B-158687, B-158794, JUL. 7, 1966

B-158687,B-158794: Jul 7, 1966

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TO CONTINENTAL CHEMICAL CORPORATION: REFERENCE IS MADE TO YOUR LETTERS OF MARCH 7 AND 23. BIDS WERE OPENED FEBRUARY 24. YOU WERE LOW BIDDER IN THE AMOUNT OF $0.585 PER GALLON. YOUR BID WAS REJECTED BASED ON A DETERMINATION OF NONRESPONSIBILITY AND THE SECOND LOW BID WAS ALSO REJECTED. YOU WERE LOW ON ITEMS 1. WHICH WERE TO BE AWARDED IN THE AGGREGATE. YOUR BID WAS REJECTED FOR NONRESPONSIBILITY AND AWARD WAS MADE TO THE SECOND LOW BIDDER. YOU HAVE PROTESTED THE ABOVE REJECTIONS ON THE GROUND THAT THE DETERMINATIONS OF NONRESPONSIBILITY WERE NOT BASED ON YOUR PERFORMANCE UNDER RECENT CONTRACTS. IT IS YOUR CONTENTION THAT A PROPER EVALUATION OF YOUR PERFORMANCE DURING THE SIX MONTHS PRIOR TO MARCH 1966 WOULD ESTABLISH YOUR RESPONSIBILITY.

B-158687, B-158794, JUL. 7, 1966

TO CONTINENTAL CHEMICAL CORPORATION:

REFERENCE IS MADE TO YOUR LETTERS OF MARCH 7 AND 23, 1966, AND SUBSEQUENT CORRESPONDENCE, CONCERNING YOUR PROTESTS IN CONNECTION WITH INVITATIONS FOR BIDS NOS. ATH-86167 AND 24989, ISSUED BY THE GENERAL SERVICES ADMINISTRATION (GSA), ATLANTA, GEORGIA, AND DENVER, COLORADO.

INVITATION NO. 86167 REQUESTED BIDS ON 4,146 ONE GALLON CONTAINERS OF LIQUID TOILET SOAP. BIDS WERE OPENED FEBRUARY 24, 1966, AND YOU WERE LOW BIDDER IN THE AMOUNT OF $0.585 PER GALLON. YOUR BID WAS REJECTED BASED ON A DETERMINATION OF NONRESPONSIBILITY AND THE SECOND LOW BID WAS ALSO REJECTED, AWARD BEING MADE TO THE THIRD LOW BIDDER, NATIONAL CHEMICAL LABORATORIES, AT $0.66 PER GALLON, OR A TOTAL OF $2,736.36. INVITATION NO. 24989 REQUESTED BIDS TO BE OPENED FEBRUARY 14, 1966, ON VARIOUS TYPES OF POLISH. YOU WERE LOW ON ITEMS 1, 2 AND 3 OF METAL POLISH, WHICH WERE TO BE AWARDED IN THE AGGREGATE, IN THE TOTAL NET AMOUNT OF $1,108.18, BASED ON THE ESTIMATED QUANTITIES SHOWN IN THE INVITATION. YOUR BID WAS REJECTED FOR NONRESPONSIBILITY AND AWARD WAS MADE TO THE SECOND LOW BIDDER, E. A. THOMPSON CO., INC., IN THE NET AMOUNT OF $1,169.70. UNDER BOTH OF THESE INVITATIONS CONTINENTAL CERTIFIED ITSELF TO BE A SMALL BUSINESS CONCERN.

YOU HAVE PROTESTED THE ABOVE REJECTIONS ON THE GROUND THAT THE DETERMINATIONS OF NONRESPONSIBILITY WERE NOT BASED ON YOUR PERFORMANCE UNDER RECENT CONTRACTS. YOU STATE IN YOUR LETTER OF MARCH 23 THAT DURING THE PRECEDING NINE MONTHS YOU INCORPORATED MANY CHANGES INTO YOUR OPERATION AND VASTLY IMPROVED YOUR DELIVERY ON GOVERNMENT CONTRACTS, AND IT IS YOUR CONTENTION THAT A PROPER EVALUATION OF YOUR PERFORMANCE DURING THE SIX MONTHS PRIOR TO MARCH 1966 WOULD ESTABLISH YOUR RESPONSIBILITY.

SUBSECTIONS 4 AND 5 OF SECTION 1-1.310 OF THE FEDERAL PROCUREMENT REGULATIONS PROVIDE THAT CONTRACTS SHALL BE AWARDED ONLY TO RESPONSIBLE PROSPECTIVE CONTRACTORS AND THAT, IN ORDER TO QUALIFY AS RESPONSIBLE, A PROSPECTIVE CONTRACTOR MUST MEET CERTAIN SPECIFIED STANDARDS, INCLUDING HAVING A SATISFACTORY RECORD OF PERFORMANCE.

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

"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,"KNOW HOW," 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. * * * THE AWARD SHALL BE WITHHELD PENDING EITHER SBA ISSUANCE OF A CERTIFICATE OF COMPETENCY OR THE EXPIRATION OF 15 WORKING DAYS AFTER SBA IS SO NOTIFIED, WHICHEVER IS EARLIER, SUBJECT TO THE FOLLOWING:

"/1) THIS PROCEDURE IS NOT MANDATORY WHERE AWARD MUST BE MADE WITHOUT DELAY AND THE CONTRACTING OFFICER INCLUDES IN THE CONTRACT FILE A STATEMENT SIGNED BY HIM WHICH JUSTIFIES IMMEDIATE ACTION. A COPY OF THE STATEMENT SHALL BE FURNISHED THE SBA REPRESENTATIVE.

"/2) THIS PROCEDURE DOES NOT APPLY TO PROPOSED AWARDS OF LESS THAN $2,500.

"/3) THIS PROCEDURE IS OPTIONAL, WITHIN THE DISCRETION OF THE CONTRACTING OFFICER, AS TO PROPOSED AWARDS OF MORE THAN $2,500, BUT LESS THAN $10,000.

"/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.'

IN EVALUATING YOUR PERFORMANCE RECORD FOR THE PURPOSE OF MAKING AN AWARD UNDER INVITATION NO. 86167, THE ATLANTA CONTRACTING OFFICER REVIEWED YOUR DELIVERIES BACK TO JANUARY 1964 AND REQUESTED DELIVERY INFORMATION FROM OTHER GSA REGIONAL BUYING OFFICES, AND ON THE BASIS OF YOUR OVERALL RECORD OF DELINQUENT DELIVERIES, AS REPORTED TO HIM, DETERMINED THAT YOU WERE NOT A RESPONSIBLE BIDDER. THE MATTER WAS NOT REFERRED TO SBA, FOR POSSIBLE ISSUANCE OF A CERTIFICATE OF COMPETENCY (COC), SINCE THE AMOUNT OF THE PROPOSED AWARD WAS APPROXIMATELY $2,700, AND REFERENCE TO SBA WAS THEREFORE OPTIONAL, WITHIN THE DISCRETION OF THE CONTRACTING OFFICER, UNDER SECTION 1-1.708-2 (A) (3) OF THE FEDERAL PROCUREMENT REGULATIONS, QUOTED ABOVE.

WITH REFERENCE TO INVITATION NO. 24989, THE DENVER REGIONAL OFFICE EXAMINED YOUR RECORD OF DELIVERIES TO THAT OFFICE FOR THE PERIOD FROM JANUARY 1, 1965, THROUGH FEBRUARY 15, 1966, WHICH INDICATED THAT 43 PERCENT OF THE ORDERS PLACED WERE DELIVERED LATE. CONSIDERATION WAS ALSO GIVEN TO THE FACT THAT, WHEN INFORMATION AS TO YOUR PERFORMANCE RECORD WAS SOUGHT FROM OTHER REGIONS THE PICTURE WAS THE SAME. THE QUESTION OF YOUR RESPONSIBILITY WAS THEREFORE CONSIDERED BY THE REGIONAL BUYER AND BY THE CHIEF, BUYING DIVISION, AND IT WAS DETERMINED THAT NO AWARD WOULD BE MADE TO YOU, DUE TO NONRESPONSIBILITY. THIS CASE LIKEWISE WAS NOT REFERRED TO SBA, SINCE THE PROCEDURE FOR REFERRAL UNDER THE COC PROCEDURE DOES NOT APPLY TO PROPOSED AWARDS OF LESS THAN $2,500.

THE DETERMINATION OF A PROSPECTIVE CONTRACTOR'S ABILITY TO PERFORM IS PRIMARILY THE FUNCTION OF THE ADMINISTRATIVE OFFICERS CONCERNED, AND IN MAKING THIS DETERMINATION THEY ARE VESTED WITH CONSIDERABLE DISCRETION. IN THE ABSENCE OF ANY SHOWING OF BAD FAITH OR OTHER ABUSE OF THIS DISCRETION, WE ARE NOT REQUIRED TO OBJECT TO THE DETERMINATION MADE BY THE ADMINISTRATIVE AGENCY. 37 COMP. GEN. 430, 435. IT DOES APPEAR, AND IS ADMITTED BY THE CENTRAL OFFICE OF GSA, THAT IN MAKING THE EVALUATION IN CONNECTION WITH INVITATION NO. 86167, THE REGIONAL OFFICE PROBABLY PLACED TOO GREAT WEIGHT ON FAULTY PERFORMANCE PRIOR TO JULY 1965. ALSO, THE ONLY EXTENSIVE DELAYS IN DELIVERIES TO THE DENVER REGIONAL OFFICE WERE ON ORDERS DATED JULY 1, 1965, AND PRIOR THERETO. HOWEVER, ON THE BASIS OF THE INFORMATION BEFORE THE RESPECTIVE CONTRACTING OFFICERS WECANNOT CONCLUDE THAT THEIR DETERMINATIONS WERE NOT MADE IN GOOD FAITH OR WITHOUT SUBSTANTIAL REASONS. SINCE THE BIDS OF THE SUCCESSFUL BIDDERS CONFORMED TO THE INVITATIONS FOR BIDS, AND WERE ACCEPTED IN GOOD FAITH BY THE CONTRACTING OFFICERS, WE BELIEVE THAT VALID OBLIGATIONS WERE BROUGHT INTO EXISTENCE BY ACCEPTANCE, WHICH WERE BINDING ON THE GOVERNMENT. IN THE CIRCUMSTANCES, WE WOULD NOT BE JUSTIFIED IN OBJECTING TO THE AWARDS AS MADE, AND YOUR PROTEST MUST THEREFORE BE DENIED.

IN YOUR LETTER OF MARCH 23, 1966, TO GSA IN WASHINGTON, YOU REFER TO THE STATEMENT IN LETTER OF SEPTEMBER 7, 1965, FROM GSA'S GENERAL COUNSEL TO THIS OFFICE, THAT THE ACTION TAKEN BY THE DENVER OFFICE IN NOT MAKING AN INDEPENDENT CHECK OF YOUR RESPONSIBILITY WITH RESPECT TO IFB 36379, OPENED JUNE 9, 1965, WAS NOT CONDONED, AND THAT SAID OFFICE WOULD BE APPROPRIATELY ADMONISHED. THIS ACTION WAS TAKEN BY A MEMORANDUM DATED JANUARY 4, 1966, AND GSA HAS STATED THAT SINCE THIS MEMORANDUM APPARENTLY WAS INSUFFICIENT, FURTHER REMEDIAL ACTION IS BEING TAKEN BY MEMORANDA TO ALL REGIONAL COUNSELS AND TO APPROPRIATE OFFICIALS OF THE FEDERAL SUPPLY SERVICE TO COVER THE ENTIRE QUESTION OF RESPONSIBILITY IN SUCH CASES MORE SPECIFICALLY. ADDITIONALLY, WE HAVE BEEN ADVISED THAT AN AWARD WAS MADE TO YOU EARLY IN APRIL 1966, BY THE GSA CENTRAL OFFICE IN THE APPROXIMATE AMOUNT OF $108,000 UNDER IFB FPNGC-L-55839, AND THAT YOU RECEIVED AN AWARD FROM THE ATLANTA REGIONAL OFFICE ON MAY 10, 1966, FOR APPROXIMATELY $17,000. IN VIEW OF THESE RECENT AWARDS TO YOUR FIRM AND THE ACTION TAKEN BY GSA TO ENSURE THAT MORE CAREFUL REVIEW IS MADE OF DETERMINATIONS OF NONRESPONSIBILITY, THE PREVIOUSLY EXISTING PROBLEMS RELATING TO DETERMINATIONS OF YOUR RESPONSIBILITY APPEAR TO HAVE BEEN SATISFACTORILY RESOLVED.