B-164485, AUG. 6, 1968

B-164485: Aug 6, 1968

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INC.: REFERENCE IS MADE TO YOUR TELEGRAM OF MAY 31. THE PROCUREMENT WAS NEGOTIATED PURSUANT TO 10 U.S.C. 2304 (A) (2). WHICH PROVIDES THAT A PROCUREMENT MAY BE NEGOTIATED IF "THE PUBLIC EXIGENCY WILL NOT PERMIT THE DELAY INCIDENT TO ADVERTISING.'. THE RECORD SHOWS THAT THE DESCRIBED CARTRIDGE BAGS ARE TO BE USED AS POWDER BAGS FOR THE 16-INCH GUNS OF THE RECENTLY RECOMMISSIONED BATTLESHIP U.S.S. IT WAS DETERMINED THAT YOUR FIRM HAD QUOTED THE LOWEST PRICES. IT WAS ALSO DETERMINED THAT THE HERZOG TEXTILE CORPORATION AND THE GEORGE G. HARRIS CORPORATION WERE. A PREAWARD SURVEY WAS REQUESTED ON YOUR FIRM BY THE CONTRACTING OFFICER PURSUANT TO ASPR 1-904.1 FOR THE EXPRESS PURPOSE OF ASCERTAINING YOUR ABILITY TO MANUFACTURE AND DELIVER THE PROCUREMENT ITEM IN ACCORDANCE WITH THE SPECIFICATIONS AND DELIVERY REQUIREMENTS.

B-164485, AUG. 6, 1968

TO WOOLART MILLS, INC.:

REFERENCE IS MADE TO YOUR TELEGRAM OF MAY 31, 1968, PROTESTING THE AWARD OF A CONTRACT TO THE GEORGE G. HARRIS CORPORATION UNDER REQUEST FOR PROPOSALS NO. DSA100-68-R-1293, ISSUED BY THE DEFENSE PERSONNEL SUPPORT CENTER, DEFENSE SUPPLY AGENCY.

THE REQUEST FOR PROPOSALS ISSUED MARCH 27, 1968, SOLICITED OFFERS FOR THE MANUFACTURE AND DELIVERY OF 116,667 SQUARE YARDS OF "CLOTH, SILK, CARTRIDGE BAG, 8.0 OZ MIN - 10.0 OZ. MAX, NATURAL COLOR, 60" WIDTH.' NOTE INSERTED IMMEDIATELY UNDER THE ABOVE-QUOTED ITEM DESCRIPTION ADVISED PROSPECTIVE OFFERORS THAT WIDTHS OTHER THAN 60 INCHES MAY BE CONSIDERED FOR AWARD. THE PROCUREMENT WAS NEGOTIATED PURSUANT TO 10 U.S.C. 2304 (A) (2), AS IMPLEMENTED BY ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-202, WHICH PROVIDES THAT A PROCUREMENT MAY BE NEGOTIATED IF "THE PUBLIC EXIGENCY WILL NOT PERMIT THE DELAY INCIDENT TO ADVERTISING.' THE RECORD SHOWS THAT THE DESCRIBED CARTRIDGE BAGS ARE TO BE USED AS POWDER BAGS FOR THE 16-INCH GUNS OF THE RECENTLY RECOMMISSIONED BATTLESHIP U.S.S. NEW JERSEY, AND THAT IN VIEW OF THE URGENT NEED OF THE ITEM THE PURCHASE REQUISITION BORE AN 02 PRIORITY DESIGNATOR IN ACCORDANCE WITH THE UNIFORM MATERIAL ISSUE PRIORITY SYSTEM. THE CITATION OF AN 02 PRIORITY JUSTIFIED USE OF THIS NEGOTIATION AUTHORITY. SEE ASPR 3-202.2 (VI).

SUBSEQUENT TO OPENING OF PROPOSALS AND NEGOTIATIONS WITH THE FIVE RESPONDING OFFERORS, IT WAS DETERMINED THAT YOUR FIRM HAD QUOTED THE LOWEST PRICES. IT WAS ALSO DETERMINED THAT THE HERZOG TEXTILE CORPORATION AND THE GEORGE G. HARRIS CORPORATION WERE, RESPECTIVELY, THE SECOND AND THIRD LOW RESPONDING OFFERORS UNDER THE REQUEST FOR PROPOSALS.

THEREAFTER, A PREAWARD SURVEY WAS REQUESTED ON YOUR FIRM BY THE CONTRACTING OFFICER PURSUANT TO ASPR 1-904.1 FOR THE EXPRESS PURPOSE OF ASCERTAINING YOUR ABILITY TO MANUFACTURE AND DELIVER THE PROCUREMENT ITEM IN ACCORDANCE WITH THE SPECIFICATIONS AND DELIVERY REQUIREMENTS. THE PREAWARD SURVEY TEAM FOUND THAT YOUR FIRM AND THE GROSVERNORDALE TEXTILE CORPORATION -- YOUR DESIGNATED SUBCONTRACTOR -- WERE NONRESPONSIBLE IN THE ARES OF TECHNICAL CAPABILITY, PRODUCTION CAPABILITY, PURCHASING AND SUBCONTRACTING, QUALITY ASSURANCE CAPABILITY, LABOR RESOURCES, AND ABILITY TO MEET THE REQUIRED DELIVERY SCHEDULE. BASED THEREON, THE SURVEY REPORT DATED APRIL 30,1968, RECOMMENDED THAT "NO AWARD" BE MADE TO YOUR FIRM. THE CONTRACTING OFFICER SUMMARIZED THE REASONS FOR THE RECOMMENDATION OF "NO AWARD," AS FOLLOWS:

"* * * THE REPORT INDICATED THAT PLANT OF PERFORMANCE WAS FORMED ON 1 MARCH 1968 AND HAS NOT PRODUCED SILK CLOTH ALTHOUGH ITS MANAGEMENT MAY HAVE DONE SO; SPECIFICATIONS HAVE NOT BEEN MADE AVAILABLE TO PRINCIPALS AND THEREFORE REQUIREMENTS ARE NOT KNOWN; LOOMS ARE INADEQUATE TO PRODUCE TO THE REQUIRED SCHEDULE; MANAGEMENT HAS NOT SEEN SPECIFICATIONS, IS NOT AWARE OF REQUIRED TESTS, PACKAGING REQUIREMENTS NOR DELIVERY SCHEDULE; THERE IS A LACK OF PLANNING BETWEEN PROTESTANT AND PLANT; PLANT DOES NOT MEET QUALITY CONTROL REQUIREMENT NOR DOES IT HAVE SUFFICIENT INSPECTION PERSONNEL; REPRESENTATIVE OF PROTESTANT WOULD HANDLE ALL QUALITY ASPECTS BY MAKING VISITS TO PLANT.'

THE CONTRACTING OFFICER ALSO POINTS OUT THAT, IN SPITE OF YOUR STATEMENTS THAT THE MANAGEMENT OF GROSVERNORDALE TEXTILE MILLS HAS PRODUCED MILLIONS OF YARDS OF CARTRIDGE CLOTH FOR THE GOVERNMENT, THE PLANT ITSELF IS NEW, AND HAS NEVER PRODUCED THE PROCUREMENT ITEM, AND TO THE BEST OF HIS KNOWLEDGE THE LAST GOVERNMENT PURCHASE OF THE PROCUREMENT ITEM WAS IN 1956. MOREOVER, HE REPORTS, YOUR INFERENCE THAT YOU HAVE BEEN PRODUCING THE ITEM ON A REGULAR BASIS IS NOT SUPPORTED BY THE RECORD. SINCE YOU ADVISED THE CONTRACTING OFFICER THAT THE SAME GENERAL SITUATION WHICH CAUSED THE NEGATIVE DETERMINATION AT THE GROSVERNORDALE PLANT, EXISTED AT YOUR ALTERNATE PLANT, ROCKINGHAM MILLS, THE CONTRACTING OFFICER CANCELED THE PREVIOUSLY REQUESTED PREAWARD SURVEY ON THAT FACILITY.

SINCE IT APPEARED THAT YOUR FIRM, THE LOWEST OFFEROR, WAS NOT RESPONSIBLE, THE CONTRACTING OFFICER REQUESTED A PREAWARD SURVEY ON THE SECOND LOW OFFEROR, HERZOG TEXTILE CORPORATION, AND ITS PLANT, FITCHBURG WOOLEN COMPANY. THE PREAWARD SURVEY CONCLUDED THAT NO AWARD SHOULD BE MADE TO THAT FIRM ON THE BASIS OF ITS NONRESPONSIBILITY.

IN VIEW OF THE FOREGOING, ON MAY 16, 1968, THE CONTRACTING OFFICER FORMALLY DETERMINED THAT BOTH YOUR FIRM AND HERZOG TEXTILE CORPORATION -- SMALL BUSINESS CONCERNS -- WERE NOT RESPONSIBLE OFFERORS AND THEREFORE NOT ENTITLED TO BE CONSIDERED FOR AWARD OF THE ANTICIPATED CONTRACT. IN THIS REGARD, AN ADMINISTRATIVE DETERMINATION OF A SMALL BUSINESS OFFEROR'S NONRESPONSIBILITY IS SUBJECT TO REVIEW BY THE SMALL BUSINESS ADMINISTRATION (SBA) WITH RESPECT TO THE OFFEROR'S CAPACITY AND CREDIT, UNDER 15 U.S.C. 637 (B) (7) AND ASPR 1-705.4. HOWEVER, ASPR 1-705.4 (C) (IV) PROVIDES THAT "A REFERRAL NEED NOT BE MADE TO SBA IF THE CONTRACTING OFFICER CERTIFIES IN WRITING THAT THE AWARD MUST BE MADE WITHOUT DELAY * * *.' A DETERMINATION AND FINDINGS SIGNED ON MAY 16, 1968, BY THE CONTRACTING OFFICER, STATES THAT IN VIEW OF THE EXTREME URGENCY OF THE PROCUREMENT AND IN ACCORDANCE WITH ASPR 1-705.4 (C) (IV) THE QUESTION OF THE ABILITY OF WOOLART MILLS, INC., TO PERFORM THE CONTRACT, WILL NOT BE REFERRED TO SBA FOR EVALUATION AND REVIEW UNDER CERTIFICATE OF COMPETENCY PROCEDURES. THE BASIS FOR THE DETERMINATION WAS AS FOLLOWS:

"PROCUREMENT BEARS A PRIORITY 02. AWARD MUST BE MADE AS SOON AS POSSIBLE. PREPRODUCTION SAMPLES ARE ALSO REQUIRED, AND MUST BE MANUFACTURED, TESTED AND APPROVED BEFORE FULL PRODUCTION CAN BE STARTED. THEREFORE, ANY FURTHER DELAY IN MAKING AN AWARD, WILL ONLY DELAY DELIVERIES THAT MUCH MORE.'

THE CONTRACTING OFFICER THEREAFTER DETERMINED, AFTER A CAPABILITY REVIEW, THAT GEORGE G. HARRIS WAS A RESPONSIBLE OFFEROR, AND AS SUCH, ENTITLED TO AWARD OF THE CONTRACT. ACCORDINGLY, THAT FIRM WAS AWARDED CONTRACT NO. DSA100-68-C-2507 DATED MAY 27, 1968, FOR 93,333 LINEAR YARDS OF 45-INCH WIDE SILK CLOTH IN THE TOTAL AMOUNT OF$349,665.60.

YOUR PROTEST OF THE AWARD OF THE CONTRACT TO GEORGE G. HARRIS IS PREDICATED UPON THE BASES THAT YOUR FIRM IS BETTER QUALIFIED TO PERFORM THE CONTRACT; THAT YOUR OFFERED PRICE WAS 52 CENTS PER SQUARE YARD LOWER THAN THE CONTRACT PRICE; THAT YOUR OFFERED DELIVERY SCHEDULE IS MORE ADVANTAGEOUS TO THE GOVERNMENT; AND THAT YOU CAN SUPPLY 60-INCH WIDE SILK CLOTH AS DESIRED BY THE PROCURING AGENCY AND YOUR CLOTH DOES NOT REQUIRE CONVERTING AS CONTENDED BY THE PROCURING AGENCY.

YOUR ALLEGATIONS THAT YOUR OFFER WAS IN FACT SUPERIOR TO THE CONTRACTOR'S BECAUSE YOU OFFERED A BETTER DELIVERY SCHEDULE, LOWER PRICES, AND 60-INCH MATERIAL, ARE NOT FOR CONSIDERATION IN DETERMINING THE LEGALITY OF THE SUBJECT AWARD. ASPR 1-904.1 PROVIDES THAT "EXCEPT AS OTHERWISE PROVIDED * * * NO PURCHASE SHALL BE MADE FROM, AND NO CONTRACT SHALL BE AWARDED TO, ANY PERSON OR FIRM UNLESS THE CONTRACTING OFFICER FIRST MAKES, SIGNS, AND PLACES IN THE CONTRACT FILE, AN AFFIRMATIVE DETERMINATION THAT THE PROSPECTIVE CONTRACTOR IS RESPONSIBLE * * *.' HENCE, IN THE ABSENCE OF SUCH AN AFFIRMATIVE DETERMINATION, YOUR FIRM WAS NOT ELIGIBLE FOR AWARD.

YOUR ARGUMENT THAT WOOLART MILLS, INC., POSSESSED THE REQUISITE CAPABILITY TO PROPERLY PERFORM THE CONTRACT IS REFUTED BY THE NEGATIVE RECOMMENDATION CONTAINED IN THE PREAWARD SURVEY. THE UNDERLYING QUESTION IS WHETHER YOUR FIRM WAS, IN FACT, A RESPONSIBLE OFFEROR WHICH WAS QUALIFIED TO MEET THE TERMS AND CONDITIONS OF THE SOLICITATION. INSOFAR AS YOUR CONTENTIONS ARE AT VARIANCE WITH THE FACTS ADMINISTRATIVELY REPORTED, OUR OFFICE IS BOUND BY THE WELL SETTLED RULE THAT PROHIBITS ANY INTERFERENCE WITH ADMINISTRATIVE DETERMINATIONS OF RESPONSIBILITY IN THE ABSENCE OF A CLEAR SHOWING OF BAD FAITH OR LACK OF A REASONABLE BASIS THEREFOR. SUCH A SHOWING WAS NOT MADE HERE. 37 COMP. GEN. 430. SEE ALSO, ZEPHYR AIRCRAFT CORPORATION V UNITED STATES, 122 CT. CL. 523. THE REASONS FOR THIS RULE ARE SET OUT IN OUR DECISION AT 39 COMP. GEN. 705, 711, IN PART, AS FOLLOWS:

"* * * THE PROJECTION OF A BIDDER'S ABILITY TO PERFORM IF AWARDED A CONTRACT IS OF NECESSITY A MATTER OF JUDGMENT. 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 * * *.'

WITH RESPECT TO THAT ELEMENT OF YOUR PROTEST CHARGING THAT THE CONTRACTING OFFICER DETERMINED WOOLART MILLS, INC., TO BE NONRESPONSIBLE BECAUSE IT DID NOT POSSESS THE FACILITIES TO "CONVERT" THE CLOTH IN ACCORDANCE WITH THE TERMS OF THE SOLICITATION, WE ARE ADVISED THAT ON MAY 1, 1968, IN RESPONSE TO YOUR STATEMENT THAT AN ALTERNATE METHOD OF ACHIEVING THE SAME RESULTS WOULD BE EMPLOYED, THE FAILURE TO HAVE THE "CONVERTING" EQUIPMENT WOULD NOT HAVE BEEN CONSIDERED A BASIS FOR REJECTION OF YOUR OFFER. BUT THIS DID NOT HAVE A SUBSTANTIAL BEARING ON YOUR RESPONSIBILITY.

WE HAVE ALSO CONSIDERED YOUR LETTERS OF JUNE 20 AND 21, 1968, WHEREIN YOU FORWARDED, TO THE PROCURING ACTIVITY, THE RESULTS OF INDEPENDENT TESTS CONDUCTED ON SAMPLES OF CLOTH WOVEN AT GROSVERNORDALE TEXTILE MILLS IN ACCORDANCE WITH THE SPECIFICATIONS. SINCE AWARD OF THE CONTRACT WAS MADE ON MAY 27, 1968, NO USEFUL PURPOSE WOULD BE SERVED BY EVALUATING THE TEST RESULTS. MOREOVER, THE ABILITY TO WEAVE A TECHNICALLY SATISFACTORY SAMPLE -- PRODUCTION CAPABILITY -- WOULD NOT OVERCOME THE OTHER ELEMENTS OF NONRESPONSIBILITY NOTED ABOVE.

IN ADDITION, YOU PROTESTED THE AWARD ON THE GROUND THAT, CONTRARY TO THE CONTRACTING OFFICER'S DETERMINATION, GEORGE G. HARRIS IS NOT A MANUFACTURER OR DEALER WITHIN THE MEANING OF THE WALSH-HEALEY PUBLIC CONTRACTS ACT, AS AMENDED, 41 U.S.C. 35. SECTION 29 OF "WALSH-HEALEY PUBLIC CONTRACTS ACT RULINGS AND INTERPRETATIONS" NO. 3, PUBLISHED BY THE DEPARTMENT OF LABOR, PROVIDES:

"/A) THE RESPONSIBILITY OF DETERMINING WHETHER OR NOT A BIDDER IS QUALIFIED AS A MANUFACTURER OR AS A REGULAR DEALER UNDER THE PUBLIC CONTRACTS ACT RESTS IN THE FIRST INSTANCE WITH THE CONTRACTING OFFICER MIGHT MAKE IS SUBJECT TO REVIEW BY THE DEPARTMENT OF LABOR WHICH IS CHARGED WITH THE ADMINISTRATION OF THE ACT. THE DEPARTMENT OF LABOR MAY DETERMINE THE QUALIFICATIONS OF A BIDDER IN THE FIRST INSTANCE IN THE ABSENCE OF ANY DECISION BY THE CONTRACTING OFFICER.'

IN B-148715, JUNE 25, 1962, AND B-161933, OCTOBER 20, 1967, RESPECTIVELY, WE HELD IN PERTINENT PART AS FOLLOWS:

"WE REGARD IT AS CLEAR FROM THE FOREGOING THAT A DETERMINATION AS TO A BIDDER'S QUALIFICATIONS AS A MANUFACTURER IS BY LAW AND REGULATION THE RESPONSIBILITY OF THE CONTRACTING OFFICER, SUBJECT TO REVIEW BY THE DEPARTMENT OF LABOR, WHICH HAS THE FINAL AUTHORITY. * * *

"OUR OFFICE DOES NOT HAVE JURISDICTION TO REVIEW DETERMINATIONS AS TO WHETHER PARTICULAR FIRMS ARE REGULAR DEALERS OR MANUFACTURERS. B 147620, JANUARY 22, 1962. * * *"

WE ARE INFORMED THAT THE CONTRACTING OFFICER HAS SUBMITTED YOUR PROTEST WITH RESPECT TO THE QUALIFICATIONS OF GEORGE G. HARRIS AS A REGULAR DEALER OR MANUFACTURER UNDER 41 U.S.C. 35 TO THE DEPARTMENT OF LABOR FOR CONSIDERATION AND REVIEW UNDER ITS ESTABLISHED PROCEDURES.

THEREFORE, AND SINCE IT IS NOT APPARENT THAT THE CONTRACTING OFFICER ACTED IN OTHER THAN IN GOOD FAITH OR WITHOUT A REASONABLE BASIS IN REJECTING THE OFFER OF WOOLART MILLS, INC., OUR OFFICE WOULD NOT BE JUSTIFIED IN QUESTIONING THE AWARD MADE TO THE GEORGE G. HARRIS CORPORATION UNDER THE REQUEST FOR PROPOSALS.