B-150826, MAY 29, 1963

B-150826: May 29, 1963

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INCORPORATED: REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 18. THE POWER SUPPLY UNITS REQUIRED QUALIFICATION PRIOR TO THE BID OPENING DATE AND AWARD WAS TO BE MADE ONLY FOR SUCH PRODUCTS THAT HAD BEEN TESTED AND QUALIFIED FOR INCLUSION IN THE QUALIFIED PRODUCTS LIST (PARAGRAPH ONE. ONLY FIVE BIDS WERE RECEIVED AND ONLY THREE BIDDERS HAD THEIR PRODUCTS QUALIFIED AND APPROVED FOR INCLUSION PRIOR TO THE DATE OF OPENING OF BIDS. 954 WAS LOW. WAS THE SECOND LOW BIDDER AND ITS BID WAS $354. THE THIRD BIDDER WHOSE PRODUCT WAS QUALIFIED AND APPROVED WAS WESTINGHOUSE ELECTRIC CORPORATION AND ITS BID WAS IN THE AMOUNT OF $521. STEPS WERE TAKEN TO PREPARE A FACILITY CAPABILITY REPORT (FCR) ON YOUR FIRM.

B-150826, MAY 29, 1963

TO AVION, INCORPORATED:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 18, 1963, PROTESTING THE AWARD OF A CONTRACT TO ANOTHER BIDDER UNDER INVITATION FOR BIDS NO. 33-657 -62-535 ISSUED BY THE WRIGHT-PATTERSON AIR FORCE BASE, OHIO, ON JULY 10, 1962, FOR FURNISHING POWER SUPPLY UNITS, TYPE ECU-45/A AND DATA, FOR CERTAIN AIRCRAFT.

THE CITED INVITATION SOLICITED BIDS--- TO BE OPENED DECEMBER 27, 1962--- FOR FURNISHING 906 POWER SUPPLY UNITS, TYPE ECU-45/A, AND DATA FOR CERTAIN AIRCRAFT. THE POWER SUPPLY UNITS REQUIRED QUALIFICATION PRIOR TO THE BID OPENING DATE AND AWARD WAS TO BE MADE ONLY FOR SUCH PRODUCTS THAT HAD BEEN TESTED AND QUALIFIED FOR INCLUSION IN THE QUALIFIED PRODUCTS LIST (PARAGRAPH ONE, PAGE TWO OF SCHEDULE). ONLY FIVE BIDS WERE RECEIVED AND ONLY THREE BIDDERS HAD THEIR PRODUCTS QUALIFIED AND APPROVED FOR INCLUSION PRIOR TO THE DATE OF OPENING OF BIDS. YOUR BID IN THE AMOUNT OF $279,954 WAS LOW. TUNG-SOL ELECTRIC, INC., WAS THE SECOND LOW BIDDER AND ITS BID WAS $354,803. THE THIRD BIDDER WHOSE PRODUCT WAS QUALIFIED AND APPROVED WAS WESTINGHOUSE ELECTRIC CORPORATION AND ITS BID WAS IN THE AMOUNT OF $521,647.

AFTER THE OPENING OF THE BIDS ON DECEMBER 27, 1962, STEPS WERE TAKEN TO PREPARE A FACILITY CAPABILITY REPORT (FCR) ON YOUR FIRM. PARAGRAPH 1- 903.1 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) PROVIDES THAT ONE OF THE MINIMUM STANDARDS FOR A RESPONSIBLE PROSPECTIVE CONTRACTOR IS THAT HE HAVE ADEQUATE FINANCIAL RESOURCES. AFTER AN INVESTIGATION OF YOUR FIRM AND CONFERENCES BY ADMINISTRATIVE OFFICIALS WITH YOUR FIRM, CONSUMING APPROXIMATELY 25 DAYS, IT WAS FINALLY CONCLUDED THAT YOUR FIRM WAS NOT FINANCIALLY RESPONSIBLE FOR PURPOSES OF AWARD UNDER THE INSTANT INVITATION. AWARD OF THE CONTRACT WAS MADE TO TUNG-SOL ELECTRIC, INC., ON FEBRUARY 1, 1963.

YOUR PROTEST IS BASED ON TWO ALLEGATIONS. IN THE FIRST PLACE, YOU ALLEGE THAT THE GOVERNMENT'S DETERMINATION AS TO YOUR FINANCIAL STABILITY IS ERRONEOUS. YOU STATE THAT THE NEGATIVE FCR WAS INDUCED BY THE ALLEGATION BY YOUR COMPETITOR THAT YOUR BID PRICE WAS TOO LOW TO PRODUCE THE CONTRACT ITEM PROFITABLY. ALSO, YOU STATE THAT THE AGENCY WHICH PERFORMED THE FACILITY SURVEY RENDERED A FAVORABLE REPORT BUT THE NEGATIVE REPORT WAS RENDERED WITHOUT AFFORDING YOU AN OPPORTUNITY TO SHOW YOUR CAPABILITY TO PERFORM THE CONTRACT HERE INVOLVED. YOU POINT OUT THAT YOU WERE AWARDED A CONTRACT ON NOVEMBER 30, 1962 (NO. AF 33/657/-10187), BY THE SAME AGENCY AS IS INVOLVED IN THE PRESENT SITUATION.

IT APPEARS FROM THE RECORD THAT THE FACILITY SURVEY CONDUCTED BY THE ADMINISTRATIVE OFFICE RESULTED IN A TENTATIVE APPROVAL OF YOUR FIRM SUBJECT TO THE CONCURRENCE BY THE "FINANCIAL BRANCH, AFSC" (HEADQUARTERS, WRIGHT-PATTERSON AIR FORCE BASE) THAT YOUR FIRM HAD THE FINANCIAL STABILITY TO PERFORM THE CONTRACT. SUBSEQUENTLY, OR ON FEBRUARY 1, 1963, YOU WERE NOTIFIED BY THE CONTRACTING OFFICER THAT AWARD OF THE CONTRACT COULD NOT BE MADE TO YOUR FIRM DUE TO A NEGATIVE FCR AND THAT THE BASIS FOR THIS NEGATIVE FCR MIGHT BE OBTAINED FROM THE CHIEF OF THE ACTIVITY THAT PERFORMED THE SURVEY "LOCATED AT: HQ AFSC/ASXKMF), WRIGHT-PATTERSON AFB, OHIO.' IT APPEARS FROM YOUR OWN STATEMENT THAT ON FEBRUARY 5, 1963, YOU CONFERRED WITH ADMINISTRATIVE OFFICIALS AT WRIGHT-PATTERSON AIR FORCE BASE AND IT IS ASSUMED THAT YOU WERE FURNISHED WITH THE DETAILS FORMING THE BASIS FOR THEIR CONCLUSION. WITH REGARD TO YOUR CONTENTION THAT YOU WERE AWARDED A CONTRACT AS LATE AS NOVEMBER 30, 1962, INDICATING THAT THERE WAS NO QUESTION AT THAT TIME CONCERNING YOUR FINANCIAL STABILITY, IT IS STATED IN A REPORT OF APRIL 2, 1963, FROM THE HEADQUARTERS, UNITED STATES AIR FORCE, THAT---

"* * * THE FILE INDICATES THAT DURING CALENDAR YEAR 1962 THE AIR FORCE HAD BECOME CONCERNED ABOUT THE FINANCIAL CONDITION OF AVION AND PARTICULARLY THE INCREASING LACK OF WORKING CAPITAL AS REFLECTED BY THEIR FINANCIAL STATEMENTS. IN NOVEMBER 1962, A DISCUSSION WAS HELD WITH OFFICIALS OF THE COMPANY CONCERNING THE COMPANY'S FINANCIAL PROBLEMS. THIS DISCUSSION WAS PRIOR TO AND IN CONNECTION WITH THE PROPOSED AWARD OF CONTRACT 33/657/-10187, WHICH IS REFERRED TO IN THE PROTESTANT'S LETTER. FINANCIAL CLEARANCE TO AWARD THIS CONTRACT TO AVION WAS GIVEN ONLY AFTER IT HAD BEEN ESTABLISHED THAT THE CONTRACT WAS NEGOTIATED ON A SOLE SOURCE BASIS WITH THE COMPANY. IN THE PRESENT PROCUREMENT, THE FCR SUBMITTED BY THE CONTRACT MANAGEMENT DISTRICT CONTAINED A QUALIFIED ANSWER REGARDING AVION'S FINANCIAL STABILITY. IN ACCORDANCE WITH PRESCRIBED PROCUREMENT PROCEDURES, THE QUESTION CONCERNING THE COMPANY'S FINANCIAL CONDITION WAS REFERRED TO THE APPROPRIATE AIR FORCE FINANCIAL OFFICE FOR REVIEW AND RECOMMENDATION. BASED ON THEIR REVIEW OF INFORMATION ON HAND AT THAT TIME, FINANCIAL CLEARANCE WAS DENIED BY THAT OFFICE. AS A RESULT OF THIS NEGATIVE FINDING, THE CONTRACTING OFFICER, IN ACCORDANCE WITH ASPR 1-904, DETERMINED THAT AVION WAS NOT A (FINANCIALLY) RESPONSIBLE CONTRACTOR AND ACCORDINGLY REFUSED TO AWARD THE CONTRACT TO AVION. A REVIEW OF THE ATTACHED FILE BY THIS OFFICE DISCLOSES THAT THE DETERMINATION OF NON- RESPONSIBILITY WAS BASED ON A FACTUAL ANALYSIS OF CURRENT AND HISTORIC FINANCIAL DATA AND THAT, IN VIEW OF THE INFORMATION ON HAND AND THE RECOMMENDATIONS OF THE FINANCIAL OFFICE, THE CONTRACTING OFFICER'S DECISION TO REJECT THE BID OF AVION WAS FULLY JUSTIFIED.'

THE INVITATION FOR BIDS IN THIS CASE PROVIDED IN NOTE 6 OF THE IFB COVER PAGE THAT IF A BID WAS TO BE FAVORABLY CONSIDERED, A SURVEY TEAM MIGHT CONTACT THE BIDDER'S FACILITY TO DETERMINE HIS ABILITY TO PERFORM AND THAT CURRENT FINANCIAL STATEMENTS AND OTHER PERTINENT DATA SHOULD BE AVAILABLE AT THAT TIME IF NOT ALREADY ON FILE WITH THE AIR FORCE SYSTEMS COMMAND. AN EXAMINATION OF YOUR FINANCIAL STATEMENTS AND OTHER PERTINENT DATA LED TO THE CONCLUSION THAT YOUR FIRM LACKED THE FINANCIAL STABILITY FOR THE PURPOSES OF AWARD UNDER THE SUBJECT INVITATION. THE QUALIFICATIONS OF PROPOSED CONTRACTORS MUST BE DETERMINED PRIMARILY BY THE ADMINISTRATIVE OFFICERS CONCERNED. 37 COMP. GEN. 430. WHETHER A BIDDER SHOULD BE AFFORDED AN OPPORTUNITY TO CORRECT ANY FINANCIAL DEFICIENCIES MUST BE LEFT TO THE SOUND DISCRETION OF THE CONTRACTING AGENCY, IN THE ABSENCE OF CLEAR AND CONVINCING EVIDENCE OF ERROR. 39 COMP. GEN. 895. NOTHING HAS BEEN PRESENTED TO SHOW THAT THE CONTRACTING OFFICE FAILED TO CONSIDER ANY FACTORS WHICH WERE IN EXISTENCE AT THE TIME THE SURVEY WAS CONDUCTED.

YOUR SECOND ALLEGATION IS THAT THE BID OF TUNG-SOL SHOULD HAVE BEEN REJECTED SINCE THE EQUIPMENT IT OFFERED DID NOT COMPLY WITH THE SPECIFICATIONS. IN YOUR LETTER OF FEBRUARY 6, 1963, TO THE CONTRACTING OFFICE YOU POINTED OUT THAT TUNG-SOL PUT A QUALIFYING STATEMENT IN ITS BID WHICH READS "FSN 6130-863-5345 ALREADY ASSIGNED TO TUNG-SOL CHATHAM UNIT.' ALSO, YOU STATED THAT THE FEDERAL STOCK LIST DESCRIBED THIS STOCK NUMBER AS A POWER SUPPLY FOR EQUIPMENT INSTALLED TRANSFORMER RECTIFIER UNIT,"BOEING AIRPLANE COMPANY DRAWING 65-19761, MODEL C-135, MADE BY CHATHAM ELECTRONICS PART NUMBER 28VS100Y. YOU POINTED OUT FURTHER THAT THIS PART NUMBER 28VS100Y DOES NOT MEET THE SPECIFICATIONS. THIS EQUIPMENT CARRYING THE CITED PART NUMBER WAS TESTED BY THE CONTRACTING AGENCY AND WAS LISTED ON THE QUALIFIED PRODUCTS LIST. IN REVIEWING YOUR CHARGES THAT THE PRODUCT OFFERED BY TUNG-SOL DOES NOT MEET THE SPECIFICATIONS THE RECORDS SHOW THE FOLLOWING ADMINISTRATIVE OFFICE DENIAL THEREOF:

"2. THE DIRECTORATE OF OPERATIONAL SUPPORT ENGINEERING HAS REVIEWED AVION'S LETTER AND THE FOLLOWING COMMENTS ARE OFFERED:

A. AVION'S STATEMENT, THAT CHATHAM UNIT P/N 28VS100Y DOES NOT CONFORM TO MS27209 (DATED 23 MAY 1962) DUE TO THE INPUT VOLTAGE RANGE, IS NOT FACTUAL. THE CHATHAM ITEM INPUT VOLTAGE RANGE (195 TO 210V, 3 PHASE, 4 WIRE, 380 TO 420 GPS) IS REFLECTED IN MS27209, UNDER THE LOWER BLOCK WHICH LISTS "CONDITIONS.'

"B. CHATHAM UNIT P/N 28VS100Y HAS BEEN TESTED AND QUALIFIED TO MS27209 AND MIL-P-26517A (USAF) AND, AS SUCH, IS LISTED ON QPL 26517-1 DATED 16 JAN 1963.

"3. IN VIEW OF THE ABOVE, IT IS THE OPINION OF THIS DIRECTORATE THAT CHATHAM ELECTRONICS DID NOT TAKE EXCEPTION TO THE IFB REQUIREMENTS BY CITING POWER SUPPLY P/N 28VS100Y.'

OUR OFFICE HAS NO KNOWLEDGE OF THE TECHNICAL ASPECTS OF THE DISPUTED MATTER AND MUST NECESSARILY RELY ON THE CORRECTNESS OF THE TESTS PERFORMED BY THE SCIENTIFIC PERSONNEL OF THE CONTRACTING AGENCY, IN THE ABSENCE OF A SHOWING BY CLEAR AND CONVINCING EVIDENCE THAT THE REPORTS OF SUCH TESTS ARE ERRONEOUS.

IN VIEW OF THE FOREGOING WE FIND NO BASIS FOR DISAGREEING WITH THE ACTION TAKEN BY THE ADMINISTRATIVE OFFICE IN THE AWARD OF THE INVOLVED CONTRACT.