B-163860-/1), JUL. 22, 1969

B-163860-/1): Jul 22, 1969

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CONCLUDED THAT PROTESTANT WAS ERRONEOUSLY DECLARED NONRESPONSIBLE AND THAT SMALL BUSINESS ADMINISTRATION WOULD HAVE ISSUED A CERTIFICATE OF COMPETENCY THEREFORE PROTESTANT SHOULD HAVE RECEIVED AWARD. CANCELLATION WOULD NOT BE PRACTICAL AND THAT PORTION OF PROTEST IS DENIED. SECRETARY: ENCLOSED IS A COPY OF OUR DECISION OF TODAY TO SPACE SYSTEMS LABORATORY. YOU WILL NOTE THAT OUR DECISION OF TODAY HOLDS THAT SPACE SYSTEMS WAS ENTITLED TO. SHOULD HAVE RECEIVED THE CONTRACT AWARDED TO BAUSCH AND LOMB IN FEBRUARY 1968. WE WERE UNABLE TO CONCLUDE THAT CANCELLATION OF THE CONTRACT WOULD BE IN THE BEST INTEREST OF THE GOVERNMENT. IT IS OUR BELIEF THAT A FAIR AND EXPEDITIOUS RESOLUTION OF BID PROTESTS IS ESSENTIAL TO PRESERVATION OF CONFIDENCE IN THE COMPETITIVE BIDDING SYSTEM.

B-163860-/1), JUL. 22, 1969

BID PROTEST - IMPROPER DETERMINATION DECISION TO SPACE SYSTEMS LABORATORY, INC., RECONSIDERING DECISION OF AUG. 14, 1968, AGAINST NEGOTIATED AWARD TO BAUSCH AND LOMB OPTICAL CO. BY FRANKFORD ARSENAL. CONCLUDED THAT PROTESTANT WAS ERRONEOUSLY DECLARED NONRESPONSIBLE AND THAT SMALL BUSINESS ADMINISTRATION WOULD HAVE ISSUED A CERTIFICATE OF COMPETENCY THEREFORE PROTESTANT SHOULD HAVE RECEIVED AWARD. HOWEVER, DUE TO EXTENT OF COMPLETION OF CONTRACT, CANCELLATION WOULD NOT BE PRACTICAL AND THAT PORTION OF PROTEST IS DENIED.

TO MR. SECRETARY:

ENCLOSED IS A COPY OF OUR DECISION OF TODAY TO SPACE SYSTEMS LABORATORY, INC. (SPACE SYSTEMS), IN REPLY TO THAT COMPANY'S REQUEST FOR RECONSIDERATION OF OUR DECISION OF AUGUST 14, 1968, IN WHICH WE DENIED THE COMPANY'S PROTEST AGAINST AWARD TO ANOTHER FIRM UNDER REQUEST FOR PROPOSALS (RFP) NO. DAAA25-68-R-0294, ISSUED BY THE FRANKFORD ARSENAL, PHILADELPHIA, PENNSYLVANIA.

YOU WILL NOTE THAT OUR DECISION OF TODAY HOLDS THAT SPACE SYSTEMS WAS ENTITLED TO, AND SHOULD HAVE RECEIVED THE CONTRACT AWARDED TO BAUSCH AND LOMB IN FEBRUARY 1968. HOWEVER, DUE TO THE EXTENT TO WHICH THE CONTRACT HAS ALREADY BEEN PERFORMED, WE WERE UNABLE TO CONCLUDE THAT CANCELLATION OF THE CONTRACT WOULD BE IN THE BEST INTEREST OF THE GOVERNMENT.

IT IS OUR BELIEF THAT A FAIR AND EXPEDITIOUS RESOLUTION OF BID PROTESTS IS ESSENTIAL TO PRESERVATION OF CONFIDENCE IN THE COMPETITIVE BIDDING SYSTEM, AND IT IS THEREFORE A MATTER OF GRAVE CONCERN TO THIS OFFICE WHENEVER WE CONCLUDE THAT AN ACTION OF THE PROCURING AGENCY HAS RESULTED IN INJUSTICE TO A PROTESTING BIDDER, BUT MUST FIND WE ARE PRECLUDED FROM CORRECTING SUCH INJUSTICE BY THE EXTENT TO WHICH AN ERRONEOUSLY AWARDED CONTRACT HAS ALREADY BEEN PERFORMED. IT IS, HOWEVER, OF EVEN GREATER CONCERN TO US WHEN WE MUST CONCLUDE THAT OUR INABILITY TO GRANT THE RELIEF REQUESTED IN A MERITORIOUS PROTEST IS ATTRIBUTABLE TO DELAYS RESULTING FROM NUMEROUS AND REPEATED REQUESTS BY THIS OFFICE FOR COMPLETE, ACCURATE AND CURRENT FACTUAL INFORMATION NECESSARY TO OUR CONSIDERATION OF THE PROTEST.

IN THE PRESENT INSTANCE WE FEEL THAT HAD THE RECORDS OF THE PROCURING AGENCY BEEN MORE ACCURATE; HAD THE AGENCY BEEN MORE PROMPT IN ITS RESPONSES TO OUR REQUESTS FOR REPORTS AND ADDITIONAL INFORMATION; AND HAD IT BEEN MORE ACCURATE IN ITS STATEMENTS CONCERNING THE FACTUAL INFORMATION MATERIAL TO THIS PROTEST, THIS OFFICE COULD, AND WOULD, HAVE BEEN ABLE TO REACH A DECISION WHICH WOULD HAVE CORRECTED THE INJUSTICE SUFFERED BY THE PROTESTING BIDDER IN THIS CASE. WE THEREFORE CONSIDER IT APPROPRIATE TO SET OUT IN SOME DETAIL OUR EXPERIENCES IN THIS PROTEST, IN THE HOPE THAT RECURRENCE CAN BE PREVENTED IN THE FUTURE.

SPACE SYSTEMS LODGED ITS PROTEST ON MARCH 21, 1968 (FOR A BRIEF SUMMARY OF EVENTS PRIOR TO THIS DATE, SEE ENCLOSED COPY OF OUR DECISION OF AUGUST 14, 1968). THIS OFFICE BY LETTER OF MARCH 26, 1968, REQUESTED THAT ARMY FURNISH US WITH AN ADMINISTRATIVE REPORT IN CONNECTION WITH THIS PROTEST. ON APRIL 9, 1968, WE RECEIVED A SUPPLEMENTARY LETTER DATED MARCH 26, 1968, FROM SPACE SYSTEMS WHICH WAS FORWARDED TO ARMY ON APRIL 12, 1968. THIS LETTER IN ADDITION TO BRIEFLY SUMMARIZING THE BACKGROUND AND CIRCUMSTANCES LEADING UP TO THE AWARD, OUTLINED THE REASONS WHY SPACE SYSTEMS SHOULD HAVE RECEIVED THE AWARD. WE RECEIVED THE INITIAL ADMINISTRATIVE REPORT FROM ARMY ON APRIL 17, 1968, WHICH LISTED THE PROCURING ACTIVITY'S EVIDENCE IN SUPPORT OF THE DETERMINATION THAT SPACE SYSTEMS' DELIVERY DELINQUENCIES COULD BE ATTRIBUTED TO THE FAILURE OF GERMAN SUPPLIERS TO MAKE TIMELY DELIVERIES OF A SUFFICIENT NUMBER OF ACCEPTABLE PARTS, AND THAT SPACE SYSTEMS' REFUSAL TO SWITCH TO MORE RELIABLE DOMESTIC SOURCES CONSTITUTED LACK OF TENACITY AND PERSEVERANCE. SPACE SYSTEMS WAS NOTIFIED AND WAS SUBSEQUENTLY FURNISHED RELEVANT PORTIONS OF THE REPORT. ON MAY 16, 1968, COUNSEL FOR SPACE SYSTEMS SUBMITTED A DOCUMENTED REBUTTAL DENYING THAT SPACE SYSTEMS HAD ANY UNUSUAL PROBLEMS WHATSOEVER WITH ITS GERMAN SUPPLIERS AND TAKING ISSUE WITH THE REPORT ON SEVERAL OTHER POINTS. IT WAS NOT UNTIL MAY 22, 1968, THAT OUR OFFICE RECEIVED A SUPPLEMENTAL REPORT IN RESPONSE TO SPACE SYSTEMS' LETTER OF MARCH 26, 1968. THIS REPORT WAS NOT WHOLLY RESPONSIVE TO THE QUESTIONS RAISED BY SPACE SYSTEMS. AS A RESULT OF SPACE SYSTEMS' REBUTTAL AND THE UNSATISFACTORY SUPPLEMENTAL REPORT, WE FELT THAT THERE WAS SOME DOUBT AS TO WHETHER SPACE SYSTEMS' DELINQUENCIES COULD BE ATTRIBUTED TO GERMAN SUPPLIERS (WHICH WAS, AND CONTINUED TO BE, THE PRIMARY QUESTION).

BY LETTER OF MAY 31, 1968 (COPY ENCLOSED) WE REQUESTED ARMY TO FURNISH US AN ADDITIONAL REPORT RESPONSIVE TO CERTAIN DOCUMENTS SUBMITTED BY SPACE SYSTEMS, INCLUDING ANY DOCUMENTARY EVIDENCE ON WHICH THE CONCLUSIONS THAT DELINQUENCIES WERE ATTRIBUTABLE TO GERMAN SUPPLIERS, AS SET OUT IN THE PRE -AWARD SURVEY REPORT, WERE BASED. IT WAS NOT UNTIL JULY 15, 1968, THAT WE RECEIVED THIS REQUESTED SUPPLEMENTARY REPORT. SINCE THE RECORD AT THIS POINT INCLUDED MONTHLY PROGRESS REPORTS, CONTRACT PERFORMANCE ANALYSIS, MONTHLY REPORTS OF DELINQUENT DELIVERIES, NOTIFICATIONS OF DELAY IN DELIVERY AND TRIP REPORTS BY THE INDUSTRIAL SPECIALIST FROM FRANKFORD ARSENAL, ALL OF WHICH STATED OR IMPLIED THAT THE DELINQUENCIES UNDER THE VARIOUS CONTRACTS WERE ATTRIBUTABLE TO SPACE SYSTEMS' FAILURE TO RECEIVE A SUFFICIENT NUMBER OF PARTS FROM ITS GERMAN VENDORS, ON AUGUST 14 THIS OFFICE RENDERED A DECISION WHICH DENIED SPACE SYSTEMS' PROTEST BASED UPON THE DOCUMENTATION DESCRIBED ABOVE. (FOR A COMPLETE LISTING OF THIS DOCUMENTATION, SEE PAGE 8 AND 9 OF OUR DECISION OF AUGUST 14.)

BY ITS LETTER OF AUGUST 15, AS SUPPLEMENTED BY A LEGAL BRIEF OF AUGUST 30, SPACE SYSTEMS REQUESTED A RECONSIDERATION OF OUR DECISION OF AUGUST 14 AND SUBMITTED ADDITIONAL INFORMATION TO SUPPORT ITS CONTENTION THAT THE INFORMATION RELATIVE TO DELINQUENCIES OF GERMAN SUPPLIERS AS SET OUT IN OUR DECISION OF AUGUST 14, WAS INCORRECT. THIS INFORMATION, COUPLED WITH OTHER INFORMATION SUBMITTED BY SPACE SYSTEMS, STRONGLY SUPPORTED SPACE SYSTEMS' POSITION THAT THE DELINQUENCIES UNDER AMC-3957 WERE ACTUALLY CAUSED BY THE GOVERNMENT'S FAILURE TO CORRECT DRAWING ERRORS AND DESIGN DEFICIENCIES FOR SUCH ASSEMBLIES. (SEE OUR LETTER OF OCTOBER 10, 1968, COPY ENCLOSED.)

IN VIEW OF THE ABOVE INFORMATION, OUR LETTER OF OCTOBER 10, REQUESTED ADDITIONAL DOCUMENTATION OR INFORMATION IN SUPPORT OF THE DETERMINATION THAT THE DELINQUENCIES UNDER AMC-3957 WERE ATTRIBUTABLE TO DELINQUENCIES BY GERMAN SUPPLIERS RATHER THAN DEFECTIVE SPECIFICATIONS. HOWEVER, NEITHER THE SUPPLEMENTAL REPORT NOR LEGAL OPINION OF NOVEMBER 14, 1968, RECEIVED IN RESPONSE TO OUR LETTER OF OCTOBER 10, SUPPLIED THE REQUESTED DOCUMENTATION OR INFORMATION. ON THE CONTRARY THE PROCURING AGENCY IN THE SUPPLEMENTAL REPORT STATES THAT "ALTHOUGH REQUESTED BY GAO, WE ARE UNABLE TO IDENTIFY THE SPECIFIC GERMAN SUPPLIERS AND THE EXTENT AND DATES OF THEIR DELINQUENCIES AS PERTAINS TO CONTRACT AMC-3957.' COPIES OF FIVE TELEGRAMS WERE SUBSEQUENTLY SENT TO THIS OFFICE BY THE PROCURING ACTIVITY ON DECEMBER 2, 1968. THESE TELEGRAMS WERE REPRESENTED AS THE ONLY ADDITIONAL DOCUMENTATION WHICH WOULD SUPPORT THE DETERMINATION THAT SPACE SYSTEMS' DELINQUENCIES WERE ATTRIBUTABLE TO LATE DELIVERIES BY GERMAN SUPPLIERS. HOWEVER, THESE TELEGRAMS FAILED TO SUBSTANTIATE THE DETERMINATION. ONLY ONE OF THE TELEGRAMS HAD ANY BEARING ON THE QUESTION OF WHAT CAUSED THE CITED DELINQUENCIES UNDER 3957 (W) AND IT SUPPORTED SPACE SYSTEMS' CONTENTION THAT THE DELINQUENCIES WERE CAUSED BY DEFECTIVE SPECIFICATIONS. THE REMAINING TELEGRAMS REFERRED TO DELINQUENCIES WHICH OCCURRED SEVERAL MONTHS PRIOR TO THE DELINQUENCIES WHICH THE CONTRACTING OFFICER STATES WERE CAUSED BY GERMAN SUPPLIERS. (SEE PAGE 3 OF OUR DECISION OF FEBRUARY 6, 1969.)

THUS, AFTER ALMOST NINE MONTHS AND FOUR ADMINISTRATIVE REPORTS THE PROCURING AGENCY FINALLY ADMITTED THAT IT HAD NO SUPPORTING DOCUMENTATION FOR ITS DETERMINATION THAT SPACE SYSTEMS' DELINQUENCIES UNDER AMC-3957 WERE CAUSED BY DELAYS IN DELIVERIES BY GERMAN SUPPLIERS. FURTHER, IT APPEARS THAT AS EARLY AS MARCH 1967, THE AGENCY HAD EVIDENCE TO THE CONTRARY. (SEE PAGE 2 OF OUR LETTER OF OCTOBER 10, 1968.)

IN VIEW OF THIS FAILURE OF THE PROCURING ACTIVITY TO FURNISH US ADDITIONAL DOCUMENTATION OR INFORMATION TO SUPPORT THE CONTRACTING OFFICER'S DETERMINATION, WE CONCLUDED THAT SPACE SYSTEMS WAS ERRONEOUSLY DECLARED NONRESPONSIBLE DUE TO LACK OF TENACITY AND PERSEVERANCE.

THE ONLY QUESTION REMAINING TO BE ANSWERED WAS WHETHER SPACE SYSTEMS HAD THE NECESSARY CAPACITY AND CREDIT AT THE TIME OF AWARD TO PERFORM THIS CONTRACT. BY LETTER OF FEBRUARY 6, 1969, WE REQUESTED ARMY TO TAKE THE NECESSARY STEPS TO MAKE A DETERMINATION AS TO SPACE SYSTEMS' CAPACITY AND CREDIT, ADVISING ARMY THAT SHOULD THE DETERMINATION BE NEGATIVE, THE MATTER SHOULD BE SUBMITTED TO THE SMALL BUSINESS ADMINISTRATION (SBA) FOR ACTION PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-705.4. WE FURTHER REQUESTED THAT IF IT HAD ALREADY BEEN DETERMINED, OR IF A ,NUNC PRO TUNC" DETERMINATION WAS MADE BY THE ARMY OR BY SBA THAT SPACE SYSTEMS HAD THE NECESSARY CAPACITY AND CREDIT TO PERFORM THE CONTRACT, THIS OFFICE BE NOTIFIED IN ORDER THAT FURTHER ACTION WOULD BE TAKEN.

THE CONTRACTING OFFICER AT FRANKFORD ARSENAL SUBSEQUENTLY MADE A DETERMINATION THAT SPACE SYSTEMS DID NOT HAVE THE NECESSARY CAPACITY AND CREDIT TO PERFORM THIS CONTRACT. PURSUANT TO ASPR 1-705.4, THIS DETERMINATION WAS SUBMITTED TO SBA. SBA DETERMINED ON APRIL 23, 1969, THAT BASED ON THE INFORMATION OF THAT DATE, HAD IT RECEIVED A REFERRAL IN FEBRUARY 1968, IT WOULD HAVE ISSUED A CERTIFICATE OF COMPETENCY IN BEHALF OF SPACE SYSTEMS. CONSEQUENTLY, IT WAS ONLY AT THIS LATE DATE THAT OUR OFFICE WAS IN A POSITION TO OFFICIALLY CONCLUDE THAT SPACE SYSTEMS WAS ENTITLED TO, AND SHOULD HAVE RECEIVED, THE AWARD.

BY LETTER OF MAY 8, 1969, COUNSEL FOR SPACE SYSTEMS CONTENDED THAT THE CONTRACT WITH BAUSCH AND LOMB WAS INVALID AB INITIO. HOWEVER, HE STATED THAT CANCELLATION COULD BE AVOIDED AND SPACE SYSTEMS PLACED IN SUBSTANTIALLY THE SAME POSITION AS IT WAS AT THE TIME OF THE ORIGINAL AWARD, PROVIDED AN EQUITABLE ALTERNATIVE COULD BE ARRANGED WITH THE DEPARTMENT OF THE ARMY. BY LETTER OF MAY 16, 1969, WE FORWARDED COUNSEL'S SUGGESTION TO THE DEPARTMENT OF ARMY FOR COMMENT. ON JUNE 4, 1969, WE RECEIVED A LETTER FROM THE PROCURING ACTIVITY STATING THAT THE CONTRACT WITH BAUSCH AND LOMB WAS NOT ILLEGAL AND CANCELLATION WAS NOT WARRANTED AND IN ANY EVENT THEY COULD FIND NO AUTHORITY FOR NEGOTIATION OF A CONTRACT WITH SPACE SYSTEMS. SPACE SYSTEMS' PRESIDENT AND COUNSEL MET WITH ARMY PROCUREMENT OFFICIALS ON JUNE 9, 1969, TO DISCUSS THIS MATTER, BUT WERE UNABLE TO REACH AN AGREEMENT WITH ARMY CONCERNING COUNSEL'S RECOMMENDATION.

SINCE THE ORIGINAL RFP HAD STATED THAT THE PROCUREMENT HAD AN 02 PRIORITY DESIGNATOR, WE ATTEMPTED TO ASCERTAIN THE CURRENT PRIORITY STATUS. WERE INITIALLY ADVISED BY FRANKFORD ARSENAL, IN ITS LETTER OF MAY 5, 1969, THAT APPROXIMATELY 75 PERCENT OF THE CONTRACT CONSISTED OF PROJECT (OUX), CLOSED LOOP, AND PRIORITY SEA. ON MAY 12, 1968, WE WERE FURTHER ADVISED THAT 25 PERCENT OF THE PROCUREMENT WAS FOR THE PURPOSE OF FILLING MILITARY ASSISTANCE PROGRAM NEEDS AND HAD NO PRIORITY. BY TELEGRAM OF JUNE 12 AMC ADVISED US THAT AS OF JUNE 10, OF THE 544 COLLIMATORS REMAINING TO BE DELIVERED ONLY 74 WERE PRIORITY ITEMS. HOWEVER, COUNSEL FOR SPACE SYSTEMS WAS ADVISED THAT NONE OF THE ITEMS REMAINING TO BE DELIVERED WERE PRIORITY ITEMS. AFTER FURTHER INQUIRY, WE WERE ADVISED BY LETTER OF JUNE 24, 1969, BY AMC, THAT ALL OF THE ITEMS REMAINING TO BE DELIVERED WERE 02 PRIORITY. FINALLY, AFTER FURTHER INQUIRY, WE WERE ADVISED BY A LETTER OF JUNE 27, 1969, FROM AMC THAT, OF THE UNITS REMAINING TO BE DELIVERED, 244 UNITS WERE OF A PRIORITY OTHER THAN 02. UPON FURTHER ORAL INQUIRY, WE WERE ADVISED THAT ALL OF THE UNDELIVERED UNITS HAD BEEN ASSIGNED PRIORITY DESIGNATORS OF 15 OR ABOVE.

WHILE THIS OFFICE RECOGNIZES THAT IN ANY PROCUREMENT OF THIS NATURE THERE MAY BE SOME DELAY, AND ON OCCASION SOME MISLEADING OR INACCURATE INFORMATION MAY BE SENT OUT BY THE PROCURING ACTIVITY, IN THE PRESENT CASE WE ARE OF THE OPINION THAT THE NUMBER AND EXTENT OF THE DELAYS, TOGETHER WITH THE INSTANCES OF INACCURATE INFORMATION WERE SO SUBSTANTIAL AND SO NUMEROUS AS TO NECESSARILY RAISE A QUESTION AS TO WHETHER PROPER EFFORTS WERE EXERTED TO ASSURE THAT PROMPT AND ACCURATE REPORTS WERE FURNISHED TO THIS OFFICE. WE FEEL THAT THE UNNECESSARY DELAYS IN RESPONDING TO OUR REQUESTS FOR INFORMATION COUPLED WITH THE INACCURATE INFORMATION RECEIVED IN RESPONSE THERETO WAS DETRIMENTAL TO THE EXERCISE OF OUR STATUTORY FUNCTIONS IN THIS AREA, AND WE STRONGLY RECOMMEND THAT APPROPRIATE ACTION BE TAKEN TO PREVENT A RECURRENCE IN FUTURE PROTESTS INVOLVING MILITARY PROCUREMENTS OF THE DEFICIENCIES BROUGHT OUT IN THE PRESENT CASE.