B-163859, APR. 17, 1968

B-163859: Apr 17, 1968

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THE PROCUREMENT ITEM IS AN ENGINE CONTAINER FOR SHIPMENT TO CANTON. THE PROCUREMENT WAS RESTRICTED TO SMALL BUSINESS CONCERNS. WHICH MESSER IS REPORTED TO HAVE FILED WITH THE MICHIGAN DEPARTMENT OF TREASURY. INCLUDES AN ESTIMATE THAT MESSER'S ANNUAL VOLUME OF BUSINESS IS APPROXIMATELY $400. 000 AND A STATEMENT THAT DEBT IS HEAVY IN RELATION TO CORPORATE EQUITY BUT AN OVERALL FINANCIAL CONDITION IS PRESENTLY UNDETERMINED. ANOTHER ATTACHMENT TO YOUR PROTEST IS A LETTER DATED MARCH 6. IN WHICH YOU ALLEGED THAT THE LOW BIDDER (MESSER) HAS NO PREVIOUS EXPERIENCE IN BUILDING THE PROCUREMENT ITEM AND DOES NOT HAVE THE TOOLING OR EQUIPMENT NECESSARY TO PRODUCE THE ITEM. YOU FURTHER STATE THAT THIS IS THE SECOND PROCUREMENT OF THE SAME ITEM IN WHICH AWARD HAS BEEN MADE TO A CONTRACTOR WHO LACKS THE CAPABILITY TO PERFORM THE CONTRACT.

B-163859, APR. 17, 1968

TO THE GERSTENSLAGER COMPANY:

WE REFER TO YOUR PROTEST BY LETTER DATED MARCH 6, 1968, ADDRESSED TO A MEMBER OF CONGRESS, AGAINST THE AWARD OF A NEGOTIATED CONTRACT BY THE UNITED STATES ARMY TANK AUTOMOTIVE COMMAND TO MESSER STAMPING COMPANY (MESSER), PURSUANT TO REQUEST FOR QUOTATION (RFQ) NO. DAAE-07 68-Q-0428, ISSUED DECEMBER 16, 1967. THE PROCUREMENT ITEM IS AN ENGINE CONTAINER FOR SHIPMENT TO CANTON, OHIO, AND MUSKEGON, MICHIGAN, AND THE PROCUREMENT WAS RESTRICTED TO SMALL BUSINESS CONCERNS.

THE ATTACHMENTS TO YOUR PROTEST INCLUDE A CREDIT REPORT DATED AUGUST 28, 1967, WHICH YOU STATE SHOWS A LACK ON THE PART OF MESSER OF THE ASSETS NECESSARY TO PERFORM THE CONTRACT IN QUESTION, THE AMOUNT OF WHICH EXCEEDS $800,000. THE CREDIT REPORT SUMMARIZES INFORMATION TAKEN FROM A FINANCIAL STATEMENT DATED JUNE 30, 1965, WHICH MESSER IS REPORTED TO HAVE FILED WITH THE MICHIGAN DEPARTMENT OF TREASURY, AND INCLUDES AN ESTIMATE THAT MESSER'S ANNUAL VOLUME OF BUSINESS IS APPROXIMATELY $400,000 AND A STATEMENT THAT DEBT IS HEAVY IN RELATION TO CORPORATE EQUITY BUT AN OVERALL FINANCIAL CONDITION IS PRESENTLY UNDETERMINED.

ANOTHER ATTACHMENT TO YOUR PROTEST IS A LETTER DATED MARCH 6, ADDRESSED TO THE PROCURING ACTIVITY, IN WHICH YOU ALLEGED THAT THE LOW BIDDER (MESSER) HAS NO PREVIOUS EXPERIENCE IN BUILDING THE PROCUREMENT ITEM AND DOES NOT HAVE THE TOOLING OR EQUIPMENT NECESSARY TO PRODUCE THE ITEM. FURTHER, YOU STATED THAT THE NECESSARY TOOLING, EQUIPMENT, AND TECHNICAL KNOWLEDGE COULD NOT BE OBTAINED IN SUFFICIENT TIME TO MEET THE SCHEDULE REQUIRING DELIVERIES TO COMMENCE ON MAY 1, 1968, AND TO BE COMPLETED BY JULY 17, 1968.

YOU FURTHER STATE THAT THIS IS THE SECOND PROCUREMENT OF THE SAME ITEM IN WHICH AWARD HAS BEEN MADE TO A CONTRACTOR WHO LACKS THE CAPABILITY TO PERFORM THE CONTRACT. THE EARLIER PROCUREMENT WAS UNDER AN INVITATION FOR BIDS DATED AUGUST 14, 1967, PURSUANT TO WHICH AWARD WAS MADE ON SEPTEMBER 14, 1967, TO BAYOU CITY STEEL COMPANY, INC. (BAYOU), AND YOU CLAIM THAT EVEN THOUGH THE CONTRACT REQUIRED PRODUCTION TO COMMENCE 90 DAYS AFTER AWARD, BAYOU HAS YET TO COMPLY WITH SUCH REQUIREMENTS.

FINALLY, YOU CLAIM THAT ON MARCH 4 YOU MADE A VERBAL PROTEST IN THE NEGOTIATED PROCUREMENT TO THE PROCURING ACTIVITY AGAINST AWARD TO ANY OTHER OFFEROR; THAT YOU WERE INFORMED AT THE TIME THAT YOU WERE NOT THE LOW OFFEROR; AND THAT PURSUANT TO ADVICE RECEIVED FROM THE PROCURING ACTIVITY, YOU PROCEEDED TO PREPARE THE WRITTEN PROTEST WHICH YOU FILED BY YOUR LETTER OF MARCH 6. THEREFORE YOU CONTEND THAT THE AWARD WAS MADE AFTER YOUR PROTEST.

PURSUANT TO A DETERMINATION AND FINDINGS DATED DECEMBER 15, 1967, CITING THE PUBLIC EXIGENCY AUTHORITY IN 10 U.S.C. 2304 (A) (2) AND ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-202.2 (VI), TELETYPE RFQ NO. DAAE-07-68-Q- 0428 WAS ISSUED BY THE U.S. ARMY TANK AUTOMOTIVE COMMAND TO 15 POTENTIAL SUPPLIERS ON DECEMBER 16, 1967, SOLICITING QUOTATIONS TO FURNISH 1,118 ENGINE CONTAINERS IDENTIFIED BY ORDNANCE PART NO. 10935322 AND FEDERAL STOCK NO. 8115-967-3343. THE EXTENDED CLOSING DATE FOR SUBMISSION OF QUOTATIONS WAS JANUARY 10, 1968, AND THE DELIVERY SCHEDULE CALLED FOR SEVEN SHIPMENTS COMMENCING FEBRUARY 28 AND TERMINATING MAY 31, 1968. THE 11 RESPONSES RECEIVED UNDER THE RFQ, QUOTATIONS SUBMITTED BY MESSER, BY BAYOU, AND BY YOU WERE CONSIDERED IN THE ZONE OF COMPETITION.

BY TELETYPE ISSUED JANUARY 31, 1968, THE PROCURING ACTIVITY REOPENED THE PROCUREMENT WITH A NEW CLOSING DATE OF FEBRUARY 9, 1968, INCREASED THE QUANTITY OF THE CONTAINERS FROM 1,118 TO 2,521 UNITS, AND PRESCRIBED A NEW DELIVERY SCHEDULE REQUIRING SIX SHIPMENTS COMMENCING APRIL 1, 1968, AND TERMINATING JUNE 17, 1968. UNDER THE REOPENED SOLICITATION, EIGHT QUOTATIONS WERE RECEIVED ON AN F.O.B. ORIGIN BASIS. MESSER WAS LOWEST AND YOU WERE SECOND WITH A UNIT PRICE OF $332 F.O.B. WOOSTER, OHIO. FEBRUARY 13, IN VIEW OF MESSER'S STATUS AS LOW OFFEROR, THE PROCURING ACTIVITY ISSUED A REQUEST TO THE DEFENSE CONTRACT ADMINISTRATION SERVICES REGION (DCASR), DETROIT, TO PERFORM A PREAWARD SURVEY OF MESSER.

ON FEBRUARY 26, THE PROCURING ACTIVITY COMMUNICATED WITH YOU, MESSER, AND ANOTHER BIDDER CONSIDERED TO BE IN A COMPETITIVE PRICE RANGE AND REQUESTED EACH OF YOU TO RESUBMIT YOUR BEST POSSIBLE F.O.B. DESTINATION PRICES BY TELEPHONE AND TO CONFIRM BY LETTER. ON FEBRUARY 28, THE PROCURING ACTIVITY DISCUSSED WITH EACH OF YOU A MINOR ENGINEERING CHANGE, AND A FURTHER REVISION OF THE DELIVERY SCHEDULE WAS MADE TO DEFER THE INITIAL SHIPMENT TO MAY 1, 1968, AND THE FINAL SHIPMENT TO JULY 17, 1968. THE CHANGE IN DELIVERY SCHEDULE WAS OCCASIONED BY THE FACT THAT THE ENGINES FOR WHICH THE COVERS WERE INTENDED COULD NOT BE DELIVERED PRIOR TO MAY 1. MESSER'S REVISED PRICES WERE STILL BELOW YOURS ALTHOUGH YOU REDUCED YOUR F.O.B. ORIGIN UNIT PRICE TO $331.60 AND QUOTED F.O.B. DESTINATION UNIT PRICES OF $334.25 FOR CANTON AND $341 FOR MUSKEGON.

THE DCASR PREAWARD SURVEY REPORT ON MESSER, DATED FEBRUARY 28, WAS RECEIVED BY THE CONTRACTING OFFICER ON THE SAME DATE, AND IT RECOMMENDED THAT THE CONTRACT BE AWARDED TO MESSER. AMONG OTHER THINGS, THE REPORT INCLUDED FINDINGS THAT MESSER HAD ADEQUATE TRAINED PERSONNEL; HAD ON HAND AND IN GOOD CONDITION WELDERS AND PRESSES; HAD ARRANGED TO PROCURE THROUGH ITS SUBSIDIARY, MESSER TOOL AND DIE OF CINCINNATI, OHIO, THE REQUIRED TOOLS, DIES, JIGS, AND FIXTURES, WHICH WERE REPORTED BY THE INDUSTRIAL SPECIALIST MEMBER OF THE SURVEY TEAM TO BE OF SIMPLE DESIGN AND CONSTRUCTION; AND HAD MADE SATISFACTORY COMMITMENTS FOR THE PURCHASE OF OTHER ITEMS AND MATERIALS REQUIRED FOR PRODUCTION. FURTHER, BASED ON THE LATEST DELIVERY SCHEDULE, THE SURVEY TEAM FOUND THAT THERE WAS NO DEFICIENCY IN MESSER'S MAKE AND BUY PROGRAM.

CONCERNING MESSER'S FINANCIAL CONDITION, THE DCASR REPORT SUMMARIZED INFORMATION TAKEN FROM A BALANCE SHEET DATED JUNE 30, 1967, AND A PROFIT AND LOSS STATEMENT COVERING THE PERIOD JULY 1, 1966 THROUGH JUNE 30, 1967, WHICH SHOWED A 1.58/1.00 RATIO OF CURRENT ASSETS TO CURRENT LIABILITIES AND AVAILABLE WORKING CAPITAL, INCLUDING A VERIFIED OPEN CREDIT FROM A DETROIT BANK OF APPROXIMATELY $100,000. THE AVAILABILITY OF PROGRESS PAYMENTS UNDER THE CONTRACT OF MORE THAN $500,000 WAS ALSO REGARDED AS A SIGNIFICANT FACTOR. ACCORDINGLY, THE REPORT WAS AFFIRMATIVE AS TO FINANCES.

ON THE BASIS OF THE SUPPORTING DATA FURNISHED WITH THE DCASR REPORT AND RECORDS MAINTAINED BY THE PROCURING ACTIVITY, THE CONTRACTING OFFICER ISSUED A DETERMINATION THAT MESSER WAS A RESPONSIBLE CONTRACTOR WITHIN THE MEANING OF ASPR 1-903.1. ON FEBRUARY 29, AWARD TO MESSER WAS APPROVED ON THE BASIS OF ITS LOW UNIT PRICE OF $319.83 F.O.B. DESTINATION, WHICH WAS FOUND TO BE REASONABLE SINCE IT WAS OBTAINED THROUGH ADEQUATE COMPETITION AND COMPARED FAVORABLY WITH THE UNIT PRICE OF $325.81 FOR WHICH THE SAME ITEM HAD PREVIOUSLY BEEN PROCURED FROM BAYOU ON SEPTEMBER 14, 1967. NOTICE OF THE AWARD WAS TRANSMITTED TO YOU BY LETTER DATED MARCH 7, THE SAME DATE THE PROCURING ACTIVITY RECEIVED YOUR WRITTEN PROTEST. THERE IS NO INDICATION IN THE RECORD OF THE RECEIPT BY THE PROCURING ACTIVITY OF ANY VERBAL PROTEST FROM YOU PRIOR TO THE AWARD.

WITH FURTHER REGARD TO MESSER'S CAPABILITY TO PERFORM THE CONTRACT, THE RECORD SHOWS THAT ON MARCH 15 REPRESENTATIVES OF THE PROCURING ACTIVITY AND DCASR VISITED MESSER'S PLANT TO REVIEW ITS PROGRESS AND OBSERVED THAT ACTION HAD BEEN TAKEN BY MESSER TO PREPARE FOR PRODUCTION COMMENCING THE WEEK OF MARCH 25. A SECOND VISIT TO MONITOR PRODUCTION PROGRESS WAS SCHEDULED FOR THE FIRST PART OF APRIL.

WITH RESPECT TO THE CONTRACT WITH BAYOU, WHICH, AS INDICATED ABOVE, WAS AWARDED ON SEPTEMBER 14, 1967, WE ARE ADVISED BY THE DEPARTMENT OF THE ARMY THAT DELIVERIES ARE CURRENT.

OUR OFFICE HAS CONSISTENTLY HELD THAT THE DETERMINATION OF A BIDDER'S OVERALL RESPONSIBILITY IS PRIMARILY THE FUNCTION OF THE CONTRACTING AGENCY AND NOT OF THE GENERAL ACCOUNTING OFFICE. 38 COMP. GEN. 131; 33 ID. 549. WHETHER A BIDDER IS, OR IS NOT, CAPABLE OF PRODUCING IN ACCORDANCE WITH CONTRACT REQUIREMENTS IS A QUESTION OF FACT, AND ABSENT EVIDENCE THAT THE DETERMINATION OF A BIDDER'S CAPABILITIES WAS BASED ON ERROR, FRAUD, OR FAVORITISM, OUR OFFICE WILL ACCEPT THE FINDINGS OF THE CONTRACTING AGENCY. 40 COMP. GEN. 294. WE HAVE ALSO STATED THAT THE PROJECTION OF A BIDDER'S ABILITY TO PERFORM IF AWARDED A CONTRACT IS OF NECESSITY A MATTER OF JUDGMENT, WHICH, WHILE IT SHOULD BE BASED ON FACT AND ARRIVED AT IN GOOD FAITH, MUST PROPERLY BE LEFT LARGELY TO THE SOUND ADMINISTRATIVE DISCRETION OF THE CONTRACTING OFFICERS 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, WE HAVE HELD THAT IT WOULD BE UNREASONABLE TO SUPERIMPOSE THE JUDGMENT OF OUR OFFICE OR ANY OTHER AGENCY OR GROUP ON THAT OF THE CONTRACTING OFFICIALS. 39 COMP. GEN. 705, 711.

UNDER ASPR 1-905, THE DETERMINATION OF THE RESPONSIBILITY OF A PROSPECTIVE CONTRACTOR IS REQUIRED TO BE MADE ON THE BASIS OF CURRENTLY VALID INFORMATION ON FILE OR WITHIN THE KNOWLEDGE OF PERSONNEL IN THE DEPARTMENT OF DEFENSE, AND GENERALLY THE INFORMATION REGARDING THE PROSPECTIVE CONTRACTOR'S RESPONSIBILITY, INCLUDING PREAWARD SURVEYS WHEN DEEMED NECESSARY, MUST BE OBTAINED PROMPTLY AFTER BID OPENING OR RECEIPT OF PROPOSALS. UNDER ASPR 1-905.4, A PREAWARD SURVEY IS DEFINED AS AN EVALUATION BY A CONTRACT ADMINISTRATION OFFICE OF A PROSPECTIVE CONTRACTOR'S CAPABILITY TO PERFORM UNDER THE TERMS OF A PROPOSED CONTRACT, AND WHEN SUCH A SURVEY IS MADE, THE CONTRACTING OFFICER IS REQUIRED TO USE THE EVALUATION IN DETERMINING THE PROSPECTIVE CONTRACTOR'S RESPONSIBILITY.

THE RECORD SHOWS THAT THE AWARD TO MESSER ON FEBRUARY 29, WHICH PRECEDED BY 4 DAYS YOUR ALLEGED VERBAL PROTEST TO THE PROCURING ACTIVITY, WAS MADE AFTER THE CONTRACTING OFFICER HAD ISSUED THE DETERMINATION REQUIRED BY ASPR 1-904.1 THAT MESSER WAS A RESPONSIBLE PROSPECTIVE CONTRACTOR WITHIN THE MEANING OF ASPR 1-902. THE RECORD FURTHER SHOWS THAT IN MAKING SUCH DETERMINATION THE CONTRACTING OFFICER USED INFORMATION AVAILABLE AT THE PROCURING ACTIVITY AND COMPLIED WITH THE REQUIREMENTS OF ASPR 1-905.4 CONCERNING THE USE OF THE PREAWARD SURVEY REPORT. IN THE CIRCUMSTANCES, WE ARE UNABLE TO CONCLUDE THAT THE CONTRACTING OFFICER'S DETERMINATION WAS WITHOUT A SUBSTANTIAL BASIS, AND WE FIND NO LEGAL BASIS TO QUESTION THE VALIDITY OF THE AWARD.

IN VIEW OF THE FOREGOING, WE ARE UNABLE TO CONCUR WITH YOUR VIEW THAT THE AWARD TO MESSER WAS MADE WITHOUT REGARD TO ITS CAPABILITY TO PERFORM THE CONTRACT. FURTHER, THE FACT THAT BAYOU IS DELIVERING ON SCHEDULE UNDER THE CONTRACT WHICH IT RECEIVED PRIOR TO THIS PROCUREMENT WOULD APPEAR TO INDICATE THAT BAYOU IS DISCHARGING ITS CONTRACTUAL OBLIGATIONS IN A RESPONSIBLE MANNER. ACCORDINGLY, YOUR PROTEST IS DENIED.