B-173431, NOV 17, 1971

B-173431: Nov 17, 1971

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A CONTRACTING OFFICER IS NOT REQUIRED TO ACCEPT AN AFFIRMATIVE RECOMMENDATION IN A PREAWARD SURVEY WHEN IN HIS JUDGMENT THE EVIDENCE REQUIRES A FINDING OF NONRESPONSIBILITY. GAO WILL CONCUR WITH THE DETERMINATION OF THE CONTRACTING OFFICER. THE FAILURE TO REFER THE MATTER TO THE SMALL BUSINESS ADMINISTRATION FOR CONSIDERATION OF A CERTIFICATE OF COMPETENCY IS SUPPORTED BY A CERTIFICATE OF URGENCY AS AUTHORIZED BY ASPR 1 705.4(C)(IV). TO LAKE STATE MANUFACTURING CORPORATION: REFERENCE IS MADE TO YOUR LETTER OF JULY 7. PROTESTING THAT YOU SHOULD NOT HAVE BEEN DETERMINED TO BE A NONRESPONSIBLE BIDDER UNDER INVITATION FOR BIDS (IFB) DSA100-71-B-0757. THE CONTRACTING OFFICER DETERMINED THAT YOU WERE NOT A RESPONSIBLE BIDDER.

B-173431, NOV 17, 1971

BID PROTEST - DETERMINATION OF NONRESPONSIBILITY - CERTIFICATE OF COMPETENCY DENIAL OF PROTEST AGAINST A DETERMINATION OF NONRESPONSIBILITY MADE BY THE CONTRACTING OFFICER UNDER AN IFB ISSUED BY THE DEFENSE PERSONNEL SUPPORT CENTER, PHILADELPHIA, PA. A CONTRACTING OFFICER IS NOT REQUIRED TO ACCEPT AN AFFIRMATIVE RECOMMENDATION IN A PREAWARD SURVEY WHEN IN HIS JUDGMENT THE EVIDENCE REQUIRES A FINDING OF NONRESPONSIBILITY. ABSENT A CLEAR SHOWING OF ARBITRARINESS, CAPRICIOUSNESS OR BAD FAITH, GAO WILL CONCUR WITH THE DETERMINATION OF THE CONTRACTING OFFICER. IN THIS CASE, THE EVIDENCE DOES NOT SHOW A VIOLATION OF THAT STANDARD. FURTHER, THE FAILURE TO REFER THE MATTER TO THE SMALL BUSINESS ADMINISTRATION FOR CONSIDERATION OF A CERTIFICATE OF COMPETENCY IS SUPPORTED BY A CERTIFICATE OF URGENCY AS AUTHORIZED BY ASPR 1 705.4(C)(IV).

TO LAKE STATE MANUFACTURING CORPORATION:

REFERENCE IS MADE TO YOUR LETTER OF JULY 7, 1971, PROTESTING THAT YOU SHOULD NOT HAVE BEEN DETERMINED TO BE A NONRESPONSIBLE BIDDER UNDER INVITATION FOR BIDS (IFB) DSA100-71-B-0757, ISSUED BY THE DEFENSE PERSONNEL SUPPORT CENTER, PHILADELPHIA, PENNSYLVANIA.

THE PREAWARD SURVEY RECOMMENDED AN AWARD TO YOUR FIRM. HOWEVER, THE CONTRACTING OFFICER DETERMINED THAT YOU WERE NOT A RESPONSIBLE BIDDER. THE BASIS FOR THAT DETERMINATION IS SET FORTH IN A CONTRACTING OFFICER MEMORANDUM OF JUNE 10, 1971, AS FOLLOWS:

"THE DEFENSE SUPPLY AGENCY HAS TWO CLAIMS DATED 7 DEC 1970. ONE IS FOR $22,895.64 WHICH REPRESENTS UNLIQUIDATED PROGRESS PAYMENTS AGAINST CONTRACT DSAF01-69-C-0082 FOR GUN SLINGS. THE SECOND CLAIM IS FOR $88,586.85 AGAINST DSA100-69-C-2050, COVER, WATER CANTEEN, AND REPRESENTS PAYMENTS FOR GOODS NEVER RECEIVED BY THE RECEIVING DEPOTS. THE NAVY DEPARTMENT HAS FILED A CLAIM FOR $2561.41. ALSO, FEDERAL AND STATE CLAIMS EXIST FOR $48,001.20, REPRESENTING PAYROLL TAXES AND EMPLOYEE DEDUCTIONS. LAKE STATE MFG. CO. WAS AWARDED CONTRACT DSA100 71-C-1158, 8 MARCH 1971, FOR 265,125 EACH COVER, WATER CANTEEN AFTER COC ACTION. THE DELIVERY SCHEDULE BEGINS IN JULY AND IS SCHEDULED TO END IN SEPTEMBER.

"THE PRE-AWARD MONITORS ADVISED THE CONTRACTING OFFICER THAT THE BIDDER INTENDED TO FINANCE ANY POSSIBLE AWARD FOR WHICH THE SURVEY WAS CONDUCTED, BY ESTABLISHING A CASH FLOW FROM PAYMENTS RECEIVED AGAINST CURRENT CONTRACT DSA100-71-C-1158. THE BIDDER PROPOSED TO BEGIN SHIPPING AHEAD OF SCHEDULE AND ALSO PROPOSED TO COMPLETE CONTRACT DSA100-69-C-2050. THE CONTRACTOR PROJECTED THE FOLLOWING SCHEDULE TO THE PRE-AWARD MONITORS:

DSA100-69-C-2050 DSA100-71-C-1158

COVER, WATER CANTEEN COVER, WATER CANTEEN

21,000 EA. - APRIL 1971 58,000 EA. - APRIL 1971

21,000 EA. ADD'L - MAY 1971 69,000 EA. ADD'L - MAY 1971

21,000 EA. ADD'L - JUNE 1971 69,000 EA. ADD'L - JUNE 1971

7,650 EA. ADD'L - JULY 1971 69,000 EA. ADD'L - JULY 1971

"WHEN THE PRE-AWARD SURVEY WAS REVIEWED BY THE CONTRACTING OFFICER, IT BECAME EVIDENT THAT THE COMPLETE AWARD RECOMMENDATION WAS BASED UPON SUPPOSITIONS, NOT FACTS, AND THE GOOD INTENTIONS OF THE BIDDER. THE CONTRACTING OFFICER DECIDED TO DELAY AN AWARD IN ORDER TO ASCERTAIN WHETHER THE BIDDER WOULD DELIVER CANTEEN COVERS AS PROJECTED IN THE SURVEY SO AS TO ESTABLISH A CASH FLOW. THE BIDDER FAILED TO DELIVER AS PROJECTED. THE CONTRACTING OFFICER BROUGHT THIS MATTER TO THE ATTENTION OF THE SURVEYING ACTIVITY AND REQUESTED THAT THE ENTIRE MATTER BE REVIEWED IN ORDER TO DETERMINE WHETHER THE ORIGINAL AWARD RECOMMENDATION WAS STILL VALID WHEN CONSIDERED WITH THE BIDDER'S FAILURE TO PERFORM AS INDICATED IN THE SURVEY.

"THE SURVEYING ACTIVITY CONFIRMED ITS ORIGINAL RECOMMENDATION FOR COMPLETE AWARD. BASED UPON THE BIDDER'S PROPOSED DELIVERIES, WHICH WERE TO HAVE ESTABLISHED A 'CASH FLOW', LAKE STATE WAS TO HAVE RETURNED 42,000 EACH COVER, WATER CANTEEN AS OF THE END OF MAY 1971, AGAINST CONTRACT DSA100-69-C-2050 AND 127,000 EACH COVER, WATER CANTEEN AS OF THE END OF MAY 1971, AGAINST CONTRACT DSA100-71-C-1158. RECORDED RECEIPTS AGAINST DSA100-71-C-1158 ARE 48,300 UNITS. THERE ARE NO RECEIPTS AGAINST CONTRACT DSA100-69-C-2050.

"IN SEVERAL CONVERSATIONS WITH DCASD TWIN CITIES, THE OVERRIDING OPINION OF THE PRE-AWARD MONITORS WAS THAT SINCE LAKE STATE WAS ALREADY HEAVILY INDEBTED TO THE GOVERNMENT, IT IS NECESSARY TO CONTINUE MAKING AWARDS TO THE BIDDER IN ORDER TO KEEP THE COMPANY OPERATING SO THAT THE INDEBTEDNESS TO THE GOVERNMENT COULD BE LIQUIDATED. DCASD TWIN CITIES HAS ADMITTED THAT THE BIDDER'S PAST RECORD IS POOR BUT STILL BASES ITS' FAVORABLE FINDINGS ON 'THE APPARENT DESIRE OF THE RECEIVER AND THE PRESENT MANAGEMENT TO REESTABLISH GOOD STANDINGS WITH THE GOVERNMENT'.

"ALL FINANCIAL DATA HAS BEEN DEVELOPED BY DCASD, TWIN CITIES. THE RECEIVER HAS NOT OFFERED ANY SUBSTANTIVE DATA CONCERNING THE FINANCIAL POSITION OF THE BIDDER.

"IT IS THE OPINION OF THE CONTRACTING OFFICER THAT THE BIDDER HAS NOT ESTABLISHED THE NECESSARY 'CASH FLOW' WHICH WOULD BE NEEDED TO PERFORM UNDER THE BID IN QUESTION. CURRENT RULES OF PROCUREMENT STIPULATE THAT A BIDDER MUST HAVE THE ABILITY TO FINANCE A PROPOSED AWARD. IT IS NOT INCUMBENT UPON THE CONTRACTING OFFICER TO MAKE A BIDDER FINANCIALLY RESPONSIBLE."

OUR OFFICE HAS HELD THAT A CONTRACTING OFFICER IS NOT REQUIRED TO ACCEPT AN AFFIRMATIVE RECOMMENDATION IN A PREAWARD SURVEY WHEN IN HIS JUDGMENT THE EVIDENCE REQUIRES A DETERMINATION OF NONRESPONSIBILITY. B 169342, B- 169351, B-169503, JUNE 19, 1970. WE HAVE HELD FURTHER THAT THE DETERMINATION OF RESPONSIBILITY INVOLVES A CONSIDERABLE RANGE OF DISCRETION AND ABSENT A CLEAR SHOWING OF ARBITRARINESS, CAPRICIOUSNESS OR BAD FAITH, THE DETERMINATION OF THE CONTRACTING OFFICER WILL BE ACCORDED FINALITY BY OUR OFFICE. 49 COMP. GEN. 139 (1969); B-172126, JUNE 23, 1971; B-169342, B-169351, B-169503, JUNE 19, 1970. THE EVIDENCE IN THIS CASE DOES NOT ESTABLISH THAT THE CONTRACTING OFFICER VIOLATED THE STATED STANDARD.

FURTHER, THE FAILURE TO REFER THE MATTER TO THE SMALL BUSINESS ADMINISTRATION FOR CONSIDERATION OF A CERTIFICATE OF COMPETENCY IS SUPPORTED BY A CERTIFICATE OF URGENCY AS AUTHORIZED BY ASPR 1 705.4(C)(IV).

IN VIEW OF THE ABOVE, THE PROTEST IS DENIED.