B-165830, JUL. 24, 1969

B-165830, JUL. 24, 1969

BID PROTEST - BIDDER RESPONSIBILITY DECISION TO SAN BERNARDINO MATERIALS CO. REAFFIRMING DECISION OF FEB. 11, 1969, DENYING PROTEST AGAINST REJECTION OF BID ON BASIS OF NONRESPONSIBILITY. ON BASIS OF RECORD CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY BASED ON PREAWARD SURVEY MAY NOT BE HELD TO HAVE BEEN WITHOUT REASONABLE GROUNDS OR CONDUCTED IN BAD FAITH. IN RESPONSIBILITY DETERMINATIONS THE CRITICAL ELEMENT IS THE BIDDER'S ABILITY TO PERFORM AT THE TIME OF THE DETERMINATION AND THE FACT THAT LATER THE PROTESTANT WAS DECLARED RESPONSIBLE FOR ANOTHER CONTRACT DOES NOT MAKE THE PREVIOUS FINDING OF NONRESPONSIBILITY ERRONEOUS.

TO SAN BERNARDINO MATERIALS COMPANY:

REFERENCE IS MADE TO A LETTER OF MARCH 7, 1969, FROM VERITRON WEST, INC., AND YOUR LETTERS OF MAY 9 AND MAY 15, 1969, WITH ENCLOSURES, REQUESTING RECONSIDERATION OF OUR DECISION DATED FEBRUARY 11, 1969, WHEREIN WE DENIED YOUR PROTEST OF THE AWARD OF A CONTRACT TO SKYLINE EASTERN, INC., UNDER INVITATION FOR BIDS (IFB) NO. DAAJ01-69-B-0019 (3G), ISSUED BY THE U. S. ARMY AVIATION MATERIEL COMMAND FOR CERTAIN SEAT SHELLS AND LATCHES TO BE SUPPLIED AS GOVERNMENT FURNISHED MATERIAL FOR A UH-1 HELICOPTER PRODUCTION CONTRACT.

IN OUR DECISION WE HELD THAT THE DEFENSE CONTRACT ADMINISTRATION SERVICES DISTRICT'S (DCASD), VAN NUYS, CALIFORNIA, PREAWARD SURVEY CONDUCTED ON SEPTEMBER 4, 1968, AND THE RESULTANT DETERMINATION OF SAN BERNARDINO MATERIALS COMPANY'S (SBMC) NONRESPONSIBILITY WAS SUPPORTED BY SUBSTANTIAL EVIDENCE AND WAS MADE IN THE PROPER EXERCISE OF THAT AGENCY'S DISCRETION BASED ON THE FOLLOWING FINDINGS: (1) SBMC WAS A NEW CONTRACTOR WITH VIRTUALLY NO EQUIPMENT ON BOARD; (2) ONLY FOUR PERSONS WERE EMPLOYED AT THE TIME OF THE SURVEY; (3) THE FIRM LACKED WRITTEN COMMITMENTS TO OBTAIN NECESSARY EQUIPMENT; AND (4) THE PROPOSED DELIVERY DATES FOR PRODUCTION MATERIALS WERE NOT SUBSTANTIATED BY CONFIRMED WRITTEN COMMITMENTS.

THE LETTER OF MARCH 7, FROM VERITRON WEST, INC., ALLEGED AS A BASIS FOR RECONSIDERATION THAT NO WRITTEN COMMITMENTS WERE REQUESTED BY THE DCASD TEAM AT THE TIME OF THE PREAWARD SURVEY, AND THERE WERE ATTACHED TO THAT LETTER SEVERAL QUOTATIONS FROM MANUFACTURERS. IT ALSO CHARGED THE SURVEY TEAM WITH BAD FAITH, AND CLAIMS THAT SKYLINE EASTERN, INC., THE AWARDEE OF THE SUBJECT CONTRACT, WAS PRESSURED BY THE GOVERNMENT TO MEET ITS DELIVERY OBLIGATION. THE LETTER OF MARCH 7 ALSO STATED THAT OUR REVIEW OF THE SUBJECT PROTEST WAS INCOMPLETE, BECAUSE OUR OFFICE DID NOT CONDUCT A HEARING AND QUESTIONING OF THE PARTIES TO THE DISPUTE.

BY YOUR LETTER OF MAY 9, 1969, YOU REITERATE THE ALLEGATION CONTAINED IN THE LETTER OF MARCH 7, BY STATING THAT THE DCASD TEAM ACTED IN BAD FAITH AND DID NOT REPORT THE TRUE CONDITIONS OF THE SBMC. YOU FURTHER STATE THAT THE KEY EMPLOYEES OF THE SBMC WERE PREVIOUSLY EMPLOYED BY ANOTHER FIRM, AEROJET-GENERAL CORPORATION, WHERE SUCH EMPLOYEES MANAGED OVER "70 LIGHTWEIGHT ARMOR CONTRACTS * * * WORTH IN EXCESS OF $10 MILLION, AND PRODUCED OVER 60 PERCENT OF THE ARMY'S AIRCRAFT ARMOR. * * * THUS, * * * THE INDIVIDUALS INVOLVED * * * REPEATEDLY DEMONSTRATED THEIR HIGH DEGREE OF RESPONSIBILITY.' IN ADDITION, YOU ASSERT THAT ALLOYS UNLIMITED, WHICH IS THE PARENT COMPANY OF SBMC, POSSESSES THE FINANCIAL RESOURCES AND MANAGEMENT SKILLS, WHICH COMBINED WITH SBMC'S TECHNICAL COMPETENCE MAKES A PERFECT COMBINATION FOR SUCCESS. AS FURTHER EVIDENCE OF SBMC'S RESPONSIBILITY, YOU PRESENT THE FACT THAT A CONTRACT UNDER INVITATION FOR BIDS (IFB) NO. DAAJ01-69 C-0528 (3G) WAS AWARDED TO SBMC BY THE U. S. ARMY AVIATION MATERIEL COMMAND, AND THAT SAID CONTRACT WAS PERFORMED 13 DAYS AHEAD OF THE ACCELERATED SCHEDULE. THE ENCLOSURES TO YOUR LETTER INCLUDE A LIST OF CONTRACTS AWARDED TO SBMC AND FOUR PAGES OF PHOTOGRAPHS DEPICTING VARIOUS EQUIPMENT PURPORTEDLY ON HAND DURING THE DCASD PREAWARD SURVEY. LASTLY, YOUR LETTER OF MAY 15, 1969, ENCLOSED A DUN AND BRADSTREET REPORT OF MAY 13, 1969, ON SBMC AND VERITRON WEST, INC. THEREFORE, YOU CONCLUDE THAT THE REJECTION OF SBMC'S BID WAS THE RESULT OF AN INADEQUATE AND IMPROPER SURVEY.

YOUR PROTEST WAS THE SUBJECT OF TWO REPORTS FROM THE DEPARTMENT OF THE ARMY DATED APRIL 29 AND JUNE 26, 1969. THE ARMY'S REPORT OF APRIL 29 STATES THAT AT THE TIME OF THE PREAWARD SURVEY, THE SURVEY TEAM REQUESTED DOCUMENTED EVIDENCE OF MATERIAL ACQUISITION, AND WAS SHOWN ONLY ROUGH NOTES, NONE OF WHICH WERE ON LETTERHEAD STATIONERY FROM SBMC OR POSSIBLE SOURCES OF EQUIPMENT. FURTHERMORE, REQUEST FOR DOCUMENTARY EVIDENCE ON PURCHASE OF PRODUCTION EQUIPMENT WAS NOT MET, BECAUSE ONLY A ROUGH CHART OF PROCUREMENT TIME PHASING AND PROJECTED ARRIVAL OF THE PRODUCTION EQUIPMENT WAS SHOWN TO THE DCASD TEAM. REGARDING THE ALLEGATION THAT THE ARMY PRESSURED SKYLINE EASTERN INTO COMPLIANCE, THE REPORT DENIED THIS CHARGE. THE ARMY'S REPORT OF JUNE 26, REFERRING TO YOUR LETTER OF MAY 9, WHEREIN YOU DISCUSSED THE SBMC'S EMPLOYEES' PAST EMPLOYMENT, STATES THAT THE PREAWARD SURVEY RATED TECHNICAL CAPABILITY AS SATISFACTORY, AND THAT THIS FACTOR WAS NOT A BASIS FOR THE DCASD TEAM'S DETERMINATION OF SBMC'S NONRESPONSIBILITY. CONCERNING YOUR PERFORMANCE UNDER CONTRACT PURSUANT TO IFB NO. DAAJ01-69-C-0528 (3G), WHICH WAS AWARDED TO SBMC ON MARCH 1, 1969, THE REPORTS STATE THAT THIS CONTRACT WAS AWARDED FOR COMPONENT PARTS OF THE ARMOR SEATS AND NOT FOR THE END ITEM PILOT AND COMPANY - PILOT SEAT SHELLS CALLED FOR UNDER IFB NO. DAAJ01-69-B-0019 (3G). THE ARMY'S REPORT ENCLOSES THREE AFFIDAVITS, SUBSCRIBED AND SWORN TO BY THE MEMBERS OF THE DCASD TEAM WHO CONDUCTED THE PREAWARD SURVEY ON SEPTEMBER 4, 1968. EACH OF THESE AFFIDAVITS STATES IN PART THAT: "ON THE ABOVE DATE, I.E., 4 SEPT 1968 I CONDUCTED A SURVEY ON THE ABOVE CONCERN WITH NEGATIVE RESULTS. THESE RESULTS AND FINDINGS WERE BASED ON A LACK OF DOCUMENTARY EVIDENCE FOR PURCHASED MATERIALS OR THE EVIDENCE OF FIRM QUOTES AND INTENT TO PURCHASE SUCH MATERIALS. THIS EVIDENCE WAS REQUESTED BUT WAS NOT GIVEN. ALSO NO DOCUMENTATION WAS GIVEN AS TO QUOTES/OR DELIVERY DATES FOR CERTAIN PIECES OF EQUIPMENT SAID TO BE REQUIRED IN THE MANUFACTURE OF THE BID ITEM. DOCUMENTATION WAS FURTHER REQUESTED FOR CERTAIN SUB CONTRACTED ITEMS BUT WAS NOT GIVEN.'CERTIFICATION WAS REQUESTED FOR PROPER TESTING OF THE BALLISTIC MATERIALS TO BE USED BUT THE CERTIFICATION WAS NOT PRESENTED TO THE PRE-AWARD SURVEY BOARD.

* * * * * * * "A -NO AWARD,- FOR SAFETY WAS RECOMMENDED FOR THE FOLLOWING REASONS.

"A. THE COMPANY HAD NO STORAGE CONTAINERS FOR 30 CALIBER AMMUNITION WHICH WAS TO BE FURNISHED BY THE GOVERNMENT.

"B. NO SUITABLE WEAPON, OR FIXTURE FROM WHICH TEST FIRING WOULD BE ACCOMPLISHED, WAS AVAILABLE.

"C. NO FIRING OR TEST RANGE WAS AVAILABLE AT THE TIME OF SURVEY. HOWEVER, PLANS, OR DRAWINGS FOR SUCH RANGE WERE LATER SUBMITTED.

"D. OPERATIONS CREATING HEALTH HAZARDS, DUST AND CHEMICAL FUMES, COULD NOT BE EVALUATED DUE TO EQUIPMENT NOT BEING IN PLACE OR INSTALLED.

"E. ACTUAL PLANT SAFETY AND THE SAFETY PROGRAM COULD NOT BE EVALUATED DUE TO THE LACK OF PERSONNEL OR EQUIPMENT IN AN EMPTY BUILDING IN WHICH PROPOSED CONTRACT WAS TO BE PROCESSED.'MR. MCLAUGHLIN SUBMITTED TO ME A QUALITY CONTROL PLAN WHICH HE STATED WOULD BE USED BY SBMC AT THEIR GUASTI FACILITY UPON COMPLETION, AND THAT IT WOULD MEET MIL-Q-9858A.'MIL-I-45208A WAS THE QUALITY ASSURANCE SPECIFICATION APPLIED TO THE PROPOSED PROCUREMENT.'INVESTIGATION REVEALED THAT PRODUCTION ON THE PROPOSED CONTRACT WOULD BE PERFORMED AT SAN BERNARDINO MATERIAL CO., GUASTI, CALIFORNIA. VERITRON WEST AND SBMC ARE BOTH SUBSIDIARIES OF ALLOY UNLIMITED INC., NEW YORK.'THE QUALITY CONTROL PLAN AS WRITTEN WITHOUT A DOUBT WOULD MEET THE REQUIREMENTS OF MIL-I-45208. HOWEVER FOR THE REASONS STATED ABOVE, A COMPLETE PRE AWARD SURVEY COULD NOT BE ACCOMPLISHED AS WE COULD NOT TELL WHETHER THE COMPANY WILL OR WILL NOT BE ABLE TO PERFORM SINCE THEY WERE NOT, AT THAT TIME, SET UP OR STAFFED. IT WAS RECOMMENDED IF THE SBMC WAS TO BE CONSIDERED THEY SHOULD BE RESURVEYED AT THEIR GUASTI FACILITY AFTER THEY ARE READY FOR BUSINESS.'

PRIOR TO AWARD OF A CONTRACT, THE CONTRACTING OFFICER IS REQUIRED TO MAKE AN AFFIRMATIVE DETERMINATION THAT THE PROSPECTIVE CONTRACTOR IS RESPONSIBLE. SECTION 1-902 OF THE ARMED SERVICES PROCUREMENT REGULATION STATES THAT DOUBT AS TO PRODUCTIVE CAPACITY WHICH CANNOT BE RESOLVED AFFIRMATIVELY REQUIRES A DETERMINATION OF NONRESPONSIBILITY. THE DETERMINATION OF RESPONSIBILITY IS COMMITTED TO THE DISCRETION OF THE CONTRACTING OFFICER (SEE 36 COMP. GEN. 42) AND THE DISCRETIONARY NATURE OF THIS IS ALSO RECOGNIZED BY THE COURTS. SEE FRIEND V LEE, 221 F.2D 96 AND O-BRIEN V CARNEY, 6 F.SUPP. 761. THE DETERMINATION OF RESPONSIBILITY IS A MATTER OF JUDGMENT AND IT WOULD BE UNREASONABLE TO SUPERIMPOSE THE JUDGMENT OF OUR OFFICE ON THAT OF THE CONTRACTING OFFICIALS IN THE ABSENCE OF A CLEAR SHOWING OF BAD FAITH OR LACK OF ANY REASONABLE JUSTIFICATION THEREFOR. SEE 39 COMP. GEN. 705.

ON THE BASIS OF THE PRESENT RECORD WE CANNOT CONCLUDE THAT THE AGENCY'S DETERMINATION OF SBMC'S NONRESPONSIBILITY, BASED ON THE PREAWARD SURVEY OF SEPTEMBER 4, 1968, WAS WITHOUT ANY REASONABLE GROUNDS OR WAS CONDUCTED IN BAD FAITH. SPECIFICALLY, SBMC'S FAILURE TO SUBMIT THE REQUIRED DOCUMENTATION AT THE TIME OF THE SURVEY, WHICH WAS ESSENTIAL INFORMATION AS TO THE CONTRACTOR'S CAPABILITY TO PERFORM THE SUBJECT CONTRACT, JUSTIFIED THE DCASD TEAM'S UNFAVORABLE PREAWARD SURVEY. THE FAILURE TO SUBMIT DOCUMENTATION CANNOT BE WAIVED MERELY ON THE BASIS THAT SUCH DOCUMENTATION WAS FURNISHED, AS IN THIS CASE, SUBSEQUENT TO AWARD OF A CONTRACT TO ANOTHER BIDDER.

FURTHER, THE CRITICAL ELEMENT IN RESPONSIBILITY DETERMINATIONS IS THE BIDDER'S ABILITY TO PERFORM AS IT APPEARS AT THE TIME OF THE DETERMINATION, AND THE FACT THAT SBMC WAS SUBSEQUENTLY DECLARED RESPONSIBLE ON FEBRUARY 14, 1969, AND WAS AWARDED A CONTRACT ON MARCH 1 UNDER IFB NO. DAAJ01-69-C-0528 (3G) DOES NOT REQUIRE THE CONCLUSION THAT THE PREVIOUS FINDING OF NONRESPONSIBILITY WAS ERRONEOUS. THE FACT THAT A BIDDER MIGHT HAVE BEEN NONRESPONSIBLE AT AN EARLY DATE HAS NO BEARING ON HIS ABILITY TO PERFORM AT A LATER DATE, OR VICE VERSA. SEE B-166144, MARCH 20, 1969.

CONCERNING YOUR ALLEGATION THAT OUR REVIEW OF THIS PROTEST WAS INCOMPLETE, DUE TO A FAILURE TO QUESTION THE PARTIES TO THE DISPUTE, WE CALL YOUR ATTENTION TO THE FACT THAT OUR OFFICE DOES NOT UNDERTAKE TO RESOLVE DISPUTED FACTS BY THE TAKING AND WEIGHING OF ORAL TESTIMONY, BUT BASES ITS DECISIONS UPON A REVIEW OF THE WRITTEN RECORD, WITH THE OBJECTIVE OF DETERMINING WHETHER THE ADMINISTRATIVE ACTION TAKEN WAS SO CLEARLY ERRONEOUS AS TO REQUIRE US TO CONSIDER IT ILLEGAL. HOWEVER, AN INFORMAL CONFERENCE MAY BE GRANTED AT THE REQUEST OF THE CONTRACTOR (SEE WELCH, THE GENERAL ACCOUNTING OFFICE IN THE GOVERNMENT PROCUREMENT, 14 FED. B.J. 321), AND WE NOTE THAT SUCH A CONFERENCE WAS GRANTED TO YOU IN THIS CASE.

BASED ON THE FOREGOING, OUR DECISION OF FEBRUARY 11, 1969, IS SUSTAINED.