B-156083, APR. 20, 1965

B-156083: Apr 20, 1965

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TO MONITOR PLASTICS COMPANY: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM DATED FEBRUARY 6. THE REQUEST FOR PROPOSALS FOR 214 PERSHING MOTOR NOZZLES WAS ISSUED OCTOBER 20. YOUR PRICE WAS 10 PERCENT BELOW THAT OF THE NEXT LOW BIDDER (THE CURRENT PRODUCER) AND OVER 20 PERCENT BELOW THE OTHER 5 PROPOSALS. ALTHOUGH THE PRICE SPREAD WAS CONSIDERED AS NOT NECESSARILY SIGNIFICANT CONFIRMATION OF YOUR BID PRICE WAS REQUESTED BECAUSE YOUR COMPANY HAD UNSUCCESSFULLY SOUGHT TO OBTAIN A CERTIFICATE OF COMPETENCY (COC) FROM THE SMALL BUSINESS ADMINISTRATION (SBA) AND COMPETE FOR THE PRECEDING NOZZLE PROCUREMENT. THE FIVE REASONS FOR THIS ADMINISTRATIVE DETERMINATION WERE (1) INADEQUATE ABILITY TO PERFORM (INSUFFICIENT PERSONNEL THEN IN HOUSE OR EVEN ADEQUATELY PLANNED).

B-156083, APR. 20, 1965

TO MONITOR PLASTICS COMPANY:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM DATED FEBRUARY 6, 1965, PROTESTING THE AWARD OF ANY CONTRACT UNDER DEPARTMENT OF THE ARMY REQUEST FOR PROPOSALS AMC-/Z/01-021-65-842, FOR PERSHING NOZZLES, TO ANY SUPPLIER WHOSE PRICE EXCEEDS YOUR OWN.

THE REQUEST FOR PROPOSALS FOR 214 PERSHING MOTOR NOZZLES WAS ISSUED OCTOBER 20, 1964, TO 18 CONTRACTORS AND RESULTED IN 7 PROPOSALS BY NOVEMBER 20, 1964. YOUR PRICE WAS 10 PERCENT BELOW THAT OF THE NEXT LOW BIDDER (THE CURRENT PRODUCER) AND OVER 20 PERCENT BELOW THE OTHER 5 PROPOSALS. ALTHOUGH THE PRICE SPREAD WAS CONSIDERED AS NOT NECESSARILY SIGNIFICANT CONFIRMATION OF YOUR BID PRICE WAS REQUESTED BECAUSE YOUR COMPANY HAD UNSUCCESSFULLY SOUGHT TO OBTAIN A CERTIFICATE OF COMPETENCY (COC) FROM THE SMALL BUSINESS ADMINISTRATION (SBA) AND COMPETE FOR THE PRECEDING NOZZLE PROCUREMENT. YOU CONFIRMED YOUR PRICE UNDER THE PRESENT PROPOSAL. THE SAN FRANCISCO PROCUREMENT DISTRICT CONDUCTED A PREAWARD SURVEY AND REACHED AN ADVERSE DECISION WITH RESPECT TO YOUR ABILITY TO PERFORM THE CONTRACT. YOU REQUESTED A COC FROM THE SMALL BUSINESS ADMINISTRATION IN SAN FRANCISCO WHICH ADVISED THAT THE 15-DAY DELAY PERIOD AUTHORIZED BY LAW WOULD BE UTILIZED. DURING THE PREAWARD SURVEY THE PERSHING ENGINEER MOST FAMILIAR WITH NOZZLES AND THEIR PROCUREMENT HISTORY RESURVEYED YOUR COMPANY. THE CONTRACTING OFFICER MADE A DETERMINATION OF THE NONRESPONSIBILITY OF YOUR COMPANY ON JANUARY 7, 1965, AND NOTIFIED THE SBA. THE FIVE REASONS FOR THIS ADMINISTRATIVE DETERMINATION WERE (1) INADEQUATE ABILITY TO PERFORM (INSUFFICIENT PERSONNEL THEN IN HOUSE OR EVEN ADEQUATELY PLANNED), (2) INADEQUATE EQUIPMENT TO PERFORM (INSUFFICIENT EQUIPMENT THEN IN HOUSE--- MOST OF IT MARGINAL AND INSUFFICIENT TOOLING PLANNED), (3) INADEQUATE FINANCIAL RESOURCES (WORKING CAPITAL SEEMED GROSSLY INADEQUATE FOR AN $883,000 AWARD AND WAS INCONSISTENT WITH YOUR PROPOSAL THAT FINANCING WAS ARRANGED AND THAT PROGRESS PAYMENTS WERE NEEDED ONLY AS A SAFEGUARD--- WORKING CAPITAL WAS ONLY $17,946.43--- INVOLVED BANK WOULD EXTEND NO CREDIT--- DUN AND BRADSTREET RATING WAS BLANK--- YOUR AUDITOR DECLINED AN OPINION AND YOUR FINANCE COMPANY WOULD LOAN ONLY WITH COLLATERAL), (4) INADEQUATE PLANT SAFETY, AND (5) AN INABILITY TO MEET THE DELIVERY SCHEDULE.

THE ADMINISTRATIVE REPORT SHOWS THAT THE PROTOTYPE AND FIRST NOZZLES PRODUCED WERE BY DUMONT (SUBCONTRACTOR TO THIOKOL). THAT FIRM IS NOW ABSORBED OR MERGED INTO THOMPSON FIBRE GLASS WHOSE PROPOSAL ON THIS PROCUREMENT WAS SIXTH LOW. THE NEXT PRODUCTION WAS A CONTRACT WITH CURTISS-WRIGHT, WHOSE PROPOSAL HERE WAS THIRD LOW. LAST YEAR'S CONTRACT FOR CURRENT PRODUCTION WAS AWARDED KAISER AEROSPACE AND ELECTRONICS CORPORATION WHICH COMPANY ALSO RECEIVED THE FEBRUARY 9, 1965, AWARD WHICH YOU NOW PROTEST.

IT IS REPORTED TO US THAT THE NOZZLES IN THE PRESENT PROCUREMENT ALONG WITH THE VARIOUS OTHER MISSILE PARTS MUST BE ACCEPTABLE AND DELIVERED ON SCHEDULE, AS UNACCEPTABLE UNITS WILL CAUSE ENORMOUS AND CUMULATIVE EXPENSE TO THE GOVERNMENT SINCE DEPLOYMENT OF MISSILES AND USING TROOP UNITS INVOLVED FOR THE NATIONAL DEFENSE IS ATTUNED TO MISSILE PRODUCTION; THAT ANY QUESTION AS TO A BIDDER'S RESPONSIBILITY AND RESPONSIVENESS MUST BE STRICTLY RESOLVED AND DETERMINED, BEING A MATTER OF UTMOST IMPORTANCE THAT THE GOVERNMENT SHOULD NOT PERMIT THE AWARD OF A CLOSE-TOLERANCE PRODUCTION TO A BUSINESS WITH KNOWN LIMITED FINANCES, PERSONNEL AND FACILITIES.

THE SMALL BUSINESS ADMINISTRATION ON FEBRUARY 5, 1965, ADVISED THE U.S. ARMY MISSILE COMMAND, REDSTONE ARSENAL, ALABAMA, THAT BASED ON A COMPREHENSIVE ANALYSIS OF ALL AVAILABLE INFORMATION IT HAD DECLINED TO ISSUE A CERTIFICATE OF COMPETENCY ON YOUR APPLICATION THEREFOR IN RELATION TO REQUEST FOR PROPOSALS AMC-/Z/01-021-65-842. ACCORDINGLY, CONTRACT NO. DA-01-021-AMC-11899/Z) WAS AWARDED TO THE KAISER AEROSPACE AND ELECTRONICS CORPORATION AS THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER UNDER THE REQUEST FOR PROPOSALS. IN OUR OPINION SUCH AWARD IS NOT SUBJECT TO QUESTION BY OUR OFFICE.

ASIDE FROM THE FACT THAT THE SMALL BUSINESS ADMINISTRATION HAS REFUSED TO ISSUE A CERTIFICATE OF COMPETENCY--- AND ITS DETERMINATION IS CONCLUSIVE AS FAR AS THIS OFFICE IS CONCERNED--- THE QUESTION OF RESPONSIBILITY IS A MATTER AS TO WHICH SECTION 1-904 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) REQUIRES THE CONTRACTING OFFICER TO MAKE AN AFFIRMATIVE DETERMINATION THAT THE PROSPECTIVE CONTRACTOR IS RESPONSIBLE WITHIN THE MEANING OF SECTIONS 1-902 AND 1 903 OF ASPR. THERE IS FOR APPLICATION HERE THE GENERAL RULE THAT THE QUESTION AS TO RESPONSIBILITY AND CAPABILITY OF THE BIDDER ON A PROPOSED GOVERNMENT CONTRACT IS A MATTER PRIMARILY FOR DETERMINATION BY THE CONTRACTING AGENCY AND SUCH DETERMINATION WHEN MADE WILL NOT BE QUESTIONED BY THE COURTS OR OUR OFFICE, IN THE ABSENCE OF FRAUD OR THE LACK OF A REASONABLE BASIS THEREFOR. SEE O-BRIEN V. CARNEY, 6 FED.SUPP. 761, 762; FRIEND V. LEE, 221 F.2D 96; 20 COMP. GEN. 862; AND 37 ID. 430, 435.

SINCE IT HAS BEEN DETERMINED THAT YOUR COMPANY DID NOT MEET THE PRESCRIBED STANDARDS OF RESPONSIBILITY AS SET FORTH IN SECTION 1-903 OF ASPR AND SINCE YOUR COMPANY WAS DENIED A CERTIFICATE OF COMPETENCY BY THE SMALL BUSINESS ADMINISTRATION, NO LEGAL BASIS EXISTS FOR DISTURBING THE ACTION OF THE ADMINISTRATIVE OFFICE IN REJECTING YOUR PROPOSAL.