B-154725, SEP. 23, 1964

B-154725: Sep 23, 1964

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TO CURTISS-WRIGHT CORPORATION: FURTHER REFERENCE IS MADE TO YOUR LETTER DATED JULY 9. PROSPECTIVE BIDDERS WERE ADVISED THAT AN AWARD WOULD GENERALLY BE MADE TO A SINGLE BIDDER FOR ALL ITEMS BUT THAT THE GOVERNMENT RESERVED THE RIGHT TO AWARD BY ITEM WHEN THE CONTRACTING OFFICER DETERMINED THAT TO BE ADVANTAGEOUS TO THE GOVERNMENT. THE FOLLOWING FOUR BIDS WERE RECEIVED ON ITEMS 1 AND 2: TABLE TOTAL TOTAL BIDDER ITEM 1 ITEM 2 1. AN EVALUATION OF THE BIDS RECEIVED INDICATED THAT THE LOWEST TOTAL BID OF ANY COMPANY FOR BOTH ITEMS 1 AND 2 WAS THAT OF YOUR FIRM IN THE TOTAL AMOUNT OF $247. WHICH IS $37. IT IS REPORTED THAT SINCE THERE WAS NO TECHNICAL BASIS FOR REQUIRING A SINGLE AWARD OF BOTH ITEMS.

B-154725, SEP. 23, 1964

TO CURTISS-WRIGHT CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED JULY 9, 1964, PROTESTING AGAINST THE ACTION OF THE UNITED STATES NAVY PURCHASING OFFICE, BROOKLYN, NEW YORK, IN AWARDING A CONTRACT TO LIECO, C., SYOSSET, LONG ISLAND, NEW YORK, UNDER INVITATION NO. N140-488-64.

THE INVITATION REQUESTED BIDS FOR FURNISHING THREE RADAR REPAIR TRAINING SETS, DEVICE 11D8, AND THREE REPAIR PARTS KITS IN ACCORDANCE WITH ANNEX "B" ATTACHED TO THE INVITATION, ITEMS 1 AND 2, RESPECTIVELY. ON PAGE 9 OF THE INVITATION, PROSPECTIVE BIDDERS WERE ADVISED THAT AN AWARD WOULD GENERALLY BE MADE TO A SINGLE BIDDER FOR ALL ITEMS BUT THAT THE GOVERNMENT RESERVED THE RIGHT TO AWARD BY ITEM WHEN THE CONTRACTING OFFICER DETERMINED THAT TO BE ADVANTAGEOUS TO THE GOVERNMENT.

THE FOLLOWING FOUR BIDS WERE RECEIVED ON ITEMS 1 AND 2:

TABLE

TOTAL TOTAL

BIDDER ITEM 1 ITEM 2 1. LIECO, INC.

$172,500 N/B 2. REFLECTONE ELECTRONICS

DIVISION

UNIVERSAL MATCH CORPORATION 246,375 37,125 3. CURTISS-WRIGHT CORPORATION

199,500 (1) 48,000 (1)

ALTERNATE 199,500 54,000 4. FUTURONICS CORPORATION

196,500 55,890

(1) PER MATERIAL IN STRICT ACCORDANCE WITH SPECIFICATIONS.

AN EVALUATION OF THE BIDS RECEIVED INDICATED THAT THE LOWEST TOTAL BID OF ANY COMPANY FOR BOTH ITEMS 1 AND 2 WAS THAT OF YOUR FIRM IN THE TOTAL AMOUNT OF $247,500. HOWEVER, BY SPLITTING THE AWARDS AND PLACING THE AWARD FOR ITEM 1 WITH LIECO, INC., FOR $172,500 AND THE AWARD FOR ITEM 2 WITH REFLECTONE ELECTRONICS AT THE BID PRICE OF $37,125, THE TOTAL EXPENDITURE OF THE GOVERNMENT FOR BOTH ITEMS WOULD BE $209,625, WHICH IS $37,875 LOWER THAN YOUR AGGREGATE TOTAL BID FOR ITEMS 1 AND 2. IT IS REPORTED THAT SINCE THERE WAS NO TECHNICAL BASIS FOR REQUIRING A SINGLE AWARD OF BOTH ITEMS, AND IN VIEW OF THE SAVINGS TO THE GOVERNMENT, THE DECISION WAS MADE TO AWARD ITEM 1 TO LEICO, INC., AND ITEM 2 TO REFLECTONE ELECTRONICS. ON JUNE 30, 1964, ITEM 1 WAS AWARDED TO LIECO, INC. THIS ACTION WAS IN ACCORDANCE WITH THE TERMS OF THE INVITATION ABOVE REFERRED TO.

YOU CONTEND THAT LIECO, INC., IS NOT A RESPONSIBLE CONTRACTOR WITHIN THE MEANING OF PARAGRAPHS 1-902 AND 1-903 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) IN THAT IT DOES NOT APPEAR TO HAVE THE FINANCIAL RESOURCES OR TECHNICAL SKILLS DEMANDED BY THE CITED PROVISIONS OF THE REGULATION. YOU STATE THAT IN IMPLEMENTATION OF ASPR REQUIREMENTS THAT AN AFFIRMATIVE DETERMINATION BE MADE BY THE CONTRACTING OFFICER THAT A PROSPECTIVE CONTRACTOR IS RESPONSIBLE BEFORE AN AWARD MAY BE MADE TO IT, THE SECRETARY OF DEFENSE, BY MEMORANDUM DATED FEBRUARY 21, 1964, (DEFENSE PROCUREMENT CIRCULAR NO. 3, DATED MARCH 4, 1964) POINTED OUT THAT THIS EXCLUDES A COMPANY WHOSE QUALIFICATIONS ARE NOT BETTER THAN BORDERLINE AS TO PRODUCTION CAPACITY AND FINANCIAL CAPABILITY, AMONG OTHER THINGS, AND THAT A COMPANY IS EXCLUDED WHOSE PERFORMANCE MAY BE JEOPARDIZED BY EVIDENCE OF FINANCIAL DIFFICULTY WHICH MAY CULMINATE IN LOSS OF NEEDED FINANCIAL CAPABILITY DURING THE PERIOD OF CONTRACT PERFORMANCE. YOU ALSO STATE THAT YOU HAVE INFORMATION INDICATING THAT LIECO, INC., HAS HAD SOME 13 LAW SUITS INSTITUTED AGAINST IT SINCE OCTOBER 1963, MOST OF WHICH SEEK TO RECOVER AMOUNTS FOR LABOR AND GOODS SOLD AND DELIVERED; THAT DURING THIS PERIOD, A FEDERAL TAX LIEN WAS ALSO ENTERED AGAINST THIS COMPANY IN THE AMOUNT OF $22,079; THAT ON NOVEMBER 4, 1963, LIECO, INC., GAVE A CHATTEL MORTGAGE IN THE AMOUNT OF $59,250 COVERING ITS EQUIPMENT; AND THAT IN 1959 IT OPERATED UNDER RECEIVERSHIP. YOU ALLEGE THAT THIS EVIDENCE OF FINANCIAL INSTABILITY IS COMPLEMENTED BY EQUALLY PERSUASIVE EVIDENCE OF LACK OF REQUISITE TECHNICAL SKILL AND CAPABILITY; THAT BESIDES BEING TOTALLY UNKNOWN IN THE SIMULATOR INDUSTRY, LIECO, INC., FAILED TO SUBMIT A QUOTATION ON THE SPARE PARTS FOR DEVICE 11D8 ON THE GROUNDS OF ,INSUFFICIENT INFORMATION.' YOU STATE THAT IT IS INCONCEIVABLE THAT A CONTRACTOR WHO PROFESSES TO HAVE SUFFICIENT TECHNICAL SKILL TO FABRICATE THE COMPLETE TRAINING PACKAGE CAN LACK SUFFICIENT INFORMATION, TECHNICAL OR OTHERWISE, TO QUOTE THE PRODUCTION OF SPARE PARTS FOR SUCH PACKAGE. YOU ALLEGE THAT THE INFERENCE TO BE DRAWN FROM LIECO'S DILEMMA IS THAT IT IS UNAWARE OF OR LACKS ADEQUATE COMPREHENSION OF THE TASK CALLED FOR BY THE INVITATION FOR BIDS.

IN REGARD TO THE FAILURE OF LIECO TO QUOTE A PRICE FOR THE SPARE PARTS COVERED BY ITEM 2 OF THE ADMINISTRATIVE OFFICE REPORTS THAT THE CORPORATION EXPLAINED ITS FAILURE TO BID ON ITEM 2 IN TERMS OF A NEED FOR FURTHER CLARIFICATION OF CERTAIN ITEMS; THAT PERSONNEL OF LIECO POINTED OUT THAT IN ONE CASE, NAMELY ITEM 133 OF THE SPARE PARTS LIST, THE MAGNETRON TUBE CALLED FOR WAS PART NUMBER 6230 WHICH LIECO STATES IS NO LONGER MADE, WHEREAS THE SPECIFICATION FOR THE DEVICE ITSELF ALLOWS THE FURNISHING OF TYPES QK6229, QK6230, OR EQUAL.

IN REGARD TO THE RESPONSIBILITY OF LIECO, INC., THE CONTRACTING OFFICER STATES AS FOLLOWS:

"5. THE RESPONSIBILITY OF LIECO, INC., THE PROPOSED CONTRACTOR FOR ITEM 1, WAS CAREFULLY INVESTIGATED. THE INSPECTOR OF NAVAL MATERIAL, GARDEN CITY, LONG ISLAND, N.Y., CONDUCTED A PRE-AWARD SURVEY OF THE FACILITIES AND TECHNICAL CAPABILITY OF LIECO, INC. THE CONCLUSION OF THE PRE-AWARD SURVEY TEAM WAS THAT LIECO, INC. POSSESSES THE ABILITY TO FULFILL THE SUBJECT REQUIREMENT. A COPY OF THE FINDINGS OF THE PRE AWARD SURVEY TEAM ARE FORWARDED AS ENCLOSURES (5). IN ADDITION, THIS OFFICE CONTACTED MR. ALBRECHT OF NTDC FOR COMMENTS AS TO LIECO, INC.'S TECHNICAL CAPABILITY. MR. ALBRECHT IS BOTH THE PROJECT ENGINEER ON A CONTRACT WHICH LIECO, INC. IS CURRENTLY WORKING UNDER (REFERENCE (B) (,AND ALSO THE ORIGINATOR OF THE SPECIFICATIONS APPLICABLE TO THE SUBJECT PROCUREMENT, (ENCLOSURE (3) ). MR. ALBRECHT SAID THAT HE HAD VISITED LIECO, INC. VERY RECENTLY IN RELATION TO REFERENCE (B) AND THAT LIECO, INC. IS PERFORMING SATISFACTORILY UNDER THIS CONTRACT. MR. ALBRECHT ALSO STATED THAT HE SAW NO REASON WHY LIECO, INC. WOULD NOT BE ABLE TO PERFORM SATISFACTORILY UNDER THE PRESENT PROCUREMENT IF THEY WERE AWARDED THE CONTRACT.

"6. A CAREFUL INVESTIGATION WAS ALSO MADE OF THE FINANCIAL CAPABILITY OF THE PROPOSED CONTRACTOR, LIECO, INC. A DUN AND BRADSTREET REPORT, (ENCLOSURE (6) (, ESTABLISHED THAT LIECO HAD BEEN IN BUSINESS SINCE 1951, AND THAT ITS PRESIDENT SET THE FIRM'S CURRENT NET WORTH AT $180,000 AND ITS ACTIVE VOLUME ESTIMATE AT $100,000. THE REPORT INDICATED THAT THE VARIOUS ACTIONS AGAINST THE FIRM WERE EXTREMELY SMALL IN ALMOST EVERY CASE AND HAD EITHER BEEN COMPLETELY RETIRED OR ARRANGEMENTS HAD BEEN ENTERED INTO FOR THEIR SETTLEMENT. THE REPORT ALSO INDICATED THAT A MR. MICHAEL FORTE OWNED 50 PERCENT OF THE STOCK INTEREST OF THE CORPORATION. OBTAIN MORE DEFINITIVE INFORMATION ON THE FINANCIAL CAPABILITY OF LIECO, INC., A CONFIDENTIAL BANK REPORT WAS OBTAINED, (ENCLOSURE (7) ). THIS REPORT INDICATES THE BANK'S CONFIDENCE IN LIECO, INC.'S ABILITY TO FINANCE THE SUBJECT PROCUREMENT, AND THE STRONG FINANCIAL POSITION OF MR. FORTE, TOGETHER WITH THE BANK'S UNDERSTANDING THAT MR. FORTE OWNS 66 PERCENT OF THE COMPANY'S STOCK. THIS OFFICE ALSO DISCUSSED THE FINANCIAL CAPABILITY DIRECTLY WITH PERSONNEL OF LIECO, INC. AS A RESULT OF THE INQUIRY, LIECO, INC. SUBMITTED A LETTER, DATED 24 JUNE 1964 (ENCLOSURE (8) (, IN WHICH IT INDICATED THAT THE FINANCIAL IMPLEMENTATION OF THE PROCUREMENT HAD BEEN DISCUSSED WITH ITS BANK AND ITS PRINCIPAL STOCKHOLDER, MR. MICHAEL FORTE, AND SET FORTH ASSURANCE THAT LIECO WILL BE ADEQUATELY FINANCED THROUGHOUT THE LIFE OF ANY CONTRACT WHICH SHOULD BE AWARDED UNDER THE SUBJECT PROCUREMENT. A FURTHER INQUIRY WAS MADE DIRECTLY TO MR. FORTE, THE CHIEF STOCKHOLDER,WHO SAID THAT HE WOULD BACK LIECO, INC. FINANCIALLY UNDER THE CONTRACT AND THAT LIECO, INC. IS CAPABLE, BOTH FINANCIALLY AND TECHNICALLY OF FULFILLING ALL THE REQUIREMENTS OF THE SUBJECT PROCUREMENT.'

THIS OFFICE, AS WELL AS THE COURTS, HAS CONSISTENTLY HELD THAT THE QUESTION AS TO A BIDDER'S RESPONSIBILITY IS PRIMARILY FOR DETERMINATION BY THE CONTRACTING OFFICER. 33 COMP. GEN. 549; 38 ID. 131; NIKLAUS V. MILLER, 66 N.W.2D 824; KNISKA V. SPLAIN, 110 N.Y. 2D 267; BROWN V. PHOENIX, 272 P.2D 358; MCNICHOLS V. DENVER, 274 P.2D 317. THE RECORD HERE ESTABLISHES THAT THE NECESSARY DETERMINATION REQUIRED BY REGULATION AS TO THE RESPONSIBILITY OF LIECO, INC., WAS MADE BY THE CONTRACTING OFFICER AND, IN THE ABSENCE OF EVIDENCE OF CAPRICIOUS OR ARBITRARY ACTION, WE ARE REQUIRED TO ACCEPT THE ADMINISTRATIVE DETERMINATION THAT THE SUCCESSFUL BIDDER WAS CAPABLE OF PERFORMING THE RESULTING CONTRACT.