B-174431, MAR 31, 1972

B-174431: Mar 31, 1972

Additional Materials:

Contact:

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

 

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

THE CONTRACTING OFFICER'S DISCRETION IS SUBSTANTIAL AND WILL NOT BE DISTURBED UNLESS IT IS SHOWN TO BE ARBITRARY OR CAPRICIOUS. 45 COMP. THERE IS NO STATUTORY PROHIBITION AGAINST THE ACCEPTANCE OF A VERY LOW OR EVEN UNPROFITABLE BID. THE SUBJECT IFB WAS ISSUED ON AUGUST 26. FOURTEEN BIDS WERE RECEIVED AND OPENED ON OCTOBER 4. VANBAR'S BID WAS DETERMINED TO BE LOW. THE PROTEST IS BASED PRIMARILY ON THE CONTENTION THAT VANBAR IS NOT RESPONSIBLE BECAUSE (1) THE FIRM LACKS FINANCIAL RESPONSIBILITY AS DESCRIBED IN APPENDIX E-211 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR). IS TOO CLOSE TO VANBAR'S COSTS. (3) TWELVE EMPLOYEES ARE NOT SUFFICIENT TO COMPLY WITH THE REQUIREMENTS OF ASPR E 211.6.

B-174431, MAR 31, 1972

BID PROTEST - RESPONSIBILITY - FINANCIAL CAPACITY - UNPROFITABLE BID - AFFIRMATIVE ACTION COMPLIANCE DECISION DENYING THE PROTEST OF HY-GAIN ELECTRONICS CORPORATION AGAINST AWARD OF A CONTRACT TO VANBAR UNDER AN RFP ISSUED BY THE ARMY ELECTRONICS COMMAND, PHILADELPHIA, PA. FOR ANTENNAE AND ANCILLARY ITEMS. IN MAKING A DETERMINATION OF RESPONSIBILITY, THE CONTRACTING OFFICER'S DISCRETION IS SUBSTANTIAL AND WILL NOT BE DISTURBED UNLESS IT IS SHOWN TO BE ARBITRARY OR CAPRICIOUS. 45 COMP. GEN. 4 (1965). IN THE INSTANT CASE, VANBAR'S FINANCIAL CAPACITY SEEMS ADEQUATE, THE LOCAL LABOR MARKET HAS A READY SUPPLY OF ADDITIONAL EMPLOYEES, AND THE REQUIRED CERTIFICATION CONCERNING THE BIDDER'S AFFIRMATIVE ACTION PROGRAM HAS BEEN SUBMITTED. FURTHER, THERE IS NO STATUTORY PROHIBITION AGAINST THE ACCEPTANCE OF A VERY LOW OR EVEN UNPROFITABLE BID. B-173362, SEPTEMBER 29, 1971. IN VIEW OF THE FOREGOING, THERE EXISTS NO LEGAL BASIS FOR QUESTIONING THE CONTRACTING OFFICER'S DECISION AND THE PROTEST MUST BE DENIED.

TO WACHTEL, WIENER & ROSS:

WE REFER TO YOUR LETTER DATED FEBRUARY 22, 1972, IN BEHALF OF HY-GAIN ELECTRONICS CORPORATION (HY-GAIN), AND PRIOR CORRESPONDENCE FROM HY GAIN, PROTESTING AGAINST THE AWARD OF A CONTRACT TO VANBAR UNDER INVITATION FOR BIDS (IFB) NO. DAAB05-72-B-0001, ISSUED BY THE UNITED STATES ARMY ELECTRONICS COMMAND, PHILADELPHIA, PENNSYLVANIA.

THE SUBJECT IFB WAS ISSUED ON AUGUST 26, 1971, FOR 17,990 ANTENNAE AND ANCILLARY ITEMS. FOURTEEN BIDS WERE RECEIVED AND OPENED ON OCTOBER 4, 1971. AFTER EVALUATION, INCLUDING MILITARY PACKAGING AND PACKING AND TRANSPORTATION COSTS, VANBAR'S BID WAS DETERMINED TO BE LOW. AWARD HAS BEEN WITHHELD PENDING OUR RESOLUTION OF THE PROTEST FIRST SUBMITTED BY TELEGRAM DATED OCTOBER 29, 1971. THE PROTEST IS BASED PRIMARILY ON THE CONTENTION THAT VANBAR IS NOT RESPONSIBLE BECAUSE (1) THE FIRM LACKS FINANCIAL RESPONSIBILITY AS DESCRIBED IN APPENDIX E-211 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), (2) THE BID PRICE OF VANBAR AT $64.93 PER ITEM, IS TOO CLOSE TO VANBAR'S COSTS, (3) TWELVE EMPLOYEES ARE NOT SUFFICIENT TO COMPLY WITH THE REQUIREMENTS OF ASPR E 211.6, ASPR 1- 904.1 AND ASPR 1-906 AND (4) VANBAR HAS NOT COMPLIED WITH THE REQUIREMENTS OF ASPR 12-806(B)(2), AFFIRMATIVE ACTION PROGRAM.

IN THE COURSE OF EVALUATION THE CONTRACTING OFFICER NOTED THAT VANBAR'S BID APPEARED TO BE QUITE LOW. SUBSEQUENTLY THE BID WAS VERIFIED TWICE AT THE REQUEST OF THE CONTRACTING OFFICER. A PREAWARD SURVEY WAS ALSO INITIATED TO DETERMINE VANBAR'S RESPONSIBILITY AS A PROSPECTIVE CONTRACTOR IN ACCORDANCE WITH ASPR 1-902 WHICH PROVIDES THAT CONTRACTS SHALL BE AWARDED ONLY TO RESPONSIBLE PROSPECTIVE CONTRACTORS. ASPR 1-903.1 FURTHER PROVIDES THAT A PROSPECTIVE CONTRACTOR MUST HAVE ADEQUATE FINANCIAL RESOURCES OR THE ABILITY TO OBTAIN SUCH RESOURCES AS REQUIRED DURING THE PERFORMANCE OF THE CONTRACT. THE CONTRACTING OFFICER HAS DETERMINED THAT VANBAR IS RESPONSIBLE UNDER THE CRITERIA SET OUT IN ASPR 1-903.

YOUR FIRST THREE ALLEGATIONS INVOLVE FACTORS WHICH HAVE BEEN EVALUATED PURSUANT TO THE PRE-AWARD SURVEY. IN REGARD TO FINANCIAL RESPONSIBILITY, ALTHOUGH THE BID PRICE ALLOWS LITTLE ROOM FOR ERROR, IT HAS BEEN DETERMINED THAT VANBAR HAS SUFFICIENT FINANCIAL RESOURCES AND CREDIT TO PERFORM AND, IF NECESSARY, TO ABSORB REASONABLE OVERRUNS. AS TO SUFFICIENCY OF WORK FORCE, THE NECESSARY ADDITIONAL EMPLOYEES ARE FOUND TO BE AVAILABLE IN THE LOCAL LABOR MARKET.

THE FACT THAT VANBAR'S PRICE IS VERY CLOSE TO THE GOVERNMENT'S ESTIMATE OF THE COST OF PERFORMANCE DOES NOT AUTOMATICALLY WARRANT A DETERMINATION THAT THE BIDDER IS NOT RESPONSIBLE. NOR ARE WE AWARE OF ANY PROVISION OF LAW PRECLUDING A BIDDER FROM OFFERING TO PERFORM AT A PRICE WHICH OTHERS MAY CONSIDER TOO LOW, OR EVEN UNPROFITABLE. SEE B 173362, SEPTEMBER 29, 1971, AND CASES CITED THEREIN.

THE CONTRACTING OFFICER HAS THE DUTY OF DECIDING THE RESPONSIBILITY OF RESPECTIVE CONTRACTORS. IN MAKING THE DETERMINATION THE CONTRACTING OFFICER IS VESTED WITH A CONSIDERABLE DEGREE OF DISCRETION. WE WILL NOT SUBSTITUTE OUR JUDGMENT IN SUCH CASES AND WILL UPHOLD THE CONTRACTING OFFICER'S DETERMINATION OF RESPONSIBILITY UNLESS IT IS SHOWN TO BE ARBITRARY, CAPRICIOUS OR NOT SUPPORTED BY SUBSTANTIAL EVIDENCE. SEE 45 COMP. GEN. 4 (1965); 43 ID. 257 (1963). WE HAVE CAREFULLY REVIEWED AND CONSIDERED THE INFORMATION RELIED UPON BY THE CONTRACTING OFFICER IN MAKING THE DETERMINATION THAT VANBAR IS RESPONSIBLE, INCLUDING A CRITICAL REPORT BY THE PRODUCTION ENGINEER, AND AN ASSESSMENT OF THE RISK INHERENT IN THIS PARTICULAR AWARD. WE FIND NO BASIS UPON WHICH OUR OFFICE WOULD BE JUSTIFIED IN CONCLUDING THAT THERE WAS AN ABUSE OF ADMINISTRATIVE DISCRETION.

FINALLY, HY-GAIN ASSERTS THAT VANBAR HAS NOT COMPLIED WITH THE REQUIREMENTS OF ASPR 12-806(B)(2), ENTITLED "AFFIRMATIVE ACTION PROGRAM." WE OBSERVE THAT THE VANBAR BID INCLUDES A CERTIFICATION AT SECTION B.13 THAT IT HAS DEVELOPED AND MAINTAINED THE REQUIRED PROGRAMS.

IN VIEW OF THE FOREGOING, WE FIND NO BASIS TO QUESTION THE PROPRIETY OF THE PROPOSED AWARD.