B-164932, DEC. 6, 1968

B-164932, DEC. 6, 1968

TO NEWGARD INDUSTRIES, INCORPORATED:

REFERENCE IS MADE TO YOUR LETTERS OF MARCH 20 AND JULY 26, 1968, PROTESTING THE AWARD OF A CONTRACT TO AUTOSCOPE, INCORPORATED, UNDER POST OFFICE DEPARTMENT INVITATION FOR BIDS NO. 122 ISSUED FOR 7,100 SATCHELS, COLLECTORS-, CANVAS.

THE INVITATION FOR BIDS, A TOTAL SET ASIDE FOR SMALL BUSINESS CONCERNS, WAS ISSUED ON DECEMBER 18, 1967, WITH BID OPENING SET FOR JANUARY 8, 1968. AUTOSCOPE SUBMITTED THE LOW BID AND AWARD WAS MADE TO AUTOSCOPE ON JANUARY 30, 1968. ON MARCH 21, 1968, THE CONTRACTING OFFICER REQUESTED FROM AUTOSCOPE THE NAMES OF ITS SUBCONTRACTORS. THE CONTRACTING OFFICER CONSIDERED ONE MAJOR SUBCONTRACTOR TO BE A LARGE BUSINESS CONTRARY TO THE BIDDER'S CERTIFICATION. AS A RESULT THE MATTER WAS REFERRED TO THE SMALL BUSINESS ADMINISTRATION ON MARCH 28, 1968. ON APRIL 4, 1968, THE SMALL BUSINESS ADMINISTRATION CONFIRMED THAT THE SUBCONTRACTOR WAS A LARGE BUSINESS. THE CONTRACTING OFFICER NOTIFIED AUTOSCOPE THAT THE SUBCONTRACT WAS IN VIOLATION OF THE PRIME CONTRACT TERMS. ON APRIL 28, 1968, AUTOSCOPE ASKED THAT THE GOVERNMENT ACCEPT A PRICE REDUCTION OF $0.27 PER UNIT RATHER THAN REQUIRE TERMINATION OF THE SUBCONTRACT WITH THE LARGE BUSINESS. THE POST OFFICE DEPARTMENT ACCEPTED THIS PROPOSAL ON APRIL 29, 1968, AND THE CONTRACT WAS COMPLETED ON SEPTEMBER 12, 1968.

THE PROTEST AGAINST THIS CONTRACT, FORMALLY SUBMITTED TO THIS OFFICE BY THE LETTER OF JULY 26, 1968, IS BASED UPON THE UNCONTESTED FACT THAT AUTOSCOPE BY VIRTUE OF ITS USE OF A LARGE SUBCONTRACTOR DID NOT QUALIFY AS A SMALL BUSINESS FOR PURPOSES OF THIS PROCUREMENT BECAUSE AS A NON- MANUFACTURER AUTOSCOPE'S SIZE WAS DEPENDENT UPON THE SIZE OF ITS SUBCONTRACTOR.

YOU CONTEND THAT THE POST OFFICE DEPARTMENT SHOULD, PRIOR TO AWARD, HAVE ASCERTAINED THE IDENTITY OF THE SUBCONTRACTORS AUTOSCOPE PROPOSED TO USE SO THAT ITS FAILURE TO QUALIFY AS A SMALL BUSINESS CONCERN FOR PURPOSES OF THE PROCUREMENT WOULD HAVE BECOME EVIDENT BEFORE ANY CONTRACT CAME INTO BEING.

ANY QUESTION AS TO A BIDDER'S SIZE, WHETHER RAISED BY ANOTHER BIDDER OR THE CONTRACTING OFFICER, SHOULD BE DECIDED BEFORE AWARD. HOWEVER, AUTOSCOPE'S BID INDICATED THAT THE ITEM WOULD BE MANUFACTURED BY SMALL BUSINESS. THE CONTRACTING OFFICER APPARENTLY KNEW OF NO BASIS FOR QUESTIONING THAT INFORMATION AND NO PROTEST WAS RAISED PRIOR TO AWARD BY ANY OTHER PARTY. PAGE 8 OF THE INVITATION REQUIRED THE BIDDER TO FURNISH THE PLACE OF MANUFACTURE (ADDRESS), BUT DID NOT REVEAL IN ANY WAY THE SIZE OR IDENTITY OF THE MANUFACTURER. ON THE FACE OF ITS BID, AUTOSCOPE HAD MADE THE NECESSARY CERTIFICATION AND WAS BOUND TO HAVE THE SATCHELS MANUFACTURED BY A SMALL BUSINESS CONCERN. THE RESPONSIBLE PROCUREMENT OFFICIALS HAD NO KNOWLEDGE THAT THE CONTRACT WOULD NOT BE PERFORMED IN ACCORDANCE WITH ITS TERMS.

IN VIEW OF THE FOREGOING AND CONSISTENT WITH THE REGULATIONS, WE DO NOT FIND THE CONTRACTING OFFICER WAS UNDER AN AFFIRMATIVE DUTY TO GO BEHIND THE REPRESENTATIONS IN THE BID AND ASCERTAIN THAT AUTOSCOPE INTENDED TO HAVE THE SATCHELS MANUFACTURED BY A LARGE BUSINESS.

THIS OFFICE HAS HELD THAT AN AWARD MADE ON A SMALL BUSINESS SET ASIDE IN GOOD FAITH TO A CONCERN WHICH IS LATER DETERMINED TO BE LARGE IS AT BEST VOIDABLE, AT THE OPTION OF THE GOVERNMENT, NOT VOID AB INITIO. SEE B- 137689, JANUARY 21, 1959, AND 41 COMP. GEN. 252. IN THIS PARTICULAR CASE, THE EXERCISE OF THE OPTION TO VOID THE CONTRACT ON THE BASIS OF AUTOSCOPE'S SIZE OR ITS IMPROPER SELF-CERTIFICATION WOULD NOT NOW BE IN THE GOVERNMENT'S BEST INTEREST SINCE THE SATCHELS HAVE BEEN MANUFACTURED, DELIVERED, AND PAID FOR. HOWEVER, BY LETTER OF TODAY WE ARE ADVISING THE POSTMASTER GENERAL THAT IN THE FUTURE SERIOUS CONSIDERATION SHOULD BE GIVEN TO CANCELLING THE CONTRACT WHEN THE CONTRACTING AGENCY BECOMES AWARE THAT, CONTRARY TO THE CONTRACTOR'S CERTIFICATION, THE GOODS ARE NOT BEING MANUFACTURED BY SMALL BUSINESS.