B-174181, JAN 28, 1972

B-174181: Jan 28, 1972

Additional Materials:

Contact:

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

 

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

EACH OF PROTESTANT'S PROPOSALS WERE REJECTED SUBSEQUENT TO NEGATIVE PLANT FACILITIES AND FINANCIAL RESPONSIBILITY REPORTS AND REFUSALS BY THE SMALL BUSINESS ADMINISTRATION (SBA) TO ISSUE CERTIFICATES OF COMPETENCY. THAT DETERMINATIONS OF NONRESPONSIBILITY WILL ONLY BE QUESTIONED WHERE SUCH ACTION APPEARS ARBITRARY. THERE IS NO LEGAL BASIS FOR OBJECTION TO THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY. TO INDIAN MADE PRODUCTS COMPANY: REFERENCE IS MADE TO YOUR TELEFAX OF SEPTEMBER 26. THE THREE SOLICITATIONS IN QUESTION WERE FOR REQUIREMENTS CONTRACTS. WERE ISSUED BY GSA'S CENTRAL OFFICE SUPPLIES AND PAPER PRODUCTS BRANCH LOCATED IN NEW YORK. WAS FOR LEAD PENCILS FOR THE PERIOD JULY 1.

B-174181, JAN 28, 1972

BID PROTEST - NONRESPONSIBILITY - METHODS OF EVALUATION DECISION DENYING THE PROTEST OF INDIAN MADE PRODUCTS COMPANY AGAINST A DETERMINATION OF NONRESPONSIBILITY IN CONNECTION WITH THREE SEPARATE IFBS ISSUED BY THE GENERAL SERVICES ADMINISTRATION (GSA). EACH OF PROTESTANT'S PROPOSALS WERE REJECTED SUBSEQUENT TO NEGATIVE PLANT FACILITIES AND FINANCIAL RESPONSIBILITY REPORTS AND REFUSALS BY THE SMALL BUSINESS ADMINISTRATION (SBA) TO ISSUE CERTIFICATES OF COMPETENCY. IT HAS BEEN THE POSITION OF THE COMP. GEN. THAT DETERMINATIONS OF NONRESPONSIBILITY WILL ONLY BE QUESTIONED WHERE SUCH ACTION APPEARS ARBITRARY, CAPRICIOUS, OR NOT BASED ON SUBSTANTIAL EVIDENCE. SEE B- 170540, NOVEMBER 18, 1970. IN THE INSTANT CASE, THERE IS NO LEGAL BASIS FOR OBJECTION TO THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY.

TO INDIAN MADE PRODUCTS COMPANY:

REFERENCE IS MADE TO YOUR TELEFAX OF SEPTEMBER 26, 1971, AND TO YOUR SUBSEQUENT LETTERS CONCERNING BIDS SUBMITTED BY YOUR FIRM UNDER INVITATION FOR BIDS (IFB) FPNSO-EP-2013-A, EP-1066-A AND ET-1093-A, ISSUED BY THE GENERAL SERVICES ADMINISTRATION (GSA).

THE THREE SOLICITATIONS IN QUESTION WERE FOR REQUIREMENTS CONTRACTS, AND WERE ISSUED BY GSA'S CENTRAL OFFICE SUPPLIES AND PAPER PRODUCTS BRANCH LOCATED IN NEW YORK. THE FIRST SOLICITATION, IFB-FPNSO-EP-1066 A ISSUED APRIL 19, 1971, WAS FOR LEAD PENCILS FOR THE PERIOD JULY 1, 1971, OR DATE OF AWARD WHICHEVER WAS LATER, THROUGH JUNE 30, 1972. YOUR FIRM'S BID WAS LOW FOR CERTAIN ITEMS AT A VALUE ESTIMATED TO BE $16,056.64. SUBSEQUENT TO BID OPENING ON MAY 19, 1971, THE CONTRACTING OFFICER REQUESTED PLANT FACILITIES AND FINANCIAL RESPONSIBILITY REPORTS TO ASSIST HIM IN DETERMINING THE RESPONSIBILITY OF YOUR FIRM. THE PLANT FACILITIES REPORT WAS NEGATIVE, THE QUALITY CONTROL REPRESENTATIVE CONCLUDING THAT YOUR FIRM WAS "INCAPABLE OF PERFORMING" THE CONTRACT. THE FINANCIAL RESPONSIBILITY REPORT WAS ALSO UNFAVORABLE. IN LIGHT OF THESE REPORTS, THE CONTRACTING OFFICER DETERMINED THAT THERE WAS INSUFFICIENT BASIS FOR A DETERMINATION THAT YOUR FIRM WAS A RESPONSIBLE BIDDER. THEREFORE, SINCE YOUR FIRM IS A SMALL BUSINESS CONCERN, AND PURSUANT TO THE THEN CURRENT FEDERAL PROCUREMENT REGULATIONS (FPR) 1-1.310-8 (SEE PRESENT FPR 1-1.708-2), ON AUGUST 15, 1971, THE MATTER WAS REFERRED TO THE SMALL BUSINESS ADMINISTRATION (SBA) FOR CONSIDERATION OF THE POSSIBILITY OF ISSUING A CERTIFICATE OF COMPETENCY (COC). BY LETTER OF SEPTEMBER 22, 1971, SBA STATED THAT IT WAS CLOSING ITS FILE BECAUSE YOUR FIRM HAD SUBMITTED AN UNACCEPTABLE APPLICATION.

THE SECOND SOLICITATION, IFB FPNSO-ET-1093-A, ISSUED ON MAY 12, 1971, WAS FOR RUBBER AND RUBBER SUBSTITUTE ERASERS AND MECHANICAL PENCIL ERASERS FOR THE PERIOD OCTOBER 1, 1971, OR DATE OF AWARD, WHICHEVER WAS LATER, THROUGH SEPTEMBER 30, 1972. YOUR FIRM BID ON ITEMS 25 THROUGH 28 AND WAS LOW FOR THESE ERASERS IN AN ESTIMATED AMOUNT OF $8,226.10. FOLLOWING BID OPENING ON JUNE 10, 1971, THE CONTRACTING OFFICER REQUESTED A PLANT FACILITIES REPORT, AND AN ADVERSE REPORT DATED JULY 30, 1971, WAS FURNISHED THE PROCURING ACTIVITY. THE CONTRACTING OFFICER ALSO REQUESTED A FINANCIAL RESPONSIBILITY REPORT, WHICH WAS ALSO ADVERSE. ON SEPTEMBER 7, 1971, THE MATTER WAS SUBMITTED TO SBA. ON SEPTEMBER 22 SBA ADVISED THE PROCURING ACTIVITY THAT IT WAS MARKING ITS CASE FILE "CLOSED", INASMUCH AS YOUR FIRM HAD FAILED TO SUBMIT AN APPLICATION FOR COC PROCESSING.

THE THIRD SOLICITATION, IFB FPNSO-EP-2013-A, ISSUED ON JUNE 21, 1971, WAS FOR BALLPOINT DESK PEN SETS FOR THE PERIOD NOVEMBER 1, 1971, OR DATE OF AWARD WHICHEVER WAS LATER, THROUGH OCTOBER 31, 1972. YOUR FIRM WAS LOW ON ALL ITEMS. ONCE AGAIN THE CONTRACTING OFFICER REQUESTED PLANT FACILITIES AND FINANCIAL RESPONSIBILITY REPORTS TO DETERMINE YOUR FIRM'S ABILITY TO PERFORM. BOTH THE PLANT FACILITIES AND FINANCIAL RESPONSIBILITY REPORTS WERE NEGATIVE. ON SEPTEMBER 9, 1971, THE CONTRACTING OFFICER ONCE AGAIN REFERRED THE MATTER TO THE SBA FOR POSSIBLE ISSUANCE OF A COC. SEPTEMBER 22 SBA ADVISED THE PROCURING ACTIVITY THAT IT WAS MARKING ITS FILE "CLOSED", SINCE YOUR FIRM HAD FAILED TO FILE FOR A COC BY THE STIPULATED DEADLINE DATE.

IT IS YOUR CONTENTION THAT (1) THE NEGATIVE REPORTS INCIDENT TO THE THREE SOLICITATIONS WERE UNWARRANTED, (2) GSA HELD UP PRODUCTION FOR THREE MONTHS THROUGH NO FAULT OF YOUR FIRM, (3) YOUR FIRM IS NOW SELLING ITS PRODUCTS TO THE GOVERNMENT AT A LOSS, FOR WHICH GSA REFUSES TO GRANT RELIEF, AND (4) GSA MADE REFERRALS TO SBA FOR THE THREE PROCUREMENTS IN QUESTION WITHIN TWO WEEKS FOR THE PURPOSE OF "THROWING US OUT".

REGARDING YOUR FIRST CONTENTION, THAT THE NEGATIVE PLANT FACILITIES AND FINANCIAL RESPONSIBILITY REPORTS WERE UNWARRANTED, THERE IS NO EVIDENCE OF RECORD THAT THE CONTRACTING OFFICER HAD ANY REASON TO QUESTION THE JUDGMENTS OF THE INDIVIDUALS PREPARING THESE REPORTS OR THE RESULTING CONCLUSIONS. THE RECORD INDICATES THAT THE UNFAVORABLE PLANT FACILITIES REPORTS WERE BASED PRIMARILY ON YOUR FIRM'S DELINQUENCY IN FILLING ORDERS, WHICH RESULTED FROM YOUR FIRM'S POOR PRACTICES IN ITS PURCHASE OF SUPPLIES IN TIME TO MEET DELIVERY SCHEDULES. THIS, IN TURN, IS ATTRIBUTED TO FAILURE TO DELEGATE PURCHASING AUTHORITY TO OTHER PERSONNEL IN YOUR FIRM. AS PREVIOUSLY MENTIONED, DUE TO THESE ADVERSE REPORTS AND HIS OWN SERIOUS DOUBTS AS TO THE RESPONSIBILITY OF YOUR FIRM, THE CONTRACTING OFFICER IN EACH OF THE PROCUREMENTS REFERRED THE MATTER TO SBA FOR THE POSSIBLE ISSUANCE OF A COC. AT THIS POINT IT SHOULD BE EXPLAINED THAT THE CONTRACTING OFFICER, IN EFFECT, QUESTIONED YOUR FIRM'S CAPACITY TO PERFORM PRIMARILY ON THE BASIS OF YOUR FIRM'S LACK OF BUSINESS ORGANIZATION RESULTING IN DELINQUENT DELIVERIES. IN VIEW OF THE FACT THAT FPR 1 1.708- 1 LISTS ORGANIZATION AS ONE OF THE ELEMENTS TO BE CONSIDERED IN DETERMINING A BIDDER'S CAPACITY, THE CONTRACTING OFFICER'S REFERRALS TO SBA WERE PROPER.

THIS OFFICE HAS CONSISTENTLY RECOGNIZED THAT IT IS A BASIC FUNCTION OF THE CONTRACTING OFFICER TO DETERMINE THE RESPONSIBILITY OF THE PROSPECTIVE CONTRACTOR AND THAT AN ADMINISTRATIVE DETERMINATION OF NONRESPONSIBILITY WILL NOT BE QUESTIONED BY OUR OFFICE UNLESS ARBITRARY, CAPRICIOUS OR NOT BASED ON SUBSTANTIAL EVIDENCE. B-170540, NOVEMBER 18, 1970. HOWEVER, REGARDING SMALL BUSINESS CONCERNS SUCH AS YOUR FIRM, 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. B 173499, OCTOBER 18, 1971. HOWEVER, AS PREVIOUSLY MENTIONED, ON TWO OF THE PROCUREMENTS YOUR FIRM FAILED TO SUBMIT AN APPLICATION FOR A COC AND IN THE THIRD PROCUREMENT YOUR FIRM FAILED TO SUBMIT AN ACCEPTABLE APPLICATION, WHICH AMOUNTS, IN ESSENCE, TO A FAILURE TO FILE ANY APPLICATION. THUS, YOU FAILED TO AVAIL YOURSELF OF ANY POSSIBLE RELIEF PROVIDED BY THE SMALL BUSINESS ACT. 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.

REGARDING YOUR CONTENTION THAT YOUR PRODUCTION WAS HELD UP FOR THREE MONTHS DUE TO THE GOVERNMENT'S PROCRASTINATION, GSA STATES THAT WITH THE EXCEPTION OF CERTAIN ORDERS, FOR WHICH DELIVERY TIME WAS EXTENDED TO COVER GOVERNMENT TESTING, IT IS UNAWARE OF ANY INSTANCES OF DELAYS CAUSED BY THE GOVERNMENT. WHILE THE RECORD IS NOT TOO EXTENSIVE REGARDING PRODUCTION DELAYS IN CONNECTION WITH YOUR PREVIOUS CONTRACTS WITH THE GOVERNMENT, THERE IS NO EVIDENCE OF RECORD TO INDICATE THAT YOU WERE NOT GRANTED SUFFICIENT ADDITIONAL TIME TO COMPENSATE FOR GOVERNMENT-CAUSED DELAY.

CONCERNING YOUR CONTENTION THAT YOUR FIRM IS NOW SELLING ITS PRODUCTS TO THE GOVERNMENT AT A LOSS, FOR WHICH GSA REFUSES TO GRANT RELIEF, YOU DID NOT SPECIFICALLY IDENTIFY WHICH PRODUCTS YOUR FIRM WAS SELLING AT A LOSS. THE RECORD INDICATES THAT PERHAPS YOU ARE REFERRING TO A BALLPOINT PEN DESK SET WHICH WAS FURNISHED UNDER CONTRACT GS-OOS 91123. WHILE IT IS UNFORTUNATE THAT PRODUCTION COSTS INCREASED TO THE POINT THAT YOU LOST MONEY ON THE DESK SET FURNISHED UNDER CONTRACT GS OOS-91123, YOU WERE AWARDED THIS CONTRACT ON THE BASIS OF YOUR LOW OFFER TO FURNISH THE ITEM REQUIRED UNDER THE TERMS AND CONDITIONS OF THE SOLICITATION. UNDER THE CIRCUMSTANCES, THERE IS NO AUTHORITY FOR THE GOVERNMENT TO INCREASE THE CONTRACT PRICE BECAUSE PERFORMANCE HAS BECOME UNPROFITABLE. SEE 46 COMP. GEN. 874 (1967).

REGARDING YOUR FINAL CONTENTION, THAT GSA DELIBERATELY MADE REFERRALS TO SBA FOR THE THREE PROCUREMENTS WITHIN A TWO WEEK PERIOD OF TIME FOR THE PURPOSE OF THROWING YOUR FIRM OUT, SBA HAS ADVISED THAT THERE ARE NO RESTRICTIONS WHICH WOULD PROHIBIT SBA FROM PROCESSING MULTIPLE COC ACTIONS ON ONE FIRM AT ONE TIME, AND THAT IT FREQUENTLY PROCESSES THREE OR FOUR COCS AT THE SAME TIME ON BEHALF OF THE SAME FIRM. IN VIEW THEREOF, AND OF YOUR FAILURE TO PROPERLY REQUEST COC ACTION, WE SEE NO MERIT IN THIS PORTION OF YOUR PROTEST.

ACCORDINGLY, FOR THE ABOVE REASONS YOUR PROTEST IS DENIED.