B-150995, APR. 29, 1963

B-150995: Apr 29, 1963

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TO INGERSOLL-RAND COMPANY: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF MARCH 7. THE COMPRESSORS ARE TO BE SHIPPED BY THE SUCCESSFUL BIDDER UNDER THIS INVITATION TO THE SUCCESSFUL BIDDER UNDER AN INVITATION COVERING THE FURNISHING OF FLAME THROWER SERVICE UNITS. UNDER WHICH BIDS WERE TO BE OPENED THE SAME DAY. THREE BIDS WERE RECEIVED AND OPENED ON DECEMBER 21. THE FOLLOWING IS A TABULATION OF SUCH BIDS FOR EVALUATION. NEW YORK A PREAWARD SURVEY WAS REQUESTED ON THE LOWEST BIDDER. TO DETERMINE WHETHER OR NOT ITS BID WAS ACCEPTABLE IN THE LIGHT OF THE EXPERIENCE REQUIREMENTS OF THE . REFLECTED THAT THE DAVEY COMPRESSOR COMPANY DID NOT POSSESS SUFFICIENT EXPERIENCE TO COMPLY WITH THE PROVISIONS OF THE "RESPONSIBLE PROSPECTIVE CONTRACTOR" CLAUSE SET FORTH IN THE INVITATION AND THAT THE COMPANY WAS NOT CAPABLE OF MEETING THE DELIVERY REQUIREMENT.

B-150995, APR. 29, 1963

TO INGERSOLL-RAND COMPANY:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF MARCH 7, 1963, TO OUR OFFICE AND TO YOUR LETTER OF MARCH 8, 1963, TO THE U.S. ARMY CHEMICAL PROCUREMENT DISTRICT, NEW YORK, PROTESTING AGAINST THE MAKING OF ANY AWARD OTHER THAN TO YOUR FIRM UNDER INVITATION NO. AMC/A/-30-070-63 66.

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

"FOR THE PURPOSES OF THIS INVITATION FOR BIDS, A RESPONSIBLE PROSPECTIVE CONTRACTOR, IN ADDITION TO THE CRITERIA SET FORTH IN SECTION I, PART 9 OF THE ARMED SERVICES PROCUREMENT REGULATIONS, SHALL BE ONE EXPERIENCED IN THE DESIGN AND PRODUCTION OF A COMPRESSOR WEIGHING APPROXIMATELY 1100 POUNDS AND DELIVERING 50 CUBIC FEET OF FREE AIR AT 3,000 POUNDS PER SQUARE INCH PRESSURE WHEN OPERATING AT 1800 REVOLUTIONS PER MINUTE WITH A POWER- INPUT NOT EXCEEDING 50 HORSEPOWER.'

THREE BIDS WERE RECEIVED AND OPENED ON DECEMBER 21, 1962. THE FOLLOWING IS A TABULATION OF SUCH BIDS FOR EVALUATION, AS INDICATED BY THE ABSTRACT OF BIDS:

TABLE

UNIT PRICE TOTAL PRICE

DAVEY COMPRESSOR COMPANY $4,968 $635,904

KENT, OHIO

JOY MANUFACTURING COMPANY 4,980 637,440

MICHIGAN CITY, INDIANA

INGERSOLL-RAND COMPANY 4,990 638,720

NEW YORK, NEW YORK

A PREAWARD SURVEY WAS REQUESTED ON THE LOWEST BIDDER, DAVEY COMPRESSOR COMPANY, TO DETERMINE WHETHER OR NOT ITS BID WAS ACCEPTABLE IN THE LIGHT OF THE EXPERIENCE REQUIREMENTS OF THE ,RESPONSIBLE PROSPECTIVE CONTRACTOR" CLAUSE OF THE INVITATION, QUOTED ABOVE. THE REPORT OF SURVEY, ON DECEMBER 27, 1962, REFLECTED THAT THE DAVEY COMPRESSOR COMPANY DID NOT POSSESS SUFFICIENT EXPERIENCE TO COMPLY WITH THE PROVISIONS OF THE "RESPONSIBLE PROSPECTIVE CONTRACTOR" CLAUSE SET FORTH IN THE INVITATION AND THAT THE COMPANY WAS NOT CAPABLE OF MEETING THE DELIVERY REQUIREMENT. ON THE BASIS OF THIS SURVEY THE CONTRACTING OFFICER DETERMINED THAT THE BID OF THE DAVEY COMPRESSOR COMPANY SHOULD BE REJECTED BECAUSE THE COMPANY LACKED ADEQUATE CAPACITY TO PERFORM THE CONTRACT. IN COMPLIANCE WITH THE PROVISIONS OF PARAGRAPH 1-705.6 (B) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), THE MATTER OF DAVEY'S RESPONSIBILITY WAS REFERRED TO THE SMALL BUSINESS ADMINISTRATION (SBA) FOR CONSIDERATION AS TO WHETHER A CERTIFICATE OF COMPETENCY AS TO ITS CAPACITY AND CREDIT SHOULD BE ISSUED. BY LETTER DATED FEBRUARY 25, 1963, THE SBA ADVISED THE PROCUREMENT ACTIVITY THAT ON THIS DATE IT WAS ISSUING A CERTIFICATE OF COMPETENCY IN FAVOR OF THE DAVEY COMPRESSOR COMPANY.

IN YOUR LETTER OF MARCH 8, 1963, TO THE U.S. ARMY CHEMICAL PROCUREMENT DISTRICT, NEW YORK, YOU REFER TO A STATEMENT MADE BY IT IN ITS LETTER OF JANUARY 28, 1963, TO THE EFFECT THAT A DETERMINATION OF THE SBA AS TO "CAPACITY AND CREDIT" OF A SMALL-BUSINESS CONCERN WHICH SUBMITS A BID ON A GOVERNMENT PROCUREMENT IS CONCLUSIVE. YOU STATE THAT NO QUESTION IS RAISED BY YOU AS TO "CAPACITY AND CREDIT" BUT RATHER AS TO THE STATUS OF ANY OF THE OTHER BIDDERS, NAMELY, THE DAVEY COMPRESSOR COMPANY AND THE JOY MANUFACTURING COMPANY, AS A " "RESPONSIBLE PROSPECTIVE NTRACTOR," " AS DEFINED IN THE INVITATION. IT IS REPORTED THAT THE CONTRACTING OFFICER AND HIS TECHNICAL ADVISERS HAVE DETERMINED THAT THE JOY MANUFACTURING COMPANY, A LARGE BUSINESS FIRM AND THE SECOND LOWEST BIDDER, DOES MEET THE EXPERIENCE REQUIREMENTS OF THE "RESPONSIBLE PROSPECTIVE CONTRACTOR" CLAUSE OF THE INVITATION. AS TO THE DAVEY COMPRESSOR COMPANY, WHILE THE RECORD DOES INDICATE THAT THE PROCUREMENT ACTIVITY HAS DETERMINED THAT THE COMPANY DOES NOT MEET THE EXPERIENCE REQUIREMENTS OF THE "RESPONSIBLE PROSPECTIVE CONTRACTOR" CLAUSE OF THE INVITATION, THE FACT REMAINS THAT THE SBA HAS ISSUED A CERTIFICATE OF COMPETENCY AS TO CAPACITY AND CREDIT IN BEHALF OF THE COMPANY. IT IS OUR VIEW THAT THE EXPERIENCE REQUIREMENTS OF THE "RESPONSIBLE PROSPECTIVE CONTRACTOR" CLAUSE OF THE INVITATION CLEARLY GO TO MATTERS OF RESPONSIBILITY INCLUDED IN THE DEFINITION OF "CAPACITY" IN ASPR 1-705.6 (A). IN DECISION OF OUR OFFICE REPORTED IN 40 COMP. GEN. 106, WE HELD, QUOTING THE SYLLABUS:

"EXPERIENCE QUALIFICATIONS SPECIFICALLY STATED IN AN INVITATION FOR THE PROCUREMENT OF WATER PURIFICATION EQUIPMENT BY A MILITARY DEPARTMENT ARE MATTERS OF RESPONSIBILITY INCLUDED IN THE DEFINITION OF "CAPACITY" IN SECTION 1-705.6 (A) OF THE ARMED SERVICES PROCUREMENT REGULATION, WHICH REFERS TO THE STATUTORY AUTHORITY OF THE SMALL BUSINESS ADMINISTRATION TO CERTIFY THE COMPETENCY OF SMALL BUSINESS CONCERNS, AND THE INCLUSION IN THE INVITATION OF SPECIFIC EXPERIENCE REQUIREMENTS CANNOT DEFEAT THE STATUTORY AUTHORITY VESTED IN THE SMALL BUSINESS ADMINISTRATION TO MAKE DETERMINATIONS OF THE CAPACITY AND CREDIT OF BIDDERS; THEREFORE, THE DETERMINATION OF THE EXPERIENCE QUALIFICATIONS OF SEVERAL SMALL BUSINESS CONCERNS SUBMITTING BIDS FOR THE WATER PURIFICATION EQUIPMENT MUST BE REFERRED TO THE SMALL BUSINESS ADMINISTRATION.'

UNDER SECTION 8 (B) (7) OF THE SMALL BUSINESS ACT, AS AMENDED, 15 U.S.C. 637 (B) (7), THE ISSUANCE OF A CERTIFICATE OF COMPETENCY BY SBA IS CONCLUSIVE UPON GOVERNMENT PROCUREMENT OFFICERS WITH RESPECT TO THE COMPETENCY, AS TO CAPACITY AND CREDIT, OF ANY SMALL-BUSINESS CONCERN TO PERFORM A GOVERNMENT CONTRACT. THE TERM "CAPACITY" IS DEFINED IN ASPR 1- 705.6 (A) AS MEANING THE OVERALL ABILITY TO MEET QUALITY, QUANTITY, AND TIME REQUIREMENTS OF A PROPOSED CONTRACT AND INCLUDES ABILITY TO PERFORM, ORGANIZATION, EXPERIENCE, TECHNICAL KNOWLEDGE, SKILLS, "KNOW-HOW," TECHNICAL EQUIPMENT AND FACILITIES. SBA HAS THE SOLE JURISDICTION TO DETERMINE THE COMPETENCY OF A SMALL-BUSINESS BIDDER WHOSE BID HAS BEEN DETERMINED BY THE CONTRACTING OFFICER TO BE NONRESPONSIVE DUE TO LACK OF CAPACITY OR CREDIT. ONCE SBA HAS DETERMINED TO ISSUE A CERTIFICATE OF COMPETENCY, IT IS CONCLUSIVE ON THE CONTRACTING OFFICER SO FAR AS THE BIDDER'S CAPACITY OR CREDIT IS CONCERNED. SEE 38 COMP. GEN. 864; 40 ID. 106.

YOU ALSO CONTEND THAT THE DAVEY COMPRESSOR COMPANY DOES NOT QUALIFY AS A SMALL-BUSINESS CONCERN BECAUSE OF ITS AFFILIATION WITH THE DAVEY TREE EXPERT COMPANY, INC., KENT AIR TOOL COMPANY, INC., BONNOT COMPANY, INC., C. L. GOUGLER MACHINE COMPANY, INC., AND DAVEY INVESTMENT COMPANY. VIEW OF THE ABOVE CONTENTION, OUR OFFICE REQUESTED THE SBA TO FURNISH US WITH A REPORT ON THE ACTION TAKEN BY THAT AGENCY WITH RESPECT TO THE SMALL -BUSINESS SIZE STATUS OF THE DAVEY COMPRESSOR COMPANY. IN ITS REPORT THE SBA STATES THAT DURING ITS INVESTIGATION IT DISCOVERED THAT THE DAVEY INVESTMENT COMPANY IS A SUBSIDIARY OF THE DAVEY TREE EXPERT COMPANY, INC.; THAT THE BONNOT COMPANY, INC., AND THE KENT AIR TOOL COMPANY, INC., ARE SUBSIDIARIES OF C. L. GOUGLER MACHINE COMPANY, INC.; AND THAT IT WAS DETERMINED THAT THE DAVEY COMPRESSOR COMPANY WAS NOT AFFILIATED WITH EITHER THE DAVEY TREE EXPERT COMPANY, INC., OR THE C. L. GOUGLER MACHINE COMPANY, INC. SBA ALSO STATED THAT ON MARCH 7, 1963, THE DIRECTOR, OFFICE OF SMALL BUSINESS SIZE STANDARDS, DETERMINED THAT THE COMPANY HAD FEWER THAN 500 EMPLOYEES AND QUALIFIED AS A SMALL BUSINESS FOR THE PURPOSE OF GOVERNMENT PROCUREMENT. UNDER THE PROVISIONS OF 15 U.S.C. 637 (B) (6), OFFICES OF THE GOVERNMENT HAVING PROCUREMENT POWERS MUST ACCEPT AS CONCLUSIVE AN SBA DETERMINATION AS TO WHICH ENTERPRISES ARE TO BE DESIGNATED SMALL-BUSINESS CONCERNS.

YOU FURTHER CONTEND THAT THE INVITATION TO BID IS INVALID IN THAT IT DOES NOT PROVIDE FOR EVALUATION OF ALL FACTORS OF COSTS TO THE GOVERNMENT, PARTICULARLY AS TO TRANSPORTATION COSTS AND SHIPPING WEIGHTS, THE COMPETITIVE BIDDING STATUTE CODIFIED AT 10 U.S.C. 2305 REQUIRES THAT THE AWARD OF A CONTRACT BE MADE TO THAT RESPONSIBLE BIDDER SUBMITTING THE LOWEST RESPONSIVE BID,"OTHER FACTORS CONSIDERED.' 37 COMP. GEN. 550. ONE OF THE FACTORS FOR CONSIDERATION IN THE SELECTION OF A LOW BID SUBMITTED ON AN F.O.B. ORIGIN BASIS IS THE COST TO THE GOVERNMENT OF TRANSPORTATION TO DESTINATION. IN SUCH CIRCUMSTANCES, A GUARANTEED SHIPPING WEIGHT OF THE ITEM TO BE PROCURED IS AN ESSENTIAL ELEMENT IN EVALUATING THE GOVERNMENT'S TRANSPORTATION COSTS APPLICABLE TO EACH RESPONSIVE BIDDER'S OFFER. THE PURPOSE OF SUCH EVALUATION IS TO FIX THE EXACT COST OF THE ITEM TO THE GOVERNMENT. IT IS FUNDAMENTAL THAT THE RULES OF COMPETITIVE ADVERTISED BIDDING REQUIRE THAT BIDS BE EVALUATED UPON A COMMON BASIS WHICH IS PRESCRIBED IN THE INVITATION. 10 COMP. GEN. 261; 38 ID. 550. INSEPARABLE FROM THIS RULE IS THE REQUIREMENT THAT BIDS GENERALLY ARE TO BE EVALUATED AS OF THE TIME OF OPENING.

OUR OFFICE CONSISTENTLY HAS HELD THAT THE COST OF DELIVERY IS ALWAYS A MATTER FOR CONSIDERATION BY THE GOVERNMENT IN EVALUATING BIDS. THE REASONS THEREFOR ARE MANIFEST. IN IMPLEMENTATION OF THIS POLICY, IT IS NOTED THAT PARAGRAPH 1-1305.5 OF THE ARMED SERVICES PROCUREMENT REGULATION EVEN GOES SO FAR AS TO PROVIDE THAT---

"WHEN THE EXACT DESTINATIONS OF THE SUPPLIES BEING PURCHASED ARE NOT KNOWN AT THE TIME BIDS OR PROPOSALS ARE SOLICITED, BUT THE GENERAL LOCATION OF THE DESTINATION, SUCH AS EAST COAST, MIDDLE WEST, OR WEST COAST, IS KNOWN, A DEFINITE PLACE OR PLACES SHALL BE DESIGNATED AS THE POINT TO WHICH TRANSPORTATION COSTS WILL BE COMPUTED--- BUT ONLY FOR THE PURPOSE OF EVALUATING BIDS OR PROPOSALS. * * *"

IT IS REPORTED THAT IN THE INSTANT CASE THE PROCUREMENT ACTIVITY WAS UNABLE AT THE TIME OF THE ISSUANCE OF THE INVITATION TO ANTICIPATE EVEN THE GENERAL LOCATION WHERE THE COMPRESSORS WOULD BE SHIPPED BECAUSE OF THE PROBABILITY THAT THE ULTIMATE DESTINATION FOR THE SHIPMENT OF COMPRESSORS BEING PURCHASED UNDER THIS PROCUREMENT COULD BE ANY PLACE IN THE UNITED STATES.

YOU STATE THAT EVALUATION OF BIDS COULD READILY HAVE BEEN MADE BY INCLUDING A REQUIREMENT FOR FURNISHING GUARANTEED SHIPPING DATA AND A STATEMENT SIMILAR TO THAT CONTAINED IN ASPR 2-201 (B) (XIII) RELATIVE TO GUARANTEED SHIPPING WEIGHTS EXCEPT THAT DESTINATION OF THE COMPRESSORS WOULD BE DETERMINED AFTER AWARD UNDER THE INVITATION COVERING THE FLAME THROWER SERVICE UNITS. WE THINK THAT YOUR CONTENTION HAS MERIT IN THE LIGHT OF THE FACT THAT BIDS ON BOTH THE COMPRESSORS AND THE FLAME THROWER SERVICE UNITS WERE TO BE OPENED ON THE SAME DAY. HOWEVER, WE ARE ADVISED THAT THE CONTRACT FOR FURNISHING THE FLAME THROWER SERVICE UNITS HAS BEEN AWARDED TO THE DAVEY COMPRESSOR COMPANY. HENCE, SINCE THE COMPANY IS ALSO THE LOWEST BIDDER ON THE COMPRESSORS, EVALUATION OF TRANSPORTATION COSTS ON THAT ITEM BY THE CONTRACTING OFFICER IS NOT NECESSARY AND, THEREFORE, THE QUESTION OF THE NECESSITY FOR EVALUATION OF TRANSPORTATION COSTS UNDER THIS INVITATION NOW APPEARS TO BE MOOT.