B-148629, MAY 22, 1962

B-148629: May 22, 1962

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TO F AND H MANUFACTURING CORP.: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM AND LETTER DATED APRIL 9 AND 12. THREE BIDS WERE RECEIVED ON OR BEFORE THE TIME AND DATE SCHEDULED FOR OPENING OF BIDS. WAS RECEIVED AFTER THE TIME SET FOR OPENING OF BIDS. IT IS REPORTED THAT PURSUANT TO EXISTING REGULATIONS. THE NECESSARY INVESTIGATION WAS UNDERTAKEN TO DETERMINE WHETHER YOUR BID WAS DELAYED IN THE MAIL AND CONSEQUENTLY SHOULD BE CONSIDERED. OR WHETHER IT WAS MAILED TOO LATE TO ARRIVE IN THE CONTRACTING OFFICE PRIOR TO THE TIME SET FOR OPENING. WHICH WAS RECEIVED ON MARCH 2. IT WAS ESTABLISHED THAT YOUR BID WAS ACTUALLY DELAYED IN THE MAIL AND. A PREAWARD SURVEY WAS CONDUCTED OF YOUR CAPABILITIES TO PERFORM THE RESULTING CONTRACT.

B-148629, MAY 22, 1962

TO F AND H MANUFACTURING CORP.:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM AND LETTER DATED APRIL 9 AND 12, 1962, RESPECTIVELY, PROTESTING AGAINST THE AWARD OF A CONTRACT TO ANOTHER BIDDER UNDER INVITATION NO. SC-36-039-62-1856-A1-51, ISSUED BY THE U.S. ARMY SIGNAL SUPPLY AGENCY, CHICAGO, ILLINOIS.

THE INVITATION REQUESTED BIDS FOR FURNISHING 9,805 TO 58,830 UNITS OF "BASE, MAST AB-15/GR" AND RESTRICTED THE BIDDING TO SMALL-BUSINESS CONCERNS. IT STIPULATED THAT BIDS WOULD BE OPENED AT :30 P.M. ON FEBRUARY 19, 1962. THREE BIDS WERE RECEIVED ON OR BEFORE THE TIME AND DATE SCHEDULED FOR OPENING OF BIDS. THE FOURTH BID, SUBMITTED BY YOUR FIRM, WAS RECEIVED AFTER THE TIME SET FOR OPENING OF BIDS. IT IS REPORTED THAT PURSUANT TO EXISTING REGULATIONS, THE NECESSARY INVESTIGATION WAS UNDERTAKEN TO DETERMINE WHETHER YOUR BID WAS DELAYED IN THE MAIL AND CONSEQUENTLY SHOULD BE CONSIDERED, OR WHETHER IT WAS MAILED TOO LATE TO ARRIVE IN THE CONTRACTING OFFICE PRIOR TO THE TIME SET FOR OPENING. IN A LETTER FROM THE LINDENHURST, NEW YORK, POSTMASTER DATED FEBRUARY 28, 1962, WHICH WAS RECEIVED ON MARCH 2, 1962, IT WAS ESTABLISHED THAT YOUR BID WAS ACTUALLY DELAYED IN THE MAIL AND, AS SUCH, SHOULD BE CONSIDERED FOR AWARD.

SINCE YOUR FIRM SUBMITTED THE LOWEST BID, A PREAWARD SURVEY WAS CONDUCTED OF YOUR CAPABILITIES TO PERFORM THE RESULTING CONTRACT. AS A RESULT OF THIS SURVEY IT WAS DETERMINED BY THE CONTRACTOR EVALUATION BOARD, WITH THE CONCURRENCE OF THE CONTRACTING OFFICER, THAT YOUR FIRM LACKED THE FINANCIAL ABILITY TO ASSURE SATISFACTORY PERFORMANCE OF THE CONTEMPLATED CONTRACT. ON APRIL 6, 1962, THE SMALL BUSINESS ADMINISTRATION (SBA) WAS ADVISED BY THE CONTRACTING OFFICER THAT AN AWARD MUST BE MADE WITHOUT DELAY AND WITHOUT AFFORDING THAT ADMINISTRATION AN OPPORTUNITY TO CONSIDER WHETHER A CERTIFICATE OF COMPETENCY SHOULD BE ISSUED TO YOUR FIRM. THIS ACTION IS SUPPORTED BY A CERTIFICATE EXECUTED PURSUANT TO SECTION 1-705.6 (B) (I) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), THAT THE NATIONAL DEFENSE URGENCY OF THE PROCUREMENT COULD NOT BE DELAYED PENDING A CONSIDERATION OF YOUR CAPABILITIES BY THE SBA. ON THE SAME DATE YOU WERE NOTIFIED THAT YOUR BID WAS REJECTED FOR THE REASON THAT YOUR "COMPANY LACKS THE FINANCIAL ABILITY TO ASSURE SATISFACTORY PERFORMANCE ON SUBJECT SOLICITATION" AND THAT THE MATTER OF YOUR COMPETENCY WAS NOT BEING REFERRED TO THE SBA FOR CONSIDERATION BECAUSE OF THE URGENT NEED FOR THE EQUIPMENT. A CONTRACT FOR FURNISHING 39,460 UNITS OF THE REQUIRED EQUIPMENT WAS AWARDED TO THE J. AND H. SMITH MANUFACTURING COMPANY ON APRIL 6, 1962.

IN YOUR LETTER OF APRIL 12, 1962, YOU STATE THAT:

"A. THE ATTACHED LETTER OF APRIL 6, 1962 FROM SIGNAL CORPS POINTS OUT THAT DUE TO THE URGENT DELIVERY REQUIREMENT OF THIS INVITATION THEY DID NOT REFER OUR CASE TO THE SMALL BUSINESS ADMINISTRATION FOR THE POSSIBLE ISSUANCE OF A CERTIFICATE OF COMPETENCY AS THE TIME REQUIRED BY THE SMALL BUSINESS ADMINISTRATION FOR THE ISSUANCE OF A CERTIFICATE WOULD DELAY DELIVERY BEYOND THE REQUIRED SCHEDULE. WE WOULD LIKE TO POINT OUT THAT WE FEEL SUFFICIENT TIME HAS ELAPSED BETWEEN THE OPENING DATE AND DATE OF AWARD TO ALLOW FOR THIS SURVEY BY THE SMALL BUSINESS ADMINISTRATION.

"B. THEIR LETTER ALSO POINTS OUT THAT OUR BID WAS REJECTED BECAUSE "COMPANY LACKS THE FINANCIAL ABILITY, ETC. .' IN THIS INSTANCE WE WOULD LIKE TO POINT OUT THAT A FINANCIAL SURVEY WAS NOT MADE AGAINST THIS INVITATION BY THE ECONOMICS DIVISION OF THE U.S. ARMY SIGNAL SUPPLY AGENCY, BUT THAT THE DETERMINATION WAS MADE FROM THE EXISTING FILE. FEEL THAT EACH CASE SHOULD BE JUDGED ON ITS OWN MERIT. IF WE HAD BEEN SURVEYED BY THE ECONOMICS DIVISION, WE COULD HAVE OBTAINED A COMMITMENT FROM OUR BANK GRANTING UP TO $50,000 IN LOANS, AS ADVANCE WORKING CAPITAL TO INSURE THE REQUIRED DELIVERY ON THIS CONTRACT. IN ADDITION, PROGRESS PAYMENTS WERE REQUESTED BY US ON THIS SOLICITATION AND APPROVAL OF OUR ACCOUNTING SYSTEM WAS MADE BY THE ARMY AUDIT AGENCY. THIS WOULD HAVE GIVEN US ADDITIONAL WORKING CAPITAL IF THESE PROGRESS PAYMENTS WERE APPROVED BY THE CONTRACTING OFFICER.

"C. SINCE THIS COMPANY IS CURRENTLY IN PRODUCTION ON A MAJOR PORTION OF THIS ITEM UNDER BOTH PRIME AND SUBCONTRACT, WE POINTED OUT TO MR. HAROLD LEVY OF THE SIGNAL CORPS IN HIS PRE-AWARD SURVEY OF MARCH 16, 1962 THAT PRE-PRODUCTION SAMPLES COULD BE DELIVERED WITHIN 10 DAYS AFTER DATE OF AWARD AND IF SAMPLES WERE DELETED BASED ON OUR CURRENT APPROVAL, PRODUCTION COULD START AT THE RATE OF 5000 EACH PER MONTH STARTING 90 DAYS AFTER DATE OF AWARD. THIS IS WELL IN ADVANCE OF THE CONTRACT SCHEDULE OF SAMPLES IN 45 DAYS AND PRODUCTION 115 DAYS AFTER DATE OF AWARD.

"IN VIEW OF THE ABOVE AND IN VIEW OF THE FACT THAT WE WERE DENIED THE NORMAL RIGHT OF APPLYING TO THE SMALL BUSINESS ADMINISTRATION FOR A CERTIFICATE OF COMPETENCY, WE FEEL THAT THE PRESENT AWARD SHOULD BE SET ASIDE AND THIS COMPANY GIVEN THE OPPORTUNITY TO APPLY FOR THIS CERTIFICATE. WE HAVE EVERY RIGHT TO BELIEVE THAT THIS CERTIFICATE WOULD HAVE BEEN GRANTED, AS SMALL BUSINESS CERTIFIED US FIVE TIMES IN THE LAST YEAR AND WE MET THE PERFORMANCE REQUIREMENTS ON ALL OF THESE CONTRACT. WITH REGARD TO THE DELIVERY SITUATION, OUR STATEMENTS IN THE PRE-AWARD SURVEY SHOULD HAVE BEEN TAKEN INTO CONSIDERATION BEFORE THE CONTRACTING OFFICER MADE HIS DETERMINATION.'

IN REGARD TO YOUR CONTENTIONS AND THE URGENCY FOR THE REQUIRED EQUIPMENT, THE CONTRACTING OFFICER STATES IN HIS REPORT OF APRIL 17, 1962, AS FOLLOWS:

"PARAGRAPH A OF THE CONTRACTOR'S LETTER OF 12 APRIL 1962 STATES THAT SUFFICIENT TIME ELAPSED BETWEEN THE OPENING DATE AND THE DATE OF AWARD TO ALLOW FOR A SURVEY BY THE SMALL BUSINESS ADMINISTRATION. SPECIFICALLY, THE BIDS WERE OPENED AT THE MIDWESTERN REGIONAL OFFICE AT 1:30 P.M. CST ON 19 FEBRUARY 1962. THE BID OF THE F AND H MANUFACTURING COMPANY ARRIVED IN THIS OFFICE AFTER THE TIME SET FOR OPENING. PURSUANT TO EXISTING REGULATIONS, THE NECESSARY INVESTIGATION WAS UNDERTAKEN TO DETERMINE WHETHER THE BID OF THE F AND H MANUFACTURING WAS DELAYED IN THE MAILS AND CONSEQUENTLY SHOULD BE CONSIDERED, OR WHETHER THE BID WAS MAILED TOO LATE TO ARRIVE IN THIS OFFICE PRIOR TO THE TIME SET FOR OPENING. IN A LETTER FROM THE LINDENHURST POSTMASTER DATED 28 FEBRUARY 1962 WHICH ARRIVED IN THIS OFFICE ON 2 MARCH 1962, IT WAS ESTABLISHED THAT THIS BID WAS ACTUALLY DELAYED IN THE MAILS AND, AS SUCH, SHOULD BE CONSIDERED FOR AWARD. THIS TIME, ACTION WAS TAKEN TO ESTABLISH WHETHER THE LOW BIDDER, F AND H MANUFACTURING CORPORATION, WAS RESPONSIBLE PURSUANT TO THE REQUIREMENTS OF ASPR PART IX, SECTION I. THE NECESSARY REVIEWS, INCLUDING AN EVALUATION OF THE CONTRACTOR'S TECHNICAL ABILITY, FINANCIAL ABILITY, FACILITIES, QUALITY, AND PERFORMANCE REQUIRED AN ADDITIONAL THIRTY DAYS OF PROCESSING TIME. THIS INCLUDED A VISIT TO THE CONTRACTOR'S FACILITY BY A MEMBER OF THE CONTRACTING OFFICER'S TEAM CONDUCTING THE PRE-AWARD SURVEY, AND THE ADMINISTRATIVE TIME INVOLVED IN THE PREPARATION OF THE NECESSARY REPORTS. IMMEDIATELY UPON COMPLETION OF THE EVALUATION, IT WAS DETERMINED THAT THE CONTRACTOR DID NOT MEET THE MINIMUM STANDARDS FOR RESPONSIBLE PROSPECTIVE CONTRACTORS AS OUTLINED IN THE ASPR; CONSEQUENTLY, THIS CONTRACTOR WAS REJECTED AS BEING NON-RESPONSIBLE.

"PARAGRAPH B OF THE CONTRACTOR'S LETTER STATES THAT A FINANCIAL SURVEY WAS NOT MADE AGAINST THIS IFB. PAGE 17, PROVISION F OF THE IFB REQUESTS THAT CONTRACTORS EITHER SUBMIT THEIR LATEST FINANCIAL DATA OR INDICATE THAT FINANCIAL DATA PREVIOUSLY FURNISHED REFLECT THE CURRENT FINANCIAL CONDITION OF THE COMPANY. THE F AND H MANUFACTURING COMPANY INDICATED THAT FINANCIAL DATA PREVIOUSLY FURNISHED THIS AGENCY REFLECTS THEIR CURRENT POSITION. THE DATA AVAILABLE TO THE U.S. ARMY SIGNAL SUPPLY AGENCY WAS FORWARDED TO PHILADELPHIA BY MR. H. D. JACKSON OF THE F AND H MANUFACTURING CORPORATION ON 2 MARCH 1962, AND REFLECTED THE FINANCIAL POSITION OF THIS COMPANY AS OF 31 JANUARY 1962. THE COMPANY MADE NO MENTION OF THE AVAILABILITY OF ADDITIONAL FINANCING FROM OTHER SOURCES. IT IS DOUBTFUL, NEVERTHELESS, WHETHER THE ADDITIONAL BANK FINANCING WOULD HAVE ALTERED THE NEGATIVE DETERMINATION. BASED ON THIS FINANCIAL DATA FURNISHED BY THE CONTRACTOR, IT WAS DETERMINED THAT THE F AND H MANUFACTURING CORPORATION DID NOT POSSESS THE NECESSARY RESOURCES SUFFICIENT TO SUPPORT UNCOMPLETED ORDERS IN ADDITION TO THIS PROPOSED AWARD. CONSEQUENTLY, THIS CONTRACTOR REPRESENTS A GREATER THAN NORMAL AND UNACCEPTABLE RISK TO THE GOVERNMENT.

"BASE, MAST AB-15/GR, FSN 5985-221-5544, IS URGENTLY REQUIRED TO FILL EXISTING SHORTAGES OF U.S. ARMIES IN EUROPE TO PERMIT COMMUNICATION AND TACTICAL COMBAT OPERATION. NON-AVAILABILITY OF THIS ITEM SERIOUSLY CURTAILS THE COMMUNICATION CAPABILITIES WITHIN THE ARMY AREA MOBILE COMMUNICATION NETWORK AND JEOPARDIZES THE COMBAT READINESS OF EUROPEAN FORCES FOR EARLY DEPLOYMENT UNITS AND THE DEFENSE OF THE UNITED STATES. THIS ITEM IS CURRENTLY NOT AVAILABLE IN THE SUPPLY SYSTEM; AND, THEREFORE, IT WAS IMPERATIVE THAT EMERGENCY ACTION BE TAKEN TO SECURE DELIVERY OF THESE SUPPLIES AT THE EARLIEST POSSIBLE DATE.

"IN VIEW OF THIS URGENCY, IT WAS THE DETERMINATION OF THE CONTRACTING OFFICER THAT THE THREE WEEK DELAY INCIDENT TO THE PROCESSING OF A CERTIFICATE OF COMPETENCY BY THE SMALL BUSINESS ADMINISTRATION COULD NOT BE TOLERATED; AND, ACCORDINGLY, THE AWARD WAS PROCESSED TO THE SECOND LOW BIDDER PURSUANT TO THE AUTHORIZATION OF ASPR 1-705.6 (B) (1).'

SECTION 1-705.6 (B) (I) OF THE ARMED SERVICES PROCUREMENT REGULATION PROVIDES THAT:

"/B) IF A SMALL BUSINESS CONCERN HAS SUBMITTED AN OTHERWISE ACCEPTABLE BID OR PROPOSAL BUT HAS BEEN FOUND BY THE CONTRACTING OFFICER TO BE NONRESPONSIBLE AS TO CAPACITY OR CREDIT, AND IF THE BID OR PROPOSAL IS TO BE REJECTED FOR THIS REASON ALONE, (I) SBA SHALL BE NOTIFIED OF THE CIRCUMSTANCES SO AS TO PERMIT IT TO ISSUE A CERTIFICATE OF COMPETENCY, AND (II) AWARD SHALL BE WITHHELD PENDING EITHER SBA ACTION CONCERNING ISSUANCE OF A CERTIFICATE OF COMPETENCY OR THE EXPIRATION OF FIFTEEN WORKING DAYS AFTER SBA IS SO NOTIFIED, WHICHEVER IS EARLIER, SUBJECT TO THE FOLLOWING:

"/I) THIS PROCEDURE IS NOT MANDATORY WHERE THE CONTRACTING OFFICER CERTIFIES IN WRITING THAT AWARD MUST BE MADE WITHOUT DELAY, AND PROMPTLY ADVISES THE SBA REPRESENTATIVE THEREOF, AND INCLUDES IN THE CONTRACT FILE A STATEMENT SIGNED BY HIM WHICH JUSTIFIES THE CERTIFICATE. A COPY OF THE STATEMENT SHALL BE FURNISHED THE SBA REPRESENTATIVE.'

WHILE YOUR BID WAS REJECTED BECAUSE IT WAS DETERMINED THAT YOUR FIRM LACKED THE FINANCIAL ABILITY TO ASSURE SATISFACTORY PERFORMANCE ON THE SUBJECT SOLICITATION AND, PURSUANT TO SECTION 1-705.6 (B), ASPR, THE MATTER ORDINARILY WOULD BE SUBMITTED TO THE SMALL BUSINESS ADMINISTRATION FOR CONSIDERATION AS TO WHETHER A CERTIFICATE OF COMPETENCY SHOULD BE ISSUED, THE CONTRACTING OFFICER WAS NOT OBLIGED TO FOLLOW SUCH PROCEDURE HERE. SECTION 1-705.6 (B) (I), ASPR, ABOVE QUOTED, PROVIDES THAT SUCH PROCEDURE IS NOT MANDATORY WHERE THE CONTRACTING OFFICER CERTIFIES IN WRITING THAT AWARD MUST BE MADE WITHOUT DELAY. SUCH A CERTIFICATE IS IN THE FILE BEFORE US AND THERE IS NOTHING IN THE RECORD WHICH WOULD REQUIRE OUR OFFICE TO QUESTION THE BASIS OF THE CERTIFICATION.

IT LONG HAS BEEN AN ESTABLISHED RULE OF OUR OFFICE THAT THE DETERMINATION OF THE CAPABILITIES OF A BIDDER--- INDEPENDENT OF THE AUTHORITY OF THE SMALL BUSINESS ADMINISTRATION TO ISSUE A CERTIFICATE OF COMPETENCY--- IS PRIMARILY THE FUNCTION OF THE PROCUREMENT AGENCY, AND IN THE ABSENCE OF BAD FAITH OR LACK OF REASONABLE FACTUAL BASIS FOR THE DETERMINATION, WE WILL NOT OBJECT TO THE DETERMINATION AS MADE. 38 COMP. GEN. 248.

IN VIEW OF THE FOREGOING, WE MUST CONCLUDE THAT THE AWARD ACTION TAKEN BY THE DEPARTMENT OF THE ARMY IN THE MATTER IS NOT SUBJECT TO LEGAL OBJECTION.