B-173562, JUN 1, 1972

B-173562, JUN 1, 1972

BID PROTEST - NONRESPONSIBLE BIDDER - DETERMINATION DENIAL OF PROTEST BY PACIFIC AEROSOL, INC; AGAINST THE AWARD OF A CONTRACT TO STROUSE, INC; UNDER AN IFB ISSUED BY GSA. PROTESTANT CONTENDS THAT STROUSE IS A NONRESPONSIBLE BIDDER, AS EVIDENCED BY ITS RECORD ON SIMILAR PROCUREMENTS. ALTHOUGH IT IS APPARENT FROM THE RECORD THAT THE CONTRACTOR HAS BEEN SOMETHING LESS THAN DILIGENT AND TIMELY IN THE PERFORMANCE OF ITS CONTRACTS WITH GSA, THE FACT REMAINS THAT IT IS THE DUTY OF THE CONTRACTING OFFICER TO DETERMINE EACH BIDDER'S RESPONSIBILITY TO PERFORM GOVERNMENT CONTRACTS. THAT DETERMINATION WILL BE ACCEPTED BY GAO IN THE ABSENCE OF EVIDENCE THAT THE DISCRETION VESTED IN THE CONTRACTING OFFICER HAS BEEN ABUSED.

TO PACIFIC AEROSOL, INC.:

WE REFER TO YOUR LETTER OF OCTOBER 26, 1971, AND PRIOR CORRESPONDENCE, PROTESTING AGAINST AWARD OF A CONTRACT TO STROUSE, INC; UNDER INVITATION FOR BIDS (IFB) NO. FPNGH-M-18935-A-4-30-71, ISSUED BY THE GENERAL SERVICES ADMINISTRATION (GSA). OUR OFFICE WAS ADVISED BY GSA IN ITS LETTER OF SEPTEMBER 28, 1971, THAT AWARD UNDER THE IFB WOULD BE MADE TO THE LOW BIDDER, STROUSE, INC; NOTWITHSTANDING THE PROTEST DUE TO AN URGENT NEED FOR THE PAINTS COVERED BY THE IFB.

THE BASIS OF THE PACIFIC AEROSOL PROTEST AGAINST AN AWARD TO STROUSE, INC; IS THAT IT IS A NONRESPONSIBLE BIDDER IN THAT THERE HAVE BEEN CONTINUAL DELINQUENCIES IN DELIVERIES OF MATERIALS PURCHASED UNDER SEVERAL CONTRACTS THAT HAVE BEEN AWARDED TO IT. IT IS STATED THAT THE DELINQUENCIES NOT ONLY CONSTITUTE BREACHES OF CONTRACTUAL OBLIGATIONS TO GSA, BUT ARE ALSO COSTLY TO GSA AND DETRIMENTAL TO THE NEEDS OF THE GSA OFFICES REQUIRING THE MATERIALS. FURTHER, IT IS STATED THAT ALLOWING STROUSE TO DELIVER PORTIONS OF THE PURCHASED ITEMS LATE ENABLES IT TO SHIP THE ITEMS IN BULK TO A GREATER EXTENT THAN TIMELY DELIVERIES WOULD ALLOW, THEREBY CAUSING A REDUCTION IN STROUSE'S TRANSPORTATION COSTS AND PROVIDING STROUSE AN ADVANTAGE WHEREBY IT CAN REDUCE BIDS SUBMITTED ON THESE PROCUREMENTS. MOREOVER, IT IS CONTENDED THAT STROUSE LACKED THE REQUISITE CAPACITY, STAFF, AND QUALITY CONTROL SYSTEM NEEDED TO PROPERLY PERFORM THE CONTRACTS. FINALLY, IT IS ALLEGED THAT STROUSE HAS CONTINUALLY SUPPLIED SUBSPECIFICATION MATERIALS UNDER THESE CONTRACTS, GOODS WHICH GSA HAS EITHER ACCEPTED OUTRIGHT OR ON THE BASIS OF ONLY NOMINAL PRICE REDUCTIONS. FOR THESE REASONS, PACIFIC AEROSOL REQUESTED THAT AN INVESTIGATION BE CONDUCTED INTO THE MANNER IN WHICH THE PROCUREMENTS WERE CONDUCTED UNDER REQUIREMENTS CONTRACTS GS-00S-80328, - 83959, -88014, AND -89623 AWARDED TO STROUSE FOR THE PERIOD JULY 1969 TO JUNE 1971.

CONTRACT NO. GS-00S-80328 WAS AWARDED UNDER IFB NO. FPNGH-M-70534-A-2 28- 69 ON MAY 9, 1969, TO COVER THE PERIOD OF JULY 1, 1969, TO DECEMBER 31, 1969. THE PLANT FACILITIES REPORT, DATED APRIL 3, 1969, NOTED THAT STROUSE'S CAPACITY, QUALITY CONTROL, AND FINANCIAL CAPABILITIES WERE ADEQUATE. IT WAS FURTHER NOTED THAT DELINQUENCIES WERE NOT SUBSTANTIAL AT THAT TIME DUE TO A SLOWDOWN IN GOVERNMENT BUSINESS AND THAT STROUSE SHOULD BE CURRENT ON ITS CONTRACTS WITH GSA BY AWARD OF CONTRACT 80328. IT WAS ALSO NOTED THAT:

"A QUALITY ASSURANCE AGREEMENT IS IN EFFECT FOR 6850 SERIES OF PRODUCTS AT THE PRESENT TIME, BUT DUE TO THE CONSISTENT DELINQUENT DELIVERY SITUATION ON AEROSOL PAINTS, IT WAS NOT POSSIBLE TO EXTEND THE AGREEMENT TO COVER ITEMS OF THIS IFB ALTHOUGH PLANT MANAGEMENT HAS REPEATEDLY REQUESTED CONSIDERATION. AS SOON AS SITUATION WARRANTS, A RECOMMENDATION WILL BE MADE FOR INCLUDE 8010 AND 8030 ITEMS IN THE PRESENT AGREEMENT."

STROUSE WAS PLACED ON THE GSA QUALITY ASSURANCE PROGRAM FOR THESE TWO ITEMS ON JUNE 6, 1969, AT WHICH TIME IT HAD BECOME CURRENT ON ITS CONTRACTS WITH GSA. SHORTLY AFTER AWARD OF CONTRACT -80328, HOWEVER, STROUSE AGAIN BECAME DELINQUENT IN DELIVERIES. BY LETTER OF OCTOBER 21, 1969, GSA NOTIFIED STROUSE THAT IT WAS DELINQUENT ON 40 PURCHASE ORDERS TOTALING ABOUT 473,320 CANS OF LACQUER AEROSOL, AND IT WAS ADVISED THAT IF A SATISFACTORY EXPLANATION WAS NOT FURNISHED, ITS RIGHT TO PROCEED WITH THE ORDERS WOULD BE TERMINATED. STROUSE RESPONDED THAT THE DELINQUENCIES HAD OCCURRED AS A RESULT OF FLOODS, A STRIKE AT A SUBCONTRACTOR'S PLANT, AND EMPLOYEE VACATIONS AND ABSENTEEISM. THEREAFTER, STROUSE OFFERED A $3,000 PRICE REDUCTION FOR EXTENSION OF THE DELIVERY SCHEDULE TO NOVEMBER 30, 1969 AND GSA ACCEPTED THE OFFER. AS OF DECEMBER 31, 1969, THERE WERE 43 DELINQUENT ORDERS (315,504 CANS), AND, AS NOTED BY GSA ON JANUARY 14, 1970, EXTENSIONS OF DELIVERY DATES HAD BEEN GRANTED TO STROUSE UNDER THIS CONTRACT FOR MORE THAN 100 PURCHASE ORDERS SINCE NOVEMBER 1969.

STROUSE WAS REMOVED FROM THE QUALITY ASSURANCE PROGRAM COVERING ITEMS FURNISHED UNDER CONTRACT -80328 ON DECEMBER 5, 1969. A PARTICIPANT OF THIS PROGRAM IS PERMITTED TO SEND A FORM TO GSA DESIGNATING THE DATE OF SHIPMENT OF GOODS COVERED BY THE PROGRAM TO THE USING OFFICE. NONPARTICIPANT MUST FIRST SHIP ITS GOODS TO A GSA LABORATORY FOR SAMPLING AND TESTING. AFTER ITS REMOVAL FROM THE PROGRAM, STROUSE CONTINUED TO SEND IN THE FORM DESIGNATING THE DATE OF SHIPMENT. WE HAVE BEEN ADVISED INFORMALLY THAT IT WAS LATER DISCOVERED THAT STROUSE WAS SHIPPING AFTER THE DATE DESIGNATED AS THE DATE OF SHIPMENT. STROUSE ALLEGED IT HAD DELIVERED THE MATERIALS TO ITS TRUCKERS ON THE DESIGNATED DATES AND COULD NOT EXPLAIN WHY THE MATERIALS WERE NOT TIMELY DELIVERED. SOME OF THE SHIPMENTS ARRIVED 60 TO 90 DAYS AFTER THE ALLEGED SHIPMENT DATES.

ON DECEMBER 12, 1969, A FIRE AT THE STROUSE PLANT INTERRUPTED PRODUCTION. ACCORDINGLY, AN EXTENSION OF DELIVERY DATES TO JANUARY 30, 1970, WAS GRANTED FOR 22 PURCHASE ORDERS. A GSA OFFICIAL NOTED WHILE AT THE STROUSE PLANT ON DECEMBER 31, 1969, THAT, NOTWITHSTANDING THE FIRE, BOTH PRODUCTION LINES WERE IN OPERATION AND WAS ADVISED BY A STROUSE EMPLOYEE THAT THE LINES HAD BEGUN OPERATION SHORTLY AFTER CHRISTMAS. STARTER FLUID AND DE-ICER, COMMERCIAL ITEMS, WERE BEING PRODUCED ON THE LINES. PRODUCTION UNDER GOVERNMENT CONTRACTS HAD NOT BEEN RESUMED. STROUSE ADVISED GSA THAT THESE ITEMS COULD BE PRODUCED ON THE LINES, BUT THAT FURTHER REPAIRS HAD TO BE COMPLETED BEFORE WORK ON THE GSA CONTRACTS COULD RESUME. STROUSE WAS UNABLE TO COMPLETE THE REPAIRS IN EARLY JANUARY DUE TO UNUSUAL WEATHER CONDITIONS. GOVERNMENT PRODUCTION WAS RESUMED DURING MID-JANUARY. AS OF JANUARY 16, 1970, STROUSE WAS DELINQUENT UNDER NINE CONTRACTS AND ON SCHEDULE ON THREE CONTRACTS. DELINQUENCIES TOTALED APPROXIMATELY 500,000 CANS. STROUSE'S INITIAL REQUEST FOR AN EXTENSION TO FEBRUARY 15 WAS THEN GRANTED ON THE BASIS THAT THE DELAY WAS DUE TO THE FACT THAT THE PRODUCTION LINES HAD BEEN INOPERABLE FOR PAINT PRODUCTS FOR A TIME.

CONCERNING MATERIALS SUPPLIED UNDER CONTRACT -80328 WHICH DID NOT MEET SPECIFICATIONS, WE NOTE FROM THE ADMINISTRATIVE REPORT THAT DURING THE LATTER PART OF 1969 TESTS WERE CONDUCTED ON STROUSE'S ITEMS WHICH SHOWED SOME TO CONTAIN C02 IN VARYING DEGREES. BECAUSE STROUSE PROCESSED OTHER PRODUCTS WHICH USE C02 AS A PROPELLENT ON THE SAME PRODUCTION LINES AS THE AEROSOL PAINTS, IT WAS THE OPINION OF GSA THAT THIS RECURRING PROBLEM OF C02 CONTAMINATION WAS THE RESULT OF INADEQUATE QUALITY CONTROL BY STROUSE OVER ITS PRODUCTION PROCESS. FOR THIS REASON, THE QUALITY ASSURANCE AGREEMENT WITH STROUSE WAS CANCELLED. STROUSE REPLACED THE 4,492 DEFECTIVE CANS OF PAINT DURING MARCH AND APRIL, 1970. SOME OF THE STROUSE PAINTS WERE ALSO FOUND NOT TO MEET THE COLOR CONTRAST RATIO, AND REPLACEMENT OF THESE WERE REQUESTED. THE HAWAII OFFICE REPORTED THAT 1,200 CANS WERE FOUND TO BE SUBSPECIFICATION UNDER THE GLOSS REQUIREMENTS. ALSO ON MARCH 4, 1971, 2,592 CANS WERE REJECTED FOR FAILURE TO MEET THE GLOSS REQUIREMENTS. IN LATE 1970, A COMPLAINT SUBMITTED TO THE GSA CENTRAL OFFICE SHOWED THAT ONE USE OF THE PAINTS HAD 102 CANS WHICH WOULD NOT SPRAY PROPERLY.

CONTRACT NO. GS-00S-83959 WAS AWARDED STROUSE UNDER IFB NO. FPNGH-M 70661 -A-10-20-69 TO COVER THE PERIOD OF JANUARY 14, 1970, TO JUNE 30, 1970. THE PLANT FACILITIES REPORT ON STROUSE, PREPARED FOR THIS IFB ON NOVEMBER 19, 1969, NOTED THAT STROUSE WAS ON THE GSA REVIEW LIST AND THAT ITS PAST PERFORMANCE WAS QUESTIONABLE. THE OPINION WAS EXPRESSED THEREIN THAT STROUSE WAS INCAPABLE OF PERFORMING, BUT THIS WAS CHANGED IN JANUARY 1970 TO CAPABLE OF PERFORMING. THE NOVEMBER REPORT SHOWED THAT STROUSE'S CAPACITY WAS CONSIDERED ADEQUATE, ASSUMING COMMERCIAL COMMITMENTS WERE NOT ALLOWED TO INTERFERE WITH GOVERNMENT REQUIREMENTS. PERSONNEL PROBLEMS WERE NOTED AS BEING CHRONIC. THE STROUSE QUALITY CONTROL SYSTEM WAS CONSIDERED ADEQUATE. AS OF THIS TIME, 14 OF 15 STROUSE GOVERNMENT CONTRACTS WERE IN A DELINQUENT STATUS. APPARENTLY STROUSE PRODUCTION INCREASED AND THE CONTRACTOR BECAME MORE DILIGENT AFTER MID-JANUARY 1970 BECAUSE AS IS NOTED IN THE PLANT FACILITIES REPORT OF JUNE 5, 1970:

"2,498,994 CANS OF LACQUERS AND ENAMELS HAVE BEEN MANUFACTURED AND SAMPLED AND SENT TO REGION #2 LAB FOR COMPLETE TESTING FROM 1/15/70 THROUGH 5/15/70 INCLUSIVE WITHOUT REJECTION *** AT PRESENT STROUSE, INC; IS DOING 90% OF PRODUCTION FOR THE U.S. GOV. GSA *** AT PRESENT STROUSE, INC; HAS NO MAJOR COMMERCIAL BUSINESS FOR JUNE, JULY, AND AUGUST, ALSO STROUSE, INC. HAS LOST THEIR 3 MAJOR COMMERCIAL ACCOUNTS ***AT PRESENT STROUSE, INC. HAS 18 WORKING CONTRACTS OF WHICH ALL ARE SAMPLED UP THROUGH JULY 15, 1970 AND SHIPPING ON SCHEDULE AND AHEAD OF SCHEDULE IN MANY CASES

THEREAFTER, STROUSE'S PERFORMANCE RECORD IMPROVED DURING FEBRUARY AND MARCH 1970. OF A TOTAL OF 311 PURCHASE ORDERS (1,961,530 CANS), 71 (225,000 CANS), OR 25 PERCENT, WERE DELIVERED ON AN AVERAGE OF THREE TO FOUR WEEKS LATE. QUALITY PERFORMANCE WAS RATED 95 PERCENT. THE CONTRACT WAS EXTENDED TO JULY 20, TO AUGUST 14, AND AUGUST 28, 1970. ON AUGUST 20, GSA OFFICES WERE NOTIFIED THAT "ALL PURCHASE ORDERS RECEIVED WITH DELIVERY DATES DUE OR PAST DUE AS OF THE DATE OF RECEIPT OF THIS MODIFICATION ARE REVISED TO THE EXTENT THAT DELIVERY IS DUE ON SUCH PURCHASE ORDERS 30 DAYS FROM RECEIPT OF THIS MODIFICATION." THIS WAS DONE AT NO COST TO EITHER PARTY TO THE CONTRACT. FINAL SHIPMENT UNDER THE CONTRACT WAS MADE BY STROUSE ON NOVEMBER 13, 1970.

REGARDING QUALITY OF THE SUPPLIED ITEMS, 18,072 CANS WERE FOUND TO HAVE OMITTED OR ILLEGIBLE LABELING. ALSO DIVIDERS WERE MISSING FROM CARTONS WITH THE RESULT THAT THE CANS WERE POORLY PACKED. THIS BATCH WAS SAMPLED AND REJECTED ON MARCH 26, 1970. CORRECTION WAS PROMISED, BUT UPON RESAMPLING CONDUCTED ON APRIL 2, ALL SHORTCOMINGS HAD NOT BEEN CORRECTED AND THE ITEMS WERE AGAIN REJECTED. A THIRD TESTING WAS ALLOWED WITH INSTRUCTIONS TO TERMINATE THAT PORTION OF THE CONTRACT SHOULD REJECTION OCCUR AGAIN. ON MARCH 12, 1971, 151 CANS WERE FOUND WITH DEFECTIVE VALVES WHICH CAUSED FAULTY SPRAYING. ON FEBRUARY 26, 1971, A SIMILAR COMPLAINT HAD BEEN LODGED ON 110 CANS. ON MAY 6, 1971, A FIFTH COMPLAINT ON ONE PAINT LOT WAS RECEIVED INDICATING LACQUER IN 193 CANS DID NOT CONFORM TO SPECIFICATIONS WITH THE EFFECT THAT THE CANS WOULD NOT SPRAY PROPERLY. WOULD APPEAR THAT 2,160 CANS OF THIS LOT WERE ALSO ON A "HOLD" STATUS FOR THE SAME REASONS IN GSA REGION 6. THESE OCCURRENCES WOULD NOT HAVE BEEN REFLECTED, OF COURSE, IN THE QUALITY PERFORMANCE OF 95 PERCENT IN VIEW OF THE FACT THAT THE FINAL CONTRACT ADMINISTRATION REPORT IS DATED NOVEMBER 15, 1970.

CONTRACT NO. GS-00S-88014 WAS AWARDED STROUSE ON AUGUST 20, 1970, UNDER IFB NO. FPNGH-M-70902-A-4-20-70 TO COVER THE PERIOD ENDING DECEMBER 31, 1970. STROUSE HAD BEEN FOUND QUALIFIED FOR AWARD FINANCIALLY AND ALSO AS REGARDED ITS QUALITY CONTROL. THE PLANT FACILITIES REPORT WAS PREPARED ON JUNE 5, 1970, OR APPROXIMATELY DURING THE PERIOD THAT STROUSE PRODUCTION AND DELIVERY WERE GOOD. IT FOUND STROUSE CAPABLE OF PERFORMING. THE FINAL CONTRACT ADMINISTRATION REPORT DATED JULY 23, 1971, SHOWS THAT OF 432 PURCHASE ORDERS (2,658,126 CANS) ISSUED UNDER THE CONTRACT, 182 ORDERS WERE DELIVERED LATE. THE AVERAGE TARDINESS OF THE DELIVERIES TOTALED FOUR WEEKS. THE LAST SHIPMENT WAS MADE BY STROUSE ON JULY 12, 1971. CONSEQUENTLY, DELIVERY PERFORMANCE WAS RATED 75 PERCENT. QUALITY PERFORMANCE WAS ALSO RATED 75 PERCENT. WE DO NOTE, HOWEVER, THAT BECAUSE OF GSA'S FAILURE TO PROVIDE THE CONTRACTOR WITH THE REQUIRED COLOR CHIPS, WHICH WERE REQUESTED ON AUGUST 1, UNTIL SEPTEMBER 21, 1970, DELIVERY DATES WERE APPARENTLY INCREASED BY 30 DAYS. ON FEBRUARY 2, 1971, A FURTHER DELIVERY EXTENSION OF 15 DAYS ON ALL PURCHASE ORDERS DUE OR PAST DUE WAS ALLOWED.

AS REGARDS QUALITY PERFORMANCE ON THIS CONTRACT, WE NOTE ONE REJECTION OF APPROXIMATELY 31,000 CANS OF SUBSPECIFICATION MATERIAL WHICH THE CONTRACTOR TOOK OVER FOUR MONTHS TO CORRECT. THE CONTRACTOR, IT APPEARS, SUBMITTED THE MATERIALS FOR SAMPLING AND TESTING AT LEAST THREE TIMES BEFORE THE TESTING COULD BE PASSED. WE NOTE ALSO THAT A RATING OF ONLY 75 PERCENT WAS GIVEN THE CONTRACTOR'S QUALITY PERFORMANCE. TWO BATCHES OF PAINTS WERE REJECTED FOR FAILURE TO MEET THE GLOSS AND COLOR REQUIREMENTS OF THE SPECIFICATIONS. THIS INVOLVED 158,492 AND 12,032 CANS RESPECTIVELY. IT WAS REPORTED ALSO THAT SOME OF THE TECHNICAL INFORMATION SUPPLIED BY THE CONTRACTOR CONCERNING THE COLOR FOR THE ONE BATCH DIFFERED CONSIDERABLY FROM THAT FOUND BY THE LABORATORY. ON SEPTEMBER 11, 1970, A COMPLAINT WAS LODGED BY ONE USER OF THE PAINT THAT ALL 120 CANS ON STOCK DID NOT SPRAY PROPERLY. PACIFIC AEROSOL MADE A SURVEY ITSELF OF A GSA SELF-SERVICE STORE, NOTING THE LARGE PERCENTAGE OF DEFECTIVE CANS IT FOUND. PORTIONS OF THE ITEMS SAMPLED WERE SUPPLIED BY STROUSE UNDER CONTRACT -88014. THE ADMINISTRATIVE REPORT CONFIRMS THAT THERE WERE A GOOD NUMBER OF CAN DEFICIENCIES. THE REPORT STATED: "A SUPPLEMENTARY REPORT *** CONTAINS DETAILS OF SURVEYS PERFORMED IN SELF-SERVICE STORES AT CRYSTAL MALL, ARLINGTON, VIRGINIA, AND SAN FRANCISCO, CALIFORNIA, AND IN WAREHOUSE STOCKS IN REGION 2. THIS REPORT SHOWS 22 DEFECTIVELY MARKED CANS OUT OF 127 IN CRYSTAL MALL, 23 OUT OF 150 CANS IN SAN FRANCISCO, AND 37 OUT OF 395 CANS IN REGION 2. THE PERCENTAGES IN THE LOCATIONS INDICATE A HIGHER PERCENTAGE THAN THAT TOLERANCE ALLOWED BY THE SPECIFICATION. HOWEVER, THE PERCENTAGES DO NOT REFLECT THE MAGNITUDE OBSERVED IN PACIFIC'S SURVEY OF ONLY ONE SELF-SERVICE STORE. WHILE ADMITTEDLY IT APPEARS THAT IN AT LEAST ONE INSTANCE WE DID ACCEPT SUPPLIES WHICH DEVIATED FROM THE SPECIFICATIONS, OUR CONTRACTING PERSONNEL INFORM US THAT THIS MAY BE THE RESULT OF RANDOM SAMPLING METHODS EMPLOYED BY US IN TESTING PAINT SUPPLIES FOR COMPLIANCE WITH SPECIFICATION REQUIREMENTS. THIS PROCESS, WHICH IS THE ONLY PRACTICABLE METHOD OF TESTING THE VAST QUANTITY OF CANS OF PAINT WHICH MAY BE PRODUCED IN ANY ONE BATCH, DOES NOT, OF COURSE, ENSURE TOTAL OR ACCEPTABLE COMPLIANCE WITH SPECIFICATIONS *** IN ANY EVENT, THE RESULT WAS IN NO WAY INTENTIONAL AND WE BELIEVE IT IS, UNFORTUNATELY, A PRODUCT OF RANDOM TESTING METHODS WHICH CONTAIN INHERENT LIMITATIONS."

FURTHER, STROUSE WAS INFORMED BY GSA THAT THE MONTHLY REPORTS OF ORDERS RECEIVED AND SHIPMENTS MADE FOR THE MONTHS OF NOVEMBER AND DECEMBER 1970 HAD NOT BEEN RECEIVED BY GSA AS OF JANUARY 29, 1971, AND THAT THIS WAS IN VIOLATION OF STROUSE'S CONTRACTUAL OBLIGATIONS AND WAS SUFFICIENT CAUSE FOR ACTION UNDER THE "DEFAULT" PROVISION OF THE CONTRACT.

CONTRACT NO. GS-00S-89623 WAS AWARDED STROUSE UNDER IFB NO. FPNGH-M 18706 -A-9-25-70 ON JANUARY 13, 1971, TO COVER THE PERIOD ENDING JUNE 30, 1971. STROUSE WAS AGAIN DETERMINED TO HAVE SUFFICIENT CAPACITY TO PERFORM, TO BE FINANCIALLY CAPABLE, AND TO HAVE THE NECESSARY QUALITY CONTROL SYSTEM. MARCH, A 10-DAY LETTER WAS ISSUED TO STROUSE BY REGION 2 ON MATERIALS NOT SUBMITTED FOR INSPECTION AND TESTING BY THE DUE DATE. THESE MATERIALS CONSISTED OF OVER 100,000 CANS (APPROXIMATELY 34 PURCHASE ORDERS). TERMINATION OF THESE PURCHASE ORDERS WAS RECOMMENDED, AND IT WAS NOTED THAT AS OF APRIL 8 ONE PRODUCTION LINE IN THE STROUSE PLANT HAD BEEN SHUT DOWN AND THE ONLY OTHER LINE WAS PRODUCING COMMERCIAL CANS OF PAINT. WAS LATER DETERMINED THAT STROUSE'S DELINQUENCY WAS EXCUSABLE. STROUSE'S CAN SUPPLIER HAD DELIVERED UNACCEPTABLE LITHOGRAPH CANS WHICH STROUSE HAD REJECTED. THAT CAN SUPPLIER ALSO HAD A STRIKE AT ITS PLANT WHICH CURTAILED PRODUCTION OF CANS. DURING THIS TIME GSA BEGAN NOTICING DISCREPANCIES ON THE STROUSE MONTHLY REPORTS ON THE PURCHASE ORDERS IT HAD RECEIVED AND THE SHIPMENTS IT HAD MADE ON SUCH ORDERS. ALSO, STROUSE MAY HAVE BEEN HAVING EMPLOYEE PROBLEMS AGAIN AS ONE EMPLOYEE INFORMED GSA PERSONNEL THAT 19 STROUSE EMPLOYEES HAD BEEN LAID OFF DURING THE PERIOD.

IN ADDITION TO THE FOREGOING, WE HAVE ALSO ASCERTAINED THE FOLLOWING INFORMATION. ON OCTOBER 29, 1971, 16 PURCHASE ORDERS (55,320 CANS) WERE REJECTED FOR A LOW CONTRAST RATIO. ON OCTOBER 18, 1971, THREE PURCHASE ORDERS (14,412 CANS) WERE REJECTED DUE TO THE NET WEIGHT NOT MEETING SPECIFICATIONS. ON OCTOBER 28, 1971, FIVE PURCHASE ORDERS (3,408 CANS) WERE REJECTED FOR A LOW CONTRAST RATIO. ON NOVEMBER 4, 1971, FOUR PURCHASE ORDERS (1,788 CANS) WERE REJECTED AS SUBSPECIFICATION. A GSA MEMORANDUM OF DECEMBER 17, 1971, NOTES 4,200 CANS WERE RECEIVED THAT WERE INCORRECTLY LABELED. ON JULY 7, 1971, 43,104 CANS WERE FOUND TO NOT MEET THE GLOSS REQUIREMENTS. ON JULY 26, 1971, APPROXIMATELY 41,236 CANS WERE FOUND THAT WERE INCORRECTLY LABELED. ON JULY 26, 1971, 1,392 CANS WERE REJECTED BECAUSE THEY WOULD NOT SPRAY. ON AUGUST 5, 1971, APPROXIMATELY 2,200 CANS WERE REJECTED FOR THE SAME REASON. ON JUNE 21, 1971, IT WOULD APPEAR THAT APPROXIMATELY 13 PURCHASE ORDERS TOTALING OVER 43,000 CANS WERE TERMINATED AND REPURCHASED. A ?01 PER CAN REDUCTION IN PRICE IN RETURN FOR A 30-DAY EXTENSION OF DELIVERY DATES HAD BEEN REJECTED BY GSA ON APRIL 15, 1971. THE STROUSE OFFER OF MAY 21, 1971, OF A THREE PERCENT CONSIDERATION FOR AN EXTENSION OF DELIVERY DATES HAD ALSO BEEN REJECTED. WE NOTE FURTHER THAT CANS FOR SIX PURCHASE ORDERS, THE DELIVERY DATES FOR WHICH BECAME DUE BETWEEN JULY 21 AND NOVEMBER 5, 1971, WERE ALL RECEIVED BY GSA ON NOVEMBER 1, 1971. CANS FOR FIVE PURCHASE ORDERS, THE DELIVERY DATES FOR WHICH BECAME DUE UNDER CONTRACT -88014 BETWEEN DECEMBER 11, 1970 AND MARCH 5, 1971 (ALL BUT ONE OF THESE DELIVERIES WAS LATE), WERE ALL SHIPPED BY STROUSE ON FEBRUARY 24, 1971. WE HAVE BEEN ADVISED THAT CONTRACT -89623 WAS COMPLETED ON MAY 16, 1972, WHEN GSA TERMINATED THE LAST 28 PURCHASE ORDERS ISSUED.

WE HAVE BEEN INFORMED THAT UNDER THE CONTRACT AWARDED STROUSE NOTWITHSTANDING THE PACIFIC AEROSOL PROTEST, APPROXIMATELY 135 PURCHASE ORDERS HAVE BEEN TERMINATED BY GSA. ANOTHER 50 PURCHASE ORDERS WERE ALSO DELINQUENT. HOWEVER, BECAUSE STROUSE REPORTED A FIRE IN ITS PLANT ON FEBRUARY 12, 1972, WHICH CAUSED ITS PRODUCTION LINES TO BE SHUT DOWN COMPLETELY UNTIL FEBRUARY 22 AND TO BE RUNNING AT ONLY HALF CAPACITY ON FEBRUARY 29, IT IS POSSIBLE THAT DELIVERY OF SOME OF THESE ORDERS MAY BE DEEMED EXCUSABLE.

ALTHOUGH IT IS APPARENT FROM THE FOREGOING THAT THE CONTRACTOR HAS BEEN SOMETHING LESS THAN DILIGENT AND TIMELY IN THE PERFORMANCE OF ITS CONTRACTS WITH GSA, THE FACT REMAINS THAT IT IS THE DUTY OF THE CONTRACTING OFFICER TO DETERMINE EACH BIDDER'S RESPONSIBILITY TO PERFORM GOVERNMENT CONTRACTS. IN MAKING THE DETERMINATION, THE CONTRACTING OFFICER IS VESTED WITH A CONSIDERABLE DEGREE OF DISCRETION, AND WE WILL NOT SUBSTITUTE OUR JUDGMENT IN SUCH CASES. IT HAS LONG BEEN THE RULE OF OUR OFFICE TO ACCEPT THE CONTRACTING OFFICER'S DETERMINATION IN THE ABSENCE OF EVIDENCE THAT SUCH DISCRETION HAS BEEN ABUSED. 51 COMP. GEN. (B-173157, OCTOBER 26, 1971). IN THIS CASE, IT APPEARS THAT BEFORE EACH DETERMINATION OF RESPONSIBILITY OF STROUSE WAS MADE, THE CONTRACTING OFFICER OBTAINED A PREAWARD SURVEY REPORT UPON WHICH THE DETERMINATION WAS BASED. ALTHOUGH THE REPORTS DID CONTAIN SOME NEGATIVE INFORMATION, SUFFICIENT AFFIRMATIVE INFORMATION WAS CONTAINED THEREIN FROM WHICH THE CONTRACTING OFFICER WAS ABLE TO CONCLUDE THAT STROUSE WAS A RESPONSIBLE, PROSPECTIVE CONTRACTOR.