B-159933, NOV. 18, 1966

B-159933: Nov 18, 1966

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FINZEL: FURTHER REFERENCE IS MADE TO YOUR LETTERS OF SEPTEMBER 6 AND OCTOBER 27. THE SUBJECT INVITATION WAS ISSUED ON FEBRUARY 25. A FOURTH ITEM WAS ADDED BY AMENDMENT NUMBER 2. FIVE BIDS WERE RECEIVED AND OPENED ON MARCH 28. AFTER A QUESTION CONCERNING THE RESPONSIVENESS OF ROBERTS' BID WAS RESOLVED. ITS BID WAS EVALUATED AND DETERMINED TO BE THE LOWEST. A PRE- AWARD SURVEY WAS CONDUCTED. THE SURVEY REVEALED THAT ROBERTS WAS EXPERIENCING FINANCIAL DIFFICULTIES AND THAT A BANKRUPTCY PROCEEDING WAS THEN PENDING IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEBRASKA. SINCE THE CONTRACTING OFFICER WAS UNABLE TO MAKE AN AFFIRMATIVE DETERMINATION OF RESPONSIBILITY. THE LETTER NOTICE OF AWARD WAS DATED AND MAILED ON AUGUST 26.

B-159933, NOV. 18, 1966

TO HUBERT H. FINZEL:

FURTHER REFERENCE IS MADE TO YOUR LETTERS OF SEPTEMBER 6 AND OCTOBER 27, 1966, WITH ENCLOSURES, PROTESTING ON BEHALF OF ROBERTS SUPPLY COMPANY AGAINST THE AWARD OF A CONTRACT TO JUST MANUFACTURING COMPANY BY THE DEFENSE CONSTRUCTION SUPPLY CENTER, COLUMBUS, OHIO, UNDER INVITATION FOR BIDS NO. DSA-700-66-3393.

THE SUBJECT INVITATION WAS ISSUED ON FEBRUARY 25, 1966, FOR A QUANTITY OF URINALS LISTED UNDER THREE ITEMS. A FOURTH ITEM WAS ADDED BY AMENDMENT NUMBER 2. FIVE BIDS WERE RECEIVED AND OPENED ON MARCH 28. AFTER A QUESTION CONCERNING THE RESPONSIVENESS OF ROBERTS' BID WAS RESOLVED, ITS BID WAS EVALUATED AND DETERMINED TO BE THE LOWEST. FOR THE PURPOSE OF DETERMINING ROBERTS' RESPONSIBILITY AS A PROSPECTIVE CONTRACTOR AS REQUIRED BY ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-904, A PRE- AWARD SURVEY WAS CONDUCTED. THE SURVEY REVEALED THAT ROBERTS WAS EXPERIENCING FINANCIAL DIFFICULTIES AND THAT A BANKRUPTCY PROCEEDING WAS THEN PENDING IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEBRASKA. BECAUSE OF THE UNCERTAINTY OF THE OUTCOME OF THIS PROCEEDING AND BECAUSE OF THE FAILURE OF FINANCIAL DATA FURNISHED BY ROBERTS TO INDICATE A SATISFACTORY FINANCIAL CONDITION, THE FINANCIAL ANALYST OF THE SURVEY TEAM MADE A NEGATIVE FINANCIAL CAPABILITY DETERMINATION. ON JULY 5, 1966, THE PRE-AWARD SURVEY BOARD SUBMITTED ITS FORMAL RECOMMENDATION AGAINST AWARD OF A CONTRACT TO ROBERTS.

SINCE THE CONTRACTING OFFICER WAS UNABLE TO MAKE AN AFFIRMATIVE DETERMINATION OF RESPONSIBILITY, HE REFERRED THE MATTER TO SBA PURSUANT TO ASPR 1-705.4 TO CONSIDER ISSUANCE OF A CERTIFICATE OF COMPETENCY (COC). BY LETTER DATED AUGUST 17, 1966, SBA ADVISED THE CONTRACTING OFFICER THAT IT HAD DECLINED TO ISSUE A COC. IN RESPONSE TO ROBERTS' REQUEST FOR RECONSIDERATION OF THE DENIAL OF THE COC, SBA ADVISED ROBERTS IN A LETTER DATED AUGUST 24 OF THE BASIS FOR ITS ACTION. ALTHOUGH ROBERTS HAD REQUESTED A DELAY IN THE AWARD PENDING ITS APPEAL OF THE DECISION DENYING THE COC, THE PROCURING ACTIVITY ADVISED ROBERTS ON AUGUST 23 THAT AWARD HAD BEEN MADE TO JUST. THE LETTER NOTICE OF AWARD WAS DATED AND MAILED ON AUGUST 26. IN MAKING THE AWARD, ITEM 1 WAS REDUCED TO 4975 AND ITEM 4 WAS DELETED IN ITS ENTIRETY.

ROBERTS' PROTEST IS BASED PRIMARILY ON THE CONTENTION THAT BOTH THE ADMINISTRATIVE AND SBA DETERMINATIONS OF NONRESPONSIBILITY WERE ERRONEOUS AND THE SBA DETERMINATION WAS ARBITRARY. IN THIS CONNECTION, IT IS POINTED OUT THAT WHILE THE ADMINISTRATIVE DETERMINATION WAS BASED ON FINANCIAL DEFICIENCIES, THE SBA DETERMINATION WAS BASED ON CAPACITY FACTORS, THEREFORE INDICATED SOME INCONSISTENCY OR CONTRADICTION. WITH REGARD TO THE SBA DETERMINATION, ROBERTS CONTENDS THAT THE DENIAL OF THE COC BY THE WASHINGTON OFFICE COMPLETELY IGNORES THE FIELD OFFICES' FAVORABLE RECOMMENDATIONS AND THE FACT THAT THE PRE AWARD SURVEY TEAM MADE AN AFFIRMATIVE DETERMINATION ON CAPACITY FACTORS AND ONLY REFERRED THE MATTER OF FINANCIAL COMPETENCY FOR CONSIDERATION. THE SBA CONCLUSIONS ON THE CAPACITY FACTORS ARE ALSO DISPUTED AT SOME LENGTH. IN ADDITION, CERTAIN INNUENDOS ARE MADE CONCERNING THE MOTIVE FOR REDUCING THE QUANTITY OF URINALS AND THE "GREAT ASTE" IN MAKING THE AWARD AFTER DENIAL OF THE COC.

WE HAVE CONSISTENTLY TAKEN THE POSITION THAT THE QUESTION OF THE RESPONSIBILITY OF A PROSPECTIVE GOVERNMENT CONTRACTOR IS PRIMARILY FOR CONSIDERATION AND DETERMINATION BY THE ADMINISTRATIVE AGENCY CONCERNED, OR IN THE CASE OF THE CAPACITY AND CREDIT OF A SMALL BUSINESS CONCERN, BY THE SMALL BUSINESS ADMINISTRATION, AND WE WILL NOT QUESTION SUCH DETERMINATION IN THE ABSENCE OF A CLEAR SHOWING OF BAD FAITH OR LACK OF A REASONABLE BASIS FOR THE CONCLUSION REACHED. 37 ID. 705, 711. THE COURTS HAVE ALSO ADOPTED A SIMILAR VIEW. O-BRIEN V. CARNEY, ET AL., 6 F.SUPP. 761; FRIEND V. LEE, 221 FED.2D 96.

THE PROJECTION OF A BIDDER'S ABILITY TO PERFORM IF AWARDED A CONTRACT IS OF NECESSITY A MATTER OF JUDGMENT. WHILE SUCH JUDGMENT SHOULD BE BASED ON FACT AND SHOULD BE ARRIVED AT IN GOOD FAITH, IT MUST PROPERLY BE LEFT LARGELY TO THE SOUND ADMINISTRATIVE DISCRETION OF THE CONTRACTING OFFICIALS INVOLVED SINCE THEY ARE IN THE BEST POSITION TO ASSESS RESPONSIBILITY, THEY MUST BEAR THE BRUNT OF ANY DIFFICULTY EXPERIENCED BY REASON OF THE CONTRACTOR'S LACK OF CAPACITY OR CREDIT AND THEY MUST MAINTAIN THE DAY-TO-DAY RELATIONS WITH THE CONTRACTOR ON BEHALF OF THE GOVERNMENT. FOR THESE REASONS, IT WOULD BE UNREASONABLE TO SUPERIMPOSE THE JUDGMENT OF OUR OFFICE ON THAT OF THE CONTRACTING OFFICIALS IN ANY CASE IN WHICH THERE APPEARS TO BE A SUBSTANTIAL BASIS FOR THE ACTION OF THOSE OFFICIALS.

IN THE INSTANT CASE, THE FACTS INDICATE THAT THE CONTRACTING OFFICER'S DETERMINATION THAT HE COULD NOT FIND ROBERTS A RESPONSIBLE PROSPECTIVE CONTRACTOR WAS MADE IN GOOD FAITH, AFTER CAREFUL CONSIDERATION, AND AFTER A PRE-AWARD SURVEY INDICATED A LACK OF FINANCIAL STABILITY. ALTHOUGH IT APPEARS THAT SUBSEQUENT TO THE AWARD, IN OCTOBER, FINANCIAL STABILITY MAY HAVE BEEN ATTAINED, THIS WAS NOT THE CASE, INSOFAR AS THE RECORD SHOWS AT THE TIME OF THE SURVEY OR AT THE TIME OF THE AWARD. WHILE IT MAY APPEAR INCONSISTENT THAT THE CONTRACTING OFFICER DETERMINED THAT ROBERTS WAS NOT FINANCIALLY QUALIFIED WHEREAS SBA'S REFUSAL TO ISSUE A COC WAS BASED ON CAPACITY FACTORS, WE DO NOT BELIEVE THIS IS THE CASE. APPARENTLY SBA RESTRICTED ITS CONSIDERATION OF ROBERTS' RESPONSIBILITY TO CAPACITY FACTORS AND HAVING FOUND THE COMPANY NOT QUALIFIED IN THIS RESPECT, THERE WAS NO NEED TO CONSIDER CREDIT. IN ANY EVENT, THE DECISION OF THE SBA NOT TO ISSUE A COC MUST BE VIEWED AS A CONFIRMATION, ALTHOUGH POSSIBLY FOR A DIFFERENT REASON, OF THE CONTRACTING OFFICER'S DETERMINATION THAT ROBERTS LACKED THE NECESSARY OVERALL QUALIFICATIONS TO PERFORM THE PROPOSED CONTRACT. SEE 39 COMP. GEN. 705, 711. MOREOVER, WITH RESPECT TO SBA'S REFUSAL TO ISSUE A COC, WE HAVE NO AUTHORITY TO REVIEW ITS DETERMINATIONS OR REQUIRE IT TO ISSUE A COC. B-153446, MAY 8, 1964.

ALTHOUGH ROBERTS MAY HAVE RECEIVED A COC ON JUNE 3, 1966, AS YOU ALLEGE, WE DO NOT BELIEVE THIS CAN BE RELIED ON AS AN INDICATION THAT THE SUBJECT DETERMINATIONS ARE INVALID SINCE THE QUESTION OF A BIDDER'S RESPONSIBILITY IS A MATTER WHICH MUST BE DETERMINED FOR A PARTICULAR PROCUREMENT IN LIGHT OF THE CIRCUMSTANCES RELEVANT THERETO. SINCE NO EVIDENCE HAS BEEN PRESENTED TO INDICATE ANY IMPROPRIETY IN THE ADMINISTRATIVE ACTION IN REDUCING THE QUANTITY OF URINALS PROCURED OR IN MAKING THE AWARD IMMEDIATELY AFTER THE COC WAS DENIED, WE PERCEIVE OF NO BASIS UPON WHICH OUR OFFICE MAY PROPERLY OBJECT TO SUCH ACTION.

ASIDE FROM THE MATTER OF ROBERTS' RESPONSIBILITY, THERE IS A FURTHER REASON WHY WE BELIEVE ITS BID WAS NOT PROPERLY FOR ACCEPTANCE. ALTHOUGH THE INVITATION SPECIFIED A DEFINITE NUMBER OF URINALS TO BE PROCURED, PARAGRAPH 8 (C) OF STANDARD FORM 33-A, INCORPORATED THEREIN BY REFERENCE, RESERVES TO THE GOVERNMENT THE RIGHT "* * * TO MAKE ANY AWARD ON ANY ITEM FOR A QUANTITY LESS THAN THE QUANTITY BID UPON * * * UNLESS THE BIDDER SPECIFIES OTHERWISE IN HIS BID.' ROBERTS' BID FOR EACH ITEM WAS QUALIFIED BY THE PHRASE "ALL OR NONE," WHICH CLEARLY INDICATES THAT ROBERTS' PRICE REMAINS FIRM ONLY IF THE GOVERNMENT AWARDS THE TOTAL QUANTITY ON WHICH BIDS WERE REQUESTED. THEREFORE, WHEN THE PROCURING ACTIVITY CONCLUDED THAT IT HAD ACTUAL NEED FOR A REDUCED QUANTITY OF URINALS, ROBERTS' BID NO LONGER CONSTITUTED A FIRM OFFER WHICH WOULD BIND IT UPON AN ACCEPTANCE FOR THE REDUCED QUANTITIES EVEN IF IT HAD BEEN CONSIDERED A RESPONSIBLE BIDDER. SEE B 152941, MARCH 12, 1964.

ACCORDINGLY, WE FIND NO LEGAL BASIS TO QUESTION THE ACTION TAKEN BY THE ADMINISTRATIVE OFFICE IN THE AWARD OF THE SUBJECT CONTRACT AND YOUR CLIENT'S PROTEST IS DENIED. ROBERTS' FILE IS RETURNED.