B-155703, JUN. 9, 1965

B-155703, JUN. 9, 1965

TO SILVER AND ROSEN:

BY LETTER DATED DECEMBER 24, 1964, WITH ENCLOSURES, AND SUBSEQUENT CORRESPONDENCE, YOU PROTESTED, ON BEHALF OF A. L. CHIPMAN, T/A GOODWIN MOVING AND STORAGE CO., AGAINST THE AWARD OF A CONTRACT BY THE DEPARTMENT OF THE AIR FORCE TO MCGEE'S VAN AND STORAGE CO., UNDER INVITATION FOR BIDS NO. 04-602-65-48.

THE INVITATION, ISSUED ON OCTOBER 6, 1964, BY HAMILTON AIR FORCE BASE, CALIFORNIA, REQUESTED BIDS ON A TOTAL SMALL BUSINESS SET-ASIDE BASIS FOR PACKING AND CRATING SERVICES INCIDENT TO THE MOVEMENT OF HOUSEHOLD EFFECTS, INCLUDING DRAYAGE WITHIN A 60-MILE RADIUS OF THE AIR BASE. PAGE 3A OF THE INVITATION ADVISED BIDDERS AS FOLLOWS:

"ALL SERVICES CALLED FOR HEREIN ARE CONSIDERED INTERSTATE MOVES, THEREFORE, BIDDERS WHO DO NOT POSSESS AN ICC MOTOR CARRIER PERMIT OR DO NOT PERFORM THE SERVICES UNDER AN AGREEMENT WITH AN AUTHORIZED CARRIER WILL BE CONSIDERED NON-RESPONSIVE. BIDDERS SHALL CITE THE ICC MOTOR CARRIER CERTIFICATE NUMBER AUTHORIZING THEM TO HANDLE INTERSTATE MOVES.

"ICC PERMIT NUMBER---------------------------------"

SPECIAL PROVISION SP-4 OF THE INVITATION PROVIDED:

"PERMITS/LICENSES. BIDDER CERTIFIES THAT HE (OR THROUGH A SUBCONTRACTOR) HAS SUCH VALID PERMITS, LICENSES, CERTIFICATES, RECEIPTS AND/OR OTHER DOCUMENTS AS REQUIRED TO OPERATE BY THE FEDERAL OR STATE REGULATORY BODIES AND THOSE OVERSEAS AREAS, IF REQUIRED, IN WHICH HE INTENDS TO CONDUCT HIS OPERATION. IN THE EVENT OPERATING RIGHTS ARE REVOKED OR WITHDRAWN AT ANY TIME DURING THE LIFE OF THE CONTRACT, THE CONTRACTOR WILL IMMEDIATELY NOTIFY THE CONTRACTING OFFICER OF SUCH FACT IN WRITING.'

PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-701.1E3 AND THE SMALL BUSINESS SIZE REGULATION CODIFIED AT 13 CFR 121.3-8 (F), THE INVITATION CONTAINED THE FOLLOWING DEFINITION OF A SMALL BUSINESS CONCERN FOR PURPOSES OF THIS PROCUREMENT:

"* * * A "SMALL BUSINESS CONCERN" IS A CONCERN, INCLUDING ITS AFFILIATES, WHICH IS INDEPENDENTLY OWNED AND OPERATED, IS NOT DOMINANT IN THE FIELD OF OPERATION IN WHICH IT IS BIDDING ON GOVERNMENT CONTRACTS, THE ANNUAL RECEIPTS OF THE CONCERN AND ITS AFFILIATES MUST NOT EXCEED $3,000,000 EXCEPT THAT IF THE CONCERN IS LOCATED IN ALASKA, SUCH RECEIPTS MUST NOT EXCEED $3,750,000. NO SUCH CONCERN, HOWEVER, WILL BE DENIED SMALL BUSINESS STATUS FOR THE PURPOSE OF GOVERNMENT PROCUREMENT SOLELY BECAUSE OF ITS CONTRACTUAL RELATIONSHIP WITH A LARGE INTERSTATE VAN LINE IF (I) THE CONCERN'S ANNUAL RECEIPTS HAVE NOT EXCEEDED $3,000,000 DURING ITS MOST RECENTLY COMPLETED FISCAL YEAR ($3,750,000 IF LOCATED IN ALASKA), AND (II) NOT MORE THAN FIFTY PERCENT (50 PERCENT) OF SUCH ANNUAL RECEIPTS ARE DIRECTLY ATTRIBUTABLE TO THE CONCERN'S RELATIONSHIP WITH AN INTERSTATE VAN LINE AND CAN FURTHER QUALIFY UNDER THE CRITERIA SET FORTH IN REGULATIONS OF THE SMALL BUSINESS ADMINISTRATION (CODE OF FEDERAL REGULATIONS, TITLE 13, 121.3-8. * * *"

SIX BIDS WERE RECEIVED AND OPENED ON NOVEMBER 6, 1964, AND IT APPEARED THAT MCGEE SUBMITTED THE LOWEST AGGREGATE BID IN THE AMOUNT OF $29,117.50 AND THAT GOODWIN SUBMITTED THE HIGHEST BID IN THE AMOUNT OF $56,657.40. AWARD WAS MADE TO MCGEE ON NOVEMBER 30, 1964, NOTWITHSTANDING THE PROTEST OF GOODWIN THAT ONLY IT AND THE UNITED CALIFORNIA EXPRESS AND STORAGE CO. HAD VALID INTERSTATE COMMERCE COMMISSION (ICC) PERMITS AUTHORIZING INTERSTATE CARRIAGE.

YOU CONTEND THAT MCGEE DOES NOT HAVE EITHER IN ITS OWN RIGHT OR THROUGH A SUBCONTRACTOR THE REQUISITE CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY, AND THAT THE CONTRACT WOULD IN FACT BE PERFORMED BY ALLIED VAN LINES--- A LARGE BUSINESS CONCERN--- UNDER A LEASE AGREEMENT WHEREBY MCGEE IS AUTHORIZED TO USE ALLIED'S ICC PERMIT. IN VIEW THEREOF, IT IS YOUR POSITION THAT ALLIED WILL BE SOLELY RESPONSIBLE FOR PERFORMANCE SINCE IT HAS EXCLUSIVE POSSESSION, CONTROL AND USE OF MCGEE'S VEHICLES, AND ALSO DIRECTION OF MCGEE'S EMPLOYEES, EVEN THOUGH MCGEE HAS ARRANGED CONTRACTUALLY TO USE ALLIED'S ICC PERMIT IN CONNECTION WITH THE DRAYAGE REQUIREMENTS OF THE CONTRACT.

REGARDLESS OF THE IMPLICATIONS THAT MIGHT ARISE FROM THE LEASE AGREEMENT BETWEEN MCGEE AND ALLIED VAN LINES WHICH, OF COURSE, BEARS NO RELATIONSHIP TO THE CONTRACT AWARDED TO MCGEE, THE FACT REMAINS THAT THE INVITATION AND THE RESULTING CONTRACT EXPRESSLY SANCTIONED CONTRACTUAL RELATIONSHIPS BETWEEN THE SMALL BUSINESS CONTRACTOR AND A LARGE INTERSTATE VAN LINE. BOTH ASPR 1-701.1E3 AND THE SMALL BUSINESS SIZE REGULATION CODIFIED AT 13 CFR 121.3-8 (F) PROVIDE THAT A CONTRACTUAL RELATIONSHIP CANNOT HAVE THE EFFECT OF DENYING A SMALL BUSINESS STATUS TO A BIDDER SUCH AS MCGEE. CERTAINLY, A LEASE IS A CONTRACTUAL RELATIONSHIP. IT WOULD SEEM TO FOLLOW, THEREFORE, THAT NOT ONLY IS SUBCONTRACTING OR ANOTHER ARRANGEMENT WITH LARGE BUSINESS CONCERNS CONTEMPLATED BUT IS EXPRESSLY AUTHORIZED. WHILE IT MAY BE THAT ALLIED WILL PERFORM CERTAIN DRAYAGE SERVICES UNDER THE CONTRACT, MCGEE IS SOLELY RESPONSIBLE TO THE GOVERNMENT FOR THE ENTIRE PERFORMANCE OF THE CONTRACT AND NO PRIVITY EXISTS BETWEEN ALLIED AND THE GOVERNMENT WITH RESPECT TO CONTRACT SERVICES COVERED BY ITS ICC PERMIT. THERE IS NO QUESTION THAT THE INVITATION ANTICIPATED THE PERFORMANCE OF SERVICES BY A CONTRACTOR UNDER AN AGREEMENT WITH AN ICC AUTHORIZED CARRIER; HENCE, THE PARTICULAR TYPE OF CONTRACTUAL ARRANGEMENT BETWEEN SUCH PARTIES IS NOT SIGNIFICANT ESPECIALLY WHERE, AS HERE, THE SERVICES CONTRACTED FOR WILL BE PERFORMED IN ACCORDANCE WITH THE TERMS OF THE CONTRACT.

WE HAVE HELD THAT AWARDS MADE TO CARRIERS NOT HOLDING ALL OF THE REQUISITE AUTHORITIES BUT WHO HAVE AGREEMENTS WITH OTHER CARRIERS HAVING THE NECESSARY CERTIFICATION AND PERMITS TO PERFORM THE WORK FOR WHICH THE BIDDER IS NOT LICENSED ARE VALID. 36 COMP. GEN. 649.