B-163249, MAR. 6, 1968

B-163249: Mar 6, 1968

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DENYING THAT DETERMINATION OF RESPONSIBILITY OF LOW BIDDER WAS IMPROPER. DETERMINATION AFTER PREAWARD SURVEY AND FURTHER REVIEW OF DELINQUENT CONTRACTS THAT BIDDER WAS RESPONSIBLE AND COULD PERFORM IS SUPPORTED BY THE RECORD AND IN ABSENCE OF EVIDENCE THAT CONTRACTING OFFICER ACTED IN OTHER THAN IN GOOD FAITH OR ABUSED DISCRETION DETERMINATION MUST BE REGARDED AS PROPER. TO TELEDYNE SYSTEMS COMPANY: FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST THE AWARD OF A CONTRACT TO ANY BIDDER OTHER THAN YOUR FIRM BY WARNER ROBINS AIR FORCE BASE UNDER INVITATION FOR BIDS NO. IT ALSO PROVIDED FOR WAIVER OF FIRST ARTICLE APPROVAL IF THE AWARD WAS MADE TO A FIRM CURRENTLY IN PRODUCTION OF ITEMS IDENTICAL OR SIMILAR TO THOSE SPECIFIED.

B-163249, MAR. 6, 1968

BIDDERS - RESPONSIBILITY - PRIOR UNSATISFACTORY SERVICE DECISION TO TELEDYNE SYSTEMS CO., SECOND LOW BIDDER, DENYING THAT DETERMINATION OF RESPONSIBILITY OF LOW BIDDER WAS IMPROPER. DETERMINATION AFTER PREAWARD SURVEY AND FURTHER REVIEW OF DELINQUENT CONTRACTS THAT BIDDER WAS RESPONSIBLE AND COULD PERFORM IS SUPPORTED BY THE RECORD AND IN ABSENCE OF EVIDENCE THAT CONTRACTING OFFICER ACTED IN OTHER THAN IN GOOD FAITH OR ABUSED DISCRETION DETERMINATION MUST BE REGARDED AS PROPER.

TO TELEDYNE SYSTEMS COMPANY:

FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST THE AWARD OF A CONTRACT TO ANY BIDDER OTHER THAN YOUR FIRM BY WARNER ROBINS AIR FORCE BASE UNDER INVITATION FOR BIDS NO. F09603-68-B-0009.

THE SUBJECT INVITATION, ISSUED ON JULY 10, 1967, WITH A CLOSING DATE OF AUGUST 9, 1967, SOLICITED BIDS ON FURNISHING 400 QUADRATURE REJECTORS IN ACCORDANCE WITH STATED SPECIFICATIONS AND GOVERNMENT FURNISHED DRAWINGS. THE INVITATION CALLED FOR DELIVERY OF A FIRST ARTICLE WITHIN 60 DAYS FROM DATE OF AWARD AND DELIVERY OF THE ENTIRE QUANTITY WITHIN 180 DAYS AFTER FIRST ARTICLE APPROVAL. IT ALSO PROVIDED FOR WAIVER OF FIRST ARTICLE APPROVAL IF THE AWARD WAS MADE TO A FIRM CURRENTLY IN PRODUCTION OF ITEMS IDENTICAL OR SIMILAR TO THOSE SPECIFIED.

TWO BIDS WERE RECEIVED. YOU BID $350.53 PER UNIT, AND EASTERN AIR DEVICES, INC., BID $282.80 PER UNIT. THE CONTRACTING OFFICER REQUESTED A PREAWARD SURVEY OF EASTERN AIR DEVICES ON AUGUST 18, 1967. A NEGATIVE RECOMMENDATION WAS MADE BY THE SURVEY TEAM ON SEPTEMBER 1, 1967, ON THE BASIS OF ITS CONCLUSION THAT EASTERN HAD AN UNSATISFACTORY RECORD OF PERFORMANCE ON PRIOR GOVERNMENT CONTRACTS. THEREAFTER, A PREAWARD SURVEY OF YOUR FIRM WAS REQUESTED AND, ON SEPTEMBER 18, 1967, AN AFFIRMATIVE RECOMMENDATION WAS MADE. THE CONTRACTING OFFICER THEN REQUESTED A RESURVEY OF EASTERN AIR DEVICES' PERFORMANCE RECORD BY THE DEFENSE CONTRACT ADMINISTRATION SERVICE REGION, BOSTON, MASSACHUSETTS, AND ON OCTOBER 6, 1967, RECEIVED THE FOLLOWING REPORT:

"AS REQUESTED, THIS OFFICE HAS REVIEWED SUBJECT PAS AS RELATED TO CONTRACTOR'S CURRENT PERFORMANCE. AS OF THIS DATE, 6 OCT 67, A REVIEW REVEALS THAT SEVEN OF THE DELINQUENT CONTRACTS HAVE BEEN SHIPPED COMPLETE AND THE REMAINING SEVEN ARE STILL IN A DELINQUENT STATUS. HOWEVER, SHIPMENTS ARE BEING MADE ON THE LATTER AND EARLY RECOVERY IS ANTICIPATED. CONTRACTOR IS AWARE OF HIS DELINQUENCY PROBLEMS AND APPEARS TO BE TAKING NECESSARY CORRECTIVE ACTION.

"IN VIEW OF THE ABOVE PROGRESS, IT IS RECOMMENDED THAT THE UNSATISFACTORY FINDING IN PERFORMANCE ON SUBJECT PAS BE CHANGED TO SATISFACTORY AND COMPLETE AWARD IS RECOMMENDED.' AS A RESULT THEREOF, ON OCTOBER 9, 1967, THE CONTRACTING OFFICER ISSUED A WRITTEN DETERMINATION THAT EASTERN AIR DEVICES WAS A RESPONSIBLE PROSPECTIVE CONTRACTOR. THE CONTRACT WAS AWARDED ON NOVEMBER 7, 1967.

IT IS YOUR CONTENTION THAT EASTERN AIR DEVICES LACKS THE NECESSARY TECHNICAL CAPABILITY TO QUALIFY AS A TIMELY SUPPLIER OF THE ITEM BEING PROCURED. AS EVIDENCE OF THIS CONTENTION YOU REFER TO A CONTRACT AWARDED TO EASTERN FOR THE SAME ITEM IN OCTOBER 1966, AND STATE THAT, TO THE BEST OF YOUR KNOWLEDGE, EASTERN HAS FAILED TO PERFORM IN ACCORDANCE WITH THE CONTRACT AS LATE AS DECEMBER 29, 1967. SPECIFICALLY, YOU STATE THAT AT THE TIME OF OPENING OF THE SUBJECT INVITATION EASTERN WAS FIVE MONTHS DELINQUENT IN OBTAINING THE REQUIRED FIRST ARTICLE APPROVAL UNDER THE ABOVE CONTRACT, WHICH IS AMPLE REASON FOR DCASR'S NEGATIVE RECOMMENDATION. YOU ALSO STATE THAT AS A RESULT OF EASTERN'S FAILURE TO PROGRESS AS REQUIRED UNDER THE CONTRACT, TWO EMERGENCY AWARDS FOR THESE ITEMS WERE MADE TO YOUR FIRM. YOU REPORT THAT ONE OF THESE CONTRACTS HAS BEEN COMPLETED AND THE OTHER IS PROCEEDING SATISFACTORILY. YOU MADE SUBSTANTIALLY THE SAME PROTEST AS ABOVE TO WARNER ROBINS ON AUGUST 9, 1967, AND IT WAS DENIED BY LETTER DATED NOVEMBER 7, 1967.

FINALLY, YOU ARGUE THAT AWARD IN THE CIRCUMSTANCES HERE PRESENT IS CONTRARY TO THE DEPARTMENT OF DEFENSE POLICY AS EXPRESSED IN ARMED SERVICES PROCUREMENT REGULATION 1-902 AND IS INCONSISTENT WITH THE PRIOR AWARD TO EASTERN WHEN YOU WERE THE LOW BIDDER. THE PART OF ASPR 1-902 TO WHICH YOU REFER IS:

"* * * 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.' ALTHOUGH YOU WERE THE LOW BIDDER UNDER THE EARLIER PROCUREMENT YOU REFER TO THE AIR FORCE'S POSITION THEN, AS EXPRESSED IN THE FOLLOWING EXCERPT FROM THE AIR FORCE LETTER OF NOVEMBER 17, 1966, DENYING YOUR PROTEST, AS INDICATING AN INCONSISTENT AWARD PROCEDURE:

"THE STATEMENT IN YOUR LETTER REFERENCED ABOVE THAT MECHATROL IS THE LOW BIDDER AND CAN DELIVER PRODUCTION QUANTITIES AT LEAST FIVE (5) MONTHS SOONER THAN ANY OTHER SUPPLIER IS NOT A VALID FACTOR FOR CONSIDERATION. ASPR 1-902 PROVIDES THAT -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. - AS AN EXAMPLE OF A HISTORY OF CHRONIC DELINQUENCIES CONTRACT AF09/603/47176 PREVIOUSLY AWARDED YOUR COMPANY FOR IDENTICAL ITEM WAS DELIVERED NINE (9) MONTHS BEYOND DELIVERY REQUIREMENTS.'

THE STATUTE GOVERNING PROCUREMENT BY FORMAL ADVERTISING, 10 U.S.C. 2304 (A), REQUIRES THAT AWARD BE MADE TO THAT RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. WITH RESPECT TO THE REQUIREMENT THAT THE AWARD BE MADE TO A RESPONSIBLE BIDDER, ASPR 1-902 PROVIDES THAT A PROSPECTIVE CONTRACTOR MUST MAKE AN AFFIRMATIVE DEMONSTRATION OF HIS RESPONSIBILITY AND THAT UNLESS THE INFORMATION CONCERNING THIS MATTER CLEARLY INDICATES HE IS RESPONSIBLE, THE CONTRACTING OFFICER MUST MAKE A DETERMINATION OF NONRESPONSIBILITY. FURTHER PROVIDES THAT DOUBT IN THIS REGARD WHICH CANNOT BE RESOLVED AFFIRMATIVELY REQUIRES A NEGATIVE DETERMINATION. PARAGRAPH 1-903 PRESCRIBES THE MINIMUM STANDARDS OF RESPONSIBILITY WHICH INCLUDE, AMONG OTHER THINGS, THE ABILITY TO MEET THE REQUIRED DELIVERY SCHEDULE, THE NECESSARY ORGANIZATION, EXPERIENCE, OPERATIONAL CONTROLS, TECHNICAL SKILLS, EQUIPMENT AND FACILITIES, OR THE ABILITY TO OBTAIN THEM. THE REGULATION ALSO PROVIDES THAT SUCH INFORMATION SHALL BE OBTAINED ON AS CURRENT A BASIS AS FEASIBLE FROM THE FILES OF THE DEPARTMENT OF DEFENSE, WHERE AVAILABLE, OR THROUGH PREAWARD SURVEY CONDUCTED BY THE CONTRACT ADMINISTRATIVE OFFICE, AND THAT SUCH INFORMATION SHALL BE SUFFICIENT TO SATISFY THE CONTRACTING OFFICER THAT THE PROSPECTIVE CONTRACTOR MEETS THE MINIMUM STANDARDS OF RESPONSIBILITY.

IT HAS LONG BEEN OUR POSITION THAT IT IS NEITHER THE PROVINCE NOR THE INTENTION OF OUR OFFICE TO DETERMINE THE RESPONSIBILITY OF PROSPECTIVE CONTRACTORS, SUCH DETERMINATION BEING A QUESTION OF FACT PRIMARILY FOR DETERMINATION BY THE CONTRACTING OFFICER CONCERNED. 45 COMP. GEN. 4; 43ID. 57; 38ID. 131; 37ID. 430. IN THESE AND OTHER DECISIONS WE HAVE TAKEN THE POSITION THAT A DETERMINATION OF RESPONSIBILITY NECESSARILY INVOLVES THE EXERCISE OF A CONSIDERABLE RANGE OF DISCRETION AND JUDGMENT, WHICH SHOULD NOT BE DISTURBED BY OUR OFFICE IN THE ABSENCE OF CONVINCING EVIDENCE THAT THE DETERMINATION WAS ARBITRARY, CAPRICIOUS, OR NOT BASED UPON SUBSTANTIAL EVIDENCE. IT IS, HOWEVER, THE PROVINCE OF OUR OFFICE TO REVIEW THE RECORD BEFORE US TO DETERMINE IF IT REASONABLY SUPPORTS THE CONTRACTING OFFICER'S FINDING. 45 COMP. GEN. 4.

IN THE INSTANT CASE, THE SURVEY REPORT AS ORIGINALLY SUBMITTED TO THE CONTRACTING OFFICER CONSIDERED AND FOUND EASTERN SATISFACTORY IN TECHNICAL CAPABILITY, PRODUCTION CAPABILITY, FINANCIAL CAPABILITY, PURCHASING AND SUBCONTRACTING, QUALITY ASSURANCE CAPABILITY, AND ABILITY TO MEET THE REQUIRED SCHEDULE. HOWEVER, A REVIEW OF EASTERN'S RECORD OF PERFORMANCE ON NUMEROUS GOVERNMENT CONTRACTS LED THE SURVEY TEAM'S INDUSTRIAL SPECIALIST TO THE CONCLUSION THAT IT WAS UNSATISFACTORY AND, THEREFORE, A "NO AWARD RECOMMENDATION" WAS MADE. IT IS REPORTED THAT AT THE TIME OF THE SURVEY EASTERN HAD 186 GOVERNMENT CONTRACTS, 86 OF WHICH WERE IN THE SURVEY TEAM'S AREA, AND OF THE LATTER NUMBER 14 WERE THEN DELINQUENT FROM ONE TO 143 DAYS. IT WAS ALSO REPORTED THAT ON AUGUST 8, 1967, THE DAY BEFORE OPENING OF BIDS ON THE SUBJECT SOLICITATION, EASTERN HAD RECEIVED FIRST ARTICLE APPROVAL ON ITS QUADRATURE REJECTOR BEING PRODUCED UNDER CONTRACT NO. F09603-67-C-1135. BECAUSE HE WAS NOT SATISFIED THAT THE FOREGOING RECORD OF UNSATISFACTORY PERFORMANCE NECESSARILY REQUIRED THE CONCLUSION THAT EASTERN WAS NONRESPONSIBLE IN VIEW OF THE SATISFACTORY FINDINGS IN THE OTHER AREAS AND IN VIEW OF QUALIFICATION OF ITS PRODUCT UNDER THE CURRENT CONTRACT, THE CONTRACTING OFFICER REQUESTED A FURTHER REVIEW OF ITS PERFORMANCE ON THE DELINQUENT CONTRACTS. AS REPORTED HERETOFORE, AS OF OCTOBER 6, 1967, SEVEN OF THESE CONTRACTS HAD BEEN COMPLETED AND SHIPMENTS HAD BEEN MADE ON THE OTHER SEVEN AND EARLY COMPLETION WAS ANTICIPATED. FURTHERMORE, IT WAS REPORTED THAT EASTERN WAS AWARE OF ITS DELINQUENCY PROBLEMS AND WAS TAKING CORRECTIVE ACTION. VIEW THEREOF, AND SINCE EASTERN'S UNIT PRICE WAS $68 LOWER, THE AWARD WAS MADE TO EASTERN.

IN THESE CIRCUMSTANCES, WE DO NOT BELIEVE WE WOULD BE JUSTIFIED IN SUBSTITUTING OUR JUDGMENT FOR THAT OF THE CONTRACTING OFFICER SINCE THERE IS NO EVIDENCE THAT HE ACTED OTHER THAN IN GOOD FAITH OR THAT HE ABUSED THE DISCRETION PERMITTED. ALTHOUGH YOU ALLEGE AN INCONSISTENCY IN THE ADMINISTRATIVE HANDLING OF THIS AWARD AND THE AWARD OF CONTRACT NO. F09603 -67-C-1135 TO EASTERN, WE DO NOT FIND EVIDENCE TO INDICATE THAT ANY INCONSISTENCY RESULTED FROM ANYTHING OTHER THAN A SOUND EXERCISE OF JUDGMENT UNDER THE CIRCUMSTANCES PRESENTED.

ACCORDINGLY, WE FIND NO BASIS UPON WHICH OUR OFFICE MAY PROPERLY OBJECT TO THE AWARD TO EASTERN AIR DEVICES, INC. ..END :