B-150091, JAN. 17, 1963

B-150091, JAN. 17, 1963

TO VIKING SUPPLY CORPORATION:

FURTHER REFERENCE IS MADE TO A LETTER DATED OCTOBER 10, 1962, WITH ENCLOSURES, FROM THE ABOVE ATTORNEYS PROTESTING, IN YOUR BEHALF, THE ACTION TAKEN BY THE PUBLIC HEALTH SERVICE, DIVISION OF INDIAN HEALTH, ALBUQUERQUE, NEW MEXICO, UNDER INVITATION NO. 2569-9-17-62, DATED SEPTEMBER 11, 1962.

THE INVITATION WAS ISSUED BY THE PUBLIC HEALTH SERVICE SOLICITING BIDS FOR FURNISHING ASBESTOS CEMENT PIPE AND RELATED WATER SERVICE MATERIAL FOR USE IN CONSTRUCTING AN INDIAN SANITATION FACILITY AT SHIPROCK, NEW MEXICO, THE CUSTODY OF THE FACILITY SUBSEQUENTLY TO BE TRANSFERRED TO THE NAVAJO INDIAN TRIBE. IT IS REPORTED THAT THE BIDS RECEIVED IN RESPONSE TO THE INVITATION ON ITEMS NOS. 1, 2 AND 10, THE ITEMS WITH WHICH WE ARE HERE CONCERNED, WERE FOUND BY THE CONTRACTING OFFICER TO HAVE BEEN AS FOLLOWS:

TABLE BIDDER ITEM 1 ITEM 2 ITEM 10 VIKING SUPPLY CORPORATION $10,582.00 $339.00 $145.50 JOHNS-MANVILLE SALES CORPORATION 12,155.00 77.50------ EPPSCO, INC. 14,014.00 149.00 516.00 MOMSEN DUNNEGAN RYAN CO. 13,156.00 104.00 210.50 H. G. REITER CO.

--------- ------ 194.50 MINE AND SMELTER SUPPLY CO. --------- ------ 411.50

AFTER EVALUATION OF THE BIDS THE ALBUQUERQUE INDIAN HEALTH AREA OFFICE AWARDED CONTRACT NO. PH74-63-55 TO THE JOHNS-MANVILLE SALES CORPORATION, ALBUQUERQUE, NEW MEXICO, ON SEPTEMBER 28, 1962, FOR ITEMS NOS. 1 AND 2 IN THE TOTAL AMOUNT OF $12,232.50 FOR THE REASON THAT THE NAVAJO INDIAN TRIBE WAS OPPOSED TO THE FOREIGN MATERIALS OFFERED IN YOUR COMBINED TOTAL LOW BID OF $10,921 FOR ITEMS NOS. 1 AND 2, OR IN THE AMOUNT OF $11,576.26 AFTER APPLICATION OF THE 6 PERCENT FOREIGN DIFFERENTIAL UNDER THE "BUY AMERICAN ACT," 41 U.S.C. 10A-D, AS MODIFIED BY EXECUTIVE ORDER NO. 10582, DATED DECEMBER 17, 1954. REGARDING ITEM NO. 10, THE RECORD BEFORE US SHOWS THAT THE ALBUQUERQUE INDIAN HEALTH AREA OFFICE AWARDED THIS ITEM TO YOU BY PURCHASE ORDER NO. 63-2121-1, DATED SEPTEMBER 28, 1962, ON THE BASIS OF YOUR LOW BID OF $145.50 FOR THE DOMESTIC MATERIALS OFFERED FOR THIS ITEM.

IT IS NOTED FROM THE BRIEF OF HOLLABAUGH AND JACOBS THAT THE PROTEST OF THE AWARD OF ITEMS NOS. 1 AND 2 TO THE JOHNS-MANVILLE SALES CORPORATION IS BASED PRIMARILY UPON THE FACT THAT YOU WERE DENIED AN AWARD FOR THESE ITEMS EVEN THOUGH YOU HAD SUBMITTED THE LOW COMBINED BID THEREFOR AND WHICH BID WAS OTHERWISE IN COMPLIANCE WITH ALL APPLICABLE SPECIFICATIONS, LAWS AND REGULATIONS. THE ATTORNEYS CONTEND THAT THE FAILURE TO AWARD ITEMS NOS. 1 AND 2 TO YOU WAS ARBITRARY, CAPRICIOUS, UNCONSTITUTIONAL AND WITHOUT PRECEDENT AND WAS NOT IN ACCORDANCE WITH APPLICABLE RULES AND REGULATIONS. THEY POINT OUT FURTHER THAT THE AWARD ACTION WAS TAKEN WITHOUT GRANTING YOU A HEARING OR EVEN FORMALLY ADVISING YOU OF THE CIRCUMSTANCES OR REASONS AS TO WHY THE ACTION WAS TAKEN.

AN EXAMINATION OF THE BIDS RECEIVED IN RESPONSE TO INVITATION NO. 2569-9- 17-62 CLEARLY SHOWS THAT WHILE YOU WERE AWARDED ITEM NO. 10 ON THE BASIS OF YOUR LOW BID FOR FURNISHING DOMESTIC MATERIALS FOR THAT ITEM, YOUR BID OF $10,582 FOR ITEM NO. 1--- $11,216.92 AFTER APPLYING THE APPLICABLE 6 PERCENT FOREIGN DIFFERENTIAL--- WAS THE LOWEST BID RECEIVED FOR THAT ITEM. HENCE, THERE CAN BE LITTLE DOUBT THAT YOUR BID FOR ITEM NO. 1 SHOULD HAVE BEEN GIVEN CONSIDERATION TOWARD AWARD OF THIS ITEM. IN THIS REGARD, HOWEVER, THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE REPORTS THAT WHILE THE PURCHASE OF ALL MATERIALS FOR THIS WORK WAS TO BE MADE FROM APPROPRIATED FUNDS ALL LABOR REQUIRED TO INCORPORATE THE MATERIAL INTO THE CONSTRUCTION WAS TO BE ACCOMPLISHED BY INDIAN LABOR WITHOUT CHARGE TO THE GOVERNMENT. IN ADDITION, AT THE TIME OF THE EVALUATION OF THE BIDS THE ALBUQUERQUE INDIAN HEALTH AREA OFFICE WAS INFORMED BY MEMORANDUM DATED SEPTEMBER 25, 1962, FROM THE NAVAJO INDIAN TRIBE THAT TRIBAL POLICY WAS OPPOSED TO THE ACCEPTANCE OF FOREIGN-MADE MATERIALS AS OFFERED UNDER ITEM NO. 1 OF YOUR BID. AT THAT TIME THE AREA OFFICE OFFICIALS ALSO WERE AWARE THAT CUSTODY OF THE SHIPROCK PROJECT WOULD BE TRANSFERRED TO THE NAVAJO INDIAN TRIBE AND CONSEQUENTLY THE PROJECT MAINTENANCE RESPONSIBILITY WOULD BE WITH THE TRIBE. MOREOVER, THERE WAS, OF COURSE, THE DESIRE TO MAINTAIN WORKABLE PUBLIC RELATIONS WITH THE TRIBE AND THE PROBABILITY OF THE FORTHCOMING SEVERE WINTER WEATHER CONDITIONS. IN VIEW OF ALL OF THESE CONDITIONS, AND OF THE DESIRE OF THE AREA OFFICE TO MAKE AWARDS FOR MATERIALS THAT COULD BE DELIVERED WITHOUT DELAY AND FOR MATERIALS THAT THE INDIANS WOULD NOT REFUSE TO USE, AN AWARD OF CONTRACT WAS MADE OF ITEMS NOS. 1 AND 2 TO THE JOHNS MANVILLE SALES CORPORATION.

REGARDLESS OF THE FOREGOING REASONS FOR MAKING THE AWARD OF ITEMS NOS. 1 AND 2, THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE ACKNOWLEDGES THE IRREGULARITY OF THE AWARD BY REPORTING THAT THE AREA OFFICE OFFICIALS LACKED AUTHORITY TO DECIDE ON SUCH AN AWARD TO ANYONE OTHER THAN THE LOWEST BIDDER. THE DEPARTMENT ADVISES THAT UNDER CERTAIN POLICY AND REGULATORY GUIDANCE PROCEDURES, CONTRACTING OFFICERS ARE REQUIRED TO SUBMIT SUCH CASES AS THIS THROUGH ADMINISTRATIVE CHANNELS TO HIGHER AUTHORITY FOR REVIEW WHEN EITHER A FOREIGN BID IS SUBJECT TO REJECTION BECAUSE OF THE NATIONAL INTEREST OR THE CONTRACTING OFFICER CONSIDERS, IN THE PURCHASE OF DOMESTIC MATERIALS, THAT A DIFFERENTIAL GREATER THAN 6 PERCENT IS NOT UNREASONABLE OR INCONSISTENT WITH THE PUBLIC INTEREST. THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE HAS ADVISED THAT IMMEDIATELY UPON THE MATTER OF THE SUBJECT AWARD HAVING BEEN BROUGHT TO ITS ATTENTION VERBAL ADMINISTRATIVE ACTION WAS TAKEN TO PREVENT RECURRENCE OF SUCH PROCUREMENT PROCEDURE BY THE ALBUQUERQUE INDIAN HEALTH AREA OFFICE AND THAT SUCH ADMINISTRATIVE ACTION WILL BE CONFIRMED IN WRITING.

THERE CAN BE NO QUESTION THAT THE AWARD AS MADE WAS IMPROPER BUT SINCE THE DEPARTMENT REPORTS THAT THE MATERIAL PROCURED UNDER CONTRACT NO. PH74- 63-55 FROM THE JOHNS-MANVILLE SALES CORPORATION HAS BEEN DELIVERED AND INCORPORATED IN THE CONSTRUCTION, WE DO NOT BELIEVE THAT A CANCELLATION OF THE CONTRACT WOULD BE WARRANTED.

YOU MAY BE ASSURED OF OUR INTEREST IN SEEING THAT IRREGULARITIES OF THIS KIND DO NOT RECUR.