B-169058, APR. 17, 1970

B-169058, APR. 17, 1970

BIDDERS--QUALIFICATIONS--PRIOR UNSATISFACTORY SERVICE--ADMINISTRATIVE DETERMINATION UNDER SOLICITATION FOR POWER TRANSFORMERS IN INCREMENTAL QUANTITIES, UNSUCCESSFUL LOW BIDDER FOR TOTAL OF INCREMENT QUANTITIES WHO PROTESTS AWARD TO SECOND LOW BIDDER OFFERS NO BASIS FOR OBJECTION SINCE PREAWARD SURVEY RECOMMENDED THAT PROTESTANT FIRM NOT BE AWARDED CONTRACT AND CONTRACTING OFFICER DETERMINED FIRM WAS NONRESPONSIBLE BECAUSE OF FAILURE TO APPLY TENACITY AND PERSEVERANCE IN PERFORMANCE OF GOVERNMENT CONTRACTS. SURVEY SHOWED HISTORY OF DELINQUENCY ATTRIBUTABLE TO ACTIONS ON PART OF PROTESTANT AND EVIDENCE SHOWS CONTRACTING OFFICER'S DETERMINATION WAS BASED ON SUBSTANTIAL GROUNDS AND WAS NOT FRAUDULENT OR CAPRICIOUS. SEE COMP. GEN. DECS. CITED.

TO MILWAUKEE TRANSFORMER COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 9, 1970, PROTESTING THE AWARD OF A CONTRACT UNDER SOLICITATION NO. DSA 900-70-B-1017 ISSUED BY THE DEFENSE SUPPLY AGENCY, DEFENSE ELECTRONICS SUPPLY CENTER, DAYTON, OHIO.

THE SUBJECT SOLICITATION, ISSUED ON OCTOBER 6, 1969, SOLICITED BIDS ON INCREMENTAL QUANTITIES OF 25 THROUGH 49 EACH, 50 THROUGH 74 EACH, 75 THROUGH 99 EACH AND 100 THROUGH 249 EACH, POWER TRANSFORMERS, FSN 5950 897 -7903. BIDS IN RESPONSE TO THE INVITATION WERE OPENED ON NOVEMBER 3, 1969, WITH YOUR FIRM'S BID OF $5,960 BEING THE LOWEST BID FOR THE TOTAL OF THE INCREMENT QUANTITIES AND THE BID OF FISHER ENGINEERING, INC; IN THE SUM OF $7,253 WAS THE SECOND LOWEST TOTAL BID.

THE CONTRACTING OFFICER REQUESTED THAT A PREAWARD SURVEY BE CONDUCTED ON YOUR FIRM AND SUCH SURVEY WAS CONDUCTED ON NOVEMBER 17, 1969, WITH A REPORT BEING ISSUED RECOMMENDING THAT YOUR FIRM NOT BE AWARDED THE CONTRACT. ON THE BASIS OF THE INFORMATION CONTAINED IN THE PREAWARD SURVEY REPORT AND OTHER AVAILABLE INFORMATION, THE CONTRACTING OFFICER DETERMINED THAT YOUR FIRM WAS A NONRESPONSIBLE BIDDER FOR THE PROCUREMENT BECAUSE OF YOUR FAILURE TO APPLY TENACITY AND PERSEVERANCE IN THE PERFORMANCE OF YOUR CONTRACTS WITH THE GOVERNMENT. ACCORDINGLY, ON JANUARY 12, 1970, AWARD WAS MADE TO FISHER ENGINEERING, THE NEXT LOWEST RESPONSIVE BIDDER.

THE PREAWARD SURVEY REPORT WHICH RECOMMENDED THAT NO AWARD BE MADE TO YOUR FIRM, AND UPON WHICH THE CONTRACTING OFFICER BASED HIS DECISION, INCLUDED THE FOLLOWING PERTINENT INFORMATION:

"ON 24 SEPTEMBER 1969 AT 12:30 P.M. APPROXIMATELY 25 PRODUCTION EMPLOYEES WALKED OFF THEIR JOBS AND FORMED A PICKET LINE OUTSIDE THE BIDDER'S PLANT. THIS STRIKE HAS BEEN IN PROGRESS FOR 54 DAYS AND IS PRESENTLY STILL IN EFFECT. THE UNION INVOLVED IS THE ONE NOTED IN SECTION III OF DD FORM 1524-1. THE COMPANY IS STILL IN OPERATION WITH SUPERVISORY PERSONNEL WORKING IN THE PRODUCTION AREA.

"RECORDS, DATING BACK TO 25 SEPTEMBER 1968, INDICATE THAT MILWAUKEE TRANSFORMER HAD COMPLETED 11 GOVERNMENT CONTRACTS OF WHICH HE WAS DELINQUENT ON TEN OF THE CONTRACTS. IN ALL CASES OF DELINQUENCY THE DELAY WAS ATTRIBUTED TO THE CONTRACTOR. THESE FIGURES INDICATE A 91% DELINQUENCY RATE ON PAST PRODUCTION PERFORMANCE.

"AT THE PRESENT TIME, MILWAUKEE TRANSFORMER CO. HAS 12 ACTIVE GOVERNMENT CONTRACTS OF WHICH FIVE ARE DELINQUENT AND TWO ANTICIPATED DELINQUENT.

"THE INDUSTRIAL SPECIALIST IS UNABLE TO DETERMINE WHETHER OR NOT THE BIDDER HAS THE ADEQUATE CAPACITY OR LOAD TIME TO PERFORM SATISFACTORILY ON THIS BID. THE PRESIDENT, MR. H. SMITH, WAS CONTACTED ON 12 NOVEMBER 1969 IN AN ATTEMPT TO MAKE AN APPOINTMENT TO CONDUCT AN ON-SITE PRE AWARD SURVEY. AT THIS TIME, MR. SMITH EXPRESSED A DEFINITE UNWILLINGNESS TO PARTICIPATE IN ANY WAY IN THIS SURVEY FOR THIS IFB. HE REFUSED ADMITTANCE TO THE INDUSTRIAL SPECIALIST TO HIS PLANT. "7. MILWAUKEE TRANSFORMER HAS THREE UNCOMPLETED CONTRACTS FOR THE SAME ITEM CALLED FOR UNDER IFB DSA 900 -70-B-1017. STATUS OF THESE CONTRACTS IS AS FOLLOWS:

CONT.

AWARD CONTRACT DELIVERY UNDELIVERED DELIVERY CONTRACT NO. DATE QUANTITY DUE DATE BALANCE FORECAST DSA900-69-C-9523 5/16/69 68 10/13/69 68

10 APR 70 DSA900-70-C-1397 8/13/69 50 10/18/69 50 8 MAY 70 DSA900-70-C- 2749 10/6/69 76 1/4/70 76 8 MAY 70"

THE REPORT CONTAINED AN ANALYSIS OF THE REASONS FOR DELINQUENCY ON 10 OF THE 11 CONTRACTS COMPLETED BY YOUR FIRM, AND SUCH ANALYSIS CONCLUDED THAT IN ALL CASES DELAY IN DELIVERY WAS ATTRIBUTABLE TO ACTIONS ON THE PART OF YOUR FIRM.

PARAGRAPH 1-903.1 OF THE ARMED SERVICES PROCUREMENT REGULATION ESTABLISHES THE GENERAL STANDARDS OF RESPONSIBILITY FOR PROSPECTIVE CONTRACTORS AND IN SUBSECTION (III) OF THE SECTION PROVIDES THAT SUCH CONTRACTOR MUST:

"(III) 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. (IN THE CASE OF SMALL BUSINESS CONCERNS, SEE 1 705.4 (C) (VI) AND 1-905.2.);"

IT IS PROVIDED IN 10 U.S.C. 2305 (C) THAT CONTRACT AWARDS PURSUANT TO FORMAL ADVERTISING SHALL BE MADE TO "THE RESPONSIBLE BIDDER" WHOSE BID IS RESPONSIVE AND WILL BE MOST ADVANTAGEOUS TO THE UNITED STATES. IT HAS BEEN CONSISTENTLY HELD THAT THIS DETERMINATION BY THE CONTRACTING OFFICER OF THE PROSPECTIVE CONTRACTOR'S ABILITY OR WILLINGNESS TO PERFORM IS PRIMARILY A MATTER FOR ADMINISTRATIVE DETERMINATION AND, IN THE ABSENCE OF BAD FAITH AND LACK OF REASONABLE GROUNDS FOR THE DETERMINATION, THERE IS NO BASIS FOR OBJECTION BY THIS OFFICE. 38 COMP. GEN. 131 (1958); 37 ID. 798 (1958); 37 ID. 430, 435 (1957); B 158609, APRIL 20, 1966; B-153002, FEBRUARY 3, 1964. THE EVIDENCE OF RECORD IN THIS CASE IS SUFFICIENT TO SHOW THAT THE DETERMINATION MADE BY THE CONTRACTING OFFICER--THAT YOU WERE NOT A RESPONSIBLE CONTRACTOR DUE TO PRIOR UNSATISFACTORY PERFORMANCE OF GOVERNMENT CONTRACTS--WAS BASED UPON SUBSTANTIAL GROUNDS AND WAS NOT FRAUDULENT, CAPRICIOUS, ARBITRARY OR SO GROSSLY ERRONEOUS AS TO NECESSARILY IMPLY BAD FAITH.

FOR THE REASONS STATED, WE FIND NO LEGAL BASIS FOR OBJECTION TO THE ACTION OF THE CONTRACTING OFFICER IN REJECTING YOUR BID AND MAKING AWARD TO THE NEXT LOW RESPONSIVE, RESPONSIBLE BIDDER. THEREFORE, YOUR PROTEST AGAINST SUCH ACTION IS DENIED.