B-165137, NOV. 18, 1968

B-165137: Nov 18, 1968

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THE SOLICITATION WAS ISSUED ON OCTOBER 27. DELIVERY AT FIVE DESTINATIONS WAS TO BE COMPLETED IN SPECIFIED INSTALLMENTS BETWEEN SEPTEMBER 1 AND 15 AND DECEMBER 1 AND 15. THE SOLICITATION WAS AMENDED FOUR TIMES RESULTING IN AN INCREASE IN QUANTITY TO 56. SIX PROPOSALS WERE RECEIVED AS FOLLOWS: FOB ORIGIN FOB ORIGIN FRT PPD LEVEL A LEVEL B LEVEL A LEVEL B TERMS PACK PACK PACK PACK WALLACE PHARM. . SUBJECT MATERIAL IS NOT ACCEPTABLE. AN AWARD IS NOT RECOMMENDED TO S.F. YOU CONTEND THAT YOUR "SAMPLES WERE WELL WITHIN THE ALLOWABLE LIMITS FOR SPOTS" . THAT THE PERCENTAGE OF CHIPPED TABLETS WAS NOT CORRECT AS EVALUATED. YOU FURTHER CONTEND THAT THE CHIPS FROM THE BROKEN TABLETS MAY HAVE RESULTED FROM THEIR HANDLING SUBSEQUENT TO THE TIME THE BOTTLES WERE FILLED.

B-165137, NOV. 18, 1968

TO S. F. DURST AND COMPANY, INC.:

WE REFER TO YOUR LETTER DATED SEPTEMBER 18, 1968, WITH ENCLOSURE, WHICH PROTESTED THE REJECTION OF YOUR LOW BID SUBMITTED TO THE DEFENSE PERSONNEL SUPPORT CENTER, PHILADELPHIA, PENNSYLVANIA, UNDER REQUEST FOR PROPOSAL (RFP) NO. DSA 120-68-R-1038.

THE SOLICITATION WAS ISSUED ON OCTOBER 27, 1967, AND REQUESTED PROPOSALS FOR SUPPLYING 35,208 PACKS OF MEPROBAMATE TABLETS N.F., 0.4 GM, (6 GR) 500 -S. DELIVERY AT FIVE DESTINATIONS WAS TO BE COMPLETED IN SPECIFIED INSTALLMENTS BETWEEN SEPTEMBER 1 AND 15 AND DECEMBER 1 AND 15, 1968.

THE RFP PROVIDED THAT OFFERORS QUOTE PRICES SEPARATELY ON IMPORTED AND DOMESTIC PACKS, IDENTIFIED AS "LEVEL A" OR "LEVEL B" , RESPECTIVELY, AND ON THE BASIS OF F.O.B. ORIGIN AND F.O.B. DESTINATION. THE SOLICITATION WAS AMENDED FOUR TIMES RESULTING IN AN INCREASE IN QUANTITY TO 56,232 PACKS AND THE DELETION OF THE PATENT INDEMNITY PROVISION.

SECTION 51.1-2A OF THE RFP ALSO PROVIDED THAT OFFERORS WHO HAD NOT PREVIOUSLY FURNISHED SUCH SUPPLIES TO THE GOVERNMENT COULD REASONABLY ANTICIPATE A REQUEST FOR FURNISHING PRE-AWARD SAMPLES, AND THAT THE GOVERNMENT RESERVED THE RIGHT TO REJECT THE OFFER OF ANY FIRM THAT FAILED TO FURNISH THE SAMPLES OR WHOSE SAMPLES DID NOT CONFORM TO THE CONTRACT SPECIFICATIONS. SIX PROPOSALS WERE RECEIVED AS FOLLOWS:

FOB ORIGIN FOB ORIGIN FRT PPD

LEVEL A LEVEL B LEVEL A LEVEL B TERMS

PACK PACK PACK PACK WALLACE PHARM. ----

---- 9.50

9.50 NET WYETH LABS. ---- ---- 10.82 10.71 NET STRONG COBB ARNER ---- -- -- ---- 11.53 NET PANRAY DIV. 13.93 13.85 14.03 13.95 1 PERCENT - 20 S. F. DURST -- - ---- ---- 2.85 2 PERCENT - 20 GYMA LABS. (AGENTS 2.45 2.30 --- - ---- 1/4 OF 1 PERCENT - 20

FOR A/S SYNTHETIC)

THE CONTRACTING OFFICER REPORTED THAT YOUR FIRM, IN OFFERING A DOMESTIC PRODUCT, SUBMITTED THE LOWEST PROPOSAL AT A PACK PRICE OF $2.85 EACH. HOWEVER, THE PRE-AWARD SAMPLE EVALUATION REPORT MADE BY THE QUALITY CONTROL BRANCH AND DATED AUGUST 15, 1968, STATED THAT:

"APPEARANCE: TWO UNITS EXAMINED BY THE LABORATORY CONTAINED 169 DEFECTIVE TABLETS. ONE UNIT CONTAINED 1.6 PERCENT SPOTTED, AND 13.6 PERCENT CHIPPED TABLETS. THE OTHER UNIT CONTAINED 1.8 PERCENT SPOTTED, 16.6 PERCENT CHIPPED TABLETS, AND A BROKEN TABLET. FEDERAL STANDARD NO. 140A, TABLETS (FOR MEDICINAL PURPOSES), REQUIRES THAT UNCOATED TABLETS SHALL SHOW NO EVIDENCE OF SURFACE SPOTS (MAJOR A DEFECT) EXCEEDING THE LIMITS PERMITTED IN THE CLASSIFICATION OF DEFECTS WITHIN THE ACCEPTABLE QUALITY LEVEL OF 1.0 PERCENT. FEDERAL STANDARD NO. 140A, ALSO REQUIRES THAT CHIPS OF TABLETS (MINOR DEFECT) DOES NOT EXCEED THE ACCEPTABLE QUALITY LEVEL OF 2.5 PERCENT.

"SINCE THE BIDDER HAS SUPPLIED A NON-CONFORMING PRODUCT AND HAS NOT DEMONSTRATED HIS CAPABILITY TO PRODUCE ACCEPTABLE MATERIAL IN ACCORDANCE WITH THE GOVERNMENT SPECIFICATIONS, SUBJECT MATERIAL IS NOT ACCEPTABLE; THEREFORE, AN AWARD IS NOT RECOMMENDED TO S.F. DURST COMPANY.'

DUE TO THE SMALL BUSINESS STATUS OF YOUR FIRM, THE CONTRACTING OFFICER, IN ACCORDANCE WITH SECTION 2 (8) OF THE SMALL BUSINESS ACT OF JULY 18, 1958, AND PURSUANT TO THE CERTIFICATE OF COMPETENCY (COC) PROCEDURES SET FORTH IN SECTION 1-705.4 OF THE ARMED SERVICES PROCUREMENT REGULATION, NOTIFIED THE SMALL BUSINESS ADMINISTRATION (SBA) OF HIS INTENT TO REJECT YOUR BID ON THE BASIS OF NON RESPONSIBILITY RESULTING FROM THE SAMPLE EVALUATION REPORT. ON AUGUST 26, 1968, THE SBA NOTIFIED THE CONTRACTING OFFICER THAT IT WOULD DECLINE TO ISSUE A COC TO YOUR FIRM.

YOU CONTEND THAT YOUR "SAMPLES WERE WELL WITHIN THE ALLOWABLE LIMITS FOR SPOTS" , AND THAT THE PERCENTAGE OF CHIPPED TABLETS WAS NOT CORRECT AS EVALUATED. YOU FURTHER CONTEND THAT THE CHIPS FROM THE BROKEN TABLETS MAY HAVE RESULTED FROM THEIR HANDLING SUBSEQUENT TO THE TIME THE BOTTLES WERE FILLED. LASTLY, YOU ALLEGE THAT THE SAMPLE EXAMINED DID NOT REPRESENT A VALID PROCESS AVERAGE OF YOUR MEPROBAMATE TABLETS.

THE DEFENSE SUPPLY AGENCY HAS FURNISHED THE FOLLOWING REPORT IN REPLY TO YOUR PROTEST, WHICH APPEARS TO BE FULLY RESPONSIVE THERETO:

"IN TAKING ISSUE WITH THE GOVERNMENT'S FINDINGS, DURST DOES NOT CITE THE AQL BUT CITES INSTEAD, THE PERCENTAGE OF DEFECTS ALLOWABLE IN A SAMPLE PLAN FOR A BATCH SIZE OF 100,000 TABLETS UNDER MIL STANDARD 105-D. A SAMPLE PLAN MAY, AS IN THIS CASE, PERMIT A GREATER PERCENTAGE OF DEFECTS THAN IS ALLOWED BY THE AQL. MIL STANDARD 105-D, PARAGRAPH 4.3 STATES, IN PART:

-THE SAMPLING PLANS PROVIDED HEREIN ARE SO ARRANGED THAT THE PROBABILITY OF ACCEPTANCE AT THE DESIGNATED AQL VALUE DEPENDS UPON THE SAMPLE SIZE, BEING GENERALLY HIGHER FOR LARGE SAMPLES THAN FOR SMALL ONES, FOR A GIVEN AQL.- PARAGRAPH 7.1 OF THE MIL STANDARD INDICATES THE SAMPLES ARE TO BE SELECTED AT RANDOM. IT IS EVIDENT THAT TO USE THE ACCEPTANCE LEVEL FOR A RANDOM PRODUCTION SAMPLE TO EVALUATE A PRE-AWARD SAMPLE IS A DISTORTION OF THE PURPOSES OF EACH.

"AS INDICATED IN PROVISION 51.1-2A OF THE SOLICITATION, AN OFFEROR WHO HAS NOT PREVIOUSLY PRODUCED THE ITEM FOR THE GOVERNMENT CAN ANTICIPATE A REQUEST FOR A PRE-AWARD SAMPLE. THE PURPOSE OF SUCH A SAMPLE IS TO ENABLE THE GOVERNMENT TO DETERMINE THE OFFEROR'S ABILITY TO PRODUCE THE REQUIRED ITEM BUT WITHOUT THE RISK OF REJECTION OF AN ENTIRE PRODUCTION LOT. IT IS CONSIDERED THAT SUCH A PROVISION BENEFITS BOTH THE OFFEROR AND THE GOVERNMENT ALIKE. IT SHOULD BE NOTED THAT THE SAMPLE IS SELECTED BY THE CONTRACTOR AND THERE IS NO REQUIREMENT FOR RANDOM SELECTION AS THERE WOULD BE IN A PRODUCTION LOT. HOWEVER, WHERE THE OFFEROR DOES SELECT THE SAMPLE WITH NO REQUIREMENT FOR RANDOM SELECTION, AND THE SAMPLE IS FOR THE PURPOSE OF ESTABLISHING HIS ABILITY TO PRODUCE THE ITEM IN ACCORDANCE WITH SPECIFICATIONS, IT IS EXPECTED THAT THE SAMPLE WILL MEET THE AQL ITSELF. PRIOR TO SOLICITATION OF OFFERS, A CONTRACTING OFFICER CANNOT FORECAST THE PRODUCTION LOT (BATCH SIZE) QUANTITY THAT A MANUFACTURER WILL HAVE IN ACTUAL PRODUCTION. THIS WILL VARY FROM FIRM TO FIRM. NOR IS IT DESIRED THAT AN OFFEROR RUN AN ACTUAL PRODUCTION LOT MERELY TO PRODUCE A PRE-AWARD SAMPLE. BECAUSE OF THESE THINGS, A PRE-AWARD SAMPLE SIZE BASED ON STATISTICAL SAMPLING CANNOT BE INCORPORATED IN THE SOLICITATION. IN LIEU THEREOF A REASONABLE SAMPLE SIZE IS ESTABLISHED FROM WHICH THE ABILITY AND POTENTIAL OF THE OFFEROR TO PRODUCE THE ITEM CAN BE DETERMINED. UNDER THIS PROCEDURE, ALL POTENTIAL SUPPLIERS WHO ARE REQUIRED TO SUBMIT SAMPLES, ARE SUBJECT TO EQUAL EVALUATION. SINCE THE OFFEROR SELECTS THE SAMPLE, IT IS NOT CONSIDERED UNFAIR THAT THE SAMPLE MUST MEET THE BASIC AQL ESTABLISHED BY THE SPECIFICATIONS.

"IN DISCUSSING THE NUMERICAL VALUES RELATED TO PRE-AWARD SAMPLES, IT IS IMPORTANT NOT TO LOSE SIGHT OF THE QUALITY VALUES WHICH THE NUMBERS REPRESENT. TABLE X-N (PAGE 54, MIL STD 105-D) CONTAINS TABLES FOR SAMPLE SIZE CODE LETTER: N. THE LETTER -N- IS THE SAMPLE SIZE CODE LETTER FOR A LOT SIZE OF 100,000 TABLETS WITH AN INSPECTION LEVEL OF II. CHART -N- IN THE TABLE SHOWS THE OPERATING CHARACTERISTICS CURVES FOR SINGLE SAMPLING PLANS, THE NORMAL TYPE OF SAMPLING. USING CHART -N- AND APPLYING THE DEFINITION OF PERCENT DEFECTIVE AS SHOWN IN PARAGRAPH 3.2 OF THE MIL STANDARD, WE WOULD EXPECT THAT 30 PERCENT OF THE LOTS PRODUCED BY DURST WOULD BE REJECTED BASED ON FINDING 1.8 PERCENT DEFECTIVES FOR SPOTS IN THE 500 TABLETS EXAMINED. WE WOULD ALSO EXPECT THAT 20 PERCENT OF THE LOTS PRODUCED BY DURST WOULD BE REJECTED BASED ON FINDING 1.6 PERCENT DEFECTIVES FOR SPOTS IN THE OTHER SAMPLE. A REJECTION RATE OF THIS MAGNITUDE (AVERAGE 25 PERCENT FOR THE TOTAL SAMPLE EXAMINED) IS CONSIDERED A SERIOUS REFLECTION ON THE MANUFACTURER'S ABILITY TO MEET THE AQL IN ACTUAL PRODUCTION, AND IN THIS CASE, DIRECTLY SUPPORTS THE DETERMINATION THAT DURST CANNOT BE CONSIDERED A RESPONSIBLE SUPPLIER OF THE PRODUCT REQUIRED.

"ADDITIONAL SUPPORT FOR THE DETERMINATION, AND AGAIN, A SERIOUS REFLECTION ON THE OFFEROR'S ABILITY TO PRODUCE SUPPLIES OF THE INTENDED QUALITY, IS THE GOVERNMENT'S FINDING WITH RESPECT TO CHIPPED TABLETS. SHOULD IMMEDIATELY BE POINTED OUT THAT HAD THE CHIPPING OCCURRED AS A RESULT OF HANDLING AFTER THE BOTTLES WERE FILLED, THERE WOULD HAVE BEEN SMALL CHIPS AND POWDER FOUND IN THE BOTTLES HOLDING THE TABLETS. NO SUCH CHIPS OR POWDER WERE FOUND IN EITHER OF THE BOTTLES. THIS MATTER ASIDE, FROM TABLE IIA (PAGE 10 OF MIL STD 105-D) IT IS ESTABLISHED THAT THE TABLE FOR SAMPLE CODE LETTER N, WITH AN AQL OF 2.5, WOULD ACCEPT 21 CHIPPED TABLETS AND REJECT ON 22. IN THE DURST SAMPLES, 68 CHIPPED TABLETS (13.6 PERCENT DEFECTIVE) WERE FOUND IN ONE BOTTLE, AND 83 (16.6 PERCENT DEFECTIVES) WERE FOUND IN THE OTHER. USING PERCENT DEFECTIVES OF THIS MAGNITUDE, AND AGAIN REFERRING TO CHART -N-, WE WOULD EXPECT ALMOST 100 PERCENT REJECTION OF THE LOTS PRODUCED.'

ALTHOUGH WE HAVE NO AUTHORITY TO REVIEW THE ADMINISTRATIVE DETERMINATIONS OF THE SBA TO DIRECT IT TO ISSUE A COC, WE WILL REVIEW THE CONTRACTING OFFICER'S REJECTION OF A BID FOR NONRESPONSIBILITY, WHETHER OR NOT SBA HAS REFUSED TO ISSUE A COC. SEE B-162232, NOVEMBER 24, 1967. IN SUCH A REVIEW, WE TAKE INTO CONSIDERATION ALL PERTINENT EVIDENCE AVAILABLE TO THE CONTRACTING OFFICER AND THE SBA. SEE B 161339, SEPTEMBER 25, 1967.

IN THIS INSTANCE, AFTER THE CONTRACTING OFFICER HAD DETERMINED YOUR NONRESPONSIBILITY AND SBA HAD REFUSED TO ISSUE A COC, YOU PROTESTED ON THE BASIS OF MATTERS GENERALLY REQUIRING THE JUDGMENT OF TECHNICAL AND SCIENTIFIC PERSONNEL KNOWLEDGEABLE IN THE PARTICULAR AREA INVOLVED. WHERE THE CONCLUSIONS OF THE GOVERNMENT'S EXPERTS ARE AT VARIANCE WITH THOSE OF A BIDDER-S, WE MUST ACCEPT THE GOVERNMENT'S VERSION UNLESS IT IS CLEARLY UNSUPPORTABLE. ON THE RECORD BEFORE US WE ARE UNABLE TO CONCLUDE THAT THE AGENCY'S ACTION WAS ARBITRARY, CAPRICIOUS, OR MADE IN BAD FAITH, OR NOT SUPPORTED BY REASONABLE GROUNDS. SEE B-161676, AUGUST 22, 1967.

IN THE CIRCUMSTANCES, AND SINCE THE RECORD SHOWS THAT YOUR SAMPLES WERE FULLY AND CAREFULLY EVALUATED BY THE COGNIZANT SCIENTIFIC STAFF OF THE DSA, YOUR PROTEST MUST BE DENIED.