B-105841, OCT 17, 1951

B-105841, OCT 17, 1951

PRECIS-UNAVAILABLE

THE SECRETARY OF THE AIR FORCE:

REFERENCE IS MADE TO LETTER DATED SEPTEMBER 26, 1951, FROM THE DIRECTOR OF FINANCE, HEADQUARTERS, UNITED STATES AIR FORCE, FORWARDING, AMONG OTHER ENCLOSURES, A COPY OF A LETTER DATED AUGUST 20, 1951, FROM THE PATTERSON IRON AND METAL COMPANY, WHEREIN PROTEST WAS MADE TO THE CONTRACTING OFFICER, 862ND SPECIALIZED DEPOT, WILMINGTON PIKE, DAYTON, OHIO, AGAINST THE ACCEPTANCE OF THE BID OF THE KIMCO PAPER COMPANY SUBMITTED IN RESPONSE TO INVITATION NO. 33-604-S-52-1, ISSUED JULY 6, 1951, AT THE DEPOT, FOR BIDS FOR THE PURCHASE OF 12 ITEMS OF MISCELLANEOUS SCRAP METAL. THE LETTER DATED SEPTEMBER 26, 1951, INVITES ATTENTION TO THE STATEMENT BY THE CONTRACTING OFFICER, ALSO FORWARDED THEREWITH, AND REQUESTS THAT WHEN A DECISION IS RENDERED IN THIS CASE ALL PAPERS BE ENCLOSED FOR RETURN TO THE FIELD.

THE DIRECTOR OF FINANCE IS NOT ENTITLED TO A DECISION, 26 COMP. GEN. 993, BUT, SINCE A PROMPT DECISION APPEARS NECESSARY, THIS DECISION IS BEING ADDRESSED TO YOU.

BY AMENDMENT NO. 2, TO THE REFERRED-TO INVITATION, PROSPECTIVE BIDDERS WERE NOTIFIED PRIOR TO THE SCHEDULED OPENING DATE OF BIDS THAT A PROVISION WAS ADDED TO THE INVITATION AS FOLLOWS:

"E. BIDDER HEREBY CERTIFIES THAT HE IS NOT ACTING AS AN AGENT FOR ANYONE ELSE WHO IS ALSO SUBMITTING A BID ON THE SAME LOT OF PROPERTY; AND THAT HE HAS NOT ARRANGED FOR ANOTHER PARTY TO SUBMIT AN ADDITIONAL BID WHICH IS ACTUALLY THOUGH NOT OPENLY ON HIS (THE BIDDERS) BEHALF.

"2. WITH THE EXCEPTION OF THE ABOVE, ALL ITEMS AND CONDITIONS OF THE INVITATION REMAIN IN FULL FORCE AND EFFECT.

"3. BIDDERS ARE REQUESTED TO SUBMIT ONE (1) SIGNED COPY OF THIS AMENDMENT NO. 2. THIS AMENDMENT WILL BE ATTACHED TO AND MADE A PART OF THE ORIGINAL INVITATION NO. 33-604-S-52-1."

IT APPEARS FROM AN ABSTRACT OF THE BIDS RECEIVED THAT 22 BIDS WERE RECEIVED, INCLUDING ONE BID EACH FROM THE KIPELOVE STEEL COMPANY, THE KOPELOVE IRON AND METAL COMPANY AND THE KIMCO PAPER COMPANY, ALL LOCATED IN DAYTON, OHIO. THE PATTERSON IRON AND METAL COMPANY, ALSO ONE OF THE BIDDERS, PROTESTED AGAINST CONSIDERATION OF THE BID OF THE KIMCO PAPER COMPANY ON THE GROUND THAT SAID COMPANY IS A SUBSIDIARY OF THE KOPELOVE IRON AND METAL COMPANY AS SHOWN ON ITS LETTERHEADS AND THAT THE SAID KIMCO PAPER COMPANY NORMALLY WOULD NOT BID ON THE MATERIAL LISTED IN THE BID SCHEDULE AS ITS "BUSINESS IS DONE WITH SMALL PEDDLERS AND INDIVIDUALS SELLING SMALL LOTS" WHEREAS "THE INDUSTRIAL SCRAP AND OTHER LARGE AMOUNTS ARE NORMALLY PURCHASED BY THE PARENT COMPANY."

IN THE STATEMENT OF THE CONTRACTING OFFICER IT IS REPORTED THAT AFTER BIDS WERE OPENED SEVERAL OF THE BIDDERS OBJECTED TO CONSIDERATION OF THE BIDS SUBMITTED BY THE KOPELOVE STEEL COMPANY, KOPELOVE IRON AND METAL COMPANY AND KIMCO PAPER COMPANY ON THE GROUND THAT SAID BIDS WERE IN VIOLATION OF THE CERTIFICATES FURNISHED PURSUANT TO AMENDMENT NO. 2, QUOTED ABOVE. IT IS REPORTED FURTHER THAT THE REPRESENTATIVE OF THE KOPELOVE IRON AND METAL COMPANY CONTENDS THAT EACH OF THE THREE BIDS WAS SUBMITTED "IN ACCORDANCE WITH THE TERMS OF THE INVITATION," BY A CORPORATION LEGALLY RECOGNIZED AS A SEPARATE ENTITY UNDER THE LAWS OF THE STATE OF OHIO; THAT THE THREE BIDDERS HAVE SEPARATE PLACES OF BUSINESS AND DIFFERENT OFFICE MANAGERS; AND THAT SAID BIDDERS FILE SEPARATE INCOME TAX RETURNS AND MAINTAIN CORPORATE RECORDS ON AN INDIVIDUAL BASIS. WITH RESPECT THERETO, THE CONTRACTING OFFICER STATES THAT AFTER AN INVESTIGATION HE FOUND THAT ALTHOUGH THE ABOVE FACTS ARE TRUE, "THE MAJORITY OF THE STOCKHOLDERS ARE THE SAME IN EACH OF THE THREE (3) CORPORATION." IT IS STATED FURTHER THAT THE KOPELOVE IRON AND METAL COMPANY ENGAGES PRIMARILY IN THE PURCHASE AND SALE OF SCRAP IRON AND METAL; THE KIMCO PAPER COMPANY FOR THE MOST PART ENGAGES IN THE PURCHASE AND SALE OF SCRAP PAPER; AND THE KOPELOVE STEEL COMPANY ENGAGES IN THE PURCHASE AND SALE OF STEEL FABRICATED PRODUCTS. ALSO, THE CONTRACTING OFFICER REPORTS THAT THE DEPOT HAS DEALT MANY TIMES IN THE PAST FEW YEARS WITH THE KOPELOVE IRON AND METAL COMPANY IN THE SALE OF SCRAP MATERIALS BUT HAS NEVER HAD ANY DEALINGS WITH EITHER THE KIMCO PAPER COMPANY OR THE KOPELOVE STEEL COMPANY. WHILE CERTAIN INFORMATION HAS BEEN FURNISHED WHICH INDICATES A CLOSE RELATIONSHIP EXISTING BETWEEN THE THREE BIDDERS, THERE IS NOTHING IN THE RECORD SHOWING THAT EITHER THE KIMCO PAPER COMPANY OR THE KOPELOVE STEEL COMPANY WAS ACTING AS AGENT FOR THE KOPELOVE IRON AND METAL COMPANY OR THAT THE LATTER COMPANY ARRANGED FOR EITHER OF THE TWO BIDDERS TO SUBMIT A BID ON ITS BEHALF. AS TO THE STATEMENT BY THE CONTRACTING OFFICER THAT A MAJORITY OF THE STOCKHOLDERS IS THE SAME IN ALL THREE CORPORATIONS, THE GENERAL RULE IS THAT A CORPORATION WILL BE CONSIDERED A LEGAL ENTITY, SEPARATE AND DISTINCT FROM ITS STOCKHOLDERS, UNLESS IT CAN BE SHOWN BY APPROPRIATE EVIDENCE THAT THE RECOGNITION OF THE SEPARATE CORPORATE ENTITY WILL PROMOTE FRAUD, INJUSTICE, OR WILL CONTRAVENE PUBLIC POLICY. 18 C.J.S. 374, 385; 13 AM. JUR. 160, AND THE NUMEROUS CASES THERE CITED. NO SUCH SHOWING HAS BEEN MADE IN THIS CASE. FURTHERMORE, THE FACT THAT THE THREE CORPORATIONS ENGAGE IN THE PURCHASE AND SALE OF DIFFERENT KINDS OF SCRAP MATERIAL OR THE FACT THAT TWO OF THEM GENERALLY ENGAGE IN THE BUSINESS OF PURCHASING AND SELLING SCRAP MATERIAL DIFFERENT FROM THAT DESCRIBED IN THE INVITATION MAY NOT BE ACCEPTED AS ESTABLISHING THAT THEIR CERTIFICATIONS ARE INCORRECT SO AS TO JUSTIFY A REFUSAL TO CONSIDER THEIR BIDS. ACCORDINGLY, UNLESS FURTHER INFORMATION IS DEVELOPED SHOWING THAT THE CERTIFICATIONS WERE INCORRECT OR THAT THEY WERE SUBMITTED FOR THE PURPOSE OF DECEIVING THE GOVERNMENT, ALL THREE BIDS SHOULD BE CONSIDERED FOR THE PURPOSE OF MAKING AWARD.

THE ENCLOSURES WITH THE LETTER OF SEPTEMBER 26, 1951, EXCEPT THE STATEMENT OF THE CONTRACTING OFFICER, ARE FORWARDED HEREWITH.