B-140186, SEP. 1, 1959

B-140186, SEP. 1, 1959

TO TRIO-TECH COMPANY:

BY LETTERS OF JULY 9, 20, AND 24, 1959, REFERENCE TT-NAV 59010, YOU HAVE PROTESTED THE REJECTION OF YOUR LOW BID SUBMITTED PURSUANT TO INVITATION NO. 600-1502-59, ISSUED FEBRUARY 13, 1959, BY THE NAVY PURCHASING OFFICE, WASHINGTON, D.C., FOR 100 LIQUID OXYGEN SYSTEM TESTERS.

UPON OPENING OF BIDS ON MARCH 13, 1959, IT WAS FOUND THAT YOUR BID, IN THE AMOUNT OF $39,766, WAS LOW. HOWEVER, THAT BID WAS REJECTED (AND AWARD WAS MADE TO ANOTHER BIDDER ON MAY 22, 1959), AS YOU WERE ADVISED BY LETTER OF JUNE 30, 1959, FROM THE CONTRACTING OFFICER, BECAUSE THE CONTRACTING OFFICER FOUND THAT HE WAS UNABLE TO MAKE AN AFFIRMATIVE DETERMINATION THAT YOU WERE A RESPONSIBLE BIDDER WITHIN THE MEANING OF SECTION 1-903 OF THE ARMED SERVICES PROCUREMENT REGULATION, AS REQUIRED BY SECTION 1-902 OF SUCH REGULATION. SECTION 1-903.1 OF ASPR PROVIDES, IN PART, THAT A BIDDER IN ORDER TO BE ELIGIBLE FOR AWARD OF A CONTRACT FOR SUPPLIES MUST BE A MANUFACTURER OR REGULAR DEALER.

A MANUFACTURER IS DEFINED AT SECTION 1-201.9 (B) (I) AS A PERSON OR FIRM:

"/A) WHO OWNS, OPERATES, OR MAINTAINS A FACTORY OR ESTABLISHMENT THAT PRODUCES ON THE PREMISES THE MATERIALS, SUPPLIES, ARTICLES, OR EQUIPMENT REQUIRED UNDER THE CONTRACT OR OF THE GENERAL CHARACTER DESCRIBED BY THE SPECIFICATIONS; OR

"/B) WHO, IF NEWLY ENTERING INTO A MANUFACTURING ACTIVITY OF THE TYPE DESCRIBED IN (A) ABOVE, HAS MADE ALL NECESSARY PRIOR ARRANGEMENTS FOR MANUFACTURING SPACE, EQUIPMENT, AND PERSONNEL, TO PERFORM THE MANUFACTURING OPERATIONS REQUIRED FOR CONTRACT PERFORMANCE; AND WHO, PRIOR TO BEING AWARDED A CONTRACT, SATISFIES THE CONTRACTING OFFICER THAT IT QUALIFIES UNDER PARAGRAPH (A) OR (B) ABOVE; * * *.'

THE UNCONTESTED FACT APPEARS TO BE THAT YOU ARE A FIRM JUST ENTERING INTO A MANUFACTURING ACTIVITY TO PRODUCE THE KIND OF SUPPLIES WHICH ARE THE SUBJECT MATTER OF THE INVITATION FOR BIDS. YOU ALLEGE, HOWEVER, THAT YOU ARE QUALIFIED AS A MANUFACTURER UNDER (B) ABOVE. THE CONTRACTING OFFICER, ON THE OTHER HAND, CONTENDS YOUR FIRM DOES NOT QUALIFY THEREUNDER BECAUSE IT HAD NOT, AT THE TIME IN QUESTION, DEMONSTRATED THAT IT HAD PERSONNEL WITH THE ABILITY TO PERFORM IN ACCORDANCE WITH SPECIFICATION REQUIREMENTS, AND BECAUSE IT HAD NOT EMPLOYED PERSONNEL FOR THE PORTION OF THE PROJECT TO BE ACCOMPLISHED BY THE COMPANY.

THE WALSH-HEALEY PUBLIC CONTRACTS ACT OF JUNE 30, 1936, AS AMENDED, 40 U.S.C. 35, PROVIDES IN PART THAT, WITH CERTAIN EXCEPTIONS NOT HERE MATERIAL, EVERY CONTRACT EXCEEDING $10,000 IN AMOUNT ENTERED INTO BY ANY GOVERNMENT AGENCY FOR THE PROCUREMENT OF SUPPLIES SHALL CONTAIN A STIPULATION THAT THE CONTRACTOR IS A MANUFACTURER OF OR REGULAR DEALER IN SUCH SUPPLIES AND THAT ANY BREACH OF SUCH STIPULATION SHALL RENDER THE CONTRACTOR LIABLE FOR LIQUIDATED DAMAGES, AND CONSTITUTE GROUNDS FOR CANCELLATION OF THE CONTRACT. THE ACT, AS AMENDED, FURTHER PROVIDES AT 41 U.S.C. 38 THAT THE SECRETARY OF LABOR SHALL HAVE AUTHORITY TO ADMINISTER THE PROVISIONS OF THE ACT, AND TO MAKE SUCH RULES AND REGULATIONS AS MAY BE NECESSARY TO THAT END.

UNDER THAT AUTHORITY, THE SECRETARY OF LABOR HAS ISSUED REGULATIONS APPEARING AT 41 C.F.R. 301.101 WHICH PROVIDE:

"/A) A MANUFACTURER IS A PERSON WHO OWNS, OPERATES, OR MAINTAINS A FACTORY OR ESTABLISHMENT THAT PRODUCES ON THE PREMISES THE MATERIALS, SUPPLIES, ARTICLES, OR EQUIPMENT REQUIRED UNDER THE CONTRACT AND OF GENERAL CHARACTER DESCRIBED BY THE SPECIFICATIONS.

"/C) (1) EXCEPT AS HEREINAFTER PROVIDED, EVERY BID RECEIVED FROM ANY BIDDER WHO DOES NOT FALL WITHIN ONE OF THE FOREGOING CATEGORIES SHALL BE REJECTED BY THE CONTRACTING OFFICER.' FURTHER, THE "WALSH HEALEY PUBLIC CONTRACTS ACT RULINGS AND INTERPRETATIONS" NO. 3, PUBLISHED BY THE DEPARTMENT OF LABOR, STATES AT SECTION 29:

"/A) THE RESPONSIBILITY OF DETERMINING WHETHER OR NOT A BIDDER IS QUALIFIED AS A MANUFACTURER OR AS A REGULAR DEALER UNDER THE PUBLIC CONTRACTS ACT RESTS IN THE FIRST INSTANCE WITH THE CONTRACTING AGENCY. HOWEVER, ANY DECISION WHICH THE CONTRACTING OFFICER MIGHT TAKE IS SUBJECT TO REVIEW BY THE DEPARTMENT OF LABOR WHICH IS CHARGED WITH THE ADMINISTRATION OF THE ACT. THE DEPARTMENT OF LABOR MAY DETERMINE THE QUALIFICATIONS OF A BIDDER IN THE FIRST INSTANCE IN THE ABSENCE OF ANY DECISION BY THE CONTRACTING OFFICER.'

WE REGARD IT AS CLEAR FROM THE FOREGOING THAT A DETERMINATION ASTO A BIDDER'S QUALIFICATIONS AS A MANUFACTURER IS BY LAW AND REGULATION THE RESPONSIBILITY OF THE CONTRACTING OFFICER, SUBJECT TO REVIEW BY THE DEPARTMENT OF LABOR, WHICH HAS THE FINAL AUTHORITY. THEREFORE, NOTWITHSTANDING WHAT WE MIGHT HAVE DETERMINED AS TO YOUR QUALIFICATIONS AS A MANUFACTURER UNDER THE EVIDENCE SUBMITTED, THERE APPEARS TO HAVE BEEN PRESENTED NO LEGAL BASIS UPON WHICH WE MIGHT QUESTION THE VALIDITY OF THE AWARD MADE. SEE B-119163, APRIL 20, 1954.