B-158227, JAN. 28, 1966

B-158227, JAN. 28, 1966

TO HUDSON AND CREYKE:

REFERENCE IS MADE TO YOUR LETTERS OF DECEMBER 23, 1965, AND JANUARY 20, 1966, ON BEHALF OF CARPENTER BROTHERS, PROTESTING AWARD TO ANOTHER BIDDER ON GENERAL SERVICES ADMINISTRATION CONSTRUCTION PROJECT NO. 16076, SOUTHERN UTILIZATION RESEARCH LABORATORY, DEPARTMENT OF AGRICULTURE, NEW ORLEANS, LOUISIANA.

SECTIONS 2-09 (A) AND (I) OF THE SPECIAL CONDITIONS OF THE INVITATION FOR BIDS REQUIRE THAT BIDDERS SUBMIT BY THE TIME SET FOR BID OPENING, WHICH WAS 3 P.M. CST, DECEMBER 2, 1965, THE NAMES AND ADDRESSES OF THE FIRMS TO WHOM IT IS PROPOSED TO SUBCONTRACT CERTAIN NAMED CATEGORIES OF WORK, AND PROVIDE THAT FAILURE TO TIMELY SUBMIT THE LIST OF SUBCONTRACTORS SHALL CAUSE THE BID TO BE REJECTED AS NONRESPONSIVE TO THE INVITATION. SECTION 2-09 (A) FURTHER STIPULATES THAT "EXCEPT AS OTHERWISE PROVIDED HEREIN, THE SUCCESSFUL BIDDER AGREES THAT HE WILL NOT HAVE ANY OF THE LISTED CATEGORIES OF WORK INVOLVED IN THE PERFORMANCE OF THIS CONTRACT PERFORMED BY ANY SUBCONTRACTOR OTHER THAN THE SUBCONTRACTOR NAMED FOR THE PERFORMANCE OF SUCH WORK.' SECTION 2-09 (F) OF SAID SPECIAL CONDITIONS PROVIDES THAT NO SUBSTITUTIONS FOR THE FIRMS NAMED WILL BE PERMITTED EXCEPT IN UNUSUAL SITUATIONS AND THEN ONLY UPON THE SUBMISSION IN WRITING TO THE CONTRACTING OFFICER OF A COMPLETE JUSTIFICATION THEREFOR AND RECEIPT OF THE CONTRACTING OFFICER'S WRITTEN APPROVAL.

THE LOW BID WAS SUBMITTED BY MIKE BRADFORD AND COMPANY, INC., IN THE AMOUNT OF $989,000, AND CARPENTER BROTHERS WAS SECOND LOW AT $1,054,000. BRADFORD SUBMITTED THE REQUIRED LIST OF PROPOSED SUBCONTRACTORS AND LISTED ELECTROLINE NATIONAL, INC., AS THE SUBCONTRACTOR FOR THE ELECTRICAL WORK CATEGORY. THE RECORD DISCLOSES THAT ELECTROLINE IS A FLORIDA CORPORATION, CHARTERED APRIL 23, 1965, AND THAT ITS OFFICERS AND DIRECTORS ARE MIKE BRADFORD, PRESIDENT, JAMES C. WADSWORTH, VICE PRESIDENT; AND SUSAN K. (MRS. M.) BRADFORD,SECRETARY-TREASURER. IT APPEARS FURTHER THAT THE KEY PERSONNEL OF THIS CORPORATION HAD ALL PREVIOUSLY WORKED IN THE ELECTRICAL DEPARTMENTS OF MIKE BRADFORD AND COMPANY, INC., AND BRADFORD OVERSEAS, INC., AND THAT ADMINISTRATIVE OFFICIALS OF BRADFORD FORMED ELECTROLINE TO HANDLE CONTRACTS THAT WERE SPECIFICALLY ELECTRICAL, AS WELL AS LARGE ELECTRICAL SUBCONTRACTS.

IN PROTESTING ANY AWARD TO BRADFORD, YOU CONTEND THAT BRADFORD'S BID SHOULD BE REJECTED AS NONRESPONSIVE FOR VIOLATION OF SECTION 2-09 OF THE SPECIAL CONDITIONS OF THE IFB. YOU HAVE FORWARDED A COPY OF A LETTER DATED DECEMBER 13, 1965, ADDRESSED TO MR. ROBERT D. CARPENTER OF CARPENTER BROTHERS BY FISCHBACH AND MOORE, INC., INDICATING THAT THE ELECTRICAL WORK WAS OFFERED TO FISCHBACH AND MOORE BY BRADFORD AFTER THE BIDS WERE OPENED, AND IT IS YOUR CONTENTION THAT THIS EVIDENCE OF BID SHOPPING SHOWS A LACK OF GOOD FAITH BY BRADFORD IN LISTING ELECTROLINE AS THE ELECTRICAL SUBCONTRACTOR, AND AN INTENTION TO ATTEMPT TO SUBSTITUTE ANOTHER SUB IF A BETTER PRICE COULD BE OBTAINED. IT IS YOUR POSITION THAT IT IS NOT ENOUGH THAT A BID BE RESPONSIVE ON ITS FACE AND THAT SECTION 1-2.404-1 (B) (6) OF THE FEDERAL PROCUREMENT REGULATIONS CLEARLY REQUIRES THE REJECTION OF BIDS SUBMITTED IN BAD FAITH, AND YOU LIKEN THE PRESENT CASE TO THOSE IN WHICH A BIDDER FAILS TO SUBMIT A BONA FIDE CERTIFICATION OF SMALL BUSINESS COMPETENCY, CITING 40 COMP. GEN. 550 AND 41 COMP. GEN. 47.

THE PROCEDURE REQUIRING THE LISTING OF PROPOSED SUBCONTRACTORS FOR VARIOUS CATEGORIES OF WORK UNDER CERTAIN CONSTRUCTION CONTRACTS WAS INAUGURATED ON A TRIAL BASIS BY GSA IN 1963 AND IS CURRENTLY COVERED BY SECTION 5B-2.202-70 OF THE GSA PROCUREMENT REGULATIONS (41 CFR 5B 2.202- 70). WE HAVE TAKEN THE POSITION THAT THE PROVISION FOR LISTING SUBCONTRACTORS IS A MATERIAL REQUIREMENT AND THAT FAILURE TO FURNISH SAID LIST RENDERS A BID NONRESPONSIVE AND PROPERLY FOR REJECTION, AS PROVIDED IN THE INVITATION. 43 COMP. GEN. 206; B-156194, MARCH 4, 1965, AND B- 156426, MAY 10, 1965, ALL OF WHICH DECISIONS ARE CITED BY YOU. IT SHOULD BE NOTED THAT THESE DECISIONS RELATE TO THE MATERIALITY OF THE LISTING REQUIREMENT AND WHETHER THE SUBCONTRACTORS WERE, IN FACT, LISTED AS REQUIRED. ON THIS BASIS, BRADFORD'S BID WAS CLEARLY RESPONSIVE ON ITS FACE.

IN QUOTING FROM SECTION 2-09 (A) OF THE SPECIAL CONDITIONS OF THE IFB IN YOUR LETTER OF DECEMBER 23, 1965, CONCERNING THE BIDDERS AGREEMENT NOT TO HAVE WORK PERFORMED BY ANY SUBCONTRACTOR OTHER THAN THE ONE LISTED, YOU HAVE OMITTED "EXCEPT AS OTHERWISE PROVIDED HEREIN * * *.' A PERTINENT PROVISION "OTHERWISE" IS CONTAINED IN SECTION 2 09 (F), WHICH PERMITS SUBSTITUTION IN UNUSUAL SITUATIONS, UPON SUBMISSION BY THE BIDDER OF COMPLETE WRITTEN JUSTIFICATION THEREFOR AND APPROVAL BY THE CONTRACTING OFFICER, AS STATED ABOVE. THIS SPECIFICALLY RECOGNIZES THAT SUBSTITUTION MAY BE JUSTIFIED IN SOME CASES AND PROVIDES A METHOD FOR ACCOMPLISHING SAME. SECTION 1-2.301 OF THE FEDERAL PROCUREMENT REGULATIONS, TITLE ,RESPONSIVENESS OF BIDS," PROVIDES THAT "TO BE CONSIDERED FOR AWARD, A BID MUST COMPLY IN ALL MATERIAL RESPECTS WITH THE INVITATION FOR BIDS SO THAT, BOTH AS TO THE METHOD AND TIMELINESS OF SUBMISSION AND AS TO THE SUBSTANCE OF ANY RESULTING CONTRACT, ALL BIDDERS MAY STAND ON AN EQUAL FOOTING AND THE INTEGRITY OF THE FORMAL ADVERTISING SYSTEM MAY BE MAINTAINED.' IN THE PRESENT CASE THE REPRESENTATIVE OF THE BRADFORD COMPANY WHO SOLICITED THE BID FROM FISCHBACH AND MOORE STATED THAT HE WAS UNDER THE IMPRESSION THAT THE SUBSTITUTION COULD BE MADE. HOWEVER, HE WAS ADVISED BY GSA THAT ELECTROLINE NATIONAL WAS CONSIDERED TO BE A RESPONSIBLE CONTRACTOR AND THAT IF THE CONTRACT WAS AWARDED TO BRADFORD, THE ELECTRICAL WORK THROUGHOUT THE DURATION OF THE PROJECT MUST BE PERFORMED BY ELECTROLINE. SINCE BRADFORD COMPLIED FULLY WITH THE REQUIREMENT FOR LISTING SUBCONTRACTORS, AND NO SUBSTITUTION IN THE ELECTRICAL CATEGORY WILL BE PERMITTED, ANY RESULTING CONTRACT WOULD NOT BE ON TERMS OTHER THAN THOSE OFFERED OTHER BIDDERS.

WITH REFERENCE TO THE SOLICITATION OF ANOTHER ELECTRICAL BID AS EVIDENCE OF BAD FAITH ON THE PART OF BRADFORD, IT WOULD APPEAR, IN VIEW OF THE CLOSE RELATIONSHIP OF THE TWO FIRMS, THAT A LEGITIMATE REASON, ARISING SUBSEQUENT TO BID OPENING, COULD EXIST FOR WISHING TO MAKE A SUBSTITUTION. WHETHER THE CONTRACTING OFFICER WOULD APPROVE THE SUBSTITUTION IS ANOTHER QUESTION, BUT IN OUR OPINION, THE MERE FACT THAT ANOTHER ELECTRICAL BID WAS SOLICITED AFTER BID OPENING IS NOT, OF ITSELF, PROOF OF BAD FAITH IN THE SUBMISSION OF A BID.

THE CASES CONSIDERED IN 40 COMP. GEN. 550 AND 41 COMP. GEN. 47 INVOLVE NOT CERTIFICATES OF COMPETENCY BUT SELF-CERTIFICATION OF SIZE STATUS. SECTION 121.3-8 OF THE SMALL BUSINESS SIZE STANDARD REGULATIONS (13 CFR 121.3-8) DEFINES SMALL BUSINESS FOR GOVERNMENT PROCUREMENT AND PROVIDES IN PERTINENT PART THAT "IN THE SUBMISSION OF A BID OR PROPOSAL ON A GOVERNMENT PROCUREMENT, A CONCERN WHICH MEETS THE CRITERIA PROVIDED IN THIS SECTION MAY REPRESENT THAT IT IS A SMALL BUSINESS. IN THE ABSENCE OF A WRITTEN PROTEST OR OTHER INFORMATION WHICH WOULD CAUSE HIM TO QUESTION THE VERACITY OF THE SELF CERTIFICATION, THE CONTRACTING OFFICER SHALL ACCEPT THE SELF CERTIFICATION AT FACE VALUE FOR THE PARTICULAR PROCUREMENT INVOLVED.' AS STATED IN 40 COMP. GEN. 550, AT PAGE 553, THE SELF- CERTIFICATION PROCEDURE WAS DESIGNED TO SIMPLIFY AND EXPEDITE SIZE DETERMINATIONS AND PROCUREMENT PROCESSES AND IT WAS HOPED BY SBA THAT 95 TO 99 PERCENT OF THE CASES WOULD BE HANDLED UNDER THIS PROCEDURE. THE ABOVE REGULATION THEREFORE PLACES A VERY HIGH PREMIUM ON BONA FIDE SIZE CERTIFICATIONS, SINCE IT IS POSSIBLE FOR A CONCERN WHICH IS NOT SMALL BUSINESS TO RECEIVE AN AWARD ON A SMALL BUSINESS SET-ASIDE WHICH IS CONTRARY TO LAW AND PREJUDICIAL TO THE RIGHTS OF OTHER BIDDERS. THE DECISION IN 40 COMP. GEN. 550 INVOLVED A FIRM WHICH WAS NOT SMALL BUSINESS AT THE TIME OF BID OPENING AND WHICH REPRESENTED IN ITS BID THAT IT WAS NOT SMALL-BUSINESS CONCERN, BUT WHICH BECAME A SMALL BUSINESS PRIOR TO AWARD, DUE TO A CHANGE IN THE DEFINITION OF SMALL BUSINESS. IN THAT CASE WE HELD THAT THE BID WAS NONRESPONSIVE ON ITS FACE AND THAT AN AWARD TO SUCH BIDDER WOULD BE DETRIMENTAL TO THE EFFECTIVENESS OF THE SMALL BUSINESS SET-ASIDE PROCEDURE AND POSSIBLY PREJUDICIAL TO THE INTERESTS OF OTHER LARGE CONCERNS WHO DID NOT SUBMIT BIDS BUT COULD HAVE QUALIFIED UNDER THE CHANGED DEFINITION. IN 41 COMP. GEN. 47 A BIDDER CERTIFIED HIMSELF AS A SMALL BUSINESS CONCERN ALTHOUGH HE WAS ON NOTICE BY THE SMALL BUSINESS ADMINISTRATION PRIOR TO THE SUBMISSION OF THE BID THAT HIS SIZE STATUS WAS SUBJECT TO QUESTION. THIS BIDDER TOOK ACTION AFTER OPENING OF BIDS FOR THE SOLE PURPOSE OF MEETING THE SMALL BUSINESS SIZE CRITERIA AND RECEIVED THE AWARD. SINCE IT WAS ESTABLISHED THAT HE WAS NOT IN FACT A SMALL BUSINESS AT THE TIME THE BIDS WERE OPENED AND WAS ON NOTICE OF THE QUESTION AS TO HIS SIZE STATUS, WE CONCLUDED THAT THE GENERAL RULE THAT THE DETERMINATION OF ELIGIBILITY AS A SMALL BUSINESS CONCERN IS MADE AS OF THE DATE OF AWARD SHOULD NOT BE FOLLOWED AND DIRECTED CANCELLATION OF THE AWARD.

YOU CONTEND THAT THESE CASES ARE ANALOGOUS TO THE CASE UNDER CONSIDERATION IN THREE RESPECTS, (1) THE FAILURE TO COMPLY WITH A BID REQUIREMENT IN GOOD FAITH, (2) AN OVERT ACT SUBSEQUENT TO BID OPENING THAT ESTABLISHES THE LACK OF GOOD FAITH, AND (3) THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM IS ADVERSELY AFFECTED. WE FAIL TO SEE THE ANALOGY. THE PURPOSE OF THE SELF-CERTIFICATION OF SIZE STATUS IS TO ATTEMPT TO INSURE COMPLIANCE WITH STATUTORY REQUIREMENTS THAT CERTAIN CONTRACTS BE AWARDED TO A SPECIFIC CLASS OF ELIGIBLE BIDDERS, I.E., SMALL BUSINESSES. A CERTIFICATION MADE IN BAD FAITH CAN EASILY RESULT IN AN AWARD BEING MADE TO A BIDDER WHO IS PROHIBITED BY LAW AND REGULATION FROM RECEIVING SAME, WHICH COMPLETELY DISRUPTS THE SMALL BUSINESS SET ASIDE PROCEDURES, IS PREJUDICIAL TO THE RIGHTS OF OTHER BIDDERS AND HAS A VERY DEFINITE ADVERSE EFFECT ON THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM. ON THE OTHER HAND, THE REGULATIONS AND PROVISIONS OF THE IFB RELATING TO LISTING OF SUBCONTRACTORS ARE NOT DESIGNED TO CHANNEL AN AWARD TO A CERTAIN CLASS OF BIDDERS OR TO DETERMINE THE ELIGIBILITY OF PRIME CONTRACTORS TO RECEIVE AN AWARD. THEY ARE DESIGNED TO ELIMINATE CERTAIN UNDESIRABLE EFFECTS OF BID SHOPPING AFTER THE SUCCESSFUL BIDDER HAS BEEN ASCERTAINED. GENERALLY THE QUESTION OF WHETHER A BID IS RESPONSIVE IS DETERMINED ON THE BASIS OF WHETHER THE BID, ON ITS FACE, COMPLIES IN ALL MATERIAL RESPECTS WITH THE REQUIREMENTS SET FORTH IN THE INVITATION FOR BIDS. IT IS NOT DETERMINED FROM ACTIONS WHICH MAY BE TAKEN BY THE BIDDER AFTER BIDS ARE OPENED.

THE GOVERNMENT'S INTEREST IS ADEQUATELY PROTECTED AGAINST THE ABUSES OF BID SHOPPING BY THE PROVISIONS IN THE INVITATION WHICH PERMIT SUBCONTRACTOR SUBSTITUTIONS ONLY IN UNUSUAL CIRCUMSTANCES, AND ONLY IF APPROVED IN WRITING BY THE CONTRACTING OFFICER. BRADFORD'S BID WAS COMPLETE AND FULLY RESPONSIVE TO THE TERMS OF THE INVITATION WHEN OPENED. ITS SUBSEQUENT ATTEMPT TO OBTAIN A NEW QUOTATION FROM AN UNLISTED SUBCONTRACTOR WAS WHOLLY INEFFECTUAL AND COULD HAVE NO BEARING ON THE QUESTION OF RESPONSIVENESS. IN THE CIRCUMSTANCES, WE PERCEIVE NO ADVERSE EFFECT ON THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM.

FOR THE REASONS STATED WE CONCLUDE THAT THE BID OF MIKE BRADFORD AND COMPANY, INC., AS IT RELATES TO THE LISTING OF SUBCONTRACTORS, IS FULLY RESPONSIVE TO THE INVITATION, AND THAT AN AWARD TO BRADFORD WOULD NOT CONTRAVENE THE CITED DECISIONS OF THIS OFFICE. THE PROTEST OF CARPENTER BROTHERS IS THEREFORE DENIED.