B-147632, MARCH 13, 1962, 41 COMP. GEN. 591

B-147632, MARCH 13, 1962, 41 COMP. GEN. 591

BIDDERS - QUALIFICATIONS - MANUFACTURER OR DEALER - TIME OF DETERMINATION WHEN THE AVAILABILITY OF THE FACILITIES OF AN ESTABLISHED MANUFACTURER TO A LOW BIDDER WAS NOT KNOWN BY THE CONTRACTING OFFICERS AT THE TIME THE LOW BID WAS REJECTED AFTER A PREAWARD SURVEY DISCLOSED THAT THE BIDDER WAS A NEWLY ESTABLISHED CONCERN WITHOUT THE FACILITIES TO QUALIFY AS A MANUFACTURER UNDER AN INVITATION INCORPORATING BY REFERENCE THE PROVISIONS OF THE WALSH-HEALEY PUBLIC CONTRACTS ACT, 41 U.S.C. 35, SUBSEQUENT CONSIDERATION OF THE AVAILABILITY OF SUCH FACILITIES FOR PURPOSES OF ASCERTAINING THE LOW BIDDER'S QUALIFICATIONS AS A REGULAR MANUFACTURER WOULD NOT BE PROPER, AND THE RESULTANT CONTRACT TO THE LOWEST QUALIFIED AND RESPONSIVE BIDDER WILL NOT BE DISTURBED.

TO AEROLOGICAL RESEARCH, INCORPORATED, MARCH 13, 1962:

REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 18, 1961, WITH ENCLOSURES, AND TO SUBSEQUENT CORRESPONDENCE, PROTESTING AGAINST THE AWARD OF A CONTRACT TO ANOTHER FIRM UNDER INVITATION FOR BIDS NO. SC-36-039-62-313 A1, ISSUED BY THE U.S. ARMY SIGNAL SUPPLY AGENCY. IT IS CONTENDED THAT YOU WERE A RESPONSIBLE BIDDER AND, SINCE YOUR OFFER WAS THE LOWEST RECEIVED, AWARD SHOULD HAVE BEEN MADE TO YOUR FIRM.

THE RECORD DISCLOSED THAT BY THE SAID INVITATION BIDS WERE SOUGHT ON THE FURNISHING OF A QUANTITY OF RADIO TELETYPEWRITER SETS. THE PROVISIONS OF STANDARD FORM 32, DATED OCTOBER 1957, WERE INCORPORATED THEREIN BY REFERENCE, WHICH PROVIDED, IN PERTINENT PART, THAT---

IF THIS CONTRACT IS FOR THE MANUFACTURE OR FURNISHING OF MATERIALS, SUPPLIES, ARTICLES, OR EQUIPMENT IN AN AMOUNT WHICH EXCEEDS OR MAY EXCEED $10,000 AND IS OTHERWISE SUBJECT TO THE WALSH-HEALEY PUBLIC CONTRACTS ACT, AS AMENDED (41 U.S.C. 35-45), THERE ARE HEREBY INCORPORATED BY REFERENCE ALL REPRESENTATIONS AND STIPULATIONS REQUIRED BY SAID ACT AND REGULATIONS ISSUED THEREUNDER BY THE SECRETARY OF LABOR, SUCH REPRESENTATIONS AND STIPULATIONS BEING SUBJECT TO ALL APPLICABLE RULINGS AND INTERPRETATIONS OF THE SECRETARY OF LABOR WHICH ARE NOW OR MAY HEREAFTER BE IN EFFECT.

THE CONTRACT WAS FOR THE MANUFACTURE OF EQUIPMENT IN EXCESS OF $10,000 IN VALUE, AND YOU REPRESENTED IN YOUR BID THAT YOU WERE A REGULAR MANUFACTURER OF THE SUPPLIES BID UPON.

THE BIDS WERE OPENED ON OCTOBER 9, 1961, AND SINCE YOU WERE THE LOW BIDDER AT $1,650,406.50 A PREAWARD FACILITIES SURVEY WAS MADE OF YOUR FIRM. IT WAS ESTABLISHED THAT YOU WERE A NEWLY FORMED CONCERN, INCORPORATED MAY 22, 1961; AND THAT YOU HAD NO PLANT OR FACILITIES IN YOUR NAME. THE SURVEY FURTHER DISCLOSED THAT CRAIG INSTRUMENT CORPORATION WAS A WHOLLY OWNED SUBSIDIARY HAVING LIMITED PLANT, FACILITIES AND PERSONNEL, WHOSE TOTAL SALES DURING THE YEARS 1959 AND 1960 APPROXIMATED $250,000.

DURING THE COURSE OF THE SURVEY GOVERNMENT REPRESENTATIVES WERE ADVISED THAT BOTH COMPANIES WOULD BE OPERATED AS SEPARATE ENTITIES. IN THAT CONNECTION, BY LETTER OF OCTOBER 17, 1961, YOU ADVISED THE PROCUREMENT PERSONNEL THAT IT WAS CONTEMPLATED THAT ON OR ABOUT NOVEMBER 1, 1961, A PUBLIC STOCK OFFERING WOULD BE ISSUED, AND THAT NEGOTIATIONS HAD BEEN UNDERTAKEN WITH CERTAIN PARTIES WITH THE VIEW TO ACQUIRING ADEQUATE PLANT FACILITIES TO PRODUCE THE SUBJECT EQUIPMENT. THE RECORD DOES NOT SHOW WHETHER, TO THE DATE OF YOUR PROTEST, ANY FACILITIES HAD BEEN ACQUIRED.

UNDER THOSE FACTS AND CIRCUMSTANCES THERE AROSE THE QUESTION WHETHER YOUR FIRM COULD BE CONSIDERED A PROPER SOURCE OF SUPPLY WITHIN THE MEANING OF THE WALSH-HEALEY PUBLIC CONTRACTS ACT, 41 U.S.C. 35, AND IMPLEMENTING REGULATIONS. PARAGRAPH 1-201.18 OF THE ARMED SERVICES PROCUREMENT REGULATION DEFINES A PROSPECTIVE CONTRACTOR, AMONG OTHERS, AS A MANUFACTURER "WHO, IF NEWLY ENTERING INTO A MANUFACTURING ACTIVITY * * * HAS MADE ALL NECESSARY PRIOR ARRANGEMENTS FOR MANUFACTURING SPACE, EQUIPMENT, AND PERSONNEL, TO PERFORM THE MANUFACTURING OPERATIONS REQUIRED FOR CONTRACT PERFORMANCE.' PARAGRAPH 2-404.2 THEREOF IMPOSES UPON ALL PROCUREMENT OFFICIALS THE DUTY TO REJECT ANY BID WHICH FAILS TO CONFORM TO THE ESSENTIAL REQUIREMENTS OF THE INVITATION AND, IN THAT CONNECTION, THE OBLIGATION TO DETERMINE THE ELIGIBILITY OF ANY BIDDER UNDER THE ABOVE- QUOTED REGULATION, SUBJECT TO REVIEW BY THE DEPARTMENT OF LABOR. PURSUANT THERETO THE CONTRACTING OFFICER FOUND YOUR FIRM TO BE UNQUALIFIED AS A MANUFACTURER AT THAT TIME FOR THE PURPOSES OF THE PROCUREMENT INVOLVED BASED UPON THE INVESTIGATION AND RECOMMENDATION OF THE CONTRACT EVALUATION BOARD. UPON REVIEW THAT FINDING WAS AFFIRMED BY THE ASSISTANT CHIEF, PROCUREMENT AND DISTRIBUTION DIVISION OF THE AGENCY. ACCORDINGLY, AWARD WAS MADE TO THE LOWEST QUALIFIED AND RESPONSIVE BIDDER.

THEREAFTER, THE DETAILS OF A MEETING OF THE OFFICERS OF YOUR ORGANIZATION AND THOSE OF CRAIG INSTRUMENT CORPORATION WERE BROUGHT TO THE ATTENTION OF THE PROCUREMENT AGENCY, WHEREBY, THROUGH A LEASE AGREEMENT, THE ENTIRE FACILITIES OF THE LATTER COMPANY WERE MADE AVAILABLE TO YOU. NOTWITHSTANDING THE FACT THAT ADMINISTRATIVE PERSONNEL WERE ADVISED, DURING THE SURVEY, THAT ONLY THE PREPRODUCTION MODELS WOULD BE MADE BY CRAIG, IT IS NOW CONTENDED THAT THE FACILITIES OF SUCH FIRM SHOULD HAVE BEEN CONSIDERED IN THE EVALUATION OF YOUR BID FOR THE PURPOSE OF ASCERTAINING YOUR QUALIFICATIONS AS A REGULAR MANUFACTURER UNDER APPLICABLE LAW AND REGULATIONS. SINCE THE AVAILABILITY OF THE CRAIG FACILITIES WAS NOT MADE KNOWN TO THE CONTRACTING AGENCY PRIOR TO AWARD, WE BELIEVE THIS FACTOR CANNOT NOW BE CONSIDERED IN DETERMINING THE PROPRIETY OF THE ADMINISTRATIVE ACTION TAKEN.

UNDER ALL THE FACTS AND CIRCUMSTANCES OF THIS CASE WE DO NOT FEEL THAT THE ADMINISTRATIVE ACTION TAKEN WAS SUCH AS TO WARRANT CANCELLATION OF THE AWARD TO TWIN COACH COMPANY AND, THEREFORE, THE RESULTANT CONTRACT WILL NOT BE DISTURBED.