B-157267, B-157645, DEC. 22, 1965

B-157267,B-157645: Dec 22, 1965

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

TO CONTINENTAL CHEMICAL CORPORATION: REFERENCE IS MADE TO YOUR LETTER OF JULY 19. INVITATION NO. 55338 WAS ISSUED MARCH 30. YOU WERE LOW ON A NUMBER OF ITEMS. IT WAS CONSIDERED ADVISABLE TO CHECK ON YOUR FACILITIES. A SURVEY WAS MADE BY AN INSPECTOR FROM THE GSA CHICAGO REGIONAL OFFICE. WHO CONCLUDED THAT YOU WERE AN UNRELIABLE SOURCE OF SUPPLY AND SO REPORTED UNDER DATE OF JUNE 2. DETERMINED THAT YOU WERE NOT A RESPONSIBLE BIDDER AND THAT YOU THEREFORE COULD NOT BE CONSIDERED FOR AWARD. WAS ALSO REJECTED FOR NONRESPONSIBILITY. YOU CONTEND THAT GSA'S ACTION WAS BASED ON REPORTS WHICH WERE ERRONEOUS AND BIASED. THIS WAS DONE BY GSA IN MAKING ITS SURVEY AND IT IS REPORTED THAT THE NUMBER OF ORDERS DELIVERED IN A DELINQUENT STATUS WAS CONSISTENTLY IN EXCESS OF 50 PERCENT OF THE TOTAL NUMBER OF ORDERS ISSUED.

B-157267, B-157645, DEC. 22, 1965

TO CONTINENTAL CHEMICAL CORPORATION:

REFERENCE IS MADE TO YOUR LETTER OF JULY 19, 1965, AND SUBSEQUENT CORRESPONDENCE, CONCERNING YOUR PROTEST OF AN AWARD TO ANY OTHER BIDDER UNDER INVITATION FOR BIDS (IFB) NO. FPNGC-L-55338, ISSUED BY THE GENERAL SERVICES ADMINISTRATION (GSA), WASHINGTON, D.C., AND IFB NO. 36379, ISSUED BY THE GSA REGIONAL OFFICE, DENVER, COLORADO.

INVITATION NO. 55338 WAS ISSUED MARCH 30, 1965, AND OPENED ON APRIL 20, 1965. YOU WERE LOW ON A NUMBER OF ITEMS, BUT SINCE YOU HAD A HISTORY OF UNSATISFACTORY PERFORMANCE BOTH IN REGIONAL AND CENTRAL OFFICE PROCUREMENTS, IT WAS CONSIDERED ADVISABLE TO CHECK ON YOUR FACILITIES, AS WELL AS YOUR ABILITY AND WILLINGNESS TO PERFORM. A SURVEY WAS MADE BY AN INSPECTOR FROM THE GSA CHICAGO REGIONAL OFFICE, WHO CONCLUDED THAT YOU WERE AN UNRELIABLE SOURCE OF SUPPLY AND SO REPORTED UNDER DATE OF JUNE 2, 1965. THE CONTRACTING OFFICER REVIEWED THESE FINDINGS, AS WELL AS YOUR KNOWN RECORD OF PERFORMANCE UNDER GOVERNMENT CONTRACTS, AND DETERMINED THAT YOU WERE NOT A RESPONSIBLE BIDDER AND THAT YOU THEREFORE COULD NOT BE CONSIDERED FOR AWARD. YOUR BID ON INVITATION NO. 36379, WHICH OPENED JUNE 9, 1965, WAS ALSO REJECTED FOR NONRESPONSIBILITY, BASED ON THE CONTRACTING OFFICER'S REVIEW OF YOUR RECORD OF UNSATISFACTORY PERFORMANCE IN FULFILLING DELIVERY REQUIREMENTS ON PREVIOUS CONTRACTS.

IN PROTESTING THE REJECTION OF YOUR BIDS, YOU CONTEND THAT GSA'S ACTION WAS BASED ON REPORTS WHICH WERE ERRONEOUS AND BIASED. YOU ALSO QUESTION THE GSA TESTING PROCEDURES AS THEY RELATE TO THE FREQUENCY OF INSPECTIONS AND THE ACCURACY OF TEST RESULTS AND YOU ATTRIBUTE MANY OF THE DELAYS IN DELIVERY UNDER CERTAIN OF YOUR CONTRACTS TO THE GOVERNMENT'S DELAY IN INSPECTING AND RELEASING PRODUCTS UNDER OTHER CONTRACTS WHICH MADE IT IMPOSSIBLE FOR YOU TO MANUFACTURE ADDITIONAL QUANTITIES BECAUSE OF LIMITED STORAGE FACILITIES.

AS STATED BY YOU IN YOUR LETTER OF AUGUST 20, 1965, CONSIDERATION SHOULD BE GIVEN TO YOUR OVER-ALL PERFORMANCE. THIS WAS DONE BY GSA IN MAKING ITS SURVEY AND IT IS REPORTED THAT THE NUMBER OF ORDERS DELIVERED IN A DELINQUENT STATUS WAS CONSISTENTLY IN EXCESS OF 50 PERCENT OF THE TOTAL NUMBER OF ORDERS ISSUED. IT IS FURTHER REPORTED BY GSA THAT A RECONSTRUCTION OF ALL DELIVERY CASES UNDER THE VARIOUS CONTRACTS MENTIONED IN THE SURVEY REVEALED THAT 85 ORDERS WERE DELINQUENT OUT OF A TOTAL OF 128 ORDERS ISSUED UNDER 11 DIFFERENT CONTRACTS.

WITH REFERENCE TO THE FREQUENCY OF INSPECTIONS, IT APPEARS THAT VISITS TO YOUR PLANT FOR THIS PURPOSE WERE MORE FREQUENT THAN IS NORMALLY PROVIDED OTHER CONTRACTORS WITH SIMILAR VOLUMES AND THAT, IN AN ATTEMPT TO FURTHER ASSIST YOU WITH YOUR SPACE PROBLEM, YOU WERE PERMITTED TO RELEASE SHIPMENTS OF WAX REMOVER, YOUR LARGE VOLUME ITEM, WITHOUT AWAITING FINAL TEST RESULTS. AS TO THE ACCURACY OF TEST RESULTS, IT APPEARS THAT ONE REJECTION WAS WITHDRAWN BECAUSE IT HAD BEEN BASED ON A MISINTERPRETATION OF THE SPECIFICATION BY THE GSA LABORATORY. FIVE REJECTIONS UNDER OTHER CONTRACTS ARE REPORTED TO HAVE BEEN WITHDRAWN BECAUSE OF GSA'S URGENT NEED FOR THE MATERIAL AND IN ORDER TO FOREGO PROTRACTED DISCUSSION AND DEBATE CONCERNING MARGINAL TEST RESULTS. HOWEVER, WITH THE EXCEPTION OF THE ABOVE REJECTION DUE TO MISINTERPRETATION, ALL REJECTIONS ARE CONSIDERED BY GSA TO HAVE BEEN REASONABLE.

THE FEDERAL PROCUREMENT REGULATIONS PROVIDE, IN PERTINENT PART, AS FOLLOWS:

"SEC. 1-1.310-4 GENERAL POLICY.

IT IS THE POLICY THAT CONTRACTS SHALL BE AWARDED ONLY TO RESPONSIBLE PROSPECTIVE CONTRACTORS. A "RESPONSIBLE PROSPECTIVE CONTRACTOR" IS ONE WHICH IS FOUND BY THE CONTRACTING OFFICER TO MEET THE MINIMUM STANDARDS SET FORTH IN SEC. 1-1.310-5 AND SUCH ADDITIONAL STANDARDS AS MAY BE PRESCRIBED FOR SPECIFIC PROCUREMENTS BY THE AGENCY CONCERNED.

"SEC. 1-1.310-5 STANDARDS.

(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:

(4) HAS A SATISFACTORY RECORD OF INTEGRITY, JUDGMENT, AND PERFORMANCE (CONTRACTORS WHICH ARE SERIOUSLY DELINQUENT IN CURRENT CONTRACT PERFORMANCE, CONSIDERING THE NUMBER OF CONTRACTS AND THE EXTENT OF DELINQUENCIES OF EACH, SHALL, IN THE ABSENCE OF EVIDENCE TO THE CONTRARY OR COMPELLING CIRCUMSTANCES, BE PRESUMED TO BE UNABLE TO FULFILL THIS REQUIREMENT);

"SEC. 1-1.708-1 GENERAL.

PURSUANT TO AUTHORITY OF THE SMALL BUSINESS ACT (15 U.S.C. 637 (B) (7), SBA IS EMPOWERED TO CERTIFY TO GOVERNMENT PROCUREMENT OFFICERS THE COMPETENCY AS TO CAPACITY AND CREDIT OF ANY SMALL BUSINESS CONCERN OR GROUP OF SUCH CONCERNS TO PERFORM A SPECIFIC GOVERNMENT CONTRACT. AS USED IN THIS SECTION,"CAPACITY" MEANS THE OVERALL ABILITY OF A PROSPECTIVE SMALL BUSINESS CONTRACTOR TO MEET QUALITY, QUANTITY, AND TIME REQUIREMENTS OF A PROPOSED CONTRACT AND INCLUDES ABILITY TO PERFORM,ORGANIZATION, EXPERIENCE, TECHNICAL KNOWLEDGE, SKILLS,"KNOWHOW," TECHNICAL EQUIPMENT, AND FACILITIES.

"SEC. 1-1.708-2 APPLICABILITY AND PROCEDURE.

(A) IF A SMALL BUSINESS CONCERN HAS SUBMITTED AN OTHERWISE ACCEPTABLE BID OR PROPOSAL BUT HAS BEEN FOUND BY THE CONTRACTING OFFICER NOT TO BE RESPONSIBLE AS TO CAPACITY OR CREDIT, AND IF THE BID OR PROPOSAL IS TO BE REJECTED FOR THIS REASON ALONE, SBA SHALL BE NOTIFIED OF THE CIRCUMSTANCES SO AS TO PERMIT IT TO ISSUE A CERTIFICATE OF COMPETENCY, AND AWARD SHALL BE WITHHELD PENDING EITHER SBA ISSUANCE OF A CERTIFICATE OF COMPETENCY OR THE EXPIRATION OF FIFTEEN WORKING DAYS AFTER SBA IS SO NOTIFIED, WHICHEVER IS EARLIER, SUBJECT TO THE FOLLOWING:

(4) THIS PROCEDURE DOES NOT APPLY WHERE THE CONTRACTING OFFICER HAS FOUND A SMALL BUSINESS CONCERN NOT TO BE RESPONSIBLE FOR A REASON OTHER THAN LACK OF CAPACITY OR CREDIT.'

AS INDICATED BY THE FOREGOING REGULATIONS, IT IS THE DUTY OF THE CONTRACTING OFFICER TO DETERMINE WHETHER A PROSPECTIVE CONTRACTOR MEETS THE REQUIRED STANDARDS OF RESPONSIBILITY SET FORTH THEREIN. PERFORMANCE UNDER CURRENT CONTRACTS IS ONE OF THE PRINCIPAL FACTORS FOR CONSIDERATION AND THE CONTRACTING OFFICER IS VESTED WITH CONSIDERABLE DISCRETION IN MAKING THE REQUIRED DETERMINATION BASED ON HIS JUDGMENT AS TO THIS AND OTHER STATED FACTORS. ACCORDINGLY, UNLESS THE CONTRACTING OFFICER'S FINDING IS CLEARLY CONTRARY TO THE EVIDENCE OR IS INDICATIVE OF BAD FAITH, WE WOULD NOT BE JUSTIFIED IN QUESTIONING SAME. 37 COMP. GEN. 431, 435.

IN ACCORDANCE WITH SEC. 1-1.708-2 (A) (4) ABOVE, SBA NEED NOT BE NOTIFIED OF THE CIRCUMSTANCES OF A PROPOSED REJECTION OF THE BID OF A SMALL BUSINESS CONCERN FOR A REASON OTHER THAN LACK OF CAPACITY OR CREDIT. THE PRESENT CASE, THE CONTRACTING OFFICER'S DECISION THAT THE CONSIDERATION OF YOUR BID ON IFB NO. 55338 COULD NOT BE JUSTIFIED WAS NOT BASED ON YOUR LACK OF CAPACITY OR CREDIT, BUT ON THE CONCLUSION THAT YOUR PERFORMANCE UNDER PAST CONTRACTS INDICATED A LACK OF EFFORT AND A DISREGARD OF THE NECESSITY FOR COMPLIANCE WITH CONTRACT DELIVERY REQUIREMENTS. IT WAS THEREFORE NOT CONSIDERED NECESSARY TO REFER YOUR CASE TO SBA FOR CONSIDERATION OF THE ISSUANCE OF A CERTIFICATE OF COMPETENCY (COC).

WITH REFERENCE TO THE REJECTION OF YOUR BID BY THE DENVER OFFICE ON IFB NO. 36379, IT APPEARS THAT SUCH ACTION WAS BASED ON THE PREVIOUS DETERMINATIONS THAT YOU WERE NOT A NONRESPONSIBLE BIDDER. AS STATED IN 43 COMP. GEN. 140, THE CONTINUED REFUSAL TO AWARD CONTRACTS ON THIS BASIS COULD OPERATE TO DENY A BIDDER THE RIGHT TO DEFEND HIMSELF AGAINST THE CHARGE OF NONRESPONSIBILITY AND COULD DEPRIVE HIM INDEFINITELY OF THE OPPORTUNITY TO RECEIVE AWARDS. HOWEVER, A REASONABLE APPROACH TO THE SITUATION WOULD NOT REQUIRE A PROCURING AGENCY TO CONDUCT A SURVEY EVERY TIME A BID IS RECEIVED FROM A BIDDER WHO AT LAST REPORT WAS CONSIDERED TO BE NONRESPONSIBLE, BUT WOULD DICTATE THAT A SURVEY BE MADE IF, THROUGH LAPSE OF TIME OR RECEIPT OF SOME DEFINITE INFORMATION, THE CONTRACTING OFFICER HAS REASON TO BELIEVE THAT THE DEFICIENCIES UPON WHICH THE PREVIOUS DETERMINATION OF NONRESPONSIBILITY WAS BASED MAY HAVE BEEN CURED.

IN THE PRESENT CASE THE ACTION OF THE DENVER OFFICE, IN BASING REJECTION OF YOUR BID UNDER IFB NO. 36379 ON A PREVIOUS DETERMINATION OF NONRESPONSIBILITY, WOULD APPEAR TO RAISE A QUESTION OF TECHNICAL COMPLIANCE WITH OUR POSITION IN 43 COMP. GEN. 140. HOWEVER, SINCE BIDS UNDER THIS INVITATION WERE OPENED ON JUNE 9, 1965, IT WOULD SEEM THAT THE QUESTION OF YOUR RESPONSIBILITY WAS SUBJECT TO THE SAME CONSIDERATION AND OBJECTIONS AS THOSE COVERED BY THE GSA SURVEY REPORT OF JUNE 2, 1965, UNDER IFB NO. 55338, WHICH REPORT WAS LATER REVIEWED AND FOUND TO BE ESSENTIALLY CORRECT. SINCE THE EVIDENCE SUBMITTED BY YOU DOES NOT ESTABLISH THAT THE FINDINGS OF THIS REPORT ARE ERRONEOUS OR THAT THERE WAS BIAS OR BAD FAITH ON THE PART OF GSA PERSONNEL, WE WOULD NOT BE JUSTIFIED IN QUESTIONING THE REJECTION OF YOUR BIDS UNDER INVITATIONS NOS. 55338 AND 36379, AND YOUR PROTEST AS TO THESE INVITATIONS MUST THEREFORE BE DENIED.

WITH REFERENCE TO YOUR PROTEST UNDER IFB NOS. 55510 AND 55619, GSA HAS REPORTED THAT YOUR OPERATIONS DURING 1965 WERE UNDER VIRTUALLY CONTINUOUS REVIEW, AND THAT OF PARTICULAR MOMENT WAS THE HIRING OF A CAPABLE CHEMIST WHO WAS ABLE TO CARRY ON IN MR. ASHKIN'S ABSENCE AND COMPETENT IN THE AREAS OF DETAILED SUPERVISION AND QUALITY CONTROL, WHERE YOUR COMPANY HAD BEEN PARTICULARLY WEAK. IT IS FURTHER REPORTED THAT MR. ASHKIN ADMITTED THAT HE HAD MADE THE MISTAKE OF BIDDING ON TOO MANY SMALL CONTRACTS, WHICH GENERATED PRODUCTION PROBLEMS. IN THIS CONNECTION IT WAS FELT BY GSA THAT, IN THE ABSENCE OF A PRACTICAL QUALITY CONTROL SYSTEM AND COMPETENT SUBORDINATES, NO SERIOUS EFFORT WAS BEING MADE TO PERFORM ON THE MANY TYPES OF ITEMS ON WHICH YOU WERE BIDDING, AND THAT FACTORS OF TRUE WILLINGNESS AND PERSEVERANCE WERE CONSEQUENTLY MISSING.

UPON ASCERTAINING THAT THE SITUATIONS MENTIONED IN THE PRECEDING PARAGRAPH WERE LARGELY CURED, IT WAS CONSIDERED BY GSA THAT YOUR WILLINGNESS AND TENACITY HAD BEEN ESTABLISHED AND THAT YOUR BIDS COULD BE CONSIDERED AS BONA FIDE. HOWEVER, THER WAS STILL SERIOUS DOUBT AS TO YOUR PHYSICAL ABILITY TO MEET DELIVERY DEADLINES. THIS MATTER WAS THEREFORE REFERRED TO SBA ON OCTOBER 6, 1965, AND IT IS REPORTED THAT ON OCTOBER 28, 1965, YOUR FIRM WAS CERTIFIED BY SBA AS COMPETENT, AS TO CAPACITY AND CREDIT, AND THAT AWARDS HAVE BEEN MADE TO YOU UNDER BOTH OF THE LAST MENTIONED INVITATIONS. IN VIEW THEREOF, IT WOULD APPEAR THAT A BASIS FOR PROTEST UNDER SUCH INVITATIONS NO LONGER EXISTS, AND WE ARE THEREFORE CLOSING OUR FILE IN THESE CASES.