B-141710, MARCH 1, 1960, 39 COMP. GEN. 609

B-141710, MARCH 1, 1960, 39 COMP. GEN. 609

CONTRACTS - AWARDS - TIE BIDS - SURPLUS AREA CONCERNS - LOCATION DETERMINATION AN AWARD, AS THE RESULT OF DRAWING LOTS, TO A BIDDER WHOSE TIE BID WAS SUBMITTED BY ITS REPRESENTATIVE AND ONLY EMPLOYEE IN A LABOR SURPLUS AREA, BUT WHOSE MAIN PLACE OF BUSINESS FROM WHICH THE ITEM WAS TO BE INVOICED WAS LOCATED ELSEWHERE, MAY NOT BE CONSIDERED IMPROPER UNDER GENERAL SERVICES ADMINISTRATION GENERAL REGULATION NO. 18 WHICH RECOGNIZES THAT THE LOCATION OF THE BIDDING FIRM IN A LABOR SURPLUS AREA CONTROLS IN THE EVENT OF TIE BIDS; HOWEVER, A CONTEMPLATED REVISION OF THE REGULATION WHICH WILL GIVE PRIORITY WITH RESPECT TO THE LABOR AREA CONCERN, IN THE EVENT OF TIE BIDS, ONLY IF THE ITEMS ARE TO BE DELIVERED FROM A PLANT OR WAREHOUSE IN A LABOR SURPLUS AREA AT WHICH THE ITEMS ARE PRODUCED OR REGULARLY STOCKED AND SOLD WOULD BE DESIRABLE TO CORRECT THE PRESENT INEQUITIES RESULTING FROM THE MERE SUBMISSION OF BIDS ADDRESSED FROM A LABOR SURPLUS AREA.

TO ARTHUR S. LAPINE AND COMPANY, MARCH 1, 1960:

WE REFER TO YOUR LETTER OF JANUARY 14, 1960, WITH ENCLOSURES, QUESTIONING THE MANNER OF AWARD OF A CONTRACT UNDER INVITATION FOR BIDS NO. 3020-60 ISSUED NOVEMBER 5, 1959, BY THE NATIONAL BUREAU OF STANDARDS FOR A RECORDING SPECTROPHOTOMETER WITH ACCESSORIES.

BIDS WERE OPENED ON NOVEMBER 17, 1959. OF THE EIGHT BIDS RECEIVED, SEVEN CONTAINED THE IDENTICAL BID PRICE OF $8,825. EACH OF THE TIED BIDDERS OFFERED THE ITEM AS MANUFACTURED BY BECKMAN INSTRUMENTS, INC., OF FULLERTON, CALIFORNIA. ON THE BASIS OF THE ADDRESS OF EACH BIDDER SHOWN ON HIS BID, THE CONTRACTING OFFICER FOUND THAT TWO OF THE TIED BIDDERS WERE LOCATED IN AREAS OF SUBSTANTIAL LABOR SURPLUS AS DETERMINED BY THE SECRETARY OF LABOR PURSUANT TO 32A CRF DMP 4A1. UNDER GENERAL SERVICES ADMINISTRATION GENERAL REGULATION NO. 18 ISSUED JANUARY 27, 1958, A CONCERN LOCATED IN A LABOR SURPLUS AREA IS GRANTED PRIORITY WITH RESPECT TO THE AWARD OF A CONTRACT IN THE EVENT OF TIE BIDS. LOTS, THEREFORE, WERE DRAWN TO DETERMINE WHICH OF THE TWO BIDDERS LOCATED IN LABOR SURPLUS AREAS SHOULD RECEIVE THE AWARD. AS A RESULT, AWARD WAS MADE ON NOVEMBER 24, 1959, TO SCHAAR AND COMPANY WHICH OFFERED DELIVERY IN 15 TO 30 DAYS.

IN AN ENCLOSURE TO YOUR LETTER OF JANUARY 14, IT IS POINTED OUT THAT ALTHOUGH THE ADDRESS SHOWN ON THE SUCCESSFUL BID WAS 1339 YORKSHIRE ROAD, DETROIT, MICHIGAN, THE SCHAAR MAIN OFFICE IS IN CHICAGO, AND THE SALE WOULD BE INVOICED FROM THE LATTER LOCATION. YOU ALSO NOTE THAT THE INSTRUMENT IS MANUFACTURED IN CALIFORNIA AND UNDER CUSTOMARY PROCEDURES WOULD BE INSTALLED AND SERVICED BY WASHINGTON AREA EMPLOYEES.

INVESTIGATION CONDUCTED WITH RESPECT TO THE MATTER HAS REVEALED THAT THE INVITATION FOR BIDS WAS FURNISHED BY THE NATIONAL BUREAU OF STANDARDS TO SCHAAR AND COMPANY AT A SILVER SPRING, MARYLAND, ADDRESS. THE BID OF THE SUCCESSFUL FIRM WAS SUBMITTED BY ITS DISTRICT MANAGER AND ONLY EMPLOYEE IN THE DETROIT, MICHIGAN, AREA. THE ADDRESS USED IN THE BID IS THE HOME OF THE DISTRICT MANAGER WHO INDICATED THAT HIS FUNCTION IS LIMITED TO SALES WHILE THE DELIVERY FUNCTION IS PERFORMED BY THE FIRM'S MAIN OFFICE IN CHICAGO. THE MANAGER COULD NOT EXPLAIN WHY THE INVITATION WAS FURNISHED TO HIM FOR COMPLETION AND SUBMISSION OTHER THAN THE FACT THAT HE WAS THE SENIOR AREA MANAGER FOR SCHAAR AND COMPANY.

THE POLICY FOLLOWED IN GIVING PRECEDENCE TO BIDDERS IN AREAS OF SUBSTANTIAL LABOR SURPLUS DERIVES FROM DEFENSE MANPOWER POLICY NO. 4, 32A CFR DMP 4B4 WHICH PROVIDES THAT ALL PROCUREMENT AGENCIES SHALL:

IN THE EVENT OF TIE BIDS OR OFFERS ON ANY PROCUREMENT, AWARD THE CONTRACT TO THE FIRM LOCATED IN A LABOR SURPLUS AREA, OTHER THINGS BEING EQUAL.

WE HAVE HELD THAT SUCH POLICY IS NOT INCONSISTENT WITH THE STATUTES GENERALLY COVERING PROCUREMENT BY THE GOVERNMENT UNDER COMPETITIVE BID PROCEDURES. 34 COMP. GEN. 451; B-88826, AUGUST 29, 1949. IN OUR DECISION, B-136269, JULY 11, 1958, WE CONSIDERED WHETHER UNDER THE CITED POLICY, WHERE THE PLACE OF MANUFACTURE IS THE SAME IN THE CASE OF EACH ELIGIBLE BID, LOCATION OF THE BIDDING CONCERN SINCE THE POLICY WAS DESIGNED TO BRING WORK TO WORKERS IN SURPLUS LABOR AREAS AND WHILE THE WORK INVOLVED IN THE PERFORMANCE OF SHELF ITEM PROCUREMENT IS MINIMAL, IT IS MORE THAN NO WORK AT ALL.

PRIORITY UNDER GSA GENERAL REGULATION NO. 18 DEPENDS, AS IN THE CASE OF THE POLICY FROM WHICH IT IS DERIVED, ON WHERE THE BIDDING CONCERN IS LOCATED. WHETHER THE SUCCESSFUL CONCERN IN THE PROCUREMENT UNDER CONSIDERATION CAN BE REGARDED AS "LOCATED" IN DETROIT APPEARS QUESTIONABLE. IT MAY, HOWEVER, BE ARGUED THAT WORK OF SOME KIND WILL BE CARRIED OUT IN A SURPLUS LABOR AREA EVEN IF IT IS LIMITED TO THE MAILING OF A BID AND THE FORWARDING OF A PURCHASE ORDER. IN ANY CASE, IT DOES NOT APPEAR THAT THE PROCEDURE FOLLOWED IN THIS INSTANCE IS SO WRONG AS TO RENDER THE AWARD VOID.

IT IS NOTEWORTHY, HOWEVER, THAT MANY FIRMS IN THE KIND OF BUSINESS IN WHICH YOU AND YOUR COMPETITORS FOR THE PROCUREMENT ARE ENGAGED HAVE REPRESENTATIVES COVERING SUBSTANTIALLY THE ENTIRE COUNTRY SO THAT ALL OR MOST OF THEM COULD SUBMIT BIDS FROM AREAS OF SUBSTANTIAL LABOR SURPLUS ON THE SAME BASIS THAT THE SUCCESSFUL BIDDER DID. EVERY BIDDER WOULD THUS BE ENTITLED TO A PRIORITY WITH THE RESULT THAT THE PRIORITY WOULD BECOME MEANINGLESS. MORE SIGNIFICANTLY, AN AWARD TO A FIRM WHICH WOULD ACTUALLY PERFORM THE ORDERING, SHIPPING, BILLING, AND RELATED FUNCTIONS IN AN AREA OF SUBSTANTIAL LABOR SURPLUS WOULD PROVIDE MORE WORK FOR WORKERS IN SUCH AREA THAN WOULD THE AWARD TO A FIRM WHICH WOULD SIMPLY SUBMIT THE BID AND FORWARD THE PURCHASE ORDER FROM THE LABOR SURPLUS AREA. NEVERTHELESS, UNDER THE PROCEDURE FOLLOWED IN THE INSTANT CASE, THE FORMER FIRM WOULD BE CONSIDERED FOR A PRIORITY ONLY IF THE ADDRESS SHOWN ON THE BID WAS IN A LABOR SURPLUS AREA, AND EVEN IN THAT CASE IT WOULD RECEIVE NO MORE CONSIDERATION THAN WOULD THE LATTER TYPE OF FIRM. THE RESULT IN SUCH INSTANCE WOULD APPEAR TO BE INCONSISTENT WITH THE STATED PURPOSE OF THE DEFENSE MANPOWER POLICY.

WE HAVE BEEN ADVISED THAT GENERAL REGULATION NO. 18, AND OTHER GENERAL SERVICES ADMINISTRATION REGULATIONS TO THE SAME EFFECT, WILL BE REPLACED BY REGULATIONS GIVING PRIORITY WITH RESPECT TO THE LABOR AREA IN THE EVENT OF TIE BIDS IN SITUATIONS OF THIS KIND ONLY IF THE ITEMS WILL BE DELIVERED TO THE GOVERNMENT FROM A PLANT OR WAREHOUSE IN A LABOR SURPLUS AREA AT WHICH THE END ITEMS ARE EITHER PRODUCED OR REGULARLY KEPT IN STOCK AND SOLD IN THE USUAL COURSE OF BUSINESS. THE ADOPTION OF SUCH POLICY SHOULD, WE BELIEVE, CORRECT THE SITUATION.

A COPY OF THIS LETTER IS BEING FORWARDED TO THE ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION, AS AN INDICATION OF THE DESIRABILITY OF THE REGULATORY CHANGE NOW BEING CONSIDERED AND OF THE NEED FOR ITS PROMPT IMPLEMENTATION.