B-157136, NOV. 15, 1965

B-157136, NOV. 15, 1965

TO CHEMCO, INC:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF SEPTEMBER 1, 1965, PROTESTING AGAINST THE REJECTION OF YOUR BIDS AND THE AWARD OF TWO CONTRACTS TO HOL-GAR MANUFACTURING CORPORATION, PRIMOS, PENNSYLVANIA, BY THE DEPARTMENT OF THE ARMY PURSUANT TO INVITATIONS NOS. AMC (T/-11 184-65- 176- (A/-JD AND AMC (T/-11-184-65-177- (A/-JD, AS AMENDED, HEREINAFTER REFERRED TO AS INVITATIONS NOS. 176 AND 177.

THE UNITED STATES ARMY MOBILITY EQUIPMENT CENTER, DIRECTORATE OF PROCUREMENT AND PRODUCTION, ST. LOUIS, MISSOURI, BY THE REFERRED-TO INVITATIONS REQUESTED BIDS FOR FURNISHING 2,573 GENERATOR SETS, 1.5 KW., D.C., AND 3,109 GENERATOR SETS, 1.5 KW., A.C. BOTH INVITATIONS WERE 100- PERCENT SET-ASIDES FOR SMALL BUSINESS. THE BIDS WERE OPENED ON JUNE 21, 1965, AND SINCE YOU WERE THE LOW BIDDER ON BOTH INVITATIONS A PREAWARD FACILITIES SURVEY WAS MADE OF YOUR FIRM. IT WAS ESTABLISHED THAT YOU WERE A NEWLY FORMED CONCERN, INCORPORATED JUNE 7, 1965, UNDER THE LAWS OF THE STATE OF MINNESOTA, AND THAT YOU HAD NO PLANT OR FACILITIES. IT IS REPORTED THAT ON JUNE 22, 1965, THE CONTRACTING OFFICER WAS UNSUCCESSFUL IN AN ATTEMPT TO LOCATE OFFICIALS OF YOUR FIRM BY TELEPHONE AT THE DULUTH, MINNESOTA, LOCATION SHOWN IN YOUR BIDS AS THE SHIPPING POINT; THAT THE SMALL BUSINESS ADMINISTRATION IN DULUTH COULD FIND NO RECORD OF YOUR FIRM; THAT A CALL TO YOUR WASHINGTON, D.C., OFFICE RESULTED IN INFORMATION THAT YOUR FIRM HAD TWO FRANCHISES IN DULUTH, MINNESOTA; AND THAT ON JUNE 25, 1965, THE CONTRACTING OFFICER RECEIVED INFORMATION TO THE EFFECT THAT YOUR FIRM HAD NO FIRM COMMITMENTS FOR A PLANT, BUT PROPOSED LOCATING IN SHAKOPEE, MINNESOTA, IN A MONTH OR TWO. ON JUNE 29, 1965, MR. SIMON OF YOUR FIRM ADVISED THE CONTRACTING OFFICE BY TELEPHONE THAT YOUR FIRM HAD OBTAINED A FACILITY IN CHISHOLM, MINNESOTA, WHICH HE STATED WOULD BE AVAILABLE FOR INSPECTION ON JULY 15, 1965, AND IN REPLY TO THE QUESTION AS TO WHETHER YOUR FIRM WAS A MANUFACTURER OR A REGULAR DEALER, MR. SIMON REPLIED THAT YOU WERE A MANUFACTURER. THIS QUESTION WAS PROMPTED BY THE FACT THAT YOUR FIRM HAD FAILED TO INDICATE IN THE BOXES PROVIDED ON THE BID FORM WHETHER YOUR FIRM WAS A REGULAR DEALER OR MANUFACTURER.

UNDER THE FOREGOING FACTS AND CIRCUMSTANCES THERE AROSE THE QUESTION WHETHER YOUR FIRM COULD BE CONSIDERED A PROPER SOURCE OF SUPPLY WITHIN THE MEANING OF THE WALSH-HEALEY PUBLIC CONTRACTS ACT, 41 U.S.C. 35, AND IMPLEMENTING REGULATIONS. PARAGRAPH 12-603.1 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) PROVIDES THAT IN ORDER TO QUALIFY AS A MANUFACTURER, A BIDDER MUST BE ABLE TO SHOW BEFORE AWARD IF HE IS NEWLY ENTERING IN SUCH MANUFACTURING ACTIVITY, THAT HE HAS MADE ALL NECESSARY PRIOR ARRANGEMENTS FOR SPACE, EQUIPMENT AND PERSONNEL TO PERFORM THE MANUFACTURING OPERATIONS REQUIRED FOR THE FULFILLMENT OF THE CONTRACT. PARAGRAPH 2-404.2 THEREOF IMPOSES UPON ALL PROCUREMENT OFFICIALS THE DUTY TO REJECT ANY BID WHICH FAILS TO CONFORM TO THE ESSENTIAL REQUIREMENTS OF THE INVITATION AND, IN THAT CONNECTION, THE OBLIGATION TO DETERMINE THE ELIGIBILITY OF ANY BIDDER UNDER THE ABOVE-QUOTED REGULATION, SUBJECT TO REVIEW BY THE DEPARTMENT OF LABOR. PURSUANT THERETO THE CONTRACTING OFFICER FOUND YOUR FIRM TO BE UNQUALIFIED AS A MANUFACTURER AT THAT TIME FOR THE PURPOSES OF THE PROCUREMENT INVOLVED BASED UPON THE PREAWARD SURVEY. UPON REVIEW THAT FINDING WAS AFFIRMED BY THE DEPARTMENT OF LABOR, WAGE AND HOUR AND PUBLIC CONTRACTS DIVISION, IN ITS LETTER OF JULY 20, 1965, TO THE CONTRACTING OFFICE. BY TELEGRAM DATED AUGUST 16, 1965, THE CONTRACTING OFFICER ADVISED YOU THAT THE BIDS OF YOUR FIRM UNDER THE INVITATIONS INVOLVED WERE BEING REJECTED BECAUSE YOUR FIRM DID NOT QUALIFY AS A SOURCE OF SUPPLY WITHIN THE MEANING OF THE WALSH-HEALY ACT AND THAT THIS FINDING WAS SUSTAINED BY THE DEPARTMENT OF LABOR. ACCORDINGLY, AWARDS UNDER BOTH INVITATIONS WERE MADE TO THE NEXT LOWEST BIDDER, HOL-GAR MANUFACTURING CORPORATION, ON AUGUST 30, 1965.

BY TELEGRAM DATED SEPTEMBER 1, 1965, ADDRESSED TO THE CONTRACTING OFFICE, YOU PROTESTED AGAINST THE REJECTION OF YOUR BIDS. YOU CONTEND THAT YOUR FIRM MET THE MINIMUM STANDARDS FOR A RESPONSIVE AND RESPONSIBLE BIDDER PRESCRIBED BY THE PROVISIONS OF ASPR 1-903 AND THAT AS A SMALL BUSINESS MANUFACTURER BIDDING ON A 100-PERCENT SMALL BUSINESS SET-ASIDE THE MATTER OF YOUR COMPETENCY SHOULD HAVE BEEN REFERRED TO THE SMALL BUSINESS ADMINISTRATION (SBA) FOR ISSUANCE OF A CERTIFICATE OF COMPETENCY AS TO CAPACITY AND CREDIT IN YOUR BEHALF.

IN VIEW OF THE FINDING OF THE CONTRACTING OFFICER THAT YOU DID NOT QUALIFY AS A MANUFACTURER, WHICH FINDING WAS AFFIRMED BY THE DEPARTMENT OF LABOR, AND THE PREAWARD SURVEY RESULTS, SO AUTHORITY EXISTED FOR MAKING AWARD TO YOU AS PROSPECTIVE RESPONSIBLE CONTRACTOR. SEE ASPR 1 900 ET SEQ. THE AUTHORITY OF THE SBA TO ISSUE CERTIFICATES OF COMPETENCY AS TO THE CAPACITY AND CREDIT OF A SMALL BUSINESS BIDDER DOES NOT EXTEND TO DETERMINATIONS OF THE STATUS OF A BIDDER AS A REGULAR DEALER OR MANUFACTURER UNDER 41 U.S.C. 35. SEE 37 COMP. GEN. 676. THEREFORE, THE CONTRACTING OFFICER WAS NOT REQUIRED TO REFER THE MATTER OF YOUR FIRM'S RESPONSIBILITY TO THE SBA FOR DETERMINATION.

IN VIEW OF THE FOREGOING, WE MUST CONCLUDE THAT THE AWARDS MADE ARE NOT SUBJECT TO LEGAL OBJECTION BY OUR OFFICE.