B-161339, SEP. 25, 1967

B-161339: Sep 25, 1967

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LOW BIDDER WHO PROTESTS REJECTION OF BID ON BASIS OF LACK OF RESPONSIBILITY AND DENIAL OF CERTIFICATE OF COMPETENCY BY SBA MUST HAVE PROTEST DENIED SINCE RECORD INDICATES THAT DETERMINATION OF NONRESPONSIBILITY WAS NOT ARBITRARY OR UNREASONABLE. ALTHOUGH SBA AND PRE -AWARD SURVEY WERE MADE INDEPENDENTLY OF EACH OTHER BOTH SURVEYS COVERED SAME AREA AND SAME MATERIAL. TO CONTINENTAL CHEMICAL CORPORATION: REFERENCE IS MADE TO YOUR LETTER OF APRIL 26. THE INVITATION WAS FOR A REQUIREMENTS CONTRACT (WITH GUARANTEED MINIMUM QUANTITIES) FOR FSC CLASS 7930. WHICH WAS ISSUED DECEMBER 27. BIDS WERE OPENED ON JANUARY 16. CONTINENTAL CHEMICAL WAS LOW BIDDER ON ITEMS 5 AND 15. IT IS REPORTED THAT BECAUSE OF UNSATISFACTORY PERFORMANCE IN CONNECTION WITH SOME OTHER GSA CONTRACTS.

B-161339, SEP. 25, 1967

BIDDERS - RESPONSIBILITY - ADMINISTRATIVE - DETERMINATION DECISION TO CONTINENTAL CHEMICAL CORPORATION CONCERNING PROTEST AGAINST REJECTION OF BID BY FEDERAL SUPPLY SERVICES, GSA FOR FURNISHING FLOOR WAX. LOW BIDDER WHO PROTESTS REJECTION OF BID ON BASIS OF LACK OF RESPONSIBILITY AND DENIAL OF CERTIFICATE OF COMPETENCY BY SBA MUST HAVE PROTEST DENIED SINCE RECORD INDICATES THAT DETERMINATION OF NONRESPONSIBILITY WAS NOT ARBITRARY OR UNREASONABLE. ALTHOUGH SBA AND PRE -AWARD SURVEY WERE MADE INDEPENDENTLY OF EACH OTHER BOTH SURVEYS COVERED SAME AREA AND SAME MATERIAL, THE RECORD SUPPORTS THE NEGATIVE DETERMINATIONS OF RESPONSIBILITY.

TO CONTINENTAL CHEMICAL CORPORATION:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 26, 1967, AND SUBSEQUENT CORRESPONDENCE, CONCERNING YOUR PROTEST IN CONNECTION WITH INVITATION FOR BIDS NO. FPNGC-ZJ-56222-A-16-67, ISSUED BY THE GENERAL SERVICES ADMINISTRATION, FEDERAL SUPPLY SERVICE, WASHINGTON, D.C.

THE INVITATION WAS FOR A REQUIREMENTS CONTRACT (WITH GUARANTEED MINIMUM QUANTITIES) FOR FSC CLASS 7930, REMOVER, WATER EMULSION TYPE FLOOR WAX, HIGH AND REGULAR CONCENTRATE, FOR THE PERIOD MAY 1, 1967 THROUGH APRIL 30, 1968. THE INVITATION, WHICH WAS ISSUED DECEMBER 27, 1966, CONTAINED A NOTICE OF TOTAL SMALL BUSINESS SET-ASIDE, AND BIDS WERE OPENED ON JANUARY 16, 1967. CONTINENTAL CHEMICAL WAS LOW BIDDER ON ITEMS 5 AND 15.

IT IS REPORTED THAT BECAUSE OF UNSATISFACTORY PERFORMANCE IN CONNECTION WITH SOME OTHER GSA CONTRACTS, A PLANT FACILITIES REPORT WAS REQUESTED. THE REPORT STATED THAT CONTINENTAL IS INCAPABLE OF PRODUCING THE REQUIRED ITEMS AND RECOMMENDED THAT ITS BID NOT BE CONSIDERED FOR AWARD AT THAT TIME. AS A RESULT OF THE ADVERSE REPORT AND BECAUSE OF THE BIDDER'S POOR RECORD OF CONTRACT PERFORMANCE, AND IN ACCORDANCE WITH THE PROVISIONS OF THE FEDERAL PROCUREMENT REGULATIONS (FPR) (SEC. 1-1.708-2 (A) (, THE SMALL BUSINESS ADMINISTRATION (SBA) WAS REQUESTED TO GIVE CONSIDERATION TO THE ISSUANCE OF A CERTIFICATE OF COMPETENCY. THE SBA DECLINED TO ISSUE A CERTIFICATE OF COMPETENCY.

THE REPORT FURTHER STATES THAT IN VIEW OF THE UNFAVORABLE PLANT FACILITIES REPORT AND THE REFUSAL BY SBA TO ISSUE A CERTIFICATE OF COMPETENCY, THE CONTRACTING OFFICER DETERMINED THAT CONTINENTAL DID NOT MEET THE STANDARDS SET FORTH IN FPR SECS. 1-1.300-4 AND 1-1.310-5 FOR A RESPONSIBLE BIDDER.

A REPORT DATED JUNE 15, 1967, OBTAINED FROM SBA, STATED, IN PART, AS FOLLOWS:

"SBA CONDUCTED AN INDEPENDENT INVESTIGATION TO DETERMINE THE CAPACITY AND CREDIT OF CONTINENTAL TO PERFORM THE TWO PROPOSED CONTRACTS. BASED ON ITS INITIAL SURVEY, INCLUDING INFORMATION FURNISHED BY THE APPLICANT, THE AGENCY TENTATIVELY CONCLUDED THAT THE APPLICANT POSSESSED THE REQUISITE CAPACITY AND CREDIT. HOWEVER, FURTHER CONTACTS AND CONVERSATIONS WITH GSA DEVELOPED INFORMATION SUBSTANTIALLY AT VARIANCE WITH THAT WHICH SBA PREVIOUSLY HAD. ACCORDINGLY, ON APRIL 14, 1967, CERTIFICATES OF COMPETENCY WERE DECLINED AS TO BOTH CONTRACTS. (FPNGC-Z-56186-A-12-22-26 AND FPNGC-J 56222-A-1-16-67).

"OUR REINVESTIGATION INTO THE APPLICANT'S PERFORMANCE RECORD AND ACTUAL TEST REPORT SHOWED A CONTINUING RECORD OF DELINQUENCIES AND A FAILURE TO MEET SPECIFICATION REQUIREMENTS. THE APPLICANT WAS THREATENED WITH DEFAULT ACTION ON TWO CONTRACTS. THIS ACTION WAS DEFERRED, HOWEVER, AFTER MEETING WITH GSA AND THE FIRM WAS PLACED ON 90 DAYS' PROBATION TO GIVE THE APPLICANT AN OPPORTUNITY TO CLEAR UP PRODUCTION DIFFICULTIES AND PRESENT DELINQUENCIES. MUCH OF THE CAUSE OF THE CONTRACTOR'S FAILURE TO PRODUCE AN ACCEPTABLE PRODUCT ON SCHEDULE ARISES FROM HIS LACK OF A PRODUCTION SCHEDULE, ADEQUATE QUALITY ASSURANCE, FACILITIES, TECHNICAL PERSONNEL, AND THE FAILURE OF MANAGEMENT TO DILIGENTLY PURSUE CONTRACT OBJECTIVES.

"CONTINENTAL ADMITS THAT ITS RECORD IS POOR AS TO ITS PERFORMANCE ON CONTRACTS FOR ADHESIVES AND DETERGENTS. THEREFORE, IT DOES NOT OBJECT TO DECLINATION OF A COC AS A RESPONSIBLE CONTRACTOR FOR PURPOSES OF AWARD UNDER IFB 56186. IT OBJECTS TO OUR FINDINGS OF NON RESPONSIBILITY UNDER IFB 56222 FOR WAX REMOVER ON THE GROUNDS THAT FEW DIFFICULTIES ARE BEING EXPERIENCED ON A CURRENT CONTRACT FOR THE SAME ITEMS.

"SBA, IN DETERMINING A CONTRACTOR'S RESPONSIBILITY TO PERFORM A PROPOSED CONTRACT, MUST NECESSARILY CONSIDER THE OVERALL ABILITY TO PERFORM. YOUR DECISIONS HAVE ESTABLISHED THAT THE SBA CERTIFICATION AS TO CAPACITY EXTENDS TO ORGANIZATION, PERSONNEL, TECHNICAL SKILLS, KNOW-HOW, TECHNICAL EQUIPMENT, PHYSICAL FACILITIES, EXPERIENCE, AND THE ABILITY TO COMBINE THEM IN A COORDINATED PRODUCTION UNIT SUFFICIENT TO PRODUCE A QUALITY PRODUCT ON SCHEDULE (38 COMP. GEN. 864).

"IN VIEW OF THE FILE DISCLOSURES THAT NUMEROUS TEST SAMPLES, INCLUDING SOME FOR WAX REMOVERS, WHICH WERE SUBMITTED FOR APPROVAL HAVE BEEN REJECTED OUTRIGHT OR REQUIRED REWORKING DUE TO POOR QUALITY, AND TOGETHER WITH THE DIFFICULTIES MENTIONED IN THE PRECEDING PARAGRAPHS, WE WERE UNABLE TO DOCUMENT SUFFICIENT POSITIVE INFORMATION TO JUSTIFY ISSUANCE OF A COC AS TO EITHER CONTRACT.'

THE ARGUMENTS AND COMMENTS PRESENTED IN YOUR LETTERS MAY BE GROUPED INTO FIVE BASIC ONTENTIONS:

YOU CONTEND THAT THE DELINQUENCIES AND LATE DELIVERIES ARE DIRECTLY ATTRIBUTABLE TO THE FIRE WHICH TOTALLY DESTROYED YOUR QUARTERS IN APRIL 1966, AND TO THE SHUT-DOWN OF OPERATIONS WHILE MOVING FROM TEMPORARY QUARTERS TO PERMANENT QUARTERS DURING NOVEMBER AND DECEMBER 1966. YOU STATE THAT FOLLOWING THE DESTRUCTIVE FIRE OF APRIL 1966, YOU SET UP TEMPORARY QUARTERS WHICH WERE OCCUPIED FROM APRIL THROUGH DECEMBER 1966, AND THAT THE MOVE FROM THE TEMPORARY QUARTERS TO THE NEW, PERMANENT AND PRESENT QUARTERS WAS STARTED IN NOVEMBER AND COMPLETED IN DECEMBER 1966. YOU STATE THAT THE NECESSITY TO "START-UP" PRODUCTION ANEW ON TWO OCCASIONS WAS THE DIRECT CAUSE OF THE DELINQUENCIES, THAT AN EXTENSION OF DELIVERY TIME ON THE THEN CURRENT "REMOVER" CONTRACT WAS REQUESTED; THAT THE CONTRACTING OFFICER WAS AWARE OF YOUR UNANTICIPATED DIFFICULTIES; AND THAT IN FACT, YOU WERE CURRENT ON ALL DELIVERIES BY APRIL 1967.

YOU ALSO CONTEND THAT THE SMALL BUSINESS ADMINISTRATION DENIAL OF A CERTIFICATE OF COMPETENCY WAS BASED ON BIASED INFORMATION AND THAT THE GENERAL SERVICES ADMINISTRATION REJECTION OF YOUR BID ON THIS INVITATION WAS ARBITRARY.

YOU FURTHER CONTEND THAT THE REJECTIONS OF THIS BID AND BIDS ON OTHER TYPES OF CHEMICAL SUPPLIES ARE INCONSISTENT SINCE SOME ARE BASED ON POOR PERFORMANCE, OTHERS ON POOR QUALITY, AND STILL OTHERS ON POOR MANAGEMENT. YOU STATE THAT ONE REGIONAL OFFICE HAS ACCEPTED AN ITEM WHEREAS ANOTHER OFFICE HAS REJECTED THE SAME ITEM AS NOT MEETING SPECIFICATIONS ALTHOUGH BOTH SHIPMENTS WERE DRAWN FROM THE SAME LOT. YOU STATE THAT BIDS ON THE SAME ITEMS AT DIFFERENT TIMES WOULD BE REJECTED FOR QUALITY REASONS AND OTHER TIMES FOR POOR PERFORMANCE. YOU FURTHER STATE, HOWEVER, THAT YOU HAVE HAD NO DIFFICULTY WITH THE QUALITY OF YOUR WAX REMOVER DELIVERIES, BUT ONLY ON THE DELINQUENCY SCORE.

YOU FINALLY CONTEND THAT THE CONTRACTING OFFICER (AND THE SBA) IN THIS PROCUREMENT HAVE OBVIOUSLY VIEWED YOUR FIRM'S CAPABILITIES IN A BROAD ASPECT COVERING ALL TYPES OF PRODUCTS, OVERLOOKING OR DISREGARDING THE FACT THAT ON THE SINGLE ITEM OF WAX REMOVER YOU HAVE HAD NO QUALITY DIFFICULTIES AND YOUR DELIVERY RECORD IS GOOD. YOU URGE THAT SINCE THE INSTANT PROCUREMENT IS FOR WAX REMOVER YOUR RECORD ON THAT PRODUCT ALONE SHOULD BE CONSIDERED.

AT THE OUTSET IT MUST BE STATED THAT THE GSA PLANT FACILITIES REPORT WAS COMPLETED ON FEBRUARY 24, 1967. THE REPORT IS QUITE THOROUGH, LISTING ALL YOUR EQUIPMENT AND ITS CAPACITY. THERE APPEARED TO BE NO QUESTION AS TO THE CAPACITY OF THE EQUIPMENT TO PRODUCE THE PROCUREMENT REQUIREMENTS. HOWEVER, THE REPORT STATES THAT "POOR PERFORMANCE IN DELIVERY IS PRESENTLY BEING ENCOUNTERED ON CONTRACT GS 00S-59534 FOR IDENTICAL ITEMS.' THE REPORT CONTINUED, AS TO THIS CONTRACT, THAT YOU HAD BEEN LATE IN SUBMITTING MATERIAL ON 24 ORDERS SINCE THE INCEPTION OF THE CONTRACT AND THAT ADDITIONAL ORDERS WERE EXPECTED TO BE DELINQUENT. THIS REPORT LISTED 24 INSTANCES, BETWEEN JULY 10, 1966, AND JANUARY 18, 1967, WHERE ORDERS DUE FOR INSPECTION ON SPECIFIED DATES WERE SUBMITTED LATE FROM SEVERAL DAYS TO AS MUCH AS FOUR WEEKS. TEN ADDITIONAL ORDERS WERE DUE FOR INSPECTION BETWEEN JANUARY 25, 1967, AND FEBRUARY 23, 1967, BUT NO NOTIFICATION HAD BEEN RECEIVED THAT THE PRODUCTS WERE READY FOR INSPECTION BY THE DATE OF THE REPORT, FEBRUARY 24, 1967.

IN VIEW OF THE CONSISTENCY OF THE SURVEY REPORTS, THE CONTRACTING OFFICER CONCLUDED THAT YOUR FIRM AT THAT TIME HAD NOT ACHIEVED THAT DEGREE OF RESPONSIBILITY FOR DELIVERY UPON WHICH HE COULD RELY, AND THIS, COUPLED WITH YOUR PRODUCT QUALITY RECORD ON OTHER CONTRACTS, RESULTED IN HIS DECISION TO REJECT YOUR BIDS.

ASIDE FROM THE FACT THAT SMALL BUSINESS ADMINISTRATION REFUSED TO ISSUE A CERTIFICATE OF COMPETENCY, THE QUESTION OF RESPONSIBILITY IS A MATTER AS TO WHICH SECTIONS 1-1.310-1 THROUGH 11 OF THE FEDERAL PROCUREMENT REGULATIONS REQUIRE THE CONTRACTING OFFICER TO MAKE AN AFFIRMATIVE DETERMINATION THAT THE PROSPECTIVE CONTRACTOR IS RESPONSIBLE WITHIN THE MEANING OF THE CITED SECTIONS. IT IS THE GENERAL RULE THAT THE QUESTION AS TO RESPONSIBILITY AND CAPABILITY OF A BIDDER ON A PROPOSED GOVERNMENT CONTRACT IS A MATTER PRIMARILY FOR DETERMINATION BY THE CONTRACTING AGENCY AND SUCH DETERMINATION WHEN MADE WILL NOT BE QUESTIONED BY THE COURTS OR OUR OFFICE, IN THE ABSENCE OF FRAUD OR THE LACK OF A REASONABLE BASIS FOR THE DETERMINATION. SEE O-BRIEN V. CARNEY, 6 FED.SUPP. 761, 762; FRIEND V. LEE, 221 F.2D 96; 20 COMP. GEN. 862; AND 37 ID. 430, 435.

ON THE BASIS OF YOUR SUBMITTED MATERIAL AND THE GOVERNMENT RECORDS BEFORE US, WE CANNOT CNCLUDE THAT THE SMALL BUSINESS ADMINISTRATION REPORT WAS BASED ON BIASED MATERIAL, SINCE IT MADE AN INDEPENDENT SURVEY, OR THAT THE DETERMINATION OF THE CONTRACTING OFFICER, ON THE BASIS OF THE MATERIAL BEFORE HIM AT THE TIME, WAS ARBITRARY OR UNREASONABLE.

AS TO YOUR CONTENTION THAT REJECTIONS OF YOUR BIDS HAVE BEEN ON INCONSISTENT GROUNDS, WE BELIEVE THAT AN ANALYSIS OF THE REJECTIONS, ALTHOUGH COUCHED IN DIFFERENT LANGUAGE, ALL APPEAR TO HAVE A COMMON FACTOR --A FAILURE IN THE AREA OF CONTRACT ADMINISTRATION TO MEET THOSE STANDARDS OF RESPONSIBILITY WHICH THE GOVERNMENT HAS A RIGHT TO EXPECT IN THOSE WITH WHOM IT CONTRACTS. THERE APPEARS LITTLE QUESTION THAT YOUR FIRM CAN PRODUCE A QUALIFIED PRODUCT, BUT THAT YOU ARE LACKING IN TEST CONTROLS AND PROCEDURES IN SCHEDULING OPERATIONS IN ORDER TO MEET CONTRACTS SPECIFICATIONS AND DELIVERY DATES. THESE ARE MANAGEMENT PROBLEMS, AND APPEAR TO CONSTITUTE THE BASES FOR YOUR PAST DIFFICULTIES.

CONTRARY TO YOUR APPARENT BELIEF, THE GENERAL SERVICES ADMINISTRATION SURVEY OF YOUR FACILITIES AND THAT OF THE SMALL BUSINESS ADMINISTRATION WERE MADE INDEPENDENTLY OF EACH OTHER, BUT BOTH SURVEYS NATURALLY COVERED THE SAME AREA AND HAD ACCESS TO THE SAME MATERIAL.

FINALLY, YOU URGE THAT CONSIDERATION OF YOUR PERFORMANCE RECORD SHOULD HAVE BEEN CONFINED TO PERFORMANCE ON WAX REMOVER CONTRACTS, THE PRODUCT BEING PROCURED ON THE INSTANT INVITATION. YOU STATE THAT YOUR PERFORMANCE ON WAX REMOVER CONTRACTS HAS BEEN SATISFACTORY ON THE QUALITY LEVEL AS WELL AS IN MEETING DELIVERY SCHEDULES. WE HAVE MENTIONED ABOVE YOUR PERFORMANCE RECORD ON A WAX REMOVER CONTRACT FOR THE PRIOR YEAR AS REFLECTED BY THE ADMINISTRATIVE RECORDS AND HAVE COMMENTED THEREON. THUS APPEARS THAT WHAT YOU MAY CONSIDER SATISFACTORY PERFORMANCE WAS NOT CONSIDERED SO BY THE PROCURING OFFICE.

HOWEVER, AS TO THE SEGREGATION OF CONTRACTS BY PRODUCT, WE MUST CONCLUDE THAT THERE IS NO LEGAL REQUIREMENT THAT SURVEYS BE MADE ON THAT BASIS. THE OBJECT OF THE SEVERAL SURVEYS IS TO ASCERTAIN AND TECHNICALLY EVALUATE THE ESSENTIAL FINANCIAL, PRODUCTION AND MANAGEMENT CAPABILITIES OF THE BIDDER TO ENABLE THE CONTRACTING OFFICER TO DETERMINE FOR HIMSELF THE PROPRIETY OF AWARDING THE PROPOSED CONTRACT. THESE SURVEYS ENCOMPASS THE ENTIRE OPERATION OF THE COMPANY SURVEYED. THIS IS NECESSARY BECAUSE THE COMPANY IS AN INTEGRATED UNIT, AND THE CONSIDERATION OF THE MANUFACTURE OF ONE ITEM TO THE EXCLUSION OF OTHER ITEMS WOULD GIVE A DISTORTED VIEW OF THE ENTIRE PICTURE.

IN ANY EVENT, OUR OFFICE HAS CONSISTENTLY HELD THAT THE QUESTION OF A BIDDER'S RESPONSIBILITY IS PRIMARILY FOR DETERMINATION BY THE CONTRACTING OFFICER. 38 COMP. GEN. 131, 33 ID. 549. THE RECORD PRESENTED IN THIS CASE ESTABLISHES THAT THE NEGATIVE DETERMINATION AS TO THE RESPONSIBILITY OF YOUR FIRM WAS MADE AFTER DUE CONSIDERATION OF THE INFORMATION DISCLOSED BY THE PRE-AWARD SURVEYS. IN THE ABSENCE OF EVIDENCE OF ARBITRARY OR CAPRICIOUS ACTION, WE FIND NO BASIS TO OBJECT TO THE ADMINISTRATIVE NEGATIVE DETERMINATION OF RESPONSIBILITY.

IN VIEW OF THE FOREGOING, WE FIND NO LEGAL REASON TO QUESTION THE ACTION OF THE CONTRACTING OFFICER, AND YOUR PROTEST IS THEREFORE DENIED.

YOU MAY BE ADVISED THAT YOUR PROTESTS ON IFB NO. CH-FT-649 AND 650, IFB NO. CH-FT-662, AND IFB NO. F/56234, ARE BEING CONSIDERED INDIVIDUALLY AND WILL BE THE SUBJECT OF A SEPARATE DECISION.