B-169441, DEC. 22, 1970

B-169441: Dec 22, 1970

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WERE UNDERWAY. SEAY AND MANUEL: REFERENCE IS MADE TO YOUR PROTEST. WHICH WAS NEGOTIATED UNDER THE AUTHORITY IN 10 U.S.C. 2304(A)(10). WAS RESTRICTED TO SMALL BUSINESS CONCERNS. RECEIVED THE AWARD AFTER THE CONTRACTING OFFICER HAD ISSUED A DETERMINATION THAT GARY WAS RESPONSIBLE IN ACCORDANCE WITH ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-904. GARY'S TOTAL PRICE FOR FISCAL YEAR 1970 WAS $593. TWO OTHER QUOTATIONS WERE HIGHER. YOU SAY THAT YOU HAVE BEEN INFORMED THAT DURING A PREAWARD SURVEY OF THE FIRM GARY WAS DETERMINED TO BE NOT TECHNICALLY QUALIFIED AND TO BE LACKING IN ADEQUATE PRODUCTION AND OTHER FACILITIES. YOU ASSERT THAT ALTHOUGH GARY WAS DELINQUENT UNDER A SIMILAR CONTRACT WITH THE DEPARTMENT OF THE AIR FORCE.

B-169441, DEC. 22, 1970

BID PROTEST - BIDDER RESPONSIBILITY - CAPACITY DENIAL OF PROTEST OF AMERICAN AIR MOTIVE CORPORATION AGAINST THE AWARD OF A NEGOTIATED CONTRACT FOR OVERHAUL OF R-3350 AIRCRAFT ENGINES ISSUED BY NAVAL AIR SYSTEMS COMMAND TO GARY AIRCRAFT CORPORATION. WHERE A SURVEY OF GARY BROUGHT TO THE SURFACE QUESTIONS ABOUT ITS CAPACITY TO PERFORM THE CONTRACT BECAUSE OF CURRENT OBLIGATIONS UNDER AN AIR FORCE CONTRACT AND ABOUT THE ADEQUACY OF ITS QUALITY CONTROL TECHNIQUES THAN THE SUBSEQUENT AWARD TO GARY AFTER IT HAD TAKEN ADVANTAGE OF OPTIONS IN ITS AIR FORCE CONTRACT TO REDUCE ITS OBLIGATION THEREUNDER CANNOT BE ASSAULTED ON THE GROUNDS THAT THE CONTRACTING OFFICER DELIBERATELY DELAYED IN ORDER TO AFFORD GARY MORE TIME BECAUSE IN THE INTERUM PREAWARD SURVEYS (RESULTING IN UNFAVORABLE EVALUATIONS) OF OTHER OFFERORS (INCLUDING PROTESTANT), WERE UNDERWAY.

TO GIANGRECO, SEAY AND MANUEL:

REFERENCE IS MADE TO YOUR PROTEST, BY TELEGRAM DATED MARCH 30, 1970, ON BEHALF OF AMERICAN AIR MOTIVE CORPORATION (AMERICAN), MIAMI, FLORIDA, AGAINST THE AWARD OF CONTRACT N00019-70-C-0434 TO GARY AIRCRAFT CORPORATION (GARY), SAN ANTONIO, TEXAS, BY THE NAVAL AIR SYSTEMS COMMAND (NASC) FOR THE PERFORMANCE OF OVERHAUL AND RELATED WORK ON R 3350 AIRCRAFT ENGINES DURING THE FISCAL YEAR 1970, WITH OPTIONS FOR FISCAL YEARS 1971 AND 1972. THE PROCUREMENT, WHICH WAS NEGOTIATED UNDER THE AUTHORITY IN 10 U.S.C. 2304(A)(10), WAS RESTRICTED TO SMALL BUSINESS CONCERNS.

THE SOLICITATION, REQUEST FOR QUOTATIONS (RFQ) N00019-70-Q-0039, DATED OCTOBER 21, 1969, PROVIDED, AMONG OTHER THINGS, THAT AWARD WOULD BE MADE TO THE RESPONSIBLE OFFEROR WHOSE OFFER, CONFORMING TO THE SOLICITATION WOULD BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. IT SPECIFICALLY RESERVED TO THE GOVERNMENT THE RIGHT TO CONDUCT A PREAWARD SURVEY TO DETERMINE THE PROSPECTIVE CONTRACTOR'S ABILITY TO COMPLY WITH THE PROCUREMENT REQUIREMENTS AND PERFORM IN ACCORDANCE WITH THE TERMS OF THE PROPOSED CONTRACT. GARY, THE LOW OFFEROR, RECEIVED THE AWARD AFTER THE CONTRACTING OFFICER HAD ISSUED A DETERMINATION THAT GARY WAS RESPONSIBLE IN ACCORDANCE WITH ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-904. GARY'S TOTAL PRICE FOR FISCAL YEAR 1970 WAS $593,600. AMERICAN, THE SECOND-LOW OFFEROR, QUOTED A TOTAL PRICE OF $860,244.56, AND TWO OTHER QUOTATIONS WERE HIGHER.

YOU SAY THAT YOU HAVE BEEN INFORMED THAT DURING A PREAWARD SURVEY OF THE FIRM GARY WAS DETERMINED TO BE NOT TECHNICALLY QUALIFIED AND TO BE LACKING IN ADEQUATE PRODUCTION AND OTHER FACILITIES. YOU ASSERT THAT ALTHOUGH GARY WAS DELINQUENT UNDER A SIMILAR CONTRACT WITH THE DEPARTMENT OF THE AIR FORCE, IT APPEARS THAT THE NAVY CONTRACTING OFFICER DELIBERATELY DEFERRED AWARD UNDER THE RFQ UNTIL A REDUCED DELIVERY SCHEDULE COULD BE NEGOTIATED BY GARY WITH THE AIR FORCE, THEREBY REMEDYING THE DELINQUENCY ON THAT CONTRACT. IN ADDITION, YOU SAY THAT A REVISED SCHEDULE OF INPUT AND PRODUCTION DELIVERY UNDER THE NAVY RFQ WAS DELIBERATELY MADE TO ACCOMMODATE GARY'S LOW QUOTATION ON THE NAVY PROCUREMENT.

IN LINE WITH THE FOREGOING, YOU CONTEND THAT GARY WAS DISQUALIFIED BY THE ADVERSE PREAWARD SURVEY REPORT, AND THAT THE CONTRACTING OFFICER VIOLATED THE PROVISIONS OF 10 U.S.C. 2304(G) AND ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-805.1, RELATING TO NEGOTIATION WITH OFFERORS WITHIN A COMPETITIVE RANGE, BY NOT CONDUCTING NEGOTIATIONS WITH AMERICAN. ACCORDINGLY, YOU REQUEST THAT THE CONTRACT WHICH WAS AWARDED TO GARY BE SET ASIDE AND THAT NASC BE INSTRUCTED TO ENTER INTO NEGOTIATIONS WITH AMERICAN FOR A CONTRACT FOR THE PROCUREMENT.

AN ADDITIONAL COMPLAINT WHICH YOU MAKE IS THAT NASC DENIED YOU ACCESS TO THE PREAWARD SURVEY REPORT ON GARY. IN THIS CONNECTION, ASPR 1-907 PRECLUDES RELEASE OUTSIDE THE GOVERNMENT OF PREAWARD SURVEY DATA AND SPECIFICALLY STATES THAT SUCH DATA "SHALL NOT BE MADE AVAILABLE FOR INSPECTION BY INDIVIDUALS, FIRMS, OR TRADE ORGANIZATIONS." SEE, ALSO, ASPR 1-329.3(C)(5)(B), WHICH EXEMPTS FROM PUBLIC DISCLOSURE, PURSUANT TO PUBLIC LAW 89-487 (AS CODIFIED AT 5 U.S.C. 552), PREAWARD SURVEYS AND OTHER ADVISORY DOCUMENTS CONSIDERED BY CONTRACTING OFFICERS IN DETERMINING CONTRACTOR RESPONSIBILITY FOR AWARD PURPOSES. IN THE CIRCUMSTANCES, THE ACTION OF NASC IN THIS RESPECT MUST BE REGARDED AS BEING IN ACCORD WITH THE PERTINENT STATUTE AND REGULATIONS.

THE RECORD MADE AVAILABLE TO OUR OFFICE SHOWS THAT IN JUNE 1969, FOUR MONTHS PRIOR TO THE ISSUANCE OF THE RFQ BY NASC, THE DEFENSE CONTRACT ADMINISTRATION SERVICES OFFICE, SAN ANTONIO (DCASO-SAN ANTONIO), MADE A SURVEY OF GARY AT THE REQUEST OF THE DEPARTMENT OF THE AIR FORCE FOR THE PURPOSE OF ASCERTAINING WHETHER GARY WAS CAPABLE OF PERFORMING OVERHAUL OF R-3350 AND R-1830 AIRCRAFT ENGINES. THE SURVEY FINDINGS WERE FAVORABLE, AND AIR FORCE CONTRACT F41608-69-D-0239 WAS ACCORDINGLY AWARDED TO GARY.

ON NOVEMBER 21, 1969, AFTER THE OPENING OF QUOTATIONS RECEIVED IN RESPONSE TO THE SUBJECT SOLICITATION, DCASO-SAN ANTONIO WAS REQUESTED TO MAKE A PREAWARD SURVEY OF GARY FOR NASC. THE SURVEY WAS PERFORMED IN DECEMBER 1969 BY A DCASO-SAN ANTONIO TEAM, WHICH WAS ACCOMPANIED BY A NAVY TEAM COMPRISED OF SEVEN PRODUCTION AND QUALITY CONTROL EXPERTS.

UNDER DATE OF DECEMBER 9, 1969, DCASO-SAN ANTONIO ISSUED ITS PREAWARD SURVEY REPORT ON GARY, WHICH WAS COMPRISED OF TWO SEPARATE REPORTS; I.E., A MAJORITY REPORT, WHICH RATED SEVERAL AREAS UNSATISFACTORY AND RECOMMENDED NO AWARD, AND A MINORITY REPORT, WHICH DISAGREED WITH THE MAJORITY REPORT AND CONCLUDED THAT GARY COULD PERFORM SUCCESSFULLY. THE NAVY TEAM ISSUED A SEPARATE REPORT WHICH ALSO RECOMMENDED AWARD TO GARY.

THE ADVERSE DCASO MAJORITY REPORT ON GARY MADE NOTE OF THE FACT THAT GARY WAS OVERHAULING AIRCRAFT ENGINES UNDER ITS AIR FORCE CONTRACT AND CONCLUDED THAT GARY WOULD NOT HAVE THE CAPABILITY TO PERFORM BOTH THE AIR FORCE AND THE NAVY CONTRACTS CONCURRENTLY. A MEMORANDUM IN THE FILE, HOWEVER, ADDRESSED UNDER DATE OF JANUARY 7, 1970, BY DCASO-SAN ANTONIO TO THE DEFENSE CONTRACT ADMINISTRATION SERVICES REGION, DALLAS, TEXAS (DCASR- DALLAS), STATES THAT "BASED UPON FACTUAL NOTIFICATION BY THE AIR FORCE REGARDING REDUCED REQUIREMENTS FOR R-1830 AND R-3350 (ENGINES), THE CONTRACTOR MIGHT HAVE AVAILABLE THE CAPABILITY THAT WOULD PERMIT PERFORMANCE OF THE NAVY REQUIREMENTS UNDER SOLICITATION N00019-70-Q- 0039."

DCASR-DALLAS REVIEWED THE PREAWARD SURVEY REPORT AND RELATED DATA ON GARY AND CONCURRED WITH THE OPINION OF DCASO-SAN ANTONIO THAT A CUTBACK ON THE AIR FORCE PROGRAM WOULD MATERIALLY IMPROVE GARY'S TECHNICAL AND PRODUCTION CAPABILITIES, PLANT FACILITIES AND EQUIPMENT AVAILABILITY. NEVERTHELESS, DCASR-DALLAS CONCLUDED THAT GARY WAS DEFICIENT IN THE QUALITY CONTROL AREA AS WELL AS AREAS OF TECHNICAL AND PRODUCTION CAPABILITIES AND CERTAIN OTHER AREAS. THE DCASR-DALLAS PREAWARD SURVEY REVIEW BOARD THEREFORE VOTED TO RECOMMEND NO AWARD TO GARY "BASED ON FAILURE ON THE PART OF THE BIDDER TO SHOW HOW HE WOULD SATISFY THE REQUIREMENTS OF THIS PROCUREMENT."

A DCASO-SAN ANTONIO SMALL BUSINESS REPRESENTATIVE, WHO PARTICIPATED IN THE DCASR-DALLAS BOARD ACTION, DISAGREED WITH THE BOARD'S NEGATIVE RECOMMENDATION. FURTHER, A MEMORANDUM ISSUED ON DECEMBER 11, 1969, BY THE CHIEF OF THE DCASO-SAN ANTONIO SMALL BUSINESS OFFICE DISCLOSES THAT THE SURVEY TEAM DISCUSSED WITH GARY THE AREAS QUESTIONED BY THE TEAM. STATES THAT "THE CONTRACTOR, BY SUBMISSION OF A FIRM, WRITTEN COMMITMENT TO CORRECT ALL CURRENT DEFICIENCIES, EXPAND FACILITIES AS MAY BE REQUIRED, HIRE ADDITIONAL SKILLS AS NEEDED, AND UPDATE QUALITY CONTROL MANUALS, ETC., HAS CLEARLY DEMONSTRATED THE CAPABILITY TO PERFORM SUCCESSFULLY." THE MEMORANDUM THEREFORE URGED THE COMMANDER, DCASR-DALLAS, TO OVERRIDE THE BOARD'S ACTION. THE COMMANDER, HOWEVER, APPROVED THE BOARD'S NEGATIVE RECOMMENDATION ON DECEMBER 11.

ON DECEMBER 15, 1969, NASC REQUESTED A PREAWARD SURVEY OF AMERICAN. ALSO IN DECEMBER, NASC REQUESTED A SURVEY OF AERODEX, INC. (AERODEX), THE THIRD -LOW OFFEROR. SINCE BOTH FIRMS WERE LOCATED IN MIAMI, DETACHMENT 7 AIR FORCE CONTRACT MAINTENANCE CENTER, MIAMI, CONDUCTED THE SURVEYS IN CONJUNCTION WITH A NAVY TEAM.

THE PREAWARD SURVEY REPORT ON AMERICAN, WHICH WAS DATED JANUARY 19, 1970, INCLUDED A UNANIMOUS RECOMMENDATION OF THE JOINT SURVEY TEAM THAT NO AWARD BE MADE TO AMERICAN. THIS RECOMMENDATION WAS BASED UPON AMERICAN'S UNSATISFACTORY PERFORMANCE RECORD AND A DETERMINATION THAT IT WAS UNABLE TO MEET THE REQUIRED SCHEDULE. THE PREAWARD SURVEY REVIEW BOARD AT MIAMI REVIEWED THE SURVEY DATA AND STATED THAT WITH A LONGER START-UP TIME THE FINDING OF AMERICAN'S INABILITY TO MEET THE REQUIRED SCHEDULE COULD HAVE BEEN ELIMINATED; NEVERTHELESS, THE BOARD FURTHER STATED, THE UNSATISFACTORY PERFORMANCE RECORD WOULD PRECLUDE RECOMMENDATION FOR AWARD TO AMERICAN. THE BOARD THEREFORE CONCURRED WITH THE ADVERSE SURVEY REPORT AND RECOMMENDATION ON AMERICAN.

AS TO AERODEX, THE SURVEY TEAM REPORTED THAT WITH TIMELY CORRECTION OF CERTAIN DEFICIENCIES, WHICH THE TEAM HAD NOTED WITH RESPECT TO PLANT FACILITY CAPABILITY AND PLANT SAFETY, AERODEX WOULD MEET THE REQUIREMENTS FOR PERFORMANCE OF THE CONTRACT.

ON JANUARY 22, 1970, NASC REPRESENTATIVES MET AND CONSIDERED THE PREAWARD SURVEY REPORTS ON ALL THREE LOW OFFERORS AND THE EVALUATION OF THE REPORTS BY THE NASC SURVEY TEAM. THE NASC MEMORANDUM ON THE MATTER STATES THAT AN ANALYSIS OF THE REPORTS ON GARY AND AERODEX REVEALED THAT THE DEFICIENCIES NOTED BY THE SURVEY TEAM COULD BE CORRECTED; THAT BOTH GARY AND AERODEX HAD EXPERIENCE IN THE OVERHAUL OF THE R-3350 SERIES ENGINES FOR THE AIR FORCE; AND THAT BOTH FIRMS HAD APPARENTLY DELIVERED AN ACCEPTABLE PRODUCT DURING PERFORMANCE OF THEIR CONTRACTS. WITH REGARD TO AMERICAN, HOWEVER, THE MEMORANDUM STATED THAT IT DID NOT APPEAR THAT AMERICAN COULD ACQUIRE AN ACCEPTABLE STATURE FOR THE SAME FACTORS WITHIN A SUITABLE TIME FRAME. THE MEMORANDUM STATED THE CONCLUSION THAT WHILE GARY AND AERODEX, WITH TIMELY CORRECTION OF DEFICIENCIES, COULD QUALIFY AS ACCEPTABLE SOURCES OF SUPPLY, AMERICAN WAS UNACCEPTABLE. IN ADDITION, SINCE GARY'S PROPOSAL WAS SUBSTANTIALLY LOWER IN PRICE THAN THE PROPOSAL OF AERODEX, THE NASC REPRESENTATIVES RECOMMENDED THAT AWARD BE MADE TO GARY.

ON JANUARY 27, THE NASC PROCUREMENT REVIEW BOARD CONSIDERED THE MATTER. QUALITY ASSURANCE PERSONNEL ADVISED THE BAORD THAT ENGINES OVERHAULED BY GARY APPEARED TO HOLD UP AS WELL AS ENGINES OVERHAULED BY AERODEX AND THAT GARY HAD THE REQUIRED CAPABILITY TO PERFORM THE NAVY CONTRACT. OTHER NASC PERSONNEL EXPRESSED THEIR CONFIDENCE IN GARY'S CAPABILITY BUT RECOMMENDED A POST AWARD SURVEY OF THE GARY FACILITY. THE BOARD'S UNANIMOUS OPINION WAS THAT THE CONTRACT SHOULD BE NEGOTIATED WITH GARY WITHOUT FURTHER DISCUSSION WITH OTHER OFFERORS. A MEMORANDUM OF THE NASC BOARD'S MEETING INDICATES THAT THE BOARD'S DECISION WAS BASED ON (1) AGREEMENT THAT AMERICAN COULD NOT BE DETERMINED TO BE A RESPONSIBLE CONTRACTOR FOR THE PROCUREMENT REQUIREMENT AND THAT ITS PRICE WAS NOT WITHIN THE COMPETITIVE RANGE; (2) A DETERMINATION THAT THE PRICES OF THE OTHER OFFERORS WERE ALSO NOT WITHIN THE COMPETITIVE RANGE AS CONTEMPLATED BY ASPR 3-805.1; AND (3) THE FACT THAT GARY COULD BE DETERMINED TO BE A RESPONSIBLE CONTRACTOR BASED ON CAREFUL ANALYSIS OF THE PREAWARD SURVEY REPORT OF DECEMBER 9, 1969, AS SUPPLEMENTED BY INFORMATION FURNISHED BY THE NAVY MEMBERS OF THE SURVEY TEAM AND BY THE NASC MEMORANDUM OF JANUARY 22, 1970, DISCUSSED ABOVE.

IN A TELEPHONE CALL OF JANUARY 29, NASC PERSONNEL WERE ADVISED BY DCASR- DALLAS THAT GARY WAS TO BE RESURVEYED ON JANUARY 30, 1970, AT THE REQUEST OF THE DEPARTMENT OF THE AIR FORCE, INCIDENT TO AWARD OF ADD-ON REQUIREMENTS UNDER GARY'S AIR FORCE CONTRACT; THAT DCASR-DALLAS PERSONNEL, DURING AN INFORMAL VISIT TO GARY, HAD NOTED MANY CHANGES AND IMPROVEMENTS BY GARY WHICH MIGHT LEAD TO REPLACEMENT OF THE "NO AWARD" RECOMMENDATION BY A "COMPLETE AWARD" RECOMMENDATION; AND THAT DCASR DALLAS WAS WILLING TO RESURVEY GARY, UPON REQUEST, FOR THE NAVY PROCUREMENT. BY TWX OF THE SAME DATE, NASC REQUESTED DCASR-DALLAS TO PERFORM THE RESURVEY.

ON FEBRUARY 4, DCASR-DALLAS ADVISED NASC THAT IN LIEU OF A FORMAL RESURVEY OF GARY, DCASR PERSONNEL HAD REVISITED GARY'S PLANT, HAD NOTED VARIOUS IMPROVEMENTS IN GARY'S OPERATIONS AND FACILITIES, AND HAD OBSERVED THAT ONLY PLATING PROBLEMS WOULD PRECLUDE A DCASR RECOMMENDATION FOR COMPLETE AWARD. ON FEBRUARY 11, DCASO-SAN ANTONIO ADVISED NASC THAT ITS NEGATIVE RECOMMENDATION MIGHT BE REVERSED IF DCASR-DALLAS WOULD APPROVE GARY IN THE QUALITY ASSURANCE AREA. OTHER ADVICE RECEIVED BY NASC FROM DCASR-DALLAS WAS TO THE EFFECT THAT THE AIR FORCE HAD CERTIFIED GARY'S COMPLIANCE WITH PLATING REQUIREMENTS AND HAD THEREFORE PROCEEDED TO MAKE AWARD TO GARY, NOTWITHSTANDING THE NEGATIVE RECOMMENDATION IN THE DCASO- SAN ANTONIO DECEMBER 1969 PREAWARD SURVEY REPORT, THEREBY NECESSITATING RECONSIDERATION OF THE MATTER BY DCASR-DALLAS AT A POST AWARD CONFERENCE.

THE MINUTES OF THE DCASR-DALLAS PREAWARD SURVEY REVIEW BOARD POST AWARD CONFERENCE, WHICH WAS HELD ON FEBRUARY 12, 1970, SHOW THAT THE BOARD RECOMMENDED WITHDRAWAL OF THE NEGATIVE DCASO-SAN ANTONIO RECOMMENDATION IN THE ORIGINAL PREAWARD SURVEY REPORT AND SUBSTITUTION OF AN AFFIRMATIVE RECOMMENDATION. IN MAKING ITS RECOMMENDATIONS, THE DCASR-DALLAS BOARD TOOK NOTE OF THE FACT THAT A REDUCTION BY THE AIR FORCE OF ITS REQUIREMENTS FOR OVERHAUL OF R-1830 AND R-3350 ENGINES HAD RESULTED IN AVAILABILITY TO GARY OF SUFFICIENT WORKERS AND WORK-LEADERS TO PERMIT CONCURRENT PERFORMANCE OF THE NAVY REQUIREMENTS FOR OVERHAUL OF R-3350 ENGINES, AND THAT A NEW BUILDING COMPLETED BY GARY PROVIDED ADEQUATE SPACE FOR TEMPORARY STORAGE OF NAVY GOVERNMENT-FURNISHED PROPERTY AND FOR SETTING UP SEPARATE NAVY OVERHAUL LINES. THE BOARD FURTHER NOTED THAT GARY HAD IMPROVED ITS PREVIOUSLY UNSATISFACTORY QUALITY ASSURANCE SYSTEM TO THE POINT OF ACCEPTABILITY BY BOTH DCASO SAN ANTONIO AND DCASR-DALLAS, AND THAT GARY'S IMPROVED PERFORMANCE OF ITS AIR FORCE CONTRACT REQUIREMENTS FOR R-3350 ENGINES DURING NOVEMBER AND DECEMBER 1969 WARRANTED A FINDING THAT ITS PERFORMANCE SHOULD NOW BE DECLARED SATISFACTORY. NASC GAVE CONSIDERATION TO THE DCASR-DALLAS BOARD REVISED RECOMMENDATION WITH RESPECT TO GARY, AND AFTER SELECTION OF GARY FOR NEGOTIATION ON THE BASIS OF ITS PROPOSAL, NASC PERSONNEL MET WITH GARY ON FEBRUARY 20, 1970, TO DISCUSS THE PROCUREMENT REQUIREMENTS AND THE ACTIONS WHICH GARY HAD TAKEN TO CORRECT THE DEFICIENCIES WHICH HAD BEEN NOTED IN THE INITIAL PREAWARD SURVEY. A NAVY REPRESENTATIVE, WHO HAD PARTICIPATED IN THE SURVEY, EXPRESSED SATISFACTION WITH GARY'S PROGRESS REPORT AND NOTED, AMONG OTHER THINGS, THAT GARY HAD REVISED ITS QUALITY CONTROL MANUAL IN ACCORDANCE WITH THE APPLICABLE SPECIFICATION, MIL-I-45208A, AND HAD SUBMITTED THE MANUAL TO THE GOVERNMENT FOR COMMENT. IN ADDITION, THE PARTIES AGREED ON ARRANGEMENTS FOR PERFORMANCE OF A POST AWARD SURVEY OF GARY TO ASSURE CONTINUED PROGRESS IN THE AREAS WHICH HAD BEEN QUESTIONED AT THE TIME OF THE PREAWARD SURVEY.

ON MARCH 2, THE CONTRACT NEGOTIATOR RECOMMENDED AWARD TO GARY, AND ON MARCH 3, THE CONTRACTING OFFICER, WHO HAD ALREADY ISSUED A DETERMINATION UNDER DATE OF FEBRUARY 6 THAT GARY WAS A RESPONSIBLE CONTRACTOR FOR THE PURPOSE OF THE PROCUREMENT, APPROVED THE RECOMMENDATION FOR AWARD. THE CONTRACT, N00019-70-C-0434, WHICH WAS EXECUTED BY THE PARTIES ON MARCH 13, 1970, REFLECTED THE QUANTITIES SET FORTH IN THE RFQ, AS REDUCED BY AN AMENDMENT ISSUED NOVEMBER 10, 1969, OR TEN DAYS BEFORE THE NOVEMBER 20 CLOSING DATE FOR SUBMISSION OF QUOTATIONS. THE ONLY ITEM IN THE CONTRACT WHICH WAS NEGOTIATED WITH GARY WAS THE DELIVERY SCHEDULE, AND THIS ACTION WAS CONSIDERED JUSTIFIED IN VIEW OF THE FACT THAT THE ORIGINAL SCHEDULE HAD BEEN SET ON THE BASIS OF A JANUARY 1970 AWARD, WHEREAS THE ACTUAL AWARD DATE WAS SOME TWO MONTHS LATER.

BOTH 10 U.S.C. 2304(G) AND ASPR 3-805.1, WITH CERTAIN EXCEPTIONS NOT PERTINENT HERE, CONTEMPLATE NEGOTIATIONS AFTER RECEIPT OF INITIAL PROPOSALS; HOWEVER, SUCH NEGOTIATIONS ARE REQUIRED TO BE CONDUCTED ONLY WITH THOSE RESPONSIBLE OFFERORS WHOSE PROPOSALS ARE WITHIN A COMPETITIVE RANGE, PRICE AND OTHER FACTORS CONSIDERED. WE HAVE STATED THAT THE DETERMINATION OF WHICH PROPOSALS ARE WITHIN A COMPETITIVE RANGE IS PRIMARILY A MATTER OF ADMINISTRATIVE DISCRETION WHICH WILL NOT BE DISTURBED BY OUR OFFICE IN THE ABSENCE OF A CLEAR SHOWING THAT SUCH DETERMINATION INVOLVED AN ABUSE OF DISCRETION. 48 COMP. GEN. 314, 317 (1968). SIMILARLY, WE HAVE CONSISTENTLY HELD THAT THE DETERMINATION OF THE RESPONSIBILITY OF A PROSPECTIVE GOVERNMENT CONTRACTOR IS PRIMARILY THE FUNCTION OF THE CONTRACTING AGENCY CONCERNED, AND OUR OFFICE WILL NOT QUESTION THE FINAL JUDGMENT OF THE OFFICIALS CONCERNED UNLESS IT IS SHOWN TO BE ARBITRARY, CAPRICIOUS OR WITHOUT ADEQUATE SUPPORT IN THE RECORD. COMP. GEN. 131, 133 (1958).

THE RECORD ESTABLISHES THAT SHORTLY AFTER RECEIPT BY NASC OF THE NEGATIVE PREAWARD SURVEY REPORT ON GARY, ACTION WAS INITIATED BY NASC TO HAVE A PREAWARD SURVEY MADE OF AMERICAN. IN ADDITION, THE RECORD SHOWS THAT THE DECISION BY NASC NOT TO NEGOTIATE WITH AMERICAN WAS BASED ON A DETERMINATION BY THE CONTRACTING OFFICER, AFTER CONSIDERATION OF THE NEGATIVE PREAWARD SURVEY REPORT ON AMERICAN, THAT SUCH FIRM WAS NOT A RESPONSIBLE PROSPECTIVE CONTRACTOR. IN LIGHT OF SUCH DETERMINATION THE CONTRACTING OFFICER WAS NOT REQUIRED BY THE PROVISIONS OF 10 U.S.C. 2304(G) AND ASPR 3-805.1 TO CONDUCT NEGOTIATIONS WITH AMERICAN FOR THAT REASON ALONE AND IRRESPECTIVE OF THE ADDITIONAL FINDING THAT THE PRICES OF AMERICAN AND THE OTHER OFFERS WERE NOT WITHIN A COMPETITIVE RANGE.

THE RECORD FURTHER SHOWS THAT WHILE THE PREAWARD SURVEYS OF AMERICAN AND AERODEX WERE UNDER WAY, GARY TOOK ACTION TO IMPROVE ITS OPERATIONS, AND A REDUCTION IN THE REQUIREMENTS COVERED BY THE OPTION IN GARY'S AIR FORCE CONTRACT ALSO INURED TO GARY'S ADVANTAGE TO THE EXTENT THAT THE AREAS WHICH DCASO-SAN ANTONIO HAD RATED UNSATISFACTORY IN ITS REPORT OF DECEMBER 9, 1969, HAD BECOME ACCEPTABLE TO DCASO-SAN ANTONIO AND TO DCASR-DALLAS.

IN VIEW OF THE ABOVE CIRCUMSTANCES, WHICH WE HAVE RELATED IN CONSIDERABLE DETAIL, WE CANNOT CONCLUDE THAT THE CONTRACTING OFFICER ERRED IN NOT NEGOTIATING WITH AMERICAN OR THAT THE AWARD WAS DELIBERATELY DELAYED IN ORDER TO AFFORD GARY SUFFICIENT TIME IN WHICH TO IMPROVE ITS POSITION AND DEMONSTRATE THAT IT WAS, IN FACT, A RESPONSIBLE PROSPECTIVE CONTRACTOR FOR THE AWARD.

FOR THE REASONS STATED, WE SEE NO LEGAL BASIS TO QUESTION THE AWARD TO GARY, WHICH, ACCORDING TO RECENT INFORMATION RECEIVED FROM THE DEPARTMENT OF THE NAVY, IS PERFORMING ITS CONTRACT SATISFACTORILY. YOUR PROTEST IS THEREFORE DENIED.