B-173499, OCT 18, 1971

B-173499, OCT 18, 1971

BID PROTEST - SMALL BUSINESS SET-ASIDE - NONRESPONSIBLE BIDDER - CERTIFICATE OF COMPETENCY DENIAL OF PROTEST BY MARINE SERVICE & MANUFACTURING COMPANY, AGAINST THE ACTION OF THE U.S. NAVY SHIPS PARTS CONTROL CENTER, MECHANICSBURG, PA., IN REJECTING THEIR BID ON A TOTAL SMALL BUSINESS SET-ASIDE PROCUREMENT OF HOISTING GUIDE BEAMS, AND AGAINST THE RULING OF THE SMALL BUSINESS ADMINISTRATION (SBA) THAT PROTESTANT FAILED TO FILE A CERTIFICATE OF COMPETENCY (COC) APPLICATION WITHIN THE PRESCRIBED TIME LIMITS. SINCE THE PREAWARD SURVEY TEAM RECOMMENDED "NO AWARD" BECAUSE PROTESTANT WAS RATED UNSATISFACTORY IN SEVERAL CRITICAL AREAS, IT CANNOT BE SAID THAT THE CONTRACTING OFFICER'S ACTION WAS ARBITRARY, CAPRICIOUS, OR UNSUPPORTED BY THE FACTS. IF A CONTRACTING OFFICER DETERMINES A BIDDER TO BE NONRESPONSIBLE AS TO CAPACITY AND CREDIT, SBA IS AUTHORIZED TO CERTIFY THE BIDDER'S COMPETENCY, AND THE CONTRACTING OFFICER MUST ACCEPT THAT JUDGMENT AS CONCLUSIVE (SECTION 8(B)(7) OF THE SMALL BUSINESS ACT OF 1958). SINCE TIME IS OF THE ESSENCE IN THESE SITUATIONS, A COC APPLICATION MUST BE SUBMITTED PROMPTLY, ACCURATELY AND IN THE REQUIRED DETAIL. THE RECORD HERE SUPPORTS THE DETERMINATION BY SBA THAT THE APPLICATION HAD DEFICIENCIES WHICH WOULD HAVE PREVENTED AN ACCURATE ANALYSIS OF PROTESTANT'S CREDIT. ACCORDINGLY, THE PROTEST MUST BE DENIED.

TO MARINE SERVICE & MFG. CO.:

REFERENCE IS MADE TO YOUR LETTERS DATED JULY 3 AND 14, 1971, PROTESTING AGAINST THE ACTION OF THE U.S. NAVY SHIPS PARTS CONTROL CENTER, MECHANICSBURG, PENNSYLVANIA, IN REJECTING YOUR BID UNDER INVITATION NO. N00104-71-B-1217. IN THESE SAME LETTERS YOU ALSO PROTEST AGAINST THE RULING OF THE SMALL BUSINESS ADMINISTRATION (SBA) THAT YOU FAILED TO FILE AN ACCEPTABLE CERTIFICATE OF COMPETENCY (COC) APPLICATION WITHIN THE PRESCRIBED TIME LIMITS.

THE INVITATION WAS ISSUED AS A TOTAL SMALL BUSINESS SET-ASIDE PROCUREMENT. IT CONTEMPLATED THE AWARD OF AN INDEFINITE QUANTITY CONTRACT, WITH A MINIMUM QUANTITY OF 20 HOISTING GUIDE BEAMS AND THE RIGHT TO ORDER AN ADDITIONAL 80 UNITS, BUT NOT TO EXCEED A TOTAL OF 100 UNITS. THE BID OF YOUR COMPANY WAS THE SECOND LOWEST OF ELEVEN BIDS RECEIVED. AFTER THE CONTRACTING OFFICER DETERMINED THAT THE LOWEST BIDDER WAS NOT A RESPONSIBLE PROSPECTIVE CONTRACTOR AND THE LOW BIDDER SUBSEQUENTLY FAILED TO FILE FOR A COC WITH SBA, THE LOW BID WAS REJECTED PURSUANT TO PARAGRAPHS 1-903.1(II) AND 1-903.2 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR). THE REJECTION OF THIS BID MADE YOUR BID THE LOWEST RESPONSIVE BID.

ON MAY 20, 1971, THE CONTRACTING OFFICER REQUESTED OF THE DEFENSE CONTRACT ADMINISTRATION SERVICES REGION (DCASR), CLEVELAND, A PREAWARD SURVEY OF YOUR COMPANY. AS THE RESULT OF THE SURVEY, DCASR RECOMMENDED "NO AWARD" BECAUSE THE SURVEY REVEALED THAT YOUR COMPANY WAS UNSATISFACTORY IN THE AREAS OF TECHNICAL CAPABILITY, PRODUCTION CAPABILITY, FINANCIAL CAPABILITY, QUALITY ASSURANCE CAPABILITY, PURCHASING AND SUBCONTRACTING, PERFORMANCE RECORD, AND ABILITY TO MEET THE DELIVERY SCHEDULE OF THE SUBJECT CONTRACT. BASED ON THE REPORT OF THE PREAWARD SURVEY TEAM THE CONTRACTING OFFICER DETERMINED THAT YOUR COMPANY COULD NOT BE CONSIDERED A RESPONSIBLE PROSPECTIVE CONTRACTOR BECAUSE OF UNSATISFACTORY CAPACITY AND CREDIT.

THIS DETERMINATION WAS REFERRED TO THE SBA CHICAGO REGIONAL OFFICE FOR PROCESSING IN ACCORDANCE WITH ASPR 1-705.4. THAT OFFICE FORWARDED THE REFERRAL TO THE SBA DETROIT OFFICE FOR ACTION. BY LETTER DATED JUNE 22, 1971, SBA CONFIRMED ITS TELEPHONE ADVICE TO YOU THAT THE CONTRACTING OFFICER PROPOSED TO REJECT YOUR BID, AND YOU WERE ADVISED TO COMPLETE THE FORMS ENCLOSED THEREWITH NO LATER THAN 4:00 P.M., JUNE 29, 1971, IN APPLYING FOR A COC.

THE COC APPLICATION FORMS WERE DELIVERED BY YOU TO THE SBA DETROIT REGIONAL OFFICE A FEW MINUTES BEFORE THE DEADLINE ON JUNE 29 FOR FILING THE APPLICATION WITH SBA. HOWEVER, THE APPLICATION FORMS WERE FOUND TO BE INCOMPLETE AND TO CONTAIN INCONSISTENCIES, AND IT IS REPORTED THAT WHEN SUCH INCONSISTENCIES AND OMISSIONS WERE BROUGHT TO YOUR ATTENTION IN THE OFFICE OF MR. ARTHUR C. KRAFT, INDUSTRIAL SPECIALIST, SBA DETROIT REGIONAL OFFICE, ON THE DAY YOU SUBMITTED THE FORMS, YOU FAILED TO GIVE ANY SATISFACTORY EXPLANATION FOR THE INCONSISTENCIES AND OMISSIONS.

BY LETTER DATED JUNE 30, 1971, MR. KRAFT REFERENCED HIS CONVERSATIONS WITH YOU, AND ADVISED THAT THE FILES ON YOUR CASE WERE CLOSED BECAUSE OF YOUR FAILURE TO SUBMIT AN ACCEPTABLE COC APPLICATION WITHIN THE PRESCRIBED TIME LIMITS. THE LETTER STATED THAT THE COC APPLICATION WAS INCOMPLETE INASMUCH AS IT LACKED, AMONG OTHER THINGS, DETAILED PROFIT OR LOSS STATEMENTS FOR THE LAST FOUR YEARS AS REQUIRED BY SECTION 2 OF SBA FORM 74. THE LETTER ALSO STATED THAT THE LACK OF COMPLETE AND/OR ACCURATE INFORMATION PREVENTED SBA FROM MAKING AN ACCURATE ANALYSIS OF THE SITUATION.

THE SBA RECORDS SHOW THAT THE INCONSISTENCIES AND OMISSIONS CONCERNING YOUR APPLICATION WERE SPECIFICALLY IDENTIFIED IN A MEMORANDUM BY MR. KRAFT DATED JULY 9, 1971, AS FOLLOWS:

"(1) THE APPLICATION FORM LISTS THE CASH ON HAND AS $1,137; THE FINANCIAL STATEMENT *** SHOWS THE CASH ON HAND AS $3,115.41. THEY ARE DATED JUNE 1, 1971, AND MAY 31, 1971, RESPECTIVELY (ONE DAY APART) *** .

"(2) THE APPLICATION DOES NOT SHOW AN AGEING OF THE ACCOUNTS PAYABLE, YET *** (SCHEDULE 3) SHOWS 4 PAST DUE ACCOUNTS PAYABLE.

"(3) UNDER CONTRACTS, NOTES & MORTGAGES PAYABLE (ON THE APPLICATION), IT SHOWS A LOAN IN THE AMOUNT OF $30,800 FROM THE ERIE COUNTY BANK. THE MATURITY IS SHOWN AS JULY 24 (WHAT YEAR?) AND NO REPAYMENT TERMS ARE SHOWN.

"(4) SECTION II - COMPARATIVE STATEMENT OF SALES, PROFIT OR LOSS, ETC. (ON APPLICATION FORM) LEFT BLANK, NOTHING SHOWN - YET FIRM HAS BEEN IN BUSINESS SINCE 1967.

"(5) THE CASH FLOW PROJECTION SHOWS THE CASH POSITION AT THE END OF THE FIRST MONTH AS $493 AND THE CASH ON HAND AT THE BEGINNING OF THE SECOND MONTH AS $2,493, ETC. (NO EXPLANATION GIVEN).

"(6) THE CASH FLOW PROJECTION FOR THE TOTAL BUSINESS SHOWS THE CASH POSITION AT THE END OF THE FIRST MONTH AS $510 AND THE CASH ON HAND AT THE BEGINNING OF THE SECOND MONTH AS $15,510, ETC. (NO EXPLANATION GIVEN). ANY MEANINGFUL ANALYSIS OF EITHER CASH FLOW CANNOT BE MADE SINCE THEY ARE INCOMPLETE.

"(7) *** IF THE MAXIMUM QUANTITY IS ORDERED, THE CONTRACT VALUE WOULD BE $48,000 AND ORDERS MAY BE ISSUED UNDER THIS CONTRACT FROM APRIL 5, 1971 THROUGH APRIL 3, 1972, WITH POSSIBLE DELIVERIES THROUGH JULY 1972. THE CASH FLOW PROJECTIONS *** ON THE CONTRACT AND ON THE TOTAL BUSINESS COVER ONLY 4 MONTHS AND 5 MONTHS, RESPECTIVELY."

IN SUPPORT OF YOUR PROTEST, YOU HAVE SUBMITTED TO THIS OFFICE BY LETTER DATED JULY 14, 1971, DOCUMENTS IDENTICAL TO THOSE SUBMITTED TO SBA IN SUPPORT OF YOUR APPLICATION FOR A COC, AND REVIEWED IN THE JULY 9 MEMORANDUM AS QUOTED ABOVE. HOWEVER, FROM OUR REVIEW OF SUCH DOCUMENTS, AND YOUR APPLICATION FOR A COC, WE MUST AGREE THAT THE CONCLUSIONS SET OUT IN THE MEMORANDUM ARE CORRECT.

YOU ALSO CONTEND THAT YOUR SHOP IS WELL EQUIPPED AND ABLE TO PERFORM THE CONTRACT. HOWEVER, THE QUALITY OF YOUR PLANT FACILITIES AND EQUIPMENT ARE NOT IN ISSUE, SINCE THEY WERE GIVEN A SATISFACTORY RATING BY THE PREAWARD SURVEY TEAM.

WITH RESPECT TO SMALL BUSINESS BIDDERS, IF A CONTRACTING OFFICER DETERMINES SUCH A BIDDER TO BE NONRESPONSIBLE AS TO CAPACITY AND CREDIT AND FOR THAT REASON ALONE DECIDES TO REJECT AN OTHERWISE ACCEPTABLE BID, SBA IS AUTHORIZED TO CERTIFY THE BIDDER'S COMPETENCY, AS TO CAPACITY AND CREDIT, TO PERFORM THE SPECIFIC GOVERNMENT CONTRACT. THE CONTRACTING OFFICER IS REQUIRED TO ACCEPT THE SUBSTITUTED JUDGMENT OF SBA AS REFLECTED BY A COC AS CONCLUSIVE (SECTION 8(B)(7) OF THE SMALL BUSINESS ACT OF 1958, PUBLIC LAW 85-536; 15 U.S.C. 637(B)(7)). THIS AUTHORITY OFFERS A LARGE MEASURE OF PROTECTION TO SMALL BUSINESS CONCERNS AGAINST ARBITRARY, PREJUDICED OR DISCRIMINATORY ACTIONS BY CONTRACTING OFFICERS.

WITH RESPECT TO WHETHER SBA SHOULD HAVE GIVEN YOU ADDITIONAL TIME TO SUPPLEMENT OR CORRECT YOUR APPLICATION, THE FACT THAT AN AWARD IS BEING SUSPENDED FOR A COC DETERMINATION REQUIRES SBA TO ACT EXPEDITIOUSLY IN PROCESSING APPLICATIONS. SINCE TIME IS OF THE ESSENCE, A COC APPLICATION MUST BE SUBMITTED PROMPTLY, ACCURATELY, AND IN THE REQUIRED DETAIL BY THE APPLICANT. THE AMOUNT OF TIME TO BE ALLOWED A PROSPECTIVE CONTRACTOR FOR THE SUBMISSION OF EVIDENCE IN SUPPORT OF A COC IS FOR DETERMINATION BY SBA. B-152198, NOVEMBER 6, 1963. IN THIS CONNECTION PARAGRAPH 17A OF ND 615-1B, THE SBA NATIONAL DIRECTIVE GOVERNING THE CERTIFICATE OF COMPETENCY PROGRAM, STATES IN PART:

"THE TIME LIMIT ALLOWED SBA FOR PROCESSING A COC IS 15 WORKING DAYS BEGINNING WITH THE FIRST DAY AFTER RECEIPT OF AN ACCEPTABLE REFERRAL, INCLUDING APPROPRIATE DOCUMENTATION*** ."

FURTHER, WHERE A FIRM FAILS TO FILE AN ACCEPTABLE COC APPLICATION WITHIN THE ESTABLISHED TIME LIMITS, PARAGRAPH 16A, ND 615-1B, PROVIDES:

"IF ANY OF THE EVENTS LISTED BELOW OCCUR, THE CHIEF, PROCUREMENT AND MANAGEMENT ASSISTANCE WILL CLOSE THE CASE AND IMMEDIATELY NOTIFY THE CONTRACTING OFFICER, THE APPLICANT, CENTRAL OFFICE, AND OTHERS CONCERNED IN THE SAME MANNER AS NOTED ABOVE. THE ORIGINAL OF CLOSE OUT FORM 106 WILL BE TRANSMITTED TO THE CENTRAL OFFICE, SHOWING DATE AND INDICATING ON THE REVERSE SIDE THE REASONS FOR CLOSING THE CASE. FOR EXAMPLE:

A. THE FIRM FAILS TO FILE AN ACCEPTABLE COC APPLICATION WITHIN THE ESTABLISHED TIME LIMITS *** ."

THE RECORD BEFORE THIS OFFICE SUPPORTS THE DETERMINATION OF SBA THAT, ALTHOUGH YOU FILED YOUR COC APPLICATION JUST PRIOR TO THE SPECIFIED DEADLINE, YOUR SUBMISSION HAD DEFICIENCIES WHICH WOULD HAVE PREVENTED SBA FROM MAKING AN ACCURATE ANALYSIS OF YOUR CREDIT. THE EFFECT OF YOUR FAILURE TO FURNISH THE NECESSARY INFORMATION IN AN ACCEPTABLE MANNER WITHIN THE ESTABLISHED TIME LIMITS IS THE SAME AS IF YOUR FIRM HAD FAILED TO FILE ANY APPLICATION. BY NOT FILING AN ACCEPTABLE COC APPLICATION WITH SBA, YOU FAILED TO AVAIL YOURSELF OF THE POSSIBLE RELIEF PROVIDED BY STATUTE AND REGULATION TO AFFORD SMALL BUSINESS CONCERNS A DEGREE OF PROTECTION AGAINST UNREASONABLE DETERMINATIONS AS TO THEIR CAPACITY OR CREDIT BY CONTRACTING OFFICERS. UNDER SUCH CIRCUMSTANCES, WE DO NOT BELIEVE THAT WE SHOULD UNDERTAKE A REVIEW OF THE CONTRACTING OFFICER'S DETERMINATION THAT YOUR FIRM WAS NONRESPONSIBLE FOR REASONS PERTAINING TO YOUR CAPACITY OR CREDIT, SINCE SUCH ACTION WOULD, IN EFFECT, AMOUNT TO A SUBSTITUTION, AT THE OPTION OF A BIDDER, OF THIS OFFICE FOR THE AGENCY SPECIFICALLY AUTHORIZED BY STATUTE TO REVIEW CONTRACTING OFFICERS' DECISIONS AS TO THE CAPACITY OR CREDIT OF SMALL BUSINESS CONCERNS. SEE B- 160451, JANUARY 13, 1967; B 156069, JUNE 15, 1965; AND B-154865, SEPTEMBER 14, 1964.

ACCORDINGLY, YOUR PROTEST IS DENIED.