B-164783, SEPT. 12, 1968

B-164783: Sep 12, 1968

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TO THERMODYNE: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF JULY 5 AND TO YOUR LETTERS OF JULY 7 AND AUGUST 20. THE REQUEST FOR PROPOSALS WAS ISSUED MARCH 29. SEVENTY-FOUR SOURCES WERE SOLICITED AND SEVEN PROPOSALS WERE RECEIVED BY THE CLOSE OF BUSINESS ON MAY 15. A JOINT PREAWARD SURVEY WAS CONDUCTED OF THE CAPABILITIES OF YOUR FIRM BY THE DEFENSE CONTRACT ADMINISTRATION SERVICES REGION (DCASR). THE DCASR SURVEY REPORT TO THE PROCUREMENT ACTIVITY RECOMMENDED THAT NO AWARD BE MADE TO YOUR FIRM SINCE IT DID NOT HAVE OR HAVE PLANNED QUALITY CONTROL OR INSPECTION FUNCTIONS REQUIRED OF THE SUCCESSFUL CONTRACTOR BY MILITARY SPECIFICATION REFERENCED IN THE REQUEST FOR PROPOSALS. THE REPORT OF THE FRANKFORD ARSENAL SURVEY TEAM ON YOUR CAPABILITIES OBSERVED THAT YOUR PRODUCTION CAPABILITY AND QUALITY ASSURANCE PROGRAMS WERE INADEQUATE BECAUSE YOU EMPLOYED A LIMITED NUMBER OF PRODUCTION PERSONNEL AND BECAUSE YOU LACKED TOOLS AND EQUIPMENT AND SUFFICIENT MANUFACTURING AND STORAGE FACILITIES.

B-164783, SEPT. 12, 1968

TO THERMODYNE:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF JULY 5 AND TO YOUR LETTERS OF JULY 7 AND AUGUST 20, 1968, PROTESTING THE AWARD OF A CONTRACT TO ANOTHER FIRM UNDER REQUEST FOR PROPOSALS NO. DAAA25-68-R 0539, ISSUED BY THE UNITED STATES ARMY, FRANKFORD ARSENAL, PHILADELPHIA, PENNSYLVANIA.

THE REQUEST FOR PROPOSALS WAS ISSUED MARCH 29, 1968, ON A SMALL BUSINESS RESTRICTED BASIS FOR THE PROCUREMENT OF 133 REUSABLE SHIPPING CONTAINERS, PART NO. 10539215 (FOR USE IN SHIPPING TEST SET COMPUTER LOGIC UNIT AN/GSM -70). IN VIEW OF THE EXTREME URGENCY FOR THE CONTAINERS, THE PROCUREMENT REQUEST BORE A HIGH PRIORITY DESIGNATION. SEVENTY-FOUR SOURCES WERE SOLICITED AND SEVEN PROPOSALS WERE RECEIVED BY THE CLOSE OF BUSINESS ON MAY 15, 1968. YOUR COMPANY SUBMITTED THE LOWEST OFFER AND NASH-HAMMOND, INC., SUBMITTED THE NEXT LOWEST OFFER.

ON JUNE 5, 1968, A JOINT PREAWARD SURVEY WAS CONDUCTED OF THE CAPABILITIES OF YOUR FIRM BY THE DEFENSE CONTRACT ADMINISTRATION SERVICES REGION (DCASR), SAN FRANCISCO, AND FRANKFORD ARSENAL PERSONNEL. THE DCASR SURVEY REPORT TO THE PROCUREMENT ACTIVITY RECOMMENDED THAT NO AWARD BE MADE TO YOUR FIRM SINCE IT DID NOT HAVE OR HAVE PLANNED QUALITY CONTROL OR INSPECTION FUNCTIONS REQUIRED OF THE SUCCESSFUL CONTRACTOR BY MILITARY SPECIFICATION REFERENCED IN THE REQUEST FOR PROPOSALS. THE REPORT OF THE FRANKFORD ARSENAL SURVEY TEAM ON YOUR CAPABILITIES OBSERVED THAT YOUR PRODUCTION CAPABILITY AND QUALITY ASSURANCE PROGRAMS WERE INADEQUATE BECAUSE YOU EMPLOYED A LIMITED NUMBER OF PRODUCTION PERSONNEL AND BECAUSE YOU LACKED TOOLS AND EQUIPMENT AND SUFFICIENT MANUFACTURING AND STORAGE FACILITIES. IN VIEW OF THESE ADVERSE FINDINGS REFLECTING UPON YOUR FIRM'S ABILITY TO MEET THE GOVERNMENT'S NEEDS, IT WAS RECOMMENDED THAT NO AWARD BE MADE TO YOUR FIRM.

THEREAFTER, ON JUNE 27, 1968, THE CONTRACTING OFFICER ISSUED THE FOLLOWING DETERMINATION:

"DEPARTMENT OF THE ARMY

DETERMINATION OF NON-RESPONSIBILITY AND

NON-REFERRAL TO SMALL BUSINESS ADMINISTRATION "1. I HEREBY FIND THAT:

"A.THERMODYNE, SAN CARLOS HAS SUBMITTED A RESPONSIVE PROPOSAL ONRFP NO. DAAA25-68-R-0539 FOR 133 EACH CONTAINERS, SHIPPING, REUSABLE, PART NO. 10539215. "2. A NO AWARD RECOMMENDATION WAS RECEIVED ON 14 JUNE 1968 FROM DCASR-SAN FRANCISCO, PREAWARD SURVEY REPORT NO. DCRL 68-6-1, DATED 12 JUNE 1968 BASED ON AN UNSATISFACTORY QUALITY ASSURANCE CAPABILITY. "3. IN SUPPORT OF THE RECOMMENDATION OF NO AWARD, THE REPORT CITES THAT THE FINDINGS OF THE PREAWARD SURVEY TEAM, CONSISTING OF DCASR-SAN FRANCISCO AND FRANKFORD ARSENAL PERSONNEL, HAVE BEEN REVIEWED AND EVALUATED, ANALYSES OF THE FINDINGS INDICATES THAT THE PROPOSED CONTRACTOR DOES NOT EFFECTIVELY HAVE, OR PLANNED QUALITY CONTROL OR INSPECTION FUNCTIONS IN ACCORDANCE WITH PROVISIONS OF THE REQUEST FOR PROPOSALS. BASED ON THE FINDINGS A RECOMMENDATION FOR A NO AWARD IS SUBMITTED. "4. THE PROCUREMENT DIRECTIVES FOR THIS ITEM CITES AN -02-SEA- ISSUE PRIORITY DESIGNATOR. THE ITEM IS COMPLETELY OUT OF STOCK. IT HAS BEEN NECESSARY TO SHIP THE END ITEM IN WOODEN CONTAINERS BECAUSE OF THE NON-AVAILABILITY OF THE CONTAINER, P/N 10539215 AT AN ADDED COST TO THE GOVERNMENT. "5. BASED ON THE ABOVE FINDINGS, I HEREBY DETERMINE THAT THERMODYNE, SAN CARLOS, CALIFORNIA, A SMALL BUSINESS CONCERN, IS NON-RESPONSIBLE PURSUANT TO ASPR 1-903 AND AN AFFIRMATIVE DETERMINATION OF RESPONSIBILITY CANNOT BE MADE AND BECAUSE AWARD MUST BE MADE WITHOUT DELAY, I DETERMINE THAT IT IS UNNECESSARY TO REFER THIS CASE FOR A CERTIFICATE OF COMPETENCY TO THE SMALL BUSINESS ADMINISTRATION UNDER THE PROVISIONS OF ASPR 1-705.4 (C) (IV).'

AWARD WAS THEREFORE MADE TO NASH-HAMMOND, INC., AS THE LOWEST RESPONSIVE AND RESPONSIBLE OFFEROR UNDER THE REQUEST FOR PROPOSALS ON JUNE 28, 1968. YOU PROTEST ON THE BASIS THAT NO JUSTIFICATION EXISTED TO EXEMPT THE MATTER OF YOUR RESPONSIBILITY FROM REFERRAL TO THE SMALL BUSINESS ADMINISTRATION (SBA) UNDER THE CERTIFICATE OF COMPETENCY PROCEDURES.

ASPR 1-902 PROVIDES THAT PURCHASES SHALL BE MADE FROM, AND CONTRACTS SHALL BE AWARDED TO, RESPONSIBLE PROSPECTIVE CONTRACTORS ONLY. RESPONSIBLE PROSPECTIVE CONTRACTOR IS ONE WHICH MEETS THE STANDARDS SET FORTH IN ASPR 1-903.1 AND 1-903.2 AND APPLICABLE SPECIAL STANDARDS. THAT SECTION FURTHER PROVIDES THAT THE AWARD OF A CONTRACT TO A SUPPLIER BASED ON LOWEST EVALUATED PRICE ALONE CAN BE FALSE ECONOMY IN THE EVENT OF DEFAULT, LATE DELIVERIES, OR OTHER UNSATISFACTORY PERFORMANCE RESULTING IN ADDITIONAL PROCUREMENT OR ADMINISTRATIVE COSTS. UNDER THE REGULATION, DOUBT AS TO PRODUCTIVE CAPACITY WHICH CANNOT BE RESOLVED AFFIRMATIVELY REQUIRES A DETERMINATION OF NONRESPONSIBILITY.

IT IS THE POSITION OF OUR OFFICE THAT THE DETERMINATION OF A PROSPECTIVE CONTRACTOR'S QUALIFICATIONS IS PRIMARILY THE FUNCTION OF THE CONTRACTING AGENCY, INVOLVING THE EXERCISE OF A CONSIDERABLE RANGE OF DISCRETION AND, IN THE ABSENCE OF BAD FAITH OR LACK OF SUBSTANTIAL GROUNDS FOR THE ADMINISTRATIVE DETERMINATION, THERE IS NO BASIS FOR LEGAL OBJECTION. COMP. GEN. 430, 435.

ASPR 1-705.4 (C) PROVIDES THAT WHEN THE PROPOSAL OF A SMALL BUSINESS CONCERN IS TO BE REJECTED SOLELY BECAUSE THE CONTRACTING OFFICER HAS DETERMINED THAT THE CONCERN IS NONRESPONSIBLE AS TO CAPACITY OR CREDIT, THE MATTER SHALL BE REFERRED TO SBA AND AWARD SHALL NOT BE MADE UNTIL SBA RENDERS ITS DECISION OR UNTIL 15 WORKING DAYS HAVE ELAPSED, WHICHEVER IS EARLIER. 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, INCLUDES SUCH CERTIFICATE AND SUPPORTING DOCUMENTATION IN THE CONTRACT FILE, AND PROMPTLY FURNISHES A COPY TO THE SBA REPRESENTATIVE.

AS INDICATED ABOVE, THE URGENCY OF THE PROCUREMENT HAD BEEN ESTABLISHED BEFORE ISSUANCE OF THE REQUEST FOR PROPOSALS. THE REQUIRED CERTIFICATION WAS FURNISHED TO SBA ON JULY 3, 1968, OR WITHIN A FEW DAYS AFTER AWARD WAS MADE TO NASH-HAMMOND. WE BELIEVE THAT THE CONTRACTING OFFICER ACTED WITH REASONABLE DILIGENCE IN CONDUCTING THE NECESSARY INQUIRIES PREREQUISITE TO AWARD.

THE RECORD BEFORE US DOES NOT INDICATE THAT SUFFICIENT TIME WAS AVAILABLE TO THE CONTRACTING OFFICER TO HAVE PERMITTED A REFERRAL TO SBA. IT WAS NOT UNTIL AFTER THE SURVEY TEAM RECOMMENDED THAT NO AWARD BE MADE TO YOUR FIRM THAT A PREAWARD SURVEY ON NASH-HAMMOND WAS REQUESTED ON JUNE 15, 1968. ON JUNE 25, 1968, OR 1 DAY AFTER RECEIPT OF THE FAVORABLE SURVEY REPORT ON NASH-HAMMOND, FURTHER INQUIRY WAS MADE OF THE SURVEY TEAM TO ASCERTAIN WHETHER YOUR UNSATISFACTORY QUALITY ASSURANCE CAPABILITY HAD BEEN REMEDIED OR IMPROVED. AWARD WAS MADE TO NASH-HAMMOND WITHIN 3 DAYS AFTER YOUR FIRM WAS FINALLY DETERMINED TO BE NONRESPONSIBLE. IN THIS REGARD, SEE 46 COMP. GEN. 53, WHEREIN WE DISCUSSED THE APPLICATION OF THIS NON-SBA REFERRAL AUTHORITY PROVIDED IN ASPR 1-705.4.

IN THESE CIRCUMSTANCES, WE FIND NO ADEQUATE BASIS FOR OBJECTION TO THE ACTION TAKEN BY THE CONTRACTING OFFICER IN REJECTING YOUR LOW OFFER AND IN MAKING AN AWARD TO THE NEXT LOWEST RESPONSIVE, RESPONSIBLE OFFEROR. COMP. GEN. 248. YOUR PROTEST IS THEREFORE DENIED.