B-170156, NOV. 9, 1970

B-170156, NOV. 9, 1970

BID PROTEST - SMALL BUSINESS SET-ASIDE DENIAL OF PROTEST AGAINST AWARD OF CONTRACTS FOR FURNISHING WOOL OVERCOATS UNDER TOTAL SMALL BUSINESS SET-ASIDE TO PEMBROKE, INC., ABATE CLOTHING, INC., AND BONHAM MANUFACTURING COMPANY, INC. A DETERMINATION THAT A LOW SMALL BUSINESS BIDDER HAD THE CAPACITY TO PERFORM BASED ON A PRE-AWARD SURVEY IS NO BASIS TO QUESTION THE BIDDERS CAPACITY AND ABILITY TO PERFORM. A BIDDER WHO FURNISHED TWO SEPARATE TYPES OF DISCOUNTS, ONE FOR PROMPT PAYMENT, AND ANOTHER A TRADE DISCOUNT UNDER A CLAUSE THAT PERMITTED MORE THAN ONE DISCOUNT SHOULD NOT HAVE BID CONSIDERED AMBIGUOUS.

TO VI-MIL, INCORPORATED:

WE REFER TO YOUR LETTER OF JUNE 25, 1970, AND ENCLOSURES, PROTESTING THE AWARD OF CONTRACTS UNDER SOLICITATION NO. DSA-100-70-B-1302 (B 1302) ISSUED BY THE DEFENSE SUPPLY AGENCY AND CALLING FOR THE MANUFACTURE AND DELIVERY OF 247,008 OVERCOATS, MAN'S WOOL, GABARDINE, AG-44 WITH REMOVAL LINER.

THE PROCUREMENT WAS A TOTAL SMALL BUSINESS SET-ASIDE AND WAS INITIATED ON APRIL 21, 1970, BY SOLICITATION B-1302. FIFTEEN BIDS WERE RECEIVED AND OPENED ON MAY 26, 1970. YOUR PROTEST IS DIRECTED AGAINST THE AWARD OF CONTRACTS TO PEMBROKE, INCORPORATED, FOR 150,000 UNITS, TO ABATE CLOTHING, INCORPORATED, FOR 50,000 UNITS AND TO BONHAM MANUFACTURING COMPANY, INCORPORATED, FOR 35,000 UNITS. THE PROTESTS AGAINST THESE FIRMS WILL BE DISCUSSED IN THE ORDER LISTED ABOVE.

IN YOUR LETTER OF JUNE 23, 1970, TO THE DEFENSE SUPPLY AGENCY YOU CONTEND THAT PEMBROKE HAS SHOWN A LACK OF CAPACITY TO PRODUCE 150,000 AG-44 OVERCOATS AT THE PLACE OF PERFORMANCE INDICATED IN THE BID WITHIN THE TIME ALLOTTED. YOU STATE THAT A REVIEW OF ALL CONTRACTS AWARDED TO PEMBROKE WITHIN THE PAST YEAR OR SO WILL SHOW THAT IN MOST INSTANCES PEMBROKE WAS ALLOWED TO SUBCONTRACT A PORTION OR ALL OF THE QUANTITIES ORIGINALLY SCHEDULED TO BE MADE AT PEMBROKE'S PLANT. ALTHOUGH YOU CONCEDE THAT AS PRIME CONTRACTOR THE RECORDS WILL INDICATE SUFFICIENT QUANTITIES CAN AND HAVE BEEN PRODUCED WITHIN THE REQUIRED TIME, YOU NEVERTHELESS ASSERT THAT CLOSE EXAMINATION OF THE SUBCONTRACTED QUANTITIES WILL PROVE PEMBROKE'S INABILITY TO PRODUCE IN EXCESS OF 85,000 TO 100,000 UNITS WITHIN A SIMILAR PERIOD AND YOU REFERENCE AS EXAMPLES PEMBROKE'S HANDLING OF BID DSA 100-69 -B-2087 (B-2087) AND BID DSA 100-70-B-0419 (B-0419).

MOREOVER, YOU STATE THAT IF IT CAN BE ASSUMED THAT THE PLANT AND FACILITIES LISTED IN PEMBROKE'S BID HAVE EXPANDED SUFFICIENTLY TO PRODUCE THE ENTIRE 150,000 UNITS, YOU PROTEST THE AWARD ON THE BASIS THAT PEMBROKE DOES NOT QUALIFY AS A SMALL BUSINESS. IN THIS REGARD, YOU STATE THAT BASED ON YOUR OWN PRODUCTION CAPABILITIES, AND ALLOWING FOR VARIABLES AND POSSIBLE GREATER EFFICIENCIES, A QUALIFIED SUPPLIER OF THE TYPE OF OVERCOAT HERE INVOLVED WOULD REQUIRE A MINIMUM OF BETWEEN 600 TO 700 EMPLOYEES TO PRODUCE THE GARMENTS ACCORDING TO THE DELIVERY SCHEDULE WHEREAS THE SMALL BUSINESS SIZE STANDARD FOR THE PROCUREMENT IS 500 EMPLOYEES.

IN HIS REPORT TO US OF JULY 31, 1970, THE CONTRACTING OFFICER STATES THAT A PRE-AWARD SURVEY MADE AT PEMBROKE'S FACILITY AT EGG HARBOR, NEW JERSEY, RECOMMENDED A PARTIAL AWARD OF 134,744 UNITS OF THE 150,000 BID UPON BY PEMBROKE. THIS RECOMMENDATION FOR PARTIAL AWARD WAS BASED ON PEMBROKE'S INTENTION TO ADD ONLY 15 ADDITIONAL PERSONNEL INSTEAD OF 50 WHICH THE PRE- AWARD SURVEYOR THOUGHT NECESSARY TO ACCOMPLISH PRODUCTION. THE MATTER WAS FURTHER DISCUSSED WITH PEMBROKE AND IT WAS AGREED THAT PEMBROKE WOULD RECRUIT THE ADDITIONAL 50 PERSONNEL WHICH THE SURVEY SHOWED WERE AVAILABLE IN THE LABOR MARKET. THE ADDITION OF 50 PERSONNEL WOULD RAISE PEMBROKE'S WORK FORCE FROM 275 TO 325. IN VIEW OF THIS COMMITMENT BY PEMBROKE THE SURVEY TEAM REVISED ITS RECOMMENDATION FROM A PARTIAL AWARD TO A COMPLETE AWARD. ACCORDINGLY, AWARD WAS MADE TO PEMBROKE ON JULY 2, 1970, FOR 150,000 AG-44 OVERCOATS.

WITH REGARD TO YOUR ASSERTIONS ON SOLICITATIONS NOS. B-2087 AND B 0419 THE CONTRACTING OFFICER REPORTS THAT SOLICITATION B-2087 RESULTED IN AWARD TO PEMBROKE ON JULY 31, 1969, OF 42,532 OVERCOATS, MAN'S WOOL, SERGE GREEN UNDER CONTRACT DSA 100-70-C-0182. AT THE TIME OF AWARD, PEMBROKE WAS PRODUCING UNDER CONTRACT DSA 100-69-C-1829 (SOLICITATION NO. B-1170) FOR 100,000 AG-44 OVERCOATS AWARDED ON MARCH 26, 1969. IN ORDER TO ENSURE THAT IT WOULD NOT BECOME DELINQUENT FOR THE INITIAL DELIVERY INCREMENTS DUE UNDER CONTRACT C-0182 FOR THE 42,532 SERGE GREEN OVERCOATS, PEMBROKE RECEIVED APPROVAL TO SUBCONTRACT 15,000 UNITS.

SOLICITATION B-0419 WAS ISSUED FOR 170,004 AG-44 OVERCOATS. PEMBROKE WAS THE LOW BIDDER ON 85,004 UNITS AND RECEIVED AN AWARD FOR THIS QUANTITY ON NOVEMBER 14, 1969, UNDER CONTRACT DSA 100-70-C-0380. SINCE PEMBROKE WAS ALREADY PRODUCING AG-44 OVERCOATS AND WANTED TO MAINTAIN CONTINUITY OF PRODUCTION OF AG-44 OVERCOATS IT REQUESTED PERMISSION TO SUBCONTRACT THE REMAINING BALANCE OF 27,532 SERGE GREEN OVERCOATS. PERMISSION TO SUBCONTRACT WAS GRANTED AND THE BALANCE OF THE SERGE GREEN OVERCOATS WAS SUBCONTRACTED.

IN YOUR LETTER OF JUNE 5, 1970, TO THE HONORABLE THOMAS P. O'NEIL YOU REFERENCE (IN ADDITION TO SOLICITATIONS NOS. B-2087 AND B-0419) FOUR ADDITIONAL SOLICITATIONS: B-1926, B-1866, B-0114 AND B-1378. THE CONTRACTING OFFICER'S REPORT ON THESE SOLICITATIONS READS AS FOLLOWS:

"(1) B-1926

(A) THIS SOLICITATION RESULTED IN AWARD TO PEMBROKE ON 2 JUL 69 OF 3,344 EACH OVERCOAT, WOOL, MELTON, BLUE OFFICER UNDER CONTRACT DSA 100 70-C- 0050. THE RECORDS INDICATE THAT PEMBROKE RECEIVED PERMISSION TO SUBCONTRACT THIS SMALL QUANTITY TO DAVIS CLOTHING CO., INC.

(B) THE SUBCONTRACTING WAS ACCOMPLISHED IN SEPTEMBER 1969 AT A TIME WHEN PEMBROKE HAD BECOME AWARE OF SOLICITATION B-0419 FOR 170,004 AG-44 OVERCOAT (OF WHICH QUANTITY PEMBROKE RECEIVED AN AWARD OF 85,000 EACH AS AFORESAID).

"(2) B-1866

THIS SOLICITATION WAS ORIGINALLY ISSUED ON 2 MAY 1969 FOR 92,379 EACH OVERCOAT, MAN'S WOOL, KERSEY (PEACOAT). DUE TO QUANTITATIVE LIMITATIONS IMPOSED BY SEVERAL BIDDERS, ONLY 85,000 PEACOATS COULD BE AWARDED, LEAVING A LACK OF COVERAGE OF 7,379 EACH. OF THE 85,000 UNITS, PEMBROKE RECEIVED ITS MAXIMUM BID UPON OF 60,000 EACH ON 11 JUL 1969 UNDER CONTRACT DSA 100- 70-C-0104 AT PRICES RANGING FROM $26.82 TO $27.05 *** PEMBROKE NAMED MODERN GARMENT, INC., GLASSBORO, N.J., AS THE PLACE OF PERFORMANCE IN THE BID. THUS, THIS WAS NOT A CASE WHERE SUBCONTRACTING WAS REQUESTED AFTER AWARD.

"(3) B-0114

SINCE COVERAGE HAD NOT BEEN OBTAINED FOR THE 7,379 PEACOATS, IT WAS NECESSARY TO READVERTISE. THIS WAS DONE BY ISSUANCE OF SOLICITATION B 0114 WHICH RESULTED IN AWARD TO PEMBROKE ON 2 DEC 1969 UNDER CONTRACT DSA 100-70-C-0479 AT A PRICE OF $28.20. MODERN GARMENT WAS NAMED AS SUBCONTRACTOR IN THE BID AND NO SUBCONTRACTING WAS REQUESTED AFTER AWARD.

"(4) B-1378

THIS SOLICITATION WAS FOR 96,796 EACH PEACOATS. ALTHOUGH PEMBROKE BID ON THE ENTIRE QUANTITY, IT WAS FOUND NOT TO HAVE CAPACITY FOR THE FULL QUANTITY. CONSEQUENTLY, PEMBROKE RECEIVED AN AWARD OF 66,796 ON 22 JUN 70 UNDER CONTRACT DSA 100-70-C-2072. ONCE AGAIN MODERN GARMENT WAS NAMED BY PEMBROKE AS SUBCONTRACTOR IN THE BID. THE REMAINING QUANTITY OF 30,000 WAS AWARDED TO BONHAM MFG. CO., BONHAM, TEXAS."

THE FOREGOING DESCRIPTION OF PEMBROKE'S ACTIVITIES ON CONTRACTS CITED BY YOU INDICATES THAT PEMBROKE SUBCONTRACTED TWO OF EIGHT CONTRACTS AFTER AWARD. OF THE REMAINING SIX CONTRACTS THREE ARE BEING PERFORMED AT PEMBROKE'S OWN FACILITIES AND THREE ARE BEING PERFORMED BY A SUBCONTRACTOR WHICH PEMBROKE NAMED IN ITS BIDS. WE SEE NO LEGAL BASIS UPON WHICH WE COULD QUESTION PEMBROKE'S SUBCONTRACTING AS SUMMARIZED ABOVE.

WITH RESPECT TO YOUR CONTENTIONS CONCERNING PEMBROKE'S CAPACITY TO PRODUCE 150,000 AG-44 OVERCOATS ON THE PRESENT PROCUREMENT WITHIN THE DELIVERY SCHEDULE, IT SHOULD BE NOTED THAT QUESTIONS CONCERNING THE CAPACITY OR ABILITY OF A CONTRACTOR TO PERFORM ARE PRIMARILY FOR RESOLUTION BY THE CONTRACTING AGENCY OFFICIALS INVOLVED IN THE PROCUREMENT. IN THE ABSENCE OF A SHOWING OF BAD FAITH BY THE DECIDING OFFICIALS OR A LACK OF A REASONABLE BASIS FOR ANY DETERMINATION MADE BY THEM, WE WILL ACCEPT THEIR DETERMINATIONS REGARDING THE RESPONSIBILITY OF PROSPECTIVE CONTRACTORS. 33 COMP. GEN. 549 (1954), 38 COMP. GEN. 131 (1958). IN THIS CASE, A PRE-AWARD SURVEY OF PEMBROKE'S FACILITIES ULTIMATELY RESULTED IN A RECOMMENDATION THAT PEMBROKE BE AWARDED A CONTRACT FOR 150,000 AG-44 OVERCOATS. THE RECOMMENDATION WAS BASED ON A PHYSICAL INSPECTION OF PEMBROKE'S FACILITIES. IN ADDITION, A SUMMARY FURNISHED US BY THE CONTRACTING OFFICER INDICATES THAT PEMBROKE'S PERFORMANCE OF PRIOR CONTRACTS AT ITS OWN FACILITIES WAS WELL WITHIN THE DELIVERY SCHEDULES SET OUT IN THE CONTRACTS. WE FIND NO BASIS ON THE RECORD TO QUESTION THE CONTRACTING OFFICER'S POSITIVE DETERMINATION CONCERNING PEMBROKE'S CAPACITY AND ABILITY TO PERFORM THE INSTANT CONTRACT.

IN YOUR LETTER OF JUNE 23, 1970, TO THE CONTRACTING OFFICER YOU INFERENTIALLY RAISE A QUESTION OF AFFILIATION BETWEEN PEMBROKE AND A. DIPAOLA FELLING COMPANY IN CONNECTION WITH YOUR CONTENTION REGARDING THE SMALL BUSINESS SIZE STATUS OF PEMBROKE. THE CONTRACTING OFFICER REPORTS THAT MR. DIPAOLA, PRESIDENT OF PEMBROKE, HAS ADVISED HIM THAT HE FORMERLY OWNED THE FELLING COMPANY BUT HAD COMPLETELY SOLD OUT HIS INTEREST APPROXIMATELY THREE YEARS AGO AND THAT, ALTHOUGH DIPAOLA'S NAME HAS BEEN RETAINED BY THE FELLING COMPANY FOR THE PURPOSE OF GOOD WILL, MR. DIPAOLA CATEGORICALLY DENIES THAT THERE IS ANY AFFILIATION BETWEEN PEMBROKE AND A. DIPAOLA FELLING COMPANY. IN ANY EVENT, YOU HAVE CITED NO EVIDENCE SHOWING ANY CONNECTION BETWEEN PEMBROKE AND A. DIPAOLA FELLING COMPANY (SEE ASPR 1 -703(B)(1)) AND YOUR PROTEST WAS UNTIMELY SINCE IT WAS NOT RECEIVED PRIOR TO THE CLOSE OF BUSINESS ON THE FIFTH WORKING DAY AFTER THE DATE OF BID OPENING. SEE ASPR 1-703 (B)(1). HOWEVER, IN ACCORDANCE WITH ASPR 1- 703(B)(1)(II) YOUR PROTEST LETTER WAS REFERRED BY THE CONTRACTING OFFICER TO THE NEW YORK SMALL BUSINESS ADMINISTRATION REGIONAL OFFICE FOR CONSIDERATION IN ANY FUTURE ACTION.

WE HAVE HELD THAT IN THE ABSENCE OF A TIMELY PROTEST, AS REQUIRED BY ASPR 1-703(B)(1), A CONTRACTING OFFICER HAS AUTHORITY TO ACCEPT AT FACE VALUE A REPRESENTATION BY A BIDDER THAT IT IS A SMALL BUSINESS CONCERN AND THAT AN AWARD MADE UNDER SUCH CIRCUMSTANCES WILL NOT BE QUESTIONED BY OUR OFFICE. 46 COMP. GEN. 342 (1966). WE SEE NO REASON TO DEPART FROM THAT RULING IN THIS CASE. NOR DO WE SEE ANY BASIS TO REJECT THE PRE-AWARD SURVEY WHICH FOUND THAT PEMBROKE HAS THE CAPACITY TO PRODUCE 150,000 AG-44 OVERCOATS WITHIN THE DELIVERY SCHEDULE WITH A WORK FORCE OF 325 WHICH IS WELL WITHIN THE MAXIMUM SMALL BUSINESS SIZE STANDARD FOR THE PROCUREMENT.

YOUR PROTEST AGAINST THE AWARD OF A CONTRACT TO ABATE CLOTHING, INCORPORATED, IS PREMISED ON THE DISCOUNTS OFFERED BY ABATE IN ITS BID. ON THE SOLICITATION FORM ABATE OFFERED A PROMPT PAYMENT DISCOUNT OF 1 PERCENT - 10 CALENDAR DAYS AND 1/2 PERCENT - 20 CALENDAR DAYS. IN A COVER LETTER DATED MAY 26, 1970, ACCOMPANYING THE BID, ABATE ALSO OFFERED THE FOLLOWING DISCOUNT:

"WE ARE BIDDING ON THE ABOVE INVITATION NUMBER AS FOLLOWS:

50,000 UNITS 39.45 $1,972,500.00 LESS 1 %

FOR OGDEN DESTINATION ADD 35[ PER UNIT."

YOU CONTEND THAT THE PROMPT PAYMENT DISCOUNT AND THE DISCOUNT OFFERED IN ABATE'S LETTER OF MAY 26 ARE AMBIGUOUS AND SUFFICIENTLY VAGUE TO RENDER ABATE'S BID NON-RESPONSIVE. WE CANNOT AGREE. ABATE'S OFFER, ACCORDING TO THE CONTRACTING OFFICER, WAS INTERPRETED IN ACCORDANCE WITH THE TERMS OF THE DISCOUNT LIMITATION CLAUSE ON PAGE 49 OF THE SOLICITATION. THIS CLAUSE PROVIDES, IN PERTINENT PART, AS FOLLOWS:

" *** OFFERORS WHO DESIRE TO DO SO MAY QUOTE CUSTOMARY TERMS OF DISCOUNT (NOT IN EXCESS OF TWO PERCENT) FOR PROMPT PAYMENT IN ADDITION TO ANY TRADE OR SPECIAL DISCOUNT AVAILABLE TO THE GOVERNMENT, PROVIDED SUCH DISCOUNTS ARE STATED SEPARATELY IN THEIR OFFERS. UNLESS SUCH TRADE OR SPECIAL DISCOUNTS ARE SEPARATELY STATED, THE OFFEROR AGREES THAT, WHEN THE DISCOUNT OFFERED EXCEEDS TWO PERCENT, THE ENTIRE DISCOUNT WILL BE CONSIDERED AS A TRADE OR SPECIAL DISCOUNT AND WILL NOT BE TREATED AS A DISCOUNT FOR PROMPT PAYMENT."

UNDER THIS CLAUSE BIDDERS WERE PERMITTED TO QUOTE TWO SEPARATE TYPES OF DISCOUNTS - ONE FOR PROMPT PAYMENT AND ANOTHER DESIGNATED A "TRADE" OR "SPECIAL" DISCOUNT. ABATE OFFERED BOTH TYPES OF DISCOUNTS AND STATED THEM SEPARATELY IN ITS BID. WE SEE NOTHING EITHER AMBIGUOUS, CONFLICTING OR VAGUE IN ABATE'S BID.

YOUR PROTEST AGAINST THE AWARD TO BONHAM MANUFACTURING COMPANY IS PREMISED ON AN ASSERTION THAT BONHAM DOES NOT HAVE THE CAPACITY TO PRODUCE THE QUANTITY OF 35,000 AG-44 OVERCOATS AWARDED IT UNDER THE INSTANT SOLICITATION BECAUSE IT HAD ALSO BEEN AWARDED A CONTRACT FOR 30,000 PEACOATS UNDER SOLICITATION NO. DSA 100-70-B-1378.

A PRE-AWARD SURVEY ON BONHAM IN THE RECORD BEFORE US INDICATES THAT A POSITIVE RECOMMENDATION FOR COMPLETE AWARD OF THE $35,000 AG-44 OVERCOATS WAS MADE BY THE SURVEY TEAM. THIS RECOMMENDATION WAS MADE WITH FULL KNOWLEDGE THAT BONHAM RECEIVED AN AWARD OF 30,000 PEACOATS UNDER SOLICITATION B-1378. THERE IS NO BASIS IN THE RECORD TO QUESTION THE SURVEY RECOMMENDATION OR THE CONTRACT AWARD.

YOUR PROTEST AGAINST THE THREE AWARDS ABOVE DISCUSSED MUST BE, AND IS, DENIED.