B-161410, AUG. 25, 1967

B-161410, AUG. 25, 1967

BIDDERS - RESPONSIBILITY - SMALL BUSINESS BIDS - MULTIPLE DECISION ON BEHALF OF GUITON'S CHARTER BUS SERVICE AGAINST AWARD TO CALIFORNIA SIGHTSEEING TOURS FOR BUS SERVICES FOR OAKLAND ARMY BASE, CALIFORNIA SET ASIDE FOR SMALL BUSINESS CONCERNS. BIDDER FOR FURNISHING BUS SERVICES WHO ALLEGES THAT SUCCESSFUL BIDDER AND ANOTHER BIDDER HAD AN IDENTITY OF INTEREST, THAT PRICES WERE NOT ARRIVED AT INDEPENDENTLY AND THAT SUCCESSFUL BIDDER DID NOT HAVE SUFFICIENT BUSES TO PERFORM MUST ON BASIS OF RECORD HAVE PROTEST DENIED. PERMISSION AFTER OPENING GIVEN TO SUCCESSFUL BIDDER TO CERTIFY THAT HIS COMPANY WAS NOT CONTROLLED BY PARENT COMPANY WAS A MINOR INFORMALITY THAT COULD BE CURED. PREAWARD SURVEY SUPPORTS DETERMINATION OF CAPABILITY TO PERFORM AND THAT HE HAD SUFFICIENT BUSES BY SUBCONTRACTING ARRANGEMENTS. ALTHOUGH ON 14 OF 15 ITEMS TWO CORPORATIONS QUOTED SAME PRICES THEY DO NOT CONSTITUTE "LINE ITEMS" ALTHOUGH ONE ITEM IS LINE ITEM SINCE TOTAL PRICE OF EACH OF THE 2 BIDS ON SUCH ITEM WAS $400 AND A $2,500 EXCEPTION IS IN ASPR 1-114 (C) (II) MATTER IS NOT FOR REPORTING TO JUSTICE AS IDENTICAL BIDS. SUBMISSION OF TWO SEPARATE BIDS BY RELATED COMPANIES WAS NOT PREJUDICIAL TO OTHER BIDDERS.

TO CRAIG Z. RANDALL, ESQUIRE:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 20, 1967, AND TO SUBSEQUENT CORRESPONDENCE, RELATIVE TO THE PROTEST FILED BY YOUR FIRM ON BEHALF OF MR. ANDRE GUITON, D/B/A GUITON'S CHARTER BUS SERVICE, BERKELEY, CALIFORNIA, AGAINST THE REJECTION OF HIS BID AND THE AWARD OF A CONTRACT TO CALIFORNIA SIGHTSEEING TOURS, INCORPORATED, HARBOR CITY, CALIFORNIA, PURSUANT TO INVITATION FOR BIDS NO. DAHC23-67-B 0015, ISSUED DECEMBER 2, 1966, BY THE WESTERN AREA MILITARY TRAFFIC MANAGEMENT AND TERMINAL SERVICE, OAKLAND ARMY BASE, OAKLAND, CALIFORNIA.

THE INVITATION FOR BIDS WAS ISSUED WITH A VIEW TOWARD ENTERING INTO A REQUIREMENTS CONTRACT WITH A SMALL BUSINESS CONCERN FOR THE FURNISHING OF BUS SERVICE BETWEEN SPECIFIED POINTS DURING THE PERIOD FEBRUARY 1, 1967, THROUGH JANUARY 31, 1968. FOR BID EVALUATION PURPOSES, BIDDERS WERE REQUIRED TO QUOTE SEPARATE RATES ON 26 ITEMS OF ESTIMATED QUANTITIES OF REQUIRED SERVICES, CANCELED TRIPS AND STANDBY TIME IN EXCESS OF ONE HOUR.

THE EIGHT BIDS RECEIVED IN RESPONSE TO THE INVITATION WERE PUBLICLY OPENED, AS SCHEDULED, ON JANUARY 4, 1967. THE LOWEST BIDDER ALLEGED A MISTAKE AND WAS PERMITTED TO WITHDRAW ITS BID AFTER REVIEW OF THE FACTS AND CIRCUMSTANCES CONCERNING THE ALLEGED MISTAKE. THE SECOND AND THIRD LOWEST BIDS, IN THE TOTAL AMOUNTS OF $420,848.75 AND $423,247.50, WERE SUBMITTED RESPECTIVELY BY CALIFORNIA SIGHTSEEING TOURS, INCORPORATED, AND MR. ANDRE GUITON. THE SIXTH LOWEST BIDDER, M AND M CHARTER LINES, INCORPORATED, SAN FRANCISCO, CALIFORNIA, QUOTED PRICES AGGREGATING THE SUM OF $500,262.50. A CONTRACT WAS AWARDED ON JANUARY 30, 1967, TO CALIFORNIA SIGHTSEEING TOURS, INCORPORATED, AS THAT RESPONSIBLE BIDDER WHOSE BID WAS THE LOWEST OF THE SEVEN BIDS WHICH REMAINED FOR CONSIDERATION AFTER IT WAS DETERMINED THAT PERMISSION SHOULD BE GRANTED FOR THE WITHDRAWAL OF THE LOWEST OF THE EIGHT BIDS RECEIVED.

THE PROTEST SUBMITTED BY YOUR FIRM ON BEHALF OF MR. GUITON IS BASED UPON AN ALLEGED IDENTITY OF INTEREST BETWEEN THE SUCCESSFUL BIDDER AND M AND M CHARTER LINES, INCORPORATED; THE FAILURE OF THE SUCCESSFUL BIDDER TO SHOW, BY THE CHECKING OF AN APPROPRIATE BLOCK ON PAGE 2 OF THE INVITATION FOR BIDS, WHETHER IT WAS OWNED OR CONTROLLED BY A PARENT COMPANY; THE CONTENTION THAT THE SUCCESSFUL BIDDER PROPERLY COULD NOT HAVE CERTIFIED, WITHOUT EXCEPTION, THAT ITS PRICES WERE ARRIVED AT INDEPENDENTLY AS REQUIRED BY THE INVITATION; THE FACT THAT THE PROTESTING BIDDER WAS NOT ADVISED IN TIME TO SUBMIT A WRITTEN PROTEST PRIOR TO AWARD OF THE CONTRACT; AND YOUR APPARENT BELIEF THAT IT WOULD NOT HAVE BEEN PROPER TO MAKE A CONTRACT AWARD TO CALIFORNIA SIGHTSEEING TOURS, INCORPORATED, IF IT DID NOT OWN AT THE TIME OF MAKING THE AWARD A SUFFICIENT NUMBER OF BUSES TO PERFORM THE PROPOSED CONTRACT AND TO MEET ITS OBLIGATIONS UNDER A PREVIOUS CONTRACT WITH THE GOVERNMENT WHICH WAS STILL IN EFFECT.

YOU SUBMITTED BY LETTER DATED MAY 29, 1967, COPIES OF CERTAIN DOCUMENTS WHICH YOU RECEIVED FROM THE CALIFORNIA DEPARTMENT OF MOTOR VEHICLES, AND INDICATED THAT YOUR INVESTIGATION FAILED TO DISCLOSE THAT THE SUCCESSFUL BIDDER OWNED MORE THAN SIX BUSES ON FEBRUARY 1, 1967. YOU REQUESTED COPIES OF "ALL INFORMATION" FURNISHED BY THE DEPARTMENT OF THE ARMY IN REGARD TO THE PROTEST AND COPIES OF THE PERTINENT CORRESPONDENCE WHICH WE RECEIVED FROM THE DEPARTMENT WERE ENCLOSED WITH OUR LETTER TO YOU OF JUNE 23, 1967. YOU WERE ALSO GIVEN CERTAIN INFORMATION DISCLOSED IN A PRE- AWARD SURVEY REPORT ON CALIFORNIA SIGHTSEEING TOURS, INCORPORATED. THAT REPORT WAS PREPARED AT THE REQUEST OF THE CONTRACTING OFFICER BY THE ANAHEIM, CALIFORNIA, DEFENSE CONTRACT ADMINISTRATIVE SERVICES DISTRICT, DEFENSE SUPPLY AGENCY.

IN A LETTER DATED JUNE 30, 1967, YOU STATED THAT YOU HAD NO FURTHER EVIDENCE TO SUBMIT, BUT COMMENTED ON CERTAIN OF THE STATEMENTS MADE BY THE COGNIZANT ADMINISTRATIVE OFFICIALS REGARDING THE PROTEST AND EMPHASIZED YOUR PREVIOUSLY STATED POSITION THAT THE BID OF CALIFORNIA SIGHTSEEING TOURS, INCORPORATED, AND THE BID OF M AND M CHARTER LINES, INCORPORATED, WERE MULTIPLE BIDS WHICH SHOULD HAVE BEEN DISREGARDED IN THE MAKING OF A CONTRACT AWARD PURSUANT TO INVITATION FOR BIDS NO. DAHC23-67-B-0015.

THE BID SUBMITTED BY CALIFORNIA SIGHTSEEING TOURS, INCORPORATED, WAS SIGNED BY MR. W. B. SAWYER, VICE PRESIDENT AND MANAGER OF THE COMPANY, AND THE BID SUBMITTED BY M AND M CHARTER LINES, INCORPORATED, WAS SIGNED BY MR. D. A. MANNINO, PRESIDENT OF THAT COMPANY. MR. MANNINO IS THE PRINCIPAL OWNER OF BOTH CORPORATIONS AND THE FACILITIES OF THE TWO CORPORATIONS ARE INTERRELATED TO A CONSIDERABLE EXTENT. EACH GID CONTAINED A REPRESENTATION ON PAGE 2 OF THE BIDDING FORM THAT THE BIDDER WAS NOT OWNED OR CONTROLLED BY A PARENT COMPANY. THE BID OF CALIFORNIA SIGHTSEEING TOURS, INCORPORATED, AT TIME OF BID OPENING, DID NOT CONTAIN SUCH REPRESENTATION. HOWEVER, THE BID NOW SHOWS MR. SAWYER'S INITIALED CHECK MARK TO INDICATE THAT THE BIDDER IS NOT OWNED OR CONTROLLED BY A PARENT COMPANY. THE INSERTION OF THE CHECK MARK WAS PERMITTED AFTER OPENING OF BIDS ON THE BASIS THAT ITS ORIGINAL OMISSION CONSTITUTED A MINOR INFORMALITY OR IRREGULARITY IN BID WHICH WOULD BE CURED OR WAIVED IN ACCORDANCE WITH THE PROVISIONS OF SECTIONS 1-114 AND 2-405, AND PARAGRAPH 2-201 (A) (XXIII), ARMED SERVICES PROCUREMENT REGULATION (ASPR). THE PRICES QUOTED BY THE TWO CORPORATIONS ON 15 OF THE 26 ITEMS OF THE INVITATION FOR BIDS ARE IDENTICAL. THE IDENTICAL PRICING SITUATION OCCURRED WITH RESPECT TO A RELATIVELY MINOR ITEM OF BUS SERVICE AND WITH RESPECT TO 14 ITEMS UNDER WHICH "NO TRIP" AND "STANDBY" RATES WERE REQUIRED TO BE FURNISHED.

THE CONTRACTING OFFICER WAS INFORMED ORALLY ON JANUARY 25, 1967, THAT YOUR CLIENT INTENDED TO PROTEST IF AWARD WAS MADE OTHER THAN TO GUITON'S CHARTER BUS SERVICE. IT APPEARS YOU WERE ADVISED THAT THIS WAS YOUR CLIENT'S PREROGATIVE AND THAT THE PROTEST SHOULD BE SUBMITTED IN THE FORM OF A LETTER SIGNED BY MR. GUITON. A TIME LIMITATION FOR SUBMISSION OF A WRITTEN PROTEST SHOULD HAVE BEEN SPECIFIED IN ACCORDANCE WITH THE PROVISIONS OF SUBSECTION 2-407.9, ASPR. HOWEVER, IT WOULD APPEAR THAT A WRITTEN PROTEST SHOULD HAVE BEEN SUBMITTED PROMPTLY AFTER THE CONVERSATION OF JANUARY 25, 1967, SINCE IT WAS CONTEMPLATED THAT THE PERIOD OF THE PROPOSED CONTRACT WOULD COMMENCE ON FEBRUARY 1, 1967. IN ANY EVENT, THE FAILURE OF THE CONTRACTING OFFICER TO SET A LIMITING DATE FOR THE SUBMISSION OF A WRITTEN PROTEST DOES NOT, IN OUR OPINION, AFFECT IN ANY MANNER THE VALIDITY OF THE CONTRACT WHICH WAS AWARDED TO CALIFORNIA SIGHTSEEING TOURS, INCORPORATED.

THE PROVISIONS OF SECTIONS 1-114 AND 2-405, AND PARAGRAPH 2-201 (A) (XXIII), ASPR, SO FAR AS THEY CONCERN THE QUESTION WHETHER A MINOR INFORMALITY OR IRREGULARITY IN BID MAY BE CURED OR WAIVED, ARE SUBSTANTIALLY IN ACCORDANCE WITH THE VIEWS EXPRESSED BY OUR OFFICE IN VARIOUS CASES TO THE EFFECT THAT A MINOR INFORMALITY OR IRREGULARITY IN BID MAY BE WAIVED IF SUCH ACTION IS NOT PREJUDICIAL TO THE RIGHTS OF OTHER BIDDERS. IN OUR OPINION, THE CONTRACTING OFFICER IN THIS CASE WAS AUTHORIZED TO PERMIT THE SUCCESSFUL BIDDER TO SUPPLY THE CERTIFICATION THAT IT WAS NOT OWNED OR CONTROLLED BY A PARENT COMPANY AFTER THE OPENING OF BIDS. ALSO, WE DO NOT AGREE WITH YOUR SUGGESTION THAT, BECAUSE OF THE ELEMENT OF COMMON OWNERSHIP, NEITHER THE SUCCESSFUL BIDDER NOR M AND M CHARTER LINES, INCORPORATED, PROPERLY COULD HAVE CERTIFIED THAT IT WAS NOT OWNED OR CONTROLLED BY A PARENT COMPANY.

WITH RESPECT TO THE QUESTION WHETHER THE SUCCESSFUL BIDDER WAS CAPABLE OF PERFORMING THE PROPOSED CONTRACT, A DETERMINATION OF A BIDDER'S RESPONSIBILITY OR NONRESPONSIBILITY INVOLVES THE EXERCISE OF A CONSIDERABLE RANGE OF DISCRETION AND OUR OFFICE HAS CONSISTENTLY ADHERED TO THE RULE THAT THE ADMINISTRATIVE DETERMINATION IN A PARTICULAR CASE WILL NOT BE QUESTIONED UNLESS IT APPEARS THAT THE DETERMINATION IS EITHER ARBITRARY OR CAPRICIOUS OR NOT BASED ON SUBSTANTIAL EVIDENCE. 38 COMP. GEN. 131; 37 ID. 430, 435. THE INFORMATION CONTAINED IN THE PRE-AWARD SURVEY REPORT ON CALIFORNIA SIGHTSEEING TOURS, INCORPORATED, REASONABLY SUPPORTS THE ADMINISTRATIVE DETERMINATION THAT THE SUCCESSFUL BIDDER QUALIFIED AS A RESPONSIBLE PROSPECTIVE CONTRACTOR FOR THE FURNISHING OF THE REQUIRED BUS SERVICES, ALTHOUGH IT APPARENTLY DID NOT OWN A SUFFICIENT NUMBER OF BUSES TO PERFORM THE PROPOSED CONTRACT AND TO MEET ITS OBLIGATIONS UNDER A PREVIOUS CONTRACT WITH THE GOVERNMENT. THE COMPANY HAD MADE CERTAIN SUBCONTRACTING ARRANGEMENTS AND THE PRE-AWARD SURVEY REPORT OTHERWISE INDICATED THAT THE COMPANY HAD THE ABILITY TO OBTAIN THE NUMBER OF BUSES NECESSARY FOR TRIPS WHICH WOULD BE ORDERED BY THE GOVERNMENT DURING THE PERIOD OF THE PROPOSED CONTRACT.

IT APPEARS THAT 14 OF THE 15 ITEMS FOR WHICH IDENTICAL PRICES WERE QUOTED BY THE TWO CORPORATIONS DO NOT CONSTITUTE "LINE ITEMS" WITHIN THE MEANING OF SECTION 1-114, ASPR, WHICH CONCERNS PRIMARILY THE MATTER OF REPORTING IDENTICAL BIDS TO THE DEPARTMENT OF JUSTICE. THE 15TH ITEM INVOLVED WHAT APPEARS TO BE A "LINE ITEM," BUT THE DEPARTMENT OF THE ARMY WAS NOT REQUIRED UNDER THE PROVISIONS OF THE REGULATION TO REPORT THE IDENTICAL BIDS ON THAT ITEM TO THE DEPARTMENT OF JUSTICE, SINCE THE TOTAL PRICE UNDER EACH OF THE TWO BIDS ON SUCH ITEM WAS $400 AND A $2,500 EXCEPTION IS PROVIDED FOR IN PARAGRAPH (C) (II) OF SECTION 1-114, ASPR.

IT IS POSSIBLE THAT MR. SAWYER AND MR. MANNINO ACTED INDEPENDENTLY IN THE MATTER OF PREPARING AND SUBMITTING BIDS ON BEHALF OF THE TWO CORPORATIONS, CONSIDERING THAT BOTH CORPORATIONS MAY HAVE ADOPTED STANDARD RATES FOR SUCH ITEMS AS CANCELED TRIPS AND STANDBY TIME IN EXCESS OF ONE HOUR. HOWEVER, IN VIEW OF THE CLOSE RELATIONSHIP BETWEEN THE TWO CORPORATIONS, THEIR CERTIFICATIONS UNDER PARAGRAPH 8 OF THE FORM OF REPRESENTATIONS AND CERTIFICATIONS WOULD APPEAR TO BE PROPERLY FOR CONSIDERATION AS INDICATING ONLY THAT THE PRICES QUOTED WERE NOT DISCUSSED WITH OR COMMUNICATED TO ANY OF THE OTHER BIDDERS. IN OUR OPINION, THE CONTRACTING OFFICER SHOULD HAVE CONSIDERED THAT, FOR ALL PRACTICAL PURPOSES, THE TWO BIDS HAD BEEN SUBMITTED BY ONE CONCERN, AND WE AGREE WITH YOUR CONTENTION THAT THE MERE FACT THAT SEPARATE CORPORATE ENTITIES WERE INVOLVED WOULD NOT AUTOMATICALLY PRECLUDE A CHALLENGE OF MULTIPLE BIDDING.

IN A LETTER OF PROTEST, DATED MARCH 17, 1967, TO THE CONTRACTING OFFICER, REFERENCE WAS MADE TO 14 COMP. GEN. 168 AND 39 COMP. GEN. 892, WHICH DECISIONS RELATE TO THE SUBJECT OF DOUBLE OR MULTIPLE BIDDING. IT WAS CONTENDED THAT THE CONTRACTING OFFICER "ALLOWED THE MULTIPLE BID IN IGNORANCE OF THE APPLICABLE LAW.' THE SUGGESTION WAS MADE THAT, IF A CORPORATION IS AN ELIGIBLE BIDDER IN ITS OWN RIGHT, NO MATTER WHO THE STOCKHOLDERS MAY BE, SEVERAL SEPARATE BUT AFFILIATED CORPORATIONS COULD SUBMIT BIDS AND THEY THEN COULD SELECT THE HIGHEST LOW BID AND COLLAPSE THE OTHER CORPORATIONS, THEREBY PRACTICALLY INSURING THAT ONE OF THE CONCERNS WOULD BE THE SUCCESSFUL BIDDER. YOUR LETTER OF JUNE 30, 1967, RAISED THE QUESTION AS TO WHAT WOULD HAVE BEEN THE RESULT IF THE SUCCESSFUL BIDDER IN THIS CASE HAD NOT MADE AN EFFORT TO QUALIFY AND IF THE BID OF M AND M CHARTER LINES, INCORPORATED, WAS NEXT IN LINE FOR CONSIDERATION. IT WAS ALSO CONTENDED IN YOUR LETTER OF JUNE 30, 1967, THAT THE RULING IN 39 COMP. GEN. 892 CONCERNED A FACTUAL SITUATION WHICH IS NOT COMPARABLE WITH THE ONE HERE INVOLVED.

IN 14 COMP. GEN. 168, IT WAS DETERMINED BY OUR OFFICE THAT NO BIDDER SHOULD BE PERMITTED THE ADVANTAGE OF DOUBLE BIDDING. THAT DECISION WAS MODIFIED BY DECISION, 39 COMP. GEN. 892, IN WHICH IT WAS HELD THAT THE BIDS OF A NAMED CORPORATION AND AN AFFILIATED ORGANIZATION COULD BE CONSIDERED IN THE MAKING OF A CONTRACT AWARD. THE SECOND DECISION OTHERWISE INDICATED THAT THE PRACTICE OF DOUBLE OR MULTIPLE BIDDING IS NOT PROHIBITED BY LAW AND THAT IT IS QUESTIONABLE EVEN IF SUCH A PRACTICE IS UNDESIRABLE. WE AGREE THAT THERE IS A DIFFERENCE BETWEEN THE FACTS OF THAT CASE AND THE CIRCUMSTANCES HERE INVOLVED. HOWEVER, THE SUBJECT OF MULTIPLE BIDDING HAS BEEN CONSIDERED IN SUBSEQUENT DECISIONS OF OUR OFFICE IN WHICH NO EXCEPTIONS WERE TAKEN TO THE AWARDS MADE OR PROPOSED TO BE MADE. IN ONE OF THOSE DECISIONS, B-154275, JULY 1, 1964, THE BIDS OF TWO CLOSELY RELATED CORPORATIONS WERE INVOLVED AND IT WAS CONSIDERED THAT ANY UNDESIRABLE ASPECTS OF MULTIPLE BIDDING CAN BE CONTROLLED BY MAKING EFFICIENT PRE-AWARD SURVEYS AND MAKING AWARDS TO THE BEST ADVANTAGE OF THE GOVERNMENT.

A PRE-AWARD SURVEY WAS MADE ON CALIFORNIA SIGHTSEEING TOURS, INCORPORATED. THE REPORT ON THE SURVEY FULLY DISCLOSED THE RELATIONSHIP BETWEEN THE SUCCESSFUL BIDDER AND M AND M CHARTER LINES, INCORPORATED, AND IT IS CLEAR THAT THE SUBMISSION OF SEPARATE BIDS BY THE TWO CORPORATIONS WAS NOT PREJUDICIAL TO THE INTERESTS OF THE GOVERNMENT OR TO THE RIGHTS OF ANY OF THE OTHER BIDDERS. WE RECOGNIZE THE POSSIBILITY THAT A LOW BIDDER, WHETHER OR NOT AFFILIATED WITH ANOTHER BIDDER, MIGHT NOT ATTEMPT TO QUALIFY AS A RESPONSIBLE PROSPECTIVE CONTRACTOR. HOWEVER, WE DO NOT BELIEVE THAT ANY SUCH POSSIBILITY WOULD NECESSARILY PRECLUDE THE CONSIDERATION OF MULTIPLE BIDS IN THE MAKING OF A CONTRACT AWARD. ACCORDINGLY, AND SINCE THERE IS NO EVIDENCE TO INDICATE THAT THE BIDS OF THE TWO CORPORATIONS WERE NOT SUBMITTED IN GOOD FAITH, THE PROTEST ON MR. GUITON'S BEHALF IS HEREBY DENIED.