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Can a newly formed corporation used the track record of one of the stockholders' business?

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Can a newly formed corporation used the track record of one of the stockholders' business?

Post by venom.0420 on Fri Jun 19, 2009 12:22 pm

We had a bidder yesterday that had previous transactions with us as a sole proprietorship, I'll hide them under the alias ABC Sales Co. When I looked at their eligiblity documents, they are now registered with SEC under the name (another alias) ABC Sales Corporation. The owner of the ABC Sales Co. which was a sole proprietorship buz, is one of the stockholders in ABC Sales Corporation. Further, when I looked at the Statement of Similar and Completed Projects, the transaction they presented as a track record were transactions with our company when they are still ABC Sales Co.

Our BAC Chair and some of the members allowed it, but I did not because I believe that they are now two different entities, instead I suggested that a joint venture agreement should be prepared for the two companies in order for them to be eligible. We are still in the post-qualification period and I'm looking for a more concrete basis on my refusal to officially recommend their disqualification.

Any help on this matter would be greatly appreciated. Very Happy
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Re: Can a newly formed corporation used the track record of one of the stockholders' business?

Post by engrjhez® on Fri Jun 19, 2009 7:09 pm

venom.0420 wrote:We had a bidder yesterday that had previous transactions with us as a sole proprietorship, I'll hide them under the alias ABC Sales Co. When I looked at their eligiblity documents, they are now registered with SEC under the name (another alias) ABC Sales Corporation. The owner of the ABC Sales Co. which was a sole proprietorship buz, is one of the stockholders in ABC Sales Corporation. Further, when I looked at the Statement of Similar and Completed Projects, the transaction they presented as a track record were transactions with our company when they are still ABC Sales Co.

Our BAC Chair and some of the members allowed it, but I did not because I believe that they are now two different entities, instead I suggested that a joint venture agreement should be prepared for the two companies in order for them to be eligible. We are still in the post-qualification period and I'm looking for a more concrete basis on my refusal to officially recommend their disqualification.

Any help on this matter would be greatly appreciated. Very Happy
You are correct in treating the two entities as distinct from each other. It would also follow that the eligibility requirement as to DTI or SEC registration depends on which entity applied. I may suggest you take a look back to the time they purchased the eligibility and bidding documents:

1. What is the business name they used in the Official Receipt of Payment?
2. What is the business name inscribed on the eligibility, technical, and financial envelopes?
3. What is the business name as indicated in their bidding documents especially the financial proposal?

If a lot of discrepancy is present, you may declare the bidder as "non-responsive". But it all comes down to No.1 above. Whatever they used in No.1 must be clearly the same entity they have to use in their bids -otherwise, they already have FAILED in that very beginning. Very Happy
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Re: Can a newly formed corporation used the track record of one of the stockholders' business?

Post by sunriser431 on Fri Jun 19, 2009 11:56 pm

venom.0420 wrote:We had a bidder yesterday that had previous transactions with us as a sole proprietorship, I'll hide them under the alias ABC Sales Co. When I looked at their eligiblity documents, they are now registered with SEC under the name (another alias) ABC Sales Corporation. The owner of the ABC Sales Co. which was a sole proprietorship buz, is one of the stockholders in ABC Sales Corporation. Further, when I looked at the Statement of Similar and Completed Projects, the transaction they presented as a track record were transactions with our company when they are still ABC Sales Co.

Our BAC Chair and some of the members allowed it, but I did not because I believe that they are now two different entities, instead I suggested that a joint venture agreement should be prepared for the two companies in order for them to be eligible. We are still in the post-qualification period and I'm looking for a more concrete basis on my refusal to officially recommend their disqualification.

Any help on this matter would be greatly appreciated. Very Happy

Section 65. Offenses and Penalties
65.1 xxxx
65.2 xxxx
65.3.1 xxxx
65.3.2 Submitting Bidding Documents of whatever kind and nature that contain false information or falsified documents or conceal such information in the Bidding Documents, in order to influence the outcome of the public bidding. This statement is self explanatory.You could even institude Blacklistings.
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Re: Can a newly formed corporation used the track record of one of the stockholders' business?

Post by RDV @ GP3i on Sat Jun 20, 2009 11:25 am

venom.0420 wrote:We had a bidder yesterday that had previous transactions with us as a sole proprietorship, I'll hide them under the alias ABC Sales Co. When I looked at their eligiblity documents, they are now registered with SEC under the name (another alias) ABC Sales Corporation. The owner of the ABC Sales Co. which was a sole proprietorship buz, is one of the stockholders in ABC Sales Corporation. Further, when I looked at the Statement of Similar and Completed Projects, the transaction they presented as a track record were transactions with our company when they are still ABC Sales Co.

Our BAC Chair and some of the members allowed it, but I did not because I believe that they are now two different entities, instead I suggested that a joint venture agreement should be prepared for the two companies in order for them to be eligible. We are still in the post-qualification period and I'm looking for a more concrete basis on my refusal to officially recommend their disqualification.

Any help on this matter would be greatly appreciated. Very Happy

Definitely, you are right, they are two different entities; hence, the experience of the stockholder cannot be considered as experience of the corporation.

Your suggestion that a JVA should be prepared for the 2 companies would not be legally tenable also. It is already too late in the day to submit a JVA. When ABC Sales Corporation participated in the bidding process it joined as a corporation and not as a Joint Venture; hence a JVA submitted belatedly could not cure the apparent defect.
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Re: Can a newly formed corporation used the track record of one of the stockholders' business?

Post by venom.0420 on Mon Jun 22, 2009 1:22 pm

engrjhez wrote:
venom.0420 wrote:We had a bidder yesterday that had previous transactions with us as a sole proprietorship, I'll hide them under the alias ABC Sales Co. When I looked at their eligiblity documents, they are now registered with SEC under the name (another alias) ABC Sales Corporation. The owner of the ABC Sales Co. which was a sole proprietorship buz, is one of the stockholders in ABC Sales Corporation. Further, when I looked at the Statement of Similar and Completed Projects, the transaction they presented as a track record were transactions with our company when they are still ABC Sales Co.

Our BAC Chair and some of the members allowed it, but I did not because I believe that they are now two different entities, instead I suggested that a joint venture agreement should be prepared for the two companies in order for them to be eligible. We are still in the post-qualification period and I'm looking for a more concrete basis on my refusal to officially recommend their disqualification.

Any help on this matter would be greatly appreciated. Very Happy
You are correct in treating the two entities as distinct from each other. It would also follow that the eligibility requirement as to DTI or SEC registration depends on which entity applied. I may suggest you take a look back to the time they purchased the eligibility and bidding documents:

1. What is the business name they used in the Official Receipt of Payment?
2. What is the business name inscribed on the eligibility, technical, and financial envelopes?
3. What is the business name as indicated in their bidding documents especially the financial proposal?

If a lot of discrepancy is present, you may declare the bidder as "non-responsive". But it all comes down to No.1 above. Whatever they used in No.1 must be clearly the same entity they have to use in their bids -otherwise, they already have FAILED in that very beginning. Very Happy

Engrjhez,

Thanks for the usual help. They are now using their incorporated name in all the documents. Except from the one I already mentioned. By the way, I browsed the bid docs and I found that they attached a notarized affidavit from the sole proprietor that she have incorporated her buz from that of a sole proprietor to a corporation. The sole proprietor is now the president of the incorporated buz. Will this affidavit be enough to consider the track record of the bidder?
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Re: Can a newly formed corporation used the track record of one of the stockholders' business?

Post by venom.0420 on Mon Jun 22, 2009 1:25 pm

RDV wrote:
venom.0420 wrote:We had a bidder yesterday that had previous transactions with us as a sole proprietorship, I'll hide them under the alias ABC Sales Co. When I looked at their eligiblity documents, they are now registered with SEC under the name (another alias) ABC Sales Corporation. The owner of the ABC Sales Co. which was a sole proprietorship buz, is one of the stockholders in ABC Sales Corporation. Further, when I looked at the Statement of Similar and Completed Projects, the transaction they presented as a track record were transactions with our company when they are still ABC Sales Co.

Our BAC Chair and some of the members allowed it, but I did not because I believe that they are now two different entities, instead I suggested that a joint venture agreement should be prepared for the two companies in order for them to be eligible. We are still in the post-qualification period and I'm looking for a more concrete basis on my refusal to officially recommend their disqualification.

Any help on this matter would be greatly appreciated. Very Happy

Definitely, you are right, they are two different entities; hence, the experience of the stockholder cannot be considered as experience of the corporation.

Your suggestion that a JVA should be prepared for the 2 companies would not be legally tenable also. It is already too late in the day to submit a JVA. When ABC Sales Corporation participated in the bidding process it joined as a corporation and not as a Joint Venture; hence a JVA submitted belatedly could not cure the apparent defect.

Sir RDV,

Thanks for the usual help. I wasn't suggesting to the bidder to submit it during "that" bidding but once it's rebidded. Anyway, I browsed their bid docs and I found that they attached a notarized affidavit from the sole proprietor that she have incorporated her buz from that of a sole proprietor to a corporation. The sole proprietor is now the president of the incorporated buz. Will this affidavit be enough to consider the track record of the bidder?
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Re: Can a newly formed corporation used the track record of one of the stockholders' business?

Post by venom.0420 on Mon Jun 22, 2009 1:26 pm

sunriser431 wrote:
venom.0420 wrote:We had a bidder yesterday that had previous transactions with us as a sole proprietorship, I'll hide them under the alias ABC Sales Co. When I looked at their eligiblity documents, they are now registered with SEC under the name (another alias) ABC Sales Corporation. The owner of the ABC Sales Co. which was a sole proprietorship buz, is one of the stockholders in ABC Sales Corporation. Further, when I looked at the Statement of Similar and Completed Projects, the transaction they presented as a track record were transactions with our company when they are still ABC Sales Co.

Our BAC Chair and some of the members allowed it, but I did not because I believe that they are now two different entities, instead I suggested that a joint venture agreement should be prepared for the two companies in order for them to be eligible. We are still in the post-qualification period and I'm looking for a more concrete basis on my refusal to officially recommend their disqualification.

Any help on this matter would be greatly appreciated. Very Happy


Section 65. Offenses and Penalties
65.1 xxxx
65.2 xxxx
65.3.1 xxxx
65.3.2 Submitting Bidding Documents of whatever kind and nature that contain false information or falsified documents or conceal such information in the Bidding Documents, in order to influence the outcome of the public bidding. This statement is self explanatory.You could even institude Blacklistings.

Sunriser431,

I dunno where your coming from your reply to my post, but thanks anyway. Very Happy


Last edited by venom.0420 on Mon Jun 22, 2009 1:30 pm; edited 1 time in total (Reason for editing : typo error..)
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Re: Can a newly formed corporation used the track record of one of the stockholders' business?

Post by sunriser431 on Mon Jun 22, 2009 1:51 pm

venom.0420 wrote:
sunriser431 wrote:
venom.0420 wrote:We had a bidder yesterday that had previous transactions with us as a sole proprietorship, I'll hide them under the alias ABC Sales Co. When I looked at their eligiblity documents, they are now registered with SEC under the name (another alias) ABC Sales Corporation. The owner of the ABC Sales Co. which was a sole proprietorship buz, is one of the stockholders in ABC Sales Corporation. Further, when I looked at the Statement of Similar and Completed Projects, the transaction they presented as a track record were transactions with our company when they are still ABC Sales Co.

Our BAC Chair and some of the members allowed it, but I did not because I believe that they are now two different entities, instead I suggested that a joint venture agreement should be prepared for the two companies in order for them to be eligible. We are still in the post-qualification period and I'm looking for a more concrete basis on my refusal to officially recommend their disqualification.

Any help on this matter would be greatly appreciated. Very Happy


Section 65. Offenses and Penalties
65.1 xxxx
65.2 xxxx
65.3.1 xxxx
65.3.2 Submitting Bidding Documents of whatever kind and nature that contain false information or falsified documents or conceal such information in the Bidding Documents, in order to influence the outcome of the public bidding. This statement is self explanatory.You could even institude Blacklistings.

Sunriser431,

I dunno where your coming from your reply to my post, but thanks anyway. Very Happy


The Transformation from Single proprietor to Legitimate Corporation and using the track record of the former. Granted there is no malice on part of the former, will this influence the outcome/results of the bidding procedure/Public bidding? In my opinion yes. The Corporation now trying to window dress its track record to make compliant with the requirements. Thats how simple it is bounce


Last edited by sunriser431 on Mon Jun 22, 2009 3:19 pm; edited 1 time in total
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Re: Can a newly formed corporation used the track record of one of the stockholders' business?

Post by RDV @ GP3i on Mon Jun 22, 2009 1:55 pm

venom.0420 wrote:Sir RDV,

Thanks for the usual help. I wasn't suggesting to the bidder to submit it during "that" bidding but once it's rebidded. Anyway, I browsed their bid docs and I found that they attached a notarized affidavit from the sole proprietor that she have incorporated her buz from that of a sole proprietor to a corporation. The sole proprietor is now the president of the incorporated buz. Will this affidavit be enough to consider the track record of the bidder?

If that is the case, you may need to look at their articles of incorporation and consult a lawyer to find out, if it was really change in status from sole proprietorship to corporation, and if there is such an animal.
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Re: Can a newly formed corporation used the track record of one of the stockholders' business?

Post by venom.0420 on Mon Jun 22, 2009 3:08 pm

Thanks for all the replies! Very Happy
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