B-166773, JUN. 10, 1969

B-166773: Jun 10, 1969

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TO THUNDERBIRD MACHINE AND SUPPLY COMPANY: REFERENCE IS MADE TO YOUR TELEGRAM OF APRIL 25. THE PROCUREMENT WAS FOR 8 LOTS OF A NEW TYPE OF VERTICAL SLIDING PADEYES. IS BEING INSTALLED AS PART OF THE ASW MODERNIZATION PROGRAM. BIDS WERE OPENED ON MARCH 10. YOUR BID WAS LOW AT $374. WAS INDICATED IN YOUR BID THAT YOU WERE A SMALL BUSINESS CONCERN. WHICH WAS SECOND LOW. THE PREAWARD SURVEY OF YOUR CONCERN WAS CONDUCTED BY THE DEFENSE CONTRACT ADMINISTRATIVE SERVICES OFFICE (DCASO). THE RECOMMENDATION WAS THAT AN AWARD SHOULD NOT BE MADE TO YOUR CONCERN. APPARENTLY YOU WERE REQUESTED TO FURNISH A LETTER OF CREDIT FROM YOUR BANK AND THE LETTER YOU SUBMITTED STATED AS FOLLOWS: "BANK OF * * * WILL LOAN THIS MONEY ($30.

B-166773, JUN. 10, 1969

TO THUNDERBIRD MACHINE AND SUPPLY COMPANY:

REFERENCE IS MADE TO YOUR TELEGRAM OF APRIL 25, 1969, AND LETTERS OF APRIL 26, 1969, AND APRIL 29, 1969, PROTESTING AGAINST THE AWARD OF A CONTRACT TO ANY OTHER CONCERN UNDER INVITATION FOR BIDS NO. N-00151 69-B- 0737, ISSUED BY THE PURCHASE DIVISION, PHILADELPHIA NAVAL SHIPYARD, PHILADELPHIA, PENNSYLVANIA.

THE PROCUREMENT WAS FOR 8 LOTS OF A NEW TYPE OF VERTICAL SLIDING PADEYES, TO BE INSTALLED ON VARIOUS NAVAL VESSELS. THE PADEYE, A DEVICE USED TO REPLENISH SHIP'S SUPPLIES, IS BEING INSTALLED AS PART OF THE ASW MODERNIZATION PROGRAM.

BIDS WERE OPENED ON MARCH 10, 1969, AND YOUR BID WAS LOW AT $374,788. WAS INDICATED IN YOUR BID THAT YOU WERE A SMALL BUSINESS CONCERN. THE ENTWISTLE COMPANY, ALSO A SMALL BUSINESS CONCERN, SUBMITTED A BID OF $426,420, WHICH WAS SECOND LOW.

THE PROCUREMENT HAD BEEN ASSIGNED PRIORITY DESIGNATION 03; THEREFORE, THE CONTRACTING OFFICER REQUESTED SIMULTANEOUS PREAWARD SURVEYS OF THE TWO LOW BIDDERS. THE PREAWARD SURVEY OF YOUR CONCERN WAS CONDUCTED BY THE DEFENSE CONTRACT ADMINISTRATIVE SERVICES OFFICE (DCASO), HOUSTON, TEXAS, AND THE RECOMMENDATION WAS THAT AN AWARD SHOULD NOT BE MADE TO YOUR CONCERN. DCASO FOUND YOUR CONCERN TO BE UNSATISFACTORY AS TO FINANCIAL CAPABILITY. APPARENTLY YOU WERE REQUESTED TO FURNISH A LETTER OF CREDIT FROM YOUR BANK AND THE LETTER YOU SUBMITTED STATED AS FOLLOWS: "BANK OF * * * WILL LOAN THIS MONEY ($30,000) TO THE COMPANY PROVIDED THE FINANCIAL CONDITION AND OTHER CIRCUMSTANCES AT THE MOMENT MEET THE REQUIREMENTS OF BANK OF * * *.' DCASO DECIDED THAT A NEGATIVE FINANCIAL RECOMMENDATION WAS IN THE BEST INTERESTS OF THE GOVERNMENT SINCE EVIDENCE OF DEFINITE OUTSIDE FINANCIAL ASSISTANCE FROM A BANK OR OTHER SOURCE HAD NOT BEEN SUBMITTED. DCASO DETERMINED THAT YOUR CONCERN'S FINANCIAL CONDITION WITH A DEFICIT WORKING CAPITAL AND DEFICIT NET WORTH WAS NOT ADEQUATE FOR THE INSTANT CONTRACT.

THE FINDINGS OF DCASO-HOUSTON WERE REVIEWED BY THE DEFENSE CONTRACT ADMINISTRATIVE SERVICES REGION (DCASR), DALLAS, ON APRIL 9, 1969. DCASR- DALLAS CONCLUDED THAT SINCE THE CURRENT PAYABLES OF YOUR CONCERN WERE WELL IN EXCESS OF CURRENT ASSETS IT WAS CONSIDERED EXTREMELY DOUBTFUL THAT EVEN A $30,000 LETTER OF CREDIT WOULD HAVE BEEN SUFFICIENT FOR A CONTRACT IN THE AMOUNT OF THIS PROCUREMENT. DCASR DALLAS THEREFORE CONCURRED WITH DCASO-HOUSTON'S NEGATIVE RECOMMENDATION.

ON APRIL 17, 1969, THE CONTRACTING OFFICER RECEIVED A MEMORANDUM DATED APRIL 15, 1969, FROM THE PLANNING OFFICER OF THE PHILADELPHIA NAVAL SHIPYARD. THE MEMORANDUM STATED THAT THE FIRST DELIVERY OF THE ITEMS UNDER THIS PROCUREMENT WERE CONSIDERED REQUIRED BY DECEMBER 1, 1969, IN ORDER TO MEET THE SCHEDULED DELIVERY OF THE DD-931/945 CL ASW MODERNIZATIONS. THE MEMORANDUM FURTHER STATED THAT UNDER THE PRESENT DELIVERY SCHEDULE OF 335 DAYS AFTER AWARD OF CONTRACT, THE FIRST UNITS WILL BE DELIVERED NO EARLIER THAN MARCH 16, 1970. THE MEMORANDUM CONCLUDED THAT THE DELIVERY DATE OF MARCH 16, 1970, WILL RESULT IN THE FIRST TWO SHIPS NOT HAVING THIS VITAL EQUIPMENT INSTALLED AT DELIVERY AND THAT ANY FURTHER DELAY IN THE AWARD OF A CONTRACT WOULD PROBABLY CAUSE ADDITIONAL VESSELS TO BE DELIVERED WITHOUT HAVING THIS EQUIPMENT INSTALLED. IT WAS CONSIDERED THAT THE DELIVERY OF SHIPS WITHOUT THE NECESSARY PADEYE EQUIPMENT WOULD INCREASE THE COSTS OF EACH OF THE SHIPS SO DELIVERED BECAUSE AN INTERIM REPLENISHMENT FACILITY WOULD HAVE TO BE INSTALLED.

ON APRIL 17, 1969, THE CONTRACTING OFFICER PREPARED A CERTIFICATE OF URGENCY PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) SEC. 1- 705.4 (C) (IV), SETTING FORTH THE REASONS FOR NOT REFERRING THIS MATTER TO THE SMALL BUSINESS ADMINISTRATION (SBA) FOR ISSUANCE OF A CERTIFICATE OF COMPETENCY (COC) ON THE CAPACITY AND CREDIT OF THE LOW BIDDER. THE REASONS IN THE CONTRACTING OFFICER'S MEMORANDUM OF APRIL 17, 1969, ARE BASED ON THE INFORMATION FURNISHED BY THE PLANNING OFFICER IN THE MEMORANDUM OF APRIL 15, 1969. THE CONTRACTING OFFICER'S MEMORANDUM CONCLUDED THAT THE 15 DAYS NECESSARY TO PROCESS A COC REFERRAL WOULD "SERIOUSLY JEOPARDIZE THE SIX (6) MONTHS MANUFACTURING LEAD-TIME NEEDED TO MEET THE SCHEDULE, SINCE FURTHER DELAY WILL UNDOUBTEDLY CAUSE ADDITIONAL VESSELS TO BE DELIVERED WITHOUT THIS EQUIPMENT INSTALLED.' THE CONTRACTING OFFICER'S REPORT ON YOUR PROTEST STATES THAT THE CONTRACTING OFFICER HAS BEEN DIRECTED TO COMMENCE NEGOTIATIONS WITH THE CONTRACTOR TO ACCELERATE DELIVERIES OF THE PADEYE EQUIPMENT TO MEET SHIPS' AVAILABILITY SCHEDULES AND THAT THIS FURTHER INDICATES THE URGENCY OF THE PROCUREMENT OF THE SLIDING PADEYES FOR THE ASW MODERNIZATION PROGRAM.

IN VIEW OF THE NEGATIVE RECOMMENDATION IN THE PREAWARD SURVEY OF YOUR CONCERN AND THE URGENCY FACTOR, CONTRACT NO. N00151-69-C-1096 (X) WAS AWARDED TO THE SECOND LOW BIDDER ON APRIL 22, 1969, FOLLOWING A FAVORABLE PREAWARD SURVEY DATED APRIL 10, 1969, ON THAT FIRM.

YOU HAVE PROTESTED AGAINST THE AWARD OF A CONTRACT TO ANY OTHER CONCERN AND YOU HAVE ALSO PROTESTED AGAINST THE ADMINISTRATIVE DECISION NOT TO REFER THE MATTER OF YOUR CAPABILITIES TO SBA UNDER THE COC PROCEDURES.

ASPR 1-705.4 (C) (IV) PROVIDES: "A REFERRAL NEED NOT BE MADE TO THE 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. CONTRACTING OFFICERS SHALL, IMMEDIATELY UPON RECEIPT OF SUFFICIENT INFORMATION, MAKE A DETERMINATION CONCERNING THE RESPONSIBILITY OF THE LOW RESPONSIVE PROSPECTIVE SMALL BUSINESS CONTRACTOR. IF A CONTRACTING OFFICER MAKES A DETERMINATION OF NONRESPONSIBILITY, AND IF ONLY CAPACITY OF CREDIT CONSIDERATIONS ARE INVOLVED, HE SHALL PROMPTLY REFER TO SBA FOR CERTIFICATE OF COMPETENCY CONSIDERATION UNLESS HE EXECUTES A DOCUMENTED CERTIFICATE OF URGENCY INDICATING THE SPECIFIC REASONS WHY AN AWARD MUST BE MADE WITHOUT THE DELAY INCIDENT TO REFERRAL TO SBA. REFERRAL OF A CASE TO SBA OR EXECUTION OF A CERTIFICATE OF URGENCY SHALL NOT BE DEFERRED PENDING INVESTIGATION AND DETERMINATION OF THE RESPONSIBILITY OF OTHER OFFERORS.'

WHETHER AN AWARD MUST BE MADE WITHOUT DELAY TO JUSTIFY THE INVOCATION OF ASPR 1-705.4 (C) (IV), IS A MATTER OF JUDGMENT WHICH WILL NOT BE QUESTIONED BY THIS OFFICE UNLESS IT IS SHOWN THAT THE ADMINISTRATIVE OFFICE ABUSED ITS DISCRETION IN THIS REGARD. SEE B 163967, SEPTEMBER 26, 1968. THERE IS NOTHING IN THE LETTER OF APRIL 29, 1969, WHICH WOULD ESTABLISH THAT THE CONTRACTING OFFICER'S JUDGMENT BASED ON INFORMATION FROM THE NAVY PLANNING OFFICER THAT "FURTHER DELAY WILL UNDOUBTEDLY CAUSE ADDITIONAL VESSELS TO BE DELIVERED WITHOUT THIS EQUIPMENT INSTALLED," WAS NOT MADE IN GOOD FAITH.

WHILE THERE IS NO BASIS FOR QUESTIONING THE VALIDITY OF THE AWARD MADE, WE THINK THAT THE TIMING OF EVENTS IN CONNECTION WITH THE PROCUREMENT WAS SUCH THAT THE MATTER OF YOUR FIRM'S CAPACITY AND CREDIT COULD HAVE BEEN REFERRED TO THE SBA FOR POSSIBLE ISSUANCE OF A COC WITHOUT DELAYING THE AWARD FOR MORE THAN A FEW DAYS. WE HAVE BROUGHT THIS MATTER TO THE ATTENTION OF THE SECRETARY OF THE NAVY.

WITH RESPECT TO WHETHER IT WAS PROPER TO MAKE AN AWARD TO OTHER THAN YOUR CONCERN, ASPR 1-902 PROVIDES THAT PURCHASES SHALL BE AWARDED ONLY TO RESPONSIBLE PROSPECTIVE CONTRACTORS. THIS PARAGRAPH ALSO PROVIDES THAT THE CONTRACTING OFFICER SHALL MAKE A DETERMINATION OF NONRESPONSIBILITY IF, AFTER COMPLIANCE WITH ASPR 1-905 AND 1-906, THE INFORMATION THUS OBTAINED DOES NOT INDICATE CLEARLY THAT THE PROSPECTIVE CONTRACTOR IS RESPONSIBLE. ASPR 1-905.4 PROVIDES THAT PREAWARD EVALUATION SHALL BE USED BY THE CONTRACTING OFFICER IN DETERMINING THE PROSPECTIVE CONTRACTOR'S RESPONSIBILITY. ASPR 1-903.1 (I) PROVIDES THAT A PROSPECTIVE CONTRACTOR MUST HAVE ADEQUATE FINANCIAL RESOURCES, OR THE ABILITY TO OBTAIN SUCH RESOURCES AS REQUIRED DURING PERFORMANCE OF THE CONTRACT.

THE VALIDITY OF A CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY MUST BE JUDGED ON THE BASIS OF INFORMATION BEFORE HIM AT THE TIME IT WAS MADE. 47 COMP. GEN. 373. ON THE BASIS OF THE RECORD BEFORE US WE CANNOT SAY THAT THERE WAS NO FACTUAL BASIS FOR THE FINDINGS IN THE PREAWARD SURVEY OR THAT THE INFORMATION IN THE PREAWARD SURVEY WOULD NOT REASONABLY SUPPORT THE CONTRACTING OFFICER'S DETERMINATION THAT YOU WERE NOT A RESPONSIBLE BIDDER. PURSUANT TO OUR REVIEW WE FIND IT HAS NOT BEEN ESTABLISHED THAT THE CONTRACTING OFFICER'S DETERMINATION REGARDING YOUR RESPONSIBILITY BASED ON THE INFORMATION IN THE PREAWARD SURVEY WAS ARBITRARY, CAPRICIOUS OR IN BAD FAITH; CONSEQUENTLY, SUCH DETERMINATION MAY NOT BE QUESTIONED BY OUR OFFICE. SEE B-160562, APRIL 19, 1967, AND B-160649, AUGUST 7, 1967.