B-164894, AUG. 30, 1968

B-164894, AUG. 30, 1968

TO SPARTAN AVIATION, INCORPORATED:

REFERENCE IS MADE TO THE TELEGRAM OF JULY 22, 1968, AND LETTER OF AUGUST 20, 1968, PROTESTING AGAINST THE AWARD OF A CONTRACT TO ANY OTHER OFFEROR UNDER REQUEST FOR PROPOSALS NO. F41608-68-R-4399, ISSUED ON APRIL 11, 1968, BY THE DIRECTORATE, PROCUREMENT AND PRODUCTION, SAN ANTONIO AIR MATERIEL AREA, SAAMA, KELLY AIR FORCE BASE, TEXAS. OFFERS WERE SOLICITED FOR THE MODIFICATION AND OVERHAUL OF VARIOUS QUANTITIES OF AIR FORCE 4360- 59B SERIES AIRCRAFT ENGINES UNDER ITEM NO. 1 AND AIR FORCE 4360-63A SERIES AIRCRAFT ENGINES UNDER ITEM NO. 2.

THE CONTRACT TO BE AWARDED PURSUANT TO THIS SOLICITATION IS AN INDEFINITE QUANTITY TYPE CONTRACT. THE QUANTITIES SPECIFIED IN THE RFP WERE REVISED BY THE LETTER OF JUNE 3, 1968, WHICH STATED THAT THE MINIMUM COMBINED QUANTITY WAS 333; THE BEST ESTIMATED COMBINED QUANTITY WAS ,227; AND THAT 1,870 ENGINES CONSTITUTED THE MAXIMUM COMBINED QUANTITY. THE MINIMUM QUANTITY OF ENGINES TO BE INPUT AND OUTPUT ACCORDING TO THE DELIVERY SCHEDULE IS AS FOLLOWS: INPUT

SEP OCT NOV DEC JAN FEB MAR APR MAY JUN ----- --- --- --- --- --- --- --- --- ------ ITEM 1 1 2 2 7 10 12 13 13 13 0 ITEM 2 5 5 5 25 30 40 50 50 50 0 OUTPUT --- -- ITEM 1 0 0 0 5 7 10 12 13 13 13 ITEM 2

0 0 0 15 25 30 40 50 50 50

THE MAXIMUM OUTPUT FOR ITEM NO. 1 WILL BE 14 IN DECEMBER 1968 AND 30 IN JANUARY 1969 AND 36 PER MONTH THEREAFTER THROUGH NOVEMBER 1969. THE MAXIMUM OUTPUT FOR ITEM NO. 2 WILL BE 15 IN DECEMBER 1968 AND 50 IN JANUARY 1969 AND 140 PER MONTH THEREAFTER THROUGH NOVEMBER 1969. THE CONTRACTUAL PERIOD WILL BE FOR 15 MONTHS FROM DATE OF AWARD WITH A PROVISION TO EXERCISE AN OPTION FOR AN ADDITIONAL 90 DAYS OF PRODUCTION AND THE MINIMUM QUANTITY OF COMBINED R-4360 ENGINES UNDER THE OPTION WILL BE 180 EACH WITH THE MAXIMUM QUANTITY TO BE 360 EACH.

THE AIR FORCE HAS FURNISHED OUR OFFICE WITH A COMPOSITE COST PER ENGINE PRICE UNDER SPARTAN'S PROPOSAL AND UNDER THE PROPOSAL FROM AERODEX, INCORPORATED, AND A COMPARISON OF THE TWO INDICATES THAT YOUR COMPOSITE PRICE PER ENGINE IS LOWER THAN THE COMPOSITE PRICE OF AERODEX, INCORPORATED. SPARTAN'S OVERALL EVALUATED PROPOSAL IS ALSO LOWER THAN THE ONE SUBMITTED BY AERODEX. IT HAS BEEN DETERMINED THAT THE PRICES NEGOTIATED WITH AERODEX ARE IN THE RANGE OF REASONABLENESS. IT IS NOT CONTEMPLATED THAT AN AWARD FOR THE INSTANT PROCUREMENT WILL BE MADE TO SPARTAN SINCE IT HAS BEEN DETERMINED THAT ON THE BASIS OF ITS PRESENT FACILITIES, SPARTAN CANNOT MEET THE REQUIREMENTS OF THE DELIVERY SCHEDULE AND THAT THE CONSTRUCTION OF NEW FACILITIES CANNOT BE COMPLETED IN TIME FOR SPARTAN TO MEET THE MAXIMUM DELIVERY REQUIREMENTS.

AIR FORCE'S REPORT INDICATES THAT ON JUNE 19, 1968, THE CONTRACTING OFFICER REQUESTED THE DEFENSE CONTRACT ADMINISTRATIVE SERVICES OFFICE (DCASO), OKLAHOMA CITY, OKLAHOMA, TO CONDUCT A PREAWARD SURVEY OF SPARTAN SINCE THE CONTRACTING OFFICER UNDERSTOOD THAT SPARTAN HAD NOT HAD ANY EXPERIENCE IN OVERHAULING THE R-4360 ENGINE. A REPORT DATED JUNE 27, 1968, INDICATES THAT A GROUP OF REPRESENTATIVES FROM SAAMA, THE BUYING ACTIVITY, PARTICIPATED IN THE PREAWARD SURVEY OF SPARTAN WHICH IS UNDER THE COGNIZANCE OF DCASO, OKLAHOMA CITY, OKLAHOMA. THE PRELIMINARY CONCLUSIONS OF THE SAAMA REPRESENTATIVES WERE THAT SPARTAN'S CAPABILITY TO PERFORM MUST BE BASED UPON THE TIMELY CONSTRUCTION OF NEW FACILITIES AND THE TIMELY PROCUREMENT OF EQUIPMENT. THE SAAMA GROUP GAVE A QUALIFIED AFFIRMATIVE RECOMMENDATION TO SPARTAN CONTINGENT UPON SPARTAN'S OBTAINING BINDING WRITTEN AGREEMENTS FROM THE CONSTRUCTION CONTRACTOR SETTING FORTH THE PROPOSED SCHEDULE FOR ACCOMPLISHMENT OF FACILITIES CONSTRUCTION.

IN CONTRAST TO THE ABOVE-QUALIFIED RECOMMENDATION BY THE SAAMA REPRESENTATIVES, DCASO WHICH AS INDICATED HAS THE RESPONSIBILITY FOR THE PREAWARD SURVEY, FOUND THAT THE NECESSITY FOR CONSTRUCTION OF NEW FACILITIES BY SPARTAN WOULD DELAY THE COMMENCING OF PRODUCTION UNTIL DECEMBER 1, 1968, AND THAT THEREFORE SPARTAN COULD NOT MEET THE REQUIREMENTS OF THE DELIVERY SCHEDULE. THE PREAWARD SURVEY WAS BASED UPON A MAXIMUM PRODUCTION SCHEDULE FOR THE R-4360 ENGINES ENCOMPASSING 29 ENGINES FOR DECEMBER 1968; 80 ENGINES FOR JANUARY 1969; AND 176 ENGINES PER MONTH FROM FEBRUARY THROUGH NOVEMBER 1969. A REPORT PREPARED BY THE INDUSTRIAL SPECIALIST WITH THE PREAWARD SURVEY TEAM INDICATES THAT THE INITIAL FACILITY CONSTRUCTION PLAN REVIEWED BY THE SAAMA REPRESENTATIVES WAS NOT EXPLICIT ENOUGH TO ALLOW AN IN-DEPTH EVALUATION AND THAT CERTAIN ADDITIONAL DETAILS FURNISHED BY SPARTAN INDICATE THAT THE TIME FRAME REQUIRED FOR CONSTRUCTION WOULD DELAY PRODUCTION UNTIL DECEMBER 1, 1968.

ON JULY 17, 1968, A MEETING WAS HELD AT SAAMA TO REVIEW THE PREAWARD SURVEY OF SPARTAN CONDUCTED BY DCASO. THE MEMORANDUM OF THIS MEETING IS SIGNED BY THE DIRECTOR OF PROCUREMENT AND PRODUCTION AND THE DIRECTOR OF MATERIEL MANAGEMENT AT SAAMA AND THIS MEMORANDUM CONFIRMS THAT SUBSEQUENT TO THE QUALIFIED AFFIRMATIVE DETERMINATION BY THE SAAMA REPRESENTATIVES, ADDITIONAL INFORMATION WAS DEVELOPED BY DCASO WHICH INDICATED THAT SPARTAN COULD NOT PERFORM AS PROPOSED FOR THE REASONS STATED IN THE PREAWARD SURVEY. THE REPORT CONCLUDES THAT AFTER A COMPLETE REVIEW OF THE PREAWARD SURVEY BY SAAMA, IT WAS AGREED TO ACCEPT THE NEGATIVE RECOMMENDATION IN DCASO'S PREAWARD SURVEY REGARDING SPARTAN'S ABILITY TO PERFORM.

SPARTAN'S TELEGRAM OF JULY 22, 1968, REQUESTS A IMMEDIATE REVIEW OF THIS MATTER BY THIS OFFICE TO DETERMINE WHETHER THE AIR FORCE IS JUSTIFIED IN NOT AWARDING A CONTRACT FOR THE INSTANT PROCUREMENT TO SPARTAN. THE LETTER OF AUGUST 20, 1968, ADVISES THAT SPARTAN HAS AGAIN BEEN ASSURED BY THE PROPOSED CONTRACTOR FOR CONSTRUCTION OF SPARTAN'S NEW FACILITIES THAT THE FACILITY CONSTRUCTION SCHEDULE IS REASONABLE AND CAN BE MET. A COPY OF THIS SCHEDULE WAS FURNISHED TO REPRESENTATIVES OF THIS OFFICE. IT IS CONCEDED IN THE LETTER OF AUGUST 20 THAT THE COMPLETION DATES IN THE FACILITY CONSTRUCTION SCHEDULE WERE BASED UPON SPARTAN'S RECEIVING AN AWARD PRIOR TO AUGUST 1, 1968, AND THAT SINCE AWARD WILL NOT BE MADE UNTIL THE END OF AUGUST, THE DELIVERY SCHEDULES WILL HAVE TO BE ADJUSTED ACCORDINGLY. THE LETTER OF AUGUST 20 ALSO STATES THAT THE NECESSARY MANPOWER CAN BE OBTAINED AND THAT SPARTAN WILL TAKE EVERY REASONABLE ACTION TO ENHANCE THE QUALITY OF ITS WORK. THE LETTER OF AUGUST 20 STATES THAT THE SAAMA TEAM FOUND SPARTAN'S CAPABILITY AND PLANS FOR CONTRACT PERFORMANCE TO BE SATISFACTORY AND THAT SPARTAN FINDS IT DIFFICULT TO BELIEVE THAT THE FINDINGS OF THAT GROUP WERE REVERSED.

A QUESTION WAS RAISED IN THE PREAWARD SURVEY WHETHER SPARTAN COULD ACQUIRE THE NECESSARY SKILLED PERSONNEL REQUIRED FOR PERFORMANCE OF THE R- 4360 CONTRACT. IT IS STATED IN THE PREAWARD SURVEY THAT WHILE SPARTAN COULD OBTAIN AND TRAIN THE REQUIRED PERSONNEL, THE FACILITIES AND THE GOING PRODUCTION OPERATION NECESSARY FOR EFFECTIVE TRAINING AND ORGANIZATION WOULD NOT BE AVAILABLE UNTIL DECEMBER 1, 1968. ATTACHED TO THE PREAWARD SURVEY IS A LETTER DATED JULY 17, 1968, FROM THE OKLAHOMA STATE EMPLOYMENT SERVICE FOR THE TULSA AREA WHICH STATES THAT THERE ARE PRESENTLY 13 AIRCRAFT ENGINE MECHANICS REGISTERED WITH THE LOCAL OFFICE; THAT THESE MECHANICS ARE ON TEMPORARY LAY-OFF FROM LOCAL INDUSTRY; HOWEVER, IT WAS EXPECTED THAT THEY WOULD BE ABSORBED BY LOCAL INDUSTRY WITHIN A SHORT PERIOD OF TIME. A LETTER DATED AUGUST 21, 1968, FROM THE OKLAHOMA STATE EMPLOYMENT SERVICE FURNISHED TO OUR OFFICE BY SPARTAN'S REPRESENTATIVES STATES THAT THERE SHOULD BE NO DIFFICULTY IN STAFFING NEW OR EXPANDING PLANTS IN THE TULSA, OKLAHOMA, AREA AND VARIOUS STATISTICAL INFORMATION IS SET FORTH WITH RESPECT TO UNEMPLOYED PERSONS IN THE TULSA AREA. THIS LETTER DOES NOT GIVE ANYINFORMATION WITH RESPECT TO UNEMPLOYED SKILLED PERSONNEL OF THE TYPE WHICH WOULD BE REQUIRED UNDER THE INSTANT PROCUREMENT. SPARTAN CONTENDS THAT IT CAN TRAIN THE NECESSARY PERSONNEL; HOWEVER, AIR FORCE DISAGREES THAT THE TRAINING CAN BE ACCOMPLISHED WITHIN THE TIME-FRAME ALLOTED FOR PRODUCTION.

THE REPORT FROM HEADQUARTERS, UNITED STATES AIR FORCE, A COPY OF WHICH WAS MADE AVAILABLE TO YOU, STATES THAT DELAYS IN DELIVERIES CANNOT BE TOLERATED AND THAT IT WAS MAINLY FOR THIS REASON THAT THE PREAWARD SURVEY RECOMMENDED AGAINST AN AWARD TO SPARTAN. IN THIS CONNECTION THE R-4360 ENGINE IS USED IN C124 AIRCRAFT WHICH ARE ACTIVE IN SOUTHEAST ASIA. THE CIRCUMSTANCES THERE DOES NOT SEEM TO BE ANY POSSIBILITY FOR ADJUSTING THE CONTRACT DELIVERY SCHEDULE AS SUGGESTED IN YOUR LETTER OF AUGUST 20, 1968.

AFTER CONSULTATION WITH AN ADVISORY BOARD WHICH CONFIRMED THE RECOMMENDATION IN THE PREAWARD SURVEY THE CONTRACTING OFFICER MADE A DETERMINATION THAT SPARTAN WAS NONRESPONSIBLE FOR THE PURPOSES OF THIS PROCUREMENT WITHIN THE MEANING OF ARMED SERVICES PROCUREMENT REGULATION 1- 903.1. THIS SECTION OF ASPR SETS FORTH THE GENERAL MINIMUM STANDARDS FOR RESPONSIBLE PROSPECTIVE CONTRACTORS AND ONE OF THE STANDARDS UNDER THIS SECTION IS THAT THE PROSPECTIVE CONTRACTOR MUST BE ABLE TO COMPLY WITH THE REQUIRED OR PROPOSED DELIVERY SCHEDULE, TAKING INTO CONSIDERATION ALL EXISTING BUSINESS COMMITMENTS, COMMERCIAL AS WELL AS GOVERNMENT. UNDER ASPR 1-901 THE REQUIREMENTS SET FORTH IN 1-903 ARE MADE APPLICABLE TO NEGOTIATED PROCUREMENTS.

IN OUR DECISION B-160562, JULY 26, 1967, WE STATED AS FOLLOWS WITH RESPECT TO THE EFFECT WHICH IS TO BE GIVEN TO RECOMMENDATIONS IN A PREAWARD SURVEY:

"WE HAVE BEEN ADVISED BY THE DEFENSE SUPPLY AGENCY THAT DCASR PREAWARD SURVEYS ARE GENERALLY ACCOMPLISHED ON A TEAM BASIS COMPRISED OF TECHNICAL REPRESENTATIVES FROM QUALITY ASSURANCE AND PRODUCTION AND FINANCIAL SPECIALISTS. THE RESULTS OF THEIR INDIVIDUAL INVESTIGATIONS ARE COMPILED AND FORWARDED TO A PREAWARD MONITOR WITH RECOMMENDATIONS IN THEIR RESPECTIVE AREAS OF ANALYSIS. THE PREAWARD FINDINGS AND RECOMMENDATIONS ARE THEN SUBJECTED TO SUPERVISORY REVIEW AND ULTIMATELY ARE EXAMINED BY A PREAWARD SURVEY BOARD COMPOSED OF KEY PERSONNEL APPOINTED BY THE REGION DIRECTOR. THE FINAL REPORT SUBMITTED TO THE CONTRACTING OFFICER REPRESENTS THE COLLECTIVE JUDGMENTS AND RECOMMENDATIONS OF THE REGION. HOWEVER, THE ULTIMATE AUTHORITY AS TO WHETHER TO GRANT OR DENY AN AWARD STILL RESTS WITH THE CONTRACTING OFFICER WHO EVALUATES THE RECOMMENDATIONS CONTAINED IN THE PREAWARD SURVEY REPORT, TOGETHER WITH OTHER INFORMATION AVAILABLE TO HIM, IN RENDERING A FINAL DETERMINATION REGARDING THE PROPOSED CONTRACTOR'S RESPONSIBILITY.' DETERMINATIONS REGARDING AN OFFEROR'S RESPONSIBILITY OR NONRESPONSIBILITY INVOLVE THE EXERCISE OF A CONSIDERABLE DEGREE OF DISCRETION AND OUR OFFICE HAS CONSISTENTLY ADHERED TO THE RULE THAT SUCH DETERMINATION WILL NOT BE QUESTIONED UNLESS SHOWN TO BE ARBITRARY OR CAPRICIOUS OR NOT BASED ON SUBSTANTIAL EVIDENCE. SEE B- 161085, JULY 31, 1967; B-160562, JULY 26, 1967.

IN VIEW OF THE FACTS DEVELOPED BY THE PREAWARD SURVEY IT CANNOT BE SAID THAT THERE WAS NOT A SUBSTANTIAL BASIS FOR THE CONTRACTING OFFICER'S DETERMINATION THAT SPARTAN IS NOT A RESPONSIBLE PROSPECTIVE CONTRACTOR FOR PURPOSES OF THIS PROCUREMENT. THERE IS NO QUESTION BUT THAT THERE IS A RISK FACTOR INVOLVED WITH REGARD TO WHETHER THE CONSTRUCTION OF SPARTAN'S PROPOSED FACILITIES CAN BE COMPLETED IN TIME TO MEET THE CRITICAL REQUIREMENTS OF THE DELIVERY SCHEDULE AND AS INDICATED THE TECHNICAL OPINION OF THE AIR FORCE IS THAT THE MAXIMUM DELIVERY SCHEDULE CANNOT BE MET BY SPARTAN.

WITH RESPECT TO LABOR RESOURCES THE POINT IS NOT WHETHER THE RESOURCES ARE AVAILABLE BUT WHETHER THE NECESSARY PERSONNEL CAN BE TRAINED TO ASSURE PRODUCTION IN ACCORDANCE WITH THE DELIVERY SCHEDULE. THE OPINION OF THE PREAWARD SURVEY IS THAT PERSONNEL CANNOT BE SO TRAINED. THE MEMORANDUM OF JULY 17, 1968, DESCRIBED ABOVE, SEEMS CLEAR THAT SAAMA INITIALLY GAVE SPARTAN A QUALIFIED AFFIRMATIVE RECOMMENDATION AND THAT UPON FURTHER REVIEW SAAMA DECIDED TO ACCEPT THE NEGATIVE RECOMMENDATION IN THE PREAWARD SURVEY.

IN THE CIRCUMSTANCES OUR OFFICE HAS NO BASIS FOR QUESTIONING THE ADMINISTRATIVE DETERMINATION REGARDING SPARTAN'S RESPONSIBILITY.