B-153446, MAY 8, 1964

B-153446, MAY 8, 1964

TO MERCURY CHEMICAL COMPANY, INCORPORATED:

WE REFER TO YOUR TELEGRAM DATED FEBRUARY 6, 1964, AND YOUR LETTERS OF FEBRUARY 7 AND MARCH 18, 1964, PROTESTING THE AWARD OF A CONTRACT TO EMPIRE FINDINGS COMPANY, INCORPORATED, 10-34 44TH DRIVE, LONG ISLAND CITY, NEW YORK, AND THE AWARD TO CHEMICAL COMPOUNDING COMPANY, 532 JOHNSTON AVENUE, JERSEY CITY, NEW JERSEY. YOU ALSO PROTEST THE CONTRACTING OFFICER'S DETERMINATION THAT YOU WERE NOT A RESPONSIBLE BIDDER.

ON DECEMBER 2, 1963, THE DEFENSE PETROLEUM SUPPLY CENTER, WASHINGTON 25, D.C., ISSUED INVITATION FOR BIDS NO. DSA-6-64-172 FOR THE PROCUREMENT OF THE FOLLOWING QUANTITIES OF WATER PURIFICATION, CHLORINATION KITS, TYPE I, IN ACCORDANCE WITH APPLICABLE SPECIFICATIONS:

CHART.

QUANTITY (NUMBER

ITEM NO. DESTINATIONS OF UNITS)

1.0563 TRACY DDA 14,350

1.1118 ATLANTA ARMY DEPOT 6,150

1.3928 MECHANICSBURG DDA 14,350

1.4316 MEMPHIS ARMY DEPOT 6,150

DELIVERIES WERE TO BE F.O.B. DESTINATION TO THE LOCALITIES INDICATED IN COLUMN 2. THE INVITATION FOR BIDS STATED THAT THE DESIRED DELIVERY DATE OF THE FOUR ITEMS WAS MARCH 16, 1964. PAGE 14 OF THE INVITATION FOR BIDS PROVIDED FOR LABOR SURPLUS AREA AND SMALL BUSINESS SET-ASIDE FOR ONE-HALF THE UNITS UNDER ITEM NO. 1.3928, AND ONE-HALF THE UNITS UNDER ITEM NO. 1.0563 IN ACCORDANCE WITH THE PRIORITIES LISTED ON PAGE 11.

BIDS WERE OPENED ON DECEMBER 16, 1963. BIDS WERE RECEIVED FROM EMPIRE FINDINGS, MERCURY CHEMICAL COMPANY, AND CHEMICAL COMPOUNDING COMPANY. YOU SUBMITTED THE LOW BID FOR ALL OF THE ITEMS IN THIS PROCUREMENT. THE PROCURING ACTIVITY REQUESTED A PRE-AWARD SURVEY OF YOUR CONCERN AND ON JANUARY 7, 1964, HEADQUARTERS, SCHENECTADY ARMY DEPOT, SCHENECTADY, NEW YORK, TRANSMITTED THE RESULTS OF THIS SURVEY TO THE PROCURING ACTIVITY. IT WAS FOUND THAT YOU WERE DELINQUENT IN PERFORMANCE AS TO DELIVERY UNDER SIX LISTED CONTRACTS, AND TWO OF THESE CONTRACTS WERE FOR THE SAME TYPE ITEM AS IN THIS PROCUREMENT. THERE WAS NO QUESTION AS TO YOUR CAPACITY; HOWEVER, IT WAS CONCLUDED, THAT YOUR FINANCIAL SITUATION WAS VERY WEAK. THE PROCURING ACTIVITY WAS ADVISED THAT FOR THIS PROCUREMENT YOU HAD THE BACKING OF A RELIABLE AND FINANCIALLY SOUND COMPANY.

YOU WERE DETERMINED TO BE NONRESPONSIBLE AND THE MATTER WAS REFERRED TO THE SMALL BUSINESS ADMINISTRATION FOR THE ISSUANCE OF A CERTIFICATE OF COMPETENCY. ON JANUARY 30, 1964, THE SMALL BUSINESS ADMINISTRATION OFFICE LOCATED AT 42 BROADWAY, NEW YORK, 4, NEW YORK, ADVISED THE CONTRACTING OFFICER AS FOLLOWS:

"THE SMALL BUSINESS ADMINISTRATION (NEW YORK REGIONAL OFFICE) HAS REVIEWED THE APPLICATION FOR A CERTIFICATE OF COMPETENCY, COC-II-1172, FILED BY MERCURY CHEMICAL CO., INC., 4619 SECOND AVENUE, BROOKLYN 32, NEW YORK, RELATING TO THE PROPOSED PROCUREMENT UNDER IFB-DSA-6-64-172, FOR THE PRODUCTION OF WATER PURIFICATION CHLORINATION KITS.

"BASED ON A COMPREHENSIVE ANALYSIS OF ALL AVAILABLE INFORMATION, THIS REGIONAL OFFICE HAS DECLINED TO RECOMMEND ISSUANCE OF A CERTIFICATE OF COMPETENCY IN THIS INSTANCE. CASE IS CLOSED.'

ON FEBRUARY 3, 1964, ONE-HALF OF ITEM NO. 1.0563 AND ITEM NOS. 1.1118, 1.3928, AND 1.4316 WERE AWARDED TO EMPIRE FINDINGS FOR $110,730.75 UNDER CONTRACT NO. DSA-6-5392. ON FEBRUARY 28, 1964, CONTRACT NO. DSA-6-5824, WAS AWARDED TO CHEMICAL COMPOUNDING FOR THE SET-ASIDE PORTION UNDER ITEM NO. 1.0563. THE CONTRACT PRICE FOR THIS AWARD WAS $23,175.25. FEBRUARY 6, 1964, AFTER THE AWARD TO EMPIRE FINDINGS YOU ADVISED OUR OFFICE THAT EMPIRE FINDINGS WOULD NOT BE ABLE TO MEET THE REQUIRED DELIVERY SCHEDULE SINCE WALLACE AND TIERNAN, INCORPORATED, THE EXCLUSIVE LICENSEE OF A COMPONENT PART OF THE CHLORINATION KITS, AND HERTMAN-LEDDON COMPANY, A SUB-LICENSEE OF WALLACE AND TIERNAN, HAD DISCONTINUED THE MANUFACTURE OF THIS COMPONENT PART. ON MARCH 18, 1964, AFTER THE AWARD TO CHEMICAL COMPOUNDING, YOU ADVISED THAT CHEMICAL COMPOUNDING HAD REQUESTED THE USE OF YOUR MACHINERY TO MANUFACTURE THE ITEMS IN THIS PROCUREMENT. ON THIS BASIS YOU PROTEST THE CONTRACTING OFFICER'S DETERMINATION THAT EMPIRE FINDINGS AND CHEMICAL COMPOUNDING WERE RESPONSIBLE BIDDERS.

IN REGARD TO EMPIRE FINDINGS THE CONTRACTING OFFICER WAS AWARE THAT THIS BIDDER HAD OTHER CONTRACTS WITH THE GOVERNMENT. PRIOR TO AWARD EMPIRE FINDINGS EXHIBITED A SATISFACTORY CHLORINATION KIT TO THE CONTRACTING OFFICER. AFTER YOUR PROTEST, EMPIRE FINDINGS THROUGH ITS AFFILIATE, PROPPER MANUFACTURING COMPANY, INCORPORATED, INFORMED THE CONTRACTING OFFICER THAT THE SUB-LICENSEE FOR THE COMPONENT PART OF THE CHLORINATION KIT HAD NOT DISCONTINUED MANUFACTURE AS YOU CONTEND, AND THAT OTHER QUALIFIED MANUFACTURERS OF THIS PART HAD QUOTED PRICES TO EMPIRE FINDINGS. MOREOVER, ON MARCH 9, 1964, EMPIRE FINDINGS MADE TIMELY AND ACCEPTABLE DELIVERIES UNDER NEGOTIATED CONTRACT NO. DSA-6 5364, FOR THE PROCUREMENT OF THE SAME TYPE ITEM AS SPECIFIED IN THIS PROCUREMENT. CHEMICAL COMPOUNDING WAS DETERMINED TO BE RESPONSIBLE ON THE BASIS OF SATISFACTORY PERFORMANCE UNDER PRIOR CONTRACTS FOR OTHER ITEMS.

IN THESE CIRCUMSTANCES WE FIND NO BASIS TO QUESTION THE DETERMINATION THAT YOU WERE NOT A RESPONSIBLE BIDDER. WE HAVE HELD THAT THE REFUSAL OF SBA TO ISSUE A CERTIFICATE OF COMPETENCY AS TO A SMALL BUSINESS BIDDER MUST BE REGARDED AS PERSUASIVE WITH RESPECT TO THE COMPETENCY OR CREDIT OF THE BIDDER CONCERNED. 39 COMP. GEN. 705. WHEN THE ISSUANCE OF A CERTIFICATE OF COMPETENCY IS DENIED, THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY MUST BE REGARDED AS HAVING BEEN AFFIRMED. WE HAVE NO AUTHORITY TO REVIEW DETERMINATIONS OF THE SMALL BUSINESS ADMINISTRATION OR REQUIRE IT TO ISSUE A CERTIFICATE OF COMPETENCY. NOR DO WE DISTURB THE DETERMINATIONS OF A CONTRACTING OFFICER WHERE, AS HERE, THEY DO NOT APPEAR TO BE EITHER ARBITRARY OR CAPRICIOUS. SEE ALSO B-152831, JANUARY 8, 1964.

WHILE MORE SPECIFIC INFORMATION REGARDING THE ABILITY OF EMPIRE FINDINGS AND CHEMICAL COMPOUNDING TO PERFORM THESE CONTRACTS WOULD HAVE BEEN DESIRABLE, THERE IS NO INDICATION IN YOUR LETTERS THAT THE CONTRACTING OFFICER'S DETERMINATION AS TO THE RESPONSIBILITY OF THESE BIDDERS WAS ARBITRARY OR CAPRICIOUS. IN THIS SITUATION THE RULE IS WELL ESTABLISHED THAT WHEN AN AUTHORIZED OFFICIAL OF THE CONTRACTING AGENCY DETERMINES THE RESPONSIBILITY OF A BIDDER, SUCH DETERMINATION CANNOT BE OVERTHROWN BY THE COURTS OR OUR OFFICE UNLESS IT CAN BE HELD THAT THE DETERMINATION WAS ARBITRARY, CAPRICIOUS, OR FRAUDULENT. SEE MCQUILLIN, MUNICIPAL CORPORATIONS, 3RD EDITION, VOLUME 10, SECTION 29.73 AND CASES THEREIN CITED; 38 COMP. GEN. 131; 33 ID. 549. FURTHERMORE, EMPIRE FINDINGS' TIMELY AND ACCEPTABLE DELIVERIES FOR THE SAME TYPE ITEM UNDER ANOTHER CONTRACT FURTHER SUBSTANTIATES THAT EMPIRE FINDINGS WILL BE ABLE TO MAKE TIMELY DELIVERIES IN THIS PROCUREMENT. WE ARE ADVISED THAT THERE IS NO INDICATION THAT CHEMICAL COMPOUNDING WILL NOT BE ABLE TO MAKE TIMELY DELIVERIES.