B-142957, JUNE 27, 1960, 39 COMP. GEN. 892

B-142957, JUNE 27, 1960, 39 COMP. GEN. 892

BIDS - MULTIPLE - PROPRIETY MULTIPLE BIDS SUBMITTED BY ONE INDIVIDUAL ON BEHALF OF TWO OR MORE COMPANIES OR BY TWO OR MORE AFFILIATED COMPANIES DO NOT HAVE TO BE REJECTED WHEN SUCH BIDS ARE NOT SUBMITTED FOR THE PURPOSE OF CIRCUMVENTING A LAW, SUCH AS THE DAVIS-BACON ACT OF AUGUST 30, 1935, FOR GAINING AN UNFAIR ADVANTAGE IN CASE OF AWARDS BY DRAWING LOTS, OR FOR ANY OTHER PURPOSE WHICH WOULD BE PREJUDICIAL TO THE UNITED STATES OR TO OTHER BIDDERS. 14 COMP. GEN. 168, MODIFIED. THE REJECTION OF TWO LOW BIDS SUBMITTED BY AFFILIATED COMPANIES FOR THE PURPOSE OF OBTAINING PARTIAL AWARDS FOR SUCH AMOUNT OF WORK AS EACH COMPANY COULD CAPABLY PERFORM, ON THE BASIS THAT MULTIPLE BIDS ARE LEGALLY OBJECTIONABLE, WOULD BE PREJUDICIAL TO THE INTERESTS OF THE UNITED STATES AND, THEREFORE, SUCH BIDS MAY BE CONSIDERED FOR AWARD.

TO THE SECRETARY OF HEALTH, EDUCATION, AND WELFARE, JUNE 27, 1960:

REFERENCE IS MADE TO LETTER OF JUNE 16, 1960, FROM YOUR DIRECTOR OF ADMINISTRATION, REPLYING TO OUR REQUEST DATED MAY 26, 1960, FOR A REPORT ON THE FACTS AND CIRCUMSTANCES WHICH PROMPTED THE FILING OF A PROTEST BY COUNSEL FOR PERGAMON INTERNATIONAL CORPORATION AGAINST THE AWARD OF CONTRACT TO ANY OTHER BIDDER UNDER INVITATION FOR BIDS NO. 171 4-21-60, ISSUED BY THE NATIONAL INSTITUTES OF HEALTH.

THE RECORD DISCLOSES THAT IN RESPONSE TO THE SAID INVITATION THE ABOVE- NAMED BIDDER AND PERGAMON INSTITUTE AND RESEARCH INFORMATION SERVICE, AMONG OTHERS, SUBMITTED PROPOSALS TO FURNISH THE NECESSARY TRANSLATION AND PUBLICATION SERVICES SET FORTH THEREIN. THESE TWO PROPOSALS WERE THE LOWEST OFFERS RECEIVED. UPON INVESTIGATION IT WAS ADMINISTRATIVELY DETERMINED THAT THE TWO BIDDING CONCERNS WERE INTERRELATED, AND THAT THEY CONTEMPLATED USING THE FACILITIES AND PERSONNEL OF BOTH ORGANIZATIONS IN PERFORMING THE WORK IN THE EVENT OF AN AWARD OF A CONTRACT TO EITHER ONE OR BOTH CONCERNS. BECAUSE OF THE ESTABLISHED AFFILIATION, BOTH BIDS WERE TENTATIVELY REJECTED PURSUANT TO SECTION 7-50-90 OF YOUR DEPARTMENTAL PROCUREMENT MANUAL WHICH STIPULATES THAT IF MORE THAN ONE BID IS SUBMITTED BY, OR IN BEHALF OF ONE PERSON, OR IF A PARENT COMPANY AND ITS SUBSIDIARY BOTH SUBMIT SEPARATE BIDS, THEN SUCH OFFERS SHALL BE DISREGARDED. IN VIEW OF THE FOREGOING, AND SINCE THE BIDS OF THE AFFILIATED CONCERNS WERE THE LOWEST RECEIVED, THE PROTEST RAISES THE QUESTION WHETHER THOSE OFFERS PROPERLY MAY BE CONSIDERED.

HISTORICALLY, THE MATTER OF MULTIPLE BIDDING WAS MADE A PART OF SECTION 3722, REVISED STATUTES (ENACTED MARCH 3, 1863, 12 STAT. 828) WHICH APPLIED TO THE DEPARTMENT OF THE NAVY, AND WHICH PROVIDED THAT IF MORE THAN ONE BID IS OFFERED BY, OR IN BEHALF OF ONE PERSON, ALL SUCH BIDS MAY BE REJECTED. IN DECISION OF THIS OFFICE DATED JUNE 25, 1934, 14 COMP. GEN. 168, THE ADMINISTRATOR OF VETERANS AFFAIRS WAS ADVISED THAT THE INFORMATION IN POSSESSION OF THE GOVERNMENT, TO THE EFFECT THAT TWO OF THE BIDDING COMPANIES THERE INVOLVED WERE NO LONGER SEPARATE AND DISTINCT LEGAL ENTITIES, SHOULD BE CONVEYED TO THEM, AND THAT THEREAFTER BIDS SHOULD BE SUBMITTED IN THE NAME OF ONLY ONE OF THE FIRMS. ( ITALICS SUPPLIED.) PURSUANT THERETO CERTAIN PROCUREMENT FORMS AND REGULATIONS WERE ADOPTED BY THE VARIOUS DEPARTMENTS AND AGENCIES OF THE GOVERNMENT WHICH, IN SOME INSTANCES, MADE MANDATORY THE REJECTION OF DUPLICATE BIDS, WHILE OTHERS WERE PERMISSIVE IN THEIR TERMS.

BY SECTION 11 (A) OF THE ARMED SERVICE PROCUREMENT ACT OF 1947, 62 STAT. 25, THE CONGRESS SPECIFICALLY REPEALED SECTION 3722, REVISED STATUTES. AND THIS OFFICE HAS NOT ADHERED TO THE PROPOSITION THAT ALL DOUBLE BIDDING IS PROHIBITED OR EVEN UNDESIRABLE. IN A REPORT DATED APRIL 2, 1957, TO THE CHAIRMAN, MILITARY OPERATIONS SUBCOMMITTEE, HOUSE COMMITTEE ON GOVERNMENT OPERATIONS, WE STATED IN GENERAL TERMS THAT--- " IT IS NOT UNUSUAL FOR BIDS TO BE RECEIVED FROM DIFFERENT DIVISIONS OF THE SAME CORPORATION AND SOMETIMES FROM A PARENT CORPORATION AND ONE OR MORE OF ITS SUBSIDIARIES UNDER THE SAME INVITATION FOR BIDS. IN SUCH CASES THE BIDDERS GENERALLY ARE RESPONDING TO SEPARATE COPIES OF THE INVITATION SENT TO THEM AND APPARENTLY DO NOT HAVE ANY REASON TO BELIEVE THAN AN AFFILIATED COMPANY OR DIVISION HAS BEEN REQUESTED TO SUBMIT A BID. PERCEIVE NO LEGAL OBJECTION TO CONSIDERATION OF THE BIDS RECEIVED UNDER THESE CIRCUMSTANCES. AN INDIVIDUAL MIGHT ALSO HAVE LEGITIMATE REASONS FOR SUBMITTING BIDS ON BEHALF OF TWO OR MORE OF THE COMPANIES WHICH HE OWNS OR CONTROLS. THIS COULD BE THE SITUATION WHERE PARTIAL AWARDS ARE PERMITTED AND IT IS HOPED THAT AN AWARD WILL BE MADE TO EACH OF THE COMPANIES FOR SUCH AMOUNT OF THE WORK AS IT CAN CONVENIENTLY PERFORM.' THAT APPEARS TO BE THE SITUATION IN THE INSTANT CASE WHERE THE TWO BIDDING PARTIES HOPE TO BE AWARDED A CONTRACT FOR SUCH AN AMOUNT OF THE DESIRED WORK AS THEY, INDIVIDUALLY, MAY BE FOUND BY THE CONTRACTING OFFICER TO BE CAPABLE OF ACCOMPLISHING.

OF COURSE, A CONTRACTING OFFICER WOULD BE JUSTIFIED IN REJECTING MORE THAN ONE BID SUBMITTED BY A PERSON, OR BY TWO OR MORE AFFILIATED COMPANIES, WHERE SUCH BIDDING WAS RESORTED TO FOR THE PURPOSE OF CIRCUMVENTING THE REQUIREMENTS OF A STATUTE SUCH AS THE DAVIS-BACON ACT OF AUGUST 30, 1935, 49 STAT. 1011, 40 U.S.C. 276A; WHERE AN UNFAIR ADVANTAGE MAY BE GAINED IN CASES OF AN AWARD THROUGH THE DRAWING OF LOTS; OR IN ANY OTHER INSTANCE WHERE MULTIPLE BIDDING IS PREJUDICIAL EITHER TO THE UNITED STATES OR TO OTHER BIDDERS.

WITH RESPECT TO THE PRESENT CASE, SINCE THE TWO BIDS OF PERGAMON INTERNATIONAL CORPORATION AND ITS AFFILIATED ORGANIZATION ARE THE LOWEST OFFERS RECEIVED, IT WOULD BE PREJUDICIAL TO THE INTERESTS OF THE UNITED STATES TO REJECT SUCH OFFERS AND, THEREFORE, WE CONCUR WITH THE RECOMMENDATION OF YOUR DIRECTOR OF ADMINISTRATION THAT SUCH PROPOSALS BE CONSIDERED. ACCORDINGLY, THE IMPLICATION ARISING BY VIRTUE OF CERTAIN STATEMENTS CONTAINED IN DECISION AT 14 COMP. GEN. 168, THAT ALL MULTIPLE BIDS ARE TO BE REJECTED, SHOULD BE DISREGARDED; AND TO THE EXTENT THAT THE SAID DECISION IS INCONSISTENT WITH OUR CONCLUSIONS STATED HEREIN, IT NO LONGER WILL BE FOLLOWED.