B-162013, B-162158, OCT. 9, 1967

B-162013,B-162158: Oct 9, 1967

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LOW BIDDER WHO IS SHOWN TO HAVE BEEN DEFICIENT AND TO HAVE POOR PERFORMANCE IN NUMEROUS INSTANCES UNDER PREVIOUS CONTRACTS MUST BE REGARDED AS HAVING BID PROPERLY REJECTED FOR NONRESPONSIBILITY SINCE DETERMINATION WAS BASED UPON SUBSTANTIAL EVIDENCE. REFERRAL TO SBA IS NOT REQUIRED UNDER ASPR 1-903.1 (III) WHEN PAST UNSATISFACTORY PERFORMANCE IS DUE TO FAILURE TO APPLY THE NECESSARY TENACITY OR PERSEVERANCE TO DO AN ACCEPTABLE JOB. WHILE LOW BID WAS $10. 061 LOWER THAN BID OF SUCCESSFUL BIDDER IT LONG HAS BEEN HELD THAT IT IS INFINITELY MORE IN PUBLIC INTEREST TO ABIDE BY THE RULES OF COMPETITIVE BIDDING THAN TO OBTAIN A PECUNIARY ADVANTAGE BY VIOLATION OF SUCH RULES. WAS A READVERTISEMENT OF INVITATION NO.

B-162013, B-162158, OCT. 9, 1967

BIDDERS - RESPONSIBILITY DECISION CONCERNING REJECTION OF LOW BID BY REINHARD ELECTRONICS FOR FURNISHING NONPERSONAL REPAIR AND MAINTENANCE SERVICES TO AIR FORCE ACADEMY. LOW BIDDER WHO IS SHOWN TO HAVE BEEN DEFICIENT AND TO HAVE POOR PERFORMANCE IN NUMEROUS INSTANCES UNDER PREVIOUS CONTRACTS MUST BE REGARDED AS HAVING BID PROPERLY REJECTED FOR NONRESPONSIBILITY SINCE DETERMINATION WAS BASED UPON SUBSTANTIAL EVIDENCE. FURTHER, REFERRAL TO SBA IS NOT REQUIRED UNDER ASPR 1-903.1 (III) WHEN PAST UNSATISFACTORY PERFORMANCE IS DUE TO FAILURE TO APPLY THE NECESSARY TENACITY OR PERSEVERANCE TO DO AN ACCEPTABLE JOB. WHILE LOW BID WAS $10,061 LOWER THAN BID OF SUCCESSFUL BIDDER IT LONG HAS BEEN HELD THAT IT IS INFINITELY MORE IN PUBLIC INTEREST TO ABIDE BY THE RULES OF COMPETITIVE BIDDING THAN TO OBTAIN A PECUNIARY ADVANTAGE BY VIOLATION OF SUCH RULES.

TO REINHARD ELECTRONICS:

BY TELEGRAMS DATED JULY 11 AND 27 AND SEPTEMBER 6, 1967, YOU PROTESTED AGAINST THE REJECTION OF YOUR LOW BID SUBMITTED IN RESPONSE TO SMALL BUSINESS RESTRICTED INVITATIONS FOR BIDS NOS. F05611-67-B-0117 AND F05611- 68-B-0001 ISSUED BY THE UNITED STATES AIR FORCE ACADEMY.

INVITATION NO. F05611-68-B-0001, ISSUED ON JULY 13, 1967, WAS A READVERTISEMENT OF INVITATION NO. F05611-67-B-0121, ISSUED ON MAY 9, 1967, WHICH WAS CANCELED AFTER OPENING PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2-404.1 (B) (II) BECAUSE OF SPECIFICATION REVISION. BOTH INVITATIONS COVERED NONPERSONAL SERVICES TO INSPECT, REPAIR AND MAINTAIN ELECTRONIC EQUIPMENT AND SYSTEMS AT THE AIR FORCE ACADEMY. WHEN BIDS UNDER THE ORIGINAL INVITATION WERE OPENED ON JUNE 8, 1967, YOUR FIRM WAS LOW BIDDER AT $1,080 PER MONTH. OTHER BIDS RECEIVED RANGED FROM $2,890 TO $5,958 PER MONTH. BECAUSE OF THIS WIDE VARIANCE IN BID PRICES, THE INVITATION WAS ANALYZED TO DETERMINE IF THE SPECIFICATIONS WERE MISLEADING TO BIDDERS. IT WAS FOUND THAT 17 ITEMS LISTED FOR MAINTENANCE AND REPAIR WERE OF AN INCONSEQUENTIAL NATURE, REQUIRING IN SOME INSTANCES ONLY ONE SERVICE CALL PER YEAR. THESE MINOR ITEMS, WHEN COUPLED WITH THE REMAINDER OF THE WORK SPECIFICATIONS, APPEARED TO BE FACTORS WHICH COULD HAVE MISLED THE BIDDERS AND POSSIBLY RESULTED IN THE WIDE VARIANCE OF BID PRICES. THE INVITATION WAS THEREFORE CANCELED, AND THE PROCUREMENT WAS READVERTISED ON JULY 13, 1967, UNDER REVISED SPECIFICATIONS. WHEN THE NEW INVITATION WAS OPENED ON AUGUST 2, 1967, TWO ADDITIONAL FIRMS HAD SUBMITTED BIDS, AND THE BID PRICES WERE CONSIDERABLY LESS THAN THOSE PREVIOUSLY SUBMITTED. AGAIN, YOU SUBMITTED THE LOWEST BID IN THE AMOUNT OF $1,080 PER MONTH. SINCE YOU WERE NOT DISPLACED AS THE LOW BIDDER UNDER THE ORIGINAL INVITATION, NO PREJUDICE RESULTED TO YOU UNDER THE RESOLICITATION.

ALTHOUGH YOU WERE THE LOWEST BIDDER UNDER THIS RESOLICITATION, THE CONTRACTING OFFICER WAS UNABLE, AS REQUIRED BY ASPR 1-903.1 (III), TO MAKE AN AFFIRMATIVE DETERMINATION THAT YOUR FIRM WAS A RESPONSIBLE PROSPECTIVE CONTRACTOR BECAUSE OF AN UNSATISFACTORY PERFORMANCE RECORD. HENCE, YOUR BID WAS REJECTED AND AWARD WAS MADE TO THE LOWEST RESPONSIBLE, RESPONSIVE BIDDER--CRAFTSMAN ELECTRONIC SERVICE--ON AUGUST 25, 1967. THE DETAILS INVOLVED IN THE DETERMINATION OF NONRESPONSIBILITY ARE DISCUSSED LATER IN THIS DECISION.

THE DECISIONS OF OUR OFFICE CITED BY YOU TO SUPPORT YOUR ARGUMENT FOR CANCELLATION OF THE RESOLICITATION ARE NOT APPLICABLE HERE SINCE THOSE CASES INVOLVED SITUATIONS WHEREIN NO COGENT REASONS EXISTED FOR THE CANCELLATION OF THE INVITATIONS. WE FIND HERE THAT THE ORIGINAL SPECIFICATIONS WERE MISLEADING AND, DUE TO THEIR COMPLEXITY, RESULTED IN UNREASONABLE BIDS. THEREFORE, AND SINCE THE RESOLICITATION IS NOT SUBJECT TO QUESTION, NO VALID BASIS EXISTS FOR DISTURBING EITHER THE RESOLICITATION OR THE AWARD THEREUNDER.

INVITATION FOR BIDS NO. F05611-67-B-0117, COVERING THE REPAIR OF A COMMUNITY ANTENNA TELEVISION SYSTEM, WAS ISSUED ON APRIL 28, 1967. FOUR BIDS WERE RECEIVED AND OPENED ON JUNE 6, 1967, AND WHILE IT APPEARED THAT YOUR FIRM WAS THE LOW BIDDER, THE CONTRACTING OFFICER WAS UNABLE TO MAKE AN AFFIRMATIVE DETERMINATION THAT YOUR FIRM WAS A RESPONSIBLE PROSPECTIVE CONTRACTOR. SINCE SUCH AN AFFIRMATIVE DETERMINATION IS A PREREQUISITE TO AN AWARD UNDER ASPR 1-904.1, THE CONTRACTING OFFICER EVALUATED THE NEXT LOW BID SUBMITTED BY THE MAYFIELD ENGINEERING COMPANY. AWARD WAS MADE TO THIS BIDDER ON JULY 7, 1967, AS THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER AFTER THE REQUIRED DETERMINATIONS WERE MADE. UPON REVIEW, WE FIND NO LEGAL BASIS TO DISTURB THE AWARD MADE TO MAYFIELD ENGINEERING COMPANY.

ASPR 1-902 PROVIDES IN PERTINENT PART:

"1-902 GENERAL POLICY. * * * 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.'

ALSO, ASPR 1-903.1 (III) PROVIDES THAT A PROSPECTIVE CONTRACTOR MUST: "HAVE A SATISFACTORY RECORD OF PERFORMANCE (CONTRACTORS WHO ARE SERIOUSLY DEFICIENT IN CURRENT CONTRACT PERFORMANCE, WHEN THE NUMBER OF CONTRACTS AND THE EXTENT OF DEFICIENCY OF EACH ARE CONSIDERED, SHALL, IN THE ABSENCE OF EVIDENCE TO THE CONTRARY OR CIRCUMSTANCES PROPERLY BEYOND THE CONTROL OF THE CONTRACTOR, BE PRESUMED TO BE UNABLE TO MEET THIS REQUIREMENT). PAST UNSATISFACTORY PERFORMANCE, DUE TO FAILURE TO APPLY NECESSARY TENACITY OR PERSEVERANCE TO DO AN ACCEPTABLE JOB, SHALL BE SUFFICIENT TO JUSTIFY A FINDING OF NONRESPONSIBILITY AND IN THE CASE OF SMALL BUSINESS CONCERNS, SHALL NOT REQUIRE SUBMISSION OF THE CASE TO THE SMALL BUSINESS ADMINISTRATION; * * *"

A DOCUMENTED REPORT HAS BEEN RECEIVED FROM THE PROCUREMENT AGENCY WITH RESPECT TO THE REJECTION OF YOUR LOW BID ON THE GROUND OF NONRESPONSIBILITY AND THERE ARE SET FORTH BELOW THE DETAILED RESPONSES TO THE ALLEGATIONS CONTAINED IN YOUR TELEGRAM OF JULY 11. THESE RESPONSES ARE EQUALLY APPLICABLE TO YOUR RESPONSIBILITY UNDER INVITATION NO. F05611- 68-B-0001, DISCUSSED ABOVE. AS TO YOUR FIRST CONTENTION THAT YOUR FIRM HAD A CONTRACT FOR THE PAST 4 YEARS WHICH INCLUDED THE MAINTENANCE OF THE EQUIPMENT INVOLVED IN THIS PROCUREMENT, WE ARE ADVISED THAT:

"THE CONTRACTOR DID PERFORM UNDER CONTRACTS TO MAINTAIN THE EXISTING ANTENNA TELEVISION SYSTEM; HOWEVER, HE STATES ERRONEOUSLY THAT HE HELD CONTRACTS THAT INCLUDED MAINTENANCE OF -THE EQUIPMENT INVOLVED- IN THE CONTRACT AWARDED TO THE SECOND LOW BIDDER ON 7 JULY 1967. THIS CONTRACT CALLS FOR THE REPLACEMENT OF THE EXISTING SYSTEM WITH A BETTER AND MUCH MORE SOPHISTICATED SYSTEM AND IT HAS BEEN DETERMINED BY ACADEMY PERSONNEL THAT THIS CONTRACTOR HAS NOT DEMONSTRATED HIS ABILITY TO SATISFACTORILY PERFORM UNDER AWARDED CONTRACTS. * * *"

YOU FURTHER ADVISE THAT BETWEEN JANUARY 20 AND JANUARY 26, 1967, THE ACADEMY SUDDENLY AND WITH NO BASIS MADE KNOWN TO YOUR FIRM INSTITUTED DEFAULT TERMINATION ACTION ON THREE CURRENT CONTRACTS; THAT AIR FORCE LOGISTICS COMMAND (AFLC) HEADQUARTERS DETERMINED THAT NO FACTUAL BASIS EXISTED FOR SUCH ACTION ON TWO OF THE CONTRACTS, AND THAT FURTHER THE ACADEMY VOLUNTARILY WITHDREW TERMINATION ACTION ON THE THIRD CONTRACT. YOU ALSO POINT OUT IN THIS CONNECTION THAT THE ACADEMY GAVE NO NOTICE OF DEFICIENCIES OR DELINQUENCIES IN PERFORMANCE. THE PROCUREMENT AGENCY'S RESPONSE TO THESE ALLEGATIONS IS AS FOLLOWS:

"THE ACADEMY DID INSTITUTE TERMINATION FOR DEFAULT ACTION ON TWO OF THIS FIRM'S CONTRACTS IN MARCH 1967, AND FOR GOOD AND SUFFICIENT REASONS. THESE WERE CONTRACTS NO. AF 05/611/-3861 AND AF 05/611/ 3855. * * * ON CONTRACT AF 05/611/-3861, MAINTENANCE OF SUPERVISORY CONTROL AND BASE WARNING SYSTEMS, THE ADMINISTRATIVE CONTRACTING OFFICER ADVISED THE CONTRACTOR OF HIS UNSATISFACTORY PERFORMANCE BY LETTER DATED 12 AUGUST 1966 AND IN PERIODIC MEETINGS FROM 4 OCTOBER 1966 THROUGH 8 DECEMBER 1966. A SHOW CAUSE LETTER WAS WRITTEN TO THE CONTRACTOR ON 20 JANUARY 1967. ON THE OTHER CONTRACT, AF 05/611/-3855, REPAIR AND MAINTAIN ELECTRONIC EQUIPMENT AND SYSTEMS, THE ADMINISTRATIVE CONTRACTING OFFICER ADVISED THE CONTRACTOR OF HIS UNSATISFACTORY PERFORMANCE BY LETTERS DATED 10 AUGUST 1966, 28 SEPTEMBER 1966, AND IN PERIODIC MEETINGS FROM OCTOBER 1966 THROUGH JANUARY 1967. A SHOW CAUSE LETTER WAS WRITTEN TO THE CONTRACTOR ON 20 JANUARY 1967. * * * BECAUSE THE TERMINATION CONTRACTING OFFICER, HQ AFLC, DECIDED THAT THE CONTRACTOR SHOULD BE PERMITTED TO COMPLETE PERFORMANCE UNDER THE CONTRACTS THROUGH 30 JUNE 1967, CANNOT BE INTERPRETED TO MEAN THAT -THERE WAS NO FACTUAL BASIS FOR DEFAULT.- THIS STATEMENT BY THE CONTRACTOR IS PURE CONJECTURE; WE AT THE ACADEMY HAVE NOT BEEN INFORMED BY THE TERMINATION CONTRACTING OFFICER WHY HE ELECTED NOT TO TERMINATE THE CONTRACTS. A DECISION WAS MADE BY THIS COMMAND NOT TO PURSUE DEFAULT ACTION ON THE THIRD CONTRACT WHICH THE CONTRACTOR REFERRED TO; HOWEVER, THIS DECISION WAS MADE BEFORE AND NOT AFTER THE OTHER TWO WERE FORWARDED TO AFLC FOR INVESTIGATION FOR DEFAULT ACTION.'

THE RECORD BEFORE US CONTAINS NUMEROUS EXAMPLES OF YOUR DEFICIENT AND POOR PERFORMANCE UNDER PREVIOUS CONTRACTS WHICH, IN OUR OPINION, SUFFICIENTLY SUPPORT THE ADMINISTRATIVE DETERMINATION OF NONRESPONSIBILITY. WHILE IT IS NOT PRACTICABLE TO RESTATE HERE THE EXTENSIVE ENUMERATION OF DEFICIENCIES, WE ARE ATTACHING FOR YOUR INFORMATION COPIES OF PERTINENT REPORTS BY THE PROCUREMENT OFFICIALS WHEREIN SUCH DETAIL ENUMERATION IS SET FORTH.

NEXT YOU CONTEND THAT THE AWARD WAS MADE AT A PREMIUM PRICE AND CONSTITUTED ARBITRARY AND CAPRICIOUS ACTION SEVERELY DETRIMENTAL TO THE GOVERNMENT. WE HAVE BEEN ADVISED THAT THE GOVERNMENT ESTIMATE FOR THE WORK AWARDED WAS $94,800 AND THAT THE CONTRACT PRICE IS IN THE AMOUNT OF $68,205. WE FIND NO BASIS TO CONCLUDE THAT THE CONTRACT PRICE WHICH WAS DETERMINED BY COMPETITION AND REPRESENTED AN AMOUNT SUBSTANTIALLY LESS THAN THE GOVERNMENT'S ESTIMATE WAS UNREASONABLE OR OTHERWISE SUBJECT TO QUESTION BY OUR OFFICE.

YOU NEXT ALLEGE THAT THE REQUIREMENTS OF ASPR 1-705.4 (CERTIFICATE OF COMPETENCY PROCEDURES IN THE CASE OF SMALL BUSINESS BIDDERS) HAD BEEN BLATANTLY VIOLATED APPARENTLY SINCE THE MATTER OF YOUR FIRM'S NONRESPONSIBILITY WAS NOT REFERRED TO THE SMALL BUSINESS ADMINISTRATION FOR RESOLUTION. HOWEVER, AS PROVIDED IN ASPR 1-903.1 (III), QUOTED ABOVE, SUCH REFERRAL ACTION IS NOT REQUIRED IN THE CASE OF A PROSPECTIVE CONTRACTOR WHOSE PAST UNSATISFACTORY PERFORMANCE WAS DUE TO FAILURE TO APPLY THE NECESSARY TENACITY OR PERSEVERANCE TO DO AN ACCEPTABLE JOB. SEE 43 COMP. GEN. 298. THE RECORD BEFORE US SUPPORTS THE CONCLUSION THAT YOUR FIRM'S POOR PERFORMANCE WAS DUE TO INATTENTION TO CONTRACT REQUIREMENTS AND FAILURE TO OBSERVE THE PERFORMANCE STANDARDS EXPECTED OF GOVERNMENT CONTRACTORS.

SECTION 2305 (C) OF TITLE 10, U.S.C. PROVIDES THAT AWARDS OF ADVERTISED PROCUREMENTS SHALL BE MADE TO THE RESPONSIBLE BIDDER WHOSE BID IS RESPONSIVE TO THE INVITATION AND WILL BE THE MOST ADVANTAGEOUS TO THE UNITED STATES, PRICE AND OTHER FACTORS CONSIDERED. A DETERMINATION OF RESPONSIBILITY IS PRIMARILY THE FUNCTION OF THE CONTRACTING OFFICER, AND IS NECESSARILY A MATTER OF JUDGMENT INVOLVING A CONSIDERABLE RANGE OF DISCRETION. WHERE SUCH DETERMINATION IS BASED UPON SUBSTANTIAL EVIDENCE, AS HERE, THERE IS NO VALID BASIS UPON WHICH WE MAY SUBSTITUTE OUR JUDGMENT FOR THAT OF THE CONTRACTING OFFICER. 38 COMP. GEN. 131; 37 COMP. GEN. 430, 435.

WHILE YOUR BID PRICE WAS $10,061 LOWER THAN THE BID OF THE SUCCESSFUL BIDDER, NEVERTHELESS, IT LONG HAS BEEN HELD THAT IT IS INFINITELY MORE IN THE PUBLIC INTEREST TO ABIDE BY THE RULES OF COMPETITIVE BIDDING THAN TO OBTAIN A PECUNIARY ADVANTAGE IN A PARTICULAR CASE BY THE VIOLATION OF SUCH RULES. 17 COMP. GEN. 554.