B-151630, AUG. 20, 1963

B-151630: Aug 20, 1963

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THE INVITATION WAS ISSUED AS A SMALL BUSINESS SET-ASIDE BY THE ARMY MAP SERVICE. THE CONTRACT TERM WAS SET FROM THE DATE OF AWARD THROUGH JUNE 30. BIDS WERE OPENED ON APRIL 23. YOU WERE EVALUATED AS THE LOW BIDDER ON ITEM NO. 2. A PRE-AWARD SURVEY WAS CONDUCTED OF YOUR FACILITIES ON APRIL 25. THAT YOUR PRESENT FACILITIES WERE COMPLETELY INADEQUATE FOR THE WORK REQUIRED UNDER THE INVITATION. TWO OF WHOM WERE CLEANING WOMEN. THAT THE SHOP WAS SLOW AT THE TIME. IT WAS REPORTED THAT THE CONTRACT WAS APPROXIMATELY ONE YEAR LATE BEING COMPLETED. THAT POOR PERFORMANCE STANDARDS WERE MAINTAINED. THE CONTRACTING OFFICER CONCLUDED THAT YOUR FIRM WAS NOT A RESPONSIBLE BIDDER FOR THIS PROCUREMENT.

B-151630, AUG. 20, 1963

TO HIGH-SPEED PROCESS PRINTING CORPORATION:

THIS REFERS TO YOUR LETTER OF MAY 22, 1963, PROTESTING AGAINST THE REJECTION OF YOUR BID UNDER INVITATION FOR BIDS NO. ENG-49-018-63-63.

THE INVITATION WAS ISSUED AS A SMALL BUSINESS SET-ASIDE BY THE ARMY MAP SERVICE, DEPARTMENT OF THE ARMY, WASHINGTON 25, D.C., ON APRIL 5, 1963, FOR LITHOGRAPHY OF MAPS AND REPRODUCTION OF FILM DUPLICATES. BIDS REQUESTED ON ITEM NOS. 1 AND 2. ITEM NO. 1 SPECIFIED MAPS AS COVERED BY PRICE LIST A; MINIMUM IMPRESSIONS: 600,000; MAXIMUM IMPRESSIONS: 1,200,000. ITEM NO. 2 INCLUDED MAPS AS COVERED BY PRICE LIST A, AND PRICE LIST B; MINIMUM IMPRESSIONS: EQUIVALENT OF 5,400,000 ONE-UP IMPRESSIONS; MAXIMUM IMPRESSIONS: EQUIVALENT OF 10,800,000 ONE-UPIMPRESSIONS. THE CONTRACT TERM WAS SET FROM THE DATE OF AWARD THROUGH JUNE 30, 1963.

BIDS WERE OPENED ON APRIL 23, 1963, AND YOU WERE EVALUATED AS THE LOW BIDDER ON ITEM NO. 2. A PRE-AWARD SURVEY WAS CONDUCTED OF YOUR FACILITIES ON APRIL 25, 1963, BY AN OFFICIAL OF THE DEPARTMENT. HE REPORTED BACK TO THE CONTRACTING OFFICER, UNDER DATE OF APRIL 26, 1963, THAT YOUR PRESENT FACILITIES WERE COMPLETELY INADEQUATE FOR THE WORK REQUIRED UNDER THE INVITATION. HE REPORTED, FOR EXAMPLE, THAT WHILE YOU INDICATED TO HIM THAT YOU HAD 30 EMPLOYEES ON YOUR PAYROLL AT THE TIME OF HIS VISIT, HE ONLY FOUND EIGHT EMPLOYEES, TWO OF WHOM WERE CLEANING WOMEN. YOU EXPLAINED, HE SAYS, THAT THE SHOP WAS SLOW AT THE TIME. THE INSPECTOR FOUND THAT YOUR FIRM HAD MADE NO PLANT ADDITIONS SINCE IT LAST REPORTED TO ARMY MAP SERVICE IN 1960.

THE CONTRACTING OFFICER ALSO RECEIVED A REPORT FROM HIS QUALITY ANALYSIS DIVISION TO THE EFFECT THAT YOUR PLANT HAD UNSATISFACTORILY PERFORMED CONTRACT NO. DA-49-018-ENG-1762 IN 1957 AND 1958, WITH THE SAME MANAGEMENT AND FACILITIES, COVERING THE SAME SERVICE, BUT UNDER THE COMPANY NAMES OF TUDOR PRESS, INCORPORATED AND LITHOGRAPHIC CORPORATION OF AMERICA. IT WAS REPORTED THAT THE CONTRACT WAS APPROXIMATELY ONE YEAR LATE BEING COMPLETED; THAT POOR PERFORMANCE STANDARDS WERE MAINTAINED; AND THAT "MR. WILBUR, WHO HAS CONTINUED AS PRESIDENT OF THE FIRM THROUGH ITS VARIOUS NAMES, NEVER SHOWED THE ABILITY OR DESIRE TO ORGANIZE HIS FIRM TO PRODUCE QUALITY WORK EFFICIENTLY OR ON TIME.'

THE CONTRACTING OFFICER CONCLUDED THAT YOUR FIRM WAS NOT A RESPONSIBLE BIDDER FOR THIS PROCUREMENT. IN THIS CONNECTION, HE REPORTS AS FOLLOWS:

"* * * THE RUN-DOWN CONDITION OF THE BUILDING * * * THE MISREPRESENTATIONS OF THE WILBURS (HARLAND WILBUR AS PRESIDENT AND RALPH WILBUR AS VICE PRESIDENT OF HIGH-SPEED) AS TO WORK FORCE AND EQUIPMENT, WERE NOT VIEWED IN THEMSELVES AS DISQUALIFYING. THEY WERE, ON THE CONTRARY, VIEWED AS EVIDENCE THAT THESE TWO INDIVIDUALS HAD NOT IMPROVED THEIR BUSINESS ETHICS SINCE THE TIME OF THE UNSATISFACTORY PERFORMANCE OF 1957-58 * * *.'

ON MAY 7, 1963, AWARDS ON ITEM NO. 2 WERE MADE TO TWO OTHER BIDDERS, NAMELY, CONTINENTAL LITHOGRAPHERS, INC. AND GATEWAY PRESS, INC. THE CONTRACTING OFFICER STATES THAT THE MATTER OF REJECTING YOUR BID WAS NOT FORWARDED TO THE SMALL BUSINESS ADMINISTRATION FOR POSSIBLE ISSUANCE OF CERTIFICATE OF COMPETENCY (C.O.C.); BUT SBA REPRESENTATIVES WERE NOTIFIED, ON MAY 13, 1963, THAT YOUR LOW BID HAD BEEN REJECTED BECAUSE OF PAST PERFORMANCE.

YOU NOTE THAT THE "PAST PERFORMANCE" REFERS TO A "JOB DONE YEARS AGO BY ANOTHER CORPORATION WHICH HAS BEEN OUT OF BUSINESS SINCE 1957; " AND YOU QUESTION WHETHER THE REJECTION OF YOUR LOW BID WITHOUT A PRIOR REFERRAL TO SBA WAS PROPER.

THE ARMED SERVICES PROCUREMENT REGULATION PROVIDES, GENERALLY, THAT BEFORE AN OTHERWISE ACCEPTABLE BID FROM A SMALL BUSINESS CONCERN MAY BE REJECTED BY A CONTRACTING OFFICER BECAUSE THE BIDDER IS NONRESPONSIBLE AS TO CAPACITY OR CREDIT, THE MATTER SHALL BE SUBMITTED TO THE SBA FOR POSSIBLE ISSUANCE OF A CERTIFICATE OF COMPETENCY. ON THE OTHER HAND, IN THE LANGUAGE OF THE ASPR: "THIS PROCEDURE DOES NOT APPLY WHERE THE CONTRACTING OFFICER HAS FOUND A SMALL BUSINESS CONCERN NONRESPONSIBLE FOR A REASON OTHER THAN LACK OF CAPACITY OR CREDIT.' ASPR 1-705.6 (B) (IV). AS PROVIDED, REFERRAL TO SBA IS NOT REQUIRED WHERE THE REJECTION IS BASED ON A LACK OF INTEGRITY (SEE 37 COMP. GEN. 676) OR PRIOR UNSATISFACTORY CONTRACT PERFORMANCE WHERE THE PAST UNSATISFACTORY PERFORMANCE WAS NOT DUE SOLELY TO A LACK OF CAPACITY OR CREDIT. SEE B 148124, APRIL 13, 1962.

THE CONTRACTING OFFICER STATES THAT YOUR PAST RECORD OF PERFORMANCE WAS NOT ATTRIBUTED SOLELY TO CAPACITY OR CREDIT. HE CONCLUDED FROM YOUR "PAST UNSATISFACTORY PERFORMANCE," THAT YOUR FIRM LACKED THE NECESSARY "BUSINESS ETHICS" TO BE A RESPONSIBLE BIDDER ON THIS PROCUREMENT. ACCORDINGLY, THE REJECTION WAS NOT BASED ON A LACK OF CAPACITY OR CREDIT, AND THE CONTRACTING OFFICER WAS NOT REQUIRED TO SUBMIT THE MATTER TO THE SBA.

THIS OFFICE WILL ACCEPT AN ADMINISTRATIVE DETERMINATION AS TO THE QUALIFICATIONS OF A PROPOSED CONTRACTOR UNLESS IT IS SHOWN THAT THE DETERMINATION WAS MADE IN BAD FAITH OR WITHOUT A REASONABLE BASIS. SEE 37 COMP. GEN. 798, 800.

YOU POINT OUT THAT THE CONTRACTING OFFICER'S DETERMINATION TO REJECT YOUR BID WAS BASED ON A PRIOR CONTRACT WITH A FIRM WHICH HAS BEEN OUT OF BUSINESS SINCE 1957.

BRIEFLY, THE RECORD SHOWS THAT THE PRIOR CONTRACT IN QUESTION WAS AWARDED TO TUDOR PRESS IN 1957 AND ASSUMED BY LITHOGRAPH CORPORATION IN 1958, AFTER TUDOR PRESS BECAME BANKRUPT; WITH BOTH CONTRACTORS WORK WAS BEHIND SCHEDULE AND QUALITY WAS, AT BEST, MINIMAL; AND BOTH FIRMS WERE CONTROLLED BY HARLAND AND RALPH WILBUR (FATHER AND SON), THE SAME TWO INDIVIDUALS WHO NOW CONTROL HIGH-SPEED PROCESS PRINTING.

UNDER THE CIRCUMSTANCES, WE THINK THAT THE CONTRACTING OFFICER IS JUSTIFIED IN CONSIDERING THE PERFORMANCE RECORD SHOWN BY THE PRIOR CONCERNS WITH REGARD TO YOUR QUALIFICATIONS. AFTER ALL, A BUSINESS ORGANIZATION ACTS THROUGH THE INDIVIDUALS WHO CONTROL THE ACTIVITIES OF THE RGANIZATION; AND WE HAVE RECOGNIZED THAT WHEN TWO ORGANIZATIONS HAVE IDENTICAL OWNERSHIP, THE ACTS OF ONE MAY PROPERLY BE IMPUTED TO THE OTHER ON THE QUESTION WHETHER THE BIDDER IS QUALIFIED TO PERFORM ON A GOVERNMENT CONTRACT. 39 COMP. GEN. 468.

WE HAVE HELD THAT A LOW BIDDER MAY NOT BE REJECTED MERELY BECAUSE HE DEFAULTED UNDER A PRIOR SIMILAR CONTRACT (15 COMP. GEN. 249); BUT WE RECOGNIZE THAT THE CIRCUMSTANCES SURROUNDING A PRIOR DEFAULT MAY INDICATE THAT THE BIDDER IS NOT A RESPONSIBLE BIDDER ON A FUTURE PROCUREMENT. COMP. GEN. 705, 710.

ON THE PRIOR CONTRACT, THE GOVERNMENT INSPECTORS CONSISTENTLY REPORTED THAT TUDOR PRESS, UNDER THE MANAGEMENT OF HARLAND AND RALPH WILBUR, LACKED DIRECTION AND CONTROL; THAT PERSONNEL PROBLEMS EXISTED AND THE TURNOVER WAS SUCH AS TO PREVENT JOURNEYMAN PROFICIENCY IN MOST DEPARTMENTS. IT WAS CONSISTENTLY REPORTED THAT MANAGEMENT SIMPLY FAILED TO SHOW AN ACTIVE INTEREST IN COMPLETING THE JOB. AGAIN, THE REPORTS RECEIVED ON LITHO CORPORATION AFTER IT ASSUMED PERFORMANCE OF THE CONTRACT INDICATED THAT MANAGEMENT--- HARLAND AND RALPH WILBUR--- WAS "TOTALLY LACKING.'

THE INFORMATION OBTAINED BY THE CONTRACTING OFFICER ON YOUR FIRM INDICATED TO HIM THAT THE LACK OF COMPETENT MANAGEMENT FOUND IN THE PRIOR FIRMS EXISTED WITH THE SAME MANAGEMENT IN YOUR FIRM. WE CANNOT SAY THAT THE ADMINISTRATIVE CONCLUSION THAT YOUR FIRM WAS NOT RESPONSIBLE FOR PURPOSES OF THIS PROCUREMENT WAS ARBITRARY OR UNREASONABLE.