B-157090, SEP. 30, 1965

B-157090, SEP. 30, 1965

TO CORDELL ENGINEERING, INC.:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF JUNE 24, 1965, AND LETTER OF JUNE 25, 1965, PROTESTING AGAINST THE AWARD OF A CONTRACT TO AN OFFEROR OTHER THAN YOUR FIRM--- A SMALL BUSINESS CONCERN--- UNDER DEPARTMENT OF THE AIR FORCE REQUEST FOR QUOTATIONS NO. 65-10-16, ISSUED ON JUNE 2, 1965, BY THE BASE PROCUREMENT OFFICE, ORLANDO AIR FORCE BASE, FLORIDA.

THE REQUEST FOR QUOTATIONS REQUESTED OFFERS TO FURNISH A 16 MM. COLOR REVERSAL FILM PROCESSING SYSTEM INSTALLED IN TWO MATING UNITS SEPARATELY TRANSPORTABLE MOBILE TYPE TRAILER. PROSPECTIVE OFFERORS WERE ADVISED ON PAGE 2 OF THE REQUEST THAT DELIVERY WAS REQUIRED WITHIN 90 DAYS AFTER RECEIPT OF A NOTICE OF AWARD AND THAT QUOTATIONS DEVIATING THEREFROM WOULD BE CONSIDERED NONRESPONSIVE AND WOULD BE REJECTED. UPON THE RECEIPT OF QUOTATIONS ON JUNE 11, 1965, IT APPEARED THAT YOU SUBMITTED THE LOWEST PRICE OF $172,067 FOR DELIVERY WITHIN 90 DAYS. THE ONLY OTHER QUOTATION WAS RECEIVED FROM THE HOUSTON FEARLESS CORPORATION WHICH OFFERED A PRICE OF $188,315 FOR DELIVERY WITHIN 120 DAYS AFTER RECEIPT OF THE CONTRACT.

PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-905.4, A PREAWARD SURVEY WAS CONDUCTED OF YOUR RESPONSIBILITY AS A PROSPECTIVE GOVERNMENT CONTRACTOR AND IT WAS CONCLUDED THEREFROM THAT YOU DID NOT MEET THE MINIMUM STANDARDS OF RESPONSIBILITY PRESCRIBED BY ASPR 1-903 ESPECIALLY AS TO YOUR CAPABILITIES IN THE AREAS OF PRODUCTION AND QUALITY ASSURANCE. IT WAS ALSO NOTED THAT YOU DID NOT HAVE AVAILABLE FOR USE OF THE PREAWARD SURVEY TEAM INFORMATION RELATING TO YOUR FINANCIAL ABILITY TO PERFORM THE CONTEMPLATED CONTRACT.

ON JUNE 18, 1965, THE SMALL BUSINESS REPRESENTATIVE, BOSTON CONTRACT MANAGEMENT DISTRICT, WAS REQUESTED BY THE CONTRACTING OFFICER TO REFER THE NEGATIVE FACILITY CAPABILITY REPORT ON YOUR FIRM TO THE SMALL BUSINESS ADMINISTRATION (SBA) FOR CONSIDERATION AS TO WHETHER A CERTIFICATE OF COMPETENCY SHOULD BE ISSUED TO YOUR FIRM. HOWEVER, ON JUNE 23 THE CONTRACTING OFFICER WITHDREW THE REQUEST FOR CERTIFICATE OF COMPETENCY ACTION WHEN IT WAS DETERMINED THAT AN AWARD MUST BE MADE WITHOUT DELAY BECAUSE OF THE URGENT NEED FOR THE EQUIPMENT. AWARD WAS THEREFORE MADE TO HOUSTON FEARLESS ON JUNE 29, 1965, IN THE AMOUNT OF $180,000 WHICH REFLECTED A NEGOTIATED DECREASE OF $8,315 FROM ITS PROPOSED PRICE. THIS ACTION IS SUPPORTED BY A CERTIFICATE EXECUTED BY THE CONTRACTING OFFICER ON JUNE 23, 1965, PURSUANT TO ASPR 1-705.4/C) (IV), THAT THE EQUIPMENT TO BE PROCURED IS VITAL TO A PRIORITY MISSION IN SOUTHEAST ASIA, AND THAT AWARD TO OTHER THAN THE LOW OFFEROR MUST BE MADE WITHOUT DELAY.

ASPR 1-705.4/C) PROVIDES:

"/C) IF A BID OR PROPOSAL OF A SMALL BUSINESS CONCERN IS TO BE REJECTED SOLELY BECAUSE THE CONTRACTING OFFICER HAS DETERMINED THE CONCERN TO BE NONRESPONSIBLE AS TO CAPACITY OR CREDIT, THE MATTER SHALL BE REFERRED TO THE SBA. THIS PROCEDURE APPLIES ONLY TO PROPOSED AWARDS EXCEEDING $2,500. FOR PROPOSED AWARDS EXCEEDING $2,500, BUT NOT EXCEEDING $10,000, ITS USE IS WITHIN THE DISCRETION OF THE CONTRACTING OFFICER. A PRE-AWARD SURVEY (SEE 1-905) SHALL BE MADE PRIOR TO A DETERMINATION BY A CONTRACTING OFFICER THAT A SMALL BUSINESS CONCERN IS NOT RESPONSIBLE BECAUSE OF A LACK OF CAPACITY OR CREDIT ON A PROPOSED AWARD OF MORE THAN $10,000. IF A PARTIAL SET-ASIDE IS INVOLVED AND THE BID OF A SMALL BUSINESS CONCERN ON THE UNRESERVED PORTION IS TO BE REJECTED FOR LACK OF CAPACITY OR CREDIT AND THE SAME SMALL BUSINESS CONCERN IS ENTITLED TO CONSIDERATION ON THE RESERVED PORTION OF THE SET-ASIDE IF A CERTIFICATE OF COMPETENCY IS ISSUED BY THE SBA, THE ENTIRE QUANTITY OF THE PROCUREMENT (RESERVED AND UNRESERVED) FOR WHICH THAT SMALL BUSINESS CONCERN MAY BE ENTITLED, IF COMPETENT, SHALL BE REFERRED TO SBA AND THE REFERRAL PAPERS SO NOTED. THE SBA MAY THEN CERTIFY THE SMALL BUSINESS CONCERN FOR THE MAXIMUM QUANTITY OF THE PROCUREMENT FOR WHICH IT IS ELIGIBLE. THE AWARD SHALL BE WITHHELD UNTIL SBA ACTION CONCERNING ISSUANCE OF A CERTIFICATE OF COMPETENCY, OR UNTIL 15 WORKING DAYS AFTER THE SBA IS SO NOTIFIED, WHICHEVER IS EARLIER, SUBJECT TO THE FOLLOWING:

"/IV) A REFERRAL NEED NOT BE MADE TO THE SBA IF THE CONTRACTING OFFICER CERTIFIES IN WRITING THAT THE AWARD MUST BE MADE WITHOUT DELAY, INCLUDES SUCH CERTIFICATE AND SUPPORTING DOCUMENTATION IN THE CONTRACT FILE, AND PROMPTLY FURNISHES A COPY TO THE SBA REPRESENTATIVE.'

IN YOUR TELEGRAM AND LETTER OF JUNE 24, AND 25, 1965, RESPECTIVELY, SIX REASONS ARE GIVEN AS TO WHY YOU BELIEVE THE ACTIONS TAKEN BY THE DEPARTMENT OF THE AIR FORCE WERE CLEARLY DISCRIMINATORY AS TO YOUR FIRM, A SMALL BUSINESS CONCERN.

THE FIRST REASON GIVEN BY YOU IS THAT YOUR FIRM WAS NOT SUFFICIENTLY FOREWARNED OF THE SURVEY CONDUCTED BY THE BOSTON CONTRACT MANAGEMENT DISTRICT. A SUFFICIENT ANSWER TO THIS POINT OF PROTEST IS A REFERENCE TO PARAGRAPH "G" OF THE REQUEST FOR QUOTATIONS WHICH PROVIDED:

"G. FINANCIAL AND TECHNICAL ABILITY CLAUSE (NOV 1961): IF A BID OR PROPOSAL SUBMITTED IN RESPONSE TO THIS QUOTATION IS FAVORABLY CONSIDERED, A SURVEY TEAM MAY CONTACT YOUR FACILITY TO DETERMINE YOUR ABILITY TO PERFORM. CURRENT FINANCIAL STATEMENTS AND OTHER PERTINENT DATA SHOULD BE AVAILABLE AT THAT TIME IF NOT ALREADY ON FILE WITH THE AIR FORCE SYSTEMS COMMAND. THE TEAM MAY ALSO EVALUATE YOUR SYSTEM FOR DETERMINING THE FINANCIAL AND TECHNICAL ABILITY OF YOUR PROPOSED SUBCONTRACT OR PROCUREMENT SOURCES TO PERFORM.'

THE SECOND GROUND FOR YOUR PROTEST IS THAT YOUR FIRM WAS NOT AWARE THAT CONTRACT FINANCING SHOULD HAVE BEEN ARRANGED WITH A BANK PRIOR TO THE VISIT OF THE FINANCIAL ANALYST FROM THE BOSTON CONTRACT MANAGEMENT DISTRICT. PARAGRAPH "G" SCHEDULE OF THE REQUEST FOR QUOTATIONS, PROVIDES IN EFFECT THAT A PROSPECTIVE CONTRACTOR SHALL ESTABLISH TO THE SATISFACTION OF THE SURVEY TEAM THAT HE HAS THE FINANCIAL CAPABILITY TO PERFORM THE CONTRACT. IN ADDITION TO THE PROVISIONS OF PARAGRAPH "G," ABOVE, THE RECORD INDICATES THAT A REPRESENTATIVE OF YOUR FIRM PROMISED TO HAVE CERTAIN FINANCIAL INFORMATION IN THE HANDS OF FINANCIAL ANALYST, A MEMBER OF THE SURVEY TEAM, BY JUNE 18, 1965, BUT THAT HE FAILED TO DO SO.

THE THIRD BASIS FOR YOUR PROTEST IS THAT THE TIME PERMITTED IN THE REQUEST FOR QUOTATIONS WAS INSUFFICIENT TO OBTAIN WRITTEN QUOTATIONS FROM YOUR FIRM'S SUPPLIERS, AND THAT BECAUSE OF THIS, YOUR FIRM DID NOT HAVE THE WRITTEN QUOTATIONS AVAILABLE WHEN THE PREAWARD SURVEY TEAM WAS MAKING ITS SURVEY. YOU ALSO STATE THAT THE NONAVAILABILITY OF SUCH WRITTEN QUOTATIONS INDUCED, IN PART, THE NEGATIVE SURVEY REPORT. HOWEVER, THE RECORDS SHOW THAT A REPRESENTATIVE OF YOUR FIRM ATTENDED A PREQUOTATION CONFERENCE HELD ON JUNE 2, 1965, AND WAS MADE AWARE OF THE URGENCY OF THE PROCUREMENT. IN FACT, THE RECORD ESTABLISHES THAT THE JUNE 11, 1965, DATE FOR RECEIPT OF PROPOSALS WAS AGREEABLE TO ALL PROSPECTIVE OFFERORS. VIEW OF THE KNOWN URGENCY OF THE PROCUREMENT, YOU SHOULD HAVE REQUESTED OFFERS FROM SUPPLIERS AS EARLY AS POSSIBLE.

THE FOURTH GROUND FOR YOUR PROTEST IS THAT SUBSEQUENT TO THE COMPLETION OF THE PREAWARD SURVEY, YOUR FIRM MET ALL OF THE REQUIREMENTS FOR AN AFFIRMATIVE SURVEY REPORT WHICH, YOU STATE, COULD HAVE BEEN PRODUCED INITIALLY HAD THE REQUIREMENTS OF THE SURVEY BEEN MADE KNOWN TO YOUR FIRM. WE HAVE ALREADY COMMENTED IN PART ON THE FOREGOING; HOWEVER, RESPONSIBILITY DETERMINATIONS MUST BE REGARDED AS FINAL SUBSEQUENT TO AWARD ACTION; MOREOVER, IT WOULD BE TO THE DISADVANTAGE OF THE GOVERNMENT TO KEEP THE MATTER OPEN UNTIL A NONRESPONSIBLE OFFEROR EXHAUSTS ALL EFFORTS TO OVERCOME SUCH INITIAL DETERMINATION OF NONRESPONSIBILITY.

THE FIFTH REASON FOR YOUR PROTEST IS THAT THE CONTRACTING OFFICER, AFTER RECEIPT OF THE NEGATIVE PREAWARD SURVEY, WITHDREW HIS REQUEST TO HAVE A CERTIFICATE OF COMPETENCY REVIEW PERFORMED BY THE SBA TWO DAYS AFTER IT HAD BEEN MADE. WHILE ASPR 1-705.4/C) SUPRA, PROVIDES THAT AWARD SHALL BE WITHHELD PENDING EITHER SBA ACTION CONCERNING ISSUANCE OF A CERTIFICATE OF COMPETENCY OR THE EXPIRATION OF 15 WORKING DAYS AFTER SBA IS SO NOTIFIED, WHICHEVER IS EARLIER, THIS PROCEDURE IS NOT MANDATORY WHERE THE CONTRACTING OFFICER CERTIFIES IN WRITING THAT AWARD MUST BE MADE WITHOUT DELAY. SUCH A CERTIFICATE IS IN THE FILE BEFORE US. IN OUR OPINION THE FACT THAT THE CONTRACTING OFFICER REFERRED THE MATTER OF YOUR RESPONSIBILITY TO SBA WOULD NOT THEREAFTER PRECLUDE APPLICATION OF THE NONREFERRAL AUTHORITY ON THE BASIS OF COMPETENT ADVICE OF URGENCY. ALSO BELIEVE THAT THE WAIVER OF SBA REFERRAL MAY BE INVOKED AT ANY TIME PRIOR TO THE SBA DETERMINATION WHEN IT APPEARS THAT A BONA FIDE PROCUREMENT URGENCY REQUIRES ACCELERATED CONTRACTUAL ACTION.

ALTHOUGH THE HOUSTON FEARLESS QUOTATION WAS NONRESPONSIVE TO THE REQUEST FOR QUOTATIONS BECAUSE IT OFFERED DELIVERY WITHIN 120 DAYS AFTER RECEIPT OF THE CONTRACT, THE PROCUREMENT AGENCY, WHEN IT WAS FACED WITH THE NECESSITY FOR MAKING AN IMMEDIATE AWARD, INVOKED THE AUTHORITY OF 10 U.S.C. 2304/A) (10) TO NEGOTIATE A CONTRACT WITH HUSTON FEARLESS ON A SOLE SOURCE BASIS. IT WOULD HAVE BEEN PATENTLY IMPROPER TO HAVE FAVORABLY CONSIDERED YOUR LOW OFFER SINCE, UNDER ASPR 1-902, AWARD MAY BE MADE TO RESPONSIBLE PROSPECTIVE CONTRACTORS ONLY. SEE, ALSO, ASPR 1-904.1. THE USE OF THE CITED NEGOTIATION AUTHORITY APPEARS PROPER SINCE HOUSTON FEARLESS WAS, AS A RESULT OF THE DETERMINATION OF YOUR NONRESPONSIBILITY, THE ONLY RESPONSIBLE SOURCE OF SUPPLY.

WHILE IT WOULD APPEAR THAT THE URGENCY OF THE PROCUREMENT LOST SOME OF ITS SIGNIFICANCE SINCE THE AWARD MADE TO HOUSTON FEARLESS CALLED FOR DELIVERY IN 120 DAYS RATHER THAN WITHIN 90 DAYS AFTER NOTICE OF AWARD AS REQUIRED BY REQUEST FOR QUOTATIONS, THE RECORD INDICATES THAT EVEN A 15- DAY DELAY TO ENABLE SBA TO ACT WOULD HAVE BEEN ADVERSE TO THE URGENT NEEDS OF THE GOVERNMENT. HENCE, IN OUR OPINION THE ACTIONS TAKEN IN THIS CASE ARE NOT SUBJECT TO QUESTION BY OUR OFFICE. IN THAT CONNECTION, WE ARE ADVISED THAT HOUSTON FEARLESS HAS PROGRESSED SIGNIFICANTLY IN PERFORMANCE OF THE CONTRACT WORK.