B-152515, JAN. 10, 1964

B-152515, JAN. 10, 1964

TO MR. H. HURWITZ:

WE HAVE RECEIVED YOUR LETTERS OF SEPTEMBER 16, 24, OCTOBER 17 AND DECEMBER 2, 1963, IN WHICH YOU PROTEST THE AWARD OF A CONTRACT SET ASIDE FOR SMALL BUSINESS BY PORTSMOUTH NAVAL SHIPYARD FOR 1,750 YARDS OF SUIT MATERIAL, ISSUED UNDER IFB-102-224-63, TO THE SECOND LOW BIDDER. THE OPENING OF BIDS ON MAY 10, 1963, DISCLOSED THREE RESPONSIVE BIDS IN THE AMOUNTS OF $4,292.18, $4,309.59 AND $5,209.75, OF WHICH YOUR BID WAS THE LOWEST.

YOUR ORGANIZATION WAS NOT ITSELF EQUIPPED FOR MANUFACTURING THE GOODS TO BE PURCHASED, AND YOU SUBMITTED YOUR BID ON THE BASIS THAT YOU WOULD SUBCONTRACT 100 PERCENT OF THE WORK. ON MAY 31, 1963, THE INSPECTOR OF NAVAL MATERIAL, NEW YORK, CONDUCTED A PREAWARD SURVEY OF YOUR ORGANIZATION. THE INFORMATION GATHERED DID NOT MATERIALLY DIFFER FROM THAT OBTAINED BY A PREAWARD SURVEY MADE IN THE PREVIOUS MONTH IN REGARD TO ANOTHER PROCUREMENT. IT WAS DETERMINED THAT YOU HAD HAD ONLY TWO PAST PROCUREMENTS WITH THE GOVERNMENT, ONE OF WHICH INVOLVED DELINQUENT DELIVERIES. MOREOVER, AT THAT TIME YOU HAD NO BANK OF RECORD. BECAUSE OF THE RESULTS OF THIS INVESTIGATION, THE ACTIVITY APPARENTLY DECIDED THAT IT HAD SUFFICIENT BASES TO DOUBT YOUR CAPABILITY TO OBTAIN A SATISFACTORY COMMITMENT FROM A RESPONSIBLE MANUFACTURER, AND THEREFORE COULD NOT MAKE A DETERMINATION IN ACCORDANCE WITH PARAGRAPH 1-904.1 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) THAT YOU WERE A RESPONSIBLE BIDDER WITHOUT EVIDENCE THAT YOU COULD OBTAIN SUCH MANUFACTURER. BECAUSE THIS EVIDENCE WAS NOT FORTHCOMING, AWARD WAS MADE TO THE SECOND LOW BIDDER ON JUNE 7, 1963.

BEFORE CONSIDERING THIS RECORD, IT IS WORTH NOTING THAT WHILE YOU HAVE STRONGLY OBJECTED TO THE FAILURE OF THE PROCURING ACTIVITY TO SUBMIT THE QUESTION OF YOUR RESPONSIBILITY TO THE SMALL BUSINESS ADMINISTRATION (SBA), AND THE PROCURING ACTIVITY HAS CONTENDED THAT YOU ARE NOT ELIGIBLE FOR AWARD BECAUSE YOU ARE NOT A REGULAR DEALER, NEITHER WAS THE PROCEDURE FOR REQUESTING A CERTIFICATE OF COMPETENCY FROM SBA AVAILABLE NOR THE QUESTION OF WHAT CONSTITUTES A REGULAR DEALER RELEVANT IN THIS PROCUREMENT, SINCE THE BIDS WERE NOT OF SUFFICIENT MAGNITUDE TO REQUIRE SUBMISSION TO SBA IN ACCORDANCE WITH ASPR 1-705.6, "CERTIFICATES OF COMPETENCY," OR TO BE CONSIDERED WITHIN THE SCOPE OF ASPR 12-601, WHICH SECTIONS RESPECTIVELY PROVIDE IN RELEVANT PART:

"1-705.6 CERTIFICATES OF COMPETENCY.

"/B) IF A SMALL BUSINESS CONCERN HAS SUBMITTED AN OTHERWISE ACCEPTABLE BID OR PROPOSAL BUT HAS BEEN FOUND BY THE CONTRACTING OFFICER TO BE NONRESPONSIBLE AS TO CAPACITY OR CREDIT, AND IF THE BID OR PROPOSAL IS TO BE REJECTED FOR THIS REASON ALONE, (I) SBA SHALL BE NOTIFIED OF THE CIRCUMSTANCES SO AS TO PERMIT IT TO ISSUE A CERTIFICATE OF COMPETENCY, AND (II) AWARD SHALL BE WITHHELD PENDING EITHER SBA ACTION CONCERNING ISSUANCE OF A CERTIFICATE OF COMPETENCY OR THE EXPIRATION OF FIFTEEN WORKING DAYS AFTER SBA IS SO NOTIFIED, WHICHEVER IS EARLIER, SUBJECT TO THE FOLLOWING:

(III) THIS PROCEDURE IS OPTIONAL, WITHIN THE DISCRETION OF THE CONTRACTING OFFICER, AS TO PROPOSED AWARDS OF MORE THAN $2,500, BUT LESS THAN $10,000.

"12-601 STATUTORY REQUIREMENT. IN ACCORDANCE WITH THE REQUIREMENTS OF THE WALSH-HEALEY PUBLIC CONTRACTS ACT (41 U.S.C. 35-45), ALL CONTRACTS SUBJECT TO SAID ACT ENTERED INTO BY ANY DEPARTMENT FOR THE MANUFACTURE OR FURNISHING OF SUPPLIES IN ANY AMOUNT EXCEEDING $10,000 (I) WILL BE WITH MANUFACTURERS OR REGULAR DEALERS, AND -II- SHALL INCORPORATE BY REFERENCE THE REPRESENTATIONS AND STIPULATIONS REQUIRED BY SAID ACT PERTAINING TO SUCH MATTERS AS MINIMUM WAGES, MAXIMUM HOURS, CHILD LABOR, CONVICT LABOR, AND SAFE AND SANITARY WORKING CONDITIONS.'

GENERALLY, THE RESPONSIBILITY OF THE BIDDER MAY NOT BE EVALUATED ON THE BASIS OF THE QUALIFICATIONS OF ITS INTENDED SUBCONTRACTOR UNLESS THE APPLICABLE INVITATION SO PROVIDES. 38 COMP. GEN. 778, 780. FURTHERMORE, EVEN WHERE THE INVITATION DOES SO PROVIDE, THE GOVERNMENT MUST DETERMINE THE RESPONSIBILITY OF ITS PRIME CONTRACTOR IN THE FIRST INSTANCE BY THE PERFORMANCE OF THE BIDDER'S OWN ORGANIZATION AND ONLY SECONDARILY BY THE QUALIFICATIONS OF SUBCONTRACTORS WHICH THE BIDDER PROPOSES TO USE. SEE 39 COMP. GEN. 173, WHERE THE PROCURING ACTIVITY WAS NOT AT LIBERTY TO CONSIDER BASING AWARD ON THE QUALIFICATIONS OF SUBCONTRACTORS BECAUSE THE PRIME FAILED TO MEET CERTAIN EXPERIENCE REQUIREMENTS SPECIFICALLY STATED IN THE INVITATION.

IN THE PRESENT CASE, THE ACTIVITY DID IN THE FIRST INSTANCE INVESTIGATE YOUR ORGANIZATION. CF. B-149781, DATED OCTOBER 29, 1962. THE INVITATION INCLUDED NO SPECIFIC EXPERIENCE REQUIREMENTS. IN VIEW OF THE SOMEWHAT UNFAVORABLE BUT PRESUMABLY INCONCLUSIVE NATURE OF THE PREAWARD SURVEYS, AND THE FACT THAT GOODS TO BE SUPPLIED WERE NOT OFF THE-SHELF ARTICLES BUT RATHER INVOLVED UNFINISHED MATERIALS TO BE WHOLLY MANUFACTURED TO SPECIFICATIONS BY THE SUBCONTRACTOR, WE THINK THE AGENCY WAS ENTITLED TO CONSIDER THE QUALIFICATIONS OF YOUR SUBCONTRACTOR. CF. 15 COMP. GEN. 286.

DURING THE PREAWARD SURVEY, YOU STATED THAT BEHRENS MILLS, INC., OF BROOKLYN, NEW YORK, WOULD WEAVE THE CLOTH FOR YOU. HOWEVER, THIS FIRM INDICATED THAT IT HAD NOT COME TO TERMS WITH YOU AND HAD NO COMMITMENT TO PRODUCE THE MATERIAL. IN VIEW OF PAST EXPERIENCE WITH YOU UNDER INVITATION FOR BIDS NO. N140-430-63, WHERE TWO SUCCESSIVE ALLEGED COMMITMENTS WITH FINISHERS FAILED TO MATERIALIZE, THE PROCURING ACTIVITY DECIDED THAT FURTHER INQUIRY WAS NOT WARRANTED AND PROCEEDED TO AWARD THE CONTRACT TO THE SECOND LOW BIDDER. AFTER AWARD, THE ACTIVITY RECEIVED YOUR LETTER OF JUNE 6, 1963, STATING THAT YOU COULD OBTAIN FIRM COMMITMENTS FROM A NAMED SUPPLIER AND A NAMED FINISHER.

ALTHOUGH IT WOULD NOT HAVE BEEN OBJECTIONABLE TO HAVE GIVEN YOU AN OPPORTUNITY TO SECURE COMMITMENTS OTHER THAN THE ONE YOU ERRONEOUSLY ALLEGED YOU HAD, WE CANNOT SAY, IN VIEW OF PAST SIMILAR DIFFICULTY, THAT IT WAS IMPROPER TO PROCEED WITH AWARD WITHOUT EXTENDING THIS OPPORTUNITY. ACCORDINGLY, WE DO NOT PROPOSE TO TAKE FURTHER ACTION IN THIS MATTER.