B-149830, OCT. 12, 1962

B-149830: Oct 12, 1962

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TO ANCHOR EQUIPMENT COMPANY: FURTHER REFERENCE IS MADE TO YOUR LETTER OF AUGUST 30. THE AWARDS MADE UNDER EACH OF THE INVITATIONS WERE DISTRIBUTED BETWEEN THE WALWORTH COMPANY. THE CONTRACTS WITH THOSE FIRMS PROVIDE HIGHER PRICES THAN WERE QUOTED BY YOUR JOBBERS ON APPROXIMATELY 15 OF THE 54 BASIC ITEMS INCLUDED IN THE TWO INVITATIONS FOR BIDS. THE TWO FIRMS WHICH OFFERED TO FURNISH VALUES MANUFACTURED BY YOUR COMPANY WERE THE MINDECO CORPORATION. IT WAS FOUND THAT YOUR COMPANY HAD THE NECESSARY FACILITIES. ALTHOUGH QUESTIONS WERE RAISED WITH RESPECT TO PREVIOUS SUBCONTRACTING DIFFICULTIES AND THE ADEQUACY OF YOUR CURRENT QUALITY CONTROL SYSTEM TO ASSURE A QUALITY PRODUCT WITHOUT A LARGE AMOUNT OF GOVERNMENT PRODUCT VERIFICATION.

B-149830, OCT. 12, 1962

TO ANCHOR EQUIPMENT COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF AUGUST 30, 1962, PROTESTING THE REJECTIONS OF BIDS SUBMITTED BY YOUR JOBBERS ON SEVERAL ITEMS OF INVITATIONS FOR BIDS NOS. N140-573-62 AND N140-642-62 ISSUED ON APRIL 13 AND 30, 1962, BY THE NAVY PURCHASING OFFICE, BROOKLYN, NEW YORK, COVERING PROPOSED PURCHASES OF GATE, ANGLE, CHECK, NEEDLE AND GLOBE VALVES FOR SHIP STEAM AND WATER FEED SYSTEMS.

THE AWARDS MADE UNDER EACH OF THE INVITATIONS WERE DISTRIBUTED BETWEEN THE WALWORTH COMPANY, NEW YORK, NEW YORK, AND THE CRANE COMPANY, INDUSTRIAL PRODUCTS GROUP, CHICAGO, ILLINOIS. THE CONTRACTS WITH THOSE FIRMS PROVIDE HIGHER PRICES THAN WERE QUOTED BY YOUR JOBBERS ON APPROXIMATELY 15 OF THE 54 BASIC ITEMS INCLUDED IN THE TWO INVITATIONS FOR BIDS. THE TWO FIRMS WHICH OFFERED TO FURNISH VALUES MANUFACTURED BY YOUR COMPANY WERE THE MINDECO CORPORATION, BROOKLYN, NEW YORK, AND THE IDEAL SUPPLY COMPANY, JERSEY CITY, NEW JERSEY.

THE RECORD SHOWS THAT THE NAVY PURCHASING OFFICE, BROOKLYN, NEW YORK, REQUESTED THE OFFICE OF THE INSPECTOR OF NAVAL MATERIAL AT SAN FRANCISCO, CALIFORNIA, TO CONDUCT A PREAWARD SURVEY OF YOUR COMPANY, AND RECEIVED A REPORT DATED JULY 12, 1962, SHOWING THE RESULTS OF THE SURVEY. IT WAS FOUND THAT YOUR COMPANY HAD THE NECESSARY FACILITIES, PERSONNEL AND EXPERIENCE, ALTHOUGH QUESTIONS WERE RAISED WITH RESPECT TO PREVIOUS SUBCONTRACTING DIFFICULTIES AND THE ADEQUACY OF YOUR CURRENT QUALITY CONTROL SYSTEM TO ASSURE A QUALITY PRODUCT WITHOUT A LARGE AMOUNT OF GOVERNMENT PRODUCT VERIFICATION.

THE PREAWARD SURVEY REPORT ALSO SET FORTH THAT YOUR COMPANY HAS A LONG HISTORY OF DELINQUENCY; THAT IN FEBRUARY 1962 IT WAS PLACED ON THE NAVY CONTRACTOR EXPERIENCE LIST WHICH RELATES TO FIRMS HAVING RELATIVELY POOR CONTRACT PERFORMANCE RECORDS; THAT YOU HAD MADE EFFORTS TO ELIMINATE ADMINISTRATIVE DEFICIENCIES BUT THIS HAD NOT REFLECTED AN IMPROVEMENT IN YOUR PERFORMANCE OF CURRENT CONTRACTS; THAT THE DUE DATES ON 14 CURRENT CONTRACTS UNDER ADMINISTRATIVE COGNIZANCE OF THE INSPECTION OFFICE HAD BEEN REACHED AND ALL 14 CONTRACTS WERE DELINQUENT; AND THAT OF 10 RECENTLY COMPLETED CONTRACTS ONLY 3 CONTRACTS WERE COMPLETED WITHIN THE SPECIFIED PERFORMANCE PERIODS.

YOU HAVE CONTENDED THAT THERE EXISTED NO FORESEEABLE REASON FOR ANY FAILURE ON YOUR PART IN MEETING DELIVERY REQUIREMENTS IF CONTRACTS HAD BEEN AWARDED TO YOUR JOBBERS. YOU HAVE ALSO RAISED A QUESTION AS TO WHY THE NAVY DID NOT REQUEST THE SMALL BUSINESS ADMINISTRATION TO CONSIDER YOUR QUALIFICATIONS BEFORE MAKING THE AWARDS UNDER THE TWO INVITATIONS FOR BIDS.

SECTION 1-903.1, PARAGRAPH (IV), OF THE ARMED SERVICES PROCUREMENT REGULATION, REQUIRES CONSIDERATION OF THE QUESTION AS TO WHETHER A PROSPECTIVE CONTRACTOR HAS A SATISFACTORY RECORD OF PERFORMANCE AND PROVIDES FOR SPECIAL CONSIDERATION OF SERIOUS DELINQUENCIES IN CURRENT CONTRACT PERFORMANCE. IN THIS CASE IT APPEARS THAT THE EVIDENCE RELATING TO YOUR PERFORMANCE OF PAST AND CURRENT CONTRACTS WITH THE GOVERNMENT CONSTITUTED A REASONABLE BASIS FOR THE ADMINISTRATIVE CONCLUSION THAT CONTRACT AWARDS TO YOUR JOBBERS WOULD NOT MEET THE STATUTORY REQUIREMENT THAT AWARDS AFTER FORMAL ADVERTISING BE RESTRICTED TO RESPONSIBLE BIDDERS WHOSE BIDS CONFORM TO THE INVITATIONS FOR BIDS AND WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT.

THE CONGRESS HAS SPECIFICALLY LIMITED THE RIGHT OF PROCURING AGENCIES TO DETERMINE THE RESPONSIBILITY OF SMALL BUSINESS CONCERNS BY GIVING THE SMALL BUSINESS ADMINISTRATION THE AUTHORITY TO MAKE FINAL DETERMINATIONS AS TO THOSE ELEMENTS OF RESPONSIBILITY INCLUDED IN THE TERMS "CAPACITY AND CREDIT.' HOWEVER, AS CONCLUDED IN 37 COMP. GEN. 676, A SMALL BUSINESS ADMINISTRATION CERTIFICATE OF COMPETENCY AS TO THE CAPACITY AND CREDIT OF A SMALL BUSINESS CONCERN WOULD NOT BE CONTROLLING ON THE QUESTION AS TO A SMALL BUSINESS BIDDER'S ELIGIBILITY TO RECEIVE A CONTRACT AWARD IF THE PROCUREMENT AGENCY FOUND THAT THE SMALL BUSINESS CONCERN WAS NOT QUALIFIED FOR REASONS OTHER THAN A LACK OF CAPACITY OR CREDIT. THAT WAS THE SITUATION IN THE CASE OF THE REJECTION OF THE BIDS SUBMITTED BY YOUR JOBBERS UNDER INVITATIONS NOS. N140-573-62 AND N140-642-62.

WE HAVE CONSISTENTLY TAKEN THE POSITION THAT THE QUESTION AS TO THE QUALIFICATIONS OF A PROSPECTIVE CONTRACTOR PRIMARILY IS FOR DETERMINATION BY THE ADMINISTRATIVE OFFICERS CONCERNED, AND SUCH DETERMINATION WILL NOT BE QUESTIONED BY US IN THE ABSENCE OF A CLEAR SHOWING OF BAD FAITH OR LACK OF A REASONABLE BASIS THEREFOR. SINCE THE CIRCUMSTANCES OF THIS CASE DO NOT REFLECT ANY ARBITRARY ACTION ON THE PART OF THE CONTRACTING AGENCY, WE WOULD NOT BE WARRANTED IN RAISING ANY OBJECTION TO THE REJECTION OF THE BIDS SUBMITTED BY YOUR JOBBERS.