B-151804, DEC. 11, 1963

B-151804: Dec 11, 1963

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INC.: REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 12. GROUP 1 WAS DESIGNATED AS THE PERSISTENT LABOR SURPLUS AREA CONCERNS WHICH WERE ALSO SMALL BUSINESS CONCERNS. FOUR OTHER GROUPS OF LESS PRIORITY WERE SET OUT IN THE INVITATION BUT THIS IS OF NO RELEVANCE HERE. A CONCERN SHALL BE DEEMED TO PERFORM A SUBSTANTIAL PROPORTION OF A CONTRACT IN PERSISTENT LABOR SURPLUS AREAS IF THE COSTS THAT THE CONCERN WILL INCUR ON ACCOUNT OF MANUFACTURING OR PRODUCTION PERFORMED IN SUCH AREAS (BY ITSELF OR ITS FIRST-TIER SUBCONTRACTORS) AMOUNT TO MORE THAN 50 PERCENT OF THE CONTRACT PRICE. "/D) AGREEMENT. HE WILL PERFORM. HE WILL PERFORM. THE LOWEST RESPONSIVE BIDDER ON ITEM 1 WAS W. A FACILITY CAPABILITY REPORT (FCR) WAS REQUESTED AS TO APPLE AND A NEGATIVE FCR ON THIS CONCERN WAS RECEIVED ON MARCH 20.

B-151804, DEC. 11, 1963

TO KINGS POINT INDUSTRIES, INC.:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 12, 1963, AND SUBSEQUENT CORRESPONDENCE FROM YOUR ATTORNEY, PROTESTING THE AWARD OF A CONTRACT TO W. A. APPLE MANUFACTURING, INC., UNDER INVITATION FOR BIDS NO. 36-600-63- 236 ISSUED BY THE MIDDLETOWN AIR MATERIEL AREA, OLMSTED AIR FORCE BASE, PENNSYLVANIA, ON OCTOBER 26, 1962.

THE INVITATION SOLICITED BIDS--- TO BE OPENED NOVEMBER 27, 1962--- FOR THE MANUFACTURE OF CERTAIN QUANTITIES OF THREE TYPES OF SLINGS, DELIVERY F.O.B. POINT OF ORIGIN. ITEM 1 COVERED 24,360 SLINGS; ITEM 2 COVERED 660 SLINGS; AND ITEM 3, 14,628 SLINGS. THE INVITATION PROVIDED THAT LIKE QUANTITY OF SLINGS HAD BEEN SET ASIDE FOR AWARD ONLY TO ONE OR MORE LABOR SURPLUS AREA CONCERNS, AND TO A LIMITED EXTENT, TO SMALL BUSINESS CONCERNS WHICH DID NOT QUALIFY AS LABOR SURPLUS AREA CONCERNS. ALSO, THE INVITATION PROVIDED THAT NEGOTIATIONS FOR THE SET-ASIDE PORTION WOULD BE CONDUCTED ONLY WITH RESPONSIBLE LABOR SURPLUS AREA CONCERNS (AND SMALL BUSINESS CONCERNS TO THE EXTENT INDICATED) WHICH HAD SUBMITTED RESPONSIVE BIDS ON THE NON-SET-ASIDE PORTION AT A UNIT PRICE WITHIN 120 PERCENT OF THE HIGHEST AWARD MADE ON THE NON-SET-ASIDE PORTION, FOLLOWING A CERTAIN ORDER OF PRIORITY. GROUP 1 WAS DESIGNATED AS THE PERSISTENT LABOR SURPLUS AREA CONCERNS WHICH WERE ALSO SMALL BUSINESS CONCERNS. FOUR OTHER GROUPS OF LESS PRIORITY WERE SET OUT IN THE INVITATION BUT THIS IS OF NO RELEVANCE HERE. ALSO, THE INVITATION SET OUT VARIOUS DEFINITIONS CONCERNING LABOR SURPLUS AREA CONCERNS AND PARAGRAPHS FF (B) (2) (I) AND

"/2) THE TERM "LABOR SURPLUS AREA CONCERN" INCLUDES PERSISTENT FF (D) OF THE INVITATION PROVIDED THAT--- LABOR SURPLUS AREA CONCERNS AND SUBSTANTIAL LABOR SURPLUS AREA CONCERNS AS DEFINED BELOW:

"/I) "PERSISTENT LABOR SURPLUS AREA CONCERN" MEANS A CONCERN THAT AGREES TO PERFORM, OR CAUSE TO BE PERFORMED, A SUBSTANTIAL PROPORTION OF A CONTRACT IN PERSISTENT LABOR SURPLUS AREAS. A CONCERN SHALL BE DEEMED TO PERFORM A SUBSTANTIAL PROPORTION OF A CONTRACT IN PERSISTENT LABOR SURPLUS AREAS IF THE COSTS THAT THE CONCERN WILL INCUR ON ACCOUNT OF MANUFACTURING OR PRODUCTION PERFORMED IN SUCH AREAS (BY ITSELF OR ITS FIRST-TIER SUBCONTRACTORS) AMOUNT TO MORE THAN 50 PERCENT OF THE CONTRACT PRICE.

"/D) AGREEMENT. THE BIDDER AGREES THAT, IF AWARDED A CONTRACT AS A PERSISTENT LABOR SURPLUS AREA CONCERN UNDER THE SET-ASIDE PORTION OF THIS PROCUREMENT, HE WILL PERFORM, OR CAUSE TO BE PERFORMED, A SUBSTANTIAL PROPORTION OF THE PRODUCTION IN AREAS CLASSIFIED AT THE TIME OF AWARD, OR AT THE TIME OF PERFORMANCE OF THE CONTRACT, AS PERSISTENT LABOR SURPLUS AREAS; AND THAT IF AWARDED A CONTRACT AS A SUBSTANTIAL LABOR SURPLUS AREA CONCERN UNDER THE SET-ASIDE PORTION OF THIS PROCUREMENT, HE WILL PERFORM, OR CAUSE TO BE PERFORMED, A SUBSTANTIAL PROPORTION OF THE PRODUCTION IN AREAS CLASSIFIED AT THE TIME OF AWARD, OR AT THE TIME OF PERFORMANCE OF THE CONTRACT, AS SUBSTANTIAL OR PERSISTENT LABOR SURPLUS AREAS.'

THE LOWEST RESPONSIVE BIDDER ON ITEM 1 WAS W. A. APPLE MANUFACTURING, INC., WHICH BID A UNIT PRICE OF $4.62 OR A TOTAL OF $112,543.20; ON ITEM 2, YOUR FIRM BID A UNIT PRICE OF $12.32 OR A TOTAL OF $8,131.20; AND ON ITEM 3, W. A. APPLE MANUFACTURING, INC., BID A UNIT PRICE OF $15.40, OR A TOTAL OF $225,271.20. ON MARCH 4, 1963, A FACILITY CAPABILITY REPORT (FCR) WAS REQUESTED AS TO APPLE AND A NEGATIVE FCR ON THIS CONCERN WAS RECEIVED ON MARCH 20, 1963. ACTION WAS THEN TAKEN TO MAKE AWARDS TO THE NEXT LOW BIDDERS WHICH WERE AS FOLLOWS: ITEM 1, MILLS MANUFACTURING COMPANY AND ITEMS 2 AND 3, YOUR FIRM. AN FCR WAS REQUESTED AS TO YOUR FIRM AND MILLS ON APRIL 6, 1963. DELAYS WERE ENCOUNTERED IN RECEIVING A REPLY TO THE REQUEST ON YOUR FIRM AND IT WAS NOT UNTIL MAY 17, 1963, THAT A FAVORABLE FCR ON YOUR FIRM WAS RECEIVED BY THE CONTRACTING OFFICE. AWARDS WERE MADE ON MAY 23, 1963, TO MILLS AND YOUR FIRM. AS TO THE AWARD OF THE SET ASIDE PORTION OF THE INVITATION THE CONTRACTING OFFICER REPORTS THAT--

"6. AFTER THE ABOVE AWARDS WERE MADE, NEGOTIATIONS WERE THEN COMMENCED FOR THE SET-ASIDE PORTIONS OF THIS INVITATION FOR BID. THE SET-ASIDES WERE CONTEMPLATED TO BE AWARDED, THE SAME AS THE NON-SET ASIDE PORTIONS, I.E., AS FOLLOWS:

ITEM 1--- MILLS MANUFACTURING COMPANY

ITEM 2--- KINGS POINT INDUSTRIES

ITEM 3--- KINGS POINT INDUSTRIES

"7. FCR'S WERE REQUESTED ON 28 MAY 63 ON THE ABOVE CONCERNS FOR THE SET- ASIDE QUANTITIES OF THIS IFB. FAVORABLE REPLIES THERETO WERE RECEIVED ON 5 JUNE 63 ON MILLS AND ON 14 JUNE 63 ON KINGS POINT. NO QUESTION AROSE ON KINGS POINT FCR FOR THE SET-ASIDE PORTION, AS OCCURRED ON THE NON-SET- ASIDE PORTION. WHILE THESE AWARDS WERE IN THE PROCESS OF BEING MADE TO THESE CONCERNS, MR. APPLE OF THE W. A. APPLE MANUFACTURING INC. CONTACTED THIS OFFICE AND INQUIRED AS TO WHY HE WAS NOT AWARDED ITEMS 1 AND 3 OF THIS PARTICULAR IFB. HE WAS INFORMED THAT AWARD WAS NOT MADE TO HIS CONCERN, SINCE WE RECEIVED A NEGATIVE FCR ON HIS FACILITY. MR. APPLE THEN SUBMITTED A PROTEST TO THIS OFFICE ON THE AWARDS OF ITEMS 1 AND 3. UPON RECEIPT OF THE PROTEST, ALL ACTION ON THE AWARD OF THE SET-ASIDE PORTIONS OF THIS IFB WERE STOPPED AND A COMPLETE REVIEW OF THE INVITATION FOR BID WAS MADE. IT WAS NOTED THAT THE FCR PERFORMED ON THE W. A. APPLE MANUFACTURING INC. WAS PERFORMED APPROXIMATELY THREE MONTHS PRIOR TO THIS DATE AND IT WAS DECIDED THAT BEFORE ANY FURTHER ACTION WAS TAKEN TO REQUEST ANOTHER FCR ON APPLE. HOWEVER, A FAVORABLE FCR WAS NOW RECEIVED ON THE W. A. APPLE CONCERN AND AWARD OF THE SET-ASIDE PORTIONS ON ITEMS 1 AND 3 WAS MADE TO THIS CONCERN ON 29 JUNE 63. THE AWARDS OF THE SET-ASIDE PORTIONS WERE MADE AS FOLLOWS:

TABLE

ITEM 1--- W. A. APPLE MANUFACTURING, INC.

UNIT PRICE - $4.62 TOTAL PRICE--- $112,543.20

CONTRACT NUMBER AF 36 (600/-16288

ITEM 2--- KINGS POINT INDUSTRIES

UNIT PRICE - $12.32 TOTAL PRICE--- $ 8,131.20

SUPPLEMENTAL AGREEMENT NO. 1 TO CONTRACT AF 36 (600/-15458

ITEM 3--- W. A. APPLE MANUFACTURING, INC.

UNIT PRICE - $15.40 TOTAL PRICE--- $225,271.20

CONTRACT NUMBER AF 36 (600/-16288

"8. IT IS TO BE NOTED THAT THE AWARD OF THE SET-ASIDE PORTIONS ON ITEMS 1 AND 3 MADE TO THE W. A. APPLE CONCERN WAS NOT MADE AT THE SAME PRICES AS THE AWARDS OF THE NON-SET-ASIDE PORTIONS, BUT RATHER AT APPLE'S ORIGINAL BID PRICES, WHICH WERE IN EXCESS OF $27,000.00 LOWER THAN THE ORIGINAL AWARDS.'

IT HAS BEEN YOUR CONTENTION THAT APPLE CANNOT COMPLY WITH BOTH THE DELIVERY SCHEDULE AND THE REQUIREMENT THAT OVER 50 PERCENT OF THE CONTRACT VALUE BE PERFORMED IN A PERSISTENT LABOR SURPLUS AREA. IN REGARD TO THIS CONTENTION THE ADMINISTRATIVE OFFICE REPORTED UNDER DATE OF SEPTEMBER 5, 1963, THAT---

"* * * INFORMATION OBTAINED FROM APPLE'S SUPPLIERS OF WEBBING AND THREAD INDICATES THAT APPLE CAN OBTAIN HIS INITIAL REQUIREMENTS FROM THE SOUTHERN WEAVING COMPANY IN SUFFICIENT TIME TO COMPLY WITH THE INITIAL DELIVERY SCHEDULE REQUIREMENTS. APPLE HAS ALSO PLACED FIRM COMMITMENTS WITH THE ALLIANCE WEBBING COMPANY FOR SUPPLYING MATERIALS IN EXCESS OF 50 PERCENT OF THE CONTRACT. THESE MATERIALS WILL BE MANUFACTURED BY THE MURDOCK WEBBING COMPANY, CENTRAL FALLS, RHODE ISLAND, AND THE PREMIER THREAD COMPANY, BRISTOL, RHODE ISLAND, BOTH OF WHICH FIRMS ARE IN PERSISTENT LABOR SURPLUS AREAS.'

UPON OUR REQUEST FOR FURTHER DATA FROM THE DEPARTMENT OF THE AIR FORCE, IT HAS BEEN REPORTED THAT APPLE HAS INCREASED ITS PURCHASES BY $1,172.25 FROM SUPPLIERS IN PERSISTENT LABOR AREAS, BRINGING ITS TOTAL PURCHASES IN SUCH AREAS TO $168,947.25 WHICH IS SLIGHTLY IN EXCESS OF 50 PERCENT OF ITS CONTRACT PRICE. ALSO, IT HAS BEEN REPORTED THAT THE WEBBING REQUIREMENTS HAVE BEEN COMPARED WITH THE ORDERS PLACED BY APPLE WITH ITS SEVERAL SUPPLIERS AND IT HAS BEEN CONCLUDED THAT APPLE'S COMMITMENTS FROM ITS SUPPLIERS WILL BE IN TIME TO MEET THE CONTRACT REQUIREMENTS COMPUTED FROM THE DATE OF APPROVAL OF THE FIRST ARTICLE SUBMITTED. AN EXAMINATION OF THE CORRESPONDENCE IN THIS CASE TENDS TO SUPPORT APPLE'S CONTENTION THAT ITS MAIN SUPPLY SOURCE FOR THE ONE TYPE OF WEBBING WHICH WAS IN A PERSISTENT LABOR SURPLUS AREA HAD RECEIVED A LARGE NUMBER OF ORDERS BETWEEN THE AWARD OF THE CONTRACT INVOLVED AND THE TIME APPLE PLACED ITS ORDERS. IN ANY EVENT THERE WAS NOTHING IN THE INVITATION TO REQUIRE A BIDDER TO FURNISH EVIDENCE THAT, PRIOR TO AWARD, IT HAD PLACED ORDERS WITH, OR SECURED FIRM COMMITMENTS FROM, SUPPLIERS IN PERSISTENT LABOR SURPLUS AREAS TO QUALIFY FOR AWARD ON THIS BASIS. IT ONLY AGREED TO PERFORM, OR CAUSE TO BE PERFORMED, SO MUCH IN THOSE AREAS SO THAT THE COSTS INCURRED AMOUNTED TO MORE THAN 50 PERCENT OF THE CONTRACT PRICE.

SINCE THE EVIDENCE FURNISHED BY THE ADMINISTRATIVE OFFICE INDICATES THAT APPLE WILL ABIDE BY THE REQUIREMENT THAT OVER 50 PERCENT OF THE CONTRACT VALUE BE PERFORMED IN A PERSISTENT LABOR SURPLUS AREA WE FIND NO BASIS FOR CANCELING THE CONTRACT AWARDED TO APPLE, AND YOUR PROTEST MUST THEREFORE BE DENIED.