B-159535, AUG. 16, 1966

B-159535: Aug 16, 1966

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TO WHITTAKER CORPORATION: FURTHER REFERENCE IS MADE TO YOUR LETTER DATED JUNE 1. WAS ISSUED ON FEBRUARY 24. BIDS WERE OPENED ON MARCH 14. THE ALLEGED MISTAKE WOULD NOT BE PROCESSED UNLESS AWARD WAS NOT MADE TO PARSONS. WHITTAKER CORPORATION PROTESTED THE AWARD TO PARSONS AND CLAIMS PARSONS IS NOT ENTITLED TO THE AWARD BECAUSE IT IS NOT A RESPONSIBLE PROSPECTIVE CONTRACTOR AS THAT TERM IS DEFINED IN THE ARMED SERVICES PROCUREMENT REGULATION. WHITTAKER ARGUES PARSONS IS NOT RESPONSIBLE BECAUSE: "A.). A REVIEW OF CREDIT REPORTS AND BANK DATA WILL DETAIL PAST LOSSES AND SLOW PAYMENTS TO VENDORS.'. SECTION 1-903.1 OF THE ASPR STATES THAT A RESPONSIBLE PROSPECTIVE CONTRACTOR MUST HAVE (1) ADEQUATE FINANCIAL RESOURCES OR THE ABILITY TO OBTAIN SAME DURING PERFORMANCE OF THE CONTRACT.

B-159535, AUG. 16, 1966

TO WHITTAKER CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED JUNE 1, 1966, WITH ENCLOSURES, PROTESTING AGAINST AN AWARD TO PARSONS CORPORATION, TRAVERSE CITY, MICHIGAN, PURSUANT TO INVITATION FOR BIDS NO. 40-600-66 9, ISSUED

BY HEADQUARTERS, ARNOLD ENGINEERING DEVELOPMENT CENTER (AEDC), ARNOLD AIR FORCE STATION, TULLAHOMA, TENNESSEE.

THE ABOVE-REFERENCED INVITATION, THE SECOND STEP OF A TWO-STEP FORMALLY ADVERTISED PROCUREMENT, WAS ISSUED ON FEBRUARY 24, 1966, AND SOLICITED A FIRM QUANTITY OF 170 AND AN ADDITIONAL OPTIONAL QUANTITY OF 171 FIBERGLASS PLASTIC LAMINATED COMPRESSOR BLADES, PLUS DATA AND SPECIAL TOOLING, FOR THE C-2 SUPERSONIC PROPULSION WIND TUNNEL AT AEDC. BIDS WERE OPENED ON MARCH 14, 1966, WITH THREE FIRMS RESPONDING TO THE IFB; PARSONS CORPORATION SUBMITTED THE LOWEST BID IN THE AMOUNT OF $1,335,160 AND WHITTAKER CORPORATION SUBMITTED THE HIGHEST BID OF $1,955,101.50, A DIFFERENCE OF ALMOST $600,000. BECAUSE OF THE SUBSTANTIAL DIFFERENCE IN THESE BIDS AEDC SOUGHT VERIFICATION FROM PARSONS WHO REAFFIRMED ITS PRICE. ON MARCH 18, 1966, WHITTAKER ALLEGED A MISTAKE IN ITS BID OF $39,610 AND REQUESTED THAT ITS BID PRICE BE REDUCED BY THAT AMOUNT. THE CONTRACTING OFFICER ADVISED WHITTAKER THAT INASMUCH AS A REDUCTION OF ITS BID PRICE AS REQUESTED WOULD NOT DISPLACE PARSONS' LOW BID, THE ALLEGED MISTAKE WOULD NOT BE PROCESSED UNLESS AWARD WAS NOT MADE TO PARSONS. THEREAFTER, ON JUNE 1, 1966, WHITTAKER CORPORATION PROTESTED THE AWARD TO PARSONS AND CLAIMS PARSONS IS NOT ENTITLED TO THE AWARD BECAUSE IT IS NOT A RESPONSIBLE PROSPECTIVE CONTRACTOR AS THAT TERM IS DEFINED IN THE ARMED SERVICES PROCUREMENT REGULATION, ASPR, 1-903. SPECIFICALLY, WHITTAKER ARGUES PARSONS IS NOT RESPONSIBLE BECAUSE:

"A.) THE HISTORY OF PARSONS' DELIVERIES UNDER PRIOR CONTRACTS COMPARED TO THE DELIVERY SCHEDULE SET FORTH IN THE CONTRACTS.

"B.) THE GOVERNMENT'S REASONING AS TO PARSONS' ABILITY TO PERFORM WHEN THE GOVERNMENT FAILED TO EXERCISE OPTION WITH PARSONS FOR C-2 COMPRESSOR BLADES, AND;

"C.) PARSONS' FINANCIAL RESOURCES TO PERFORM. A REVIEW OF CREDIT REPORTS AND BANK DATA WILL DETAIL PAST LOSSES AND SLOW PAYMENTS TO VENDORS.'

SECTION 1-903.1 OF THE ASPR STATES THAT A RESPONSIBLE PROSPECTIVE CONTRACTOR MUST HAVE (1) ADEQUATE FINANCIAL RESOURCES OR THE ABILITY TO OBTAIN SAME DURING PERFORMANCE OF THE CONTRACT; (2) BE ABLE TO DELIVER AND PERFORM ON SCHEDULE, AND; (3) HAVE A SATISFACTORY RECORD OF PERFORMANCE ON PAST AND/OR CURRENT CONTRACTS. IF PARSONS MEETS THESE CRITERIA IT IS CONSIDERED TO BE CAPABLE OF PERFORMING THE CONTRACT IN QUESTION. SHOULD BE NOTED AT THIS POINT THAT AN AWARD WAS MADE TO PARSONS ON JUNE 28, 1966, PURSUANT TO ASPR 2-407.9 (B) (2).

IN LIGHT OF THE PROTEST FROM WHITTAKER AND BECAUSE OF THE DIFFERENCE IN BID PRICES, A PRE-AWARD SURVEY OF PARSONS' CAPABILITY WAS CONDUCTED BY THE GRAND RAPIDS, MICHIGAN, CONTRACT ADMINISTRATION SERVICE DISTRICT WITH SPECIAL ATTENTION FOCUSED ON PARSONS' FINANCIAL CAPABILITIES. THE RESULTS OF THIS SURVEY FORMED THE BASIS OF THE CONTRACTING OFFICER'S DECISION TO MAKE AN AWARD TO PARSONS.

CONSIDERING WHITTAKER CORPORATION'S ARGUMENTS IN ORDER, IN REGARD TO THE FIRST CONTENTION, THAT PARSONS' POOR DELIVERIES UNDER PRIOR CONTRACTS INDICATE IT WILL NOT BE ABLE TO MEET THE DELIVERY SCHEDULE UNDER THE INSTANT CONTRACT, IT IS REPORTED BY AEDC THAT THEY HAVE HAD ONLY ONE PRIOR CONTRACT WITH PARSONS AND WHILE THERE WERE SOME INSTANCES OF DELINQUENCY, IT DID DELIVER IN ACCORDANCE WITH REVISED DELIVERY SCHEDULES AND WAS NOT DECLARED IN DEFAULT. EVEN IF PARSONS HAD BEEN DECLARED IN DEFAULT ON THE PRIOR CONTRACT, REJECTION OF ITS BID FOR IRRESPONSIBILITY WOULD NOT BE REQUIRED UNDER THE PRESENT INVITATION, FOR ALTHOUGH THIS OFFICE HAS HELD THAT PRIOR DEFAULT MAY BE AN ADEQUATE BASIS FOR AN ADMINISTRATIVE DETERMINATION OF BIDDER IRRESPONSIBILITY, THIS OFFICE HAS ALSO UPHELD THE OPPOSITE CONCLUSION, THAT PRIOR DEFAULT DOES NOT REQUIRE DISQUALIFICATION OF PROSPECTIVE CONTRACTORS, AS BEING WITHIN THE REASONABLE RANGE OF ADMINISTRATIVE DISCRETION. COMPARE 27 COMP. GEN. 621 AND B-125183 OF MARCH 1, 1956. SO, IF A PRIOR DEFAULT DOES NOT REQUIRE AN ADMINISTRATIVE DETERMINATION THAT A PROSPECTIVE CONTRACTOR IS IRRESPONSIBLE, IT IS CLEAR THAT A HISTORY OF LATE DELIVERIES ON A PRIOR CONTRACT DOES NOT NECESSARILY BAR CONSIDERATION OF PARSONS' BID HERE. FURTHERMORE, A REPORT FROM ARNOLD AIR FORCE STATION DATED MAY 25, 1966, STATES THAT:

"* * * ALL, REPEAT ALL, EVALUATORS AND ADVISORS TO THE PROJECT OFFICER ARE OF THE OPINION THAT PARSONS CORPORATION IS BEST QUALIFIED TECHNICALLY FOR THE C-2 CONTRACT.'

IF PARSONS TRULY IS THE BEST QUALIFIED FIRM FOR THE JOB, IT WOULD SEEM THEY WILL BE ABLE TO PRODUCE THE EQUIPMENT FASTER AND BETTER THAN ANYONE ELSE AND WILL BE ABLE, THEREFORE, TO MAKE DELIVERIES MORE EXPEDITIOUSLY THAN ANYONE ELSE.

WHITTAKER'S NEXT TWO CONTENTIONS ARE ESSENTIALLY THE SAME AND WILL BE TREATED AS SUCH; SPECIFICALLY, THEY ARE THAT THE GOVERNMENT'S FAILURE TO EXERCISE ITS OPTION FOR THE C-2 PORTION OF THE PREVIOUS CONTRACT AND PARSONS' LACK OF FINANCIAL RESOURCES TO PERFORM INDICATE THAT PARSONS DOES NOT SATISFY THE CRITERIA ESTABLISHED IN ASPR 1-903.1 REFERRED TO ABOVE. THE AIR FORCE HAS INFORMED US THE PREVIOUS CONTRACT REQUIRED A SUBSTANTIAL AMOUNT OF RESEARCH AND DEVELOPMENT WORK WHICH HAD THE EFFECT OF INCREASING PARSONS' COSTS WHICH, IN TURN, CAUSED PARSONS TO INCUR FINANCIAL DIFFICULTIES. DUE TO THE URGENT NEED FOR THE C-1 BLADES, THE AIR FORCE DECIDED IT WAS IN THE PUBLIC INTEREST TO GRANT RELIEF TO PARSONS IN THE AMOUNT OF ITS EXCESS COSTS; IT WAS DETERMINED, HOWEVER, THAT THE C-2 PORTION OF THE CONTRACT SHOULD BE TERMINATED FOR MUTUAL CONVENIENCE AND READVERTISED AT A LATER DATE RATHER THAN GRANT ADDITIONAL MONETARY RELIEF AT THAT TIME. THE NEW PROCUREMENT FOR THE C-2 BLADES IS THE INSTANT SOLICITATION. WE DO NOT BELIEVE THIS ACTION BY THE AIR FORCE CONSTITUTES A VALID REASON FOR DECLARING PARSONS NOT A RESPONSIBLE PROSPECTIVE CONTRACTOR. THIS VIEW IS BUTTRESSED BY THE EXTENSIVE INVESTIGATION MADE OF PARSONS' FINANCIAL RESOURCES WHICH RESULTED IN A RECOMMENDATION FOR AWARD TO PARSONS CORPORATION. THE REPORT STATES IN PART AS FOLLOWS:

"* * * WE HAVE A SITUATION WHERE A DECISION MUST BE MADE BETWEEN AN AWARD TO A CONTRACTOR WITH LIMITED FINANCIAL RESOURCES, BUT HAVING A DEMONSTRATED CAPABILITY TO PRODUCE URGENTLY NEEDED BLADES, AND A NEW BIDDER WHO HAS NEVER PROVIDED ANY BLADES BUT WHO IS MUCH STRONGER THAN PARSONS FROM A FINANCIAL STANDPOINT. IT IS OUR OPINION THAT THE SUBJECT AWARD SHOULD BE MADE TO PARSONS WITH A PROVISO THAT ALL PROGRESS PAYMENTS GENERATED BY BOTH C-1 AND C-2 CONTRACTS BE DEPOSITED IN A SPECIAL BANK ACCOUNT AND RELEASED OVER THE COUNTER SIGNATURE OF A CONTRACTING OFFICER. BY DOING THIS, WE CAN BE ASSURED THAT PAYMENTS OF VITAL VENDORS WOULD BE MADE IN A TIMELY MANNER AND THEREBY NOT RESTRICT THE FLOW OF MATERIALS, ETC. IT IS ALSO RECOGNIZED THAT, DUE TO SPECIAL ARRANGEMENTS WITH VENDORS AND SUPPLIERS, THE STRAIN ON WORKING CAPITAL FUNDS WOULD BE EASED. ADDITIONALLY, CONTRACTOR'S PROVEN CAPABILITY SHOULD ENABLE TIMELY DELIVERIES OF ACCEPTABLE ITEMS. FINALLY, AN ANTICIPATED SAVINGS OF APPROXIMATELY $600,000 SHOULD BE REALIZED BY PLACING THE AWARD WITH PARSONS ON A FIRM-FIXED PRICE BASIS.'

WE HAVE BEEN INFORMED BY THE AIR FORCE THAT THE RECOMMENDED PROVISO HAS BEEN INCORPORATED IN PARSONS' CONTRACT.

FINALLY, THE DETERMINATION OF THE PROSPECTIVE CONTRACTOR'S ABILITY TO PERFORM IS PRIMARILY THE FUNCTION OF THE ADMINISTRATIVE OFFICERS CONCERNED, AND IN THE ABSENCE OF ANY SHOWING OF BAD FAITH OR LACK OF REASONABLE BASIS THEREFOR, THERE IS NO GROUND UPON WHICH WE MAY OBJECT. SEE 37 COMP. GEN. 430, 435. THERE HAS BEEN NO ATTEMPT BY WHITTAKER CORPORATION TO SHOW BAD FAITH OR LACK OF REASONABLE BASIS IN THE CONTRACTING OFFICER'S DECISION.

IN VIEW OF THE FACTS AND CIRCUMSTANCES IN THIS CASE WE FEEL IT WOULD BE UNREASONABLE TO SUPERIMPOSE THE JUDGMENT OF OUR OFFICE ON THAT OF THE CONTRACTING OFFICIALS. ACCORDINGLY, WE HAVE NO OBJECTION TO THE ACTION TAKEN BY THE CONTRACTING OFFICER IN AWARDING THE CONTRACT TO PARSONS AND YOUR PROTEST IS, THEREFORE, DENIED.