B-156335, JUN. 21, 1965

B-156335: Jun 21, 1965

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CORPORATION: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF MARCH 15. TWELVE BIDS WERE RECEIVED AND OPENED ON FEBRUARY 11. THE LOWEST BID IN THE AMOUNT OF $38.96 EACH WAS SUBMITTED BY YOUR FIRM. THE NEXT LOWEST BID IN THE AMOUNT OF $49.85 EACH WAS SUBMITTED BY CRYER ELECTRONICS. A PREAWARD SURVEY OF YOUR PLANT AND FACILITIES WAS CONDUCTED TO DETERMINE YOUR RESPONSIBILITY WITHIN THE MEANING OF SECTIONS 1-902 AND 1-903 OF ASPR. 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-156335, JUN. 21, 1965

TO JO-BAR MFG. CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF MARCH 15, AND LETTERS DATED MARCH 17 AND JUNE 2, 1965, PROTESTING AGAINST THE MAKING OF ANY AWARD OTHER THAN TO YOUR CORPORATION UNDER DEPARTMENT OF THE ARMY INVITATION NO. AMC (Z/-01-021-65-1043, ISSUED BY THE REDSTONE ARSENAL,ALABAMA.

THE INVITATION REQUESTED BIDS FOR FURNISHING 62 EACH, RACE, BEARING, INNER-TRUNNION, ORD PART NO. 10187829. TWELVE BIDS WERE RECEIVED AND OPENED ON FEBRUARY 11, 1965. THE LOWEST BID IN THE AMOUNT OF $38.96 EACH WAS SUBMITTED BY YOUR FIRM. THE NEXT LOWEST BID IN THE AMOUNT OF $49.85 EACH WAS SUBMITTED BY CRYER ELECTRONICS.

PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-905.4, A PREAWARD SURVEY OF YOUR PLANT AND FACILITIES WAS CONDUCTED TO DETERMINE YOUR RESPONSIBILITY WITHIN THE MEANING OF SECTIONS 1-902 AND 1-903 OF ASPR, AS AMENDED BY DEFENSE PROCUREMENT CIRCULAR NUMBER 9, JUNE 18, 1964, WHICH READ, 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 AFFIRMATIVELY THEIR CAPABILITY TO FULFILL SUCCESSFULLY THE CONTEMPLATED CONTRACT. WHEN THE CONTRACTING OFFICER IS UNABLE TO OBTAIN INFORMATION SUFFICIENT TO PERMIT AN 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 PRODUCITVE 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); "

THE REPORT OF THE SURVEY TEAM WAS FAVORABLE IN RESPECT TO YOUR FIRM'S CAPABILITY. HOWEVER, THE REPORT DID INDICATE CONSISTENT DELINQUENCIES IN CONTRACT PERFORMANCE UNDER PAST AND CURRENT CONTRACTS AND IT RECOMMENDED THAT AN AWARD NOT BE MADE TO YOUR FIRM. SINCE THE CONTRACTING OFFICER WAS REQUIRED BY ASPR 1-904.1 TO MAKE, SIGN AND FILE AN AFFIRMATIVE DETERMINATION THAT THE PROSPECTIVE CONTRACTOR IS RESPONSIBLE WITHIN THE MEANING OF THE PROVISIONS QUOTED ABOVE BEFORE MAKING A CONTRACT AWARD, HE GAVE FURTHER CONSIDERATION TO THE INDICATED DELINQUENCIES, AND AS A RESULT DETERMINED THAT YOUR FIRM WAS NOT A RESPONSIBLE BIDDER WITHIN THE MEANING OF THE PROVISIONS OF ASPR 1-904.1. THEREAFTER, ON MARCH 11, 1965, AWARD WAS MADE TO CRYER ELECTRONICS IN THE AMOUNT OF $3,090.70, WITHOUT PRIOR REFERRAL OF YOUR BID TO THE SMALL BUSINESS ADMINISTRATION UNDER THE CERTIFICATE OF COMPETENCY PROCEDURE. (THIS PROCEDURE IS NOT MANDATORY FOR AWARDS NOT EXCEEDING $10,000. ASPR 1-705.4 (B) (II) ).

YOU CONTEND THAT THE DETERMINATION OF THE CONTRACTING OFFICER AS TO YOUR NONRESPONSIBILITY IS BASED ON PAST DELINQUENCIES IN DELIVERIES UNDER THREE PREVIOUS CONTRACTS, NONE OF WHICH YOU STATE WERE YOUR FIRM'S FAULT. YOU STATE THAT TWO OF THE THREE DELINQUENCIES IN DELIVERIES WERE DUE TO THE GOVERNMENT'S FAILURE TO FURNISH TOOLING IN TIME TO PERMIT YOUR FIRM TO DELIVER ON SCHEDULE AND THAT THE THIRD DELINQUENCY WAS BROUGHT ABOUT BY THE MILL ROLLING THE ALUMINUM NECESSARY FOR THE CONTRACT.

IN SUPPORT OF HIS DETERMINATION AS TO YOUR NONRESPONSIBILITY, THE CONTRACTING OFFICER HAS FURNISHED A REPORT OF THE FACTS UPON WHICH HE BASED HIS CONCLUSIONS. IN HIS REPORT THE CONTRACTING OFFICER STATES--

"4. AN ANALYSIS OF THE CONTRACTOR'S PERFORMANCE REVEALS THAT DURING THE 6 MONTHS IMMEDIATELY PRECEDING THE PRE-AWARD SURVEY THE CONTRACTOR HAD 8 ARMY AND 5 NAVY CONTRACTS--- OF THESE DELAYS WERE EXPERIENCED (AS STATED IN THE CONTRACTOR'S LETTER) ON 3 ARMY CONTRACTS DUE TO DELAY ON THE PART OF THE GOVERNMENT IN FURNISHING GFE MATERIAL; HOWEVER, THE CONTRACTOR WAS NOT PENALIZED FOR THESE CONTRACTS IN EVALUATING PERFORMANCE. OF THE REMAINING 5 ARMY AND 5 NAVY CONTRACTS, ONLY ONE WAS COMPLETED ON TIME AND 9 WERE DELINQUENT FOR PERIODS OF FROM 10 TO 120 DAYS DUE TO MANUFACTURING PROBLEMS AND OVERALL POOR PERFORMANCE. BASED ON THIS EVALUATION IT IS SHOWN THAT THE CONTRACTOR HAS HAD A HISTORY OF DELINQUENCIES WHICH WERE SOLELY HIS RESPONSIBILITY AND THAT A DECISION OF BEING NOT RESPONSIBLE IS THE ONLY ONE THAT COULD BE MADE, AND THE CONTRACTING OFFICER, THEREFORE, COULD NOT MAKE AN AFFIRMATIVE FINDING OF RESPONSIBILITY AS REQUIRED BY ASPR 1-902, 1-903 AND DPC NO. 9 FOR THE AWARD OF CONTRACT DA-01-021 AMC- 11999 (Z) TO JO-BAR. ACCORDINGLY, IT IS THE FINDING OF THE CONTRACTING OFFICER THAT JO-BAR WAS A NON-RESPONSIBLE BIDDER AND WAS PROPERLY REJECTED. FURTHER, I RECOMMEND THAT THE PROTECT OF JO-BAR MANUFACTURING CORPORATION BE DENIED.'

WITH HIS REPORT THE CONTRACTING OFFICER SUBMITTED A LIST OF ARMY AND NAVY CONTRACTS WHICH WERE ACTIVE DURING THE PERIOD FROM SEPTEMBER 30, 1964, THROUGH FEBRUARY 24, 1965, AND SUCH LIST SHOWS THAT YOUR FIRM WAS DELINQUENT IN THE PERFORMANCE OF THE FOLLOWING CONTRACTS:

CHART ARMY CONTRACTS AMC (Z) 00256 10 DAYS DELINQUENT, DELIVERIES NOW COMPLETED;

MANUFACTURING PROBLEMS AMC (W) 00660 60 DAYS DELINQUENT, DELIVERIES NOW COMPLETE;

PROBLEM WAS INABILITY OF FORGING SUBCONTRACTOR

TO HOLD SPECIFICATION TOLERANCES REQUIRING

REWORK OF COMPONENTS. AMC (W) 01303 120 DAYS DELINQUENT, DELIVERIES NOW COMPLETE;

PROBLEM WAS INABILITY OF SUBCONTRACTOR TO

DELIVER AN INTRICATE STAMPING ON TIME. AMC (Z) 11540 30 DAYS DELINQUENT, DELIVERIES NOW COMPLETE;

CONTRACTOR EXPERIENCED MANUFACTURING PROBLEMS. NAVY CONTRACTS N-166-4558 120 DAYS DELINQUENT; DELIVERIES HAVE NOT BEEN

MADE; PROBLEM WAS MISINTERPRETATION OF

SPECIFICATIONS BY THE CONTRACTOR. N-383 89133A 90 DAYS DELINQUENT, DELIVERIES HAVE NOT BEEN

MADE; CONTRACTOR EXPERIENCED MATERIAL AND

MANUFACTURING PROBLEMS. N-156-44194 120 DAYS DELINQUENT, DELIVERIES NOW COMPLETE;

MATERIAL AND MANUFACTURING PROBLEMS. N-197 2757 40 DAYS DELINQUENT, DELIVERIES NOW COMPLETE;

ERROR IN PRODUCTION. N-197-2398 90 DAYS DELINQUENT, DELIVERIES NOW COMPLETE;

VENDOR AND PRODUCTION PROBLEMS.

IT IS PROVIDED AT 10 U.S.C. 2305 (C) THAT CONTRACT AWARDS PURSUANT TO FORMAL ADVERTISING SHALL BE MADE TO "THE RESPONSIBLE BIDDER" WHOSE BID IS RESPONSIVE AND WILL BE MOST ADVANTAGEOUS TO THE UNITED STATES. THE DETERMINATION OF A PROSPECTIVE CONTRACTOR'S RESPONSIBILITY IS PRIMARILY THE FUNCTION OF THE CONTRACTING OFFICER, AND NECESSARILY IS A MATTER OF JUDGMENT INVOLVING A CONSIDERABLE RANGE OF DISCRETION. WHERE SUCH DETERMINATION IS BASED UPON SUBSTANTIAL EVIDENCE, THERE IS NO VALID BASIS ON WHICH WE MAY SUBSTITUTE OUR JUDGMENT FOR THAT OF THE CONTRACTING OFFICER. 39 COMP. GEN. 705, 711. IN OUR OPINION THE ABOVE REPORTED FACTS CONSTITUTE SUBSTANTIAL EVIDENCE OF A PRIOR UNSATISFACTORY RECORD OF PERFORMANCE, AND THE CONTRACTING OFFICER'S DETERMINATION MAY NOT THEREFORE BE QUESTIONED BY OUR OFFICE.