B-170145, OCT. 1, 1970

B-170145: Oct 1, 1970

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BID PROTEST - BIDDER RESPONSIBILITY - SBA DENIAL OF PROTEST AGAINST REJECTION OF LOW BID BECAUSE BIDDER WAS NONRESPONSIBLE AND AWARD TO SECOND OFFEROR ON BASIS THAT URGENCY OF PROCUREMENT DID NOT REQUIRE REFERRAL OF BIDDER'S NONRESPONSIBILITY TO SBA. ALTHOUGH REJECTION OF LOW BIDDER FOR LACK OF PAST PERFORMANCE WAS ONE OF FACTORS CONSIDERED BY CONTRACTING OFFICER RECORD INDICATES ABSENCE OF EVIDENCE THAT PROTESTANT WAS GOING CONCERN. THAT OFFICERS HAD MANAGEMENT EXPERIENCE AND THEREFORE CONTRACTING OFFICER'S DETERMINATION WAS NOT ARBITRARY OR CLEARLY UNSUPPORTABLE. TO SCHOOL OF VIETNAMESE LANGUAGE AND CULTURE: REFERENCE IS MADE TO YOUR LETTER DATED JUNE 23. THE REQUEST FOR PROPOSALS WAS ISSUED ON APRIL 13.

B-170145, OCT. 1, 1970

BID PROTEST - BIDDER RESPONSIBILITY - SBA DENIAL OF PROTEST AGAINST REJECTION OF LOW BID BECAUSE BIDDER WAS NONRESPONSIBLE AND AWARD TO SECOND OFFEROR ON BASIS THAT URGENCY OF PROCUREMENT DID NOT REQUIRE REFERRAL OF BIDDER'S NONRESPONSIBILITY TO SBA. ALTHOUGH REJECTION OF LOW BIDDER FOR LACK OF PAST PERFORMANCE WAS ONE OF FACTORS CONSIDERED BY CONTRACTING OFFICER RECORD INDICATES ABSENCE OF EVIDENCE THAT PROTESTANT WAS GOING CONCERN, THAT IT HAD EVER FUNCTIONED AS A BUSINESS, THAT OFFICERS HAD MANAGEMENT EXPERIENCE AND THEREFORE CONTRACTING OFFICER'S DETERMINATION WAS NOT ARBITRARY OR CLEARLY UNSUPPORTABLE.

TO SCHOOL OF VIETNAMESE LANGUAGE AND CULTURE:

REFERENCE IS MADE TO YOUR LETTER DATED JUNE 23, 1970, AND SUBSEQUENT COMMUNICATIONS, PROTESTING THE AWARD OF A CONTRACT TO THE AMERICAN LANGUAGE AND CULTURE INSTITUTE OF MONTEREY, CALIFORNIA, UNDER RFP NO. DAHC15-70-R-0048, ISSUED BY THE DEFENSE SUPPLY SERVICE, WASHINGTON, D.C.

THE REQUEST FOR PROPOSALS WAS ISSUED ON APRIL 13, 1970, FOR SERVICES AND LANGUAGE TRAINING IN THE VIETNAMESE LANGUAGE, AS ORDERED BY THE DEFENSE SUPPLY SERVICE FOR CLASSES COMMENCING DURING THE PERIOD JULY 1, 1970, THROUGH JUNE 30, 1971.

THIS PROCUREMENT WAS SET ASIDE FOR SMALL BUSINESS CONCERNS AND 10 PROPOSALS WERE RECEIVED FROM SMALL BUSINESS FIRMS. YOUR PRICE ON THE ESTIMATED REQUIREMENTS WAS $591,007.28 AND THE PRICE QUOTED BY AMERICAN LANGUAGE AND CULTURE INSTITUTE OF MONTEREY WAS $606,944.00, WITH BOTH ORGANIZATIONS OFFERING A ONE PERCENT PROMPT PAYMENT DISCOUNT. PREAWARD SURVEYS WERE THEN REQUESTED ON YOUR ORGANIZATION AND OTHER CONCERNS BEING CONSIDERED FOR AWARD TO ASSIST THE CONTRACTING OFFICER IN DETERMINING THE RESPONSIBILITY OF SUCH PROSPECTIVE CONTRACTORS. YOU WERE DETERMINED TO BE NONRESPONSIBLE BY THE CONTRACTING OFFICER AS TO THE SUBJECT PROCUREMENT, AND YOU PROTEST THAT DETERMINATION AND THE SUBSEQUENT AWARD OF THE CONTRACT TO AMERICAN LANGUAGE CULTURE INSTITUTE OF MONTEREY AS THE LOW RESPONSIVE AND RESPONSIBLE OFFEROR.

THE CIRCUMSTANCES AND CONSIDERATIONS INVOLVED IN THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY ON YOUR ORGANIZATION IS REPORTED AS FOLLOWS:

"4. PRE-AWARD SURVEYS WERE REQUESTED OF FIRMS BEING CONSIDERED FOR AWARD. DEFENSE CONTRACT ADMINISTRATION SERVICES REGION, DALLAS, TEXAS REPORTED THAT SVLC WAS FINANCIALLY, TECHNICALLY, AND MANAGERIALLY CAPABLE OF PERFORMANCE AND RECOMMENDED AWARD. (TAB E). HOWEVER, EXAMINATION BY THE CONTRACTING OFFICER OF THE SURVEY AND INFORMATION RECEIVED FROM THE DLI THAT ITS OFFICIALS AT EL PASO KNEW OF NO SCHOOL DOING BUSINESS UNDER THE NAME OF THE SCHOOL OF VIETNAMESE LANGUAGE AND CULTURE, CAUSED US TO REQUEST THAT THE OFFEROR SUBMIT BUSINESS REFERENCES. THE PRESIDENT OF SVLC, THEREFORE WAS INVITED TO MEET WITH THE CONTRACTING OFFICER ON 15 JUNE TO DISCUSS QUALIFYING SVLC AS A RESPONSIBLE FIRM. THE MEMORANDUM FOR RECORD OF THIS MEETING IS ATTACHED (TAB F). AS THE MFR INDICATES ALL ATTEMPTS BY THE CONTRACTING OFFICER TO ELICIT SOME POSITIVE EVIDENCE THAT SVLC IS A GOING CONCERN PROVED FUTILE. THERE WAS NO RECORD OF PERFORMANCE; NO EVIDENCE THAT ANY OF THE FIRM'S OFFICERS COULD MANAGE A BUSINESS; NO BUSINESS REFERENCES BECAUSE THE FIRM HAD NEVER DONE ANY GOVERNMENT OR COMMERCIAL WORK. APPARENTLY ALL THAT EXISTED WAS AN AGREEMENT AMONG THE PARTNERS AND A 'CERTIFICATE OF BUSINESS UNDER AN ASSUMED NAME' ISSUED BY THE STATE OF TEXAS. (TAB G).

"5. IN ATTEMPTING TO DETERMINE RESPONSIBILITY THE CONTRACTING OFFICER CONSIDERED THE FOLLOWING REGULATORY AND POLICY GUIDANCE:

A. SECTION 1-902 OF ASPR (ARMED SERVICES PROCUREMENT REGULATION) ESTABLISHED THE GENERAL POLICY THAT CONTRACTS WILL BE AWARDED ONLY TO RESPONSIBLE PROSPECTIVE CONTRACTORS. THE SECRETARY OF DEFENSE, BY MEMORANDUM OF JUNE 9, 1966 EMPHASIZED THE NEED FOR DEALING POSITIVELY WITH THE SELECTION OF ONLY FULLY QUALIFIED SOURCES IN THE DEFENSE PROCUREMENT PROGRAM. (TAB H). TO DATE THIS POLICY HAS NOT BEEN REFUTED, INDEED, SUBSEQUENT REVISIONS TO ASPR HAVE BEEN DESIGNED TO ASSURE THE SELECTION OF ONLY QUALIFIED RESPONSIBLE CONTRACTORS.

B. SECTION 1-904.1 OF ASPR STATES IN PART:

' ... NO PURCHASE SHALL BE MADE FROM, AND NO CONTRACT SHALL BE AWARDED TO, ANY PERSON OR FIRM UNLESS THE CONTRACTING OFFICER FIRST MAKES, SIGNS, AND PLACES IN THE CONTRACT FILE, AN AFFIRMATIVE DETERMINATION THAT THE PROSPECTIVE CONTRACTOR IS RESPONSIBLE WITHIN THE MEANING OF 1-902. THE DETERMINATION OF RESPONSIBILITY SHALL CONTAIN A STATEMENT JUSTIFYING THE DETERMINATION.'

"THUS IN ORDER TO MAKE AN AWARD, THE CONTRACTING OFFICER MUST FIRST DETERMINE THE FIRM TO BE RESPONSIBLE, THEN JUSTIFY HIS DECISION. SECTION 1-903 OF ASPR REQUIRES THAT TO RECEIVE AN AWARD, A PROSPECTIVE CONTRACTOR MUST HAVE A SATISFACTORY RECORD OF PERFORMANCE AND A SATISFACTORY RECORD OF INTEGRITY. IF A FIRM, OR THE INDIVIDUALS COMPRISING IT HAVE NEVER FUNCTIONED AS A BUSINESS --- OR AS INDIVIDUALS, HAVE NEVER MANAGED A BUSINESS, UNDER THE GUIDANCE CONTAINED IN COMPTROLLER GENERAL DECISION OF 15 MAY 1968 (B-160758) WITH RESPECT TO NEWLY ORGANIZED FIRMS, THE CONTRACTING OFFICER WOULD APPEAR TO BE WITHOUT AUTHORITY TO MAKE AWARD TO A FIRM WHERE THE EXPERIENCE AND RESPONSIBILITIES OF THE COMPANY'S PRINCIPAL OFFICERS SHOW THAT THEY WERE NOT WELL QUALIFIED AND LACKED EXPERIENCE IN MANAGING A LANGUAGE TRAINING PROGRAM.

C. ASPR 1-902 REQUIRES THAT THE PROSPECTIVE CONTRACTOR MUST AFFIRMATIVELY DEMONSTRATE HIS RESPONSIBILITY AND THAT THE CONTRACTING OFFICER SHALL MAKE A DETERMINATION OF NON-RESPONSIBILITY IF THE INFORMATION SO PROVIDED DOES NOT 'INDICATE CLEARLY' THAT THE PROSPECTIVE CONTRACTOR IS RESPONSIBLE. THIS INSTANCE, THE PROTESTANT FIRM HAD BEEN ESTABLISHED IN JANUARY 1970 AND HAD HAD NO ACTIVITY AT ALL. ACCORDING TO THE FIRM'S PRESIDENT, IT HAD SOUGHT NO OTHER BUSINESS SINCE THE COMPANY HAD BEEN ORGANIZED SOLELY TO OBTAIN THIS CONTRACT. FURTHER, NONE OF THE PARTNERS INDIVIDUALLY HAD ANY BUSINESS MANAGEMENT EXPERIENCE. IN THIS CASE, THEREFORE, THE INFORMATION AVAILABLE CERTAINLY COULD NOT 'INDICATE CLEARLY' THE CONTRACTOR'S RESPONSIBILITY. THIS SECTION OF ASPR GOES ON TO DIRECT:

'DOUBT AS TO PRODUCTIVE CAPACITY OR FINANCIAL STRENGTH WHICH CANNOT BE RESOLVED AFFIRMATIVELY SHALL REQUIRE A DETERMINATION OF NON RESPONSIBILITY.'

"6. A CAREFUL REVIEW AND EVALUATION OF ALL THE ADVICE AND MATERIAL AVAILABLE TO HIM, INCLUDING THE FAVORABLE PRE-AWARD SURVEY AND COMPTROLLER GENERAL DECISIONS WHICH STATE THAT LACK OF PREVIOUS CONTRACTING IS NOT A BAN TO AWARD, STILL LEFT THE CONTRACTING OFFICER WITH NO EVIDENCE THAT SVLC COULD MANAGE AND DIRECT A LANGUAGE TRAINING PROGRAM. WE HAVE LEARNED FROM PAST EXPERIENCE THAT THIS IS NOT AN EASY TASK FOR EVEN AN EXPERIENCED SEASONED CONTRACTOR. WE REVIEWED THE EXPERIENCE OF THE THREE SVLC PARTNERS - ONE HAD NO SUPERVISORY OR MANAGERIAL EXPERIENCE; ONE HAD BEEN A SENIOR INSTRUCTOR - ASSISTANT SUPERVISOR FOR APPROXIMATELY TWO YEARS FOR A LANGUAGE SCHOOL; AND ONE HAD BEEN A SUPERVISORY COORDINATOR FOR TWO YEARS FOR ANOTHER LANGUAGE SCHOOL. THE CONTRACTING OFFICER CONSIDERED THE IMPACT OF A BREAKDOWN IN PERFORMANCE ON THE DEFENSE LANGUAGE TRAINING PROGRAM. EVERY STUDENT IS BEING TRAINED FOR A SPECIFIC ASSIGNMENT WHICH USUALLY CONTROLS THE ROTATIONAL REASSIGNMENT OF THE INDIVIDUAL NOW HANDLING THAT ASSIGNMENT. CONTRACT DELAYS OR DEFAULT UPSET THE SCHEDULE AND CAUSE INCALCULABLE LOSSES IN TIME, EFFORT, AND MORALE. THE CONTRACTING OFFICER'S BEST JUDGMENT WAS THAT THERE WAS NOT SUFFICIENT EVIDENCE OF SVLC'S RESPONSIBILITY TO WARRANT AN AWARD. THEREFORE, A DETERMINATION OF NON-RESPONSIBILITY WAS MANDATORY UNDER ASPR 1-902. SUCH A DETERMINATION WAS MADE (TAB I).

"7. WE HAD ALREADY FAILED TO MAKE AWARD BY THE DEADLINE DATE, 15 JUNE, ESTABLISHED BY DLI (TAB J). ANY FURTHER DELAY WOULD HAVE PRECLUDED THE START OF THE FIRST CLASS SCHEDULED FOR MONTEREY IN EARLY JULY. IT IS IMPORTANT TO UNDERSTAND THAT TROOPS ARE ORDERED WELL IN ADVANCE TO BEGIN LANGUAGE TRAINING AT DLI SCHOOLS. ANY BREAK OR DELAY IN TRAINING CAUSES COSTLY LOSS OF MANPOWER, AND SINCE FUTURE ASSIGNMENTS ARE PREDICATED ON COMPLETION OF TRAINING, SUCH COMPLETIONS MUST BE AS SCHEDULED. THEREFORE, TIME DID NOT PERMIT REFERRAL OF THIS DETERMINATION TO THE SMALL BUSINESS ADMINISTRATION, AS WOULD HAVE NORMALLY BEEN DONE. HOWEVER, INFORMATION COPIES OF THE CERTIFICATE OF URGENCY (TAB K) AND OF THE DETERMINATION OF NON-RESPONSIBILITY WERE FORWARDED TO THE SBA'S DALLAS REGIONAL OFFICE.

"8. IT IS MY OPINION THAT THE PROCUREMENT WAS HANDLED IN ACCORDANCE WITH EXISTING REGULATIONS AND THAT THE CONTRACTING OFFICER TOOK THE ONLY COURSE OF ACTION AVAILABLE TO HIM, PARTICULARLY IN LIGHT OF THE IMPORTANCE OF THIS PROGRAM TO THE DEFENSE EFFORT, THE HUNDREDS OF STUDENTS IN TRAINING, AND THE ADDITIONAL HUNDREDS OF ROTATIONAL REASSIGNMENTS DEPENDENT ON THE TIMELY COMPLETION OF THIS CONTRACT TRAINING."

IN ACCORD WITH THE REGULATIONS CITED IN THE ABOVE REPORT THIS OFFICE HAS CONSISTENTLY RECOGNIZED THAT IT IS A BASIC FUNCTION OF THE CONTRACTING OFFICER TO DETERMINE THE RESPONSIBILITY OF A PROSPECTIVE CONTRACTOR AND THAT AN ADMINISTRATIVE DETERMINATION OF NONRESPONSIBILITY WILL NOT BE QUESTIONED BY OUR OFFICE UNLESS ARBITRARY, CAPRICIOUS OR NOT BASED ON SUBSTANTIAL EVIDENCE. SEE B 164508, AUGUST 6, 1968; B-166275, OCTOBER 17, 1969; AND 39 COMP. GEN. 705 (1960) WHEREIN WE STATED AT PAGE 711:

" *** THE PROJECTION OF A BIDDER'S ABILITY TO PERFORM IF AWARDED A CONTRACT IS OF NECESSITY A MATTER OF JUDGMENT. WHILE SUCH JUDGMENT SHOULD BE BASED ON FACT AND SHOULD BE ARRIVED AT IN GOOD FAITH, IT MUST PROPERLY BE LEFT LARGELY TO THE SOUND ADMINISTRATIVE DISCRETION OF THE CONTRACTING OFFICES INVOLVED, SINCE THEY ARE IN THE BEST POSITION TO ASSESS RESPONSIBILITY, THEY MUST BEAR THE MAJOR BRUNT OF ANY DIFFICULTIES EXPERIENCED BY REASON OF THE CONTRACTOR'S LACK OF ABILITY, AND THEY MUST MAINTAIN THE DAY TO DAY RELATIONS WITH THE CONTRACTOR ON BEHALF OF THE GOVERNMENT. FOR THESE REASONS, IT WOULD BE UNREASONABLE TO SUPERIMPOSE THE JUDGMENT OF OUR OFFICE OR ANY OTHER AGENCY OR GROUP ON THAT OF THE CONTRACTING OFFICIALS. *** "

YOU STATE THAT YOU BELIEVE YOU WERE NOT AWARDED THE CONTRACT BECAUSE OF THE LACK OF ANY PAST PERFORMANCE DATA BY YOUR ORGANIZATION. ALTHOUGH THE REPORT SHOWS THAT THIS WAS ONE OF THE FACTORS CONSIDERED BY THE CONTRACTING OFFICER, IT APPEARS THAT THE DETERMINATION OF NON RESPONSIBILITY WAS MAINLY ON THE BASIS THAT AFTER CONSIDERABLE INQUIRY AND INVESTIGATION THE CONTRACTING OFFICER WAS UNABLE TO OBTAIN ANY EVIDENCE THAT YOU WERE OPERATING AS A GOING CONCERN; THAT YOU HAD EVER FUNCTIONED AS A BUSINESS; OR THAT ANY OF THE OFFICERS OF YOUR ORGANIZATION HAD ANY BUSINESS MANAGEMENT EXPERIENCE OR WERE WELL QUALIFIED TO MANAGE A LANGUAGE TRAINING PROGRAM OF THE SIZE HERE INVOLVED. IN VIEW THEREOF, AND SINCE THE RECORD DOES NOT PROVIDE ANY SIGNIFICANT ADDITIONAL EVIDENCE CONCERNING SUCH FACTORS, WE CANNOT CONCLUDE THAT THE CONTRACTING OFFICER'S DETERMINATION WAS ARBITRARY OR CLEARLY UNSUPPORTABLE UNDER THE PARTICULAR CIRCUMSTANCES AND PERTINENT REGULATIONS.

WITH REGARD TO YOUR ALLEGATION THAT THE CONTRACTING OFFICER HAD ADEQUATE TIME TO REFER THE MATTER TO THE SMALL BUSINESS ADMINISTRATION FOR A CERTIFICATE OF COMPETENCY, ASPR 1-705.4(C)(IV) STATES IN PART AS FOLLOWS:

"(IV) A REFERRAL NEED NOT BE MADE TO THE SBA IF THE CONTRACTING OFFICER CERTIFIES IN WRITING, AND HIS CERTIFICATE IS APPROVED BY THE CHIEF OF THE PURCHASING OFFICE, THAT THE AWARD MUST BE MADE WITHOUT DELAY, *** ."

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

ACCORDINGLY, YOUR PROTEST MUST BE DENIED.