B-134993, APRIL 25, 1958, 37 COMP. GEN. 703

B-134993: Apr 25, 1958

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

WAS NOT FINANCIALLY RESPONSIBLE BASED ON CURRENT COMMERCIAL CREDIT INFORMATION INDEPENDENTLY COMPILED FROM LOCAL SOURCES BY THE CONTRACTING AGENCY RATHER THAN FROM CREDIT REFERENCES SUPPLIED BY THE BIDDER IS PROPER AND IN THE ABSENCE OF CONVINCING EVIDENCE OF FRAUD. OR LACK OF PROPER FACTUAL BASIS SUCH DETERMINATION IS NOT REVIEWABLE BY THE COMPTROLLER GENERAL. 1958: FURTHER REFERENCE IS MADE TO YOUR LETTER OF JANUARY 22. FOUR BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION. THE MATTER OF THE FINANCIAL RESPONSIBILITY OF YOUR FIRM WAS PARTICULARLY IMPORTANT. UPON A DETERMINATION THAT YOUR FIRM WAS NOT FINANCIALLY RESPONSIBLE TO FURNISH THE REQUIRED SERVICES AT THE PRICES BID. YOUR BID WAS REJECTED AND AWARD WAS MADE ON JANUARY 14.

B-134993, APRIL 25, 1958, 37 COMP. GEN. 703

BIDDERS - QUALIFICATIONS - FINANCIAL RESPONSIBILITY AN ADMINISTRATIVE DETERMINATION THAT THE LOW BIDDER, WHO COULD NOT FURNISH A PERFORMANCE BOND AND WHO REFUSED OR FAILED TO FURNISH INFORMATION TO THE SMALL BUSINESS ADMINISTRATION FOR CERTIFICATE OF COMPETENCY PURPOSES, WAS NOT FINANCIALLY RESPONSIBLE BASED ON CURRENT COMMERCIAL CREDIT INFORMATION INDEPENDENTLY COMPILED FROM LOCAL SOURCES BY THE CONTRACTING AGENCY RATHER THAN FROM CREDIT REFERENCES SUPPLIED BY THE BIDDER IS PROPER AND IN THE ABSENCE OF CONVINCING EVIDENCE OF FRAUD, COLLUSION, BAD FAITH, OR LACK OF PROPER FACTUAL BASIS SUCH DETERMINATION IS NOT REVIEWABLE BY THE COMPTROLLER GENERAL.

TO THE PERMAGRAIN CORPORATION, APRIL 25, 1958:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JANUARY 22, 1958, AND SUBSEQUENT CORRESPONDENCE, PROTESTING AGAINST THE AWARDS OF CONTRACTS BY THE GENERAL SERVICES ADMINISTRATION UNDER INVITATION FOR BIDS NO. NY 2-GWB -71399, ISSUED ON NOVEMBER 25, 1957, BY REGION II OF THE FEDERAL SUPPLY SERVICE.

THE INVITATION, AS AMENDED, REQUESTED BIDS FOR 70 ITEMS OF MINOR REPAIRS AND REFINISHING SERVICES ON METAL AND WOOD OFFICE FURNITURE. FOUR BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION, INCLUDING THE APPARENT LOW BID OF YOUR FIRM ON BOTH TYPES OF FURNITURE. IN VIEW OF THE WIDE DISPARITY OF BID PRICES BETWEEN THOSE SUBMITTED BY YOUR FIRM AND THOSE OF THE OTHER BIDDERS, THE MATTER OF THE FINANCIAL RESPONSIBILITY OF YOUR FIRM WAS PARTICULARLY IMPORTANT. UPON A DETERMINATION THAT YOUR FIRM WAS NOT FINANCIALLY RESPONSIBLE TO FURNISH THE REQUIRED SERVICES AT THE PRICES BID, YOUR BID WAS REJECTED AND AWARD WAS MADE ON JANUARY 14, 1958, TO NU- 1GRAIN CORPORATION AS THE LOWEST RESPONSIBLE BIDDER ON THE WOOD FURNITURE ITEMS AND TO ARROW OFFICE EQUIPMENT, INC., AS THE LOWEST RESPONSIBLE BIDDER ON THE METAL FURNITURE ITEMS.

YOUR PROTEST IS BASED UPON THE GROUNDS THAT YOUR FIRM WOULD HAVE BEEN FINANCIALLY ABLE TO PERFORM AND THAT THE MATTER OF YOUR FINANCIAL RESPONSIBILITY SHOULD HAVE BEEN SUBMITTED TO THE SMALL BUSINESS ADMINISTRATION.

UNDER 41 U.S.C. 254 (B), AWARDS AFTER FORMAL ADVERTISING ARE REQUIRED TO BE MADE TO THAT ,RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, WILL BE THE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED.' A RESPONSIBLE BIDDER HAS BEEN DEFINED AS ONE WHO POSSESSES, AMONG OTHER ATTRIBUTES, THE FINANCIAL CAPACITY TO PERFORM. SEE OSBORN V. MITTEN, 6 P.2D 902; WILLIS V. HATHAWAY, 117 SO. 89, 94; INGE V. BOARD OF PUBLIC WORKS, 33 SO. 678, 681; 30 COMP. GEN. 235. THE RECORD DOES NOT INDICATE THAT YOUR CAPACITY IN ANY OTHER RESPECT TO PERFORM THIS CONTRACT HAS BEEN QUESTIONED. HENCE, WHETHER AWARD PROPERLY COULD HAVE BEEN MADE TO HIGHER BIDDERS DEPENDS UPON WHETHER THE ADMINISTRATIVE DETERMINATION THAT YOU LACKED FINANCIAL RESPONSIBILITY WAS PROPERLY MADE.

SUBSEQUENT TO THE OPENING OF BIDS, YOU WERE ADVISED THAT ADDITIONAL TIME WOULD BE REQUIRED FOR EVALUATING BIDS, AND UNDER DATE OF DECEMBER 23, 1957, YOUR FIRM EXTENDED THE TIME OF ACCEPTANCE FOR AN ADDITIONAL 30 DAYS. THIS ACTION WAS REQUIRED IN ORDER THAT THE CONTRACTING OFFICE MIGHT HAVE SUFFICIENT TIME TO DETERMINE THE ACCEPTABILITY OF YOUR FIRM AS A GOVERNMENT CONTRACTOR. A CONTRACTOR'S RESPONSIBILITY REPORT WAS PREPARED BASED UPON CURRENT COMMERCIAL CREDIT INFORMATION WHICH WAS INDEPENDENTLY COMPILED BY REGION II FROM AVAILABLE LOCAL SOURCES. IN VIEW OF THE REPORTED FINANCIAL WEAKNESS OF YOUR FIRM AND THE SUBSTANTIAL AMOUNT OF THE PROPOSED CONTRACT, THE CONTRACTING OFFICER SUGGESTED THAT A PERFORMANCE BOND BE FURNISHED BY YOUR FIRM TO MINIMIZE THE EFFECT OF YOUR LACK OF FINANCIAL RESPONSIBILITY. HOWEVER, YOU ADVISED THAT A BOND IN ANY AMOUNT COULD NOT BE FURNISHED.

AS REQUIRED BY INTERNAL PROCEDURES, THE SMALL BUSINESS ADMINISTRATION WAS REQUESTED BY THE CONTRACTING OFFICER UNDER DATE OF DECEMBER 17, 1957, TO ISSUE A CERTIFICATE OF COMPETENCY AS TO YOUR FIRM'S CREDIT PURSUANT TO 15 U.S.C. 641 (D). IN REPLY, THE SMALL BUSINESS ADMINISTRATION ADVISED ON DECEMBER 24, 1957, THAT PERMAGRAIN "DID NOT FILE FOR A CERTIFICATE OF COMPETENCY" AND THAT IT CONSIDERED THE CASE CLOSED. INFORMAL ADVICE FROM THAT ADMINISTRATION IN RESPECT THERETO WAS TO THE EFFECT THAT YOUR FIRM REFUSED OR FAILED TO FURNISH THE NECESSARY INFORMATION IN ORDER THAT A DETERMINATION MIGHT BE MADE AS TO WHETHER A CERTIFICATE SHOULD BE ISSUED.

WHILE, AS STATED IN YOUR LETTER OF JANUARY 22, 1958, INQUIRY WAS NOT MADE OF YOUR CREDIT REFERENCES UNTIL AFTER AWARD, THE PURPOSE OF SUCH INQUIRIES WAS TO OBTAIN INFORMATION FOR THE CONTRACTING OFFICE'S CREDIT FILES FOR FUTURE REFERENCE PURPOSES ONLY, AND HAD NO BEARING ON YOUR CAPACITY TO PERFORM THE INSTANT SERVICES. THE ADMINISTRATIVE OFFICE REPORTS THAT IT IS FELT THAT A DETERMINATION OF FINANCIAL CAPACITY CAN BE MADE WITHOUT RETURNS FROM TRADE REFERENCES, ESPECIALLY THOSE FURNISHED BY THE SUBJECT, AND IN THIS CASE THE DETERMINATION WAS MADE ON A REPORT OF THE REGIONAL COMPTROLLER BASED ON DIRECT DISCLOSURE OF DATA, INCLUDING YOUR BALANCE SHEET AND OPERATING STATEMENT, SUPPLEMENT BY A A CREDIT REPORT WHICH INCLUDED TRADE AND BANK REFERENCES.

OUR OFFICE HAS HELD CONSISTENTLY THAT THE RESPONSIBILITY OF A BIDDER IS PRIMARILY A MATTER FOR DETERMINATION BY THE CONTRACTING AGENCY AND SUCH DETERMINATIONS ARE NOT REVIEWABLE BY OUR OFFICE IN THE ABSENCE OF CONVINCING EVIDENCE OF FRAUD, COLLUSION, BAD FAITH, OR LACK OF PROPER FACTUAL BASIS. UNDER THE CIRCUMSTANCES HERE, THERE IS NO APPARENT LEGAL BASIS UPON WHICH WE MAY CONCLUDE THAT THE AWARDS WERE IMPROPER.

THE MATTERS COVERED IN YOUR LETTER OF FEBRUARY 4, 1958, RESPECTING THE RESPONSIBILITY OF THE NU-1GRAIN CORPORATION, ARE PRIMARILY THE CONCERN OF THE AGENCY ADMINISTERING THE CONTRACT AND MAY NOT BE CONSIDERED HERE IN DETERMINING THE VALIDITY OF YOUR PROTEST.

THE ORIGINAL LETTER ENCLOSED WITH YOUR LETTER OF JANUARY 27, 1958, IS RETURNED HEREWITH.