B-159319, JUL. 25, 1966

B-159319: Jul 25, 1966

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INC.: REFERENCE IS MADE TO YOUR PROTEST BY LETTER DATED MAY 26. THE TWO BIDS RECEIVED UNDER THE IFB WERE OPENED AS SCHEDULED. WAS LOWER THAN THE OTHER BID. THE CONTRACTING OFFICER NOTIFIED YOU BY TELEGRAPHIC MESSAGE DATED APRIL 29 THAT YOUR BID PRICE WAS SOMEWHAT LOWER THAN COMPETING BIDS. INASMUCH AS THE CONTRACTING OFFICER WAS AWARE THAT YOU HAD A POOR PERFORMANCE RECORD ON PREVIOUS GOVERNMENT CONTRACTS. A LIMITED PREAWARD SURVEY OF YOUR FACILITIES WAS REQUESTED FROM THE GARDEN CITY. DISCLOSED THAT AS OF MAY 12 YOU WERE DELINQUENT ON 19 OF 81 GOVERNMENT CONTRACTS. THAT YOUR PURCHASING AND SUBCONTRACTING WERE CONSIDERED UNSATISFACTORY ABSENT SUBMISSION OF CONFIRMED COMMITMENTS FOR REVIEW TO SUBSTANTIATE SUBCONTRACTOR DELIVERIES.

B-159319, JUL. 25, 1966

TO ALTON IRON WORKS, INC.:

REFERENCE IS MADE TO YOUR PROTEST BY LETTER DATED MAY 26, 1966, ADDRESSED TO THE U.S. ARMY TANK AUTOMOTIVE CENTER, NEW CUMBERLAND, PENNSYLVANIA, AGAINST THE REJECTION OF YOUR LOW BID AND AWARD OF A CONTRACT TO ANOTHER BIDDER AT A PRICE THREE TIMES YOUR BID PRICE UNDER INVITATION FOR BIDS (IFB) NO. AMC-20-113-66-0493 (T), ISSUED MARCH 18, 1966.

THE IFB, AS AMENDED, SOLICITED BIDS TO FURNISH A TOTAL QUANTITY OF 487 PARTS KITS, FEDERAL STOCK NO. 2910-545-1558, TO BE MANUFACTURED IN ACCORDANCE WITH ORDNANCE DRAWING A5702641, AS MODIFIED BY ENGINEERING EVALUATION REPORT NO. 5702641, REVISION A, DATED NOVEMBER 13, 1965, AND TO BE DELIVERED WITHIN 90 DAYS AFTER DATE OF CONTRACT. ON APRIL 15, THE TWO BIDS RECEIVED UNDER THE IFB WERE OPENED AS SCHEDULED. YOUR BID, WITH A UNIT PRICE OF $4.25, TOTAL $2,069.75, WAS LOWER THAN THE OTHER BID, FROM THE CLARK CABLE CORPORATION (CLARK), WITH A UNIT PRICE OF $12.60, TOTAL PRICE $6,136.20. FURTHER, THE PROCUREMENT HISTORY DISCLOSED THAT THE PRICES WHICH HAD BEEN PAID FOR THE ITEM DURING THE PERIOD AUGUST 1960 THROUGH DECEMBER 1964 HAD RANGED FROM $13.70 TO $14.17 PER UNIT.

IN VIEW OF THE WIDE DIFFERENCE BETWEEN YOUR BID AND THE CLARK BID, THE CONTRACTING OFFICER NOTIFIED YOU BY TELEGRAPHIC MESSAGE DATED APRIL 29 THAT YOUR BID PRICE WAS SOMEWHAT LOWER THAN COMPETING BIDS, THUS INDICATING A POSSIBLE ERROR IN YOUR BID, AND THEREFORE REQUESTED YOU TO CONFIRM YOUR BID PRICE AND ALSO SUGGESTED THAT YOU RECHECK THE SPECIFICATIONS. BY LETTER OF MAY 2, YOU CONFIRMED YOUR ORIGINAL BID PRICE AND DELIVERY SCHEDULE.

INASMUCH AS THE CONTRACTING OFFICER WAS AWARE THAT YOU HAD A POOR PERFORMANCE RECORD ON PREVIOUS GOVERNMENT CONTRACTS, A LIMITED PREAWARD SURVEY OF YOUR FACILITIES WAS REQUESTED FROM THE GARDEN CITY, NEW YORK, DEFENSE CONTRACT ADMINISTRATION SERVICES DISTRICT (DCASD). THE DCASD REPORT, DATED MAY 13, DISCLOSED THAT AS OF MAY 12 YOU WERE DELINQUENT ON 19 OF 81 GOVERNMENT CONTRACTS; THAT YOUR PAST PERFORMANCE HAD ALSO BEEN UNSATISFACTORY; THAT YOUR PURCHASING AND SUBCONTRACTING WERE CONSIDERED UNSATISFACTORY ABSENT SUBMISSION OF CONFIRMED COMMITMENTS FOR REVIEW TO SUBSTANTIATE SUBCONTRACTOR DELIVERIES; AND THAT IN VIEW OF YOUR CURRENT DELINQUENCIES, IT WAS NOT POSSIBLE TO ASCERTAIN WHETHER YOU HAD THE ABILITY TO MEET THE REQUIRED DELIVERY SCHEDULE FOR THE PROCUREMENT IN QUESTION. ACCORDINGLY, THE DCASD RECOMMENDED THAT NO AWARD BE MADE TO YOU.

BASED ON THE ADVERSE PREAWARD SURVEY, THE CONTRACTING OFFICER DETERMINED THAT YOU WERE NOT A RESPONSIBLE SOURCE OF SUPPLY FOR THE PROCUREMENT NEED AND THEREFORE AWARD SHOULD NOT BE MADE TO YOU. FURTHER, SINCE YOUR BID WAS UNDER $2,500, IT WAS CONCLUDED THAT REFERRAL OF THE MATTER OF YOUR RESPONSIBILITY TO THE SMALL BUSINESS ADMINISTRATION (SBA) WAS NOT REQUIRED IN ACCORDANCE WITH THE CERTIFICATE OF COMPETENCY PROCEDURES PRESCRIBED IN ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-705.4. ACCORDINGLY, AWARD WAS MADE ON MAY 25 TO CLARK, WHOSE BID PRICE OF $12.60 PER UNIT WAS NOT CONSIDERED EXCESSIVE IN THE LIGHT OF THE PREVIOUS PRICES PAID FOR THE ITEM, AND YOU WERE SO ADVISED BY LETTER OF THE SAME DATE, WHICH INCLUDED THE FOLLOWING PERTINENT INFORMATION:

"AWARD TO YOUR COMPANY WAS NOT POSSIBLE DUE TO NEGATIVE PRE-AWARD SURVEY DATED 13 MAY 1966 FOR THE FOLLOWING REASONS: "PAST AND PRESENT PERFORMANCE ARE NOT CONSIDERED SATISFACTORY. OF 81 CONTRACTS CURRENTLY BEING ADMINISTERED BY THIS OFFICE, 19 ARE DELINQUENT FOR THE MONTHS OF JANUARY, FEBRUARY, MARCH AND APRIL 1966, AND ARE VALUED AT APPROXIMATELY $475,000. THE VALUE OF THE CURRENT DELINQUENT CONTRACTS ARE SUBSTANTIALLY FAR IN EXCESS OF CURRENT MONTHLY SHIPMENTS.

"DELIVERIES DUE FOR THE MONTH OF MAY 1966 ARE VALUED AT APPROXIMATELY $174,000. OF CONTRACTS COMPLETED SINCE OCTOBER 1964 TO DATE 18 WERE DELINQUENT. THE MAJORITY OF THE DELINQUENCIES ARE DUE TO LATE RECEIPT OF PARTS FROM SUBCONTRACTORS.'"

IN YOUR PROTEST LETTER OF MAY 26, YOU ALLEGED THAT THE PREAWARD SURVEY REPORT WAS INACCURATE IN THAT YOUR GOVERNMENT CONTRACT DELINQUENCIES INVOLVED ONLY A FEW OF 175 CONTRACTS AND WERE OCCASIONED BY LATE RECEIPT OF GOVERNMENT FURNISHED TOOLING AND EQUIPMENT, LATE GOVERNMENT APPROVAL OF PREPRODUCTION SAMPLES OR DESIGN DRAWINGS, AND EXTENSIONS OF PERFORMANCE TIME DUE TO THE FAULT OF THE GOVERNMENT. IN VIEW OF SUCH ALLEGATIONS, THE DCASD WAS REQUESTED BY THE PROCURING ACTIVITY TO REVIEW THE PREAWARD SURVEY OF YOUR FACILITIES. IN A SUPPLEMENTAL REPORT DATED JUNE 16, DCASD STATED THAT AS OF THAT DATE YOU WERE STILL DELINQUENT ON 18 OF 92 PRIME GOVERNMENT CONTRACTS; THAT NO APPRECIABLE CHANGE IN SUCH TREND WAS INDICATED; AND THAT, THEREFORE, NO CHANGE WAS MADE IN DCASD'S PRIOR "NO AWARD" RECOMMENDATION. IN ADDITION, THE CONTRACTING OFFICER, IN A REPORT DATED JUNE 20, MAKES THE FOLLOWING COMMENTS ON YOUR PROTEST:

"ALTON IRON WORKS INC. COMPLAINTS IN THEIR LETTER OF 26 MAY 1966 ARE INACCURATE IN THAT:

"/I) THE DCASD ADVISES THAT 19 CONTRACTS OUT OF A TOTAL OF 81 WERE DELINQUENT AS OF 13 MAY 1966 AND NOT A "FEW" OUT OF 175 CONTRACTS.

"/II) THE REASON FOR DELINQUENCIES IS PRIMARILY LATE DELIVERIES FROM SUB- CONTRACTORS AND NOT BECAUSE OF THE REASONS STATED BY THE COMPANY.

"/III) THE FIRM'S PURCHASING AND SUB-CONTRACTING PROCEDURES ARE UNSATISFACTORY; ALTON IRON WORKS INC. DID NOT FURNISH CONFIRMED SUB CONTRACTING COMMITMENTS TO SUBSTANTIATE DELIVERY SCHEDULES; AND

"/IV) THE AWARD TO CLARK CABLE CORP (2ND LOW BIDDER) AT $12.60 EACH FOR A TOTAL OF $6,136.20 IS NOT GROSSLY EXCESSIVE, BUT IS ACTUALLY IN LINE WITH PRICES PREVIOUSLY PAID.'

ASPR 1-903.1, RELATING TO MINIMUM STANDARDS FOR RESPONSIBLE PROSPECTIVE CONTRACTORS, REQUIRES THAT SUCH CONTRACTORS HAVE A SATISFACTORY RECORD OF PERFORMANCE. WHEN THE PROSPECTIVE CONTRACTOR IS A SMALL BUSINESS CONCERN, HOWEVER, AND THE CAUSES OF HIS POOR PAST PERFORMANCE RELATE SOLELY TO HIS CAPACITY AND CREDIT, THE PROVISIONS OF ASPR 1-705.4 ARE FOR APPLICATION. ASPR 1-705.4 (C) READS, IN PERTINENT PART, AS FOLLOWS:

"/C) IF A BID OR PROPOSAL OF A SMALL BUSINESS CONCERN IS TO BE REJECTED SOLELY BECAUSE THE CONTRACTING OFFICER HAS DETERMINED THE CONCERN TO BE NONRESPONSIBLE AS TO CAPACITY OR CREDIT, THE MATTER SHALL BE REFERRED TO THE SBA. THIS PROCEDURE APPLIES ONLY TO PROPOSED AWARDS EXCEEDING $2,500. FOR PROPOSED AWARDS EXCEEDING $2,500, BUT NOT EXCEEDING $10,000, ITS USE IS WITHIN THE DISCRETION OF THE CONTRACTING OFFICER. * * *"

THE FACTS OF RECORD, WHICH SHOW THAT AS RECENTLY AS ONE MONTH AGO YOU WERE IN A DELINQUENT STATUS ON APPROXIMATELY 20 PERCENT OF YOUR GOVERNMENT CONTRACTS (18 OF 92) AND THAT YOUR DELINQUENCIES WERE ATTRIBUTABLE PRIMARILY TO LATE DELIVERIES FROM SUBCONTRACTORS RATHER THAN TO ANY FAULT ON THE PART OF THE GOVERNMENT, SUBSTANTIATE, IN OUR OPINION, THE ADMINISTRATIVE DETERMINATION THAT YOU WERE NOT A RESPONSIBLE BIDDER FOR THE PROCUREMENT IN QUESTION. FURTHER, SINCE AN AWARD BASED ON YOUR BID WOULD HAVE BEEN LESS THAN $2,500 THE CERTIFICATE OF COMPETENCY PROCEDURE WAS NOT APPLICABLE. ACCORDINGLY, WE FIND NO LEGAL BASIS TO QUESTION THE REJECTION OF YOUR BID WITHOUT REFERRAL OF THE QUESTION OF YOUR RESPONSIBILITY TO SBA.

CONCERNING YOUR STATEMENT THAT THE AWARD WAS MADE AT A PRICE THREE TIMES YOUR LOW BID PRICE, YOU ARE ADVISED THAT WHETHER A RESPONSIVE BID SHOULD BE REJECTED BECAUSE OF UNREASONABLENESS OF PRICE IS A MATTER PRIMARILY WITHIN THE DISCRETION OF THE CONTRACTING AGENCY. SINCE THE DETERMINATION IN THIS CASE THAT THE AWARD PRICE WAS REASONABLE WAS BASED ON EVIDENCE THAT SUCH PRICE WAS APPROXIMATELY 10 PERCENT LOWER THAN THE PRICES PAID BY THE PROCURING ACTIVITY FOR THE SAME ITEM OVER A PRIOR PERIOD IN EXCESS OF FOUR YEARS, WE ARE UNABLE TO CONCLUDE THAT THE AWARD WAS NOT MADE IN THE BEST INTEREST OF THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED, AS REQUIRED BY THE APPLICABLE PROCUREMENT STATUTE (10 U.S.C. 2305) AND REGULATIONS.