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B-159061, AUG. 4, 1966

B-159061 Aug 04, 1966
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TO UNITED DAIRY EQUIPMENT COMPANY: REFERENCE IS MADE TO YOUR LETTER DATED JULY 13. QUOTATIONS WERE REQUESTED FOR THE ESTABLISHMENT AT THE UNITED STATES NAVAL BASE. A PROTEST AGAINST THE POSSIBLE AWARD OF THE PROPOSED CONTRACT TO DSCI WAS FILED FOR THE STATED REASON THAT IT HAD NOT BEEN ESTABLISHED THAT THE COMPANY WAS A RESPONSIBLE PROSPECTIVE CONTRACTOR UNDER THE LAWS AND REGULATIONS PERTAINING TO AWARDS OF GOVERNMENT CONTRACTS. DSCI WAS ENGAGED IN THE PERFORMANCE OF CONTRACTS WITH THE DEPARTMENTS OF THE AIR FORCE AND THE NAVY. IT WAS REPORTED BY THE DEPARTMENT OF THE NAVY THAT A DETERMINATION OF CONTRACTOR RESPONSIBILITY FAVORABLE TO DSCI WITH RESPECT TO THE GUANTANAMO PROJECT WAS MADE IN ACCORDANCE WITH THE STANDARDS SET FORTH IN SECTION 1- 903 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR).

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B-159061, AUG. 4, 1966

TO UNITED DAIRY EQUIPMENT COMPANY:

REFERENCE IS MADE TO YOUR LETTER DATED JULY 13, 1966, RELATIVE TO OUR DECISION OF JUNE 30, 1966, WHICH DENIED THE PROTEST OF YOUR COMPANY AGAINST THE POSSIBLE AWARD OF A CONTRACT TO THE DAIRY SYNTHESIZING CORPORATION INTERNATIONAL (DSCI), NEW YORK, NEW YORK, PURSUANT TO REQUEST FOR QUOTATIONS NO. 189-29-66, ISSUED BY THE NAVAL SUPPLY CENTER, NORFOLK, VIRGINIA.

QUOTATIONS WERE REQUESTED FOR THE ESTABLISHMENT AT THE UNITED STATES NAVAL BASE, GUANTANAMO BAY, CUBA, OF A MILK RECOMBINING PLANT AND FOR THE PRODUCTION AND DELIVERY OF DAIRY PRODUCTS TO THE SUPPLY DEPOT AT THE BASE. A PROTEST AGAINST THE POSSIBLE AWARD OF THE PROPOSED CONTRACT TO DSCI WAS FILED FOR THE STATED REASON THAT IT HAD NOT BEEN ESTABLISHED THAT THE COMPANY WAS A RESPONSIBLE PROSPECTIVE CONTRACTOR UNDER THE LAWS AND REGULATIONS PERTAINING TO AWARDS OF GOVERNMENT CONTRACTS. DSCI WAS ENGAGED IN THE PERFORMANCE OF CONTRACTS WITH THE DEPARTMENTS OF THE AIR FORCE AND THE NAVY, COVERING OPERATIONS IN PAKISTAN AND AT ROTA, SPAIN, AND IT WAS REPORTED BY THE DEPARTMENT OF THE NAVY THAT A DETERMINATION OF CONTRACTOR RESPONSIBILITY FAVORABLE TO DSCI WITH RESPECT TO THE GUANTANAMO PROJECT WAS MADE IN ACCORDANCE WITH THE STANDARDS SET FORTH IN SECTION 1- 903 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR). THE DEPARTMENT RECOMMENDED THAT THE PROTEST BE DENIED AND THAT RECOMMENDATION WAS AFFIRMED IN A SUPPLEMENTAL REPORT WHICH WAS FURNISHED BY THE DEPARTMENT AFTER RECEIPT OF A COPY OF A LETTER DATED JUNE 6, 1966, TO OUR OFFICE, FROM THE ATTORNEYS REPRESENTING YOUR COMPANY IN REGARD TO THE PROTEST.

IT WAS CONCLUDED BY THE DEPARTMENT OF THE NAVY THAT DSCI HAS ADEQUATE FINANCIAL RESOURCES; THAT IT HAS THE ABILITY TO MEET REQUIRED DELIVERY DATES; THAT IT HAS A SATISFACTORY RECORD OF PERFORMANCE UNDER THE EXISTING CONTRACTS COVERING OPERATIONS IN PAKISTAN AND ROTA, SPAIN; AND THAT THERE IS NOTHING TO INDICATE A LACK OF INTEGRITY ON THE PART OF DSCI. THE DEPARTMENT CONSIDERED THAT AN ON-SITE INSPECTION OF THE FACILITIES OF DSCI IN THE UNITED STATES, OR IN THE VIRGIN ISLANDS, WAS NOT NECESSARY INASMUCH AS NO FACILITIES WERE REQUIRED OTHER THAN TO ASSURE THE PROCUREMENT OF THE PRODUCTION EQUIPMENT TO BE INSTALLED IN A BUILDING AT THE UNITED STATES NAVAL BASE, GUANTANAMO, CUBA.

THE REPORTED FACTS AND CIRCUMSTANCES CONCERNING THE CONCLUSIONS REACHED BY THE DEPARTMENT OF THE NAVY IN THE MATTER WERE OUTLINED IN OUR DECISION OF JUNE 30, 1966, TO THE ATTORNEYS REPRESENTING YOUR COMPANY, AND THEY WERE PREVIOUSLY FURNISHED A COPY OF THE NAVY'S SUPPLEMENTAL REPORT ON THE PROTEST. IN DENYING THE PROTEST, THE OPINIONS WERE EXPRESSED THAT THE NAVY MADE AN ADEQUATE INVESTIGATION OF DSCI'S QUALIFICATIONS AND THAT WE WOULD NOT BE WARRANTED IN TAKING THE POSITION THAT AN AWARD OF THE GUANTANAMO CONTRACT TO DSCI WOULD BE IMPROPER IF THE NAVY FINALLY DETERMINED THAT THE COMPANY IS FULLY CAPABLE OF MEETING THE REQUIREMENTS OF THE PROPOSED CONTRACT. WE HAVE BEEN ADVISED INFORMALLY THAT, SUBSEQUENT TO OUR DENIAL OF THE PROTEST, A CONTRACT WAS AWARDED TO DSCI FOR THE WORK AND SERVICES AS DESCRIBED IN THE REQUEST FOR QUOTATIONS.

THE DECISION CITED 43 COMP. GEN. 228, WHICH IS TO THE EFFECT THAT DETERMINATIONS OF CONTRACTOR RESPONSIBILITY ARE PRIMARILY WITHIN THE PROVINCE OF THE CONTRACTING AGENCIES CONCERNED AND THAT WE WILL NOT QUESTION THE DETERMINATION OF CONTRACTOR RESPONSIBILITY BY A CONTRACTING AGENCY IN THE ABSENCE OF A CLEAR SHOWING THAT THE DETERMINATION AS MADE IS EITHER ARBITRARY OR CAPRICIOUS OR NOT MADE IN ENTIRE GOOD FAITH. THE COURTS HAVE ADOPTED A SIMILAR VIEW, O-BRIEN V. CARNEY, 6 F.SUPP. 761; FRIEND V. LEE, 221 F.2D 96. IN THIS CASE THERE WAS FOUND NO SUFFICIENT BASIS FOR A CONCLUSION THAT THE NAVY'S DETERMINATION OF CONTRACTOR RESPONSIBILITY FAVORABLE TO DSCI WAS NOT SUPPORTED BY SUBSTANTIAL EVIDENCE OR NOT BASED UPON REASONABLE GROUNDS.

YOU EXPRESS A GENERAL DISAGREEMENT WITH THE DECISION AND REFER TO CERTAIN STATEMENTS THEREIN AS BEING EITHER INCORRECT OR AS REQUIRING CLARIFICATION. THE PARTICULAR STATEMENTS RELATE TO THE DISCUSSION OF THE TERM "PRE-AWARD SURVEYS," AS IN ASPR-905.4; THE REPORTED FACT THAT, PENDING THE COMPLETION OF EQUIPMENT INSTALLATIONS AT ROTA, SPAIN, DSCI IS HAULING MILK FROM SEVILLE, SPAIN; AND THE FACT THAT OUR RECORDS SHOW THAT MR. JOEL TURNER, LISTED IN A DUN AND BRADSTREET REPORT AS THE TREASURER OF DSCI, HAD TAKEN AN ACTIVE INTEREST IN THE PROTEST OF YOUR COMPANY.

PRE-AWARD SURVEYS OF PROSPECTIVE CONTRACTORS ON PROCUREMENTS OF THE MILITARY DEPARTMENTS HAVE IN THE PAST BEEN CONDUCTED BY AN INSPECTION SERVICE OR BRANCH OF EACH DEPARTMENT AND THE ADMINISTRATIVE REPORTS ON THE PROTEST HERE INVOLVED INDICATED THAT CERTAIN INFORMATION CONCERNING DSCI'S QUALIFICATIONS HAD BEEN OBTAINED FROM THE OFFICE OF NAVAL MATERIAL. ASSUMED THAT THIS MEANT THAT A PRE-AWARD SURVEY HAD BEEN REQUESTED FROM AND MADE BY THE OFFICE OF NAVAL MATERIAL WITH THE SCOPE OF THE SURVEY BEING LIMITED AT LEAST TO THE EXTENT THAT THE PURCHASING OFFICE DID NOT REQUEST AN ON-SITE INSPECTION OF DSCI'S FACILITIES. WE NOW UNDERSTAND THAT THE OFFICE OF NAVAL MATERIAL WAS NOT REQUESTED TO CONDUCT A PRE-AWARD SURVEY BUT THAT CERTAIN INFORMATION REGARDING DSCI'S QUALIFICATIONS WAS OBTAINED FROM THE FILES OF THAT OFFICE IN CONNECTION WITH THE CONSIDERATION OF THE QUESTION WHETHER DSCI SHOULD BE DETERMINED AS A RESPONSIBLE PROSPECTIVE CONTRACTOR FOR THE WORK AND SERVICES REQUIRED UNDER THE PROVISIONS OF THE REQUEST FOR QUOTATIONS. WE ARE ADVISED BY THE DEPARTMENT OF THE NAVY THAT ANY REQUESTED PRE-AWARD SURVEY WOULD HAVE BEEN FOR CONSIDERATION BY THE RECENTLY ESTABLISHED AGENCY KNOWN AS "DEFENSE CONTRACT ADMINISTRATIVE SERVICES," WHICH WAS ORGANIZED AS A PART OF THE DEFENSE SUPPLY AGENCY.

WE REGRET THAT THE DECISION STATES THE NAVY CONDUCTED A PRE-AWARD SURVEY IN THIS CASE, PARTICULARLY SO FAR AS THAT STATEMENT NORMALLY WOULD BE CONSIDERED AS MEANING THAT A PRE-AWARD SURVEY WAS MADE IN ACCORDANCE WITH THE PROCEDURES FOR INITIATION AND REPORTING ON PRE AWARD SURVEYS AS SET FORTH IN APPENDIX K OF THE ASPR. HOWEVER, SUCH A PRE-AWARD SURVEY IS NOT ESSENTIAL TO A DETERMINATION OF RESPONSIBILITY UNDER THE PROVISIONS OF ASPR 1-905.4 WHEN THE INFORMATION AVAILABLE TO THE PURCHASING OFFICE IS SUFFICIENT TO MAKE A DETERMINATION REGARDING SUCH RESPONSIBILITY, AND WE REMAIN OF THE OPINION THAT THE NAVY MADE AN ADEQUATE INVESTIGATION OF DSCI'S QUALIFICATIONS CONCERNING THE PERFORMANCE OF THE PROPOSED CONTRACT.

THE NAVY HAS VERIFIED YOUR STATEMENTS THAT THE ARRANGEMENTS FOR DELIVERIES OF MILK FROM SEVILLE TO ROTA, SPAIN, WERE MADE BY YOUR COMPANY WITH THE DEPARTMENTS OF THE AIR FORCE AND THE NAVY, THAT THE MILK WAS TRUCKED IN REFRIGERATED TRUCKS PROVIDED BY THE NAVY, AND THAT DSCI HAD NOTHING TO DO WITH THE ARRANGEMENTS EXCEPT TO THE EXTENT THAT IT AGREED TO REIMBURSE THE NAVY FOR THE COSTS OF TRANSPORTATION. THE NAVY HAS REPORTED THAT SUCH AGREEMENT IS INCLUDED IN AN AMENDMENT TO THE CONTRACT COVERING DSCI'S OPERATIONS AT ROTA, SPAIN.

IN REGARD TO MR. TURNER'S INTEREST IN THE PROTEST OF YOUR COMPANY, YOU REQUEST ADVICE AS TO WHETHER THIS RESULTED FROM PERMITTING HIM TO EXAMINE YOUR LETTERS AND DOCUMENTS FOR INFORMATION AND REFUTATION. THE PROTEST WAS DISCUSSED WITH MR. TURNER AT A MEETING IN OUR OFFICE ON MAY 17, 1966, BEFORE THE RECEIPT OF AN ADMINISTRATIVE REPORT ON THE PROTEST AND BEFORE THERE HAD BEEN PRESENTED ON BEHALF OF YOUR COMPANY ANY INFORMATION OR EVIDENCE IN SUPPORT OF THE PROTEST. SO FAR AS WE KNOW, MR. TURNER WAS ADVISED BY THE NAVY THAT WE HAD REQUESTED A REPORT ON THE PROTEST WHEN CONTRACT NEGOTIATIONS WERE NEARING COMPLETION, AND HE WAS INTERESTED PRIMARILY IN BEING IN A POSITION TO FURNISH SUCH INFORMATION AS WE MIGHT DESIRE FROM HIS COMPANY CONCERNING ITS CAPABILITIES TO PERFORM THE PROPOSED CONTRACT. THE NAVY HAS ADVISED US THAT, ALTHOUGH CONTRACT NEGOTIATIONS WERE CONDUCTED WITH MR. TURNER, HE WAS NOT AFFORDED AN OPPORTUNITY TO EXAMINE ANY OF THE MATERIAL SUBMITTED BY OR ON BEHALF OF YOUR COMPANY.

IN OUR OPINION, YOUR LETTER DOES NOT PROVIDE ANY ADDITIONAL INFORMATION OR EVIDENCE WHICH WOULD JUSTIFY A DIFFERENT CONCLUSION FROM THAT REACHED IN THE DECISION OF JUNE 30, 1966, DENYING THE PROTEST INVOLVED. ACCORDINGLY, THE DECISION IS HEREBY AFFIRMED.

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