B-160758, MAY 15, 1967

B-160758, MAY 15, 1967

TO ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO LETTER DATED JANUARY 24, 1967, FROM THE GENERAL COUNSEL REQUESTING OUR DECISION AS TO WHETHER, UNDER THE CIRCUMSTANCES SET FORTH BELOW, THE GENERAL SERVICES ADMINISTRATION (GSA) LEGALLY MAY CANCEL THE CONTRACT AWARDED TO THE GULF STATES ELEVATOR CORPORATION PURSUANT TO INVITATION FOR BIDS NO. GS-07B-414/BM).

THE SUBJECT INVITATION WAS ISSUED ON NOVEMBER 8, 1966, REQUESTING BIDS FOR FURNISHING ELEVATOR MAINTENANCE AT THE FEDERAL OFFICE BUILDING, UNITED STATES CUSTOMHOUSE AND FEDERAL BUILDING, AND UNITED STATES POST OFFICE, AT NEW ORLEANS, LOUISIANA, DURING THE PERIOD JANUARY 1, 1967, THROUGH DECEMBER 31, 1968. CLAUSE 2 OF THE GENERAL CONDITIONS, PAGE 14 OF THE INVITATION, PROVIDED THAT BIDS WOULD BE CONSIDERED ONLY FROM BIDDERS WHO, IN THE JUDGMENT OF THE CONTRACTING OFFICER, ARE REGULARLY ESTABLISHED IN BUSINESS, ARE FINANCIALLY RESPONSIBLE, ABLE TO SHOW EVIDENCE OF SATISFACTORY PAST PERFORMANCE, AND HAVE SATISFACTORILY MAINTAINED ELEVATORS OF SIMILAR GRADE AND COMPLEXITY TO THE DEGREE INCLUDED IN THE SPECIFICATIONS FOR A PERIOD OF NOT LESS THAN 1 YEAR.

TWO BIDS WERE RECEIVED AND OPENED ON DECEMBER 6, 1966. THE UNITED ELEVATOR CORPORATION, A NEWLY ORGANIZED FIRM, HAVING BEEN IN BUSINESS APPROXIMATELY 60 DAYS, SUBMITTED THE LOW BID OF $1,841 PER MONTH AND GULF STATES ELEVATOR CORPORATION SUBMITTED THE HIGH BID OF $2,023 PER MONTH. IN RESPONSE TO THE CONTRACTING OFFICER'S REQUEST FOR INFORMATION TO SHOW THAT IT MET THE QUALIFICATION REQUIREMENT STATED IN CLAUSE 2 OF THE INVITATION MR. B. F. GRADY, PRESIDENT OF UNITED, SUBMITTED A LETTER DATED DECEMBER 9, 1966, CONTAINING CERTAIN DATA. IN THAT LETTER MR. GRADY MERELY STATED THAT HE WAS THE PRESIDENT AND MR. L. J. BOE WAS THE SECRETARY AND TREASURER OF THE COMPANY. HE DID NOT DETAIL HIS EXPERIENCE IN THE FIELD OF SERVICING ELEVATORS; HOWEVER, HE DID FURNISH A BRIEF RESUME OF MR. BOE'S EXPERIENCE IN THE ELEVATOR FIELD. HE FURTHER STATED HE HAD MAINTAINED ASSOCIATION WITH GSA REPRESENTATIVES FOR THE PAST 8 YEARS WHILE HE WAS WITH GULF STATES ELEVATOR, BUT DID NOT INDICATE HIS CAPACITY. FURTHER, HE DID NOT LIST ANY CURRENT CONTRACTS FOR SERVICING ELEVATORS WHICH HIS COMPANY HELD, BUT ONLY SOME PROSPECTIVE ONES. AFTER REVIEWING DATA FURNISHED THE CONTRACTING OFFICER DETERMINED THAT SUFFICIENT EVIDENCE HAD NOT BEEN SUBMITTED TO SHOW THAT UNITED MET THE INVITATION REQUIREMENTS AS TO THE RESPONSIBILITY OF BIDDERS AND UNITED WAS SO ADVISED. UNITED BY TELEGRAM AND LETTER DATED DECEMBER 19, 1966, TO THE CONTRACTING OFFICER, PROTESTED THIS DETERMINATION.

IN THE LETTER OF JANUARY 24, THE GENERAL COUNSEL STATES THAT SINCE UNITED HAD CERTIFIED THAT IT WAS A SMALL BUSINESS CONCERN THE CONTRACTING OFFICER WOULD NORMALLY HAVE REFERRED THE QUESTION OF ITS TECHNICAL QUALIFICATIONS TO THE SMALL BUSINESS ADMINISTRATION UNDER THE PROVISIONS OF FPR SEC. 1- 1.708.2. HOWEVER, SINCE MAINTENANCE OF THE ELEVATORS IN TWO OF THE BUILDINGS WHICH WERE THE SUBJECT OF THE INVITATION WAS BEING PERFORMED UNDER A CONTRACT WHICH WOULD EXPIRE DECEMBER 31, 1966, THE CONTRACTING OFFICER DETERMINED THAT IN ORDER TO ENSURE SAFE CONTINUOUS ELEVATOR SERVICE TO THESE BUILDINGS, IT WOULD BE NECESSARY TO AWARD THE CONTRACT WITHOUT DELAY PURSUANT TO FPR SEC. 1 1.708-2 (A) (1). ACCORDINGLY, THE CONTRACT WAS AWARDED TO GULF STATES ELEVATOR CORPORATION ON DECEMBER 22, 1966. THE GENERAL COUNSEL FURTHER STATES THAT IT IS THE OPINION OF YOUR AGENCY THAT THE CONTRACTING OFFICER WAS MISTAKEN IN REJECTING THE BID OF UNITED SINCE HE (1) COULD HAVE EXTENDED THE EXISTING ARRANGEMENTS FOR ELEVATOR MAINTENANCE TO PROVIDE SUFFICIENT TIME TO REFER THE CASE TO THE SMALL BUSINESS ADMINISTRATION; (2) DID NOT REQUEST MORE DETAILED INFORMATION FROM UNITED, ALTHOUGH HE WAS INVITED TO DO SO IN UNITED'S LETTER OF DECEMBER 9; AND (3) DID NOT CONSIDER THAT THE EXPERIENCE OF THE OFFICIALS, GAINED PRIOR TO THE FORMATION OF THE NEW CORPORATION, COULD BE IMPUTED TO THE CORPORATION IN ACCORDANCE WITH OUR DECISIONS IN 36 COMP. GEN. 673 AND 38 ID. 572. ACCORDINGLY, THE GENERAL COUNSEL RECOMMENDS THAT GSA BE AUTHORIZED BY OUR OFFICE TO CANCEL THE AWARD TO GULF STATES ELEVATOR CORPORATION AND AWARD THE CONTRACT TO UNITED ON THE BASIS OF ITS LOW BID.

IN LETTER OF DECEMBER 19, 1966, PROTESTING REJECTION OF THE BID OF UNITED, MR. GRADY, PRESIDENT, STATED THAT HE HAD 21 YEARS IN THE ELEVATOR MAINTENANCE FIELD ENCOMPASSING ENGINEERING, SALES, SERVICE MANAGEMENT AND GENERAL MANAGEMENT. HE POINTED OUT THAT HE HAD BEEN PRESIDENT AND GENERAL MANAGER OF GULF STATES ELEVATOR CORPORATION AND THE MANAGER OF THE NEW ORLEANS BRANCH FOR MONTGOMERY ELEVATOR COMPANY AFTER IT PURCHASED GULF STATES ELEVATOR IN MAY 1966 UNTIL HIS RESIGNATION IN OCTOBER 1966, AND THAT HE WAS THE ORIGINATOR OF THE GULF STATES ELEVATOR CORPORATION. ALSO STATED THAT MR. IRA J. BLEKER IS NOW EMPLOYED BY UNITED AND THAT HE RENDERED FIELD SUPERVISION FOR THE SERVICING OF ELEVATORS IN THE FEDERAL BUILDINGS IN NEW ORLEANS UNDER THE CURRENT CONTRACTS AND MAINTAINED THE ELEVATORS AS A MAINTENANCE MECHANIC FOR 2 TO 3 YEARS. ALSO, IN A MEMORANDUM DATED DECEMBER 6, 1966, THE ACTING CHIEF, OPERATIONS BRANCH, BUILDINGS MANAGEMENT DIVISION, STATED THAT UNITED IS HEADED BY MR. GRADY AND MR. BOE WHO FORMERLY OPERATED UNDER THE NAME OF GULF STATES ELEVATOR CORPORATION AND THAT THEY PERFORMED ELEVATOR MAINTENANCE SERVICE CONTRACTS WITH GSA FOR A NUMBER OF YEARS AT THE FEDERAL OFFICE BUILDING AND CUSTOMHOUSE AT NEW ORLEANS.

IT APPEARS TO BE THE POSITION OF THE CONTRACTING OFFICER THAT THE QUALIFICATION OF THE LOW BIDDER MUST BE DETERMINED ON THE BASIS OF HIS CONFORMITY TO THE REQUIREMENTS OF THE INVITATION WITHOUT OTHER OR FURTHER CONSIDERATION OF HIS ACTUAL CAPABILITIES AND COMPETENCY. WHILE IT IS TRUE WE HAVE HELD THAT AWARD OF A CONTRACT MAY BE LIMITED TO THOSE BIDDERS MEETING SPECIFIED QUALITATIVE AND QUANTITATIVE EXPERIENCE REQUIREMENTS IN A SPECIALIZED FIELD, WE DO NOT CONDONE, AS A GENERAL PROPOSITION, THE REJECTION OF BIDS OF RESPONSIBLE BIDDERS BECAUSE AS A TECHNICAL MATTER THEY DO NOT MEET PRESCRIBED EXPERIENCE QUALIFICATIONS. 39 COMP. GEN. 173.

AS INDICATED BY YOUR GENERAL COUNSEL OUR DECISIONS HOLD THAT IN EVALUATING THE RESPONSIBILITY OF A NEWLY FORMED CORPORATION, THE EXPERIENCE AND RESPONSIBILITY OF THE PRINCIPAL OFFICER AND ITS PREDECESSOR CORPORATION CAN BE CONSIDERED. 36 COMP. GEN. 673. IN VIEW THEREOF, AND HAVING REGARD FOR THE INFORMATION SUBMITTED BY UNITED IN ITS LETTER OF DECEMBER 19, 1966, TOGETHER WITH THE FACTS REPORTED BY THE ACTING CHIEF, OPERATIONS BRANCH, THERE CAN BE NO DOUBT THAT THE PRINCIPAL OFFICERS OF UNITED ARE WELL QUALIFIED AND HAVE HAD EXTENSIVE EXPERIENCE IN PERFORMING ELEVATOR MAINTENANCE SERVICE. CONSEQUENTLY, WE THINK THAT UNITED SHOULD NOT HAVE BEEN REJECTED AS NONRESPONSIBLE SOLELY BECAUSE IT DID NOT MEET THE 1-YEAR OPERATION REQUIREMENT OF THE INVITATION.

THE ATTORNEY FOR GULF STATES ELEVATOR CORPORATION HAS SUBMITTED A MEMORANDUM TO OUR OFFICE RESISTING THE CANCELLATION OF THE CONTRACT AND AWARD TO UNITED ON THE BASIS THAT UNITED IS NOT A RESPONSIBLE BIDDER BECAUSE OF LACK OF INTEGRITY. THE MEMORANDUM IS DIRECTED PRIMARILY TO THE ALLEGED UNFAIR BUSINESS PRACTICES OF MR. GRADY, ONE OF THE PRINCIPALS IN THE SALE OF GULF TO MONTGOMERY ELEVATOR COMPANY, IN ORGANIZING UNITED TO COMPETE WITH GULF. SOME OF THE TACTICS COMPLAINED OF ARE THAT MR. GRADY IS IN CONSTANT COMMUNICATION WITH GULF'S EMPLOYEES AND HAS SUCCEEDED IN LURING SOME OF THEM FROM GULF TO THE NEW COMPANY. ALSO, THAT MR. GRADY HAS ACCESS TO THE PRICING POLICIES OF GULF AND WAS ABLE TO TAKE ADVANTAGE OF SUCH INFORMATION IN PREPARING THE BID OF UNITED. IN ADDITION, THE SUGGESTION IS MADE THAT UNITED IS USING CERTAIN PROPERTY WRONGFULLY TAKEN FROM GULF.

IN LETTER OF MARCH 3, 1967, YOUR GENERAL COUNSEL IN COMMENTING ON THESE ALLEGATIONS STATES THAT THE MATTERS COMPLAINED OF DO NOT AFFECT THE GOVERNMENT AND THAT THE AGGRESSIVENESS DISPLAYED BY MR. GRADY DOES NOT SHOW LACK OF INTEGRITY. HE FURTHER STATES THAT THE ONLY ELEMENT ALLEGED BY GULF WHICH WOULD SUPPORT A FINDING OF LACK OF INTEGRITY WOULD BE THE ONE CONCERNING THE USE OF GULF'S PROPERTY, BUT THE GOVERNMENT CANNOT GIVE HEED TO THAT UNTIL SUCH TIME AS A CRIMINAL ACTION IS COMMENCED.

THE ATTORNEY FOR GULF STATES ELEVATOR CORPORATION ALSO FILED A SUPPLEMENTAL MEMORANDUM WHICH ALLEGED THAT UNITED HAD DOUBTFUL INTEGRITY IN THAT ITS CURRENT PRESIDENT, MR. B. F. GRADY, WHEN HE WAS PRESIDENT OF GULF STATES, GAVE GIFTS TO THE GSA BUILDING MANAGER IN NEW ORLEANS, MR. LAVERN W. HUGHES.

IN LETTER OF MAY 3, 1967, YOUR GENERAL COUNSEL ADVISED THAT YOUR COMPLIANCE DIVISION INVESTIGATED THE ALLEGATIONS. IT IS REPORTED THAT THE FOLLOWING PERSONS, AMONG OTHERS, WERE INTERVIEWED: MR. B. F. GRADY, REFERRED TO ABOVE; MR. E. J. MARCHAL, FORMER VICE PRESIDENT OF GULF STATES; MRS. MAXINE CLOUET, FORMER EMPLOYEE OF GULF STATES NOW EMPLOYED BY UNITED; MR. FRED ZWEIFEL, BRANCH SALES MANAGER FOR MR. ZWEIFEL IS REPORTED TO HAVE SIGNED A STATEMENT DURING THE INVESTIGATION THAT IN THE CHRISTMAS SEASON OF 1964-1965 THERE HAD BEEN CONVERSATIONS BETWEEN MR. GRADY, MR. MARCHAL, MRS. CLOUET AND HIMSELF ABOUT PURCHASING A GIFT FOR MR. HUGHES AND THAT A POLAROID CAMERA WAS PURCHASED BY MR. MARCHAL ON A CREDIT CARD BELONGING TO MR. ZWEIFEL AT THE GENERAL DISTRIBUTORS OF LOUISIANA; AND THAT MR. MARCHAL BROUGHT THE CAMERA BACK TO THE OFFICE, SHOWED IT AROUND AND TOOK PICTURES WITH IT. MR. ZWEIFEL IS REPORTED AS STATING,"I DO NOT KNOW WHO GAVE THE CAMERA TO MR. HUGHES, OR IN FACT, IF IT WAS ACTUALLY GIVEN TO HIM," AND AS TO THE $100 SUIT OF CLOTHES ALLEGEDLY BOUGHT FOR MR. HUGHES,"I DO NOT KNOW IF THE SUIT WAS ACTUALLY PURCHASED.' MR. SWEIFEL ALSO STATED THAT HE WAS WITH MR. BOE WHEN MR. HUGHES' AUTOMOBILE WAS TOWED FROM MR. HUGHES' HOUSE TO A REPAIR SHOP AND THAT HE DOES NOT KNOW WHO PAID THE REPAIR BILL.

MRS. CLOUET IS REPORTED TO HAVE FURNISHED A STATEMENT THAT SHE HAS NO KNOWLEDGE THAT GIFTS WERE GIVEN TO MR. HUGHES AND THAT SHE DID NOT HEAR OR PARTICIPATE IN ANY CONVERSATIONS CONCERNING SUCH GIFTS. ALSO, WE ARE ADVISED THAT MR. MARCHAL, MR. GRADY, MR. BOE AND MR. HUGHES HAVE DENIED THE ALLEGATIONS OF THE GIFT OF A CAMERA AND SUIT OF CLOTHES.

IT IS REPORTED THAT THE MANAGER OF GENERAL DISTRIBUTORS OF LOUISIANA ADVISED THAT NO RECORDS ARE KEPT WHICH WOULD REFLECT THE PURCHASE OF ANY ITEM FROM THE STORE EVEN IF THE DATE AND ITEM PURCHASED COULD BE IDENTIFIED.

THE COMPTROLLER OF STEVENS, INC., THE STORE WHERE THE SUIT WHICH ALLEGEDLY WAS GIVEN TO MR. HUGHES WAS PURCHASED, IS REPORTED TO HAVE ADVISED THAT MR. MARCHAL AND MR. GRADY HAD PERSONAL ACCOUNTS AT THE STORE AND NEITHER ACCOUNT REFLECTED A PURCHASING OF ABOUT $100 IN EITHER NOVEMBER, DECEMBER OR JANUARY OF 1964-1965 OR IN THE SAME EITHER NOVEMBER, DECEMBER OR/JANUARY OF 1964-1965 OR IN THE SAME PERIOD OF 1965-1966. IS STATED FURTHER THAT THE CHRISTMAS GIFT REGISTER FOR THE YEARS 1964-1965 DID NOT INCLUDE A GIFT CERTIFICATE IN THE NAME OF MR. HUGHES OR A CERTIFICATE WITHOUT A NAME IN AN AMOUNT OF ABOUT $100.

IT IS REPORTED FURTHER THAT THE POLAROID CORPORATION HAS ADVISED THAT THERE IS NO CAMERA REGISTERED IN THE NAME OF LAVERN W. HUGHES.

ADDITIONALLY, IT IS REPORTED THAT MR. HUGHES' SON, JOHN, WORKED FOR GULF STATES FOR A FEW MONTHS IN 1965 AND 1966 AND THAT JOHNHAD BEEN SENT TO GULF STATES BY THE INTERNATIONAL UNION OF ELEVATOR CONTRACTORS.

IN CONNECTION WITH THE REPAIR OF THE AUTOMOBILE, IT IS REPORTED THAT MR. HUGHES STATED THAT HE GAVE THE CAR TO JOHN IN 1963-1964 BECAUSE HE HAD TROUBLE WITH IT AND THAT TO THE BEST OF HIS RECOLLECTION JOHN HAD AN AGREEMENT TO TRADE THE CAR TO ANOTHER PERSON EMPLOYED BY GULF STATES, A CURTIS SIMON, WHO DECIDED HE COULD NOT AFFORD THE TRADE AFTER DETERMINING THE COST OF REPAIRS. IT IS REPORTED FURTHER THAT THERE IS NO EVIDENCE THAT GULF STATES PAID THE REPAIR BILLS ON THE CAR, AND THAT MR. BOE TOWED THE CAR FROM THE HUGHES' HOME TO THE GARAGE, BUT PROBABLY AT THE REQUEST OF CURTIS SIMON.

THE MAY 3 LETTER CONCLUDES THE THE COMPLIANCE DIVISION UNCOVERED NO EVIDENCE IN ITS INVESTIGATION WHICH ESTABLISHED THAT MR. GRADY OR ANY OTHER EMPLOYEE OR REPRESENTATIVE OF GULF STATES MADE GIFTS TO MR. HUGHES OF A POLAROID CAMERA OR SUIT OF CLOTHES OR THAT THE EMPLOYMENT OF HIS SON CONNOTED ANY FAVORITISM SINCE JOHN WAS REFERRED TO GULF STATES IN THE NORMAL COURSE OF EVENTS BY THE ELEVATOR UNION.

ON THE BASIS OF THE RECORD AND SINCE THE DETERMINATION OF THE RESPONSIBILITY OF A BIDDER IS PRIMARILY THAT OF YOUR AGENCY, WE AGREE WITH THE RECOMMENDATION OF YOUR GENERAL COUNSEL THAT THE CONTRACT AWARDED TO GULF SHOULD BE CANCELED AND AWARD MADE TO UNITED AS THE LOWEST RESPONSIVE AND RESPONSIBLE BIDDER.