B-153782, JUN. 1, 1964

B-153782: Jun 1, 1964

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TO KOENIG AND RATNER: FURTHER REFERENCE IS MADE TO YOUR LETTER DATED MARCH 25. YOU STATE FURTHER THAT KEY BOOK HAD BEEN INTENTIONALLY EXCLUDED FROM THE BIDDERS' LIST DUE TO THE FACT THAT THE USIA MADE A PREDETERMINATION TO DISALLOW ANY BID SUBMITTED BY KEY BOOK ON THE GROUNDS THAT KEY BOOK'S FACILITIES ARE INADEQUATE AND THAT IT HAD FAILED TO PERFORM SATISFACTORILY UNDER THE PRESENT CONTRACT. IA-9169) IT BECAME INCREASINGLY APPARENT THAT THE UNITED STATES INFORMATION AGENCY'S BOOK PROGRAM WAS SUFFERING DUE TO DELAYS IN DELIVERY AND CONTRACTOR ERRORS TO SUCH AN EXTENT THAT SERIOUS CONSIDERATION HAD TO BE GIVEN TOWARD PLACING THE CONTRACTOR IN DEFAULT. THE KEY BOOK SERVICE FACILITIES WERE VISITED BY THE AGENCY'S REPRESENTATIVES ACTUALLY ENGAGED IN THE BOOK PROGRAM AND THEY WERE UNFAVORABLY IMPRESSED BY WHAT THEY OBSERVED IN REGARD TO ITS BUSINESS PRACTICES RESPECTING THE CONTRACT.

B-153782, JUN. 1, 1964

TO KOENIG AND RATNER:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED MARCH 25, 1964, WRITTEN IN BEHALF OF KEY BOOK SERVICE, INC., PROTESTING THE AWARD OF A CONTRACT BY THE UNITED STATES INFORMATION AGENCY FOR THE PROCUREMENT AND DISTRIBUTION OF BOOKS ON A BULK BASIS. YOU STATE THAT KEY BOOK HAS BEEN EXCLUDED FROM BIDDING ON THE CONTRACT ALTHOUGH IT HAS BEEN ON THE USIA BIDDER LIST FOR SEVERAL YEARS AND HAS HELD THE CONTRACT FOR WHICH IT HAS BEEN EXCLUDED FROM BIDDING FOR THE PAST TWO YEARS. YOU STATE FURTHER THAT KEY BOOK HAD BEEN INTENTIONALLY EXCLUDED FROM THE BIDDERS' LIST DUE TO THE FACT THAT THE USIA MADE A PREDETERMINATION TO DISALLOW ANY BID SUBMITTED BY KEY BOOK ON THE GROUNDS THAT KEY BOOK'S FACILITIES ARE INADEQUATE AND THAT IT HAD FAILED TO PERFORM SATISFACTORILY UNDER THE PRESENT CONTRACT. YOU URGE THAT REGARDLESS OF OFFICE DETERMINATION AS TO THE NEW CONTRACT, THAT THE DECISION OF THE USIA TO DISALLOW FUTURE BIDS OF KEY BOOK ON THE GROUND THAT IT HAS FAILED TO COMPETENTLY PERFORM UNDER THE PRESENT CONTRACT SHOULD BE SET ASIDE AND THAT KEY BOOK SHOULD BE RESTORED TO THE BIDDERS' LIST WITHOUT PREJUDICE.

THE RECORD DISCLOSES THAT FOLLOWING THE AWARD IN 1963 OF AN ANNUAL OPEN- END BOOK CONTRACT TO KEY BOOK SERVICE, INC. (NO. IA-9169) IT BECAME INCREASINGLY APPARENT THAT THE UNITED STATES INFORMATION AGENCY'S BOOK PROGRAM WAS SUFFERING DUE TO DELAYS IN DELIVERY AND CONTRACTOR ERRORS TO SUCH AN EXTENT THAT SERIOUS CONSIDERATION HAD TO BE GIVEN TOWARD PLACING THE CONTRACTOR IN DEFAULT. IN WEIGHING THE MATTER, THE AGENCY DECIDED NOT TO TAKE DEFAULT ACTION AGAINST THE CONTRACTOR BUT RATHER TO PHASE OUT THE CONTRACT ORDERS ON A GRADUAL BASIS SO THAT DISRUPTION OF THE AGENCY'S BOOK PROGRAM SERVICES WOULD BE HELD TO A MINIMUM.

THE KEY BOOK SERVICE FACILITIES WERE VISITED BY THE AGENCY'S REPRESENTATIVES ACTUALLY ENGAGED IN THE BOOK PROGRAM AND THEY WERE UNFAVORABLY IMPRESSED BY WHAT THEY OBSERVED IN REGARD TO ITS BUSINESS PRACTICES RESPECTING THE CONTRACT. IT WAS ADMINISTRATIVELY CONCLUDED THAT KEY BOOK SERVICE HAD DEMONSTRATED A FLAGRANT, CONTINUAL DISREGARD OF ITS CONTRACT OBLIGATIONS AND AN EXTREME LACK OF COOPERATION AND LACK OF PERSEVERANCE IN MATTERS OF CONTRACT OPERATIONS, WHICH CIRCUMSTANCES WERE NOT INCIDENTAL TO OR CAUSED BY FACTORS OF PERFORMANCE "CAPACITY.'

BECAUSE OF ITS EXPERIENCE WITH KEY BOOK SERVICE, INC., THE AGENCY DEEMED IT ADVISABLE TO TAKE PREVENTIVE MEASURES SO THAT THIS SITUATION WITH A CONTRACTOR'S LACK OF PERFORMANCE WOULD NOT AGAIN ARISE BY INSTITUTING, AS A PART OF THE SUCCESSIVE INVITATION TO BID NO. 64-157 24-C, THE REQUIREMENT THAT BIDDERS MUST UNDERGO A MORE EXTENSIVE PRE AWARD SURVEY AND INSPECTION THAN HAD BEEN THE AGENCY PRACTICE. THUS, IT CAN BE CONCLUDED FROM THE TOTAL RECORD THAT NO INVITATION TO BID WAS SENT TO KEY BOOK SERVICE, INC., PRIMARILY BECAUSE OF ITS BAD PERFORMANCE ON THE EXISTING CONTRACT AND THAT, IN EVALUATING ITS PERFORMANCE, THE AGENCY BASED SUCH EVALUATION UPON THE DAY TO DAY INFLEXIBLE ATTITUDE OF A MANAGEMENT FOUND TO BE UNWILLING TO ADAPT ITS WORKING PROCEDURES TO THE DEMANDS OF A WORLD-WIDE BOOK ORDER PROGRAM.

SECTIONS 1-1.310-4, 5 AND 6, OF FEDERAL PROCUREMENT REGULATIONS, SET FORTH THE GENERAL POLICY, STANDARDS AND REQUIREMENT FOR MAKING A DETERMINATION OF RESPONSIBILITY OF PROSPECTIVE CONTRACTORS. IN MAKING AN AWARD AFTER ADVERTISING FOR PROPOSALS, THE PUBLIC INTEREST REQUIRES THAT THE CONTRACT BE AWARDED ONLY TO THE LOWEST RESPONSIBLE BIDDER, AND IN MAKING A DETERMINATION AS TO WHETHER A BIDDER IS RESPONSIBLE, NOT ONLY ARE FEDERAL AND MUNICIPAL OFFICERS REQUIRED TO CONSIDER HIS FINANCIAL RESOURCES BUT ALSO THE JUDGMENT, ABILITY AND INTEGRITY OF THE BIDDER AND TO INQUIRE OF HIS FITNESS AND ABILITY SUCCESSFULLY TO FULFILL THE CONTRACT REQUIREMENTS. 26 COMP. GEN. 676.

WE HAVE CONSISTENTLY TAKEN THE POSITION THAT THE QUESTION AS TO THE QUALIFICATIONS OF A PROSPECTIVE CONTRACTOR PRIMARILY IS FOR DETERMINATION BY THE ADMINISTRATIVE OFFICERS CONCERNED. WE HELD IN OUR DECISION AT 39 COMP. GEN. 868, 872, THAT AN ADMINISTRATIVE DETERMINATION THAT A LOW BIDDER LACKS INTEGRITY OR HAS DEMONSTRATED POOR BUSINESS PRACTICES MUST BE BASED ON CONVINCING EVIDENCE. THIS IS A WELL-ESTABLISHED PRINCIPLE INHERENT IN FORMAL COMPETITIVE ADVERTISING BY THE GOVERNMENT. 8 COMP. GEN. 252; 20 ID. 903; ZEPHYR AIRCRAFT CORPORATION V. UNITED STATES, 122 CT.CL. 523; 280 OPS.ATTY.GEN. 384; 33 ID. 453. SIMILAR CONSIDERATIONS PERTAIN TO THE PREPARATION OF BIDDERS' LISTS AND THERE IS NO REQUIREMENT THAT ALL BIDS BE REJECTED AND THE NEEDS READVERTISED MERELY BECAUSE OF FAILURE TO FURNISH A BIDDER WITH A COPY OF AN INVITATION, IT APPEARING THAT THE PROCUREMENT WAS ADVERTISED OTHERWISE IN ACCORDANCE WITH THE PROCEDURE PRESCRIBED PURSUANT TO THE FEDERAL PROCUREMENT REGULATIONS. SEE FPR 1-1.310-7. IN THIS CASE IT APPEARS THAT THE EVIDENCE RELATING TO KEY BOOK SERVICE'S PERFORMANCE OF ITS CURRENT CONTRACT WITH THE GOVERNMENT CONSTITUTED A REASONABLE BASIS FOR THE ADMINISTRATIVE CONCLUSION THAT AN INVITATION TO KEY TO BID ON THE NEW CONTRACT WOULD AMOUNT TO A CONTINUATION OF THE SERVICES THE USIA WAS THEN RECEIVING FROM THE CONTRACTOR AND THUS WOULD PROLONG A SITUATION FOUND TO BE DISADVANTAGEOUS TO THE GOVERNMENT.

ACCORDINGLY, YOUR PROTEST IS DENIED. THE UNITED STATES INFORMATION AGENCY HAS ADVISED US, HOWEVER, THAT KEY BOOK SERVICE, INC., HAS NOT BEEN REMOVED FROM THE AGENCY'S BIDDERS' LIST, AND THUS WILL RECEIVE CONSIDERATION FOR FUTURE CONTRACTS.