In re Descomp, Inc., B-178956
| Decision Date | 31 January 1974 |
| Docket Number | B-179672,B-178956 |
| Citation | 53 Comp.Gen 522 |
| Parties | In the matter of Descomp, Inc. |
| Court | Comptroller General of the United States |
Contracts - Protests - Abeyance pending court action - consideration nonetheless by general accounting office where a protester filed a complaint with the united states district court District of Delaware, grounded on the same contentions raised in the protest, and sought inter alia a preliminary injunction, while the court's order denying the injunction did not specifically mention the General Accounting Office (GAO), and the GAO policy is not to issue a decision on the merits of a protest where the issues involved are likely to be disposed of in litigation before a court of competent jurisdiction, the protest is nonetheless for consideration on the merits because the court seeks GAO's expertise prior to further litigation developments. Similar issues in a second protest, which are the subject of a separate suit in the same court, are also for consideration on the merits. Contracts - labor stipulations - service contract act of 1965 - applicability of act - keypunch operators, ETC solicitations for keypunching, verifying services, document sorting, and source data conversion that have as their principal purpose providing services are not excluded from the coverage of the service contract act as procurements of supplies, but the applicability of the act is doubtful for a different reason, that is the workers covered by wage determinations are clerical employees, and according to the holding in 53 Comp.Gen. 370 the act and its legislative history indicate the "service employee" concept covers only "blue collar" workers. However since the act does not specifically prohibit the classification of clerical workers as service employees, the present protest also is denied. Contracts - labor stipulations - service contract act of 1965 - minimum wage etc., determinations - locality basis for determination a bidder that is not located in government facilities areas for which a service contract act wage determination has been provided is nevertheless bound by the determination, since the solicitation terms indicate that wage obligations are fixed by whatever determination is attached to the solicitation, and an exemption for an "outside" bidder is lacking, and although the department of labor's view that "locality" means the locality of a government installation in a procurement of this type was criticized in 53 Comp.Gen. 370, this view remains the settled interpretation of the issue at present. Bidders - qualifications - geographical location requirement the contention that the contracting agency's needs do not justify the scope of the 75-mile geographical restriction in the invitation for bids and the allegations that protester's past experience shows it can meet the requirements of the specifications do not furnish the basis to conclude the use of the limitation was an abuse of discretion, since stating the restriction in terms of a mileage radius rather than highway miles represents a reasonable approach, and the fact that the protester might be able to meet the requirements does not per S.C. render the restriction unreasonable, as determining whether certain needs justify a particular restriction is a matter of agency judgment, and adequate competition was apparently generated.
On June 8, 1973, the Department of Housing and Urban Development (HUD) issued Invitation for Bids (IFB) h-2-74, which solicited bids on two separate requirements, each involving an indefinite quantity of keypunching and verifying services for both cards and magnetic tapes. August 31, 1973, the United States Civil Service Commission (CSC) issued solicitation cs-ifb-04-74, which solicited bids for data conversion services of central personnel data file material (approximately 3.3 million documents) to either punched cards or magnetic tape at the bidder's option. Both IFB's contained service contract act provisions and attached wage determinations, discussed infra.
By letter of June 20, 1973, Descomp protested against certain terms of the HUD solicitation and by letter of September 13 1973, counsel for Descomp protested against certain terms of the CSC solicitation. The issues raised in the protests are similar and involve, inter alia, the service contract act of 1965, 41 U.S.C. 351 note. Essentially, Descomp has contended that because the solicitations call for supplies, not services, the act is inapplicable, and that even if it is applicable, the attached wage determinations covering localities in the Washington, D.C., area are inapplicable to Descomp, which is located in bear, Delaware. Addition, the protestor has objected to a provision in the CSC solicitation which states that bids will be considered only from concerns whose work facilities are located within 75 miles of the united states capitol building.
Bids on the HUD solicitation were opened June 25, 1973, and the agency proceeded to award contracts to the low bidders on each of the two specified requirements on June 29, 1973. Bids on the CSC solicitation were opened September 14, 1973. In a letter to this office dated October 16, 1973, the director of bureau of management services advised that CSC intended to proceed to make an award to the low responsive bidder Milmark Services, Inc., by November 1, 1973.
On or about October 26, 1973, the protestor filed civil action No. 4751 () in the united states district court for the District of Delaware. The complaint was grounded upon the same objections to the IFB made in the protest and plaintiff requested that the court issue a temporary restraining order restraining defendant from awarding the contract; that the court render a declaratory judgment stating that the service contract act is inapplicable or, alternatively, that the wage rate to be paid is that of the Wilmington, Delaware, area; and that defendant be preliminarily and permanently enjoined from imposing the requirement of the service contract act on plaintiff or, alternatively, enjoined from imposing on plaintiff the Washington, D.C., wage rate schedule.
We have been advised that a motion for a temporary restraining order was denied October 31, 1973. Also, the court, on November 13, 1973, issued an order denying the motion for a preliminary injunction, concluding that plaintiff had failed to establish a cause of action upon which it had a likelihood of success. The order stated that the court was convinced that the contract is essentially one for performing services; that the court believed that the wages which would be applicable would be those which prevail or are minimum wages at the location where the work is being performed; and that defendants possessed the authority to establish the 75 -mile geographic limitation and the limitation was not without a rational basis. While the order did not specifically mention our office, and while it is our policy not to issue a decision on the merits of a protest where the material issues involved are likely to be disposed of in litigation before a court of competent jurisdiction, we have received a letter dated November 28, 1973, from the chief judge of the court, stating that the court would appreciate the exercise of GAO's expertise in this matter prior to any further developments in the litigation. Accordingly, we will consider this protest on the merits at this time.
Also, we have been informally advised that on December 3, 1973, the protestor filed suit against the Honorable James Lynn, secretary of HUD, in the united states district court, Delaware. Plaintiff sought declaratory relief, alleging that defendant abused his discretion in requiring plaintiff to bid on IFB h-2-74 based upon the Washington, D.C., wage rates in the solicitation rather than upon prevailing wages in Wilmington, Delaware, or upon the fair labor standards act (29 U.S.C. 201) minimum wage. This issue is also raised in Descomp's protest against the HUD solicitation. While the court has not requested our decision on this matter, since the issues involved here are similar to those in the CSC procurement, we will also consider the protest against the HUD solicitation on the merits at this time.
For the reasons which follow, the protests are denied.
The initial contention is that the service contract act of 1965, 41 U.S. Code, 351, et seq., is not applicable to these procurements because the solicitations do not involve the awards of contracts for services. The act provides generally that every contract (and any bid specification therefor) entered into by the united states or the District of Columbia in excess of $2, 500, with certain exceptions, the principal purpose of which is to furnish services in the united states through the use of service employees, shall contain a provision specifying the minimum monetary wages and fringe benefits to be paid the various classes of service employees in the performance of the contract as determined by the secretary of labor in accordance with the prevailing rates for such employees in the locality.
Descomp believes that the current contracts are for supplies - the production of punched cards. The protestor cites several of the department of labor's rules relating to the administration of the act in this regard, including 29 CFR 4.134(c), which states that contracts for printing, reproduction or duplicating ordinarily involve the furnishing of materials, not services.
From examination of the solicitation terms stating the work to be performed, and from the nature of the work as indicated by consideration of each solicitation as a whole, we think it is clear beyond doubt that the principal purpose of the...
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