B-169283, MAR. 30, 1970

B-169283, MAR. 30, 1970

BIDDERS--QUALIFICATIONS--SMALL BUSINESS CONCERNS--CERTIFICATION REFERRAL PROCEDURE FURTHER ACTION REGARDING NAVY'S REJECTION OF SMALL BUSINESS PROPOSAL FOR FURNISHING CERTAIN ELECTRONIC EQUIPMENT IS NOT REQUIRED, SINCE SBA HAS NOT ISSUED CERTIFICATE OF COMPETENCY AS TO PROTESTANT, AND UNDER CIRCUMSTANCES GAO WOULD NOT BE WARRANTED IN TAKING EXCEPTION TO CONTRACTING OFFICER'S DETERMINATION OF PROTESTANT'S NONRESPONSIBILITY UNLESS DETERMINATION IS CLEARLY ARBITRARY OR CAPRICIOUS OR NOT BASED ON SUBSTANTIAL EVIDENCE. REJECTION APPARENTLY WAS BASED UPON CONTRACTING OFFICER'S REASONABLE BELIEF THAT ON BASIS OR PROPOSAL HE COULD NOT DETERMINE BIDDER RESPONSIBLE AS REQUIRED BY ASPR 1-904.1 AND 1-904.2. SEE COMP. GEN. DECS. CITED.

TO COIL COMPANY OF AMERICA, INCORPORATED:

REFERENCE IS MADE TO YOUR LETTER DATED MARCH 3, 1970, WITH ENCLOSURES, REQUESTING OUR CONSIDERATION OF THE CIRCUMSTANCES UNDER WHICH A PROPOSAL OF YOUR COMPANY WAS REJECTED AND AN AWARD MADE TO THE PROTOTYPE TRANSFORMER CORPORATION, EAST ORANGE, NEW JERSEY, FOR THE FURNISHING OF CERTAIN ELECTRONIC REACTORS, PURSUANT TO REQUEST FOR PROPOSALS NO. N00126- 69-R-8-X-W919, ISSUED JUNE 17, 1969, BY THE NAVY ELECTRONICS SUPPLY OFFICE, GREAT LAKES, ILLINOIS.

THE ENCLOSURES WITH YOUR LETTER INDICATE THAT, AS OF JULY 8, 1969, THE CLOSING DATE FOR RECEIPT OF PROPOSALS, ONLY TWO PROPOSALS HAD BEEN RECEIVED. THOSE PROPOSALS WERE SUBMITTED BY YOUR COMPANY AND THE PROTOTYPE TRANSFORMER CORPORATION AND YOUR PROPOSAL PRICES WERE LOWER THAN THE PRICES QUOTED BY THE OTHER OFFEROR. THE CONTRACTING OFFICER DETERMINED THAT AN AWARD SHOULD NOT BE MADE TO YOUR COMPANY BECAUSE IT COULD NOT, IN HIS OPINION, QUALIFY AS A RESPONSIBLE PROSPECTIVE CONTRACTOR UNDER THE STANDARDS OF SECTION 1, PART 9, ARMED SERVICES PROCUREMENT REGULATION (ASPR), FOR THE PROCUREMENT INVOLVED.

SINCE YOUR COMPANY WAS REPRESENTED TO BE A SMALL BUSINESS CONCERN AND THE DETERMINATION OF NONRESPONSIBILITY ON THE PART OF YOUR COMPANY APPARENTLY RELATED PRIMARILY TO A QUESTION WHETHER IT HAD THE CAPACITY TO PERFORM THE PROPOSED CONTRACT, IT WAS FOUND NECESSARY TO REFER THE CASE TO THE SMALL BUSINESS ADMINISTRATION (SBA), FOR CONSIDERATION UNDER THE SMALL BUSINESS CERTIFICATE OF COMPETENCY PROGRAM. THE SBA GENERALLY IS ALLOWED A PERIOD OF 15 DAYS TO DETERMINE IN SUCH CASES WHETHER OR NOT TO ISSUE A CERTIFICATE OF COMPETENCY (COC), AS TO THE CAPACITY AND CREDIT OF A SMALL BUSINESS BIDDER OR OFFEROR, WHICH WOULD BE APPLICABLE TO THE PROCUREMENT UNDER CONSIDERATION. SEE ASPR 1 705.4 (C).

BY LETTER DATED AUGUST 26, 1969, FROM THE NEWARK, NEW JERSEY, OFFICE OF THE SBA, YOU WERE REQUESTED TO COMPLETE AND RETURN CERTAIN FORMS NOT LATER THAN 9:00 A.M; SEPTEMBER 5, 1969. IN A LETTER DATED SEPTEMBER 5, 1969, YOU WERE ADVISED THAT, SINCE THE REQUIRED APPLICATION AND DATA HAD NOT BEEN RECEIVED, THE SBA WAS REQUIRED TO CLOSE THE CASE. IN THE MEANTIME, BY LETTER DATED AUGUST 26, 1969, AFTER YOU HAD RECEIVED A TELEPHONE CALL FROM THE SBA NEWARK, NEW JERSEY OFFICE, YOU ADVISED THE NAVY ELECTRONICS SUPPLY OFFICE WITH RESPECT TO THE POSSIBILITY THAT YOU WOULD NOT PURSUE THE MATTER WITH THE SBA, AND REFERRED TO CERTAIN DISCUSSIONS WHICH TOOK PLACE WHILE THE PREAWARD SURVEY OF YOUR COMPANY WAS BEING CONDUCTED. YOU INDICATED THAT A DISPUTE HAD ARISEN BETWEEN REPRESENTATIVES OF YOUR COMPANY AND REPRESENTATIVES OF THE GOVERNMENT'S PREAWARD SURVEY TEAM CONCERNING THE QUESTION WHETHER CERTAIN OF YOUR TESTING EQUIPMENT COULD BE REGARDED AS SATISFACTORY IF THEY HAD NOT BEEN CALIBRATED.

BY ENACTMENT OF SECTION 8 (B) (7) OF THE SMALL BUSINESS ACT, 15 U.S.C. 637 (B) (7), THE CONGRESS HAS LIMITED IN SOME RESPECTS THE AUTHORITY OF ADMINISTRATIVE OFFICERS TO MAKE FINAL DETERMINATIONS OF NONRESPONSIBILITY ON THE PART OF SMALL BUSINESS BIDDERS OR OFFERORS BY PROVIDING THAT, WHERE A SMALL BUSINESS CONCERN IS CERTIFIED BY THE SBA TO BE COMPETENT AS TO CAPACITY AND CREDIT, THE PROCURING OFFICERS OF THE GOVERNMENT MUST ACCEPT SUCH CERTIFICATION AS CONCLUSIVE. THE SBA MAY SUBSTITUTE ITS JUDGMENT FOR THAT OF THE CONTRACTING AGENCY WITH RESPECT TO THE QUESTION WHETHER A SMALL BUSINESS OFFEROR HAS THE NECESSARY FINANCIAL RESOURCES, FACILITIES AND EQUIPMENT, OR THE ABILITY TO OBTAIN THEM WITHIN SUFFICIENT TIME. HOWEVER, IF A COC HAS NOT BEEN ISSUED AND A PROTEST IS MADE TO OUR OFFICE AGAINST A CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY IN THE PARTICULAR CASE, WE WOULD NOT BE WARRANTED IN TAKING EXCEPTION TO THE DETERMINATION UNLESS IT IS CLEAR THAT THE DETERMINATION IS EITHER ARBITRARY OR CAPRICIOUS, OR NOT BASED ON SUBSTANTIAL EVIDENCE. THE REASONS FOR THIS CONCLUSION ARE SET FORTH IN 47 COMP. GEN. 291 (1967), AT PAGE 304, AND YOUR ATTENTION IS ALSO INVITED TO 43 COMP. GEN. 228 (1963), WHEREIN WE STATED THAT THE ABILITY OF A BIDDER TO PERFORM IN ACCORDANCE WITH THE REQUIREMENTS OF AN INVITATION FOR BIDS IS FOR DETERMINATION PRIMARILY BY THE CONTRACTING AGENCY "AND ABSENT A SHOWING OF BAD FAITH OR LACK OF A REASONABLE BASIS THEREFOR, WE WILL NOT QUESTION THE VALIDITY OF THE DETERMINATION."

ASPR 1-902 STATES IN PART THAT A RESPONSIBLE PROSPECTIVE CONTRACTOR IS ONE WHICH MEETS THE STANDARDS SET FORTH IN ASPR 1-903.1 AND 1 903.2. THE PRESCRIBED STANDARDS FOR RESPONSIBLE PROSPECTIVE CONTRACTORS INCLUDE AN ABILITY TO COMPLY WITH THE REQUIRED OR PROPOSED DELIVERY SCHEDULE AND THE POSSESSION OF THE NECESSARY TECHNICAL EQUIPMENT AND FACILITIES, OR THE ABILITY TO OBTAIN THEM WITHIN SUFFICIENT TIME TO COMPLY WITH THE REQUIREMENTS OF THE PROPOSED CONTRACT.

WITH RESPECT TO THE POSSIBILITY THAT YOUR PROPOSAL WAS REJECTED PRIMARILY ON THE GROUND THAT YOUR TESTING EQUIPMENT HAD NOT BEEN CALIBRATED, THERE WOULD HAVE BEEN INVOLVED A QUESTION WHETHER THE TESTING EQUIPMENT WAS SUFFICIENTLY ADEQUATE TO PROVIDE ASSURANCE THAT SATISFACTORY ITEMS WOULD BE TIMELY FURNISHED UNDER A CONTRACT AWARDED TO YOUR COMPANY. PRESUMABLY IT WAS THE OPINION OF THE GOVERNMENT'S TECHNICAL EXPERTS IN THE PARTICULAR FIELD WHO PERFORMED THE PREAWARD SURVEY OF YOUR COMPANY THAT THE EQUIPMENT COULD NOT BE CONSIDERED ADEQUATE WITHOUT CALIBRATION. IF THAT WAS THE SITUATION, IT WOULD APPEAR THAT THE CONTRACTING OFFICER'S DECISION TO REJECT YOUR PROPOSAL WAS NOT ARBITRARY BUT WAS BASED UPON A REASONABLE BELIEF THAT HE COULD NOT MAKE AN AFFIRMATIVE DETERMINATION CONCERNING THE MATTER OF YOUR RESPONSIBILITY, SUCH AS WOULD HAVE BEEN REQUIRED UNDER ASPR 1-904.1 AND 1-904.2 FOR THE PURPOSE OF MAKING AN AWARD ON THE BASIS OF YOUR PROPOSAL.

ACCORDINGLY, FURTHER ACTION BY OUR OFFICE WITH RESPECT TO THE REJECTION OF YOUR PROPOSAL DOES NOT APPEAR TO BE REQUIRED. WE ARE RETURNING THE COPY OF YOUR PROPOSAL, THE CORRESPONDENCE, WITH ENCLOSURES, WHICH YOU RECEIVED FROM THE SBA, AND THE UNDATED LETTER WHICH YOU RECEIVED FROM THE NAVY ELECTRONICS SUPPLY OFFICE ADVISING OF THE AWARD MADE TO THE PROTOTYPE TRANSFORMER CORPORATION.