B-174491, JAN 31, 1972

B-174491, JAN 31, 1972

BID PROTEST - NONRESPONSIBILITY DECISION DENYING THE PROTEST OF ASTRO NAUTICS SYSTEMS, INC., LOW BIDDER, AGAINST THE PROPOSED AWARD OF A LABOR SURPLUS AREA SET-ASIDE TO ANOTHER CONCERN UNDER AN IFB ISSUED BY THE DIRECTORATE OF PROCUREMENT AND PRODUCTION, SAN ANTONIO AIR MATERIEL AREA (SAAMA), KELLY AFB, TEX. FOLLOWING CONFIRMATION BY THE PRE-AWARD SURVEY BOARD OF AN UNSATISFACTORY EVALUATION BY THE DEFENSE CONTRACT ADMINISTRATIVE SERVICES REGION (DCASR), PROTESTANT SUBMITTED ADDITIONAL INFORMATION WHICH SERVED AS THE BASIS FOR A SECOND DETERMINATION OF NONRESPONSIBILITY. THE MATTER WAS THEN REFERRED TO THE SMALL BUSINESS ADMINISTRATION WHICH REFUSED TO ISSUE A CERTIFICATE OF COMPETENCY. THE COMP. GEN. HAS NO AUTHORITY TO COMPEL THE SBA TO REVIEW A PRIOR DECISION AND, WHEN THERE IS NO EVIDENCE TO SUPPORT AN INFERENCE OF BAD FAITH, DETERMINATIONS OF RESPONSIBILITY MUST BE LEFT TO THE PROCURING ACTIVITY'S DISCRETION. ACCORDINGLY, THE PROTEST IS DENIED.

TO ASTRO NAUTICS SYSTEMS, INCORPORATED:

REFERENCE IS MADE TO YOUR TELEGRAM OF NOVEMBER 8 AND LETTER DATED NOVEMBER 15, 1971, WITH ENCLOSURES, PROTESTING THE PROPOSED AWARD OF A CONTRACT TO ANOTHER CONCERN UNDER INVITATION FOR BIDS NO. F41608-71-B 0711, ISSUED ON APRIL 26, 1971, BY THE DIRECTORATE OF PROCUREMENT AND PRODUCTION, SAN ANTONIO AIR MATERIEL AREA (SAAMA), KELLY AIR FORCE BASE, TEXAS.

THE SOLICITATION WAS FOR INCREMENTAL QUANTITIES, WITH OR WITHOUT FIRST ARTICLE TESTING, OF A SELF PROPELLED DEICING UNIT FOR AIRCRAFT, PLUS SPARE PARTS AND DATA, TO BE MANUFACTURED IN ACCORDANCE WITH APPLICABLE SPECIFICATIONS. A PORTION OF THE PROCUREMENT WAS SET ASIDE EXCLUSIVELY FOR LABOR SURPLUS AREA CONCERNS.

THE GOVERNMENT'S DESIRED DELIVERY SCHEDULE WAS 8 PRODUCTION UNITS WITHIN 90 DAYS AND 10 UNITS EVERY 30 DAYS THEREAFTER UNTIL COMPLETE. THE REQUIRED DELIVERY SCHEDULE, AS AMENDED, WAS 8 UNITS WITHIN 150 DAYS AND 10 UNITS EVERY 30 DAYS THEREAFTER UNTIL COMPLETE.

SIX BIDS WERE RECEIVED BY BID OPENING ON AUGUST 16, 1971, INCLUDING FOUR FROM SMALL BUSINESS CONCERNS, AS FOLLOWS:

ASTRO NAUTICS $21,516 PER UNIT

STANRAY CORPORATION 22,305 PER UNIT

EMC CORPORATION 26,407 PER UNIT

READING TECHMATIC CORPORATION29,900 PER UNIT

SUPERIOR WELDING, INC. 33,000 PER UNIT

GENERAL STEEL TANK COMPANY 57,413 PER UNIT

YOUR CONCERN IS A SMALL BUSINESS CONCERN WHILE STANRAY, THE NEXT LOW BIDDER, IS NOT; BOTH CONTEMPLATE PRODUCING IN LABOR SURPLUS AREAS.

A PREAWARD SURVEY BY THE DEFENSE CONTRACT ADMINISTRATIVE SERVICES REGION (DCASR) - CHICAGO, FOUND YOUR CONCERN TO BE UNSATISFACTORY IN THE AREAS OF PRODUCTION, FINANCE AND QUALITY CONTROL. THE PRE-AWARD SURVEY BOARD HAS CONCURRED IN THESE FINDINGS.

THE NARRATIVE WITH THE PREAWARD SURVEY REPORT STATES THAT IN OVER TWO YEARS OF EXISTENCE ASTRO NAUTICS HAS HAD NO SALES AND NO EMPLOYEES OTHER THAN THE OFFICERS OF THE COMPANY. IT FURTHER STATES THAT YOUR CONCERN HAS NO PRODUCTION CAPABILITY AND THAT THE WORK WOULD BE ACCOMPLISHED THROUGH SUBCONTRACTING WITH ERLINDER MANUFACTURING AND UNIVERSAL INDUSTRIES. ERLINDER WAS FOUND TO BE A TRUCK REPAIR SHOP WHICH EMPLOYED GENERAL MECHANICS WITH VARYING DEGREES OF SKILL, WITH NO INSPECTORS AND NO QUALITY CONTROL. UNIVERSAL, THE PROPOSED PRIMARY SUBCONTRACTOR, WAS FOUND TO LACK A PRODUCTION FORCE OR ORDERS OF CONSEQUENCE. PERFORMANCE UNDER UNIVERSAL'S LAST GOVERNMENT CONTRACT (DAAB05-70-C-3518) WAS SO UNSATISFACTORY AS TO RESULT IN WITHHOLDING OF PROGRESS PAYMENTS. WHILE UNIVERSAL IS LOCATED IN A LABOR SURPLUS AREA AND THERE WOULD BE NO DIFFICULTY IN OBTAINING UNSKILLED LABOR, DCASR CONSIDERED IT QUESTIONABLE WHETHER UNIVERSAL COULD TRAIN AND SUPPORT AN ADEQUATE WORK FORCE OF SKILLED EMPLOYEES SUCH AS ENGINEERS, MACHINISTS, WELDERS AND MECHANICS IN VIEW OF THE LACK OF CURRENT ORDERS. WITH RESPECT TO FINANCING, THE PREAWARD SURVEY RECOMMENDED NO AWARD UNTIL YOUR CONCERN SUBMITTED FIRM DOCUMENTED EVIDENCE ESTABLISHING THAT FUNDS WOULD BE AVAILABLE.

YOUR LETTER OF NOVEMBER 15 STATES THAT YOUR PERSONNEL MET WITH DCASR ON NOVEMBER 10 AND THAT BY LETTER OF OCTOBER 25, 1971, YOU FURNISHED ADDITIONAL INFORMATION WHICH CLEARED UP ANY MISUNDERSTANDINGS THERE MAY HAVE BEEN WITH RESPECT TO YOUR PRODUCTION AND TECHNICAL CAPABILITIES. COPY OF THE OCTOBER 25 LETTER WAS ENCLOSED WITH YOUR PROTEST. YOU ALSO ADVISE THAT ADDITIONAL INFORMATION ON YOUR FINANCIAL ABILITY HAS BEEN FURNISHED TO DCASR.

A COMPLETE REVIEW WAS MADE TO CONSIDER THE EFFECT OF THE INFORMATION FURNISHED IN YOUR LETTER OF OCTOBER 25 AND THE MEETING WITH YOUR REPRESENTATIVES ON NOVEMBER 10. THE ADDITIONAL INFORMATION FURNISHED BY YOU PRESENTED A NEW ARRANGEMENT WHEREBY YOUR CONCERN WOULD DO THE WORK WHICH INITIALLY WAS TO BE SUBCONTRACTED TO UNIVERSAL. IN THIS CONNECTION YOU FURNISHED A LETTER DATED SEPTEMBER 22, 1970, FROM UNIVERSAL (BOTH YOUR CONCERN AND UNIVERSAL ARE LOCATED AT THE SAME ADDRESS) WHICH CONFIRMED AN AGREEMENT UNDER WHICH UNIVERSAL WOULD MAKE AVAILABLE SUCH MANUFACTURING SPACE AS MIGHT BE NEEDED BY YOUR CONCERN IN THE PERFORMANCE OF ITS CONTRACTS. NO LEASE OR OTHER FORMAL DOCUMENTATION OF THIS ARRANGEMENT WAS FURNISHED. ABOUT 20 PERCENT OF THE WORK WOULD STILL BE SUBCONTRACTED OUT TO ERLINDER.

DCASR EVALUATED THIS INFORMATION AND CONCLUDED THAT THE NEW MANUFACTURING SCHEME DID NOT RESOLVE THE DEFICIENCIES FOUND UNDER YOUR PRIOR ARRANGEMENT. THE TECHNICAL ABILITY OF YOUR CONCERN AS THE PRIMARY MANUFACTURER WAS AN UNKNOWN FACTOR WHICH COULD NEITHER BE DEMONSTRATED BY PRIOR GOVERNMENT WORK, SINCE YOUR CONCERN HAD NEVER PERFORMED ON A GOVERNMENT CONTRACT, OR BY COMMERCIAL PRODUCTION, SINCE NO SAMPLES OF COMMERCIAL PRODUCTS WERE FURNISHED. AGAIN, WHILE A WORK FORCE MIGHT BE OBTAINABLE IN YOUR AREA OF MANUFACTURE, THE DEVELOPMENT OF A PRODUCTION CAPABILITY IN TIME TO MEET THE REQUIRED DELIVERY SCHEDULE WAS CONSIDERED QUESTIONABLE.

WITH REGARD TO FINANCING, YOUR CONCERN FURNISHED NO FIRM DOCUMENTARY EVIDENCE SHOWING THAT FUNDS WOULD BE AVAILABLE. ACCORDINGLY, DCASR AFFIRMED THE ORIGINAL NEGATIVE CONCLUSION AS TO RESPONSIBILITY.

THE PROCURING ACTIVITY REFERRED THE MATTER TO THE SMALL BUSINESS ADMINISTRATION (SBA) UNDER THE CERTIFICATE OF COMPETENCY (COC) PROCEDURES. BY LETTER DATED NOVEMBER 10, 1971, THE SBA REGIONAL OFFICE IN CHICAGO, ILLINOIS, ADVISED THE PROCURING ACTIVITY THAT BASED ON ITS COMPREHENSIVE REVIEW, THAT AGENCY DECLINED TO ISSUE A COC TO YOUR CONCERN IN THIS INSTANCE.

THE CONTRACTING OFFICER HAS DETERMINED THAT YOUR CONCERN IS NOT A RESPONSIBLE BIDDER FOR PURPOSES OF THIS PROCUREMENT. YOU HAVE PROTESTED THIS DETERMINATION TO OUR OFFICE. AWARD IS BEING WITHHELD PENDING OUR RESOLUTION OF YOUR PROTEST.

IT IS NOT THE FUNCTION OF THIS OFFICE TO SUPERIMPOSE ITS JUDGMENT ON ADMINISTRATIVE DETERMINATIONS OF A PROSPECTIVE CONTRACTOR'S ABILITY TO PERFORM IN THE ABSENCE OF A SHOWING OF BAD FAITH OR LACK OF REASONABLE BASIS FOR SUCH DETERMINATION. 39 COMP. GEN. 705 (1960); B-171838, APRIL 15, 1971. THE REFUSAL OF SBA TO ISSUE A COC MUST BE VIEWED AS AN AFFIRMATION OF THE CONTRACTING OFFICER'S DETERMINATION OF YOUR CONCERN'S NONRESPONSIBILITY. 43 COMP. GEN. 228, 231 (1963). OUR OFFICE DOES NOT HAVE THE AUTHORITY TO REQUIRE SBA TO ISSUE A COC IN A PARTICULAR CASE. PURSUANT TO OUR REVIEW, WE FIND THAT THERE IS SUBSTANTIAL EVIDENCE IN THE FILE TO SUPPORT THE CONTRACTING OFFICER'S DETERMINATION THAT YOUR CONCERN IS NOT A RESPONSIBLE PROSPECTIVE CONTRACTOR.

THE LETTER OF OCTOBER 25, 1971, ENCLOSED WITH YOUR PROTEST, QUESTIONS WHETHER THE INVITATION WAS DEFECTIVE BECAUSE PROGRESS PAYMENTS WERE EXCLUDED. THE CONTRACTING OFFICER'S REPORT STATES THAT PROGRESS PAYMENTS WERE NOT INCLUDED IN THE INSTANT SOLICITATION BECAUSE OF THE RELATIVELY SHORT LEAD TIME BETWEEN THE BEGINNING OF THE WORK AND FIRST PRODUCTION DELIVERY. THE FAILURE TO PROVIDE FOR PROGRESS PAYMENTS DOES NOT APPEAR TO HAVE ADVERSELY AFFECTED COMPETITION SINCE NEITHER YOUR CONCERN OR ANY OF THE OTHER PROSPECTIVE SMALL BUSINESS BIDDERS REQUESTED PROGRESS PAYMENTS PRIOR TO BID OPENING. NOR DOES IT APPEAR THAT PROVISION FOR PROGRESS PAYMENTS WOULD HAVE MATERIALLY AFFECTED THE RESPONSIBILITY DETERMINATION. WITHOUT DECIDING THE PROPRIETY OF EXCLUDING PROGRESS PAYMENTS, THE ISSUE DOES NOT CONSTITUTE A BASIS FOR CANCELLING THE INSTANT INVITATION.