B-160640, MAR. 7, 1967

B-160640: Mar 7, 1967

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IS HEAVILY ENDOWED. YOU ALSO STATE YOUR DOUBT THAT A UNIVERSITY MET CERTAIN PERSONNEL REQUIREMENTS STATED IN A RECENT REQUEST FOR PROPOSALS UNDER WHICH A CONTRACT WAS AWARDED TO IT. WE ARE NOT AWARE OF AND YOU DO NOT CITE. REGULATION OR ESTABLISHED LEGAL PRINCIPLE WHICH IS CONTRARY TO THE PRACTICE OF WHICH YOU COMPLAIN. THAT IT IS UNREASONABLE TO EXPECT A PRIVATE ENTERPRISE TO COMPETE WITH A SUBSIDIZED ENTITY. AT THE PRESENT TIME THERE IS NO POLICY PRONOUNCEMENT BY THE DEPARTMENT OF DEFENSE. WE ARE INFORMED THAT THE ISSUE OF FAIR COMPETITION BETWEEN NONPROFIT. THE SUBCOMMITTEE ALSO CONCLUDED IT WOULD BE IMPRACTICAL TO DETERMINE IN ADVANCE OF A PROCUREMENT WHICH TYPE OF ORGANIZATION IS BEST QUALIFIED TO PERFORM RESEARCH PROJECTS.

B-160640, MAR. 7, 1967

TO A-V CORPORATION:

IN YOUR LETTER OF DECEMBER 28, 1966, WITH ENCLOSURES, WHICH HAS BEEN FORWARDED TO US BY SENATOR JOHN G. TOWER, YOU REQUEST THAT A "FORMAL COMPLAINT" BE ENTERED AGAINST A PROCUREMENT PRACTICE OF THE 1350TH MOTION PICTURE SQUADRON, WRIGHT-PATTERSON AIR FORCE BASE, INVOLVING THAT SQUADRON'S SOLICITATION OF OFFERS FOR SERVICES FROM A UNIVERSITY IN COMPETITION WITH OFFERS FROM PRIVATE INDUSTRY. YOU CONSIDER THIS PRACTICE TO BE UNFAIR COMPETITION, BECAUSE THE UNIVERSITY ENJOYS A TAX EXEMPTION, IS HEAVILY ENDOWED, PROBABLY HAS LOWER WAGES THAN INDUSTRY, AND PROBABLY HAS NO NEED TO INCLUDE OVERHEAD IN ITS OFFER. YOU ALSO STATE YOUR DOUBT THAT A UNIVERSITY MET CERTAIN PERSONNEL REQUIREMENTS STATED IN A RECENT REQUEST FOR PROPOSALS UNDER WHICH A CONTRACT WAS AWARDED TO IT.

WE ARE NOT AWARE OF AND YOU DO NOT CITE, ANY RELEVANT STATUTE, REGULATION OR ESTABLISHED LEGAL PRINCIPLE WHICH IS CONTRARY TO THE PRACTICE OF WHICH YOU COMPLAIN. IN REPLYING TO A COMPLAINT SIMILAR TO YOURS IN OUR DECISION B-156838, JULY 13, 1965, WE STATED:

"WITH RESPECT TO YOUR CONTENTION THAT PRIVATE INDUSTRY HAS BEEN REQUESTED TO FURNISH PROPOSALS IN COMPETITION WITH A NONPROFIT ENTITY SUBSIDIZED BY GOVERNMENT PROGRAMS, YOU STATE THAT UNIVERSITIES OBTAIN THEIR SUPPORT FROM ENDOWMENTS, GRANTS, AND TUITION AND RECEIVE SUBSIDIES, DIRECT AND INDIRECT FROM GOVERNMENTAL BODIES; THAT IT IS UNREASONABLE TO EXPECT A PRIVATE ENTERPRISE TO COMPETE WITH A SUBSIDIZED ENTITY; AND THAT TO FORCE PRIVATE INDUSTRY TO COMPETE REPEATEDLY WITH UNIVERSITIES IN AREAS OF DEFENSE PROCUREMENT NORMALLY SERVED BY PRIVATE INDUSTRY WOULD MEAN THE EXODUS OF PRIVATE INDUSTRY FROM THESE AREAS AND A CRITICAL NARROWING OF THE DEFENSE PROCUREMENT BASE. WHILE YOU PRESENT COGENT ARGUMENTS IN THIS REGARD, AT THE PRESENT TIME THERE IS NO POLICY PRONOUNCEMENT BY THE DEPARTMENT OF DEFENSE, EITHER IN THE ARMED SERVICES PROCUREMENT REGULATION OR IN ANY OTHER DIRECTIVE WHICH PRECLUDES COMPETITION BETWEEN PROFIT AND NONPROFIT ORGANIZATIONS WHEN SEEKING GOVERNMENT CONTRACTS.'

WE ARE INFORMED THAT THE ISSUE OF FAIR COMPETITION BETWEEN NONPROFIT, EDUCATIONAL AND PRIVATE INDUSTRIAL INSTITUTIONS HAS SINCE BEEN REVIEWED BY ARMY, NAVY, AND AIR FORCE REPRESENTATIVES OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) COMMITTEE. THE COMMITTEE CONSIDERED DATA DEVELOPED BY THE UNITED STATES AIR FORCE ON 1,650 CONTRACTS OVER $10,000, AWARDED IN THE LAST HALF OF FISCAL YEAR 1965, WHERE NONPROFIT (INCLUDING EDUCATIONAL) AND PRIVATE FIRMS COMPETED WITH ONE ANOTHER. THE DATA SHOWED THAT NONPROFIT FIRMS RESPONDED TO ONLY 77 OF THE 1,650 SOLICITATIONS, AND RECEIVED AWARDS OF CONTRACTS IN ONLY 22 OF THOSE 77 SOLICITATIONS. THE ASPR SUBCOMMITTEE CHARGED WITH INITIAL STUDY OF THIS MATTER CONCLUDED THAT THE ISSUE OF FAIR COMPETITION BETWEEN NONPROFIT, EDUCATIONAL AND PRIVATE FIRMS DOES NOT REPRESENT A MAJOR PROBLEM. THE SUBCOMMITTEE ALSO CONCLUDED IT WOULD BE IMPRACTICAL TO DETERMINE IN ADVANCE OF A PROCUREMENT WHICH TYPE OF ORGANIZATION IS BEST QUALIFIED TO PERFORM RESEARCH PROJECTS, AND THAT THE ARBITRARY EXCLUSION OF ANY TYPE OF FIRM WOULD CONSTITUTE A RESTRICTION ON COMPETITION. THE SUBCOMMITTEE ALSO DECIDED THAT THE USE OF AN EVALUATION PENALTY AGAINST EDUCATIONAL INSTITUTIONS WOULD BE INEQUITABLE BECAUSE THEY RECEIVE DIFFERENT AMOUNTS OF ASSISTANCE AT VARYING TIMES.

BASED ON THE ABOVE, THE ASPR COMMITTEE DECIDED THAT THE ASPR SHOULD NOT BE AMENDED TO PRECLUDE COMPETITION BETWEEN PROFIT AND NONPROFIT ORGANIZATIONS. WE ARE INFORMALLY ADVISED THAT THERE HAS BEEN NO CHANGE IN THE ASPR SINCE THAT DECISION.

ALTHOUGH YOU HAVE STATED A DOUBT THAT A UNIVERSITY MET CERTAIN PERSONNEL REQUIREMENTS STATED IN A RECENT REQUEST FOR PROPOSALS UNDER WHICH A CONTRACT WAS AWARDED TO IT, YOU HAVE NOT PROVIDED ANY EVIDENTIARY BASIS FOR THAT DOUBT. HOWEVER, SINCE THE ALLEGATION APPEARS TO INVOLVE THE QUESTION OF A FIRM'S ABILITY TO PERFORM A CONTRACT, YOUR ATTENTION IS DIRECTED TO OUR DECISION AT 39 COMP. GEN. 705, IN WHICH AT PAGE 711 WE STATED:

"CLEARLY, ONE OF THE FACTORS IN DETERMINING THE RESPONSIBILITY OF A BIDDER IS HIS APPARENT ABILITY TO PERFORM IN ACCORDANCE WITH THE REQUIREMENTS SET OUT IN THE INVITATION. 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 BASIS UPON WHICH WE MAY OBJECT. 37 COMP. GEN. 430, 435. 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 OFFICES INVOLVED, SINCE THEY ARE IN THE BEST POSITION TO ASSESS RESPONSIBILITY, THEY MUST BEAR THE MAJOR BRUNT OF ANY DIFFICULTIES EXPERIENCED BY REASON OF THE CONTRACTOR'S LACK OF ABILITY, 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 OR ANY OTHER AGENCY OR GROUP ON THAT OF THE CONTRACTING OFFICIALS. * * *"

IN VIEW OF THE FOREGOING, WE ARE UNABLE TO FIND ANY LEGAL BASIS FOR ANY ACTION BY OUR OFFICE IN THE MATTER, AND THEREFORE MUST DENY YOUR PROTEST.