B-157943, MAR. 31, 1966

B-157943: Mar 31, 1966

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INCORPORATED: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM DATED OCTOBER 28. YOUR PROTEST ON EACH INVITATION WILL BE CONSIDERED SEPARATELY. WAS ISSUED ON AUGUST 23. THREE BIDS WERE RECEIVED. YOUR COMPANY WAS LOW BIDDER WITH A BID OF $14. PENN CITY ELEVATOR COMPANY WAS NEXT LOWEST BIDDER WITH A BID OF $19. HIGH BIDDER WAS UNITED ELEVATOR COMPANY WITH A BID OF $22. IT WAS DECIDED TO REJECT YOUR COMPANY'S BID IN RESPONSE TO INVITATION NO. 2PBO-RC-303 DUE TO UNSATISFACTORY PERFORMANCE IN CONNECTION WITH ITS EXISTING CONTRACTS AND AWARD WAS MADE TO THE SECOND LOW BIDDER. THE EXISTING CONTRACTS ON WHICH PERFORMANCE HAD BEEN FOUND DEFICIENT WERE GS-02B 9865. CONNECTION WITH GS-02B-9865 IT IS REPORTED THAT ON FOUR SEPARATE OCCASIONS BETWEEN DECEMBER 3.

B-157943, MAR. 31, 1966

TO BEMM, INCORPORATED:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM DATED OCTOBER 28, 1965, AND COPIES OF YOUR LETTERS DATED NOVEMBER 18, DECEMBER 2, 1965, JANUARY 8 AND MARCH 8, 1966, PROTESTING ACTION BY GENERAL SERVICES ADMINISTRATION (GSA) UNDER INVITATIONS FOR BIDS NOS. 2PBO-RC-303 AND 2PBO-SG-316. YOUR PROTEST ON EACH INVITATION WILL BE CONSIDERED SEPARATELY.

INVITATION FOR BIDS NO. 2 PBO-RC-303 FOR ELEVATOR MAINTENANCE SERVICE AT THE U.S. CUSTOMHOUSE, PHILADELPHIA, PENNSYLVANIA, WAS ISSUED ON AUGUST 23, FOR OPENING ON SEPTEMBER 17, 1965. THREE BIDS WERE RECEIVED. YOUR COMPANY WAS LOW BIDDER WITH A BID OF $14,000. PENN CITY ELEVATOR COMPANY WAS NEXT LOWEST BIDDER WITH A BID OF $19,392. HIGH BIDDER WAS UNITED ELEVATOR COMPANY WITH A BID OF $22,274.

AT A GSA BOARD OF AWARD MEETING ON SEPTEMBER 29, 1965, IT WAS DECIDED TO REJECT YOUR COMPANY'S BID IN RESPONSE TO INVITATION NO. 2PBO-RC-303 DUE TO UNSATISFACTORY PERFORMANCE IN CONNECTION WITH ITS EXISTING CONTRACTS AND AWARD WAS MADE TO THE SECOND LOW BIDDER, PENN CITY ELEVATOR COMPANY ON OR ABOUT OCTOBER 6, 1965. THE EXISTING CONTRACTS ON WHICH PERFORMANCE HAD BEEN FOUND DEFICIENT WERE GS-02B 9865, FOR ELEVATOR MAINTENANCE SERVICE AT THE U.S. CUSTOMHOUSE, PHILADELPHIA, AND CONTRACT NO. GS-02B-9855, FOR ELEVATOR MAINTENANCE SERVICE AT THE PENN A.C. BUILDING, PHILADELPHIA. CONNECTION WITH GS-02B-9865 IT IS REPORTED THAT ON FOUR SEPARATE OCCASIONS BETWEEN DECEMBER 3, 1964, AND MAY 13, 1965, IT WAS NECESSARY FOR THE CONTRACTING OFFICER TO WRITE TO YOUR COMPANY REGARDING DEFICIENCIES IN SERVICE TO THE U.S. CUSTOMHOUSE. NUMEROUS TELEPHONE CONTACTS WERE ALSO REQUIRED. ONE ELEVATOR (CAR NO. 3) WAS OUT OF SERVICE FROM OCTOBER 12, 1964, TO SOMETIME AFTER FEBRUARY 16, 1965. ON AT LEAST TWO OCCASIONS (FEBRUARY 16, 1965, AND MAY 13, 1965) GSA FOUND IT NECESSARY TO IMPOSE A DEADLINE FOR THE COMPLETION OF MAINTENANCE TO THE ELEVATORS AND TO ADVISE YOUR COMPANY THAT IF WORK SHOULD NOT BE COMPLETED BY THE DEADLINE THAT THE CONTRACT WOULD BE TERMINATED AND DEFAULT PROCEEDINGS WOULD BE UNDERTAKEN AGAINST YOUR COMPANY. IN CONNECTION WITH YOUR PERFORMANCE ON CONTRACT NO. GS-02B-9855 FOR SERVICE AT THE PENN A.C. BUILDING, IT WAS FOUND NECESSARY TO WRITE YOUR COMPANY ON EIGHT OCCASIONS BETWEEN DECEMBER 23, 1964, AND AUGUST 18, 1965, RELATIVE TO YOUR UNSATISFACTORY PERFORMANCE AND YOU WERE AGAIN ADVISED OF POSSIBLE DEFAULT PROCEEDINGS IF CERTAIN DEFICIENCIES WERE NOT CORRECTED BY THE GIVEN DEADLINE. THE GSA REQUESTED CONCURRENCE OF THE SMALL BUSINESS ADMINISTRATION (SBA) IN THE CONTRACTING OFFICER'S DETERMINATION THAT YOUR COMPANY WAS NOT A RESPONSIBLE BIDDER. HOWEVER,SBA, ON OCTOBER 27, 1965, ISSUED A CERTIFICATE OF COMPETENCY (COC) THAT YOUR COMPANY WAS COMPETENT, AS TO CAPACITY AND CREDIT, TO PERFORM THE PROPOSED PROCUREMENT CONTEMPLATED BY INVITATION 2PBO-RC-303. YOUR CORRESPONDENCE REVEALS THAT YOUR PROTEST AGAINST NOT RECEIVING AN AWARD UNDER 2PBO-RC-303 IS BASED ON THE FACT THAT YOU WERE ISSUED A COC BY THE SBA IN THIS INSTANCE.

FEDERAL PROCUREMENT REGULATIONS (FPR) 1-1.708-3 PROVIDES THAT, IN ACCORDANCE WITH THE SMALL BUSINESS ACT (15 U.S.C. 637 (B) (7) (, PROCUREMENT AGENCIES ARE REQUIRED TO ACCEPT SBA CERTIFICATES OF COMPETENCY AS A CONCLUSIVE DETERMINATION OF A PROSPECTIVE CONTRACTOR'S RESPONSIBILITY AS TO CAPACITY AND CREDIT, THAT IS, WITH RESPECT TO A BIDDER'S OVERALL ABILITY TO MEET QUALITY, QUANTITY, AND TIME REQUIREMENTS OF THE PROCUREMENT, INCLUDING ABILITY TO PERFORM, ORGANIZATION, TECHNICAL EXPERIENCE, KNOWLEDGE, SKILLS,"KNOW HOW," TECHNICAL EQUIPMENT AND FACILITIES. SEE 39 COMP. GEN. 868, 872. WHILE A RECORD OF PAST DELINQUENCIES OR DEFAULTS BY A COMPANY TO WHOM A COC HAD BEEN ISSUED WOULD PROVIDE NO BASIS FOR REFUSING TO MAKE AN AWARD IF SUCH DELINQUENCIES OR DEFAULTS WERE DUE TO FACTORS INCLUDED IN CAPACITY OR CREDIT, SEE 38 COMP. GEN. 289, IT IS WELL ESTABLISHED THAT THOSE ELEMENTS MAKING UP THE FACTOR OF INTEGRITY--- I.E., NOT WHETHER THE BIDDER CAN PERFORM BUT WHETHER HE WILL PERFORM--- ARE NOT COVERED BY THE COC BUT ARE LEFT FOR DETERMINATION BY THE CONTRACTING AGENCY. SEE ESPECIALLY WARREN BROTHERS ROADS COMPANY V. UNITED STATES, CT.CL. NO. 302-61, DECEMBER 17, 1965; B-148124, APRIL 13, 1962; B-146372, SEPTEMBER 8, 1961; B-143145, NOVEMBER 3, 1960. THE ADMINISTRATIVE RECORD REVEALS THAT YOU WERE FOUND NOT TO BE RESPONSIBLE BECAUSE OF YOUR UNSATISFACTORY PERFORMANCE IN CONNECTION WITH YOUR EXISTING CONTRACTS, WHICH THE CONTRACTING OFFICER DID NOT ATTRIBUTE TO LACK OF CAPACITY OR CREDIT.

THE FACT THAT THE CONTRACTING OFFICER REFERRED THE MATTER OF REJECTION OF YOUR BID UNDER INVITATION 2PBO-RC-303 TO THE SBA IS NOT CONCLUSIVE IN ITSELF INASMUCH AS SUCH REFERRAL WAS STATED TO BE DONE IN ACCORDANCE WITH PROVISIONS OF FPR 1-1.310-5A (2) (3) AND (4) WHICH INCLUDED A REQUIREMENT FOR DETERMINATION OF A SATISFACTORY RECORD OF INTEGRITY, JUDGMENT AND PERFORMANCE. SUCH REFERRAL WAS, THEREFORE, NOT MANDATORY IN THIS INSTANCE. SEE FPR 1-1.708-2 (A) (4) AND (5). FURTHER, THE SUBMITTED FILE SHOWS THAT YOU WERE NOTIFIED BY GSA AS EARLY AS OCTOBER 11, 1965, PRIOR TO ACTION BY SBA, THAT YOUR COMPANY HAD NOT BEEN AWARDED A CONTRACT AND THAT AN AWARD HAD BEEN MADE TO PENN ELEVATOR COMPANY.

WE HAVE CONSISTENTLY TAKEN THE POSITION THAT THE QUESTION AS TO THE QUALIFICATIONS OF A PROSPECTIVE CONTRACTOR PRIMARILY IS FOR DETERMINATION BY THE ADMINISTRATIVE OFFICERS CONCERNED. WE HELD IN OUR DECISION AT 39 COMP. GEN. 868, 872, THAT AN ADMINISTRATIVE DETERMINATION THAT A LOW BIDDER LACKS INTEGRITY OR HAS DEMONSTRATED POOR BUSINESS PRACTICES MUST BE BASED ON CONVINCING EVIDENCE. SEE, ALSO, FPR 1-1.708-2 (A) (5). THIS IS A WELL-ESTABLISHED PRINCIPLE INHERENT IN FORMAL COMPETITIVE ADVERTISING BY THE GOVERNMENT. 8 COMP. GEN. 252; 20 ID. 903; ZEPHYR AIRCRAFT CORPORATION V. UNITED STATES, 122 CT.CL. 523.

IN YOUR LETTER OF JANUARY 8, 1966, YOU TAKE ISSUE WITH THE FINDINGS AND CONCLUSIONS REACHED BY GSA IN CONNECTION WITH YOUR PERFORMANCE AND ALLEGE THAT YOUR COMPANY HAS WILLINGLY AND PROPERLY EXECUTED CONTRACTS IN ACCORDANCE WITH WRITTEN SPECIFICATIONS. THE FACTUAL POINTS AT ISSUE COULD BE RESOLVED BY OUR OFFICE ONLY IF WE WERE TO HOLD A FULL-SCALE ADVERSARY PROCEEDING WITH SWORN TESTIMONY, CROSS-EXAMINATION OF WITNESSES, ETC. WE HAVE NOT THE FACILITIES FOR NOR ARE WE OTHERWISE DISPOSED IN FAVOR OF SUCH AN UNDERTAKING. IN ANY CASE, THE MATTER OF RESPONSIBILITY REMAINS FOR DETERMINATION BY THE CONTRACTING OFFICER TO THE EXTENT THAT HIS AUTHORITY HAS NOT BEEN CIRCUMSCRIBED BY THE COC PROCEDURES, FOR AS THE COURTS HAVE INDICATED, THE FINAL SELECTION OF A CONTRACTOR INVOLVES DISCRETION THAT IS NOT ORDINARILY SUBJECT TO REVIEW. FRIEND V. LEE, 221 F.2D 96. IN FACT, THE COURTS HAVE GONE TO THE EXTENT OF INDICATING THAT CONDUCT TANTAMOUNT TO FRAUD MUST BE PROVED AS A CONDITION TO REVIEWING THE DETERMINATION OF RESPONSIBILITY. IBID.

THE CONTRACTING OFFICER'S DETERMINATION THAT YOUR COMPANY WAS NOT RESPONSIBLE FOR REASONS NOT INCLUDED IN THE COC, WHICH HAVE ALREADY BEEN DESCRIBED, WAS BASED ON A DETAILED REVIEW OF THE HISTORY OF YOUR PERFORMANCE ON CURRENT CONTRACTS. WHILE THE DEFICIENCIES NOTED IN YOUR RECORD ARE, TAKEN INDIVIDUALLY, RELATIVELY MINOR, WITH THE EXCEPTION OF THE COMPLETE SHUTDOWN REFERRED TO ABOVE, THE CUMULATIVE EFFECT IS UNDULY TO INCREASE THE BURDEN OF ADMINISTRATION FROM THE GOVERNMENT'S STANDPOINT. SUCH RECORD IS, WE THINK, ADEQUATE TO SUPPORT A DETERMINATION OF NONRESPONSIBILITY BY THE CONTRACTING OFFICER. WE FIND THAT THE EVIDENCE RELATING TO YOUR PERFORMANCE ON THEN CURRENT CONTRACTS WITH THE GOVERNMENT CONSTITUTED A REASONABLE BASIS FOR THE ADMINISTRATIVE CONCLUSION THAT AN AWARD TO YOU UNDER INVITATION 2PBO-RC-303 WOULD AMOUNT TO A CONTINUATION OF THE SERVICES GSA WAS THEN RECEIVING FROM THE CONTRACTOR AND THUS WOULD PROLONG A SITUATION FOUND TO BE DISADVANTAGEOUS TO THE GOVERNMENT.

ACCORDINGLY, YOUR PROTEST UNDER INVITATION NO. 2PBO-RC-303 IS DENIED.

THE GSA ISSUED INVITATION NO. 2PBO-SG-316 FOR ELEVATOR MAINTENANCE SERVICE AT THE U.S. POST OFFICE AND CUSTOMHOUSE, 9TH AND MARKET STREETS, PHILADELPHIA, PENNSYLVANIA, ON OCTOBER 21, 1965, FOR PUBLIC OPENING ON NOVEMBER 9, 1965. YOUR COMPANY WAS LOW BIDDER OF THE FOUR BIDS RECEIVED. THE RESPECTIVE BIDS WERE:

BEMM, INC. $10,416 PER ANNUM

UNITED ELEVATOR COMPANY 10,990 PER ANNUM

QUAKER ELEVATOR COMPANY 11,196 PER ANNUM

GENERAL ELEVATOR COMPANY 11,700 PER ANNUM

BY LETTERS DATED NOVEMBER 30, 1965, EACH OF THE FOUR BUSINESS CONCERNS SUBMITTING A BID UNDER INVITATION FOR BIDS NO. 2PBO-SG-316 WAS NOTIFIED THAT ALL BIDS WERE BEING REJECTED IN ACCORDANCE WITH THE RIGHTS RESERVED TO THE GOVERNMENT AND THAT A NEW INVITATION WOULD BE ISSUED IN THE NEAR FUTURE.

IT IS REPORTED THAT, AFTER REVIEWING THE INVITATION AND CONFERRING WITH THE REGIONAL COUNSEL, THE CONTRACTING OFFICER DETERMINED THAT THE SPECIFICATIONS IN THE INVITATION WERE INADEQUATE, AMBIGUOUS OR OTHERWISE DEFICIENT AND THEREFORE DETERMINED TO CANCEL THE INVITATION AND REJECT ALL BIDS.

IN SUPPORT OF THIS DETERMINATION THE CONTRACTING OFFICER HAS CITED SEVERAL DISCREPANCIES IN THE INVITATION AND SPECIFICATION INCLUDING TERM OF CONTRACT AND DEFAULT CLAUSES, LIABILITY OF THE CONTRACTOR CLAUSE, PAYMENT PROVISION, SUBMISSION OF PARTS PROVISION, TIME FOR PERFORMANCE AND SCOPE AND EXTENT OF WORK PROVISIONS. FURTHER, ENACTMENT OF NEW LEGISLATION WHICH NOW PERMITS THE GSA TO ENTER INTO CONTRACTS FOR THREE YEARS IN SECURING MAINTENANCE OF EQUIPMENT IN FEDERAL BUILDINGS IS CITED AS REQUIRING CANCELLATION OF THE INVITATION. IT IS THE GOVERNMENT'S POSITION THAT IT CAN OBTAIN MORE FAVORABLE TERMS ON AN ELEVATOR MAINTENANCE SERVICE CONTRACT IF THE CONTRACT PERIOD IS FOR THREE YEARS RATHER THAN ONE. THIS IS CONSIDERED TO BE AN EQUALLY COMPELLING REASON FOR REJECTING ALL BIDS AND CANCELLING THE INVITATION.

PARAGRAPH 10 (B) OF INSTRUCTIONS TO BIDDERS PROVIDES AS FOLLOWS:

"THE GOVERNMENT MAY, WHEN IN ITS INTEREST, REJECT ANY OR ALL BIDS OR WAIVE ANY INFORMALITY IN BIDS RECEIVED.'

FEDERAL PROCUREMENT REGULATIONS 1-2.404-1 PROVIDES, IN PERTINENT PART, AS FOLLOWS:

"SEC. 1-2.404-1 CANCELLATION OF INVITATION AFTER OPENING.

"/A) PRESERVATION OF THE INTEGRITY OF THE COMPETITIVE BID SYSTEM DICTATES THAT, AFTER BIDS HAVE BEEN OPENED, AWARD MUST BE MADE TO THAT RESPONSIBLE BIDDER WHO SUBMITTED THE LOWEST RESPONSIVE BID, UNLESS THERE IS A COMPELLING REASON TO REJECT ALL BIDS AND CANCEL THE INVITATION * * *.

"/B) INVITATION FOR BIDS MAY BE CANCELLED AFTER OPENING BUT PRIOR TO AWARD, AND ALL BIDS REJECTED WHERE SUCH ACTION IS CONSISTENT WITH SEC. 1- 2.404-1 (A) AND THE CONTRACTING OFFICER DETERMINES IN WRITING THAT CANCELLATION IS IN THE BEST INTEREST OF THE GOVERNMENT FOR REASONS SUCH AS THE FOLLOWING:

"/1) INADEQUATE, AMBIGUOUS, OR OTHERWISE DEFICIENT SPECIFICATIONS WERE CITED IN THE INVITATION FOR BIDS.'

THE ACT OF OCTOBER 20, 1965, PUB.L. 89-276, 79 STAT. 1010, 40 U.S.C. 490 (A) (14) GRANTS TO THE ADMINISTRATOR OF GENERAL SERVICES THE AUTHORITY "TO ENTER INTO CONTRACTS FOR PERIODS NOT EXCEEDING THREE YEARS FOR THE INSPECTION, MAINTENANCE, AND REPAIR OF FIXED EQUIPMENT IN SUCH BUILDINGS WHICH ARE FEDERALLY OWNED.' THE INVITATION IN QUESTION WAS ISSUED ON OCTOBER 21, 1965, THE DAY AFTER THE ABOVE PROVISION WAS ENACTED INTO LAW.

WE HAVE HELD THAT THE CANCELLATION OF AN INVITATION IS TO BE AVOIDED WHERE POSSIBLE, BECAUSE OF THE OBVIOUS PREJUDICIAL EFFECT OF THE DISCLOSURE OF ALL BIDS. HOWEVER, WE HAVE CONSISTENTLY MAINTAINED THAT THE PUBLIC INTEREST IS FOR PRIMARY CONSIDERATION IN AWARDING A CONTRACT AND WE HAVE RECOGNIZED THE PROPRIETY OF SUCH ACTION IN NUMEROUS INSTANCES, INCLUDING THOSE IN WHICH IT IS DESIRED TO PROCURE UNDER DIFFERENT TERMS THAN THOSE ON WHICH BIDS WERE ORIGINALLY SOLICITED. 37 COMP. GEN. 760. FURTHER, IT HAS CONSISTENTLY BEEN HELD THAT AN INVITATION FOR BIDS DOES NOT IMPORT ANY OBLIGATION ON THE GOVERNMENT TO ACCEPT ONE OF THE OFFERS RECEIVED, AND THAT ALL BIDS MAY BE REJECTED WHERE IT IS DETERMINED TO BE IN THE BEST INTEREST OF THE GOVERNMENT TO DO SO. 17 COMP. GEN. 554. WHERE CHANGES IN AN INVITATION ARE CONTEMPLATED WHICH IN THE ADMINISTRATIVE JUDGMENT WILL RESULT IN AN INVITATION WHICH IS SUPERIOR TO THE FORMER INVITATION, WE CANNOT CONCLUDE THAT THE ADMINISTRATIVE DECISION IS INDICATIVE OF ARBITRARY ACTION.

IN THE LIGHT OF THE FACTS PRESENTED, SINCE REJECTION OF ALL BIDS AND CANCELLATION OF THE INVITATION WAS AUTHORIZED BY THE PROVISIONS OF THE INVITATION AND BY THE ABOVE PERTINENT REGULATIONS, THIS OFFICE CAN FIND NO LEGAL OBJECTION TO THE ACTION TAKEN BY THE GENERAL SERVICES ADMINISTRATION IN THE CIRCUMSTANCES.

ACCORDINGLY, YOUR PROTEST WITH RESPECT TO INVITATION 2PBO-SG-316 MUST BE DENIED.