B-171943, JUN 15, 1971

B-171943: Jun 15, 1971

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ATTORNEY'S OFFICE THAT THERE WAS INSUFFICIENT EVIDENCE TO PROSECUTE AND IT IS THE CONTRACTING OFFICER'S OPINION THAT IT WOULD BE IN THE BEST INTEREST OF THE GOVERNMENT TO MAKE AWARD TO U.S. TO AERDCO INC.: REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 16. WAS FOR HELIUM REQUIREMENTS. THE BIDS WERE OPENED AS SCHEDULED ON NOVEMBER 25. AWARD WAS MADE TO USH FOR THOSE ITEMS FOR WHICH IT WAS THE LOW BIDDER. IT IS YOUR CONTENTION THAT AWARD SHOULD NOT HAVE BEEN MADE TO USH BECAUSE USH IS NOT A RESPONSIBLE BIDDER. AS IS EVIDENCED BY THEIR PAST PERFORMANCE UNDER A 1969-1970 CONTRACT FOR HELIUM. YOU ALSO CHARGE THAT USH FAILED TO CONDUCT HYDROSTATIC TESTING ON CERTAIN STEEL CYLINDERS WHICH WERE STAMPED AS HAVING BEEN TESTED AND THAT USH CHARGED THE GOVERNMENT FOR THIS TESTING WHICH IN FACT HAD NOT BEEN PERFORMED.

B-171943, JUN 15, 1971

BID PROTEST - BIDDER RESPONSIBILITY DECISION DENYING PROTEST AGAINST AWARD OF A CONTRACT TO UNITED STATES HELIUM, LOW BIDDER, UNDER AN IFB ISSUED BY THE FEDERAL SUPPLY SERVICE, GSA, FOR HELIUM REQUIREMENTS, AND TESTING AND SERVICING OF CYLINDERS IN WHICH THE HELIUM WOULD BE PLACED. NOTWITHSTANDING PROTESTANT'S ALLEGATIONS OF QUESTIONABLE BUSINESS PRACTICES BY U.S. HELIUM, A PREVIOUS INVESTIGATION BY THE FBI RESULTED IN A DECISION BY THE U.S. ATTORNEY'S OFFICE THAT THERE WAS INSUFFICIENT EVIDENCE TO PROSECUTE AND IT IS THE CONTRACTING OFFICER'S OPINION THAT IT WOULD BE IN THE BEST INTEREST OF THE GOVERNMENT TO MAKE AWARD TO U.S. HELIUM AND THAT IT SHOULD NOT BE DETERMINED NONRESPONSIVE ON THE BASIS OF A COMPETITOR'S ALLEGATIONS.

TO AERDCO INC.:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 16, 1971, PROTESTING THE AWARD OF A CONTRACT ON DECEMBER 31, 1970, TO UNITED STATES HELIUM (USH) UNDER INVITATION FOR BIDS NO. 7PF-61678/2B/7FP ISSUED BY THE FEDERAL SUPPLY SERVICE (FSS), GENERAL SERVICES ADMINISTRATION (GSA), FORT WORTH, TEXAS.

THE ABOVE MENTIONED SOLICITATION, ISSUED ON NOVEMBER 6, 1970, WAS FOR HELIUM REQUIREMENTS, AS WELL AS TESTING AND SERVICING OF CYLINDERS IN WHICH THE HELIUM WOULD BE PLACED, FOR THE PERIOD MARCH 1, 1971, THROUGH FEBRUARY 28, 1972. THE BIDS WERE OPENED AS SCHEDULED ON NOVEMBER 25, 1970. AWARD WAS MADE TO USH FOR THOSE ITEMS FOR WHICH IT WAS THE LOW BIDDER.

IT IS YOUR CONTENTION THAT AWARD SHOULD NOT HAVE BEEN MADE TO USH BECAUSE USH IS NOT A RESPONSIBLE BIDDER, AS IS EVIDENCED BY THEIR PAST PERFORMANCE UNDER A 1969-1970 CONTRACT FOR HELIUM. YOU STATE THAT UNDER THE PRIOR CONTRACT THE ATOMIC ENERGY COMMISSION (AEC) HAD BEEN IMPROPERLY BILLED BY USH. YOU ALSO CHARGE THAT USH FAILED TO CONDUCT HYDROSTATIC TESTING ON CERTAIN STEEL CYLINDERS WHICH WERE STAMPED AS HAVING BEEN TESTED AND THAT USH CHARGED THE GOVERNMENT FOR THIS TESTING WHICH IN FACT HAD NOT BEEN PERFORMED.

ACCORDING TO THE RECORD, ON NOVEMBER 13, 1969, TWO MEMBERS OF YOUR FIRM, WHO WERE FORMER OFFICIALS OF USH, VISITED THE SAN FRANCISCO OPERATIONS OFFICE OF AEC, (WHICH AGENCY RECEIVED SOME OF THE CYLINDERS THAT WERE SUPPOSED TO HAVE BEEN TESTED AND SERVICED BY USH) FOR THE PURPOSE OF INFORMING AEC OF ALLEGED UNBUSINESSLIKE ACTIVITIES BY USH. SPECIFICALLY, THESE MEMBERS ALLEGED THAT:

1. USH HAD PERFORMED HYDROSTATIC TESTING ON 1300 CUBIC FEET CYLINDERS WITH EQUIPMENT THAT HAD NOT BEEN, AS OF THAT DATE, INSPECTED AND APPROVED BY THE BUREAU OF EXPLOSIVES, INTERSTATE COMMERCE COMMISSION (ICC).

2. USH HAD DATE STAMPED THE COLLAR OF SOME OF THE CYLINDERS INDICATING COMPLETED HYDROSTATIC TESTING, WHEN IN REALITY ONLY THE VALVE WAS REPLACED AND THE CYLINDER COMPRESSED WITH 1374 CUBIC FEET OF GRADE D (97.5 PERCENT PURE) HELIUM.

3. CYLINDERS WHICH WERE SUPPOSEDLY HYDROSTATICALLY TESTED WERE NOT PROPERLY DRIED OUT PRIOR TO FILLING.

4. ANY FUTURE CONTRACTORS BEING AWARDED HELIUM CONTRACTS, AFTER BEING MADE AWARE OF USH'S SUSPECTED PRACTICES, WOULD INSIST ON HYDROSTATICALLY TESTING EACH OF AEC'S CYLINDERS BEFORE FILLING THEM, REGARDLESS OF THE DATE STAMPED ON THE COLLAR. AS A RESULT OF THESE ALLEGATIONS GSA'S OFFICE OF AUDITS AND COMPLIANCE WAS REQUESTED TO INVESTIGATE THE MATTER. ON THE SAME DATE THAT THE INVESTIGATION WAS REQUESTED, GSA'S FORT WORTH OFFICE OPENED BIDS FOR THE PROCUREMENT OF HELIUM REQUIREMENTS FOR THE PERIOD MARCH 1, 1970, THROUGH FEBRUARY 28, 1971.

THE OFFICE OF AUDIT AND COMPLIANCE PROVIDED THE REGIONAL DIRECTOR, FSS, FORT WORTH, TEXAS, WITH A REPORT OF THE RESULTS OF ITS INVESTIGATION. THIS REPORT WAS SUBSEQUENTLY FORWARDED TO FSS IN WASHINGTON, D.C. WE ARE ADVISED THAT THE INFORMATION DEVELOPED DURING THE INVESTIGATION WAS GIVEN TO THE FEDERAL BUREAU OF INVESTIGATION (FBI).

ON THE BASIS OF THE INFORMATION CONTAINED IN THE OFFICE OF AUDIT AND COMPLIANCE REPORT, USH WAS SUSPENDED EFFECTIVE MARCH 20, 1970, FROM DOING BUSINESS WITH FSS, PENDING COMPLETION OF THE FBI INVESTIGATION AND SUCH LEGAL PROCEEDINGS AS MIGHT ENSUE. AS A RESULT OF THE SUSPENSION USH RECEIVED NO AWARDS UNDER THE SOLICITATION FOR THE MARCH 1, 1970, THROUGH FEBRUARY 28, 1971, HELIUM REQUIREMENTS, ALTHOUGH USH WAS LOW ON 22 ITEMS. BY LETTER DATED SEPTEMBER 2, 1970, THE UNITED STATES ATTORNEY FOR THE NORTHERN DISTRICT OF CALIFORNIA, ADVISED THE INTERESTED GOVERNMENT AGENCIES, THAT HE WAS DECLINING TO PROSECUTE USH, AND ON SEPTEMBER 22, 1970, USH WAS REMOVED FROM THE LIST OF SUSPENDED BIDDERS.

AS PREVIOUSLY MENTIONED, ON NOVEMBER 6, 1970, THE GSA REGIONAL OFFICE AT FORT WORTH ISSUED SOLICITATION NO. 7PF-61678/2B/7FP FOR HELIUM REQUIREMENTS FOR THE PERIOD MARCH 1, 1971, THROUGH FEBRUARY 28, 1972. LETTER OF NOVEMBER 23, 1970, YOU MADE ADDITIONAL CHARGES OF A SIMILAR NATURE CONCERNING THE RESPONSIBILITY OF USH.

AFTER REVIEWING ALL OF THE AVAILABLE FACTS, THE CONTRACTING OFFICER, WITH THE CONCURRENCE OF THE REGIONAL DIRECTOR, FSS, DETERMINED THAT IT WAS IN THE BEST INTEREST OF THE GOVERNMENT TO MAKE AWARD TO USH FOR THOSE ITEMS FOR WHICH IT WAS THE LOW BIDDER, AND THAT USH SHOULD NOT BE DETERMINED TO BE NONRESPONSIBLE ON THE BASIS OF UNSUBSTANTIATED ALLEGATIONS MADE BY A COMPETITOR. THE DECISION OF THE CONTRACTING OFFICER WAS APPROVED BY THE ACTING COMMISSIONER, FSS, ON DECEMBER 17, 1970. IN MAKING HIS DETERMINATION, THE CONTRACTING OFFICER NOTED THAT USH HAD BEEN SUSPENDED FROM DOING BUSINESS WITH FSS DURING THE PREVIOUS YEAR AND THAT THE FIRM WAS DEPRIVED OF A CONTRACT (AND THE GOVERNMENT WAS DEPRIVED OF A LOWER PRICED CONTRACT) BECAUSE OF YOUR SIMILAR ACCUSATIONS WHICH AN INVESTIGATION DISCLOSED WERE NOT SUPPORTED BY SUFFICIENT EVIDENCE TO WARRANT PROSECUTION. THE CONTRACTING OFFICER THEREFORE BELIEVED IT TO BE UNJUST TO AGAIN DEPRIVE THE SAME LOW BIDDER OF A CONTRACT SOLELY ON THE BASIS OF FURTHER UNPROVEN ALLEGATIONS OF A SIMILAR NATURE BY A FORMER EMPLOYEE OF THAT BIDDER. THE AGENCY ALSO POINTS OUT THAT YOU WERE IN LINE FOR AWARD ON SEVERAL ADDITIONAL ITEMS, AS THE NEXT-LOW BIDDER, HAD USH BEEN DETERMINED NONRESPONSIBLE PURSUANT TO YOUR ALLEGATIONS.

YOUR ALLEGATIONS WERE REFERRED TO THE GSA OFFICE OF AUDITS AND COMPLIANCE ON JANUARY 5, 1971, AND THE SAN FRANCISCO OFFICE ENTERED INTO FURTHER DISCUSSIONS WITH BOTH THE FBI AND THE UNITED STATES ATTORNEY FOR THE NORTHERN DISTRICT OF CALIFORNIA CONCERNING THE ASPECTS OF THE CASE. AS A RESULT OF THOSE DISCUSSIONS, THE UNITED STATES ATTORNEY REQUESTED FURTHER INVESTIGATION BY THE FBI. SINCE THE CONTRACT REQUIRES EMERGENCY DELIVERIES WITHIN THREE DAYS FROM RECEIPT OF CYLINDERS, AND ROUTINE DELIVERIES WITHIN 15 DAYS, IT DOES NOT APPEAR THAT PURCHASES OF THE HELIUM COULD HAVE BEEN DELAYED WHILE YOUR CHARGES WERE BEING FULLY INVESTIGATED AND FORMALLY DECIDED.

IT IS GSA'S POSITION THAT, PENDING COMPLETION OF THE INVESTIGATION, THERE IS NO CONCLUSIVE EVIDENCE THAT USH IS GUILTY OF THE ALLEGATIONS WHICH YOU HAVE STATED AND, THEREFORE, THERE IS NOT A SUFFICIENT BASIS AT THIS TIME OR AT THE TIME OF THE CONTRACT AWARD FOR DETERMINING USH TO BE A NONRESPONSIBLE BIDDER.

CONTRACTS WHICH ARE AWARDED PURSUANT TO FORMAL ADVERTISING ARE REQUIRED, UNDER 41 U.S.C. 253, TO BE AWARDED "TO THAT RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT." A RESPONSIBLE BIDDER IS ONE WHO IS FOUND BY THE CONTRACTING OFFICER TO MEET THE MINIMUM STANDARDS SET OUT IN FEDERAL PROCUREMENT REGULATION 1-1.310-5, WHICH INCLUDES A SATISFACTORY RECORD OF INTEGRITY.

WHETHER EVIDENCE OF A BIDDER'S LACK OF INTEGRITY IS SUFFICIENT TO WARRANT A FINDING IN ANY PARTICULAR CASE THAT THE BIDDER IS NOT RESPONSIBLE IS A MATTER PRIMARILY FOR EVALUATION BY THE PROCURING AGENCY. IT IS THE POSITION OF THIS OFFICE THAT WE WILL NOT SUBSTITUTE OUR JUDGMENT FOR THAT OF THE CONTRACTING AGENCY UNLESS IT IS SHOWN THAT THE AGENCY'S DETERMINATION WAS ARBITRARY, CAPRICIOUS OR NOT BASED ON SUBSTANTIAL EVIDENCE. B-168801, APRIL 8, 1970; B-166529, OCTOBER 6, 1969; 48 COMP. GEN. 769 (1969) AND DECISIONS OF OUR OFFICE CITED THEREIN. ALSO, SEE B- 159242, JULY 26, 1966; B-169070, APRIL 24, 1970.

IN THIS CONNECTION, WE SEE NO VALID BASIS ON WHICH TO DISAGREE WITH GSA'S POSITION THAT YOUR PROTEST CONSISTS MAINLY OF ALLEGATIONS OF ACTIONS OF A CRIMINAL NATURE ON THE PART OF USH, AND THAT SIMILAR CHARGES WERE MADE BY YOU IN CONNECTION WITH A PRIOR CONTRACT BY THE GOVERNMENT WITH USH WHICH, AFTER INVESTIGATION, WERE DETERMINED TO BE NOT SUPPORTABLE BY SUFFICIENT EVIDENCE TO WARRANT PROSECUTION. YOUR LATEST ALLEGATIONS HAVE BEEN CONSIDERED BY THE CONTRACTING AGENCY AND ARE UNDER INVESTIGATION BY THE FBI. UNTIL THAT INVESTIGATION IS COMPLETED, AND ALL OF THE EVIDENCE THEN OF RECORD IS EVALUATED BY THE AGENCIES PRIMARILY CONCERNED, WE MUST CONSIDER THE MERIT OF YOUR CHARGES TO BE UNRESOLVED.

ACCORDINGLY, IN VIEW OF ALL OF THE CIRCUMSTANCES INVOLVED, WE ARE UNABLE TO CONCLUDE THAT GSA'S DETERMINATION THAT USH IS A RESPONSIBLE CONTRACTOR WAS SO IMPROPER OR ERRONEOUS AS TO RENDER THE AWARD TO USH CLEARLY ILLEGAL, AND THUS PROVIDE THIS OFFICE WITH VALID GROUNDS ON WHICH WE MAY REQUIRE CANCELLATION OF GSA'S CONTRACT WITH THAT FIRM. YOUR PROTEST MUST THEREFORE BE DENIED.