B-149697, NOV. 5, 1962

B-149697, NOV. 5, 1962

TO ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

WE HAVE A REPORT DATED OCTOBER 10, 1962, WITH ENCLOSURES, FROM THE COMMISSIONER, FEDERAL SUPPLY SERVICE, IN RESPONSE TO OUR REQUEST OF AUGUST 21, 1962, FOR INFORMATION CONCERNING THE AWARD OF A CONTRACT TO ELECTRO- NEUTRONICS, INCORPORATED (ENI), PURSUANT TO A SET-ASIDE UNDER INVITATION FOR BIDS NO. FNVH-Z-41975/2/-A-5-31-62.

THE INVITATION, ISSUED MAY 8, 1962, BY THE NATIONAL BUYING DIVISION, SOLICITED BIDS FOR SEVERAL VARIETIES OF RADIOLOGICAL DETECTION INSTRUMENTS. ITEM NO. 1 CALLED FOR A QUANTITY OF RADIOLOGICAL SURVEY METERS CONFORMING TO STANDARD ITEM SPECIFICATION NO. CD-V-700. PARAGRAPH 34 PROVIDED THAT, IN ADDITION TO THE QUANTITY TO BE AWARDED UNDER THE ADVERTISED PORTION, QUANTITIES OF SEVERAL ITEMS INCLUDING ITEM NO. 1 HAD BEEN SET ASIDE FOR AWARD TO ONE OR MORE SMALL BUSINESS CONCERNS UNDER DELIVERY SCHEDULES CONFORMING TO THOSE SPECIFIED ON THE ADVERTISED PORTION. SMALL BIDDERS WERE REFERRED BY THE PARAGRAPH TO GS FORM 1773, DATED FEBRUARY 1962, A COPY OF WHICH WAS ATTACHED TO THE INVITATION.

THE GSA FORM PROVIDES THAT NEGOTIATIONS FOR AWARD OF THE SET-ASIDE PORTIONS WILL BE CONDUCTED WITH RESPONSIBLE SMALL BUSINESS CONCERNS SUBMITTING RESPONSIVE BIDS ON THE NON-SET-ASIDE PORTIONS AT A UNIT PRICE WITHIN 120 PERCENT OF THE PRICE AWARDED PURSUANT TO FORMAL ADVERTISING. IT FURTHER PROVIDES THAT FIRST PRIORITY WILL BE GIVEN TO SMALL BUSINESS CONCERNS WHICH ARE ALSO PERSISTENT LABOR SURPLUS AREA CONCERNS; SECOND PRIORITY TO SMALL BUSINESS CONCERNS WHICH ARE ALSO SUBSTANTIAL LABOR SURPLUS AREA CONCERNS; AND THIRD PRIORITY TO OTHER SMALL BUSINESS CONCERNS. THE FORM ALSO DEFINES SMALL BUSINESS CONCERN AND THE VARIOUS LABOR SURPLUS AREAS AND LABOR SURPLUS AREA CONCERNS. A PERSISTENT LABOR SURPLUS AREA CONCERN IS DEFINED AS ONE WHICH AGREES TO PERFORM OR CAUSE TO BE PERFORMED A SUBSTANTIAL PORTION OF THE CONTRACT IN PERSISTENT LABOR SURPLUS AREAS. THE CONCERN IS DEEMED TO PERFORM A SUBSTANTIAL PORTION OF THE CONTRACT IN SUCH AREAS IF THE COSTS OF MANUFACTURE OR PRODUCTION PERFORMED IN SUCH AREAS AMOUNTS TO MORE THAN HALF OF THE CONTRACT PRICE. A SUBSTANTIAL LABOR SURPLUS AREA CONCERN IS DEFINED IN THE SAME MANNER EXCEPT THAT THE TERM "SUBSTANTIAL" IS SUBSTITUTED FOR "PERSISTENT.' THE FORM FINALLY PROVIDES AT PARAGRAPH (C) AS FOLLOWS:

"/C) IDENTIFICATION OF AREAS OF PERFORMANCE. EACH BIDDER DESIRING TO BE CONSIDERED FOR AWARD AS A SMALL BUSINESS LABOR SURPLUS AREA CONCERN ON THE SET-ASIDE PORTION OF THIS PROCUREMENT SHALL IDENTIFY IN HIS BID THE GEOGRAPHICAL AREAS IN WHICH HE PROPOSES TO PERFORM, OR CAUSE TO BE PERFORMED, A SUBSTANTIAL PROPORTION OF THE PRODUCTION OF THE CONTRACT. THE DEPARTMENT OF LABOR CLASSIFICATION OF ANY SUCH AREA CHANGES AFTER THE BIDDER HAS SUBMITTED HIS BID, THE BIDDER MAY CHANGE THE AREAS IN WHICH HE PROPOSES TO PERFORM: PROVIDED, THAT HE SO NOTIFIES THE CONTRACTING OFFICER BEFORE AWARD OF THE SET-ASIDE PORTION. PRIORITY FOR NEGOTIATION WILL BE BASED UPON THE LABOR SURPLUS CLASSIFICATION OF THE DESIGNATED PRODUCTION AREAS AS OF THE TIME OF THE PROPOSED AWARD.'

AT THE BOTTOM OF THE FORM THE BIDDER IS SUPPLIED WITH BLANKS TO INDICATE THE GEOGRAPHIC AREA IN WHICH A SUBSTANTIAL PROPORTION OF THE WORK IS TO BE PERFORMED; ENI INDICATED THAT IT WOULD PERFORM A SUBSTANTIAL PROPORTION OF THE WORK AT STOCKTON, CALIFORNIA. IN ADDITION, THE PRODUCTION POINT FOR THE ITEM IN QUESTION WAS IDENTIFIED IN THE FIRM'S BID AT PARAGRAPH 8 AS EITHER STOCKTON, CALIFORNIA, OR OAKLAND,CALIFORNIA, DEPENDING ON DEPARTMENT OF LABOR CLASSIFICATION. ENI'S BID ON ITEM 1 WAS $20.90 PER UNIT AS COMPARED TO A NON-SET-ASIDE AWARDED PRICE OF $18.54 PER UNIT. THE ALLEN-JONES ELECTRONICS CORPORATION SUBMITTED A RESPONSIVE BID FOR THE ITEM OF $18.75 PER UNIT. HOWEVER, THAT FIRM PROPOSED TO PERFORM THE WORK AT GARDENA, CALIFORNIA, WHICH WAS NOT A LABOR SURPLUS AREA, EITHER AT THE TIME OF BID OPENING OR AWARD. ON THE OTHER HAND, STOCKTON, CALIFORNIA, AT WHICH A SUBSTANTIAL PORTION OF THE WORK WOULD BE PERFORMED UNDER THE ENI BID AS SUBMITTED, QUALIFIED AS A SUBSTANTIAL LABOR SURPLUS CONCERN. ACCORDINGLY, UNDER THE TERMS OF GSA FORM 1773, ENI WAS CONSIDERED TO BE IN A PREFERENCE CATEGORY FOR PARTICIPATION IN NEGOTIATIONS ON THE SET-ASIDE FOR ITEM NO. 1.

PURSUANT TO ITS USUAL PROCEDURES, GSA INVESTIGATED THE ADEQUACY OF ENI'S FACILITIES AT STOCKTON AND, AFTER DUE CONSIDERATION, AN UNFAVORABLE REPORT WAS ISSUED. THEN, STILL IN ACCORDANCE WITH NORMAL PROCEDURES, THE MATTER WAS REFERRED TO THE SMALL BUSINESS ADMINISTRATION FOR POSSIBLE ISSUANCE OF A CERTIFICATE OF COMPETENCY.

SBA REPRESENTATIVES, IN UNDERTAKING AN EXAMINATION TO DETERMINE WHETHER A C.O.C. SHOULD BE ISSUED, ADVISED ENI OF THE QUESTION AS TO THE ADEQUACY OF THE STOCKTON FACILITIES. THE FIRM THEN PROPOSED, ON JUNE 26, 1962, TO PERFORM THE WORK AT TRACY, CALIFORNIA, ANOTHER SUBSTANTIAL LABOR SURPLUS AREA. GSA REPRESENTATIVES SERIOUSLY QUESTIONED THE ABILITY OF ENI TO PRODUCE THE ITEM AT THE TRACY FACILITIES AND THE MATTER WAS AGAIN REFERRED TO SBA WHICH DETERMINED THAT ENI COULD NOT QUALIFY FOR A C.O.C. BECAUSE OF INADEQUATE FINANCING. DISCUSSIONS WITH SBA REPRESENTATIVES REVEALED THAT SBA CONSIDERED ENI TO BE OTHERWISE CAPABLE OF PRODUCING AT TRACY. AT THE SAME TIME GSA WAS ADVISED THAT THE FIRM HAD RECEIVED LINES OF CREDIT UP TO $300,000 WHICH WAS BELIEVED BY THE CONTRACTING OFFICER TO BE COMPLETELY ADEQUATE TO PERFORM A CONTRACT FOR ITEM NO. 1. THEREFORE, GSA DETERMINED THAT ENI SHOULD BE REGARDED AS A RESPONSIBLE BIDDER AND A CONTRACT WAS AWARDED ON JUNE 29, 1962, TO THAT FIRM FOR PRODUCTION OF A QUANTITY OF ITEM NO. 1 AT A PRICE OF $745,215.30. WE UNDERSTAND THAT ENI IS CONSIDERED TO BE CARRYING OUT THE CONTRACT IN AN ACCEPTABLE MANNER. ALLEN -JONES HAS PROTESTED THE GRANTING OF PRIORITY CONSIDERATION TO ENI ON THE BASIS OF A LOCATION NOT LISTED IN ITS BID.

WE HAVE PREVIOUSLY CONSIDERED THE RIGHT OF A BIDDER TO QUALIFY FOR PRIORITY CONSIDERATION ON A SET-ASIDE OF THIS TYPE ON THE BASIS OF A PLACE OF PERFORMANCE NOT INDICATED IN ITS BID. SEE 41 COMP. GEN. 160; B-146244, SEPTEMBER 6, 1961; AND B-145942, SEPTEMBER 6, 1961. IN EACH OF THE CASES CONSIDERED IN THE CITED DECISIONS THE BIDDER WAS REQUIRED TO INDICATE IN HIS BID THE INTENDED PLACE OF MANUFACTURE. IN EACH DECISION WE NOTED, HOWEVER, THAT THE INFORMATION WAS INSUFFICIENT TO DETERMINE, REGARDLESS OF WHETHER THE LOCATION LISTED QUALIFIED AS A LABOR SURPLUS AREA, THAT THE FIRM COULD QUALIFY AS A LABOR SURPLUS AREA CONCERN SINCE THE PLACE WHERE A SUBSTANTIAL AMOUNT OF THE WORK WAS TO BE PERFORMED COULD NOT BE DETERMINED ON THE BASIS OF THE INFORMATION SUPPLIED. WE CONCLUDED IN THOSE CASES, THEREFORE, THAT WE COULD NOT OBJECT TO THE ACTION TAKEN BY THE CONTRACTING AGENCY IN EACH CASE. WE MADE IT CLEAR, HOWEVER, THAT IN OUR JUDGMENT FUTURE INVITATIONS INVOLVING LABOR SURPLUS SET-ASIDES SHOULD CONTAIN CLEAR STATEMENTS AS TO THE INFORMATION TO BE FURNISHED BY THE BIDDERS, INCLUDING SUPPORTING DATA WHICH MIGHT BE REQUIRED, THE REQUIRED TIME OF SUBMISSION, AND THE EFFECT OF FAILURE TO FURNISH THE REQUIRED INFORMATION.

WE ASSUME THAT GSA FORM 1773 WAS DEVELOPED AND INCLUDED IN THE INVITATION AS A RESULT OF OUR VIEWS EXPRESSED IN THE CITED DECISIONS. WE FURTHER ASSUME, THEREFORE, THAT THE PURPOSE OF THE FORM WAS TO PERMIT A DETERMINATION, ON THE BASIS OF DATA CONTAINED IN THE BID, OF THE PRIORITY CATEGORY INTO WHICH ANY GIVEN BIDDER WOULD FALL. WE NOTE ALSO THAT IN PARAGRAPH (C) OF THE FORM, QUOTED ABOVE, THE BIDDER IS GIVEN AN OPPORTUNITY TO CHANGE THE SITE OR SITES OF PERFORMANCE LISTED ON THE FORM IF THE CLASSIFICATION OF SUCH AREA CHANGES AFTER SUBMISSION OF HIS BID. WE ASSUME THAT UNDER THE FAMILIAR RULE OF CONSTRUCTION, ESPRESSIO UNIUS EXCLUSIO ALTERIUS, SUCH AN EXPRESSION OF SITUATIONS PERMITTING A CHANGE IMPLIES AN EXCLUSION FROM THE PERMISSION OF ALL OTHER SITUATIONS NOT EXPRESSED. SEE 17 C.J.S., CONTRACTS, SECTION 312. ACCORDINGLY, IN OUR JUDGMENT, THE PROVISIONS OF THE INVITATION, AS EXPRESSED IN THE FORM, SHOULD PROPERLY HAVE BEEN INTERPRETED TO PRECLUDE ENI FROM CHANGING THE SITE OF SUBSTANTIAL PERFORMANCE LISTED IN THE FORM SINCE THE ONLY EXPRESSED CONDITION UNDER WHICH A CHANGE WAS AUTHORIZED, A CHANGE IN CLASSIFICATION, DID NOT APPLY.

WE BELIEVE THAT THE FOREGOING REPRESENTS A PROPER INTERPRETATION OF THE LANGUAGE OF THE FORM PROVISION. WE ARE NOT SURE, HOWEVER, THAT THIS NECESSARILY REPRESENTS THE INTENT OF THE AGENCY IN ISSUING THE FORM. CERTAINLY WE BELIEVE THAT THE FORM SHOULD BE THOROUGHLY REEXAMINED WITH A VIEW TO MODIFYING IT TO CONFORM TO THE STANDARDS SET OUT IN OUR EARLIER DECISIONS. SEE ESPECIALLY 41 COMP. GEN. 160, 165.

BECAUSE OF THE TIME EXPIRED SINCE AWARD, THE APPARENT SUCCESSFUL WOULD OTHERWISE RESULT IN OBTAINING THE URGENTLY NEEDED ITEMS UNDER PROCUREMENT, WE WILL NOT REQUIRE CANCELLATION OF THE AWARD TO ENI. HOWEVER, FUTURE AWARDS UNDER SIMILAR CIRCUMSTANCES SHOULD BE GUIDED BY THE FOREGOING CRITERIA.