B-154505, OCT. 2, 1964

B-154505: Oct 2, 1964

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MISSILE SYSTEMS CORPORATION OF TEXAS: FURTHER REFERENCE IS MADE TO YOUR LETTERS OF JUNE 18. THE BASES OF YOUR PROTEST ARE. THAT NEGOTIATIONS FOR THE SET-ASIDE PORTION OF THE INVITATION SHOULD HAVE BEGUN WITH EMTEX. THAT EMTEX PRIORITY QUALIFICATION FOR LABOR SURPLUS SET-ASIDE WAS TO BE ESTABLISHED AT THE TIME OF NEGOTIATIONS AND. THAT LOCKLEY MACHINE COMPANY IS NOT A CAPABLE SUPPLIER OF THE ITEM AND THEREFORE SHOULD NOT BE CONSIDERED A RESPONSIVE" BIDDER. YOU ALLEGE FURTHER THAT LOCKLEY MACHINE COMPANY IS BEHIND QUALITY AND DELIVERY SCHEDULES ON A CURRENT CONTRACT TO PRODUCE THE SAME ITEM AND THUS IS NEITHER A RESPONSIBLE NOR A QUALIFIED BIDDER AND IS NOT ELIGIBLE TO PARTICIPATE IN NEGOTIATIONS FOR THE SET-ASIDE AWARD EVEN THOUGH IT HAS FIRST PRIORITY FOR THIS PORTION OF THE INVITATION.

B-154505, OCT. 2, 1964

TO EMTEX DIVISION, MISSILE SYSTEMS CORPORATION OF TEXAS:

FURTHER REFERENCE IS MADE TO YOUR LETTERS OF JUNE 18, JULY 11, AND SEPTEMBER 10, 1964, WHEREIN YOU PROTESTED THE POTENTIAL AWARD OF THE LABOR SURPLUS SET-ASIDE PORTION OF THE PROCUREMENT UNDER DEPARTMENT OF THE ARMY INVITATION FOR BIDS NO. AMC (A/-11-173-64-116 TO LOCKLEY MACHINE COMPANY. THE BASES OF YOUR PROTEST ARE; FIRST, THAT NEGOTIATIONS FOR THE SET-ASIDE PORTION OF THE INVITATION SHOULD HAVE BEGUN WITH EMTEX; THAT EMTEX PRIORITY QUALIFICATION FOR LABOR SURPLUS SET-ASIDE WAS TO BE ESTABLISHED AT THE TIME OF NEGOTIATIONS AND, SECOND, THAT LOCKLEY MACHINE COMPANY IS NOT A CAPABLE SUPPLIER OF THE ITEM AND THEREFORE SHOULD NOT BE CONSIDERED A RESPONSIVE" BIDDER. YOU ALLEGE FURTHER THAT LOCKLEY MACHINE COMPANY IS BEHIND QUALITY AND DELIVERY SCHEDULES ON A CURRENT CONTRACT TO PRODUCE THE SAME ITEM AND THUS IS NEITHER A RESPONSIBLE NOR A QUALIFIED BIDDER AND IS NOT ELIGIBLE TO PARTICIPATE IN NEGOTIATIONS FOR THE SET-ASIDE AWARD EVEN THOUGH IT HAS FIRST PRIORITY FOR THIS PORTION OF THE INVITATION. YOU ALSO ALLEGE THAT THE INTERPRETATION OF THE LABOR SURPLUS CLAUSE BY THE DEPARTMENT OF THE ARMY ALLOWS A COMPETITOR TO LOWER HIS PRICE TO THAT OF THE LOW BIDDER AFTER THE BIDS HAVE BEEN OPENED WHICH IS CONTRARY TO ADVERTISED PROCUREMENT PROCEDURE.

INVITATION FOR BIDS NO. AMC/A/-11-173-64-116 WITH AMENDMENT 1 ISSUED APRIL 24, 1964, AND OPENED MAY 25, 1964, COVERED A QUANTITY OF 165 DEMOLITION KITS AND IN ADDITION PROVIDED FOR A QUANTITY OF 165 KITS OF THIS ITEM SET ASIDE FOR AWARD TO A LABOR SURPLUS AREA CONCERN. YOUR COMPANY WAS LOW BIDDER ON THE INVITATION, WHICH PROVIDED ON PAGE 2, PARAGRAPH (A) THAT NEGOTIATIONS FOR THE SET-ASIDE PORTION WILL BE CONDUCTED WITH BIDDERS IN THE FOLLOWING ORDER OF PRIORITY:

GROUP 1. PERSISTENT LABOR SURPLUS AREA CONCERNS WHICH ARE ALSO SMALL BUSINESS CONCERNS.

GROUP 2. OTHER PERSISTENT LABOR SURPLUS AREA CONCERNS.

GROUP 3. SUBSTANTIAL LABOR SURPLUS AREA CONCERNS WHICH ARE CONCERNS WHICH ARE ALSO SMALL BUSINESS CONCERNS.

GROUP 4. OTHER SUBSTANTIAL LABOR SURPLUS AREA CONCERNS.

GROUP 5. SMALL BUSINESS CONCERNS WHICH ARE NOT LABOR SURPLUS AREA CONCERNS.

YOUR COMPANY IDENTIFIED IN ITS BID THE INTENDED AREAS OF PERFORMANCE FOR THE SET-ASIDE PORTION, WHICH AREAS, PURSUANT TO THE LATEST DEPARTMENT OF LABOR ISSUE OF "AREA LABOR MARKET TRENDS" WERE CLASSIFIED AS SUBSTANTIAL LABOR SURPLUS AREAS WHICH CLASSIFICATION WAS NOT CHANGED PRIOR TO AWARD. IN PARAGRAPH (C) OF PAGE 4 OF THE INVITATION IT IS PROVIDED THAT A BIDDER IS ALLOWED THE PREROGATIVE TO CHANGE ITS DESIGNATED AREAS OF PERFORMANCE, ONLY IF, AFTER BID OPENING AND PRIOR TO AWARD, THE CLASSIFICATION OF SAID AREAS HAS BEEN CHANGED BY THE DEPARTMENT OF LABOR. ALSO, IN OUR DECISION OF JUNE 28, 1963, B 151247, WE HELD THAT A BIDDER COULD NOT CHANGE ITS PRIORITY FROM GROUP 3 TO GROUP 1 UPON AN ALLEGATION THAT IT MADE AN ERROR IN INDICATING IT WOULD PERFORM IN A SUBSTANTIAL LABOR SURPLUS AREA BECAUSE SUCH CHANGE WOULD DISCRIMINATE AGAINST OTHER BIDDERS. IN VIEW THEREOF, WE SEE NO PROPER BASIS FOR PERMITTING YOU TO NOW SUBMIT DATA ENTITLING YOU TO BE PLACED IN A HIGHER PRIORITY GROUP. LOCKLEY MACHINE COMPANY, A SMALL BUSINESS CONCERN, WAS AT THE TIME OF THE BID OPENING IN AN AREA OF SUBSTANTIAL AND PERSISTENT LABOR SURPLUS. THE COMBINATION OF LABOR SURPLUS CLASSIFICATION AND SMALL BUSINESS STATUS PLACES LOCKLEY MACHINE COMPANY IN GROUP NO. 1 ABOVE, WHICH HAS FIRST PRIORITY FOR PURPOSES OF NEGOTIATING THE SET-ASIDE PORTION. YOUR COMPANY, ALSO A SMALL BUSINESS CONCERN, BUT BEING IN AN AREA OF SUBSTANTIAL LABOR SURPLUS IS PLACED IN GROUP NO. 3 AND THUS RANKS SECOND IN ORDER OF PRIORITY FOR PURPOSES OF NEGOTIATING THE SET-ASIDE. 41 COMP. GEN. 160.

THE LABOR SURPLUS CLAUSE IS NOT INTERPRETED BY THE CONTRACTING AGENCY AS YOU CONTEND, BUT, RATHER, IS APPLIED VERBATIM TO THE FACT SITUATION AS MAY EXIST IN THE PARTICULAR PROCUREMENT. THE CLAUSE ITSELF IS AUTHORIZED BY THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) PROMULGATED BY THE SECRETARY OF DEFENSE PURSUANT TO 10 U.S.C. 2202. THE INTENT OF THE CLAUSE, AS WELL AS ITS EFFECT, IS DESIGNED TO PLACE A SUBSTANTIAL PORTION OF DEFENSE CONTRACTS IN AREAS CLASSIFIED AS LABOR SURPLUS. THE CLAUSE AUTHORIZES NEGOTIATION OF CERTAIN PORTIONS OF DEFENSE CONTRACTS WITH BIDDERS IN LABOR SURPLUS AREAS AND THEREFORE, SUCH CONTRACTS ARE PLACED OUTSIDE THE SCOPE OF ADVERTISED PROCUREMENT. THE NEGOTIATION IS NOT DESIGNED TO ASCERTAIN THE AREA NOR THE LABOR CLASS WHEREIN THE BIDDER INTENDS TO PERFORM, NOR IS IT INTENDED TO ASCERTAIN THE CLASSIFICATION OF ANY BIDDER MEETING THE REQUIREMENTS FOR LABOR SURPLUS, BUT RATHER TO ASCERTAIN THE PRICE AT WHICH A BIDDER, QUALIFIED IN ACCORDANCE WITH THE TERMS OF THE CLAUSE AND THE BID SUBMITTED, WILL DELIVER THE PRODUCT REQUIRED.

THEREFORE, YOUR CONTENTION THAT NEGOTIATION FOR THE SET-ASIDE PORTION OF THE INVITATION SHOULD HAVE BEGUN WITH YOUR COMPANY OR AT LEAST SIMULTANEOUSLY WITH OTHER QUALIFIED BIDDERS IS, ON THE RECORD, FOUND TO BE WITHOUT MERIT.

WITH RESPECT TO THE REQUEST CONTAINED IN YOUR LETTER OF SEPTEMBER 10, 1964, THAT ADDITIONAL FISCAL DATA WHICH YOU CONSIDER PERTINENT TO THE MATTER BE OBTAINED FROM THE LOCKLEY MACHINE COMPANY, IT IS NOT THE FUNCTION OF THE GENERAL ACCOUNTING OFFICE TO CONDUCT SUCH EXAMINATION OF A BIDDER IN CONNECTION WITH A BID PROTEST. THE DEPARTMENT OF THE ARMY HAS SUBMITTED A COMPREHENSIVE REPORT ON THE PROTEST WHICH IS FOUND TO BE FULLY DOCUMENTED AND WHICH SUFFICES TO SUPPLY ALL THE INFORMATION REQUIRED TO REACH A DECISION. SINCE YOUR LETTER OF SEPTEMBER 10, 1964, CONTAINS NO ADDITIONAL EVIDENCE OF NONRESPONSIBILITY A SUPPLEMENTAL ADMINISTRATIVE REPORT IN THE PREMISES IS DEEMED UNNECESSARY.

THE RECORD DISCLOSES THAT AFTER DETERMINING THAT LOCKLEY MACHINE COMPANY WAS THE ONLY FIRM IN PRIORITY GROUP NO. 1, A PREAWARD SURVEY WAS CONDUCTED OF ITS FACILITIES. REGARDING LOCKLEY'S BACKLOG OF OTHER GOVERNMENT WORK IT WAS FOUND THAT EACH JOB HAS ITS OWN LINE FOR LOCATION, TOOLING, PERSONNEL, ETC. THERE ARE NO CONFLICTS CAUSED BY THE USE OF THE SAME MACHINES ON DIFFERENT JOBS. THIS APPLIES TO THE PRESENT CONTRACT FOR THE DEMOLITION KIT AND WILL FOLLOW THROUGH ON THE PROCUREMENT UNDER CONSIDERATION. THE PREAWARD SURVEY FOUND THAT THE LOCKLEY MACHINE COMPANY HAS THE TECHNICAL KNOWLEDGE AND ABILITY TO PERFORM AND PRODUCE QUALITY PRODUCTS. THE COMPANY'S RECORD OF MEETING ITS DELIVERY SCHEDULES IS SHOWN TO BE ADEQUATE SINCE IT IS CURRENTLY QUALIFYING FOR AND RECEIVING PROGRESS PAYMENTS FROM BOTH THE DEPARTMENT OF THE ARMY AND THE DEPARTMENT OF THE NAVY. FINANCIALLY, THE COMPANY WAS FOUND TO BE FULLY RESPONSIBLE WITHIN THE MEANING OF ASPR 1-902 AND 1-903, MEETING THE CRITERIA FOR PROGRESS PAYMENT FINANCING, INCLUDING THE ADEQUACY OF THE SYSTEM OF ACCOUNTING AND CONTROLS MAINTAINED BY THE COMPANY. REASONABLE ARRANGEMENTS WERE FOUND TO HAVE BEEN MADE TO FINANCE PERFORMANCE OF THE PROPOSED CONTRACT AND A FULL AWARD WAS RECOMMENDED BY THOSE OFFICIALS RESPONSIBLE FOR THE PREAWARD SURVEY.

THE ALLEGATIONS OF YOUR PROTEST HAVE BEEN REVIEWED IN THE LIGHT OF THE EVIDENCE IN THE HANDS OF THE CONTRACTING OFFICER. THE ARMED SERVICES PROCUREMENT REGULATION SECTION 1-904.1 REQUIRES THAT THE CONTRACTING OFFICER, IN EVERY CASE WHERE AN AWARD OF A CONTRACT IS TO BE MADE, MAKE A DOCUMENTED DETERMINATION THAT THE BIDDER TO WHOM HE PROPOSES TO LET THE CONTRACT IS RESPONSIBLE. THE DETERMINATION OF A BIDDER'S RESPONSIBILITY IS THE FUNCTION OF EACH CONTRACTING OFFICER AS HE PASSES UPON AN AWARD TO BE MADE BY HIM. THE REGULATION AUTHORIZES THE CONTRACTING OFFICER TO CONSIDER INFORMATION FROM EVERY AND ANY SOURCE THAT HE CONSIDERS PROPER AND NECESSARY IN THE CIRCUMSTANCES AND YOUR PROTEST DOUBLY INSURED A MOST COMPREHENSIVE REVIEW OF THE BIDDER'S QUALIFICATIONS. IT IS RECOGNIZED THAT THE PROJECTION OF A BIDDER'S ABILITY TO PERFORM, IF AWARDED A CONTRACT, IS OF NECESSITY A MATTER OF JUDGMENT. WHILE SUCH JUDGMENT SHOULD BE BASED ON FACT AND SHOULD BE ARRIVED AT IN GOOD FAITH, IT MUST PROPERLY BE LEFT LARGELY TO THE SOUND ADMINISTRATIVE DISCRETION OF THE CONTRACTING OFFICERS INVOLVED SINCE THEY ARE IN THE BEST POSITION TO ASSESS RESPONSIBILITY. THEY MUST BEAR THE BRUNT OF ANY DIFFICULTY EXPERIENCED BY REASON OF THE CONTRACTOR'S LACK OF ABILITY AND THEY MUST MAINTAIN THE DAY-TO-DAY RELATIONS WITH THE CONTRACTOR ON BEHALF OF THE GOVERNMENT. IN THIS CONNECTION IT SHOULD BE UNDERSTOOD THAT THE QUESTION OF RESPONSIBILITY IS NOT DECIDED BY A BIDDER'S PAST PERFORMANCE ALONE, BUT THAT OTHER FACTORS, INCLUDING THE BIDDER'S REPUTATION IN ITS DEALINGS WITH THE GOVERNMENT BEFORE ANY AND ALL GOVERNMENT AGENCIES, ARE FOR CONSIDERATION. IT MUST BE FURTHER UNDERSTOOD THAT THIS OFFICE IS NOT REQUIRED TO DETERMINE WHETHER OR NOT A FIRM IS RESPONSIBLE. THIS OFFICE MERELY ASCERTAINS WHETHER THE INFORMATION THAT THE CONTRACTING OFFICER RELIED UPON REASONABLY SUPPORTED THE AWARD.

IN THE CIRCUMSTANCES NO LEGAL BASIS EXISTS FOR DISTURBING THE ADMINISTRATIVE ACTION TAKEN UNDER THE INVITATION. 37 COMP. GEN. 430, 435. ACCORDINGLY, THE PROTEST IS DENIED.