B-132350, SEP. 25, 1957

B-132350, SEP. 25, 1957

TO METAL CRAFT MANUFACTURING AND SALES CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED JUNE 20, 1957, TO OUR CLAIMS DIVISION, PROTESTING THE AWARD OF A CONTRACT TO ANOTHER CONCERN PURSUANT TO INVITATION FOR BIDS NO. 33-602-57-30, ISSUED BY SHELBY AIR FORCE DEPOT, WILKINS AIR FORCE STATION, SHELBY, OHIO. YOU REQUESTED EITHER THAT THE CONTRACT BE TERMINATED AND THAT A CONTRACT BE AWARDED TO YOUR COMPANY ON THE BASIS OF ITS BID PRICE OR THAT YOUR COMPANY BE PAID THE AMOUNT OF $106,624.98 TO COVER ITS LOSS OF ANTICIPATED PROFIT.

WE HAVE RECEIVED A REPORT IN THE MATTER FROM THE DEPARTMENT OF THE AIR FORCE. ACCORDING TO THIS REPORT, IT WAS DETERMINED TO MAKE THE AWARD ON THE BASIS OF THE QUANTITIES DESIGNATED UNDER BID C OF THE INVITATION. YOUR COMPANY SUBMITTED THE LOWEST BID PRICE ON EACH OF THE TWO ITEMS OF THAT SCHEDULE. YOUR BID ON ITEM 1 OF BID C WAS REJECTED AS NOT MEETING THE DELIVERY REQUIREMENTS AND NO PROTEST WAS MADE WITH RESPECT TO SUCH REJECTION. IT WAS PROPOSED TO MAKE THE AWARD ON ITEM 2 TO YOUR COMPANY AND, IN ACCORDANCE WITH ESTABLISHED PROCEDURES AND APPLICABLE REGULATIONS, A SURVEY WAS CONDUCTED TO DETERMINE YOUR CAPABILITY TO PERFORM THE PROPOSED CONTRACT. THE SURVEY RESULTED IN AN UNFAVORABLE REPORT BASED ON FINDINGS OF INADEQUATE FACILITIES, LACK OF PRODUCTION CAPACITY, INABILITY TO MEET DELIVERY SCHEDULE, POOR QUALITY CONTROL AND INADEQUATE FINANCIAL RESOURCES.

THE FINDINGS OF THIS SURVEY WERE APPROVED BY THE ADVISORY BOARD OF THE KANSAS CITY PROCUREMENT OFFICE AND THEY WERE FURTHER REVIEWED AND APPROVED BY THE ST. LOUIS AIR FORCE PROCUREMENT DISTRICT ADVISORY BOARD. ALSO, THE SMALL BUSINESS ADMINISTRATION DENIED YOUR APPLICATION FOR A CERTIFICATE OF COMPETENCY. THE AWARD ON ITEM 2 OF BID C WAS SUBSEQUENTLY MADE TO THE AIR LOGISTICS CORPORATION, PASADENA, CALIFORNIA, AS THE LOWEST RESPONSIBLE BIDDER ON THAT ITEM. AT THE TIME YOUR COMPANY WAS BEING CONSIDERED FOR THE AWARD IT WAS IN SERIOUS FINANCIAL DIFFICULTIES AND WAS IN FACT BEING OPERATED BY A COMMITTEE OF CREDITORS. ON JULY 25, 1957, YOU FILED A PETITION IN BANKRUPTCY.

THE FINDINGS OF THE ST. LOUIS AIR FORCE PROCUREMENT DISTRICT ADVISORY BOARD SET FORTH: (1) THAT DUE TO WEAKNESS OF YOUR FINANCIAL POSITION AND PRIOR LIENS THERE WAS NO ASSURANCE THAT YOUR FACILITIES WOULD BE AVAILABLE DURING THE LIFE OF THE CONTRACT; (2) THAT POOR PLANNING FOR THE PROCUREMENT IN QUESTION WAS INDICATED BY LACK OF SPECIFICATIONS REFERRED TO IN THE BID SET AND DRAWINGS; (3) THAT YOU HAD NOT PREVIOUSLY PERFORMED ON A PRIME AIR FORCE CONTRACT AND, FROM INFORMATION OBTAINED FROM THE DEPARTMENT OF THE NAVY, IT APPEARED THAT YOU DID NOT STRICTLY OBSERVE SPECIFICATION REQUIREMENTS EXCEPT WHERE VIOLATIONS WERE BROUGHT TO YOUR ATTENTION; (4) THAT A DELINQUENT CONTRACT WOULD RESULT IF THE AWARD SHOULD BE MADE TO YOUR COMPANY; AND (5) THAT IN THE EVENT OF A FORECLOSURE A LOSS TO THE GOVERNMENT WOULD RESULT PARTICULARLY IF ADVANCE PAYMENTS OR PROGRESS PAYMENTS, INCLUDING 90 PERCENT FOR OVERHEAD, WERE TO BE MADE AS REQUESTED BY YOUR COMPANY.

THE DEPARTMENT OF THE AIR FORCE HAS TAKEN THE POSITION THAT THE CONTRACTING OFFICER'S REFUSAL TO MAKE THE AWARD TO YOUR COMPANY WAS FULLY JUSTIFIED, AND ON THE RECORD PRESENTLY BEFORE US IT IS APPARENT THAT WE WOULD NOT BE WARRANTED IN TAKING EXCEPTION TO THE AWARD WHICH WAS MADE TO THE AIR LOGISTICS CORPORATION. WHETHER OR NOT THE AWARD WAS PROPERLY MADE, IT IS FUNDAMENTAL THAT THE GOVERNMENT WOULD NOT BE LIABLE FOR THE ALLEGED LOSS OF ANTICIPATED PROFIT CLAIMED BY YOU. SEE HEYER PRODUCTS COMPANY, INC. V. UNITED STATES, 140 F.SUPP. 409; 135 C.CLS. 63, AND THE CASES CITED THEREIN.