B-173021, SEP 3, 1971

B-173021: Sep 3, 1971

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

IT IS ALSO CLEAR THAT PROTESTANT WAS NOT AFFORDED ITS RIGHTS AS A SMALL BUSINESS BIDDER AS CONTEMPLATED BY ASPR 1-705.4(C). THE LOW BID SHOULD HAVE BEEN PROMPTLY REFERRED TO THE SMALL BUSINESS ADMINISTRATION IMMEDIATELY AFTER THE PRE-AWARD SURVEY REVIEW BOARD'S RECOMMENDATION THAT NO AWARD BE MADE TO PROTESTANT. IT WAS IMPROPER TO DEFER THE CERTIFICATE OF URGENCY PENDING THE INVESTIGATION AND DETERMINATION OF THE RESPONSIBILITY OF THE SECOND LOW BIDDER. SECRETARY: REFERENCE IS MADE TO A LETTER DATED JUNE 17. DELIVERY OF THE 323 ASSEMBLIES WAS REQUIRED WITHIN 180 DAYS AFTER NOTICE OF AWARD. THE SOLICITATION WAS ISSUED FEBRUARY 19. THE BID SETS WERE MAILED TO THE THREE APPROVED SOURCES - CO-OPERATIVE INDUSTRIES.

B-173021, SEP 3, 1971

BID PROTEST - BIDDER RESPONSIBILITY - SMALL BUSINESS BIDDER DECISION CONCERNING PROTEST OF CO-OPERATIVE INDUSTRIES, INC., LOW BIDDER, AGAINST AWARD OF A CONTRACT TO THE BENDIX CORPORATION, SECOND LOW BIDDER, UNDER AN IFB ISSUED BY THE ARMY AVIATION SYSTEMS COMMAND, ST. LOUIS, MO., FOR A NUMBER OF SPECIAL PURPOSE CABLE ASSEMBLIES. WHILE THE COMP. GEN. CONCURS IN A FINDING OF NONRESPONSIBILITY OF THE LOW BIDDER, IT IS ALSO CLEAR THAT PROTESTANT WAS NOT AFFORDED ITS RIGHTS AS A SMALL BUSINESS BIDDER AS CONTEMPLATED BY ASPR 1-705.4(C). THE LOW BID SHOULD HAVE BEEN PROMPTLY REFERRED TO THE SMALL BUSINESS ADMINISTRATION IMMEDIATELY AFTER THE PRE-AWARD SURVEY REVIEW BOARD'S RECOMMENDATION THAT NO AWARD BE MADE TO PROTESTANT, AND IT WAS IMPROPER TO DEFER THE CERTIFICATE OF URGENCY PENDING THE INVESTIGATION AND DETERMINATION OF THE RESPONSIBILITY OF THE SECOND LOW BIDDER.

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER DATED JUNE 17, 1971, FROM THE DEPUTY GENERAL COUNSEL, HEADQUARTERS, UNITED STATES ARMY MATERIEL COMMAND, CONCERNING THE PROTEST OF CO-OPERATIVE INDUSTRIES, INCORPORATED, AGAINST THE REJECTION OF ITS LOW BID UNDER INVITATION FOR BIDS NO. DAAJ01-71-B- 0366 (P1J), ISSUED BY THE UNITED STATES ARMY AVIATION SYSTEMS COMMAND, ST. LOUIS, MISSOURI.

THE PROCUREMENT SOLICITED BIDS FOR A SPECIAL PURPOSE CABLE ASSEMBLY, FSN 2925-758-9789, ON A QUALIFIED PART NUMBER BASIS FOR A QUANTITY OF 323 EACH WITH A 50 PERCENT OPTION. DELIVERY OF THE 323 ASSEMBLIES WAS REQUIRED WITHIN 180 DAYS AFTER NOTICE OF AWARD. THE SOLICITATION WAS ISSUED FEBRUARY 19, 1971, WITH OPENING DATE OF MARCH 5, 1971. THE BID SETS WERE MAILED TO THE THREE APPROVED SOURCES - CO-OPERATIVE INDUSTRIES, INCORPORATED, THE BENDIX CORPORATION, ELECTRICAL COMPONENTS DIVISION, AND AVCO/LYCOMING DIVISION. BID SETS WERE ALSO FORWARDED TO 25 OTHER COMPANIES WHO REQUESTED COPIES, BUT WERE NOT APPROVED SOURCES.

FOUR BIDS WERE RECEIVED WITH UNIT PRICES AS FOLLOWS:

CO-OPERATIVE INDUSTRIES, INC. $ 111.49

THE BENDIX CORPORATION $ 155.04

ALTON IRON WORKS $ 600.00

ENGINEERING DESIGN & DEVELOPMENT $1,189.50

THE CABLE ASSEMBLIES WERE URGENTLY NEEDED AND CLASSED AS SUPERCRITICAL. IT IS REPORTED THAT THE DEMAND RATE AT THE DEPOT IS APPROXIMATELY 18 PER MONTH TO FILL INCOMING REQUISITIONS, AND THAT THERE WAS NO STOCK ON HAND AT THE DEPOTS NOR WAS ANY DUE IN ON CONTRACTS.

PRE-AWARD SURVEYS WERE REQUESTED ON MARCH 9, 1971, FOR THE TWO LOWEST RESPONSIVE BIDDERS. THE SURVEY FOR CO-OPERATIVE INDUSTRIES WAS CONDUCTED ON MARCH 19, 1971, BY THE DEFENSE CONTRACT ADMINISTRATION SERVICES DISTRICT, SPRINGFIELD, NEW JERSEY, WHILE A SURVEY ON THE BENDIX CORPORATION, ELECTRICAL COMPONENTS DIVISION, WAS CONDUCTED BY DEFENSE CONTRACT ADMINISTRATION SERVICES DIVISION, BINGHAMPTON, NEW YORK.

THE SURVEY OF CO-OPERATIVE INDUSTRIES FOUND THE COMPANY'S TECHNICAL CAPABILITIES SATISFACTORY, BUT RESPECTING PRODUCTION CAPABILITY THE FINDINGS STATED:

"EVEN THOUGH CO-OPERATIVE INDUSTRIES HAS EQUIPMENT AND FACILITIES, THE FIRM DID NOT SOLICIT OR OBTAIN DELIVERY VERIFICATIONS FOR THE LONG LEAD TIME MATERIALS REQUIRED FOR THIS BID NOR DID THE BIDDER PRESENT A PRODUCTION PLAN. CONTRACT DAAG31-69-C-0769, 286 EACH IDENTICAL ITEM REQUIRED DELIVERY COMPLETION 240 DAYS AFTER AWARD. SIXTY-SEVEN UNITS OF INITIAL INCREMENT OF 143 UNITS WERE SHIPPED THREE DAYS LATE AND 46 UNITS OF THE FINAL INCREMENT OF 143 UNITS WERE SHIPPED 12 DAYS LATE. DELAY WAS DUE TO REJECTION OF MATERIAL AT FINAL INSPECTION. WHILE IN THIS CASE DELINQUENCY WAS NOT LENGTHY THE FIRM HAD CONSIDERABLY MORE TIME TO PERFORM THAN THE 180 DAYS ALLOWED BY THIS IFB.

"THE COMPANY HAS NOT ACCOMPLISHED THE NORMAL PREPRODUCTION PLANNING FUNCTIONS TO ESTABLISH THEIR ABILITY TO PERFORM WITHIN THE TIME CONSTRAINTS OF THIS SOLICITATION. INADEQUATE PLANNING AND SCHEDULING HAS BEEN A MAJOR CAUSAL FACTOR FOR PRIOR CONTRACT DELINQUENCY. IT IS THEREFORE CONCLUDED THAT CO-OPERATIVE INDUSTRIES HAS NOT DEMONSTRATED THE PRODUCTION CAPABILITY TO MEET THE REQUIRED DELIVERY SCHEDULE OF THIS IFB."

THE SURVEY TEAM PRESENTED ITS FINDINGS ON MARCH 23, 1971, TO THE PRE AWARD SURVEY REVIEW BOARD WHICH DETERMINED ON MARCH 25, 1971, THAT ITS RECOMMENDATION SHOULD BE "NO AWARD" TO CO-OPERATIVE INDUSTRIES. THE PRE- AWARD SURVEY OF THE BENDIX CORPORATION FOUND THE COMPANY SATISFACTORY AND ON APRIL 8, 1971, RECOMMENDED AWARD.

IT IS REPORTED THAT IN VIEW OF THE URGENT NEED FOR THE CABLE ASSEMBLIES AND IN VIEW OF THE PRE-AWARD SURVEYS, THE CONTRACTING OFFICER, AFTER CONSULTATION WITH LEGAL AND TECHNICAL SPECIALISTS DETERMINED THAT DELAY INCIDENT TO REFERRAL TO THE SMALL BUSINESS ADMINISTRATION FOR CERTIFICATE OF COMPETENCY CONSIDERATION ON THE LOW BIDDER WOULD BE PREJUDICIAL TO THE INTEREST OF THE GOVERNMENT. CONSEQUENTLY, APPROVAL FOR A CERTIFICATE OF URGENCY PERMITTING AWARD TO THE NEXT LOW RESPONSIVE BIDDER WAS APPROVED ON APRIL 21, 1971, AND A COPY OF THE CERTIFICATE WAS FURNISHED TO THE SBA IN ACCORDANCE WITH ASPR 1-705.4(C)(IV). IT IS FURTHER REPORTED THAT SIMULTANEOUS WITH THIS ACTION ALL DOCUMENTS HAVING COMMITTED FUNDS WERE BEING RECALLED BY THE COMMODITY MANAGER TO DETERMINE THE VALIDITY OF REQUIREMENTS BECAUSE OF CERTAIN FUNDING PROBLEMS. OBLIGATION APPROVAL FOR THIS PROCUREMENT WAS FINALLY GIVEN MAY 3, 1971. ON MAY 4, 1971, CO- OPERATIVE WAS DETERMINED TO BE NONRESPONSIBLE BASED ON THE PRE-AWARD SURVEY FINDINGS, AND ON THE SAME DATE A CONTRACT WAS AWARDED TO THE NEXT LOW BIDDER, BENDIX.

ON MAY 7, 1971, CO-OPERATIVE PROTESTED TO THE CONTRACTING OFFICER AND WAS ADVISED THAT THE SMALL BUSINESS ADMINISTRATION DID NOT HAVE JURISDICTION AND THAT ITS PROTEST MUST PROPERLY BE FILED WITH THE GAO. BY LETTER DATED MAY 18, 1971, CO-OPERATIVE FILED A PROTEST WITH OUR OFFICE ALLEGING THAT IT WAS A RESPONSIBLE BIDDER AND OBJECTING TO THE AWARD TO "LARGE BUSINESS OVER SMALL BUSINESS AT A PREMIUM OF 40% IN COST."

AS YOU KNOW, OUR OFFICE DOES NOT MAKE INDEPENDENT DETERMINATIONS AS TO A BIDDER'S RESPONSIBILITY TO PERFORM A GOVERNMENT CONTRACT. SUCH DETERMINATIONS ARE MADE BY THE CONTRACTING AGENCY, AND IN THE ABSENCE OF ANY SHOWING OF BAD FAITH OR LACK OF REASONABLE FACTUAL BASIS FOR THE DETERMINATION, WE WILL NOT OBJECT TO THE DETERMINATION AS MADE. SEE 38 COMP. GEN. 248 (1958); 39 COMP. GEN. 705 (1960). BASED ON THE RECORD BEFORE US, INCLUDING THE FINDINGS OF THE PRE-AWARD SURVEY, WE CANNOT CONCLUDE THAT CO-OPERATIVE SHOULD HAVE BEEN REGARDED AS A RESPONSIBLE BIDDER FOR THIS PROCUREMENT.

HOWEVER, WE DO NOT FIND THAT THE LOW BIDDER WAS AFFORDED ITS RIGHTS AS A SMALL BUSINESS BIDDER ON THIS PROCUREMENT. ASPR 1-705.4, DEALING WITH THE CERTIFICATE OF COMPETENCY (COC) PROCEDURE, STATES THAT IF A BID OR PROPOSAL OF A SMALL BUSINESS CONCERN IS TO BE REJECTED SOLELY BECAUSE THE CONTRACTING OFFICER HAS DETERMINED THE CONCERN TO BE NONRESPONSIBLE AS TO CAPACITY OR CREDIT, THE MATTER SHALL BE REFERRED TO THE SBA. ASPR 1- 705.4(C) PROVIDES THAT THE AWARD SHALL BE WITHHELD PENDING SBA'S DETERMINATION ON THE MATTER OR UNTIL 15 WORKING DAYS AFTER REFERRAL TO THE SBA, WHICHEVER IS EARLIER. HOWEVER, THE MATTER NEED NOT BE REFERRED TO SBA WHERE THE CONTRACTING OFFICER CERTIFIES IN WRITING, AND THE CERTIFICATE IS APPROVED BY HIGHER AUTHORITY, THAT THE AWARD MUST BE MADE WITHOUT DELAY. THE CERTIFICATE OF URGENCY WAS APPROVED IN THIS CASE ON APRIL 21, 1971, BUT BECAUSE OF THE FUNDING PROBLEM PREVIOUSLY MENTIONED, THE AWARD COULD NOT BE MADE UNTIL MAY 4, 1971.

WE DO NOT QUARREL WITH THE CONTRACTING OFFICER'S ACTION IN NOT REFERRING THE MATTER TO SBA DURING THE PERIOD OF DELAY CAUSED BY THE FUNDING PROBLEM AFTER THE CERTIFICATE OF URGENCY HAD BEEN APPROVED. WE FAIL TO UNDERSTAND, HOWEVER, WHY THE LOW BID WAS NOT REFERRED TO SBA IMMEDIATELY AFTER THE MARCH 25, 1971, PRE-AWARD SURVEY RECOMMENDATION OF "NO AWARD." SO FAR AS THE RECORD SHOWS, NO ACTION ON THE LOW BID WAS TAKEN UNTIL APRIL 16 (OR 22 DAYS LATER), WHEN THE CERTIFICATE OF URGENCY WAS REQUESTED BY THE CONTRACTING OFFICER. IN THIS REGARD ASPR 1 705.4(C) (IV) PROVIDES THAT "REFERRAL OF A CASE TO SBA OR EXECUTION OF A CERTIFICATE OF URGENCY SHALL NOT BE DEFERRED PENDING INVESTIGATION AND DETERMINATION OF THE RESPONSIBILITY OF OTHER OFFERORS."

IT APPEARS TO US THAT, CONTRARY TO THE REGULATION, THE CERTIFICATE OF URGENCY WAS DEFERRED IN THIS CASE PENDING INVESTIGATION AND DETERMINATION OF THE RESPONSIBILITY OF THE SECOND LOW BIDDER. WE THINK THAT THE LOW BID COULD AND SHOULD HAVE BEEN PROMPTLY REFERRED TO THE SBA IMMEDIATELY AFTER THE MARCH 25 NEGATIVE FINDING. INDEED, WE READ ASPR 1-705.4(C) AS CONTEMPLATING EXACTLY THIS PROCEDURE IN ORDER TO EXPEDITE THE SBA REVIEW.

ALTHOUGH THE REGULATORY PROVISIONS WERE NOT COMPLIED WITH, IN VIEW OF THE URGENCY OF THE PROCUREMENT AND THE TIME WHICH HAS EXPIRED SINCE AWARD, WE CONCLUDE THAT THE INTERESTS OF THE GOVERNMENT PRECLUDE ANY EFFECTIVE ACTION WITH RESPECT TO THE INSTANT MATTER. THEREFORE, WE DO NOT INTEND TO DISTURB THE AWARD TO THE NEXT LOW BIDDER. NEVERTHELESS, WE RECOMMEND ACTION TO INSURE COMPLIANCE WITH THE CITED PROVISIONS OF ASPR.