B-168610, APR. 7, 1970

B-168610: Apr 7, 1970

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CONTRACTING OFFICER'S DETERMINATION WAS BASED ON SUBSTANTIAL GROUNDS. INC.: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF DECEMBER 13. THE SUBJECT PROCUREMENT WAS NEGOTIATED PURSUANT TO THE AUTHORITY OF 10 U.S.C. 2304 (A) (7). THE CONTRACTING OFFICER HAVING DETERMINED THAT NEGOTIATION WAS NECESSARY BECAUSE OF A RECENT REVISION OF THE APPLICABLE SPECIFICATIONS AND THE SHORT DELIVERY PERIOD ALLOWED FOR THE FIRST INCREMENTAL QUANTITY. THE REQUISITION UPON WHICH THE PROCUREMENT WAS INSTITUTED REQUESTED DELIVERIES IN OCTOBER AND DECEMBER 1969. THE INSTANT PROCUREMENT WAS ISSUED ON SEPTEMBER 9. REQUESTS FOR PROPOSALS WERE ISSUED TO FOURTEEN POTENTIAL SUPPLIERS. SIX PROPOSALS WERE RECEIVED BY THE CLOSING DATE SPECIFIED FOR RECEIPT OF PROPOSALS.

B-168610, APR. 7, 1970

BIDS--EVALUATION--FACTORS OTHER THAN PRICE--PRICE ALONE CAN BE FALSE ECONOMY UNSUCCESSFUL LOW OFFEROR WHOSE SAMPLES OF ANTI-HUMAN SERUM FOR DETERMINING BLOOD COMPATIBILITY DID NOT MEET REQUIREMENTS AND TO WHOM QUALITY CONTROL BRANCH COULD NOT RECOMMEND AWARD, OFFERS NO BASIS FOR OBJECTION TO AWARD TO NEXT LOW OFFEROR SINCE URGENT NEED MADE IT IMPRACTICABLE TO FURTHER TEST SAMPLES AND PRECLUDED REFERRAL TO SMALL BUSINESS ADMINISTRATION. CONTRACTING OFFICER REJECTED PROTESTANT AS NONRESPONSIBLE SUPPLIER, NOTWITHSTANDING LOW PRICE, SINCE ASPR 1-902 PROVIDES THAT AWARD TO SUPPLIER BASED ON LOWEST EVALUATED PRICE ALONE CAN BE FALSE ECONOMY. CONTRACTING OFFICER'S DETERMINATION WAS BASED ON SUBSTANTIAL GROUNDS. SEE COMP. GEN. DECS. CITED.

TO METABOLIC RESEARCH FOUNDATION, INC.:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF DECEMBER 13, 1969, PROTESTING AGAINST THE AWARD OF A CONTRACT TO SCHERING DIAGNOSTICS (SCHERING) BY THE DEFENSE SUPPLY AGENCY, DEFENSE PERSONNEL SUPPORT CENTER, PHILADELPHIA, PENNSYLVANIA (DSA), UNDER SOLICITATION NO. DSA 120-70-R- 0313.

THE SUBJECT PROCUREMENT WAS NEGOTIATED PURSUANT TO THE AUTHORITY OF 10 U.S.C. 2304 (A) (7), AS IMPLEMENTED BY SECTION 3-207 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), THE CONTRACTING OFFICER HAVING DETERMINED THAT NEGOTIATION WAS NECESSARY BECAUSE OF A RECENT REVISION OF THE APPLICABLE SPECIFICATIONS AND THE SHORT DELIVERY PERIOD ALLOWED FOR THE FIRST INCREMENTAL QUANTITY. THE REQUISITION UPON WHICH THE PROCUREMENT WAS INSTITUTED REQUESTED DELIVERIES IN OCTOBER AND DECEMBER 1969.

THE INSTANT PROCUREMENT WAS ISSUED ON SEPTEMBER 9, 1969, AND DESIGNATED SEPTEMBER 25, 1969, AS THE CLOSING DATE FOR RECEIPT OF PROPOSALS. CALLED FOR A TOTAL QUANTITY OF 4608 BOXES OF COOMBS TEST ANTI-HUMAN SERUM TO BE DELIVERED F.O.B. DESTINATION, TO FIVE DSA SUPPLY DEPOTS IN TWO QUANTITY INSTALLMENTS FOR EACH DESTINATION; THE FIRST INCREMENT, THIRTY DAYS AFTER THE DATE OF AWARD, AND THE SECOND INCREMENT NINETY DAYS AFTER AWARD.

REQUESTS FOR PROPOSALS WERE ISSUED TO FOURTEEN POTENTIAL SUPPLIERS, AND SIX PROPOSALS WERE RECEIVED BY THE CLOSING DATE SPECIFIED FOR RECEIPT OF PROPOSALS. YOUR FIRM SUBMITTED THE LOWEST PRICE AT $8.10 PER UNIT LESS 2 PERCENT PROMPT PAYMENT DISCOUNT. SCHERING SUBMITTED THE NEXT LOWEST PRICE.

IN ORDER TO ENABLE HIM TO COMPLY WITH HIS DUTY TO DETERMINE THE RESPONSIBILITY OF A PROSPECTIVE CONTRACTOR, THE CONTRACTING OFFICER REQUESTED THE QUALITY CONTROL BRANCH OF THE TECHNICAL OPERATIONS DIVISION TO ADVISE HIM AS TO THE NEED FOR A PREAWARD SURVEY OR SUBMISSION OF PREAWARD SAMPLES WITH RESPECT TO BOTH OF THE TWO LOWEST OFFERORS. THE QUALITY CONTROL BRANCH REPORTED ON OCTOBER 3, 1969, THAT NO SURVEY OR SAMPLES WOULD BE REQUIRED AS TO SCHERING, SINCE IT WAS MAKING DELIVERIES OF ACCEPTABLE SUPPLIES UNDER AN EXISTING CONTRACT FOR THE SAME ITEM, BUT THAT A PREAWARD SURVEY, AS WELL AS SAMPLES, WAS REQUIRED FOR METABOLIC, SINCE YOUR COMPANY'S EARLIER EFFORTS TO QUALIFY AS AN ACCEPTABLE SUPPLIER OF SOMEWHAT SIMILAR ITEMS HAD PROVEN LARGELY UNSUCCESSFUL, BASED ON UNSATISFACTORY LABORATORY FINDINGS ON PREAWARD SAMPLES SUBMITTED BY YOUR FIRM, ALTHOUGH IN ONE INSTANCE THE NOTED DEFICIENCIES HAD BEEN CORRECTED AND AWARD MADE TO METABOLIC FOR THE PRODUCTION OF A MUCH SIMPLER ITEM THAN THE ONE IN QUESTION.

YOUR FIRM WAS REQUESTED ON OCTOBER 8, 1969, TO SUBMIT SEVEN SAMPLES FOR TESTING. BY TELEGRAM DATED OCTOBER 17, 1969, YOU ADVISED DSA THAT THE REQUESTED SAMPLES WERE BEING SHIPPED UNDER SEPARATE COVER. ON NOVEMBER 6, 1969, THE SAMPLES WERE TESTED AT FORT KNOX, KENTUCKY, AND THE RESULTS OF SUCH TESTING WERE FORWARDED TO THE QUALITY CONTROL BRANCH. BY A WRITTEN REPORT DATED NOVEMBER 21, 1969, THE PURCHASING OFFICE WAS ADVISED BY THE QUALITY CONTROL BRANCH THAT METABOLIC'S SAMPLES FAILED TO MEET CERTAIN CRITICAL SPECIFICATION REQUIREMENTS IN THE FOLLOWING RESPECTS:

"* * * THE SUBJECT SAMPLES DID NOT COMPLY WITH THE APPLICABLE PURCHASE DESCRIPTION REQUIREMENT, PARAGRAPH 7 OF PAGE 1, WHICH SPECIFIES THAT THE ANTI-HUMAN SERUM WHEN DILUTED 1:16 IN SALINE SHALL CAUSE AGGLUTINATION OF SENSITIZED D POSITIVE ERYTHROCYTES PRODUCING A 1.4 REACTION ONE SERIAL DILUTION HIGHER THAN THE BASIC TITER OF ANTI-D SERUM. IN ADDITION, TESTING OF THE PRE-AWARD SAMPLE, LOT NO. MRF 10G110G2 DISCLOSED THAT THE MATERIAL WAS UNSATISFACTORY DUE TO EXCESSIVE 'STICKINESS' OF THE CELL BUTTON."

THE REPORT CONCLUDED THAT THE QUALITY CONTROL BRANCH COULD NOT RECOMMEND AWARD TO YOU, AND THAT NO FURTHER PREAWARD SURVEY WOULD BE REQUIRED. THE CONTRACTING OFFICER THEREUPON CONCLUDED THAT HE COULD NOT MAKE AN AFFIRMATIVE DETERMINATION OF YOUR RESPONSIBILITY. IN JUSTIFICATION OF HIS CONCLUSION HE STATES:

"A REFERENCE TO THE NEGATIVE REPORT ON THE METABOLIC PREAWARD SAMPLES SUBMITTED IN CONNECTION WITH THE PROTESTED PROCUREMENT * * * WILL DISCLOSE THAT IT WAS THE CRITICAL TITER TEST MENTIONED IN THE FOREGOING PARAGRAPH WHICH METABOLIC'S SAMPLES FAILED TO PASS. ADDITIONALLY, THE REPORT INDICATES THAT THE TEST MATERIAL WAS 'UNSATISFACTORY DUE TO EXCESSIVE "STICKINESS" OF THE CELL BUTTON.' THE CONTRACTING OFFICER HAS BEEN ADVISED THAT ALTHOUGH THE NEGATIVE PRE-AWARD SAMPLE REPORT DOES NOT ELABORATE ON THIS DEFICIENCY (WHICH RELATES TO THE SPECIFICITY OF THE ITEM), IT IS AS CRITICAL AS, IF NOT MORE CRITICAL THAN, THE TITER TEST FAILURE. THE COOMBS TEST SERUM IS USED TO DETERMINE THE COMPATIBILITY OF A POTENTIAL DONOR'S BLOOD WITH THAT OF AN INTENDED RECIPIENT WHERE A TRANSFUSION IS CONTEMPLATED. WHEN BLOOD CELLS FROM THE DONOR AND BLOOD SERUM FROM THE RECIPIENT ARE MIXED WITH THE COOMBS TEST SERUM AND NO AGGLUTINATION (CLUMPING) OCCURS, THE BLOOD OF THE DONOR AND RECIPIENT ARE CONSIDERED COMPATIBLE FOR TRANSFUSION. THE CONTRARY IS TRUE IF AGGLUTINATION OCCURS. EXCESSIVE STICKINESS OF THE CELL BUTTON UTILIZING IMPROPERLY PRODUCED COOMBS TEST SERUM PRODUCES WHAT APPEARS TO BE AGGLUTINATION, AND THUS FALSELY INDICATES INCOMPATIBILITY OF BLOOD AS BETWEEN DONOR AND RECIPIENT IN CASES WHERE COMPATIBILITY DOES, IN FACT, EXIST. SUCH A FALSE RESULT COULD BRING ABOUT THE REJECTION OF PERFECTLY COMPATIBLE BLOOD, IMPERILING THE HEALTH OR LIFE OF AN INTENDED RECIPIENT THROUGH DELAY IN PERFORMING, OR NONPERFORMANCE OF, AN URGENTLY NEEDED TRANSFUSION."

SINCE YOU ARE A SMALL BUSINESS CONCERN, THE CONTRACTING OFFICER WAS ON THE POINT OF REFERRING THE QUESTION OF RESPONSIBILITY TO THE SMALL BUSINESS ADMINISTRATION (SBA) IN ACCORDANCE WITH ASPR 1-705.4 FOR POSSIBLE ISSUANCE BY THAT AGENCY OF A CERTIFICATE OF COMPETENCY (COC). HOWEVER, ON DECEMBER 1, 1969, THE CONTRACTING OFFICER WAS ADVISED THAT THE PROCUREMENT WAS BEING ASSIGNED ISSUE PRIORITY DESIGNATOR 03 UNDER THE UNIFORM MATERIEL MOVEMENT AND ISSUE PRIORITY SYSTEM BECAUSE OF THE CRITICAL SUPPLY SHORTAGE AND BACKORDER POSITION WHICH HAD DEVELOPED WITH RESPECT TO THE ITEM. DECEMBER 3 HE RECEIVED THE AMENDED PURCHASE REQUEST CITING THE 03 PRIORITY. UNDER THESE CIRCUMSTANCES THE CONTRACTING OFFICER DETERMINED THAT THE URGENT NEED FOR IMMEDIATE AWARD TO ASSURE THE EARLIEST POSSIBLE DELIVERY OF THE SUPPLIES MADE IT IMPRACTICABLE TO TEST FURTHER SAMPLES OF YOUR PRODUCT, AND PRECLUDED A REFERRAL TO SBA. ACCORDINGLY, AS REQUIRED BY ASPR 1-705.4 (C) (IV), A CERTIFICATE OF URGENCY WAS EXECUTED BY THE CONTRACTING OFFICER ON DECEMBER 10 AND APPROVED BY THE DIRECTOR, PROCUREMENT AND PRODUCTION, ON THE NEXT DAY, AND A COPY THEREOF, WITH A COPY OF HIS FINDING OF NONRESPONSIBILITY, WAS PROMPTLY FURNISHED THE SBA. THE CONTRACT WAS AWARDED SCHERING ON DECEMBER 12, 1969, AND YOU WERE SO NOTIFIED.

THE ESSENTIAL QUESTIONS RAISED BY YOUR PROTEST ARE WHETHER, SINCE THE PROCUREMENT DOCUMENT DID NOT CONTAIN A PROVISION SPECIFICALLY REQUIRING THE SUBMISSION OF A PREAWARD SAMPLE, THE TESTS OF YOUR SAMPLES WERE A PROPER BASIS FOR DETERMINING YOUR RESPONSIBILITY; AND WHETHER THE PRIORITY DESIGNATOR 03 BEING GIVEN THIS PROCUREMENT CONSTITUTED A VALID REASON FOR THE CONTRACTING OFFICER'S FAILURE TO REFER THE MATTER TO SBA, SINCE THE AWARD WAS NOT MADE FOR SOME 21 DAYS AFTER THE TEST REPORTS HAD BEEN RECEIVED.

WITH RESPECT TO THE SECOND QUESTION, THE RECORD SHOWS THAT THE NEGATIVE REPORT OF PREAWARD SAMPLE EVALUATION, DATED NOVEMBER 21, 1969, WAS NOT RECEIVED IN THE PURCHASING OFFICE UNTIL NOVEMBER 26 (THE DAY PRIOR TO THANKSGIVING DAY). THE PRIORITY STATUS OF THE PROCUREMENT WAS DECLARED ON DECEMBER 1, THE SECOND WORKING DAY THEREAFTER, AND THE CONTRACTING OFFICER EXECUTED THE CERTIFICATE OF URGENCY FIVE DAYS AFTER RECEIPT OF THE AMENDED PURCHASE REQUEST IN WHICH THAT PRIORITY WAS STATED. ON THESE FACTS WE FIND NO BASIS FOR CHARGING THE CONTRACTING OFFICER WITH ANY UNDUE DELAY, AND THERE COULD NOT IN ANY EVENT HAVE BEEN ALLOWED THE 15 WORKING DAYS PROVIDED BY THE REGULATIONS FOR SBA ACTION. NEITHER WOULD THERE HAVE BEEN TIME FOR TESTING OF ADDITIONAL SAMPLES IF YOU HAD SUBMITTED THEM.

IN CONSIDERING THE BASIC QUESTION OF WHETHER PREAWARD SAMPLES WERE AUTHORIZED IN THIS INSTANCE, WE MUST TAKE NOTE OF THE DISTINCTION BETWEEN BID SAMPLES WHICH MAY BE REQUIRED, UNDER ASPR 2-202.4, TO ESTABLISH CHARACTERISTICS OF THE PRODUCT OFFERED WHICH CANNOT BE DESCRIBED ADEQUATELY IN A SPECIFICATION OR PURCHASE DESCRIPTION, AND SAMPLES SUBMITTED BEFORE A CONTRACT AWARD TO ESTABLISH A MANUFACTURER'S ABILITY TO PRODUCE A PRODUCT CONFORMING TO THE SPECIFICATIONS. FOR EXAMPLE, IN B- 165685 (3), JULY 24, 1969, WE STATED:

"THE PRESENT SOLICITATION REQUIREMENT WAS NOT INTENDED TO SHOW THE CHARACTERISTICS OF AN OFFEROR'S PRODUCT AS CONTEMPLATED BY ASPR 2 202.4, BUT RATHER TO SECURE EVIDENCE THAT AN OFFEROR WAS CAPABLE OF MEETING THE SPECIFICATIONS. THE DECISIONS OF OUR OFFICE CITED ABOVE DEALT WITH THE RESPONSIVENESS OF BIDS WHERE SAMPLES OF THE PRODUCT WERE REQUIRED TO BE FURNISHED FOR THE PURPOSE OF DETERMINING EXACTLY THE CHARACTERISTICS OF THE PRODUCT OFFERED. SEE 39 COMP. GEN. 595, 598; 41 COMP. GEN. 366, 368. THAT IS NOT THE CASE HERE WHERE TEST RESULTS WERE REQUESTED FOR THE SOLE PURPOSE OF RESTRICTING AWARD TO THOSE OFFERORS WHOSE PRODUCT HAD PREVIOUSLY PASSED THE PRESCRIBED TESTS.

"* * * IT WOULD THEREFORE SEEM TO LOGICALLY FOLLOW THAT THE PREAWARD TESTS WERE FOR THE BENEFIT OF THE GOVERNMENT AND WERE REQUIRED SOLELY FOR THE PURPOSE OF DETERMINING, PRIOR TO AWARD, THAT THE OFFEROR IS ABLE TO DESIGN, CONSTRUCT AND FURNISH PRODUCTION ITEMS MEETING THE NEEDS OF THE GOVERNMENT ACCORDING TO THE REQUIREMENTS OF THE SPECIFICATIONS. CF. 37 COMP. GEN. 143; 37 ID. 640."

SINCE A BIDDER'S CAPABILITY OF PRODUCING ARTICLES MEETING SPECIFICATIONS IS A MATTER OF RESPONSIBILITY, EVIDENCE OF WHICH MAY BE SUBMITTED AT ANY TIME BEFORE AWARD, EVEN WHERE A SOLICITATION CALLS FOR ITS SUBMISSION WITH BIDS (43 COMP. GEN. 77 (1963)) THE ABSENCE OF LANGUAGE REQUIRING THE SUBMISSION OF A PREAWARD SAMPLE IS NOT FATAL TO THE CULMINATION OF A LEGAL CONTRACT. UNDER THE CIRCUMSTANCES PRESENT HERE, PREAWARD SAMPLES WERE SOLICITED IN CONNECTION WITH THE GENERAL REQUIREMENT OF ASPR 1-902, WHICH PROVIDES:

"PURCHASES SHALL BE MADE FROM, AND CONTRACTS SHALL BE AWARDED TO, RESPONSIBLE PROSPECTIVE CONTRACTORS ONLY. * * * 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 QUOTED ASPR PARAGRAPH ALSO PROVIDES THAT THE CONTRACTING OFFICER SHALL MAKE A DETERMINATION OF NONRESPONSIBILITY IF INFORMATION AVAILABLE TO HIM DOES NOT CLEARLY INTIMATE THAT THE PROSPECTIVE CONTRACTOR IS RESPONSIBLE. IT WAS IN OBSERVANCE OF THIS POLICY THAT THE CONTRACTING OFFICER REJECTED YOUR FIRM AS A NONRESPONSIBLE SUPPLIER NOTWITHSTANDING YOUR LOW PRICE.

THE RESPONSIBILITY OF A PROSPECTIVE CONTRACTOR INVOLVES ALL FACTORS NECESSARY TO ENABLE THE CONTRACTING OFFICER TO ARRIVE AT A REASONABLE CONCLUSION THAT THE GOVERNMENT COULD RELY UPON THAT CONTRACTOR TO RENDER SATISFACTORY PERFORMANCE, INCLUDING FINANCIAL RESOURCES, PHYSICAL PLANT AND EQUIPMENT, EXPERIENCE, SKILL, JUDGMENT, AND INTEGRITY. IF THE CONTRACTING OFFICER HAS A VALID REASON TO DOUBT, AS HE DID HERE, THAT A PROSPECTIVE CONTRACTOR'S PROCEDURES, INCLUDING QUALITY CONTROL, ARE ADEQUATE FOR PRODUCTION OF AN ITEM WHICH WILL CONFORM TO THE SPECIFIC REQUIREMENTS OF THE SOLICITATION, WE BELIEVE HE IS FULLY JUSTIFIED IN CALLING FOR THE SUBMISSION OF A PREAWARD SAMPLE SO AS TO DETERMINE PROPERLY THE QUESTION OF RESPONSIBILITY. WE NOTE IN THIS REGARD THAT YOU VOICED NO OBJECTION AT THE TIME YOU WERE REQUESTED TO SUBMIT THE SAMPLES AND INDEED ARGUE THAT YOU SHOULD HAVE BEEN GIVEN AN OPPORTUNITY TO SUBMIT ADDITIONAL SAMPLES.

WE ARE SATISFIED FROM THE RECORD THAT THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY WAS BASED UPON SUBSTANTIAL GROUNDS, AND THAT THE MANDATE OF ASPR 1-705.4 (C) (IV) WAS MET AND THAT REFERRAL OF THE QUESTION OF YOUR RESPONSIBILITY TO SBA WAS NOT REQUIRED.

IN THE CIRCUMSTANCES, WE FIND NO ADEQUATE BASIS FOR OBJECTION TO THE ACTION TAKEN BY THE CONTRACTING OFFICER IN REJECTING YOUR LOW OFFER AND IN MAKING AWARD TO SCHERING, THE NEXT LOW RESPONSIBLE OFFEROR. ACCORDINGLY, YOUR PROTEST IS DENIED.