B-149250, SEP. 11, 1962

B-149250: Sep 11, 1962

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WAS REJECTED BECAUSE IT DID NOT OFFER "STANDARD PRODUCTION EQUIPMENT. PROMPT PAYMENT DISCOUNT) WAS RECEIVED FROM THE BELFORT INSTRUMENT COMPANY. THE BID OF THAT FIRM IS NOT CONSIDERED RESPONSIVE. THE BIDDER IS NOT CONSIDERED COMPETENT TO PERFORM. THE BID IS NOT RESPONSIVE AS THE EQUIPMENT PROPOSED IS NOT STANDARD PRODUCTION EQUIPMENT BUT HARDWARE THAT REMAINS TO BE PRODUCED TO MEET THE REQUIREMENTS FOR SIMILAR EQUIPMENT UNDER A PREVIOUS CONTRACT ON WHICH DELIVERY IS LONG OVERDUE. THE LACK OF PERFORMANCE COMPETENCE IS CLEARLY EVIDENCED BY THAT DEMONSTRATED IN FULFILLING THE REQUIREMENTS UNDER WEATHER BUREAU PURCHASE ORDERS W61-2902. WAS ONE FOR EQUIPMENT IDENTICAL TO THAT REQUIRED UNDER THE SPECIFICATIONS OF THE CONTRACT AWARDED TO BRISTOL.

B-149250, SEP. 11, 1962

TO THE SECRETARY OF COMMERCE:

WE RECEIVED A TELEGRAM DATED JUNE 21, 1962, AND LETTERS DATED JULY 2 AND 30, 1962, FROM THE ATTORNEYS REPRESENTING BELFORT INSTRUMENT COMPANY, HEREINAFTER REFERRED TO AS BELFORT, PROTESTING THE AWARD OF A CONTRACT TO BRISTOL COMPANY ON MAY 7, 1962. INVITATION FOR BIDS WB094 62, ISSUED BY THE WEATHER BUREAU ON MARCH 9, 1962, REQUESTED BIDS FOR DIFFERENT QUANTITIES OF AMBIENT AND DEW POINT TEMPERATURE SYSTEMS. BELFORT SUBMITTED THE LOWER OF THE TWO BIDS RECEIVED, BUT WAS REJECTED BECAUSE IT DID NOT OFFER "STANDARD PRODUCTION EQUIPMENT," AS REQUESTED BY THE INVITATION CLAUSE ,QUALIFICATION OF BIDDER.'

IN RECOMMENDING AWARD OF 74 UNITS TO BRISTOL COMPANY AT $1,488 EACH, THE CONTRACTING OFFICER JUSTIFIED THE REJECTION OF BELFORT'S BID ON THE FOLLOWING GROUNDS:

"THOUGH A LOWER BID OF $945.25 ($950.00 LESS 1/2 OF 1 PERCENT, 20 DAYS, PROMPT PAYMENT DISCOUNT) WAS RECEIVED FROM THE BELFORT INSTRUMENT COMPANY, THE BID OF THAT FIRM IS NOT CONSIDERED RESPONSIVE, AND THE BIDDER IS NOT CONSIDERED COMPETENT TO PERFORM. THE BID IS NOT RESPONSIVE AS THE EQUIPMENT PROPOSED IS NOT STANDARD PRODUCTION EQUIPMENT BUT HARDWARE THAT REMAINS TO BE PRODUCED TO MEET THE REQUIREMENTS FOR SIMILAR EQUIPMENT UNDER A PREVIOUS CONTRACT ON WHICH DELIVERY IS LONG OVERDUE. THE ULTIMATE END PRODUCT REMAINS TO BE PRODUCED, MARKETED, OR PROVED OPERATIONALLY. THE LACK OF PERFORMANCE COMPETENCE IS CLEARLY EVIDENCED BY THAT DEMONSTRATED IN FULFILLING THE REQUIREMENTS UNDER WEATHER BUREAU PURCHASE ORDERS W61-2902, DATED DECEMBER 20 (19), 1960 * * *.'

THE CONTRACT AWARDED TO BELFORT ON DECEMBER 19, 1960, REFERRED TO IN THE ABOVE QUOTATION, WAS ONE FOR EQUIPMENT IDENTICAL TO THAT REQUIRED UNDER THE SPECIFICATIONS OF THE CONTRACT AWARDED TO BRISTOL. THE BELFORT CONTRACT CALLED FOR DELIVERY OF A PREPRODUCTION MODEL IN 180 DAYS, AND COMPLETE DELIVERY OF 70 UNITS IN 150 DAYS AFTER APPROVAL OF THE MODEL. THE MODEL WAS DELIVERED ONE DAY LATE AND REJECTED AS NOT MEETING THE SPECIFICATIONS. THE SECOND MODEL WAS DELIVERED AND CONDITIONAL APPROVAL WAS GRANTED ON FEBRUARY 26, 1962. THEREFORE, COMPLETE DELIVERY APPEARS TO HAVE BEEN DUE ON JULY 26, 1962. HOWEVER, ON JULY 29, 1962, A PARTIAL DELIVERY WAS REJECTED FOR THE SECOND TIME AS BEING UNACCEPTABLE. ACCEPTABLE DELIVERIES HAD BEEN MADE AS OF AUGUST 31, 1962.

THE REPORT FROM YOUR GENERAL COUNSEL'S OFFICE STATES THAT THE BID OF BELFORT WAS NOT REJECTED BECAUSE OF ITS PERFORMANCE ON THE PREVIOUS CONTRACT, BUT RATHER BECAUSE ITS BID WAS NONRESPONSIVE FOR FAILURE TO MEET THE REQUIREMENT OF OFFERING "STANDARD PRODUCTION EQUIPMENT.' IT ADVISES US THAT THE PURPOSE OF THE REQUIREMENT WAS TO ASSURE FASTER DELIVERY OF THE TEMPERATURE SYSTEMS, THE NEED FOR WHICH WAS BECOMING ACUTE BECAUSE THE ORIGINAL PROCUREMENT FROM BELFORT WAS EXTENDING OVER A LONGER PERIOD THAN CONTEMPLATED AT THE TIME THE PRIOR INVITATION WAS ISSUED. THE REPORT STATES THAT WHILE THE FORMER INVITATION CALLED FOR DELIVERY ONLY "AS SOON AS PRACTICABLE," THE PRESENT INVITATION REQUIRED DELIVERY OF THE PREPRODUCTION MODEL WITHIN 90 DAYS AFTER AWARD, AND DELIVERY OF THE 74 TEMPERATURE SYSTEMS AT A RATE OF NOT LESS THAN 20 A MONTH STARTING NO MORE THAN 120 DAYS AFTER APPROVAL OF THE MODEL.

THE REJECTION OF THE BELFORT BID HINGES ON ITS FAILURE TO SUPPLY "STANDARD PRODUCTION IPMENT.' BELFORT CONTENDS THAT THE TERM MEANS EQUIPMENT WHICH IS IN PRODUCTION. THE REPRESENTATIVES OF YOUR DEPARTMENT SAY IT REQUIRES EQUIPMENT WHICH HAS BEEN ALREADY PRODUCED, AND IMPLIEDLY, ALREADY MARKETED AND PROVED OPERATIONALLY. HOWEVER, NO DEFINITION IS OFFERED IN EITHER THE INVITATION FOR BIDS OR THE FEDERAL PROCUREMENT REGULATIONS, AND WE CAN NOWHERE FIND GUIDEPOSTS FROM WHICH WE MIGHT DETERMINE HOW "STANDARD" OR AT WHAT POINT IN "PRODUCTION" THE EQUIPMENT MUST BE.

IN ANY EVENT, WE DO NOT THINK BELFORT CAN LEGALLY BE DECLARED NONRESPONSIVE SOLELY FOR FAILURE TO OFFER "STANDARD PRODUCTION EQUIPMENT.' THIS RESTRICTION, SPECIFICALLY INCLUDED UNDER THE CLAUSE "QUALIFICATION OF BIDDER," IMPOSES A SPECIALIZED EXPERIENCE REQUIREMENT WHICH IS CONCERNED WITH THE RESPONSIBILITY OF THE BIDDER, NOT THE RESPONSIVENESS OF A BID. IN OUR DECISION B-147091, DATED SEPTEMBER 22, 1961, WE CONSIDERED THE REJECTION OF A BID WHICH THE PROCURING ACTIVITY DECIDED WAS NOT RESPONSIVE TO A PROVISION IN THE INVITATION REQUIRING THE OFFERED EQUIPMENT TO ,HAVE, PRIOR TO THE OPENING DATE OF BIDS, BEEN * * * MANUFACTURED AND SOLD IN COMMERCIAL QUANTITIES.' WE HELD AS FOLLOWS:

"IN ESSENCE, THE PROVISION IMPOSES AN EXPERIENCE QUALIFICATION UNDER WHICH ANY BIDDER MUST HAVE PRODUCED AND SOLD IN COMMERCIAL QUANTITIES ARTICLES SIMILAR TO THOSE CALLED FOR BY THE INVITATION. * * * THE PROPRIETY OF INCLUSION IN AN INVITATION OF SPECIALIZED EXPERIENCE REQUIREMENTS IS FOR DETERMINATION IN THE FIRST INSTANCE BY THE PROCURING AGENCY, AND IN THE ABSENCE OF CONVINCING EVIDENCE THAT SUCH REQUIREMENTS ARE CLEARLY UNNECESSARY TO MEET THE NEEDS OF THE GOVERNMENT, OR ARE SO RESTRICTIVE AS TO UNDULY LIMIT COMPETITION, OUR OFFICE IS NOT INCLINED TO SUBSTITUTE ITS JUDGMENT FOR THAT OF THE PROCURING AGENCY. THE ISSUE, NEVERTHELESS, REMAINS ONE OF RESPONSIBILITY RATHER THAN OF RESPONSIVENESS, AND THE ULTIMATE QUESTION TO BE DECIDED IS NOT WHETHER THE SPECIALIZED EXPERIENCE REQUIREMENT HAS OR HAS NOT BEEN MET, BUT WHETHER, HAVING IN MIND ALL OF THE FACTORS WHICH ENTER INTO SUCH A DETERMINATION, A PARTICULAR BIDDER MAY BE REGARDED AS RESPONSIBLE. * * *

"* * * WHILE IT MAY BE THAT THE PRODUCTION OF ONE PROTOTYPE OF AN ARTICLE DOES NOT GIVE ASSURANCE OF A BIDDER'S CAPABILITY TO PRODUCE DUPLICATES OF THAT ARTICLE SPEEDILY AND EFFICIENTLY, IT SEEMS CLEAR THAT THE QUESTION OF HIS ABILITY TO DO SO INVOLVES HIS COMPETENCE AND RESPONSIBILITY RATHER THAN THE CONFORMABILITY TO SPECIFICATION REQUIREMENTS OF THE ARTICLE HE OFFERS TO FURNISH. THIS ASPECT OF THE MATTER IS OF PARTICULAR SIGNIFICANCE IN THE CASE OF SMALL BUSINESS BIDDERS WHO MAY BE ELIGIBLE FOR A CERTIFICATE OF COMPETENCY FROM THE SMALL BUSINESS ADMINISTRATION.

"BASED ON THE FOREGOING, IT IS OUR VIEW THAT NO BID UNDER THE PRESENT INVITATION MAY BE REJECTED SOLELY ON THE GROUND OF FAILURE TO MEET THE REQUIREMENT FOR PREVIOUS MANUFACTURE AND SALE IN COMMERCIAL QUANTITIES OF "COMMERCIAL EQUIVALENTS" OF THE EQUIPMENTS DESIRED. * * *"

IN THAT DECISION WE RECOGNIZED THAT THE QUESTION OF WHETHER AN EXPERIENCE REQUIREMENT GOES TO RESPONSIVENESS OR RESPONSIBILITY "IS OF PARTICULAR SIGNIFICANCE IN THE CASE OF SMALL BUSINESS BIDDERS WHO MAY BE ELIGIBLE FOR A CERTIFICATE OF COMPETENCY FROM THE SMALL BUSINESS ADMINISTRATION.' SECTION 1-1.708-3 OF THE FEDERAL PROCUREMENT REGULATIONS PROVIDES THAT PROCUREMENT AGENCIES SHALL ACCEPT SMALL BUSINESS ADMINISTRATION CERTIFICATES OF COMPETENCY AS CONCLUSIVE OF A PROSPECTIVE CONTRACTOR'S RESPONSIBILITY AS TO CAPACITY. SEE ALSO 38 COMP. GEN. 864. BELFORT ALLEGES THAT IT IS A SMALL BUSINESS. THE QUESTION BEFORE US, THEREFORE, IS WHETHER UNDER THE PRINCIPLES APPLICABLE TO THE COMPETITIVE ADVERTISED BIDDING THE LOW BID PROPERLY WAS REJECTED WITHOUT REFERRAL TO THE SMALL BUSINESS ADMINISTRATION; IN OTHER WORDS, WHETHER THE BASIS FOR REJECTION WAS PROPERLY CONSIDERED TO BE NONRESPONSIVENESS TO THE INVITATION, OR WAS PURELY A MATTER OF RESPONSIBILITY OR CAPABILITY AS TO WHICH SMALL BUSINESS ADMINISTRATION IS THE FINAL ARBITER.

THE QUESTION WAS PRESENT IN OUR RECENT DECISION OF 40 COMP. GEN. 106, 110. THERE THE AGENCY REJECTED BIDS OF SMALL BUSINESSES AS NONRESPONSIVE TO AN EXPERIENCE CLAUSE IN THE INVITATION WHICH REQUIRED BIDDERS TO HAVE PREVIOUSLY MANUFACTURED ITEMS SIMILAR TO THE ONES BEING PROCURED. HOLDING THAT THE VALIDITY OF THE AWARDED CONTRACT WOULD DEPEND UPON A DETERMINATION BY SMALL BUSINESS ADMINISTRATION AS TO WHETHER THE BIDDERS WHOSE BIDS WERE REJECTED WERE IN FACT NONRESPONSIBLE, WE MADE THE FOLLOWING STATEMENTS:

"WHEN THE REASONS GIVEN FOR REJECTION OF THE BIDS ARE EXAMINED IN THE LIGHT OF THE DEFINITION OF "CAPACITY" CONTAINED IN SECTION 1-705.6/A) OF ASPR, WE CANNOT ESCAPE THE CONCLUSION THAT THESE REASONS BOIL DOWN TO DOUBT AS TO THE BIDDERS' ABILITY TO MEET THE QUALITY REQUIREMENTS OF THE PROPOSED CONTRACT, OR AS TO THEIR TECHNICAL KNOWLEDGE, EXPERIENCE, OR "KNOW-HOW," ALL OF WHICH ARE DEFINED AS INCLUDED IN THE BIDDERS'"CAPACITY.' ALL OF THESE FACTORS ARE ELEMENTS OF A BIDDER'S RESPONSIBILITY, WHICH HAS ALWAYS BEEN RECOGNIZED AS A PREREQUISITE TO THE AWARD OF ANY CONTRACT, AND IS SO DECLARED IN THE STATUTORY REQUIREMENT THAT AWARD BE MADE TO A "RESPONSIBLE" BIDDER. WHILE WE HAVE IN A NUMBER OF CASES REJECTED PROTESTS BY BIDDERS WHO FAILED TO MEET EXPERIENCE QUALIFICATIONS SPECIFICALLY STATED IN INVITATIONS FOR BIDS, AND HAVE SOMETIMES REFERRED TO THE BIDS OF SUCH BIDDERS AS NOT "RESPONSIVE" TO THE INVITATION, WE HAVE IN ALL SUCH CASES CONSIDERED THE QUALIFICATION REQUIREMENTS ON THE BASIS OF WHETHER THEY WERE REASONABLE TESTS OF RESPONSIBILITY. WHERE IT APPEARED THAT A BIDDER EXCLUDED BY THE PROVISIONS OF SUCH A QUALIFICATION REQUIREMENT COULD NOT OTHERWISE HAVE BEEN FOUND TO BE LACKING IN RESPONSIBILITY, WE HAVE HELD THE QUALIFICATION REQUIREMENT TO BE IMPROPER AS AN UNAUTHORIZED RESTRICTION OF COMPETITION. SEE 39 COMP. GEN. 173. AS STATED THEREIN, WE FEEL THAT "THE STATEMENT OF SUCH QUALIFICATIONS SHOULD NOT BE CONSIDERED AS HAVING THE EFFECT OF TRANSFORMING THE PURELY FACTUAL QUESTION OF RESPONSIBILITY INTO A LEGAL QUESTION OF CONFORMITY TO THE INVITATION.'

"THE QUESTION BEFORE US IS NOT WHETHER THE DETERMINATIONS BY ARMY THAT THE THREE LOWER BIDDERS WERE NOT "RESPONSIBLE" SOURCES FOR THE PROCUREMENT IN QUESTION WERE JUSTIFIED. THE CONGRESS HAS SPECIFICALLY LIMITED THE RIGHT OF PROCURING AGENCIES TO DETERMINE THE RESPONSIBILITY OF SMALL BUSINESS BIDDERS BY GIVING THE SMALL BUSINESS ADMINISTRATION THE FINAL WORD AS TO THOSE ELEMENTS OF RESPONSIBILITY INCLUDED IN THE TERMS "CAPACITY AND CREDIT.' SINCE THE EXPERIENCE REQUIREMENTS STATED IN NOTE NO. 5 OF THE INVITATION CLEARLY GO TO MATTERS OF RESPONSIBILITY WHICH ARE PROPERLY INCLUDED IN THE DEFINITIONS OF "CAPACITY" IN ASPR 1-705.6/A), WE CANNOT AGREE THAT THE STATUTORY AUTHORITY OF THE SMALL BUSINESS ADMINISTRATION CAN BE DEFEATED MERELY BY PUTTING THE REQUIREMENTS IN THE INVITATION AND REJECTING THE BID AS NONRESPONSIVE THERETO.'

WHILE IT IS CLEAR THAT THE QUALIFICATIONS OF BELFORT, WHICH ALLEGEDLY IS A SMALL BUSINESS CONCERN, SHOULD HAVE BEEN CONSIDERED BY SMALL BUSINESS ADMINISTRATION, WE ARE OF THE OPINION THAT THE CONTRACT WAS AWARDED TO BRISTOL IN GOOD FAITH. SINCE THE PREPRODUCTION MODEL OFFERED BY BRISTOL HAS NOW BEEN APPROVED, WE DO NOT THINK IT WOULD BE IN THE BEST INTERESTS OF THE GOVERNMENT TO CANCEL THE BRISTOL CONTRACT EVEN IF THE SMALL BUSINESS ADMINISTRATION, GIVEN THE OPPORTUNITY, WOULD FIND BELFORT TO BE RESPONSIBLE.