B-156100, MAY 3, 1965

B-156100: May 3, 1965

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GOOD PASTURE AND BLOCK: FURTHER REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 5. THE BIDS RECEIVED WERE OPENED DECEMBER 15. BARRY INDUSTRIES WAS THE LOW BIDDER AND CONSOLIDATED AMERICAN SERVICES. BARRY'S LOW BID WAS REJECTED BY THE CONTRACTING OFFICER ON THE BASIS OF HIS DETERMINATION THAT SAID FIRM WAS NOT A RESPONSIBLE BIDDER. AWARD OF A CONTRACT WAS THEREFORE MADE TO CONSOLIDATED ON DECEMBER 21. A RESPONSIBLE PROSPECTIVE CONTRACTOR IS ONE WHICH MEETS THE MINIMUM STANDARDS SET FORTH IN 1-903. THE AWARD OF A CONTRACT TO A MARGINAL SUPPLIER BASED ON LOWEST COST ALONE CAN BE FALSE ECONOMY IF THERE IS SUBSEQUENT DEFAULT. WHILE IT IS IMPORTANT THAT GOVERNMENT PURCHASES BE MADE AT THE LOWEST COST.

B-156100, MAY 3, 1965

TO BROWN, GOOD PASTURE AND BLOCK:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 5, 1965, PROTESTING ON BEHALF OF BARRY INDUSTRIES AGAINST AN AWARD TO ANY OTHER BIDDER UNDER INVITATION FOR BIDS NO. AII-44-008-65-25.

THE INVITATION SOLICITED BIDS FOR FURNISHING CUSTODIAL SERVICES IN CERTAIN BUILDINGS AT FORT BELVOIR, VIRGINIA, FOR THE PERIOD BEGINNING JANUARY 1, 1965, AND ENDING DECEMBER 31, 1965. THE BIDS RECEIVED WERE OPENED DECEMBER 15, 1964. BARRY INDUSTRIES WAS THE LOW BIDDER AND CONSOLIDATED AMERICAN SERVICES, INC., SECOND LOWEST. HOWEVER, BARRY'S LOW BID WAS REJECTED BY THE CONTRACTING OFFICER ON THE BASIS OF HIS DETERMINATION THAT SAID FIRM WAS NOT A RESPONSIBLE BIDDER. AWARD OF A CONTRACT WAS THEREFORE MADE TO CONSOLIDATED ON DECEMBER 21, 1964.

IN ACCORDANCE WITH APPLICABLE LAW AND REGULATION, THE CONTRACTING OFFICER UNDERTOOK CONSIDERATION OF THE QUESTION OF BARRY'S RESPONSIBILITY WITHIN THE MEANING OF SECTIONS 1-902 AND 1-903 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), AS AMENDED BY DEFENSE PROCUREMENT CIRCULAR NUMBER 9, JUNE 18, 1964, WHICH READS, IN PERTINENT PARTS, AS FOLLOWS:

"1-902 GENERAL POLICY. PURCHASES SHALL BE MADE FROM, AND CONTRACTS SHALL BE AWARDED ONLY TO, RESPONSIBLE PROSPECTIVE CONTRACTORS. A RESPONSIBLE PROSPECTIVE CONTRACTOR IS ONE WHICH MEETS THE MINIMUM STANDARDS SET FORTH IN 1-903, AND SUCH ADDITIONAL STANDARDS AS MAY BE PRESCRIBED IN ACCORDANCE WITH 1-903.5 AND BY OVERSEA COMMANDERS. THE AWARD OF A CONTRACT TO A MARGINAL SUPPLIER BASED ON LOWEST COST ALONE CAN BE FALSE ECONOMY IF THERE IS SUBSEQUENT DEFAULT, LATE DELIVERIES, OR OTHER UNSATISFACTORY PERFORMANCE RESULTING IN ADDITIONAL PROCUREMENT OR ADMINISTRATIVE COSTS. WHILE IT IS IMPORTANT THAT GOVERNMENT PURCHASES BE MADE AT THE LOWEST COST, THIS DOES NOT REQUIRE AN AWARD TO A MARGINAL SUPPLIER SOLELY BECAUSE HE SUBMITS THE LOWEST OFFER. PROSPECTIVE CONTRACTORS MUST DEMONSTRATE AFFIRMATIVELY THEIR CAPABILITY TO FULFILL SUCCESSFULLY THE CONTEMPLATED CONTRACT. WHEN THE CONTRACTING OFFICER IS UNABLE TO OBTAIN INFORMATION SUFFICIENT TO PERMIT AFFIRMATIVE DETERMINATION OF RESPONSIBILITY, A DETERMINATION OF NONRESPONSIBILITY WILL BE MADE. RECENT UNSATISFACTORY PRIOR PERFORMANCE, IN EITHER QUALITY OR TIMELINESS OF DELIVERY, WHETHER OR NOT DEFAULT PROCEEDINGS WERE INSTITUTED, ARE EXAMPLES OF PROBLEMS WHICH THE CONTRACTING OFFICER MUST RESOLVE PRIOR TO MAKING AN AFFIRMATIVE DETERMINATION OF RESPONSIBILITY. DOUBT AS TO PRODUCTIVE CAPACITY OR FINANCIAL STRENGTH WHICH CANNOT BE RESOLVED WILL REQUIRE A DETERMINATION OF NONRESPONSIBILITY.

"1-903.1 GENERAL STANDARDS. EXCEPT AS OTHERWISE PROVIDED IN THIS PARAGRAPH 1-903, A PROSPECTIVE CONTRACTOR MUST---

(III) HAVE A SATISFACTORY RECORD OF PERFORMANCE (CONTRACTORS WHO ARE SERIOUSLY DELINQUENT IN CURRENT CONTRACT PERFORMANCE, WHEN THE NUMBER OF CONTRACTS AND THE EXTENT OF DELINQUENCIES OF EACH ARE CONSIDERED, SHALL, IN THE ABSENCE OF EVIDENCE TO THE CONTRARY OR CIRCUMSTANCES PROPERLY BEYOND THE CONTROL OF THE CONTRACTOR, BE PRESUMED TO BE UNABLE TO FULFILL THIS REQUIREMENT (III) ; SEE 1-905.2 AND 1-905.4 (D); "

BEFORE ANY AWARD CAN BE MADE TO A BIDDER THE CONTRACTING OFFICER IS REQUIRED, BY ASPR 1-904.1, TO MAKE, SIGN, AND FILE AN AFFIRMATIVE DETERMINATION OF RESPONSIBILITY. IF HE CONCLUDES THAT HE CANNOT MAKE SUCH DETERMINATION, HE MUST ENTER A DETERMINATION OF NONRESPONSIBILITY AND REJECT THE BID. IN THIS CASE, AFTER INVESTIGATION OF BARRY INDUSTRIES, HE MADE THE FOLLOWING DETERMINATION OF NONRESPONSIBILITY, DATED DECEMBER 21, 1964:

"DETERMINATION OF NON-RESPONSIBILITY

"1. BARRY INDUSTRIES, INC., WASHINGTON, D.C., LOW BIDDER ON INVITATION TO BID AII-44-008-65-25 COVERING CUSTODIAL SERVICES AT USADC, NORTH POST, FORT BELVOIR, VIRGINIA, IS HEREBY DETERMINED AS NON RESPONSIBLE WITHIN THE MEANING OF ASPR 1-902 AND ASPR 1-903.

A. SUBJECT CONTRACTOR HAS PERFORMED UNDER CONTRACTS NO. DA-44-008 ENG 3210, DATED 30 JULY 1962 AND DA-44-008 ENG-3208 DATED 30 JULY 1962. DURING THE PERIOD OF THE ABOVE CITED CONTRACTS, MONIES WERE WITHHELD FROM INVOICES ON BOTH CONTRACTS FOR NON-PERFORMANCE AND UNSATISFACTORY SERVICES. CONTRACTOR IS CONSIDERED MARGINAL AND NON RESPONSIBLE PER RECORDS IN THIS OFFICE WHICH INDICATE REPEATED POOR AND UNSATISFACTORY PERFORMANCE, INADEQUATE SUPERVISION AND INSUFFICIENT MANPOWER. A TEN (10) DAY NOTICE AND A THIRTY (30) DAY NOTICE WAS ISSUED CONTRACTOR TO IMPROVE HIS PERFORMANCE AND CORRECT DEFICIENCIES. THE CONTRACTOR HAD TO BE CONSTANTLY URGED TO PROVIDE SUFFICIENT MANPOWER TO PERFORM THE WORK ACCORDING TO THE CONTRACT SPECIFICATIONS. EFFORTS TO GET THE CONTRACTOR TO ADEQUATELY MAN THE JOBS WERE NEVER COMPLETELY SUCCESSFUL. SUPERVISION PROVIDED WAS NOT ADEQUATE AT ANY TIME. DEFICIENCIES NOTED WERE CORRECTED ONLY AFTER MUCH DELAY AND CONSTANT PRODDING.

B. FOR A PERIOD OF TWO (2) MONTHS COVERING AUGUST AND SEPTEMBER 1962, THE CONTRACTOR AVERAGED APPROXIMATELY SIX (6) BELOW STANDARD RATINGS PER DAY COMPILED FROM THE DAILY JANITORIAL STANDARDS CHECKLIST. SOME OF THE MOST COMMON DEFICIENCIES WERE, CONTRACTOR APPLIED WAX OVER DIRTY FLOORS; SEMI- WEEKLY AND WEEKLY TASKS WERE NOT ACCOMPLISHED AS SCHEDULED; QUARTERLY, TRI -ANNUAL, AND SEMI-ANNUAL TASKS WERE NOT PERFORMED AS SCHEDULED; SWEEPING UNSATISFACTORY; DUSTING UNSATISFACTORY; WET MOPPING AND SCRUBBING UNSATISFACTORY; LATRINES NOT CLEANED PROPERLY AND NOT SERVICES PROPERLY; AND CONTRACTOR'S CLEANING PERSONNEL CONTINUED TO EMPTY ASH TRAYS IN WITH THE TRASH AND NOT IN SEPARATE METAL CONTAINERS AS SPECIFIED, CREATING A FIRE HAZARD; COBWEBS REMAINED IN CORNERS AND WINDOW SILLS. THE CONTRACTING OFFICER HAS PERSONAL KNOWLEDGE OF THE CONTRACTOR'S POOR PERFORMANCE AND INADEQUATE SUPERVISION BY NUMEROUS PERSONAL INSPECTIONS. WHILE THE DEFICIENCIES IN THE CONTRACT RECORDS OF PERFORMANCE WHEN TAKEN INDIVIDUALLY, DO NOT SEEM SIGNIFICANT, THE ACCUMULATIVE EFFECT GREATLY INCREASED THE ADMINISTRATIVE BURDEN OF THE CONTRACTS.

C. INFORMATION RECEIVED FROM CONTRACTING OFFICER, FORT DIX, NEW JERSEY, INDICATES DEDUCTIONS FOR POOR PERFORMANCE WERE WITHHELD ON THEIR CONTRACT MR. DA-28-013A-1-3479, DATED 26 JUNE 1963. CLOSE SUPERVISION ON THE CONTRACT WAS REQUIRED.

D. CONTRACTING OFFICER, AT LETTERKENNY ARMY DEPOT, PENNSYLVANIA, STATES BARRY INDUSTRIES IS NOW PERFORMING SATISFACTORY, BUT WAS THREATENED A NOTICE OF DEFAULT BEFORE HE IMPROVED HIS PERFORMANCE.

E. CONTRACTING OFFICER AT NASA STATED THAT BARRY INDUSTRIES, INC. HAD BEEN DECLARED NON-RESPONSIBLE BIDDER, DUE TO POOR PERFORMANCE ON CONTRACT WITH THAT AGENCY, WHICH WAS TERMINATED FOR POOR PERFORMANCE. COPY OF CONTRACTING OFFICER'S DETERMINATION IN FILE.

F. IN VIEW OF THE ABOVE INFORMATION AND PAST EXPERIENCE AT THIS INSTALLATION WITH THE PERFORMANCE OF SUBJECT CONTRACTOR, IT IS DETERMINED THAT THE FAILURE OF THE CONTRACTOR, BARRY INDUSTRIES, TO ADEQUATELY PERFORM IS NOT DUE TO CAPACITY OR CREDIT, BUT DUE TO THE FACT THAT THE CONTRACTOR LACKED THE NECESSARY PERSEVERANCE, TENACITY AND INTEGRITY TO ACCOMPLISH ITS MISSION. THEREFORE, THE CONTRACTING OFFICER HAS DETERMINED THAT IT WOULD NOT BE IN THE BEST INTEREST OF THE GOVERNMENT TO AWARD CONTRACT TO BARRY INDUSTRIES, INC., WASHINGTON, D.C.'

YOU CONTEND THAT THIS DETERMINATION DOES NOT HAVE "ANY FOUNDATION IN FACT" AND IS "BASED ON THE PERSONAL FEELINGS OF THE CONTRACTING OFFICER TOWARD OUR FIRM; " AND THAT THE INFORMATION CONCERNING BARRY'S PERFORMANCE AT OTHER GOVERNMENT INSTALLATIONS SHOULD NOT BE CONSIDERED AS YOU ASSUME ONE SUCH INSTALLATION IS ALTUS AIR FORCE BASE AND THE DISPUTE UNDER THAT CONTRACT IS PRESENTLY BEING LITIGATED, AND THE OTHER INSTALLATION IS APPARENTLY LETTERKENNY ARMY DEPOT, WHERE PERFORMANCE IS PRESENTLY SATISFACTORY.

WITH REGARD TO PAST PERFORMANCE OF CONTRACTS AT OTHER INSTALLATIONS, THE DETERMINATION ENUMERATES THOSE CONSIDERED AS FORT DIX, LETTERKENNY, AND NASA. AS INDICATED THEREIN, IT APPEARS THAT BARRY'S PERFORMANCE AT LETTERKENNY IS NOW SATISFACTORY AS YOU STATE. THE INFORMATION DEVELOPED AS TO PERFORMANCE AT THE OTHER TWO INSTALLATIONS IS NOT REFUTED BY YOU. HOWEVER, REGARDING PERFORMANCE OF THE NASA CONTRACT, WE NOTE THAT THE CONTRACTING OFFICER'S STATEMENT THAT THE CONTRACT HAD BEEN EVENTUALLY TERMINATED IS APPARENTLY IN ERROR AS THE SUPPORTING DOCUMENTS FROM NASA INDICATE OTHERWISE.

CONTRARY TO YOUR CONTENTIONS REGARDING PERFORMANCE OF THE REFERENCED CONTRACTS AT FORT BELVOIR, THE CONTRACTING OFFICER HAS SUBMITTED OBJECTIVE DOCUMENTATION IN SUPPORT OF HIS CONCLUSION THAT BARRY'S PERFORMANCE WAS UNSATISFACTORY. WE REFER SPECIFICALLY TO SOME THIRTEEN OR FOURTEEN MEMORANDUMS OR REPORTS FROM THE HEADS OF VARIOUS SECTIONS TO THE POST ENGINEER AND FOR THE PURCHASING AND CONTRACTING OFFICE DETAILING NUMEROUS DEFICIENCIES IN BARRY'S PERFORMANCE. THESE MEMORANDUMS OR REPORTS COVER THE ENTIRE SPAN OF THE CONTRACTS, INCLUDING THE TWO MONTH PERIOD THEY WERE EXTENDED. THEY ARE REPLETE WITH COMPLAINTS OF UNSATISFACTORY SERVICES RANGING FROM FAILURE TO CLEAN AT ALL TO ENTIRELY UNSATISFACTORY CLEANING, AND FROM FAILURE TO PROVIDE THE NECESSARY SUPPLIES FOR THE LAVATORIES TO CREATING A FIRE HAZARD BY FAILING TO OBSERVE GOOD HOUSEKEEPING PRACTICES IN THE JANITORIAL ROOMS WHERE SUPPLIES WERE KEPT. IN ADDITION, WE HAVE BEEN FURNISHED A COMPILATION OF DEFICIENCIES RECORDED ON DAILY JANITORIAL STANDARDS CHECK LIST (DD FORM 1112), WHICH GIVES A GRAPHIC RESUME OF THE EXTENT OF THE SUBSTANDARD WORK COMPLAINED OF. FURTHERMORE, IT APPEARS FROM THE ABOVE MEMORANDUMS AND RECORDS THAT BARRY RATHER CONSISTENTLY FAILED TO PROVIDE EITHER ADEQUATE PERSONNEL OR ADEQUATE SUPERVISION OF PERSONNEL, AND WAS DILATORY IN MEETING VARIOUS REQUIREMENTS OF THE CONTRACT, WHICH HAD THE CUMULATIVE EFFECT OF UNDULY INCREASING THE ADMINISTRATIVE BURDEN FROM THE GOVERNMENT'S STANDPOINT.

THE PRIMARY QUESTION PRESENTED BY YOUR PROTEST IS WHETHER THE CONTRACTING OFFICER'S CONCLUSION THAT YOUR CLIENT WAS NOT A RESPONSIBLE PROSPECTIVE CONTRACTOR WITHIN THE MEANING OF THE APPLICABLE PROVISIONS OF ASPR HERETOFORE QUOTED WAS ARBITRARY OR CAPRICIOUS OR NOT SUPPORTED BY SUBSTANTIAL GROUNDS. THE DETERMINATION OF A PROSPECTIVE CONTRACTOR'S RESPONSIBILITY IS PRIMARILY THE FUNCTION OF THE CONTRACTING OFFICER, AND NECESSARILY INVOLVES THE EXERCISE OF A REASONABLE DISCRETION. WHERE SUCH DETERMINATION IS BASED UPON SUBSTANTIAL EVIDENCE AND IS NEITHER ARBITRARY NOR CAPRICIOUS, WE WILL NOT UNDERTAKE TO SUBSTITUTE OUR JUDGMENT FOR THAT OF THE CONTRACTING OFFICER. 39 COMP. GEN. 705, 711. UPON REVIEW OF THIS RECORD IT IS OUR CONSIDERED OPINION THAT THE FACTS RECITED BY THE CONTRACTING OFFICER IN MAKING HIS DETERMINATION ARE SUPPORTED BY THE REPORTS RELIED ON BY HIM, AND THAT WE COULD NOT PROPERLY HOLD THAT THE DETERMINATION WAS MADE WITHOUT SUBSTANTIAL SUPPORT. WHILE IT IS APPARENTLY TRUE THAT BARRY IS CURRENTLY PERFORMING IN A SATISFACTORY MANNER UNDER ITS CONTRACT AT LETTERKENNY, AND CONSIDERATION OF CURRENTLY VALID INFORMATION IS REQUIRED BY ASPR 1-905.1, WE FEEL THAT THE MOST THAT COULD BE SAID WOULD BE THAT THE CONTRACTING OFFICER MIGHT CONCEIVABLY HAVE FELT THAT THIS CURRENT RECORD WOULD JUSTIFY A DETERMINATION OF RESPONSIBILITY, DESPITE THE PRIOR RECORD; WE DO NOT BELIEVE THAT HIS FAILURE TO ADOPT SUCH A LIBERAL POSITION CAN BE CONSIDERED ARBITRARY OR CAPRICIOUS.

CONCERNING YOUR STATEMENT THAT EXTENSION OF EACH OF THE CONTRACTS AT FORT BELVOIR FOR TWO MONTHS INDICATES THAT BARRY'S PERFORMANCE WAS IN FACT SATISFACTORY, WE QUOTE THE FOLLOWING FROM THE ADMINISTRATIVE REPORT:

"DETERMINATION TO EXTEND CONTRACT

"THE SUPPLEMENTAL AGREEMENT EXTENDING THE CONTRACT FOR THE MONTH OF AUGUST AND SEPTEMBER STATED AS THE REASON THE NECESSITY FOR CONTINUATION OF SERVICES AND DIFFICULTIES ARISING IN CONNECTION WITH THE AWARD OF A NEW CONTRACT.

"ADVERTISEMENT OF THE NEW CUSTODIAL REQUIREMENT WAS DELAYED DUE TO THE COMPLEXITY OF THE PROCUREMENT FOR REVIEW AND EVALUATION OF THE SPECIFICATIONS, APPROVAL BY HEADQUARTERS PROCUREMENT ACTIVITY, AND COMPLICATIONS INVOLVING DETERMINATION OF RESPONSIBILITY OF LOW BIDDER ON BIDS RECEIVED.

"THE CONTRACTING OFFICER DETERMINED THAT TO EXTEND BARRY INDUSTRIES CONTRACT WOULD BE IN THE BEST INTEREST OF THE GOVERNMENT, AS THE SERVICES WERE ESSENTIAL AND CONTINUOUS, AND THERE COULD NOT BE A BREAK IN SERVICE. THE ADMINISTRATIVE COST AND THE HIGH COST OF SERVICES TO HIRE A NEW CONTRACTOR FOR A PERIOD OF ONE OR TWO MONTHS WOULD HAVE FAR EXCEEDED THE AMOUNT PAID BARRY INDUSTRIES.'

SINCE A CONTINUATION OF CUSTODIAL SERVICES WITHOUT INTERRUPTION WAS NECESSARY PENDING RESOLUTION OF THE MATTERS CITED, EXTENSION OF BARRY'S CONTRACTS APPEARS TO HAVE BEEN THE EXPEDIENT THING TO DO, BUT WE DO NOT AGREE THAT THIS MUST BE CONSTRUED AS AN ACKNOWLEDGMENT THAT BARRY'S PERFORMANCE WAS SATISFACTORY. ACCORDINGLY, WE SEE NO LEGAL BASIS FOR DISTURBING THE CONTRACT AWARDED TO CONSOLIDATED, AND YOUR PROTEST IS THEREFORE DENIED.