B-161814, AUG. 22, 1967

B-161814: Aug 22, 1967

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LOW OFFEROR WHO WAS DETERMINED TO BE NONRESPONSIBLE BECAUSE OF PAST UNSATISFACTORY PERFORMANCE AND INABILITY TO MEET REVISED DELIVERY SCHEDULE BASED ON FACTS AND INFORMATION PROVIDED BY PROTESTING FIRM MUST HAVE PROTEST DENIED. ALSO SINCE A CERTIFICATE OF URGENCY WAS EFFECTED UNDER ASPR 1 - 705.4/C) (IV). NO OBJECTION MAY BE MADE THAT BIDDER'S COMPETENCY WAS NOT REFERRED TO SBA. TRUSTEE: THIS IS IN REPLY TO YOUR TELEGRAM DATED APRIL 15. THE REFERENCED REQUEST WAS ISSUED BY THE ARMY MOBILITY EQUIPMENT CENTER (AMEC). THAT THE CONTRACTING OFFICER'S DETERMINATION OF YOUR NONRESPONSIBILITY IS ERRONEOUS. THAT HIS NONREFERRAL OF THE QUESTION OF YOUR COMPETENCY TO THE SMALL BUSINESS ADMINISTRATION (SBA) FOR REVIEW ON THE BASIS OF AN URGENT NEED FOR THE PROCUREMENT IS UNWARRANTED.

B-161814, AUG. 22, 1967

BIDDER - RESPONSIBILITY - PREAWARD SURVEY DECISION TO UNITED MANUFACTURING AND ENGINEERING CO. PROTESTING REJECTION OF LOW OFFER SUBMITTED UNDER NEGOTIATED MULTI-YEAR PROCUREMENT FOR LAND AND PUMP UNITS ON BASIS OF NONRESPONSIBILITY AND FAILURE OF AMEC TO REFER QUESTION OF COMPETENCY TO SBA. LOW OFFEROR WHO WAS DETERMINED TO BE NONRESPONSIBLE BECAUSE OF PAST UNSATISFACTORY PERFORMANCE AND INABILITY TO MEET REVISED DELIVERY SCHEDULE BASED ON FACTS AND INFORMATION PROVIDED BY PROTESTING FIRM MUST HAVE PROTEST DENIED. ALSO SINCE A CERTIFICATE OF URGENCY WAS EFFECTED UNDER ASPR 1 - 705.4/C) (IV), AS TO URGENT DELIVERY SCHEDULE, NO OBJECTION MAY BE MADE THAT BIDDER'S COMPETENCY WAS NOT REFERRED TO SBA.

TO MR. DONALD C. LITTLE, TRUSTEE:

THIS IS IN REPLY TO YOUR TELEGRAM DATED APRIL 15, 1967, AND SUPPORTING LETTER DATED AUGUST 6, 1967, WITH ENCLOSURES, PROTESTING THE REJECTION OF YOUR LOW OFFER SUBMITTED UNDER REQUEST FOR PROPOSALS (RFP) NO. DAAK01-67-B -0505.

THE REFERENCED REQUEST WAS ISSUED BY THE ARMY MOBILITY EQUIPMENT CENTER (AMEC), DIRECTORATE OF PROCUREMENT AND PRODUCTION, ST. LOUIS, MISSOURI, AND PROPOSED TO ESTABLISH A MULTI-YEAR CONTRACT FOR AN INITIAL QUANTITY OF 120 TANK AND PUMP UNITS CONFORMING TO MILITARY SPECIFICATION MIL-T-40136B GL, AND AN ADDITIONAL 120 UNITS EACH MONTH THEREAFTER.

YOUR PROTEST PRESENTS ESSENTIALLY TWO CONTENTIONS: FIRST, THAT THE CONTRACTING OFFICER'S DETERMINATION OF YOUR NONRESPONSIBILITY IS ERRONEOUS; AND SECOND, THAT HIS NONREFERRAL OF THE QUESTION OF YOUR COMPETENCY TO THE SMALL BUSINESS ADMINISTRATION (SBA) FOR REVIEW ON THE BASIS OF AN URGENT NEED FOR THE PROCUREMENT IS UNWARRANTED.

RELATIVE TO YOUR PROTEST CONCERNING THE CONTRACTING OFFICER'S DETERMINATION THAT YOUR FIRM IS NOT RESPONSIBLE YOU ALLEGE THAT A PREAWARD SURVEY WAS MADE OF YOUR PLANT ON THE BASIS OF AN IMPOSSIBLE INITIAL DELIVERY REQUIREMENT AND A REEVALUATION OF YOUR FIRM'S COMPETENCY WAS NOT MADE AFTER THE DELIVERY SCHEDULE WAS REVISED. YOU FURTHER STATE THAT BY LETTER OF MAY 29, 1967, YOU PROVIDED AMEC WITH COMPLETE INFORMATION CONCERNING YOUR TECHNICAL ENGINEERING, TOOLING AND DIES, MANPOWER, FINANCIAL, AND EQUIPMENT CAPABILITIES. IN THE LETTER YOU ALSO OUTLINED SIX PREVIOUS CONTRACTS ON THE SAME ITEMS, YOUR PLANNED PRODUCTION, MANPOWER REQUIREMENTS AND AVAILABILITY OF ADDITIONAL MANPOWER, AND YOU SUBMITTED PLANS OF A PROPOSED BUILDING ADDITION TO INCREASE FACILITIES TO ASSURE ADEQUATE SPACE FOR PRODUCING THE REQUIREMENTS OF THE CONTRACT. YOU STATE THAT SUBSEQUENT TO YOUR MAY 29 LETTER A RESURVEY WAS CONDUCTED WHICH CONSISTED OF A 20 MINUTE LONG DISTANCE TELEPHONE CALL BY AN ARMY PRODUCTION CONTROL SPECIALIST WHICH YOU CONTEND IS AN INADEQUATE BASIS FOR REEVALUATION. IT IS FURTHER CONTENDED THAT IN VIEW OF YOUR PRIOR EXPERIENCE IN PRODUCING OVER 1,000 IDENTICAL UNITS AND YOUR RECORD OF PRODUCING A GOOD SERVICEABLE PRODUCT WITH NO FIELD COMPLAINTS, IT IS DIFFICULT TO UNDERSTAND HOW A PLANT SURVEY COULD BE ADVERSE. LASTLY, IN SUPPORT OF YOUR ABILITY TO PERFORM ON THE CONTRACT YOU STATE THAT YOU HAVE SUBCONTRACTED WITH HIGHLAND INDUSTRIES, THE SUCCESSFUL OFFEROR, FOR A TOTAL AMOUNT OF $560,729.02, OF ITS $3,383,070, CONTRACT WITH THE GOVERNMENT UNDER THE REFERENCED RFP.

IN REPLY TO THE ABOVE CONTENTIONS THE CONTRACTING OFFICER HAS STATED THE FOLLOWING:

"ON 15 MAY 1967, NEGOTIATIONS WERE CLOSED ON RFP NO. DAAK01-67-B 0505 WHICH REQUIRED DELIVERY OF 2,681 TANK AND PUMP UNITS CONFORMING TO MILITARY SPECIFICATION MIL-T-40136B GL. FUNDING IS AVAILABLE FOR 1,273 UNITS, THE FY 67 REQUIREMENT. THE REMAINING 1,408 ARE THE UNFUNDED FY 68 PORTION OF THE MULTI YEAR PROCUREMENT. UNITED MANUFACTURING WAS THE LOW OFFEROR. HOWEVER, THIS FIRM HAS BEEN DETERMINED TO BE NONRESPONSIBLE IN VIEW OF THEIR PAST UNSATISFACTORY PERFORMANCE RECORD AND ADVERSE FINDINGS OF A PREAWARD SURVEY CONDUCTED IN CONNECTION WITH THIS PROCUREMENT.

"A COMPLETE SURVEY WAS MADE OF UNITED'S TOPEKA FACILITY IN EARLY MAY 1967. THE 12 MAY REPORT RECOMMENDED -NO AWARD- BECAUSE OF UNSATISFACTORY RATINGS IN PRODUCTION CAPABILITY, PLANT FACILITIES AND EQUIPMENT, PERFORMANCE, AND ABILITY TO MEET THE REQUIRED DELIVERY SCHEDULE. THE SURVEY POINTED UP THE FACT THAT A MAJOR COMPONENT COULD NOT BE DELIVERED BY THE ONLY SUPPLIER IN TIME TO MEET THE RFP DELIVERY SCHEDULE. CONSEQUENTLY, FIRST DELIVERY WAS EXTENDED 90 DAYS AND ALL OFFERORS WERE AFFORDED THE OPPORTUNITY TO SUBMIT CHANGES TO THEIR OFFERS BASED ON THE REVISED SCHEDULE. THE MONTHLY DELIVERY RATE REMAINED AT 120 EACH. THE SURVEY ACTIVITY DCASO, KANSAS CITY, WAS REQUESTED TO REEVALUATE THE 12 MAY SURVEY REPORT IN LIGHT OF THE NEW DELIVERY REQUIREMENT. DCASO RESPONDED WITH A REPORT DATED 26 MAY 1967, WHICH STATED UNITED COULD MEET THE EXTENDED FIRST DELIVERY BUT DID NOT HAVE THE CAPACITY TO PRODUCE AT THE REQUIRED MONTHLY RATE OF 120 UNITS. BY LETTER OF 29 MAY 1967, UNITED VOLUNTEERED ADDITIONAL INFORMATION REGARDING THEIR ABILITY TO PRODUCE, THEIR BACKGROUND ON THIS ITEM, AND THE ADDITIONAL FACILITIES PROPOSED TO ENABLE THEM TO REACH THE REQUIRED PRODUCTION RATE. AGAIN DCASO WAS REQUESTED TO REEVALUATE THE SURVEY RECOMMENDATION TAKING INTO ACCOUNT THE INFORMATION FURNISHED. UNITED WAS CONTACTED BY TELEPHONE AS SHOWN IN THE DCASO REPORT OF 8 JUNE 1967. FAMILIARITY GAINED IN THE PREVIOUS TRIPS MADE ANOTHER PLANT VISIT UNNECESSARY. THE ADDITIONAL INFORMATION DID NOT CHANGE THE UNSATISFACTORY RATINGS OF THE ORIGINAL SURVEY. AFTER A COMPLETE SURVEY AND TWO SUBSEQUENT REEVALUATIONS, UNITED'S ABILITY TO PERFORM WAS MEASURED IN LIGHT OF THE FOLLOWING:

"/A) UNITED COULD PRODUCE A MAXIMUM OF ONLY 3 UNITS PER DAY AT THEIR PRESENT LOCATION ON A ONE-SHIFT BASIS.

"/B) PLANS FOR AN ADDITIONAL FACILITY WERE OVER OPTIMISTIC. THE TIME FRAME AND COST ASSOCIATED WITH REHABILITATION OF THE PROPOSED BUILDING WERE UNREALISTIC. THE BUILDING IS OF PRE-FAB STEEL CONSTRUCTION LACKING PLUMBING, VENTILATION, ENOUGH DOORS, WINDOWS, INSULATION, WATER, HEATING EQUIPMENT, OFFICES AND ADEQUATE LIGHTING. THE FACILITY COULD NOT BE MADE READY IN TIME TO MEET THE DELIVERY REQUIREMENTS.

"/C) UNITED'S PAST PERFORMANCE RECORD WAS UNSATISFACTORY. ON A PRIOR CONTRACT FOR THE SAME ITEM, DA 23-195-AMC-01066/T), UNITED AGREED TO PRODUCTION RATES OF 60 TO 75 UNITS PER MONTH. THESE RATES WERE NEVER ACCOMPLISHED. THE DELIVERY SCHEDULE WAS ADJUSTED ON FIVE OCCASIONS. THE CONTRACT ORIGINALLY PROVIDED FOR COMPLETION IN JUNE 1966, BUT FINAL DELIVERY WAS NOT MADE UNTIL SIX MONTHS LATER. THE ACTUAL PRODUCTION RATE WAS 34 UNITS PER MONTH. EXCEPT FOR A FEW DAYS LOST BECAUSE OF A TORNADO IN JUNE 1966, NONE OF THE DELAY WAS EXCUSABLE.

"AS STATED IN THE PROTEST, UNITED DID WIRE THE MECOM DIRECTORATE OF PROCUREMENT AND PRODUCTION ON 13 JUNE 1967. IT REQUESTED THEY BE ADVISED IF ANY ADDITIONAL DATA WAS REQUIRED TO PROVE THEIR ABILITY TO PERFORM. THIS DATE ALL THE INFORMATION NECESSARY TO ADJUDGE UNITED'S RESPONSIBILITY HAD BEEN OBTAINED.

"ON 13 JUNE 1967, UNITED WAS DETERMINED TO BE NONRESPONSIBLE BASED ON PAST UNSATISFACTORY PERFORMANCE AND INABILITY TO MEET THE REQUIRED RFP DELIVERY SCHEDULE. IT WAS ALSO DETERMINED THAT FURTHER DELAY IN AWARD OF THE CONTRACT WOULD PRECLUDE THE GOVERNMENT FROM OBTAINING REQUIRED DELIVERIES. PRIOR TO MAKING THE LATTER DETERMINATION, THE URGENT NEED WAS VERIFIED BY THE RESPONSIBLE SUPPLY ELEMENT. THE ENTIRE FIRST YEAR QUANTITY CARRIES PRIORITY DESIGNATION 02 UNDER THE UNIFORM MATERIEL MOVEMENT AND ISSUE PRIORITY SYSTEM. IN ACCORDANCE WITH ASPR 1-705.4 (C), THE MATTER WAS NOT REFERRED TO THE SMALL BUSINESS ADMINISTRATION SINCE THE ADDITIONAL TIME WAS NOT AVAILABLE TO AWAIT SBA'S DETERMINATION WHETHER A CERTIFICATE OF COMPETENCY COULD BE ISSUED. CONTRACT DAAK01-67-C-B257 WAS AWARDED ON 16 JUNE 1967 TO HIGHLAND INDUSTRIES, NORTH KANSAS CITY, MISSOURI, THE SECOND LOW OFFEROR; A FIRM DETERMINED RESPONSIBLE. THE PROTEST WIRE WAS RECEIVED AFTER AWARD HAD BEEN MADE.'

ASPR SEC. 1-902 TREATS THE QUESTION OF CONTRACTOR RESPONSIBILITY AS FOLLOWS:

"1-902 GENERAL POLICY. PURCHASES SHALL BE MADE FROM, AND CONTRACTS SHALL BE AWARDED TO, RESPONSIBLE PROSPECTIVE CONTRACTORS ONLY. A RESPONSIBLE PROSPECTIVE CONTRACTOR IS ONE WHICH MEETS THE STANDARDS SET FORTH IN 1- 903.1 AND 1-903.2, AND SUCH SPECIAL STANDARDS AS MAY BE PRESCRIBED IN ACCORDANCE WITH 1-903.3 AND BY OVERSEAS COMMANDERS. THE AWARD OF A CONTRACT TO A SUPPLIER BASED ON LOWEST EVALUATED PRICE ALONE CAN BE FALSE ECONOMY IF THERE IS SUBSEQUENT DEFAULT, LATE DELIVERIES, OR OTHER UNSATISFACTORY PERFORMANCE RESULTING IN ADDITIONAL PROCUREMENT OR ADMINISTRATIVE COSTS. WHILE IT IS IMPORTANT THAT GOVERNMENT PURCHASES BE MADE AT THE LOWEST PRICE, THIS DOES NOT REQUIRE AN AWARD TO A MARGINAL SUPPLIER SOLELY BECAUSE HE SUBMITS THE LOWEST BID OR OFFER. A PROSPECTIVE CONTRACTOR MUST DEMONSTRATE AFFIRMATIVELY HIS RESPONSIBILITY, INCLUDING, WHEN NECESSARY, THAT OF HIS PROPOSED SUBCONTRACTORS. THE CONTRACTING OFFICER SHALL MAKE A DETERMINATION OF NONRESPONSIBILITY IF, AFTER COMPLIANCE WITH 1-905 AND 1-906, THE INFORMATION THUS OBTAINED DOES NOT INDICATE CLEARLY THAT THE PROSPECTIVE CONTRACTOR IS RESPONSIBLE. RECENT UNSATISFACTORY PERFORMANCE, IN EITHER QUALITY OR TIMELINESS OF DELIVERY, WHETHER OR NOT DEFAULT PROCEEDINGS WERE INSTITUTED, IS AN EXAMPLE OF A PROBLEM WHICH THE CONTRACTING OFFICER MUST CONSIDER AND RESOLVE AS TO ITS IMPACT ON THE CURRENT PROCUREMENT PRIOR TO MAKING AN AFFIRMATIVE DETERMINATION OF RESPONSIBILITY. DOUBT AS TO PRODUCTIVE CAPACITY OR FINANCIAL STRENGTH WHICH CANNOT BE RESOLVED AFFIRMATIVELY SHALL REQUIRE A DETERMINATION OF NONRESPONSIBILITY.'

IT IS THE POSITION OF THIS OFFICE THAT THE DETERMINATION OF A CONTRACTOR'S QUALIFICATIONS IS PRIMARILY THE FUNCTION OF THE CONTRACTING AGENCY, INVOLVING THE EXERCISE OF A CONSIDERABLE RANGE OF DISCRETION, AND, IN THE ABSENCE OF BAD FAITH, OR LACK OF SUBSTANTIAL GROUNDS FOR THE ADMINISTRATIVE DETERMINATION, THERE IS NO BASIS FOR LEGAL OBJECTION. SEE 37 COMP. GEN. 430.

IT IS APPARENT FROM THE RECORD THAT AT THE TIME THE CONTRACTING OFFICER DETERMINED YOUR FIRM TO BE NONRESPONSIBLE BECAUSE OF PAST UNSATISFACTORY PERFORMANCE AND INABILITY TO MEET THE REQUIRED REVISED DELIVERY SCHEDULE HE HAD DULY CONSIDERED ALL OF THE FACTS SOLICITED FROM OR VOLUNTEERED BY YOU UP TO THAT TIME. UPON OUR REVIEW OF THE RECORD WE FIND NO EVIDENCE THAT THE CONTRACTING OFFICER'S DETERMINATION WAS MADE IN BAD FAITH, BUT RATHER THAT HIS DECISION WAS BASED UPON AND SUPPORTED BY THE FACTS AND INFORMATION DERIVED LARGELY FROM YOUR FIRM AND THEREFORE WE HAVE NO AUTHORITY TO DISTURB THE DECISION.

IN CONNECTION WITH YOUR OBJECTION TO THE CONTRACTING OFFICER'S DECISION NOT TO REFER THE QUESTION OF YOUR COMPETENCY TO SBA FOR ITS CONSIDERATION, THE RECORD ESTABLISHES THAT THE REQUIRED CERTIFICATION OF URGENCY WAS EFFECTED PURSUANT TO THE AUTHORITY IN ASPR 1-705.4 (C) (IV). IN VIEW OF HIS WRITTEN CERTIFICATION TO SBA THAT THE ADDITIONAL TIME REQUIRED TO PROCESS A CERTIFICATE OF COMPETENCY WOULD PRECLUDE THE GOVERNMENT FROM MEETING THE REQUIRED URGENT DELIVERY SCHEDULE THERE DOES NOT APPEAR TO BE ANY LEGAL BASIS FOR OBJECTION.