B-162232, NOVEMBER 24, 1967, 47 COMP. GEN. 291

B-162232, NOVEMBER 24, 1967, 47 COMP. GEN. 291

BIDDERS - QUALIFICATIONS - ADMINISTRATIVE DETERMINATIONS - REVIEW A CONTRACTING OFFICER WHO NOTWITHSTANDING VERIFICATION OF A LOW BID SUSPICIOUSLY OUT OF LINE WITH OTHER BIDS AND THE GOVERNMENT'S ESTIMATE IS STILL DOUBTFUL OF THE REASONABLENESS OF THE LOW BID PRICE, AS WELL AS THE BIDDER-S--- A SMALL BUSINESS CONCERN--- FINANCIAL CAPACITY, EXPERIENCE, AND ABILITY TO SUBCONTRACT WORK ON A PROPOSED RESEARCH TUNNEL AND, THEREFORE, UNABLE TO MAKE THE PREAWARD DETERMINATION OF BIDDER RESPONSIBILITY REQUIRED BY ADMINISTRATIVE REGULATION, UPON REFUSAL OF THE SMALL BUSINESS ADMINISTRATION TO ISSUE A CERTIFICATE OF COMPETENCY, PROPERLY CONSIDERED THE LOW BIDDER NONRESPONSIBLE, A DETERMINATION FOUND UPON REVIEW BY THE GENERAL ACCOUNTING OFFICE UNDER ITS AUDIT AUTHORITY TO BE SUPPORTED BY THE RECORD, AND THE CONTRACTING OFFICER HAVING ACTED WITHIN THE SCOPE OF HIS AUTHORITY, HIS REJECTION OF THE LOW BIDDER AS NONRESPONSIBLE IS NOT SUBJECT TO JUDICIAL REVIEW. BIDS - REJECTION - PROPRIETY ALTHOUGH NOT AUTHORIZED TO REVIEW A SMALL BUSINESS ADMINISTRATION (SBA) DETERMINATION OR TO DIRECT THE ISSUANCE OF A CERTIFICATE OF COMPETENCY, THE GENERAL ACCOUNTING OFFICE IS NOT PRECLUDED FROM REVIEWING THE REJECTION OF A SMALL BUSINESS CONCERN AS NONRESPONSIBLE, WHETHER OR NOT SBA ISSUED A CERTIFICATE OF COMPETENCY, AS THE QUESTION UPON REVIEW OF ALL PERTIENT INFORMATION AND EVIDENCE AVAILABLE TO THE CONTRACTING OFFICER AND THE SBA IS WHETHER THE BID REJECTION WAS PROPER, AND WHERE THE RECORD JUSTIFIES THE DOUBT OF THE CONTRACTING OFFICER AND SBA, IT IS IMMATERIAL THAT THE RECORD MIGHT ALSO SUPPORT A DETERMINATION OF BIDDER RESPONSIBILITY, IN VIEW OF THE FACT THAT A PROSPECTIVE CONTRACTOR HAS THE BURDEN TO AFFIRMATIVELY DEMONSTRATE RESPONSIBILITY, AND THE CONTRACTING OFFICER IS NOT REQUIRED TO INDEPENDENTLY GATHER INFORMATION TO RESOLVE DOUBT, INSTEAD ANY DOUBT SHOULD BE RESOLVED AGAINST THE BIDDER.

TO THE PHOENIX GENERAL CONSTRUCTION CO., INC., NOVEMBER 24, 1967:

REFERENCE IS MADE TO YOUR PROTEST BY TELEGRAM DATED AUGUST 9, 1967, AS SUPPLEMENTED BY SUBSEQUENT CORRESPONDENCE, AGAINST THE REJECTION OF YOUR LOW BID BY THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION (NASA) AND THE AWARD OF A CONTRACT TO ANOTHER BIDDER UNDER INVITATION FOR BIDS (IFB) NO. L-7929, ISSUED APRIL 4, 1967, BY THE LANGLEY RESEARCH CENTER, LANGLEY STATION, HAMPTON, VIRGINIA, FOR THE CONSTRUCTION OF A TUNNEL STRUCTURE AND FOUNDATIONS FOR THE V/STOL TRANSITION RESEARCH TUNNEL, WEST AREA, LANGLEY RESEARCH CENTER. SINCE THE ADMINISTRATIVE REPORTS AND A REPORT FROM THE SMALL BUSINESS ADMINISTRATION (SBA) HAVE BEEN MADE AVAILABLE TO YOU, ONLY SUCH FACTS AS ARE ESSENTIAL TO OUR DECISION WILL BE SET FORTH HEREIN.

THE IFB, WHICH SOLICITED BOTH A BASE BID AND AN ALTERNATE BID,DESCRIBED THE WORK, WHICH IS TO BE COMPLETED WITHIN 530 DAYS AFTER RECEIPT OF NOTICE TO PROCEED, AS INCLUDING REINFORCED CONCRETE FOUNDATIONS AND SLABS AND STEEL TUNNEL CIRCUIT, THE MAJOR PORTIONS TO INCLUDE THE TUNNEL, STAGNATION AREA AND EXHAUST TOWER, AIR INTAKE TOWER, TURNING VANES, DIFFUSING SCREENS, NACELLE TO HOUSE DRIVE MOTOR SYSTEM, AIR INTAKE FLAPS, AIR CONTROL VALVE, AND REMOVAL OF EXISTING DUCT AND VALVE HOUSE. BIDDERS WERE PLACED ON NOTICE THAT THE TUNNEL ERECTION WORK SHOULD BE COORDINATED WITH THE COMPLETION OF THE DRIVE SYSTEM INSTALLATION AND TEST CHAMBER AND MECHANICAL-ELECTRICAL EQUIPMENT ROOM CONSTRUCTION BY OTHERS. THE WAGE RATE DETERMINATION ISSUED BY THE SOLICITOR OF LABOR AND INCORPORATED IN THE IFB, AS AMENDED, HAD AN EXPIRATION DATE OF SEPTEMBER 6, 1967.

ON MAY 24, 1967, THE FOUR BIDS RECEIVED IN RESPONSE TO THE IFB WERE OPENED. THE STANDING OF THE BIDS WAS AS FOLLOWS:

BIDDER BASE BID ALTERNATE A PHOENIX GENERAL CONSTRUCTION CO. INC $1,418,000 $1,455,000 CHICAGO BRIDGE AND IRON CO. 2,070,000 2,090,000 PITTSBURGH DES MOINES STEEL CO. 2,174,000 2,224,000 BLOUNT CONSTRUCTION COMPANY 2,249,000 2,294,700 THE GOVERNMENT'S ESTIMATE FOR THE COST OF THE WORK WAS $1,988,800.

ON MAY 25, ONE DAY SUBSEQUENT TO THE BID OPENING, THE PROCUREMENT OFFICER MET WITH THREE OF YOUR PRINCIPALS AND REQUESTED THAT THERE BE FURNISHED TO THE GOVERNMENT DATA REGARDING YOUR FINANCIAL AND SUBCONTRACTING ARRANGEMENTS IN ORDER TO ESTABLISH YOUR CAPABILITY TO PERFORM THE WORK, AS WELL AS A STATEMENT CONCERNING THE ANTICIPATED CASH FLOW REQUIREMENTS FOR THE CONTRACT. FURTHER, BECAUSE OF THE SUBSTANTIAL DISPARITY BETWEEN YOUR PRICE AND THE GOVERNMENT'S ESTIMATE AND BETWEEN YOUR PRICE AND THE THREE COMPETING BIDS, YOU WERE REQUESTED TO FURNISH CERTAIN ADDITIONAL INFORMATION AND TO CONFIRM IN WRITING YOUR BID PRICES FOR THE BASE BID AND ALTERNATE, AND BY LETTER OF MAY 25, YOU WERE INFORMED THAT THE REQUEST FOR BID VERIFICATION WAS MADE BECAUSE THE PRICE DISPARITY GAVE RISE TO SUSPICION OF A MISTAKE IN YOUR BID.

BY LETTER DATED MAY 30, ADDRESSED TO THE LANGLEY RESEARCH CENTER, YOU CONFIRMED YOUR BID PRICE. IN ADDITION, YOU CONTENDED THAT THE COMPETING BIDS DID NOT OFFER THE GOVERNMENT A FAIR PRICE AND THAT THE GOVERNMENT'S ESTIMATE WAS OUT OF LINE FOR THE WORK INVOLVED, AND YOU OFFERED TO SUBSTANTIATE SUCH ALLEGATIONS. IN ANOTHER LETTER OF THE SAME DATE, ALSO ADDRESSED TO THE LANGLEY RESEARCH CENTER, YOU FURNISHED A STATEMENT OF YOUR ESTIMATED MONTHLY CASH OUTLAYS BASED UPON 18 MONTHS' COMPLETION TIME.

IN A LETTER DATED JUNE 2, 1967, TO THE CONTRACTING OFFICER, YOU LISTED SEVERAL FIRMS FABRICATING THE VARIOUS TYPES OF MATERIAL WHICH WOULD BE REQUIRED FOR THE WORK, AND YOU CONFIRMED STATEMENTS WHICH YOUR REPRESENTATIVES APPARENTLY MADE ON MAY 25 AT THE CONFERENCE WITH THE CONTRACTING OFFICER, ONE DAY AFTER THE OPENING OF BIDS, THAT YOU PROPOSED TO DO ALL OF YOUR OWN CONCRETE WORK, DEMOLITION, AND ERECTION OF THE TUNNEL. YOU ALSO STATED THAT YOU WERE CONSIDERING OTHER FABRICATORS ON SOME ITEMS AND WOULD SUBMIT THEIR NAMES FOR APPROVAL BY NASA AT A LATER DATE.

IN A TELEGRAM DATED JUNE 5 TO YOU, THE CONTRACTING OFFICER REFERRED TO THE LETTER OF MAY 30 IN WHICH YOU MADE THE ALLEGATIONS THAT THE COMPETING BIDS WERE NOT FAIR AND QUESTIONED THE ACCURACY OF THE GOVERNMENT ESTIMATE, REQUESTED YOU TO SUBSTANTIATE SUCH ALLEGATIONS, AND FURTHER REQUESTED THAT YOUR REPLY BE SUBMITTED BY JUNE 8. BY TELEGRAM DATED JUNE 6, HOWEVER, YOU REPLIED THAT IT WAS NOT YOUR INTENT IN WRITING THE LETTER OF MAY 30 TO SUPPLY ANY ADDITIONAL INFORMATION REGARDING YOUR ESTIMATE (BID PRICE), AND YOU STATED THAT, WHILE YOU WERE WILLING TO FURNISH ADDITIONAL INFORMATION REGARDING THE MATTERS DISCUSSED AT THE MAY 25 MEETING WITH NASA, INCLUDING THE EXPERIENCE OF YOUR KEY PERSONNEL, FINANCIAL AND BONDING CAPABILITIES, AND SUBCONTRACTORS AND VENDORS, YOU DID NOT CHOOSE TO MAKE ANY OTHER STATEMENTS EXCEPT UNDER OATH AND SUBJECT TO THE RIGHT TO SUBPOENA WITNESSES.

BY JUNE 8, IN ADDITION TO THE INFORMATION WHICH YOU HAD FURNISHED, THE CONTRACTING OFFICER WAS ALSO IN POSSESSION OF A CREDIT REPORT WHICH INDICATED THAT YOU ANTICIPATED ANNUAL SALES OF $1,500,000 BUT REFLECTED A WORTH OF ONLY $20,000 IN ADDITION TO ASSETS "IN GOOD FIVE FIGURES; " A STATEMENT FROM YOUR PROPOSED SURETY THAT YOU QUALIFIED FOR AT LEAST $6 MILLION BONDING CAPACITY; AND STATEMENTS FROM YOUR BANK INDICATING THAT THE BALANCE IN YOUR ACCOUNT HAD RANGED FROM A MODERATE TO MIDDLE FIVE FIGURE ACCOUNT BUT NO PROBLEM WOULD BE ANTICIPATED IN ARRANGING CREDIT IN LOW SIX FIGURE AMOUNTS, STATEMENTS WHICH THE CONTRACTING OFFICER CONSTRUED TO MEAN THAT THE BANK WOULD EXTEND CREDIT TO YOU OF $100,000 TO $300,000. FURTHER, OTHER INFORMATION AVAILABLE TO THE CONTRACTING OFFICER INDICATED THAT YOU HAD BEEN ORGANIZED IN 1966; THAT YOUR ORGANIZATION CONSISTED OF FIVE ACTIVE INDIVIDUALS, NECESSITATING SUBCONTRACTING OF A MAJOR PORTION OF THE ORK; THAT WHILE YOUR KEY PERSONNEL HAD HAD EXPERIENCE WITH OTHER CONSTRUCTION COMPANIES, THE EXPERIENCE OF YOUR PRESIDENT WAS CHIEFLY IN MANAGEMENT AND ADMINISTRATION RATHER THAN IN AN ENGINEERING OR TECHNICAL CAPACITY; AND THAT THERE WAS NO INDICATION THAT THE BACKGROUND AND EXPERIENCE OF YOUR PROPOSED FIELD SUPERINTENDENT, ANY MORE THAN THAT OF YOUR PRESIDENT, ADEQUATELY ESTABLISHED THE PROFESSIONAL ENGINEERING COMPETENCE NECESSARY TO MANAGE SUCCESSFULLY THE CONSTRUCTION OF THE SUBJECT FACILITY. AFTER CONSIDERATION OF ALL OF THE AVAILABLE INFORMATION, THE CONTRACTING OFFICER CONCLUDED THAT THERE WAS DOUBT AS TO YOUR FINANCIAL CAPACITY, YOUR EXPERIENCE, YOUR ABILITY TO SUBCONTRACT EFFECTIVELY (ABSENT EVIDENCE OF COMMITMENTS OR ARRANGEMENTS WITH RESPONSIBLE SUBCONTRACTORS), AND THE REASONABLENESS OF YOUR BID PRICE; ACCORDINGLY, THE CONTRACTING OFFICER FURTHER CONCLUDED THAT HE WAS UNABLE TO MAKE THE PRE-AWARD DETERMINATION REQUIRED BY NASA PROCUREMENT REGULATION (NASA PR) 2.407-2 AND NASA PR 1.902 THAT YOU WERE A RESPONSIBLE PROSPECTIVE CONTRACTOR. HOWEVER, SINCE YOU WERE A SMALL BUSINESS CONCERN AND THE FACTORS WHICH PROMPTED THE CONTRACTING OFFICER'S NEGATIVE DETERMINATION OF YOUR RESPONSIBILITY CONCERNED YOUR CAPACITY AND CREDIT, THE CONTRACTING OFFICER, IN ACCORDANCE WITH SECTION 2 (8) OF THE SMALL BUSINESS ACT OF JULY 18, 1958, P. L. 85-536, AS AMENDED (15 U.S.C. 637 (B) (7) ( AND PURSUANT TO THE CERTIFICATE OF COMPETENCY (COC) PROCEDURES SET FORTH IN NASA PR 1.705-4 (B), NOTIFIED SBA BY LETTER OF JUNE 8 OF HIS INTENT TO REJECT YOUR BID ON THE BASIS OF NONRESPONSIBILITY AND STATED THAT, IN COMPLIANCE WITH THE COC PROCEDURES, HE WOULD WITHHOLD AWARD PENDING SBA ACTION CONCERNING ISSUANCE OF A COC TO YOU OR THE EXPIRATION OF 15 WORKING DAYS AFTER RECEIPT BY SBA OF THE LETTER OF NOTIFICATION, WHICHEVER WAS EARLIER. YOU WERE ADVISED OF THE CONTRACTING OFFICER'S ACTION BY TELEGRAM DATED JUNE 9.

THE RECORD INDICATES THAT YOU SUBSEQUENTLY FILED WITH THE SBA SOUTHWESTERN AREA OFFICE IN DALLAS, TEXAS, AN APPLICATION FOR A COC AND THAT YOU SUBMITTED TO THAT OFFICE CERTAIN DATA RELATING TO YOUR PRICING, PROPOSED WORK SCHEDULE, CONTEMPLATED SUBCONTRACTOR ARRANGEMENTS, AND OTHER PERTINENT INFORMATION. THE AREA OFFICE RECORDS INDICATE THAT INCIDENT TO EVALUATING THE PRICING AND PLANNING DOCUMENTATION WHICH YOU SUBMITTED, THAT OFFICE EVALUATED YOUR ESTIMATES AND VERIFIED THE INFORMAL QUOTATIONS AND BY COMPARING SUCH FIGURES WITH THE PRICES WHICH YOU SHOWED IN YOUR COMPUTATIONS CONCLUDED THAT YOUR BID PRICE WAS REALISTIC. FURTHER, THE AREA OFFICE CHECKED THE AVAILABILITY OF THE NECESSARY ADDITIONAL LABOR AT THE CONTRACT SITE WITH THE VIRGINIA EMPLOYMENT COMMISSION AND WITH TWO LABOR UNIONS, AND VERIFIED THAT THE NECESSARY EQUIPMENT TO PERFORM THE WORK WAS AVAILABLE TO YOU ON A RENTAL BASIS. THE AREA OFFICE ALSO REPORTS THAT IT CHECKED WITH FORMER EMPLOYERS AND OTHER REFERENCES LISTED FOR YOUR PRESIDENT AND FOR YOUR PROJECT SUPERINTENDENT, AND THAT SUCH INQUIRIES ELICITED RESPONSES ON WHICH THE OFFICE CONCLUDED THAT BOTH INDIVIDUALS ENJOY EXCELLENT PROFESSIONAL REPUTATIONS FOR CONSTRUCTION MANAGEMENT, ENGINEERING AND SUPERVISION ON PROJECTS WHICH THE AREA OFFICE REGARDED AS MUCH MORE SOPHISTICATED THAN THE NASA TUNNEL PROJECT. FURTHER, IT WAS CONCLUDED THAT MR. CURTIS MATHES, JR., OF YOUR ORGANIZATION ENJOYS A GOOD MECHANICAL ENGINEERING REPUTATION AND AN EXCELLENT REPUTATION IN BUSINESS AND FINANCIAL MANAGEMENT. THE AREA OFFICE RECORDS ALSO INDICATE THAT THE OFFICE CHECKED ON A PROJECT AT THE ARNOLD RESEARCH CENTER, TULLAHOMA, TENNESSEE, WHICH WAS INCLUDED IN A LIST OF ELEVEN CONTRACTS ON WHICH YOUR PRESIDENT HAD REPORTEDLY SERVED AS GENERAL SUPERVISOR FOR THE CONTRACTOR, CHANEY AND JAMES CONSTRUCTION CO., INC., AND CONCLUDED THAT THE WORK IN QUESTION WAS WIND TUNNEL CONSTRUCTION. ADVICE RECEIVED FROM A REPRESENTATIVE OF THE CORPS OF ENGINEERS, DEPARTMENT OF THE ARMY, MOBILE, ALABAMA, WAS TO THE EFFECT THAT THE CONTRACTOR HAD SATISFACTORILY COMPLETED THE WORK AT ARNOLD RESEARCH CENTER, AND THE EMPLOYMENT OF YOUR PRESIDENT BY THE CONTRACTOR WAS VERIFIED. ACCORDINGLY, AND ON THE BASIS OF FAVORABLE INFORMATION FROM VARIOUS SOURCES CONCERNING YOUR FINANCIAL CAPACITY, THE AREA OFFICE WAS DISPOSED TO TAKE FAVORABLE ACTION ON YOUR COC APPLICATION AND SO NOTIFIED THE CONTRACTING OFFICER, AS PROVIDED BY SBA PROCEDURES, PRIOR TO THE EXPIRATION OF THE 15 WORKING DAYS ALLOTTED FOR SBA ACTION, IN ORDER TO AFFORD THE CONTRACTING AGENCY (NASA) AN OPPORTUNITY TO FURNISH ADDITIONAL INFORMATION, IF DESIRED, REGARDING YOUR CAPACITY AND CREDIT. THE CONTRACTING OFFICER, HOWEVER, ELECTED TO REQUEST REFERRAL OF THE CASE TO SBA HEADQUARTERS IN WASHINGTON, D. C., FOR REVIEW PRIOR TO FINAL ACTION, AS IS ALSO PROVIDED UNDER SBA PROCEDURES, AND SBA HEADQUARTERS ACCEPTED THE CASE. (SEE DELEGATION OF AUTHORITY NO. 30, REVISION 12, JANUARY 7, 1967, 32 FEDERAL REGISTER (FR) 179, AND DELEGATION OF AUTHORITY NO. 5, REVISION 1, JANUARY 7, 1967, 32 FR 178.)

IN ITS REVIEW OF THE CASE, SBA HEADQUARTERS CONDUCTED AN INDEPENDENT INVESTIGATION OF YOUR CAPACITY AND CREDIT AND ALSO GAVE CONSIDERATION TO THE LIKELIHOOD OF YOUR SUSTAINING LOSSES ON THE CONTRACT SUCH AS WOULD IMPAIR YOUR ABILITY TO PERFORM, A FACTOR WHICH SBA CONSIDERS PARTICULARLY IMPORTANT WHERE, AS IN YOUR CASE, A BIDDER'S OWN FINANCIAL RESOURCES ARE LIMITED AND IT MUST RELY ON OUTSIDE SOURCES FOR FINANCIAL SUPPORT. THE SUBSTANCE OF SBA'S FINDINGS WITH RESPECT TO YOUR FINANCIAL CAPACITY IS SET FORTH HEREAFTER IN QUOTATIONS FROM SBA LETTERS DATED AUGUST 15 AND SEPTEMBER 1, COPIES OF WHICH HAVE BEEN MADE AVAILABLE TO YOU, AND THEREFORE WILL NOT BE REPEATED HERE.

IN THE COURSE OF VERIFYING THE INFORMATION WHICH APPEARED IN VARIOUS CREDIT REPORTS AND OTHER RECORDS CONCERNING THE QUALIFICATIONS OF THE MEMBERS OF YOUR ORGANIZATION A CHECK BY SBA HEADQUARTERS WITH THE FIRM OF CHANEY AND JAMES ON THE ELEVEN CONTRACTS WHICH YOUR SURETY REPRESENTED AS HAVING BEEN PERFORMED FOR THE GOVERNMENT UNDER THE GENERAL SUPERVISION OF YOUR PRESIDENT DISCLOSED THAT ONLY FOUR OF THE CONTRACTS WERE PERFORMED WHILE YOUR PRESIDENT WAS IN THE EMPLOY OF CHANEY AND JAMES. ON THE REMAINING SEVEN CONTRACTS IT APPEARS THAT YOUR PRESIDENT WAS SERVING IN THE CAPACITY OF AN ELECTRICAL SUBCONTRACTOR DOING BUSINESS AS PIONEER ELECTRICAL CONSTRUCTORS, INC. (PIONEER). MOREOVER, A CHECK WITH DEPARTMENT OF THE ARMY PERSONNEL WHO HAD BEEN DIRECTLY INVOLVED WITH THE ARNOLD RESEARCH CENTER PROJECT AT TULLAHOMA, ONE OF THE FOUR CONTRACTS PERFORMED WHILE YOUR PRESIDENT WAS DIRECTLY EMPLOYED BY CHANEY AND JAMES, RESULTED IN THE RECEIPT OF UNFAVORABLE REPORTS TO THE EFFECT THAT THE STEEL FABRICATION WAS INFERIOR, THE PREPARATION FOR WELDING WAS POOR, AND PERFORMANCE HAD RESULTED IN NUMEROUS CLAIMS WHICH WERE ONLY RECENTLY SETTLED; FURTHER, THE PROJECT WAS IDENTIFIED AS DUCT WORK TO CONNECT THE PLENUM EVACUATION SYSTEM WITH THE PROPULSION WIND TUNNEL, RATHER THAN WIND TUNNEL CONSTRUCTION. INFORMATION OBTAINED REGARDING THE F-1 PROJECT, HUNTSVILLE, ALABAMA, ON WHICH PIONEER WAS A SUBCONTRACTOR TO CHANEY AND JAMES, WAS TO THE EFFECT THAT THERE WAS LACK OF COOPERATION AND FAILURE TO MEET SCHEDULE ON THE PART OF THE SUBCONTRACTOR. INQUIRY REGARDING THE PERFORMANCE OF PIONEER ON THE SONIC FATIGUE BUILDING, DAYTON, OHIO, ON WHICH CHANEY AND JAMES WAS PRIME CONTRACTOR, RESULTED IN A REPORT TO THE EFFECT THAT CONTRACTING OFFICE PERSONNEL OF THE CORPS OF ENGINEERS COULD NOT RECALL YOUR PRESIDENT BUT THE PROJECT WAS COMPLETED IN 1964 AND NUMEROUS CLAIMS FOR ADDITIONAL COMPENSATION WERE FILED UNDER THE CONTRACT. IN ADDITION, SBA HEADQUARTERS COMMUNICATED WITH IOWA STATE UNIVERSITY AND WAS INFORMED THAT YOUR PRESIDENT HAD ATTENDED THE UNIVERSITY AS A FRESHMAN ONLY AND WAS NOT A GRADUATE AS IS STATED IN A DOCUMENT FURNISHED BY YOUR PROPOSED SURETY.

BASED ON THE FOREGOING AND ON ADDITIONAL FACTORS WHICH ARE INCLUDED IN THE EXCERPTS QUOTED HEREAFTER FROM THE SBA LETTERS OF AUGUST 15 AND SEPTEMBER 1, SBA HEADQUARTERS DECLINED TO ISSUE A COC TO YOU, AND THE CONTRACTING OFFICER WAS NOTIFIED OF SUCH ACTION BY LETTER DATED AUGUST 10 FROM THE ASSOCIATE ADMINISTRATOR OF SBA.

AT THAT TIME, NASA COULD HAVE PROCEEDED WITH AWARD TO THE NEXT LOWEST, RESPONSIVE, RESPONSIBLE BIDDER, AS AUTHORIZED BY NASA PR 1.705 4 (B). HOWEVER, UPON ADVICE FROM OUR OFFICE OF THE RECEIPT OF YOUR TELEGRAM OF AUGUST 9, IN WHICH YOU PROTESTED THE PROPOSED REJECTION OF YOUR BID, REQUESTED A PRE-AWARD DECISION IN THE MATTER BY OUR OFFICE, AND STATED THAT A LETTER WOULD FOLLOW, NASA AGREED TO DEFER THE AWARD TO PERMIT OUR OFFICE TO REVIEW THE CASE BUT INDICATED THAT DEFERMENT BEYOND AUGUST 25 WOULD DELAY RELATED PROGRAMS AT THE CONTRACT SITE.

ON AUGUST 11, YOU WERE ACCORDED A CONFERENCE WITH SBA OFFICIALS IN WASHINGTON, D. C., AT WHICH THE SBA ACTION IN YOUR CASE WAS DISCUSSED, AND ON AUGUST 14, THE SBA AREA OFFICE DISCUSSED THE MATTER WITH YOU. ADDITION, THE ADMINISTRATOR OF SBA ADDRESSED TO A MEMBER OF THE UNITED STATES SENATE, WHO HAD EXPRESSED AN INTEREST IN YOUR PROTEST, A LETTER DATED AUGUST 15 READING AS OLLOWS:

"IN CONFORMANCE WITH A VERBAL REQUEST BY A MEMBER OF YOUR STAFF, I AM FORWARDING INFORMATION ON THE BASIS FOR DECLINING THE PHOENIX GENERAL CONSTRUCTION COMPANY, DALLAS, TEXAS, APPLICATION FOR A CERTIFICATE OF COMPETENCY IN CONNECTION WITH NASA IFB-7929 FOR A RESEARCH WIND TUNNEL.

"THE APPLICANT COMPANY, WHILE ESTABLISHED OVER A YEAR AGO, HAS DONE NO WORK TO DATE. IT HAS DRAWN MANAGEMENT PERSONNEL FROM OTHER FIRMS, AND BEEN ACTIVELY ENGAGED IN THE PREPARATION OF BIDS, BUT HAS NOT BEEN AWARDED OR PERFORMED ON A CONTRACT. THE APPLICANT'S BID IS $1,418,000, WHICH IS $652,000 LOWER THAN THE NEXT HIGHER BID, AND LOWER THAN THE GOVERNMENT ESTIMATE FOR THE COST OF THE TUNNEL, WHICH IS $1,988,800. THE COMPANY PROPOSES TO SUBCONTRACT STEEL FABRICATION, STEEL ERECTION, PURCHASE MATERIALS, HIRE ALL OF ITS PRODUCTIVE EMPLOYEES, RENT ITS EQUIPMENT AND ASSEMBLE AN ORGANIZATION TO MEET A PRODUCTION SCHEDULE WHICH MUST BE DOVETAILED WITH THE WORK OF OTHER CONTRACTORS. THE EXPERIENCE OF ITS PRINCIPAL, WALTER LAGE, IS THE FOCAL POINT AROUND WHICH THE ORGANIZATION WOULD BE BUILT.

"OUR EXAMINATION OF THE MATERIAL SUPPLIED BY THE APPLICANT FAILED TO SHOW THAT THE APPLICANT'S BID WAS BASED ON A FIRM STRUCTURE OF SUBCONTRACTOR QUOTATIONS, AND IT WAS ONLY AFTER MUCH INSISTENCE ON THE PART OF THE SMALL BUSINESS ADMINISTRATION THAT SOME OF THE QUOTATIONS WERE OBTAINED IN WRITING WHICH WERE, OF COURSE, DATED AFTER THE BID OPENING. WE WERE UNABLE TO RECONCILE QUOTATIONS AGAINST THE APPLICANT'S COST SPREAD SHEET, OR TO TIE THEM IN WITH THE BID PRICE. WHILE THERE IS SOME LIMITED WIND TUNNEL EXPERIENCE IN THE BACKGROUND OF SOME OF THE PRINCIPALS IN THE APPLICANT ORGANIZATION, APPLICANT'S MEN HAVE NEVER CONSTRUCTED A WIND TUNNEL OF THIS TYPE.

"THE FIRM IS CAPITALIZED WITH $20,000 CAPITAL STOCK, 20 PERCENT OWNED BY APPLICANT'S PRINCIPAL (WALTER G. LAGE). $130,000 OF ADDITIONAL OPERATING CAPITAL WAS PROVIDED BY ANOTHER STOCKHOLDER ON DEBENTURES PAYABLE $10,000 ANNUALLY, COMMENCING ON SEPTEMBER 1, 1967. AS OF JUNE 15, 1967, ONLY $5,105 OF CASH REMAINED WITH ONLY $23,000 IN OTHER ASSETS. APPLICANT HAS NOT STARTED OR PERFORMED ANY BUSINESS OPERATIONS, BUT IN ITS FIRST YEAR SHOWS A LOSS OF $130,000. THIS LOSS FOR A FIRM WITH ONLY TWO TO FIVE EMPLOYEES, AND NOT PERFORMING ANY BUSINESS, SHOWS AN UNUSUALLY HIGH OVERHEAD COST. A $300,000 BANK LINE OF CREDIT EXISTS AND IT IS NOT LIMITED TO THIS CONTRACT. APPLICANT'S CASH FLOW PROJECTION AND OTHER INFORMATION INDICATES THAT THEY ARE BIDDING ON OTHER CONTRACTS AND EXPECT TO PERFORM ON ALL CONTRACTS WITHOUT USING ANY OF THE $300,000 LINE OF CREDIT.

"THE PROJECTION ASSUMES PROGRESS PAYMENTS WILL PROVIDE COMPLETE FINANCING OF THE PROJECT. IT OVERLOOKS THE FACT THAT MOST OF THE WORK ON THE PROPOSED CONTRACT WILL BE PERFORMED BY SUBCONTRACTORS; THE MAJOR SUBCONTRACTOR, WITH A QUOTATION OF $593,000 FOR SOME OF THE STEEL SECTIONS WILL REQUIRE A 45 PERCENT PAYMENT, OR $267,300 WHEN IT RECEIVES THE MATERIAL AND SUPPLIES IN ITS OWN SHOP. WE WERE ADVISED BY THE CONTRACTING AGENCY THAT SUCH PAYMENTS ARE GENERALLY NOT AUTHORIZED, BUT WHEN AUTHORIZED MUST BE SPECIFICALLY INCLUDED IN THE IFB. WE WERE ALSO ADVISED THAT THIS SPECIFIC PROVISION IS NOT INCLUDED IN THIS IFB. PRACTICALLY ALL OF THE CAPITAL IS BEING PROVIDED BY A SINGLE STOCKHOLDER OF THE FIRM WHO HOLDS A 40 PERCENT INTEREST. IF HE BECOMES DISCOURAGED OR DISENCHANTED, THE FIRM WOULD OBVIOUSLY HAVE TO FOLD, SINCE IT HAS NO CAPITAL OR CREDIT OF ITS OWN.

"THERE IS STRONG DOUBT AS TO THE EXPERIENCE, SUBCONTRACTING ARRANGEMENTS, THE ABILITY TO ACQUIRE THE NECESSARY SKILLED HELP, AND THE ABILITY TO PUT TOGETHER AND FINANCE A GOING ORGANIZATION SUITABLY EQUIPPED TO MEET THE REQUIRED CONSTRUCTION SCHEDULE.

"IN VIEW OF THE ABOVE, THE PHOENIX APPLICATION WAS DECLINED ON AUGUST 10, 1957.'

ON AUGUST 21, YOU WERE ACCORDED A CONFERENCE WITH REPRESENTATIVES OF OUR OFFICE, AT WHICH YOU PRESENTED A LETTER DATED AUGUST 19, RELATING MAINLY TO YOUR CONFERENCES WITH SBA, AND FURNISHED COPIES OF CERTAIN DATA PERTAINING TO THE COMPUTATION OF YOUR BID AND YOUR EXPERIENCE IN THE FIELD OF WIND TUNNEL CONSTRUCTION, WHICH, YOU STATED, HAD NOT BEEN MADE AVAILABLE TO THE CONTRACTING OFFICER BUT WOULD SUBSTANTIATE YOUR CLAIM THAT THERE WAS NO MISTAKE IN YOUR BID AND YOUR CONTENTIONS ABOUT THE UNFAIRNESS OF THE COMPETING BIDS AND THE INACCURACY OF THE GOVERNMENT'S ESTIMATE. AT THE CONFERENCE, OUR OFFICE FURNISHED TO YOU A COPY OF A STATEMENT DATED JUNE 9 BY THE CONTRACTING OFFICER, WHICH ACCOMPANIED HIS REFERRAL OF THE CASE TO SBA, SETTING FORTH THE BASIS FOR THE ADVERSE ADMINISTRATIVE DETERMINATION REGARDING YOUR RESPONSIBILITY. LATER THE SAME DAY, NASA AGREED, AT THE REQUEST OF OUR OFFICE, TO DEFER THE AWARD EVEN BEYOND AUGUST 25, IF NECESSARY, TO CONSIDER THE MATERIAL SUBMITTED BY YOU TO OUR OFFICE AND TO REVIEW CAREFULLY, IN THE LIGHT OF SUCH DATA, THE GOVERNMENT'S ESTIMATE OF THE COST OF THE CONTRACT. IN ADDITION, SBA VOLUNTEERED TO CONSIDER THE SAME DATA AND TO REVIEW ITS DECISION ACCORDINGLY.

ON AUGUST 31, REPRESENTATIVES OF NASA AND OF THE SBA WASHINGTON OFFICE MET WITH REPRESENTATIVES OF OUR OFFICE. NASA PRESENTED A REPORT DATED AUGUST 30 ADVISING OUR OFFICE THAT AFTER A CAREFUL EXAMINATION BY ITS ENGINEERING AND PROCUREMENT PERSONNEL OF ALL AVAILABLE INFORMATION RELATING TO YOUR RESPONSIBILITY AND REEXAMINATION OF THE GOVERNMENT'S PRE- BID COST ESTIMATES (ONE PREPARED BY THE PRIVATE ARCHITECT-ENGINEER FIRM WHICH HAD PREPARED THE DETAILED SPECIFICATIONS AND DRAWINGS INCLUDED IN THE IFB, AND THE OTHER BY NASA TECHNICAL AND ENGINEERING PERSONNEL) NASA HAD AGAIN DETERMINED THAT YOUR BID SHOULD BE REJECTED ON THE BASIS THAT YOU COULD NOT BE CONSIDERED A RESPONSIBLE BIDDER FOR THIS PROCUREMENT. THE REPORT INCLUDES AN EXTENSIVE DISCUSSION OF THE VARIOUS ITEMS IN YOUR PRICING SHEETS ON WHICH THE GOVERNMENT'S ESTIMATE WAS HIGHER THAN YOUR PRICES AND URGES THAT THE MAJOR REASON FOR THE OVERALL DIFFERENCE OF $565,081 BETWEEN YOUR BID AND THE GOVERNMENT ESTIMATE IS THAT YOU DID NOT BASE YOUR PRICE ON THE TYPE OF FABRICATION REQUIRED FOR THE TUNNEL STEEL. CONCERNING THE NATURE OF THE WORK, THE REPORT STRESSES THE NEED FOR SOPHISTICATED FABRICATION TECHNIQUE DUE TO THE EXACTING DIMENSIONAL TOLERANCES AND OTHER REQUIREMENTS. WITH RESPECT TO YOUR WORK APPROACH, THE REPORT POINTS OUT THAT THE USE OF MORE THAN ONE FABRICATOR, AS YOU PROPOSE, FOR THE VARIOUS TUNNEL SECTIONS IS HIGHLY UNSATISFACTORY BECAUSE THERE IS NO ASSURANCE THAT THE SECTION MADE BY ONE FABRICATOR WILL MATCH AND ALIGN WITH A SECTION MADE BY ANOTHER FABRICATOR, A CRITICAL ITEM OF WIND-TUNNEL DESIGN; THAT DUE TO THE LIMITED AREA IN WHICH THE WORK IS TO BE PERFORMED, THERE BEING ANOTHER WIND TUNNEL TO THE NORTH OF THE CONSTRUCTION SITE AND THE PROPERTY LINE AND STATE HIGHWAY TO THE SOUTH, SEQUENTIAL DELIVERIES OF THE TUNNEL SECTIONS ARE REQUIRED TO EFFICIENTLY UTILIZE THE AREAS AVAILABLE RATHER THAN EARLY DELIVERIES OF ALL TUNNEL SECTIONS AS YOU PROPOSE; AND THAT YOUR PERT (CRITICAL PATH) SCHEDULE IS OVERLY OPTIMISTIC GENERALLY AS TO CERTAIN AREAS SUCH AS THE MATTER OF PREPARATION AND SUBMISSION OF ALL REINFORCING STEEL SHOP DRAWINGS, FOR WHICH YOU ALLOW ONLY 15 DAYS, BUT FOR WHICH NASA'S EXPERIENCE SHOWS THAT A FULL MONTH IS GENERALLY REQUIRED TO COVER THE CYCLE OF MAILING TO THE ARCHITECT- ENGINEER FOR CHECKING, RETURN BY THE ARCHITECT-ENGINEER TO NASA, AND, AFTER APPROVAL OR OTHER ACTION, RETURN BY NASA TO YOU AND ULTIMATE RELAY TO THE SUBCONTRACTOR. WITH REGARD TO THE MATTER OF YOUR EXPERIENCE, THE REPORT COMMENTS THAT THE MATERIAL WHICH YOU FURNISHED RELATING TO WORK PERFORMED BY YOUR PRESIDENT AND ANOTHER MEMBER OF YOUR FIRM AT TULLAHOMA, TENNESSEE, INDICATES ONLY THE PERFORMANCE OF MODIFICATIONS TO A PROPULSION WIND TUNNEL, RATHER THAN EXPERIENCE WITH THE CONSTRUCTION OF SUPERSONIC AND TRANSONIC WIND TUNNELS.

THE REPORT FURTHER STATES THAT WHILE THE CONTRACTING OFFICER AND THE TECHNICAL STAFF, WHO HAVE HAD MANY YEARS OF EXPERIENCE IN DESIGNING AND CONSTRUCTING SIMILAR WIND TUNNELS, HAVE ENDEAVORED TO BE AS OBJECTIVE AS POSSIBLE AND TO FIND SOME REASON TO ESTABLISH AT LEAST A MARGINAL FINDING OF RESPONSIBILITY, THE CONTRACTING OFFICER, EVEN AFTER FURTHER INVESTIGATION AND CONSIDERATION OF THE ADDITIONAL DATA, HAS NOT BEEN ABLE TO CONCLUDE THAT YOU ARE A RESPONSIBLE BIDDER FOR THIS PROCUREMENT WITHIN THE MEANING OF THE PROCUREMENT REGULATION. THE REPORT CONCLUDES WITH THE STATEMENTS THAT THE MATERIAL RECEIVED TREATED AS PROPRIETARY AND THAT NO CONTACTS HAD BEEN MADE WITH ANY FROM OUR OFFICE (WHICH HAS BEEN RETURNED TO OUR FILES) HAD BEEN OF THE POTENTIAL SUPPLIERS TO EITHER VERIFY OR CLARIFY THEIR QUOTATIONS.

IN ADDITION, SBA VOLUNTARILY UNDERTOOK TO REEXAMINE ITS POSITION, AND AGAIN CONCLUDED THAT IT WOULD NOT ISSUE A COC. IN ITS LETTER DATED SEPTEMBER 1, 1967, TO OUR OFFICE, SBA MADE THE FOLLOWING STATEMENT:

"THE SMALL BUSINESS ADMINISTRATION IN ITS ADMINISTRATION OF THE CERTIFICATE OF COMPETENCY PROGRAM HAS AN OBLIGATION TO THE PUBLIC AND TO THE PROCURING AGENCIES, AS WELL AS TO THE COC APPLICANT. WE, THEREFORE, CANNOT ISSUE A COC MERELY TO ACCOMMODATE A SMALL BUSINESS CONCERN WHERE THE FACTS AVAILABLE TO SBA FAIL REASONABLY TO DEMONSTRATE THAT THE CONCERN CAN PERFORM THE WORK. TO GRANT A COC UNDER THESE CIRCUMSTANCES COULD IMPERIL THE MISSION OF THE PROCURING AGENCY. MOREOVER, A SMALL FIRM WHICH RECEIVES THE COC FOR WORK IT CANNOT PERFORM IS NOT BENEFITED. INDEED, ITS VERY EXISTENCE MIGHT BE PUT IN JEOPARDY BY FAILURE TO PERFORM.'

IN FURTHER ELABORATION OF ITS REASONS FOR DECLINING TO ISSUE A COC, SBA STATED:

"AMONG OTHER THINGS, THE WASHINGTON SBA SURVEY REVEALED THAT PHOENIX, WHICH WAS ORGANIZED IN 1966, ONLY EMPLOYS FIVE PERSONS AND HAS NO CURRENT ORGANIZATION OR EQUIPMENT. IT, THEREFORE, WOULD HAVE TO CREATE AN ORGANIZATION TO PERFORM THE CONTRACT WORK. NO SPECIFIC PLANS OR PERSONNEL WERE MADE AVAILABLE TO US FROM WHICH WE COULD DETERMINE THAT THE NECESSARY ORGANIZATION TO PERFORM A COMPLEX CONSTRUCTION PROJECT COULD BE EFFECTED.

"MOREOVER, THE WASHINGTON SBA SURVEY CAST CONSIDERABLE DOUBT AS TO THE VERACITY OF THE CLAIMS MADE CONCERNING THE EDUCATION AND EXPERIENCE OF ITS PRESIDENT AND GENERAL MANAGER, MR. WALTER G. LAGE, WHO IS TO ACT AS PROJECT MANAGER. FOR EXAMPLE, THE STATEMENTS WITH REFERENCE TO MR. LAGE'S EMPLOYMENT BY CHANEY AND JAMES CONSTRUCTION COMPANY AT ARNOLD RESEARCH CENTER SUGGEST EXPERIENCE ON A WIND TUNNEL. WE ARE INFORMED THAT THIS WORK PERFORMED BY CHANEY AND JAMES CONSTRUCTION COMPANY RELATED ONLY TO ADDITION OF A CONNECTING DUCT AND VALVE TO AN EXISTING WIND TUNNEL AND NOT THE CONSTRUCTION OF THE TUNNEL ITSELF. A COMPLETE REPORT ON THE BACKGROUND OF MR. LAGE IS ALSO ENCLOSED.

"THE WASHINGTON SBA SURVEY ALSO RAISED DOUBT CONCERNING PHOENIX'S UNDERSTANDING OF THE COMPLEXITY OF THE WORK. PHOENIX HAS DECLARED THAT MUCH OF THE STEEL WORK IS IN LINE WITH THAT PERFORMED BY TANK FABRICATORS AND ORDINARY STEEL FABRICATORS. THE WASHINGTON SBA SURVEY CONTRADICTS THIS CONCLUSION. THE SURVEY EVALUATION, WHICH IS CONSISTENT WITH THE VIEWS OF THE PROCURING ACTIVITY, IS TO THE EFFECT THAT AT LEAST FOUR SECTIONS OF THE WIND TUNNEL REQUIRE SPECIAL SKILLS NOT ORDINARILY FOUND AMONG STEEL OR TANK FABRICATORS. FOR EXAMPLE, SECTIONS 4 AND 6 ARE TRANSITIONAL AND CONTAIN CONICAL ELEMENTS THAT REQUIRE UNUSUAL SHAPING. SECTION 5 HOUSES AN 8,000 HORSEPOWER ELECTRIC MOTOR AND REQUIRES MACHINING FACILITIES FOR THE NACELLE SUPPORT. SECTION 8, THE ENTRANCE CONE, IS FABRICATED FROM CLOSE TOLERANCE CURVED PLATE FORMED TO MEET EXACTING AERODYNAMIC REQUIREMENTS. BOTH THE PROCURING ACTIVITY AND THE WASHINGTON SBA HAVE RESERVATIONS AS TO THE ABILITY OF RICHMOND ENGINEERING CO., INC., TO FABRICATE THE TUNNEL SECTIONS AS INDICATED ON PAGE 3 OF EXHIBIT PP OF THE SUPPORTING INFORMATION SUPPLIED GAO BY PHOENIX. "ANOTHER NEGATIVE ASPECT OF PHOENIX'S PLAN TO PERFORM THE WORK IS PLANTS AND ASSEMBLED AT THE JOB SITE. THIS ARRANGEMENT WOULD VERY THE IDEA THAT THE TUNNEL SECTIONS CAN BE FABRICATED AT DIFFERENT LIKELY REQUIRE THE EXTENSIVE USE OF JIGS AND TEMPLATES IN ORDER TO INSURE THE PROPER FIT AND INTERFACING OF THE SEPARATE SECTIONS. HOWEVER, NO PROVISION FOR SUCH JIGS AND TEMPLATES IS TO BE FOUND IN PHOENIX'S PLANS. THIS ADVERSELY REFLECTS ON PHOENIX'S UNDERSTANDING OF THE NATURE OF THE WORK AND THE VALIDITY OF ITS BID.

"IN OUR OPINION, PHOENIX'S PROPOSAL TO SUBCONTRACT THE MAJOR PORTION OF THE WORK MAKES IT IMPERATIVE THAT SBA KNOW WHO THE PROPOSED MAJOR SUBCONTRACTORS WILL BE AND FOR US TO EVALUATE THEIR CAPABILITIES. HOWEVER, WHEN OUR SURVEY WAS MADE, PHOENIX WAS NOT IN ANY POSITION TO NAME, WITH CERTAINTY, SUCH SUBCONTRACTORS. INSTEAD, PHOENIX PROPOSED TO NEGOTIATE SUBCONTRACTS AFTER IT RECEIVED THE CONTRACT. SBA CONSIDERS SUCH ARRANGEMENT MOST UNSATISFACTORY SINCE SUBCONTRACT COSTS ARE VITAL WHEN THE PRIME CONTRACTOR HAS LIMITED IN HOUSE FINANCIAL CAPABILITIES. A DETAILED DISCUSSION OF THIS QUESTION IS CONTAINED IN A MEMORANDUM DATED AUGUST 9, 1967, FROM MR. ERNEST W. RAISNER TO MR. CLYDE BOTHMER, A COPY OF WHICH IS IN THE FILE PREVIOUSLY SENT TO YOUR OFFICE.

"PHOENIX'S FINANCIAL PLANNING DOES NOT APPEAR TO WARRANT A FINDING THAT IT HAS THE NECESSARY CREDIT TO PERFORM THIS CONTRACT. THE COMPANY IS CAPITALIZED WITH $20,000 CAPITAL STOCK AND OBTAINED AN ADDITIONAL $130,000 BY THE SALE OF DEBENTURES TO ONE OF ITS STOCKHOLDERS. IT SUSTAINED A LOSS OF $130,000 IN ITS FIRST YEAR OF OPERATION AND, ON JUNE 15, 1967, HAD ONLY A CASH BALANCE OF APPROXIMATELY $5,000 AND APPROXIMATELY $23,000 IN OTHER ASSETS. TO SUPPLEMENT THIS LIMITED FINANCIAL STATUS, PHOENIX PROPOSES TO BORROW $45,000 FROM ONE OF ITS PRINCIPALS AND HAS OBTAINED A $300,000 LINE OF CREDIT FROM THE FIRST NATIONAL BANK OF DALLAS. WE DO NOT BELIEVE THAT THE FINANCING ARRANGEMENTS AND LIMITED CAPITAL ARE SUFFICIENT FOR THIS CONTRACT IF, AS APPEARS LIKELY, PHOENIX WILL SUSTAIN SUBSTANTIAL LOSSES IN PERFORMING THIS WORK. A FULL EXPLANATION OF THE REASONS FOR THIS VIEW IS CONTAINED IN THE FILE PREVIOUSLY SENT TO YOU.

"OUR CAREFULLY CONSIDERED EVALUATION OF THE INFORMATION OF RECORD AND SUPPORTING DOCUMENTATION LED TO THE CONCLUSION THAT PHOENIX FAILED TO ESTABLISH THAT IT HAD THE NECESSARY CAPACITY OR CREDIT TO PERFORM THE CONTRACT IN ACCORDANCE WITH ITS TERMS AND WITHIN THE SPECIFIED TIME FRAME. SBA, THEREFORE, DECLINED TO ISSUE A CERTIFICATE OF COMPETENCY.'

ON SEPTEMBER 1, OUR OFFICE WAS ADVISED BY NASA HEADQUARTERS THAT A DETERMINATION HAD BEEN MADE, ON THE BASIS OF URGENCY, THAT AWARD SHOULD BE MADE TO THE SECOND LOWEST BIDDER, WHO WAS BOTH RESPONSIVE AND RESPONSIBLE. FORMAL NOTICE OF THE AWARD, WHICH WAS MADE ON AUGUST 31, WAS GIVEN TO YOU IN A LETTER DATED SEPTEMBER 5, WHICH INCLUDES THE FOLLOWING PERTINENT STATEMENTS: "AT THIS TIME THE GAO HAS NOT ISSUED A DECISION ON YOUR PROTEST REGARDING AWARD TO ANY OTHER BIDDER. HOWEVER, THE DAVIS- BACON RATE DECISION SPECIFIED IN THE SUBJECT INVITATION IS TO EXPIRE SEPTEMBER 6, WHICH WOULD PROBABLY REQUIRE THE REJECTION OF ALL BIDS AND SUBSEQUENT READVERTISEMENT. MORE IMPORTANTLY, FURTHER DELAY IN MAKING AWARD OF THIS CONTRACT WOULD UNREASONABLY DELAY INSTALLATION WORK ON A RELATED CONTRACT FOR THE DRIVE MOTOR AND ASSOCIATED ELECTRICAL EQUIPMENT, THUS INCREASING THE COSTS TO THE GOVERNMENT AND SUBJECTING IT TO ADDITIONAL CLAIMS FOR DELAY OF AN EXISTING RELATED CONTRACT. "ACCORDINGLY, PURSUANT TO NASA PROCUREMENT REGULATION 2.407-8 (B) (3) I HAVE MADE A DETERMINATION THAT AWARD OF CONTRACT FOR THE TRANSITION RESEARCH TUNNEL IS URGENTLY REQUIRED AND PERFORMANCE WOULD BE DELAYED BY FAILURE TO MAKE AN AWARD PROMPTLY. THIS DETERMINATION WAS CONCURRED IN BY OUR NASA HEADQUARTERS. THEREFORE, YOUR BID ON SUBJECT INVITATION HAS BEEN REJECTED DUE TO NONRESPONSIBILITY OF YOUR FIRM ON THIS PROCUREMENT AND AWARD HAS BEEN MADE TO CHICAGO BRIDGE AND IRON COMPANY, ON AUGUST 31, 1967.'

IN VARIOUS LETTERS ADDRESSED TO OUR OFFICE, YOU HAVE CHARGED THAT THE CONTRACTING OFFICER'S DETERMINATION REGARDING YOUR RESPONSIBILITY WAS ARBITRARY, CAPRICIOUS, AND MADE IN BAD FAITH. YOU HAVE ACCUSED THE CONTRACTING OFFICER OF IMPROPER CONDUCT, INCLUDING DECEIT AND OTHER SERIOUS FAILINGS, AND YOU HAVE CONTENDED THAT AS A RESULT OF SUCH CONDUCT, WHICH YOU CONSIDER A MISUSE OF HIS OFFICE, YOU HAVE BEEN ILLEGALLY DENIED THE CONTRACT IN QUESTION. GREAT STRESS IS LAID BY YOU ON THE DIFFERENCE OF MORE THAN SIX HUNDRED THOUSAND DOLLARS BETWEEN YOUR BID AND THE BID WHICH WAS ACCEPTED BY NASA. IN ADDITION, THERE ARE SEVERAL AREAS ON WHICH SPECIFIC COMMENTS WILL BE MADE BELOW.

YOU HAVE ALSO MADE SEVERAL CRITICAL STATEMENTS CONCERNING SBA'S ACTION AND HAVE IMPLIED THAT THE PROCEDURES EMPLOYED IN THIS CASE, WHEREBY THE FINAL DECISION ON THE MATTER OF ISSUANCE OF A COC WAS MADE IN THE WASHINGTON OFFICE RATHER THAN IN THE AREA OFFICE, WERE NOT PROPER. WHILE OUR OFFICE HAS NO AUTHORITY TO REQUIRE THAT SBA ISSUE A COC, AND WE THEREFORE WILL NOT UNDERTAKE TO REPLY TO YOUR EXCEPTIONS TO ITS REFUSAL TO DO SO, WE DEEM IT APPROPRIATE TO CALL TO YOUR ATTENTION THAT UNDER THE DELEGATIONS OF AUTHORITY ISSUED BY THE ADMINISTRATOR OF SBA AND PUBLISHED IN THE FEDERAL REGISTER, AS CITED ABOVE, NASA WAS ENTITLED TO HAVE THE MATTER CONSIDERED AND REVIEWED BY THE SBA WASHINGTON OFFICE. FURTHER, WE SEE NO BASIS ON THE RECORD MADE AVAILABLE TO OUR OFFICE FOR YOUR INFERENCE THAT THE DECISION WHICH WAS MADE BY SBA WAS DICTATED OR CONTROLLED BY NASA, SINCE THE CONTRACTING OFFICER'S STATEMENT DATED JUNE 9 TO SBA CONCERNING THE FACTS JUSTIFYING HIS DETERMINATION OF YOUR RESPONSIBILITY WAS REQUIRED UNDER THE COC PROCEDURES (NASA PR 1.705-4 (B) (, AND SINCE SBA HAS CONDUCTED AN INDEPENDENT REVIEW.

THE STATUTE WHICH GOVERNS PROCUREMENTS BY NASA, 10 U.S.C. 2301-2314, PROVIDES WITH RESPECT TO ADVERTISED PROCUREMENTS THAT AWARD SHALL BE MADE TO THE RESPONSIBLE BIDDER WHOSE BID CONFORMING TO THE INVITATION WILL BE THE MOST ADVANTAGEOUS TO THE UNITED STATES, PRICE AND OTHER FACTORS CONSIDERED. 10 U.S.C. 2305 (C). CONSISTENT WITH SUCH PROVISION, NASA PR 1.902 PROVIDES THAT CONTRACTS WILL BE AWARDED ONLY TO RESPONSIBLE PROSPECTIVE CONTRACTORS AND REQUIRES THAT A PROSPECTIVE CONTRACTOR DEMONSTRATE AFFIRMATIVELY HIS RESPONSIBILITY, INCLUDING, WHEN NECESSARY, THAT OF HIS PROPOSED SUBCONTRACTORS; NASA PR 2.407-2 REQUIRES A PRE-AWARD DETERMINATION OF RESPONSIBILITY; AND NASA PR 2.404-2 (E) PROVIDES THAT LOW BIDS RECEIVED FROM CONCERNS DETERMINED NOT TO BE RESPONSIBLE BIDDERS SHALL BE REJECTED. THE MINIMUM STANDARDS PRESCRIBED IN NASA PR 1.903 FOR RESPONSIBLE PROSPECTIVE CONTRACTORS INCLUDE POSSESSION OF ADEQUATE FINANCIAL RESOURCES OR THE ABILITY TO OBTAIN SUCH RESOURCES AS REQUIRED DURING THE PERFORMANCE OF THE CONTRACT AND THE NECESSARY EXPERIENCE, ORGANIZATION, OPERATIONAL CONTROLS, TECHNICAL QUALIFICATIONS, SKILLS, AND FACILITIES, OR THE ABILITY TO OBTAIN THEM INCLUDING THE ABILITY TO SUBCONTRACT EFFECTIVELY.

THE SOURCES FROM WHICH NASA PR 1.905-3 REQUIRES THE CONTRACTING OFFICER TO OBTAIN THE NECESSARY INFORMATION TO MAKE HIS DETERMINATION OF RESPONSIBILITY INCLUDE REPRESENTATIONS AND OTHER INFORMATION CONTAINED IN OR ATTACHED TO BIDS AND PROPOSALS; REPLIES TO QUESTIONNAIRES; FINANCIAL DATA, SUCH AS BALANCE SHEETS, PROFIT AND LOSS STATEMENTS, CASH FORECASTS, FINANCIAL HISTORY OF THE CONTRACTOR AND AFFILIATED CONCERNS; CURRENT AND PAST RECORDS OF RESEARCH AND DEVELOPMENT AND FACILITIES; WRITTEN STATEMENTS OR COMMITMENTS CONCERNING FINANCIAL ASSISTANCE AND SUBCONTRACTING ARRANGEMENTS; AND ANALYSES OF OPERATIONAL CONTROL PROCEDURES. NASA PR 1.906, RELATING TO SUBCONTRACTOR RESPONSIBILITY, PROVIDES THAT A PROSPECTIVE PRIME CONTRACTOR MAY BE REQUIRED TO ESTABLISH IN WRITING THE RESPONSIBILITY OF HIS PROSPECTIVE SUBCONTRACTORS OR AN EFFECTIVE SUBCONTRACTING SYSTEM AFFORDING A METHOD FOR DETERMINING SUBCONTRACTOR CAPABILITY. OF PARAMOUNT IMPORTANCE IN ISSUING THE DETERMINATION OF RESPONSIBILITY IS THE FOLLOWING LANGUAGE FROM NASA PR 1.902: "THE CONTRACTING OFFICER SHALL MAKE A DETERMINATION OF NONRESPONSIBILTY IF, AFTER COMPLIANCE WITH 1.905 AND 1.906, THE INFORMATION THUS OBTAINED DOES NOT INDICATE CLEARLY THAT THE PROSPECTIVE CONTRACTOR IS RESPONSIBLE. * * * DOUBT AS TO PRODUCTIVE CAPACITY OR FINANCIAL STRENGTH WHICH CANNOT BE RESOLVED AFFIRMATIVELY SHALL REQUIRE A DETERMINATION OF RESPONSIBILITY.'

IN ADDITION TO THE REGULATIONS CONCERNING RESPONSIBILITY, NASA PR 2.406-1 REQUIRES PRE-AWARD VERIFICATION BY THE BIDDER IN CASES IN WHICH A BID MISTAKE OTHER THAN AN APPARENT MISTAKE IS SUSPECTED. MOREOVER, WHEN A PARTICULAR MISTAKE IS SUSPECTED, IT IS NOT SUFFICIENT FOR THE CONTRACTING OFFICER TO MERELY REQUEST VERIFICATION OF THE BID; HE MUST MAKE KNOWN TO THE BIDDER HIS SUSPICIONS IN SUCH CIRCUMSTANCES IN ORDER TO HOLD THE BIDDER TO THE BID AS SUBMITTED. 35 COMP. GEN. 136. SEE, ALSO, UNITED STATES V. METRO NOVELTY MANUFACTURING CO., INC. 125 F.SUPP. 713. CONSISTENT THEREWITH, NASA PR 1 406-3 (D) (1) REQUIRES THAT THE BIDDER BE INFORMED OF THE REASON FOR THE REQUEST FOR VERIFICATION, CITING AS AN EXAMPLE A BID WHICH IS SIGNIFICANTLY OUT OF LINE WITH OTHER BIDS OR WITH THE GOVERNMENT'S ESTIMATE.

CONSIDERING FIRST THE CONTRACTING OFFICER'S ACTION IN REQUESTING THAT YOU VERIFY YOUR BID AND SUGGESTING TO YOU THE POSSIBILITY THAT YOU HAD MADE A MISTAKE IN YOUR PRICE, WHILE A DIFFERENCE IN BID PRICES DOES NOT NECESSARILY MEAN THAT A SEEMINGLY LOW BID IS IN ERROR, THE CONTRACTING OFFICER WAS OBVIOUSLY ENDEAVORING TO COMPLY WITH THE REGULATIONS. FURTHER, IN A CASE SUCH AS THIS, WHERE THE PROJECT IS A TECHNICAL ONE AND THE GOVERNMENT'S ESTIMATE, WHICH HAS BEEN PREPARED BY PERSONNEL WHO HAVE HAD EXPERIENCE IN THE PARTICULAR TYPE OF WORK INVOLVED, EXCEEDS THE LOW BID BY SUCH A LARGE AMOUNT BUT IS IN LINE WITH THE HIGHER PRICES OF THE COMPETING BIDDERS, WHO ALSO HAVE HAD EXPERIENCE ON THE SAME TYPE OF WORK, IT IS OUR VIEW THAT THE CONTRACTING OFFICER WOULD HAVE BEEN SUBJECT TO CRITICISM HAD HE NOT COMPLIED WITH THE REQUIREMENT OF THE REGULATION CONCERNING BID VERIFICATION. ACCORDINGLY, WE SEE NO VALID BASIS FOR OBJECTION TO THE CONTRACTING OFFICER'S CONDUCT IN THIS RESPECT.

UNDER NASA PR 1.902 ET SEQ., THE CONTRACTING OFFICER'S SUBSEQUENT ACTION IN SOLICITING FROM YOU CERTAIN INFORMATION RELATING TO THE MINIMUM STANDARDS OF RESPONSIBILITY FOR PROSPECTIVE CONTRACTORS WAS ALSO AUTHORIZED. THEREAFTER THE BURDEN WAS ON YOU TO ESTABLISH AFFIRMATIVELY YOUR RESPONSIBILITY AND, IF NECESSARY, THAT OF YOUR PROPOSED SUBCONTRACTORS, AND THE CONTRACTING OFFICER, IN THE EVENT OF DOUBT CONCERNING YOUR FINANCIAL STRENGTH OR PRODUCTIVE CAPACITY, WAS REQUIRED BY THE REGULATION TO ISSUE A DETERMINATION OF NONRESPONSIBILITY.

THE STATUTES REQUIRING GOVERNMENT CONTRACTS TO BE AWARDED AFTER ADVERTISING AND COMPETITIVE BIDDING WERE ENACTED FOR THE PROTECTION AND BENEFIT OF THE GOVERNMENT, AND CONFER NO JUDICIALLY ENFORCEABLE RIGHTS UPON BIDDERS, AND THE SELECTION OF A CONTRACTOR BY THE CONTRACTING OFFICER ACTING WITHIN THE SCOPE OF HIS AUTHORITY HAS BEEN HELD NOT TO BE SUBJECT TO JUDICIAL REVIEW. FRIEND V. LEE, 95 U.S. APP. D. C. 224, 221 F.2D 96; SEE ALSO O-BRIEN V. CARNEY, 6 F.SUPP. 761; PERKINS V. LUKENS STEEL CO., 310 U.S. 113. THE AUTHORITY OF OUR OFFICE WITH RESPECT TO SUCH MATTERS STEMS FROM OUR STATUTORY AUTHORITY TO AUDIT EXPENDITURES BY THE ADMINISTRATIVE AGENCIES OF THE GOVERNMENT OF FUNDS APPROPRIATED BY THE CONGRESS, TO ASSURE THAT SUCH EXPENDITURES ARE MADE IN ACCORDANCE WITH ALL LAWS PRESCRIBING OR AFFECTING THE MANNER OF THEIR USE. THE AUDIT OF EXPENDITURES OF PUBLIC FUNDS IN PAYMENT OF OBLIGATIONS ARISING UNDER CONTRACTS NECESSARILY INVOLVES CONSIDERATION OF THE LEGALITY OF SUCH CONTRACTS, AND OUR AUTHORITY TO DISALLOW CREDIT IN PUBLIC ACCOUNTS FOR PAYMENTS UNDER ILLEGAL CONTRACTS IS THE ULTIMATE SANCTION FOR ENFORCEMENT OF OUR DECISIONS ON CONTRACT AWARDS. TO JUSTIFY SUCH ACTION, HOWEVER, THE ILLEGALITY MUST BE CLEAR AND CANNOT BE ASSERTED MERELY ON THE BASIS OF ERRORS ON THE PART OF THE CONTRACTING OFFICIALS IN THE EXERCISE OF JUDGMENT OR DISCRETION WITHIN THE AREAS OF THEIR AUTHORITY.

WHERE A CONTRACT HAS BEEN AWARDED TO OTHER THAN THE LOW BIDDER ON THE GROUND THAT THE LOW BIDDER IS NOT RESPONSIBLE, THE ONLY QUESTION BEFORE OUR OFFICE ON A PROTEST BY THE REJECTED BIDDER IS WHETHER OR NOT THERE IS IN THE RECORD ANY REASONABLE SUPPORT FOR THE ACTION TAKEN.

IT IS IMMATERIAL THAT THE RECORD MIGHT ALSO SUPPORT AN AFFIRMATIVE DETERMINATION OF RESPONSIBILITY, OR THAT WE MIGHT ON THE SAME RECORD HAVE MADE SUCH A DETERMINATION. THE RESPONSIBILITY FOR MAKING THE DECISION AS TO A PROSPECTIVE CONTRACTOR'S RESPONSIBILITY, AND FOR REJECTION OR ACCEPTANCE OF ITS BID, LIES PRIMARILY WITH THE CONTRACTING OFFICER. THE CASE OF SMALL BUSINESS BIDDERS, CONGRESS HAS AUTHORIZED THE SMALL BUSINESS ADMINISTRATION TO CERTIFY A BIDDER'S COMPETENCY, AS TO CAPACITY AND CREDIT, TO PERFORM A SPECIFIC GOVERNMENT CONTRACT, AND THE CONTRACTING OFFICER IS AUTHORIZED TO ACCEPT A CERTIFICATE OF COMPETENCY ISSUED BY SBA AS CONCLUSIVE. (SECTION 8 (B) (7) OF THE SMALL BUSINESS ACT OF 1958, P.L. 85-536; 15 U.S.C. 637 (B) (7) ( THIS AUTHORITY OFFERS A LARGE MEASURE OF PROTECTION TO SMALL BUSINESS CONCERNS AGAINST ARBITRARY, PREJUDICED OR DISCRIMINATORY ACTIONS BY GOVERNMENT PROCUREMENT OFFICERS. WHILE IT HAS BEEN SAID IN SOME OF OUR DECISIONS THAT WE HAVE NO AUTHORITY TO REVIEW DETERMINATIONS OF THE SMALL BUSINESS ADMINISTRATION, AND IT IS TRUE THAT WE CANNOT DIRECT THAT AGENCY TO ISSUE A COC, THE STATEMENT IN THOSE DECISIONS IS NOT TO BE UNDERSTOOD AS PRECLUDING OUR REVIEW OF THE REJECTION OF A BIDDER AS NONRESPONSIBLE, WHETHER OR NOT SBA HAS REFUSED TO ISSUE A COC. IN ANY SUCH REVIEW THE QUESTION BEFORE US IS WHETHER THE REJECTION OF THE BID IS PROPER, AND IN REVIEWING THAT ACTION WE WILL REVIEW ALL PERTINENT INFORMATION AND EVIDENCE AVAILABLE EITHER TO THE CONTRACTING OFFICER OR TO SBA. SEE B-161339, SEPTEMBER 25, 1967.

IN THE INSTANT CASE, AFTER THE CONTRACTING OFFICER HAD DETERMINED YOUR NONRESPONSIBILITY AND SBA HAD REFUSED TO ISSUE A COC, AND AS THE RESULT OF YOUR STRONG REPRESENTATIONS BRINGING IN QUESTION WHETHER ALL FACTORS BEARING ON YOUR RESPONSIBILITY HAD BEEN ADEQUATELY CONSIDERED, WE REQUESTED NASA TO REVIEW THE MATTER IN THE LIGHT OF THE EVIDENTIARY MATERIAL SUBMITTED BY YOU. AS INDICATED ABOVE, THAT AGENCY AFTER SUCH REVIEW REPORTED THAT IT FOUND NO SUFFICIENT BASIS TO CONCLUDE THAT YOU WERE RESPONSIBLE FOR THE PROPOSED CONTRACT.

WE HAVE EXAMINED THE RECORDS OF BOTH NASA AND SBA WHICH FORM THE BASES FOR THE VARIOUS FINDINGS AND CONCLUSIONS SET OUT ABOVE RELATIVE TO YOUR CAPABILITY TO PERFORM THE CONTRACT. VIEWED AS A WHOLE, WE MUST CONCLUDE THAT THE NATURE OF THE ADDITIONAL INFORMATION WHICH RESULTED FROM THE INVESTIGATION CONDUCTED BY SBA HEADQUARTERS WAS SUCH AS TO CAST SUBSTANTIAL DOUBT UPON BOTH THE ADEQUACY OF THE INVESTIGATION CONDUCTED BY ITS DALLAS OFFICE AND ON THE VALIDITY OF THE CONCLUSIONS DRAWN BY THAT OFFICE. WHETHER FURTHER INVESTIGATION, INCLUDING DISCUSSION WITH OFFICIALS OF YOUR COMPANY, SHOULD HAVE BEEN CONDUCTED BY SBA IN AN EFFORT TO RESOLVE SUCH DOUBTS EITHER FOR OR AGAINST YOUR COMPANY IS A QUESTION WHICH IS NOT PROPERLY BEFORE US FOR DETERMINATION. AS PREVIOUSLY INDICATED, OUR DECISION MUST BE BASED UPON WHETHER THE CONTRACTING AGENCY, IN THE LIGHT OF THE INFORMATION OF RECORD, COULD REASONABLY CONCLUDE THAT YOUR COMPANY WAS NOT A RESPONSIBLE BIDDER. WHILE THE APPLICABLE PROCUREMENT REGULATIONS LIST VARIOUS SOURCES FROM WHICH A CONTRACTING OFFICER MAY OBTAIN INFORMATION ON WHICH TO DETERMINE THE RESPONSIBILITY OF A BIDDER, THE REGULATIONS DO NOT IMPOSE ANY DUTY OR RESPONSIBILITY TO INDEPENDENTLY GATHER SUCH INFORMATION AS MAY BE NECESSARY TO RESOLVE ANY DOUBT RELATIVE TO A BIDDER'S RESPONSIBILITY WHICH MAY BE RAISED BY THE INFORMATION SUBMITTED BY THE BIDDER, OR BY INFORMATION WHICH MAY OTHERWISE BE AVAILABLE TO THE CONTRACTING AGENCY. INSTEAD, AND AS INDICATED BY NASA PR 1.902, SUCH DOUBT IS TO BE RESOLVED AGAINST THE BIDDER. IN THIS AREA, OUR OFFICE CAN IMPOSE NO GREATER REQUIREMENTS ON THE CONTRACTING AGENCY. IN VIEW THEREOF, AND OF OUR CONCLUSION THAT THE ENTIRE RECORD IS SUCH AS TO JUSTIFY THE DOUBT OF BOTH SBA AND NASA THAT YOUR COMPANY IS CAPABLE OF PERFORMING THE CONTRACT SATISFACTORILY AND AT ITS BID PRICE, WE ARE UNABLE TO CONCLUDE THAT THE ADMINISTRATIVE ACTION IN REJECTING YOUR BID WAS UNREASONABLE OR IMPROPER.

WITH REGARD TO YOUR APPREHENSION THAT THE INFORMATION WHICH YOU SUBMITTED TO OUR OFFICE, AND WHICH WE IN TURN FORWARDED TO NASA FOR ITS CONSIDERATION IN CONNECTION WITH ITS REVIEW OF THE PROCUREMENT AND REPORT ON YOUR PROTEST, MIGHT BE USED TO THE ADVANTAGE OF ANOTHER BIDDER, WE HAVE NO REASON TO DOUBT THE CONTRACTING OFFICER'S STATEMENT IN HIS REPORT OF AUGUST 30 THAT SUCH INFORMATION WAS TREATED AS PROPRIETARY EVEN THOUGH IT WAS NOT SO MARKED.

BASED ON THE RECORD MADE AVAILABLE TO OUR OFFICE, WE ARE UNABLE TO CONCLUDE THAT THE CONTRACTING OFFICER'S ACTIONS WERE IN OTHER THAN GOOD FAITH OR THAT THEY WERE NOT IN ACCORD WITH THE PROCUREMENT REGULATIONS. CONVERSELY, THE RECORD INDICATES THAT NASA AFFORDED A GENEROUS AMOUNT OF TIME FOR ACTION BY SBA ON YOUR COC APPLICATION, THAT IS, FROM JUNE 8 TO AUGUST 10, AND NASA'S WILLINGNESS TO RECONSIDER THE MATTER NOTWITHSTANDING SBA'S DENIAL OF A COC TO YOU EVIDENCES ITS GOOD FAITH. FURTHER, SINCE THE BASIS OF THE AWARD TO THE SECOND LOWEST BIDDER PRIOR TO OUR DECISION WAS URGENCY, NO COMMENT IS NECESSARY ON THE EFFECT OF THE PENDING EXPIRATION OF THE WAGE RATE DETERMINATION WHICH WAS INCLUDED IN THE IFB, AND SINCE THE AWARD IS SUPPORTED BY THE DETERMINATION REQUIRED BY NASA PR 2.407-8 (B) (3), WE FIND NO LEGAL BASIS TO QUESTION IT. ..END :