B-148265, JUL. 9, 1962

B-148265, JUL. 9, 1962

TO SENTINEL ELECTRONICS, INCORPORATED:

REFERENCE IS MADE TO YOUR TELEGRAM OF FEBRUARY 26, 1962, AND TO LETTER OF MARCH 8, FROM YOUR ATTORNEY, QUESTIONING THE PROPRIETY OF THE PROPOSED METHOD OF PROCUREMENT MADE A PART OF THE TERMS AND CONDITIONS OF REQUEST FOR PROPOSALS NO. SC-36-039-62-11128-A3, AND PROTESTING AGAINST THE USE OF ERRONEOUS AND INADEQUATE SPECIFICATIONS, DRAWINGS AND DIAGRAMS WHICH, BEING UNFAIR AND UNREASONABLE TO PROSPECTIVE BIDDERS, WILL IMPEDE REALISTIC COMPETITIVE BIDDING.

WITH RESPECT TO THE QUESTION WHETHER THE TERMS OF THE SOLICITATION (OBJECTIONS A AND C OF YOUR ATTORNEY'S LETTER) WERE PROPER, THIS MATTER WAS CONSIDERED IN CONNECTION WITH YOUR COUNSEL'S PROTEST AGAINST SUCH STIPULATIONS INCLUDED IN REQUEST FOR PROPOSALS NO. SC-36-039-62-10863 C2. IN DECISION OF JUNE 1, 1962, 42 COMP. GEN. - , WE HELD, FOR THE REASONS STATED THEREIN, THAT NOTWITHSTANDING THE POSSIBLE PREFERENCE TO BE ACCORDED LABOR DISTRESSED AREA FIRMS THROUGH NEGOTIATION, PURSUANT TO THE PROCEDURE ADOPTED BY THE DEPARTMENT OF THE ARMY, SUCH ACTION WAS NOT CONTRARY TO LAW OR REGULATION. WE HAVE FURTHER EXAMINED THE MATTER IN THE LIGHT OF YOUR COUNSEL'S RECENT LETTER OF JUNE 1, 1962; HOWEVER, SINCE NO NEW AND MATERIAL EVIDENCE OR ANY CONTENTIONS NOT HERETOFORE CONSIDERED WERE SUBMITTED IN SUPPORT OF HIS POSITION, WE MUST ADHERE TO THE CONCLUSION REACHED IN OUR REFERRED-TO DECISION THAT THE LABOR SET-ASIDE ASPECTS OF THE SOLICITATION WERE PROPER.

IN ADDITION TO THE FACT THAT WE KNOW OF NO LEGAL PROHIBITION WHICH WOULD NULLIFY CONTRACTS AWARDED PURSUANT THERETO, IT APPEARS SIGNIFICANT THAT SUCH PROCEDURE HERETOFORE WAS CONSIDERED AND ACCEPTED BY BOTH THE SENATE AND HOUSE OF REPRESENTATIVES. INITIALLY, DURING DEBATE BY THE CONGRESS ON THE DEFENSE APPROPRIATION ACT FOR THE FISCAL YEAR 1954, THE FOLLOWING PROVISO WAS INCLUDED BY THE SENATE TO OVERCOME THE POTENTIAL EFFECT OF DEFENSE MANPOWER POLICY NO. 4, ISSUED BY THE OFFICE OF DEFENSE MOBILIZATION:

"PROVIDED FURTHER, THAT NONE OF THE FUNDS APPROPRIATED BY THIS ACT SHALL BE AVAILABLE FOR EXPENDITURE UNDER ANY CONTRACT WITHOUT REGARD TO THE PROVISIONS OF LAW RELATING TO THE MAKING, PERFORMANCE, AMENDMENT, AND MODIFICATION OF CONTRACTS, FOR THE PURPOSE OF CORRECTING OR PREVENTING ECONOMIC DISLOCATIONS.'

SEE 99 CONG.REC. 9499-9508.

THAT LANGUAGE CLEARLY WOULD HAVE PROHIBITED THE "BID-MATCHING" FEATURES MADE A PART OF THE ADOPTED PROCEDURE. HOWEVER, THE QUOTED LIMITATION LATER WAS AMENDED BY ADOPTION OF THE CONFERENCE REPORT TO READ AS FOLLOWS-

"PROVIDED FURTHER, THAT NO FUNDS HEREIN APPROPRIATED SHALL BE USED FOR THE PAYMENT OF A PRICE DIFFERENTIAL ON CONTRACTS HEREAFTER MADE FOR THE PURPOSE OF RELIEVING ECONOMIC DISLOCATIONS.'

SEE SECTION 644 OF THE ACT OF AUGUST 1, 1957, 67 STAT. 357. THE VERSION THERE APPROVED BY THE CONGRESS HAS BEEN REPEATED IN SUCCEEDING DEFENSE APPROPRIATION ACTS, INCLUDING SECTION 523 OF THE ACT OF JULY 7, 1960, 74 STAT. 353-354 AND SECTION 623 OF THE ACT OF AUGUST 17, 1961, 75 STAT. 379.

BOTH THE SENATE AND HOUSE WERE AWARE THAT UNDER THE ADOPTED AMENDMENT THE ADMINISTRATIVE OFFICE COULD FAVOR A LABOR DISTRESSED AREA FIRM WHO WOULD AGREE TO MATCH THE PRICE OF AN OTHERWISE LOW BIDDER NOT SITUATED IN AN AREA OF SURPLUS LABOR. 99 CONG.REC. 10253 AND 10343. NOTWITHSTANDING THEIR KNOWLEDGE AND UNDERSTANDING OF SUCH CONTINUING AUTHORITY, NO SUCCEEDING CONGRESS TO DATE HAS SEEN FIT TO REVOKE OR MODIFY THE PROVISO SO AS TO PROHIBIT THE PRACTICE OF "BID MATCHING," FOR THE RELIEF OF ECONOMIC DISLOCATIONS. ACCORDINGLY, WE CANNOT CONCLUDE THAT THE PROCEDURE VIOLATES OR CIRCUMVENTS ANY LEGISLATIVE INTENT.

SO FAR AS CONCERNS THE FAILURE OF THE LABOR SURPLUS AREA PROCEDURE USED TO ESTABLISH ANY PREFERENCE BETWEEN FIRMS LOCATED IN PERSISTENT LABOR SURPLUS AREAS AND THOSE LOCATED IN ONLY SUBSTANTIAL LABOR SURPLUS AREAS, THIS IS A MATTER SUBJECT TO ADMINISTRATIVE CONTROL.

IN REGARD TO YOUR PROTEST AGAINST THE DEFICIENT DRAWINGS AND SPECIFICATIONS THERE IS ENCLOSED HEREWITH A COPY OF OUR DECISION OF TODAY TO THE SECRETARY OF THE ARMY.