B-155067, NOV. 9, 1964

B-155067: Nov 9, 1964

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THE BASIS FOR YOUR PROTEST IS THAT UPON THE ISSUANCE OF A CERTIFICATE OF COMPETENCY BY THE SMALL BUSINESS ADMINISTRATION (SBA) AN AWARD OF THE CONTRACT SHOULD BE FORTHCOMING AUTOMATICALLY. THE TWO PROPOSALS RECEIVED IN RESPONSE TO THE REQUEST FOR PROPOSALS WERE THOSE OF YOUR CORPORATION AT $28. BOTH PROPOSALS WERE CONSIDERED GENERALLY ACCEPTABLE SO FAR AS CONCERNS COMPLIANCE WITH THE REQUIRED SCOPE OF WORK. THE RECORD SHOWS THAT BOTH COMPANIES WERE REQUESTED TO SUBMIT ADDITIONAL INFORMATION CONCERNING THE TYPE OF SEALS TO BE FURNISHED. SINCE THE CORRECT INTERPRETATION WAS 1. WERE NEGATIVE AS TO CAPACITY AND CREDIT. THE SBA WAS SO ADVISED. A CERTIFICATE OF COMPETENCY WAS ISSUED TO YOU ON JULY 7.

B-155067, NOV. 9, 1964

TO LAWRENCE SYSTEMS CORPORATION:

WE REFER TO YOUR LETTER DATED AUGUST 25, 1964, PROTESTING ANY INTENDED AWARD TO ANY FIRM OTHER THAN YOUR CORPORATION RESULTING FROM THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION (NASA), LEWIS RESEARCH CENTER, REQUEST FOR PROPOSALS C-11882, DATED APRIL 22, 1964. THE BASIS FOR YOUR PROTEST IS THAT UPON THE ISSUANCE OF A CERTIFICATE OF COMPETENCY BY THE SMALL BUSINESS ADMINISTRATION (SBA) AN AWARD OF THE CONTRACT SHOULD BE FORTHCOMING AUTOMATICALLY.

REQUEST FOR PROPOSALS NO. C-11882 CALLED FOR THE DESIGN,FABRICATION AND DELIVERY OF A HIGH FREQUENCY SINUSOIDAL FLOW CONTROL SYSTEM TO CONTROL STEAM FLOW, SUCH SYSTEM TO MEET PRESCRIBED PERFORMANCE SPECIFICATIONS. THE TWO PROPOSALS RECEIVED IN RESPONSE TO THE REQUEST FOR PROPOSALS WERE THOSE OF YOUR CORPORATION AT $28,926.76, AND WESTON INSTRUMENTS, INC. (BOONSHAFT AND FUCHS DIVISION), AT $39,660. BOTH PROPOSALS WERE CONSIDERED GENERALLY ACCEPTABLE SO FAR AS CONCERNS COMPLIANCE WITH THE REQUIRED SCOPE OF WORK. HOWEVER, CERTAIN AREAS OF THE TECHNICAL PROPOSALS REQUIRED CLARIFICATION. THE RECORD SHOWS THAT BOTH COMPANIES WERE REQUESTED TO SUBMIT ADDITIONAL INFORMATION CONCERNING THE TYPE OF SEALS TO BE FURNISHED; THE TYPE OF SERVOCONTROLLERS, ACTUATORS, SERVOVALVES AND HYDRAULIC POWER SUPPLY TO BE PROVIDED, AND WITH RESPECT TO YOUR CORPORATION'S INTERPRETATION OF ARTICLE I, PARAGRAPH "F" OF THE SPECIFICATIONS AS REQUIRING A MAXIMUM FLOW RATE FOR THE VALVE OF 700 POUNDS PER HOUR, SINCE THE CORRECT INTERPRETATION WAS 1,050 POUNDS PER HOUR.

BASED UPON YOUR PROPOSAL AND THE TECHNICAL EVALUATION OF YOUR CORPORATION, LEWIS RESEARCH CENTER, IN ACCORDANCE WITH NASA PROCUREMENT REGULATION, PART 1, SUBPART 905-4, DECIDED THAT A PREAWARD SURVEY OF YOUR COMPANY SHOULD BE PERFORMED. THE RESULTS OF THE SURVEY CONDUCTED ON JUNE 16, 1964, WERE NEGATIVE AS TO CAPACITY AND CREDIT, AND THE SBA WAS SO ADVISED. ON JUNE 22, 1964, YOU MADE APPLICATION TO SBA FOR THE GRANTING OF A CERTIFICATE OF COMPETENCY, THE CENTER BEING ADVISED BYSBA OF YOUR APPLICATION. A CERTIFICATE OF COMPETENCY WAS ISSUED TO YOU ON JULY 7, 1964.

FOLLOWING THE NEGATIVE CAPABILITY REPORT OF THE LEWIS RESEARCH CENTER IT WAS DECIDED, FOR THE BENEFIT OF BOTH THE GOVERNMENT AND LAWRENCE, THAT FURTHER NEGOTIATIONS TO RESOLVE TECHNICAL MATTERS PENDING THE SBA DETERMINATION AS TO WHETHER A CERTIFICATE OF COMPETENCY SHOULD BE ISSUED WOULD SERVE NO USEFUL PURPOSE AND, THEREFORE, SHOULD BE DEFERRED. HOWEVER, SBA HAVING ISSUED THE CERTIFICATE, ON JULY 28, 1964, YOU WERE REQUESTED TO RESUME NEGOTIATIONS ON AUGUST 5 TO REACH AGREEMENT IN THE TECHNICAL AREAS PREVIOUSLY REFERRED TO.

IN THAT CONNECTION, NASA ADVISES THAT:

"INASMUCH AS BOTH OFFERORS HAVE SUBMITTED PROPOSALS WHICH ARE WITHIN A COMPETITIVE RANGE, PRICE, AND OTHER FACTORS CONSIDERED, LEWIS RESEARCH CENTER PROPOSES, IN ACCORDANCE WITH APPLICABLE LAWS AND REGULATIONS, TO RESUME NEGOTIATIONS WITH LAWRENCE SYSTEMS CORPORATION AND WESTON INSTRUMENTS, INC. THE PRINCIPAL AREAS FOR NEGOTIATIONS ARE AS FOLLOWS:

(1) AN ANALYSIS OF THE TWO PROPOSALS INDICATES THE RESEARCH AND DEVELOPMENT ASPECTS OF THE PROCUREMENT DO NOT JUSTIFY A FIXED-PRICE RESEARCH AND DEVELOPMENT TYPE OF CONTRACT, BUT RATHER A FIXED-PRICE SUPPLY CONTRACT. HENCE, CONTRACTUAL COVERAGE WILL BE EVIDENCED BY THE LATTER TYPE.

(2) THE ORIGINAL SCOPE OF WORK DID NOT CONTEMPLATE TESTING REQUIREMENTS. HOWEVER, FURTHER EVALUATION INDICATES THE NECESSITY FOR THE GOVERNMENT RECEIVING AN ACCEPTABLE PRODUCT SINCE SIGNIFICANT RESEARCH AND DEVELOPMENT IS NOT INVOLVED. HENCE, APPROPRIATE TESTING REQUIREMENTS WILL BE MADE A CONDITION PRECEDENT TO SHIPMENT OF PRODUCT BY THE CONTRACTOR.

(3) A FINAL PRICE WILL BE NEGOTIATED.

"TO CARRY OUT THE FOREGOING, IT IS PROPOSED THAT NEGOTIATIONS WITH LAWRENCE SYSTEMS CORPORATION AND WESTON INSTRUMENTS, INC., BE INITIATED BY LEWIS RESEARCH CENTER DURING THE WEEK OF OCTOBER 19, 1964, AND AWARD MADE TO THAT OFFEROR WHOSE PROPOSAL MEETS THE GOVERNMENT'S MINIMUM REQUIREMENTS AT THE LOWEST PRICE.

"ALTHOUGH THE ORIGINAL PROPOSALS RECEIVED FROM LAWRENCE SYSTEMS CORPORATION AND WESTON INSTRUMENTS, INC. HAVE EXPIRED BY LAPSE OF TIME, IT IS EXPECTED THAT THESE CONCERNS WILL SUBMIT REVISED PROPOSALS ON REQUEST. THE CAPACITY AND CREDIT OF LAWRENCE SYSTEMS CORPORATION IS NOT PRESENTLY AT ISSUE SINCE THE CERTIFICATE OF COMPETENCY, ALTHOUGH IT HAS EXPIRED BY ITS TERMS, IS STILL ACCEPTABLE TO LEWIS RESEARCH CENTER.'

WE THINK THE PROCUREMENT AGENCY'S ACTION IS SUSPENDING NEGOTIATIONS WITH YOU WHEN YOUR COMPETENCY WAS IN ISSUE WAS CORRECT. HAVING REGARD FOR THE POSSIBILITY THAT THE SBA MIGHT DECLINE TO ISSUE A CERTIFICATE OF COMPETENCY, TO HAVE CONTINUED NEGOTIATIONS AT THAT TIME TO RESOLVE TECHNICAL MATTERS WOULD HAVE BEEN A NEEDLESS WASTE OF TIME AND MONEY BOTH TO THE GOVERNMENT AND YOUR COMPANY.

MOREOVER, CONTRARY TO YOUR CONTENTION, THE AGENCY WAS NOT REQUIRED TO AWARD A CONTRACT TO YOU WHEN THE SBA ISSUED A CERTIFICATE OF COMPETENCY. AT THAT TIME THE GOVERNMENT HAD NOT DETERMINED ITS NEEDS OR THE TECHNICAL REQUIREMENTS OF THE EQUIPMENT TO BE PURCHASED. A CERTIFICATE OF COMPETENCY IS SOLELY A DETERMINATION OF THE SBA, PURSUANT TO STATUTE, THAT A SMALL BUSINESS HAS THE CAPACITY AND CREDIT TO PERFORM A PARTICULAR CONTRACT. IT IS NOT A DETERMINATION OF THE GOVERNMENT'S NEEDS OR THE ENGINEERING REQUIREMENTS OF EQUIPMENT WHICH THE GOVERNMENT PROPOSES TO PURCHASE. THESE ARE MATTERS FOR THE PROCURING AGENCY TO DETERMINE.

WE THEREFORE SEE NO BASIS FOR OBJECTION TO THE MATTER IN WHICH THIS PROCUREMENT IS BEING ACCOMPLISHED.