B-160065, NOV. 17, 1966

B-160065: Nov 17, 1966

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INC.: REFERENCE IS MADE TO YOUR LETTERS OF SEPTEMBER 14 AND 23. BIDS WERE REQUESTED FOR FURNISHING SERVICES TO OPERATE DINING HALLS. BIDS WERE OPENED SEPTEMBER 12. THE LOW BID WAS SUBMITTED BY DON NEWSOM FOOD SERVICE COMPANY (NEWSOM) IN THE AMOUNT OF $367. YOUR BID WAS SECOND LOW IN THE AMOUNT OF $389. YOU HAVE PROTESTED ANY AWARD TO NEWSOM ON THE GROUND THAT THE CONTRACT CANNOT BE PERFORMED AT NEWSOM'S LOW BID PRICE. WHICH YOU STATE YOU HAVE BEEN INFORMED WAS IN THE AMOUNT OF $359. WAS $367. IF PAYMENT IS MADE WITHIN THE DISCOUNT PERIOD. YOU ALSO STATE THAT THERE IS NO RECORD OF DON NEWSOM OR THE NEWSOM COMPANY HAVING PREVIOUSLY COMPLETED A GOVERNMENT CONTRACT. WHEN THE BIDS WERE OPENED THE CONTRACTING OFFICER NOTED THAT NEWSOM'S BID WAS LESS THAN THE ESTIMATED COST.

B-160065, NOV. 17, 1966

TO IRA GELBER FOOD SERVICES, INC.:

REFERENCE IS MADE TO YOUR LETTERS OF SEPTEMBER 14 AND 23, 1966, PROTESTING AWARD TO ANOTHER BIDDER UNDER INVITATION FOR BIDS NO. F26 600- 67-B-0179, ISSUED AT NELLIS AIR FORCE BASE, NEVADA.

BIDS WERE REQUESTED FOR FURNISHING SERVICES TO OPERATE DINING HALLS, KITCHENS AND FOOD PROCESSING FACILITIES FOR THE PERIOD OCTOBER 25, 1966 THROUGH OCTOBER 24, 1967. BIDS WERE OPENED SEPTEMBER 12, 1966, AND THE LOW BID WAS SUBMITTED BY DON NEWSOM FOOD SERVICE COMPANY (NEWSOM) IN THE AMOUNT OF $367,200 LESS DISCOUNT OF 1 PERCENT - 10 DAYS. YOUR BID WAS SECOND LOW IN THE AMOUNT OF $389,921.95, LESS DISCOUNT OF ONE TENTH OF ONE PERCENT - 10 DAYS. THE INVITATION FOR BIDS LISTED MINIMUM PERSONNEL REQUIREMENTS AND INCLUDED A REGISTER OF WAGE DETERMINATIONS AND FRINGE BENEFITS WHICH ESTABLISHED MINIMUM WAGES TO BE PAID TO THE CONTRACTOR'S EMPLOYEES.

YOU HAVE PROTESTED ANY AWARD TO NEWSOM ON THE GROUND THAT THE CONTRACT CANNOT BE PERFORMED AT NEWSOM'S LOW BID PRICE, WHICH YOU STATE YOU HAVE BEEN INFORMED WAS IN THE AMOUNT OF $359,160. THE CORRECT FIGURE, AS STATED ABOVE, WAS $367,200, LESS 1 PERCENT - 10 DAYS, OR A NET OF $363,528, IF PAYMENT IS MADE WITHIN THE DISCOUNT PERIOD. YOU FURTHER QUESTION THE FINANCIAL STABILITY OF MR. DON NEWSOM, OWNER OF THE COMPANY SUBMITTING THE LOW BID, AND YOU LIST A NUMBER OF DEBTS ALLEGEDLY DUE BY MR. NEWSOM TO VARIOUS CREDITORS. YOU ALSO STATE THAT THERE IS NO RECORD OF DON NEWSOM OR THE NEWSOM COMPANY HAVING PREVIOUSLY COMPLETED A GOVERNMENT CONTRACT.

WHEN THE BIDS WERE OPENED THE CONTRACTING OFFICER NOTED THAT NEWSOM'S BID WAS LESS THAN THE ESTIMATED COST, BASED ON MINIMUM STAFFING AND WAGES. VERIFICATION OF THE LOW BID WAS THEREFORE REQUESTED, AND NEWSOM WAS ADVISED THAT SUCH REQUEST RESULTED FROM THE FACT THAT HIS BID WAS LOWER THAN THE GOVERNMENT'S ESTIMATE OF PERFORMANCE COST BASED UPON THE STAFFING REQUIREMENTS AND MINIMUM WAGES SET OUT IN THE INVITATION. IN RESPONSE, NEWSOM VERIFIED ITS BID AS CORRECT AND FURNISHED WRITTEN CONFIRMATION OF ITS BID PRICE. A PREAWARD SURVEY WAS ALSO INITIATED TO DETERMINE NEWSOM'S RESPONSIBILITY AS A PROSPECTIVE CONTRACTOR, IN ACCORDANCE WITH PARAGRAPH 1 -902 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) WHICH PROVIDES THAT CONTRACTS SHALL BE AWARDED ONLY TO RESPONSIBLE PROSPECTIVE CONTRACTORS. PARAGRAPH 1-903.1 OF ASPR FURTHER PROVIDES THAT A PROSPECTIVE CONTRACTOR MUST HAVE ADEQUATE FINANCIAL RESOURCES, OR THE ABILITY TO OBTAIN SUCH RESOURCES AS REQUIRED DURING PERFORMANCE OF THE CONTRACT, AND MUST BE ABLE TO COMPLY WITH THE REQUIRED PERFORMANCE SCHEDULE.

SINCE YOUR PROTEST QUESTIONS NEWSOM'S RESPONSIBILITY IN THE AREAS MENTIONED, THE MATTER WAS REFERRED TO THE DALLAS OFFICE OF THE DEFENSE CONTRACT ADMINISTRATION SERVICES REGION. INVESTIGATION BY THAT OFFICE DISCLOSED THAT NEWSOM HAD AN ADEQUATE CASH POSITION AND NET WORTH AND HAD ESTABLISHED A SATISFACTORY LINE OF CREDIT FOR PERFORMANCE OF THE PROPOSED CONTRACT. WITH REFERENCE TO HIS ALLEGED DEBTS, MR. NEWSOM STATES THAT AMOUNTS DUE AMERICAN EXPRESS AND HOLIDAY INN WERE FOR TRAVELING EXPENSES INCURRED WHILE HE WAS EMPLOYED BY YOUR COMPANY AND THAT MR. GELBER ASSURED HIM MONTHS AGO THAT THESE BILLS HAD BEEN PAID. HE STATES FURTHER THAT THE AMOUNTS DUE SEARS ROEBUCK, MONTGOMERY WARD AND AETNA FINANCE HAVE BEEN PAID, AND THAT HE HAS NEVER HAD ACCOUNTS WITH HOUSEHOLD FINANCE OR DUBOIS (DUBAIR) FURNITURE COMPANY. REGARDLESS OF WHETHER ANY OF THE ACCOUNTS MENTIONED BY YOU ARE OWING BY MR. NEWSOM, IT IS THE OPINION OF THE FINANCIAL ANALYST REVIEWING THE MATTER THAT MR. NEWSOM HAS DEMONSTRATED ADEQUATE FINANCIAL RESOURCES SO AS TO BE ABLE TO LIQUIDATE THE ACCOUNTS AND STILL PERFORM THE CONTRACT FROM A FINANCIAL CAPABILITY STANDPOINT.

AS TO MR. NEWSOM'S ABILITY TO MEET THE PERFORMANCE REQUIREMENTS, BASED ON PREVIOUS EXPERIENCE, THE SURVEY REVEALS THAT HE WAS IN THE AIR FORCE FROM SEPTEMBER 1950 THROUGH MAY 1959, DURING WHICH TIME HE WORKED IN ALL PHASES OF FOOD SERVICE AND SUPERVISED ALL SIZES OF DINING HALL OPERATIONS, THE LARGEST FEEDING 12,000 MEALS PER DAY. FOR A PERIOD OF FOUR YEARS FROM JANUARY 1, 1961, HE WAS RESIDENT MANAGER OF A FOOD SERVICE CONTRACT AT JAMES CONNALLY AIR FORCE BASE, INVOLVING THREE DIFFERENT CONTRACTORS, AND WAS RESPONSIBLE FOR HIRING ALL PERSONNEL, FOOD PREPARATION, SERVING OF ALL FOODS, SANITATION, AND REQUESTING OF ALL FOODS FROM COMMISSARY. IN THIS OPERATION HE SUPERVISED TWO DINING HALLS WORKING 120 EMPLOYEES AND DURING THIS PERIOD HIS CONTRACTOR WAS CHOSEN AS HAVING THE MOST OUTSTANDING DINING HALL IN THE AIR TRAINING COMMAND. THE LATTER PART OF THIS PERIOD MAY HAVE BEEN IN YOUR EMPLOY, SINCE THE RECORD INDICATES THAT MR. NEWSOM WAS GENERAL MANAGER OF YOUR FIRM FOR THE LAST THREE YEARS. IN THIS CONNECTION, IT IS NOTED THAT YOU HAVE NOT ALLEGED HIS SERVICES WERE OTHER THAN SATISFACTORY WHILE EMPLOYED BY YOU. THE SURVEY ALSO REVEALS THAT HE HAS COMMITMENTS FROM SUFFICIENT KEY PERSONNEL TO ENTER HIS EMPLOYMENT IF AWARDED THE CONTRACT.

WITH REFERENCE TO YOUR CONTENTION THAT THE CONTRACT CANNOT BE FULFILLED BY NEWSOM AT THE PRICE QUOTED, YOU ARE ADVISED THAT EVEN WHERE A MISTAKE HAS BEEN ALLEGED, THIS OFFICE HAS CONSISTENTLY HELD THAT A CONTRACTOR MAY NOT BE RELIEVED OF ITS OBLIGATION UNDER AN OTHERWISE VALID BID FOR THE SOLE REASON THAT PERFORMANCE WILL ENTAIL A LOSS BY THE CONTRACTOR. COMP. GEN. 28; B-155009, OCTOBER 7, 1964. IN THE PRESENT CASE THERE IS NO ALLEGATION OF MISTAKE AND THE BID PRICE HAS BEEN VERIFIED AS CORRECT. ADDITIONALLY PARAGRAPH 1-311 OF ASPR, TITLED "BUYING IN," RECOGNIZES THAT BIDS ARE SOMETIMES KNOWINGLY SUBMITTED AT A PRICE LOWER THAN ANTICIPATED COSTS, BUT PROVIDES MERELY THAT "WHERE THERE IS REASON TO BELIEVE THAT "BUYING IN" HAS OCCURRED, CONTRACTING OFFICERS SHALL ASSURE THAT AMOUNTS THEREBY EXCLUDED IN THE DEVELOPMENT OF THE ORIGINAL CONTRACT PRICE ARE NOT RECOVERED IN THE PRICING OF CHANGE ORDERS OR OF FOLLOW-ON PROCUREMENTS SUBJECT TO COST ANALYSIS.'

THE DETERMINATION OF THE QUALIFICATIONS OF A PROSPECTIVE CONTRACTOR IS PRIMARILY THE RESPONSIBILITY OF THE CONTRACTING AGENCY, AND IN THE ABSENCE OF BAD FAITH OR LACK OF A REASONABLE BASIS FOR THE DETERMINATION WE WOULD NOT BE JUSTIFIED IN QUESTIONING ITS JUDGMENT. 38 COMP. GEN. 131; 37 ID. 798; ID. 430, 435. THE FINDINGS OF THE PREAWARD SURVEY HAVE BEEN CAREFULLY REVIEWED BY THE AIR FORCE LOGISTICS COMMAND AND BY HEADQUARTERS, UNITED STATES AIR FORCE, AND IT IS THEIR CONCLUSION THAT DON NEWSOM FOOD SERVICE COMPANY IS A RESPONSIBLE PROSPECTIVE CONTRACTOR. SINCE, FOR THE REASONS STATED ABOVE, WE CAN FIND NO BASIS FOR CONCLUDING OTHERWISE, YOUR PROTEST MUST BE DENIED.