March 21, 1995

P.S. Protest No. 95-06

Solicitation No. 198525-94-0626

Ancra International Corporation protests the contracting officer's determination that its offer on a supply contract was unacceptable because it failed to comply with solicitation terms concerning the use of convict labor.

Solicitation 198525-94-0626 was issued May 23, 1994, by the Topeka Purchasing Center, Topeka, KS, seeking offers for a three-year indefinite quantity, indefinite delivery, contract for shoring straps and shoring strap component assemblies used to secure loads of mail in transportation.

Section M.2 stated that award would be made to the "responsible offeror whose proposal offers the best value to the Postal Service, (i.e. a combination of price, price-related factors, and/or other factors)." Other factors included previous contract performance and quality controls. Section M.2.b. stated that cost "will be considered in the award decision, although the award may not necessarily be made to that offeror submitting the lowest price."

The following provisions and clauses were incorporated by reference in the solicitation:^[1]

Provision A-9, Award without Discussions:

The Postal Service may award a contract on the basis of initial proposals received, without discussions. Therefore, each initial proposal should contain the offeror's best terms from a cost or price and technical standpoint.

Clause 10-3, Convict Labor (October 1987):

In connection with the work under this contract, the contractor agrees not to employ any person undergoing sentence of imprisonment, except as provided by Public Law 89-176, September 10, 1965 (18 U.S.C. 4082(c)(2)) and Executive Order 11755, December 29, 1973.

Clause 10-8, Walsh-Healey Public Contracts Act^[2] (October 1987):

1. All representations and stipulations required by the Act and related regulations issued by the Secretary of Labor (41 CFR chapter 50) are hereby incorporated in this contract by reference. These representations and stipulations are subject to all applicable rulings and interpretations of the Secretary of Labor.

2. All employees whose work relates to this contract must be paid at least the minimum wage prescribed by the Secretary of Labor . . . .

Section K.4, Notice of Intent to Award Without Discussions, stated that the Postal Service "intends to make award on the basis of initial proposals received, without discussions. . . ."

Section K.7, Notice of Preaward Survey, informed offerors that the Postal Service "may contact prospective contractors to determine their capabilities to perform the work specified in this solicitation." Section K.7 advised that the Postal Service "may visit a prospective contractor's facilities to perform reviews. . . . Areas of interest in this regard may include . . . Labor resources. . . ."

Section L.9, Regular Dealer/Manufacturer Representation, required offerors to state, consistent with the Walsh-Healey Act requirements, whether they were regular dealers in or manufacturers of the supplies offered.

The offer due date was extended to September 2 by amendment. Originally, the solicitation identified Ancra as the sole approved source for the straps and their components; a second approved source, S-Line, was added before offers were due.

Ancra submitted an offer and was the subject of a preaward survey. The contracting officer advises that the survey disclosed that Ancra would be using convict labor at the state prison in Mountain City, TN, in the performance of the contract. Award was made to S-Line on December 15. By letter of that date, the contracting officer informed Ancra that it had not received the award because its "offer did not comply with Clause 10-3, October 1987, Convict Labor. . . ."^[3]

On December 27, the contracting officer received Ancra's initial protest, which contended that its convict labor plan, under the Private Sector/Prison Industry Enhancement (PIE) Program, meets the "provision for exception as described in [section 35(d) of the Walsh-Healey Act (41 U.S.C. § 35(d)], made applicable to the [Postal Service] by [39 U.S.C. § 410(b)(5)(A)] and satisfies the conditions of Section 1761(c) of Title 18 . . . ."^[4] Ancra stated that the Tennessee Department of Corrections is "fully certified and accredited by the U.S. Department of Justice" and attached a notice of certification. Ancra also complained that "at no time before, during, or after" the preaward survey "did the concern of convict labor arise."

By letter dated January 9, 1995, the contracting officer denied the protest as obviously without merit^[5] because it was an untimely protest against the terms of the solicitation. ^[6] The contracting officer also stated that Ancra had been found nonresponsible because it did not meet the terms of the convict labor clause, and explained that a preaward survey is not "an indication that an offeror will receive an award," but instead is used to "assist[] the contracting officer only in his determination of contractor responsibility."

Ancra filed a subsequent protest with this office, which received it January 25. The protester contends that the Walsh-Healey Act makes its PIE convict labor program acceptable for government contracts and that the incorporation into the solicitation of clause 10-8 makes the use of such convict labor permissible in this Postal Service contract, despite clause 10-3. Ancra argues that "a fair reading of the solicitation is that although the use of convict labor is generally prohibited, the use of convict labor in a PIE Program certified by the Department of Justice under Title 18 U.S.C. § 1761(c) is one exception to that prohibition." The protester asserts that its argument makes its protest timely, for it is "not against the terms of the solicitation, but the Postal Service's interpretation of the terms" which was "not apparent before the date set for receipt of proposals. . . ."

Ancra also argues that an offeror may submit evidence of eligibility under Walsh-Healey Act requirements when the contracting officer informs it of his determination of ineligibility, and may protest it at that time, which renders its current protest timely.^[7] The protester concludes:

In consideration of the above, Ancra . . . and the Tennessee Department of Corrections are perplexed and dismayed at the superficial interpretation given this issue, even after protest, by [the contracting officer].

Ancra asserts that the difference between its price and S-Line's could cost the Postal Service "hundreds of thousands of dollars" and asks that its protest be sustained.

In his statement in response to the protest, the contracting officer stresses that clause 10-3 "does not allow the Postal Service to make award to anyone using convict labor except as specified in that clause. The basis for the Postal Service's finding Ancra a non-responsible offeror was [that it did not meet] the terms and conditions of the clause." The contracting officer contends that the protest "now is too late as it is against a term of the solicitation, and . . . should have been asserted before . . . September 2, 1994."

The contracting officer asserts that the submission of the certificate is untimely as well, "and in any event, the certificate does not fall within the terms permitted by Clause 10-3 or our regulations on the use of Convict Labor."

In reply to the contracting officer's statement, Ancra claims that the "one and only issue" in this protest is: "[D]oes the PIE Program and the use of PIE Program Convict Labor meet the terms and conditions set forth in [this] solicitation?" Ancra asserts that the contracting officer's "myopic consideration and subsequent denial of our protest based solely on timeliness is incomprehensible. Having established the validity of the PIE Program within the solicitation, timeliness is a non-issue."

The protester emphasizes that it is protesting the contracting officer's interpretation of the solicitation rather than its terms, and argues that the contracting officer is disregarding the Walsh-Healey Act. The protester states that the contracting officer's contention that it could have requested interpretation of the solicitation clause before proposals were due "suggests that we were to anticipate his misjudgments." Ancra asserts that it "does not seem normal and customary for an offeror to explain the terms and conditions of the solicitation to the contracting officer."

In rebuttal, the contracting officer argues that the amendment to the Walsh-Healey Act upon which the protester relies is ineffective here because it was adopted after the Postal Reorganization Act was enacted, and the Postal Service has never adopted the amendment voluntarily. The contracting officer points out that the PM continues to preclude the use of convict labor in postal contracts except when provided through Federal Prison Industries or as allowed by Executive Order No. 11755, citing PM 10.2.2. The contracting officer asserts that because the PM does not permit the use of state convict labor under the PIE program, to do so would not be appropriate:

To introduce such a scheme into postal contracting by means of the dubious application of an 'after enacted' amendment as urged by Ancra would be most disruptive and an inappropriate intrusion into postal contracting practices which have been confined by statute in the area of prison labor to Federal Prison Industries . . . .

The contracting officer concludes by emphasizing that the protest was untimely filed, as Ancra "was on notice" of clause 10-3 "through the RFP itself" and its protest was received "some 52 days" after the date set for receipt of proposals.

In its final submission, Ancra emphasizes that its PIE labor program meets the requirements of the solicitation and complains that the contracting officer "down plays" the significance of the PIE program "and its acceptance as part of the Walsh-Healey Act." The protester argues that the Postal Service does not have the ability to select only specific provisions of statutes applicable to it with which it will comply, "regardless of their effectivity [sic] dates," and argues that the Congress, Department of Justice and the Department of Labor "feel the PIE program shares the necessary criteria with the Federal Prison Industries to grant exceptions."

DISCUSSION

PM 4.5.4 b. requires that protests against alleged deficiencies in a solicitation "that are apparent" before the proposal due date must be received by that date. Footnote 6, supra; see Dataware Systems Lease, Inc., P.S. Protest No. 91-41, October 10, 1991. We lack jurisdiction to adjudicate protests that are untimely filed and have no authority to waive timeliness requirements. Wayne S. Davis, P.S. Protest No. 90-54, October 18, 1990; Yale Materials Handling Corporation, P.S. Protest No. 89-83, December 13, 1989.

Ancra appears to be contending, in the alternative, either that clause 10-3 is overbroad in failing to allow contractors to use convict labor as permitted by the Walsh-Healey Act, as amended, or that there is a conflict between clause 10-3 and 10-8. A protest on either basis is a protest against the terms of the solicitation, and thus untimely unless raised before offers are to be received. AmerInd, Inc., Comp. Gen. Dec. B-248324, August 6, 1992, 92-2 CPD ¶ 85; cf. WilTel Communications Systems, Inc., P.S. Protest No. 93-19, February 9, 1994.

Aware, however, of the jurisdictional barrier to such a protest now, the protester denies that it is protesting the solicitation's terms, contending instead that it is the contracting officer's erroneous interpretation of clauses 10-3 and 10-8 subsequent to the receipt of offers of which it complains. However, in arguing that disputing interpretations of solicitation clauses are at issue, Ancra is asserting that the solicitation is ambiguous, for an ambiguity exists if the terms are "susceptible to two reasonable interpretations." Nasuf Construction Corporation - Reconsideration, Comp. Gen. Dec. B-219733.2, March 18, 1986, 86-1 CPD ¶ 263; Dataware Systems Lease, Inc., supra; Compo Corporation , P.S. Protest No. 88-22, May 3, 1988. Thus, to allege ambiguity is to protest the solicitation terms as well; the protester's allegations would be timely only if the contracting officer's interpretation of the convict labor clause were an unreasonable one. Given the plain language of the clause, that argument is not persuasive. Ancra knew or could have known its PIE program was not a program specifically permitted by clause 10-3 as an exception to its general prohibition of convict labor. If it were concerned about the matter, it could have inquired about it before offers were due.^[8]

The protest is dismissed as untimely.

William J. Jones
Senior Counsel
Contract Protests and Policies

^[1]The provision and clause numbers listed are those assigned in the appendices to the Procurement Manual (PM).

^[2]PM 10.2.5, Walsh-Healey Public Contracts Act, states in part:

1. General. The Walsh-Healey Public Contracts Act . . . requires that certain contracts for the manufacture or furnishing of supplies must be with manufacturers or regular dealers in the supplies manufactured or used in performing the contract. The Act also establishes requirements pertaining to minimum wages, maximum hours, child labor, convict labor, and safe and sanitary working conditions.

Further, PM 10.2.5 b. states that all contracts for "supplies over $10,000 . . . must incorporate the Walsh-Healey Public Contracts Act requirements by reference" and solicitations for such contracts must contain Clause 10-8.

^[3]Title 39 U.S.C. § 2201 explicitly prohibits the Postal Service from contracting "for the purchase of equipment or supplies to be manufactured by convict labor" except as provided in 18 U.S.C. § 4121 (programs administered by Federal Prison Industries, Inc., using inmates of federal facilities). PM 10.2.2 cites 39 U.S.C. § 2201 and requires all labor contracts to contain Clause 10-3 (see text, page 2).

^[4]39 U.S.C. § 410(a) excepts from application to the exercise of the Postal Service's powers "Federal law[s] dealing with public or Federal contracts . . . " except as specifically provided in 39 U.S.C. § 410(b). Section 410(b)(5)(A) makes applicable to the Postal Service "sections 35-45 [of title 41, United States Code] (known as the Walsh-Healey Act, relating to wages and hours)".

At the time of enactment of 39 U.S.C. § 410, Walsh-Healey Act § 35 provided, in part, that

In any contract . . . . for the manufacture or furnishing of . . . supplies . . . in any amount exceeding $10,000, there shall be included the following representations and stipulations:

* * *

(d) That . . . no convict labor will be employed by the contractor in the manufacture . . . of supplies . . . included in the contract.

Section 35(d) was amended in 1979 to provide by exception that

[T]his section, or any other law . . . containing similar prohibitions against purchase of goods by the Federal Government, shall not apply to convict labor which satisfies the conditions of section 1761(c) of title 18, United States Code . . . . [Emphasis supplied.]

18 U.S.C. § 1761 is a provision criminalizing certain transportation of prison-made goods, and subsection (c) of that section excepts from its application goods made by prisoners working under certain pilot programs designated by the Bureau of Justice Assistance of the Department of Justice under conditions specified in the subsection.

^[5]PM 4.5.6 c.2. provides that a contracting officer may, "[w]ith the concurrence of assigned counsel, determine that [a] protest [addressed to a contracting officer] is obviously without merit and advise the protester in writing accordingly."

^[6]PM 4.5.4 b. states:

Protests based upon alleged deficiencies in a solicitation that are apparent before the date set for the receipt of proposals must be received by the date and time set for the receipt of proposals.

^[7]That an offeror may submit additional information about its Walsh-Healey status to the contracting officer after award (PM 10.2.5 (h)(2)) is unavailing here, since further review of the contracting officer's response to that submission is by the Department of Labor (PM 10.2.5 i.1.), and not this office, which lacks jurisdiction over protests of Walsh-Healey Act determinations. PM 4.5.1.

^[8]We do not reach the question of the possible conflict between the solicitation and the Postal Service's obligations under the Walsh-Healey Act.