B-174970, FEB 29, 1972

B-174970: Feb 29, 1972

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DETERMINATIONS OF NONRESPONSIBILITY WILL ONLY BE CONSIDERED WHERE EVIDENCE INDICATES THAT THE DECISION OF THE CONTRACTING OFFICER WAS ARBITRARY. THE MATTER WAS THEN REFERRED TO THE SMALL BUSINESS ADMINISTRATION (SBA). THE TIME ALLOWED A CONTRACTOR TO SUBMIT SUPPORTIVE DATA FOR POSSIBLE ISSUANCE OF A COC IS DETERMINED SOLELY BY THE SBA (B-152198. THE CONTRACTING OFFICER'S DECISION IS BEYOND OBJECTION AND THE PROTEST MUST BE DENIED. INCORPORATED: FURTHER REFERENCE IS MADE TO YOUR LETTER (REFERENCE 71483) RECEIVED BY OUR OFFICE ON JANUARY 18. THE INVITATION WAS ISSUED ON JULY 21. EIGHT BIDS WERE RECEIVED BY THE CLOSING DATE OF OCTOBER 4. YOUR FIRM WAS THE NEXT LOW BIDDER. THE SURVEY WAS CONDUCTED BY THE DEFENSE CONTRACT ADMINISTRATION SERVICE DIVISION (DCASD).

B-174970, FEB 29, 1972

BID PROTEST - NONRESPONSIBILITY - FAILURE TO SUBMIT COC APPLICATION AND SUPPORTIVE DATA DECISION DENYING PROTEST OF STEWART-THOMAS INDUSTRIES, INC., AGAINST AWARD OF A CONTRACT TO ANY OTHER BIDDER UNDER AN IFB ISSUED BY THE NAVAL AIR ENGINEERING CENTER, PHILADELPHIA, PA., FOR THE PROCUREMENT OF MUNITION TRAILERS AND DATA. AS A GENERAL RULE, DETERMINATIONS OF NONRESPONSIBILITY WILL ONLY BE CONSIDERED WHERE EVIDENCE INDICATES THAT THE DECISION OF THE CONTRACTING OFFICER WAS ARBITRARY, CAPRICIOUS, OR FRAUDULENT. 45 COMP. GEN. 4 (1965). IN THE INSTANT CASE, A PREAWARD SURVEY CONDUCTED BY THE DEFENSE CONTRACT ADMINISTRATION SERVICE, PURSUANT TO ASPR 1-905.4, RESULTED IN A RECOMMENDATION OF NO AWARD BASED ON PROTESTANT'S INADEQUATE FINANCIAL CAPACITY. AS REQUIRED BY ASPR 1-705.4(C)(II), THE MATTER WAS THEN REFERRED TO THE SMALL BUSINESS ADMINISTRATION (SBA), WHICH CLOSED THE CASE BECAUSE PROTESTANT FAILED TO FILE AN APPLICATION FOR A CERTIFICATE OF COMPETENCY (COC). THE TIME ALLOWED A CONTRACTOR TO SUBMIT SUPPORTIVE DATA FOR POSSIBLE ISSUANCE OF A COC IS DETERMINED SOLELY BY THE SBA (B-152198, NOVEMBER 6, 1963), AND THE COMP. GEN. HAS CONSISTENTLY REFUSED TO QUESTION A DETERMINATION OF NONRESPONSIBILITY BASED ON THE BIDDER'S FAILURE TO FURNISH SUCH DATA. B-160562 OF APRIL 19, 1967. IN VIEW OF THE FOREGOING, THE CONTRACTING OFFICER'S DECISION IS BEYOND OBJECTION AND THE PROTEST MUST BE DENIED.

TO STEWART-THOMAS INDUSTRIES, INCORPORATED:

FURTHER REFERENCE IS MADE TO YOUR LETTER (REFERENCE 71483) RECEIVED BY OUR OFFICE ON JANUARY 18, 1972, PROTESTING AGAINST ANY AWARD OTHER THAN TO YOUR FIRM UNDER INVITATION FOR BIDS N00156-71-B-0488, ISSUED BY THE NAVAL AIR ENGINEERING CENTER, PHILADELPHIA, PENNSYLVANIA.

THE INVITATION WAS ISSUED ON JULY 21, 1971, FOR THE PROCUREMENT OF TEN MUNITION TRAILERS AND CERTAIN DATA. EIGHT BIDS WERE RECEIVED BY THE CLOSING DATE OF OCTOBER 4, 1971. AFTER THE DISQUALIFICATION OF ONE BIDDER AS BEING NONRESPONSIBLE, YOUR FIRM WAS THE NEXT LOW BIDDER. THE CONTRACTING OFFICER REQUESTED A PREAWARD SURVEY OF YOUR FIRM PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-905.4. THE SURVEY WAS CONDUCTED BY THE DEFENSE CONTRACT ADMINISTRATION SERVICE DIVISION (DCASD), GARDEN CITY, NEW YORK, WHICH SUBMITTED ITS REPORT ON DECEMBER 2, 1971, RECOMMENDING NO AWARD. THE NEGATIVE RECOMMENDATION WAS BASED PRIMARILY UPON THE SURVEY TEAM'S CONCLUSION THAT YOUR FIRM LACKED THE NECESSARY FINANCIAL CAPACITY. THE DCASD FINANCIAL ANALYST CONCLUDED THAT ATTEMPTS TO INCREASE YOUR PRODUCTION OUTPUT WOULD PROBABLY CAUSE A FINANCIAL STRAIN ON THE COMPANY. SPECIFICALLY, HE FOUND A HEAVY DEBT RATIO WHICH WAS AGGRAVATED BY A DECLARATION OF A LARGE DIVIDEND. ALSO, A LARGE PORTION OF WORKING CAPITAL AND NEW LOAN MONEY WOULD HAVE TO BE USED FOR IMPLEMENTATION OF INVENTORY FOR BACKLOG AND THE PROPOSED CONTRACT. IN THE ABSENCE OF FINANCIAL DATA, HE CONCLUDED THAT NO DETERMINATION COULD BE MADE AS TO ADEQUACY OF WORKING CAPITAL FOR THE INITIAL CONTRACT OPERATION. FINALLY, HE FOUND THAT THE PROPOSED LOAN WOULD REQUIRE INTEREST PAYMENTS WHICH WOULD REPRESENT AN ADDITIONAL EXPENSE, CONCEIVABLY CAUSING A LOSS ON THE PROPOSED CONTRACT. AS REQUIRED BY ASPR 1- 705.4(C)(II) THE MATTER WAS REFERRED TO THE SMALL BUSINESS ADMINISTRATION (SBA) FOR CERTIFICATE OF COMPETENCY (COC) CONSIDERATION. ON JANUARY 20, 1972, THE CONTRACTING OFFICER WAS ADVISED BY SBA THAT SINCE YOUR FIRM HAD FAILED TO FILE A COC APPLICATION THE CASE WAS BEING CLOSED. BASED PRIMARILY UPON THE PREAWARD SURVEY TEAM'S CONCLUSION THAT YOU LACK SUFFICIENT FINANCIAL CAPACITY TO PERFORM THE CONTRACT, THE CONTRACTING OFFICER THEN MADE THE DETERMINATION THAT YOUR FIRM WAS NONRESPONSIBLE.

IT IS YOUR CONTENTION THAT THE SBA DID NOT ALLOW YOUR FIRM SUFFICIENT TIME TO FILL OUT THE FORMS WHICH ACCOMPANY AN APPLICATION FOR ISSUANCE OF A CERTIFICATE OF COMPETENCY. OUR OFFICE HAS HELD THAT THE AMOUNT OF TIME TO BE ALLOWED A PROSPECTIVE CONTRACTOR FOR THE SUBMISSION OF EVIDENCE IN SUPPORT OF A CERTIFICATE OF COMPETENCY IS FOR DETERMINATION BY THE SBA. -152198, NOVEMBER 6, 1963. ALSO, OUR OFFICE HAS REFUSED TO QUESTION THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY WHERE THE CONTRACTOR FAILED TO FURNISH SBA THE DOCUMENTATION WHICH IS REQUESTED AS A BASIS FOR AN INDEPENDENT INVESTIGATION OF THE MATTER. SEE 37 COMP. GEN. 703, 705 (1958); B 160562, APRIL 19, 1967.

IT IS YOUR FURTHER CONTENTION THAT SINCE YOU HAD ACCESS TO ADEQUATE FINANCIAL SUPPORT, THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY BASED UPON FINANCIAL CONSIDERATIONS WAS ERRONEOUS.

IN REGARD TO THE DETERMINATION OF THE RESPONSIBILITY OF A PROSPECTIVE CONTRACTOR, THE AUTHORITIES ARE IN AGREEMENT THAT THE OFFICERS IN WHOM THE POWER IS VESTED TO DETERMINE "RESPONSIBILITY" MUST DETERMINE THE FACT AND SUCH DETERMINATION CANNOT BE SET ASIDE UNLESS THE ACTION WAS ARBITRARY, CAPRICIOUS OR FRAUDULENT. DETERMINATION OF THE LOWEST RESPONSIBLE BIDDER IS TO BE MADE BY THE AUTHORIZED OFFICIAL OF THE CONTRACTING AGENCY, WHO IS REQUIRED TO ACT FAIRLY UPON REASONABLE INFORMATION WHICH SUPPORTS THE DETERMINATION MADE. WHEN SUCH OFFICIAL DETERMINES THE RESPONSIBILITY OF A BIDDER, SUCH DETERMINATION CANNOT BE OVERTHROWN BY THE COURTS OR OUR OFFICE UNLESS IT CAN BE HELD THAT THE DETERMINATION WAS ARBITRARY, CAPRICIOUS OR FRAUDULENT. 45 COMP. GEN. 4 (1965). THUS, THE ONLY QUESTION FOR CONSIDERATION IS WHETHER THE DETERMINATION ADMINISTRATIVELY MADE OF YOUR NONRESPONSIBILITY MEETS THE CRITERIA DISCUSSED. PARAGRAPH 1- 902 OF ASPR PROVIDES PURCHASES SHALL BE AWARDED ONLY TO RESPONSIBLE PROSPECTIVE CONTRACTORS. ASPR 1-904.1 REQUIRES THE CONTRACTING OFFICER TO MAKE A DECISION REGARDING THE RESPONSIBILITY OF THE PROSPECTIVE CONTRACTOR. THIS REGULATION FURTHER PROVIDES THAT THIS DETERMINATION OF RESPONSIBILITY IS TO BE MADE WITHIN THE FRAMEWORK OF ASPR 1-902 AND ASPR 1 -903. ASPR 1-903 PROVIDES FOR MINIMUM STANDARDS FOR RESPONSIBLE PROSPECTIVE CONTRACTORS. ASPR 1 903.1(I) PROVIDES THAT PROSPECTIVE CONTRACTORS MUST HAVE ADEQUATE FINANCIAL RESOURCES, OR THE ABILITY TO OBTAIN SUCH RESOURCES AS REQUIRED DURING PERFORMANCE OF THE CONTRACT.

THEREFORE, IN VIEW OF THE DCASD SURVEY DATED DECEMBER 2, 1971, AND AS YOUR FIRM DID NOT AVAIL ITSELF OF THE OPPORTUNITY AFFORDED BY LAW AND REGULATION TO HAVE SBA CONSIDER THE MATTER OF ITS COMPETENCY TO PERFORM THE PROCUREMENT, WE FIND NO LEGAL BASIS TO QUESTION REJECTION OF YOUR BID.

ACCORDINGLY, YOUR PROTEST IS DENIED.