B-167549, DEC. 16, 1969

B-167549: Dec 16, 1969

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PRIOR UNSATISFACTORY SERVICE IN INVITATION SOLICITING BIDS FOR NOZZLE AND FUEL HOSE ASSEMBLIES WHERE LOW BIDDER WAS DECLARED NONRESPONSIBLE AS RESULT OF PREAWARD SURVEY SHOWING BIDDER'S ONLY FUNCTION WOULD BE TO PLACE ORDERS AND EXPEDITE VENDORS. AWARD TO NEXT LOW BIDDER IS NOT DISTURBED SINCE REPEATED FAILURE OF SUPPLIERS TO MAKE TIMELY DELIVERIES OF MATERIAL TO BIDDER INDICATES POOR CONTROL BY BIDDER OVER HIS SUBCONTRACTORS AND RELATES TO HIS TENACITY AND PERSEVERANCE RATHER THAN TO HIS CAPACITY AND CREDIT AS PRIMARY REASON FOR FINDING OF NONRESPONSIBILITY. SO THAT REFERRAL OF UNSATISFACTORY PERFORMANCE RECORD TO SMALL BUSINESS ADMINISTRATION IS NOT REQUIRED. INCORPORATED: FURTHER REFERENCE IS MADE TO YOUR TELEGRAMS OF JULY 23.

B-167549, DEC. 16, 1969

BIDDERS--QUALIFICATIONS--PRIOR UNSATISFACTORY SERVICE IN INVITATION SOLICITING BIDS FOR NOZZLE AND FUEL HOSE ASSEMBLIES WHERE LOW BIDDER WAS DECLARED NONRESPONSIBLE AS RESULT OF PREAWARD SURVEY SHOWING BIDDER'S ONLY FUNCTION WOULD BE TO PLACE ORDERS AND EXPEDITE VENDORS, TOGETHER WITH DELINQUENCY IN 6 OF 8 CONTRACTS COMPLETED DURING PAST YEAR, AWARD TO NEXT LOW BIDDER IS NOT DISTURBED SINCE REPEATED FAILURE OF SUPPLIERS TO MAKE TIMELY DELIVERIES OF MATERIAL TO BIDDER INDICATES POOR CONTROL BY BIDDER OVER HIS SUBCONTRACTORS AND RELATES TO HIS TENACITY AND PERSEVERANCE RATHER THAN TO HIS CAPACITY AND CREDIT AS PRIMARY REASON FOR FINDING OF NONRESPONSIBILITY, SO THAT REFERRAL OF UNSATISFACTORY PERFORMANCE RECORD TO SMALL BUSINESS ADMINISTRATION IS NOT REQUIRED.

TO MOTOQUIP, INCORPORATED:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAMS OF JULY 23, AUGUST 1 AND AUGUST 19, 1969, PROTESTING AGAINST THE REJECTION OF YOUR BID AND THE SUBSEQUENT AWARD OF A CONTRACT TO BOWEN-MCLAUGHLIN-YORK CO. (BOWEN) UNDER INVITATION FOR BIDS (IFB) NO. DAAG31-69-B-0225, ISSUED ON JUNE 9, 1969, BY THE U.S. ARMY CINCINNATI PROCUREMENT AGENCY, CINCINNATI, OHIO.

THE INSTANT PROCUREMENT WAS INITIATED BY TWO PURCHASE REQUESTS FROM THE ARMY TANK AUTOMOTIVE COMMAND FOR A TOTAL OF 244 NOZZLE AND FUEL HOSE ASSEMBLIES. AN INITIAL REQUEST FOR QUOTATIONS UNDER SMALL PURCHASE PROCEDURES FOR THESE ITEMS WAS CANCELED WHEN THE ONLY OFFER RECEIVED EXCEEDED $2,500. A SUBSEQUENT SOLICITATION WAS ALSO CANCELED WHEN THE LOW BID WAS NONRESPONSIVE AND THE OTHER THREE BIDS WERE EXCESSIVE IN PRICE. THE FOLLOWING BIDS WERE SUBMITTED IN RESPONSE TO THE THIRD SOLICITATION, IFB NO. DAAG31-69-B-0225:

BIDDER UNIT PRICE

MOTOQUIP, INC. $ 119.00

BOWEN-MCLAUGHLIN-YORK CO. 128.91

EMCO WHEATON, INC. 209.20

A.C. BALL CO. 227.50 MOTOQUIP AND A.C. BALL CERTIFIED THEMSELVES AS SMALL BUSINESS FIRMS IN THIS UNRESTRICTED PROCUREMENT.

THE SPECIFICATIONS INCORPORATED IN THE INSTANT IFB INCLUDED DRAWINGS, WITH LISTING OF APPROVED SOURCES, FOR THE NOZZLE, COUPLING, PLUG AND RETAINING RING INCLUDED IN THE ASSEMBLIES. IT APPEARS FROM THE ADMINISTRATIVE RECORD THAT YOU PLANNED TO SUBCONTRACT, WITH TWO VENDORS NOT LISTED AS APPROVED SOURCES, FOR COMPONENTS OF THE ASSEMBLIES WHICH YOU OFFERED. THESE COMPONENTS WOULD BE SHIPPED DIRECTLY TO ANOTHER SUBCONTRACTOR FOR ASSEMBLY AND TESTING, AFTER WHICH A FINAL SUBCONTRACTOR WOULD PACK THE ITEMS AND SHIP THEM TO GOVERNMENT DEPOTS. THE NOZZLE ASSEMBLIES WOULD THUS NEVER PHYSICALLY ENTER YOUR PLANT, AND YOUR FUNCTION WOULD BE LIMITED TO PLACING THE SUBCONTRACTS AND EXPEDITING THEM.

ON JULY 17, 1969, THE CONTRACTING OFFICER MADE A WRITTEN DETERMINATION THAT YOUR COMPANY WAS NONRESPONSIBLE, ON THE BASIS OF INFORMATION CONTAINED IN A NEGATIVE PRE-AWARD SURVEY REPORT ON YOUR COMPANY FURNISHED BY THE DEFENSE CONTRACT ADMINISTRATION SERVICES REGION (DCASR), NEW YORK, NEW YORK, DATED JULY 11, 1969. THE "NO AWARD" RECOMMENDATION MADE BY THE SURVEY TEAM IN THE JULY 11 REPORT WAS BASED UPON ITS FINDINGS THAT YOUR COMPANY'S PURCHASING AND SUBCONTRACTING ARRANGEMENTS AND PERFORMANCE RECORD WERE UNSATISFACTORY. IN SUMMARY, THE SURVEY TEAM STATED:

"* * * BIDDER'S ONLY FUNCTION WILL BE TO PLACE ORDERS AND EXPEDITE HIS VENDORS. HOWEVER, BIDDER FAILED TO PRODUCE NECESSARY EVIDENCE, ORAL OR WRITTEN, INDICATING THAT HIS VENDORS COULD DELIVER MATERIAL IN SUFFICIENT LEAD TIME TO MEET IFB DELIVERY SCHEDULE.

"ONE OF THE REQUIREMENTS FOR PERFORMING THIS IFB IS THAT CONTRACTOR PURCHASE THE NOZZLE, COUPLING, PLUG AND RETAINING RING FROM AN APPROVED SOURCE * * *. HOWEVER, CONTRACTOR SELECTED TWO VENDORS * * * WHO ARE NOT LISTED AS APPROVED SOURCES."

"* * * OF 8 CONTRACTS COMPLETED (BY MOTOQUIP) DURING PAST YEAR, 6 WERE DELINQUENT WHEN COMPLETED. OF THE 6 DELINQUENT CONTRACTS, ONE, WAS TERMINATED (CONVENIENCE TO GOVERNMENT), TWO COMPLETED 3 MONTHS LATE, ONE COMPLETED 7 MONTHS LATE; 2 COMPLETED 2 MONTHS LATE. CURRENTLY, 2 OUT OF 4 CONTRACTS ARE DELINQUENT. * * *" THE ADMINISTRATIVE RECORD FURTHER SHOWS THAT THE NUMBER OF DELINQUENT CURRENT CONTRACTS SUBSEQUENTLY INCREASED FROM TWO TO THREE. ON JULY 15, 1969, THE DEFENSE CONTRACT ADMINISTRATION SERVICES DISTRICT, READING, PENNSYLVANIA, SUBMITTED A FAVORABLE PRE-AWARD SURVEY REPORT ON BOWEN. ACCORDINGLY, AWARD WAS MADE TO BOWEN, AS THE NEXT LOWEST RESPONSIBLE BIDDER, ON JULY 18, 1969.

THE LAW GOVERNING THIS PROCUREMENT REQUIRES THAT GOVERNMENT CONTRACTS BE AWARDED TO "RESPONSIBLE" BIDDERS. 10 U.S.C. 2305(C). AUTHORITY TO MAKE THE DECISION AS TO A PROSPECTIVE CONTRACTOR'S RESPONSIBILITY AND THE ACCEPTANCE OR REJECTION OF ITS BID LIES PRIMARILY WITH THE CONTRACTING OFFICER, 37 COMP. GEN. 430 (1957), 43 ID. 228 (1963), AND SUCH DETERMINATION WILL NOT BE QUESTIONED BY THIS OFFICE IN THE ABSENCE OF A SHOWING OF BAD FAITH OR LACK OF SUBSTANTIAL FACTUAL GROUNDS TO SUPPORT IT. 36 COMP. GEN. 42 (1956); 37 ID. 430 (1957); 38 ID. 131 (1958).

IN IMPLEMENTATION OF THE STATUTE, SECTION 1-903 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) PRESCRIBES "MINIMUM STANDARDS FOR RESPONSIBLE PROSPECTIVE CONTRACTORS," AND ASPR 1-903.1 (II) PROVIDES THAT PROSPECTIVE CONTRACTORS MUST BE ABLE TO COMPLY WITH THE REQUIRED OR PROPOSED DELIVERY OR PERFORMANCE SCHEDULE, TAKING INTO CONSIDERATION ALL EXISTING BUSINESS COMMITMENTS, COMMERCIAL AS WELL AS GOVERNMENTAL. ASPR 1 -903.1 (III) STATES THAT A PROSPECTIVE CONTRACTOR MUST:

"HAVE A SATISFACTORY RECORD OF PERFORMANCE (CONTRACTORS WHO ARE SERIOUSLY DEFICIENT IN CURRENT CONTRACT PERFORMANCE, WHEN THE NUMBER OF CONTRACTS AND THE EXTENT OF DEFICIENCY OF EACH ARE CONSIDERED, SHALL, IN THE ABSENCE OF EVIDENCE TO THE CONTRARY OR CIRCUMSTANCES PROPERLY BEYOND THE CONTROL OF THE CONTRACTOR, BE PRESUMED TO BE UNABLE TO MEET THIS REQUIREMENT). PAST UNSATISFACTORY PERFORMANCE, DUE TO FAILURE TO APPLY NECESSARY TENACITY OR PERSEVERANCE TO DO AN ACCEPTABLE JOB, SHALL BE SUFFICIENT TO JUSTIFY A FINDING OF NONRESPONSIBILITY AND IN THE CASE OF SMALL BUSINESS CONCERNS, SHALL NOT REQUIRE SUBMISSION OF THE CASE TO THE SMALL BUSINESS ADMINISTRATION."

YOUR TELEGRAM OF JULY 23, 1969, STATES "WE ARE SIMULTANEOUSLY APPEALING TO THE SMALL BUSINESS ADMINISTRATION (SBA) * * *." IN THIS, WE PRESUME YOU WERE INVOKING THE AUTHORITY OF THAT AGENCY UNDER THE SMALL BUSINESS ACT, PUB. L. 85-536, AS AMENDED, TO CERTIFY TO GOVERNMENT PROCUREMENT OFFICERS WITH RESPECT TO THE COMPETENCY, AS TO CAPACITY AND CREDIT, OF A SMALL BUSINESS CONCERN TO PERFORM A SPECIFIC GOVERNMENT CONTRACT (15 U.S.C. 637(B)(7)). HOWEVER, UNDER ASPR 1 903.1(III), IN THE CASE OF A FINDING OF NONRESPONSIBILITY BASED ON A RECORD OF UNSATISFACTORY PERFORMANCE, REFERRAL TO SBA IS REQUIRED ONLY IF THE DELINQUENT PERFORMANCE WAS DUE SOLELY TO INADEQUATE CAPACITY OR CREDIT, THE ABOVE- MENTIONED AUTHORITY OF SBA BEING LIMITED TO CERTIFICATION OF THOSE FACTORS. IN REGARD TO YOUR CAPACITY AND CREDIT, THE PRE-AWARD SURVEY REPORT CONCLUDED THAT YOUR PERSONNEL UNDERSTOOD THE SPECIFICATIONS; YOUR PLANT FACILITIES AND EQUIPMENT WERE ADEQUATE FOR PERFORMANCE OF THE CONTRACT; YOUR LABOR RESOURCES WERE SATISFACTORY AND YOUR FINANCIAL CAPABILITY WAS ADEQUATE. THE CONTRACTING OFFICER'S JULY 17, 1969, DETERMINATION OF NON-RESPONSIBILITY CONCLUDED, HOWEVER, AS FOLLOWS:

"FURTHER IT IS DETERMINED THAT THIS STATEMENT OF NON-RESPONSIBILITY IS NOT MADE ON THE BASIS OF CAPACITY OR CREDIT, THAT THIS IS A MATTER OF PAST PERFORMANCE AND DELIVERY AND THEREFORE NO REQUIREMENT EXISTS FOR REFERRAL TO (SBA)."

THE CONTRACTING OFFICER HAS SUBSEQUENTLY STATED, IN A SEPTEMBER 3, 1969, SUPPLEMENT TO HIS DETERMINATION OF NON-RESPONSIBILITY:

"DCAS PERSONNEL HAVE WORKED WITH THE CONTRACTOR TO ENCOURAGE HIM TO TAKE TIMELY AND NECESSARY ACTIONS WITH HIS SUBCONTRACTORS TO INSURE MEETING DELIVERY SCHEDULES. ALL OF THE CONTRACTOR'S DELINQUENCIES UNDER CURRENT CONTRACTS HAVE BEEN DUE TO LATE DELIVERIES FROM VENDORS AND AS OF THIS DATE THE CONTRACTOR HAS NOT SHOWN IMPROVEMENT IN THIS AREA." THUS THE RECORD INDICATES THAT THE PRIMARY REASON FOR THE PROCURING ACTIVITY'S DETERMINATION THAT YOUR FIRM LACKED THE NECESSARY TENACITY AND PERSEVERANCE TO PERFORM THIS CONTRACT WAS THE REPEATED FAILURE OF YOUR SUPPLIERS TO MAKE TIMELY DELIVERIES OF MATERIAL. THIS OFFICE HAS HELD THAT POOR CONTROL ON THE PART OF A CONTRACTOR IN OBTAINING TIMELY DELIVERIES OF MATERIALS FROM SUBCONTRACTORS RELATES TO THE TENACITY AND PERSEVERANCE OF A CONTRACTOR RATHER THAN HIS CAPACITY OR CREDIT. 159062, JULY 20, 1966; B-163860, AUGUST 14, 1968. SINCE WE FIND NO BASIS IN THE RECORD FOR CONSIDERING THE CONTRACTING OFFICER'S FINDINGS TO BE ARBITRARY OR WITHOUT SUBSTANTIAL SUPPORT, WE CONCLUDE THAT REFERENCE TO SBA WAS NOT REQUIRED BY THE STATUTE OR THE REGULATION CITED.