B-175366, APR 21, 1972

B-175366, APR 21, 1972

BID PROTEST - WALSH-HEALEY PUBLIC CONTRACTS ACT DECISION DENYING THE PROTEST OF FLOWDYNE CORPORATION AGAINST REJECTION OF ITS OFFER SUBMITTED IN RESPONSE TO AN RFP ISSUED BY THE NAVAL SUPPLY CENTER, PUGET SOUND, BREMERTON, WASH., FOR A PROCUREMENT OF FOUR ELECTROHYDRAULIC POWER SUPPLY UNITS. IT WAS DETERMINED THAT FLOWDYNE DID NOT QUALIFY AS A MANUFACTURER OR REGULAR DEALER IN THE ITEMS OFFERED, PURSUANT TO THE REQUIREMENTS OF SECTION 35 OF THE WALSH-HEALEY PUBLIC CONTRACTS ACT, 41 U.S.C. 35-45. UNDER THE ACT THE RESPONSIBILITY IS PLACED UPON THE CONTRACTING OFFICER TO DETERMINE WHETHER A PARTICULAR FIRM IS QUALIFIED AS A MANUFACTURER, SUBJECT TO REVIEW BY THE DEPARTMENT OF LABOR, WHICH DECISION IS FINAL. 167426, AUGUST 19, 1969. ACCORDINGLY, THE PROTEST MUST BE DENIED.

TO FLOWDYNE CORPORATION:

WE REFER TO YOUR PROTEST AGAINST REJECTION OF YOUR OFFER BY THE NAVAL SUPPLY CENTER, PUGET SOUND, BREMERTON, WASHINGTON, UNDER REQUEST FOR PROPOSAL NO. N00406-72-R-0105, AFTER A DETERMINATION THAT YOUR CORPORATION DOES NOT QUALIFY AS A MANUFACTURER OF THE ARTICLES TO BE MANUFACTURED IN THE PERFORMANCE OF THE CONTRACT.

THE SOLICITATION, REQUESTING OFFERS ON 4 ELECTROHYDRAULIC POWER SUPPLY UNITS, WITH DATA, IN ACCORDANCE WITH APPLICABLE SPECIFICATIONS, WAS ISSUED ON DECEMBER 2, 1971. SINCE THE SOLICITATION CONTEMPLATED A SUPPLY CONTRACT EXCEEDING $10,000, EACH OFFEROR WAS REQUIRED BY THE SOLICITATION TO CERTIFY THAT IT WAS EITHER A MANUFACTURER OF, OR A REGULAR DEALER IN, THE ITEMS OFFERED AS REQUIRED BY SECTION 35 OF THE WALSH-HEALEY PUBLIC CONTRACTS ACT, 41 U.S.C. 35-45. YOUR OFFER CONTAINED A CERTIFICATION THAT YOU ARE A MANUFACTURER OF THE ITEMS.

AT THE REQUEST OF THE NAVAL SUPPLY CENTER, PUGET SOUND, THE DEFENSE SUPPLY AGENCY, DEFENSE CONTRACT ADMINISTRATION SERVICES REGION, NEW YORK, GARDEN CITY DISTRICT, CONDUCTED A PREAWARD SURVEY ON JANUARY 26, 1972, AT FLOWDYNE CORPORATION TO DETERMINE ITS QUALIFICATIONS AS A MANUFACTURER OF THE POWER UNITS BEING OFFERED. THE PERTINENT PARTS OF THE REPORT OF THAT SURVEY ARE AS FOLLOWS:

"2. IN AN INTERVIEW WITH MR. L. B. HABERMAN, PRESIDENT OF SUBJECT BIDDER, I WAS INFORMED OF THE FOLLOWING:

A. SUBJECT BIDDER HAS A WRITTEN LEASE WITH EASTERN ELECTRIC EQUIPMENT CO., INC., WHICH OCCUPIES ABOUT 80% OF THE BUILDING AT 44 EAST OLD COUNTRY ROAD.

B. THE AREA WHICH BIDDER INDICATES IS UNDER LEASE WITH THE LANDLORD IS FILLED PARTLY WITH EQUIPMENT BELONGING TO A SECOND TENANT, A COMPANY WHICH SUPPLIES SUPERMARKETS WITH SHOWCASES AND COUNTERS. THERE ARE NO LINES OR SIGNS IN THE AREA INDICATING WHICH PORTION OF THE SPACE BELONGS TO THE BIDDER OR TO THE SECOND TENANT BUT A BEAM IN THE CEILING, POINTED TO BY MR. HABERMAN, ACTED AS THE DIVIDING LINE.

C. BIDDER HAS THE FOLLOWING EMPLOYEES:

1. MR. HABERMAN - ENGINEER

2. MRS. HABERMAN - BOOKKEEPER

3. MR. HABERMAN'S SON - PART-TIME

EMPLOYEE

4. AN UNSKILLED HELPER, WHO APPEARED

TO BE NOT AVAILABLE AND FOR WHOM

NO PAYCHECK STUBS OR INTERNAL

REVENUE SERVICE WITHHOLDING RECEIPTS

COULD BE PRODUCED.

D. MR. HABERMAN ASSERTED BIDDER OWNED THE FOLLOWING EQUIPMENT:

1. HAND TOOLS

2. HYDRAULIC POWER UNIT

3. DOLLIES

4. WELDING EQUIPMENT

UPON BEING REQUESTED TO EXHIBIT THE WELDING EQUIPMENT, WHICH WAS NOT VISIBLE, MR. HABERMAN CONDUCTED ME THROUGH A DOOR INTO THE EASTERN ELECTRIC PLANT AND INDICATED TWO PIECES OF WELDING EQUIPMENT. MR. HABERMAN READILY ADMITTED THAT THE WELDING EQUIPMENT WAS NEITHER THE PROPERTY OF FLOWDYNE CORP., NOR LEASED NOR WAS THERE ANY WRITTEN AGREEMENT WHATSOEVER FOR THEIR USE.

E. BIDDER PLANNED TO ORDER ALL RAW MATERIALS, PURCHASE A PUMP AND A MOTOR PLUS A LARGE NUMBER OF OTHER ITEMS FROM VARIOUS MANUFACTURERS. IT WOULD THEN WELD THE VARIOUS PARTS IN THE ASSEMBLY AREA OF THE SHOP. IT WOULD ALSO DO TESTING AND PACKAGING.

F. AT THE TIME BIDDER WOULD BORROW THE WELDING EQUIPMENT FROM THE LANDLORD, IT WOULD ALSO HIRE A CERTIFIED WELDER.

"7. IF BIDDER ALREADY OBTAINED A CONTRACT TO MANUFACTURE THE SAME ITEM, WHY SHOULD IT BE CONSIDERED AS NEWLY ENTERING THE MANUFACTURING OF ELECTROHYDRAULIC POWER SUPPLIES? THE INDUSTRIAL LABOR RELATIONS OFFICE HAS SOLE AUTHORITY AT THE REGION TO DETERMINE WHETHER BIDDER IS A QUALIFIED MANUFACTURER OR REGULAR DEALER UNDER THE WALSH-HEALEY PUBLIC CONTRACTS ACT AND ASPR 12-603. NO SUCH DETERMINATION WAS MADE DURING THE LAST SURVEY ON THE SIMILAR PROCUREMENT. THE RECORDS SHOW THAT FLOWDYNE DID VIRTUALLY NO WORK AT ALL TO ACCOMPLISH THE COMPLETED GOODS. ALL MANUFACTURING WAS SUBCONTRACTED. TESTING, INSPECTING, PACKING, PACKAGING, AND SHIPPING ARE NOT MANUFACTURING ACTIVITIES. HAD THIS OFFICE SURVEYED BIDDER FOR THE ITEM ON WHICH IT IS AGAIN BIDDING, IT WOULD HAVE FOUND THE BIDDER UNQUALIFIED.

"8. THEREFORE IT IS THE OPINION OF THIS OFFICE THAT BIDDER IS NEWLY ENTERING INTO THE MANUFACTURING OF THE BID ITEM. AS BIDDER HAS NOT MADE ALL NECESSARY PRIOR ARRANGEMENTS FOR EQUIPMENT AND PERSONNEL TO PERFORM THE MANUFACTURING OPERATIONS REQUIRED FOR THE FULFILLMENT OF THE CONTRACT, IT IS NOT QUALIFIED AS A MANUFACTURER AS DEFINED BY THE WALSH-HEALEY PUBLIC CONTRACTS ACT AND ASPR 12-603.1."

BASED ON THE INFORMATION CONTAINED IN THE REPORT OF THE PREAWARD SURVEY, THE CONTRACTING OFFICER ADVISED YOU THAT YOUR CORPORATION WAS NOT AN ELIGIBLE BIDDER FOR THE POWER UNITS SINCE IT DID NOT QUALIFY AS A MANUFACTURER OF THE UNITS UNDER THE WALSH-HEALEY PUBLIC CONTRACTS ACT. AFTER RECEIPT OF THIS ADVICE, YOU OFFERED TO PERFORM THE CONTRACT IN THE SAME MANNER AS A PREVIOUS CONTRACT FOR SIMILAR POWER SUPPLIES, WITH ALL MANUFACTURING PERFORMED BY SUBCONTRACTORS. IT APPEARS FROM THE RECORD THAT NO DETERMINATION AS TO YOUR STATUS AS A MANUFACTURER WAS MADE IN CONNECTION WITH THE PREVIOUS CONTRACT.

THE CONTRACTING OFFICER REVIEWED THE ADDITIONAL INFORMATION FURNISHED BY YOUR COMPANY AND MADE HIS FINAL DETERMINATION THAT FLOWDYNE CORPORATION WAS NOT A QUALIFIED MANUFACTURER OF THE ITEMS BEING OFFERED. THIS DETERMINATION, TOGETHER WITH THE CONTRACTING OFFICER'S FILE IN THE MATTER, WAS FORWARDED BY LETTER OF FEBRUARY 11, 1972, TO THE ADMINISTRATOR, WAGE AND HOUR AND PUBLIC CONTRACTS DIVISIONS, U.S. DEPARTMENT OF LABOR, FOR REVIEW.

THE RECORD IN THE PRESENT CASE IS SILENT AS TO THE REASON FOR THE CONTRACTING AGENCY'S FAILURE TO MAKE A DETERMINATION ON YOUR STATUS AS A MANUFACTURER OF POWER SUPPLIES BEFORE AWARD OF THE PREVIOUS CONTRACT. DCASR, NEW YORK, STATED ABOVE THAT HAD IT SURVEYED YOUR FIRM FOR THE ITEM ON WHICH YOU WERE AGAIN BIDDING, IT WOULD HAVE FOUND YOU UNQUALIFIED AS A MANUFACTURER IN THE FIRST INSTANCE. IN ANY EVENT, YOUR OFFER TO PERFORM THE PRESENT CONTRACT IN THE SAME MANNER AS THE PREVIOUS CONTRACT, WITH ALL MANUFACTURING PERFORMED BY SUBCONTRACTORS, WAS SUBMITTED TO THE DEPARTMENT OF LABOR AND WAS CONSIDERED DURING ITS REVIEW.

BY LETTER OF FEBRUARY 28, 1971, THE U.S. DEPARTMENT OF LABOR STATED THAT THE INFORMATION IN THIS MATTER HAD BEEN REVIEWED AND THE DEPARTMENT COULD FIND NO REASON TO QUESTION THE CONTRACTING OFFICER'S DETERMINATION THAT PUBLIC CONTRACTS ACT.

THE WALSH-HEALEY PUBLIC CONTRACTS ACT, 41 U.S.C. 35-45, AUTHORIZES THE SECRETARY OF LABOR TO ADMINISTER ITS PROVISIONS AND TO ISSUE RULES AND REGULATIONS THEREUNDER. SECTION 29 OF "WALSH-HEALEY PUBLIC CONTRACTS ACT RULINGS AND INTERPRETATIONS NO. 3" PUBLISHED BY THE DEPARTMENT OF LABOR PROVIDES:

"(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."

IN CONSTRUING THE FOREGOING SECTION, THIS OFFICE HAS HELD THAT THE RESPONSIBILITY IS PLACED UPON THE CONTRACTING OFFICER TO DETERMINE WHETHER A PARTICULAR FIRM IS QUALIFIED AS A MANUFACTURER, SUBJECT TO REVIEW BY THE DEPARTMENT OF LABOR, WHOSE DECISION IS FINAL. B-166905, JULY 24, 1969; B- 167426, AUGUST 19, 1969, AND CASES CITED THEREIN. IN VIEW THEREOF, WE FIND NO BASIS IN THE PRESENT CASE FOR LEGAL OBJECTION TO THE ACTIONS OF THE CONTRACTING OFFICER AND THE DEPARTMENT OF LABOR IN DETERMINING THAT FLOWDYNE CORPORATION IS NOT QUALIFIED AS A MANUFACTURER OF THE POWER SUPPLIES IN QUESTION.

FOR THE REASONS STATED, YOUR PROTEST IS DENIED.