B-144194, MAR. 9, 1961

B-144194: Mar 9, 1961

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HAWES AND SYMINGTON: REFERENCE IS MADE TO YOUR TELEGRAM OF OCTOBER 7. THE ABSTRACT OF BIDS FOR INVITATION 220 STATES THAT THE STOFFEL BID WAS REJECTED BECAUSE:. - "THIS FIRM IS NOT A QUALIFIED PRODUCER AS THEY HAVE DELIVERED APPROXIMATELY 6. THE DEADLINE FOR COMPLETE DELIVERY WAS AUGUST 15. AS A RESULT OF THIS COMPANY'S FAILURE TO DELIVER ON TIME SEALS ARE OUT OF STOCK AT 3 OF OUR SUPPLY CENTERS. 000 SEALS WAS REJECTED DUE TO SHARP EDGES AND POOR WORKMANSHIP. 000 WERE REJECTED ON SEPTEMBER 9. YOU CONTEND THAT IT WAS IMPROPER FOR THE POST OFFICE DEPARTMENT IN EVALUATING STOFFEL'S RESPONSIBILITY IN CONNECTION WITH THE CURRENT PROCUREMENT TO CONSIDER ITS OVERALL PERFORMANCE UNDER THE PRIOR PROCUREMENT IN THAT AN AGREEMENT HAD BEEN REACHED BETWEEN REPRESENTATIVES OF THE DEPARTMENT AND STOFFEL THAT CONSIDERATION OF ITS ELIGIBILITY WOULD BE LIMITED TO THE QUANTITY AND QUALITY OF PERFORMANCE BETWEEN AUGUST 8.

B-144194, MAR. 9, 1961

TO FOWLER, LEVA, HAWES AND SYMINGTON:

REFERENCE IS MADE TO YOUR TELEGRAM OF OCTOBER 7, 1960, AND LETTERS OF OCTOBER 13 AND 31, 1960, JANUARY 3, AND FEBRUARY 15, 1961, CONCERNING THE PROTEST OF STOFFEL SEALS CORPORATION AGAINST THE AWARD TO A HIGHER BIDDER OF A CONTRACT UNDER POST OFFICE INVITATION 220 COVERING THE PROCUREMENT OF 13,750,000 METAL AIR MAIL BAG SEALS TO BE FURNISHED AT THE RATE OF 2,000,000 A MONTH.

THE ABSTRACT OF BIDS FOR INVITATION 220 STATES THAT THE STOFFEL BID WAS REJECTED BECAUSE:---

"THIS FIRM IS NOT A QUALIFIED PRODUCER AS THEY HAVE DELIVERED APPROXIMATELY 6,740,000 SEALS AGAINST AN AWARD OF 13,000,000 SEALS UNDER INVITATION 348. THE DEADLINE FOR COMPLETE DELIVERY WAS AUGUST 15, 1960. AS A RESULT OF THIS COMPANY'S FAILURE TO DELIVER ON TIME SEALS ARE OUT OF STOCK AT 3 OF OUR SUPPLY CENTERS. ON AUGUST 25, A LOAD OF 720,000 SEALS WAS REJECTED DUE TO SHARP EDGES AND POOR WORKMANSHIP. TWO ADDITIONAL LOADS TOTALING 1,520,000 WERE REJECTED ON SEPTEMBER 9, 0.'

YOU CONTEND THAT IT WAS IMPROPER FOR THE POST OFFICE DEPARTMENT IN EVALUATING STOFFEL'S RESPONSIBILITY IN CONNECTION WITH THE CURRENT PROCUREMENT TO CONSIDER ITS OVERALL PERFORMANCE UNDER THE PRIOR PROCUREMENT IN THAT AN AGREEMENT HAD BEEN REACHED BETWEEN REPRESENTATIVES OF THE DEPARTMENT AND STOFFEL THAT CONSIDERATION OF ITS ELIGIBILITY WOULD BE LIMITED TO THE QUANTITY AND QUALITY OF PERFORMANCE BETWEEN AUGUST 8, 1960, AND THE AWARD DATE, SEPTEMBER 12, 1960. YOU INDICATE THAT, WHILE WITHIN THAT PERIOD SOME 2,240,000 ITEMS WERE REJECTED, DURING THE SAME PERIOD 1,000,000 HAD BEEN CORRECTED AND ACCEPTED AND A PROCESS FOR REMEDYING THE BALANCE HAD BEEN FOUND AND BROUGHT TO THE ATTENTION OF THE DEPARTMENT. FURTHER, YOU STATE THAT NOTWITHSTANDING THE DEFICIENT ITEMS FURNISHED DURING THE CRITICAL PERIOD, STOFFEL HAD SUPPLIED MORE ACCEPTABLE ITEMS THAN IT HAD PROMISED TO PRODUCE. YOU SUGGEST THAT THE FACTS WARRANT A CONCLUSION THAT STOFFEL WAS RESPONSIBLE AND REQUIRE THAT THE CONTRACT AWARDED TO A HIGHER BIDDER BE CANCELED AND AWARDED TO STOFFEL. IF THE AWARDED CONTRACT CANNOT BE CANCELED ON THAT BASIS, YOU SUGGEST THAT THE SUCCESSFUL BIDDER'S MISREPRESENTATION CONCERNING THE EMPLOYMENT OF A COMPANY REPRESENTATIVE WOULD REQUIRE CANCELLATION OF THE CONTRACT.

THE RECORD SHOWS THAT BEFORE ISSUING INVITATION 220 TO STOFFEL THE DEPARTMENT REVIEWED THE COMPANY'S PERFORMANCE RECORD AND CONCLUDED THAT IT DID NOT WARRANT THE COMPANY'S BEING INVITED TO BID. HOWEVER, AFTER CONFERRING WITH A REPRESENTATIVE OF THE COMPANY, IT WAS APPARENTLY DECIDED THAT THE COMPANY WOULD BE ALLOWED TO BID AND THAT ITS RESPONSIBILITY WOULD BE EVALUATED ON THE BASIS OF PERFORMANCE SUBSEQUENT TO THE MEETING. WHILE IT IS NOT CLEAR WHAT CAUSED THE DEPARTMENT TO RELENT ON ITS FORMER POSITION, WE WOULD ASSUME THAT THIS WAS BASED UPON GOOD AND SUFFICIENT REASONS. THE STATEMENT IN THE POSTMASTER GENERAL'SLETTER OF OCTOBER 21, 1960, THAT STOFFEL EXPANDED ITS PRODUCTION AFTER THE ISSUANCE OF THE INVITATION, BUT THAT IT DID NOT ADEQUATELY CONTROL THE QUALITY LEVEL AND THAT "WE AGREED TO CONSIDER THE STOFFEL BID PROVIDING BOTH QUALITY AND DELIVERIES WERE SATISFACTORY" INDICATES TO US AS CONTENDED BY YOU, THAT THE POST OFFICE DEPARTMENT DID AGREE TO LIMIT ITS ESTIMATE OF STOFFEL'S ABILITY ON THE BASIS OF ITS PERFORMANCE DURING THE PERIOD AUGUST 8 TO SEPTEMBER 12, 1960. THEREFORE, STOFFEL'S RESPONSIBILITY SHOULD HAVE BEEN EVALUATED IN ACCORDANCE WITH THE AGREEMENT. HOWEVER, THE POSTMASTER GENERAL'S LETTER OF OCTOBER 21, 1960, INDICATES THAT THE CRITERIA FOR EVALUATION WERE TO BE SATISFACTORY QUALITY AND QUANTITY. THE DEPARTMENT TAKES THE VIEW THAT EVEN ON THIS BASIS STOFFEL WAS NOT QUALIFIED, SINCE WHILE THE ACCEPTABLE QUANTITIES MAY HAVE EXCEEDED THE AMOUNTS PROMISED DURING THE EVALUATION PERIOD THERE WERE QUALITY DEFICIENCIES AMONG THEM AND THEY WERE ALL ITEMS THAT WENT TO MAKE UP THE REQUIRED CONTRACT AMOUNT AND THEREFORE SHOULD HAVE MET THE STANDARD QUALITY REQUIREMENTS. IN THE CIRCUMSTANCES, IT APPEARS THAT EVEN THOUGH THE DEPARTMENT DID NOT EVALUATE STOFFEL'S RESPONSIBILITY IN STRICT ACCORDANCE WITH ITS AGREEMENT, IT HAS DETERMINED THAT AN ADEQUATE FACTUAL BASIS EXISTED AT THAT TIME UPON WHICH IT COULD HAVE CONCLUDED THAT THE FIRM WAS NOT QUALIFIED.

AS YOU HAVE SUGGESTED, THE CORRECTION OF SOME OF THE DEFICIENCIES AND THE DISCOVERY OF A METHOD TO CORRECT THE OTHERS ACT TO MITIGATE THE CIRCUMSTANCES. HOWEVER, WHETHER THEY VITIATE THE DEFICIENCIES IS ANOTHER QUESTION. HAD ALL THE ITEMS ACTUALLY BEEN CORRECTED THERE WOULD HAVE BEEN SERIOUS DOUBT IF STOFFEL WERE LABELED IRRESPONSIBLE, BUT AS LONG AS A MAJOR PART OF THE DEFICIENT ARTICLES REMAINED TO BE ADJUSTED, NOTWITHSTANDING A PROCESS HAD BEEN DISCOVERED THAT WOULD HAVE IMPROVED THE PRODUCT, IT COULD CONCEIVABLY BE CONJECTURAL WHETHER STOFFEL COULD SATISFACTORILY PERFORM. WHILE IT MAY HAVE DISCOVERED A PROCESS TO IMPROVE THE ITEM, THE ACTUAL DEMONSTRATION OF ITS ABILITY TO MANUFACTURE A SATISFACTORY ARTICLE IS SHOWN BEST BY ACTUAL PERFORMANCE, WHICH WAS NOT ACCOMPLISHED UNTIL AFTER THE CRITICAL PERIOD.

THE DETERMINATION OF A PROSPECTIVE CONTRACTOR'S ABILITY TO PERFORM IS PRIMARILY THE FUNCTION OF THE ADMINISTRATIVE OFFICERS CONCERNED, AND IN THE ABSENCE OF A SHOWING OF LACK OF REASONABLE BASIS THEREFOR, THERE IS NO BASIS UPON WHICH WE MAY OBJECT. THE PROJECTION OF A BIDDER'S ABILITY TO PERFORM IF AWARDED A CONTRACT IS OF NECESSITY A MATTER OF JUDGMENT WHICH MUST PROPERLY BE LEFT LARGELY TO THE SOUND ADMINISTRATIVE DISCRETION OF THE CONTRACTING OFFICES 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. HOWEVER, WHILE THE QUESTION OF RESPONSIBILITY IS LARGELY A MATTER FOR DETERMINATION BY THE CONTRACTING AGENCY, IN VIEW OF THE IMPROVED PERFORMANCE DEMONSTRATED AT THE END OF THE CONTRACT AND THE EXPERIENCE GAINED IN OVERCOMING EARLY PROBLEMS, WE WOULD HAVE GRAVE DOUBT THAT THERE IS A REASONABLE FACTUAL BASIS UPON WHICH THE STOFFEL FIRM COULD BE LABELED IRRESPONSIBLE FOR FUTURE PROCUREMENTS THAT MAY FOLLOW INVITATION 220.

AS YOU HAVE INDICATED, THE SUCCESSFUL BIDDER CHECKED STATEMENTS ON THE BID FORM INDICATING THAT IT DID NOT EMPLOY OTHER THAN A FULL TIME BONA FIDE EMPLOYEE TO SOLICIT GOVERNMENT BUSINESS, WHEN IN FACT THE REPRESENTATIVE IT EMPLOYS WORKS FOR OTHER FIRMS AS WELL. WHILE THE STATEMENT MADE BY THE BIDDER WAS A MISREPRESENTATION OF THE FACTS, 41 C.F.R. 1-1.504-4 RECOGNIZES THAT AN INDIVIDUAL WHO REPRESENTS MORE THAN ONE FIRM CAN BE A BONA FIDE EMPLOYEE. SINCE THE COVENANTS AGAINST CONTINGENT FEES REQUIRES ANNULMENT OF THE CONTRACT ONLY WHERE THE REPRESENTATIVE IS NOT A BONA FIDE EMPLOYEE, TO IMPOSE A FORFEITURE IN ANY OTHER CIRCUMSTANCE WOULD NOT BE PROPER.

IN VIEW OF THE FOREGOING, WE CANNOT CONCLUDE THAT THE ACTION OF THE ADMINISTRATIVE OFFICE IN REJECTING THE STOFFEL BID WAS WITHOUT A REASONABLE FACTUAL BASIS, OR THAT THE CIRCUMSTANCES SURROUNDING THE MISREPRESENTATION IN THE SUCCESSFUL BID REQUIRES CANCELLATION OF THAT CONTRACT. THEREFORE, NO FURTHER ACTION WILL BE TAKEN BY OUR OFFICE IN THIS MATTER.