B-175751, AUG 17, 1972

B-175751: Aug 17, 1972

Additional Materials:

Contact:

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

 

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

THAT WALCO WAS NONRESPONSIBLE MUST BE REGARDED TO HAVE BEEN AFFIRMED BY THE SBA'S LATER DECISION. IT APPEARS TO BE SUPPORTED BY EVIDENCE OF RECORD AND IS NEITHER ARBITRARY NOR CAPRICIOUS. TO WALCO MANUFACTURING COMPANY: REFERENCE IS MADE TO YOUR LETTERS OF APRIL 17 AND JUNE 22. TWENTY-FIVE PERCENT OF THE PROCUREMENT WAS SCHEDULED FOR USE BY THE MILITARY IN SOUTHEAST ASIA. NINE BIDS WERE RECEIVED AND OPENED ON THE SCHEDULED OPENING DATE. THE PERTINENT BIDS WERE AS FOLLOWS: BID PRICE WALCO MFG. TO MAKE A PREAWARD SURVEY OF WALCO MANUFACTURING COMPANY (WALCO) SINCE HE DID NOT HAVE ANY INFORMATION ON FILE FOR DETERMINING WALCO'S RESPONSIBILITY. "NO AWARD" WAS UNANIMOUSLY RECOMMENDED BY THE PREAWARD SURVEY BOARD.

B-175751, AUG 17, 1972

BID PROTEST - NONRESPONSIBLE BIDDER - SBA REFUSAL TO ISSUE COC DENIAL OF PROTEST BY WALCO MANUFACTURING COMPANY AGAINST THE AWARD OF A CONTRACT TO FT. WAYNE TRUCK PARTS AND EQUIPMENT COMPANY BY THE U.S. ARMY TANK AUTOMOTIVE COMMAND (TACOM), WARREN, MICH. THE DETERMINATION BY THE CONTRACTING OFFICER, ON THE BASIS OF TWO PREAWARD SURVEYS, THAT WALCO WAS NONRESPONSIBLE MUST BE REGARDED TO HAVE BEEN AFFIRMED BY THE SBA'S LATER DECISION, BASED ON "ALL AVAILABLE INFORMATION," NOT TO ISSUE THE FIRM A CERTIFICATE OF COMPETENCY (COC). GAO REGARDS SBA'S REFUSAL TO ISSUE WALCO THE COC AS PERSUASIVE WITH RESPECT TO THE COMPETENCY OR CREDIT OF THE FIRM. SEE 39 COMP. GEN. 705 (1960). FURTHER, GAO HAS NO AUTHORITY TO REVIEW A DETERMINATION OF THE SBA NOT TO ISSUE A COC WHERE, AS HERE, IT APPEARS TO BE SUPPORTED BY EVIDENCE OF RECORD AND IS NEITHER ARBITRARY NOR CAPRICIOUS. SEE B 166942, JULY 28, 1969.

TO WALCO MANUFACTURING COMPANY:

REFERENCE IS MADE TO YOUR LETTERS OF APRIL 17 AND JUNE 22, 1972, PROTESTING AGAINST THE AWARD OF A CONTRACT TO FT. WAYNE TRUCK PARTS AND EQUIPMENT COMPANY (FT. WAYNE), UNDER INVITATION FOR BIDS DAAE07-72-B 0840, ISSUED DECEMBER 27, 1971, BY THE U.S. ARMY TANK AUTOMOTIVE COMMAND (TACOM), WARREN, MICHIGAN.

THE INVITATION SOLICITED BIDS ON "11,645 EACH, TORQUE ROD ASSEMBLY, TANDEM AXLE," HAVING AN ISSUE PRIORITY DESIGNATOR OF "06." TWENTY-FIVE PERCENT OF THE PROCUREMENT WAS SCHEDULED FOR USE BY THE MILITARY IN SOUTHEAST ASIA. NINE BIDS WERE RECEIVED AND OPENED ON THE SCHEDULED OPENING DATE, JANUARY 18, 1972. THE PERTINENT BIDS WERE AS FOLLOWS:

BID PRICE

WALCO MFG. CO. $148,706.65

(LOW BID)

FT. WAYNE $156,508.80

(SECOND-LOW BID)

THE CONTRACTING OFFICER REQUESTED THE DEFENSE CONTRACT ADMINISTRATION SERVICES REGION (DCASR), DETROIT, MICHIGAN, TO MAKE A PREAWARD SURVEY OF WALCO MANUFACTURING COMPANY (WALCO) SINCE HE DID NOT HAVE ANY INFORMATION ON FILE FOR DETERMINING WALCO'S RESPONSIBILITY. A PREAWARD SURVEY REPORT, S2302A21030PN, DATED FEBRUARY 11, 1972, FOUND WALCO TO BE UNSATISFACTORY IN THE FOLLOWING AREAS:

1. TECHNICAL CAPABILITY

2. PRODUCTION CAPABILITY

3. PLANT FACILITIES AND EQUIPMENT

4. PURCHASING AND SUBCONTRACTING

5. QUALITY ASSURANCE CAPABILITY

6. LABOR SOURCE

7. ABILITY TO MEET REQUIRED SCHEDULE

AS A RESULT, "NO AWARD" WAS UNANIMOUSLY RECOMMENDED BY THE PREAWARD SURVEY BOARD.

AT YOUR REQUEST, IN A LETTER TO TACOM DATED FEBRUARY 23, 1972, A RESURVEY WAS CONDUCTED. THE REPORT ON THE SECOND PREAWARD SURVEY, DATED MARCH 10, 1972, INDICATED THAT CONDITIONS EXISTING AT THE TIME THE ORIGINAL SURVEY WAS PERFORMED REMAINED UNCHANGED AND AGAIN RECOMMENDED "NO AWARD" BE MADE TO WALCO. AFTER CONSIDERING AND EVALUATING ALL AVAILABLE INFORMATION, THE CONTRACTING OFFICER DETERMINED THAT WALCO WAS NONRESPONSIBLE BECAUSE OF FACTORS INVOLVING THE FIRM'S CAPACITY TO PERFORM THE REQUIREMENTS AS SPECIFIED. THEREAFTER, ON MARCH 13, 1972, THE CONTRACTING OFFICER REFERRED THE MATTER OF WALCO'S CAPACITY AND CREDIT TO THE SMALL BUSINESS ADMINISTRATION (SBA), PURSUANT TO ARMED SERVICES PROCUREMENT REGULATIONS (ASPR) 1-705.4, FOR A POSSIBLE ISSUANCE OF A CERTIFICATE OF COMPETENCY (COC). IN A LETTER DATED APRIL 4, 1972, THE SBA DECLINED TO ISSUE WALCO A COC.

BY YOUR LETTER DATED APRIL 10, 1972, TO TACOM, YOU CLAIMED TO HAVE NEW INFORMATION DEMONSTRATING WALCO'S RESPONSIBILITY (FOR EXAMPLE, A NEW SUBCONTRACTOR WHO COULD ADEQUATELY MEET THE DELIVERY REQUIREMENTS). APRIL 17, 1972, THE CONTRACTING OFFICER DETERMINED WALCO TO BE NONRESPONSIBLE WITHIN THE MEANING OF ASPR 1-902 AND 1-903. THE NONRESPONSIBILITY DETERMINATION WAS MADE, EVEN THOUGH "NEW" INFORMATION WAS ALLEGED, BECAUSE OF THE URGENT NEED FOR THE SUPPLIES WHICH COULD NOT STAND FURTHER DELAY, THE SPECULATIVE NATURE OF THE NEW INFORMATION AND THE PREVIOUS INABILITY OF WALCO TO DEMONSTRATE ITS CAPABILITY TO EITHER THE ARMY OR THE SBA. AS A RESULT, ON APRIL 17, 1972, THE CONTRACT WAS AWARDED TO FT. WAYNE.

YOU CONTEND THAT DCASR, DETROIT, MICHIGAN, WAS BIASED AGAINST WALCO BECAUSE IT REJECTED THE BID OF AN ADEQUATELY EQUIPPED AND MANAGED COMPANY, THAT WAS CAPABLE OF PRODUCING THE REQUIRED SUPPLIES, BASED ON REASONS WHICH YOU FIND TO BE UNCOMPREHENSIBLE. IN SUPPORT OF YOUR ASSERTION, YOU SAY THAT THE SBA'S DENIAL TO ISSUE A COC WAS BASED ON DIFFERENT GROUNDS THAN THOSE USED BY THE CONTRACTING OFFICER IN REJECTING WALCO'S BID.

FINALLY, YOU ARGUE THAT THE LENGTHY PERIOD NEEDED TO DETERMINE AWARD OF THE CONTRACT (90 DAYS) PROVIDED WALCO WITH SUFFICIENT TIME TO OBTAIN NEW INFORMATION (A NEW SUBCONTRACTOR PROVIDING SHORTER PROMISED DELIVERY DATES) THEREBY MAKING WALCO A RESPONSIBLE BIDDER. YOU CONTEND THAT THE CONTRACTING OFFICER'S DETERMINATION OF WALCO'S NONRESPONSIBILITY AND AWARD OF A CONTRACT TO FT. WAYNE IN THE LIGHT OF THE NEW INFORMATION MADE AVAILABLE WAS AN UNREASONABLE AND UNFAIR ACTION WHICH DEPRIVED THE GOVERNMENT OF CONSIDERABLE SAVINGS.

THE U.S. ARMY MATERIEL COMMAND STATES IN ITS ADMINISTRATIVE REPORT THAT WALCO'S BID WAS NOT REJECTED BECAUSE THE GOVERNMENT HARBORED "PREJUDICED ATTITUDES" TOWARDS ANY OFFICIAL OF YOUR FIRM, BUT THAT WALCO WAS DETERMINED TO BE NONRESPONSIBLE BECAUSE IT WAS FOUND UNSATISFACTORY IN SEVEN FACTORS INVESTIGATED IN BOTH PREAWARD SURVEYS. IN ADDITION, IT IS REPORTED THAT THE SBA, CONTRARY TO YOUR ALLEGATION THAT ADEQUATE NEW GROUNDS WERE PRESENTED FOR A FINDING OF RESPONSIBILITY, ADOPTED THE CONTRACTING OFFICER'S REASONS FOR FINDING WALCO NONRESPONSIBLE IN DENYING TO ISSUE A COC "BASED ON THE COMPREHENSIVE ANALYSIS OF ALL AVAILABLE INFORMATION."

OUR OFFICE IS OF THE VIEW THAT THE REFUSAL OF THE SBA TO ISSUE A COC TO A SMALL BUSINESS CONCERN MUST BE REGARDED AS PERSUASIVE WITH RESPECT TO THE COMPETENCY OR CREDIT OF THE BIDDER CONCERNED. SEE 39 COMP. GEN. 705 (1960). WHEN THE ISSUANCE OF A COC IS DENIED, THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY MUST BE REGARDED AS HAVING BEEN AFFIRMED. WE HAVE NO AUTHORITY TO REVIEW A DETERMINATION OF THE SBA, OR TO REQUIRE IT TO ISSUE A COC, NOR WILL WE DISTURB THE DETERMINATION OF A CONTRACTING OFFICER WHERE, AS HERE, IT APPEARS TO BE SUPPORTED BY EVIDENCE OF RECORD AND IS NEITHER ARBITRARY NOR CAPRICIOUS. SEE B-166942, JULY 28, 1969; B-164513, OCTOBER 17, 1968; B 164069, JUNE 20, 1968. SINCE YOU HAVE OFFERED ONLY YOUR UNSUPPORTED ALLEGATIONS TO SUBSTANTIATE YOUR CLAIMS OF BIAS, THERE IS NO VALID BASIS OF RECORD UPON WHICH WE MAY HOLD THAT IMPROPER CONSIDERATIONS WERE INVOLVED IN THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY.

REGARDING YOUR CONTENTION THAT THE CONTRACTING OFFICER'S DECISION NOT TO FURTHER DELAY HIS DETERMINATION OF WALCO'S NONRESPONSIBILITY AND THE SUBSEQUENT REWARDING OF THE CONTRACT TO FT. WAYNE WERE ARBITRARY ACTIONS, OUR OFFICE RECOGNIZES THAT THE AWARDING OF CONTRACTS SHOULD BE PROCESSED IN AN ORDERLY AND EFFICIENT MANNER, AND THERE COMES A TIME WHEN AN AWARD MUST BE MADE ON THE BASIS OF THE FACTS AT HAND. IN THIS REGARD, IT HAS BEEN REPORTED THAT DURING THE INITIAL PERIOD FOR EVALUATING THE PROPOSALS TACOM PLACED THE SUBJECT ITEM ON "THE TOP TEN MOST URGENT ITEMS." WE HAVE BEEN FURTHER ADVISED BY THE CONTRACTING AGENCY THAT AN ADDITIONAL DELAY IN AWARDING THE CONTRACT WHICH WOULD HAVE BEEN NECESSITATED BY A THIRD PREAWARD SURVEY AND A POSSIBLE SECOND REFERRAL TO THE SBA WOULD NOT HAVE BEEN PERMISSIBLE SINCE THE NEED FOR THE EQUIPMENT HAD BECOME SO URGENT THAT IT WAS IMPERATIVE THAT THE AWARD BE MADE AS SOON AS POSSIBLE.

IN VIEW OF THE FOREGOING, WE MUST CONCLUDE THAT THE RECORD DOES NOT PROVIDE THIS OFFICE WITH AN ADEQUATE BASIS FOR OBJECTING TO THE AWARD TO FT. WAYNE. ACCORDINGLY, YOUR PROTEST IS DENIED.