B-173298, AUG 3, 1971

B-173298, AUG 3, 1971

BID PROTEST - WALSH-HEALEY PUBLIC CONTRACTS ACT - CERTIFICATE OF COMPETENCY DENIAL OF PROTEST BY SERAFIN SANTIAGO AGAINST THE CANCELLATION BY GENERAL SERVICES ADMINISTRATION OF A CONTRACT FOR "SWAGING" TOOLS. THE CONTRACT WAS CANCELLED, IN SPITE OF A CERTIFICATE OF COMPETENCY (COC) BEING ISSUED BY THE SMALL BUSINESS ADMINISTRATION, AFTER THE DEPARTMENT OF LABOR DETERMINED THAT PROTESTANT WAS NEITHER A REGULAR DEALER NOR MANUFACTURER OF THE TOOLS AS REQUIRED BY THE WALSH-HEALEY PUBLIC CONTRACTS ACT, 41 U.S.C. 35-45. RESPONSIBILITY FOR APPLYING THE CRITERIA OF THE WALSH-HEALEY ACT IS VESTED IN THE CONTRACTING OFFICER AND THE DEPARTMENT OF LABOR, AND GAO IS NOT AUTHORIZED TO REVIEW DETERMINATIONS AS TO WHETHER PARTICULAR FIRMS ARE WITHIN THE PURVIEW OF THE ACT. FURTHER, A COC HAS NO LEGAL EFFECT ON ELIGIBILITY UNDER THE WALSH-HEALEY ACT.

TO MR. SERAFIN SANTIAGO:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 9, 1971, WITH ENCLOSURE, REGARDING THE ACTION OF THE GENERAL SERVICES ADMINISTRATION (GSA) IN CANCELING CONTRACT NO. GSOOS-04236 FOR "SWAGING" TOOLS ON THE GROUND THAT YOU WERE NOT A MANUFACTURER OR REGULAR DEALER IN SUCH TOOLS.

IN YOUR LETTER, YOU INDICATE THAT YOU CANNOT UNDERSTAND HOW GSA COULD HAVE DETERMINED THAT YOU WERE NOT A REGULAR DEALER IN THESE TOOLS SINCE YOU RECEIVED A CERTIFICATE OF COMPETENCY (COC) FOR THIS PROCUREMENT FROM THE SMALL BUSINESS ADMINISTRATION (SBA) "WHO CERTAINLY THUS CONSIDERED ME A REGULAR DEALER."

WE UNDERSTAND THAT GSA CANCELED YOUR CONTRACT ON JUNE 3, 1971, AFTER THE DEPARTMENT OF LABOR DETERMINED ON MAY 13, 1971, THAT YOUR FIRM WAS NEITHER A REGULAR DEALER NOR MANUFACTURER OF THE TOOLS AS REQUIRED BY THE PROVISIONS OF THE WALSH-HEALEY PUBLIC CONTRACTS ACT, 41 U.S.C. 35 45. THIS STATUTE, AS SUPPLEMENTED BY SUBPART 1-12.6 OF THE FEDERAL PROCUREMENT REGULATIONS (41 CODE OF FEDERAL REGULATIONS (CFR) 1-12.6), PROVIDES THAT, WITH CERTAIN EXCEPTIONS NOT HERE MATERIAL, EVERY CONTRACT - INCLUDING THOSE TO BE PERFORMED IN PUERTO RICO - EXCEEDING $10,000 IN AMOUNT ENTERED INTO BY ANY GOVERNMENT AGENCY FOR THE PROCUREMENT OF SUPPLIES SHALL CONTAIN A STIPULATION THAT THE CONTRACTOR IS A MANUFACTURER OF OR REGULAR DEALER IN SUCH SUPPLIES AND THAT ANY BREACH OF SUCH STIPULATION SHALL CONSTITUTE GROUNDS FOR CANCELLATION OF THE CONTRACT. THE ACT, AS AMENDED, FURTHER PROVIDES AT 41 U.S.C. 38 THAT THE SECRETARY OF LABOR SHALL HAVE AUTHORITY TO ADMINISTER THE PROVISIONS OF THAT ACT AND TO MAKE SUCH RULES AND REGULATIONS AS MAY BE NECESSARY TO THAT END. THE "WALSH-HEALEY PUBLIC CONTRACTS ACT RULINGS AND INTERPRETATIONS NO. 3," PUBLISHED BY THE DEPARTMENT OF LABOR, STATES AT SECTION 29:

"(A) THE RESPONSIBILITY OF DETERMINING WHETHER OR NOT A BIDDER IS QUALIFIED AS A MANUFACTURER OR AS A REGULAR DEALER UNDER THE PUBLIC CONTRACTS ACT RESTS IN THE FIRST INSTANCE WITH THE CONTRACTING AGENCY. HOWEVER, ANY DECISION WHICH THE CONTRACTING OFFICER MIGHT MAKE IS SUBJECT TO REVIEW BY THE DEPARTMENT OF LABOR WHICH IS CHARGED WITH THE ADMINISTRATION OF THE ACT. THE DEPARTMENT OF LABOR MAY DETERMINE THE QUALIFICATIONS OF A BIDDER IN THE FIRST INSTANCE IN THE ABSENCE OF ANY DECISION BY THE CONTRACTING OFFICER."

THUS, RESPONSIBILITY FOR APPLYING THE CRITERIA OF THE WALSH-HEALEY PUBLIC CONTRACTS ACT IS VESTED IN THE CONTRACTING OFFICER AND THE DEPARTMENT OF LABOR. OUR OFFICE IS NOT AUTHORIZED TO REVIEW DETERMINATIONS AS TO WHETHER PARTICULAR FIRMS ARE REGULAR DEALERS OR MANUFACTURERS WITHIN THE PURVIEW OF THE WALSH-HEALEY ACT AND WE HAVE DENIED JURISDICTION IN THIS AREA BECAUSE SUCH DETERMINATIONS REST WITH THE CONTRACTING OFFICER SUBJECT TO FINAL REVIEW BY THE DEPARTMENT OF LABOR. B-166285, NOVEMBER 26, 1969; B-166905, JULY 24, 1969; B-167004, JULY 9, 1969.

UNDER THE PROCUREMENT STATUTE (41 U.S.C. 253(B)) AND THE REGULATIONS THEREUNDER AT 41 CFR 1-2.407-1, NO CONTRACT MAY BE AWARDED TO A BIDDER WHO IS NOT RESPONSIBLE UNDER THE CRITERIA PRESCRIBED BY THE REGULATION AT 41 CFR 1-1.310-5, INCLUDING THE STATUTORY REQUIREMENT THAT THE BIDDER BE A MANUFACTURER OR A REGULAR DEALER.

WHILE THE SBA ISSUED A COC TO YOU WITH RESPECT TO THIS PROCUREMENT, IT LONG HAS BEEN RECOGNIZED THAT SUCH CERTIFICATE IS CONTROLLING ONLY AS TO A BIDDER'S CAPACITY AND CREDIT TO PERFORM A CONTRACT. BUT A COC HAS NO LEGAL EFFECT ON HIS ELIGIBILITY AS A MANUFACTURER OR REGULAR DEALER UNDER THE WALSH-HEALEY PUBLIC CONTRACTS ACT. WE HAVE SO HELD IN 37 COMP. GEN. 676 (1958). AT PAGE 678 OF THAT DECISION, WE STATED:

"SINCE BY ITS TERMS SECTION 213 OF THE SMALL BUSINESS ACT, 15 U.S.C. 642, MAKES CONCLUSIVE THE ADMINISTRATION'S CERTIFICATION OF A SMALL BUSINESS CONCERN AS COMPETENT WITH RESPECT TO 'CAPACITY AND CREDIT,' WE THINK SUCH PROVISION MUST BE CONSTRUED AS CONTROLLING ONLY INSOFAR AS IT CONFLICTS WITH A DETERMINATION BY A PROCUREMENT OFFICER AS TO THE 'CAPACITY OR CREDIT' OF A BIDDER. HOWEVER, IF A BIDDER IS FOUND NOT TO BE QUALIFIED FOR OTHER REASONS, AS FOR EXAMPLE LACK OF INTEGRITY OR A CONSISTENT RECORD OF DEFAULT UNDER PRIOR CONTRACTS; OR IF HE IS FOUND NOT TO BE A 'MANUFACTURER' OR 'REGULAR DEALER,' OR IS DEBARRED FROM GOVERNMENT CONTRACTS UNDER THE STATUTES ABOVE CITED, IN OUR VIEW THE CERTIFICATE OF COMPETENCY, BEING LIMITED BY STATUTE TO 'CAPACITY AND CREDIT,' WOULD NOT BE DETERMINATIVE OF THE AWARD TO BE MADE."

FURTHER, THE COC PROCEDURES DO NOT APPLY WHERE THE CONTRACTING OFFICER HAS FOUND A SMALL BUSINESS CONCERN NOT RESPONSIBLE FOR A REASON OTHER THAN LACK OF COMPETENCY OR CREDIT. IN THIS REGARD, 41 CFR 1 1.310-5(A)(6) PROVIDES:

"(A) IN ORDER TO QUALIFY AS RESPONSIBLE, A PROSPECTIVE CONTRACTOR MUST, IN THE OPINION OF THE CONTRACTING OFFICER, MEET THE FOLLOWING STANDARDS AS THEY RELATE TO THE PARTICULAR PROCUREMENT UNDER CONSIDERATION:

"(6) IS OTHERWISE QUALIFIED AND ELIGIBLE TO RECEIVE AN AWARD UNDER APPLICABLE LAWS AND REGULATIONS; E.G., SUBPART 1-12.6."

UNDER THE CIRCUMSTANCES, WE MUST CONCLUDE THAT THE ACTION OF GSA IN CANCELING YOUR CONTRACT WAS A PROPER EXERCISE OF PROCUREMENT RESPONSIBILITY WHICH MAY NOT BE QUESTIONED BY OUR OFFICE.

WE TRUST THE FOREGOING SATISFACTORILY EXPLAINS THE BASES OF THE ACTIONS TAKEN BY GSA. WITH RESPECT TO YOUR REQUEST THAT GSA WITHHOLD AN AWARD TO YOUR COMPETITOR UNTIL YOU HAVE HAD AN OPPORTUNITY FOR A HEARING BEFORE THE AGENCY, WE HAVE BEEN ADVISED INFORMALLY THAT GSA HAS PROCEEDED WITH AWARD TO THE OTHER BIDDER ON THE PROCUREMENT BECAUSE OF THE URGENT NEED FOR THE TOOLS.