B-169070, APR. 24, 1970

B-169070: Apr 24, 1970

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

IS NOT SUFFICIENT TO SUSTAIN PROTEST SINCE INADEQUATE INTEGRITY RECORD. ADMINISTRATIVE FINDING OF RESPONSIBILITY IS ACCEPTED ABSENT SHOWING OF BAD FAITH OR LACK OF REASONABLE BASIS THEREFOR. TO WHOM AWARD WAS RECOMMENDED BY PREAWARD SURVEY. WAS NOT MANUFACTURER OF IMPORTANT KIT COMPONENT WHICH WOULD RESULT IN INFERIOR PRODUCT IS REJECTED SINCE INVITATION DID NOT REQUIRE BIDDERS TO BE MANUFACTURERS AND PLAN PRESENTED TO SURVEY TEAM INDICATED PARTICULAR MANUFACTURER OF SAID COMPONENT. YOU INDICATE THAT CAN-TITE SHOULD NOT HAVE BEEN REGARDED AS A RESPONSIBLE BIDDER. CONTEND THAT THE PREAWARD SURVEY REPORT COULD HARDLY HAVE BEEN VERY THOROUGH BECAUSE IT APPARENTLY IGNORED CERTAIN MATTERS OF PUBLIC RECORD INVOLVING CAN-TITE'S OFFICERS.

B-169070, APR. 24, 1970

BIDDERS--QUALIFICATIONS--INTEGRITY, ETC.--EFFECT ON SUBSEQUENT PROCUREMENT FACT THAT SOME OFFICERS OF SUCCESSFUL BIDDER HAD PLEADED GUILTY TO CONSPIRACY IN 1957, AS PRINCIPALS IN DIFFERENT CONCERN, IS NOT SUFFICIENT TO SUSTAIN PROTEST SINCE INADEQUATE INTEGRITY RECORD, OR EVEN PRIOR ADMITTED CRIMINAL ACTIVITIES, DOES NOT COMPEL NONRESPONSIBILITY FINDING. ALTHOUGH SATISFACTORY INTEGRITY RECORD CONSTITUTES ONE FACTOR IN RESPONSIBILITY DETERMINATION UNDER ASPR 1 903.1, ADMINISTRATIVE FINDING OF RESPONSIBILITY IS ACCEPTED ABSENT SHOWING OF BAD FAITH OR LACK OF REASONABLE BASIS THEREFOR. MOREOVER, EVEN IF OFFICERS' PRIOR MISCONDUCT COULD BE IMPUTED TO PRESENT FIRM, ANY DEBARMENT PERIOD RESULTING FROM ALLEGED OFFENSES AS CONTEMPLATED BY ASPR, HAS LONG SINCE EXPIRED. SEE COMP. GEN. DECS. CITED. BIDDERS- QUALIFICATIONS--PREAWARD SURVEYS-- PERFORMANCE STANDARDS UNSUCCESSFUL BIDDER'S OBJECTION THAT LOW BIDDER UNDER NAVY CONTRACT FOR BOAT REPAIR KITS, TO WHOM AWARD WAS RECOMMENDED BY PREAWARD SURVEY, WAS NOT MANUFACTURER OF IMPORTANT KIT COMPONENT WHICH WOULD RESULT IN INFERIOR PRODUCT IS REJECTED SINCE INVITATION DID NOT REQUIRE BIDDERS TO BE MANUFACTURERS AND PLAN PRESENTED TO SURVEY TEAM INDICATED PARTICULAR MANUFACTURER OF SAID COMPONENT, WHO APPEARS TO BE ACCEPTABLE MANUFACTURER OF SUCH PRODUCTS. MOREOVER, SINCE INVITATION PROVIDED FOR GOVERNMENT INSPECTION AT CONTRACTOR'S AND SUBCONTRACTOR'S PLANTS AND INCLUDED FIRST ARTICLE TESTING AND APPROVAL PROVISION, GOVERNMENT APPEARS ADEQUATELY PROTECTED AGAINST UNSATISFACTORY PRODUCT.

TO BONDED PRODUCTS, INCORPORATED:

THE HONORABLE JOSEPH G. MINISH, HOUSE OF REPRESENTATIVES, HAS REFERRED TO OUR OFFICE YOUR LETTER OF FEBRUARY 4, 1970, PROTESTING THE AWARD OF A CONTRACT TO THE CAN-TITE RUBBER CORPORATION UNDER INVITATION FOR BIDS (IFB) NO. N00104-70-B-0480(14.3), ISSUED BY THE NAVY SHIPS PARTS CONTROL CENTER, MECHANICSBURG, PENNSYLVANIA. YOU INDICATE THAT CAN-TITE SHOULD NOT HAVE BEEN REGARDED AS A RESPONSIBLE BIDDER, AND CONTEND THAT THE PREAWARD SURVEY REPORT COULD HARDLY HAVE BEEN VERY THOROUGH BECAUSE IT APPARENTLY IGNORED CERTAIN MATTERS OF PUBLIC RECORD INVOLVING CAN-TITE'S OFFICERS.

THE ABOVE-REFERENCED INVITATION, ISSUED ON SEPTEMBER 18, 1969, CONTEMPLATED AN INDEFINITE QUANTITY CONTRACT (1582 TO 4743) FOR PLASTIC BOAT REPAIR KITS. A SIMILAR QUANTITY WAS ALSO SET ASIDE FOR LABOR SURPLUS AREA CONCERNS UNDER THE TERMS OF ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-804.2 (B). THE FOLLOWING BIDS WERE RECORDED AT THE BID OPENING ON OCTOBER 7, 1969:

BIDDER UNIT PRICE

CAN-TITE RUBBER CORP. $25.66

FRANK & WARREN, INC. 27.34

BONDED PRODUCTS, INC. 28.50

TRIPLE S INDUSTRIES 30.82 FRANK & WARREN, INC. AND TRIPLE S INDUSTRIES ALSO BID UNIT PRICES OF $26.94 AND $30.57, RESPECTIVELY, IF THE FIRST ARTICLE TESTING REQUIREMENT OF THE IFB WAS WAIVED.

ON OCTOBER 14, 1969, THE PROCURING ACTIVITY REQUESTED THE DEFENSE CONTRACT ADMINISTRATION SERVICES DISTRICT, GARDEN CITY, NEW YORK (DCASD), TO PERFORM A PREAWARD SURVEY OF CAN-TITE. IN ITS PREAWARD SURVEY REPORT OF OCTOBER 27, 1969, DCASD RECOMMENDED THAT THE COMPLETE AWARD BE MADE TO CAN-TITE. THE CONTRACTING OFFICER AWARDED THE CONTRACT FOR THE ADVERTISED PORTION TO THAT FIRM, AS THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER, ON DECEMBER 4, 1969.

CAN-TITE CERTIFIED ITSELF TO BE A SMALL BUSINESS CONCERN AND SUBMITTED WITH ITS BID A CERTIFICATE OF ELIGIBILITY FOR PREFERENCE IN FEDERAL PROCUREMENT UNDER DEFENSE MANPOWER POLICY NO. 4. SINCE CAN TITE SUBMITTED THE LOW RESPONSIVE BID OF CERTIFIED-ELIGIBLE CONCERNS WHICH WERE ALSO SMALL BUSINESS CONCERNS, IT WAS ENTITLED TO THE FIRST PRIORITY FOR NEGOTIATION OF THE SET-ASIDE PORTION OF THE PROCUREMENT, AND RECEIVED THE AWARD AT ITS BID PRICE OF $25.66 A UNIT.

IN SUPPORT OF YOUR CONTENTIONS THAT CAN-TITE DOES NOT QUALIFY AS A RESPONSIBLE BIDDER AND THAT THE PREAWARD SURVEY WAS SUPERFICIAL, YOU FURNISHED A REPORT MADE BY A BUSINESS REPORTING FIRM. THIS REPORT INDICATES THAT CERTAIN OFFICERS OF CAN-TITE PLEADED "GUILTY" IN 1957, IN A FEDERAL DISTRICT COURT TO MAKING FALSE AND FRAUDULENT STATEMENTS INVOLVING A MATTER WITHIN THE JURISDICTION OF THE UNITED STATES DEPARTMENT OF COMMERCE, AND TO CONSPIRING TO VIOLATE THE DEFENSE PRODUCTION ACT OF 1950, WHILE SERVING AS PRINCIPALS IN A DIFFERENT CORPORATION. ALTHOUGH OFFENSES OF SUCH NATURE ARE SET OUT IN SECTION I, PART 6, OF ASPR AS GROUNDS FOR DEBARRING OR SUSPENDING INDIVIDUALS AND FIRMS, FOR PERIODS OF TIME, FROM PARTICIPATING IN GOVERNMENT PROCUREMENTS, IT SHOULD BE NOTED THAT EVEN IF THE OFFICERS' PRIOR CONDUCT COULD BE TRANSMITTED TO CAN-TITE THE PERIOD OF SUCH INELIGIBILITY WOULD HAVE BEEN COMPLETED UNDER THAT REGULATION SEVERAL YEARS PRIOR TO THE AWARD.

THE DCASD PREAWARD SURVEY TEAMS IN THE INSTANT CASE INVESTIGATED CAN TITE'S TECHNICAL CAPABILITY, PRODUCTION CAPABILITY, PLANT FACILITIES AND EQUIPMENT, FINANCIAL CAPABILITY, PURCHASING AND SUBCONTRACTING, QUALITY ASSURANCE CAPABILITY, PERFORMANCE RECORD AND ABILITY TO MEET THE REQUIRED SCHEDULE. THIS INVESTIGATION INCLUDED A VISIT TO CAN TITE'S PLANT BY MEMBERS OF THE DCASD TEAM. CAN-TITE'S TECHNICAL CAPABILITY WAS DEEMED SATISFACTORY AS WELL AS ITS PRODUCTION CAPABILITY, PLANT FACILITIES AND EQUIPMENT. ALTHOUGH ALL OF THE KIT COMPONENTS WERE TO BE PURCHASED BY CAN -TITE, IT SUBMITTED SATISFACTORY PLANS FOR THE PURCHASE OF THESE MATERIALS, FIRST ARTICLE TESTING, PRODUCTION ASSEMBLY, INSPECTION, PACKAGING AND SHIPMENT. CAN-TITE'S PRODUCTION EQUIPMENT WAS INSPECTED AND FOUND TO BE IN GOOD CONDITION AND ADEQUATE FOR PERFORMANCE OF THE CONTRACT. THIS FIRM'S PURCHASING AND SUBCONTRACTING ARRANGEMENTS WERE ALSO DEEMED SATISFACTORY, SINCE IT HAD IN HOUSE SUFFICIENT QUANTITIES OF COMPONENTS FOR ASSEMBLY OF THE FIRST ARTICLE AND IT FURNISHED WRITTEN QUOTATIONS FROM COMPONENT SUPPLIERS WHICH OFFERED ACCEPTABLE DELIVERY SCHEDULES.

A CHECK OF CAN-TITE'S PERFORMANCE RECORD SHOWED THAT ONE OF ITS TWO CONTRACTS BEING ADMINISTERED BY DCASD WAS DELINQUENT. HOWEVER, THE DELINQUENCY WAS FOUND TO BE DUE TO THE CONTRACTOR'S LATE REQUEST FOR GOVERNMENT FURNISHED MATERIALS, AND SUCH FACTOR WAS NOT CONSIDERED TO BE OF SUCH SIGNIFICANCE OR GRAVITY AS TO OVERCOME THE OTHERWISE FAVORABLE FINDINGS OF THE PREAWARD SURVEY TEAM. CAN-TITE'S QUALITY ASSURANCE PERSONNEL AND PROCEDURES WERE EXAMINED AND FOUND TO BE ADEQUATE FOR THE INSTANT PROCUREMENT. A FINANCIAL ANALYST DETERMINED THAT CAN-TITE'S FINANCIAL CAPABILITY WAS SATISFACTORY, UPON REVIEW OF THAT FIRM'S FINANCIAL RATIOS, CASH ON HAND, WORKING CAPITAL, VOLUME OF SALES, PROFITABLE OPERATIONS AND AVAILABILITY OF BANK FINANCING IF NEEDED.

IT IS THE ESTABLISHED POSITION OF OUR OFFICE THAT THE RESPONSIBILITY OR NONRESPONSIBILITY OF A PROSPECTIVE CONTRACTOR IS A MATTER PRIMARILY FOR DETERMINATION BY THE CONTRACTING OFFICER, AND HIS JUDGMENT WILL BE QUESTIONED BY OUR OFFICE ONLY UPON A SHOWING OF BAD FAITH OR LACK OF A REASONABLE BASIS FOR THE DECISION REACHED. 37 COMP. GEN. 430, 435 (1957). ALTHOUGH ONE OF THE FACTORS FOR CONSIDERATION UNDER ASPR 1 903.1 IN DETERMINING RESPONSIBILITY IS A SATISFACTORY RECORD OF INTEGRITY, WE HAVE HELD THAT EVIDENCE OF PRIOR INADEQUACIES, OR EVEN PRIOR ADMITTED CRIMINAL ACTIVITIES, DOES NOT COMPEL A FINDING OF NONRESPONSIBILITY. 167108, OCTOBER 27, 1969; B-167785, DECEMBER 19, 1969. ADDITIONALLY, IN THE INSTANT CASE, THE ALLEGED OFFENSES OCCURRED MORE THAN 13 YEARS AGO, AND AS STATED ABOVE, THE PERIOD OF ANY CONTRACTING RESTRICTIONS RESULTING THEREFROM AS CONTEMPLATED BY ASPR IS LONG GONE. IN THESE CIRCUMSTANCES, AND CONSIDERING THE FAVORABLE DATA WHICH WAS BEFORE THE CONTRACTING OFFICER, WE WOULD NOT BE JUSTIFIED IN HOLDING THAT THE ADMINISTRATIVE DETERMINATION THAT CAN-TITE WAS A RESPONSIBLE PROSPECTIVE CONTRACTOR FOR THIS PROCUREMENT IS LEGALLY OBJECTIONABLE.

YOU ALSO CONTEND THAT CAN-TITE DOES NOT MANUFACTURE THE EPOXY RESIN FORMULATIONS, WHICH YOU STATE ARE THE WHOLE HEART OF THE KIT. YOU SUGGEST THAT THIS WILL RESULT IN AN INFERIOR PRODUCT. IN THIS REGARD, THE INVITATION DID NOT REQUIRE BIDDERS TO BE MANUFACTURERS OF THE RESIN FORMULATIONS. CAN-TITE'S PURCHASING AND SUBCONTRACTING PLAN PRESENTED TO THE DCASD PREAWARD SURVEY TEAM INDICATED THAT THE RESIN WAS TO BE PURCHASED FROM CONAP, INC; ALLEGANY, NEW YORK, WHICH APPEARS TO BE AN ACCEPTABLE MANUFACTURER OF ELECTRICAL INSULATING SYSTEMS, ADHESIVES, COATINGS, SEALANTS, EPOXIES AND URETHANES. IT SHOULD ALSO BE NOTED THAT THE INVITATION PROVIDED FOR INSPECTION OF THE SUPPLIES BY THE GOVERNMENT AT THE CONTRACTOR'S OR SUBCONTRACTOR'S PLANT, AND INCLUDED THE CLAUSE FOR FIRST ARTICLE TESTING AND APPROVAL AS PRESCRIBED BY ASPR 7-104.55 (A), WHICH PROVISIONS APPEAR TO PROVIDE ADEQUATE PROTECTION AGAINST THE RECEIPT OF UNSATISFACTORY SUPPLIES.