B-159669, MAR. 7, 1967

B-159669: Mar 7, 1967

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TO CREST ULTRASONICS CORPORATION: REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 17. IS A BIG BUSINESS CORPORATION. WAS THEREFORE IMPROPER. LEWIS CORPORATION WAS THE APPARENT LOW BIDDER ON LOT I AND DYNASONICS CORPORATION WAS THE APPARENT LOW BIDDER ON LOT II. PROTESTED TO THIS OFFICE AND TO THE NAVY PURCHASING OFFICE THAT THE BIDS OFFERED BY THESE TWO FIRMS WERE NONRESPONSIVE. OUR OFFICE WAS INFORMED OF THIS ACTION BY LETTER DATED JULY 29. WE WERE ACTUALLY INFORMED BY NAVY'S LETTER OF JULY 29. THAT THE BIDS OF THE LEWIS CORPORATION AND DYNASONICS CORPORATION WERE CONSIDERED TO BE NONRESPONSIVE. THAT "SINCE CREST IS THE NEXT LOWEST BIDDER AND IN LINE FOR AN AWARD" IT WAS DEEMED UNNECESSARY TO MAKE A FORMAL REPORT OF YOUR ORIGINAL PROTEST.

B-159669, MAR. 7, 1967

TO CREST ULTRASONICS CORPORATION:

REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 17, 1966, IN WHICH YOU CONTEND THAT SINCE DELTA SONICS, INCORPORATED OF HAWTHORNE, CALIFORNIA, IS A BIG BUSINESS CORPORATION, AWARD OF ITEMS COVERED BY A SMALL BUSINESS SET -ASIDE, ITEMS 10, 14, 16, 17, AND 18 OF LOT II OF INVITATION FOR BIDS NO. 600-1288-66 ISSUED BY THE UNITED STATES NAVY PURCHASING OFFICE, WASHINGTON NAVY YAR, WASHINGTON, D.C., WAS THEREFORE IMPROPER.

IN THIS PROCUREMENT OF ULTRASONIC CLEANING SYSTEMS, THE GOVERNMENT RESERVED A RIGHT TO AWARD EITHER ON A LOT BASIS OR BY AN ITEM BASIS. THE INVITATION CONSISTED OF TWO LOTS, THE FIRST GRANTING A PARTIAL SMALL BUSINESS SET-ASIDE OF FOUR OF THE NINE ITEMS, AND THE SECOND RESTRICTING ALL ELEVEN UNITS TO SMALL BUSINESS ENTERPRISES.

AT BID OPENING, JULY 7, 1966, LEWIS CORPORATION WAS THE APPARENT LOW BIDDER ON LOT I AND DYNASONICS CORPORATION WAS THE APPARENT LOW BIDDER ON LOT II. YOUR FIRM, BY LETTER OF JULY 8, 1966, PROTESTED TO THIS OFFICE AND TO THE NAVY PURCHASING OFFICE THAT THE BIDS OFFERED BY THESE TWO FIRMS WERE NONRESPONSIVE. AFTER TECHNICAL EXAMINATION AND LEGAL ANALYSIS OF THE PROTESTED BIDS, THE NAVY CONTRACTING AUTHORITIES CONCURRED IN YOUR ESTIMATION OF THE TWO BIDS AND REJECTED THEM AS NONRESPONSIVE. OUR OFFICE WAS INFORMED OF THIS ACTION BY LETTER DATED JULY 29, 1966.

SINCE THIS REJECTION OF THE TWO BIDS YOU PROTESTED AS NONRESPONSIVE REMOVED THE BASIS FOR YOUR PROTEST, THIS OFFICE NOTIFIED YOU BY LETTER OF AUGUST 5, 1966, THAT WE CONSIDERED THE CASE CLOSED. WE WERE ACTUALLY INFORMED BY NAVY'S LETTER OF JULY 29, 1966, THAT THE BIDS OF THE LEWIS CORPORATION AND DYNASONICS CORPORATION WERE CONSIDERED TO BE NONRESPONSIVE, AND THAT "SINCE CREST IS THE NEXT LOWEST BIDDER AND IN LINE FOR AN AWARD" IT WAS DEEMED UNNECESSARY TO MAKE A FORMAL REPORT OF YOUR ORIGINAL PROTEST. WE INFORMED YOU BY LETTER OF AUGUST 5, 1966, THAT WE HAD BEEN INFORMED BY NAVY THAT THE BIDS OF LEWIS AND DYNASONICS HAD BEEN REJECTED AS NONRESPONSIVE AND THAT YOUR BID WOULD BE ACCEPTED. WE MUST APOLOGIZE FOR HAVING OVERSTATED NAVY'S RESPONSE TO US, WHICH IN REALITY AMOUNTED TO NO MORE THAN A STATEMENT THAT YOUR BID WAS BEING CONSIDERED FOR AWARD.

SUBSEQUENT TO THIS INITIAL EXCHANGE OF CORRESPONDENCE, THE CONTRACTING OFFICER EVALUATED THE GOVERNMENT'S TRANSPORTATION COST IN ACCORDANCE WITH THE PROCEDURE AND DESTINATIONS SET OUT ON PAGE 12 OF THE INVITATION, AND CONCLUDED DELTA SONICS CORPORATION'S BID WAS LOW ON ITEMS 10, 14, 16, 17, AND 18, WHILE CREST ULTRASONICS WAS LOW ON ALL OTHER ITEMS. BECAUSE FUNDS WERE NOT AVAILABLE UNTIL OCTOBER 21, 1966, AWARD ACTION WAS WITHHELD UNTIL EARLY IN NOVEMBER OF 1966.

ON NOVEMBER 9, 1966, THE NON-SET-ASIDE ITEMS OF LOT I AND ITEMS 11, 12, 13, 15, 19, AND 20 OF LOT II WERE AWARDED TO CREST ULTRASONICS; TO DELTA SONICS; AND ON NOVEMBER 16, 1966, THE SET-ASIDE PORTION OF ON NOVEMBER 10, 1966, ITEMS 10, 14, 16, 17, AND 18 OF LOT II WERE AWARDED LOT I WAS NEGOTIATED WITH CREST ULTRASONICS AND ADDED TO ITS ORIGINAL CONTRACT AS MODIFICATION NO. 0001.

ALL OF THE AWARDS WERE MADE TO THE LOW RESPONSIVE BIDDER WHEN THE GOVERNMENT'S COST OF TRANSPORTATION TO THE SELECTED DESTINATIONS IS CONSIDERED.

ON NOVEMBER 16, 1966, CREST ULTRASONICS TELEPHONICALLY NOTIFIED THE NAVY PURCHASING OFFICE OF ITS CONTENTIONS REGARDING THE STATUS OF DELTA SONICS AS A BIG BUSINESS. THIS WAS FOLLOWED BY CREST ULTRASONICS' NOVEMBER 17, 1966, LETTER TO THIS OFFICE SIMILARLY PROTESTING DELTA SONICS' STATUS AND CONTENDING IT IS OWNED BY WHEELABRATOR CORPORATION OF MISHAWAKA, INDIANA, WHICH HAS SOME 2,850 EMPLOYEES.

THIS LETTER ALSO QUESTIONS WHETHER DELTA SONICS EXTENDED ITS BID ACCEPTANCE DATE PAST THE 60-DAY ACCEPTANCE PERIOD IN THE ORIGINAL BID. FINALLY, CREST ULTRASONICS CONTENDS THAT ITS EARLIER LETTER OF JULY 8, 1966, SHOULD BE CONSIDERED AS REGISTERING A PROTEST AGAINST AWARD TO DELTA SONICS, AND THE AUGUST 5, 1966, REPLY OF THIS OFFICE SHOULD BE VIEWED AS FAVORABLY DISPOSING OF THE PROTEST.

TREATING THE SIMPLEST ISSUE FIRST, THE NAVY PURCHASING OFFICE INFORMS US DELTA SONICS DULY EXTENDED ITS BID ACCEPTANCE DATE TO THE TIME OF THE ACTUAL AWARD.

AS TO YOUR CONTENTION THAT YOUR ORIGINAL PROTEST LETTER OF JULY 9, 1966, ENCOMPASSED THE ISSUES RAISED IN YOUR LETTER OF NOVEMBER 17, 1966, WE DO NOT AGREE. WHILE IT IS TRUE YOUR JULY LETTER CLAIMED AWARD AS THE LOWEST RESPONSIBLE BIDDER AND AS SUCH PROTESTED "AN AWARD TO ANY OTHER BIDDER," THE SAME LETTER SPECIFIED PARTICULAR FAILINGS IN TWO OF THE BIDS WHICH RENDERED THEM NONRESPONSIVE TO THE INVITATION. HOWEVER, THE JULY LETTER CONTAINED NO OTHER SPECIFIC ALLEGATION REGARDING ANY OTHER BID OR BIDDER.

IT WOULD BE UNREALISTIC TO THE POINT OF IMPOSSIBILITY FOR THIS OFFICE TO VIEW A PROTEST BEFORE AWARD PHRASED IN SUCH GENERAL LANGUAGE AS OPERATING TO PROTEST EVERY ASPECT OF ALL BIDS INVOLVED IN A PROCUREMENT, BECAUSE FULL INVESTIGATION AND CONSIDERATION OF ALL IMAGINABLE OBJECTIONS WOULD ENTAIL AN INORDINATE EXPENDITURE OF TIME, MANPOWER AND FUNDS. FOR THIS REASON, WE REJECT YOUR CONTENTION THAT THE LANGUAGE OF YOUR JULY LETTER, PROTESTING AWARD "TO ANY OTHER BIDDER" OPERATED TO APPRISE EITHER THIS OFFICE OR THE CONTRACTING AGENCY OF ISSUES NOT SPECIFICALLY RAISED BY YOU NOR APPARENT ON THE RECORD.

WE NOTE DELTA SONICS' BID WAS COMPLETE AND PROPER ON ITS FACE, SO THAT THE RECORD BEFORE THE CONTRACTING OFFICER AT THE TIME OF AWARD CONTAINED NO INFORMATION REGARDING THE OBJECTION YOU NOW BRING FORWARD.

WE THEREFORE CONCLUDE THAT THE CONSIDERATION GIVEN BY BOTH THIS OFFICE AND THE NAVY PURCHASING OFFICE OF THE ISSUES RAISED IN YOUR JULY LETTER IN NO MANNER ENCOMPASSED THE SUBJECT OF YOUR PRESENT PROTEST.

IT IS UNFORTUNATE OUR LETTER OF AUGUST 5, INFORMING YOU THE PROTESTED BIDS HAD BEEN REJECTED AS NONRESPONSIVE ALSO STATED THE BID OF YOUR FIRM, THE NEXT LOWEST, WOULD BE ACCEPTED. IT IS NOW APPARENT THAT ALL OF THE FACTORS NECESSARY FOR AWARD ACTION HAD NOT BEEN ASCERTAINED WHEN THE LETTER WAS WRITTEN.

HOWEVER, THE DETERMINATION TO AWARD A CONTRACT IS THE PREROGATIVE OF THE CONTRACTING OFFICER CONCERNED, AND A LETTER FROM THIS OFFICE TO A BIDDER CANNOT BIND THE GOVERNMENT TO AN AWARD.

FOR THESE REASONS, THE DISPLACEMENT OF YOUR APPARENT LOW BID BY A BID WHICH EVALUATED LOWER WHEN THE COST OF TRANSPORTATION WAS TAKEN IN ACCOUNT WAS PROPER DESPITE THE EARLIER STATEMENT THAT AWARD TO YOUR FIRM WAS CONTEMPLATED.

AS TO THE MERITS OF YOUR CONTENTION THAT DELTA SONICS IS IN FACT A BIG BUSINESS AND THEREFORE NOT QUALIFIED FOR AWARD UNDER THE SMALL BUSINESS SET-ASIDE OF LOT II, THE NAVY INFORMS US THE MATTER WAS REFERRED TO THE REGIONAL DIRECTOR, SMALL BUSINESS ADMINISTRATION, LOS ANGELES, CALIFORNIA, PURSUANT TO SEC. 1-703 (B) (1) (III) OF THE ARMED SERVICES PROCUREMENT REGULATION.

ON THE BASIS OF THE FACTS KNOWN TO THIS OFFICE WE CANNOT SAY THAT DELTA SONICS' CERTIFICATION OF ITSELF AS A SMALL BUSINESS, AS OF THE DATE OF BID OPENING, JULY 7, 1966, SHOULD BE CONSIDERED AS MADE IN BAD FAITH BECAUSE DELTA SONICS WAS LATER PURCHASED BY A BIG BUSINESS CONCERN. IT IS UNDISPUTED THAT, AT THE TIME THE SELF-CERTIFICATION WAS ORIGINALLY SUBMITTED, THE FIRM WAS STILL A SMALL BUSINESS, THEREBY SATISFYING THE REQUIREMENTS OF SECTION 1-703 (B) OF ASPR, IN THAT "NO BIDDER OR OFFEROR SHALL BE ELIGIBLE FOR AWARD AS A SMALL BUSINESS CONCERN UNLESS HE HAS IN GOOD FAITH REPRESENTED HIMSELF AS A SMALL BUSINESS PRIOR TO THE OPENING OF BIDS OR CLOSING DATE FOR THE SUBMISSION OF OFFERS.'

OUR DECISION B-149139 OF JULY 30, 1962, DENYING A PROTEST AGAINST AN AWARD TO A BIDDER WHO, DURING THE INTERIM BETWEEN BID OPENING AND AWARD, WAS SENT A SIZE DETERMINATION BY THE SMALL BUSINESS ADMINISTRATION CHANGING THE FIRM'S STATUS FROM A SMALL BUSINESS CONCERN TO A BIG BUSINESS CONCERN, SAID:

"WE KNOW OF NO AFFIRMATIVE REQUIREMENT IN THE ASPR OR IN THE SBA REGULATIONS RESPECTING SIZE STATUS DETERMINATIONS THAT A SELF CERTIFIED BIDDER MUST UNILATERALLY APPRISE THE CONTRACTING OFFICER OF A CHANGE IN HIS SIZE STATUS DETERMINED AFTER BID OPENING.'

IN ANY CASE, UNDER SECTION 1-703 (A) OF ASPR A CONTRACTING OFFICER MUST ACCEPT A SMALL BUSINESS SELF-CERTIFICATION AT FACE VALUE IN THE ABSENCE OF TIMELY PROTEST BY ANOTHER INTERESTED BIDDER. A CONTRACT AWARDED IN GOOD FAITH ON THE BASIS OF A BIDDER'S STATEMENT THAT IT IS A SMALL BUSINESS IS NOT VOID AB INITIO, BUT IS VOIDABLE ONLY AT THE OPTION OF THE GOVERNMENT. SEE B-14793 OF APRIL 9, 1962.

SINCE THE NAVY PROCURING OFFICIALS HAVE TAKEN PROPER STEPS TO AVOID A RECURRENCE OF THE MATTER BY SUBMITTING THE QUESTION OF DELTA SONICS' SIZE STATUS TO THE LOCAL DIRECTOR OF THE SMALL BUSINESS ADMINISTRATION FOR ITS CONSIDERATION IN FUTURE ACTION, AND SINCE THE EVIDENCE IS UNCLEAR REGARDING BAD FAITH ON THE PART OF DELTA SONICS, WE DO NOT THINK IT WOULD BE IN THE BEST INTERESTS OF THE GOVERNMENT TO DISTURB THE AWARD.