B-154138, AUG. 5, 1964

B-154138: Aug 5, 1964

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INC.: REFERENCE IS MADE TO YOUR LETTER DATED MAY 1. WHICH WAS ISSUED ON DECEMBER 16. OF THE THREE BIDS WHICH WERE RECEIVED AND OPENED ON JANUARY 15. 700 WAS LOWEST. WHICH WAS DATED FEBRUARY 3. STATED THAT THERE WERE NO INDICATIONS OF ANY IMPROVEMENTS IN THE NEAR FUTURE. AN AWARD WAS MADE TO HEWLETT-PACKARD COMPANY. YOU STATE THAT YOU DO NOT QUESTION THE UNFAVORABLE FINANCIAL CAPABILITY DETERMINATION AS MUCH AS THE SECRETIVE MANNER IN WHICH THE MATTER WAS HANDLED. YOU CONTEND THAT SINCE YOU WERE AHEAD OF SCHEDULE IN PERFORMANCE OF A MUCH LARGER CONTRACT ($1.8 MILLION) FOR OLMSTED AIR FORCE BASE. - WAS UNREASONABLE. YOU COULD HAVE PROVIDED MORE CURRENT FINANCIAL INFORMATION WHICH WOULD HAVE BEEN MORE FAVORABLE TO YOU THAN THE DATA ON WHICH THE ADMINISTRATIVE DETERMINATION WAS MADE.

B-154138, AUG. 5, 1964

TO NORTHEASTERN ENGINEERING, INC.:

REFERENCE IS MADE TO YOUR LETTER DATED MAY 1, 1964, ADDRESSED TO HEADQUARTERS, MIDDLETOWN AIR MATERIEL AREA, UNITED STATES AIR FORCE, OLMSTED AIR FORCE BASE, PENNSYLVANIA, PROTESTING AWARD OF A CONTRACT TO ANOTHER BIDDER UNDER INVITATION FOR BIDS NO. 36-600-64-339.

THE INVITATION, WHICH WAS ISSUED ON DECEMBER 16, 1963, REQUESTED BIDS FROM 103 SOURCES TO FURNISH 150 FREQUENCY CONVERTERS IN ACCORDANCE WITH YOUR MODEL P/N 14-22C OR HEWLETT-PACKARD MODEL 525B, OR EQUAL. OF THE THREE BIDS WHICH WERE RECEIVED AND OPENED ON JANUARY 15, 1964, YOUR BID IN THE TOTAL AMOUNT OF $32,700 WAS LOWEST. ACCORDINGLY, ON JANUARY 17, 1964, THE CONTRACTING OFFICER REQUESTED FROM THE BOSTON CONTRACT MANAGEMENT DISTRICT (BCMD) A FACILITY CAPABILITY REPORT (FCR) ON YOUR FIRM.

THE FCR, WHICH WAS DATED FEBRUARY 3, 1964, DISCLOSED THAT YOUR OPERATING LOSS AS OF NOVEMBER 30, 1963, AMOUNTED TO $265,131.71, AND STATED THAT THERE WERE NO INDICATIONS OF ANY IMPROVEMENTS IN THE NEAR FUTURE. ACCORDINGLY, THE FINANCIAL ANALYST FOR THE BCMD DID NOT RECOMMEND APPROVAL OF AN AWARD TO YOUR COMPANY, AND AN AWARD WAS MADE TO HEWLETT-PACKARD COMPANY, THE SECOND LOW BIDDER, AT ITS BID PRICE OF $44,950.13. THE RECORD SHOWS THAT THE CONTRACTOR COMMENCED PRODUCTION ON APRIL 29, 1964, AND EXPECTS TO COMPLETE THE CONTRACT IN AUGUST 1964.

IN YOUR PROTEST, YOU STATE THAT YOU DO NOT QUESTION THE UNFAVORABLE FINANCIAL CAPABILITY DETERMINATION AS MUCH AS THE SECRETIVE MANNER IN WHICH THE MATTER WAS HANDLED, IN THAT REPEATED CALLS BY YOU TO THE PROCUREMENT OFFICE REVEALED NO PROBLEM. YOU CONTEND THAT SINCE YOU WERE AHEAD OF SCHEDULE IN PERFORMANCE OF A MUCH LARGER CONTRACT ($1.8 MILLION) FOR OLMSTED AIR FORCE BASE, A NEGATIVE FINANCIAL CAPABILITY DETERMINATION ON THIS SMALLER PROCUREMENT--- LESS THAN 2 PERCENT OF THE SIZE OF THE LARGER CONTRACT--- WAS UNREASONABLE. YOU ALLEGE THAT HAD YOU BEEN AWARE OF, OR BEEN GIVEN AN OPPORTUNITY TO REPLY TO, THE CONTEMPLATED ADMINISTRATIVE ACTION, YOU COULD HAVE PROVIDED MORE CURRENT FINANCIAL INFORMATION WHICH WOULD HAVE BEEN MORE FAVORABLE TO YOU THAN THE DATA ON WHICH THE ADMINISTRATIVE DETERMINATION WAS MADE. YOU ALSO ALLEGE THAT YOUR PARENT COMPANY, ATLANTIC RESEARCH CORPORATION, COULD HAVE PROVIDED A FULL PERFORMANCE GUARANTEE IF FURTHER REASSURANCE WAS NECESSARY. THEREFORE, YOU REQUEST THAT THE HEWLETT-PACKARD CONTRACT BE TERMINATED AND THAT AWARD BE MADE TO YOU.

THE LARGER CONTRACT WHICH YOU CITE AS AN EXAMPLE OF PAST PERFORMANCE HAS BEEN IDENTIFIED AS CONTRACT NO. AF 33/604/-35819. HOWEVER, THE RECORD PERTAINING TO THAT CONTRACT DOES NOT SUPPORT YOUR ALLEGATIONS. RATHER, IT INDICATES THAT DIFFICULTIES WERE ENCOUNTERED IN OBTAINING DEFECT-FREE ITEMS FROM YOU, AND THROUGHOUT THE LIFE OF THE CONTRACT YOUR FINANCIAL CONDITION WAS UNSTABLE. ALSO, WHILE THE CONTRACT WAS FOR $1.8 MILLION, YOUR PARENT COMPANY, ATLANTIC RESEARCH CORPORATION, PLACED A LIMIT OF $300,000 ON ITS FINANCIAL ASSISTANCE TO EACH OF ITS SUBSIDIARIES, AND YOU HAD DEPLETED THAT AMOUNT IN OCTOBER 1963.

ARMED SERVICES PROCUREMENT REGULATION 1-904 PRECLUDES AWARD OF A CONTRACT TO ANY BIDDER UNLESS THE CONTRACTING OFFICER MAKES AN AFFIRMATIVE DETERMINATION THAT THE BIDDER IS RESPONSIBLE. TO BE CONSIDERED RESPONSIBLE UNDER ASPR 1-903, A BIDDER MUST HAVE ADEQUATE FINANCIAL RESOURCES OF THE ABILITY TO OBTAIN SUCH RESOURCES AS MAY BE REQUIRED DURING THE PERFORMANCE OF THE CONTRACT. ALSO, WHILE THE CONTRACTING OFFICER, IN MAKING HIS DETERMINATION OF RESPONSIBILITY, MAY SOLICIT SUPPLEMENTAL OR UPDATED INFORMATION FROM THE PROSPECTIVE CONTRACTOR, THERE IS NO REQUIREMENT IN THE ASPR THAT HE DO SO.

THE REGULATIONS LEAVE TO THE CONTRACTING OFFICER CERTAIN DISCRETION IN THE SELECTION OF A CONTRACTOR. SUCH DISCRETION NECESSARILY INCLUDES THE DETERMINATION OF WHETHER A BIDDER SHOULD BE AFFORDED AN OPPORTUNITY TO REBUT EVIDENCE FROM OTHER SOURCES REGARDING HIS FINANCIAL STABILITY, AND ONCE THE CONTRACTING OFFICER HAS EXERCISED HIS DISCRETION IN THIS RESPECT, OUR OFFICE WILL NOT QUESTION HIS JUDGMENT IN THE ABSENCE OF CLEAR AND CONVINCING EVIDENCE OF FRAUD OR MISTAKE. IN THE CIRCUMSTANCES OF THIS CASE, PARTICULARLY IN THE LIGHT OF THE FACT THAT THE UNFAVORABLE FCR OF FEBRUARY 3, 1964, WAS BASED TO A GREAT EXTENT ON EVIDENCE THAT ONLY TWO MONTHS EARLIER YOUR OPERATING LOSSES AMOUNTED TO MORE THAN A QUARTER OF A MILLION DOLLARS- - A FACT WHICH YOU DO NOT DENY--- WE CANNOT SAY THAT THERE HAS BEEN ANY ABUSE BY THE CONTRACTING OFFICER OF SUCH DISCRETION. CONVERSELY, WE ARE INCLINED TO THE OPINION THAT, IN VIEW OF YOUR FINANCIAL HISTORY, IT WAS INCUMBENT UPON YOU TO ADVISE THE BCMD, BEFORE AWARD TO HEWLETT-PACKARD, OF ANY IMPROVEMENT IN YOUR FINANCIAL STATUS.

SINCE WE FIND NO BASIS TO DISTURB THE AWARD TO HEWLETT-PACKARD, YOUR PROTEST IS THEREFORE DENIED.