B-161977, JANUARY 22, 1968, 47 COMP. GEN. 373

B-161977, JANUARY 22, 1968, 47 COMP. GEN. 373

CONTRACTS - NEGOTIATION - EVALUATION FACTORS - ADMINISTRATIVE DETERMINATION THE DETERMINATION BY A CONTRACTING OFFICER UNDER A REQUEST FOR PROPOSALS THAT A CANADIAN SUBCONTRACTOR WAS NONRESPONSIBLE HAVING BEEN REPORTED DEFICIENT IN TECHNICAL CAPABILITY AND ABILITY TO MEET DELIVERY SCHEDULES DOES NOT EVIDENCE ABUSE OF ADMINISTRATIVE DISCRETION JUDGED ON THE BASIS OF THE INFORMATION AVAILABLE TO HIM AT THE TIME OF THE DETERMINATION, THEREFORE, THE EXCLUSION OF THE SUBCONTRACTOR FROM NEGOTIATIONS AND THE AWARD TO ANOTHER OFFEROR WERE PROPER EVEN THOUGH THE PRIME CONTRACTOR SHOULD HAVE BEEN NOTIFIED BEFORE AWARD OF THE NONRESPONSIBILITY DETERMINATION AND REQUESTED TO CLARIFY INFORMATION QUESTIONING THE DETERMINATION, BUT SHOULD NOT HAVE BEEN REQUESTED AFTER THE DETERMINATION WAS MADE TO EXTEND ITS OFFER. HOWEVER, THE SUBCONTRACTOR FOR FUTURE PROCUREMENTS, AND GUIDELINES FOR DETERMINING THE RESPONSIBILITY OF CANADIAN FIRMS SHOULD BE PROMULGATED.

TO THE CANADIAN COMMERCIAL CORPORATION, JANUARY 22, 1968:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAMS OF JULY 6 AND 14, 1967, AND SUPPLEMENTAL CORRESPONDENCE PROTESTING IN YOUR BEHALF AND IN BEHALF OF YOUR SUBCONTRACTOR, BEACONING OPTICAL AND PRECISION MATERIALS COMPANY, LTD. (BOP), AGAINST AWARD OF A CONTRACT TO SERVO CORPORATION OF AMERICA BY THE UNITED STATES ARMY ELECTRONICS COMMAND, PHILADELPHIA, UNDER REQUEST FOR PROPOSALS NO. DAABO5-67-R-1270.

THE SUBJECT REQUEST FOR PROPOSALS WAS ISSUED ON DECEMBER 30, 1966, AND CALLED FOR PROPOSALS ON FURNISHING 42 AN/TRQ-23 ( ( RADIO RECEIVING SETS, RELATED EQUIPMENT, SPARES AND REPAIR PARTS, AND LITERATURE AND DATA. THE CLOSING DATE FOR RECEIPT OF PROPOSALS, AS AMENDED, WAS FEBRUARY 27, 1967, WITH A 60 DAY ACCEPTANCE PERIOD. THE PROCUREMENT WAS ASSIGNED AN 02 PRIORITY DESIGNATOR UNDER THE UNIFORM MATERIAL MOVEMENT ISSUE PRIORITY SYSTEM, INDICATING AN URGENT REQUIREMENT FOR THE EQUIPMENT. NINE PROPOSALS WERE RECEIVED AND BOP WAS THIRD LOWEST UNDER THE INITIAL OFFERS, WITH SERVO BEING THE SIXTH LOWEST. THE FIRST FOUR OFFERORS, INCLUDING BOP, WERE DETERMINED BY THE CONTRACTING OFFICER TO BE NONRESPONSIBLE UNDER THE STANDARDS ESTABLISHED BY ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-903 AFTER PREAWARD SURVEYS OF ALL OFFERORS WERE CONDUCTED PURSUANT TO ASPR 1-905.4. THEREAFTER, NEGOTIATIONS WERE CONDUCTED WITH THE REMAINING OFFERORS AND SERVO WAS AWARDED A CONTRACT AT THE LOWEST NEGOTIATED PRICE OF $2,811,793, WHICH IS APPROXIMATELY $510,000 ABOVE BOP'S PROPOSAL PRICE.

THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY, DATED MAY 11, 1967, THE VALIDITY OF WHICH IS THE CRUX OF YOUR PROTEST, WAS MADE ON THE BASIS OF THE NEGATIVE RECOMMENDATION DATED MAY 8, 1967, OF THE U.S. ARMY ELECTRONICS COMMAND, FORT MONMOUTH, NEW JERSEY. THE ELECTRONICS COMMAND WAS REQUESTED BY THE CONTRACTING OFFICER ON MARCH 20, 1967, TO MAKE A COMPLETE SURVEY. THE SURVEY WAS CONDUCTED ON APRIL 11, 12, AND 13 AT BOP'S FACILITIES AND INCLUDED EVALUATION OF EIGHT FACTORS. BOP WAS FOUND TO BE UNSATISFACTORY IN TWO AREAS, TECHNICAL CAPABILITY AND ABILITY TO MEET REQUIRED DELIVERY SCHEDULE. IN ADDITION TO THE ABOVE SURVEY, ON MARCH 23, 1967, THE CONTRACTING OFFICER ALSO REQUESTED A PREAWARD SURVEY BY THE DEFENSE CONTRACT ADMINISTRATION SERVICES OFFICE, OTTAWA. THE REQUEST, DEPARTMENT OF DEFENSE FORM 1524, CONTAINED THE FOLLOWING NOTE: NOTE: IN THE INTEREST OF EXPEDITIOUS HANDLING OF THIS CASE, REQUEST

YOUR INVESTIGATION BE LIMITED ONLY TO FACTORS CHECKED. THIS

COMMAND DOES NOT REQUIRE INVESTIGATION AND/OR REPORT IN THE

AREAS NOT CHECKED ABOVE. EXCEPT FOR TECHNICAL CAPABILITY, THE FACTORS TO BE CHECKED BY DCASO WERE ALMOST IDENTICAL TO THOSE CONSIDERED BY FORT MONMOUTH. DCASO FOUND BOP SATISFACTORY IN ALL AREAS CHECKED, AND RECOMMENDED AWARD IN ITS REPORT OF APRIL 10, 1967.

AS NOTED ABOVE, YOUR PRIMARY OBJECTION TO THE ADMINISTRATIVE ACTION IN THIS CASE IS THE CONTRACTING OFFICER'S DETERMINATION THAT BOP WAS NONRESPONSIBLE. YOU CONTEND THAT THE CONTRACTING OFFICER'S DETERMINATION WAS BASED ON ERRONEOUS FACTS CONCERNING BOP'S CAPABILITIES AND COMPETENCY IN THIS TECHNICAL FIELD AND, IN VIEW OF HIS FAILURE TO ATTEMPT TO RESOLVE THE APPARENT CONTRADICTORY SURVEY REPORTS, WAS NOT BASED ON SOUND AND INDEPENDENT JUDGMENT. ALTHOUGH CERTAIN INFORMATION AND EVIDENCE WAS PRODUCED BY YOU SUBSEQUENT TO THE AWARD OF THE CONTRACT TO SERVO WHICH CASTS SOME DOUBT ON THE CORRECTNESS OF THE CONTRACTING OFFICER'S DETERMINATION AND RAISES SERIOUS QUESTIONS AS TO THE PROPRIETY OF THE ADMINISTRATIVE ACTIONS THEREAFTER, WE BELIEVE THE VALIDITY OF THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY MUST BE JUDGED ON THE BASIS OF THE INFORMATION BEFORE HIM AT THE TIME IT WAS MADE.

IN ADDITION TO THE PREAWARD SURVEY NORMALLY REQUESTED OF THE APPROPRIATE CONTRACT ADMINISTRATION OFFICE, THE CONTRACTING OFFICER REPORTS THAT HE REQUESTED A SURVEY BY FORT MONMOUTH BECAUSE HE CONSIDERED TECHNICAL CAPABILITY OF THE PROSPECTIVE CONTRACTOR OF PARAMOUNT IMPORTANCE AND THE TECHNICAL PERSONNEL OF THAT ACTIVITY BETTER QUALIFIED THAN DCASO PERSONNEL TO MAKE A JUDGMENT IN THIS AREA. THE IMPORTANCE ATTACHED TO TECHNICAL CAPABILITY IS REPORTED TO STEM FROM THE FACT THAT THIS IS A FIRST-TIME PRODUCTION OF A COMPLEX ITEM WHICH MUST CONFORM TO MILITARY SPECIFICATIONS AND A MODEL TO WHICH MORE THAN 140 EXCEPTIONS APPLY, REQUIRING A CONSIDERABLY AMOUNT OF REDESIGN AND REVERSE ENGINEERING BY EXPERIENCED AND QUALIFIED ENGINEERING PERSONNEL FAMILIAR WITH DIRECTION FINDING TECHNIQUES. MOREOVER, TIMELY DELIVERY WAS OF GREAT IMPORTANCE DUE TO THE PRIORITY ASSIGNED THIS PROCUREMENT.

THE DETAILED SURVEY REPORT OF THE FORT MONMOUTH TEAM BEFORE THE CONTRACTING OFFICER AT THE TIME HE MADE HIS DECISION APPEARS REASONABLY TO SUPPORT HIS DETERMINATION OF NONRESPONSIBILITY. IN BRIEF, THE FINDINGS OF THE SURVEY TEAM WERE THAT BOP'S L.A.B. PACKAGE TESTER AND TEMPERATURE AND HUMIDITY CHAMBER WERE INADEQUATE; THAT THE INSIDE STORAGE AREA FOR GFT EQUIPMENT WAS SEVERLY LIMITED AND THE OUTSIDE AREA WHICH COULD BE USED FOR STORAGE WAS NOT SECURE; THAT THE AREA TO BE USED FOR MODIFYING THE SHELTERS WAS VERY LIMITED; THAT PRICES HAD NOT BEEN OBTAINED ON SEVERAL ITEMS THAT WERE TO BE SECURED FROM VARIOUS SUPPLIERS; AND THAT THERE WERE NO PLANS AS TO WHERE THE COMPANY WAS TO RUN THE MUNSON ROAD TESTS AND THE RAILROAD HUMPING TESTS. MORE IMPORTANTLY, THEY CONCLUDED THAT THERE WAS NO EVIDENCE THAT BOP HAD SUCCESSFULLY PRODUCED ANY HIGH FREQUENCY RECEIVERS OR ANY COMPLEX DIRECTION FINDING SYSTEMS, AND THAT THE COMPANY'S EXPERIENCE IN INTERCEPT AND DIRECTION FINDING EQUIPMENT CONSISTED OF FABRICATING A LIMITED NUMBER OF LOW FREQUENCY RECEIVING SETS AS A SUBCONTRACTOR TO A PRIME DEVELOPMENT CONTRACTOR. THE SURVEY TEAM ALSO CONCLUDED FROM THE PROJECT PLAN AND RESUMES OF THE SENIOR ENGINEERS IN CHARGE OF EACH OF THE FIVE PHASES THEREOF FURNISHED BY BOP THAT THE LACK OF EXPERIENCE WOULD SERIOUSLY LIMIT THE COMPANY'S TECHNICAL CAPABILITY. THESE RESUMES INDICATED THAT TWO ENGINEERS HAD APPROXIMATELY 1 YEAR'S EXPERIENCE, ONE HAD A LITTLE MORE THAN 6 MONTHS' EXPERIENCE, AND THE FOURTH WAS NOT A GRADUATE ENGINEER BUT HAD ABOUT 6 YEARS' EXPERIENCE. FINAL FACTOR HAVING GREAT INFLUENCE ON THE SURVEY TEAM'S NEGATIVE RECOMMENDATION WAS INFORMATION IT REPORTS HAVING RECEIVED FROM MR. G. S. ELLIOTT, ELECTRONICS WARFARE SECTION, NAVY BUREAU OF SHIPS, WASHINGTON, D.C., TO THE EFFECT THAT BOP HAD RECEIVED CONTRACT NO. NOBSR-87713 FOR DEVELOPMENT OF DIRECTION FINDER AN/URD-7 IN JANUARY 1962 AND HAD NOT AT THAT TIME PRODUCED AN ACCEPTABLE MODEL EVEN THOUGH THE NORMAL TIME FOR COMPLETION OF SUCH A PROJECT WOULD BE 1-1/2 TO 2 YEARS. IT IS ALSO REPORTED THAT THE AN/URD-7 IS CONSIDERABLY LESS COMPLEX THAN THE AN/TRQ- 23. FURTHERMORE, MR. ELLIOTT IS REPORTED TO HAVE STATED THAT HE DID NOT BELIEVE BOP HAD THE TECHNICAL CAPABILITY TO COMPLETE THE AN/URD-7 PROJECT. IN ADDITION TO THE REPORTED UNSATISFACTORY PERFORMANCE WITH RESPECT TO THE ABOVE CONTRACT, THE SURVEY REPORT STATES THAT BOP WAS 2 MONTHS LATE IN FURNISHING A PREPRODUCTION MODEL OF AN AN/VRC-24, A SET OF MINOR COMPLEXITY, UNDER ONE CONTRACT AND 10 MONTHS LATE ON FIRST DELIVERY OF THE AN/VRC-24 UNDER ANOTHER CONTRACT. IT WAS ALSO REPORTED THAT BOP WAS 7 MONTHS LATE IN DELIVERY OF A PREPRODUCTION MODEL OF THE AN/TRC-68 RADIO SET UNDER ANOTHER CONTRACT. THE LATTER THREE CONTRACTS WERE WITH THE ACTIVITY PERFORMING THE SURVEY.

ALTHOUGH DCASO FOUND BOP SATISFACTORY IN ALL AREAS CHECKED AND RECOMMENDED AWARD, NO EVALUATION OR RATING OF TECHNICAL CAPABILITY WAS MADE AS THIS AREA WAS NOT INCLUDED ON THE REQUEST FORM. WE NOTE THAT DCASO'S CONCLUSIONS ARE AT VARIANCE WITH THOSE OF FORT MONMOUTH IN AT LEAST TWO IMPORTANT AREAS. DCASO CONCLUDED THAT BOP HAD THE NECESSARY ENGINEERING AND SKILLED PERSONNEL TO PERFORM THE CONTRACT. HOWEVER, IT APPEARS THAT DCASO BASED ITS CONCLUSION ON THE BOP FURNISHED RESUME OF ITS KEY PERSONNEL AND NOT AS DID FORT MONMOUTH, ON THE QUALIFICATIONS AND EXPERIENCE OF THE FIVE MEN DIRECTLY RESPONSIBLE FOR THE FIVE PHASES OF THE PROJECT PLAN. DCASO ALSO CONCLUDED THAT BASED ON PRIOR SATISFACTORY PERFORMANCE OF CONTRACTS BOP HAD THE ABILITY TO MEET THE REQUIRED DELIVERY SCHEDULE ON THE SUBJECT PROCUREMENT. THE LIST OF CONTRACTS UPON WHICH THIS JUDGMENT WAS MADE APPEARS TO HAVE BEEN PREPARED BY BOP AND DOES NOT INCLUDE THE NAVY CONTRACT REFERRED TO BY FORTH MONMOUTH. ALTHOUGH THIS LIST REFERS TO AN/VRC-24 AND VRC 24 CONTRACTS AND A TRC-68 CONTRACT, IT DOES NOT INDICATE WHETHER DELIVERY WAS TIMELY.

THE DETERMINATION OF A PROSPECTIVE CONTRACTOR'S ABILITY TO PERFORM IS OF NECESSITY A MATTER OF JUDGMENT. WHILE SUCH DETERMINATION 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 OFFICER INVOLVED. THIS OFFICE WILL NOT SUBSTITUTE ITS JUDGMENT FOR THAT OF THE OFFICERS CHARGED WITH THE DUTY AND RESPONSIBILITY OF MAKING SUCH DECISIONS UNLESS THERE IS CLEARLY NO SUBSTANTIAL BAIS FOR THEIR ACTION OR THERE IS EVIDENCE OF BAD FAITH. 45 COMP. GEN. 4; 43 ID. 257. WE HAVE CAREFULLY REVIEWED AND CONSIDERED THE INFORMATION RELIED UPON BY THE CONTRACTING OFFICER IN MAKING THE DETERMINATION THAT BOP WAS NONRESPONSIBLE AND FIND NO BASIS UPON WHICH OUR OFFICE WOULD BE JUSTIFIED IN CONCLUDING THAT THERE WAS AN ABUSE OF THE ADMINISTRATIVE DISCRETION PERMITTED. ALTHOUGH THERE IS A DISPUTE AS TO WHETHER BOP HAS THE NECESSARY TECHNICAL EXPERIENCE FROM ITS PERFORMANCE OF PAST CONTRACTS, WE DO NOT FEEL THAT FORT MONMOUTH'S AND THE CONTRACTING OFFICER'S CONCLUSION IN THIS RESPECT WAS PLAINLY WITHOUT BASIS. IN VIEW THEREOF, WE MAY NOT PROPERLY OBJECT TO THE EXCLUSION OF BOP FROM NEGOTIATIONS AND THE SUBSEQUENT AWARD OF A CONTRACT TO SERVO.

HOWEVER, WE BELIEVE THERE ARE CERTAIN ASPECTS OF THIS CASE WHICH, ALTHOUGH NOT AFFECTING THE VALIDITY OF THE AWARD TO SERVO, REQUIRE NOTING. ALTHOUGH THE CONTRACTING OFFICER MADE HIS DETERMINATION OF NONRESPONSIBILITY ON MAY 11, IT WAS NOT UNTIL AFTER THE AWARD OF A CONTRACT TO SERVO ON JUNE 22 THAT YOU WERE APPRISED OF THIS FACT. BELIEVE, AS YOU CONTEND, THAT UNDER THE PROVISIONS OF ASPR 3-508.2 THE CONTRACTING OFFICER WAS REQUIRED TO PROVIDE YOU WITH NOTICE OF THE FACT THAT HE INTENDED TO CONDUCT FURTHER NEGOTIATIONS ONLY WITH THE FIRMS HE HAD DETERMINED RESPONSIBLE. THE ARMY CONTENDS THAT THE NOTICE REQUIRED UNDER THIS REGULATION IS LIMITED TO SITUATIONS WHERE THE PROPOSAL ITSELF IS UNACCEPTABLE. HOWEVER, WE BELIEVE THAT THE LANGUAGE "OR IN WHICH A LIMITED NUMBER OF SUPPLIERS HAVE BEEN SELECTED FOR ADDITIONAL NEGOTIATION" AND THE REFERENCE TO ASPR 3-805.1, WHICH REQUIRES NEGOTIATIONS WITH ALL RESPONSIBLE OFFERORS WITHIN A COMPETITIVE RANGE, INDICATES AN INTENTION FOR THE REGULATION TO ALSO APPLY IN THE SITUATION PRESENTED IN THE INSTANT CASE. ASIDE FROM ANY REGULATION REQUIRING NOTICE OF THE DETERMINATION OF NONRESPONSIBILITY, WE BELIEVE THE CONTRACTING OFFICER ACTED IMPROPERLY IN REQUESTING A 30 DAY EXTENSION OF YOUR OFFER ON MAY 27 WHEN HE HAD ALREADY DETERMINED BOP NONRESPONSIBLE. WE DO NOT BELIEVE HE HAS SATISFACTORILY EXPLAINED THIS ACTION BY STATING THAT IT WAS TAKEN "FOR ANY UNFORESEEN AMENDMENT TO REQUIREMENTS THAT MAY EFFECT THE -RESPONSIBILITY- OF THE FOUR LOW FIRMS.'

WE ALSO BELIEVE THAT THE CONTRACTING OFFICER SHOULD HAVE TAKEN SOME ACTION SUBSEQUENT TO THE DEBRIEFING SESSION ON JULY 12 TO CLARIFY THE QUESTIONS YOU RAISED WITH RESPECT TO THE FORT MONMOUTH REPORT. SINCE HE CONCEDED THAT SEVERAL OF THE DEFICIENCIES WOULD NOT SUPPORT A DETERMINATION OF NONRESPONSIBILITY ON THE BASIS OF INFORMATION YOU PRESENTED, WE BELIEVE HE HAD AN OBLIGATION TO VERIFY THE INFORMATION REPORTEDLY OBTAINED FROM MR. ELLIOTT OF THE NAVY AND TO AT LEAST RECONSIDER THE QUESTION OF BOP'S TECHNICAL CAPABILITY IN LIGHT OF YOUR POSITION ON THESE MATTERS. INFORMATION YOU HAVE PRESENTED OUR OFFICE WITH RESPECT TO THE AN/URD-7 CONTRACT, INCLUDING A STATEMENT FROM MR. ELLIOTT, INDICATES THE STRONG POSSIBILITY THAT A CHECK WITH MR. ELLIOTT, MAY HAVE ALTERED THE CONCLUSIONS WITH RESPECT TO BOP'S PERFORMANCE THEREUNDER. IS ALSO OUR OPINION THAT RECOGNITION OF THE DEPARTMENT OF DEFENSE POLICY WITH RESPECT TO CANADIAN PURCHASES, AS EXPRESSED IN ASPR 6-501, ET SEQ., SHOULD HAVE PROMPTED THE CONTRACTING OFFICER TO RESOLVE THE QUESTIONS RAISED BY YOU IMMEDIATELY AFTER THE MEETING OF JULY 12. IN WHAT HAS BEEN SAID ABOVE, WE DO NOT MEAN TO IMPLY THAT THE CONTRACTING OFFICER WAS UNDER ANY LEGAL COMPULSION TO TAKE THE ACTION SUGGESTED OR THAT HE WOULD HAVE NECESSARILY REACHED A DIFFERENT CONCLUSION ON THE QUESTION OF BOP'S RESPONSIBILITY. HOWEVER, WE DO BELIEVE THAT SUCH ACTION WAS INDICATED BY AND WOULD HAVE BEEN PROPER UNDER THE CIRCUMSTANCES. FURTHERMORE, WE BELIEVE ASPR IS DEFICIENT IN FURNISHING THE CONTRACTING OFFICER PROCEDURES OR GUIDELINES TO FOLLOW IN DETERMINING THE RESPONSIBILITY OF CANADIAN FIRMS. ALTHOUGH ASPR 1-903 PRESCRIBES MINIMUM STANDARDS FOR PROSPECTIVE CONTRACTORS AND ASPR 1-904 REQUIRES THE CONTRACTING OFFICER TO MAKE A DETERMINATION OF RESPONSIBILITY BEFORE THE AWARD OF A CONTRACT, THE PROVISIONS OF SECTION 1, PART 9, OF ASPR ARE NOT APPLICABLE TO CANADIAN COMMERCIAL CORPORATION ASPR 1-901. WE HAVE, THEREFORE, CALLED THIS APPARENT DEFICIENCY TO THE ATTENTION OF THE SECRETARY OF DEFENSE FOR HIS CONSIDERATION.

YOU HAVE ALSO EXPRESSED CONCERN OVER BOP'S STATUS ON FUTURE PROCUREMENTS. THE DETERMINATION IN THE INSTANT CASE DOES NOT PRECLUDE CONSIDERATION OF BOP ON FUTURE PROCUREMENTS. THE DETERMINATION OF BOP'S RESPONSIBILITY AS A PROSPECTIVE CONTRACTOR ON FUTURE PROCUREMENTS MUST BE BASED ON THE FACTS AND CIRCUMSTANCES THEN EXISTING.

IN THE CIRCUMSTANCES, THERE IS NO BASIS UPON WHICH OUR OFFICE MAY PROPERLY DISTURB THE AWARD OF THE CONTRACT TO SERVO.