B-166562, MAY 28, 1969

B-166562: May 28, 1969

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INC.: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF MARCH 28 AND LETTERS OF MARCH 31 AND APRIL 30. THE REQUEST WAS ISSUED ON NOVEMBER 4. NEGOTIATION OF THE PROCUREMENT WAS AUTHORIZED UNDER THE PUBLIC EXIGENCY EXCEPTION IN 10 U.S.C. 2304 (A) (2). SIX OFFERS WERE RECEIVED IN RESPONSE TO THE REQUEST FOR PROPOSALS. WERE OFFERS OF ALTERNATE TRUCKS WHICH WERE DETERMINED TO BE NOT ACCEPTABLE. THE NEXT LOW PROPOSAL OFFERING TO FURNISH A TRUCK IN ACCORDANCE WITH THE SPECIFICATIONS WAS RECEIVED FROM YOUR FIRM. FOUR ROUNDS OF NEGOTIATIONS WERE CONDUCTED WITH YOUR FIRM DURING THE PERIOD OF JANUARY 17. PERFORMED THE SURVEY AND FOUND THAT YOUR FIRM DID NOT HAVE THE TECHNICAL CAPABILITY. IT WAS FOUND THAT THE FINANCIAL CAPABILITY OF YOUR FIRM WAS DEPENDENT UPON THE INCLUSION OF PROGRESS PAYMENTS IN THE CONTRACT.

B-166562, MAY 28, 1969

TO BOSTON PNEUMATICS, INC.:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF MARCH 28 AND LETTERS OF MARCH 31 AND APRIL 30, 1969, FROM YOUR ATTORNEY, PROTESTING AGAINST THE AWARD OF A CONTRACT TO ANY OTHER FIRM UNDER REQUEST FOR PROPOSALS NO. DSA- 400-69-R-2157, ISSUED BY THE DEFENSE GENERAL SUPPLY CENTER (DGSC), RICHMOND, VIRGINIA.

THE REQUEST WAS ISSUED ON NOVEMBER 4, 1968, UNDER AN URGENT PRIORITY DESIGNATION OF 02 FOR 150 ROUGH TERRAIN, FORKLIFT TRUCKS OF 10,000 POUNDS CAPACITY TO BE MADE IN ACCORDANCE WITH MIL-T-0021864C/ME) AND DRAWING DL13212E5400, AND FOR THE SUPPORTING CONTRACT DATA REQUIREMENTS, AND SCHEDULED A CLOSING DATE OF DECEMBER 4, 1968. AMENDMENTS 1, 2, 3, AND 4 TO THE REQUEST ADDED PACKAGING INSTRUCTIONS, CORRECTED DIMENSIONS ON THE DRAWINGS, AND EXTENDED THE CLOSING DATE FOR THE RECEIPT OF INITIAL OFFERS TO JANUARY 17, 1969. NEGOTIATION OF THE PROCUREMENT WAS AUTHORIZED UNDER THE PUBLIC EXIGENCY EXCEPTION IN 10 U.S.C. 2304 (A) (2).

SIX OFFERS WERE RECEIVED IN RESPONSE TO THE REQUEST FOR PROPOSALS. THE TWO LOW OFFERS, THAT OF THE GENERAL MOTORS CORPORATION, EARTHMOVING EQUIPMENT DIVISION, AND THAT OF ALLIS-CHALMERS MANUFACTURING, INC., WERE OFFERS OF ALTERNATE TRUCKS WHICH WERE DETERMINED TO BE NOT ACCEPTABLE. THE NEXT LOW PROPOSAL OFFERING TO FURNISH A TRUCK IN ACCORDANCE WITH THE SPECIFICATIONS WAS RECEIVED FROM YOUR FIRM, A SMALL BUSINESS CONCERN, AT A TOTAL EVALUATED PRICE OF $5,468,946.60. FOUR ROUNDS OF NEGOTIATIONS WERE CONDUCTED WITH YOUR FIRM DURING THE PERIOD OF JANUARY 17, 1969, TO MARCH 19, 1969. YOUR FIRM REMAINED THE LOW OFFEROR THROUGHOUT THE NEGOTIATIONS WITH A FINAL EVALUATED PRICE OF $5,399,545.88. DURING THE NEGOTIATION PROCESS, YOUR FIRM SUBMITTED, AS ITS FINAL OFFER, A PRICE IN THE TOTAL AMOUNT OF $5,328,771.60.

THE CONTRACTING OFFICER INITIATED A PREAWARD SURVEY OF YOUR FIRM ON JANUARY 22, 1969, TO DETERMINE ITS CAPABILITY TO PERFORM THE CONTRACT. DEFENSE CONTRACT ADMINISTRATION SERVICES DIVISION (DCASD), BALTIMORE, MARYLAND, PERFORMED THE SURVEY AND FOUND THAT YOUR FIRM DID NOT HAVE THE TECHNICAL CAPABILITY, PRODUCTION CAPABILITY, PLANT FACILITIES AND EQUIPMENT, PURCHASING AND SUBCONTRACTING SYSTEMS, TRANSPORTATION AND PACKAGING ARRANGEMENTS, AND LABOR RESOURCES TO SUCCESSFULLY PERFORM THE PROSPECTIVE CONTRACT. IN ADDITION, IT WAS FOUND THAT THE FINANCIAL CAPABILITY OF YOUR FIRM WAS DEPENDENT UPON THE INCLUSION OF PROGRESS PAYMENTS IN THE CONTRACT, BUT THAT IT LACKED AN ACCEPTABLE ACCOUNTING SYSTEM NECESSARY FOR THE INCLUSION OF PROGRESS PAYMENTS. THE SURVEY STATED THAT YOUR FIRM INTENDED TO SUBCONTRACT THE MANUFACTURING OF ALL PARTS OF THE TRUCK AND TO USE THE BALTIMORE (COLLEGE PARK), MARYLAND, FACILITY LISTED AS THE PRODUCTION FACILITY IN YOUR PROPOSAL AS AN ASSEMBLY PLANT ONLY. YOUR BID LISTED NO SUBCONTRACTING FACILITY, HOWEVER, AND THE SURVEY STATED THAT YOUR FIRM HAD OBTAINED NO QUOTATIONS FOR ANY SUBCONTRACTING OPERATIONS. THE SURVEY ALSO NOTED THAT YOUR COMPANY HAD NO EXPERIENCE IN MANUFACTURING OR ASSEMBLING THIS TYPE OF EQUIPMENT AND THAT THIS LACK OF EXPERIENCE HAD CONTRIBUTED GREATLY TO THE INADEQUATE CAPABILITIES FOUND BY THE SURVEY. THE SURVEY TEAM RECOMMENDED THAT "NO AWARD" BE MADE TO YOUR FIRM.

ON THE BASIS OF REVIEW OF ALL AVAILABLE INFORMANTION, THE CONTRACTING OFFICER CONCLUDED THAT HE COULD NOT AFFIRMATIVELY DETERMINE, AS REQUIRED BY PARAGRAPH 1-904.1 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), THAT YOUR COMPANY WAS A RESPONSIBLE PROSPECTIVE CONTRACTOR. SINCE THE CONTRACTING OFFICER HAD DETERMINED YOUR FIRM TO BE NONRESPONSIBLE AS TO CAPACITY AND CREDIT, THE MATTER OF YOUR RESPONSIBILITY WAS REFERRED TO THE SMALL BUSINESS ADMINISTRATION (SBA) IN ACCORDANCE WITH ASPR 1-705.4/C) FOR CONSIDERATION WHETHER A CERTIFICATE OF COMPETENCY (COC) SHOULD BE ISSUED TO YOUR FIRM. AFTER COMPLETING ITS OWN SURVEY, SBA ADVISED DGSC AND YOUR FIRM BY LETTERS OF MARCH 27, 1969, THAT IT DECLINED TO ISSUE THE COC IN THIS INSTANCE BASED ON A COMPLETE ANALYSIS OF ALL INFORMATION.

BY WIRE OF APRIL 4, 1969, TO DGSC, YOU ALLEGED THAT THE PREAWARD SURVEY AND SBA'S REVIEW WERE MADE BY PREJUDICED INDIVIDUALS AND REQUESTED AN OPPORTUNITY TO PRESENT YOUR QUALIFICATIONS FOR AN UNBIASED EVALUATION. THE REQUESTED MEETING WAS HELD AT DGSC ON APRIL 11, 1969, AT WHICH TIME YOUR FIRM'S PRESIDENT STATED THAT THE BASIS FOR ITS ALLEGATIONS OF BIAS AND PREJUDICE WAS THE REFUSAL OF THE PREAWARD SURVEY TEAM FROM DCASD, BALTIMORE, AND THE SBA REPRESENTATIVES TO RECEIVE FOR CONSIDERATION THE PLANS FOR PRODUCTION WHICH IT HAD ATTEMPTED TO FURNISH. YOUR COMPANY STATED THAT IT WAS ITS INTENTION TO USE THE RESOURCES OF ALL OF ITS SEVERAL AFFILIATED COMPANIES TO ASSIST IN THE PERFORMANCE OF THE CONTRACT AND THAT IT INTENDED TO PROCURE SOME OF THE MAJOR COMPONENTS FROM THE MANUFACTURERS. THE COMPLETE PRODUCTION PLANS REFERRED TO AT NUMEROUS TIMES DURING THIS MEETING WERE NEITHER PRESENTED NOR OFFERED FOR PRESENTATION BY YOUR COMPANY. YOUR ALLEGATION THAT THE PREAWARD SURVEY TEAM CAME TO ITS CONCLUSION BECAUSE IT REFUSED TO RECEIVE INFORMATION OFFERED BY YOUR FIRM HAS BEEN DENIED BY THE COMMANDER, DCASD, BALTIMORE, AND IS FULLY DISCOUNTED BY THE FACT THAT YOUR FIRM EVEN AT THE MEETING OF APRIL 11, 1969, FAILED TO PRESENT ANY SUBSTANTIAL NEW INFORMATION OR DOCUMENTS. YOUR ATTORNEY'S LETTER OF APRIL 30, 1969, SETS FORTH IN DETAIL THE NATURE AND EXTENT OF YOUR FIRM'S PREPARATIONS TO SUBMIT ITS PROPOSAL. HE STATES, IN ESSENCE, THAT THE REGULATIONS WERE NOT COMPLIED WITH IN THAT (1) AN ONSITE INSPECTION WAS NOT MADE OF THE PLANT AND FACILITIES WHICH YOUR FIRM PROPOSED TO USE TO PERFORM THE CONTRACT, AND (2) THAT THE SURVEY WAS NOT CONDUCTED IN ACCORDANCE WITH THE REQUIREMENTS OF APPENDIX "K.' IS YOUR BELIEF THAT THE PRIMARY REASON FOR THE DETERMINATION OF NONRESPONSIBILITY WAS THE FACT THAT YOUR FIRM HAD NEVER MANUFACTURED HEAVY EQUIPMENT FOR THE PURCHASING AGENCY INVOLVED. IN THIS REGARD, IT IS CONTENDED THAT:

" * * * THE DSA PROCUREMENT AND SURVEY OFFICIALS PRE-JUDGED THE QUESTION AND MADE NO EFFORT EITHER TO DETERMINE THE TOTAL PRODUCTIVE CAPABILITY OF BOSTON PNEUMATICS OR TO EXAMINE ITS PAST HISTORY IN SUFFICIENT DETAIL TO ASCERTAIN THAT BOSTON PNEUMATICS HAD IN FACT PERFORMED ON SIMILAR CONTRACTS FOR HEAVY EQUIPMENT FOR THE GOVERNMENT AT LOCATIONS IN OTHER PARTS OF THE UNITED TES.'

ASPR 1-902 PROVIDES WITH RESPECT TO THE MANDATORY REQUIREMENT THAT PURCHASES BE MADE ONLY FROM RESPONSIBLE PROSPECTIVE CONTRACTORS AS FOLLOWS:

"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.'

ASPR APPENDIX "K" PRESCRIBES THE PROCEDURES TO BE FOLLOWED IN PREAWARD SURVEYS OF PROSPECTIVE CONTRACTORS, AND PROVIDES AT PARAGRAPH K-303.1 (B) (2) AS FOLLOWS:

"LACK OF UNDERSTANDING OR MISINTERPRETATION OF THE SOLICITATION OFTEN RESULTS IN DELINQUENT CONTRACTS AND LEADS TO DEFAULT ACTIONS. THEREFORE, THE SOLICITATION SHALL BE DISCUSSED WITH THE PROSPECTIVE CONTRACTOR TO ASSURE THAT HE UNDERSTANDS ITS REQUIREMENTS, INCLUDING ITS TECHNICAL ASPECTS, SUCH AS DRAWINGS, SPECIFICATIONS, PROTOTYPE, TECHNICAL DATA, TESTING, AND PACKAGING. ANY MISINTERPRETATION OF THE REQUIREMENTS OF THE SOLICITATION WHICH COULD ADVERSELY AFFECT PERFORMANCE, OR REFUSAL BY THE PROSPECTIVE CONTRACTOR TO FURNISH REQUIRED DATA, SHOULD BE BROUGHT TO THE IMMEDIATE ATTENTION OF THE MONITOR BY THE TEAM COORDINATOR. THE MONITOR SHALL, IN TURN, PROMPTLY ADVISE THE PURCHASING OFFICE.'

A REVIEW OF THE RECORD REVEALS THAT THE POLICIES AND PROCEDURES PRESCRIBED FOR PREAWARD SURVEYS WERE FOLLOWED IN ALL MATERIAL RESPECTS INCLUDING AN ONSITE SURVEY AND DISCUSSIONS WITH YOUR PERSONNEL. SEE, IN THIS REGARD, ASPR 1-905.4.

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, AS HERE, THERE IS NO BASIS FOR LEGAL OBJECTION. SEE 37 COMP. GEN. 430 AND 43 COMP. GEN. 298. THE SBA'S REFUSAL TO ISSUEA COC WAS A PERSUASIVE AFFIRMATION OF THE CONTRACTING OFFICER'S DETERMINATION OF THE BIDDER'S NONRESPONSIBILITY. B-159862, OCTOBER 26, 1966; B 159933, NOVEMBER 18, 1966. ALSO, WE HAVE HELD THAT OUR OFFICE HAS NO AUTHORITY TO REVIEW A DETERMINATION BY SBA NOT TO ISSUE A COC IN A PARTICULAR CASE. B-164681, JANUARY 17, 1969.

WE HAVE THOROUGHLY REVIEWED THE VOLUMINOUS RECORD IN THIS CASE, TOGETHER WITH ALL THE STATEMENTS AND INFORMATION SUBMITTED BY YOU, AND WE MUST CONCLUDE THAT THE RECORD CONTAINS SUBSTANTIAL GROUNDS FOR THE DETERMINATION OF NONRESPONSIBILITY AS INFERENTIALLY AFFIRMED BY SBA. WHILE YOUR PROTEST CONCLUDES THAT THE SURVEY TEAM AND SBA DID NOT GO INTO A FULL EVALUATION OF YOUR POTENTIAL IN THAT AN ONSITE INSPECTION WAS NOT MADE OF YOUR PROPOSED PLANTS AND FACILITIES, THE RECORD REVEALS THAT YOU ARE BASICALLY A PRODUCER OF SMALL PNEUMATIC HAND TOOLS AND NOT OF FORKLIFT MOTOR TRUCKS. ALTHOUGH YOU HAVE PLANTS OR AFFILIATES AT BROOKLYN AND AMITYVILLE, NEW YORK, AND ERMIS, TEXAS, YOU DID NOT PROPOSE TO USE THEM IN YOUR PROPOSED PERFORMANCE. INSTEAD YOU PROPOSED TO USE RENTED SPACE AT FRIENDSHIP AIRPORT, MARYLAND. WE HAVE CONSIDERED THE DECISIONS OF OUR OFFICE CITED BY YOUR ATTORNEY THAT THE MERE LACK OF PRIOR EXPERIENCE IN MANUFACTURING A PRODUCT IS NOT A SUFFICIENT BASIS TO CONCLUDE THAT A NEW PRODUCER IS NONRESPONSIBLE. BUT THOSE CASES ARE NOT APPLICABLE TO THE FACTUAL SITUATION HERE WHERE YOUR FIRM DID NOT HAVE THE REQUISITE CAPACITY AND CREDIT TO PERFORM.

WE ARE ADVISED THAT, IN VIEW OF THE EXTREME URGENCY OF THE REQUIREMENT, AWARD WAS MADE TO THE PETTIBONE MULLIKEN CORPORATION, THE NEXT LOW RESPONSIBLE OFFEROR.

WE FIND NO BASIS, IN THE RECORD BEFORE US, TO QUESTION THE CONTRACTING OFFICER'S DETERMINATION OR THE AWARD MADE TO THE PETTIBONE MULLIKEN CORPORATION.