B-141908, JUL. 19, 1960

B-141908, JUL. 19, 1960

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED MARCH 11, 1960, WITH ENCLOSURES, RELATIVE TO THE PROTEST OF POWELL ANCHOR AND CHAIN COMPANY AGAINST THE ACTION OF THE DEPARTMENT OF THE ARMY IN REFUSING TO AWARD A CONTRACT TO THAT COMPANY UNDER INVITATION NO. CIVENG-30-023-60-19.

ON OCTOBER 30, 1959, THE U.S. ARMY ENGINEER DISTRICT, BUFFALO, ISSUED AN INVITATION FOR BIDS--- TO BE OPENED DECEMBER 1, 1959--- FOR VARIOUS ITEMS OF WIRE ROPE, ON WHICH TEN BIDS WERE RECEIVED. THE INVITATION REQUIRED DELIVERY ON OR BEFORE MARCH 15, 1960. THE POWELL ANCHOR AND CHAIN COMPANY WAS THE LOW BIDDER AT A PRICE OF $9,175. ON DECEMBER 4, 1959, THE U.S. ARMY ENGINEER DISTRICT, PHILADELPHIA, WAS REQUESTED TO ACCOMPLISH A PRE- AWARD SURVEY OF THAT FIRM. AS A PART OF THE SURVEY THE COMPANY'S ABILITY TO QUALIFY AS A "SOURCE OF SUPPLY"

(THERE IS MISSING MATERIAL AT THIS POINT.) UNDER ASPR 1-201.9 WAS INVESTIGATED. ON DECEMBER 16, 1959, THE U.S. ARMY ENGINEER DISTRICT, BUFFALO, WAS ADVISED THAT THE COMPANY MIGHT BE CONSIDERED A "REGULAR DEALER" FOR MARINE SUPPLIES BUT NOT FOR WIRE ROPE OR WIRE ROPE ASSEMBLIES. IT WAS RECOMMENDED THAT POWELL ANCHOR AND CHAIN COMPANY NOT BE CONSIDERED A RESPONSIBLE PROSPECTIVE CONTRACTOR. IN VIEW OF THIS RECOMMENDATION THE BUFFALO DISTRICT ON DECEMBER 30, 1959, REQUESTED A DETERMINATION AS TO POWELL'SSTATUS AS A QUALIFIED SOURCE OF SUPPLY FROM THE OFFICE, CHIEF OF ENGINEERS. ON JANUARY 29, 1960, THE BUFFALO DISTRICT WAS ADVISED

(THERE IS MISSING MATERIAL AT THIS POINT.) THAT ITS BID WAS REJECTED ON THE BASIS THAT IT DID NOT QUALIFY AS A SOURCE OF SUPPLY AS DEFINED IN PARAGRAPH 1-201.9 OF THE ARMED SERVICES PROCUREMENT REGULATION AND THE ARMY PROCUREMENT PROCEDURES MANUALS, AND AWARD WAS MADE TO THE MACWHYTE COMPANY ON THE SAME DATE. POWELL ANCHOR AND CHAIN COMPANY, BY LETTER OF FEBRUARY 3, 1960, TO OUR OFFICE, PROTESTED THIS ACTION.

ON MARCH 29, 1960, THE DEPUTY ASSISTANT SECRETARY OF THE ARMY ADVISED THE ATTORNEYS FOR THE PROTESTER THAT THE CHIEF OF ENGINEERS HAD REQUESTED AN ADVISORY OPINION FROM THE DEPARTMENT OF LABOR ON THE STATUS OF THE POWELL ANCHOR AND CHAIN COMPANY AS A QUALIFIED REGULAR DEALER FOR WIRE ROPE, AND THAT SINCE THE DEPARTMENT OF LABOR HAD ADVISED THE CHIEF OF ENGINEERS THAT THE COMPANY SHOULD BE CONSIDERED AS A QUALIFIED REGULAR DEALER FOR WIRE ROPE, THE CHIEF OF ENGINEERS HAD INSTRUCTED THE DISTRICT ENGINEERS CONCERNED THAT FUTURE DETERMINATIONS RELATIVE TO THE STATUS OF BIDDERS AS "REGULAR DEALERS" WOULD BE MADE IN ACCORDANCE WITH THE ADVISORY OPINION FROM THE DEPARTMENT OF LABOR. IN THIS CONNECTION IT IS NOTED THAT THE REQUEST FOR THE ADVISORY OPINION WAS NOT MADE UNTIL AFTER OUR OFFICE HAD REQUESTED A REPORT ON THE MATTER, AND THAT THE REQUESTED REPORT WAS NOT RECEIVED HERE UNTIL AFTER THE ADVISORY OPINION, WHICH OBVIOUSLY WAS NOT A PART OF THE RECORD UPON WHICH THE AWARD WAS MADE, HAD BEEN RECEIVED.

THE DETERMINATION BY THE CORPS OF ENGINEERS THAT POWELL ANCHOR AND CHAIN COMPANY WAS NOT A QUALIFIED SOURCE OF SUPPLY FOR WIRE ROPE APPEARS TO HAVE BEEN BASED UPON AN UNJUSTIFIABLY RESTRICTIVE INTERPRETATION OF THE PERTINENT REGULATION. WHILE WE DO NOT SUGGEST THAT SUCH DETERMINATION WAS MADE IN OTHER THAN GOOD FAITH, IT IS REGRETTABLE THAT THE CORPS OF ENGINEERS DID NOT DEEM IT ADVISABLE TO DELAY MAKING AWARD IN THE MATTER FOR THE FEW DAYS WHICH WOULD HAVE BEEN REQUIRED TO SECURE THE ADVISORY OPINION, WHICH WAS ULTIMATELY OBTAINED FROM THE DEPARTMENT OF LABOR. THE FAILURE TO DO THIS SEEMS EVEN MORE UNFORTUNATE, IN VIEW OF THE FACT THAT BIDS WERE OPENED ON DECEMBER 1, 1959, AND AWARD WAS NOT MADE UNTIL FEBRUARY 3, 1960; AND THAT POWELL ANCHOR AND CHAIN COMPANY HAD BEEN A REGULAR SUPPLIER OF WIRE ROPE TO THE UNITED STATES, AND EVEN TO THE CORPS OF ENGINEERS, PRIOR TO THE PROCUREMENT IN QUESTION. IT IS OUR OPINION THAT, IN THE ABSENCE OF URGENT NEED FOR THE SUPPLIES (WHICH HAS NOT BEEN ALLEGED), THE FAILURE TO DELAY AWARD IN SUCH CIRCUMSTANCES WAS DETRIMENTAL TO THE COMPETITIVE BIDDING SYSTEM AND CONTRARY TO THE BEST INTEREST OF THE UNITED STATES.

IT IS OF EVEN GREATER CONCERN TO US THAT THE ACTION TAKEN POINTS UP WHAT MUST BE REGARDED AS A SERIOUS DEFECT IN PRACTICAL IMPLEMENTATION OF ASPR 1 -201.18 (1960 EDITION). WHILE IT IS DECLARED TO BE THE POLICY OF THE DEPARTMENT OF DEFENSE TO APPLY THE "MANUFACTURER OR REGULAR DEALER" REQUIREMENT OF THE WALSH-HEALEY PUBLIC CONTRACTS ACT TO TRANSACTIONS OF $10,000 OR LESS, THERE APPEARS TO BE NO DESIGNATION OR DELEGATION OF AUTHORITY FOR FINAL DETERMINATION OF QUESTIONS ARISING AS TO THE STATUS OF BIDDERS AS REGULAR DEALERS OR MANUFACTURERS. IT IS THUS POSSIBLE FOR THE SAME BIDDER TO BE ACCEPTED AS AN AUTHORIZED SOURCE OF SUPPLY FOR A PARTICULAR ITEM BY ONE OF THE MILITARY DEPARTMENTS BUT NOT BY ANOTHER, OR BY ONE PROCURING SERVICE BUT NOT ANOTHER, OR--- AS WAS APPARENTLY SO IN THE CASE OF THE POWELL COMPANY- - BY ONE ENGINEER DISTRICT BUT NOT BY ANOTHER.

THE SECRETARY OF LABOR IS VESTED BY THE WALSH-HEALEY ACT WITH FINAL AUTHORITY TO DETERMINE WHETHER OR NOT A BIDDER QUALIFIES AS A REGULAR DEALER UNDER THE PROVISIONS OF THAT ACT. IT IS OUR UNDERSTANDING THAT HE HAS QUITE PROPERLY REFUSED TO UNDERTAKE TO RENDER DECISIONS AS TO TRANSACTIONS BELOW THE $10,000 LIMITATION OF THE ACT. WHILE ADVISORY OPINIONS HAVE BEEN RENDERED AT THE REQUEST OF PROCURING AGENCIES, THEY HAVE NO BINDING FORCE OR EFFECT, AND IT APPEARS THAT THEIR EFFECTIVENESS MAY BE LIMITED TO THE SINGLE PROCUREMENT IN CONNECTION WITH WHICH THEY WERE REQUESTED. IT IS ALLEGED, FOR EXAMPLE, BY THE PROTESTING BIDDER IN THIS CASE, THAT SUCH AN OPINION WITH RESPECT TO ITS STATUS AS A REGULAR DEALER IN WIRE ROPE HAD BEEN OBTAINED BY THE CHICAGO ENGINEER DISTRICT IN CONNECTION WITH THE AWARD MADE TO IT UNDER INVITATION NO. ENG-11-124-59-AF -555, OPENED APRIL 30, 1959.

WE HAVE BEEN ADVISED BY THE DEPARTMENT OF DEFENSE THAT THE REQUIREMENT IN QUESTION WAS IMPOSED AS A MEANS OF INSURING RESPONSIBILITY OF POTENTIAL BIDDERS. WE HAVE ADHERED TO THE CONCEPT THAT DETERMINATION OF THE RESPONSIBILITY OF A BIDDER IS PRIMARILY AN ADMINISTRATIVE FUNCTION WITH THE EXERCISE OF WHICH THIS OFFICE WILL NOT INTERFERE IN THE ABSENCE OF CLEARLY ARBITRARY OR IMPROPER CONDUCT. HOWEVER, WE ARE INCLINED TO THE VIEW THAT REJECTION OF A BIDDER UNDER THE "MANUFACTURER OR REGULAR DEALER" REQUIREMENT, WHERE IT APPEARS THAT THE BIDDER HAS BEEN ACCEPTED BY ANOTHER PROCURING AUTHORITY OF THE DEFENSE ESTABLISHMENT AS A PROPER SOURCE FOR, AND HAS SATISFACTORILY SUPPLIED, SUBSTANTIALLY THE SAME TYPE OF ITEM, MAY BE REGARDED AS ARBITRARY IN THE ABSENCE OF A DECISION BY AUTHORITY COMPETENT TO BIND ALL THE MILITARY AGENCIES.

SINCE IT IS UNDERSTOOD THAT DELIVERY OF THE MATERIAL HAS BEENFULLY ACCOMPLISHED, NO FURTHER ACTION WILL BE TAKEN BY THIS OFFICE IN THIS INSTANCE. A COPY OF THIS DECISION IS, HOWEVER, BEING FORWARDED TO THE SECRETARY OF DEFENSE FOR CONSIDERATION BY HIS DEPARTMENT.