B-154779, DEC. 14, 1964

B-154779: Dec 14, 1964

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TO YUKON SERVICE MECHANICAL CONTRACTORS: FURTHER REFERENCE IS MADE TO YOUR LETTER DATED JULY 17. YOU ADVISE THAT YOU HAVE BEEN REMOVED FROM THE QUALIFIED BIDDERS LIST OF THE RADIO CORPORATION OF AMERICA AND REQUEST AN INVESTIGATION OF THIS RESTRICTION OF COMPETITION. YOU ARE PROTESTING THE SUBCONTRACT AWARDED BY THE RCA SERVICE COMPANY TO THE BURGESS PRUHS CONSTRUCTION COMPANY IN CONNECTION WITH THE ABOVE REFERRED-TO PROJECT. YOU INDICATE THAT YOU SUBMITTED THE LOWEST BID TO THE RCA SERVICE COMPANY AND THAT THE BURGESS PRUHS CONSTRUCTION COMPANY APPARENTLY WAS THE SECOND LOW BIDDER. YOU CONTEND THAT YOU HAD ADEQUATE EQUIPMENT TO PERFORM THE WORK AND THAT YOUR FINANCIAL STATEMENT CLEARLY INDICATES THAT YOU WERE FINANCIALLY QUALIFIED.

B-154779, DEC. 14, 1964

TO YUKON SERVICE MECHANICAL CONTRACTORS:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED JULY 17, 1964, WITH ENCLOSURES, PROTESTING THE AWARD OF A SUBCONTRACT MADE BY THE DEPARTMENT OF THE AIR FORCE PRIME CONTRACTOR, THE RCA SERVICE COMPANY, RIVERTON, NEW JERSEY, IN CONNECTION WITH AN AIR FORCE CONTRACT AT THE CLEAR, ALASKA, BMEWS SITE. ALSO IN YOUR LETTER DATED OCTOBER 2, 1964, YOU ADVISE THAT YOU HAVE BEEN REMOVED FROM THE QUALIFIED BIDDERS LIST OF THE RADIO CORPORATION OF AMERICA AND REQUEST AN INVESTIGATION OF THIS RESTRICTION OF COMPETITION.

SPECIFICALLY, YOU ARE PROTESTING THE SUBCONTRACT AWARDED BY THE RCA SERVICE COMPANY TO THE BURGESS PRUHS CONSTRUCTION COMPANY IN CONNECTION WITH THE ABOVE REFERRED-TO PROJECT. YOU INDICATE THAT YOU SUBMITTED THE LOWEST BID TO THE RCA SERVICE COMPANY AND THAT THE BURGESS PRUHS CONSTRUCTION COMPANY APPARENTLY WAS THE SECOND LOW BIDDER. IN SUPPORT OF YOUR PROTEST YOU QUESTION THE RIGHT OF THE RCA SERVICE COMPANY TO WITHHOLD INFORMATION FROM YOU AS TO THE AMOUNT OF THE VARIOUS BIDS QUOTED FOR THE SUBCONTRACT WORK. ALSO, YOU CONTEND THAT YOU HAD ADEQUATE EQUIPMENT TO PERFORM THE WORK AND THAT YOUR FINANCIAL STATEMENT CLEARLY INDICATES THAT YOU WERE FINANCIALLY QUALIFIED.

WE NOTE THAT THE AWARD OF THE SUBCONTRACT INVOLVED, WHICH COVERED OPERATION AND MAINTENANCE PROJECTS AT THE CLEAR BMEWS SITE, WAS THE SUBJECT OF CONGRESSIONAL INVESTIGATIONS BY THE HONORABLE E. L. BARTLESS, UNITED STATES SENATE, IN EARLY APRIL 1964, AND THAT THE HONORABLE ERNEST GRUENING, UNITED STATES SENATE, IN EARLY MAY 1964. THE DEPARTMENT OF THE AIR FORCE FURNISHED REPORTS IN CONNECTION WITH THE INVESTIGATIONS TO SENATOR BARTLETT ON APRIL 23, 1964, AND TO SENATOR GRUENING ON JUNE 3, 1964, AND SINCE THE INVESTIGATIONS UNDOUBTEDLY RESULTED FROM PREVIOUS PROTESTS, TO WHICH YOU REFER IN YOUR LETTER OF JULY 17, 1964, AS HAVING BEEN MADE IN THE MATTER, IT IS ASSUMED THAT YOU ALREADY ARE AWARE OF THE POSITION TAKEN BY THE AIR FORCE IN THE CASE AND THE REASONS THEREFOR.

AT THE OUTSET IT MIGHT BE MENTIONED THAT THE DEPARTMENT OF THE AIR FORCE ADVISES THAT THE RCA SERVICE COMPANY'S PROCUREMENT PROCEDURE FOR THIS AWARD WAS BASED ON NEGOTIATED BIDS AND NOT FORMAL ADVERTISING AND, THEREFORE, THERE WAS NO OBLIGATION ON THE PART OF THAT COMPANY TO MAKE PUBLIC RELEASE OF THE BID RESULTS. THE AIR FORCE ADVISES FURTHER THAT THE MINUTES OF THE BID CONFERENCE AT CLEAR DO NOT DISCLOSE THAT ANY COMMITMENT WAS MADE BY THE RCA SERVICE COMPANY TO MAKE BID RESULTS AVAILABLE. MOREOVER, IT IS STATED THAT THE NORMAL PRACTICE IN SUCH TYPE OF NEGOTIATED PROCUREMENT IS TO RELEASE THE NAME OF THE OFFEROR RECEIVING THE AWARD AND THE AWARD AMOUNT AND THE AIR FORCE WAS INFORMED THAT THIS PRACTICE WAS FOLLOWED BY THE RCA SERVICE COMPANY. IT APPEARS, HOWEVER, THAT FIVE PROPOSALS WERE SUBMITTED FOR THE SUBCONTRACT WORK, RANGING FROM YOUR LOW BID OF $699,854 TO A HIGH BID OF $898,803. THE BURGESS PRUHS CONSTRUCTION COMPANY SUBMITTED THE THIRD LOW BID IN THE AMOUNT OF $763,866.

WITH RESPECT TO THE AVAILABILITY OF ADEQUATE EQUIPMENT TO PERFORM THE WORK, A REVIEW OF THE LIST OF YOUR AVAILABLE EQUIPMENT DISCLOSED THE COMPLETE LACK OF NECESSARY EQUIPMENT FOR COMPACTING ASPHALT CONCRETE, CULVERT BACKFILL, WATER MAIN BACKFILL, AND FOR PIPELINE BACKFILL. THE AIR FORCE REPORTS THAT YOU DID NOT DEMONSTRATE THAT YOU HAD POSSESSION OF, OR THE MEANS OF GUARANTEEING THE USE OF, SUCH REQUIRED EQUIPMENT. THE AIR FORCE POINTS OUT FURTHER THAT THE AVAILABILITY OF SUCH EQUIPMENT BECOMES A PARTICULARLY SIGNIFICANT FEATURE OF THE CONTRACTOR'S ABILITY TO SATISFACTORILY PERFORM THE WORK WHEN IT IS ANTICIPATED THAT SUCH EQUIPMENT WOULD BE AT A PREMIUM DURING THE CONSTRUCTION SEASON IN ALASKA AS A RESULT OF THE EARTHQUAKE DAMAGE IN THAT AREA.

THE MATTER OF SUFFICIENT QUALIFIED PERSONNEL TO DIRECT THE ACCOMPLISHMENT OF THE WORK TASK ALSO WAS A MAJOR CONSIDERATION IN THE ANALYSIS OF THE PROPOSALS. HERE AGAIN IT WAS DETERMINED THAT THE SMALL NUMBER OF PERSONNEL IN YOUR EMPLOYMENT--- AN INDICATION OF ONLY FOUR FULL-TIME EMPLOYEES--- DID NOT DEMONSTRATE THE EXISTENCE OF TECHNICAL AND MANAGERIAL QUALIFICATIONS AS WELL AS THE ENGINEERING AND SUPERVISORY CAPABILITIES NECESSARY FOR THE SATISFACTORY AND TIMELY ACCOMPLISHMENT OF THE REQUIRED TASKS.

MOREOVER, THE RESULT OF THE REVIEW BY THE RCA SERVICE COMPANY OF THE FINANCIAL REPORT SUBMITTED BY YOU ON APRIL 6, 1964, REFLECTED A WEAK FINANCIAL CONDITION, INVOLVING APPARENT DIFFICULTIES WHICH YOU HAD WITH DEBTS TO SUPPLIERS AND SUBCONTRACTORS. ALSO, IT WAS ASCERTAINED THAT PREVIOUS JOBS PERFORMED BY YOU WERE NOT COMPARABLE IN SIZE TO THIS $600,000 TO $700,000 PROJECT AND THAT THE LAST YEAR'S TOTAL BUSINESS OF YOUR COMPANY WAS REPORTED AT ONLY $407,000. IN THIS REGARD, IT IS THE POLICY OF THE DEPARTMENT OF DEFENSE TO GIVE VERY CAREFUL CONSIDERATION TO A PROSPECTIVE CONTRACTING FIRM'S FINANCIAL STATUS BEFORE MAKING AN AWARD AND THE RCA SERVICE COMPANY WAS BEING CONSISTENT WITH THIS POLICY WHEN EVALUATING YOUR RESPONSIBILITY IN THIS REGARD.

THE DEPARTMENT OF THE AIR FORCE REPORTS THAT YOU WERE INVITED TO BID AS A RESULT OF YOUR LETTER IN JANUARY 1964, TO THE RCA SERVICE COMPANY REQUESTING THAT YOU BE PLACED ON THE COMPANY'S BIDDERS LIST. IN THIS CONNECTION, IT MIGHT BE POINTED OUT THAT THE FACT THAT A PROSPECTIVE BIDDER IS SOLICITED BY AN INVITATION FOR BIDS TO SUBMIT A BID FOR A SUBCONTRACT DOES NOT ESTABLISH--- AS YOU CONTEND IS DONE BY IMPLICATION--- THAT SUCH PROSPECTIVE BIDDER IS QUALIFIED TO ACCOMPLISH THE WORK REQUIREMENTS. A FINAL DETERMINATION OF THE QUALIFICATIONS OF ALL BIDDERS IS NOT MADE UNTIL THEIR BIDS ARE RECEIVED AND EVALUATED.

THE REPORT OF THE DEPARTMENT OF THE AIR FORCE SHOWS THAT THE RCA SERVICE COMPANY CONDUCTED A COMPLETE ANALYSIS AND EVALUATION OF ALL BIDS RECEIVED WHICH INCLUDED, AMONG OTHERS, EQUIPMENT INVENTORY, QUALIFICATIONS OF CONTRACTOR PERSONNEL, FINANCIAL STATUS OF THE CONTRACTOR, EXPERIENCE OF THE FIRM AND ABILITY TO ACCOMPLISH THE WORK, ETC. IN THE EVALUATION OF YOUR FIRM'S OVER-ALL QUALIFICATIONS, THE RCA SERVICE COMPANY FOUND THAT BY REASON OF YOUR LACK OF ADEQUATE EQUIPMENT, THE SMALL NUMBER OF SUPERVISORY EMPLOYEES ON YOUR PAYROLL, AND YOUR FINANCIAL STATUS, IT WAS EXTREMELY UNLIKELY, IF NOT IMPOSSIBLE, THAT YOU COULD SATISFACTORILY PERFORM THE SUBCONTRACT WITHIN THE INFLEXIBLE TIME SCHEDULE IMPOSED BY CLIMATIC CONDITIONS IN THE ARCTIC AND AS DESIRED BY THE AIR FORCE TO MEET OPERATIONAL REQUIREMENTS. BY REASON OF THESE FINDINGS THE LOW BID SUBMITTED BY YOU WAS REJECTED ON THE BASIS THAT YOU WERE NOT A QUALIFIED BIDDER AND, THEREFORE, AFTER REJECTION OF THE BID OF THE SECOND LOW BIDDER, FOR THE SAME REASON, AN AWARD OF THE SUBCONTRACT WAS MADE TO THE BURGESS PRUHS CONSTRUCTION COMPANY. IT SHOULD BE EMPHASIZED THAT THE AWARD OF THE SUBCONTRACT TO THIS COMPANY WAS COMPLETELY REVIEWED BY THE AIR FORCE CONTRACTING OFFICER PRIOR TO THE ISSUANCE ON APRIL 7, 1964, OF THE LETTER OF INTENT BY THE RCA SERVICE COMPANY AND THE AWARD WAS FOUND TO BE PROPER AND IN THE BEST INTERESTS OF THE AIR FORCE. MOREOVER, FOLLOWING THE INITIATION OF SENATOR BARTLETT'S INVESTIGATION THE JUDGE ADVOCATE GENERAL OF THE AIR FORCE ALSO FURTHER REVIEWED THE BIDS RECEIVED BY THE RCA SERVICE COMPANY AND ITS METHOD OF ANALYSIS. HERE AGAIN IT WAS FOUND THAT THE COMPANY WAS COMPLETELY JUSTIFIED IN NOT AWARDING THE SUBCONTRACT TO YOU FOR THE REASONS SET FORTH ABOVE. THE JUDGE ADVOCATE GENERAL AFFIRMED THE FACT THAT THE SYSTEM OF COMPETITIVE NEGOTIATIONS USED BY THE RCA SERVICE COMPANY APPEARED TO HAVE BEEN IN SUBSTANTIAL COMPLIANCE WITH ALL APPLICABLE GOVERNMENT PROCUREMENT POLICIES, AND PARTICULARLY THAT ALL BIDS RECEIVED WERE FAIRLY EVALUATED IN ACCORDANCE WITH SUCH POLICIES. THUS, IT WOULD SEEM CLEAR THAT THERE WAS A THOROUGH AND FAIR EVALUATION OF YOUR OVER ALL QUALIFICATIONS.

IN CASES INVOLVING DIRECT PROCUREMENT BY THE GOVERNMENT IT IS A SETTLED RULE THAT THE QUESTION AS TO THE RESPONSIBILITY AND CAPABILITY OF A BIDDER ON A PROPOSED GOVERNMENT CONTRACT IS A MATTER PRIMARILY FOR DETERMINATION BY THE CONTRACTING AGENCY AND SUCH DETERMINATION WILL NOT BE QUESTIONED BY THE COURTS OR OUR OFFICE, IN THE ABSENCE OF A SHOWING OF FRAUD OR THE LACK OF A REASONABLE BASIS FOR THE DETERMINATION. SEE O-BRIEN V. CARNEY, 6 F.SUPP. 761, 762; FRIEND V. LEE, 221 F.2D 96; 20 COMP. GEN. 862; 37 ID. 430, 435. THIS RULE OBVIOUSLY WOULD BE APPLICABLE TO A CASE SUCH AS HERE INVOLVED WHERE THE DETERMINATION IS MADE BY A GOVERNMENT PRIME CONTRACTOR, SUBJECT TO APPROVAL BY A CONTRACTING OFFICER. THERE IS NO INDICATION IN THE RECORD BEFORE US OF THE LACK OF A REASONABLE BASIS FOR THE DETERMINATION MADE OR OF FRAUD IN CONNECTION THEREWITH.

ACCORDINGLY WE FIND NO LEGAL BASIS FOR OBJECTING TO THE REJECTION OF YOUR BID IN THE MATTER AND, THEREFORE, YOUR PROTEST IS DENIED.

WITH RESPECT TO YOUR PROTEST OF THE REMOVAL OF YOUR NAME FROM THE QUALIFIED BIDDERS LIST OF THE RADIO CORPORATION OF AMERICA, IT IS OUR OPINION THAT SINCE THAT COMPANY IS A PRIVATE ORGANIZATION AND SINCE SUCH A BIDDERS LIST AS MIGHT BE MAINTAINED BY A PRIVATE ENTERPRISE UNDOUBTEDLY IS ONE ALSO USED BY THE COMPANY FOR STRICTLY COMMERCIAL WORK, NOT ASSOCIATED IN ANY WAY WITH GOVERNMENT PROJECTS, THIS OFFICE WOULD NOT BE WARRANTED IN ATTEMPTING TO DICTATE WHICH FIRMS SHOULD OR SHOULD NOT BE ACCEPTABLE TO THE RADIO CORPORATION OF AMERICA TO THE EXTENT OF THEIR NAMES APPEARING ON ITS LIST OF PROSPECTIVE QUALIFIED BIDDERS. OUR ONLY CONCERN IN THIS REGARD IS, OF COURSE, THAT IN CONNECTION WITH CERTAIN KINDS OF CONTRACTS INVOLVING GOVERNMENT PROJECTS THERE BE MAINTAINED BY THE PRIME CONTRACTOR INVOLVED SUCH AN ADEQUATE BIDDERS LIST, OR THAT THERE BE SOLICITED BIDS FROM SUCH SOURCES OF QUALIFIED BIDDERS, AS WILL INSURE SUCH FREE AND OPEN COMPETITION THAT WILL BE IN THE BEST INTERESTS OF THE GOVERNMENT.