUSINESS ETHICS. WHILE RECOGNIZING THAT MRS. KARTHAUSER IS OTHERWISE AN ELIGIBLE BIDDER AS OWNER OF SPEEDIE, WE ALSO RECOGNIZE THAT MESSRS. KARTHAUSER ARE DEBARRED FROM CONTRACTING WITH THE GOVERNMENT AND THAT THE POSSIBILITY OF COMMUNITY OF INTEREST IN SPEEDIE'S FINANCIAL AND BUSINESS AFFAIRS MAY BE REASONABLY INFERRED FROM THE RECORD. WE BELIEVE THAT IT WAS PROPER FOR THE SALES AGENCY, IN CONSIDERING THE RESPONSIBILITY OF SPEEDIE, TO ALSO CONSIDER THE INTEGRITY OF THE FAMILY MEMBERS OF SPEEDIE. ALTHOUGH THE RECORD DOES NOT AFFIRMATIVELY ESTABLISH THAT THE NAMED FAMILY MEMBERS OF SPEEDIE HAVE AN INTEREST IN ITS FINANCIAL AND MANAGEMENT AFFAIRS, MRS. KARTHAUSER HAS NOT UNDERTAKEN TO SUBMIT EVIDENCE WHICH WOULD REBUT THAT CONCLUSION EVEN THOUGH AN OPPORTUNITY TO DO SO WAS EXTENDED TO HER.

PART 3, CHAPTER VIII-4 OF THE ABOVE-CITED MANUAL PROVIDES THAT AWARDS OF SALES CONTRACTS WILL NOT BE MADE TO BIDDERS ON THE CONSOLIDATED DEBARRED BIDDERS LIST. IN VIEW THEREOF, AND SINCE WE FIND NO SUBSTANTIAL BASIS TO DISAGREE WITH THE ADMINISTRATIVE FINDING THAT SPEEDIE IS A NONRESPONSIVE BIDDER, YOUR PROTEST UNDER THE SUBJECT SALES INVITATION IS DENIED.

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