B-174672, JAN 31, 1972, 51 COMP GEN 448

B-174672: Jan 31, 1972

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BIDDERS - QUALIFICATIONS - SMALL BUSINESS CONCERNS - CERTIFICATION REFERRAL PROCEDURE A BIDDER DENIED A CERTIFICATE OF COMPETENCY (COC) BY THE SMALL BUSINESS ADMINISTRATION (SBA) FOLLOWING THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY BASED ON A PREAWARD SURVEY MAY NOT WHEN THE REASON FOR THE DENIAL - THE ABILITY OF A SUBCONTRACTOR TO DELIVER A MAJOR COMPONENT OF THE SUBMARINE EQUIPMENT SOLICITED - IS CORRECTED REQUEST RECONSIDERATION OF THE DENIAL. THE REFUSAL OF THE CONTRACTING OFFICER TO RE-REFER THE COC ISSUE DOES NOT CONSTITUTE ARBITRARY ACTION WHERE HIS DETERMINATION OF NONRESPONSIBILITY WAS AFFIRMED BY THE SBA AND IS NOT AFFECTED BY THE CHANGE IN THE DELIVERY SCHEDULE.

B-174672, JAN 31, 1972, 51 COMP GEN 448

BIDDERS - QUALIFICATIONS - SMALL BUSINESS CONCERNS - CERTIFICATION REFERRAL PROCEDURE A BIDDER DENIED A CERTIFICATE OF COMPETENCY (COC) BY THE SMALL BUSINESS ADMINISTRATION (SBA) FOLLOWING THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY BASED ON A PREAWARD SURVEY MAY NOT WHEN THE REASON FOR THE DENIAL - THE ABILITY OF A SUBCONTRACTOR TO DELIVER A MAJOR COMPONENT OF THE SUBMARINE EQUIPMENT SOLICITED - IS CORRECTED REQUEST RECONSIDERATION OF THE DENIAL, AND THE REFUSAL OF THE CONTRACTING OFFICER TO RE-REFER THE COC ISSUE DOES NOT CONSTITUTE ARBITRARY ACTION WHERE HIS DETERMINATION OF NONRESPONSIBILITY WAS AFFIRMED BY THE SBA AND IS NOT AFFECTED BY THE CHANGE IN THE DELIVERY SCHEDULE, AND WHERE A RE-REFERRAL OF THE COC ISSUE WOULD REQUIRE A FURTHER SURVEY AND NONRESPONSIBILITY DETERMINATION, WHICH TIME DOES NOT PERMIT. FURTHERMORE, THE GENERAL ACCOUNTING OFFICE HAS NO AUTHORITY TO COMPEL SBA TO REVIEW THE COC DENIAL, OR TO REOPEN THE ISSUE AND ITS PROTEST PROCEDURE MAY NOT BE USED TO DELAY A CONTRACT AWARD TO GAIN TIME FOR A BIDDER TO IMPROVE ITS POSITION AFTER THE DENIAL OF A COC BY SBA.

TO ROBERT B. BOWYTZ, JANUARY 31, 1972:

WE REFER TO YOUR TELEGRAM OF DECEMBER 3, 1971, AND SUBSEQUENT COMMUNICATIONS, PROTESTING ON BEHALF OF OCEAN AND ATMOSPHERIC SCIENCE, INC. (OAS), THE CONTRACTING OFFICER'S DETERMINATION THAT YOUR CLIENT IS NOT A RESPONSIBLE CONTRACTOR FOR THE AWARD OF A CONTRACT FOR SUBMARINE DISTRESS PINGER EQUIPMENT, AND RELATED ENGINEERING SERVICES, UNDER INVITATION FOR BIDS (IFB) N00024-71-B-0502 ISSUED JUNE 24, 1971, BY THE NAVAL SHIP SYSTEMS COMMAND, DEPARTMENT OF THE NAVY.

BRIEFLY, THE PROCUREMENT IS A 100-PERCENT SET-ASIDE FOR SMALL BUSINESS PARTICIPATION AND, AFTER THE ORIGINAL LOW BIDDER FAILED TO EXTEND ITS ACCEPTANCE PERIOD, OAS BECAME THE LOW, RESPONSIVE BIDDER. THE CONTRACTING OFFICER REQUESTED THE DEFENSE CONTRACT ADMINISTRATION SERVICES DISTRICT (DCASD), NEW YORK, NEW YORK, TO MAKE A PRE-AWARD SURVEY OF OAS. THE ENSUING SURVEY REPORT CONTAINED VARIOUS FINDINGS REFLECTING UNFAVORABLY ON THAT FIRM'S PRODUCTION CAPABILITY, ITS PURCHASING AND SUBCONTRACTING PLANS, AND ITS ABILITY TO MEET THE SPECIFIED DELIVERY SCHEDULE. BECAUSE OF A MISUNDERSTANDING AS TO APPLICATION OF WALSH-HEALEY ACT CONSIDERATIONS, THE REPORT INDICATED THAT THE FINDINGS WERE FOR INFORMATIONAL PURPOSES ONLY AND THAT THE RECOMMENDATION OF NO AWARD TO OAS, BASED ON THOSE FINDINGS, WAS TO BE DISREGARDED. WE HAVE BEEN INFORMALLY ADVISED, HOWEVER, THAT WHEN DCASD WAS INFORMED THAT THE CONCLUSIONS CONCERNING THE WALSH-HEALEY ACT WERE INAPPROPRIATE, DCASD REQUESTED THAT THE RESTRICTIONS IN THE REPORT BE DISREGARDED AND THAT THE RECOMMENDATION, THAT THE AWARD NOT BE MADE TO OAS, BE REINSTATED.

AFTER CONSIDERING AND EVALUATING ALL AVAILABLE INFORMATION, THE CONTRACTING OFFICER DETERMINED THAT OAS WAS NONRESPONSIBLE BECAUSE OF FACTORS INVOLVING THAT FIRM'S CAPACITY TO PERFORM THE REQUIREMENTS AS SPECIFIED. THE MATTER WAS THEN REFERRED TO THE LOCAL SMALL BUSINESS ADMINISTRATION (SBA) FIELD OFFICE ON NOVEMBER 8, 1971, IN ACCORDANCE WITH PARAGRAPH 1-705.4(C) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), FOR ACTION REGARDING THE POSSIBLE ISSUANCE OF A CERTIFICATE OF COMPETENCY (COC) ON OAS. AFTER SBA REVIEWED OAS'S APPLICATION FOR A COC, AND THE INFORMATION OBTAINED IN CONNECTION THEREWITH, IT DECLINED TO ISSUE A COC ON DECEMBER 1, 1971.

IN YOUR PROTEST, AS REVISED UNDER DATE OF JANUARY 11, 1972, YOU SAY THAT OAS WAS ADVISED BY SBA, DURING DISCUSSIONS OF THE DENIAL OF THE COC, THAT THE DECISION WAS PRIMARILY BASED ON THE DELIVERY PERIOD OFFERED BY THE PROPOSED SUBCONTRACTOR FOR A MAJOR COMPONENT, WHICH DID NOT ALLOW OAS SUFFICIENT TIME TO PERFORM THE REMAINING OPERATIONS AND DELIVER THE COMPLETED ITEMS WITHIN THE TIME SPECIFIED. YOU ALSO SAY THAT OAS INFORMED SBA THAT THE PROPOSED SUBCONTRACTOR WAS A PRIOR PRODUCER OF THE COMPONENT AND HAD OFFERED A BETTER DELIVERY SCHEDULE ON DECEMBER 7, 1971, THAN THE SCHEDULE CONSIDERED BY SBA IN DENYING THE COC. YOU FURTHER SAY SBA INDICATED THAT ITS PROCEDURES DO NOT PROVIDE A METHOD FOR UNILATERALLY REOPENING THE COC MATTER, BUT IF THE CONTRACTING OFFICER WOULD REFER THE COC ISSUE TO SBA AGAIN SBA WOULD CONSIDER THE CASE IN THE LIGHT OF THIS ADDITIONAL INFORMATION.

SINCE THE CONTRACTING OFFICER HAS DENIED YOUR REQUEST THAT HE REOPEN THE COC MATTER WITH SBA, YOU CONTEND THAT HIS DENIAL CONSTITUTES AN ARBITRARY ACTION BECAUSE IT PRECLUDES OAS'S REAPPEARANCE BEFORE SBA, AND THAT THE CONTRACTING OFFICER HAS PLACED AN INORDINATE RELIANCE ON THE SBA DENIAL OF THE COC AS SUPPORT FOR HIS DETERMINATION THAT OAS WAS NONRESPONSIBLE. YOU ALLEGE THAT THE SURVEY REPORT IS REPLETE WITH ERRORS, ALTHOUGH YOU ACKNOWLEDGE THAT IT PROVIDED A FACTUAL FOUNDATION FOR THE CONTRACTING OFFICER'S ORIGINAL DECISION TO REFER THE MATTER TO SBA. YOU CONTEND (CITING 43 COMP. GEN. 257 (1963)) THAT A DENIAL OF AWARD TO OAS, BASED ON A FAULTY SURVEY REPORT AND AN SBA DECISION WHICH IS QUESTIONABLE BECAUSE OF A CURRENT REASON TO REVIEW IT, WOULD BE BASED ON INSUBSTANTIAL EVIDENCE AND ARBITRARY.

YOU REQUEST THAT THIS OFFICE EITHER CAUSE SBA TO REVIEW ITS ORIGINAL DECISION OR, IF AN AWARD IS NOT MADE TO OAS, REQUIRE CANCELLATION OF THE IFB FOR THE REASON THAT AN AWARD TO ANOTHER BIDDER WOULD COMPROMISE THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM. WHILE YOUR REQUEST IS STATED IN TERMS OF A REVIEW OF SBA'S ORIGINAL DECISION, IT IS OUR UNDERSTANDING THAT YOU ARE NOT ASKING, NOR WAS THE OBJECT OF YOUR CONVERSATIONS WITH SBA, FOR A REVIEW OF THE DECISION ON THE BASIS OF THE RECORD FROM WHICH THE DECISION WAS FORMULATED. INSTEAD, YOU ACTUALLY DESIRE A REDETERMINATION OF THE COC ISSUE ON THE BASIS OF A RECORD WHICH WOULD NOW INCLUDE THE NEW DELIVERY SCHEDULE OBTAINED ON DECEMBER 7 FROM YOUR PRINCIPAL SUBCONTRACTOR.

REGARDING THE DECISION WHICH YOU CITE, 43 COMP. GEN. 257 (1963), WE CONSIDER THE FACTS THERE INVOLVED TO BE READILY DISTINGUISHABLE FROM THE CASE AT HAND. IN THE PRIOR CASE, SBA ISSUED A COC AND THE CONTRACTING OFFICER THEREAFTER PROPOSED TO REJECT THE LOW BIDDER AS NONRESPONSIBLE ON THE BASIS OF LACK OF INTEGRITY, A FACTOR NOT COVERED BY THE COC. WHILE WE STATED THEREIN THAT THE TRADITIONAL TEST, UNDER WHICH THIS OFFICE MAY QUESTION A DETERMINATION OF NONRESPONSIBILITY, IS WHETHER THE DETERMINATION WAS ARBITRARY, CAPRICIOUS OR NOT SUPPORTED BY SUBSTANTIAL EVIDENCE, SUCH TEST IS APPLIED IN CONJUNCTION WITH THE POLICIES, STANDARDS AND PROCEDURES SET OUT IN THE APPLICABLE REGULATIONS (ASPR, SECTION I, PART 9) UNDER WHICH THE CONTRACTING OFFICER IS REQUIRED TO MAKE HIS DETERMINATION. THESE REGULATIONS DO NOT REQUIRE THAT THE EVIDENCE OBTAINED AFFIRMATIVELY ESTABLISH THAT A PROSPECTIVE CONTRACTOR IS NOT RESPONSIBLE. INSTEAD, IN ORDER FOR THE CONTRACTING OFFICER TO MAKE AN AWARD THE EVIDENCE MUST AFFIRMATIVELY ESTABLISH THAT THE PROSPECTIVE CONTRACTOR IS RESPONSIBLE, ASPR 1 904.1. THE REGULATIONS FURTHER PROVIDE THAT THE PROSPECTIVE CONTRACTOR MUST DEMONSTRATE AFFIRMATIVELY HIS RESPONSIBILITY AND, WHEN THE INFORMATION OBTAINED IN ACCORDANCE WITH THE REGULATIONS DOES NOT CLEARLY INDICATE THAT THE PROSPECTIVE CONTRACTOR IS RESPONSIBLE, THE CONTRACTING OFFICER IS REQUIRED TO MAKE A DETERMINATION OF NONRESPONSIBILITY, ASPR 1-902.

WE HAVE REVIEWED THE INFORMATION WHICH WAS CONSIDERED BY THE CONTRACTING OFFICER IN ARRIVING AT HIS DETERMINATION OF NONRESPONSIBILITY ON OAS FOR THE CONTRACT CONCERNED, AS WELL AS YOUR CONTENTIONS AS TO INACCURACIES IN THE SURVEY REPORT, AND WE ARE UNABLE TO CONCLUDE THAT THE CONTRACTING OFFICER'S DETERMINATION, AS MADE UNDER THE CRITERIA SET OUT ABOVE, WAS EITHER ARBITRARY OR NOT SUPPORTED BY SUBSTANTIAL EVIDENCE. WE AGAIN NOTE THAT YOU HAVE ALSO RECOGNIZED THAT THE CONTRACTING OFFICER HAD A FACTUAL FOUNDATION FOR REFERRING THE MATTER TO SBA. IN ADDITION, WE HAVE LONG RECOGNIZED THAT WHEN A BIDDER'S APPLICATION FOR ISSUANCE OF A COC IS DENIED BY SBA, WHICH MAKES ITS OWN FURTHER INQUIRY AND ANALYSIS OF THE INFORMATION OBTAINED, THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY MUST BE REGARDED AS HAVING BEEN AFFIRMED BY SBA, 43 COMP. GEN. 228 (1963).

WHILE OAS SUBSEQUENTLY OBTAINED A BETTER DELIVERY SCHEDULE FOR A MAJOR COMPONENT THAN THE SCHEDULE WHICH HAD BEEN PROPOSED AT THE TIME OF THE CONTRACTING OFFICER'S AND SBA'S DELIBERATIONS, WE DO NOT VIEW SUCH DEVELOPMENT AS AFFECTING THE PROPRIETY OF THE DECISIONS MADE PRIOR THERETO, SINCE SUCH DECISIONS WERE NECESSARILY MADE IN THE LIGHT OF THE INFORMATION THEN OF RECORD. SEE B-165830, JULY 24, 1960, AND B-161339, SEPTEMBER 25, 1967.

REGARDING YOUR CONTENTION THAT THE CONTRACTING OFFICER'S DENIAL OF YOUR REQUEST THAT HE REOPEN THE COC MATTER WITH SBA WAS ARBITRARY, AND THAT THIS OFFICE SHOULD CAUSE SBA TO FURTHER CONSIDER THE QUESTION OF ISSUING A COC TO OAS, IT SHOULD BE NOTED THAT THE AUTHORITY TO CERTIFY THE COMPETENCY OF A SMALL BUSINESS CONCERN WAS VESTED IN SBA BY THE CONGRESS. WE HAVE NO STATUTORY AUTHORITY ON WHICH TO COMPEL SBA TO EITHER REVIEW ITS PRIOR DECISION ON OAS'S APPLICATION FOR A COC, OR TO REOPEN THE MATTER ON THE BASIS OF THE NEW DELIVERY SCHEDULE OFFERED OAS BY ITS PROPOSED MAJOR SUBCONTRACTOR. ALTHOUGH, SBA HAS, ON OCCASION, VOLUNTEERED TO REOPEN A DECISION DENYING A COC, WHERE THE BASIS FOR THE DECISION WAS IN DISPUTE AND WAS INVOLVED IN A PROTEST BEFORE THIS OFFICE (SEE 47 COMP. GEN. 291 (1967)), IT IS EVIDENT FROM YOUR STATEMENTS THAT SBA HAS NOT ELECTED TO REOPEN THE COC MATTER IN THIS CASE WITHOUT A FURTHER REFERRAL FROM THE CONTRACTING OFFICER.

WHILE ASPR 1-905.2 CONTEMPLATES THAT ACTION TO OBTAIN INFORMATION REGARDING THE RESPONSIBILITY OF A PROSPECTIVE CONTRACTOR SHALL BE TAKEN PROMPTLY AFTER BID OPENING, A BIDDER'S RESPONSIBILITY SHOULD BE MEASURED, AS A GENERAL RULE, WITH RESPECT TO THE INFORMATION OF RECORD AT TIME OF AWARD RATHER THAN AN EARLIER TIME. SEE 41 COMP. GEN. 302 (1961) AND B- 171095, MAY 4, 1971. WITH RESPECT TO A BIDDER'S PERFORMANCE CAPABILITY, ASPR 1-905.2 FURTHER REQUIRES THAT INFORMATION PERTAINING THERETO BE OBTAINED ON AS CURRENT A BASIS AS FEASIBLE WITH RELATION TO THE DATE OF CONTRACT AWARD. INFREQUENTLY, WE HAVE INDICATED TO AN AGENCY OUR VIEW THAT, TIME PERMITTING, FURTHER CONSIDERATION OF A DETERMINATION OF NONRESPONSIBILITY WOULD BE DESIRABLE BECAUSE OF A MATERIAL CHANGE IN A PRINCIPAL FACTOR ON WHICH THE DETERMINATION WAS BASED, 49 COMP. GEN. 619 (1970). HOWEVER, IN OUR ACTIONS AND DECISIONS INVOLVING AN ISSUE OF RESPONSIBILITY, WE HAVE CONSISTENTLY RECOGNIZED THAT THE PROJECTION OF A BIDDER'S ABILITY TO PERFORM IF AWARDED A CONTRACT MUST PROPERLY BE LEFT BY OUR OFFICE LARGELY TO THE SOUND ADMINISTRATIVE DISCRETION OF THE CONTRACTING OFFICES INVOLVED, SINCE THEY ARE IN THE BEST POSITION TO ASSESS RESPONSIBILITY AND MUST BEAR THE BRUNT OF ANY DIFFICULTIES EXPERIENCED BY REASONS OF THE CONTRACTOR'S LACK OF ABILITY TO PERFORM IN THE TIME AND MANNER REQUIRED, 39 COMP. GEN. 705, 711 (1960).

WE ALSO RECOGNIZE THAT PROCUREMENTS SHOULD BE PROCESSED IN AN ORDERLY AND EFFICIENT MANNER, AND THAT THERE COMES A TIME WHEN AN AWARD MUST BE MADE ON THE BASIS OF THE FACTS AT HAND. IT IS NOT THE INTENTION OF THIS OFFICE TO UNDULY INTERFERE WITH THE TIMELY PROCESSING OF PROCUREMENTS BY THE AGENCIES, AND WE HAVE HELD THAT OUR BID PROTEST PROCEDURES SHOULD NOT BE PERMITTED TO BE USED AS A MEANS FOR DELAYING CONTRACT AWARDS TO GAIN TIME FOR A BIDDER TO IMPROVE ITS POSITION AFTER A CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY, FOR REASONS PERTAINING TO CAPACITY, HAS BEEN CONFIRMED THROUGH A DENIAL OF A COC BY SBA, 49 COMP. GEN. 619 (1970), SUPRA. WE BELIEVE THAT THIS PRINCIPLE IS FOR APPLICATION HERE. SHOWN ABOVE, SBA DECLINED TO ISSUE A COC ON OAS, A PROTEST WAS THEN FILED WITH THIS OFFICE AND A NEW DELIVERY SCHEDULE WAS THEREAFTER OBTAINED FROM THE PROPOSED SUPPLIER OF THE MAJOR COMPONENT.

WE HAVE BEEN INFORMALLY ADVISED THAT IT IS THE POSITION OF THE CONTRACTING OFFICER THAT HE SHOULD NOT ASK SBA TO REOPEN THE COC ISSUE, UNLESS HE FIRST OBTAINS A FURTHER SURVEY REPORT ON OAS (INCLUDING THE ASCERTAINMENT OF WHETHER ITS PRINCIPAL SUBCONTRACTOR COULD MEET ITS SHORTENED DELIVERY SCHEDULE) AND AGAIN DETERMINES THAT OAS IS NONRESPONSIBLE. SUCH ACTIONS WOULD NOT APPEAR TO BE CONTRARY TO ASPR 1 705.4(C), SUPRA, WHICH PROVIDES FOR COC REFERRALS TO SBA AFTER THE CONTRACTING OFFICER HAS DETERMINED THE PROSPECTIVE CONTRACTOR TO BE NONRESPONSIBLE. WE HAVE BEEN FURTHER ADVISED BY THE CONTRACTING AGENCY THAT THE ADDITIONAL DELAY IN AWARDING THE CONTRACT, WHICH WOULD BE OCCASIONED BY SUCH ACTIONS, IS NOT PERMISSIBLE SINCE THE NEED FOR THE EQUIPMENT IS NOW URGENT AND IT IS IMPERATIVE THAT AWARD BE MADE IN THE IMMEDIATE FUTURE.

IN VIEW OF THE FOREGOING, WE DO NOT BELIEVE THE RECORD PROVIDES THIS OFFICE WITH AN ADEQUATE BASIS FOR OBJECTING TO AN AWARD TO THE NEXT LOW RESPONSIVE BIDDER WHICH THE CONTRACTING OFFICER HAS DETERMINED TO BE RESPONSIBLE. ACCORDINGLY, YOUR PROTEST IS DENIED.