B-166275(1), OCT. 17, 1969

B-166275(1): Oct 17, 1969

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DETERMINATION THAT SMALL BUSINESS OFFEROR WAS NONRESPONSIBLE. ALTHOUGH PREAWARD SURVEY CONTAINING NEGATIVE COMMENTS WAS FAVORABLE OVERALL. WAS NOT ARBITRARY OR CAPRICIOUS WHEN BASED ON NEGATIVE REPORT BY PURCHASING AGENCY WITH INTIMATE KNOWLEDGE AND EXPERTISE OF END ITEM. IS NOT BOUND BY PREAWARD SURVEY AND COULD REASONABLY CONCLUDE THAT PROTESTANT INDICATED INABILITY TO UNDERSTAND TECHNICAL REQUIREMENTS. IN VIEW OF FACTUAL BASIS SUPPORTING EXIGENCY DETERMINATION AND FACT THAT TWO SMALL BUSINESS CONCERNS WITH LOWER OFFERS WERE REJECTED. WIENER AND ROSS: REFERENCE IS MADE TO YOUR LETTER DATED AUGUST 13. YOU CONTEND THAT THE CONTRACTING OFFICER'S DETERMINATION THAT REPUBLIC WAS NONRESPONSIBLE FOR PURPOSES OF THIS PROCUREMENT WAS ARBITRARY AND CAPRICIOUS.

B-166275(1), OCT. 17, 1969

BIDDERS--QUALIFICATIONS--PREAWARD SURVEYS--ACCEPTANCE OF FINDINGS UNDER SOLICITATION FOR COMPLEX RADAR SYSTEM SPECIFYING NEW ENGINEERING CONCEPTS, CRITICAL DELIVERY REQUIREMENTS, AND THAT OFFEROR'S TECHNICAL EXPERTISE AND EXPERIENCE WOULD BE CONSIDERED, CONTRACTING OFFICER'S (C.O.) DETERMINATION THAT SMALL BUSINESS OFFEROR WAS NONRESPONSIBLE, ALTHOUGH PREAWARD SURVEY CONTAINING NEGATIVE COMMENTS WAS FAVORABLE OVERALL, WAS NOT ARBITRARY OR CAPRICIOUS WHEN BASED ON NEGATIVE REPORT BY PURCHASING AGENCY WITH INTIMATE KNOWLEDGE AND EXPERTISE OF END ITEM, AS C.O. IS NOT BOUND BY PREAWARD SURVEY AND COULD REASONABLY CONCLUDE THAT PROTESTANT INDICATED INABILITY TO UNDERSTAND TECHNICAL REQUIREMENTS; ALSO, IN VIEW OF FACTUAL BASIS SUPPORTING EXIGENCY DETERMINATION AND FACT THAT TWO SMALL BUSINESS CONCERNS WITH LOWER OFFERS WERE REJECTED, ASPR 1- 1705.4C DOES NOT REQUIRE C.O. TO REFER MATTER TO SBA.

TO WACHTEL, WIENER AND ROSS:

REFERENCE IS MADE TO YOUR LETTER DATED AUGUST 13, 1969, WITH ENCLOSURE, AND PRIOR CORRESPONDENCE, ON BEHALF OF REPUBLIC ELECTRONICS INDUSTRIES CORP., PROTESTING AGAINST THE AWARD OF A CONTRACT TO ELECTROMAGNETIC TECHNOLOGY CORP., UNDER REQUEST FOR PROPOSALS (RFP) NO. DAAA25-69-R-0148, ISSUED BY THE DEPARTMENT OF THE ARMY, FRANKFORD ARSENAL, PHILADELPHIA, PENNSYLVANIA. YOU REQUEST THAT THE AWARD TO ELECTROMAGNETIC TECHNOLOGY CORP., A LARGE BUSINESS CONCERN, BE SET ASIDE AND THAT THE AWARD BE MADE TO REPUBLIC AS THE LOWEST RESPONSIVE AND RESPONSIBLE SMALL BUSINESS OFFEROR. YOU CONTEND THAT THE CONTRACTING OFFICER'S DETERMINATION THAT REPUBLIC WAS NONRESPONSIBLE FOR PURPOSES OF THIS PROCUREMENT WAS ARBITRARY AND CAPRICIOUS.

THE FACTS IN THIS CASE AS ADMINISTRATIVELY REPORTED ARE AS FOLLOWS. PRESOLICITATION NOTICE WAS ISSUED BY FRANKFORD ARSENAL ON SEPTEMBER 23, 1968, TO 32 POTENTIAL SOURCES FOR CERTAIN REQUIREMENTS IN SUPPORT OF THE 20MM ANTIAIRCRAFT ARTILLERY GUN, XM163 (SELF-PROPELLED) AND XM167 (TOWED).

THE PRESOLICITATION NOTICE INCLUDED AN ANNOUNCEMENT OF A PREPROPOSAL CONFERENCE TO BE HELD AT FRANKFORD ARSENAL SHORTLY AFTER THE ISSUANCE OF THE RFP FOR THE PURPOSE OF PROVIDING PROSPECTIVE OFFERORS WITH AN EXPLANATION AND DISCUSSION OF THE TECHNICAL AND CONTRACTUAL REQUIREMENTS.

A DETAILED SYNOPSIS OF THE PROPOSED PROCUREMENT WAS PUBLISHED NATIONWIDE IN THE DEPARTMENT OF COMMERCE BUSINESS DAILY ON SEPTEMBER 27, 1968. THE SYNOPSIS INCLUDED THE ANNOUNCEMENT OF THE PREPROPOSAL CONFERENCE AND INSTRUCTIONS FOR ATTENDANCE. IT EXPRESSED THE GOVERNMENT'S SEARCH FOR ,INTERESTED FIRMS POSSESSING SUPERIOR CAPABILITIES AND EXPERIENCE IN SUCH RELATED FIELDS AS X-BAND MICROWAVE, DOPPLER RADARS, ELECTROMAGNETIC COMPATIBILITY REQUIREMENTS AND DIGITAL HARDWARE EXPERIENCE.'

THE RECORD INDICATES THAT THE PROCUREMENT WAS ASSIGNED A UNIFORM MATERIEL MOVEMENT AND ISSUE PRIORITY SYSTEM (UMMIPS) DESIGNATOR 02 BECAUSE OF URGENT SOUTHEAST ASIA REQUIREMENTS FOR THE EQUIPMENT AND THAT THE REQUEST FOR PORPOSALS WAS ISSUED PURSUANT TO 10 U.S.C. 2304 (A) (2), THE EXCEPTION WHICH PERMITS NEGOTIATION INSTEAD OF FORMAL ADVERTISING WHERE THERE IS A PUBLIC EXIGENCY. THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-202.2 (VI), WHICH IMPLEMENTS 10 U.S.C. 2304 (A) (2), PROVIDES THAT WHEN AN 02 PRIORITY DESIGNATOR IS ASSIGNED TO A PROCUREMENT, THE "PUBLIC EXIGENCY" EXCEPTION MAY BE USED. SEE ALSO, 10 U.S.C. 2310 (B).

THE RFP WAS ISSUED ON OCTOBER 3, 1968, TO 32 PROSPECTIVE SOURCES AND WAS SUBSEQUENTLY FURNISHED TO OTHER PROSPECTIVE SOURCES WHICH RESPONDED TO THE PUBLISHED SYNOPSIS AND OTHER TRADE MEDIA. THE RFP INCLUDED ON PAGE 1 A "CAVEAT" ADVISING ALL OFFERORS THAT THIS SOLICITATION REPRESENTED THE INITIAL COMPETITIVE PROCUREMENT OF THE ITEMS DESCRIBED IN THE RFP. WITH RESPECT TO THE PREAWARD SURVEY FACTORS APPLICABLE TO THIS PROCUREMENT, PAGE 39 OF THE RFP PROVIDED IN PERTINENT PART AS FOLLOWS:

"2. IN ADDITION TO THE STANDARDS SET FORTH AT ASPR 1-903.1 AND 1 903.2, OR AS EXPANSION THEREOF, THE FACTORS SET FORTH BELOW APPLY TO ALL OFFERORS AND WILL BE CONSIDERED BY THE GOVERNMENT IN DETERMINING RESPONSIBILITY:

"A. LENGTH OF EXPERIENCE IN X BAND MICROWAVE DESIGN AND PRODUCTION, PARTICULARLY IN THE FIELD OF DOPPLER RADARS.

"B. LENGTH OF EXPERIENCE IN DIGITAL HARDWARE PRODUCTION, PARTICULARLY IN THE 7.5 MHZ REGION.

"C. PRODUCTION AND/OR DESIGN EXPERIENCE FOR EQUIPMENT THAT MEET THIS ELECTRO-MAGNETIC COMPATIBILITY REQUIREMENT OF MIL-STD-461.

"D. DISTRIBUTION OF COST ELEMENTS REFLECTED ON DD FORM 633 AND SUPPORTING DATA.'

THE PREPROPOSAL CONFERENCE WAS HELD AT FRANKFORD ARSENAL ON OCTOBER 17, 1968. OFFERORS ATTENDING THE CONFERENCE WERE PROVIDED WITH A DETAILED EXPLANATION OF THE CONTRACTUAL REQUIREMENTS, PARTICULARLY THE PREPRODUCTION EVALUATION OF THE TECHNICAL DATA AND THE DESIGN AND PERFORMANCE CHARACTERISTICS OF THE EQUIPMENT, INCLUDING A DISPLAY OF ACTUAL PRODUCTION UNITS. RESPECTING PREPRODUCTION EVALUATION (PPE), PAGE 7 OF THE RFP PROVIDED AS FOLLOWS:

"PRIOR TO, OR IN CONJUNCTION WITH PROCESS PLANNING, TOOL DESIGN, DEVELOPMENT OF INSPECTION PLANS AND PROCEDURES, AND DESIGN OF INSPECTION EQUIPMENT, AND THROUGHOUT THE PRODUCTION AND INSPECTION PHASES OF THE CONTRACT, THE CONTRACTOR SHALL PERFORM A DETAILED REVIEW OF ALL TECHNICAL DATA FURNISHED UNDER THE CONTRACT FOR THE PURPOSE OF IDENTIFYING AND PROPOSING THE CORRECTION OF ANY DISCREPANCY, ERROR, OMISSION, OR DEFICIENCY IN DESIGN OR TECHNICAL DATA WHICH MAY PRECLUDE PRACTICAL MANUFACTURE OR ASSEMBLY, OR WHICH MAY PRECLUDE THE ATTAINMENT OF REQUIRED PERFORMANCE AS SET FORTH IN SPECIFICATIONS:" BY AMENDMENT NO. 003 TO THE RFP, THE CLOSING DATE WAS EXTENDED FROM NOVEMBER 29, 1968, TO DECEMBER 10, 1968. OF THE 15 OFFERS RECEIVED AND OPENED ON DECEMBER 10, 1968, THE SEVEN LOWEST OFFERS, AS EVALUATED, WERE AS FOLLOWS:

(1) G. C. DEWEY CORP. $8,718,306.40

(2) COSMOS INDUSTRIES, INC. 8,930,813.46

(3) REPUBLIC ELECTRONICS INDS. CORP. 9,073,329.55

(4) POLARAD ELECTRONICS CORP. 9,220,368.04

(5) FREQUENCY ENGINEERING LABS. 9,322,151.51

(6) APPLIED DEVICES CORP. 9,736,655.00

(7) ELECTROMAGNETIC TECHNOLOGY CORP. 9,845,627.93

THE LOW OFFER OF THE G. C. DEWEY CORP. WAS REJECTED BECAUSE THE FIRM WAS DETERMINED TO BE NONRESPONSIBLE. ALSO THE BIDS OF YOUR FIRM, COSMOS INDUSTRIES, INC., POLARAD, FREQUENCY ENGINEERING LABS. AND APPLIED DEVICES CORP. WERE REJECTED BECAUSE THE CONTRACTING OFFICER HAD DETERMINED THAT YOUR FIRM AND THE OTHER COMPANIES WERE NONRESPONSIBLE FOR PURPOSES OF THIS PROCUREMENT. ON FEBRUARY 19, 1969, A CONTRACT WAS AWARDED TO ELECTROMAGNETIC TECHNOLOGY CORP. IN THE AMOUNT OF $9,845,627.93.

YOU PROTEST THE CONTRACTING OFFICER'S DETERMINATION THAT REPUBLIC IS NOT A RESPONSIBLE OFFEROR AND CONTEND THAT THE CONTRACTING OFFICER HAS BY HIS ACTIONS EVIDENCED "ARBITRARY AND CAPRICIOUS" ACTION. YOU CONTEND THAT SINCE REPUBLIC WAS DETERMINED TO BE A RESPONSIBLE PROSPECTIVE CONTRACTOR BY THE DEFENSE CONTRACT ADMINISTRATION SERVICES DIVISION (DCASD), GARDEN CITY, NEW YORK, AND SINCE ITS PROPOSAL WAS LOWER THAN ELECTROMAGNETIC'S PROPOSAL PRICE, IT SHOULD HAVE RECEIVED THE AWARD. IN YOUR LETTER OF AUGUST 13, 1969, YOU CONTEND THAT THE CONTRACTING OFFICER'S DECISION IN THE CASE OF REPUBLIC WAS NOT BASED ON FACTUAL EVIDENCE BECAUSE ALL THE CONTRACTING OFFICER HAD BEFORE HIM WAS THE PREAWARD SURVEY REPORT.

ASPR 1-902 TREATS THE QUESTION OF CONTRACTOR RESPONSIBILITY AS FOLLOWS:

"1-902 GENERAL POLICY. PURCHASES SHALL BE MADE FROM, AND CONTRACTS SHALL BE AWARDED TO, RESPONSIBLE PROSPECTIVE CONTRACTORS ONLY. A RESPONSIBLE PROSPECTIVE CONTRACTOR IS ONE WHICH MEETS THE STANDARDS SET FORTH IN 1- 903.1 AND 1-903.2, AND SUCH SPECIAL STANDARDS AS MAY BE PRESCRIBED IN ACCORDANCE WITH 1-903.3 AND BY OVERSEAS COMMANDERS. THE AWARD OF A CONTRACT TO A SUPPLIER BASED ON LOWEST EVALUATED PRICE ALONE CAN BE FALSE ECONOMY IF THERE IS SUBSEQUENT DEFAULT, LATE DELIVERIES OR OTHER UNSATISFACTORY PERFORMANCE RESULTING IN ADDITIONAL PROCUREMENT OR ADMINISTRATIVE COSTS. WHILE IT IS IMPORTANT THAT GOVERNMENT PURCHASES BE MADE AT THE LOWEST PRICE, THIS DOES NOT REQUIRE AN AWARD TO A * * * SUPPLIER SOLELY BECAUSE HE SUBMITS THE LOWEST BID OR OFFER. A PROSPECTIVE CONTRACTOR MUST DEMONSTRATE AFFIRMATIVELY HIS RESPONSIBILITY, INCLUDING, WHEN NECESSARY, THAT OF HIS PROPOSED SUBCONTRACTORS. THE CONTRACTING OFFICER SHALL MAKE A DETERMINATION OF NONRESPONSIBILITY IF, AFTER COMPLIANCE WITH 1-905 AND 1-906, THE INFORMATION THUS OBTAINED DOES NOT INDICATE CLEARLY THAT THE PROSPECTIVE CONTRACTOR IS RESPONSIBLE. RECENT UNSATISFACTORY PERFORMANCE, IN EITHER QUALITY OR TIMELINESS OF DELIVERY, WHETHER OR NOT DEFAULT PROCEEDINGS WERE INSTITUTED, IS AN EXAMPLE OF A PROBLEM WHICH THE CONTRACTING OFFICER MUST CONSIDER AND RESOLVE AS TO ITS IMPACT ON THE CURRENT PROCUREMENT PRIOR TO MAKING AN AFFIRMATIVE DETERMINATION OF RESPONSIBILITY. DOUBT AS TO PRODUCTIVE CAPACITY OR FINANCIAL STRENGTH WHICH CANNOT BE RESOLVED AFFIRMATIVELY SHALL REQUIRE A DETERMINATION OF NONRESPONSIBILITY.'

THE UNDERLYING QUESTION IS WHETHER REPUBLIC 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. 37 COMP. GEN. 430; 43 ID. 298; ZEPHYR AIRCRAFT CORPORATION V UNITED STATES, 122 CT. CL. 523.

IN YOUR LETTER OF AUGUST 13, 1969, YOU STATE THAT THE POSITION OF REPUBLIC HAS BEEN THAT THERE WAS ONLY ONE PREAWARD DCASD SURVEY TEAM AND THAT THE FRANKFORD ARSENAL PERSONNEL WERE PART OF THE SURVEY TEAM. YOU CONTEND THAT THERE IS ONLY ONE PREAWARD REPORT AND THAT ONE RECOMMENDED THAT REPUBLIC BE AWARDED THE CONTRACT. ALTHOUGH YOU RECOGNIZE THAT ASPR DOES NOT PROVIDE THAT THE CONTRACTING OFFICER MUST FOLLOW THE RECOMMENDATIONS OF THE DCASD PREAWARD SURVEY TEAM REPORT, YOU CONTEND THAT THE CONTRACTING OFFICER'S FAILURE TO FOLLOW SUCH RECOMMENDATIONS DOES EXPOSE HIM TO A CHARGE OF ABUSE OF DISCRETION. FURTHER, YOU STATE THAT THIS FACT ALONE IS NOT CONTROLLING BUT WHEN THE WHOLE COMPOSITE PICTURE IS PUT INTO PLACE, THERE COMES CLEARLY INTO FOCUS AN ARBITRARY AND CAPRICIOUS ACTION ON THE PART OF THE CONTRACTING OFFICER.

IN THE INSTANT MATTER, ARRANGEMENTS WERE MADE TO HAVE A JOINT DCASD, GARDEN CITY/FRANKFORD ARSENAL PREAWARD SURVEY WHICH WAS CONDUCTED AT REPUBLIC'S FACILITY ON JANUARY 6 AND 7, 1969. WE ARE ADVISED THAT IN VIEW OF THE EXTREME COMPLEXITY OF THE END ITEM (RADAR SET, AN/VPS-2) AND THE CRITICAL DELIVERY REQUIREMENTS, AS WELL AS THE INCORPORATION OF A RELATIVELY NEW ENGINEERING CONCEPT, PPE, IT WAS DECIDED AT THE OUTSET THAT TOP LEVEL TECHNICAL PERSONNEL FROM FRANKFORD ARSENAL WOULD BE PROVIDED TO AUGUMENT THE VARIOUS SURVEY TEAMS. WE ARE ADVISED THAT FRANKFORD ARSENAL HAD INTIMATE KNOWLEDGE OF THE RADAR SET AS A RESULT OF THEIR INVOLVEMENT IN THE RESEARCH AND DEVELOPMENT AS WELL AS PAST NONCOMPETITIVE PRODUCTION CONTRACTS. THESE SAME EXPERTS SERVED AS MEMBERS OF ALL THE TEAMS THAT CONDUCTED THE PREAWARD SURVEYS UNDER THIS PROCUREMENT AND WE ARE ADVISED THAT THEIR PARTICIPATION WAS ESSENTIAL TO ASSURE CONSISTENCY, DEPTH, AND QUALITY OF THE TECHNICAL REVIEW OF ALL THE FIRMS SURVEYED. ASPR APPENDIX K-203.1 (B) STATES THAT THE REPRESENTATIVES OF THE PURCHASING OFFICE SHALL PARTICIPATE IN THE PREAWARD SURVEYS AS DESIRED BY THE PURCHASING OFFICE AND THE RECORD BEFORE US INDICATES THAT THE PURCHASING OFFICE REQUESTED DCASD TO INCLUDE THEIR REPRESENTATIVES IN THE PREAWARD SURVEY EFFORTS.

THE RECORD SHOWS THAT ALTHOUGH REPUBLIC RECEIVED A FAVORABLE AWARD RECOMMENDATION FROM THE DCASD PREAWARD SURVEY REVIEW BOARD, THE RECOMMENDATION WAS MADE NOTWITHSTANDING NEGATIVE FINDINGS EXPRESSED BY THE FRANKFORD ARSENAL MEMBERS OF THE PREAWARD SURVEY TEAM. THE CONTRACTING OFFICER STATES THAT HE REVIEWED THE SURVEY REPORT AND OBTAINED COMMENTS FROM THE FRANKFORD ARSENAL TECHNICAL PARTICIPANTS. AFTER PERSONALLY REVIEWING THE CASE, THE CONTRACTING OFFICER STATES THAT HE DETERMINED REPUBLIC TO BE NONRESPONSIBLE SINCE REPUBLIC WAS CONSIDERED TO BE TECHNICALLY DEFICIENT IN AREAS DEEMED ESSENTIAL TO SUCCESSFUL AND TIMELY PERFORMANCE.

WHILE THE PREAWARD SURVEY CONDUCTED BY THE DCASD WAS FAVORABLE TO REPUBLIC, THE CONTRACTING OFFICER WAS UNDER NO OBLIGATION TO ACCEPT THE FINDINGS OF THE PREAWARD SURVEY TEAM AS CONCLUSIVE SINCE HE HAD OTHER COMPETENT INFORMATION BEARING ADVERSELY ON REPUBLIC'S RESPONSIBILITY. THERE IS NO REGULATORY REQUIREMENT THAT AN AWARD BE MADE TO A BIDDER SOLELY BECAUSE OF A FAVORABLE PREAWARD SURVEY. SEE B-164187, OCTOBER 25, 1968; CF. ASPR 1-905.4 (A).

IN DETERMINING THE VALIDITY OF THE CONTRACTING OFFICER'S FINDING THAT REPUBLIC WAS NOT A RESPONSIBLE OFFEROR, WE MUST LOOK TO THE INFORMATION AND DATA AVAILABLE TO AND RELIED UPON BY HIM. THE CONTRACTING OFFICER EXECUTED A WRITTEN DETERMINATION OF REPUBLIC'S NONRESPONSIBILITY ON FEBRUARY 17, 1969, WHICH STATES AS FOLLOWS:

"1. I HEREBY FIND THAT:

"A. PRE-AWARD SURVEY NUMBER DGPA-68-12-126 DATED 13 FEBRUARY 1969 WAS CONDUCTED BY DCASD-GARDEN CITY, NEW YORK, ASSISTED BY FRANKFORD ARSENAL TECHNICAL REPRESENTATIVES.

"B. THE FRANKFORD ARSENAL PARTICIPANTS SUBMITTED A REPORT ON THEIR FINDINGS TO DCASD-GARDEN CITY. THE REPORT DISCUSSED AREAS IN WHICH THE CONTRACTOR WAS FOUND TO BE TECHNICALLY DEFICIENT AND RECOMMENDED NO AWARD.

"C. NOTWITHSTANDING THE NEGATIVE REPORT OF THE FRANKFORD ARSENAL TECHNICAL PERSONNEL, THE PREAWARD SURVEY REVIEW BOARD AT DCASD-GARDEN CITY RECOMMENDED THE CONTRACTOR BE GRANTED COMPLETE AWARD. "D. BY MY REQUEST, THE FRANKFORD ARSENAL SENIOR INDUSTRIAL SPECIALIST, THE PROJECT ENGINEER AND THE ENGINEERING TECHNICIAN WHO PARTICIPATED AS TECHNICAL ADVISORS ON THE PRE-AWARD SURVEY REVIEWED THE REPORT SUBMITTED BY DCASD-GARDEN CITY. RESPONSE WAS FURNISHED BY DF DATED 17 FEBRUARY 1969, WHEREBY THE NEGATIVE FINDING PREVIOUSLY SUBMITTED TO DCASD-GARDEN CITY WAS AFFIRMED.

"2. I HAVE REVIEWED THE DCASD-GARDEN CITY PRE-AWARD SURVEY REPORT, OF WHICH THE FRANKFORD ARSENAL TECHNICAL REPORT FORMS A PART, AND THE FRANKFORD ARSENAL TECHNICAL REVIEW OF THE DCASD-GARDEN CITY REPORT. AS A RESULT OF MY REVIEW, I HEREBY DETERMINE THAT THE REQUIREMENTS OF ASPR 1- 903.1 AND 1-903.2 HAVE NOT BEEN MET, THEREFORE, REPUBLIC ELECTRONICS CORP., A SMALL BUSINESS CINCERN, IS NON-RESPONSIBLE FOR THE INSTANT PROCUREMENT. AN AFFIRMATIVE DETERMINATION CANNOT BE MADE.'

IT WAS THE OPINION OF THE FRANKFORD ARSENAL TEAM THAT IN ORDER TO PROPERLY COORDINATE PPE AND HARDWARE DELIVERY REQUIREMENTS AS SPECIFIED IN THE RFP, IT WAS NECESSARY THAT A POTENTIAL MANUFACTURER NOT ONLY BE FAMILIAR WITH VARIOUS ELECTRONIC PRODUCTION TECHNIQUES BUT ALSO BE FLUENTLY VERSED IN THE FIELD OF THE CURRENT STATE-OF-THE-ART RELATING TO COHERENT X-BAND, PULSE, DOPPLER RADARS. WITHOUT THIS UP-TO-DATE RADAR KNOWLEDGE, FROM A TECHNICAL STANDPOINT, THE PROPER DIRECTION AND ADHESION FOR THE NECESSARY PRELIMINARY PPE EFFORT COULD NOT BE ACCOMPLISHED. ARE ADVISED THAT TO START A PPE PROGRAM, AS SPECIFIED BY THE RFP, THE POTENTIAL CONTRACTOR SHOULD HAVE ON BOARD A SUFFICIENT TECHNICAL STAFF TO PROVIDE THE INITIAL TECHNICAL PROGRAM BASE LINE IMMEDIATELY UPON CONTRACT AWARD. IT WAS FOR THIS REASON THAT THE RFP INCLUDED, ON PAGE 39, VARIOUS TECHNICAL AND PRODUCTION CRITIQUE ITEMS AS TO WHICH ALL OFFERORS WERE ALERTED TO THE FACT THAT SUCH ITEMS WOULD BE REVIEWED IN DETAIL BY THE SURVEY TEAM.

OUR OFFICE HAS REVIEWED THE TRIP REPORT OF THE FRANKFORD ARSENAL MEMBERS OF THE SURVEY TEAM. THIS REPORT STATES IN DETAIL VARIOUS AREAS IN WHICH REPUBLIC WAS FOUND TO BE TECHNICALLY DEFICIENT. THE TRIP REPORT CONCLUDES BY STATING THAT REPUBLIC DID NOT UNDERSTAND THE ENGINEERING REQUIREMENTS FOR PPE; DID NOT DEMONSTRATE THE REQUIRED TECHNICAL CAPABILITY; PRODUCTION CAPABILITY; OR THE PURCHASING CAPABILITY DEMANDED BY THE RFP. WE HAVE ALSO REVIEWED THE FINDINGS OF THE DCASD REPRESENTATIVES AS WELL AS THE PREAWARD SURVEY REPORT AND WE NOTE THAT THERE ARE DIFFERENCES OF OPINION CONCERNING REPUBLIC'S RESPONSIBILITY. FOR EXAMPLE, THE RECORD INDICATES THAT AT THE TIME OF THE PREAWARD SURVEY, AN ATTEMPT WAS MADE TO QUESTION REPUBLIC CONCERNING THE ENGINEERING NOTE CHANGES TO THE TECHNICAL DATA PACKAGE. REPUBLIC INDICATED THAT THEY WERE NOT PREPARED TO DISCUSS THESE CHANGES IN DETAIL AT THAT TIME. HOWEVER, IT IS REPORTED THAT REPUBLIC STATED THAT NOTE CHANGES WERE CONSIDERED WHEN THEIR PROPOSAL WAS SUBMITTED BUT FELT IT WOULD NOT SIGNIFICANTLY ALTER THEIR ESTIMATE AND THAT THERE WAS ENOUGH CUSHION IN THE COST ESTIMATE TO COVER THESE CHANGES. THE DCASD REPRESENTATIVE ACCEPTED THE REPUBLIC STATEMENT THAT THERE WAS ENOUGH "CUSHION" TO COVER THE ENGINEERING NOTE CHANGES, WHEREAS THE FRANKFORD ARSENAL CONSIDERED THIS OMISSION BY REPUBLIC SIGNIFICANT SINCE IT REPRESENTED AN INADEQUATE ANALYSIS OF THE TECHNICAL DATA PACKAGE AND AFFECTS THE BILL OF MATERIAL AS WELL AS THE ENGINEERING TASKS TO BE ACCOMPLISHED UNDER THE PPE EFFORT. WE ARE ADVISED THAT THE COST IMPACT OF ONLY FOUR OF THE MATERIAL ITEMS COVERED BY THE ENGINEERING NOTES EXCEEDS $250,000.

ANY DETERMINATION AS TO REPUBLIC'S RESPONSIBILITY IS NECESSARILY A QUESTION OF FACT. IT IS THE RESPONSIBILITY OF OUR OFFICE TO INSURE THAT GOVERNMENT PROCUREMENTS ARE MADE IN ACCORDANCE WITH APPLICABLE LAW, AND THIS NECESSARILY INVOLVES REVIEW OF THE ADMINISTRATIVE DISCRETION TO THE EXTENT NECESSARY TO SEE THAT SUCH DISCRETION HAS BEEN EXERCISED WITHIN PROPER LIMITS. IT IS OUR DUTY TO DETERMINE FROM ALL THE FACTS AND CIRCUMSTANCES SURROUNDING THE PRESENT CONTROVERSY WHETHER THE CONTRACTING OFFICER'S DETERMINATION THAT REPUBLIC IS NOT RESPONSIBLE FOR PURPOSES OF THIS PROCUREMENT IS REASONABLY SUPPORTED BY THE RECORD. AS INDICATED ABOVE, WE HAVE ADOPTED THE GENERAL RULE THAT WE WILL NOT SUBSTITUTE OUR JUDGMENT FOR THAT OF THE CONTRACTING OFFICER, UNLESS IT IS SHOWN BY CONVINCING EVIDENCE THAT THE DETERMINATION WAS ARBITRARY, OR NOT BASED ON SUBSTANTIAL EVIDENCE. 43 COMP. GEN. 257, 258; 38 ID. 778.

IN YOUR LETTER OF AUGUST 13, 1969, YOU CONTEND THAT THE CONTRACTING OFFICER DID NOT REVIEW ALL OF THE INFORMATION AVAILABLE PRIOR TO HIS DECISION THAT REPUBLIC WAS NOT RESPONSIBLE. THIS CONTENTION APPEARS TO BE BASED ON THE FACT THAT THE CONTRACTING OFFICER DID NOT SEE REPUBLIC'S ,FACILITY AND CAPABILITY REVIEW.' THE CONTRACTING OFFICER ADVISES THAT ALTHOUGH THE "FACILITY AND CAPABILITY REVIEW" WAS FORWARDED TO FRANKFORD ARSENAL ALONG WITH THE PREAWARD SURVEY SUCH REVIEW WAS NOT EXAMINED BY HIM. HOWEVER, THE PREAWARD SURVEY, WHICH WAS CAREFULLY REVIEWED BY THE CONTRACTING OFFICER, COVERED ALL OF THE INPUT DOCUMENTATION AND THE FINDINGS IN THE PREAWARD REPORT TOOK INTO CONSIDERATION THE SUPPORTING DOCUMENTATIONS, INCLUDING THE "FACILITY AND CAPABILITY REVIEW.'

THE CONTRACTING OFFICER STATES THAT HE THOROUGHLY REVIEWED THE PREAWARD SURVEY REPORT INCLUDING THAT PORTION PREPARED BY THE FRANKFORD ARSENAL PARTICIPANTS. AFTER REVIEW AND BECAUSE OF THE CONFLICTING RECOMMENDATIONS, HE DIRECTED THAT A COMPLETE FURTHER REVIEW BE MADE BY THE FRANKFORD ARSENAL PARTICIPANTS OF REPUBLIC'S CAPABILITIES. HOWEVER, THAT SUBSEQUENT REVIEW DID NOT REVEAL ANY ADDITIONAL SIGNIFICANT INFORMATION NOT ALREADY CONSIDERED BY THEM IN THEIR INITIAL REPORT. THE REPUBLIC "FACILITY AND CAPABILITY REVIEW," WHICH WAS GIVEN TO THE PREAWARD SURVEY TEAM, WAS IN THE POSSESSION OF THE FRANKFORD ARSENAL PARTICIPANTS DURING THEIR INITIAL EVALUATION AND THEIR SUBSEQUENT REVIEW. WE ARE ADVISED THAT THIS REVIEW WAS USED BY THE PREAWARD SURVEY TEAM IN CONDUCTING ITS INVESTIGATION OF THE CAPABILITY OF REPUBLIC, AND THAT EVEN THOUGH SUCH REVIEW MAKES OUT A GOOD CASE FOR REPUBLIC'S RESPONSIBILITY, IT WAS MEASURED AGAINST THE INFORMATION AND RESULTS OBTAINED IN THE ON-THE-SPOT PREAWARD SURVEY.

THE FRANKFORD ARSENAL PERSONNEL MADE A FACT-FINDING INVESTIGATION, AND, IN SPITE OF THE REPUBLIC REVIEW, FOUND IT WANTING IN CAPABILITY. FOR EXAMPLE, IN SECTION "O" OF SUCH REVIEW A STATEMENT IS MADE CONCERNING THE EXPERIENCE OF REPUBLIC'S ENGINEERING PERSONNEL. IT IS REPORTED THAT FRANKFORD ARSENAL PERSONNEL WAS AWARE OF THAT SECTION AS EVIDENCED BY THE FOLLOWING STATEMENT FURNISHED BY THE PROCUREMENT AGENCY:

"THE CONTRACTOR'S EXPERIENCE IN -X- BAND RADAR AND DIGITAL FIELDS WAS CONSIDERED TO BE BELOW THAT REQUIRED TO SATISFACTORILY COMPLY WITH THE CONDITIONS OF THE RFQ. THE COMPANY'S PRIMARY EXPERIENCE WAS IN LOW FREQUENCY TACTICAL AIR COMMUNICATION AND NAVIGATION EQUIPMENT. WHAT EXPERIENCE THE COMPANY PERSONNEL HAD IN X BAND RADAR WAS ACHIEVED AT OTHER COMMERCIAL FACILITIES. FURTHER QUESTIONING REVEALED THAT THOSE PEOPLE IN THE COMPANY WHO HAD HAD THIS PAST DIGITAL AND RADAR EXPERIENCE DID NOT PARTICIPATE IN THE PREPARATION ON THE CONTRACTOR'S BID.'

AGAIN, IT IS OBVIOUS THAT SECTIONS "K" TO "N" OF THE REPUBLIC REVIEW WERE USED BY THE FRANKFORD ARSENAL PARTICIPANTS IN CONDUCTING THEIR PART OF THE SURVEY. ONLY BY SUCH ACTION COULD THEY HAVE ARRIVED AT THE FOLLOWING CONCLUSIONS REPORTED TO US: "/1) THE CONTRACTOR STATED THAT HIS PLANNING ENVISIONED APPROXIMATELY 5-1/2 MAN YEARS OF EFFORT. THIS WAS TO COVER THE PRE-PRODUCTION EVALUATION, SUPPORT MANUFACTURING PURCHASING AND TESTING, DESIGN AND FABRICATE ALL THE TEST EQUIPMENT AND MANAGE THE OVERALL PROGRAM. IN THIS LIGHT EACH OF THE ABOVE WERE THROUGHLY DISCUSSED TO EVALUATE THE CONTRACTOR'S COMPREHENSION OF THE JOB TO BE DONE.''2) PRE- PRODUCTION EVALUATION: THE CONTRACTOR GROSSLY UNDERESTIMATED THE JOB TO BE DONE IN THIS AREA AS EVIDENCED BY THE FACT THAT HE STATED THAT 300 HOURS OF ELECTRICAL ENGINEERING AND 1900 HOURS OF MECHANICAL ENGINEERING TIME WOULD BE UTILIZED IN THIS EFFORT. ASSIGNMENT OF THESE FEW HOURS IS NOT ONLY AN UNDERESTIMATE OF THE JOB TO BE DONE AS REQUIRED BY THE RFQ BUT, ALSO EXHIBIT A LACK OF UNDERSTANDING OF THE REQUIREMENTS FOR THE PPE EFFORT. THE RFQ PARTICULARLY SPECIFIES HOW THE TECHNICAL DATA PACKAGE MUST BE COMPLETELY ANALYZED AND REVIEWED, NOT ONLY INITIALLY, BUT ALSO DURING THE ENTIRE TENURE OF THE CONTRACT. TO STATE, FOR EXAMPLE, THAT 300 ELECTRICAL ENGINEERING HOURS WAS ALLOCATED FOR THE REVIEW OF THE RADAR SET IS INDICATIVE OF THE FACT THAT THE CONTRACTOR DID NOT HAVE AN UNDERSTANDING OF THE TECHNICAL FINESSE REQUIRED TO PERFORM TO THE PPE REQUIREMENT.''3) ENG. SUPPORT: THE MAJOR AREAS DISCUSSED WERE TEST AND PURCHASING. PURCHASING WILL BE COVERED IN A SUBSEQUENT PARAGRAPH OF THIS REPORT. LENGTHY DISCUSSIONS FOLLOWED IN AN ATTEMPT TO EVALUATE THE CONTRACTOR'S UNDERSTANDING OF THE TECHNICAL REQUIREMENTS FOR PRODUCTION TESTING OF 25, AN/VPS2 UNITS PER MONTH. HE STATED THAT HE HAD PROVIDED FOR 10 SPECIFIC TEST STATIONS FOR ALL UNIT AND SUB-UNIT TESTS AND OTHER STATIONS FOR ANTENNA TEST, SERVO TEST AND SYSTEM TEST. DETAILED DISCUSSIONS RELATIVE TO THE SPECIFICS OF THE FINAL TEST, TRANSMITTER RECEIVER (UNIT NO. 2) AND THE FINE PRINTED CIRCUIT BOARD (UNIT 4A22) SPECIFICATIONS FOUND THAT THE CONTRACTOR HAD NOT UNDERSTOOD THE REAL TECHNIQUES REQUIRED TO ADEQUATELY TEST THESE UNITS IN THE REQUIRED PRODUCTION QUANTITIES. IT BECAME EVIDENT THAT HE MERELY LISTED THE STANDARD TEST EQUIPMENT CALLED OUT IN THE GOVERNMENT SPECIFICATIONS AND HAD NO IDEAS OF HOW THIS EQUIPMENT WOULD BE EMPLOYED AT HIS -SPECIFIC- STATIONS. THE PERSONNEL AT THE CONFERENCE EMPLOYED DELAYING DISCUSSIONS TO ALLOW OTHER ENGINEERS TO READ THE SPECS, THEN THEY IN TURN WOULD DISCUSS THE REQUIREMENTS IN GENERAL TERMS. IN THE CASE OF THE FINAL SYSTEM TESTER AFTER TWO ATTEMPTS TO DEMONSTRATE THEIR KNOWLEDGE, THE CONTRACTOR'S SPOKESMAN HAD TO HUDDLE WITH MR. SELBIGER WHO ATTENDED THESE MEETINGS AS A CONSULTANT. (HE DID NOT PARTICIPATE IN THE BID PREPARATION). IN GENERAL, THE CONTRACTOR COULD ONLY COME UP WITH TECHNICAL ANSWERS AFTER THE SURVEY TEAM POINTED OUT THE MISTAKES IN THEIR OFFERED APPROACHES. AS EVIDENCE OF THE CONTRACTOR'S LACK OF KNOWLEDGE HIS ORIGINAL SYSTEM TEST APPROACH WHEN QUESTIONED WAS OFFERED AS A -BLACK BOX- WHICH COULD NOT BE EXPLAINED IN ANY DETAIL DURING THE INITIAL QUESTIONING PERIOD. WHEN PERMITTED TO REVIEW THE FINAL RADAR SYSTEM SPECIFICATION, HE INDICATED THAT THIS -BLACK BOX- WOULD HAVE A BUILT IN DELAY LINE. WHEN ASKED IF SUCH A DELAY LINE EXISTED FOR A 4,000 METER TARGET, HE COULD NOT OFFER AN EXAMPLE. THE DISCUSSION THEN BROUGHT IN THE FACT THAT AN EXISTING BRIDGE COULD BE USED FOR THE FAR DISTANCE TARGET. WHEN FURTHER QUESTIONED ABOUT THIS BRIDGE, IT WAS STATED THAT THE BRIDGE WAS APPROXIMATELY 10 MILES AWAY, AND THE SURVEY TEAM POINTED OUT THAT THE REFLECTIVE SURFACE OF THE BRIDGE COULD NOT BE PREDETERMINED FOR THE REQUIREMENTS OF THE RADAR SYSTEM TESTER. THE CONTRACTOR FINALLY CONCEDED THAT HE WOULD HAVE TO HAVE A TARGET LOCATED AT THE REQUIRED DISTANCE AWAY FROM THE RADAR BUT COULD NOT GIVE ANY DETAILS AS TO HOW THIS WOULD BE COMPLISHED.''4) IN THE CASE OF PRINTED CIRCUIT BOARD AND RADAR UNIT TEST STATIONS, CONTRACTOR STATEMENTS IN THESE AREAS INDICATED THAT HE WOULD FOLLOW THE SPECIFICATIONS COMPLETELY. WHEN IT WAS STATED BY THE SURVEY TEAM THAT THE TEST SPECIFICATIONS WERE TOTALLY LACKING IN SPECIFIC AREAS RELATED TO SPECIAL TEST EQUIPMENT, THE CONTRACTOR INDICATED THAT HE WOULD DESIGN AND FABRICATE WHAT NECESSARY EQUIPMENT WOULD BE REQUIRED. THE CONTRACTOR'S ALLOCATION OF ENGINEERING HOURS TO DESIGN THE REQUIRED SPECIFIC TEST EQUIPMENT WAS GROSSLY UNDERESTIMATED FOR THIS TASK.''5) THE CONTRACTOR'S EXPERIENCE IN -X- BAND RADAR AND DIGITAL FIELDS WAS CONSIDERED TO BE BELOW THAT REQUIRED TO SATISFACTORILY COMPLY WITH THE CONDITIONS OF THE RFQ. THE COMPANY'S PRIMARY EXPERIENCE WAS IN LOW FREQUENCY TACTICAL AIR COMMUNICATION AND NAVIGATION EQUIPMENT. WHAT EXPERIENCE THE COMPANY PERSONNEL HAD IN X BAND RADAR WAS ACHIEVED AT OTHER COMMERCIAL FACILITIES. FURTHER QUESTIONING REVEALED THAT THOSE PEOPLE IN THE COMPANY WHO HAD HAD THIS PAST DIGITAL AND RADAR EXPERIENCE DID NOT PARTICIPATE IN THE PREPARATION ON THE CONTRACTOR'S BID.''6) THE COMPANY HAD SCREEN ROOMS NECESSARY TO PERFORM VARIOUS RFI TESTS. HOWEVER, THEY MISSED THE FACT THAT THE RFQ INDICATED THAT BREEZE CABLES FOR RFI SHIELDING OF THE RADAR WERE SPECIFIED. THEIR COMPANY'S REPRESENTATIVES ATTENDED THE BIDDER'S CONFERENCE WHEN THE ENGINEERING CHANGE ASSOCIATED WITH THE BREEZE CABLES WAS DISCUSSED. EVEN WITH THE INFORMATION AVAILABLE TO THE COMPANY, THEIR ORIGINAL QUOTE DID NOT ACCOMMODATE THE REQUIREMENT FOR RFI SHIELDED CABLES (BREEZE). ADDITIONALLY, IN THE FABRICATION OF THE MOTHER BOARD FOR THE RANGE COMPUTER ASSEMBLY, THE CONTRACTOR HAD CONTEMPLATED HAND WIRING THE 1200 WIRES THAT WERE SPECIFIED IN THE UNIT. TO CONSIDER HAND WIRING IN LIEU OF MACHINE PROGRAM WIRING ILLUSTRATED ANOTHER LACK OF UNDERSTANDING OF THE REQUIREMENTS FOR FAST DIGITAL SWITCHING ESPECIALLY IN THE AREAS OF INDUCTIVE AND CAPACITIVE INTERFACE AFFECTS.'

WE DO NOT AGREE WITH YOUR CONTENTION THAT THE CONTRACTING OFFICER HAS NOW CHANGED HIS POSITION WITH RESPECT TO THE AMOUNT OF PLANT SPACE THAT REPUBLIC HAS AT ITS HUNTINGTON PLANT. THE CONTRACTING OFFICER'S POSITION IS AND HAS REMAINED THE SAME. IT IS STIPULATED THAT THE HUNTINGTON PLANT OCCUPIES AN AREA OF 34,000 SQUARE FEET. HOWEVER, THE FRANKFORD ARSENAL PARTICIPANTS APPROXIMATED THAT ONLY 24,000 SQUARE FEET OF THE TOTAL SPACE COULD BE UTILIZED FOR THIS PROCUREMENT. WE NOTE THAT THE DCASD PREAWARD SURVEY REPORT INDICATES THAT ONLY 1,000 SQUARE FEET OF MANUFACTURING SPACE AND 1,000 SQUARE FEET OF STORAGE SPACE WERE FOUND TO BE AVAILABLE FOR THIS PROCUREMENT. WE HAVE BEEN ADVISED THAT ELECTROMAGNETIC TECHNOLOGY CORPORATION ALLOCATED 51,000 SQUARE FEET SOLELY FOR MANUFACTURING, UNLIKE REPUBLIC'S 34,000 SQUARE FEET WHICH INCLUDES AREAS FOR ENGINEERING, CONTRACT ADMINISTRATION, ACCOUNTING, PERSONNEL, PURCHASING, EXECUTIVE ADMINISTRATION, ETC. WITH RESPECT TO REPUBLIC'S ESTIMATES OF THE NUMBER OF MAN-HOURS ALLOCATED TO VARIOUS ENGINEERING AND OPERATION CATEGORIES, WE NOTE THAT THERE ARE NO DIFFERENCES BETWEEN THE HOURS WHICH YOU REFER TO AND THOSE LISTED IN THE ORIGINAL FRANKFORD ARSENAL TRIP REPORT. THE 5-1/2 MAN YEARS OF TOTAL ESTIMATED ENGINEERING EFFORT WAS FURNISHED BY REPUBLIC DURING THE SURVEY. THE BREAKDOWN OF ENGINEERING AND OPERATIONS TIME CONTAINED IN THE FRANKFORD ARSENAL TRIP REPORT IS SET OUT BELOW:

A. ENGINEERING:

(1) ENG. E. E. 5,360 M/HRS. 2.6 M/YRS.

(2) ENG. TECH. 3,440 M/HRS. 1.7 M/YRS.

(3) ENG. MECH. 1,520 M/HRS. .76 M/YRS.

(4) RELIABILITY 900 M/HRS. .45 M/YRS.

TOTAL: 11,220 M/HRS.

B. OPERATIONS:

(1) PRODUCTION 196,080 M/HRS. 98.0 M/YRS.

(2) METHODS 900 M/HRS. .45 M/YRS.

(3) INSPECTION 16,360 M/HRS. 8.2 M/YRS.

(4) TEST 26,240 M/HRS. 13.1 M/YRS.

(5) DES. AND DRAFTING 5,200 M/HRS. 2.6 M/YRS.

TOTAL: 244,780 M/HRS.

IT IS REPORTED THAT REPUBLIC SUBMITTED A DD FORM 633 "CONTRACT PRICING PROPOSAL" WHICH INDICATED ENGINEERING LABOR COST IN THE TOTAL AMOUNT OF $51,925. BASED ON THE 5-1/2 MAN-YEARS OF EFFORT (11,220 MAN HOURS), THE AVERAGE ENGINEERING HOURLY RATE WOULD BE LESS THAN $5. HOWEVER, REPUBLIC CONTENDS THAT 12.3 MAN-YEARS OF EFFORT WERE INTENDED RATHER THAN 5-1/2 MAN -YEARS OF ENGINEERING EFFORT. REPUBLIC, DURING THE COURSE OF THE SURVEY, NEVER SUBMITTED A 12.3 MAN-YEARS' FIGURE RELATING TO ENGINEERING EFFORT. WE ARE ADVISED THAT IF THIS FIGURE HAD BEEN SUBMITTED, IT WOULD HAVE BEEN RELATED TO THE $51,925 AMOUNT SHOWN ON THE DD FORM 633 AND, AS A RESULT, THE 12.3 MAN-YEARS WOULD HAVE INDICATED AN AVERAGE HOURLY RATE FOR ENGINEERING LABOR OF APPROXIMATELY $2, A RATE WHICH IS REPORTED TO BE UNREALISTIC FOR THIS LABOR CATEGORY. THE RECORD INDICATES THAT OUT OF THE TOTAL HOURS FOR THE ENTIRE EFFORT, REPUBLIC ALLOCATED ONLY 300 ELECTRICAL AND 1,900 MECHANICAL ENGINEERING HOURS TO THE PPE EFFORT. REPUBLIC NOW CLAIMS THAT ALL OF THE ENGINEERING HOURS LISTED WERE TO BE USED IN THE PPE PHASE OF THE CONTRACT, WHICH WOULD LEAVE NO ENGINEERING HOURS FOR THE PRODUCTION PHASE OF THE CONTRACT. WE ARE ADVISED THAT IF THIS POSITION WAS ESTABLISHED AT THE TIME OF THE SURVEY, THE SURVEY TEAM WOULD HAVE SERIOUSLY QUESTIONED THE FAILURE TO ALLOCATE ANY ENGINEERING HOURS TO THE PRODUCTION PHASE. SINCE REPUBLIC STATED THAT 300 ENGINEERING HOURS WERE ALLOCATED TO THE PPE PHASE, THIS IS THE FIGURE THAT WAS USED BY THE SURVEY TEAM IN ITS EVALUATION. WITH RESPECT TO THE 1,900 HOURS OF MECHNICAL ENGINEERING VERSUS THE 1,520 LISTED IN THE CONTRACTING OFFICER'S COMMENTS, THE TEAM WAS ORALLY INFORMED BY REPUBLIC DURING THE SURVEY THAT THE 1,900 HOURS WOULD BE USED AND THE TEAM ACCEPTED THE 1,900 FIGURE SINCE THE DIFFERENCE OF 380 HOURS WAS DEEMED INSIGNIFICANT.

THE CONTRACTING OFFICER STATES THAT AFTER REVIEWING THE PREAWARD SURVEY REPORT, HE DETERMINED REPUBLIC TO BE NONRESPONSIBLE IN VIEW OF THEIR INABILITY TO POSITIVELY INDICATE COMPLETE UNDERSTANDING OF THE TECHNICAL REQUIREMENTS AS REQUIRED BY ASPR. IN REACHING THIS DECISION, THE CONTRACTING OFFICER UNDOUBTEDLY GAVE MORE WEIGHT TO THE NEGATIVE FINDINGS OF THE FRANKFORD ARSENAL PARTICIPANTS. HOWEVER, WE CANNOT SAY THAT THE CONTRACTING OFFICER ACTED ARBITRARILY OR FAILED TO BASE HIS DECISION ON SUBSTANTIAL EVIDENCE. THE TECHNICAL PERSONNEL OF FRANKFORD ARSENAL WHO TOOK PART IN THE PREAWARD SURVEY WERE INTIMATELY FAMILIAR WITH THIS EXTREMELY COMPLEX ELECTRONIC MATERIAL AS THEY HAD BEEN ACQUAINTED WITH THIS ITEM FROM RESEARCH AND DEVELOPMENT ON THROUGH PRODUCTION BY A PRIOR PRODUCER. ALSO, IT IS A STANDARD POLICY TO SEND OUT TECHNICAL PERSONNEL FROM FRANKFORD ARSENAL TO ASSIST ON PREAWARD SURVEYS OF COMPLEX PROCUREMENTS AND THESE PERSONNEL HAVE PERFORMED IN THIS CAPACITY ON MANY OCCASIONS. THERE IS NO PROVISION OF ASPR OR OTHER AUTHORITY WHICH REQUIRES A CONTRACTING OFFICER TO ACCEPT THE RECOMMENDATION OF A PREAWARD SURVEY TEAM AS AGAINST OTHER COMPETENT TECHNICAL ADVICE TO THE CONTRARY. IN THIS CASE, THE CONTRACTING OFFICER SAW FIT TO OVERRIDE THE DCASD RECOMMENDATION AND RELY UPON THE EXPERTS HE HAD AT HIS DISPOSAL. THIS RELIANCE WAS PREDICATED ON THE FACT THAT THESE TECHNICAL PERSONNEL HAD MUCH MORE EXPERIENCE, INTIMATE KNOWLEDGE AND EXPERTISE WITH RESPECT TO THE END ITEM THAN THE DCASD PERSONNEL. IT WAS ON THAT BASIS HE SAW FIT TO ACCEPT THEIR JUDGMENT IN LIEU OF THE DCASD REPORT. SEE B-165084; B- 165691, APRIL 11, 1969, 48 COMP. GEN. -----.

IN YOUR LETTER OF JUNE 18, 1969, YOU STATE THAT TO DENY THAT REPUBLIC WAS TREATED UNFAIRLY IS TO OVERLOOK THE GOVERNMENT PROCUREMENT SYSTEM WHEREBY A SMALL BUSINESS HAS THE RIGHT TO APPLY FOR A CERTIFICATE OF COMPETENCY FROM THE SMALL BUSINESS ADMINISTRATION (SBA) WHEN IT HAS BEEN DETERMINED TO BE NONRESPONSIBLE. ASPR 1-705.4 PROVIDES THAT WHEN THE BID OR 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 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. YOU QUESTION WHETHER AN URGENT REQUIREMENT ACTUALLY EXISTED.

THE FACTS OF RECORD INDICATE THAT ON FEBRUARY 14, 1969, THE CONTRACTING OFFICER EXECUTED A CERTIFICATE OF URGENCY WHICH STATES, IN PERTINENT PART, AS FOLLOWS:

"2. ALL LINE ITEM REQUIREMENTS BEAR PRIORITY -02-, IN SUPPORT OF SEA WITH DELIVERIES, AS SPECIFIED IN THE SOLICITATION, SPANNING THE PERIOD DECEMBER 1969 THROUGH MARCH 1971, BASED ON AWARD 20 FEBRUARY 1969. THE SOLICITATION CLOSED 10 DECEMBER 1968 AND PRE-AWARD SURVEYS OF THE POTENTIAL CONTRACTORS WERE COMPLETED 7 FEBRUARY 1969. SEVERAL DETERMINATIONS OF NON-RESPONSIBILITY HAVE BEEN MADE INVOLVING SMALL BUSINESS CONCERNS.

"3. BY MESSAGE NUMBER 00957 DATED 5 FEBRUARY 1969, THE OFFICE OF THE ASSISTANT PROJECT MANAGER FOR THE VULCAN AIR DEFENSE SYSTEM (AMSWE VADS), U.S. ARMY WEAPONS COMMAND, ROCK ISLAND, ILLINOIS WAS SOLICITED TO PROVIDE DATA RELATIVE TO PROGRAM IMPACT SHOULD SHIPPAGE OF THE DELIVERY SCHEDULE OF THE SOLICITATION BE INCURRED. BY MESSAGE RI 3526 DATED 11 FEBRUARY 1969, AMSWE-VADS ADVISED THAT DELAY IN AWARD AND CONSEQUENT SHIPPAGE IN DELIVERIES COULD NOT BE TOLERATED AND MANDATED THAT DELIVERIES BE MET AS REQUIRED BY THE SOLICITATION IN ORDER TO PROVIDE THE MINIMUM HARDWARE QUANTITIES NECESSARY TO MEET THE VULCAN ACTIVATION AND DEPLOYMENT DATES AS DIRECTED BY DEPARTMENT OF THE ARMY.

"4. BASED ON THE FOREGOING, AND PURSUANT TO ASPR 1-705.4 (C) (IV), I HEREBY CERTIFY THAT AWARD OF THE ABOVE MENTIONED REQUIREMENTS MUST BE MADE WITHOUT THE DELAY INCIDENT TO REFERRAL OF A DETERMINATION OF NONRESPONSIBILITY FOR A SMALL BUSINESS CONCERN TO THE SMALL BUSINESS ADMINISTRATION FOR CERTIFICATE OF COMPETENCY CONSIDERATION.' BY LETTER DATED FEBRUARY 20, 1969, THE CONTRACTING OFFICER NOTIFIED SBA OF HIS URGENCY DETERMINATION.

WHILE THE URGENCY OF THE PROCUREMENT WAS REVALIDATED AS INDICATED ABOVE, SUCH ACTION WAS TAKEN IN ACCORDANCE WITH ESTABLISHED PROCUREMENT PROCEDURES. THE PURPOSE OF THE REVALIDATION WAS TO ASSURE THAT THE ORIGINAL URGENCY REQUIREMENT PLACED ON THE PROCUREMENT AT ITS INCEPTION STILL PERSISTED AT THE TIME THE CONTRACTING OFFICER EXECUTED HIS CERTIFICATE OF URGENCY. ALTHOUGH YOU CONTEND THAT THE DEPARTMENT OF THE ARMY HAS NOT OFFERED ANY PROOF THAT AN URGENT REQUIREMENT EXISTED, OUR OFFICE HAS BEEN FURNISHED WITH DOCUMENTS FROM THE PROCURING AGENCY WHICH ESTABLISH THE URGENCY OF THIS PROCUREMENT. WE FIND NO FACTUAL BASIS TO QUESTION THE URGENCY DETERMINATION.

YOU CONTEND THAT THE CONTRACTING OFFICER DID NOT GIVE A SATISFACTORY EXPLANATION AS TO WHY HE COULD NOT WAIT 10 TO 15 DAYS OR EVEN 21 CALENDAR DAYS FOR SBA TO EXERCISE ITS CERTIFICATE OF COMPETENCY AUTHORITY IN VIEW OF THE FACT THAT THE RFP PROVIDED FOR A LEAD TIME OF 12 MONTHS FOR DELIVERY OF THE INITIAL SAMPLE. THE EXPLANATION LIES IN ASPR 1-705.4 (C) WHICH PROVIDES IN PERTINENT PART AS FOLLOWS: "CONCURRENT REFERRALS OF TWO OR MORE BIDS OR PROPOSALS, REJECTED BECAUSE OF LACK OF CAPACITY OR CREDIT FOR A PROPOSED AWARD, SHALL NOT BE MADE TO SBA BY THE CONTRACTING OFFICER.' UNDER THIS REQUIREMENT, REFERRAL OF THE MATTER OF REPUBLIC'S NONRESPONSIBILITY TO SBA WOULD HAVE HAD TO FOLLOW TWO OTHER LOWER PROPOSERS WHO WERE ALSO SMALL BUSINESS FIRMS. THESE SUCCESSIVE SUBMITTALS TO SBA WOULD HAVE RESULTED IN DELAYS CONSIDERABLY IN EXCESS OF 21 CALENDAR DAYS.

ALTHOUGH YOU CONTEND THAT THE GOVERNMENT WOULD HAVE SAVED $749,532 BY AWARDING THE CONTRACT TO REPUBLIC, WE DRAW YOUR ATTENTION TO ASPR 1 902 WHICH PROVIDES IN PERTINENT PART AS FOLLOWS:

"* * * THE CONTRACTING OFFICER SHALL MAKE A DETERMINATION OF NONRESPONSIBILITY IF, AFTER COMPLIANCE WITH 1-905 AND 1-906, THE INFORMATION THUS OBTAINED DOES NOT INDICATE CLEARLY THAT THE PROSPECTIVE CONTRACTOR IS RESPONSIBLE. * * * DOUBT AS TO PRODUCTIVE CAPACITY OR FINANCIAL STRENGTH WHICH CANNOT BE RESOLVED AFFIRMATIVELY SHALL REQUIRE A DETERMINATION OF NONRESPONSIBILITY.'

UNDER THIS REGULATION, THE BURDEN IS ON THE PROSPECTIVE CONTRACTOR TO ESTABLISH AFFIRMATIVELY ITS RESPONSIBILITY AND, IF NECESSARY, THAT OF ITS PROPOSED SUBCONTRACTORS, AND THE CONTRACTING OFFICER, IN THE EVENT OF DOUBT CONCERNING REPUBLIC'S PRODUCTIVE CAPACITY, WAS REQUIRED BY THE REGULATION TO ISSUE A DETERMINATION OF NONRESPONSIBILITY.

SINCE THE CONTRACTING OFFICER DETERMINED THAT REPUBLIC WAS NOT RESPONSIBLE FOR PURPOSES OF THIS PROCUREMENT, HE WAS UNDER A DUTY NOT TO MAKE AN AWARD TO REPUBLIC EVEN THOUGH ITS PRICE WAS LOWER THAN THAT OF ELECTROMAGNETIC TECHNOLOGY CORPORATION.

WE DO NOT AGREE WITH YOUR CONTENTION THAT THE FACTS IN OUR DECISION REPORTED IN 45 COMP. GEN. 4 ARE SIMILAR TO THE FACTS IN THE INSTANT PROTEST AND THAT THE PRINCIPLES STATED THEREIN SHOULD BE FOLLOWED. THAT CASE, THE CONTRACTING OFFICER DID NOT HAVE BEFORE HIM ANY CONFLICT OF SURVEYS, INFORMATION, OR DATA ON WHICH TO BASE HIS DECISION CONCERNING THE BIDDER'S RESPONSIBILITY, WHEREAS THE CONTRACTING OFFICER IN THE PRESENT CASE WAS REQUIRED TO MAKE A DETERMINATION CONCERNING REPUBLIC'S RESPONSIBILITY IN THE FACE OF CONFLICTING REPORTS FROM DCASD AND FRANKFORD ARSENAL. HOWEVER, 45 COMP. GEN. 4, 10, ALSO HELD THAT WHERE THERE ARE CONFLICTING SURVEYS AS TO THE QUESTION OF RESPONSIBILITY, AND OTHER FACTUAL INFORMATION AND DATA AVAILABLE, IT IS THE PREROGATIVE OF THE CONTRACTING OFFICER TO CONSIDER AND WEIGH ALL THESE EVIDENTIARY DATA AND TO MAKE THE DETERMINATION REQUIRED BY THE APPLICATION OF HIS OWN BEST JUDGMENT THERETO. THIS RATIONALE IS APPLICABLE TO THE FACTS OF THE INSTANT CASE.