B-149074, JUN. 22, 1962

B-149074, JUN. 22, 1962

TO THE POST OFFICE DEPARTMENT, BUREAU OF FACILITIES:

THIS REFERS TO YOUR LETTER OF MAY 31, 1962 (REFERENCE: CCR:WLB:LR), REQUESTING OUR DECISION RELATIVE TO THE AWARD OF CONTRACTS UNDER INVITATION FOR BIDS NO. 2101 AND 2102.

YOU REPORT THAT DURING SEPTEMBER 1961, MARTIN STEEL CORPORATION RECEIVED AWARD ON BOTH THE NON-SET-ASIDE PORTION AND THE SET-ASIDE PORTION OF TWO PROCUREMENTS, EACH CONTAINING A 50 PERCENT LABOR SURPLUS AREA SET-ASIDE. ONE OF THE CONTRACTS CALLED FOR A TOTAL QUANTITY OF 6,000 LARGE COLLECTION BOXES AT A TOTAL PRICE OF $187,320, AND THE OTHER CONTRACT COVERED 4,000 RELAY MAIL BOXES AT A TOTAL COST OF $133,360. ON FEBRUARY 28, 1962, THE CONTRACTOR WAS DECLARED IN DEFAULT ON BOTH CONTRACTS.

ON APRIL 15, 1962, INVITATIONS FOR BIDS NO. 2101, CALLING FOR 6,000 LARGE COLLECTION BOXES, AND NO. 2102, CALLING FOR 4,000 RELAY BOXES, WERE ISSUED FOR REPROCUREMENT OF THE DEFAULTED CONTRACTS. BOTH OF THE INVITATIONS STATE AS FOLLOWS:

"NOTICE OF LABOR SURPLUS AREA SET-ASIDE

"/A) GENERAL A PORTION OF THIS PROCUREMENT (50 PERCENT) HAS BEEN SET ASIDE FOR AWARD TO ONE OR MORE LABOR SURPLUS AREA CONCERNS, AND, TO A LIMITED EXTENT, TO SMALL BUSINESS CONCERNS WHICH DO NOT QUALIFY AS LABOR SURPLUS AREA CONCERNS.

NEGOTIATIONS FOR AWARD OF THE SET-ASIDE PORTION WILL BE CONDUCTED WITH RESPONSIBLE LABOR SURPLUS AREA CONCERNS AND SMALL BUSINESS CONCERNS THAT HAVE SUBMITTED RESPONSIVE BIDS OR PROPOSALS ON THE NON SET-ASIDE PORTION, AT A UNIT PRICE WITHIN 120 PERCENT OF THE HIGHEST AWARD MADE ON THE NON- SET-ASIDE PORTION. NEGOTIATIONS FOR THE SET ASIDE PORTION WILL BE CONDUCTED WITH SUCH BIDDERS IN THE FOLLOWING ORDER OF PRIORITY:

GROUP 1. PERSISTENT LABOR SURPLUS AREA CONCERNS WHICH ARE ALSO SMALL BUSINESS CONCERNS.

GROUP 2. OTHER PERSISTENT LABOR SURPLUS AREA CONCERNS.

GROUP 3. SUBSTANTIAL LABOR SURPLUS AREA CONCERNS WHICH ARE ALSO SMALL BUSINESS CONCERNS.

GROUP 4. OTHER SUBSTANTIAL LABOR SURPLUS AREA CONCERNS.

GROUP 5. SMALL BUSINESS CONCERNS WHICH ARE NOT LABOR SURPLUS AREA CONCERNS.

"/C) AGREEMENT ON PLACE OF PERFORMANCE. EACH BIDDER DESIRING TO BE CONSIDERED FOR AWARD AS A LABOR SURPLUS AREA CONCERN ON THE SET-ASIDE PORTION OF THIS PROCUREMENT SHALL IDENTIFY IN HIS BID THE LABOR SURPLUS AREA/S) IN WHICH HE PROPOSES TO PERFORM, OR CAUSE TO BE PERFORMED, A SUBSTANTIAL PROPORTION OF THE PRODUCTION OF THE CONTRACT. THIS INFORMATION WILL BE USED IN DETERMINING ELIGIBILITY FOR PREFERENTIAL CONSIDERATION, AND ANY CONTRACT AWARDED AS A RESULT OF SUCH CONSIDERATION SHALL SPECIFY THE PREFERENTIAL STATUS ON WHICH THE AWARD WAS BASED. THE BIDDER AGREES THAT A CONTRACT SO AWARDED UNDER THE SET ASIDE PORTION OF THIS PROCUREMENT WILL BE PERFORMED IN ACCORDANCE WITH THE PREFERENTIAL TREATMENT UTILIZED IN AWARDING THE CONTRACT, I.E., (I)IF AWARDED A CONTRACT AS A PERSISTENT LABOR SURPLUS AREA CONCERN, HE WILL PERFORM A SUBSTANTIAL PROPORTION OF THE PRODUCTION IN PERSISTENT LABOR SURPLUS AREAS AS DESCRIBED IN (B) ABOVE, AND (II) IF AWARDED A CONTRACT AS A SUBSTANTIAL LABOR SURPLUS AREA CONCERN, HE WILL PERFORM A SUBSTANTIAL PROPORTION OF THE PRODUCTION IN SUBSTANTIAL OR PERSISTENT LABOR SURPLUS AREAS AS DESCRIBED IN (B) ABOVE.

TABLE

NON-SET-ASIDE PORTION EACH $----- $--- -

SET-ASIDE PORTION EACH $----- $-----

"BIDDERS QUOTING ON SET-ASIDE PORTION SHALL STATE THE LABOR SURPLUS AREA/S) IN WHICH HE PROPOSES TO PERFORM PRODUCTION.

(PLEASE STATE)"

BIDS ON BOTH INVITATIONS WERE OPENED ON APRIL 30, 1962. CARDWELL MANUFACTURING COMPANY QUOTED A PRICE OF $37.46 PER UNIT UNDER INVITATION NO. 2101 (LARGE COLLECTION BOXES) ON THE NON-SET-ASIDE AND THE SET-ASIDE PORTION OF THE PROCUREMENT. IT QUOTED A PRICE OF $40.01 PER UNIT ON BOTH PORTIONS UNDER INVITATION NO. 2102 (RELAY MAIL BOXES). ON BOTH INVITATIONS CARDWELL WAS THE LOW BIDDER AS TO PRICE, WHILE JETA, INC., WAS SECOND LOW BIDDER WITH PRICES OF $38 UNDER INVITATION NO. 2101 AND $42 UNDER INVITATION NO. 2102. HOWEVER, CARDWELL STATED IN ITS BIDS THAT IT PROPOSED TO PERFORM THE SET-ASIDE PORTIONS AT WICHITA, KANSAS, WHICH IS NOT A LABOR SURPLUS AREA, WHEREAS META INDICATED PERFORMANCE OF THE SET- ASIDE PORTIONS IN AREAS OF SUBSTANTIAL LABOR SURPLUS. IT IS FURTHER REPORTED THAT JETA HAS AGREED TO FURNISH THE SET-ASIDE PORTIONS UNDER BOTH INVITATIONS AT THE SAME PRICES QUOTED BY CARDWELL.

YOU PROPOSE TO AWARD THE NON-SET-ASIDE PORTIONS OF BOTH INVITATIONS TO CARDWELL AND THE SET-ASIDE PORTIONS TO JETA AT THE PRICES INDICATED, NAMELY $37.46 PER UNIT UNDER INVITATION NO. 2101 AND $40.01 PER UNIT UNDER INVITATION NO. 2102.

CARDWELL CONTENDS THAT IT BID ON THE BASIS OF AN UNDERSTANDING FROM THE POST OFFICE DEPARTMENT THAT THE WHOLE AWARD ON EACH OF THESE TWO PROCUREMENTS WOULD BE GIVEN TO THE LOW BIDDER. THE BIDDER STATES THAT IT IS A QUALIFIED BUT UNTOOLED PRODUCER OF THOSE REQUIRED ITEMS AND IF IT INTENDED TO BID ON THESE ITEMS ON THE BASIS OF ONLY THE NON-SET ASIDE PORTIONS, IT WOULD HAVE HAD TO INCREASE ITS PRICE BY AS MUCH AS 25 PERCENT. ON THE OTHER HAND, IT STATES, BIDDERS WHO QUALIFY AS LABOR SURPLUS AREA CONCERNS ARE ABLE TO BID ON THE BASIS OF AN AWARD ON THE TOTAL QUANTITY IF THEY SUBMIT THE LOW BID.

YOU STATE THAT AT NO TIME WAS THERE ANY COMMITMENT, ORAL OR WRITTEN, TO ANYONE THAT AWARDS FOR THE ENTIRE QUANTITIES INVOLVED WOULD BE MADE TO ANY BIDDER APART FROM THE TERMS AND CONDITIONS SET FORTH IN THE INVITATIONS.

THE INVITATIONS CLEARLY STATE UNDER THE "NOTICE OF LABOR SURPLUS AREA SET -ASIDE" THAT AWARD OF THE SET-ASIDE PORTIONS IS TO BE MADE PURSUANT TO NEGOTIATIONS, WHICH ARE TO BE CONDUCTED WITH BIDDERS ON THE NON-SET-ASIDE PORTIONS IN THE ORDER AS SPECIFIED IN THE INVITATIONS. UNDER THE PRESCRIBED ORDER OF PREFERENCE BIDDERS WHO PROPOSE TO PERFORM, OR CAUSE TO BE PERFORMED, A SUBSTANTIAL PROPORTION OF THE PRODUCTION OF THE CONTRACT IN AN AREA OF SUBSTANTIAL LABOR SURPLUS ARE TO BE GIVEN PREFERENCE IN THE NEGOTIATION OVER BIDDERS WHO HAVE INDICATED IN THEIR BIDS THAT THEY WILL NOT PERFORM, OR CAUSE TO BE PERFORMED, THE WORK IN SUCH AREAS. SINCE CARDWELL IS NOT LISTED AS A LABOR SURPLUS AREA CONCERN ON THESE PROCUREMENTS IT MAY NOT BE GIVEN PREFERENCE IN THE NEGOTIATION FOR THE SET -ASIDE PORTION AWARDS OVER CONCERNS WHICH DO QUALIFY AS LABOR SURPLUS AREA CONCERNS.

CARDWELL CONTENDS THAT THE EFFECT OF THE LABOR SURPLUS AREA PROGRAM ON THESE PROCUREMENTS IS TO GIVE A BIDDING ADVANTAGE TO LABOR SURPLUS AREA CONCERNS. THE GOVERNING REGULATIONS IMPLEMENTING THE PROGRAM PROVIDE THAT IN NO CASE MAY A PRICE DIFFERENTIAL BE PAID FOR THE PURPOSE OF MAKING SUCH AWARDS. SEE THE FEDERAL PROCUREMENT REGULATIONS, SUBPART 1-1.802-2 (A). BUT CARDWELL DOES NOT ALLEGE THAT IT WOULD HAVE OFFERED A LOWER BID PRICE. CARDWELL STATES THAT IT UNDERSTOOD IT WAS BIDDING ON THE WHOLE QUANTITY OF EACH PROCUREMENT. HOWEVER, THE AWARDS MUST BE MADE IN ACCORDANCE WITH THE CRITERIA SPECIFIED IN THE INVITATION, AND ON THE BASIS OF THE RECORD, WE FIND THAT THE ACTION YOU CONTEMPLATE WITH REGARD TO THE AWARDS IS PROPER.

THE BIDS OF THE CARDWELL MANUFACTURING COMPANY AND OTHER ORIGINAL PAPERS ARE RETURNED HEREWITH.