B-158776, JULY 20, 1966, 46 COMP. GEN. 53

B-158776: Jul 20, 1966

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AMENDMENT OF THE REGULATION IS DESIRABLE. AN ADMINISTRATIVE DETERMINATION NOT TO ISSUE A STOP ORDER ON A CONTRACT PENDING DECISION ON THE PROPRIETY OF THE CONTRACT AWARD BY THE GENERAL ACCOUNTING OFFICE WILL NOT BE QUESTIONED. THE PROCURING AGENCY RESPONSIBLE THAT UNREASONABLE DELAY IS NOT EXPERIENCED IN THE OPERATIONAL PROGRAMS OF THE GOVERNMENT HAVING DETERMINED PRIOR TO AWARD THAT A DELAY UP TO 15 WORKING DAYS PENDING A SMALL BUSINESS ADMINISTRATION DECISION ON THE CAPABILITY OF THE LOW BIDDER WAS NOT JUSTIFIED. 1966: REFERENCE IS MADE TO YOUR PROTEST BY TELEGRAM DATED MARCH 23. 797.50 WAS LOWEST. 126.50 WAS SECOND LOW. WAS HIGHEST. THE PROCUREMENT QUANTITY WAS INCREASED TO 226 UNITS.

B-158776, JULY 20, 1966, 46 COMP. GEN. 53

BIDDERS - QUALIFICATIONS - SMALL BUSINESS CONCERNS - NONREFERRAL FOR CERTIFICATION JUSTIFICATION - ADMINISTRATIVE DETERMINATION DELAYS. THE REJECTION OF A LOW BID WITHOUT REFERRAL TO THE SMALL BUSINESS ADMINISTRATION (SBA) AS PRESCRIBED BY PARAGRAPH 1-705.4 OF THE ARMED SERVICES PROCUREMENT REGULATION BECAUSE OF THE URGENCY OF THE PROCUREMENT DOES NOT AFFECT THE LEGALITY OF THE AWARD TO THE NEXT LOW RESPONSIVE, RESPONSIBLE OFFEROR, THE MATTER COMING WITHIN THE PURVIEW OF PARAGRAPH 1- 705.4/C) (IV) PERMITTING EXCEPTION TO THE SBA CERTIFICATE OF COMPETENCY PROCEDURES, NOTWITHSTANDING THE CONTRACTING OFFICER DELAYED APPROXIMATELY 1 MONTH AFTER RECEIVING AN ADVERSE PREAWARD SURVEY ON THE LOW BIDDER BEFORE ISSUING A WRITTEN DETERMINATION OF NONRESPONSIBILITY AND THE WRITTEN NONREFERRAL CERTIFICATE REQUIRED BY PARAGRAPH 1-705.4 (C) (IV), THE REGULATION IMPOSING NO TIME LIMITATION ON THE CONTRACTING OFFICER FOR ARRIVING AT A DETERMINATION OF BIDDER NONRESPONSIBILITY. HOWEVER, TO AVOID POSSIBLE CIRCUMVENTION OF THE SMALL BUSINESS ACT, AMENDMENT OF THE REGULATION IS DESIRABLE. CONTRACTS - PROTESTS - STOP ORDER DENIED. AN ADMINISTRATIVE DETERMINATION NOT TO ISSUE A STOP ORDER ON A CONTRACT PENDING DECISION ON THE PROPRIETY OF THE CONTRACT AWARD BY THE GENERAL ACCOUNTING OFFICE WILL NOT BE QUESTIONED, THE PROCURING AGENCY RESPONSIBLE THAT UNREASONABLE DELAY IS NOT EXPERIENCED IN THE OPERATIONAL PROGRAMS OF THE GOVERNMENT HAVING DETERMINED PRIOR TO AWARD THAT A DELAY UP TO 15 WORKING DAYS PENDING A SMALL BUSINESS ADMINISTRATION DECISION ON THE CAPABILITY OF THE LOW BIDDER WAS NOT JUSTIFIED, A POSSIBLE LONGER DELAY BY ISSUANCE OF A STOP ORDER AFTER AWARD PENDING RESOLUTION OF THE AWARD PROTEST APPEARS NOT TO BE IN THE INTEREST OF THE GOVERNMENT.

TO THE CORSON ELECTRIC MANUFACTURING CORPORATION, JULY 20, 1966:

REFERENCE IS MADE TO YOUR PROTEST BY TELEGRAM DATED MARCH 23, 1966, AS SUPPLEMENTED BY YOUR LETTER OF THE SAME DATE AND RELATED CORRESPONDENCE, AGAINST THE REJECTION OF A LOW PROPOSAL SUBMITTED BY YOU IN RESPONSE TO REQUEST FOR PROPOSALS (RFP) NO AMC/Z/-01021-66-1574, ISSUED OCTOBER 25, 1965, BY THE UNITED STATES ARMY MISSILE COMMAND, REDSTONE ARSENAL, ALABAMA.

THE RFP, COVERING THE PROCUREMENT OF 210 PULSE FORMING NETWORKS, OPN 10044037, FOR THE HAWK MISSILE SYSTEM, UNIFORM MATERIAL MOVEMENT AND ISSUE PRIORITY DESIGNATOR SYSTEM 02 (THE HIGHEST URGENCY OF NEED DESIGNATOR), SPECIFIED A CLOSING DATE OF NOVEMBER 3, 1965, FOR SUBMISSION OF PROPOSALS. OF THE THREE ORIGINAL OFFERS SUBMITTED TO THE PROCURING ACTIVITY, YOUR OFFER WITH A UNIT PRICE OF $84.75, TOTAL $17,797.50 WAS LOWEST; AXEL ELECTRONICS, INC. (AXEL), WITH A UNIT PRICE OF $119.65, TOTAL $25,126.50 WAS SECOND LOW; AND RAYTHEON COMPANY (RAYTHEON), WITH A UNIT PRICE OF $165.48, TOTAL $34,750.80, WAS HIGHEST. YOU OFFERED DELIVERY IN 84 DAYS, AXEL OFFERED 24 UNITS IN 30 DAYS, 81 IN 60 AND 121 IN 90 DAYS, WHILE RAYTHEON REQUIRED 140 DAYS. SUBSEQUENTLY, THE PROCUREMENT QUANTITY WAS INCREASED TO 226 UNITS, AND YOU INCREASED YOUR UNIT PRICE TO $95.75 AND DELIVERY TIME TO 104 DAYS, WITH THE RESULT THAT WHILE THERE WAS NO CHANGE IN THE STANDING OF THE OFFERORS PRICE WISE, THE DIFFERENCE BETWEEN YOUR OFFER AND AXEL'S WAS DECREASED BY SOME $4,000 AND AXEL'S DELIVERY TIME BECAME SUBSTANTIALLY MORE FAVORABLE.

ON JANUARY 25, 1966, THE PROCURING ACTIVITY REQUESTED A PREAWARD SURVEY OF YOUR PLANT BY THE HARTFORD (CONNECTICUT) DEFENSE CONTRACT ADMINISTRATIVE SERVICES DISTRICT (DCASD). THE DCASD REPORT, WHICH WAS DATED FEBRUARY 7, RECOMMENDED THAT NO AWARD, BE MADE TO YOU, BASED ON VARIOUS FACTORS, AMONG THEM YOUR INABILITY TO OBTAIN SPECIFIED DIELECTRIC MATERIAL, LACK OF A SUFFICIENT NUMBER OF SKILLED PRODUCTION EMPLOYEES, AND A POOR PERFORMANCE HISTORY. IN VIEW OF THE ADVERSE REPORT, A PREAWARD SURVEY OF AXEL'S PLANT BY THE NEW YORK (NEW YORK) DCASD WAS REQUESTED. THE REPORT ON AXEL, WHICH WAS DATED FEBRUARY 18, WAS FAVORABLE.

ON MARCH 2, THE CONTRACTING OFFICER ISSUED A WRITTEN DETERMINATION READING AS FOLLOWS:

DETERMINATION OF NONRESPONSIBILITY

1. PURSUANT TO ASPR SECTION I, PART 9, BASED ON PRE-AWARD SURVEY FROM DCASD HARTFORD, CONN., DATED 7 FEB 66, ATTACHED, I HEREBY FIND AND DETERMINE THAT THE CORSON ELECTRIC MANUFACTURING COMPANY IS NON RESPONSIBLE TO RFP AMC/Z/-01-021-66-1574.

2. THIS DETERMINATION INCLUDES CONSIDERATION OF THE PRIMARY FACTOR OF THE EARLY DELIVERY REQUIREMENT BECAUSE OF THE URGENCY OF NEED. (IPD 02, REF AR 725-50)

ON THE SAME DATE, THE CONTRACTING OFFICER MADE THE FOLLOWING WRITTEN CERTIFICATION:

SBA NON REFERRAL

RFP AMC/Z/-01021-66-1574

THIS IS TO CERTIFY THAT THIS PROCUREMENT HAS A HIGH PRIORITY OF UTMOST URGENCY (IPD 02). BASED ON THIS FACT AND IN ACCORDANCE WITH ASPR 1-705- 4/C/-/IV) REFERRAL WILL NOT BE MADE TO SBA FOR A CERTIFICATE OF COMPETENCY ON THE CORSON ELECTRIC MFG. CO., WATROUS STREET, EAST HAMPTON, CONNECTICUT, DETERMINED NONRESPONSIBLE PURSUANT TO ASPR SECTION I, PART 9. AWARD MUST BE MADE WITHOUT DELAY.

IT IS OUR UNDERSTANDING THAT, WHILE A COPY OF SUCH CERTIFICATION WAS NOT FURNISHED TO THE SMALL BUSINESS ADMINISTRATION'S REPRESENTATIVE AT THE TIME OF ISSUANCE, IT IS CUSTOMARY FOR THE PROCURING ACTIVITY TO VERBALLY ADVISE ITS SBA REPRESENTATIVE OF SUCH MATTERS. FURTHER, A COPY OF THE CERTIFICATION HAS SINCE BEEN MAILED TO THE SBA REGIONAL OFFICE IN HARTFORD.

ON MARCH 3, AWARD WAS MADE TO AXEL. UPON NOTICE OF THE AWARD AND OF THE UNFAVORABLE REPORT ON YOUR FACILITIES, YOU REQUESTED THE PROCURING ACTIVITY TO PLACE A STOP ORDER AGAINST THE CONTRACT TO PERMIT YOU TO APPLY TO SBA FOR A CERTIFICATE OF COMPETENCY. IN ADDITION, IN YOUR PROTEST TO OUR OFFICE, YOU CONTEND THAT YOUR DELINQUENCIES HAVE BEEN OF SHORT DURATION, AND, THEREFORE, YOU REQUEST THAT A STOP ORDER BE ISSUED PENDING OUR REVIEW OF YOUR RIGHTS.

ARMED SERVICES PROCUREMENT REGULATION 1-705.4 PROVIDES THAT WHEN THE BID OR PROPOSAL OF A SMALL BUSINESS CONCERN IS TO BE REJECTED SOLELY BECAUSE THE CONTRACTING OFFICER HAS DETERMINED THAT THE CONCERN IS NONRESPONSIBLE AS TO CAPACITY OR CREDIT, THE MATTER SHALL BE REFERRED TO SBA AND AWARD SHALL NOT BE MADE UNTIL SBA RENDERS ITS DECISION OR UNTIL 15 WORKING DAYS HAVE ELAPSED, WHICHEVER IS EARLIER. HOWEVER, ASPR 1-705.4/C) (IV) PROVIDES THAT A REFERRAL NEED NOT BE MADE TO SBA IF THE CONTRACTING OFFICER CERTIFIES IN WRITING THAT THE AWARD MUST BE MADE WITHOUT DELAY, INCLUDES SUCH CERTIFICATE AND SUPPORTING DOCUMENTATION IN THE CONTRACT FILE, AND PROMPTLY FURNISHES A COPY TO THE SBA REPRESENTATIVE.

THE FACTS OF RECORD EVIDENCE THAT THE PROCUREMENT IN QUESTION WAS OF THE UTMOST URGENCY. ACCORDINGLY, AND IN THE LIGHT OF THE ADVERSE PREAWARD SURVEY REPORT ON YOUR FACILITIES, WHILE THE CONTRACTING OFFICER'S DETERMINATION THAT YOU WERE NOT RESPONSIBLE WAS BASED ON FACTORS RELATING TO YOUR CAPACITY, THE MATTER WAS CLEARLY WITHIN THE PURVIEW OF THE PROVISION IN ASPR 1-705.4/C) (IV) PERMITTING EXCEPTION TO THE SBA CERTIFICATE OF COMPETENCY PROCEDURES. WHILE THE RECORD SHOWS NO REASON WHY THE CONTRACTING OFFICER COULD NOT HAVE MADE HIS DETERMINATION OF NONRESPONSIBILITY AT AN EARLIER DATE, WHICH WOULD HAVE PROVIDED SUFFICIENT TIME FOR SBA TO PASS UPON YOUR COMPETENCY, WE CANNOT SAY THAT HE DID REACH HIS DECISION BEFORE MARCH 2, AND THE REGULATIONS IMPOSE NO TIME LIMITATION UPON HIM IN THAT RESPECT. IN THE CIRCUMSTANCES, WE FIND NO ADEQUATE BASIS FOR OBJECTION TO THE ACTION TAKEN BY THE CONTRACTING OFFICER IN REJECTING YOUR LOW BID AND IN MAKING THE AWARD TO AXEL, THE NEXT LOW RESPONSIVE, RESPONSIBLE OFFEROR. 38 COMP. GEN. 248. ALTHOUGH THE CONTRACTING OFFICER WAS REMISS IN FAILING TO ISSUE TO THE SBA REPRESENTATIVE A COPY OF HIS CERTIFICATION OF NONREFERRAL, AS REQUIRED BY ASPR 1-705.4/C) (IV), IN ADDITION TO WHATEVER VERBAL NOTICE WAS GIVEN, WE MUST REGARD THE AWARD AS LEGALLY VALID. SEE COASTAL CARGO ., INC. V. UNITED STATES, 173 CT. CL. 259. WE ARE, HOWEVER, BRINGING THIS SITUATION TO THE ATTENTION OF THE SECRETARY OF DEFENSE FOR CONSIDERATION OF THE DESIRABILITY OF AMENDING THE ASPR TO AVOID POSSIBLE CIRCUMVENTION OF THE SMALL BUSINESS ACT, 15 U.SC. 631 NOTE, IN SUCH SITUATIONS.

CONCERNING THE MATTER OF ISSUANCE OF A STOP ORDER ON THE CONTRACT PENDING DECISION BY OUR OFFICE ON YOUR PROTEST, YOU ARE ADVISED THAT OUR OFFICE HAS CONSISTENTLY TAKEN THE POSITION THAT WE CANNOT REQUIRE THE CONTRACTING AGENCY TO CAUSE WORK TO BE STOPPED UNTIL WE HAVE DECIDED THE PROPRIETY OF THE AWARD, ALTHOUGH WE BELIEVE THAT SUCH ACTION SHOULD BE TAKEN WHERE THE GOVERNMENT'S INTERESTS WOULD NOT THEREBY BE PREJUDICED. FURTHER, WE MUST RECOGNIZE THAT THE PROCUREMENT AGENCY, WHICH BEARS THE RESPONSIBILITY FOR SEEING THAT OPERATIONAL PROGRAMS OF THE GOVERNMENT ARE NOT UNREASONABLY DELAYED BY LACK OF NECESSARY SUPPLIES, IS IN A BETTER POSITION TO DETERMINE THE EXTENT TO WHICH THE INTERESTS OF THE GOVERNMENT WOULD BE PREJUDICED. B-158953, JUNE 23, 1966. CONSISTENT WITH OUR POSITION, ARMY PROCUREMENT PROCEDURES (APP) 2-407.9/G), WHICH GOVERN THE HANDLING OF PROTESTS RECEIVED AFTER AWARD OF DEPARTMENT OF THE ARMY PROCUREMENTS, PROVIDE, IN PERTINENT PART, AS FOLLOWS:

(1) WHERE IT REASONABLY APPEARS THAT THE AWARD OF THE CONTRACT MAY BE HELD TO BE INVALID, AND A DELAY IN RECEIVING THE SUPPLIES OR SERVICES IS NOT PREJUDICIAL TO THE GOVERNMENT'S INTEREST, THE CONTRACTING OFFICER SHOULD, SUBJECT TO SUCH INSTRUCTIONS AS THE HEAD OF PROCURING ACTIVITY DEEMS APPROPRIATE, SEEK A MUTUAL AGREEMENT WITH THE SUCCESSFUL BIDDER TO "STOP WORK" ON A NO COST BASIS.

(2) IF, IN CONNECTION WITH (1) ABOVE, THE CONTRACTOR REFUSES TO ENTER INTO SUCH A MUTUAL AGREEMENT, THE HEAD OF PROCURING ACTIVITY MAY DIRECT THE CONTRACTING OFFICER, IN WRITING, TO ISSUE A "STOP WORK" ORDER, UNLESS THE HEAD OF PROCURING ACTIVITY DETERMINES THAT RECEIPT OF THE SUPPLIES OR SERVICES IS SO URGENT THAT A "STOP WORK" ORDER WOULD BE PREJUDICIAL TO THE INTEREST OF THE GOVERNMENT.

IN THIS CASE, THE FACT THAT THE PROCURING ACTIVITY CONSIDERED THE PROCUREMENT SO URGENT THAT A DELAY OF UP TO 15 WORKING DAYS PENDING A DECISION BY SBA ON YOUR CAPABILITY WAS NOT JUSTIFIED PRIOR TO AWARD WOULD APPEAR TO INDICATE THAT IT WOULD NOT HAVE BEEN IN THE GOVERNMENT'S INTEREST TO ISSUE A STOP ORDER FOR POSSIBLY A LONGER PERIOD AFTER AWARD PENDING DECISION BY OUR OFFICE ON YOUR PROTEST. THEREFORE, WE CANNOT QUESTION THE ADMINISTRATIVE DECISION NOT TO ISSUE SUCH ORDER ON THE CONTRACT ON WHICH, IT IS OUR UNDERSTANDING, DELIVERIES HAVE BEEN COMPLETED.