B-162400, NOV. 17, 1967

B-162400, NOV. 17, 1967

BIDDERS - RESPONSIBILITY - PERFORMANCE CAPABILITY DECISION TO MECHANICAL EQUIPMENT CO. DENYING PROTEST AGAINST AWARD OF NEGOTIATED CONTRACT TO P.X. ENGINEERING CO. FOR FURNISHING WATER DISTILLATION UNITS TO DEFENSE SUPPLY AGENCY. BIDDER WHO WAS DETERMINED TO HAVE PLANT FACILITIES AND QUALITY CONTROL TO PERFORM IN ACCORDANCE WITH SPECIFICATIONS NEED NOT HAVE FACT THAT HE HAD NOT PREVIOUSLY PRODUCED ITEM USED IN DETERMINATION OF RESPONSIBILITY UNDER ASPR 1-903. SINCE RECORD ESTABLISHES THAT RESPONSIBILITY DETERMINATION WAS MADE BY CONTRACTING OFFICER WITHOUT ANY EVIDENCE OF CAPRICIOUS OR ARBITRARY ACTION, DETERMINATION MUST BE ACCEPTED.

TO MECHANICAL EQUIPMENT COMPANY, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 1, 1967, FORWARDING A COPY OF A LETTER OF THE SAME DATE, TO THE DEFENSE CONSTRUCTION SUPPLY CENTER, COLUMBUS, OHIO, IN WHICH YOU PROTEST THE AWARD OF CONTRACT NO. DSA -700-68-C-8029 TO THE P.X. ENGINEERING COMPANY, INC., ON A NEGOTIATED BASIS UNDER REQUEST FOR PROPOSALS (RFP) NO. DSA-700-67-R-9398, ISSUED BY THE DEFENSE CONSTRUCTION SUPPLY CENTER, DEFENSE SUPPLY AGENCY, COLUMBUS, OHIO.

THIS RFP WAS ISSUED ON JUNE 5, 1967, TO 14 PROSPECTIVE CONTRACTORS FOR 20 WATER DISTILLATION UNITS, INCLUDING, AMONG OTHER ANCILLARY ITEMS, MANUALS RELATING TO THE WATER DISTILLATION UNITS. THE SOLICITATION DOCUMENT CONTAINED A PROVISION FOR SUBMISSION OF PREPRODUCTION SAMPLES WITH A RESERVATION OF THE GOVERNMENT'S RIGHT TO WAIVE THIS REQUIREMENT, AS REQUIRED BY ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2-201 (B) (XIV). IN REGARD TO FIRST ARTICLE APPROVAL, THE SOLICITATION PROVIDED THAT THE TIME FOR SUBMISSION OF THE FIRST ARTICLE TEST REPORT WOULD BE WITHIN 90 DAYS AFTER DATE OF THE AWARD.

THREE PROPOSALS WERE RECEIVED AND EVALUATED BY DEFENSE CONSTRUCTION SUPPLY CENTER TECHNICAL PERSONNEL. THE P.X. ENGINEERING COMPANY, INC., OFFERED A UNIT PRICE OF $14,738 WITH NO CHARGE FOR COMMERCIAL PUBLICATIONS (ITEM 2) OR FOR PROVISIONING (ITEM 3). AQUA-CHEM, INC., OFFERED A UNIT PRICE OF $15,476 PLUS A CHARGE OF $625 FOR MANUALS (ITEM 2) AND A CHARGE OF $500 FOR PROVISIONING (ITEM 3). AQUA-CHEM, INC., INDICATED IN ITS PROPOSAL THAT IF THE FURNISHING OF THE PREPRODUCTION SAMPLE WERE WAIVED, THE F.O.B. ORIGIN PRICE WOULD BE REDUCED FROM $15,476 TO $14,685. YOUR FIRM QUOTED A UNIT PRICE OF $15,940 FOR THE WATER DISTILLATION UNITS, A PRICE OF $750 FOR THE MANUALS AND A PRICE OF $500 FOR PROVISIONING. YOU ALSO INDICATED IN YOUR PROPOSAL THAT YOUR PRICE OF $15,940 WOULD BE REDUCED BY $85 FOR EACH UNIT IF THE FIRST ARTICLE TESTING WERE WAIVED. TELEGRAM DATED JULY 12, 1967, THE CONTRACTING OFFICER INITIATED A SECOND ROUND OF NEGOTIATIONS WITH YOUR FIRM AND THE TWO OTHER OFFERORS. AQUA- CHEM, INC., DID NOT VARY ITS PRICE. YOUR FIRM REDUCED THE UNIT PRICE FOR THE WATER DISTILLATION UNITS TO $15,040. P.X. ENGINEERING OFFERED A 2 PERCENT DISCOUNT IF THE CONTRACT WAS AWARDED TO IT ON OR BEFORE JULY 31, 1967, AND IF THE TIME FOR SUBMISSION OF FIRST ARTICLE TEST REPORT WAS EXTENDED TO 135 DAYS.

A PREAWARD SURVEY OF THE PLANT AND FACILITIES OF P.X. ENGINEERING WAS CONDUCTED BY THE DEFENSE CONTRACT ADMINISTRATIVE SERVICES REGION (DCASR), BOSTON, MASSACHUSETTS, AND THAT ACTIVITY BY REPORT DATED JULY 17, 1967, INDICATED THAT THE COMPANY HAD THE REQUIRED TECHNICAL ABILITY, PRODUCTION CAPABILITY, PLANT AND FACILITIES NECESSARY TO PERFORM THE PROPOSED CONTRACT. THE REPORT ALSO INDICATED THAT THE FIRM COULD SUPPLY THE REQUIRED MANUALS WITHIN 2 WEEKS AFTER DATE OF AWARD. HOWEVER, THE REPORT DID INDICATE THAT THE COMPANY WOULD NOT BE ABLE TO COMPLY WITH THE REQUIREMENTS OF THE PROPOSED CONTRACT TO COMPLETE THE FIRST ARTICLE TEST REPORT WITHIN 90 DAYS AFTER DATE OF THE AWARD. THE RECORD INDICATES THAT FURTHER NEGOTIATIONS WITH RESPECT TO THE FURNISHING OF THE FIRST ARTICLE TEST REPORT WERE CONDUCTED WITH P.X. ENGINEERING AND IT WAS DETERMINED BY THE CONTRACTING OFFICER THAT THE FIRST ARTICLE TEST REPORT COULD BE SUBMITTED BY P.X. ENGINEERING WITHIN 135 DAYS AFTER DATE OF THE AWARD WITHOUT JEOPARDIZING THE REQUIRED DELIVERY DATE OF 239 DAYS AFTER DATE OF THE AWARD.

BY LETTER DATED AUGUST 2, 1967, P.X. ENGINEERING WAIVED THE REQUIREMENT THAT THE AWARD BE MADE TO IT BY JULY 31, 1967, AND IT EXTENDED A 2 PERCENT TRADE DISCOUNT. SINCE YOUR FIRM AND AQUA-CHEM, INC., HAD BOTH PREVIOUSLY SUPPLIED IDENTICAL UNITS, YOUR PROPOSAL AND THAT OF AQUA-CHEM, INC., WERE EVALUATED BASED ON WAIVING THE REQUIREMENTS OF THE FIRST ARTICLE TEST REPORT. ON AUGUST 24, 1967, A CONTRACT FOR FURNISHING THE WATER DISTILLATION UNITS WAS AWARDED TO P.X. ENGINEERING.

IN YOUR LETTER OF SEPTEMBER 1, 1967, TO THE DEFENSE CONSTRUCTION SUPPLY CENTER, YOU PROTEST THE AWARD MADE TO P.X. ENGINEERING ON THE GROUND THAT SUCH FIRM IS NOT QUALIFIED TO FURNISH A RELIABLE PRODUCT. YOU CONTEND THAT P.X. ENGINEERING HAS NEVER BUILT SEA WATER DISTILLATION EQUIPMENT; THAT THE COMPANY LACKS EMPIRICAL EXPERIENCE IN THE MANUFACTURING OF WATER DISTILLATION EQUIPMENT; AND THAT THE COMPANY LACKS AN ADEQUATE TECHNICAL STAFF, AN ADEQUATE PHYSICAL PLANT, AND A QUALIFIED QUALITY CONTROL SYSTEM. YOU CONTEND THAT IF P.X. ENGINEERING IS ALLOWED TO PROCEED WITH THE CONTRACT, IT WILL COST THE GOVERNMENT A CONSIDERABLE SUM OF MONEY BECAUSE OF THE FIRM'S INABILITY TO COMPLETE THE CONTRACT SATISFACTORILY.

THE RECORD INDICATES THAT A PREAWARD SURVEY WAS CONDUCTED OF THE PLANT AND FACILITIES OF P.X. ENGINEERING AND THAT THE SURVEY INDICATED THAT THE FIRM HAD ADEQUATE PLANT FACILITIES, AND ADEQUATE QUALITY CONTROL SYSTEM AS WELL AS THE TECHNICAL ABILITY TO PERFORM THE PROPOSED CONTRACT. IT ALSO SHOWS THAT THE CONTRACTING OFFICER DETERMINED THAT P.X. ENGINEERING MET THE RESPONSIBILITY REQUIREMENTS OF PARAGRAPH 1-903 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) AND THAT SUCH DETERMINATION WAS BASED UPON A PREAWARD SURVEY CONDUCTED BY DCASR, BOSTON. THE FACT THAT P.X. ENGINEERING MAY NOT HAVE PRODUCED THIS SAME ITEM IN THE PAST IS NOT A DECIDING FACTOR IN DETERMINING RESPONSIBILITY PURSUANT TO ASPR 1-903. SEE B-162175 DATED AUGUST 22, 1967.

THIS OFFICE, AS WELL AS THE COURTS, HAS CONSISTENTLY HELD THAT THE QUESTION AS TO A BIDDER'S RESPONSIBILITY IS PRIMARILY FOR DETERMINATION BY THE CONTRACTING OFFICER. SEE 33 COMP. GEN. 549; 38 ID. 131; NIKLAUS V. MILLER, 66 N.W. 2D 824; KNISKA V. SPLAIN, 110 N.Y.S. 2D 267; BROWN V. PHOENIX, 272 P. 2D 358; MCNICHOLS V. DENVER, 274 P. 2D 317. THE RECORD HERE ESTABLISHES THAT THE NECESSARY DETERMINATION REQUIRED BY REGULATION AS TO THE RESPONSIBILITY OF P.X. ENGINEERING WAS MADE BY THE CONTRACTING OFFICER AND, IN THE ABSENCE OF EVIDENCE OF CAPRICIOUS OR ARBITRARY ACTION, WE ARE REQUIRED TO ACCEPT THE ADMINISTRATIVE DETERMINATION THAT SUCH FIRM WAS CAPABLE OF PERFORMING THE RESULTING CONTRACT.

FOR THE REASONS STATED ABOVE, WE SEE NO VALID BASIS FOR DISTURBING THE AWARD AS MADE, AND THEREFORE, YOUR PROTEST MUST BE DENIED.