B-166969, SEPTEMBER 2, 1969, 49 COMP. GEN. 139

B-166969: Sep 2, 1969

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TENACITY AND PERSERVERANCE THE REJECTION OF THE LOW BIDDER BASED ON A DETERMINATION THE BIDDER LACKED TENACITY AND PERSEVERANCE IN OBTAINING SUPPLIES IN VIEW OF A PREAWARD SURVEY SHOWING IT HAD BEEN DELINQUENT 60 PERCENT OF THE TIME IN COMPLETING CONTRACTS OVER AN 8-MONTH PERIOD AND WAS DELINQUENT ON UNCOMPLETED CONTRACTS WAS PROPER. A DETERMINATION OF PRIOR UNSATISFACTORY PERFORMANCE IS REASONABLE. UPON AN ADMINISTRATIVE DETERMINATION OF NONRESPONSIBILITY BASED IN PART ON A BELIEF THAT THE BIDDER'S PAST UNSATISFACTORY RECORD OF PERFORMANCE WAS DUE TO A FACTOR NOT INCLUDED IN THE ELEMENTS OF CAPACITY AND CREDIT. REFERRAL OF THE MATTER TO THE SMALL BUSINESS ADMINISTRATION UNDER THE SMALL BUSINESS CERTIFICATE OF COMPETENCY PROGRAM ESTABLISHED UNDER THE PROVISIONS OF THE SMALL BUSINESS ACT IS NOT REQUIRED.

B-166969, SEPTEMBER 2, 1969, 49 COMP. GEN. 139

BIDDERS -- QUALIFICATIONS -- PRIOR UNSATISFACTORY SERVICE -- TENACITY AND PERSERVERANCE THE REJECTION OF THE LOW BIDDER BASED ON A DETERMINATION THE BIDDER LACKED TENACITY AND PERSEVERANCE IN OBTAINING SUPPLIES IN VIEW OF A PREAWARD SURVEY SHOWING IT HAD BEEN DELINQUENT 60 PERCENT OF THE TIME IN COMPLETING CONTRACTS OVER AN 8-MONTH PERIOD AND WAS DELINQUENT ON UNCOMPLETED CONTRACTS WAS PROPER, NOTWITHSTANDING THE DELIVERY OF SUSPENSION LUGS TO THE GOVERNMENT CONSTITUTED ONLY A MINOR PORTION OF THE BIDDER'S TOTAL BUSINESS. ALTHOUGH A DELAY IN PERFORMING ONE OR TWO PREVIOUS CONTRACTS WOULD NOT REQUIRE A DETERMINATION OF UNSATISFACTORY PERFORMANCE WITHIN THE MEANING OF PARAGRAPH 1-903.1(III) OF THE ARMED SERVICES PROCUREMENT REGULATION, WHEN THE CUMULATIVE EFFECT OF DELINQUENCIES INCREASE THE BURDEN OF THE GOVERNMENT IN ADMINISTERING CONTRACTS, A DETERMINATION OF PRIOR UNSATISFACTORY PERFORMANCE IS REASONABLE. BIDDERS -- QUALIFICATIONS -- PRIOR UNSATISFACTORY SERVICE - REFERRAL TO SMALL BUSINESS ADMINISTRATION ALTHOUGH THE LOW BIDDER HAD CERTIFIED ITSELF TO BE A SMALL BUSINESS CONCERN QUALIFYING FOR AN AWARD UNDER A LABOR SURPLUS AREA SET-ASIDE, UPON AN ADMINISTRATIVE DETERMINATION OF NONRESPONSIBILITY BASED IN PART ON A BELIEF THAT THE BIDDER'S PAST UNSATISFACTORY RECORD OF PERFORMANCE WAS DUE TO A FACTOR NOT INCLUDED IN THE ELEMENTS OF CAPACITY AND CREDIT, REFERRAL OF THE MATTER TO THE SMALL BUSINESS ADMINISTRATION UNDER THE SMALL BUSINESS CERTIFICATE OF COMPETENCY PROGRAM ESTABLISHED UNDER THE PROVISIONS OF THE SMALL BUSINESS ACT IS NOT REQUIRED.

TO THEODORE C. HUKE, SEPTEMBER 2, 1969:

REFERENCE IS MADE TO YOUR LETTER DATED JULY 22, 1969, ON BEHALF OF LAND- AIR, INCORPORATED, GRAND PRAIRIE, TEXAS, PROTESTING AGAINST THE REJECTION OF ITS BID SUBMITTED IN RESPONSE TO ADVERTISED SOLICITATION NO. F42600-69- B-3051, ISSUED MARCH 6, 1969, BY THE OGDEN AIR MATERIEL AREA, HILL AIR FORCE BASE, UTAH, FOR THE PROCUREMENT OF 181,921 SUSPENSION LUGS, FEDERAL STOCK NO. 13251164452AQ, INCLUDING A LABOR SURPLUS AREA SET-ASIDE QUANTITY OF 90,960 UNITS.

DUE TO A REPORTEDLY URGENT NEED FOR SUSPENSION LUGS, IT WAS DETERMINED BY THE DEPARTMENT OF THE AIR FORCE THAT AN AWARD UNDER THE ADVERTISED SOLICITATION OF MARCH 6, 1969, SHOULD BE MADE PRIOR TO SUBMITTING A REPORT TO OUR OFFICE ON THE PROTEST OF LAND-AIR, INCORPORATED. AN AWARD WAS MADE ON JUNE 4, 1969, TO DUTY MANUFACTURING, INCORPORATED, THE THIRD LOWEST "B" BIDDER, OR PRIOR PRODUCER, WHO COULD PROCEED WITH PRODUCTION WITHOUT OBTAINING A "FIRST ARTICLE" APPROVAL. THE LOW BID WAS CONSIDERED NONRESPONSIVE. THE SECOND LOWEST BID, SUBMITTED BY LAND-AIR, INCORPORATED, WAS REJECTED ON THE BASIS OF A DETERMINATION BY THE CONTRACTING OFFICER THAT LAND-AIR, INCORPORATED, COULD NOT BE CONSIDERED UNDER THE STANDARDS OF PART 9, SECTION 1, OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), AS A RESPONSIBLE PROSPECTIVE CONTRACTOR FOR THE PROCUREMENT INVOLVED BECAUSE OF AN UNSATISFACTORY RECORD OF PERFORMANCE WHICH, IN THE OPINION OF THE CONTRACTING OFFICER, WAS DUE TO A FAILURE OF THE COMPANY TO APPLY NECESSARY TENACITY OR PERSEVERANCE TO DO AN ACCEPTABLE JOB.

SINCE YOU HAD REQUESTED IN A TELEGRAM DATED JUNE 9, 1969, THAT YOU BE FURNISHED A COPY OF THE ADMINISTRATIVE REPORT ON THE PROTEST OF LAND AIR, INCORPORATED, WE FORWARDED TO YOU BY LETTER DATED JULY 9, 1969, A COPY OF A LETTER DATED JUNE 24, 1969, FROM THE DEPARTMENT OF THE AIR FORCE, REPORTING ON THE PROTEST, TOGETHER WITH COPIES OF TWO STATEMENTS OF THE CONTRACTING OFFICER DATED MAY 27, 1969, AND A COPY OF HIS MAY 12, 1969, DETERMINATION OF NONRESPONSIBILITY ON THE PART OF LAND-AIR, INCORPORATED. THIS RECORD OF THE CASE SHOWS THAT, DURING A PERIOD OF 8 MONTHS PRIOR TO MAY 1969, LAND-AIR, INCORPORATED, COMPLETED 47 GOVERNMENT CONTRACTS OF WHICH 28, OR NEARLY 60 PERCENT, WERE NOT COMPLETED WITHIN THE CONTRACT PERFORMANCE PERIODS, AND THAT, AS OF MAY 1969, LAND-AIR, INCORPORATED, WAS ENGAGED IN PERFORMING 33 GOVERNMENT CONTRACTS ON 20 OF WHICH DELINQUENCIES IN PERFORMANCE HAD OCCURRED. THE 20 CONTRACTS INCLUDED AIR FORCE CONTRACT NO. F42600-69-C-2187 AND NAVY CONTRACT NO. N00104-69-C-0160, COVERING THE PRODUCTION OF MS 3314 SUSPENSION LUGS SIMILAR TO THOSE DESCRIBED IN ADVERTISED SOLICITATION NO. F42600-69-B-3051.

THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY SHOWS VARIOUS CAUSES FOR THE DELINQUENCIES RELATING TO 20 OF THE 33 THEN CURRENT CONTRACTS WITH LAND-AIR, INCORPORATED, AND THE DEPARTMENTAL LETTER OF JUNE 24, 1969, CONTAINS THE FOLLOWING GENERAL COMMENTS CONCERNING THE PREAWARD SURVEY WHICH WAS CONDUCTED BY THE DEFENSE ADMINISTRATIVE SERVICE REGION (DCASR), DALLAS, TEXAS:

THE PAS (PREAWARD SURVEY) REPORT OF APRIL 22 WAS NEGATIVE. RECOMMENDED THAT THE CONTRACT NOT BE AWARDED TO LAND-AIR IN VIEW OF ITS POOR DELIVERY PERFORMANCE ON OTHER DEFENSE CONTRACTS. WHILE IT ACKNOWLEDGED THAT LAND-AIR HAD THE NECESSARY EQUIPMENT AND PRODUCTION PERSONNEL, IT POINTED OUT THAT OVER THE PREVIOUS EIGHT MONTHS 60 PERCENT OF THE COMPLETED CONTRACTS WERE DELINGUENT. LAND-AIR WAS ALSO THEN DELINQUENT ON TWO UNCOMPLETED CONTRACTS FOR THE IDENTICAL LUG UNDER CONSIDERATION. THESE SHORTCOMINGS WERE CAUSED PRIMARILY BY THE LATE ISSUANCE OF PURCHASE ORDERS BY LAND-AIR AND THE LACK OF MONITORING OF ITS VENDORS. THE CONTRACTING OFFICER WAS UNABLE TO MAKE AN AFFIRMATIVE DETERMINATION WITHIN THE MEANING OF ASPR 1-902 THAT LAND AIR WAS A RESPONSIBLE CONTRACTOR FOR THIS PARTICULAR PROCUREMENT AS REQUIRED BY ASPR 1-904. HE, THEREFORE, MADE A FINDING THAT LAND-AIR WAS NON-RESPONSIVE IN THIS INSTANCE BASED UPON THE NEGATIVE PAS AND PREPARED TO MAKE THE AWARD TO DUTY MFG., INC.

A COPY OF THE PREAWARD SURVEY REPORT WAS NOT FURNISHED TO YOU IN VIEW OF RESTRICTIONS PLACED ON THE USE OF SUCH REPORTS. SEE ASPR 1-907. HOWEVER, IN VIEW OF THE CONTENTIONS MADE IN YOUR LETTER OF JULY 22, 1969, IT IS CONSIDERED APPROPRIATE TO ADVISE YOU SPECIFICALLY WITH RESPECT TO THE STATEMENTS IN THE PREAWARD SURVEY REPORT CONCERNING LAND AIR'S RECORD OF PERFORMANCE AS OF THE TIME THE PREAWARD SURVEY WAS CONDUCTED.

AFTER REFERRING TO DELINQUENCIES IN PERFORMANCE ON 28 COMPLETED CONTRACTS, WHICH LATTER INCLUDED TWO CURRENT CONTRACTS FOR THE PRODUCTION AND DELIVERY OF SUSPENSION LUGS, THE REPORT STATES THAT SHOW CAUSE LETTERS WERE ISSUED CONCERNING DELINQUENCIES ON FIVE CURRENT CONTRACTS, THAT ONE CONTRACT WAS TERMINATED FOR DEFAULT AND THE ADMINISTRATIVE CONTRACTING OFFICER RECOMMENDED TERMINATION OF FIVE ADDITIONAL CONTRACTS FOR DEFAULT. IT IS STATED THAT MANY OF THE DELIVERY SCHEDULES WERE EXTENDED AND HAD AGAIN BECOME DELINQUENT; THAT ALL CURRENT AND PREVIOUS DELINQUENCIES WERE DIRECTLY ATTRIBUTABLE TO THE CONTRACTOR AND WERE THE RESULT OF LATE ISSUANCE OF PURCHASE ORDERS FOR MATERIALS AND SERVICES AND INEFFECTIVE FOLLOW-UP AND VENDORS; AND THAT THE CONTRACTORS'S ORDER AND/OR SUBCONTRACTOR FOLLOW-UP SYSTEM WAS TOTALLY UNSATISFACTORY, INADEQUATE AND, IN FACT, PRACTICALLY NON EXISTENT. IT IS ALSO STATED THAT, DESPITE REPEATED EFFORTS BY PREAWARD SURVEY TEAMS OF DEFENSE CONTRACT ADMINISTRATIVE SERVICES, THE CONTRACTOR HAD SHOWN LITTLE IMPROVEMENT; THAT EXTREME DIFFICULTY WAS EXPERIENCED IN SECURING INFORMATION FROM THE CONTRACTOR RELATIVE TO THE PRODUCTION STATUS OF CONTRACTS BEING PERFORMED; AND THAT ON MANY OCCASIONS THE INFORMATION FURNISHED PROVED TO BE TOTALLY UNRELIABLE.

YOU STATE THAT NO DISTINCTION HAS BEEN MADE IN THIS CASE AS TO THE NATURE OF THE CONTRACTS AND THEIR RELATIONSHIP TO THE TOTAL BUSINESS OF LAND-AIR, INCORPORATED, AND THAT YOUR CLIENT BELIEVES THAT ANY DETERMINATION OF TENACITY OR PERSEVERANCE SHOULD BE BASED NOT ONLY UPON THE DELINQUENT CONTRACTS BUT SHOULD BE PREDICATED UPON LAND-AIR'S ENTIRE RECORD FOR THE PERIOD 1967-1969. YOU INDICATE THAT DURING THIS PERIOD LAND-AIR, INCORPORATED, PRODUCED OVER 4.8 MILLION SUSPENSION LUGS FOR THE GOVERNMENT AT A VALUE OF APPROXIMATELY $5,712,000, THAT THERE ARE CURRENTLY UNDER CONTRACT ORDERS OVER 3 MILLION LUGS TO BE SHIPPED, AND THAT THE RECORDS ESTABLISH THAT LAND-AIR, INCORPORATED, SHIPPED 90 PERCENT OF ORDERED SUSPENSION LUGS ON OR AHEAD OF SCHEDULE. YOU PROVIDED RECAPITULATION OF THE CONTRACTS OR ORDERS FOR SUSPENSION LUGS RECEIVED BY LAND-AIR, INCORPORATED, WHICH INCLUDES A LISTING OF 78,751 LUGS REQUIRED FOR DELIVERY UNDER AIR FORCE CONTRACT NO. F42600 69-C-2187, AND A LISTING OF 102,000 LUGS REQUIRED FOR DELIVERY UNDER NAVY CONTRACT NO N00104-69-C- 0160. YOU ALSO PROVIDED A RECAPITULATION OF THE OTHER 18 CONTRACTS BEING PERFORMED AT THE TIME THE PREAWARD SURVEY OF LAND-AIR, INCORPORATED, WAS MADE AND AS TO WHICH THERE HAD BEEN REPORTED DELINQUENCES IN PERFORMANCE. YOU STATED THAT THOSE CONTRACTS REPRESENTED A TOTAL COST OF$69,419.73, AN AMOUNT WHICH IS LESS THAN 1 PERCENT OF THE TOTAL BUSINESS OF LAND-AIR, INCORPORATED, DURING THE PERIOD 1967-1969.

IN REGARD TO THE REPORTED DELINQUENCES IN PERFORMANCE OF THE THEN CURRENT CONTRACTS NOS. F42600-69-C-2187 AND N00104-69-C-0160, YOUR LETTER SETS FORTH THE FOLLOWING INFORMATION:

CONTRACT NO. F42600-69-C-2187 REQUIRED DELIVERY OF 12,500 PARTS PER MONTH FOR 6 MONTHS STARTING JANUARY 25, 1969. THE FIRST QUANTITY READY FOR SHIPMENT WAS VERBALLY REQUESTED TO BE SHIPPED OTHER THAN TO THE SCHEDULE DELIVERY POINT AND LAND-AIR, INCORPORATED, WAS ADVISED THAT THE SHIPMENT SHOULD BE GIVEN PRIORITY OVER A SHIPMENT TO BE MADE TO THE NAVY UNDER CONTRACT NO. N00104-69-C-0160. THIS MADE THE NAVY CONTRACT DELINQUENT AND IT TOOK 4 MONTHS FOR LAND-AIR, INCORPORATED TO GET BACK ON SCHEDULE. CONTRACT NO. F42600-69-C-2187 WAS, HOWEVER, COMPLETED AHEAD OF SCHEDULE, OR 26 DAYS BEFORE THE COMPLETION DATE OF THE CONTRACT.

THE NAVY CONTRACT WAS SCHEDULED FOR DELIVERY ON OR BEFORE APRIL 3, 1969, BUT LAND-AIR, INCORPORATED, WAS SUBSEQUENTLY AUTHORIZED TO MAKE SHIPMENT BY JUNE 30, 1969, AND, IN THE MEANTIME, THE NAVY PARTS CONTROL CENTER HAD REQUESTED THAT SHIPMENT BE MADE TO METALS ENGINEERING COMPANY, INSTEAD OF TO THE ORIGINALLY SPECIFIED PLACE OF DESTINATION. WHEN THE PREAWARD SURVEY OF LAND-AIR, INCORPORATED, WAS BEING MADE THE AUTHORITY FOR THIS DIVERSION IN SHIPMENT HAD BEEN RECEIVED BUT THE "PAPER WORK SUPPORTING THE FACT THAT LAND-AIR WAS NOT DELINQUENT HAD NOT BEEN RECEIVED."

YOU STATE THE POSITION OF LAND-AIR, INCORPORATED, TO BE THAT IT CANNOT BE HELD RESPONSIBLE FOR DELINQUENCES IN PERFORMING THE CITED TWO CONTRACTS WITH THE AIR FORCE AND THE NAVY BECAUSE IT ACTED ON THE GOVERNMENT'S BEHALF IN DIVERTING SHIPMENTS BASED UPON INSTRUCTIONS OF GOVERNMENT OFFICIALS AND, FURTHER, THAT THERE IS NO PAST UNSATISFACTORY RECORD ON ITS PART IN PERFORMING CONTRACTS WITH THE GOVERNMENT FOR THE PRODUCTION AND DELIVERY OF SUSPENSION LUGS. WITH REFERENCE TO THE REMAINING 18 "CURRENT" CONTRACTS COVERING THE FURNISHING OF OTHER SUPPLY ITEMS, YOU INDICATE THAT DIFFICULTIES HAD BEEN EXPERIENCED IN OBTAINING NECESSARY SUPPLIES FROM SUBCONTRACTORS UNDER EIGHT OF THE PRIME CONTRACTS DUE TO UNIQUE PROBLEMS SUCH AS BANKRUPTCY, DEATH OF THE OWNER, BREAKDOWNS OF EQUIPMENT, AND THAT, WHILE THE GOVERNMENT HAS NOTED THAT PURCHASE ORDERS WERE NOT ISSUED TO VENDORS IN SOME CASES, THIS REFERS ONLY TO WRITTEN PURCHASE ORDERS, WHEREAS, IN MOST INSTANCES INVOLVING THE DELINQUENCIES UNDER THE EIGHT PRIME CONTRACTS, VENDORS OR SUBCONTRACTORS WERE REQUESTED VERBALLY TO PROCEED WITHIN A WEEK OR 10 DAYS AFTER THE PRIME CONTRACTS WERE AWARDED TO LAND-AIR, INCORPORATED.

IT IS CONTENDED THAT THERE WAS NO FAILURE ON THE PART OF LAND-AIR, INCORPORATED, TO PROCEED DILIGENTLY WITH ITS MANAGEMENT FUNCTION OF CONDUCTING A PREAWARD EVALUATION OF EACH SUBCONTRACT FACILITY AND PROMPT PLACEMENT OF ORDERS AFTER AWARD OF THE PRIME CONTRACTS, AND THAT MOST OF THE VENDOR OR SUBCONTRACTOR DELINQUENCIES WERE BEYOND THE CONTROL OF AND WITHOUT THE FAULT OR NEGLIGENCE OF LAND-AIR, INCORPORATED.

AT PAGE 5 OF YOUR LETTER IT IS EMPHASIZED THAT THE MAJOR PART OF THE BUSINESS OF YOUR CLIENT HAS IN THE PAST INVOLVED THE MANUFACTURES OF SUSPENSION LUGS, AND IT IS ARGUED THAT SUCH FACTOR SHOULD HAVE BEEN GIVEN CONSIDERABLE WEIGHT IN THE GOVERNMENT'S EVALUATION OF THE COMPANY'S CAPABILITY AND RESPONSIBILITY, PARTICULARLY SINCE THE INVITATION FOR BIDS UNDER CONSIDERATION CONCERNED A PROPOSED PROCUREMENT OF MS-3314 SUSPENSION LUGS. YOU STATED THAT ONE CANNOT UNDERSTAND HOW THE GOVERNMENT CAN IGNORE THE MOST SIGNIFICANT ASPECT OF LAND-AIR'S OPERATION AND BASE ITS FINDINGS UPON A SMALL FRACTION OF LAND-AIR'S TOTAL BUSINESS; AND THAT THE DELINQUENT CONTRACTS DO NOT APPEAR TO BE PLACED IN THE PROPER PROSPECTIVE AS THEY RELATE TO LAND AIR'S TOTAL "TENACITY AND PERSEVERANCE."

COMPLETE INFORMATION CONCERNING THE THEN CURRENT AIR FORCE AND NAVY CONTRACTS FOR THE PRODUCTION AND DELIVERY OF SUSPENSION LUGS, CONTRACTS NOS. F42600-69-C-2187 AND N00104-69-C-0160, WAS NOT FURNISHED IN THE PREAWARD SURVEY REPORT OR IN THE CONTRACTING OFFICER'S MAY 12, 1969, DETERMINATION OF NONRESPONSIBILITY ON THE PART OF LAND-AIR, INCORPORATED. BOTH DOCUMENTS SHOW JANUARY 5, 1969, AS THE DATE OF DELINQUENCY UNDER THE AIR FORCE CONTRACT, WHEREAS YOU INDICATE THAT THE DELIVERY OF THE FIRST QUANTITY INCREMENT UNDER THAT CONTRACT (12,500 SUSPENSION LUGS), WAS DUE ON OR BEFORE JANUARY 25, 1969, OR POSSIBILITY DURING THE MONTH BEGINNING ON THAT DATE. BOTH DOCUMENTS SHOW MAY 15, 1969, AS THE ANTICIPATED OR APPROXIMATE RECOVERY DATE FOR MEETING THE DELIVERY SCHEDULE OF THE AIR FORCE CONTRACT, AND THIS PRESUMABLY WAS MEANT TO INDICATE THAT LAND-AIR, INCORPORATED, WAS CAPABLE OF PRODUCING AND DELIVERING A SUFFICIENT QUANTITY OF SUSPENSION LUGS UNDER THE AIR FORCE CONTRACT TO MEET CURRENT DELIVERY REQUIREMENTS AND TO MAKE UP FOR A PAST DELINQUENCY, SHOWN IN THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY AS HAVING AMOUNTED TO 7,400 UNITS ON APRIL 22, 1969, THE DATE OF THE PREAWARD SURVEY REPORT. BOTH DOCUMENTS ALSO SHOW APRIL 3, 1969, AS THE DATE OF DELINQUENCY UNDER THE NAVY CONTRACT AND APRIL 30, 1969, AS THE ANTICIPATED OR APPROXIMATE DATE OF RECOVERY.

SINCE THE AIR FORCE CONTRACT REPORTEDLY WAS DELINQUENT AS OF JANUARY 5, 1969, AND IT APPEARS THAT THE DELIVERY SCHEDULE OF THAT CONTRACT HAD NOT BEEN MET AS OF APRIL 22, 1969, IT IS NOT READILY APPARENT HOW A REQUEST OF THE NAVY DURING APRIL 1969 TO DIVERT THE SHIPMENT DUE UNDER THE NAVY CONTRACT, WHICH SHIPMENT APPARENTLY WAS MADE DURING THE MONTH OF JUNE 1969, OR A DIVERSION OF THE FIRST SHIPMENT DUE UNDER THE AIR FORCE CONTRACT, OR ANY PRIORITY GIVEN TO THAT CONTRACT, COULD BE SAID TO HAVE CAUSED DELINQUENCIES UNDER BOTH CONTRACTS. FURTHERMORE, WE DO NOT AGREE WITH YOUR APPARENT BELIEF THAT LAND-AIR, INCORPORATED, WOULD HAVE BEEN JUSTIFIED IN DISREGARDING THE DELIVERY SCHEDULE OF THE AIR FORCE CONTRACT WITHOUT HAVING BEEN ADVISED OF ANY PRIORITY WITH RESPECT THERETO, SO LONG AS LAND-AIR, INCORPORATED, HAD A REASONABLE EXPECTATION THAT IT WOULD BE ABLE TO DELIVER ALL OF THE SUSPENSION LUGS REQUIRED FOR DELIVERY UNDER THE AIR FORCE CONTRACT ON OR BEFORE ITS FINAL COMPLETION DATE. WE DO NOT HAVE ANY INFORMATION CONCERNING THE COMPANY'S RECORD OF PERFORMANCE UNDER PRIOR GOVERNMENT CONTRACTS FOR THE MANUFACTURE AND DELIVERY OF SUSPENSION LUGS BUT THERE IS NOTHING IN THE RECORD BEFORE US OTHER THAN TO INDICATE THAT THE TWO CONTRACTS FOR THE MANUFACTURE AND DELIVERY OF SUSPENSION LUGS, CURRENT AT THE TIME OF MAKING THE PREAWARD SURVEY, WERE NOT BEING SATISFACTORILY PERFORMED SO FAR AS THE DELIVERY REQUIREMENTS OF THOSE CONTRACTS WERE CONCERNED.

THE DETERMINATION OF NONRESPONSIBILITY MAY HAVE BEEN BASED UPON WHAT YOU STATE TO BE A SMALL FRACTION OF THE TOTAL BUSINESS OF LAND-AIR, INCORPORATED, DURING THE PERIOD 1967-1969. THAT DOES NOT NECESSARILY REQUIRE A CONCLUSION THAT THE DETERMINATION WAS UNREASONABLE SINCE A DETERMINATION REGARDING A PROSPECTIVE CONTRACTOR'S RESPONSIBILITY SHOULD BE BASED UPON THE MOST CURRENT INFORMATION AVAILABLE AND WE DOUBT THAT YOUR CLIENT WOULD HAVE BEEN CONSIDERED AS NOT HAVING A SATISFACTORY RECORD OF PERFORMANCE IF IT HAD BEEN PERFORMING SATISFACTORILY UNDER ITS THEN CURRENT CONTRACTS WITH THE GOVERNMENT OR A REASONABLE PROPORTION OF SUCH CONTRACTS. IN VIEW OF THE ANTICIPATED OR APPROXIMATE DATES OF RECOVERY UNDER THE TWO CURRENT CONTRACTS FOR THE PRODUCTION AND DELIVERY OF SUSPENSION LUGS, WE ALSO DOUBT THAT A DETERMINATION OF NONRESPONSIBILITY WOULD HAVE BEEN MADE IN THIS CASE IF THERE HAD NOT BEEN ANY SERIOUS DELINQUENCIES IN PERFORMING 18 OTHER CURRENT CONTRACTS WITH THE GOVERNMENT, SINCE IT DOES NOT NECESSARILY FOLLOW THAT A DELAY IN PERFORMING ONE OR TWO PREVIOUS CONTRACTS WOULD REQUIRE A DETERMINATION THAT THE PROSPECTIVE CONTRACTOR HAS AN UNSATISFACTORY RECORD OF PERFORMANCE WITHIN THE MEANING OF PARAGRAPH ASPR 1-903.1(III).

HOWEVER, IT IS OUR OPINION THAT THE REPORTED DELINQUENCIES UNDER THE 18 CONTRACTS PROPERLY WERE CONSIDERED BY THE CONTRACTING OFFICER IN CONJUNCTION WITH THE REPORTED DELINQUENCIES UNDER THE TWO CONTRACTS FOR THE PRODUCTION AND DELIVERY OF SUSPENSION LUGS WHEN HE MADE HIS DETERMINATION OF NONRESPONSIBILITY ON THE PART OF LAND-AIR, INCORPORATED. THE DELINQUENCIES UNDER THE 18 CONTRACTS MAY HAVE BEEN MINOR FROM THE STANDPOINT OF A COMPARISON OF THE AMOUNTS PAYABLE UNDER THE CONTRACTS WITH THE TOTAL BUSINESS OF LAND-AIR, INCORPORATED, OVER A PERIOD OF 2 OR 3 YEARS, BUT IT APPEARS THAT MORE WEIGHT SHOULD HAVE BEEN GIVEN IN THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY TO SUCH DELINQUENCIES THAN YOU HAVE SUGGESTED SINCE THEY APPARENTLY HAD A CUMULATIVE EFFECT OF INCREASING TO A CONSIDERABLE EXTENT THE BURDEN OF THE GOVERNMENT IN ADMINISTERING THE CONTRACTS WITH LAND-AIR, INCORPORATED.

OUR OFFICE HAS CONSISTENTLY TAKEN THE POSITION THAT THE QUESTION WHETHER A PROSPECTIVE CONTRACTOR IS TO BE CONSIDERED RESPONSIBLE SHOULD BE A MATTER PRIMARILY FOR DETERMINATION BY THE CONTRACTING AGENCY AND THAT THE ADMINISTRATIVE DETERMINATION SHOULD BE ACCORDED FINALITY ABSENT A CLEAR SHOWING OF BAD FAITH OR LACK OF A REASONABLE BASIS THEREFOR. WE BELIEVE THAT THE CONTRACTING OFFICER'S DETERMINATION IN THIS CASE THAT YOUR CLIENT DID NOT HAVE A SATISFACTORY RECORD OF PERFORMANCE WAS REASONABLE AND THAT HIS FURTHER DETERMINATION THAT SUCH UNSATISFACTORY RECORD OF PERFORMANCE WAS DUE TO A FAILURE TO APPLY NECESSARY TENACITY OR PERSEVERANCE WAS ALSO REASONABLE IN VIEW OF THE HIGH PERCENTAGE OF THE THEN CURRENT CONTRACTS WITH LAND-AIR, INCORPORATED, ON WHICH DELIVERY SCHEDULES WERE NOT BEING MET.

ALTHOUGH LAND-AIR, INCORPORATED, CERTIFIED ITSELF TO BE A SMALL BUSINESS CONCERN, SINCE THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY WAS BASED IN PART ON A BELIEF THAT THE BIDDER'S PAST UNSATISFACTORY RECORD OF PERFORMANCE WAS DUE TO A FACTOR NOT INCLUDED IN THE ELEMENTS OF CAPACITY AND CREDIT, IT WAS NOT NECESSARY TO REFER THE CASE TO THE SMALL BUSINESS ADMINISTRATION FOR CONSIDERATION UNDER THE SMALL BUSINESS CERTIFICATE OF COMPETENCY PROGRAM ESTABLISHED UNDER THE PROVISIONS OF THE SMALL BUSINESS ACT. SEE 43 COMP. GEN. 257.