B-170435, SEP. 15, 1970

B-170435: Sep 15, 1970

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A LOW BIDDER WHO WAS DETERMINED TO BE NONRESPONSIBLE BY THE CONTRACTING OFFICER BASED ON A PREAWARD SURVEY THAT INDICATED HE HAD FINANCIAL RESOURCES BUT RECOMMENDED AGAINST AWARD AND THE DENIAL OF A CERTIFICATE OF COMPETENCY BY SBA WAS PROPERLY DETERMINED TO BE NONRESPONSIBLE AND THE DETERMINATION IS NOT SUBJECT TO OBJECTION. BIDS WERE OPENED ON APRIL 17. AFTER IT WAS DETERMINED THAT YOUR BID WAS LOW. A PRE-AWARD SURVEY WAS CONDUCTED ON YOUR FIRM BY THE DEFENSE CONTRACT ADMINISTRATION SERVICES REGION (DCASR). THAT IN ANY EVENT THE CONTRACTING OFFICER WITH THE DCASR REPORT IN HAND INDICATING APPROVAL OF YOUR FINANCIAL RESOURCES SHOULD HAVE ACCEPTED THE SBA EVALUATION IN THE TECHNICAL AREAS AND AWARDED THE CONTRACT TO RACON.

B-170435, SEP. 15, 1970

BID PROTEST -- BIDDER RESPONSIBILITY DENIAL OF PROTEST AGAINST REJECTION OF LOW BIDDER ON BASIS OF NONRESPONSIBILITY FOR FURNISHING LOUDSPEAKERS TO DEFENSE ELECTRONICS SUPPLY CENTER. A LOW BIDDER WHO WAS DETERMINED TO BE NONRESPONSIBLE BY THE CONTRACTING OFFICER BASED ON A PREAWARD SURVEY THAT INDICATED HE HAD FINANCIAL RESOURCES BUT RECOMMENDED AGAINST AWARD AND THE DENIAL OF A CERTIFICATE OF COMPETENCY BY SBA WAS PROPERLY DETERMINED TO BE NONRESPONSIBLE AND THE DETERMINATION IS NOT SUBJECT TO OBJECTION.

TO RACON CORPORATION:

WE REFER TO YOUR LETTER OF JULY 23, 1970, PROTESTING THE REJECTION OF YOUR BID UNDER INVITATION FOR BIDS NO. DSA900-70-B-2191, ISSUED MARCH 17, 1970, BY THE DEFENSE ELECTRONICS SUPPLY CENTER AT DAYTON, OHIO.

BIDS WERE OPENED ON APRIL 17, 1970. AFTER IT WAS DETERMINED THAT YOUR BID WAS LOW, A PRE-AWARD SURVEY WAS CONDUCTED ON YOUR FIRM BY THE DEFENSE CONTRACT ADMINISTRATION SERVICES REGION (DCASR). YOU REPORT THAT DCASR APPROVED YOUR FINANCIAL CONDITION BUT RECOMMENDED AGAINST AWARD TO YOUR FIRM FOR REASONS RELATED TO PRODUCTION AND INSPECTION FACILITIES AND THAT THEREAFTER YOU APPLIED TO THE SMALL BUSINESS ADMINISTRATION (SBA) IN NEW YORK CITY FOR A CERTIFICATE OF COMPETENCY (COC). YOU FURTHER REPORT THAT SBA APPROVED OF YOUR PRODUCTION AND INSPECTION FACILITIES BUT DENIED A COC ON THE BASIS THAT YOU FAILED TO SUPPLY SBA WITH SUFFICIENT DATA TO DETERMINE YOUR FINANCIAL CAPABILITY.

YOU CONTEND THAT YOU DID FURNISH SBA WITH ALL THE INFORMATION REQUIRED BY ITS FORMS, BUT THAT IN ANY EVENT THE CONTRACTING OFFICER WITH THE DCASR REPORT IN HAND INDICATING APPROVAL OF YOUR FINANCIAL RESOURCES SHOULD HAVE ACCEPTED THE SBA EVALUATION IN THE TECHNICAL AREAS AND AWARDED THE CONTRACT TO RACON. IN THIS REGARD, YOU REPORT THAT WITHIN THE LAST FEW YEARS RACON HAS COMPLETED A CONTRACT TEN TIMES LARGER FOR THE SAME ITEM.

THE SUBJECT INVITATION CALLED FOR BIDS ON INCREMENTAL QUANTITIES OF LOUDSPEAKERS, AS SPECIFIED, AND RACON WAS THE LOW BIDDER ON EACH INCREMENT. THE CONTRACTING OFFICER REQUESTED THAT DCASR SURVEY ON APRIL 24, 1970. THE DCASR REPORT FURNISHED ON MAY 8, 1970, RECOMMENDED AGAINST AN AWARD TO YOUR FIRM. THIS RECOMMENDATION WAS BASED UPON UNSATISFACTORY FINDINGS IN A NUMBER OF TECHNICAL AREAS, INCLUDING PAST PERFORMANCE ON GOVERNMENT CONTRACTS. IT WAS REPORTED THAT THE LAST CONTRACT COMPLETED BY RACON FOR THE BID ITEM WAS DAAG11-67-C-0149, THAT FINAL DELIVERY ON THIS CONTRACT WAS MADE ON DECEMBER 15, 1967, "AND WAS ONE HUNDRED SIXTY DAYS LATE DUE TO CONTRACTOR FAULT."

AS YOU REPORT, A FAVORABLE FINDING ON FINANCIAL CAPABILITY WAS INCLUDED IN THE DCASR REPORT. THIS FINDING, AS WELL AS THE OTHER REPORT FINDINGS, WAS BASED ON A CONTEMPLATED AWARD OF 253 UNITS AT $16.79 PER UNIT (YOUR UNIT BID PRICE), ALTHOUGH DCASR WAS ADVISED THAT A 253 UNIT AWARD COULD BE INCREASED DUE TO SERVICE DEMANDS. THE DCASR FINANCIAL ANALYST CONCLUDED THAT YOUR FIRM HAD "THE FINANCIAL CAPABILITY TO PERFORM ON THE NOMINAL, PROPOSED AWARD FROM HIS OWN FINANCIAL RESOURCES."

BASED ON THE DCASR REPORT, THE CONTRACTING OFFICER MADE A WRITTEN DETERMINATION ON MAY 21, 1970, THAT RACON WAS NOT A RESPONSIBLE BIDDER BECAUSE OF PAST PERFORMANCE AND DOUBT AS TO PRODUCTION CAPACITY. LETTER DATED JUNE 4, 1970, THE CONTRACTING OFFICER ADVISED SBA IN CONNECTION WITH THE POSSIBLE ISSUANCE OF A COC TO YOUR FIRM THAT:

"2. AT THE TIME THE REQUEST WAS MADE FOR THE PRE-AWARD SURVEY, THE REQUIREMENTS HAD DROPPED TO ONLY 253 PIECES, OF LOUDSPEAKERS TO BE PROCURED; HOWEVER, SINCE THAT DATE AN ADDITIONAL 689 PIECES HAVE BEEN REQUESTED, MAKING A TOTAL DOLLAR CONTEMPLATED AWARD OF $14,874.18."

BY LETTER DATED JULY 8, 1970, SBA ADVISED THE CONTRACTING OFFICER THAT IT HAD DECLINED TO ISSUE A COC TO RACON. ON JULY 27, 1970, AWARD WAS MADE TO THE SECOND LOW BIDDER FOR A QUANTITY OF 1,000 UNITS AT $16.50 PER UNIT (YOUR BID PRICE FOR 1,000 UNITS WAS $15.74 PER UNIT).

DCASR AND SBA MAY WELL HAVE DIFFERED AS TO THE MERITS OF YOUR PRODUCTION AND INSPECTION FACILITIES. AS TO FINANCES, IT IS UNDERSTANDABLE THAT SBA WOULD WANT MORE ASSURANCE OF YOUR CAPABILITY TO PERFORM THE CONTRACT THAN WAS PROVIDED BY YOUR FIRM TO THE DCASR ANALYST, SINCE THE CONTEMPLATED AWARD HAD INCREASED FROM 253 UNITS TO 1,000 UNITS IN THE PERIOD BETWEEN THE TWO SURVEYS AND COULD NO LONGER BE CONSIDERED AS "NOMINAL" IN AMOUNT. THE CONTRACTING OFFICER WAS THUS PRESENTED WITH TWO REPORTS: THE DCASR RECOMMENDATION OF "NO AWARD" AND THE SBA DENIAL OF A COC. YOU FEEL THAT THE CONTRACTING OFFICER SHOULD HAVE LOOKED BEHIND THOSE REPORTS AND ACCEPTED THE FAVORABLE DCASR FINDING ON FINANCIAL RESOURCES AND WHAT YOU ASSUME TO BE THE FAVORABLE SBA FINDINGS ON THE OTHER AREAS, AND AWARDED THE CONTRACT TO RACON.

WE CANNOT AGREE. A BIDDER MAY BE REGARDED AS RESPONSIBLE ONLY UPON AN AFFIRMATIVE DETERMINATION TO THAT EFFECT BY THE CONTRACTING OFFICER OR FAILING THAT, AND IF HE IS SMALL, UPON ISSUANCE OF A COC BY THE SBA. ASPR 1-904. NEITHER OF THESE RESULTED IN YOUR CASE. THE SBA LETTER OF JULY 8, 1970, WHICH DENIED YOUR COC APPLICATION BECAUSE OF A LACK OF FINANCIAL DATA ALSO STATED THAT SBA FOUND "NO SUFFICIENT REASON FOR DISAGREEING WITH THE DECISION OF THE PROCURING AGENCY". UNDER THE CIRCUMSTANCES WE THINK THE CONTRACTING OFFICER WAS ENTIRELY JUSTIFIED IN VIEWING THE SBA REFUSAL TO ISSUE A COC TO YOUR FIRM AS A CONFIRMATION, ALTHOUGH FOR A DIFFERENT REASON, OF HIS PRIOR DETERMINATION OF NONRESPONSIBILITY. SEE B-156885, SEPTEMBER 3, 1965; AND B-159933, NOVEMBER 18, 1966.

ACCORDINGLY, YOUR PROTEST IS DENIED.