B-165522, FEB. 20, 1969

B-165522, FEB. 20, 1969

TO FREDERICK A. KRAUSE ASSOCIATES, INC.:

REFERENCE IS MADE TO YOUR TELEGRAM OF OCTOBER 29, 1968, AND SUPPLEMENTAL LETTERS OF NOVEMBER 8, DECEMBER 24, 30, AND 31, 1968, PROTESTING AGAINST AWARD TO ANOTHER FIRM OF THE SET-ASIDE PORTION OF INVITATION FOR BIDS (IFB) DAAA09-69-B-0010 ISSUED BY THE U.S. ARMY AMMUNITION PROCUREMENT AND SUPPLY AGENCY.

THE ABOVE INVITATION WAS ISSUED ON AUGUST 15, 1968, AND CALLED FOR TWO ITEMS, ITEM 0001 BEING FOR A SUPPORT ASSEMBLY FOR AN AMMUNITION FIBER CONTAINER, M 105 A2 AND ITEM 0002 FOR RELATED TECHNICAL DATA AND REPORTS. THE IFB STATED THAT 12,654,000 SUPPORT ASSEMBLIES WOULD BE PURCHASED ON AN UNRESTRICTED BASIS AND THAT AN EQUAL QUANTITY HAD BEEN SET ASIDE FOR AWARD TO ONE OR MORE LABOR SURPLUS CONCERNS, AND, TO A LIMITED EXTENT, TO SMALL BUSINESS CONCERNS WHICH DO NOT QUALIFY AS LABOR SURPLUS AREA CONCERNS. ALSO, THE INVITATION STATED THAT NEGOTIATIONS FOR AWARD OF THE SET-ASIDE PORTION WOULD BE CONDUCTED ONLY WITH RESPONSIBLE LABOR SURPLUS AREA CONCERNS (AND SMALL BUSINESSES TO THE EXTENT INDICATED) WHO HAD SUBMITTED RESPONSIVE BIDS OR PROPOSALS ON THE NON-SET-ASIDE PORTION AT A UNIT PRICE NO GREATER THAN 120 PERCENT OF THE HIGHEST UNIT PRICE AT WHICH AN AWARD IS MADE ON THE NON-SET-ASIDE PORTION, IN THE FOLLOWING ORDER OF PRIORITY AND UNDER THE FOLLOWING CONDITIONS:

GROUP 1. CERTIFIED-ELIGIBLE CONCERNS WHICH ARE ALSO SMALL BUSINESS CONCERNS.

GROUP 2. OTHER CERTIFIED-ELIGIBLE CONCERNS.

GROUP 3. PERSISTENT LABOR SURPLUS AREA CONCERNS WHICH ARE ALSO SMALL BUSINESS CONCERNS.

GROUP 4. OTHER PERSISTENT LABOR SURPLUS AREA CONCERNS.

GROUP 5. SUBSTANTIAL LABOR SURPLUS AREA CONCERNS WHICH ARE ALSO SMALL BUSINESS.

GROUP 6. OTHER SUBSTANTIAL LABOR SURPLUS AREA CONCERNS.

GROUP 7. SMALL BUSINESS CONCERNS WHICH ARE NOT LABOR SURPLUS AREA CONCERNS.

WITHIN EACH OF THE ABOVE GROUPS, NEGOTIATIONS WITH SUCH GROUPS WAS TO BE IN THE ORDER OF THEIR BIDS ON THE NON-SET-ASIDE PORTION, BEGINNING WITH THE LOWEST RESPONSIVE BID. THE SET-ASIDE PORTION WAS TO BE AWARDED AT THE HIGHEST UNIT PRICE AWARDED ON THE NON-SET-ASIDE PORTION, ADJUSTED TO REFLECT TRANSPORTATION AND OTHER COST FACTORS WHICH WERE CONSIDERED IN EVALUATING BIDS ON THE NON-SET-ASIDE PORTION.

A "LABOR SURPLUS AREA" IS DEFINED ON PAGE 29 OF THE INVITATION AS "A GEOGRAPHICAL AREA WHICH IS A SECTION OF CONCENTRATED UNEMPLOYMENT OR UNDEREMPLOYMENT, A PERSISTENT LABOR SURPLUS AREA, OR A SUBSTANTIAL LABOR SURPLUS AREA, AS DEFINED BELOW:

"/I) -SECTION OF CONCENTRATED UNEMPLOYMENT OR UNDEREMPLOYMENT- MEANS APPROPRIATE SECTIONS OF STATES OR -LABOR AREAS' SO CLASSIFIED BY THE SECRETARY OF LABOR.

"/II) -PERSISTENT LABOR SURPLUS AREA- MEANS AN AREA WHICH (A) IS CLASSIFIED BY THE DEPARTMENT OF LABOR AS AN -AREA OF PERSISTENT LABOR SURPLUS' (ALSO CALLED -AREA OF PERSISTENT UNEMPLOYMENT-) AND IS LISTED AS SUCH BY THAT DEPARTMENT IN CONJUNCTION WITH ITS PUBLICATION -AREA TRENDS IN EMPLOYMENT AND UNEMPLOYMENT,- OR (B) IS CERTIFIED AS AN AREA OF PERSISTENT LABOR SURPLUS BY THE DEPARTMENT OF LABOR PURSUANT TO A PROSPECTIVE CONTRACTOR.

"/III) -SUBSTANTIAL LABOR SURPLUS AREA- MEANS AN AREA WHICH (A) IS CLASSIFIED BY THE DEPARTMENT OF LABOR AS AN -AREA OF SUBSTANTIAL LABOR SURPLUS' (ALSO CALLED -AREA OF SUBSTANTIAL UNEMPLOYMENT-) AND WHICH IS LISTED AS SUCH BY THAT DEPARTMENT IN CONJUNCTION WITH ITS PUBLICATION AREA TRENDS IN EMPLOYMENT AND UNEMPLOYMENT,- OR (B) IS CERTIFIED AS AN AREA OF SUBSTANTIAL LABOR SURPLUS BY THE DEPARTMENT OF LABOR PURSUANT TO A REQUEST BY A PROSPECTIVE CONTRACTOR.'

THE INVITATION FURTHER STATED THAT THE TERM "LABOR SURPLUS AREA CONCERN" INCLUDES CERTIFIED-ELIGIBLE CONCERNS, PERSISTENT LABOR SURPLUS AREA CONCERNS AND SUBSTANTIAL LABOR SURPLUS AREA CONCERNS, AS DEFINED BELOW:

"/I) -CERTIFIED-ELIGIBLE CONCERN- MEANS A CONCERN (A) LOCATED IN OR NEAR A SECTION OF CONCENTRATED UNEMPLOYMENT OR UNDEREMPLOYMENT WHICH HAS BEEN CERTIFIED BY THE SECRETARY OF LABOR IN ACCORDANCE WITH 29 CFR 8.7 (B) WITH RESPECT TO THE EMPLOYMENT OF DISADVANTAGED PERSONS RESIDING WITHIN SUCH SECTIONS, AND (B) WHICH WILL AGREE TO PERFORM, OR CAUSE TO BE PERFORMED BY A CERTIFIED CONCERN, A SUBSTANTIAL PROPORTION OF A CONTRACT IN OR NEAR SUCH SECTIONS; IT INCLUDES A CONCERN WHICH, THOUGH NOT SO CERTIFIED, AGREES TO HAVE A SUBSTANTIAL PROPORTION OF A CONTRACT PERFORMED BY CERTIFIED CONCERNS IN OR NEAR SUCH SECTIONS. A CONCERN SHALL BE DEEMED TO PERFORM A SUBSTANTIAL PROPORTION OF A CONTRACT IN OR NEAR SECTIONS OF CONCENTRATED UNEMPLOYMENT OR UNDEREMPLOYMENT IF THE COSTS THAT THE CONCERN WILL INCUR ON ACCOUNT OF MANUFACTURING OR PRODUCTION IN OR NEAR SUCH SECTIONS (BY ITSELF IF A CERTIFIED CONCERN, OR BY CERTIFIED CONCERNS ACTING AS FIRST-TIER SUBCONTRACTORS) AMOUNT TO MORE THAN 30 PERCENT OF THE CONTRACT PRICE.

"/II) -PERSISTENT LABOR SURPLUS AREA CONCERN- MEANS A CONCERN THAT AGREES TO PERFORM, OR CAUSE TO BE PERFORMED, A SUBSTANTIAL PROPORTION OF A CONTRACT IN PERSISTENT LABOR SURPLUS AREA. A CONCERN SHALL BE DEEMED TO PERFORM A SUBSTANTIAL PROPORTION OF A CONTRACT IN PERSISTENT LABOR SURPLUS AREAS IF THE COSTS THAT THE CONCERN WILL INCUR ON ACCOUNT OF MANUFACTURING OR PRODUCTION PERFORMED IN SUCH AREAS (BY ITSELF OR ITS FIRST-TIER SUBCONTRACTORS) AMOUNT TO MORE THAN 50 PERCENT OF THE CONTRACT PRICE.

"/III) -SUBSTANTIAL LABOR SURPLUS AREA CONCERN- MEANS A CONCERN THAT AGREES TO PERFORM, OR CAUSE TO BE PERFORMED, A SUBSTANTIAL PROPORTION OF A CONTRACT IN SUBSTANTIAL LABOR SURPLUS AREAS. CONCERN SHALL BE DEEMED TO PERFORM A SUBSTANTIAL PROPORTION OF A CONTRACT IN SUBSTANTIAL LABOR SURPLUS AREAS IF THE COSTS THAT THE CONCERN WILL INCUR ON ACCOUNT OF MANUFACTURING OR PRODUCTION PERFORMED IN SUBSTANTIAL AND PERSISTENT LABOR SURPLUS AREAS (BY ITSELF OR ITS FIRST TIER SUBCONTRACTORS) AMOUNT TO MORE THAN 50 PERCENT OF THE CONTRACT PRICE.'

DUE TO ADMINISTRATIVE OVERSIGHT THE INVITATION FOR BIDS DID NOT CONTAIN THE PROVISION SUGGESTED BY ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1- 804.2 (B) (I), PARAGRAPH D, THAT "WHERE ELIGIBILITY FOR PREFERENCE IS BASED UPON THE STATUS OF THE BIDDER OR BIDDER'S SUBCONTRACTORS AS A - CERTIFIED ELIGIBLE CONCERN,- THE BIDDER SHALL FURNISH WITH HIS BID EVIDENCE OF CERTIFICATION BY THE SECRETARY OF LABOR.' NO OTHER PROVISION OF THE INVITATION INCLUDED SUCH A REQUIREMENT.

BIDS WERE OPENED ON AUGUST 30, 1968, AND THE AWARD OF THE NON-SET ASIDE PORTION WAS MADE TO AMETEK CORPORATION (AMETEK), A LARGE BUSINESS CONCERN. KDK CORPORATION (KDK) AND CRAWFORD PLASTICS CORPORATION (CRAWFORD) BOTH SMALL BUSINESSES, BID WITHIN 120 PERCENT OF AMETEK'S PRICE, CRAWFORD'S BID BEING LOWER THAN KDK'S BID.

KDK REPRESENTED IN ITS BID THAT IT WAS A CERTIFIED-ELIGIBLE LABOR SURPLUS AREA CONCERN. HOWEVER, KDK DID NOT SUBMIT ITS CERTIFICATE WITH ITS BID. IT WAS NOT UNTIL SEPTEMBER 4 THAT KDK APPLIED FOR A LABOR SURPLUS "TARGET AREA" CERTIFICATE WHICH WAS ISSUED ON SEPTEMBER 5. KDK INDICATED IN ITS BID THAT THE WORK WAS TO BE DONE IN ALBUQUERQUE, NEW MEXICO, BUT DID NOT SPECIFY WHAT PERCENTAGE OF WORK WAS TO BE DONE IN THAT AREA.

CRAWFORD REPRESENTED THAT IT WAS A PERSISTENT LABOR SURPLUS AREA CONCERN AND THAT 55 PERCENT OF THE WORK WAS TO BE PERFORMED IN FALL RIVER, MASSACHUSETTS. HOWEVER, BY LETTER OF SEPTEMBER 6, 1968, TO THE CONTRACTING OFFICER, CRAWFORD ALLEGED THAT IT HAD MADE AN ERROR IN ITS BID AND SHOULD HAVE REPRESENTED ITSELF AS A CERTIFIED-ELIGIBLE CONCERN AS TWO OF ITS INTENDED FIRST-TIER SUBCONTRACTORS WERE CERTIFIED ELIGIBLE CONCERNS. CRAWFORD DID NOT, HOWEVER, SUBMIT A CERTIFICATE FOR ITSELF OR ITS SUBCONTRACTORS EITHER WITH ITS BID OR SUBSEQUENTLY.

YOUR BID WAS NOT CONSIDERED BY THE PROCURING ACTIVITY BECAUSE YOU REPRESENTED YOURSELF TO BE A SUBSTANTIAL LABOR SURPLUS CONCERN, AND MADE NO CLAIM TO CERTIFIED-ELIGIBLE STATUS. THUS, IT WAS NOT CONSIDERED NECESSARY TO HAVE A PRE-AWARD SURVEY OF YOUR FIRM, SINCE YOU WERE IN A LOWER PRIORITY THAN EITHER KDK OR CRAWFORD. YOU SUBSEQUENTLY ALLEGED THAT YOU WERE A CERTIFIED-ELIGIBLE CONCERN, HAVING RECEIVED YOUR CERTIFICATION THE PREVIOUS JUNE FOR ANOTHER CONTRACT. HOWEVER, THE PROCURING ACTIVITY WAS OF THE OPINION THAT EVEN IF THIS WERE TRUE, KDK WOULD STILL BE ENTITLED TO THE AWARD SINCE IT ALSO WAS CONSIDERED TO BE A CERTIFIED- ELIGIBLE CONCERN AND ITS BID WAS LOWER THAN YOUR BID. CONSEQUENTLY, THE SET-ASIDE PORTION OF THE PROCUREMENT WAS FIRST OFFERED TO KDK AND A CONTRACT WAS SUBSEQUENTLY AWARDED TO KDK ON OCTOBER 21, 1968.

WHILE OTHER ISSUES HAVE BEEN RAISED IN THE INSTANT CASE WHICH WILL BE DEALT WITH LATER, THE PRIMARY ISSUE IS WHAT LABOR SURPLUS SET-ASIDE PRIORITY IS TO BE GIVEN EACH BIDDER. ACCORDING TO THE ADMINISTRATIVE REPORT KDK REPRESENTED IN ITS BID THAT IT WAS A CERTIFIED-ELIGIBLE CONCERN, ALTHOUGH IT HAD NOT BEEN CERTIFIED AS SUCH AT THE TIME OF BID OPENING. IN DEFENSE OF ITS GIVING PRIORITY TO KDK THE ADMINISTRATIVE AGENCY STATES:

"A. THE GENERAL RULE GOVERNING THE RESOLUTION OF THIS QUESTION IS THAT WHICH WAS STATED IN 41 COMPTROLLER GENERAL 417, 418 AS FOLLOWS:

-THE SET-ASIDE PORTION IS, OF COURSE, A NEGOTIATED PROCUREMENT AND, THEREFORE, IS NOT SUBJECT TO THE STRICT RULES GOVERNING PROCUREMENT BY FORMAL ADVERTISING. NEVERTHELESS, IT IS OUR POSITION THAT REQUIREMENTS FOR AND LIMITATIONS ON ELIGIBILITY FOR AWARD UNDER THE SET-ASIDE WHICH ARE STATED IN AN INVITATION SHOULD BE FOLLOWED IN THE AWARD OF THE SET-ASIDE PORTION.-

"B. ACCORDINGLY, A BIDDER NEED SUBMIT HIS BID ONLY IN CONFORMITY WITH THE TERMS OF THE INVITATION. IF THE GOVERNMENT FAILS TO REQUEST SOMETHING TO BE SUBMITTED WITH THE BID, IT IS NOT THE RESPONSIBILITY OF THE BIDDER TO DISCOVER THE OMISSION AND ACT AS IF IT HAD NOT OCCURRED. (B-145942, B- 146040, 6 SEP 61). ADDITIONALLY, WHERE A BIDDER IS SUPPLYING INFORMATION AFTER BID OPENING ONLY TO SHOW THAT HE ACTUALLY IS IN THE PRIORITY GROUP IN WHICH HE BID AND NOT FOR PURPOSES OF ATTEMPTING TO SHOW THAT HE WILL PERFORM IN A SUPERIOR CATEGORY, THEN THIS INFORMATION SHOULD BE ACCEPTED. THEREFORE, THE AWARD TO KDK WAS PROPER. THE IFB DID NOT REQUIRE THAT THE CERTIFICATE BE FURNISHED WITH THE BID. KDK WAS NOT ATTEMPTING TO PUT ITSELF IN A SUPERIOR CATEGORY AFTER BID OPENING BUT MERELY TO PROVE ITS TRUE STATUS.'

ALONG THESE LINES WE HAVE HELD THAT INVITATIONS INVOLVING LABOR SURPLUS SET-ASIDES SHOULD STATE THE INFORMATION WHICH BIDDERS ARE TO FURNISH IN THEIR BIDS AND THE EFFECT OF THE FAILURE TO FURNISH IT. 47 COMP. GEN. 543; 44 COMP. GEN. 34; 41 COMP. GEN. 160. THUS, WHERE BIDDERS WERE WARNED THAT THEIR ELIGIBILITY FOR CONSIDERATION AS A CERTIFIED-ELIGIBLE CONCERN, FOR THE PURPOSE OF PRIORITY IN THE NEGOTIATION OF THE SET-ASIDE PORTIONS, WAS PREDICATED UPON THE SUBMISSION OF A PROPER CERTIFICATION WITH THEIR BIDS, WE UPHELD THE DETERMINATION THAT A BIDDER WHO DID NOT SUBMIT THE CERTIFICATION WITH HIS BID WAS NOT QUALIFIED AS A "CERTIFIED ELIGIBLE" CONCERN. 47 COMP. GEN. 543. HOWEVER, AS PREVIOUSLY NOTED, THE SUBMISSION OF EVIDENCE OF CERTIFICATION WITH THE BID WAS NOT REQUIRED BY THE INVITATION IN THE PRESENT PROCUREMENT. THIS OMISSION, COUPLED WITH THE ABSENCE FROM THE INVITATION OF ANY PROVISION SPECIFICALLY ADVISING THE PROSPECTIVE BIDDERS OF THE EFFECT OF THEIR FAILURE TO SUBMIT CERTIFICATES OF ELIGIBILITY, LEADS US TO THE CONCLUSION THAT THE INVITATION DID NOT REQUIRE SUBMISSION OF A CERTIFICATE OF ELIGIBILITY WITH THE BIDS. EVEN IN THIS SITUATION A BIDDER WOULD NOT BE PERMITTED TO SUBMIT THE CERTIFICATE AFTER BID OPENING IF AS A RESULT OF SUCH A SUBMISSION A HIGHER PRIORITY WOULD BE OBTAINED, THE GENERAL RULE BEING THAT A BIDDER MAY NOT FURNISH INFORMATION AFTER BID OPENING TO OBTAIN A HIGHER PRIORITY THAN THAT CLAIMED IN ITS BID. 47 COMP. GEN. 543; 44 COMP. GEN. 34; B-151247, JUNE 28, 1963. IN THE PRESENT CASE KDK DID NOT RECEIVE A HIGHER PRIORITY AS A RESULT OF SUBMITTING ITS CERTIFICATE AFTER BID OPENING, BUT ONLY ESTABLISHED ITS RIGHT TO THE PRIORITY CLAIMED.

WHETHER OR NOT YOU WERE OR SHOULD HAVE BEEN PERMITTED TO ESTABLISH YOUR CERTIFIED-ELIGIBLE STATUS, OR WHETHER THE PROCUREMENT OFFICIALS WERE CHARGEABLE WITH NOTICE THEREOF, IS IMMATERIAL UNLESS KDK SHOULD HAVE BEEN REJECTED, SINCE YOUR BID WAS HIGHER.

AS TO WHETHER KDK SHOULD HAVE BEEN REJECTED BECAUSE OF MISREPRESENTATION OF ITS STATUS AS OF THE BID OPENING DATE, THE RECORD INDICATES THAT IT ACTED UPON ADVICE GIVEN TO IT BY THE SMALL BUSINESS ADVISOR AT JOLIET TO THE EFFECT THAT THE CERTIFICATION WAS A MERE FORMALITY AND THAT CERTIFICATION WAS SUFFICIENT IF OBTAINED BY THE TIME OF AWARD. WHETHER OR NOT THIS ADVICE WAS ERRONEOUS, WE BELIEVE THAT IT PRECLUDES ANY CHARGE OF BAD FAITH AGAINST KDK, AND IN THE ABSENCE OF ANY INDICATION IN THE INVITATION THAT ELIGIBILITY WAS TO BE FIXED AS OF THE TIME OF BID OPENING RATHER THAN THE TIME OF AWARD WE DO NOT FEEL THAT EXCEPTION TO THE ADMINISTRATIVE DETERMINATION TO CONSIDER KDK AS ELIGIBLE WOULD BE JUSTIFIED. YOU ALSO RAISE A QUESTION CONCERNING THE STATEMENT ON PAGE 6 OF THE INVITATION WHICH STATES, THAT "THE GOVERNMENT INTENDS TO MAKE MULTIPLE AWARDS.' IT IS YOUR CONTENTION THAT THIS STATEMENT IS AMBIGUOUS IN THAT THE IFB DOES NOT INDICATE WHETHER THE STATEMENT MEANS THAT MORE THAN ONE AWARD WILL BE MADE UNDER THE ENTIRE PROCUREMENT, WHICH INCLUDES BOTH THE SET ASIDE AND NON-SET-ASIDE PORTIONS, IN WHICH EVENT AWARDS COULD BE LIMITED TO ONE AWARD FOR EACH PORTION, OR WHETHER THE STATEMENT MEANS THAT THE GOVERNMENT INTENDS TO MAKE MORE THAN ONE AWARD FOR EACH PORTION OF THE PROCUREMENT. IT IS NOTED THAT ON PAGE 1 OF THE INVITATION IT IS STATED THAT "IN ADDITION TO THE NON-SET-ASIDE QUANTITY OF 12,654,000 AN EQUAL QUANTITY HAS BEEN SET-ASIDE FOR AWARD TO ONE OR MORE LABOR SURPLUS CONCERNS.' THIS STATEMENT INDICATES THAT THE PROCURING ACTIVITY DID NOT OBLIGATE ITSELF TO MAKE AWARDS TO MORE THAN ONE CONCERN ON THE SET-ASIDE PORTION OF THE PROCUREMENT. THUS, THE LOGICAL CONCLUSION WOULD APPEAR TO BE THAT THE STATEMENT "THE GOVERNMENT INTENDS TO MAKE MULTIPLE AWARDS" , MEANT MERELY THAT AWARD OF BOTH THE SET-ASIDE AND NON-SET-ASIDE PORTIONS WOULD NOT BE MADE TO ONE CONCERN ONLY. IN ANY EVENT, THE CONTRACTING OFFICER IS BOUND TO MAKE ONLY SUCH AWARDS AS WILL RESULT IN THE LOWEST COST TO THE GOVERNMENT, AND THE SPECIFIC PROVISIONS OF THE SET-ASIDE PRECLUDE AWARD OF MORE THAN ONE CONTRACT FOR THE SET-ASIDE IF THE FIRST ELIGIBLE BIDDER WILL ACCEPT AWARD OF THE ENTIRE QUANTITY.

ADDITIONALLY, YOU ALLEGE THAT KDK IS A LARGE BUSINESS. HOWEVER, KDK REPRESENTED IN ITS BID THAT IT WAS A SMALL BUSINESS AND UNDER ASPR 1-703 AND SMALL BUSINESS ADMINISTRATION REGULATION (SBAR) 121.3-8 THE CONTRACTING OFFICER IS REQUIRED TO ACCEPT THIS REPRESENTATION AT FACE VALUE UNLESS HE RECEIVES A WRITTEN PROTEST CONCERNING THE SIZE STATUS (OR HE HIMSELF QUESTIONS THE SIZE STATUS) WITHIN FIVE DAYS, EXCLUDING SATURDAYS, SUNDAYS, AND LEGAL HOLIDAYS, OF BID OPENING. THE RECORD DOES NOT INDICATE THAT YOUR FIRM SUBMITTED A WRITTEN PROTEST WITHIN THE PRESCRIBED TIME. HOWEVER, THE ADMINISTRATIVE REPORT STATES THAT ALTHOUGH KDK BECAME AFFILIATED WITH PAN AMERICAN SYSTEMS, INC., WHICH IS A SUBSIDIARY OF PAN AMERICAN RESOURCES, INC., DURING THE COURSE OF THE PRE- AWARD SURVEY MADE ON KDK, INFORMAL INQUIRY MADE THROUGH SMALL BUSINESS ADMINISTRATION CHANNELS REVEALED THAT THE CORPORATE AGGREGATE REMAINED SMALL BUSINESS.

FINALLY, YOU ALLEGE THAT NOT ONLY DOES KDK LACK THE TECHNICAL SKILL, PERSONNEL AND FACILITIES, BUT THAT IT ALSO LACKS THE FINANCIAL CAPABILITY TO PERFORM THE CONTRACT. THE ATTACHMENTS TO YOUR PROTEST INCLUDE A BUSINESS INFORMATION REPORT DATED NOVEMBER 5, 1968, WHICH YOU STATE SHOWS THAT THE FINANCIAL CONDITION OF PAN AMERICAN RESOURCES IS UNSTABLE. IT IS YOUR CONTENTION THAT SINCE THE PARENT COMPANY'S FINANCIAL CONDITION IS NOT TOO STABLE, THE FINANCIAL CONDITION OF THE SUBSIDIARY, PAN AMERICAN SYSTEMS, INC., WHO IS GUARANTEEING KDK'S FINANCIAL RESPONSIBILITY, MUST ALSO BE UNSTABLE. THEREFORE, YOU STATE THAT YOU SERIOUSLY DOUBT THAT KDK'S FINANCIAL RESPONSIBILITY CAN BE GUARANTEED BY A CONCERN THAT IS ITSELF NOT FINANCIALLY RESPONSIBLE.

THE ADMINISTRATIVE REPORT STATES THAT WHILE KDK HAS HAD NO EXPERIENCE IN THE MANUFACTURE OF THE SUPPORT RING ASSEMBLIES, DUE TO ITS RECENT INCORPORATION, AN EVALUATION BY A PRE-AWARD SURVEY TEAM OF KDK'S PRODUCTION CAPABILITY, PLANT FACILITIES AND EQUIPMENT, PURCHASING AND SUBCONTRACTING, QUALITY ASSURANCE CAPABILITY, TRANSPORTATION AND LABOR RESOURCES INDICATES THAT KDK IS FULLY QUALIFIED TO PERFORM THE CONTRACT.

OUR OFFICE HAS CONSISTENTLY HELD THAT THE DETERMINATION OF A BIDDER'S OVERALL RESPONSIBILITY IS PRIMARILY THE FUNCTION OF THE CONTRACTING AGENCY AND NOT OF THE GENERAL ACCOUNTING OFFICE, 38 COMP. GEN. 131; 33 ID. 549. WHETHER A BIDDER IS, OR IS NOT, CAPABLE OF PRODUCING IN ACCORDANCE WITH CONTRACT REQUIREMENTS IS A QUESTION OF FACT, AND ABSENT EVIDENCE THAT THE DETERMINATION OF A BIDDER'S CAPABILITIES WAS BASED ON ERROR, FRAUD, OR FAVORITISM, OUR OFFICE WILL ACCEPT THE FINDINGS OF THE CONTRACTING AGENCY. 46 COMP. GEN. 371, 372; 46 ID. 124, 126; 40 ID. 294. WE HAVE ALSO STATED THAT THE PROJECTION OF A BIDDER'S ABILITY TO PERFORM IF AWARDED A CONTRACT IS OF NECESSITY A MATTER OF JUDGMENT, WHICH, WHILE IT SHOULD BE BASED ON FACT AND ARRIVED AT IN GOOD FAITH, MUST PROPERLY BE LEFT LARGELY TO THE SOUND ADMINISTRATIVE DISCRETION OF THE CONTRACTING OFFICERS INVOLVED, SINCE THEY ARE IN THE BEST POSITION TO ASSESS RESPONSIBILITY, THEY MUST BEAR THE MAJOR BRUNT OF ANY DIFFICULTIES EXPERIENCED BY REASON OF THE CONTRACTOR'S LACK OF ABILITY, AND THEY MUST MAINTAIN THE DAY TO DAY RELATIONS WITH THE CONTRACTOR ON BEHALF OF THE GOVERNMENT. FOR THESE REASONS, WE HAVE HELD THAT IT WOULD BE UNREASONABLE TO SUPERIMPOSE THE JUDGMENT OF OUR OFFICE OR ANY OTHER AGENCY OR GROUP ON THAT OF THE CONTRACTING OFFICIALS. 39 COMP. GEN. 705, 711. UNDER ASPR 1- 905, THE DETERMINATION OF THE RESPONSIBILITY OF A PROSPECTIVE CONTRACTOR IS REQUIRED TO BE MADE ON THE BASIS OF CURRENTLY VALID INFORMATION OF PERSONNEL IN THE DEPARTMENT OF DEFENSE, AND GENERALLY THE INFORMATION REGARDING THE PROSPECTIVE CONTRACTOR'S RESPONSIBILITY, INCLUDING PRE-AWARD SURVEYS WHEN DEEMED NECESSARY, MUST BE OBTAINED PROMPTLY AFTER BID OPENING OR RECEIPT OF PROPOSALS. UNDER ASPR 1-905.4, A PRE-AWARD SURVEY IS DEFINED AS AN EVALUATION BY A CONTRACT ADMINISTRATION OFFICE OF A PROSPECTIVE CONTRACTOR'S CAPABILITY TO PERFORM UNDER THE TERMS OF THE PROPOSED CONTRACT, AND WHEN SUCH A SURVEY IS MADE, THE CONTRACTING OFFICER IS REQUIRED TO USE THE EVALUATION IN DETERMINING THE PROSPECTIVE CONTRACTOR'S RESPONSIBILITY.

THE RECORD DOES NOT INDICATE THAT THE CONTRACTING OFFICER KNEW OR SHOULD HAVE KNOWN OF THE BUSINESS INFORMATION REPORT PRIOR TO THE TIME THAT HE ISSUED THE DETERMINATION REQUIRED BY ASPR 1-904.1 THATKDK WAS A RESPONSIBLE PROSPECTIVE CONTRACTOR WITHIN THE MEANING OF ASPR 1-903. THE RECORD FURTHER SHOWS THAT IN MAKING SUCH DETERMINATION THE CONTRACTING OFFICER USED INFORMATION AVAILABLE AT THE PROCURING ACTIVITY AND COMPLIED WITH THE REQUIREMENTS OF ASPR 1-905.4 CONCERNING THE USE OF THE PRE-AWARD SURVEY REPORT. IN THE CIRCUMSTANCES, WE ARE UNABLE TO CONCLUDE THAT THE CONTRACTING OFFICER'S DETERMINATION WAS WITHOUT SUBSTANTIAL BASIS, AND WE FIND NO LEGAL BASIS TO QUESTION THE VALIDITY OF THE AWARD.