B-152920, JUL. 13, 1964

B-152920, JUL. 13, 1964

TO FORCES, INC.:

REFERENCE IS MADE TO YOUR TELEGRAM DATED FEBRUARY 25, 1964, PROTESTING THE ACTION OF THE DEPARTMENT OF THE AIR FORCE IN REFUSING TO SOLICIT A PROPOSAL FROM YOUR COMPANY FOR CERTAIN MOBILITY EQUIPMENT PROCURED BY THE ELECTRONIC SYSTEMS DIVISION, AFSC, BEDFORD, MASSACHUSETTS, UNDER REQUEST FOR PROPOSALS NO. ES-4-482L-40613/GWH WHICH WAS ISSUED ON FEBRUARY 17, 1964.

THE EQUIPMENT PURCHASED UNDER THE REQUEST FOR PROPOSALS CONSISTS OF TRANSPORTERS (DOLLIES), PLATFORM SKIDS, RAMPS, SPARES AND RELATED DATA. BIDS FOR THIS EQUIPMENT WERE PREVIOUSLY SOLICITED BY THE AIR FORCE UNDER TWO OTHER INVITATIONS FOR BIDS BOTH OF WHICH WERE SUBSEQUENTLY CANCELLED. THE FIRST INVITATION, NO. 19-628-63-133 (HEREAFTER 63-133), WAS ISSUED ON DECEMBER 21, 1962, AND THE SECOND INVITATION, NO. 19-628-64-28 (HEREAFTER 64-28), WAS ISSUED ON SEPTEMBER 26, 1963. YOUR COMPANY FILED PROTESTS WITH OUR OFFICE AGAINST THE PROPOSED REJECTION OF YOUR BIDS UNDER BOTH INVITATIONS.

BY LETTER OF JULY 10, 1963, THE DEPARTMENT OF THE AIR FORCE INFORMED OUR OFFICE THAT YOUR BID UNDER INVITATION 63-133 WAS REJECTED AS NONRESPONSIVE TO THE TERMS OF THE INVITATION. IT WAS REPORTED THAT THE DESCRIPTIVE LITERATURE SUBMITTED WITH YOUR BID FAILED TO SHOW THAT THE EQUIPMENT OFFERED BY YOU CONFORMED TO THE SPECIFICATIONS AND OTHER REQUIREMENTS OF THE INVITATION. HOWEVER, AS WE ADVISED YOU IN OUR LETTER OF JULY 17, 1963 (B-151014), THE AIR FORCE DETERMINED TO CANCEL THE INVITATION AFTER CONCLUDING THAT IT WAS DRAWN IN A MANNER WHICH DID NOT RESULT IN THE GOVERNMENT OBTAINING THE LOWEST POSSIBLE PRICES AND BECAUSE IT CONTAINED OTHER ERRORS. CANCELLATION OF THE INVITATION WAS ACCOMPLISHED ON JULY 19, 1963.

THE CANCELLED INVITATION REQUESTED BIDDERS TO SUBMIT DESCRIPTIVE LITERATURE FOR THE ITEMS THEY OFFERED TO FURNISH IN ORDER TO SHOW COMPLIANCE WITH SPECIFICATION REQUIREMENTS. THE SECOND INVITATION ELIMINATED THIS REQUIREMENT. INSTEAD, IT REQUESTED BIDS UNDER TWO STEP FORMAL ADVERTISING PROCEDURES. AS THE FIRST STEP, REQUESTS FOR TECHNICAL PROPOSALS WERE ISSUED TO PROSPECTIVE BIDDERS ON JULY 27, 1963. TECHNICAL PROPOSALS WERE RECEIVED FROM EIGHT FIRMS. SIX PROPOSALS, INCLUDING THE ONE SUBMITTED BY YOU, WERE FOUND ACCEPTABLE. INVITATION FOR BIDS 64-28 WAS THEN ISSUED TO ALL SIX FIRMS AS THE SECOND STEP OF THE PROCUREMENT ON SEPTEMBER 26, 1963. YOUR COMPANY, A SMALL BUSINESS, SUBMITTED THE LOWEST RESPONSIVE BID IN THE AMOUNT OF $231,999. CRAIG SYSTEMS, INC., LAWRENCE, MASSACHUSETTS, SUBMITTED THE SECOND LOWEST RESPONSIVE BID IN THE AMOUNT OF $235,003. THE NEXT LOW BID IN THE AMOUNT OF $370,728 WAS SUBMITTED BY GICHNER MOBILE SYSTEMS, BELTSVILLE, MARYLAND.

IN ACCORDANCE WITH APPLICABLE REGULATIONS, THE CONTRACTING OFFICER REQUESTED THE BOSTON, MASSACHUSETTS, CONTRACT MANAGEMENT DISTRICT, TO CONDUCT A SURVEY TO DETERMINE THE CAPABILITY OF YOUR COMPANY TO PERFORM THE PROPOSED CONTRACT. THE SURVEY WAS CONDUCTED ON OCTOBER 24, 1963, AT YOUR PLANT BY THE PRODUCTION AND QUALITY CONTROL DIVISIONS OF THE BOSTON CONTRACT MANAGEMENT DISTRICT. ON NOVEMBER 6, 1963, THE BOSTON DISTRICT SUBMITTED A FACILITY CAPABILITY REPORT TO THE CONTRACTING OFFICER WHICH CONCLUDED THAT YOUR FIRM DID NOT POSSESS THE NECESSARY QUALIFICATIONS TO PERFORM THE PROPOSED CONTRACT. SPECIFICALLY, THE REPORT STATED THAT YOUR FIRM DID NOT POSSESS: (1) THE REQUIRED ENGINEERING AND PRODUCTION CAPABILITIES, (2) FINANCIAL STABILITY, (3) ADEQUATE QUALITY CONTROL PROCEDURES, AND (4) AVAILABLE MATERIAL OR ADEQUATE SUBCONTRACTING ARRANGEMENTS TO ASSURE PERFORMANCE OF THE PROPOSED CONTRACT IN TIME TO MEET THE REQUIRED DELIVERY SCHEDULES.

SINCE YOUR FIRM IS A SMALL BUSINESS CONCERN, THE NEGATIVE FACILITY CAPABILITY REPORT WAS REFERRED BY THE AIR FORCE TO THE SMALL BUSINESS ADMINISTRATION (SBA) FOR POSSIBLE ISSUANCE OF A CERTIFICATE OF COMPETENCY. ON NOVEMBER 13, 1963, THE SBA REGIONAL OFFICE IN BOSTON ADVISED THE BOSTON CONTRACT MANAGEMENT DISTRICT THAT YOU HAD INDICATED AN INTENT TO APPLY FOR A CERTIFICATE OF COMPETENCY AND THAT IT WAS THE INTENT OF THE SBA TO PROCESS SUCH APPLICATION. HOWEVER, ON NOVEMBER 18, 1963, THE SBA OFFICE ADVISED THE AIR FORCE THAT SUBSEQUENTLY YOU DECLINED TO FILE AN APPLICATION FOR THE CERTIFICATE OF COMPETENCY AND THAT IT,THEREFORE, WAS CLOSING ITS FILES ON THE CASE WITHOUT FURTHER ACTION.

BY TELEGRAM DATED NOVEMBER 19, 1963, TO OUR OFFICE YOU PROTESTED AGAINST THE AWARD OF A CONTRACT UNDER INVITATION FOR BIDS 64-28 TO ANY BIDDER OTHER THAN YOURSELF. YOUR TELEGRAM WAS FOLLOWED BY A LETTER DATED DECEMBER 3, 1963, SETTING FORTH THE DETAILS OF YOUR PROTEST. YOU STATED THEREIN THAT THE AIR FORCE WAS DENYING THE CONTRACT AWARD TO YOUR FIRM FOR TWO SPECIFIC REASONS: INADEQUATE QUALITY ASSURANCE AND INADEQUATE FINANCIAL CONDITION.

IN REGARD TO QUALITY ASSURANCE, YOU CONTEND IN SUBSTANCE THAT SINCE THE AIR FORCE APPROVED YOUR TECHNICAL PROPOSAL UNDER STEP ONE OF THE PROCUREMENT, WHICH PROPOSAL INCLUDED AN OUTLINE OF YOUR QUALITY ASSURANCE PROGRAM, THE AIR FORCE WAS IN NO POSITION TO LATER REJECT THE ADEQUACY OF YOUR QUALITY CONTROL ASSURANCE. WITH RESPECT TO FINANCIAL INADEQUACY YOUR LETTER OF DECEMBER 3 STATES THAT THE NEGATIVE FINDING IN THE FACILITY CAPABILITY REPORT WAS MADE BY THE AIR FORCE WITHOUT WAITING FOR A LETTER CONCERNING THE AVAILABILITY OF CREDIT KNOWN TO BE FORTHCOMING FROM THE NEW ENGLAND MERCHANTS BANK. THE LETTER FROM THE BANK DATED NOVEMBER 6, 1963, ADDRESSED TO THE FINANCIAL ANALYST, BOSTON CONTRACT MANAGEMENT DISTRICT, READS AS FOLLOWS:

"THIS LETTER IS WRITTEN TO INDICATE OUR WILLINGNESS TO SUPPLY CREDIT TO FORCES, INC. FOR THE PURPOSE OF SUPPORTING THEIR CONTRACT WITH THE AIR FORCE IN THE AMOUNT OF $232,000. ACCORDING TO THE CASH FLOWS RECEIVED BY US IT WILL BE NECESSARY TO MAKE ADVANCES TO THE EXTENT OF $30,000 ON ASSIGNMENT OF THIS CONTRACT TO THE BANK. THIS AGREEMENT IS BASED ON THE REQUIREMENT THAT THE COMPANY OBTAIN $15,000 OF ADDITIONAL CAPITAL.

"SHOULD YOU HAVE ANY QUESTIONS WE WOULD BE PLEASED TO TRY TO ANSWER THEM.'

YOU ALSO STATE THAT YOU INFORMED THE AIR FORCE PRIOR TO THE NEGATIVE FINDING THAT YOU WOULD OBTAIN A LETTER FROM THE ANTHONY COMPANY INDICATING THAT IT WOULD FINANCE ITS PART OF THE SUBCONTRACT PROGRAM. THE LETTER FROM ANTHONY COMPANY TO YOU DATED NOVEMBER 5, 1963, READS AS FOLLOWS:

"THIS LETTER CONFIRMS THE FACT THAT THE ANTHONY COMPANY, AS A SUB CONTRACTOR OF FORCES, INC., WILL RENDER TO FORCES, SUB-CONTRACT LABOR IN EXCESS OF $116,000.00.'

BY TELEGRAM DATED NOVEMBER 7, 1963, ANTHONY COMPANY ADVISED FORCES AS FOLLOWS:

"IN CLARIFICATION THE ANTHONY COMPANY WILL FINANCE ITSELF IN COMPLETE SATISFACTION OF ITS SUBCONTRACT RELATIONSHIP WITH FORCES, INC. AS THEY APPLY TO THE PENDING CONTRACT FOR THE ELECTRONIC SYSTEMS DIVISION.'

IN A REPORT TO US DATED DECEMBER 18, 1963, THE AIR FORCE ADVISED THIS OFFICE THAT THE FACILITY CAPABILITY REPORT OF NOVEMBER 6, 1963, SHOWED YOUR FIRM RECEIVED NEGATIVE FINDINGS NOT ONLY WITH RESPECT TO FINANCIAL AND QUALITY ASSURANCE, BUT ALSO IN REGARD TO ENGINEERING AND PRODUCTION CAPABILITIES, ABILITY TO MEET THE REQUIRED DELIVERY SCHEDULE, AND AVAILABILITY OF MATERIALS. THE AIR FORCE REPORT OF DECEMBER 18, 1963, CONTINUES, IN PERTINENT PART, AS FOLLOWS:

"8. WITH RESPECT TO QUALITY ASSURANCE, FORCES CONTENDS THAT, SINCE THE AIR FORCE APPROVED ITS TECHNICAL PROPOSAL, WHICH INCLUDED A STATEMENT OF ITS QUALITY ASSURANCE PROGRAM, THE AIR FORCE IS IN NO POSITION NOW TO REJECT THE ADEQUACY OF THE FORCES QUALITY CONTROL ASSURANCE. WE DO NOT BELIEVE THAT THIS CONTENTION IS WARRANTED. THE SURVEY WAS INTENDED TO ESTABLISH THE ABILITY OF FORCES TO IMPLEMENT AND CARRY OUT ADEQUATELY ITS QUALITY ASSURANCE PROGRAM. THE SURVEY DISCLOSED THAT FORCES DOES NOT POSSESS ANY PRODUCTION PERSONNEL, QUALITY CONTROL PERSONNEL, MANUFACTURING FACILITIES OR TEST EQUIPMENT TO ASSURE QUALITY CONTROL. ALTHOUGH FORCES INTENDED TO SUBCONTRACT PRACTICALLY NINETY PERCENT OF THE CONTRACT, IT COULD NOT SHOW A FIRM COMMITMENT FOR ANY SINGLE ITEM OF SUBCONTRACT WORK, NOR DID IT POSSESS ANY KNOWLEDGE OF ANY OF ITS VENDORS' QUALITY CONTROL ORGANIZATIONS. ONE OF THE SUBCONTRACTORS NAMED BY FORCES THAT WOULD PERFORM THE REQUIRED TESTING, DID NOT HAVE A QUALITY CONTROL ORGANIZATION THAT MET THE MINIMUM REQUIREMENTS OF THE AIR FORCE. ITS TOOLS AND GAGES WERE NOT CALIBRATED AT SPECIFIED PERIODS, STANDARDS WERE NOT TRACEABLE TO THE NATIONAL BUREAU OF STANDARDS, NONCONFORMING SUPPLIES WERE NOT PROPERLY IDENTIFIED OR CONTROLLED AND HOUSEKEEPING WAS UNSATISFACTORY. OTHER SUBCONTRACTORS PROPOSED FOR TESTING WORK HAD NOT EVEN BEEN CONTACTED BY FORCES. OTHERS WHICH HAD BEEN CONTACTED STATED THEY COULD NOT PERFORM ALL TESTS. THE ANTHONY COMPANY, THE PRINCIPAL SUBCONTRACTOR FOR PRODUCTION, WAS FOUND TO HAVE NO ACCEPTABLE QUALITY CONTROL. THE SURVEY TEAM CAME TO THE CONCLUSION THAT FORCES IS STRICTLY AN ENGINEERING ORGANIZATION WHICH HAS NO PRODUCTION FACILITIES AND NO PRODUCTION OR QUALITY CONTROL EMPLOYEES. ALL MANUFACTURING AND ASSEMBLING AND ALL TESTING HAS TO BE SUBCONTRACTED, YET FORCES COULD NOT SUBMIT A SINGLE WRITTEN FORMAL AGREEMENT WITH ANY SUBCONTRACTOR. THE SURVEY TEAM FOUND THAT ALL CONTACTS WITH SUBCONTRACTORS HAD BEEN VERBAL, USUALLY BY TELEPHONE CONVERSATION, AND SOME PROPOSED SUBCONTRACTORS HAD NOT BEEN CONTACTED AT ALL.

"9. WITH RESPECT TO FINANCIAL, FORCES STATES THAT THE NEGATIVE FINDING WAS MADE WITHOUT CONTACTING THE NEW ENGLAND MERCHANTS NATIONAL BANK, AS REQUESTED. TO ESTABLISH ITS FINANCIAL CAPACITY, FORCES NOW INTRODUCES A LETTER FROM THE NEW ENGLAND MERCHANTS NATIONAL BANK, DATED 6 NOVEMBER 1963, AND A LETTER FROM THE ANTHONY COMPANY, DATED 5 NOVEMBER 1963. THE LETTER FROM THE ANTHONY COMPANY MERELY STATES THAT IT WILL RENDER SUBCONTRACT LABOR IN EXCESS OF $116,000. IT DOES NOT STATE THE FINANCIAL ARRANGEMENTS, IF ANY, BETWEEN THE ANTHONY COMPANY AND FORCES TO PAY FOR THIS LABOR. THE LETTER FROM THE NEW ENGLAND MERCHANTS NATIONAL BANK INDICATES THAT THE BANK WILL EXTEND CREDIT TO FORCES UP TO $30,000 PROVIDED, HOWEVER, THE PROPOSED CONTRACT IS ASSIGNED TO THE BANK AND PROVIDED FURTHER, FORCES OBTAINS $15,000 OF ADDITIONAL CAPITAL. THESE LETTERS, TAKEN IN CONJUNCTION WITH THE FINANCIAL STATEMENT SUBMITTED BY FORCES, SHOWING AS OF 30 SEPTEMBER 1963, A CASH POSITION OF $461, AND A WORKING CAPITAL OF $3,294 ARE CLEAR INDICATIONS OF THE WEAK FINANCIAL CAPACITY OF FORCES TO PERFORM THE PROPOSED CONTRACT. IN OUR OPINION, EVEN WITH THIS ADDITIONAL INFORMATION, THE NEGATIVE FINDING AS TO FINANCIAL IS JUSTIFIED.

"10. FORCES HAD AN OPPORTUNITY TO HAVE THE AIR FORCE REPORT AND FINDINGS REVIEWED BY AN INDEPENDENT AGENCY OF THE GOVERNMENT, NAMELY, THE SMALL BUSINESS ADMINISTRATION, WHICH HAS THE STATUTORY AUTHORITY TO REVIEW THE AIR FORCE DECISION CONCERNING THE QUALIFICATION OF A PROSPECTIVE CONTRACTOR AND WHICH HAS THE RIGHT TO REVERSE THE DECISION OF THE PROCURING ACTIVITY BY ISSUING A CERTIFICATE OF COMPETENCY TO THE CONTRACTOR. FOR REASONS OF ITS OWN, FORCES REFUSED TO APPLY FOR SUCH CERTIFICATE AND THEREBY PRECLUDED THE SMALL BUSINESS ADMINISTRATION TO TAKE THE ACTION THAT MIGHT HAVE RESULTED IN AN AWARD BEING MADE TO IT.

"11. IN VIEW OF THE ABOVE, THIS OFFICE IS OF THE OPINION THAT THE PROTEST OF FORCES HAS NO VALID BASIS AND RECOMMENDS THAT IT BE DENIED. THIS PROCUREMENT HAS BEEN DELAYED FOR A LONG PERIOD OF TIME, DUE IN GREAT PART TO THE PROTESTS FILED BY FORCES. THE PROTEST OF FORCES UNDER THE PRIOR INVITATION FOR BIDS ALSO LACKED MERIT. ITS BID WAS NONRESPONSIVE AND A SURVEY OF FORCES AT THAT TIME ALSO RESULTED IN A NEGATIVE FACILITY CAPABILITY REPORT. SEE REPORT DATED 13 MARCH 1963, COPY IN ATTACHED FILE. DUE TO THE LONG DELAY IN ACCOMPLISHING THIS PROCUREMENT, IT IS NOW OF PARAMOUNT IMPORTANCE THAT A CONTRACT FOR THESE SUPPLIES BE AWARDED PROMPTLY. THIS MOBILITY EQUIPMENT IS AN INTEGRAL PART OF WEAPON SYSTEMS WHICH ARE PRESENTLY UNDER CONTRACT. CERTAIN TESTS FOR THESE SYSTEMS ARE SCHEDULED TO BEGIN EARLY IN JANUARY 1964 AND END IN JUNE 1964. IT IS IMPERATIVE THAT THIS EQUIPMENT BE AVAILABLE BEFORE THE CONCLUSION OF THESE TESTS TO INSURE COMPATIBILITY BEFORE STARTING ADDITIONAL TESTS AND DELIVERY OF THE SYSTEMS TO THE USING COMMAND. * * *"

BY LETTER OF JANUARY 10, 1964, YOU SUBMITTED FOUR VOLUMES OF DOCUMENTS AND OTHER DATA FOR OUR CONSIDERATION IN REBUTTAL TO THE AIR FORCE REPORT. SHORTLY AFTER THE RECEIPT OF THIS MATERIAL THE AIR FORCE WAS NOTIFIED AND REQUESTED TO REEXAMINE THE PRICE NEGATIVE FCR. THE FOUR VOLUMES SUBMITTED WERE OBTAINED BY AN AIR FORCE REPRESENTATIVE ON THE MORNING OF JANUARY 17, 1964. OUR LETTER DATED JANUARY 20, 1964, TO THE SECRETARY OF THE AIR FORCE CONFIRMED OUR PREVIOUS INFORMAL REQUEST TO RECONSIDER THE NEGATIVE FCR IN THE LIGHT OF THE ADDITIONAL MATERIAL SUBMITTED BY YOU.

ON FEBRUARY 14, 1964, INVITATION FOR BIDS NO. 64-28 WAS CANCELLED. REQUEST FOR PROPOSALS NO. ES-4-482L-40613/GWH COVERING THE SAME EQUIPMENT WAS THEN ISSUED ON FEBRUARY 17, 1964. YOUR COMPANY WAS DENIED AN OPPORTUNITY TO SUBMIT A PROPOSAL ON THE NEW PROCUREMENT AND, AS PREVIOUSLY NOTED, YOU PROTESTED SUCH DENIAL TO OUR OFFICE BY TELEGRAM DATED FEBRUARY 25, 1964. THE AIR FORCE STATES (REPORT OF MARCH 30, 1964), THAT INVITATION FOR BIDS NO. 64-28 WAS CANCELLED BECAUSE AN AWARD COULD NOT BE MADE TO YOUR COMPANY, AS THE LOW BIDDER, SINCE YOU DID NOT QUALIFY AS A RESPONSIBLE CONTRACTOR; THAT AN AWARD TO THE SECOND LOW BIDDER, CRAIG SYSTEMS, INC., COULD NOT BE MADE BECAUSE THE TIME FOR ACCEPTING CRAIG'S BID HAD EXPIRED AND CRAIG REFUSED TO GRANT AN EXTENSION OF THE ACCEPTANCE TIME; AND THAT AN AWARD TO GICHNER MOBILE SYSTEMS, THE THIRD LOW BIDDER, WAS NOT JUSTIFIED BECAUSE OF THE LARGE DIFFERENCE IN PRICE BETWEEN THE THIRD AND SECOND LOW BID. ACCORDINGLY, THE CONTRACTING OFFICER DETERMINED TO PROCURE THE EQUIPMENT UNDER THE PUBLIC EXIGENCY NEGOTIATION AUTHORITY OF 10 U.S.C. 2304 (A) (2). NEGOTIATIONS WERE CONDUCTED WITH ALL RESPONSIBLE PROSPECTIVE CONTRACTORS WHO HAD SUBMITTED BIDS ON THE CANCELLED INVITATION. GICHNER MOBILE SYSTEMS SUBMITTED THE LOWEST OFFER AND WAS AWARDED THE CONTRACT ON MARCH 3, 1964, FOR A TOTAL PRICE OF $269,322. THE AIR FORCE REPORT STATES, IN PART, AS FOLLOWS:

"5. THE SPECIFIC INFORMATION WHICH YOU HAVE REQUESTED CONCERNING THIS PROCUREMENT IS SET FORTH IN THE ATTACHED PROTEST FILE. YOUR ATTENTION IS INVITED IN PARTICULAR TO THE STATEMENT OF THE CONTRACTING OFFICER UNDER TAB I OF THE FILE. THAT STATEMENT GIVES IN DETAIL THE ACTIONS TAKEN BY THE AIR FORCE IN COMPLIANCE WITH THE REQUEST IN YOUR LETTER OF 20 JANUARY 1964 THAT WE SHOULD RE-EXAMINE THE MATTER OF FORCES' CAPABILITY TO PERFORM A CONTRACT FOR THIS PROCUREMENT. YOU WILL NOTE THAT ALL AIR FORCE ACTIVITIES CONCERNED REVIEWED THE INFORMATION FURNISHED BY FORCES TO YOUR OFFICE AND RE-EXAMINED THEIR FINDINGS CONCERNING FORCES' CAPABILITY IN THE LIGHT OF THAT INFORMATION. THEY UNANIMOUSLY CONFIRMED THEIR PRIOR FINDINGS AND CONCLUSIONS THAT FORCES DOES NOT POSSESS THE NECESSARY QUALIFICATIONS REQUIRED OF A RESPONSIBLE CONTRACTOR TO PERFORM THE CONTRACT IN QUESTION.

"6. AS REQUESTED BY YOUR OFFICE, THE CASE WAS RESUBMITTED TO THE SMALL BUSINESS ADMINISTRATION (SBA). THE SBA CONSIDERED A REQUEST BY FORCES FOR A CERTIFICATE OF COMPETENCY AND RULED AGAINST IT. THAT ADMINISTRATION ADVISED THE AIR FORCE OF ITS RULING BY LETTER DATED 10 FEBRUARY 1964, WHICH STATED THAT FORCES IS NOT ELIGIBLE FOR A CERTIFICATE OF COMPETENCY IN CONNECTION WITH THIS PROCUREMENT. IN VIEW OF THE FINDINGS OF THE AIR FORCE FACILITY CAPABILITY SURVEY TEAM THAT FORCES WAS NOT CAPABLE OF PERFORMING THE PROPOSED CONTRACT AND THE SUBSEQUENT DETERMINATION OF THE SBA THAT FORCES WAS NOT ELIGIBLE TO RECEIVE A CERTIFICATE OF COMPETENCY FOR THIS PROCUREMENT, WE BELIEVE THAT THE AIR FORCE WAS JUSTIFIED IN EXCLUDING FORCES FROM THESE NEGOTIATIONS.

"7. IN FAILING TO NEGOTIATE WITH FORCES FOR THIS PROCUREMENT, THE AIR FORCE FOLLOWED DEPARTMENT OF DEFENSE POLICY CONCERNING THE RESPONSIBILITY OF CONTRACTORS. THE SECRETARY OF DEFENSE HAS RECENTLY UNDERSCORED THE IMPORTANCE OF DEALING ONLY WITH CONTRACTORS WHO HAVE BEEN AFFIRMATIVELY DETERMINED TO BE RESPONSIBLE IN ACCORDANCE WITH SECTION 1, PART 9 OF THE ARMED SERVICES PROCUREMENT REGULATION. * * *"

IN A REPORT DATED APRIL 22, 1964, SBA INFORMED US THAT YOUR APPLICATION FOR A CERTIFICATE OF COMPETENCY WAS DENIED ON THE BASIS THAT THE ANTHONY COMPANY WAS TO BE THE MANUFACTURER OF THE END ITEM, EITHER AS SUBCONTRACTOR OR JOINT VENTURER, AND HENCE, FORCES COULD NOT QUALIFY AS A SMALL BUSINESS CONCERN UNDER SBA'S SMALL BUSINESS SIZE STANDARDS SINCE THE NUMBER OF ANTHONY'S EMPLOYEES (OVER 500) WOULD HAVE TO BE TAKEN INTO CONSIDERATION IN MEASURING FORCES' SIZE.

THE BASIC ISSUE PRESENTED BY YOUR PROTEST IS WHETHER, IN VIEW OF THE CIRCUMSTANCES DESCRIBED ABOVE, THE AIR FORCE WAS REQUIRED TO SOLICIT A PROPOSAL FROM YOUR FIRM AFTER CANCELLATION OF INVITATION NO. 64-28. YOU CONTEND THAT, BY DENYING YOUR FIRM A COPY OF RFP NO. ES-4-482L 40613/GWH, YOUR RIGHTS UNDER ASPR 1-1002.1 WERE VIOLATED. THE AIR FORCE TAKES THE POSITION THAT, IN VIEW OF THE INFORMATION WHICH THE CONTRACTING OFFICER HAD CONCERNING THE LACK OF CAPABILITY OF YOUR FIRM FOR THIS PARTICULAR PROCUREMENT, HE WAS FULLY JUSTIFIED IN EXCLUDING YOUR FIRM FROM THE NEGOTIATIONS.

ASPR 1-1002.1 PROVIDES, IN PERTINENT PART, AS FOLLOWS:

"* * *. UPON REQUEST, PROSPECTIVE CONTRACTORS NOT INITIALLY SOLICITED MAY BE MAILED OR OTHERWISE PROVIDED COPIES OF SUCH INVITATIONS FOR BIDS OR REQUESTS FOR PROPOSALS TO THE EXTENT THEY ARE AVAILABLE. WHERE A SOLICITATION FOR PROPOSALS HAS BEEN LIMITED AS A RESULT OF A DETERMINATION THAT ONLY A SPECIFIED FIRM OR FIRMS POSSESS THE CAPABILITY TO MEET THE REQUIREMENTS OF A PROCUREMENT, REQUESTS FOR PROPOSALS SHALL BE MAILED OR OTHERWISE PROVIDED UPON REQUEST TO FIRMS NOT SOLICITED, BUT ONLY AFTER ADVICE HAS BEEN GIVEN TO THE FIRM MAKING THE REQUEST AS TO THE REASONS FOR THE LIMITED SOLICITATION AND THE UNLIKELIHOOD OF ANY OTHER FIRM BEING ABLE TO QUALIFY FOR A CONTRACT AWARD UNDER THE CIRCUMSTANCES; BUT SEE 4-205.2.

ASPR 4-205.2 (A) PROVIDES IN PERTINENT PART AS FOLLOWS:

"* * *. WHEN A SOURCE NOT INITIALLY SOLICITED REQUESTS A COPY OF A SOLICITATION AND SUCH SOURCE HAS BEEN TECHNICALLY EVALUATED AND DETERMINED NOT QUALIFIED, HE SHALL BE SO ADVISED AND HIS REQUEST SHALL BE DENIED.

IT IS YOUR CONTENTION THAT THE EXCEPTION TO ASPR 1-1002.1 WHICH IS PROVIDED BY ASPR 4-205.2 (A) HAS NO APPLICATION IN THE INSTANT CASE, APPARENTLY ON THE BASIS THAT SINCE THE AIR FORCE ACCEPTED YOUR TECHNICAL PROPOSAL SUCH ACCEPTANCE WOULD PRECLUDE A NEGATIVE FINDING ON THE QUESTION OF YOUR TECHNICAL CAPABILITY. IT IS OUR OPINION, HOWEVER, THAT THE PROVISIONS OF ASPR 4-205.2 (A) ARE DIRECTED TO NEGATIVE DETERMINATIONS OF TECHNICAL CAPABILITY OF THE TYPE MADE BY THE CONTRACTING AGENCY FOLLOWING ITS CAPABILITY SURVEY OF YOUR FACILITIES, AND THAT SUCH DETERMINATION MUST BE CONSIDERED AS SEPARATE AND DISTINCT FROM A FAVORABLE DETERMINATION ON THE ACCEPTABILITY OF YOUR TECHNICAL PROPOSAL. WE ARE THEREFORE OF THE OPINION THAT THE NEGATIVE FINDING RESULTING FROM THE CONTRACTING AGENCY'S FACILITY CAPABILITY SURVEY, TOGETHER WITH THE REFUSAL BY SBA TO ISSUE A CERTIFICATE OF COMPETENCY, WAS PROPERLY FOR CONSIDERATION AND APPLICATION IN DETERMINING WHETHER YOUR REQUEST FOR A COPY OF RFP NO. ES-4-482L- 40613/GWH SHOULD HAVE BEEN COMPLIED WITH. SEE TO THE SAME EFFECT, OUR DECISION B-149132, SEPTEMBER 5, 1962, COPY ENCLOSED, HOLDING THAT A BID NEED NOT BE SOLICITED FROM A SMALL BUSINESS CONCERN PREVIOUSLY DENIED A CERTIFICATE OF COMPETENCY.

OUR OFFICE HAS CONSISTENTLY HELD THAT THE DETERMINATION OF A BIDDER'S QUALIFICATIONS TO COMPLY WITH CONTRACT REQUIREMENTS IS PRIMARILY A FUNCTION OF THE DEPARTMENT OR AGENCY CHARGED WITH ADMINISTRATION OF THE CONTRACT AND IN THE ABSENCE OF A SHOWING OF BAD FAITH OR THE LACK OF A REASONABLE FACTUAL BASIS FOR THE DETERMINATION, WE WILL NOT OBJECT TO THE CONCLUSION REACHED. IN THIS CASE, THE AIR FORCE HAS ON THREE SEPARATE OCCASIONS DETERMINED THAT YOUR FIRM WAS NOT CAPABLE OF MEETING THE REQUIREMENTS OF THE PROCUREMENT. THE LAST DETERMINATION IN THIS REGARD WAS MADE SHORTLY BEFORE THE SECOND INVITATION FOR BIDS WAS CANCELLED AND THE PROCUREMENT RESOLICITED ON A NEGOTIATED BASIS. WHILE THE RECORD BEFORE US IS REPLETE WITH ALLEGATIONS, COUNTER-ALLEGATIONS AND REBUTTALS ON VARIOUS ASPECTS CONCERNED WITH THE QUESTION OF FORCES' RESPONSIBILITY, WHICH WE NEED NOT GO INTO HERE, WE BELIEVE THAT PORTIONS OF SUCH RECORD REASONABLY SUPPORT THE AIR FORCE'S DETERMINATION THAT YOUR FIRM WAS NOT QUALIFIED FOR PURPOSES OF THIS PARTICULAR PROCUREMENT. FOR EXAMPLE, WITH RESPECT TO FORCES' FINANCIAL INADEQUACY, WHICH IN ITSELF WOULD BE ENOUGH TO DISQUALIFY IT FOR AWARD, THE RECORD SHOWS THAT AS OF SEPTEMBER 30, 1963, FORCES HAD A CASH POSITION OF $461 AND A WORKING CAPITAL OF $3,294 WHEREAS ITS BID PRICE ON THE CONTRACT WAS $231,999. FURTHERMORE, THE EXTENSION OF CREDIT IN THE AMOUNT OF $30,000 BY THE NEW ENGLAND MERCHANTS NATIONAL BANK WAS CONDITIONED UPON THE REQUIREMENT THAT FORCES OBTAIN $15,000 OF ADDITIONAL CAPITAL. THERE HAS BEEN NO SHOWING MADE THAT FORCES WAS, AT THAT TIME, CAPABLE OF OBTAINING THIS $15,000 OF ADDITIONAL CAPITAL.

NOR DO WE THINK THAT THE AIR FORCE'S FAILURE TO WAIT FOR THE SUBMISSION OF LETTERS FROM THE BANK AND THE ANTHONY COMPANY BEFORE REACHING ITS NEGATIVE DETERMINATION OPERATES TO IMPEACH THE INTEGRITY OF THE DETERMINATION. THE GATHERING OF DATA MUST CONCLUDE AT SOME POINT IN TIME AND WHILE, IN A PARTICULAR CASE, THE FAILURE TO AWAIT THE FURTHER SUBMISSION OF INFORMATION BY A BIDDER MAY RESULT IN MAKING A DETERMINATION OF QUESTIONABLE VALIDITY, IT IS OUR OPINION THAT SUCH FAILURE IN THIS CASE IS OF NO CONSEQUENCE SINCE THE INFORMATION SUBMITTED BY THE BANK AND ANTHONY WAS NOT OF A NATURE WHICH WOULD HAVE REQUIRED A DIFFERENT CONCLUSION ON THE QUESTION OF FORCES' FINANCIAL POSITION.

IN VIEW OF THESE CONSIDERATIONS WE CANNOT CONCLUDE THAT THE RECORD SHOWS A LACK OF ANY REASONABLE FACTUAL BASIS FOR THE NEGATIVE DETERMINATION AS TO FORCES' RESPONSIBILITY. THIS BEING THE CASE, IT WOULD APPEAR THAT A RESOLICITATION OF FORCES ON THE PROCUREMENT WOULD HAVE SERVED NO USEFUL PURPOSE, SINCE THERE IS NOTHING IN THE RECORD TO INDICATE, NOR IS IT CONTENDED, THAT FORCES' CAPABILITIES TO PERFORM HAD INCREASED TO SUCH AN EXTENT AS TO WARRANT A NEW POSITIVE FINDING OF CURRENT RESPONSIBILITY FOR THE NEGOTIATED PROCUREMENT.