B-156673, SEP. 15, 1965

B-156673: Sep 15, 1965

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TO COVINGTON AND BURLING: REFERENCE IS MADE TO YOUR LETTERS DATED JULY 23 AND JULY 30. FORD'S PROPOSAL WAS REJECTED BY THE GENERAL SERVICES ADMINISTRATION ON THE BASIS OF A BELIEF THAT HE DID NOT QUALIFY AS A RESPONSIBLE PROSPECTIVE CONTRACTOR FOR THE PARTICULAR WORK. THE CONTRACT WAS AWARDED TO THE ADVANCE BUILDING MAINTENANCE COMPANY. THE AWARD SHOULD NOT HAVE BEEN MADE WITHOUT HAVING GIVEN THE SMALL BUSINESS ADMINISTRATION A REASONABLE OPPORTUNITY TO DETERMINE WHETHER OR NOT TO ISSUE A SMALL BUSINESS CERTIFICATE OF COMPETENCY TO MR. FORD THAT IT WAS UNABLE TO ISSUE A CERTIFICATE OF COMPETENCY. THAT THIS DECISION WAS BASED UPON A CAREFUL REVIEW OF THE INFORMATION AVAILABLE WHICH FAILED TO SUPPORT BOTH TECHNICAL AND FINANCIAL CAPABILITY.

B-156673, SEP. 15, 1965

TO COVINGTON AND BURLING:

REFERENCE IS MADE TO YOUR LETTERS DATED JULY 23 AND JULY 30, 1965, RELATIVE TO THE PROTEST MADE BY MR. DAVID J. FORD, RICHMOND, VIRGINIA, AGAINST THE REJECTION OF HIS PROPOSAL SUBMITTED IN RESPONSE TO GENERAL SERVICES ADMINISTRATION INVITATION NO. GS-03B-12257 (NEG.), DATED APRIL 9, 1965, COVERING A PROPOSED PROCUREMENT OF JANITORIAL SERVICES AT THE LAFAYETTE BUILDING, WASHINGTON, D.C.

MR. FORD'S PROPOSAL WAS REJECTED BY THE GENERAL SERVICES ADMINISTRATION ON THE BASIS OF A BELIEF THAT HE DID NOT QUALIFY AS A RESPONSIBLE PROSPECTIVE CONTRACTOR FOR THE PARTICULAR WORK, AND THE CONTRACT WAS AWARDED TO THE ADVANCE BUILDING MAINTENANCE COMPANY, WHICH FIRM SUBMITTED THE SECOND LOWEST PROPOSAL UNDER THE INVITATION. THE AWARD SHOULD NOT HAVE BEEN MADE WITHOUT HAVING GIVEN THE SMALL BUSINESS ADMINISTRATION A REASONABLE OPPORTUNITY TO DETERMINE WHETHER OR NOT TO ISSUE A SMALL BUSINESS CERTIFICATE OF COMPETENCY TO MR. FORD. HOWEVER, AFTER AWARD, THE SMALL BUSINESS ADMINISTRATION CONSIDERED THE CASE ON ITS MERITS AND ADVISED MR. FORD THAT IT WAS UNABLE TO ISSUE A CERTIFICATE OF COMPETENCY; AND THAT THIS DECISION WAS BASED UPON A CAREFUL REVIEW OF THE INFORMATION AVAILABLE WHICH FAILED TO SUPPORT BOTH TECHNICAL AND FINANCIAL CAPABILITY.

AFTER THE SMALL BUSINESS ADMINISTRATION DECLINED TO ISSUE A CERTIFICATE, YOU REQUESTED OUR ASSISTANCE IN OBTAINING A REVIEW OF THE CASE BY THE SMALL BUSINESS ADMINISTRATION. ACCORDINGLY, COPIES OF YOUR LETTERS DATED JULY 23 AND 30, 1965, WERE FORWARDED TO THE SMALL BUSINESS ADMINISTRATION, INVITING ATTENTION TO YOUR REQUEST FOR REVIEW OF MR. FORD'S QUALIFICATIONS, AND REQUESTING CERTAIN INFORMATION FOR OUR PURPOSES.

THE SMALL BUSINESS ADMINISTRATION HAS SUBMITTED A REPORT, INDICATING THAT NO ADDITIONAL DECISION WAS RENDERED ON MR. FORD'S APPLICATION FOR A CERTIFICATE OF COMPETENCY AND EXPRESSING THE OPINION THAT THE DENIAL OF A CERTIFICATE IN THIS CASE IS IN ACCORDANCE WITH THE SMALL BUSINESS ACT. UNDER THAT ACT, THE SMALL BUSINESS ADMINISTRATION IS AUTHORIZED, WHEN IT DETERMINES SUCH ACTION IS NECESSARY, TO CERTIFY WITH RESPECT TO THE COMPETENCY, AS TO CAPACITY AND CREDIT, OF ANY SMALL BUSINESS CONCERN OR GROUP OF SUCH CONCERNS TO PERFORM A SPECIFIC GOVERNMENT CONTRACT. SEE 15 U.S.C. 637 (B) (7).

THE REPORT OF THE SMALL BUSINESS ADMINISTRATION SETS FORTH THAT MR. FORD WAS FORMERLY THE GENERAL MANAGER OF THE KAHOE SUPPLY COMPANY, BEL AIR, MARYLAND. DURING THE TIME HE HELD THIS POSITION, HE SUPERVISED PERFORMANCE OF A CONTRACT AWARDED TO THE KAHOE SUPPLY COMPANY FOR JANITORIAL SERVICES AT THE DEPARTMENT OF AGRICULTURE UNDER CONTRACT NO. GS -03B-12153. THE WORK UNDER THAT CONTRACT WAS POORLY PERFORMED AND WAS CONSIDERED BY THE DEPARTMENT OF AGRICULTURE TO BE HIGHLY UNSATISFACTORY. REPEATED ADMONITIONS TO IMPROVE THE QUALITY OF THE WORK AND PERSONAL CONFERENCES WITH MR. FORD DID NOT RESULT IN ANY IMPROVEMENT. SUBSTANTIAL AMOUNTS WERE WITHHELD FROM MONTHLY BILLINGS ON SEVERAL OCCASIONS FOR WORK NOT PERFORMED. MR. FORD WAS DIFFICULT TO CONTACT REGARDING HIS SUPERVISORY DUTIES AND MUCH OF THE POOR PERFORMANCE WAS ALLEGEDLY DIRECTLY ATTRIBUTABLE TO HIM.

THE REPORT STATES THAT MR. FORD IS NOT NOW ENGAGED IN THIS TYPE OF ACTIVITY IN THAT HE HAS NO CONTRACTS IN EFFECT. THUS, HE DOES NOT HAVE IN HIS PRESENT EMPLOYMENT THE PERSONNEL TO PERFORM THE SERVICES DESCRIBED IN THE INVITATION OF APRIL 9, 1965. IF AWARDED THE CONTRACT, MR. FORD INTENDED TO EMPLOY THE PERSONNEL OF THE CURRENT CONTRACTOR. HOWEVER, THERE WERE NO WRITTEN COMMITMENTS FROM THE SUPERVISORY PERSONNEL MR. FORD INTENDED TO EMPLOY THAT THEY WOULD WORK FOR HIM. SIMILARLY, HE DOES NOT PRESENTLY POSSESS ALL OF THE EQUIPMENT REQUIRED TO PERFORM THE WORK AND INTENDS TO UTILIZE EQUIPMENT PROVIDED BY THE KAHOE SUPPLY COMPANY ON A NO- COST BASIS. MR. FORD'S PERSONAL FINANCES ARE INADEQUATE AND HE IS RELYING ON THE KAHOE SUPPLY COMPANY FOR BONDING CAPACITY AND FOR A LOAN OF $10,000.

THE REPORT FURTHER STATES THAT, WHILE MR. FORD HAD OBTAINED COMMITMENTS FOR BANK FINANCING BASED UPON THE ASSIGNMENT OF RECEIVABLES, HIS LACK OF AN OPERATING ORGANIZATION AND RELIANCE ON THE KAHOE SUPPLY COMPANY, A PREVIOUSLY UNSATISFACTORY CONTRACTOR, WERE CONSIDERED BY THE SMALL BUSINESS ADMINISTRATION TO BE FACTORS PRECLUDING THE CERTIFICATION THAT MR. FORD HAD THE CAPACITY AND CREDIT TO PERFORM THE PROPOSED CONTRACT.

SECTION 1-1.310-5 OF THE FEDERAL PROCUREMENT REGULATIONS PROVIDES, IN PART, AS FOLLOWS:

"/A) IN ORDER TO QUALIFY AS RESPONSIBLE, A PROSPECTIVE CONTRACTOR MUST, IN THE OPINION OF THE CONTRACTING OFFICER, MEET THE FOLLOWING STANDARDS, AS THEY RELATE TO THE PARTICULAR PROCUREMENT UNDER CONSIDERATION:

"/1) IS A MANUFACTURER, REGULAR DEALER, SERVICE CONTRACTOR, OR CONSTRUCTION CONTRACTOR (AS DEFINED IN SUBPART 1-1.2), OR SUCH OTHER PERSON OR FIRM AS MAY BE FOUND BY THE AGENCY CONCERNED TO BE QUALIFIED AND RESPONSIBLE AS A SOURCE OF SUPPLY;

"/2) HAS ADEQUATE FINANCIAL RESOURCES FOR PERFORMANCE, OR HAS THE ABILITY TO OBTAIN SUCH RESOURCES AS REQUIRED DURING PERFORMANCE;

"/3) HAS THE NECESSARY EXPERIENCE, ORGANIZATION, TECHNICAL QUALIFICATIONS, SKILLS AND FACILITIES, OR HAS THE ABILITY TO OBTAIN THEM (INCLUDING PROBABLE SUBCONTRACTOR ARRANGEMENTS);

"/5) HAS A SATISFACTORY RECORD OF INTEGRITY, JUDGMENT, AND PERFORMANCE *

"/B) ACCEPTABLE EVIDENCE OF "ABILITY TO OBTAIN" FINANCIAL RESOURCES, EXPERIENCE, ORGANIZATION, TECHNICAL QUALIFICATIONS, SKILLS, AND FACILITIES (SEE (A) (2) AND (3), ABOVE), GENERALLY SHALL BE A FIRM COMMITMENT OR ARRANGEMENT FOR THE RENTAL, PURCHASE, OR OTHER ACQUISITION THEREOF.'

IT IS APPARENT THAT MR. FORD DOES NOT QUALIFY AS A SERVICE CONTRACTOR WITHIN THE MEANING OF SECTION 1-1.214, FPR, WHICH DEFINES A SERVICE CONTRACTOR AS ONE (A) WHO OWNS, OPERATES OR MAINTAINS A PLACE OF BUSINESS, REGULARLY ENGAGED IN PERFORMING NONPERSONAL SERVICES, OR (B) WHO, IF NEWLY ENTERING INTO A SERVICE ACTIVITY, HAS MADE ALL NECESSARY PRIOR ARRANGEMENTS FOR PERSONNEL, SERVICE EQUIPMENT, AND REQUIRED LICENSES TO PERFORM SERVICES. THE RECORD IN THIS CASE INDICATES THAT MR. FORD FORMED HIS COMPANY THE DAY BEFORE HE SUBMITTED HIS PROPOSAL TO THE GENERAL SERVICES ADMINISTRATION AND IT WAS FOUND THAT THE COMPANY WAS COMPLETELY LACKING IN ORGANIZATION, THERE HAVING BEEN NO SUBSTANTIAL ARRANGEMENTS MADE FOR PERSONNEL, SERVICE EQUIPMENT, ETCETERA.

YOU HAVE CONTENDED THAT MR. FORD HAS THE NECESSARY EXPERIENCE TO PERFORM THE PROPOSED WORK BUT IT APPEARS THAT NO QUESTION WAS RAISED BY THE CONTRACTING OFFICER CONCERNING THE SUFFICIENCY OF MR. FORD'S PERSONAL EXPERIENCE IN THE PARTICULAR TYPE OF BUSINESS. IT IS NEVERTHELESS APPARENT THAT MR. FORD'S ASSOCIATION WITH THE UNSATISFACTORY WORK PERFORMED BY THE KAHOE SUPPLY COMPANY WAS ONE OF THE FACTORS CONSIDERED BY THE CONTRACTING OFFICER WHEN MR. FORD'S PROPOSAL WAS REJECTED. THE REPORT OF THE SMALL BUSINESS ADMINISTRATION INDICATES THAT MR. FORD WAS RESPONSIBLE FOR MUCH OF THE POOR PERFORMANCE BY THE KAHOE SUPPLY COMPANY AND, IF SO, IT SEEMS THAT THE GENERAL SERVICES ADMINISTRATION WOULD HAVE BEEN JUSTIFIED IN CONSIDERING THAT MR. FORD DID NOT HAVE A SATISFACTORY RECORD OF INTEGRITY, JUDGMENT AND PERFORMANCE, AS REQUIRED UNDER FPR 1- 1.310-5 (A) (5).

ALSO, WE ARE INCLINED TO AGREE WITH THE SMALL BUSINESS ADMINISTRATION THAT MR. FORD DOES NOT QUALIFY AS A RESPONSIBLE PROSPECTIVE CONTRACTOR FROM THE STANDPOINTS OF CAPACITY AND CREDIT, SINCE HE DOES NOT HAVE AN OPERATING ORGANIZATION AND HE IS RELYING ON THE KAHOE SUPPLY COMPANY, A PREVIOUSLY UNSATISFACTORY CONTRACTOR, FOR BOTH FINANCIAL ASSISTANCE AND THE USE OF ITS EQUIPMENT ON A NO-COST BASIS.

APART FROM THE AUTHORITY OF THE SMALL BUSINESS ADMINISTRATION TO ISSUE A CERTIFICATE OF COMPETENCY TO A SMALL BUSINESS CONCERN, AND THE QUESTION OF WHETHER WE ARE AUTHORIZED TO REVIEW EITHER THE GRANTING OR DENIAL OF ANY SUCH CERTIFICATE, THE DETERMINATION OF THE CAPABILITIES OF A BIDDER IS PRIMARILY THE FUNCTION OF THE PROCUREMENT AGENCY AND, IN THE ABSENCE OF A CLEAR SHOWING OF BAD FAITH OR LACK OF A REASONABLE FACTUAL BASIS FOR THE DETERMINATION, OUR OFFICE MAY NOT PROPERLY OBJECT TO THE DETERMINATION AS MADE. 38 COMP. GEN. 248. THE RECORD OF THIS CASE FAILS TO SHOW OTHER THAN THAT THE REJECTION OF MR. FORD'S PROPOSAL WAS BASED ON REASONABLE GROUNDS, AS HAS BEEN CONCLUDED BY THE SMALL BUSINESS ADMINISTRATION IN ITS CONSIDERATION OF THE QUESTION AS TO WHETHER OR NOT TO ISSUE A CERTIFICATE OF COMPETENCY TO MR. FORD.

ACCORDINGLY, WE FIND NO LEGAL BASIS FOR TAKING EXCEPTION TO THE CONTRACT AS AWARDED TO THE ADVANCE BUILDING MAINTENANCE COMPANY, AND THE PROTEST MADE TO OUR OFFICE IN THE MATTER MUST BE, AND IS, HEREBY DENIED.