B-164730, AUG. 6, 1968

B-164730, AUG. 6, 1968

TO SILVERSTEIN AND REMICK:

FURTHER REFERENCE IS MADE TO YOUR PROTEST ON BEHALF OF CONNCOR, INCORPORATED, AGAINST REJECTION OF ITS BID UNDER REQUEST FOR PROPOSALS NO. DAAA25-68-R-0419, ISSUED BY THE UNITED STATES ARMY, FRANKFORD ARSENAL, PHILADELPHIA, PENNSYLVANIA.

THE SUBJECT RFP, A TOTAL SET-ASIDE FOR SMALL BUSINESS, WAS ISSUED ON JANUARY 29, 1968, WITH A CLOSING DATE OF FEBRUARY 20, 1968, AND CALLED FOR OFFERS ON 8,220 CABLE ASSEMBLIES. THIS WAS A NEGOTIATED PROCUREMENT PURSUANT TO THE AUTHORITY OF 10 U.S.C. 2304 (A) (2), AS IMPLEMENTED BY ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-202.1, WHICH PROVIDES THAT CONTRACTS MAY BE NEGOTIATED WHERE "THE PUBLIC EXIGENCY WILL NOT PERMIT THE DELAY INCIDENT TO ADVERTISING.' ONE THOUSAND OF THE ITEMS WERE ASSIGNED A UNIFORM MATERIEL MOVEMENT AND ISSUE PRIORITY SYSTEM (UMMIPS) DESIGNATOR 2 AND THE REMAINING 7,220 WERE ASSIGNED UMMIPS DESIGNATOR 7, WHICH WERE CITED AS JUSTIFICATION FOR NEGOTIATING PURSUANT TO ASPR 3-302.2 (VI).

THIRTEEN OFFERS WERE RECEIVED ON THE DAY SCHEDULED. CONNCOR'S OFFER, AS MODIFIED, WAS LOW BOTH WITH AND WITHOUT FIRST ARTICLE TESTING. ON MARCH 14, 1968, PURSUANT TO ASPR 1-905.4, THE CONTRACTING OFFICER REQUESTED A PREAWARD SURVEY OF CONNCOR TO DETERMINE IF IT WAS A RESPONSIBLE PROSPECTIVE CONTRACTOR WITHIN THE STANDARDS OF SECTION 1 903 OF ASPR. ITS REPORT DATED APRIL 2, 1968, THE DEFENSE CONTRACT ADMINISTRATIVE SERVICES OFFICE, BUFFALO, RECOMMENDED NO AWARD BE MADE TO CONNCOR IN VIEW OF NEGATIVE FINDINGS WITH RESPECT TO PRODUCTION CAPABILITY, PURCHASING AND SUBCONTRACTING, QUALITY ASSURANCE CAPABILITY, PAST PERFORMANCE RECORD, THE ABILITY TO MEET THE REQUIRED SCHEDULE, AND THE NECESSARY TENACITY OR PERSEVERANCE TO DO AN ACCEPTABLE JOB.

ON APRIL 12, 1968, AS REQUIRED BY ASPR 1-904.1, THE CONTRACTING OFFICER SIGNED THE FOLLOWING DETERMINATION OF NONRESPONSIBILITY WITH RESPECT TO CONNCOR AND FURNISHED A COPY THEREOF TO THE SMALL BUSINESS ADMINISTRATION REPRESENTATIVE:

"1. THE PROPOSED PROCUREMENT OF 8,220 EACH CABLE ASSEMBLIES, PART NO. 8287003 UNDER RFP DAAA25-68-R0419, WHICH CLOSED 20 FEBRUARY 1968, IS IN SUPPORT FOR ESSENTIAL REPAIR ITEMS UNDER THE KNIGHT-EYE TANK PROGRAM DEPLOYED IN SOUTHEAST ASIA UNDER AN 02 PRIORITY AND IN WESTERN GERMANY UNDER AN 07 PRIORITY. THIS CABLE ASSEMBLY IS ONE OF 15 COMPONENTS WHICH MUST BE AVAILABLE UNDER A COMPOSITE SCHEDULE IN ORDER THAT THE PROGRAM CAN BE EFFECTIVELY ACCOMPLISHED.

"2. THE CONTRACTUAL SCHEDULE FOR THESE CABLE ASSEMBLIES BEGINS WITH AN INCREMENT DUE WITHIN SIX MONTHS AFTER DATE OF AWARD. ANY FURTHER DELAY IN AWARD OF CONTRACT OR OF AN AWARD TO A COMPANY OF DOUBTFUL RESPONSIBILITY CANNOT BE TOLERATED.

"3. IT IS CLEAR THAT THE LOW OFFEROR, CONNCOR, INC. A SMALL BUSINESS CONCERN, IS NOT A RESPONSIBLE OFFEROR. THE DCASO REPORT OF SURVEY DATED 2 APRIL 1968 DEMONSTRATES THAT THIS COMPANY HAS UNSATISFACTORY PRODUCTION AND QUALITY ASSURANCE CAPABILITIES, PURCHASING AND SUBCONTRACTING ARRANGEMENTS. COMPANY WILL THEREFORE BE UNABLE TO MEET THE DELIVERY SCHEDULE REQUIRED FOR THE CABLE ASSEMBLY. FURTHERMORE, THE COMPANY HAS A PAST UNSATISFACTORY RECORD OF PERFORMANCE NOT DUE TO INADEQUATE CAPABILITY OR CREDIT, BUT DUE INSTEAD TO ITS FAILURE TO APPLY NECESSARY TENACITY OR PERSERVERANCE TO DO AN ACCEPTABLE JOB. THESE DEFICIENCIES ARE EMPHASIZED IN THIS REPORT OF SURVEY AS WELL AS SUPPLEMENTAL INFORMATION FROM THE DCASO ON 13 APRIL 1968.

"4. BASED ON THE ABOVE, I DETERMINE THAT CONNCOR, INC. IS NONRESPONSIBLE UNDER ASPR 1-903.1 (III) AND THAT SUBMISSION OF THE CASE TO THE SMALL BUSINESS ADMINISTRATION IS NOT REQUIRED. FURTHERMORE, I DETERMINE THAT THE EXIGENCY REQUIREMENTS FOR THESE CABLE ASSEMBLIES CANNOT AFFORD THE MINIMUM OF FIFTEEN (15) WORKING DAYS WHICH WOULD BE REQUIRED FOR SUBMISSION TO THE SMALL BUSINESS ADMINISTRATION AND THEREFORE PURSUANT TO ASPR 1-705.4 (2C) (IV) THE MATTER NEED NOT BE REFERRED.' THEREFORE, HE AWARDED A CONTRACT TO THE SECOND LOWEST OFFEROR ON APRIL 19, 1968.

IN A LETTER DATED JULY 25, 1968, WITH ENCLOSURES, TO OUR OFFICE, YOU STATE THAT YOU WERE PRESENT DURING THE SURVEY AT CONNCOR'S FACILITIES AND BELIEVE THE ONLY QUESTIONABLE AREA WAS CONNCOR'S PERFORMANCE UNDER PRIOR CONTRACTS. IN THIS REGARD, YOU REFER TO A CONFERENCE WITH GOVERNMENT PERSONNEL ON APRIL 9 AND CONNCOR'S PRESENTATION OF A LIST OF 18 CONTRACTS IT CLAIMS WERE SATISFACTORILY COMPLETED ON TIME. THIS LIST INCLUDES FOUR CONTRACTS WHICH CONNCOR CLAIMS WERE DELAYED BY GOVERNMENT ACTION, BUT WERE COMPLETED WITHIN THE EXTENDED TIME. YOU CONTEND THAT IN ALL OTHER RESPECTS CONNCOR WAS QUALIFIED.

THE FIRST QUESTION PRESENTED BY YOUR PROTEST IS WHETHER THE CONTRACTING OFFICER WAS JUSTIFIED IN CONCLUDING THAT CONNCOR WAS NOT A RESPONSIBLE PROSPECTIVE CONTRACTOR WITHIN THE MEANING OF THE APPLICABLE PROVISIONS OF ASPR 1-903, WHICH SETS FORTH THE MINIMUM STANDARDS FOR RESPONSIBLE PROSPECTIVE CONTRACTORS AND INCLUDES THOSE FACTORS CITED HERETOFORE AS HAVING BEEN DETERMINED NEGATIVELY BY THE SURVEY TEAM. SOME OF THE SPECIFIC COMMENTS AND CONCLUSIONS OF THE SURVEY TEAM ARE THAT THERE WAS NO ADVANCE PLANNING FOR TOOLING OTHER THAN THE STATEMENT THAT CONNCOR WOULD PROVIDE THE TOOLING; THAT CONNCOR HAD NO MATERIAL CONTROL SYSTEM; THAT DETAILED VERIFICATION WITH SUPPLIERS OF PURCHASED PARTS WAS NECESSARY IN VIEW OF UNSATISFACTORY HISTORY OF SUPPLIER DELIVERIES AND IN VIEW OF THE FACT THAT QUOTATIONS OFFERED FOR VERIFICATION WERE UP TO EIGHT MONTHS OLD; THAT THE FIRM LISTED AS SUBCONTRACTOR FOR THE ENVIRONMENTAL TESTS DID NOT HAVE THE NECESSARY TEMPERATURE CHAMBERS OR HUMIDITY EQUIPMENT AND HAD NO AGREEMENT WITH CONNCOR; THAT PRIOR UNSATISFACTORY PERFORMANCE IS ATTRIBUTABLE TO CONNCOR'S LACK OF PLANNING AND EFFORT, TO VACILLATIONS IN BUY-MAKE DECISIONS WHICH DELAYED PLACEMENT OF PURCHASE ORDERS UNTIL FIVE MONTHS AFTER AWARD, TO FAILURE TO BEGIN ASSEMBLY OF UNITS UNTIL CONTRACTS WERE DELINQUENT, AND TO AN INDIFFERENT ATTITUDE WHEN DISCUSSING THESE PROBLEMS; THAT CONNCOR HAS HAD NO EXPERIENCE IN QUANTITY PRODUCTION OF SIMILARLY COMPLEX UNITS; THAT OTHER REASONS FOR DELAY IN PRIOR DELIVERIES ARE TOOLING SHORTAGES; LATE VENDOR DELIVERIES, DELAYS IN ORDERING TOOLING AND PARTS, DIFFICULTIES IN FABRICATION, ASSEMBLY, TESTING, AND FREQUENT REQUESTS FOR DRAWING OR SPECIFICATION WAIVERS; AND THAT THERE IS DOUBT THE DRAWING REQUIREMENTS WERE UNDERSTOOD.

WITH REGARD TO THE CONCLUSION THAT CONNCOR'S PAST RECORD OF PERFORMANCE WAS UNSATISFACTORY, THE SURVEY REPORT STATES THAT OF THE LAST 12 CONTRACTS ADMINISTERED BY DCASO BUFFALO, 10 WERE DELINQUENT AND TWO WERE NOT DUE UNTIL MAY AND JULY 1968. SEVEN CONTRACTS WERE REPORTED DELINQUENT OVER TWO MONTHS. ALTHOUGH PERFORMANCE DATES WERE EXTENDED FOR THREE OF THE CONTRACTS BECAUSE OF DELAYS ATTRIBUTABLE TO THE GOVERNMENT, THE EXTENDED DATES WERE EXCEEDED. AS MENTIONED IN YOUR LETTER, A CONFERENCE WAS HELD WITH GOVERNMENT PERSONNEL ON APRIL 9, 1968, AT CONNCOR'S REQUEST, TO REVIEW THE ALLEGEDLY DELINQUENT CONTRACTS. DURING THIS CONFERENCE CONNCOR ALLEGED THAT OF 18 CONTRACTS ALL BUT FOUR WERE PERFORMED SATISFACTORILY AND ON TIME AND THAT THE FOUR THAT WERE DELINQUENT WERE THE FAULT OF THE GOVERNMENT. THIS LIST OF CONTRACTS WAS REVIEWED BY DCASO AND A COMPREHENSIVE REPORT PREPARED. IN SUMMARY, THIS REPORT SHOWS THAT SEVEN CONTRACTS ON THE LIST WERE DELINQUENT RATHER THAN FOUR AS STATED BY CONNCOR AND THAT THREE DELINQUENT CONTRACTS WERE OMITTED FROM THE LIST. NO COMMENT IS MADE ON THE REMAINING CONTRACTS ON THE LIST AS THEY WERE APPARENTLY ADMINISTERED BY ANOTHER DISTRICT. IN ADDITION, IN A LETTER DATED APRIL 17, 1968, DCASO SUPPLIED DETAILS CONCERNING THE 10 CONTRACTS LISTED AS DELINQUENT IN ITS SURVEY REPORT.

THE DETERMINATION OF A PROSPECTIVE CONTRACTOR'S RESPONSIBILITY IS PRIMARILY THE FUNCTION OF THE CONTRACTING OFFICER, AND IS NECESSARILY A MATTER OF JUDGMENT. WHERE SUCH DETERMINATION IS BASED UPON SUBSTANTIAL EVIDENCE AND IS NEITHER ARBITRARY NOR CAPRICIOUS, THERE IS NO BASIS TO SUBSTITUTE OUR JUDGMENT FOR THAT OF THE CONTRACTING OFFICER. 45 COMP. GEN. 4; 39 ID. 705,711. IT IS OUR OPINION THAT THE FOREGOING REPORTED FACTS CONSTITUTE SUBSTANTIAL EVIDENCE OF PRIOR UNSATISFACTORY PERFORMANCE AND THAT THE CONTRACTING OFFICER'S DETERMINATION MAY NOT, THEREFORE, BE QUESTIONED BY OUR OFFICE.

HOWEVER, THE AUTHORITY TO MAKE FINAL DETERMINATIONS OF RESPONSIBILITY OF SMALL BUSINESS CONCERNS HAS BEEN MODIFIED AND LIMITED TO SOME EXTENT BY SECTION 8 (B) (7) OF THE SMALL BUSINESS ACT, 15 U.S.C. 637 (B) (7), WHICH PROVIDES THAT WHERE A SMALL BUSINESS IS CERTIFIED BY THE SMALL BUSINESS ADMINISTRATION TO BE A COMPETENT GOVERNMENT CONTRACTOR WITH RESPECT TO CAPACITY AND CREDIT, THE PROCURING OFFICERS OF THE GOVERNMENT MUST ACCEPT SUCH CERTIFICATION AS CONCLUSIVE. WITH TWO EXCEPTIONS, IMPLEMENTING REGULATIONS REQUIRE THAT A SMALL BUSINESS BIDDER MAY NOT BE REJECTED FOR LACK OF RESPONSIBILITY WITHOUT FIRST REFERRING THE MATTER TO THE SBA WHERE SUCH LACK OF RESPONSIBILITY INVOLVES THE BIDDER'S CAPACITY OR CREDIT. ASPR 1-705. HOWEVER, REFERRAL TO THE SBA IS NOT REQUIRED WHERE PAST UNSATISFACTORY PERFORMANCE WAS NOT DUE SOLELY TO CAPACITY AND CREDIT BUT WAS DUE TO THE FAILURE TO APPLY NECESSARY TENACITY OR PERSEVERANCE TO DO AN ACCEPTABLE JOB, ASPR 1-903.1 (III), OR WHERE THE CONTRACTING OFFICER CERTIFIES IN WRITING THAT THE AWARD MUST BE MADE WITHOUT DELAY, INCLUDES SUCH CERTIFICATE AND SUPPORTING DOCUMENTATION IN THE CONTRACT FILE, AND PROMPTLY FURNISHES A COPY TO THE SBA REPRESENTATIVE, ASPR 1 705.4 (C) (IV).

SINCE CONNCOR REPRESENTED THAT IT IS A SMALL BUSINESS CONCERN, THE SECOND QUESTION RAISED BY YOUR PROTEST IN ITS BEHALF IS WHETHER THE CONTRACTING OFFICER PROPERLY REJECTED ITS PROPOSAL WITHOUT REFERRAL TO SBA. AS NOTED HERETOFORE, IN HIS DETERMINATION OF NON RESPONSIBILITY THE CONTRACTING OFFICER STATED THAT REFERRAL TO SBA WAS NOT REQUIRED SINCE HE DETERMINED THAT CONNCOR'S PRIOR UNSATISFACTORY RECORD OF PERFORMANCE WAS DUE NOT TO INADEQUATE CAPACITY OR CREDIT BUT DUE TO ITS FAILURE TO APPLY NECESSARY TENACITY OR PERSEVERANCE TO DO AN ACCEPTABLE JOB AND BECAUSE THE EXIGENCY OF THE PROCUREMENT WOULD NOT PERMIT THE MINIMUM OF 15 WORKING DAYS WHICH WOULD BE NECESSARY FOR SUBMISSION TO SBA. IF EITHER OF THESE REASONS IS VALID, THEN UNDER APPLICABLE REGULATIONS CITED HERETOFORE THE CONTRACTING OFFICER ACTED PROPERLY IN REJECTING CONNCOR'S PROPOSAL WITHOUT REFERRAL TO SBA. SINCE THE PROCUREMENT WAS ASSIGNED UMMIPS DESIGNATOR NUMBERS 2 AND 7, WHICH UNDER ASPR 3-202.2 (VI) IS SUFFICIENT JUSTIFICATION TO NEGOTIATE UNDER THE "PUBLIC EXIGENCY" EXCEPTION, WE BELIEVE THE CONTRACTING OFFICER PROPERLY CONCLUDED THAT REFERRAL TO SBA WAS NOT REQUIRED IN VIEW OF THE PROVISION IN ASPR 1-705.4 (C) (IV) PERMITTING EXCEPTION TO THE SBA CERTIFICATE OF COMPETENCY PROCEDURES. IN VIEW THEREOF, IT IS NOT NECESSARY TO CONSIDER WHETHER NONREFERRAL WAS JUSTIFIED UNDER ASPR 1-903.1 (III).

ACCORDINGLY, WE FIND NO LEGAL BASIS TO OBJECT TO THE ACTION OF THE CONTRACTING OFFICER IN REJECTING CONNCOR'S PROPOSAL AND MAKING AWARD TO THE NEXT LOWEST OFFEROR.