B-168733, MARCH 25, 1970, 49 COMP. GEN. 619

B-168733: Mar 25, 1970

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1970: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF DECEMBER 31. FORTY-ONE SOURCES WERE SOLICITED AND SEVEN BIDS WERE RECEIVED AND OPENED ON OCTOBER 28. SINCE YOU WERE THE LOWEST BIDDER. THE SURVEY WAS CONDUCTED BY THE DEFENSE CONTRACT ADMINISTRATION SERVICES REGION (DCASR). THE BASIS STATED BY THE SURVEY TEAM FOR THIS RECOMMENDATION WAS YOUR FAILURE TO SATISFACTORILY DEMONSTRATE YOUR CAPABILITY IN THE FOLLOWING AREAS: (1) PRODUCTION CAPABILITY. THE CONTRACTING OFFICER MADE A DETERMINATION THAT YOU WERE NOT A RESPONSIBLE BIDDER WITHIN THE STANDARDS SET FORTH IN SECTION 1-903 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR). THE MATTER WAS REFERRED TO THE SMALL BUSINESS ADMINISTRATION (SBA) FOR CONSIDERATION OF A POSSIBLE ISSUANCE BY THAT AGENCY OF A CERTIFICATE OF COMPETENCY (COC).

B-168733, MARCH 25, 1970, 49 COMP. GEN. 619

BIDDERS -- QUALIFICATIONS -- FINANCIAL RESPONSIBILITY -- RECONSIDERATION ALTHOUGH BID PROTEST PROCEEDINGS SHOULD NOT BE PERMITTED TO BE USED TO DELAY CONTRACT AWARDS TO GAIN TIME FOR A NONRESPONSIBLE BIDDER TO IMPROVE ITS POSITION AFTER A CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY HAS BEEN CONFIRMED BY THE SMALL BUSINESS ADMINISTRATION (SBA), WHERE A LOW BIDDER HELD FINANCIALLY NONRESPONSIBLE ON THE BASIS OF A PREAWARD SURVEY AND SBA'S ADVERSE FINDINGS, HAS CONCLUDED NEGOTIATIONS FOR A TECHNICAL DATA RIGHTS AND PATENT LICENSE CONTRACT THAT INVOLVES MILLIONS OF DOLLARS AND PROVIDES FOR AN IMMEDIATE SUBSTANTIAL ADVANCE PAYMENT, THE BIDDER'S RESPONSIBILITY SHOULD BE RECONSIDERED AND IF NECESSARY, TIME PERMITTING, REVIEWED BY SBA, BECAUSE OF THE MANDATE IN ARMED SERVICES PROCUREMENT REGULATION 1-905.2, THAT FINANCIAL RESOURCES SHOULD BE OBTAINED ON AS CURRENT A BASIS AS FEASIBLE WITH RELATION TO THE DATE OF CONTRACT AWARD.

TO BREED CORPORATION, MARCH 25, 1970:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF DECEMBER 31, 1969, AND SUBSEQUENT CORRESPONDENCE PROTESTING AGAINST THE AWARD OF A CONTRACT TO ANY OTHER BIDDER UNDER INVITATION FOR BIDS NO. DAAA-15-70-B-0158, ISSUED BY THE UNITED STATES ARMY'S EDGEWOOD ARSENAL, EDGEWOOD, MARYLAND.

THE SOLICITATION, ISSUED ON SEPTEMBER 30, 1969, INVITED BIDS ON 53,350 FUZES, M918, WITH A PRIORITY DESIGNATOR OF "02", IN SUPPORT OF SOUTHEAST ASIA OPERATIONS. FORTY-ONE SOURCES WERE SOLICITED AND SEVEN BIDS WERE RECEIVED AND OPENED ON OCTOBER 28, 1969, THE DATE SET FOR OPENING. YOUR FIRM SUBMITTED THE LOWEST PRICE AT $5.388 PER UNIT, AND THE AMRAM MANUFACTURING CORPORATION SUBMITTED THE NEXT LOWEST PRICE AT $5.59 PER UNIT.

SINCE YOU WERE THE LOWEST BIDDER, THE CONTRACTING OFFICER REQUESTED A PREAWARD SURVEY TO BE CONDUCTED OF YOUR FIRM. THE SURVEY WAS CONDUCTED BY THE DEFENSE CONTRACT ADMINISTRATION SERVICES REGION (DCASR), SPRINGFIELD, NEW JERSEY. ON NOVEMBER 12, 1969, THE SURVEY TEAM MADE A RECOMMENDATION OF "NO AWARD." THE BASIS STATED BY THE SURVEY TEAM FOR THIS RECOMMENDATION WAS YOUR FAILURE TO SATISFACTORILY DEMONSTRATE YOUR CAPABILITY IN THE FOLLOWING AREAS:

(1) PRODUCTION CAPABILITY;

(2) PLANT FACILITIES AND EQUIPMENT;

(3) FINANCIAL CAPABILITY;

(4) PLANT SAFETY; AND

(5) ABILITY TO MEET REQUIRED DELIVERY SCHEDULES.

THEREAFTER ON NOVEMBER 17, 1969, THE CONTRACTING OFFICER MADE A DETERMINATION THAT YOU WERE NOT A RESPONSIBLE BIDDER WITHIN THE STANDARDS SET FORTH IN SECTION 1-903 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), AND THE MATTER WAS REFERRED TO THE SMALL BUSINESS ADMINISTRATION (SBA) FOR CONSIDERATION OF A POSSIBLE ISSUANCE BY THAT AGENCY OF A CERTIFICATE OF COMPETENCY (COC). ON JANUARY 12, 1970, THE SBA ISSUED A LETTER DECLINING TO ISSUE A COC. BY LETTER OF FEBRUARY 6, 1970, THE SBA ADVISED THE PROCURING AGENCY THAT SBA'S ADVERSE FINDING WAS BASED UPON THE FACT THAT YOUR FIRM DID NOT HAVE THE FINANCIAL CAPABILITY TO PERFORM ON THE CONTRACT.

WHILE YOU DO NOT TAKE SERIOUS ISSUE WITH THIS DETERMINATION, YOU CONTEND THAT YOU HAVE CONCLUDED NEGOTIATIONS WITH THE ARMY MATERIEL COMMAND (AMC) FOR A TECHNICAL DATA RIGHTS AND PATENT LICENSE CONTRACT THAT WILL ULTIMATELY INVOLVE MILLIONS OF DOLLARS AND INCLUDES AN ADVANCE PAYMENT OF $1,000,000 OF WHICH $500,000 IS DUE IMMEDIATELY, AND AS A RESULT THEREOF YOU HAVE "NOW REGAINED FINANCIAL RESPONSIBILITY."

AS OF THE DATE OF YOUR PROTEST, THE REPRESENTATIVE OF THE GOVERNMENT HAD NOT SIGNED THE DATA RIGHTS AND PATENT LICENSE CONTRACT BECAUSE THE AGREEMENT WAS AWAITING CERTIFICATION OF FUNDS PRIOR TO GOVERNMENT EXECUTION. ON MARCH 18, 1970, WE WERE INFORMALLY ADVISED BY AMC THAT THE CONTRACT HAD BEEN SIGNED BY THE GOVERNMENT, BUT IT WOULD NOT BECOME EFFECTIVE UNTIL APPROVED BY THE JUDGE ADVOCATE GENERAL OF THE ARMY FOR CIVIL LAW. ON MARCH 17, 1970, WE RECEIVED A COPY OF YOUR TELEGRAM ADDRESSED TO SBA REQUESTING A REVIEW BY THAT AGENCY OF ITS REFUSAL TO ISSUE A COC, BASED UPON "ADDITIONAL INFORMATION WE ARE ABLE TO SUBMIT," (PRESUMABLY THE AFOREMENTIONED CONTRACT WHICH WAS EXECUTORY AT THAT TIME). WE HAVE BEEN INFORMALLY ADVISED BY SBA THAT IT WILL TAKE NO FURTHER ACTION UNLESS REQUESTED BY THE CONTRACTING OFFICER. IN THIS REGARD, WE HAVE NO AUTHORITY TO REQUIRE SBA TO ISSUE A COC. B-153446, MAY 8, 1964; B-159933, NOVEMBER 18, 1966.

WE DO NOT FEEL THAT BID PROTEST PROCEEDINGS SHOULD BE PERMITTED TO BE USED AS A MEANS FOR DELAYING CONTRACT AWARDS TO GAIN TIME FOR A NONRESPONSIBLE BIDDER TO IMPROVE ITS POSITION AFTER A CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY HAS BEEN IN EFFECT CONFIRMED UPON REVIEW BY SBA. HOWEVER, IN VIEW OF THE MANDATE OF ASPR 1-905.2 THAT FINANCIAL RESOURCES SHOULD BE OBTAINED ON AS CURRENT A BASIS AS FEASIBLE WITH RELATION TO THE DATE OF CONTRACT AWARD, WE ARE TODAY ADVISING THE DEPARTMENT OF THE ARMY THAT WE FEEL IT WOULD BE DESIRABLE, IN VIEW OF YOUR LOW BID, THAT THE DETERMINATION AS TO YOUR RESPONSIBILITY BE RECONSIDERED AND, IF NECESSARY, REVIEWED BY SBA, IN THE LIGHT OF THIS CHANGE IN YOUR FINANCIAL POSITION, IF TIME PERMITS. 39 COMP. GEN. 655 (1960); B-156619, JUNE 8, 1965.

UNLESS REQUESTED BY YOU, NO FURTHER ACTION IS CONTEMPLATED BY OUR OFFICE.