Warren Brothers Roads Company v. United States

• Decision Date: 17 December 1965
• Docket Number: No. 302-61.,302-61.
• Parties: WARREN BROTHERS ROADS COMPANY v. The UNITED STATES.
• Court: U.S. Claims Court

173 Ct. Cl. 714, 355 F.2d 612 (1965)

WARREN BROTHERS ROADS COMPANY v. The UNITED STATES.

No. 302-61.

United States Court of Claims.

December 17, 1965.

John A. McWhorter, Jr., Washington, D. C., attorney of record, for plaintiff. John W. Gaskins and King & King, Washington, D. C., of counsel.

Mary J. Turner, Washington, D. C., with whom was Asst. Atty. Gen. John W. Douglas, for defendant.

Before COWEN, Chief Judge, and LARAMORE, DURFEE, DAVIS and COLLINS, Judges.

COWEN, Chief Judge.

This action was filed as the result of a decision by the Comptroller General, who held that the contracting officer's award of a contract to plaintiff was invalid and directed its award to another bidder. Plaintiff had received the award of the subject contract as a result of the disqualification of the lowest bidder by the contracting officer on the ground that the bidder lacked the requisite integrity for performing Government contracts. In doing so, the contracting officer was exercising his discretion under the standards established in Armed Services Procurement Regulations (hereinafter referred to as ASPR) Section 1.903-1, 32 CFR 55 (January 1, 1960).¹ The action was taken after an investigation of the lowest bidder, the C. G. Kershaw Contracting Company (hereinafter referred to as Kershaw), revealed certain information upon which the contracting officer based his determination that Kershaw could not be classified as a responsible bidder. Since plaintiff was the lowest responsible bidder, the award was in due time made to it.

Kershaw protested its rejection to the Comptroller General, who issued an opinion directing the cancellation of plaintiff's contract and its reletting to Kershaw. Plaintiff filed timely protests and sought reimbursement for its alleged damages. On April 26, 1961, the General Accounting Office denied plaintiff's claim. In this suit, both parties have moved for summary judgment on the issue of liability, as to which there is no factual dispute.

The Invitation for Bids was issued on January 25, 1960, by the District Engineer, U. S. Army Engineer District, Vicksburg, Mississippi, for the casting of a large number of squares of articulated concrete mattresses for use in revetment work by the defendant for river control. The casting was to be performed in a plant owned by defendant and located at Greensville, Mississippi. Bids were to be accepted within 60 days after opening, and the successful bidder was to begin work within 30 days after notification of award. Paragraph 8 of the Invitation for Bids provided in pertinent part:

8. Award of contract — (a) The contract will be awarded to that responsible bidder whose bid, conforming to the Invitation for Bids, will be most advantageous to the Government, price and other factors considered.

(b) The Government reserves the right to reject any or all bids and to waive informalities and minor irregularities in bids received.

Plaintiff's bid for the proposed work was approximately $601,050. In compliance with the Invitation, plaintiff indicated that it was not a small business within the meaning of paragraph 10 of the Invitation for Bids. The bid submitted by Kershaw, which company fell within the definition of a small business, was for approximately $577,400.

After the bids were received, the contracting officer conducted a pre-award survey, which included a study of the data submitted by the officers of Kershaw and a discussion with them. The contracting officer then determined that Kershaw was not a responsible bidder, as defined in the ASPR, and concluded that the contract should be awarded to plaintiff, inasmuch as its bid was the lowest submitted by a responsible bidder. On March 30, 1960, after it had been advised of the contracting officer's decision, Kershaw filed a formal protest which was submitted to the Chief of Engineers for his decision. On the same date, defendant requested and plaintiff agreed that the time for the acceptance of plaintiff's bid be extended to May 25, 1960.

Kershaw's protest was then reviewed in the Office of the Chief of Engineers. The Chief of Engineers concurred in the contracting officer's determination, and Kershaw's protest was denied in a communication submitted through the President of the Mississippi River Commission.

Thereafter and on or about May 3, 1960, Kershaw applied to the Small Business Administration for a Certificate of Competency, and on May 17, 1960, such a certificate was issued to Kershaw. The elements encompassed in a Certificate of Competency were explained in the ASPR, Section 1.705-6, 32 CFR 41 (January 1, 1960, as revised May 2, 1960), as follows:

(a) SBA has statutory authority to certify the competency of any small business concern as to capacity and credit. "Capacity" means the overall ability of a prospective small business contractor to meet quality, quantity, and time requirements of a proposed contract and includes ability to perform, organization, experience, technical knowledge, skills, "know-how," technical equipment, and facilities. Contracting officers shall accept SBA certificates of competency as conclusive of a prospective contractor\'s responsibility as to capacity (see §§ 1.903-1 and 1.903-2) and credit (see § 1.903-1(b)):

* * * * * * *

(4) This procedure does not apply where the contracting officer has found a small business concern nonresponsible for a reason other than lack of capacity or credit. Thus, it does not apply where a concern does not satisfy the criteria of responsibility in § 1.903-1(a), (e), (f), and (g). Where the contracting officer determines that a concern does not meet the requirements of § 1.903-1(d) as to a satisfactory record of performance, the procedure is mandatory only if the unsatisfactory record of performance was due solely to inadequate capacity or credit. However, if the contracting officer has any doubt as to whether the unsatisfactory record of performance can reasonably be attributed solely to lack of capacity or credit, the matter shall be discussed with the local SBA representative. If the local SBA representative is of the opinion that the unsatisfactory record of performance is attributable solely to a lack of capacity or credit, and the contracting officer disagrees, the contracting officer shall, in accordance with Departmental procedures forward the matter to higher authority within his Department for resolution. The decision of such higher authority shall be final. Emphasis added.

Since the Chief of Engineers concluded that Kershaw's deficiencies were above and beyond the Certificate of Competency, his office notified the contracting officer on May 17, 1960, to award the contract to plaintiff. Two days later, a representative of defendant requested plaintiff by telephone not to incur any commitments or expenditures on the contract. Within a few days after the award of the contract to plaintiff, Kershaw protested that action to the Chief of Engineers and to the Comptroller General.

In an effort to obtain a withdrawal of the Certificate of Competency, representatives of the Corps of Engineers conferred with the officials of the Small Business Administration on May 20, 1960, but the SBA declined to accede to the request.

On June 2, 1960, at the request of the Comptroller General, the Assistant Secretary of the Army sent the administrative file, together with a report on the matter, to the Comptroller General. The report recommended that the award to plaintiff be allowed to stand and that the decision be rendered as promptly as possible.

In his opinion of June 22, 1960, 39 Comp.Gen. 868, the Comptroller General decided:

1. Most of the deficiencies noted in the report were related to Kershaw\'s capacity and, as to that, the Certificate of Competency was conclusive.

2. The purported default in the performance of Kershaw\'s vice president under a private contract was a situation which did not meet the criteria contained in Section 1.903.1(d) of the ASPR, respecting the minimum standards for responsible contractors.

3. There is considerable doubt whether the regulations envisaged delinquencies of the principals of Kershaw under contracts with private parties.

4. Since an unfavorable report made by the Highway Department of the State of Indiana concerning Kershaw\'s vice president was not supported by competent evidence, it

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