B-124464, SEP. 7, 1955

B-124464, SEP. 7, 1955

TO WESTEX TRANSPORT, INC.:

REFERENCE IS MADE TO YOUR TELEGRAM OF JUNE 24, 1955, AND A COPY OF A LETTER DATED JULY 19, 1955, FROM YOUR ATTORNEY TO THE POST OFFICE DEPARTMENT, PROTESTING THE AWARD TO MESSRS. HAROLD L. TREU, A. F. BURBRIDGE AND C. C. MCCLENDON OF A CONTRACT FOR HIGHWAY POST OFFICE SERVICE BETWEEN ROCHESTER, NEW YORK, AND WILLIAMSPORT, PENNSYLVANIA. YOU CONTEND THAT THE CONTRACT SHOULD HAVE BEEN AWARDED TO WESTEX TRANSPORT, INC., AND JAMES F. MOYLAN, A PARTNERSHIP, AS LOWEST BIDDER.

ON JULY 6, 1955, AN ACKNOWLEDGMENT OF YOUR TELEGRAM WAS MAILED TO "MR. GEORGE W. MASON, PRESIDENT, WESTEX TRANSPORT, INC., DALLAS, TEXAS," BUT IT WAS RETURNED UNDELIVERED BECAUSE OF INSUFFICIENT ADDRESS.

IN RESPONSE TO A REQUEST BY THIS OFFICE, THE POST OFFICE DEPARTMENT HAS FURNISHED COPIES OF PERTINENT PAPERS AND REPORTS SETTING OUT ITS VIEWS IN THE MATTER, INCLUDING CORRESPONDENCE BETWEEN YOUR ATTORNEY AND THE DEPARTMENT. THE INVITATION FOR BIDS, ISSUED APRIL 28, 1955, REQUESTED BIDS FOR MOTOR VEHICLE MAIL SERVICE BETWEEN ROCHESTER, NEW YORK, AND WILLIAMSPORT, PENNSYLVANIA, FOR A PERIOD OF FOUR YEARS. THE INSTRUCTIONS TO BIDDERS MADE A PART OF THE INVITATION PROVIDED IN PERTINENT PART:

"2. THE LAW PROVIDES THAT NO PROPOSAL FOR A CONTRACT FOR HIGHWAY POST OFFICE SERVICE SHALL BE CONSIDERED UNLESS THE BIDDER IS A LEGAL RESIDENT OF THE COUNTY OR COUNTIES TRAVERSED BY THE ROADS OVER WHICH THE MAILS ARE TO BE CARRIED, OR A LEGAL RESIDENT WITHIN THE COUNTIES ADJOINING SUCH (COUNTY) OR COUNTIES; EXCEPT THAT PROPOSALS FOR CARRYING THE MAIL TENDERED BY FIRMS, COMPANIES, OR CORPORATIONS SHALL BE CONSIDERED: PROVIDED, THAT SUCH FIRMS, COMPANIES, OR CORPORATIONS ARE ACTUALLY ENGAGED IN BUSINESS WITHIN THE COUNTIES IN WHICH INDIVIDUALS ARE RESTRICTED AS TO RESIDENCE.

"15. THE POSTMASTER GENERAL RESERVES THE RIGHT TO REJECT ALL BIDS ON ANY ROUTE WHENEVER IN HIS JUDGMENT THE INTEREST OF THE SERVICE REQUIRE IT * *

SEVEN BIDS WERE RECEIVED, RANGING FROM $30,079.55 TO $45,643.25 PER ANNUM, THE THREE LOWEST BIDS BEING AS FOLLOWS:

1. WESTEX TRANSPORT, INC., GEORGE W. MASON AND JAMES F.

F. MOYLAN, 419 WEST GRAY, ELMIRA, NEW YORK $30,079.55

2. LAWRENCE W. HACKENBURG AND S. PAUL GEARHART,

1803 MARKET STREET, LEWISBURG, PENNSYLVANIA 33,916.75

3. HAROLD L. TREU, A. F. BURBRIDGE AND C. C.

MCCLENDON, 323 EAST WATER STREET, ELMIRA,

NEW YORK 34,970.00

ON JUNE 21, 1955, CONTRACT NO. HPO-72-C WAS AWARDED TO MESSRS. TREU, BURBRIDGE AND MCCLENDON, TO BE EFFECTIVE ON JULY 9, 1955. YOUR LOW BID WAS REJECTED BECAUSE IT WAS BELIEVED THAT THE RESIDENTIAL REQUIREMENTS OF 39 U.S.C. 425A--- INCORPORATED IN PARAGRAPH 2 OF THE INSTRUCTIONS, QUOTED ABOVE--- WERE NOT MET. THE SECOND LOW BID OF MESSRS. HACKENBURG AND GEARHART WAS REJECTED BECAUSE IT WAS NOT ACCOMPANIED BY A BID BOND AS REQUIRED BY 39 U.S.C. 426.

IT IS REPORTED BY THE POST OFFICE DEPARTMENT, IN SUBSTANCE, THAT JAMES F. MOYLAN RESIDED IN ELMIRA, NEW YORK, AND THEREFORE WOULD HAVE MET THE RESIDENCE REQUIREMENTS OF THE INVITATION FOR BIDS INSOFAR AS HE WAS CONCERNED PERSONALLY. HOWEVER, THE BID WAS A JOINT BID OF WESTEX TRANSPORT, INC.--- A TEXAS CORPORATION--- AND MR. MOYLAN. IT IS STATED THAT IF A JOINT VENTURE COULD HAVE BEEN SHOWN TO EXIST IT WOULD HAVE CONSTITUTED COMPLIANCE WITH 39 U.S.C. 425A BUT THAT AFTER INVESTIGATION AND DUE CONSIDERATION IT WAS DETERMINED THAT ALL EVIDENCE AVAILABLE INDICATED THAT SUCH A RELATIONSHIP DID NOT EXIST. IN SUCH CONNECTION, IT IS REPORTED THAT WHEN MR. MOYLAN WAS ASKED HOW MUCH HE WAS PREPARED TO INVEST IN THE PROJECT HE REPLIED "WELL, NOT MUCH; " THAT NO ELMIRA BANK FOUND A RECORD OF ANY ACCOUNT OR TRANSACTIONS IN HIS NAME; THAT ON MAY 23, 1955, MR. GEORGE W. MASON, PRESIDENT OF WESTEX TRANSPORT, INC., STATED BY TELEPHONE THAT IT WOULD REQUIRE SOME STUDY TO DETERMINE WHAT FINANCIAL INTEREST MR. MOYLAN WOULD HAVE IN THE ALLEGED PARTNERSHIP; THAT BY LETTER DATED MAY 24, 1955, MR. MOYLAN WAS REQUESTED TO PRESENT EVIDENCE OF A PARTNERSHIP STATUS AND HIS FINANCIAL ABILITY TO ASSUME SUCH A STATUS WITH RESPECT TO THE PROJECT AND THAT SINCE NO REPLY TO SUCH REQUEST HAD BEEN RECEIVED THE AWARD WAS MADE ON JUNE 21, 1955, TO MESSRS. TREU, BURBRIDGE AND MCCLENDON WHOSE ELIGIBILITY TO RECEIVE THE AWARD HAD BEEN ESTABLISHED. IT IS STATED FURTHER THAT SUCH FACTS AS HAVE BEEN SET OUT WERE GIVEN CONSIDERATION WITH RESPECT TO THE QUESTION WHETHER THERE WAS A BONA FIDE PARTNERSHIP OR JOINT VENTURE SO AS TO MEET THE RESIDENCE REQUIREMENTS OF 39 U.S.C. 425A, RATHER THAN ANY QUESTION AS TO MR. MOYLAN'S RESPONSIBILITY.

IN A LETTER TO THE POST OFFICE DEPARTMENT DATED JUNE 13, 1955, WESTEX TRANSPORT, INC., STATED---

"AS TO ESTABLISHING MR. MOYLAN'S POSITION IN THIS MATTER, I WOULD LIKE TO SAY THAT WE HAVE AN ARRANGEMENT WITH MR. MOYLAN WHEREBY HE WILL SUPERVISE THE ROCHESTER-WILLIAMSPORT OPERATION FROM ELMIRA AND WILL GENERALLY LOOK AFTER THE OPERATION AFTER IT IS ESTABLISHED AND AFTER WE HAVE HAD A TRAINED SUPERVISOR WITH HIM SUFFICIENTLY LONG ENOUGH TO SATISFY OURSELVES THAT HE IS CAPABLE OF MANAGING THE OPERATION.

"MR. MOYLAN'S PARTICIPATION BEYOND THIS DEPENDS ENTIRELY UPON THE REQUIREMENTS OF THE OPERATION ONCE IT HAS BEEN ESTABLISHED AND A SUFFICIENT EXPERIENCE HAS BEEN GAINED TO DETERMINE WHAT ADDITIONAL REQUIREMENTS OF HIM MIGHT BE ADVISABLE IN OUR OPINION.'

AND IN A LETTER DATED JUNE 15, 1955, TO THE DEPARTMENT FROM WESTEX TRANSPORT, INC., IT IS STATED---

"MR. MOYLAN IS A RESIDENT OF LONG STANDING IN THE CITY OF ELMIRA, NEW YORK AND HAS JOINED WITH WESTEX TRANSPORT, INC. IN THIS BID, AND ALTHOUGH EXACT DOLLAR REQUIREMENTS NECESSARY TO CONDUCT THE OPERATION HAVE NOT BEEN DETERMINED, MR. MOYLAN IS FINANCIALLY ABLE TO CONTRIBUTE NECESSARY FUNDS WHEREBY HE WILL PARTICIPATE ON A 10 PERCENT BASIS IN THE OVER-ALL PICTURE.

"WE HAVE AN ARRANGEMENT WHEREBY MR. MOYLAN WILL PERSONALLY SUPERVISE THE OPERATION AND WE WILL HAVE AN EXPERIENCED SUPERVISOR ON THIS OPERATION UNTIL MR. MOYLAN HAS GAINED EXPERIENCE ENOUGH TO TAKE CARE OF IT HIMSELF.'

MR. MOYLAN STATED IN A LETTER ALSO DATED JUNE 15, 1955---

"I HAVE BEEN A RESIDENT OF ELMIRA, CHEMUNG COUNTY, NEW YORK FOR MANY YEARS AND I AM FINANCIALLY ABLE TO PARTICIPATE IN THIS VENTURE AND I WILL HAVE A 10 PERCENT INTEREST AS WELL AS A WORKING INTEREST BY PERSONAL SUPERVISION IN THIS OPERATION.'

UPON THESE STATEMENTS, WHICH MAY FAIRLY BE SAID TO INDICATE THAT MR. MOYLAN INDIVIDUALLY WAS NOT INTENDED TO BE THE PRIMARILY RESPONSIBLE PARTY BUT THAT HIS NAME WAS USED IN THE BID IN AN EFFORT TO SHOW COMPLIANCE WITH THE RESIDENCE REQUIREMENTS, WE FEEL THAT THE CONCLUSION REACHED BY THE CONTRACTING AUTHORITIES WAS NOT UNREASONABLE. IT MAY ALSO BE SAID THAT THE BID, CONSIDERED AS BEING OFFERED BY A "FIRM," FAILED TO MEET THE REQUIREMENTS OF THE LAW, SINCE THE "FIRM" WAS NOT ACTUALLY ENGAGED IN BUSINESS IN THE VICINITY.

YOU ARE ACCORDINGLY ADVISED THAT IT IS OUR CONCLUSION THAT THERE APPEARS NO PROPER BASIS UPON WHICH THIS OFFICE WOULD BE JUSTIFIED IN QUESTIONING THE ADMINISTRATIVE ACTION TAKEN IN THE MATTER.