B-157597, NOV. 16, 1965

B-157597: Nov 16, 1965

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CASE AND RITCHIE: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF AUGUST 31. RECEIPT IS ALSO ACKNOWLEDGED OF YOUR LETTER OF SEPTEMBER 1. AT THAT TIME A TWO-STEP FORMAL ADVERTISING PROCEDURE WAS COMTEMPLATED. SIX PROPOSALS WERE RECEIVED AND UPON A TECHNICAL EVALUATION THEREOF IT WAS FOUND THAT THERE WERE AREAS IN ALL THE PROPOSALS RECEIVED WHICH NEEDED TO BE CLARIFIED WITH REGARD TO THE VARIOUS DESIGNS OFFERED. TECHNICAL DISCUSSIONS WERE CONDUCTED SEPARATELY WITH EACH OF THE COMPANIES WHICH RESPONDED. ONE COMPANY VOLUNTARILY WITHDREW FROM THE COMPETITION AND THE REMAINING FIVE WERE PERMITTED TO AMEND THEIR PROPOSALS ON THOSE AREAS AS TO WHICH CLARIFICATION WAS REQUIRED. UPON A FINAL TECHNICAL EVALUATION IT WAS FOUND THAT THE PROPOSALS OF FOUR FIRMS.

B-157597, NOV. 16, 1965

TO NORVILLE, WALSH, CASE AND RITCHIE:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF AUGUST 31, 1965, PROTESTING, ON BEHALF OF REPP INDUSTRIES, INC., GARDINER, NEW YORK, AGAINST THE ACTION OF THE CONTRACTING OFFICE AT FORT DETRICK, FREDERICK, MARYLAND, IN REJECTING THE CORPORATION'S BID SUBMITTED IN RESPONSE TO INVITATION FOR BIDS NO. AMC (A) 18-064-65-113. RECEIPT IS ALSO ACKNOWLEDGED OF YOUR LETTER OF SEPTEMBER 1, 1965, WITH ENCLOSURES.

ON JANUARY 22, 1965, THE UNITED STATES ARMY BIOLOGICAL LABORATORIES, FORT DETRICK, MARYLAND, ISSUED A REQUEST FOR TECHNICAL PROPOSALS FOR THE MANUFACTURE OF VARIABLE CAPACITY STAINLESS STEEL FERMENTORS FOR USE IN TISSUE CULTURE PROPAGATION. AT THAT TIME A TWO-STEP FORMAL ADVERTISING PROCEDURE WAS COMTEMPLATED. SIX PROPOSALS WERE RECEIVED AND UPON A TECHNICAL EVALUATION THEREOF IT WAS FOUND THAT THERE WERE AREAS IN ALL THE PROPOSALS RECEIVED WHICH NEEDED TO BE CLARIFIED WITH REGARD TO THE VARIOUS DESIGNS OFFERED. THEREFORE, TECHNICAL DISCUSSIONS WERE CONDUCTED SEPARATELY WITH EACH OF THE COMPANIES WHICH RESPONDED. AS A RESULT OF THESE DISCUSSIONS, ONE COMPANY VOLUNTARILY WITHDREW FROM THE COMPETITION AND THE REMAINING FIVE WERE PERMITTED TO AMEND THEIR PROPOSALS ON THOSE AREAS AS TO WHICH CLARIFICATION WAS REQUIRED. UPON A FINAL TECHNICAL EVALUATION IT WAS FOUND THAT THE PROPOSALS OF FOUR FIRMS, INCLUDING THAT OF REPP INDUSTRIES, NC., WERE TECHNICALLY ACCEPTABLE.

UNDER STEP TWO, INVITATION FOR BIDS NO. AMC (A) 18-064-65-113 WAS ISSUED ON MAY 17, 1965, TO THE FOUR COMPANIES WHOSE TECHNICAL PROPOSALS WERE DETERMINED TO BE ACCEPTABLE UNDER STEP ONE.

THE FOLLOWING FOUR BIDS WERE RECEIVED:

CHART

REPP INDUSTRIES, INC. $150,504

NEW BRUNSWICK SCIENTIFIC COMPANY 158,800

STAINLESS STELL PRODUCTS COMPANY 164,000

ARISAN INDUSTRIES, INC. 208,720

SINCE REPP INDUSTRIES, INC., WAS THE LOWEST BIDDER, PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-905.4, A PREAWARD SURVEY WAS CONDUCTED OF THE RESPONSIBILITY OF THAT CORPORATION AS A PROSPECTIVE GOVERNMENT CONTRACTOR AND IT WAS CONCLUDED THEREFROM THAT THE CORPORATION DID NOT MEET THE MINIMUM STANDARDS OF RESPONSIBILITY PRESCRIBED BY ASPR 1- 903.2 AND, THEREFORE, ITS BID WAS REJECTED. A CERTIFICATE OF COMPETENCY AS TO THE CORPORATION'S CAPACITY AND CREDIT WAS NOT REQUESTED SINCE IT DID NOT QUALIFY AS A SMALL BUSINESS CONCERN BECAUSE OF THE FACT THAT IT IS A WHOLLY OWNED SUBSIDIARY OF CENCO INSTRUMENTS CORPORATION, A LARGE BUSINESS CONCERN.

IN YOUR LETTER OF SEPTEMBER 1, 1965, YOU STATE THAT, AS LOW BIDDER, REPP INDUSTRIES, INC., SHOULD RECEIVE THE AWARD OF THE CONTRACT AND THAT THE REJECTION OF THE CORPORATION'S BID WAS DUE TO A MISUNDERSTANDING ON THE PART OF THE CONTRACTING OFFICER OF THE CAPABILITIES AND FINANCIAL RESPONSIBILITY OF THE CORPORATION. YOU STRESS THE FACT THAT REPP INDUSTRIES, INC., IS A WHOLLY OWNED SUBSIDIARY OF THE CENCO INSTRUMENTS CORPORATION, A LARGE BUSINESS CORPORATION DOING BUSINESS IN EXCESS OF $50 MILLION ANNUALLY.

THE RECORD INDICATES THAT IN MAKING HIS DETERMINATION AS TO THE NONRESPONSIBILITY OF REPP INDUSTRIES, INC., THE CONTRACTING OFFICER DID NOT QUESTION THE CORPORATION'S ABILITY TO OBTAIN FINANCIAL SUPPORT FROM ITS PARENT COMPANY, CENCO INSTRUMENTS CORPORATION, TO THE EXTENT SUCH SUPPORT MAY BE NEEDED TO PERFORM THE PROPOSED CONTRACT. IN REGARD TO AFFILIATED CONCERNS, ASPR 1-904.3 PROVIDES THAT AFFILIATED CONCERNS SHALL BE CONSIDERED AS SEPARATE ENTITIES IN DETERMINING WHETHER THE CONCERN WHICH IS TO PERFORM THE CONTRACT MEETS THE APPLICABLE STANDARDS FOR A RESPONSIBLE CONTRACTOR. SINCE THE BID IN QUESTION WAS NOT SUBMITTED BY CENCO INSTRUMENTS CORPORATION, NOR BY ITS SUBORDINATE CONCERNS AS JOINT VENTURES, IT APPEARS THAT ONLY THE CAPABILITIES OF REPP INDUSTRIES, INC., TO PERFORM THE CONTRACT ARE PERTINENT TO THE QUESTION INVOLVED. THE RECORD INDICATES THAT THE BASES FOR THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY ARE THAT REPP INDUSTRIES, INC., IS ONLY A SALES AGENCY OR SALES BROKER WITH ONLY TWO PEOPLE ON ITS PAYROLL, ONE AN ELECTRICAL ENGINEER WHO SERVES AS GENERAL MANAGER, AND THE OTHER AN ELECTRONICS TECHNICIAN; THAT THE CORPORATION HAS NO FACILITIES OR EQUIPMENT; THAT IT PROPOSES TO UTILIZE THE ENGINEERING, FABRICATION AND ASSEMBLY CAPABILITIES, FACILITIES AND EQUIPMENT OF TWO OTHER AFFILIATED FIRMS OVER WHICH THERE IS NO EVIDENCE OF CONTROL OR EXISTING BUSINESS OR WORKING AGREEMENTS, AND WHICH THEMSELVES HAVE HAD NO PREVIOUS EXPERIENCE IN THE DESIGN AND FABRICATION OF THE HIGHLY TECHNICAL ITEMS CALLED FOR BY THE INVITATION FOR BIDS. THE CONTRACTING OFFICER ALSO STATES THAT REPP INDUSTRIES, INC., DOES NOT QUALIFY AS A MANUFACTURER OR REGULAR DEALER UNDER THE WALSH-HEALEY PUBLIC CONTRACTS ACT OF JUNE 30, 1936, AS AMENDED, 41 U.S.C. 35.

WE HAVE CONSISTENTLY HELD THAT THE DETERMINATION OF A BIDDER'S RESPONSIBILITY IS PRIMARILY THAT OF THE CONTRACTING AGENCY AND NOT OF OUR OFFICE AND IS BINDING ON THE GENERAL ACCOUNTING OFFICE IN THE ABSENCE OF BAD FAITH OR A REASONABLE BASIS FOR THE DETERMINATION MADE. 33 COMP. GEN. 549; 37 ID. 430; 39 ID. 705; 43 ID. 257. THE COURTS HAVE ALSO ADOPTED A SIMILAR VIEW. O-BRIEN V. CARNEY, 6 F.SUPP. 761; FRIEND V. LEE, 221 F.2D 96. IN OUR CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THIS CASE THERE HAS BEEN FOUND NO SUFFICIENT BASIS FOR CONCLUDING THAT THE DETERMINATION OF THE CORPORATION'S LACK OF RESPONSIBILITY WAS NOT BASED UPON A FULL AND HONEST INVESTIGATION OF ITS QUALIFICATIONS.