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B-180510, B-180828, SEPT 12, 1974

B-180510,B-180828 Sep 12, 1974
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GAO IS NOT GIVEN AUTHORITY UNDER DEFENSE PRODUCTION ACT. GAO MUST ACCEPT PROCUREMENT AGENCIES' VIEWS THAT LOW BIDDER'S FAILURE TO SHOW FIRM COMMITMENTS FOR "RIPSTOP" MATERIAL NECESSARY TO MAKE REQUIRED SUPPLIES WAS NOT CAUSED BY THE GOVERNMENT'S CONTROL OF MATERIAL. 2. REASONABLE BASIS EXISTED FOR NONRESPONSIBILITY DETERMINATIONS ON PROTESTING BIDDER WHERE BIDDER DID NOT HAVE COMMITMENT FOR MATERIAL NEEDED TO COMPLETE REQUIREMENTS OF CONTRACTS IN QUESTION. WAS NOT A RESPONSIBLE PROSPECTIVE CONTRACTOR UNDER INVITATIONS FOR BIDS (IFB'S) DAAJ01-74-B-0022 (ISSUED SEPTEMBER 1973). THE ARMY SUGGESTS THAT PIONEER'S PROTEST AS TO THAT IFB IS MOOT. IFB'S -0935 AND -0022 WERE ISSUED BY THE DIRECTORATE OF PROCUREMENT AND PRODUCTION.

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B-180510, B-180828, SEPT 12, 1974

1. GAO IS NOT GIVEN AUTHORITY UNDER DEFENSE PRODUCTION ACT, 50 U.S.C. APP. 2061, TO DECIDE ISSUES REGARDING THE ALLOCATION OF MATERIALS DEEMED NECESSARY OR APPROPRIATE TO THE NATIONAL DEFENSE; THEREFORE, GAO MUST ACCEPT PROCUREMENT AGENCIES' VIEWS THAT LOW BIDDER'S FAILURE TO SHOW FIRM COMMITMENTS FOR "RIPSTOP" MATERIAL NECESSARY TO MAKE REQUIRED SUPPLIES WAS NOT CAUSED BY THE GOVERNMENT'S CONTROL OF MATERIAL. 2. REASONABLE BASIS EXISTED FOR NONRESPONSIBILITY DETERMINATIONS ON

PROTESTING BIDDER WHERE BIDDER DID NOT HAVE COMMITMENT FOR MATERIAL NEEDED TO COMPLETE REQUIREMENTS OF CONTRACTS IN QUESTION.

PIONEER RECOVERY SYSTEMS, INC.:

THIS PROTEST QUESTIONS THE SOUNDNESS OF FINDINGS MADE BY THE ARMY AND THE AIR FORCE THAT PIONEER RECOVERY SYSTEMS, INC. (PIONEER), WAS NOT A RESPONSIBLE PROSPECTIVE CONTRACTOR UNDER INVITATIONS FOR BIDS (IFB'S) DAAJ01-74-B-0022 (ISSUED SEPTEMBER 1973), DAAJ01-74-B-0182 (ISSUED NOVEMBER 1973), AND F41608-74-B-0935 (ISSUED DECEMBER 1973) FOR REQUIREMENTS OF PARACHUTES.

THE ARMY REPORTS THAT IFB -0182 HAS BEEN CANCELED. CONSEQUENTLY, THE ARMY SUGGESTS THAT PIONEER'S PROTEST AS TO THAT IFB IS MOOT. WE AGREE. FURTHER, WE CANNOT QUESTION THE TWO OTHER FINDINGS UNDER IFB'S 0935 AND - 0022 FOR THE REASONS SET FORTH BELOW.

IFB'S -0935 AND -0022 WERE ISSUED BY THE DIRECTORATE OF PROCUREMENT AND PRODUCTION, KELLY AIR FORCE BASE, TEXAS, AND THE ARMY AVIATION SYSTEMS COMMAND, RESPECTIVELY. THE FOLLOWING BIDS WERE RECEIVED IN RESPONSE TO THE TWO IFB'S:

IFB -0935 (OPENED JANUARY 10, 1974)

PIONEER RECOVERY STYSTEMS, INC. $217.20 EACH

M. STEINTHAL & CO., INC. 305.76 EACH

IFB -0022 (OPENED OCTOBER 5, 1973)

PIONEER RECOVERY SYSTEMS, INC. $165.50 EACH

MILLS MFG. CORPORATION 172.00 EACH

M. STEINTHAL & CO., INC. 179.20 EACH

SWITLILK PARACHUTE CO. 185.00 EACH

TO ASSIST THE CONTRACTING OFFICERS FOR THE PROCUREMENTS IN DETERMINING WHETHER PIONEER WAS A RESPONSIBLE CONCERN FOR THE WORK INVOLVED, PREAWARD SURVEYS WERE REQUESTED ON THE COMPANY. PREAWARD SURVEYS WERE ALSO REQUESTED ON THE COMPANIES WHO SUBMITTED THE NEXT LOWEST BIDS UNDER THE IFB'S.

THESE REQUESTS WERE IN ACCORDANCE WITH ASPR 1-902 WHICH PROVIDES THAT CONTRACTS SHALL BE AWARDED TO RESPONSIBLE PROSPECTIVE CONTRACTORS ONLY, AND THAT A RESPONSIBLE PROPSECTIVE CONTRACTOR IS ONE WHO MEETS THE STANDARDS SET FORTH IN ASPR 1-903.1 AND 1-903.2. THE STANDARDS IN THE CITED REGULATIONS REQUIRE, AS PERTINENT, THAT A PROSPECTIVE CONTRACTOR MUST:

"*** BE ABLE TO COMPLY WITH THE REQUIRED OR PROPOSED DELIVERY *** SCHEDULE, TAKING INTO CONSIDERATION ALL EXISTING BUSINESS COMMITMENTS

THE PIONEER PREAWARD SURVEYS, WHICH WERE MADE BY THE DEFENSE CONTRACT ADMINISTRATION SERVICES DIVISION (DCASD), HARTFORD, CONNECTICUT, RECOMMENDED THAT NO AWARDS BE MADE TO PIONEER UNDER THE IFB'S BECAUSE OF UNSATISFACTORY RATINGS IN THE FIRM'S ABILITY TO MEET THE REQUIRED DELIVERY SCHEDULES. SPECIFICALLY, THE SURVEYS NOTED THAT PIONEER WAS UNABLE TO SHOW FIRM COMMITMENTS FOR "RIPSTOP" MATERIAL WHICH WAS NEEDED TO MANUFACTURE THE PARACHUTES IN QUESTION. THE SURVEYS ALSO STATED THAT THE SHORTAGE OF THE MATERIAL WAS PREVALENT THROUGHOUT INDUSTRY, AND THAT THE SHORTAGE WOULD AFFECT ALL OTHER BIDDERS.

BY CONTRAST, THE SURVEY ON M. STEINTHAL AND COMPANY (STEINTHAL UNDER IFB -0935 AND THE SURVEY ON MILLS MANUFACTURING CORPORATION (MILLS) UNDER IFB -0022, BOTH PREPARED BY THE DEFENSE CONTRACT ADMINISTRATIVE SERVICES REGIONAL OFFICE, ATLANTA, GEORGIA, RECOMMENDED AWARD TO THESE COMPANIES UNDER THE IFB'S IN QUESTION AND POINTED OUT THAT THE COMPANIES HAD FIRM COMMITMENTS FOR RIPSTOP MATERIAL.

ON RECEIPT OF ALL THE SURVEYS, THE CONTRACTING OFFICERS UNDER THE IFB'S DETERMINED THAT PIONEER WAS NONRESPONSIBLE FOR THE PROCUREMENTS IN QUESTION BECAUSE THE COMPANY'S LACK OF FIRM COMMITMENTS FOR RIPSTOP MATERIAL MADE IT UNLIKELY THAT PIONEER WOULD MEET THE REQUIRED DELIVERY SCHEDULES FOR THE PARACHUTES. THEY SUBSEQUENTLY AWARDED CONTRACTS TO STEINTHAL AND MILLS.

ESSENTIALLY, PIONEER URGES THAT IT SHOULD NOT HAVE BEEN FOUND NONRESPONSIBLE UNDER EITHER PROCUREMENT BECAUSE THE AVAILABILITY OF RIPSTOP MATERIAL WAS THEN, AND IS NOW, EXCLUSIVELY WITHIN THE CONTROL OF THE GOVERNMENT AND THE GOVERNMENT HAS NOT MADE AVAILABLE SUFFICIENT SUPPLIES OF THE MATERIAL TO PIONEER FOR THE PROCUREMENTS IN QUESTION. PIONEER FURTHER CONTENDS THAT THE PROCURING ACTIVITIES INVOLVED HAVE NOT GRANTED ITS REQUESTS FOR "SPECIAL PRIORITIES ASSISTANCE" IN OBTAINING THE RIPSTOP MATERIAL.

THE DEPARTMENTS CONTEST PIONEER'S VIEW THAT RIPSTOP MATERIAL IS BEING ALLOCATED BY THE GOVERNMENT AND THAT THE MATERIAL IS EXCLUSIVELY WITHIN GOVERNMENT CONTROL. THEY FURTHER STATE THAT OTHER SUPPLIERS CAN SUPPLY THE MATERIAL AS EVIDENCED BY THE FIRM COMMITMENTS STEINTHAL AND MILLS RECEIVED FOR THE CONTRACTS IN QUESTION.

FINALLY, THE DEPARTMENTS SAY THAT PIONEER HAS MISCONSTRUED THE SPECIAL RATES FOR POWER ARE ADJUSTED PERIODICALLY TO INCLUDE THE COSTS OF THESE PRIORITIES ASSISTANCE SYSTEM. THIS SYSTEM, THE ARMY REPORTS, ONLY BECOMES OPERABLE AFTER AWARD OF A CONTRACT AND A DETERMINATION BY THE DEPARTMENT OF COMMERCE THAT NO OTHER SUPPLIERS ARE AVAILABLE. ALTHOUGH PIONEER HAS REQUESTED PRIORITIES ASSISTANCE UNDER PRIOR CONTRACTS, THE DEPARTMENT OF COMMERCE, THE AGENCY CHARGED WITH THE PRIMARY RESPONSIBILITY FOR ALLOCATING MATERIALS AFFECTING THE NATIONAL DEFENSE, HAS DETERMINED THAT OTHER SUPPLIERS OF THE MATERIAL WERE AVAILABLE. THEREFORE, NO PRIORITIES ASSISTANCE WAS GIVEN TO PIONEER. UNDER THE DEFENSE PRODUCTION ACT, 50 U.S.C. APP. 2061, THE PRESIDENT IS AUTHORIZED TO ALLOCATE MATERIALS AND FACILITIES IN SUCH MANNER, UPON SUCH CONDITIONS, AND TO SUCH EXTENT AS HE SHALL DEEM NECESSARY OR APPROPRIATE TO PROMOTE THE NATIONAL DEFENSE. MUCH OF THE POWER CONFERRED BY THE STATUTE HAS BEEN DELEGATED TO THE SECRETARY OF COMMERCE UNDER EXECUTIVE ORDER NO. 10161, SEPTEMBER 1950, AS AMENDED. NEVERTHELESS, ACCORDING TO INFORMATION FURNISHED BY THE DEPARTMENT OF COMMERCE TO A CONGRESSIONAL SOURCE, THE DEFENSE DEPARTMENT HAS AUTHORITY TO REQUEST THE DEPARTMENT OF COMMERCE TO ALTER THE "DISTRIBUTION PATTERN" OF THE RIPSTOP MATERIAL IN QUESTION.

NOWHERE IN THE CITED STATUTE OR EXECUTIVE ORDER IS AUTHORITY GIVEN TO OUR OFFICE TO DECIDE ISSUES REGARDING THE ALLOCATION OF MATERIALS DEEMED NECESSARY OR APPROPRIATE TO THE NATIONAL DEFENSE. WHETHER A DECISION SHOULD OR SHOULD NOT BE MADE TO FORMALLY ALLOCATE RIPSTOP MATERIAL, WHETHER SUCH ALLOCATION, IF IN EFFECT, IS PREJUDICIAL TO PIONEER, AND WHETHER ALLOCATIONS OR "DISTRIBUTION PATTERNS" OF RIPSTOP MATERIAL SHOULD BE CHANGED TO PROVIDE A MORE FAVORABLE DISTRIBUTION OF MATERIAL TO PIONEER ARE ISSUES THAT CANNOT PROPERLY BE DECIDED BY OUR OFFICE.

CONSEQUENTLY, WE MUST ACCEPT THE VIEWS OF THE DEPARTMENTS INVOLVED THAT PIONEER'S FAILURE TO SHOW FIRM COMMITMENTS FOR RIPSTOP MATERIAL WAS NOT CAUSED BY THE GOVERNMENT'S CONTROL OF THE MATERIAL. ALTHOUGH DCASD, HARTFORD, APPARENTLY SUBSCRIBED TO PIONEER'S VIEW THAT RIPSTOP IS EXCLUSIVELY WITHIN GOVERNMENT CONTROL AT THE TIME OF THE SURVEYS UNDER THE IFB'S IN QUESTION, THE ARMY POINTS OUT THAT DCASD, HARTFORD, IN A SUBSEQUENT PREAWARD SURVEY FOR THE CANCELED IFB -0182 STATED THAT "RIPSTOP MATERIAL IS NOT SUBJECT TO GOVERNMENT CONTROLS AT THE VENDOR LEVEL AS PREVIOUSLY THOUGHT." FURTHER, THE ATLANTA DCASD REGIONAL OFFICE OBVIOUSLY DID NOT CONSIDER RIPSTOP MATERIAL TO BE IN SERIOUSLY SHORT SUPPLY BECAUSE IT FOUND THAT STEINTHAL AND MILLS HAD SUFFICIENT COMMITMENTS FOR THE MATERIAL.

PIONEER ALSO POINTS OUT THAT A JUNE 3, 1974, DCASD, HARTFORD, LETTER SHOWS THAT THE PREAWARD SURVEY REQUESTS FOR SEVERAL CONTRACTS AWARDED BY THE ARMY AVIATION SYSTEMS COMMAND IN 1973 STIPULATED THAT THE AVAILABILITY OF RIPSTOP MATERIAL WAS NOT TO BE CONSIDERED A FACTOR IN DETERMINING THE PROPOSED CONTRACTORS' CAPABILITY TO PRODUCE THE PARACHUTES. THE COMPANY APPARENTLY BELIEVES THAT THIS STIPULATION SHOULD HAVE BEEN MADE A PART OF THE PREAWARD SURVEY REQUESTS UNDER THE SUBJECT IFB'S. THE LETTER IN QUESTION ALSO SHOWS, HOWEVER, THAT EACH OF THE CONTRACTS AWARDED WITHOUT REQUIRING THE PROSPECTIVE CONTRACTOR TO SHOW A FIRM COMMITMENT FOR RIPSTOP MATERIAL IS IN A "DELINQUENT" STATUS. THUS, WE CANNOT CONCLUDE THAT THE DECISION TO REQUIRE THAT FIRM COMMITMENTS FOR RIPSTOP MATERIAL BE SHOWN UNDER THE SUBJECT IFB'S IN AN ATTEMPT, WE ASSUME, TO PREVENT FURTHER "DELINQUENT" CONTRACT PERFORMANCE, LACKED A RATIONAL BASIS.

ONE FURTHER CONTENTION OF PIONEER MUST BE ADDRESSED. PIONEER NOTES THAT A PRIORITY RATING OF "DX," ACCORDING A CONTRACTOR A HIGH DEGREE OF PREFERENCE WHEN PLACING ORDERS FOR MATERIAL, WAS ASSIGNED TO THE AIR FORCE PROCUREMENT. HAD IT BEEN ADVISED OF THIS PRIORITY BY MEANS OF A NOTATION IN THE IFB, PIONEER CONTENDS, IT COULD HAVE OBTAINED SUPPLIER COMMITMENTS FOR THE MATERIAL IN QUESTION.

IFB -0935 DID CONTAIN THE FOLLOWING CLAUSE:

"C-21. PRIORITY RATING

CONTRACTS OR PURCHASE ORDERS TO BE AWARDED AS A RESULT OF THIS SOLICITATION SHALL BE ASSIGNED A DX RATING, DO RATING OR DMS ALLOTMENT NUMBER ***."

WE BELIEVE THIS NOTATION GAVE ADEQUATE NOTICE OF THE POSSIBILITY THAT A DX RATING MIGHT BE ASSIGNED TO THE PROCUREMENT AT THE TIME OF AWARD. THIS INFORMATION WAS SUFFICIENT TO PERMIT BIDDERS TO OBTAIN SUPPLIER COMMITMENTS CONTINGENT ON THE RATING IN QUESTION. THIS CONTINGENT ARRANGEMENT WOULD HAVE SATISFIED, IN OUR VIEW, THE REQUIREMENT FOR A COMMITMENT OF THE RIPSTOP MATERIAL, ASSUMING THE CONTRACT ACTUALLY AWARDED WAS TO BE ASSIGNED A DX RATING.

RESPONSIBILITY DETERMINATIONS NECESSARILY INVOLVE THE EXERCISE OF A CONSIDERABLE RANGE OF DISCRETION. CONSEQUENTLY, WE WILL NOT QUESTION SUCH DETERMINATIONS UNLESS THEY LACK A REASONABLE BASIS. SEE 53 COMP. GEN. (B180460, JUNE 10, 1974).

ON THE RECORD SET FORTH ABOVE WE MUST CONCLUDE THAT A REASONABLE BASIS EXISTED FOR EACH OF THE NONRESPONSIBILITY DETERMINATIONS IN QUESTION.

THE PROTESTS ARE THEREFORE DENIED.

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