B-166529, OCT. 6, 1969

AWARDS--SMALL BUSINESS CONCERNS--SIZE--AFFILIATES OF LARGE BUSINESS CONCERNS UNDER INVITATION FOR BIDS (IFB) RESTRICTED TO SMALL BUSINESS CONCERNS, LOW BIDDER WHO WAS AFFILIATED WITH NINE BUSINESS CONCERNS THROUGH OWNERSHIP BY PARENT COMPANY WHICH HAD WORKING AGREEMENTS WITH OTHER NONCONTROLLED BUSINESSES, EVEN THOUGH UNSUCCESSFUL BIDDER ALLEGED THAT TOTAL EMPLOYMENT OF PARENT AND AFFILIATES WAS OVER 500 EMPLOYEES, DESPITE CONTRARY FINDING BY SMALL BUSINESS ADMINISTRATION (SBA) THAT IFB PROVISIONS AND SBA REGULATIONS WERE NOT CIRCUMVENTED, WAS PROPERLY CONSIDERED FOR AWARD, SINCE SBA RECORDS SUPPORT FINDING THAT NO CONTROL RELATIONSHIP EXISTED BETWEEN EMPLOYEES OR BUSINESS CONCERNS OTHER THAN AFFILIATES AND PARENT FOR PURPOSE OF DETERMINING SIZE UNDER APPLICABLE IFB PROVISIONS AND SBA REGULATIONS (13 CFR 121.3-8, 121.3-2) AND JUSTIFY CONCLUSION THAT SBA DECISION WAS NOT ERRONEOUS AS A MATTER OF LAW. CONTINGENT FEES--VIOLATIONS--DETERMINATION UNDER INVITATION FOR BIDS FOR CUSHIONING MATERIAL RESTRICTED TO SMALL BUSINESS CONCERNS, WHERE UNSUCCESSFUL BIDDER ALLEGED THAT USE OF FOREIGN MATERIALS IN VIOLATION OF BUY AMERICAN ACT, 41 U.S.C. 10A-D, EMPLOYMENT OF CORPORATE OFFICIAL WITH A CRIMINAL RECORD, AND FAILURE TO DISCLOSE CONTINGENT FEE PAYMENTS FOR SOLICITATION OF CONTRACT SHOULD DISQUALIFY LOW BIDDER, PROTEST IS DENIED, SINCE ADMINISTRATIVE AGENCY CONCLUDED THAT FOREIGN MATERIALS COMPRISED LESS THAN 50 PERCENT OF END PRODUCT, AND BIDDER'S INTEGRITY SHOULD NOT BE DETERMINED FROM ACTS OF EMPLOYEE OCCURRING 2 HEARS BEFORE EMPLOYMENT AND WITHOUT EMPLOYER'S KNOWLEDGE, AND CONTRACTING OFFICER ACCEPTED BIDDER'S EXPLANATION OF MISTAKE IN CHECKING PROPER RESPONSE IN BID FORM, NO LEGAL BASIS EXISTS FOR OBJECTING TO AWARD OF CONTRACT TO LOW BIDDERS.

TO BLOCKSOM AND COMPANY:

WE REFER TO YOUR PROTEST BY LETTER DATED MARCH 25, 1969, AND SUPPLEMENTAL CORRESPONDENCE, AGAINST THE AWARD BY THE GENERAL SERVICES ADMINISTRATION (GSA) OF A CONTRACT TO NU-PAK, INC. (NU-PAK), THE LOW BIDDER UNDER INVITATION FOR BIDS (IFB) FPNGA-P-70335-A, ISSUED BY THE FEDERAL SUPPLY SERVICE ON SEPTEMBER 17, 1968, FOR REQUIREMENTS FOR CUSHIONING MATERIAL FOR THE PERIOD FEBRUARY 1, 1969, OR DATE OF AWARD, WHICHEVER IS LATER, THROUGH JANUARY 31, 1970. THE PROCUREMENT WAS RESTRICTED TO SMALL BUSINESS CONCERNS, FOR WHICH THE SIZE STANDARD IS 500 EMPLOYEES, AND YOU AND NU-PAK WERE THE ONLY BIDDERS.

THE SUBSTANCE OF YOUR PROTEST IS:

1. THE SMALL BUSINESS ADMINISTRATION (SBA) IMPROPERLY RULED THAT NU PAK IS SMALL BUSINESS FOR THE PURPOSE OF THIS PROCUREMENT. IN THIS REGARD, YOU CLAIM THAT NU-PAK IS BUT ONE OF SEVERAL AFFILIATED CONCERNS IN THE SOVEREIGN INDUSTRIES (SOVEREIGN) CONGLOMERATE OF COMPANIES WITH A TOTAL OF MORE THAN 500 EMPLOYEES AND THEREFORE CANNOT BE REGARDED AS A SMALL BUSINESS CONCERN UNDER THE TERMS OF THE IFB AND THE APPLICABLE REGULATIONS PROMULGATED BY SBA.

2. A 1956 CONVICTION OF MORALS CHARGES OF A NU-PAK OFFICIAL MAY BE IMPUTED TO NU-PAK TO ESTABLISH LACK OF INTEGRITY AND TO REQUIRE REJECTION OF ITS BID ON THE BASIS OF NONRESPONSIBILITY. IN THIS REGARD, YOU CITE 39 COMP. GEN. 468, IN WHICH OUR OFFICE HELD THAT A PLEA OF GUILTY IN JUNE 1959 BY THE PRESIDENT AND DIRECTOR OF A CORPORATION MEMBER OF A JOINT VENTURE AND THE SUBSEQUENT CONVICTION OF SUCH OFFICIAL OF CONSPIRACY TO EVADE FEDERAL INCOME TAX IN THE PERFORMANCE OF GOVERNMENT CONTRACTS CONSTITUTED SUFFICIENT EVIDENCE TO SUPPORT A DETERMINATION IN OCTOBER 1959 BY A GOVERNMENT CONTRACTING AGENCY THAT THE OFFICIAL LACKED THE INTEGRITY REQUIRED IN A RESPONSIBLE BIDDER AND THAT SUCH DEFICIENCY COULD PROPERLY BE IMPUTED TO THE JOINT VENTURE AND THEREBY JUSTIFY REJECTION OF THE LOW BID OF THE JOINT VENTURE. (FINANCIAL REPORTS FURNISHED BY YOU ON NU-PAK INDICATE THAT THE OFFICIAL IN QUESTION JOINED NU-PAK APPROXIMATELY TEN YEARS AGO.)

3. NU-PAK STATED IN ITS BID, PARAGRAPH 3 OF STANDARD FORM 33A, THAT IT HAD EMPLOYED A PERSON, OTHER THAN A BONA FIDE EMPLOYEE, TO SOLICIT THE CONTRACT AND HAD AGREED TO PAY A PERCENTAGE FEE CONTINGENT UPON OR RESULTING FROM THE AWARD OF THE CONTRACT. SUBSEQUENTLY, YOU STATE, NU PAK WAS ALLOWED TO MODIFY ITS STATEMENTS. YOU URGE, HOWEVER, THAT SUCH ACTIONS RAISE FURTHER QUESTIONS AS TO NU-PAK'S INTEGRITY AND EVIDENCE AN ATTEMPT TO CIRCUMVENT THE PROCUREMENT REGULATIONS.

4. NU-PAK USES IMPORTED MATERIAL IN ITS END PRODUCT BUT HAS STATED IN ITS BID THAT THE MATERIAL IS OF DOMESTIC ORIGIN. ACCORDINGLY, YOU CHARGE THAT THE BUY AMERICAN ACT IS BEING CIRCUMVENTED, AND YOU QUESTION THE FORMULA USED BY GSA TO DETERMINE THAT THE END PRODUCT IS OF DOMESTIC ORIGIN.

SBA HAS ADVISED OUR OFFICE BY LETTER DATED MAY 20, 1969, THAT YOU PROTESTED NU-PAK'S STATUS AS A SMALL BUSINESS CONCERN TO GSA ON OCTOBER 17, 1968, ON THE BASIS THAT NU-PAK, BY REASON OF ITS OWNERSHIP BY SOVEREIGN, IS AFFILIATED WITH NUMEROUS CONCERNS CONTROLLED BY SOVEREIGN, WHO EMPLOY A TOTAL OF MORE THAN 500 EMPLOYEES; THAT GSA REFERRED THE PROTEST TO SBA ON DECEMBER 3, 1968; AND THAT SBA'S PHOENIX (ARIZONA) REGIONAL OFFICE DETERMINED ON DECEMBER 18, 1968, THAT NU-PAK, TOGETHER WITH ITS AFFILIATES, EMPLOYS FEWER THAN 500 EMPLOYEES AND IS THEREFORE SMALL BUSINESS FOR THE GSA PROCUREMENT.

SBA FURTHER ADVISES THAT YOU APPEALED THE REGIONAL OFFICE DECISION TO THE SBA SIZE APPEALS BOARD AND PRESENTED A LIST OF VARIOUS CONCERNS WHICH YOU CLAIMED WERE UNDER THE CONTROL OF SOVEREIGN AND THEREFORE WERE AFFILIATES OF NU-PAK; THAT SOVEREIGN WAS PERMITTED TO ANSWER YOUR PROTEST; AND THAT YOU IN TURN WERE PERMITTED TO SUBMIT A REBUTTAL TO SOVEREIGN'S ANSWER. AFTER CONSIDERATION OF ALL OF THE EVIDENCE THUS PRESENTED, TOGETHER WITH SUCH OTHER INFORMATION AS SBA OTHERWISE OBTAINED, THE BOARD CONCLUDED THAT NU-PAK IS A SMALL BUSINESS CONCERN AND RECOMMENDED THAT YOUR APPEAL BE DENIED. ON MARCH 21, 1969, THE ADMINISTRATOR OF SBA APPROVED THE BOARD'S RECOMMENDATION.

UNDER 15 U.S.C. 637 (B) SBA IS AUTHORIZED TO DETERMINE WITHIN ANY INDUSTRY WHETHER A PARTICULAR CONCERN IS SMALL BUSINESS FOR THE PURPOSE OF GOVERNMENT PROCUREMENTS, AND SBA'S DECISION IN SUCH MATTERS IS CONCLUSIVE UPON THE PROCUREMENT AGENCY CONCERNED. REGULATIONS PROMULGATED BY SBA IN IMPLEMENTATION OF ITS STATUTORY AUTHORITY, AND PUBLISHED AT 13 CFR, PROVIDE, IN PERTINENT PART, AS FOLLOWS:

"121.3-8 DEFINITION OF SMALL BUSINESS FOR GOVERNMENT PROCUREMENT

"A SMALL BUSINESS CONCERN FOR THE PURPOSE OF GOVERNMENT PROCUREMENT 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 AND CAN FURTHER QUALIFY UNDER THE CRITERIA SET FORTH IN THIS SECTION. WHEN COMPUTING THE SIZE STATUS OF A BIDDER OR OFFERER, THE NUMBER OF EMPLOYEES, ANNUAL SALES OR RECEIPTS, OR OTHER APPLICABLE STANDARDS OF THE BIDDER OR OFFERER AND ALL OF ITS AFFILIATES SHALL BE INCLUDED. IN THE SUBMISSION OF A BID OR PROPOSAL ON A GOVERNMENT PROCUREMENT, A CONCERN WHICH MEETS THE CRITERIA PROVIDED IN THIS SECTION MAY REPRESENT THAT IT IS A SMALL BUSINESS.'

"121.3-2 DEFINITION OF TERMS USED IN THIS PART.

"/A) -AFFILIATES-: CONCERNS ARE AFFILIATES OF EACH OTHER WHEN EITHER DIRECTLY OR INDIRECTLY (1) ONE CONCERN (OTHER THAN AN INVESTMENT COMPANY LICENSED UNDER THE SMALL BUSINESS INVESTMENT ACT OF 1958 OR REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED), CONTROLS OR HAS THE POWER TO CONTROL THE OTHER, OR (2) A THIRD PARTY OR PARTIES (OTHER THAN AN INVESTMENT COMPANY LICENSED UNDER THE SMALL BUSINESS INVESTMENT ACT OF 1958 OR REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED), CONTROLS OR HAS THE POWER TO CONTROL BOTH. IN DETERMINING WHETHER CONCERNS ARE INDEPENDENTLY OWNED AND OPERATED AND WHETHER OR NOT AFFILIATION EXISTS, CONSIDERATION SHALL BE GIVEN TO ALL APPROPRIATE FACTORS, INCLUDING COMMON OWNERSHIP, COMMON MANAGEMENT, AND CONTRACTUAL RELATIONSHIPS: PROVIDED, HOWEVER, THAT RESTRAINTS IMPOSED ON A FRANCHISEE BY ITS FRANCHISE AGREEMENT SHALL NOT BE CONSIDERED IN DETERMINING WHETHER THE FRANCHISOR CONTROLS OR HAS THE POWER TO CONTROL AND, THEREFORE, IS AFFILIATED WITH THE FRANCHISEE, IF THE FRANCHISEE HAS THE RIGHT TO PROFIT FROM HIS EFFORT, COMMENSURATE WITH OWNERSHIP, AND BEARS THE RISK OF LOSS OR LURE.'

WHEN THE DETERMINATION OF THE ADMINISTRATOR OF SBA AS TO THE SIZE OF A BUSINESS CONCERN FOR THE PURPOSE OF SMALL BUSINESS SET ASIDE PROCUREMENTS IS SUPPORTED BY SUBSTANTIAL EVIDENCE, THE SBA DECISION IS FINAL UNLESS IT IS ERRONEOUS AS A MATTER OF LAW. SPRINGFIELD WHITE CASTLE COMPANY V FOLEY, 230 F.SUPP. 77 (1964). FURTHER, EVEN IF THE COURT MIGHT HAVE MADE A DIFFERENT DECISION THAN SBA HAD THE MATTER BEEN BEFORE THE COURT FOR AN ORIGINAL DETERMINATION, THE SBA ACTION WILL NOT BE QUESTIONED UNLESS SBA'S FINDINGS CAN BE SAID TO BE ERRONEOUS OR ARBITRARY AND CONTRARY TO LAW. AMERICAN ELECTRIC COMPANY, LTD. V UNITED STATES, 270 F.SUPP. 689 (1967). OUR OFFICE HAS APPLIED THE SAME PRINCIPLES IN THOSE CASES WHICH HAVE BEEN PRESENTED TO US FOR CONSIDERATION OF AN SBA SIZE DETERMINATION. 44 COMP. GEN. 271; 46 ID. 898.

WE HAVE EXAMINED THE SBA RECORDS WHICH FORMED THE BASES OF THE DECISIONS BY ITS PHOENIX REGIONAL OFFICE AND THE SIZE APPEALS BOARD THAT NU-PAK IS SMALL BUSINESS FOR THIS PROCUREMENT. SUCH RECORDS DISCLOSE THAT C. M. WOOD, THE PRESIDENT AND CHAIRMAN OF THE BOARD OF SOVEREIGN, IS SOVEREIGN'S LARGEST STOCKHOLDER WITH ONLY 9 PERCENT OF ITS STOCK AND THAT NO OTHER INDIVIDUAL OWNS MORE THAN ONE PERCENT OF SOVEREIGN'S STOCK. THERE IS NO EVIDENCE THAT MR. WOOD IS CONNECTED WITH ANY CONCERN OTHER THAN THE TEN REPORTED AFFILIATES OF SOVEREIGN.

AS TO THOSE CONCERNS WHICH YOU CLAIM ARE AFFILIATED WITH SOVEREIGN BY AGREEMENT, THE RECORDS INDICATE THAT SUCH AGREEMENTS RELATE TO (1) CONCERNS EMPLOYED TO MAKE SURVEYS AND EVALUATIONS OF OIL, GAS AND MINING PROPERTIES, FEASIBILITY STUDIES AND MARKET ANALYSES OF SUCH PROPERTIES; (2) FIRMS FROM WHICH OIL, GAS AND MINERAL LEASES OR MACHINERY AND EQUIPMENT WERE ACQUIRED IN EXCHANGE FOR SOVEREIGN STOCK; (3) A CONCERN EMPLOYED AS A COMMISSIONED AGENT TO NEGOTIATE SALES OF IRON PRODUCTS OUTSIDE THE UNITED STATES; AND (4) A CONCERN WITH WHICH NU-PAK HAS A TERMINABLE AGREEMENT TO FURNISH SUPPLIES IN THE FUTURE. FURTHER, THERE IS NO EVIDENCE THAT THROUGH SUCH AGREEMENTS SOVEREIGN CONTROLS ANY ONE OF SUCH CONCERNS OR VICE VERSA.

WITH REGARD TO THOSE OFFICERS OR DIRECTORS OF SOVEREIGN WHO MAY HOLD STOCK OR HAVE OFFICIAL POSITIONS IN OTHER CONCERNS, THERE IS NO EVIDENCE THAT SUCH INDIVIDUALS HAVE THE POWER TO CONTROL SOVEREIGN. IN THIS CONNECTION, SBA HAS STATED THAT IN ORDER FOR AFFILIATION TO EXIST BY COMMON MANAGEMENT WITHIN THE MEANING OF 13 CFR 121.3-2 (A) THE SAME OFFICER/S) MUST HAVE THE POWER TO CONTROL BOTH SOVEREIGN AND THE CONCERN WITH WHICH IT IS SAID TO BE AFFILIATED.

IN ADDITION, THE SBA RECORDS INCLUDE A STATEMENT FROM A FIRM OF CERTIFIED PUBLIC ACCOUNTANTS THAT BASED ON THE PAYROLL RECORDS OF SOVEREIGN AND ITS TEN AFFILIATES THE AVERAGE EMPLOYMENT FOR THE FOUR QUARTERS ENDING SEPTEMBER 30, 1968, WAS 344 EMPLOYEES AND FOR THE FOUR QUARTERS ENDING DECEMBER 31, 1968, THE AVERAGE WAS 359 EMPLOYEES.

IN LIGHT OF THE FOREGOING WE ARE UNABLE TO CONCLUDE THAT THE DECISIONS BY SBA'S REGIONAL OFFICE AND THE SIZE APPEALS BOARD THAT NU PAK IS SMALL BUSINESS FOR THE INSTANT PROCUREMENT WERE NOT SUPPORTED BY THE RECORD BEFORE SBA AT THE TIME OR WERE ERRONEOUS AS A MATTER OF LAW. ACCORDINGLY, GSA WAS BOUND BY SBA'S DETERMINATION AS TO NU-PAK'S SIZE IN MAKING AWARD UNDER THE IFB.

AS TO THE 1956 CRIMINAL CONVICTION OF AN OFFICIAL OF NU-PAK, GSA REPORTS THAT IT HAS CONFIRMED SUCH CHARGE. IN THIS CONNECTION, GSA STATES THAT IN FEBRUARY 1957 THE INDIVIDUAL IN QUESTION WAS FINED $1,000 AND COSTS BY A LOCAL COURT IN PHILADELPHIA, PENNSYLVANIA, AND WAS PLACED ON PROBATION FOR TWO YEARS, AND THAT SENTENCE WAS SUSPENDED OR CONVICTION REVERSED ON THE CHARGES WHICH WERE NOT INVOLVED IN THE FINE OR PROBATION. IN ADDITION, GSA REPORTS THAT FURTHER INVESTIGATION BY GSA'S OFFICE OF AUDITS AND COMPLIANCE HAS NOT DISCLOSED ANY ADVERSE INFORMATION CONCERNING THE OFFICIAL FOR THE PERIOD SUBSEQUENT TO THE 1956-1957 CASE AND THAT NONE OF THE CHARGES IN QUESTION INVOLVED PUBLIC OR PRIVATE CONTRACT MATTERS. SUCH CIRCUMSTANCES, GSA STATES, IT DOES NOT BELIEVE THAT THE FACTS WOULD SUPPORT A FINDING AT THIS TIME THAT NU-PAK IS NOT RESPONSIBLE.

THERE IS NO QUESTION BUT THAT THE INTEGRITY OF A BIDDER IS A PROPER MATTER FOR CONSIDERATION IN DETERMINING THE BIDDER'S RESPONSIBILITY IN CONNECTION WITH THE PERFORMANCE OF A GOVERNMENT CONTRACT. 39 COMP. GEN. 468, 470, AND COURT CASES AND DECISIONS OF OUR OFFICE THEREIN CITED. THE REQUIREMENT IN FEDERAL PROCUREMENT REGULATIONS (FPR) 1 1.310-5 OF A SATISFACTORY RECORD OF INTEGRITY AS ONE OF THE STANDARDS WHICH A PROSPECTIVE GOVERNMENT CONTRACTOR MUST MEET IS CONSISTENT THEREWITH.

WHILE WE HAVE RECOGNIZED THAT CIRCUMSTANCES WHICH WOULD JUSTIFY DEBARMENT UNDER THE PROCUREMENT REGULATIONS MIGHT WELL AFFORD A BASIS FOR A FINDING OF NONRESPONSIBILITY ON THE PART OF A BIDDER, WE HAVE STRESSED THAT THE PROCUREMENT REGULATIONS CONTEMPLATE THAT THE ADMINISTRATIVE DETERMINATION OF LACK OF INTEGRITY OR BUSINESS ETHICS BE BASED ON CLEAR AND CONVINCING EVIDENCE DEMONSTRATING SUCH DEFICIENCIES ON THE PART OF THE BIDDER. COMP. GEN. 868, 872. THE DETERMINATION OF A BIDDER'S RESPONSIBILITY TO PERFORM A CONTRACT IN A GIVEN CASE MUST BE MADE BY THE CONTRACTING AGENCY, AND OUR OFFICE WILL ACCEPT SUCH AGENCY'S DETERMINATION THAT A BIDDER IS A RESPONSIBLE BIDDER UNLESS IT IS SHOWN THAT THE AGENCY'S DETERMINATION WAS ARBITRARY, CAPRICIOUS, FRAUDULENT, OR WITHOUT SUBSTANTIAL BASIS IN FACT. B-166118, MARCH 28, 1969; 48 COMP. GEN. ----- (B-165915, B-166340, B- 166751, JUNE 5, 1969) AND DECISIONS OF OUR OFFICE CITED THEREIN.

FPR 1-1.310-7, RELATING TO INFORMATION REGARDING RESPONSIBILITY OF A PROSPECTIVE GOVERNMENT CONTRACTOR, CONTEMPLATES THAT SUCH INFORMATION BE CURRENT. FPR 1-1.604-1 (C), RELATING TO THE SCOPE OF DEBARMENT, PROVIDES THAT THE CRIMINAL, FRAUDULENT, OR SERIOUSLY IMPROPER CONDUCT OF AN INDIVIDUAL MAY BE IMPUTED TO THE BUSINESS CONCERN WITH WHICH HE IS CONNECTED, WHERE SUCH GRAVE IMPROPRIETY WAS ACCOMPLISHED WITHIN THE COURSE OF HIS OFFICIAL DUTY OR WAS EFFECTED BY HIM WITH THE KNOWLEDGE OR APPROVAL OF THAT CONCERN.

THE OFFENSES WHICH WERE COMMITTED IN 1956 BY THE NU-PAK OFFICIAL, ALTHOUGH NOT RELATED TO THE PERFORMANCE OF A CONTRACT, MIGHT HAVE WARRANTED, AFTER THE CONVICTION IN 1957, ISSUANCE BY A CONTRACTING AGENCY OF A FINDING OF NONRESPONSIBILITY FOR LACK OF INTEGRITY AND DEBARMENT FOR SERIOUS CAUSE, AS CONTEMPLATED BY FPR 1-1.604 (A) (4), WITH RESPECT TO BOTH THE INDIVIDUAL AND ANY FIRM IN WHICH HE HELD A POSITION OF AUTHORITY. HOWEVER, SUCH EVENTS TRANSPIRED MORE THAN 12 YEARS AGO AND AT LEAST TWO YEARS PRIOR TO THE OFFICIAL'S ASSOCIATION WITH NU-PAK. IN THE CIRCUMSTANCES, NOT ONLY IS SUCH DATA NOT THE INFORMATION OF A CURRENT NATURE ON WHICH FPR 1-1.310-7 REQUIRES THAT DETERMINATIONS OF RESPONSIBILITY BE BASED, BUT UNDER FPR 1-1.604-1 (C) (3) THE ACTIONS OF THE OFFICIAL, WHICH DID NOT OCCUR DURING THE COURSE OF HIS OFFICIAL DUTIES WITH NU-PAK, OR WITH THE KNOWLEDGE AND APPROVAL OF NU-PAK, MAY NOT BE IMPUTED TO NU-PAK. ACCORDINGLY, WE ARE UNABLE TO DISAGREE WITH GSA'S CONCLUSION THAT THE FACTS RELATIVE TO THE OFFICIAL'S CONVICTION WOULD, AT THIS LATE DATE, SUPPORT A FINDING THAT NU-PAK IS NOT A RESPONSIBLE BIDDER. AS TO THE INFORMATION WHICH NU PAK FURNISHED ON STANDARD FORM 33, PAGE 2 OF THE FORM IS ENTITLED "REPRESENTATIONS, CERTIFICATIONS, AND ACKNOWLEDGMENTS," AND PARAGRAPHS 3 AND 7 READ AS FOLLOWS:

"3. CONTINGENT FEE (SEE PAR. 15 ON SF 33.4)

(A) HE ( ( HAS ( ( HAS NOT, EMPLOYED OR RETAINED ANY COMPANY OR PERSON (OTHER THAN A FULL-TIME, BONA FIDE EMPLOYEE WORKING SOLELY FOR THE OFFEROR) TO SOLICIT OR SECURE THIS CONTRACT, AND (B) HE ( ( HAS, ( ( HAS NOT, PAID OR AGREED TO PAY ANY COMPANY OR PERSON (OTHER THAN A FULL-TIME, BONA FIDE EMPLOYEE WORKING SOLELY FOR THE OFFEROR) ANY FEE, COMMISSION, PERCENTAGE, OR BROKERAGE FEE CONTINGENT UPON OR RESULTING FROM THE AWARD OF THIS CONTRACT, AND AGREES TO FURNISH INFORMATION RELATING TO (A) AND (B) ABOVE, AS REQUESTED BY THE CONTRACTING OFFICER. (FOR INTERPRETATION OF THE REPRESENTATION, INCLUDING THE TERM -BONA FIDE EMPLOYEE,- SEE CODE OF FEDERAL REGULATIONS, TITLE 41, SUBPART 1-1.5.)

"7. BUY AMERICAN CERTIFICATE

THE OFFEROR HEREBY CERTIFIES THAT EACH END PRODUCT, EXCEPT THE END PRODUCTS LISTED BELOW, IS A DOMESTIC SOURCE END PRODUCT (AS DEFINED IN THE CLAUSE ENTITLED -BUY AMERICAN ACT-); AND THAT COMPONENTS OF UNKNOWN ORIGIN HAVE BEEN CONSIDERED TO HAVE BEEN MINED, PRODUCED, OR MANUFACTURED OUTSIDE THE UNITED STATES.'

IN COMPLETING PARAGRAPH 3, NU-PAK CHECKED THE FIRST BOX AFTER (A), THEREBY INDICATING THAT IT HAD EMPLOYED SOMEONE OTHER THAN A REGULAR EMPLOYEE ON A CONTINGENT FEE BASIS TO SOLICIT OR SECURE THE CONTRACT; HOWEVER, IT CHECKED THE SECOND BOX AFTER (B) THEREBY INDICATING THAT IT HAD NOT PAID OR AGREED TO PAY ANY SUCH PERSON OR COMPANY ANY AMOUNT INCIDENT TO AWARD OF THE CONTRACT. WHEN QUESTIONED ABOUT ITS ENTRY BY THE PROCURING ACTIVITY, AS IS CONTEMPLATED BY THE TERMS OF THE PARAGRAPH, NU- PAK CLAIMED THAT IT HAD MADE A MISTAKE AND REQUESTED CORRECTION OF THE ENTRY TO SHOW THAT NO COMPANY OR PERSON HAD BEEN HIRED TO REPRESENT NU- PAK. ABSENT ANY EVIDENCE THAT NU-PAK DID IN FACT HIRE SOMEONE IN CONTRAVENTION OF THE RESTRICTIONS AGAINST PAYMENT OF CONTINGENT FEES, WE ARE UNABLE TO CONCLUDE THAT THE ACCEPTANCE BY THE CONTRACTING OFFICER OF NU-PAK'S EXPLANATION, AND CORRECTION OF THIS PORTION OF ITS BID, WAS NOT WARRANTED. FURTHER, IN THE EVENT OF ANY MISREPRESENTATION BY NU-PAK OR VIOLATION OF THE COVENANT AGAINST CONTINGENT FEES NU-PAK WOULD BE SUBJECT TO SUCH ACTION UNDER FPR 1 1.508-3 AS GSA MAY DETERMINE TO BE APPROPRIATE.

AS TO PARAGRAPH 7, NU-PAK ENTERED THE WORD "NONE" TO INDICATE THAT IT WAS NOT USING "EXCLUDED END PRODUCTS" AND THE SYMBOL "N/A" TO INDICATE THAT "COUNTRY OF ORIGIN" WAS NOT APPLICABLE. IN RESPONSE TO THE REQUEST OF THE PROCURING ACTIVITY, NU-PAK SUBMITTED INFORMATION IDENTIFYING AS A FOREIGN COMPONENT OF THE END ITEM COIR FIBER OBTAINED FROM CEYLON COMPRISING 35 PERCENT OF THE TOTAL COST OF THE COMPONENTS OF THE END ITEM. THE REMAINING COMPONENTS WERE IDENTIFIED AS LATEX ACCOUNTING FOR 60 PERCENT OF THE TOTAL COMPONENT COST AND ACTIVATOR ACCOUNTING FOR THE REMAINING 5 PERCENT. BASED ON SUCH INFORMATION, GSA DETERMINED THAT NU-PAK OFFERED A DOMESTIC SOURCE END PRODUCT AS DEFINED IN THE BUY AMERICAN ACT CLAUSE, PARAGRAPH 14, STANDARD FORM 32, AND FPR 1-6.101 (D); THAT IS, AN END PRODUCT MANUFACTURED IN THE UNITED STATES "IF THE COST OF ITS COMPONENTS WHICH ARE MINED, PRODUCED, OR MANUFACTURED IN THE UNITED STATES EXCEEDS 50 PERCENT OF THE COST OF ALL ITS COMPONENTS.' IN THE CIRCUMSTANCES, WE MUST CONCLUDE THAT THE DETERMINATION MADE BY GSA WITH RESPECT TO THE SOURCE OF THE END PRODUCT OFFERED BY NU-PAK WAS IN ACCORD WITH THE PROCUREMENT REGULATIONS AND THE TERMS OF THE IFB.

FOR THE REASONS STATED, WE FIND NO LEGAL BASIS FOR OBJECTION TO THE AWARD TO NU-PAK, WHICH WAS DELAYED IN VIEW OF YOUR PROTEST BUT WAS FINALLY AUTHORIZED ON JUNE 20, 1969, ON THE BASIS OF AN URGENT NEED FOR THE PROCUREMENT ITEMS. YOUR PROTEST IS THEREFORE DENIED.