B-138908, MAY 19, 1959, 38 COMP. GEN. 778

B-138908: May 19, 1959

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BIDDERS - QUALIFICATIONS - PRIOR UNSATISFACTORY PERFORMANCE - EVIDENCE AN ADMINISTRATIVE DETERMINATION OF A BIDDER'S RESPONSIBILITY TO PERFORM A CONTRACT SHOULD BE OF SUCH STATURE AND CHARACTER AS TO LEAVE NO REASONABLE DOUBT THAT IT WAS BASED ON FULLY DOCUMENTED FACTS AND WHEN THE EVIDENCE OF PRIOR CONTRACT PERFORMANCE OF A LOW BIDDER. DOES NOT ESTABLISH THAT DELAYS AND DEFICIENCIES WERE PRIMARILY DUE TO THE CONTRACTOR AND SUBCONTRACTOR. THERE IS NO BASIS FOR REJECTION OF THE LOW BIDDER FOR LACK OF RESPONSIBILITY. EVIDENCE OF UNSATISFACTORY PERFORMANCE OF CONTRACTS WHICH PREDATE A CONTRACT OF CONSIDERABLY LARGER MAGNITUDE WHICH WAS AWARDED TO THE CONTRACTOR SHOULD NOT BE CONSIDERED IN EVALUATION OF A BIDDER'S RESPONSIBILITY TO PERFORM UNDER A CONTRACT TO BE AWARDED SINCE IT IS ONLY REASONABLE TO ASSUME THAT AT THE TIME OF THE AWARD OF THE LARGE CONTRACT.

B-138908, MAY 19, 1959, 38 COMP. GEN. 778

BIDDERS - QUALIFICATIONS - PRIOR UNSATISFACTORY PERFORMANCE - EVIDENCE AN ADMINISTRATIVE DETERMINATION OF A BIDDER'S RESPONSIBILITY TO PERFORM A CONTRACT SHOULD BE OF SUCH STATURE AND CHARACTER AS TO LEAVE NO REASONABLE DOUBT THAT IT WAS BASED ON FULLY DOCUMENTED FACTS AND WHEN THE EVIDENCE OF PRIOR CONTRACT PERFORMANCE OF A LOW BIDDER, WHO HAS BEEN ISSUED A CERTIFICATE OF COMPETENCY BY THE SMALL BUSINESS ADMINISTRATION, DOES NOT ESTABLISH THAT DELAYS AND DEFICIENCIES WERE PRIMARILY DUE TO THE CONTRACTOR AND SUBCONTRACTOR, THERE IS NO BASIS FOR REJECTION OF THE LOW BIDDER FOR LACK OF RESPONSIBILITY. EVIDENCE OF UNSATISFACTORY PERFORMANCE OF CONTRACTS WHICH PREDATE A CONTRACT OF CONSIDERABLY LARGER MAGNITUDE WHICH WAS AWARDED TO THE CONTRACTOR SHOULD NOT BE CONSIDERED IN EVALUATION OF A BIDDER'S RESPONSIBILITY TO PERFORM UNDER A CONTRACT TO BE AWARDED SINCE IT IS ONLY REASONABLE TO ASSUME THAT AT THE TIME OF THE AWARD OF THE LARGE CONTRACT, THE BIDDER'S PRIOR POOR PERFORMANCE WAS NOT CONSIDERED TO AFFECT HIS RESPONSIBILITY.

TO THE ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION, MAY 19, 1959:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 8, 1959, WITH ENCLOSURES, FURNISHING THE REPORT REQUESTED BY OUR OFFICE IN CONNECTION WITH THE PROTEST OF JACK PICOULT AGAINST THE ACTION OF YOUR ADMINISTRATION IN DELAYING THE AWARD OF A CONTRACT ON PROJECT NO. JO-80094, UNDER AN INVITATION FOR BIDS DATED NOVEMBER 10, 1958, TO HIS FIRM AS THE LOWEST BIDDER.

THE INVITATION REQUESTED BIDS FOR LIGHTING IMPROVEMENTS, PARTIAL PAINTING, ETC., AT THE UNITED STATES POST OFFICE, MORGAN ANNEX, NEW YORK, NEW YORK. BIDS WERE OPENED ON DECEMBER 8, 1958, AND PICOULT SUBMITTED THE LOWEST BID IN THE AMOUNT OF $884,000, THE NEXT LOWEST BID BEING $890,600. HOWEVER, IT WAS ADMINISTRATIVELY DETERMINED THAT PICOULT DID NOT MEET THE RESPONSIBILITY CRITERIA SET OUT IN SECTION 2 OF ADMINISTRATIVE ORDER NO. 133, AS AMENDED. ON FEBRUARY 27, 1959, THE BOARD OF AWARD, GENERAL SERVICES ADMINISTRATION, CONCURRED IN THE PROPOSED ACTION TO PASS OVER PICOULT AND AWARD TO THE SECOND LOW BIDDER. UNDER DATE OF APRIL 2, 1959, THE SMALL BUSINESS ADMINISTRATION ISSUED A CERTIFICATE OF COMPETENCY TO PICOULT PURSUANT TO 15 U.S.C. 637 (B) (7), TO THE EFFECT THAT HE IS COMPETENT AS TO CAPACITY AND CREDIT TO PERFORM THE PROPOSED WORK UNDER PROJECT NO. JO-80094. HENCE, WITH RESPECT TO ANY QUESTION AS TO THE CAPABILITIES OF PICOULT AS A GENERAL CONTRACTOR TO PERFORM THE INSTANT PROJECT, WE ARE SURE THAT YOU WILL AGREE THAT THE CERTIFICATE OF COMPETENCY IS CONCLUSIVE ON THE MATTER.

IN YOUR REPORT DATED APRIL 8, 1959, YOU ADVISE THAT THE CERTIFICATE OF COMPETENCY DOES NOT REQUIRE THAT THE CONTRACT BE AWARDED TO PICOULT IN THE LIGHT OF THE FINDINGS AND DETERMINATION MADE BY THE NEW YORK REGIONAL OFFICE WHICH RELATE TO THE UNSATISFACTORY PERFORMANCE OF PRIOR CONTRACTS BY PICOULT AND HIS PROPOSED ELECTRICAL SUBCONTRACTOR, WEINER AND FRIEDLAND, AND NOT TO HIS AND/OR THEIR LACK OF CAPACITY AND CREDIT. THERE ARE CITED IN SUPPORT OF SUCH CONCLUSION THE DECISIONS OF OUR OFFICE AT 37 COMP. GEN. 676; ID. 798; 38 ID. 289; AND B-138233 OF FEBRUARY 24, 1959.

THE BASES OF THE ADMINISTRATIVE DETERMINATION THAT PICOULT IS NOT QUALIFIED AS TO RESPONSIBILITY TO PERFORM THE RESULTING CONTRACT ARE STATED IN A MEMORANDUM DATED APRIL 1, 1959, FROM THE DEPUTY ASSISTANT COMMISSIONER FOR DESIGN AND CONSTRUCTION TO THE ASSISTANT COMMISSIONER FOR DESIGN AND CONSTRUCTION AS FOLLOWS:

1. FAILURE OF MR. PICOULT TO SATISFACTORILY PERFORM ON PROJECTS OF LESSER SCOPE.

2. THE SUBCONTRACTOR THAT MR. PICOULT PROPOSES TO USE, WEINER AND FRIEDLAND, DO NOT HAVE THE NECESSARY QUALIFICATIONS AND A SATISFACTORY RECORD OF INTEGRITY AND PERFORMANCE TO DO THE ELECTRICAL WORK. MR. PICOULT HAS STATED UPON SEVERAL OCCASIONS, AND HAS CONFIRMED IN HIS LETTER OF MARCH 7, THAT HE IS LEGALLY AND MORALLY OBLIGATED TO WEINER AND FRIEDLAND TO USE THEM AS A SUBCONTRACTOR ON THIS PROJECT. FOR THIS REASON THE QUALIFICATIONS OF THIS FIRM MUST BE CONSIDERED. IN DETERMINING THE RESPONSIBILITY OF JACK PICOULT IT SEEMS THAT THE QUALIFICATIONS OF THE PRINCIPAL SUBCONTRACTOR, WHO HE HAS INDICATED HE IS OBLIGATED TO USE, MUST ALSO BE CONSIDERED.

IT IS FURTHER STATED IN THE MEMORANDUM THAT:

GSA GENERAL REGULATION NO. 24 STATES THAT IT IS ESSENTIAL THAT PRECAUTION BE TAKEN TO AWARD CONTRACTS ONLY TO RELIABLE AND CAPABLE BIDDERS, WHO CAN REASONABLY BE EXPECTED TO COMPLY WITH CONTRACT REQUIREMENTS.

THIS REGULATION FURTHER DEFINES CERTAIN "STANDARDS OF QUALIFICATIONS" AMONG WHICH IS THAT, PROSPECTIVE CONTRACTOR MUST IN THE OPINION OF THE CONTRACTING OFFICER HAVE A SATISFACTORY RECORD OF INTEGRITY, JUDGMENT AND PERFORMANCE ( ITALICS SUPPLIED). WHILE THERE IS NOT CLEAR-CUT EVIDENCE OF MR. PICOULT'S FAILURE TO MEET THESE QUALIFICATIONS THERE IS CERTAINLY EVIDENCE TO INDICATE THAT WEINER AND FRIEDLAND COULD BE CONSIDERED TO BE DEFICIENT IN ALL THREE.

IT ALSO APPEARS THAT THERE IS SOME CONCERN THAT LABOR DIFFICULTIES WILL RESULT IF THIS CONTRACT IS AWARDED TO PICOULT SINCE HE IS A NON UNION CONTRACTOR AND SINCE THE NEW YORK BUILDING TRADES COUNCIL HAD INDICATED THAT WHILE PICOULT WAS PREPARED TO USE UNION LABOR, THEY OBJECTED TO WEINER AND FRIEDLAND AS A SUBCONTRACTOR. IT FURTHER APPEARS THAT THE ADMINISTRATIVE DETERMINATION OF PICOULT'S LACK OF RESPONSIBILITY ESSENTIALLY HAS REFERENCE TO HIS PERFORMANCE UNDER CONTRACT NO. GS-05B- 5992 FOR THE ALTERATION, LIGHTING, AIR CONDITIONING, ETC., OF THE UNITED STATES POST OFFICE AND COURTHOUSE BUILDING AT EAST ST. LOUIS, ILLINOIS. WEINER AND FRIEDLAND ARE SUBCONTRACTORS UNDER THIS PROJECT.

IT IS REPORTED THAT THE NOTICE TO PROCEED ON THE ABOVE-CITED CONTRACT WAS GIVEN ON JULY 9, 1958, AND THAT PERFORMANCE IS NOT SATISFACTORY SINCE THE JOB IS SEVERAL MONTHS LATE AND THE STATUS OF COMPLETION IS ONLY ABOUT 50 PERCENT. FURTHER, IT IS REPORTED THAT, WHILE SOME OF THE DELAY MAY BE ATTRIBUTABLE TO THE GOVERNMENT, THERE HAS BEEN AN UNUSUAL AMOUNT OF BICKERING AND DISAGREEMENT ON THIS PROJECT. THE REGIONAL DIRECTOR, PUBLIC BUILDINGS SERVICE, CHICAGO, HAS FURTHER POINTED OUT THAT PICOULT FAILED TO SUBMIT FOR APPROVAL A COMPLETE LIST OF MECHANICAL ITEMS WITHIN 30 DAYS FROM RECEIPT OF THE NOTICE TO PROCEED AS REQUIRED BY PARAGRAPH 22-3 OF THE CONTRACT SPECIFICATIONS.

GENERALLY THE RESPONSIBILITY OF A BIDDER MAY NOT BE EVALUATED ON THE BASIS OF THE QUALIFICATIONS OF HIS INTENDED SUBCONTRACTOR UNLESS THE APPLICABLE INVITATION SO PROVIDES. SEE 37 COMP. GEN. 196; ID. 544. SEE, IN THIS CONNECTION, ARTICLE 1-12 OF THE GENERAL PROVISIONS OF THE INVITATION CHARGING THE PRIME CONTRACTOR WITH THE RESPONSIBILITY FOR THE PERFORMANCE OF HIS SUBCONTRACTOR.

THE DECISIONS ABOVE CITED WHICH ARE RELIED OUPON IN DETERMINING PICOULT'S RESPONSIBILITY WITHOUT REGARD TO A CERTIFICATE OF COMPETENCY HELD, IN EFFECT, THAT A RECORD OF DEFAULT OR UNSATISFACTORY PERFORMANCE UNDER PRIOR CONTRACTS OR POOR BUSINESS PRACTICES COULD FORM THE BASIS FOR REJECTION OF THE BID OF A SMALL BUSINESS FIRM TO WHICH A CERTIFICATE OF COMPETENCY HAS BEEN ISSUED. HOWEVER, WE DO NOT FEEL THAT THOSE DECISIONS ARE CONTROLLING HERE WHERE THE EVIDENCE OF RECORD FAILS TO SUPPORT THE ADMINISTRATIVE CONCLUSION THAT PICOULT FAILED TO SATISFACTORILY PERFORM THE PROJECT AT EAST ST. LOUIS.

IT APPEARS THAT MUCH OF THE INITIAL DELAY IN THE EAST ST. LOUIS PROJECT WAS DUE TO THE OBJECTIONS OF THE CHICAGO REGIONAL OFFICE TO THE USE BY PICOULT OF WEINER AND FRIEDLAND AS A SUBCONTRACTOR UNDER THIS PROJECT. WAS NOT UNTIL AUGUST 17, 1958, OR APPROXIMATELY 38 DAYS AFTER THE DATE OF NOTICE TO PROCEED THAT THE REGIONAL OFFICE WITHDREW ITS OBJECTIONS TO THE EMPLOYMENT OF WEINER AND FRIEDLAND. SUCH DELAY NECESSARILY AFFECTED PROGRESS OF THE WORK, SUCH AS THE APPROVAL OF DRAWINGS AND MECHANICAL ITEMS WHICH WERE PREREQUISITE TO ACTUAL PERFORMANCE OF THE CONTRACT WORK. ALSO, A FEW WEEKS MORE DELAY WAS ENCOUNTERED BECAUSE OF UNION AND PICKETING DISTURBANCES WHICH COULD NOT BE ATTRIBUTABLE TO PICOULT. IT IS CONCEDED BY THE CHICAGO REGIONAL DIRECTOR THAT CONSIDERABLE TIME ELAPSED BETWEEN THE SUBMISSION OF PROPOSALS FOR CHANGES REQUESTED BY THE GOVERNMENT OF PICOULT AND FINAL ACCEPTANCE THEREOF BY THE CHICAGO OFFICE DUE PRIMARILY TO THAT OFFICE'S HEAVY WORK LOAD.

IT IS WELL ESTABLISHED, BOTH BY DECISIONS OF THE COURTS AND OF OUR OFFICE, THAT AN ADMINISTRATIVE DETERMINATION OF THE RESPONSIBILITY OF A PROSPECTIVE CONTRACTOR IS CONCLUSIVE UNLESS IT IS SHOWN THAT SUCH DETERMINATION WAS NOT BASED ON SUBSTANTIAL EVIDENCE DEMONSTRATING THE BIDDER'S LACK OF RESPONSIBILITY. SEE 38 L.R.A. ( NS) 653; WILSON V. CITY OF NEW CASTLE, 152 A. 102, 103; SANDERLIN V. LUKEN 68 S.E. 225, 227; INGE V. BOARD OF PUBLIC WORKS, 33 SO. 678, 681; 36 COMP. GEN. 42; 37 ID. 798; 38 ID. 131. WE HAVE CAREFULLY REVIEWED THE ENTIRE RECORD FURNISHED BY YOUR AGENCY WHICH RELATES TO PICOULT'S PERFORMANCE OF THE EAST ST. LOUIS PROJECT AND THE EVIDENCE SUBMITTED BY PICOULT IN REFUTATION OF THE ADMINISTRATIVE RECORD. WE ALSO HAVE THOROUGHLY DISCUSSED THE MATTER OF PICOULT'S RESPONSIBILITY AT SEVERAL CONFERENCES WITH REPRESENTATIVES OF YOUR AGENCY AND PICOULT. ADDITIONALLY, WE HAVE REVIEWED AND ANALYZED THE MANY CHANGE ORDERS INVOLVED IN THE EAST ST. LOUIS PROJECT TO DETERMINE INDEPENDENTLY THE EXTENT OF DELAY OCCASIONED THEREBY AND THE RESPONSIBILITY THEREFOR.

THE ADMINISTRATIVE RECORD FURNISHED OUR OFFICE CONTAINED VERY GENERAL STATEMENTS AND CONCLUSIONS THAT PICOULT INEXCUSABLY DELAYED PERFORMANCE. THE TENOR OF THE RECORD IS THAT PICOULT PRACTICED DILATORY TACTICS IN THE ACCOMPLISHMENT OF CHANGE ORDERS AND THE FURNISHING OF TECHNICAL DATA; FAILED TO COOPERATE WITH CONTRACTING OFFICIALS; EXERCISED INADEQUATE SUPERVISION OVER THE JOB; AND LACKED ELECTRICAL CONSTRUCTION ABILITY. THE RECORD CONSISTED OF INTEROFFICE MEMORANDA CONCERNING THE NONRESPONSIBILITY OF BOTH PICOULT AND HIS SUBCONTRACTOR, WEINER AND FRIEDLAND, AND COPIES OF CORRESPONDENCE RELATING TO THE MANY CHANGE ORDERS. HOWEVER, WE FIND NOTHING IN THE RECORD WHICH DEFINITELY ESTABLISHED THAT A SUBSTANTIAL PART OF THE ALLEGED DELAY CAN BE ATTRIBUTED TO PICOULT NOR HAS A COMPETENT ADMINISTRATIVE FINDING BEEN MADE DETAILING SUCH DELAY. ON THE OTHER HAND, PICOULT HAS SUBMITTED DETAILED INFORMATION REGARDING HIS CONDUCT OF THE EAST ST. LOUIS PROJECT. THIS INFORMATION, WHICH IS FULLY DOCUMENTED BY CORRESPONDENCE, WORK PROGRESS REPORTS, AND OTHER PERTINENT DATA, SUBSTANTIALLY REFUTES THE GENERAL STATEMENTS AND CONCLUSIONS CONTAINED IN THE ADMINISTRATIVE REPORT. THE RECORD BEFORE US REASONABLY ESTABLISHES THAT THE DELAYS WERE PRIMARILY DUE TO THE FACT THAT PICOULT INSISTED UPON WRITTEN REQUESTS FOR PROPOSALS, DEFINITIVE DRAWINGS AND DATA, AND WRITTEN CHANGE ORDERS. HOWEVER, WE DO NOT FEEL THAT SUCH ACTIONS COULD BE REGARDED AS RESULTING IN THE ALLEGED CONTRACT DEFICIENCIES WHICH COULD BE CHARGEABLE AGAINST PICOULT. IN THAT CONNECTION, IT WAS ADMITTED BY YOUR AGENCY REPRESENTATIVE AT A CONFERENCE ON MAY 6, 1959, THAT SOME THREE TO FOUR MONTHS OF THE DELAYS WERE ATTRIBUTABLE TO THE GOVERNMENT.

WE ARE SURE THAT YOUR WILL AGREE THAT THE MATTER OF DETERMINING ADMINISTRATIVELY THE RESPONSIBILITY OF A BIDDER IS OF CONSIDERABLE IMPORTANCE, SINCE, IN A VERY REAL SENSE, THE ECONOMIC EXISTENCE OF A BIDDER AS A PROSPECTIVE GOVERNMENT CONTRACTOR AS WELL AS THE GOVERNMENT'S INTERESTS MAY BE AT STAKE. FOR THESE REASONS, SUCH DETERMINATIONS SHOULD BE OF SUCH STATURE AND CHARACTER AS TO LEAVE NO REASONABLE DOUBT THAT THE MATTER OF RESPONSIBILITY WAS RESOLVED IN THE LIGHT OF FULLY DOCUMENTED FACTS. AS HERETOFORE STATED, WE DO NOT FEEL THAT THE DETERMINATION MADE HERE MET THAT CRITERIA.

A FURTHER BASIS FOR REJECTING PICOULT'S BID IS THAT HE UNSATISFACTORILY PERFORMED OTHER CONTRACTS WHICH PREDATED THE LEAST ST. LOUIS PROJECT. DO NOT THINK THAT SUCH PRIOR CONTRACTS NOW ARE PROPERLY FOR CONSIDERATION IN DETERMINING PICOULT'S RESPONSIBILITY SINCE, NOTWITHSTANDING THE ALLEGED POOR PERFORMANCE, THE LEAST ST. LOUIS PROJECT WAS AWARDED TO PICOULT. IS ONLY REASONABLE TO ASSUME THAT AT THAT TIME YOUR AGENCY DID NOT CONSIDER THAT THE ALLEGED POOR PERFORMANCE UNDER THOSE CONTRACTS AFFECTED HIS RESPONSIBILITY TO PERFORM A PROJECT OF A CONSIDERABLY LARGER MAGNITUDE.

ACCORDINGLY, AND SINCE THE CERTIFICATE OF COMPETENCY IS CONCLUSIVE UPON THE CONTRACTING OFFICER SO FAR AS PICOULT'S CAPACITY TO PERFORM THE MORGAN ANNEX PROJECT IS CONCERNED, AND SINCE WE FIND NO SUBSTANTIAL BASIS FOR THE DETERMINATION THAT PICOULT IS NOT A RESPONSIBLE BIDDER, IT IS OUR VIEW THAT THE BID OF PICOULT SHOULD BE CONSIDERED IN MAKING AN AWARD.