B-170803, NOV. 3, 1970

B-170803, NOV. 3, 1970

BID PROTEST - BIDDER RESPONSIBILITY DENIAL OF PROTEST OF FOURTH LOW BIDDER AGAINST AWARD OF MULTI-YEAR CONTRACT FOR FURNISHING HOOK POINTS FOR THE F-4 SERIES AIRCRAFT TO LOW BIDDER ON BASIS OF LACK OF RESPONSIBILITY. A DETERMINATION THAT LOW BIDDER WAS RESPONSIBLE AFTER A FAVORABLE PREAWARD SURVEY AND TECHNICAL EVALUATION JUDGMENT WERE MADE MUST BE ACCEPTED IN ABSENCE OF BAD FAITH OR LACK OF A SUFFICIENT BASIS THEREFOR.

TO RERAT MACHINE CO.:

WE REFER TO YOUR PROTEST BY TELEGRAM OF SEPTEMBER 14, AS SUPPLEMENTED BY YOUR LETTERS OF SEPTEMBER 16 AND 23, 1970, AGAINST AWARD BY THE DEPARTMENT OF THE AIR FORCE OF A SMALL BUSINESS SET-ASIDE REQUIREMENTS CONTRACT TO KENT ENGINEERING, INCORPORATED (KENT), FOR THE FURNISHING OF HOOK POINTS FOR THE F4 SERIES AIRCRAFT. THE PROCUREMENT SOLICITATION IS INVITATION FOR BIDS (IFB) F42600-70-B-5064, ISSUED JUNE 3, 1970, BY OGDEN AIR MATERIEL AREA, HILL AIR FORCE BASE, UTAH, AND KENT, WHO IS THE LOWEST RESPONSIVE BIDDER, HAS ALSO BEEN DETERMINED BY THE CONTRACTING OFFICER TO BE A RESPONSIBLE BIDDER.

THE SUBSTANCE OF YOUR PROTEST IS THAT KENT WILL NOT BE ABLE TO PRODUCE THE END ITEM AT ITS LOW BID PRICE OF $325 PER UNIT; THAT KENT'S FINANCIAL CONDITION IS SUSPECT IN LIGHT OF CERTAIN ADVERSE INFORMATION CONTAINED IN A JULY 1970 CREDIT REPORT, A COPY OF WHICH YOU HAVE FURNISHED TO OUR OFFICE; AND THAT KENT INTENDS TO USE A FORGING SUPPLIER WHO IS KNOWN TO HAVE PURCHASED FORGINGS FROM ENGLAND AND WHO HAS MARGINAL CAPABILITIES. MORE SPECIFICALLY, YOU STATE THAT THE INTENDED SUPPLIER HAS A 6,000-POUND HAMMER WHEREAS OTHER PRODUCERS OF THE FORGINGS FOR THE F-4 HOOK POINTS CLAIM THAT A 12,000-POUND TO A 14,000-POUND HAMMER IS REQUIRED TO FORGE THE HOOKS.

IN ADDITION, YOU STATE THAT THE NAVY, AFTER PERFORMING A SURVEY OF KENT, OFFERED KENT AN OPPORTUNITY TO WITHDRAW ITS BID, BUT KENT DECLINED TO TAKE SUCH ACTION ALTHOUGH ANOTHER BIDDER, BEACH ARCHITECTURAL PRODUCTS, INC. (BEACH), WHO QUOTED A UNIT PRICE OF $440 ON THE SINGLE-YEAR REQUIREMENT, WITHDREW ITS BID.

IN LINE WITH YOUR STATED OBJECTIONS, YOU URGE THAT KENT IS NOT A RESPONSIBLE BIDDER AND THAT A VIOLATION OF THE BUY AMERICAN ACT (41 U.S.C. 10A-D) MAY WELL OCCUR IF A CONTRACT IS AWARDED TO KENT.

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

PAGE 2 OF THE BID FORM, STANDARD FORM 33, REQUIRED BIDDERS TO CHECK VARIOUS ITEMS AND TO PROVIDE, WHERE APPLICABLE, CERTAIN INFORMATION. ONE SUCH ITEM IS THE BUY AMERICAN CERTIFICATE, WHEREBY A BIDDER CERTIFIES THAT, EXCEPT FOR END PRODUCTS LISTED BELOW THE CERTIFICATE, EACH END PRODUCT IS A DOMESTIC SOURCE END PRODUCT AS DEFINED IN THE BUY AMERICAN ACT CLAUSE PRESCRIBED BY ARMED SERVICES PROCUREMENT REGULATION (ASPR) 6- 104.5. THE BUY AMERICAN ACT CLAUSE, WHICH IS INCORPORATED IN THE IFB BY PARAGRAPH L-1 OF THE GENERAL PROVISIONS FOR FIXED PRICE SUPPLY CONTRACTS, DEFINES A DOMESTIC SOURCE END PRODUCT AS "(A) AN UNMANUFACTURED END PRODUCT WHICH HAS BEEN MINED OR PRODUCED IN THE UNITED STATES AND (B) AN END PRODUCT MANUFACTURED IN THE UNITED STATES IF THE COST OF THE COMPONENTS THEREOF WHICH ARE MINED, PRODUCED, OR MANUFACTURED IN THE UNITED STATES EXCEEDS 50 PERCENT OF THE COST OF ALL ITS COMPONENTS."

PARAGRAPH F-1.E., ON PAGE 20 OF THE IFB, STATED:

"E. FACILITY REQUIREMENTS: THE SPECIFICATIONS HEREOF REQUIRE THE MANUFACTURE OF ARTICLES OF VERY CLOSE TOLERANCE. BECAUSE OF THE CRITICAL APPLICATION OF THE ARTICLES INVOLVED, UNIFORMLY EXCELLENT QUALITY IS REQUIRED. IT IS CONSIDERED THAT THE REQUIRED QUALITY CAN ONLY BE ACHIEVED IF THE CONTRACTOR HAS:

1. MACHINE SHOP EQUIPMENT OF THE REQUIRED SIZE AND CAPACITY CAPABLE OF CONSISTENTLY PRODUCING ARTICLES WITHIN THE REQUIRED TOLERANCES.

2. ATMOSPHERICALLY CONTROLLED FURNACES WITH A RANGE TO 2000 DEGREES FAHRENHEIT.

3. QUALITY CONTROL AND INSPECTION PROCEDURES ADEQUATE TO ASSURE THE REQUIRED QUALITY ON ALL MATERIAL.

4. ENGINEERING AND TECHNICAL KNOWLEDGE IN THE REQUIRED METAL PROCESSING PROCEDURES.

5. SIMILARLY RELIABLE VENDORS.

TO ASSURE THAT A PROSPECTIVE CONTRACTOR HAS ADEQUATE FACILITIES AND PROCEDURES, IT IS CONTEMPLATED THAT A FACILITY SURVEY WILL BE REQUIRED OF ALL PRODUCERS WHO HAVE NOT SATISFACTORILY PRODUCED THE REQUIRED ARTICLES. THIS SURVEY WILL BE CONDUCTED BY MEMBERS OF THE STAFF OF THE ADMINISTRATIVE CONTRACTING OFFICER AND THE NAVAL AIR ENGINEERING CENTER."

ON JULY 21, BIDS WERE OPENED AS SCHEDULED. THE LOWEST BID, $255.96 PER UNIT ON THE MULTI-YEAR PROGRAM ONLY, WAS SUBMITTED BY JO-BAR MANUFACTURING CORPORATION (JO-BAR). KENT'S BID, WITH A UNIT PRICE OF $325 ON THE SINGLE -YEAR PROGRAM AND A TOTAL PRICE OF $1,551,550 ON THE MULTI-YEAR PROGRAM, WAS SECOND LOW, AND BEACH'S BID, WITH A UNIT PRICE OF $440 ON THE SINGLE- YEAR PROGRAM AND A TOTAL PRICE OF $1,773,950 ON THE MULTI-YEAR PROGRAM, WAS THIRD LOW. YOUR BID, QUOTING A UNIT PRICE OF $539.89 FOR BOTH PROGRAMS, WAS FOURTH LOW, AND THREE OTHER BIDS WERE HIGHER.

THE MULTI-YEAR PROGRAM BIDS OF JO-BAR AND KENT EACH INCLUDED QUALIFYING STATEMENTS WHICH CONFLICTED WITH THE IFB REQUIREMENTS AND WERE THEREFORE DETERMINED TO BE NONRESPONSIVE. WHILE KENT'S SINGLE YEAR PROGRAM BID WAS RESPONSIVE, THE PROCURING ACTIVITY TOOK NOTE OF THE FACT THAT THE UNIT PRICE OF $325 WAS SUBSTANTIALLY LOWER THAN THE REMAINING BIDS AND WAS ALSO APPROXIMATELY 60 PERCENT OF THE CURRENT CONTRACT PRICE, WHICH HAD BEEN OBTAINED COMPETITIVELY. ACCORDINGLY, THE PROCURING ACTIVITY SO ADVISED KENT IN A LETTER DATED JULY 31 AND ALSO REQUESTED KENT TO VERIFY ITS BID. BY TELEGRAM DATED AUGUST 4, KENT VERIFIED ITS UNIT PRICE OF $325 FOR THE SINGLE-YEAR PROGRAM.

A NOTATION ON THE ABSTRACT OF BIDS INDICATES THAT BEACH REQUESTED PERMISSION TO WITHDRAW OR MODIFY ITS BID, BUT NO ACTION WAS TAKEN ON THE REQUEST DUE TO CONSIDERATION OF THE LOWER BID BY KENT.

ON AUGUST 19, THE PROCURING ACTIVITY REQUESTED THE DEFENSE CONTRACT ADMINISTRATION SERVICES DISTRICT, SEATTLE, WASHINGTON (DCASD-SEATTLE), TO PERFORM A PREAWARD SURVEY OF KENT. THE REQUEST INDICATED THAT THE NAVAL AIR ENGINEERING CENTER (NAEC), PHILADELPHIA, PENNSYLVANIA, WOULD ALSO PARTICIPATE IN THE SURVEY AND STATED THAT PARTICULAR ATTENTION SHOULD BE GIVEN TO THE PROSPECTIVE CONTRACTOR'S ABILITY TO PERFORM AT THE PRICE QUOTED. THE LIST OF PARTICIPANTS IN THE SURVEY INCLUDES TWO NAEC REPRESENTATIVES.

THE PREAWARD SURVEY REPORT DATED SEPTEMBER 4, 1970, INCLUDED A RECOMMENDATION FOR COMPLETE AWARD TO KENT. A MEMORANDUM SIGNED BY THE TWO NAEC REPRESENTATIVES AND INCORPORATED IN THE REPORT STATES THAT A FACILITY SURVEY WAS PERFORMED FOR THE PURPOSE OF DETERMINING WHETHER THE FACILITIES OF THE PROSPECTIVE CONTRACTOR AND ITS SUBCONTRACTORS WERE ADEQUATE FOR PRODUCTION OF THE END ITEM, AND THE DETERMINATION WAS FAVORABLE IN ALL OF THE AREAS RELATED TO MANUFACTURE, SUCH AS MACHINING, FORGING, HEAT TREATING AND HARD SURFACING. THE MEMORANDUM CONCLUDES WITH THE STATEMENT, "AS A RESULT OF THIS SURVEY THE CONTRACTOR AND SUBCONTRACTORS ARE CONSIDERED ACCEPTABLE IN THE AREAS SO INVESTIGATED."

WITH RESPECT TO KENT'S FINANCIAL CONDITION, THE REPORT INDICATES THAT THE SURVEY TEAM'S FAVORABLE RECOMMENDATION ON THAT FACTOR WAS BASED ON INFORMATION OBTAINED BY THE TEAM IN AUGUST 1970, AFTER CONFERRING WITH THE TOP OFFICIALS OF KENT AND WITH ITS BANK, SHOWING THAT THERE HAS BEEN A VAST IMPROVEMENT IN KENT'S OPERATIONS UNDER NEW MANAGEMENT FOLLOWING A 1969 REORGANIZATION AND THAT ADEQUATE FINANCIAL SUPPORT FOR SUCH OPERATION IS AVAILABLE. FURTHER, THE REPORT IS ACCOMPANIED BY A LETTER DATED SEPTEMBER 2, ADDRESSED TO DCASD-SEATTLE, IN WHICH KENT AGAIN VERIFIED ITS UNIT PRICE OF $325 FOR THE SINGLE-YEAR PROGRAM.

CONTRARY TO YOUR CONTENTION, THERE IS NO INDICATION IN THE PREAWARD SURVEY REPORT, OR ELSEWHERE OF RECORD, THAT EITHER THE NAEC REPRESENTATIVES OR ANY OTHER MEMBER OF THE PREAWARD SURVEY TEAM SUGGESTED TO KENT THAT IT MIGHT WITHDRAW FROM THE PROCUREMENT.

AFTER CONSIDERATION OF THE PREAWARD SURVEY REPORT AND RELATED DATA, THE CONTRACTING OFFICER ISSUED A WRITTEN DETERMINATION THAT KENT IS A RESPONSIBLE BIDDER. FOLLOWING RECEIPT OF NOTIFICATION OF YOUR PROTEST, HOWEVER, DCASD-SEATTLE CHECKED, AT THE REQUEST OF THE PROCURING ACTIVITY, AS TO KENT'S INTENDED SUBCONTRACTOR FOR THE FORGINGS AND AS TO COMPLIANCE WITH THE BUY AMERICAN ACT.

BY LETTER OF SEPTEMBER 25, DCASD-SEATTLE ADVISED THE PROCURING ACTIVITY THAT KENT HAD CONTACTED THREE DOMESTIC FORGING SUBCONTRACTORS BUT HAD NOT YET MADE A CHOICE AS TO WHICH FIRM IT WOULD USE IN THE EVENT OF RECEIPT OF AWARD. TWO OF THE SUBCONTRACTORS, WHOSE EQUIPMENT AND FACILITIES LISTINGS WERE FURNISHED TO DCASD-SEATTLE AND ARE INCLUDED IN THE FILE MADE AVAILABLE TO OUR OFFICE, WERE STATED TO HAVE EXPERIENCE WITH THE METAL REQUIRED FOR THE MANUFACTURE OF THE HOOK POINT AND BOTH CONFIRMED THEIR ABILITY TO MANUFACTURE THE FORGINGS AS SPECIFIED IN THE BID PACKAGE. ONE OF SUCH FIRMS SPECIFICALLY STATED THAT IT CAN PRODUCE THE FORGING WITH ITS 10,000-POUND HAMMER (INCLUDED IN ITS LIST OF EQUIPMENT). AS TO THE THIRD SUBCONTRACTOR, DCASD SEATTLE WAS NOT IN POSSESSION OF A FACILITIES LISTING BUT REPORTED THAT THE FIRM DOES HAVE TWO DROP AIR HAMMERS, EACH OF WHICH WEIGHS 5,000 POUNDS.

IN SUPPORT OF HIS POSITION THAT KENT IS A RESPONSIBLE BIDDER, THE CONTRACTING OFFICER STRESSES THE FACT THAT NEITHER THE DRAWINGS NOR THE SPECIFICATIONS IN THE IFB REQUIRE THE USE OF A HAMMER OF A PARTICULAR CAPACITY TO MANUFACTURE THE HOOK POINTS. IN ADDITION, THE CONTRACTING OFFICER STATES THAT THE TWO NAEC REPRESENTATIVES WHO MADE THE FAVORABLE FACILITY SURVEY REPORTS OF KENT AND ITS SUBCONTRACTORS AND CONCURRED IN THE DCASD-SEATTLE AFFIRMATIVE DETERMINATION AS TO KENT'S RESPONSIBILITY TO PRODUCE THE HOOK POINTS, ALSO BEAR THE FINAL RESPONSIBILITY FOR ACCEPTING THE ITEMS.

WITH RESPECT TO THE BUY AMERICAN ACT, DCASD-SEATTLE STATED THAT THE BIDDER HAS INDICATED HE UNDERSTANDS AND WILL COMPLY WITH THE ACT. IN THIS CONNECTION, REFERENCE TO KENT'S BID REVEALS THAT KENT MADE NO ENTRY BENEATH THE BUY AMERICAN CERTIFICATE, NOR DID IT INDICATE ANYWHERE ELSE IN ITS BID THAT IT INTENDED TO EXCLUDE THE HOOK POINT, THE ONLY END PRODUCT INVOLVED IN THE PROCUREMENT, FROM THE BUY AMERICAN CERTIFICATE. IN SUCH CIRCUMSTANCES, WE HAVE HELD THAT THE BID SHOULD BE REGARDED AS A DOMESTIC BID, ACCEPTANCE OF WHICH BINDS THE BIDDER TO FURNISH A DOMESTIC SOURCE END PRODUCT AS DEFINED IN THE BUY AMERICAN ACT CLAUSE, B-157815, JANUARY 21, 1966; B-165186, NOVEMBER 7, 1968; 47 COMP. GEN. 624, 626 (1968). IN THE EVENT OF ITS ACCEPTANCE, THEREFORE, KENT WILL BE OBLIGATED TO SUPPLY A DOMESTIC SOURCE HOOK POINT. ACCORDINGLY, ABSENT ANY EVIDENCE THAT KENT DOES, IN FACT, PLAN TO FURNISH A FOREIGN SOURCE FORGING, WE ARE UNABLE TO CONCLUDE THAT KENT'S BID SHOULD BE EVALUATED AS OTHER THAN A DOMESTIC BID.

WHETHER A BIDDER HAS THE ABILITY TO PERFORM A CONTRACT IN ACCORDANCE WITH REQUIREMENTS SET FORTH IN AN INVITATION FOR BIDS IS A MATTER RELATED TO HIS RESPONSIBILITY WHICH IS FOR DETERMINATION PRIMARILY BY THE CONTRACTING AGENCY, AND ABSENT A SHOWING OF BAD FAITH OR LACK OF REASONABLE BASIS THEREFOR, OUR OFFICE WILL NOT QUESTION THE VALIDITY OF THE DETERMINATION. 43 COMP. GEN. 228 (1963). WHERE A PREAWARD SURVEY HAS BEEN MADE OF THE PROSPECTIVE CONTRACTOR, ASPR 1-905.4(A) REQUIRES THAT, IN MAKING THE DETERMINATION OF RESPONSIBILITY, THE CONTRACTING OFFICER SHALL USE THE PREAWARD SURVEY EVALUATION.

THE RECORD PRESENTED IN THIS CASE ESTABLISHES THAT THE DETERMINATION AS TO KENT'S RESPONSIBILITY WAS MADE AFTER DUE CONSIDERATION OF THE INFORMATION DISCLOSED BY THE PREAWARD SURVEY AND THE FAVORABLE RECOMMENDATION OF DCASD-SEATTLE. FURTHER, THE PREAWARD SURVEY INFORMATION INCLUDED A TECHNICAL JUDGMENT BY NAEC PERSONNEL THAT KENT AND ITS SUBCONTRACTORS POSSESS THE FACILITY REQUIREMENTS SET FORTH IN THE IFB, A JUDGMENT WHICH WE MUST ACCEPT ABSENT ANY EVIDENCE OF BAD FAITH OR LACK OF A SUFFICIENT BASIS THEREFOR. IN ADDITION, BOTH THE DCASD-SEATTLE RECOMMENDATION AND THE CONTRACTING OFFICER'S DETERMINATION OF RESPONSIBILITY WERE AFFIRMED AFTER THOROUGH CONSIDERATION OF THE QUESTIONS RAISED IN YOUR PROTEST. IN THE CIRCUMSTANCES, WE ARE UNABLE TO CONCLUDE THAT THE CONTRACTING OFFICER'S DETERMINATION WITH RESPECT TO KENT'S RESPONSIBILITY IS EITHER ARBITRARY OR CAPRICIOUS OR WITHOUT ADEQUATE EVIDENTIARY SUPPORT. ACCORDINGLY, IT IS OUR VIEW THAT THE DETERMINATION CONSTITUTES A REASONABLE EXERCISE OF THE DISCRETION VESTED IN THE CONTRACTING OFFICER WITH RESPECT TO THE MATTER OF ASSESSMENT OF THE QUALIFICATIONS OF A PROSPECTIVE CONTRACTOR.

FOR THE REASONS STATED, WE SEE NO LEGAL BASIS FOR OBJECTION TO CONSIDERATION BY THE PROCURING ACTIVITY OF THE BID OF KENT FOR AWARD. YOUR PROTEST IS THEREFORE DENIED.