B-167456, OCT. 20, 1969

B-167456, OCT. 20, 1969

BIDDERS--QUALIFICATIONS--PREAWARD SURVEYS--FACILITY CAPABILITY REPORT UPON PLANT FACILITIES SURVEY OF LOW BIDDER WHICH RECOMMENDED BIDDER BE FOUND NONRESPONSIBLE, BASED ON LACK OF ADEQUATE CAPACITY AND PERSONNEL, LACK OF FIRM COMMITMENTS FOR PARTS, QUESTIONABLE QUALITY CONTROL AND HIGH PERCENTAGE OF DELINQUENCIES ON OTHER CONTRACTS, AFFIRMED BY REINSPECTION OF FACILITIES, AND SMALL BUSINESS ADMINISTRATION'S (SBA) REFUSAL TO ISSUE CERTIFICATE OF COMPETENCY (COC), NO BASIS IS SHOWN FROM RECORD TO QUESTION CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY AND BIDDER'S PROTEST IS DENIED. SINCE SBA'S REFUSAL TO ISSUE COC MUST BE REGARDED AS PERSUASIVE WITH REGARD TO COMPETENCY AND AS AFFIRMATION OF CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY, SUCH DETERMINATION WILL NOT BE QUESTIONED BY GAO ABSENT BAD FAITH OR LACK OF SUBSTANTIAL EVIDENCE.

TO STRASSER, SPIEGELBERG, FRIED, FRANK AND KAMPELMAN:

WE REFER TO YOUR LETTER OF JULY 10, 1969, AND SUBSEQUENT CORRESPONDENCE ON BEHALF OF DELVA INDUSTRIES, INC., PROTESTING AGAINST THE REJECTION OF THAT FIRM'S LOW BID ON SEVERAL ITEMS UNDER SOLICITATION NO. FPNSO-E6-0505- A, ISSUED APRIL 15, 1969, BY THE FEDERAL SUPPLY SERVICE, GENERAL SERVICES ADMINISTRATION, REGION 2, FOR THE PROCUREMENT OF TUBE-TYPE FELT-TIP MARKERS.

BIDS WERE OPENED ON MAY 21, 1969. DELVA WAS LOW BIDDER ON ITEMS 1 THROUGH 8 AND 13 THROUGH 16. THE CONTRACTING OFFICER, IN ORDER TO DETERMINE WHETHER DELVA MET THE STANDARDS OF RESPONSIBILITY SET FORTH IN SECTION 1-1.310-5 OF THE FEDERAL PROCUREMENT REGULATIONS, REQUESTED A PLANT FACILITIES SURVEY OF THAT BIDDER. ON JUNE 17, 1969, THE PLANT FACILITIES REPORT RECOMMENDED THAT DELVA BE FOUND NONRESPONSIBLE, BASED UPON A LACK OF ADEQUATE CAPACITY AND PERSONNEL, LACK OF FIRM COMMITMENTS FOR SOME NECESSARY PARTS, QUESTIONABLE QUALITY CONTROL, AND A HIGH PERCENTAGE OF DELINQUENCIES ON OTHER CONTRACTS. DELVA REQUESTED A REINSPECTION OF ITS FACILITIES. A TEAM OF QUALITY CONTROL SPECIALISTS REINSPECTED DELVA'S CAPACITY AND AFFIRMED THE EARLIER CONCLUSION THAT DELVA WAS INCAPABLE OF PERFORMING.

IT IS YOUR CONTENTION THAT "THE CONCLUSIONS EXPRESSED IN THE ADMINISTRATIVE REPORT ARE BASED ON ERRONEOUS FACTUAL ASSERTIONS CONTAINED IN THE TWO PLANT FACILITIES SURVEYS * * * AND ARE THEREFORE ARBITRARY, CAPRICIOUS AND NOT BASED ON SUBSTANTIAL EVIDENCE.'

THE FIRST GROUND OF YOUR PROTEST IS THAT THE SURVEY REPORTS' DETERMINATIONS IN REGARD TO PLANT CAPABILITY IGNORE PROPOSED MODIFICATIONS OF THE EXISTING EQUIPMENT WHICH WOULD HAVE INCREASED PRODUCTION BY 25 PERCENT. HOWEVER, AT THE TIME OF THE SURVEY, DELVA WAS UNABLE TO FURNISH SPECIFIC PLANS ON DESIGN, CAPACITY, DELIVERY DATE, OR COST. THEREFORE, THE INSPECTORS CONCLUDED THAT CALCULATIONS COULD NOT BE MADE ON ANY BUT THE EXISTING MACHINERY.

YOU FURTHER STATE THAT THE SURVEY'S COMPUTATION, WHICH FOUND THAT CAP AND PLUG PRODUCTION WOULD BE 10 PERCENT SHORT OF CONTRACT REQUIREMENTS, IS BASED ON AN ASSUMED 20-DAY PRODUCTION MONTH, WHEREAS DELVA PLANS TO PRODUCE ON 22 DAYS PER MONTH. HOWEVER, THE CALCULATION WAS ALSO BASED ON DELVA'S ESTIMATE THAT IT IS ABLE TO PRODUCE 46,000 CAPS AND PLUGS A DAY. THIS PROJECTION WAS CONSIDERED BY THE QUALITY CONTROL SPECIALIST TO BE "TOTALLY UNREALISTIC SINCE IT DOES NOT REFLECT ACTUAL CONDITIONS OR ALLOWANCES FOR MACHINE BREAKDOWN, DIE CHANGES, RELIEF PERIODS, EMPLOYEE ABSENTEEISM, ETC.'

THE SECOND BASIS OF YOUR PROTEST IS THAT, CONTRARY TO THE FINDINGS OF THE REPORT, DELVA HAS THE REQUIRED ASSEMBLY CAPABILITY. THE SURVEY FOUND, HOWEVER, THAT DELVA COULD NOT ASSEMBLE 50,000 MARKERS DAILY BY HAND SINCE IT HAD NO PREVIOUS STEADY PRODUCTION EXPERIENCE; THAT IT COULD NOT PROVIDE ANY DATA TO SUBSTANTIATE AN ESTIMATED PRODUCTION OF 52 MARKERS A MINUTE; AND THAT IT MUST RECRUIT, TRAIN AND RETAIN PERSONNEL FROM A LABOR FORCE WITH A RECORD OF HIGH ABSENTEEISM AND FREQUENT TURNOVER. FURTHER, WHILE DELVA ADVISED THE SURVEY TEAMS THAT IT PLANNED TO HAVE A MACHINE BUILT TO ASSEMBLE THE MARKERS, IT OFFERED NEITHER VERIFIABLE EVIDENCE OF INTENT TO PURCHASE NOR SPECIFIC PLANS ON DESIGN, CAPACITY, DELIVERY DATE, OR COST.

WE HAVE NO INFORMATION ON THE WILLINGNESS OF THE NATIONAL INDUSTRIES FOR THE BLIND TO HANDLE THE ASSEMBLY OF THE PENS. IF DELVA WAS ABLE TO DEMONSTRATE TO THE SURVEY TEAMS THAT THE NATIONAL INDUSTRIES FOR THE BLIND WAS ABLE TO COMPLETE THE ASSEMBLY WORK WITHIN THE TIME AND COST LIMITS REQUIRED BY THE CONTRACT, THE SURVEY TEAMS WOULD HAVE, OF COURSE, CONSIDERED THIS INFORMATION IN THEIR EVALUATION OF DELVA'S RESPONSIBILITY.

THE THIRD BASIS OF YOUR PROTEST IS THAT DELVA DOES NOT LACK FIRM COMMITMENTS FOR ANY NECESSARY PARTS. THE REPORTS STATE, HOWEVER, THAT DELVA DID NOT VERIFY ITS ABILITY TO OBTAIN CERTAIN PARTS AND THAT FOR THOSE PARTS FOR WHICH PROOF OF FIRM COMMITMENTS WERE PRESENTED, NO INFORMATION WAS AVAILABLE AS TO ALTERNATIVE SOURCES IN THE EVENT OF DELIVERY PROBLEMS.

FURTHER, FELT NIBS ALREADY SUPPLIED BY THE CONTINENTAL FELT COMPANY TO DELVA WERE USED IN THE HANDMADE BID SAMPLES. THAT COMPANY IS UNABLE TO SUPPLY THE FELT NEEDED FOR THIS PROCUREMENT. AT THE TIME OF THE SURVEY, DELVA CONTENDED THAT THE STANDARD FELT COMPANY COULD SUPPLY THE FELT BUT OFFERED NO VERIFICATION. ATTACHED TO YOUR LETTER OF SEPTEMBER 8, 1969, IS A STATEMENT BY STANDARD FELT THAT IT IS PREPARED TO SUPPLY THE QUANTITIES OF FELT NEEDED. EVEN SO, THE SURVEY DETERMINED THAT DELVA'S ABILITY TO DESIGN AND BUILD MACHINERY SUITABLE FOR CONVERTING THE FELT, WHICH IT INTENDED TO BUY FROM STANDARD FELT IN COIL FORM, INTO NIB FORM IS "DOUBTFUL.'

THE FOURTH GROUND OF YOUR PROTEST IS THAT THE ADMINISTRATIVE REPORT'S CONCLUSION THAT DELVA HAS QUESTIONABLE QUALITY CONTROL IS "A COMPLETE FABRICATION NOT SUPPORTED BY THE SURVEY REPORTS.' THE SECOND SURVEY STATES, HOWEVER, THAT DELVA PRESENTED NO FORMAL PLAN OR OUTLINE TO ASSURE QUALITY CONTROL. IT ALSO STATES THAT THE PRODUCTION MANAGER IS TO SERVE AS THE QUALITY CONTROL MANAGER AND THAT WITH THE VOLUME OF ACTIVITY ESTIMATED, IT WOULD BE "PHYSICALLY IMPOSSIBLE" FOR HIM TO PERFORM BOTH JOBS ADEQUATELY. FURTHER, DELVA'S TEST APPARATUS DOES NOT HAVE THE ABILITY TO APPLY WEIGHT BY SPRING-APPLIED PRESSURE ON THE NIB OF TEST SPECIMENS AS REQUIRED BY PARAGRAPH 4.33 OF THE SPECIFICATIONS.

YOUR FINAL OBJECTION TO THE ADMINISTRATIVE REPORT IS THAT NO EVIDENCE WAS GIVEN IN THE SURVEY REPORTS TO SUSTAIN A FINDING THAT DELVA HAS BEEN DELINQUENT ON ITS OTHER CONTRACTS WITH THE GOVERNMENT. HOWEVER, DELVA WAS LATE IN DELIVERING 12 OUT OF 30 ORDERS OF BALLPOINT PENS UNDER CONTRACT NO. GS-00S-63149; 14 OUT OF 26 ORDERS OF BALLPOINT PEN BARRELS UNDER CONTRACT NO. GS-00S-63157; AND 32 OUT OF 40 ORDERS OF MECHANICAL PENCILS UNDER CONTRACT NO. GS-00S-63326. WHILE IT MAY BE TRUE, AS YOU ALLEGE, THAT "NO TOTAL AMOUNTS ARE GIVEN," THE FAILURE TO DELIVER 60 PERCENT OF THESE ORDERS WHEN DUE IS SUFFICIENT TO SUSTAIN A FINDING THAT DELVA IS FREQUENTLY DELINQUENT, ESPECIALLY SINCE DELVA WAS UNABLE TO JUSTIFY ITS DELAYS TO THE SATISFACTION OF THE PLANT FACILITIES SURVEY TEAMS. THE REPORTS FURTHER INDICATE THAT DELVA'S HOUSEKEEPING WAS POOR.

UPON RECEIPT OF THE SECOND SURVEY REPORT, THE CONTRACTING OFFICER REQUESTED THE SMALL BUSINESS ADMINISTRATION (SBA) TO PROCEED WITH ITS STUDY OF DELVA. ON AUGUST 5, 1969, SBA DECLINED TO ISSUE A CERTIFICATE OF COMPETENCY (COC) BASED UPON A COMPREHENSIVE ANALYSIS OF ALL AVAILABLE INFORMATION. WE HAVE HELD THAT THE REFUSAL OF SBA TO ISSUE A COC MUST BE REGARDED AS PERSUASIVE WITH REGARD TO COMPETENCY AND AS AFFIRMATION OF THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY. 39 COMP. GEN. 705.

WE HAVE CONSISTENTLY HELD THAT IT IS THE RESPONSIBILITY OF THE CONTRACTING OFFICER TO DETERMINE THE RESPONSIBILITY OF A BIDDER (37 COMP. GEN. 430; 38 ID. 248; 39 ID. 468; 43 ID. 228), AND THAT SUCH DETERMINATION WILL NOT BE QUESTIONED BY OUR OFFICE IN THE ABSENCE OF BAD FAITH OR A LACK OF SUBSTANTIAL EVIDENCE. 39 COMP. GEN. 705; 43 ID. 228. WE BELIEVE THAT ON THE RECORD BEFORE US THERE IS NO BASIS TO QUESTION THE CONTRACTING OFFICER'S DETERMINATION IN THIS CASE.