B-171168, MAY 4, 1971

B-171168: May 4, 1971

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DETERMINATION TO REJECT METABOLIC'S BID BECAUSE IT HAD NOT BEEN INSPECTED BY THE CLEARING HOUSE SYSTEM OF THE AMERICAN ASSOCIATION OF BLOOD BANKS (WHICH WAS NOT MANDATORY) WAS IMPROPER AFTER SUBMISSION OF THE QUESTION OF ITS CAPACITY TO THE SBA AND THE ISSUANCE TO IT OF A CERTIFICATE OF COMPETENCY. CONTRACTING OFFICER'S CLAIM THAT METABOLIC WAS NONRESPONSIBLE FOR REASONS OTHER THAN CAPACITY AND THEREFORE OUTSIDE THE RATING DOMAIN OF THE SBA DOES NOT WITHSTAND CLOSE SCRUTINY. BEFORE AWARDS ARE MADE TO METABOLIC. JOHNSON: FURTHER REFERENCE IS MADE TO THE PROTEST OF METABOLIC. WHICH WAS THE SUBJECT OF A REPORT DATED NOVEMBER 5. ITS BIDS WERE REJECTED AND AWARDS MADE TO COMMUNITY. QUALIFICATIONS: (1) BIDS WILL BE CONSIDERED ONLY FROM BIDDERS WHOSE BLOOD BANK IS APPROVED BY THE NATIONAL INSTITUTES OF HEALTH OR HAS BEEN INSPECTED FOR THE CLEARINGHOUSE SYSTEM OF THE AMERICAN ASSOCIATION OF BLOOD BANKS FOR THE PROCUREMENT OF BLOOD FOR TRANSFUSIONS. (2) THE BIDDER CERTIFIED THAT HE IS OR IS NOT APPROVED (STRIKE OUT WORDS NOT APPLICABLE) BY THE NATIONAL INSTITUTES OF HEALTH UNDER THE FEDERAL BIOLOGICAL CONTROL LAW AS A SOURCE OF SUPPLY FOR WHOLE BLOOD AND WILL COMPLY WITH THE REQUIREMENTS OUTLINED BELOW WITH RESPECT TO DONORS.

B-171168, MAY 4, 1971

BID PROTEST - BIDDER RESPONSIBILITY - CAPACITY - SBA DETERMINATION SUSTAINING PROTEST OF METABOLIC, INC., LOW BIDDER, AGAINST THE AWARD OF CONTRACTS TO COMMUNITY BLOOD AND PLASMA SERVICES, INC., UNDER IFB ISSUED BY THE VA HOSPITALS AT HOUSTON AND DALLAS, TEXAS FOR PROCUREMENT OF HUMAN WHOLE BLOOD. DETERMINATION TO REJECT METABOLIC'S BID BECAUSE IT HAD NOT BEEN INSPECTED BY THE CLEARING HOUSE SYSTEM OF THE AMERICAN ASSOCIATION OF BLOOD BANKS (WHICH WAS NOT MANDATORY) WAS IMPROPER AFTER SUBMISSION OF THE QUESTION OF ITS CAPACITY TO THE SBA AND THE ISSUANCE TO IT OF A CERTIFICATE OF COMPETENCY. CONTRACTING OFFICER'S CLAIM THAT METABOLIC WAS NONRESPONSIBLE FOR REASONS OTHER THAN CAPACITY AND THEREFORE OUTSIDE THE RATING DOMAIN OF THE SBA DOES NOT WITHSTAND CLOSE SCRUTINY. BEFORE AWARDS ARE MADE TO METABOLIC, THE COMP. GEN. BELIEVES IT WOULD BE APPROPRIATE FOR THE CONTRACTING OFFICER TO PRESENT EVIDENCE TO THE SBA AND SEEK A REEVALUATION.

TO MR. JOHNSON:

FURTHER REFERENCE IS MADE TO THE PROTEST OF METABOLIC, INCORPORATED, AGAINST THE AWARD OF CONTRACTS TO COMMUNITY BLOOD & PLASMA SERVICE, INCORPORATED, UNDER INVITATIONS FOR BIDS (IFB) NOS. 71-1 AND 549-1-71, BY THE VETERANS ADMINISTRATION (VA) HOSPITALS AT HOUSTON AND DALLAS, TEXAS, RESPECTIVELY, WHICH WAS THE SUBJECT OF A REPORT DATED NOVEMBER 5, 1970, FROM THE DIRECTOR OF THE SUPPLY SERVICE (REFERENCE:134G).

BOTH INVITATIONS CALLED FOR BIDS ON SUPPLYING THE HUMAN WHOLE BLOOD AND BLOOD COMPONENTS REQUIREMENTS OF THE RESPECTIVE HOSPITALS FOR THE PERIOD JULY 1, 1970, THROUGH JUNE 30, 1971. ALTHOUGH METABOLIC SUBMITTED THE LOW BID UNDER EACH INVITATION, ITS BIDS WERE REJECTED AND AWARDS MADE TO COMMUNITY, THE SECOND LOW BIDDER, ON OR ABOUT JUNE 30, 1970.

INVITATION FOR BIDS NO. 71-1 (HOUSTON) CONTAINED THE FOLLOWING PROVISIONS APPLICABLE TO THE PROTEST:

"1. QUALIFICATIONS: (1) BIDS WILL BE CONSIDERED ONLY FROM BIDDERS WHOSE BLOOD BANK IS APPROVED BY THE NATIONAL INSTITUTES OF HEALTH OR HAS BEEN INSPECTED FOR THE CLEARINGHOUSE SYSTEM OF THE AMERICAN ASSOCIATION OF BLOOD BANKS FOR THE PROCUREMENT OF BLOOD FOR TRANSFUSIONS.

(2) THE BIDDER CERTIFIED THAT HE IS OR IS NOT APPROVED (STRIKE OUT WORDS NOT APPLICABLE) BY THE NATIONAL INSTITUTES OF HEALTH UNDER THE FEDERAL BIOLOGICAL CONTROL LAW AS A SOURCE OF SUPPLY FOR WHOLE BLOOD AND WILL COMPLY WITH THE REQUIREMENTS OUTLINED BELOW WITH RESPECT TO DONORS, CONTAINERS, DELIVERY, ETC. (BIDDER MUST BE APPROVED BY THE NATIONAL INSTITUTES OF HEALTH IF INTERSTATE SHIPMENT IS INVOLVED AND A STATEMENT THAT SUCH APPROVAL HAS BEEN GRANTED MUST BE SUBMITTED TOGETHER WITH THE BID).

(3) THE BIDDER CERTIFIES THAT HE HAS OR HAS NOT BEEN INSPECTED (STRIKE OUT WORDS NOT APPLICABLE) FOR THE CLEARINGHOUSE SYSTEM OF THE AMERICAN ASSOCIATION OF BLOOD BANKS FOR THE PROCUREMENT OF BLOOD FOR TRANSFUSIONS.

SPECIAL NOTE TO CONTRACTING OFFICERS: INSPECTION AND ACCEPTANCE FOR THE CLEARINGHOUSE SYSTEM OF THE AABB IS NOT MANDATORY IF BIDDER IS APPROVED UNDER THE FEDERAL BIOLOGICAL CONTROL LAW BY NIH. IN ALL CASES WHERE BIDDER IS NOT ACCREDITED BY AABB, THE VA WILL INSPECT HIS FACILITIES UNDER SPECIAL CONDITION 6, INSPECTION OF BIDDER'S FACILITIES, TO DETERMINE CONFORMANCE WITH STANDARDS OF CLEARINGHOUSE SYSTEM OF AABB.

"6. INSPECTION OF BIDDER'S FACILITIES: THE RIGHT IS RESERVED TO THOROUGHLY INSPECT AND INVESTIGATE THE ESTABLISHMENT AND FACILITIES AND OTHER QUALIFICATIONS OF ANY BIDDER, AND TO REJECT ANY BID IRRESPECTIVE OF PRICE, IF IT SHOULD BE ADMINISTRATIVELY DETERMINED AS LACKING IN ANY OF THE ESSENTIALS NECESSARY TO ASSURE ACCEPTABLE STANDARDS OF PERFORMANCE. SUCH INSPECTION AND INVESTIGATION SHALL INCLUDE A DETERMINATION AS TO THE BIDDER'S CONFORMANCE WITH SPECIAL CONDITIONS 2(A) AND 2(B)(1)." IFB NO. 549-1-71 (DALLAS) CONTAINED SIMILAR PROVISIONS. BOTH INVITATIONS INCLUDED A REQUIREMENT FOR DELIVERIES TO BE MADE WITHIN FOUR HOURS OF REQUEST.

METABOLIC COMPLETED THE ABOVE-QUOTED PROVISIONS OF BOTH INVITATIONS TO SHOW THAT IT WAS APPROVED BY THE NATIONAL INSTITUTES OF HEALTH AS A SOURCE OF SUPPLY FOR WHOLE BLOOD AND WOULD COMPLY WITH THE CONTRACT REQUIREMENTS WITH RESPECT TO "DONORS, CONTAINERS, DELIVERY, ETC.," AND THAT IT HAD NOT BEEN INSPECTED FOR THE CLEARINGHOUSE SYSTEM OF THE AMERICAN ASSOCIATION OF BLOOD BANKS.

ON MAY 6, 1970, THE CONTRACTING OFFICER HAVING COGNIZANCE OF THE PROCUREMENT FOR THE DALLAS VA HOSPITAL ADVISED METABOLIC THAT ITS BID WAS REJECTED BECAUSE HE HAD DETERMINED THAT IT COULD NOT MEET THE 4 HOUR DELIVERY REQUIREMENT. BECAUSE METABOLIC HAD NOT BEEN INSPECTED FOR THE CLEARINGHOUSE SYSTEM OF THE AABB, WHICH WAS NOT MANDATORY, THE CONTRACTING OFFICER HAVING COGNIZANCE OF THE HOUSTON PROCUREMENT REQUESTED AN INSPECTION OF ITS FACILITIES PURSUANT TO THE SPECIAL NOTE UNDER PARAGRAPH 1 QUOTED ABOVE. REJECTION OF METABOLIC'S BID FOR THE PROCUREMENT AT THE HOUSTON VA HOSPITAL WAS BASED UPON THE INSPECTION TEAM'S REPORT DATED JUNE 26, 1970, OF METABOLIC'S FACILITIES, WHICH CONCLUDED THAT METABOLIC'S OPERATIONS DID NOT CONFORM TO THE STANDARDS OF THE CLEARINGHOUSE SYSTEM OF THE AABB, VA HOSPITAL STANDARDS, OR DONOR REQUIREMENTS TO BE INCLUDED IN THE CONTRACT.

IN TELEGRAMS DATED JUNE 30, 1970, AND JULY 1, 1970, METABOLIC PROTESTED REJECTION OF ITS BIDS BY THE RESPECTIVE HOSPITALS TO THE VA IN WASHINGTON, D.C. IN LETTERS DATED JULY 21 AND 30, 1970, THE DIRECTOR OF THE SUPPLY SERVICE AFFIRMED REJECTION OF BOTH BIDS ON THE BASIS OF THE INSPECTION TEAM'S REPORT. METABOLIC PROTESTED FURTHER, STATING THAT SINCE ITS BIDS HAD BEEN REJECTED FOR REASONS OF CAPACITY IT REQUESTED ISSUANCE OF CERTIFICATES OF COMPETENCY BY THE SMALL BUSINESS ADMINISTRATION (SBA). THIS REQUEST, ALONG WITH PERTINENT PARTS OF THE FILES FROM THE RESPECTIVE HOSPITALS, WAS FORWARDED TO SBA. ON SEPTEMBER 17, 1970, SBA ISSUED CERTIFICATES OF COMPETENCY (COC'S) UNDER BOTH IFB'S, CERTIFYING THAT METABOLIC WAS COMPETENT AS TO CAPACITY AND CREDIT TO PERFORM THE PROCUREMENTS COVERED BY THE IFB'S. FURTHERMORE, WE WERE ADVISED ON DECEMBER 7, 1970, THAT THE COC REVIEW BOARD, DALLAS, TEXAS, WOULD HAVE ISSUED A COC TO METABOLIC IN MAY OR JUNE 1970 IF ONE HAD BEEN APPLIED FOR.

WHILE WE RECOGNIZE THAT A CONTRACTING OFFICER'S DETERMINATION OF A BIDDER'S RESPONSIBILITY INVOLVES THE EXERCISE OF A CONSIDERABLE RANGE OF DISCRETION WHICH WILL NOT ORDINARILY BE QUESTIONED BY OUR OFFICE, A CONTRACTING OFFICER'S DETERMINATION OF RESPONSIBILITY OF A SMALL BUSINESS CONCERN IS SUBJECT TO THE AUTHORITY OF THE SBA UNDER SECTION 8(B)(7) OF THE SMALL BUSINESS ACT, PUBLIC LAW 85-536, 15 U.S.C. 637(B)(7), TO CERTIFY TO GOVERNMENT PROCUREMENT OFFICERS WITH RESPECT TO THE CAPACITY AND CREDIT OF THE SMALL BUSINESS CONCERN TO PERFORM A SPECIFIC CONTRACT. SECTION 1- 1.708-2(A) OF THE FEDERAL PROCUREMENT REGULATIONS (FPR) REQUIRES THE CONTRACTING OFFICER TO REFER A SMALL BUSINESS CONCERN TO THE SBA FOR THE POSSIBLE ISSUANCE OF A COC WHERE THE BID OF THAT CONCERN IS TO BE REJECTED BECAUSE THE CONCERN HAS BEEN DETERMINED TO BE NONRESPONSIBLE AS TO CAPACITY OR CREDIT. UNDER THE TERMS OF THE STATUTORY PROVISION AND FPR 1- 1.708-3, PROCUREMENT OFFICERS ARE REQUIRED TO ACCEPT THE SBA CERTIFICATION AS CONCLUSIVE.

IN HIS REPORT, THE DIRECTOR OF THE SUPPLY SERVICE TAKES THE POSITION THAT REJECTION OF METABOLIC'S BIDS WITHOUT REFERRAL TO SBA WAS PROPER AS THE CONTRACTING OFFICER DETERMINED METABOLIC NONRESPONSIBLE FOR REASONS OTHER THAN CAPACITY OR CREDIT. HE STATES THE "FACTS ARE THAT IT IS HUMAN BLOOD THAT IS INVOLVED IN THIS CONTRACT AND THAT THE INSPECTION TEAM, IN ADDITION TO DETECTING DEFICIENCIES IN THE FIRM'S FACILITIES, HAD DOUBTS ABOUT THE RECORDS IT KEPT AND ITS METHOD OF DRAWING BLOOD."

SECTION 1-1.708-1 OF FPR DEFINES CAPACITY AS THE "OVERALL ABILITY OF A PROSPECTIVE SMALL BUSINESS CONTRACTOR TO MEET QUALITY, QUANTITY, AND TIME REQUIREMENTS OF A PROPOSED CONTRACT AND INCLUDES ABILITY TO PERFORM, ORGANIZATION, EXPERIENCE, TECHNICAL KNOWLEDGE, SKILLS, 'KNOW HOW,' TECHNICAL EQUIPMENT, AND FACILITIES." IN OTHER WORDS, "CAPACITY" RELATES TO FACTORS WHICH ARE DETERMINATIVE OF WHETHER A BIDDER CAN PERFORM IN ACCORDANCE WITH THE TERMS OF THE PROPOSED CONTRACT. WE HAVE CAREFULLY REVIEWED THE INSPECTION TEAM'S REPORT, AS WELL AS OTHER DOCUMENTS IN THE CONTRACT FILES, AND ARE UNABLE TO AGREE WITH THE CONCLUSION THAT THE DEFICIENCIES NOTED THEREIN RELATE TO OTHER THAN DEFICIENCIES IN CAPACITY AS DEFINED BY FPR. WHEN THE REASONS GIVEN FOR REJECTION OF METABOLIC'S BIDS ARE EXAMINED IN LIGHT OF THE DEFINITION OF "CAPACITY" IN FPR 1-1.708- 1, WE CANNOT ESCAPE THE CONCLUSION THAT THESE REASONS RELATE TO DOUBT AS TO METABOLIC'S "OVERALL ABILITY *** TO MEET QUALITY, QUANTITY, AND TIME REQUIREMENTS." FURTHERMORE, WE DO NOT BELIEVE THE STATUTORY LIMITATION ON THE CONTRACTING OFFICER'S AUTHORITY TO DETERMINE THE RESPONSIBILITY OF A SMALL BUSINESS CONCERN CAN BE OVERCOME BY SIMPLY CONCLUDING THAT THE REASONS FOR THE CONTRACTING OFFICER'S NEGATIVE DETERMINATION DO NOT CONNECTION, FPR 1 1.708-2(A)(5) PROVIDES AS FOLLOWS:

"(5) A DETERMINATION BY A CONTRACTING OFFICER THAT A SMALL BUSINESS CONCERN IS NOT RESPONSIBLE FOR REASONS OTHER THAN DEFICIENCIES IN CAPACITY OR CREDIT (E.G., LACK OF INTEGRITY, BUSINESS ETHICS, OR PERSISTENT FAILURE TO APPLY NECESSARY TENACITY OR PERSEVERANCE TO DO AN ACCEPTABLE JOB) MUST BE SUPPORTED BY SUBSTANTIAL EVIDENCE DOCUMENTED IN THE CONTRACT FILE AND MUST BE APPROVED IN EACH INSTANCE BY HIGHER AUTHORITY WITHIN THE AGENCY." THERE IS NO SUCH DOCUMENTATION OR APPROVAL BY HIGHER AUTHORITY IN THE CONTRACT FILES FURNISHED OUR OFFICE.

SINCE THE CONTRACTING OFFICER'S FAILURE TO FOLLOW THE PROPER PROCEDURES WAS CONTRARY TO THE REGULATIONS IMPLEMENTING THE SMALL BUSINESS ACT AND IN CIRCUMVENTION OF THE STATUTORY PURPOSE, WE BELIEVE THE REJECTION OF THE LOW BIDS SUBMITTED BY METABOLIC WAS IMPROPER. SEE 50 COMP. GEN. (B- 168626(1), JULY 30, 1970). THEREFORE, IF METABOLIC IS WILLING TO ACCEPT THESE CONTRACTS AT THIS POINT AND SBA REVALIDATES THE COC'S BASED UPON METABOLIC'S CAPACITY AND CREDIT AS OF THE PRESENT TIME, COMMUNITY'S CONTRACTS SHOULD BE TERMINATED AND AWARDS MADE TO METABOLIC FOR THE BALANCE OF THE CONTRACT PERIODS.

BEFORE ANY AWARDS ARE MADE TO METABOLIC, HOWEVER, WE BELIEVE IT WOULD BE ENTIRELY APPROPRIATE FOR YOU TO PRESENT EVIDENCE TO SBA AND REQUEST THAT IT NOT REVALIDATE THE COC'S ISSUED TO METABOLIC, IF YOU STILL HAVE SUBSTANTIAL DOUBT AS TO THAT FIRM'S ABILITY TO PERFORM THESE CONTRACTS. SEE FPR 1-1.708.3. IN THIS CONNECTION, WE NOTE THAT YOUR AGENCY AWARDED A CONTRACT TO METABOLIC IN SEPTEMBER, 1970 (CONTRACT NO. V674P-39) FOR HUMAN BLOOD NEEDS AT THE VETERANS ADMINISTRATION HOSPITAL, TEMPLE, TEXAS, AND IT SEEMS TO US THAT METABOLIC'S PERFORMANCE UNDER THIS CONTRACT WOULD GIVE AN INDICATION AS TO THE FIRM'S ABILITY TO PERFORM SUCH CONTRACTS.