B-163346, MAR. 25, 1968

B-163346: Mar 25, 1968

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REFERENCE IS MADE TO YOUR TELEGRAM OF JANUARY 17 AND LETTER OF JANUARY 30. JET POWER WAS DETERMINED TO BE THE LOWEST RESPONSIVE OFFEROR IN THE ESTIMATED AMOUNT OF $735. THIS REGULATION PROVIDES GENERALLY THAT BEFORE A CONTRACT MAY BE AWARDED TO ANY FIRM THE CONTRACTING OFFICER SHALL FIRST MAKE AN AFFIRMATIVE WRITTEN DETERMINATION THAT THE PROSPECTIVE CONTRACTOR IS RESPONSIBLE WITHIN THE GUIDELINES STATED IN ASPR 1-902 AND 1 -903. IT WILL BE NECESSARY FOR THE PROSPECTIVE CONTRACTOR TO DEMONSTRATE AFFIRMATIVELY (TOGETHER WITH OTHER REQUIRED QUALIFICATIONS) THE CAPABILITY TO PERFORM STRICTLY IN ACCORDANCE WITH ALL THE REQUIREMENTS OF THE CONTRACT SUFFICIENT TO JUSTIFY A DETERMINATION OF THE CONTRACTOR'S -RESPONSIBILITY- WITH RESPECT TO THIS CONTRACT AS THAT TERM IS DESCRIBED IN PART 9 OF SECTION I OF THE ARMED SERVICES PROCUREMENT REGULATION.

B-163346, MAR. 25, 1968

TO JET POWER, INC.;

REFERENCE IS MADE TO YOUR TELEGRAM OF JANUARY 17 AND LETTER OF JANUARY 30, 1968, PROTESTING AGAINST THE REJECTION OF YOUR PROPOSAL SUBMITTED IN RESPONSE TO REQUEST FOR PROPOSALS (RFP) NO. F41608-68-R 4086, BY THE DEPARTMENT OF THE AIR FORCE, SAN ANTONIO AIR MATERIEL AREA.

THE RFP, ISSUED AUGUST 3, 1967, SOLICITED PROPOSALS FOR THE NEGOTIATED AWARD OF AN OPEN-END FIXED-PRICE MAINTENANCE, OVERHAUL AND MODIFICATION CONTRACT FOR THE REPAIR AND REMATCH OF J57 AIRCRAFT TURBINE BLADES IN ACCORDANCE WITH THE TECHNICAL SPECIFICATIONS SET FORTH THEREIN. PART XII OF THE SCHEDULE ADVISED PROSPECTIVE OFFERORS, IN EFFECT, THAT UNDER THE TERMS OF THE PROPOSED CONTRACT THE CONTRACTOR WOULD BE REQUIRED TO PROCESS UP TO A MAXIMUM OF 367, 415 INDIVIDUAL BLADES -- 35,000 SETS -- EVERY 30 DAYS.

THE RECORD INDICATES THAT AS THE RESULT OF NEGOTIATIONS WITH THE FIGHT LAW OFFERORS, JET POWER WAS DETERMINED TO BE THE LOWEST RESPONSIVE OFFEROR IN THE ESTIMATED AMOUNT OF $735,299. THEREAFTER, ON OCTOBER 11, 1967, THE PROCURING ACTIVITY REQUESTED A COMPLETE PREAWARD SURVEY OF JET POWER'S RESPONSIBILITY AS A PROSPECTIVE CONTRACTOR, PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1 904.1. THIS REGULATION PROVIDES GENERALLY THAT BEFORE A CONTRACT MAY BE AWARDED TO ANY FIRM THE CONTRACTING OFFICER SHALL FIRST MAKE AN AFFIRMATIVE WRITTEN DETERMINATION THAT THE PROSPECTIVE CONTRACTOR IS RESPONSIBLE WITHIN THE GUIDELINES STATED IN ASPR 1-902 AND 1 -903. IN THIS REGARD PART XIII OF THE SCHEDULE, ENTITLED "DEMONSTRATION OF ABILITY TO PERFORM," PROVIDED IN PART THAT:

"PRIOR TO ANY AWARD HEREUNDER, IT WILL BE NECESSARY FOR THE PROSPECTIVE CONTRACTOR TO DEMONSTRATE AFFIRMATIVELY (TOGETHER WITH OTHER REQUIRED QUALIFICATIONS) THE CAPABILITY TO PERFORM STRICTLY IN ACCORDANCE WITH ALL THE REQUIREMENTS OF THE CONTRACT SUFFICIENT TO JUSTIFY A DETERMINATION OF THE CONTRACTOR'S -RESPONSIBILITY- WITH RESPECT TO THIS CONTRACT AS THAT TERM IS DESCRIBED IN PART 9 OF SECTION I OF THE ARMED SERVICES PROCUREMENT REGULATION. FOR THIS PURPOSE PROSPECTIVE CONTRACTORS SHOULD SUBMIT ADEQUATE DOCUMENTATION WITH THEIR BIDS/PROPOSALS TO DEMONSTRATE AFFIRMATIVELY THEIR CAPABILITY (INCLUDING WHEN APPLICABLE, THAT OF PROPOSED SUB CONTRACTORS) TO PERFORM ALL OF THE WORK CALLED FOR IN STRICT ACCORDANCE WITH THE SPECIFICATIONS, DRAWINGS, AND/OR OTHER REQUIREMENTS HEREOF, AND WITHIN THE TIMES PRESCRIBED HEREIN. * * *"

ON OCTOBER 23, 1967, THE PREAWARD SURVEY TEAM, COMPRISED OF EXPERIENCED PERSONNEL FROM THE DEFENSE CONTRACT ADMINISTRATION SERVICES DISTRICT (DCASD) AND THE PROCUREMENT ACTIVITY, INFORMALLY ADVISED THE CONTRACTING OFFICER THAT JET POWER APPEARED TO BE QUALIFIED FOR FULL AWARD OF THE PROPOSED CONTRACT. BY LETTER DATED NOVEMBER 1, 1967, DCASD WAS FORMALLY REQUESTED BY THE PROCUREMENT ACTIVITY TO REEVALUATE THE INFORMAL RECOMMENDATION AND THE DATA IN SUPPORT THEREOF IN LIGHT OF THE FOLLOWING INFORMATION:

"1. THE UNDERSIGNED RECOMMEND THAT A CONTRACT NOT BE AWARDED TO JET POWER, INC. ON SUBJECT RFP BECAUSE, IN OUR OPINION, THIS CONTRACTOR WILL NOT BE ABLE TO PRODUCE QUALITY TURBINE BLADES IN SUFFICIENT QUANTITIES TO MEET SAAMA'S INITIAL PROJECTED REQUIREMENTS. OUR REASONS ARE AS FOLLOWS:

"A. MUCH OF THE REQUIRED TOOLING IS NOT ON SITE AND WILL NOT BE DELIVERED FOR THREE (3) TO FIVE (5) WEEKS. SUBSEQUENT TO DELIVERY, TOOLING MUST BE INSTALLED. TOOLING ALREADY ON SITE IS NOT INSTALLED (GRINDERS AND WELDING EQUIPMENT).

"B. COMPLETE ELECTRICAL WIRING MUST BE ACCOMPLISHED IN THE ENTIRE SHOP AREA INCLUDING LIGHTING AND EQUIPMENT.

"C. THE CONTRACTOR HAS NO SHOP EMPLOYEES AT PRESENT. THESE PEOPLE WILL HAVE TO BE HIRED, TRAINED, AND, IN THE CASE OF WELDERS AND OPERATORS OF INSPECTION EQUIPMENT, CERTIFIED BEFORE THEY CAN PERFORM ON A PRODUCTION BASIS.

"D. REVIEW OF THIS CONTRACTOR'S PROJECTED WORK FLOW AND TIME ALLOCATED FOR EACH STATION DOES NOT APPEAR, IN SOME INSTANCES, TO ALLOW ENOUGH TIME TO ACCOMPLISH THE TASK AND ENSURE A QUALITY PRODUCT. THE OVER ALL FLOW TIME INDICATED THEREON IS LESS THAN HALF THAT REFLECTED IN AVAILABLE INDUSTRIAL ENGINEERING DATA (WORK STANDARDS).'

BY TELEGRAM OF NOVEMBER 2, 1968, DCASD ADVISED THE PROCUREMENT ACTIVITY THAT IT RECOMMENDED "NO AWARD," BECAUSE OF JET POWER'S APPARENT INABILITY TO MEET THE MAXIMUM REQUIREMENT FOR THE PROCESSING OF 35,000 BLADE SETS A MONTH FROM THE BEGINNING OF THE CONTRACT PERIOD.

FOLLOWING RECEIPT OF THE PREAWARD SURVEY, THE CONTRACTING OFFICER REVIEWED THE AVAILABLE INFORMATION REGARDING THE RESPONSIBILITY OF YOUR FIRM TO PERFORM THE REQUIREMENTS OF THE PROPOSED CONTRACT AND DETERMINED, ON NOVEMBER 17, 1967, THAT JET POWER WAS NOT A RESPONSIBLE OFFEROR FOR THE FOLLOWING REASONS:

"THE CONTRACTOR DOES NOT HAVE THE TECHNICAL CAPABILITY, PRODUCTION CAPABILITY, PLANT FACILITIES AND EQUIPMENT, QUALITY ASSURANCE CAPABILITY, LABOR RESOURCE, ABILITY TO MEET REQUIRED SCHEDULE, AND THE PLANT SAFETY IS INADEQUATE. * * *"

SINCE JET POWER IS A SMALL BUSINESS CONCERN AND THE CONTRACTING OFFICER HAD DETERMINED THAT IT DID NOT POSSESS THE REQUISITE CAPACITY TO PERFORM THE ANTICIPATED CONTRACT UNDER THE CRITERIA SET OUT IN ASPR 1-903, THE MATTER OF YOUR FIRM'S RESPONSIBILITY WAS SUBMITTED TO THE SMALL BUSINESS ADMINISTRATION (SBA) FOR EVALUATION AND REVIEW UNDER THE CERTIFICATE OF COMPETENCY PROCEDURES. SEE 15 U.S.C. 637 (B) (7) AND ASPR 1-705.4. ARE ADVISED THAT THE SBA SOUTHEASTERN AREA OFFICE CONDUCTED INVESTIGATIONS ON NOVEMBER 20 THROUGH 21 AND DECEMBER 6 THROUGH 8, 1967, INDEPENDENT OF THE PREAWARD SURVEY, TO DETERMINE JET POWER'S COMPETENCY IN TERMS OF THE SUBJECT PROCUREMENT. CONTRACTING OFFICER THAT "BASED ON A COMPREHENSIVE ANALYSIS OF ALL AVAILABLE INFORMATION, THIS AGENCY HAS DECLINED TO ISSUE A CERTIFICATE OF COMPETENCY IN THIS INSTANCE.' THE BASES UPON WHICH SBA DECLINED TO ISSUE A CERTIFICATE OF COMPETENCY TO YOUR FIRM AS TO THIS PROCUREMENT WERE DETAILED IN A LETTER OF DECEMBER 19, 1967, TO YOU, FROM THE SBA AREA ADMINISTRATOR.

THE RECORD INDICATES THAT ON JANUARY 5, 1968, YOU WERE INFORMALLY GRANTED AN OPPORTUNITY TO SUBMIT ADDITIONAL EVIDENCE OF JET POWER'S COMPETENCY TO PERFORM THE REQUIREMENTS OF THE PROPOSED CONTRACT. THEREAFTER, YOU SUBMITTED COPIES OF CORRESPONDENCE FROM TWO SOURCES OFFERING FINANCIAL ASSISTANCE, AND A LETTER FROM THE ECONOMIC OPPORTUNITY PROGRAM, INC., OF DADE COUNTY, FLORIDA, REQUESTING SBA'S APPROVAL OF JET POWER'S APPLICATION FOR A CERTIFICATE OF COMPETENCY. ON JANUARY 9, 1968, THE ADDITIONAL EVIDENCE WAS TRANSMITTED TO SBA FOR FURTHER CONSIDERATION UNDER ITS CERTIFICATE OF COMPETENCY PROCEDURES. ON JANUARY 11, 1968, SBA ADVISED THE PROCUREMENT ACTIVITY THAT ITS PRIOR DECISION DECLINING TO ISSUE A CERTIFICATE OF COMPETENCY WAS FINAL, THEREBY PRECLUDING RECONSIDERATION OF THE MATTER ON THE MOTION OF JET POWER. HOWEVER, SBA ALSO ADVISED THAT IF THE CONTRACTING OFFICER CONSIDERED THE ADDITIONAL EVIDENCE SUFFICIENT TO OVERCOME HIS ORIGINAL NEGATIVE DETERMINATION OF RESPONSIBILITY, HE COULD MAKE AWARD DIRECTLY TO JET POWER OR REFER THE CASE, TOGETHER WITH THE ADDITIONAL EVIDENCE, TO SBA AS A NEW CASE FOR DETERMINATION OF COMPETENCY UNDER ASPR 1-705.4. IN THIS REGARD, IT IS TO BE NOTED THAT THE ADDITIONAL EVIDENCE RELATED TO YOUR FINANCIAL ABILITY TO PERFORM AND NOT TO YOUR TECHNICAL CAPACITY WHICH WAS ALSO DEEMED TO BE INADEQUATE.

IN ACCORDANCE THEREWITH, THE CONTRACTING OFFICER RECONSIDERED THE INFORMATION CONTAINED IN THE REPORT OF THE PREAWARD SURVEY, IN CONJUNCTION WITH THE ADDITIONAL FINANCIAL EVIDENCE SUBMITTED BY JET POWER, AND CONCLUDED THEREFROM THAT AN INSUFFICIENT BASIS EXISTED TO WARRANT A REVERSAL OF HIS ORIGINAL DETERMINATION OF NONRESPONSIBILITY. ACCORDINGLY, ON JANUARY 12, 1968, THE CONTRACT WAS AWARDED TO THE SECOND LOW OFFEROR.

YOUR PROTEST AGAINST THE AWARD TO THE SECOND LOW OFFEROR IS PREDICATED UPON THE ARGUMENT THAT JET POWER WAS, IN FACT, A RESPONSIBLE OFFEROR IN TERMS OF THE SUBJECT PROCUREMENT AND THAT THE REFUSAL OF THE PROCUREMENT ACTIVITY TO SUBMIT THE ADDITIONAL EVIDENCE TO SBA WAS PREJUDICIAL TO YOUR FIRM AND THE GOVERNMENT'S BEST INTERESTS. AS WILL BE NOTED FROM THE ABOVE RECITATION OF FACTS, THE PROCUREMENT ACTIVITY DID SUBMIT SUCH EVIDENCE TO SBA ON YOUR BEHALF BUT THAT AGENCY REFUSED TO RECONSIDER ITS DECISION WHICH IT REGARDED AS FINAL.

IT IS A WELL-SETTLED RULE THAT OUR OFFICE WILL NOT INTERFERE WITH A DETERMINATION MADE BY THE CONTRACTING OFFICER THAT A FIRM IS NOT A RESPONSIBLE OFFEROR WITH RESPECT TO A PARTICULAR PROCUREMENT IN THE ABSENCE OF A SHOWING OF BAD FAITH OR LACK OF A REASONABLE BASIS THEREFOR. 37 COMP. GEN. 430. THE REASONS UNDERLYING THIS RULE ARE SET OUT IN OUR DECISION AT 39 COMP. GEN. 705, 711, IN PART, AS FOLLOWS:

"* * * WHILE SUCH JUDGMENT 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 OFFICES INVOLVED, SINCE THEY ARE IN THE BEST POSITION TO ASSESS RESPONSIBILITY, THEY MUST BEAR THE MAJOR BRUNT OF ANY DIFFICULTIES EXPERIENCED BY REASON OF THE CONTRACTOR'S LACK OF ABILITY, AND THEY MUST MAINTAIN THE DAY TO DAY RELATIONS WITH THE CONTRACTOR ON BEHALF OF THE GOVERNMENT. FOR THESE REASONS, IT WOULD BE UNREASONABLE TO SUPERIMPOSE THE JUDGMENT OF OUR OFFICE OR ANY OTHER AGENCY OR GROUP ON THAT OF THE CONTRACTING OFFICIALS. * * *"

WE HAVE HELD THAT THE REFUSAL OF SBA TO ISSUE A CERTIFICATE OF COMPETENCY TO A SMALL BUSINESS OFFEROR MUST BE REGARDED AS PERSUASIVE WITH RESPECT TO THE COMPETENCY OF THE OFFEROR CONCERNED. WHEN THE ISSUANCE OF A CERTIFICATE OF COMPETENCY IS DENIED, THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY MUST BE REGARDED AS HAVING BEEN AFFIRMED. SEE 35 COMP. GEN. 233; B-159717, OCTOBER 7, 1966.

WITH PARTICULAR REFERENCE TO THE CERTIFICATE OF COMPETENCY ASPECTS OF YOUR PROTEST, THE FOLLOWING STATEMENTS FROM OUR DECISION B-162232, NOVEMBER 24, 1967, 47 COMP. GEN. ----, ARE PERTINENT:

"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'SCOMPETENCY, 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.

"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 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.' BASED ON THE RECORD BEFORE US, WE ARE UNABLE TO CONCLUDE THAT THE CONTRACTING OFFICER'S ACTIONS WERE IN OTHER THAN GOOD FAITH OR THAT THEY WERE NOT IN ACCORDANCE WITH LAW OR REGULATION. FACT, THE RECORD SHOWS THAT THE AIR FORCE AFFORDED A GENEROUS AMOUNT OF TIME FOR ACTION BY SBA ON YOUR APPLICATION FOR A CERTIFICAT OF COMPETENCY; AND THE WILLINGNESS OF THE AIR FORCE TO RECONSIDER THE MATTER NOTWITHSTANDING SBA'S DENIAL AND ITS REFUSAL TO RECONSIDER ITS DECISION OF DENIAL EVIDENCES ITS GOOD FAITH IN EXTENDING AMPLE OPPORTUNITY TO YOU TO JUSTIFY YOUR OVERALL RESPONSIBILITY. FOR THE REASONS STATED YOUR PROTEST IS DENIED.