B-158745, APR. 27, 1966

B-158745: Apr 27, 1966

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375 FOR ITEMS NOS. 1-4 WAS LOWEST. 315 WAS SECOND LOWEST. THE CONTRACT WAS AWARDED TO SWE PURSUANT TO A DETERMINATION BY THE CONTRACTING OFFICER THAT EII DID NOT MEET THE MINIMUM STANDARDS FOR PROSPECTIVE CONTRACTORS AS SET FORTH IN THE ARMED SERVICES PROCUREMENT REGULATION (ASPR/1-903.1 (III) WHICH READS. A PROSPECTIVE CONTRACTOR MUST: "/III) HAVE A SATISFACTORY RECORD OF PERFORMANCE (CONTRACTORS WHO ARE SERIOUSLY DEFICIENT IN CURRENT CONTRACT PERFORMANCE. WHEN THE NUMBER OF CONTRACTS AND THE EXTENT OF DEFICIENCY OF EACH ARE CONSIDERED. THE BIDS WERE OPENED ON FEBRUARY 17. RECOMMENDED THAT NO AWARD BE MADE FOR THE FOLLOWING REASONS: "PRODUCTION CAPABILITY AND ABILITY TO MEET THE REQUIRED DELIVERY SCHEDULE ARE CONSIDERED UNSATISFACTORY DUE TO BIDDER'S POOR PERFORMANCE RECORD AND FINANCIAL INCAPABILITY.

B-158745, APR. 27, 1966

TO ELECTRONIC INDUSTRIES, INCORPORATED:

WE REFER TO YOUR LETTER OF MARCH 16, 1966, WHEREIN YOU PROTESTED THE REJECTION OF YOUR BID UNDER INVITATION FOR BIDS NO. 383-833-66, BY THE UNITED STATES NAVY, AVIATION SUPPLY OFFICE (ASO), PHILADELPHIA, PENNSYLVANIA.

THREE FIRMS, INCLUDING YOUR FIRM, SUBMITTED BIDS IN RESPONSE TO THE INVITATION WHICH SOLICITED BIDS FOR STEPLADDER QUANTITIES OF FOUR COMPONENTS OF THE AN/APG53A RADAR SET. YOUR AGGREGATE BID OF $1,396,375 FOR ITEMS NOS. 1-4 WAS LOWEST, AND STEWART WARNER ELECTRONIC'S (SWE) BID OF $1,608,315 WAS SECOND LOWEST. HOWEVER, ON MARCH 9, 1966, THE CONTRACT WAS AWARDED TO SWE PURSUANT TO A DETERMINATION BY THE CONTRACTING OFFICER THAT EII DID NOT MEET THE MINIMUM STANDARDS FOR PROSPECTIVE CONTRACTORS AS SET FORTH IN THE ARMED SERVICES PROCUREMENT REGULATION (ASPR/1-903.1 (III) WHICH READS, IN PART, AS FOLLOWS:

"1-903.1 GENERAL STANDARDS. EXCEPT AS OTHERWISE PROVIDED IN THIS PARAGRAPH 1-903, A PROSPECTIVE CONTRACTOR MUST:

"/III) HAVE A SATISFACTORY RECORD OF PERFORMANCE (CONTRACTORS WHO ARE SERIOUSLY DEFICIENT IN CURRENT CONTRACT PERFORMANCE, WHEN THE NUMBER OF CONTRACTS AND THE EXTENT OF DEFICIENCY OF EACH ARE CONSIDERED, SHALL, IN THE ABSENCE OF EVIDENCE TO THE CONTRARY OR CIRCUMSTANCES PROPERLY BEYOND THE CONTROL OF THE CONTRACTOR, BE PRESUMED TO BE UNABLE TO MEET THIS REQUIREMENT). PAST UNSATISFACTORY PERFORMANCE, DUE TO FAILURE TO APPLY NECESSARY TENACITY OR PERSEVERANCE TO DO AN ACCEPTABLE JOB, SHALL BE SUFFICIENT TO JUSTIFY A FINDING OF NONRESPONSIBILITY * * *.'

THE BIDS WERE OPENED ON FEBRUARY 17, 1966, AND ON THE SAME DAY ASO REQUESTED DCASR-DALLAS TO PERFORM A PREAWARD SURVEY OF YOUR COMPANY PURSUANT TO ASPR 1-904.1 FOR THE EXPRESS PURPOSE OF ASCERTAINING YOUR OVERALL PERFORMANCE RECORD AND ABILITY TO MANUFACTURE AND DELIVER THE ARTICLES IN ACCORDANCE WITH THE SPECIFICATIONS AND DELIVERY REQUIREMENTS. THE DCASR REPORT (DCRT 66-2-68) CONSISTING OF A DESK AUDIT BASED ON THEN CURRENT INFORMATION ON FILE AT DCASR AND VERIFIED BY A TELEPHONE CONVERSATION ON FEBRUARY 25, 1966, WITH DCASO ALBUQUERQUE, RECOMMENDED THAT NO AWARD BE MADE FOR THE FOLLOWING REASONS:

"PRODUCTION CAPABILITY AND ABILITY TO MEET THE REQUIRED DELIVERY SCHEDULE ARE CONSIDERED UNSATISFACTORY DUE TO BIDDER'S POOR PERFORMANCE RECORD AND FINANCIAL INCAPABILITY.

"PERFORMANCE RECORD: BIDDER'S PERFORMANCE RECORD IS UNSATISFACTORY. THIS IS BASED UPON A HIGH DELINQUENCY FACTOR RELATIVE TO CONTRACTS CURRENTLY IN PROCESS IN BIDDER'S PLANT. BIDDER PRESENTLY HOLDS 87 CONTRACTS OF WHICH 34 ARE DELINQUENT, A DELINQUENCY FACTOR OF 39 PERCENT. PRINCIPAL CAUSES OF DELINQUENCIES ARE MATERIAL VENDORS' OR SUBCONTRACTORS' FAILURES TO SUPPORT BIDDER'S EFFORT. AT THIS TIME 16 "SHOW CAUSE" LETTERS HAVE BEEN ISSUED WITH MORE CONTEMPLATED. THIS CONDITION IS FURTHER COMPOUNDED BY BIDDER'S FAILURE TO RECOGNIZE POTENTIAL PROBLEMS AND INITIATE TIMELY, EFFECTIVE CORRECTIVE ACTION.

"ALL OF THE FOREGOING IS PROOF OF A COMPLETE COLLAPSE OF BIDDER'S PRODUCTION CONTROL AND TOTAL LACK OF MANAGERIAL CAPABILITY. IN VIEW OF THIS SITUATION, BIDDER'S BUSINESS PRACTICES ARE DEEMED UNSATISFACTORY SINCE HE HAS DEMONSTRATED A DEFINITE LACK OF TENACITY AND PERSEVERANCE IN THE PURSUIT OF HIS CONTRACTUAL OBLIGATIONS. * * *

"FINANCIAL CAPABILITY: BIDDER'S FINANCIAL POSITION HAS SERIOUSLY DETERIORATED. HE CONTINUES TO INCUR LOSSES FROM OPERATIONS AND FINANCIAL REPORTS INDICATE AN INCREASING DEFICIT POSITION REGARDING WORKING CAPITAL AND NET WORTH. THE TREND IS TOWARD INCREASING INDEBTEDNESS AND IF NOT REVERSED, THERE IS NO ASSURANCE BIDDER CAN REMAIN IN BUSINESS LONG ENOUGH TO COMPLETE THE PROPOSED CONTRACT IF IT WERE AWARDED. * * *"

THE CONTRACTING OFFICER ADVISED THAT THE INFORMATION CONTAINED IN THE PRE -AWARD SURVEY WAS SUPPLEMENTED BY A TELEPHONE CONVERSATION ON MARCH 9, 1966, BETWEEN HIMSELF AND DCASO-ALBUQUERQUE. DCASO REPRESENTATIVES STATED THAT A TEAM FROM THAT OFFICE HAD VISITED YOUR PLANT ON MARCH 8, 1966, AND THAT THE CONTRACTOR'S CURRENT DELINQUENCY STATUS WAS AS FOLLOWS:

TABLE

GOVERNMENT CONTRACTS 61

TOTAL DELINQUENCIES: 22

EXCUSABLE 5

UNRESOLVED AS TO EXCUSABILITY 2

DELINQUENT BECAUSE OF COPPER SHORTAGE (*) 7

INEXCUSABLE 8

(QUESTION OF EXCUSABILITY UNRESOLVED)

DCASO ALSO REPORTED THAT AS OF MARCH 9, 1966, FOUR MORE CONTRACTS WOULD BECOME DELINQUENT, AND ADDITIONAL "SHOW CAUSE" LETTERS WERE BEING CONSIDERED. IT WAS CONCLUDED THAT THE STATEMENT IN THE PRE AWARD SURVEY CONCERNING THE COMPANY'S LACK OF TENACITY AND PERSEVERANCE IN THE PERFORMANCE OF THESE CONTRACTS WAS STILL VALID.

IN THE INSTANT CASE YOU MAKE REFERENCE TO YOUR LETTER OF MARCH 12, 1966, WHICH INITIATED THE PROTEST AGAINST REJECTION OF YOUR BID UNDER INVITATION FOR BIDS NO. 104-918-66, DENIED ON APRIL 15, 1966, B 158618, WHEREIN THE BASIS FOR BOTH PROTESTS IS GENERALLY STATED. THAT LETTER READS IN PART AS FOLLOWS:

"HAD THERE BEEN A SPECIFIC ON-SITE PRE-AWARD SURVEY CONDUCTED, OR HAD DCASO-ALBUQUERQUE EVEN BEEN CURRENT ON THE TRUE CONDITIONS AS OF THAT TIME THEN THEIR REPORT WOULD HAVE BEEN SIGNIFICANTLY CHANGED.'

YOUR CONTENTION THAT AN ON-SITE PRE-AWARD SURVEY SHOULD HAVE BEEN CONDUCTED IN REGARD TO THE PRESENT INVITATION BECAUSE THE INFORMATION UPON WHICH THE CONTRACTING OFFICER BASED HIS DECISION OF NONRESPONSIBILITY WAS OUT-OF-DATE IS DIRECTLY CONTRADICTED BY HIS STATEMENT THAT:

"* * * A CAREFUL ANALYSIS OF THE MOST CURRENT INFORMATION AND RECOMMENDATIONS RECEIVED FROM DCASR, DALLAS, AND DCASO, ALBUQUERQUE, PRECLUDED THE POSITIVE DETERMINATION OF RESPONSIBILITY REQUIRED BY ASPR 1- 904.1 AND DICTATED THE REJECTION OF THE EII BID.'

IT IS CLEAR FROM THIS THAT THE CONTRACTING OFFICER CONSIDERED THE INFORMATION AVAILABLE TO HIM TO BE CURRENT AND AN ADEQUATE REFLECTION OF TRUE CONDITIONS AT THE TIME.

BECAUSE THE FACTS AND LAW EMBODIED IN THIS PROTEST ARE NOT SIGNIFICANTLY DIFFERENT FROM THOSE IN THE ABOVE-STATED CASE INVOLVING IFB NO. 104-918- 66, THE PROTEST IS DENIED FOR THE SAME REASON; THAT IS, A DETERMINATION OF RESPONSIBILITY IS SOLELY THE FUNCTION OF THE CONTRACTING OFFICER, AND NECESSARILY INVOLVES A CONSIDERABLE RANGE OF DISCRETION. WHERE THE DETERMINATION IS PREDICATED UPON SUBSTANTIAL EVIDENCE THIS OFFICE CANNOT UNDERTAKE TO MODIFY THE DECISION. 39 COMP. GEN. 05; ZEPHYR AIRCRAFT CORPORATION V. UNITED STATES, 122 CT.CL. 523. IN OUR VIEW THE CONTRACTING OFFICER HAD SUFFICIENT EVIDENCE UPON WHICH TO BASE HIS DETERMINATION THAT YOUR FIRM WAS NOT A RESPONSIBLE BIDDER UNDER THE STANDARDS SET FORTH IN ASPR. ACCORDINGLY, NO LEGAL BASIS EXISTS FOR DISTURBING THE ADMINISTRATIVE ACTION TAKEN UNDER THE INVITATION. 37 COMP. GEN. 430.