B-156374, JUN. 25, 1965

B-156374, JUN. 25, 1965

TO ATEMCO, INC.:

REFERENCE IS MADE TO YOUR TELEGRAM AND LETTER OF MARCH 22, 1965, AND LETTERS OF APRIL 13 AND JUNE 9, 1965, FROM YOUR ATTORNEY, PROTESTING AGAINST AWARD OF CONTRACT TO ANY FIRM OTHER THAN ATEMCO, INC., UNDER THE LABOR SURPLUS AREA SET-ASIDE PORTION OF INVITATION FOR BIDS NO. AMC (A) 36 -038-65-350 (SP), ISSUED BY FRANKFORD ARSENAL, PHILADELPHIA, PENNSYLVANIA.

THE SUBJECT INVITATION, ISSUED ON NOVEMBER 5, 1964, REQUESTED BIDS FOR FURNISHING A TOTAL MAXIMUM ESTIMATED QUANTITY OF 2,500 EACH--- COLLIMATOR, INFINITY, AIMING REG. M1 W/EQUIPMENT. THE INVITATION NOTED THAT THIS IS A 50 PERCENT SET-ASIDE FOR LABOR SURPLUS AREA CONCERNS. IT IS REPORTED THAT 25 INVITATIONS WERE ISSUED AND 11 BIDS RECEIVED IN RESPONSE THERETO, AND THAT THE NON-SET-ASIDE PORTION OF THIS PROCUREMENT WAS AWARDED TO SPACE SYSTEMS LABORATORY, INC., MELBOURNE, FLORIDA, ON JANUARY 29, 1965. THE INVITATION PROVIDES THAT NEGOTIATIONS WILL BE CONDUCTED ONLY WITH RESPONSIBLE LABOR SURPLUS AREA CONCERNS (AND SMALL BUSINESS CONCERNS TO THE EXTENT INDICATED) WHO HAVE SUBMITTED RESPONSIVE BIDS OR PROPOSALS ON THE NON-SET-ASIDE PORTION AT A UNIT PRICE WITHIN 120 PERCENT OF THE HIGHEST AWARD MADE ON THE NON-SET-ASIDE PORTION IN THE FOLLOWING ORDER OF PRIORITY:

GROUP 1. PERSISTENT LABOR SURPLUS AREA CONCERNS WHICH ARE ALSO SMALL BUSINESS CONCERNS.

GROUP 2. OTHER PERSISTENT LABOR SURPLUS AREA CONCERNS.

GROUP 3. SUBSTANTIAL LABOR SURPLUS AREA CONCERNS WHICH ARE ALSO SMALL BUSINESS CONCERNS.

GROUP 4. OTHER SUBSTANTIAL LABOR SURPLUS AREA CONCERNS.

GROUP 5. SMALL BUSINESS CONCERNS WHICH ARE NOT LABOR SURPLUS AREA CONCERNS.

THE INVITATION PROVIDES FURTHER THAT WITHIN EACH OF THE ABOVE GROUPS NEGOTIATIONS WITH SUCH CONCERNS ARE TO BE CONDUCTED IN THE ORDER OF THEIR BIDS ON THE NON-SET-ASIDE PORTION, BEGINNING WITH THE LOWEST RESPONSIVE BID.

THERE IS INCLUDED IN THE INVITATION A DEFINITION OF THE TWO TYPES OF LABOR SURPLUS AREA CONCERNS. A "PERSISTENT LABOR SURPLUS AREA PERFORMED, A SUBSTANTIAL PROPORTION OF A CONTRACT IN PERSISTENT LABOR SURPLUS AREAS. IT IS STATED FURTHER THAT A CONCERN IS DEEMED TO PERFORM A SUBSTANTIAL PORTION OF A CONTRACT IN SUCH AREAS IF THE COSTS WHICH THE CONCERN WILL INCUR ON ACCOUNT OF MANUFACTURING OR PRODUCTION PERFORMED IN SUCH AREAS AMOUNT TO MORE THAN 50 PERCENT OF THE CONTRACT PRICE. A "SUBSTANTIAL LABOR SURPLUS AREA CONCERN" IS DEFINED AS ONE WHICH AGREES TO PERFORM, OR CAUSE TO BE PERFORMED, A SUBSTANTIAL PROPORTION OF A CONTRACT IN SUBSTANTIAL LABOR SURPLUS AREAS. IN THAT REGARD IT IS PROVIDED THAT A CONCERN SHALL BE DEEMED TO PERFORM A SUBSTANTIAL PROPORTION OF A CONTRACT IN SUBSTANTIAL LABOR SURPLUS AREAS IF THE COSTS WHICH THE CONCERN WILL INCUR ON ACCOUNT OF MANUFACTURING OR PRODUCTION PERFORMED IN SUBSTANTIAL AND PERSISTENT LABOR SURPLUS AREAS AMOUNT TO MORE THAN 50 PERCENT OF THE CONTRACT PRICE. IN CONNECTION WITH THE IDENTIFICATION OF AREAS OF PERFORMANCE, THE INVITATION STIPULATES THAT EACH BIDDER DESIRING TO BE CONSIDERED FOR AWARD AS A LABOR SURPLUS AREA CONCERN ON THE SET-ASIDE PORTION OF THIS PROCUREMENT SHALL IDENTIFY IN HIS BID THE GEOGRAPHICAL AREAS IN WHICH HE PROPOSES TO PERFORM, OR CAUSE TO BE PERFORMED, A SUBSTANTIAL PORTION OF THE PRODUCTION OF THE CONTRACT. IN SUCH LABOR SURPLUS CERTIFICATION YOU SET FORTH "NATRONA HEIGHTS, PA.' AS THE PERSISTENT AND SUBSTANTIAL AREA WHERE MORE THAN K0 PERCENT OF THE MANUFACTURING COSTS WOULD BE INCURRED. AS WILL BE SEEN, THIS DECLARATION OF NATRONA HEIGHTS, PENNSYLVANIA, BY YOU, TO BE THE GEOGRAPHICAL AREA IN QUESTION, IS THE BASIS ABOUT WHICH THE ISSUE OF YOUR PROTEST REVOLVES.

IT IS ADMINISTRATIVELY REPORTED THAT THE SECOND LOW BIDDER, KEUFFEL AND ESSER CO., HOBOKEN, NEW JERSEY, WHILE CERTIFYING THAT MORE PERSISTENT AND SUBSTANTIAL LABOR SURPLUS AREA, IS LARGE BUSINESS, AND THEREFORE FOR PURPOSES OF THE SET-ASIDE QUANTITY FALLS INTO GROUP 2 (IDENTIFIED ABOVE) FOR ORDER OF PREFERENCE. YOUR FIRM, ATEMCO, INC., ALLEGHENY DRIVE, NATIONA HEIGHTS, PENNSYLVANIA, WAS THE THIRD LOW BIDDER RESPONSIVE ON THE NON-SET-ASIDE PORTION OF THIS PROCUREMENT. YOUR BID PRICE OF .472 IS WITHIN THE 120 PERCENT OF THE LOW BID PRICE OF $395, AND THEREFORE WITHIN THE AREA OF CONSIDERATION. IN YOUR BID YOU CERTIFIED THAT MORE THAN 50 PERCENT OF THE CONTRACT PRICE WILL BE MANUFACTURING OR PRODUCTION COSTS (BY YOURSELF OR YOUR SUBCONTRACTORS) INCURRED IN AN AREA CLASSIFIED BY THE DEPARTMENT OF LABOR AS "PERSISTENT AND SUBSTANTIAL" AND YOU SET FORTH "NATRONA HEIGHTS, PA.' AS SUCH AREA. BASED ON THIS DECLARATION, AND SINCE YOU ARE A SMALL BUSINESS CONCERN, YOU NORMALLY WOULD BE GIVEN THE FIRST OPPORTUNITY (GROUP 1) TO MATCH THE LOW BID, EVEN THOUGH KEUFFEL AND ESSER, A LARGE BUSINESS (GROUP 2), SUBMITTED A LOWER BID. HOWEVER, IT IS REPORTED THAT AN EXAMINATION OF THE CLASSIFICATION OF THE AREA DESIGNATED BY YOU REVEALED THAT NATRONA HEIGHTS, PENNSYLVANIA, WAS NOT AN AREA OF PERSISTENT AND SUBSTANTIAL UNEMPLOYMENT. BASED ON THIS INFORMATION, KEUFFEL AND ESSER WAS CONSIDERED TO HAVE THE HIGHEST PRIORITY FOR NEGOTIATION OF THE SET-ASIDE QUANTITY, AND DIRECT NEGOTIATIONS WERE INSTITUTED WITH IT THROUGH THE ISSUANCE OF A REQUEST FOR PROPOSALS.

YOUR PROTEST TO THE PROCUREMENT AGENCY AND TO OUR OFFICE IS CENTERED ON YOUR CONTENTION THAT YOU SHOULD BE PERMITTED TO CHANGE YOUR CERTIFICATION FROM NATRONA HEIGHTS, PENNSYLVANIA, TO THE GEOGRAPHICAL AREA OF FREEPORT, PENNSYLVANIA, AND SINCE FREEPORT IS IN A PERSISTENT AND SUBSTANTIAL LABOR SURPLUS AREA, SUCH DESIGNATION WOULD IMPROVE YOUR PRIORITY FROM GROUP 3 TO GROUP 1, THUS GIVING YOU PREFERENCE FOR AWARD. SUCH CONTENTION IS BASED ON YOUR ALLEGATION OF ERROR IN LISTING NATRONA HEIGHTS, AND WHICH YOU EXPLAIN AS FOLLOWS:

"3.IN INDICATING THE CITY AND STATE OF SAID AREA, ATEMCO ERRONEOUSLY USED ITS MAILING RESS,"NATRONA HEIGHTS, PA.' INSTEAD OF THE ACTUAL ADDRESS,"FREEPORT, PA., " OF ITS PLANT WHERE THE COLLIMATORS WILL BE MANUFACTURED, AND

"4. AFTER BID OPENING, ATEMCO EXPLAINED TO THE CONTRACTING OFFICER THAT IT HAD NEVER INTENDED TO MANUFACTURE ANYTHING IN NATRONA HEIGHTS, PA., THAT IT DOES NOT EVEN HAVE A PLANT, OFFICE OR FACILITY IN NATRONA HEIGHTS, THAT IT MERELY RENTS A DRAWER IN THE NATRONA HEIGHTS POST OFFICE BECAUSE ITS MAIL IS RECEIVED FASTER WHEN DELIVERY IS MADE TO ITS PLANT AND THAT THE ACTUAL LOCATION OF ITS PLANT WHERE THE COLLIMATORS WILL BE MANUFACTURED IS FREEPORT, PENNSYLVANIA, AND

"5. NATRONA HEIGHTS IS NOT IN A PERSISTENT AND SUBSTANTIAL LABOR SURPLUS AREA BUT FREEPORT, PENNSYLVANIA IS. (SEE LETTER OF JANUARY 27, 1965 FROM BUREAU OF EMPLOYMENT SECURITY ATTACHED HERETO AND MARKED EXHIBIT D.) * *

YOUR EXPLANATION, HOWEVER, SEEMS TO BE AT VARIANCE WITH THE FACTS REPORTED IN A PREAWARD SURVEY MADE OF YOUR FACILITIES, AND IN CONNECTION WITH SUCH SURVEY IT WAS REPORTED THAT---

"A THIRD AND FINAL VISIT WAS MADE BY DCAS PERSONNEL ON 3/1/65. THIS VISIT WAS CONSIDERED NECESSARY BECAUSE THE BIDDER DID NOT HAVE AVAILABLE ALL THE NECESSARY DATA TO MEET PRE-AWARD REQUIREMENTS ON PRIOR VISITS, AND HE HAD BEEN REQUESTED TO MAKE AVAILABLE INFORMATION TO SUPPORT SURPLUS LABOR AREA PERFORMANCE. DURING THIS SURVEY, DATA ATTACHED AS EXHIBITS TO THE SURVEY WAS COMPILED. A TOUR OF THE BIDDER'S EXISTING FACILITIES AT NATRONA PLANT NO. 1 WAS MADE AND THE SITE OF PLANT NO. 2 WAS SURVEYED. THE FACILITIES AT NATRONA HEIGHTS WOULD BE USED FOR MANUFACTURE OF THE SPECIAL TOOLING, AND FINAL ASSEMBLY OF THE COLLIMATOR WILL ALSO BE PERFORMED AT THIS PLANT.'

THUS, IT APPEARS THAT NATRONA HEIGHTS, PENNSYLVANIA, IS NOT MERELY A "MAILING ADDRESS" FOR ATEMCO AS YOU CONTEND.

WE HAVE CONSIDERED THE DECISIONS CITED BY YOU IN SUPPORT OF YOUR PROTEST, AND DO NOT CONSIDER THEM CONTROLLING IN THE INSTANT MATTER. IN FACT, IN OUR DECISION OF JULY 29, 1964, B-154576, 44 COMP. GEN. 34, INVOLVING A SITUATION SOMEWHAT ANALOGOUS TO THAT HERE INVOLVED, IT WAS HELD THAT THE ATTEMPT OF THE PROTESTING BIDDER TO SUPPLY INFORMATION AFTER BID OPENING, APPEARED TO HAVE BEEN FOR NO OTHER PURPOSE THAN TO CHANGE TO A HIGHER PRIORITY AND THEREBY PASS OVER OTHER BIDDERS WHO HAD QUALIFIED IN THE MANNER PRESCRIBED IN THE INVITATION. THIS VIEW IS IN LINE WITH OUR DECISION OF JUNE 28, 1963, B-151247, WHEREIN OUR OFFICE HELD THAT A BIDDER COULD NOT CHANGE ITS PRIORITY FROM GROUP 3 TO GROUP 1 UPON AN ALLEGATION THAT IT MADE AN ERROR IN INDICATING IT WOULD ERFORM IN A SUBSTANTIAL LABOR SURPLUS AREA BECAUSE SUCH CHANGE WOULD DISCRIMINATE AGAINST THE OTHER BIDDERS. IN PASSING UPON THE MATTER, IT WAS STATED:

"* * * WE CONSISTENTLY HAVE HELD THAT A BIDDER'S FAILURE TO FURNISH INFORMATION WITH HIS BID WHICH IS NECESSARY FOR COMPLETE BID EVALUATION WILL RENDER THE BID NONRESPONSIVE, AND THAT SUCH NONRESPONSIVENESS MAY NOT BE CURED AFTER BIDS ARE OPENED. THEREFORE, IT WOULD NOT BE PROPER FOR DERO (THE BIDDER) TO CORRECT ITS OMISSION OF GEOGRAPHICAL INFORMATION AFTER THE CONTENDS OF BIDS ARE PUBLICLY REVEALED. CF. 40 COMP. GEN. 432.'

IN VIEW OF THE FOREGOING, WE AGREE WITH THE PROCUREMENT AGENCY, THAT IT WOULD NOT BE PROPER FOR YOU TO CORRECT THE GEOGRAPHICAL INFORMATION SUPPLIED BY YOU WITH YOUR BID AFTER BID OPENING SINCE YOUR PRIORITY WOULD ADVANCE FROM GROUP 3 TO GROUP 1 TO THE PREJUDICE OF OTHER BIDDERS. SUCH PRINCIPLE WOULD BE FOR EQUAL APPLICATION IN THE CASE OF SPACE SYSTEMS LABORATORY, SINCE ITS ORIGINAL INDICATION OF LABOR SURPLUS AREA WAS NEGATIVE, AND ANY ATTEMPT SUBSEQUENT TO BID OPENING TO CERTIFY TO A POSITIVE STATEMENT APPEARS TO BE FOR NO OTHER PURPOSE THAN CHANGING TO A HIGHER PRIORITY, AND THEREBY PASSING OVER OTHER BIDDERS WHO QUALIFIED IN THE MANNER PRESCRIBED IN THE INVITATION. SEE 44 COMP. GEN. 34.