B-175845, MAR 9, 1973

B-175845: Mar 9, 1973

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GAO WILL NOT SUBSTITUTE ITS JUDGMENT FOR THAT OF THE CONTRACTING AGENCY AS TO A BIDDER'S RESPONSIBILITY UNLESS IT IS SHOWN BY CONVINCING EVIDENCE THAT THE DETERMINATION WAS NOT REASONABLE UNDER THE PARTICULAR CIRCUMSTANCES. 45 COMP. THE SUBJECT INVITATION WAS ISSUED ON MARCH 3. THE FOLLOWING FOUR BIDS WERE RECEIVED AND OPENED: WASHINGTON MOVING & STORAGE COMPANY $1. A PREAWARD SURVEY WAS ALSO CONDUCTED AT WASHINGTON'S DISTRICT OF COLUMBIA FACILITY ON APRIL 19. THE CONTRACTING OFFICER CONCLUDED ON THE BASIS OF THE DISTRICT OF COLUMBIA SURVEY THAT WASHINGTON'S BID WAS RESPONSIVE AND DETERMINED THAT WASHINGTON WAS A RESPONSIBLE BIDDER. WAS ALSO RECEIVED BY NASA FROM THE ACTING REGIONAL ADMINISTRATOR.

B-175845, MAR 9, 1973

BID PROTEST - RESPONSIBILITY DECISION DENYING THE PROTEST OF WASHINGTON MOVING AND STORAGE COMPANY, INC., AGAINST THE AWARD OF A CONTRACT TO ANY OTHER FIRM UNDER AN IFB ISSUED BY THE GODDARD SPACE FLIGHT CENTER, NASA. GAO WILL NOT SUBSTITUTE ITS JUDGMENT FOR THAT OF THE CONTRACTING AGENCY AS TO A BIDDER'S RESPONSIBILITY UNLESS IT IS SHOWN BY CONVINCING EVIDENCE THAT THE DETERMINATION WAS NOT REASONABLE UNDER THE PARTICULAR CIRCUMSTANCES. 45 COMP. GEN. 4 (1965). MOREOVER, CIRCUMSTANCES WHICH WOULD BE CAUSE FOR DEBARMENT OR SUSPENSION COULD WELL SUPPORT A DETERMINATION OF NONRESPONSIBILITY. SEE 39 COMP. GEN. 868, 872 (1960).

TO CADWALADER, WICKERSHAM & TAFT:

WE REFER TO YOUR LETTER, WITH ENCLOSURE, DATED NOVEMBER 14, 1972, PROTESTING ON BEHALF OF WASHINGTON MOVING AND STORAGE COMPANY, INCORPORATED, AGAINST THE AWARD OF A CONTRACT TO ANOTHER FIRM UNDER INVITATION FOR BIDS 5-51330/665, ISSUED BY THE GODDARD SPACE FLIGHT CENTER, NATIONAL AERONAUTICS AND SPACE ADMINISTRATION (NASA).

THE SUBJECT INVITATION WAS ISSUED ON MARCH 3, 1972, FOR TRANSPORTATION, WAREHOUSING AND RIGGING SERVICES. ON THE EXTENDED OPENING DATE OF APRIL 13, 1972, THE FOLLOWING FOUR BIDS WERE RECEIVED AND OPENED:

WASHINGTON MOVING & STORAGE COMPANY $1,493,958.68

JACOBS TRANSFER, INCORPORATED 1,509,094.11

KANE TRANSFER COMPANY 1,587,767.48

HOFFMAN TRUCKING COMPANY 1,614,584.69

BY TELEFAX DATED APRIL 14, 1972, JACOBS PROTESTED TO THE CONTRACTING OFFICER AGAINST THE PROPOSED AWARD TO WASHINGTON, THE LOW BIDDER, AND BY LETTER DATED APRIL 19, 1972, COUNSEL FOR JACOBS URGED THAT CONSIDERATION BE GIVEN TO THE ADEQUACY OF WASHINGTON'S FINANCIAL RESOURCES, WASHINGTON'S COMPLIANCE WITH THE SERVICE CONTRACT ACT OF 1965 AND ITS STIPULATION CONCERNING THAT ACT IN DEPARTMENT OF LABOR CASE #SCA-118, AND WASHINGTON'S RECORD OF PERFORMANCE ON OTHER GOVERNMENT CONTRACTS PARTICULARLY GS-03T- 571 (POST OFFICE) AND GS-03T 515 (NAVY DEPARTMENT).

ON APRIL 17, NASA PROCUREMENT PERSONNEL REQUESTED THE DEFENSE CONTRACT ADMINISTRATION SERVICES REGIONAL OFFICE, NEW YORK CITY, TO CONDUCT A PREAWARD SURVEY AT WASHINGTON'S OFFICE LOCATED IN NEW YORK. A PREAWARD SURVEY WAS ALSO CONDUCTED AT WASHINGTON'S DISTRICT OF COLUMBIA FACILITY ON APRIL 19, 1972.

BY A REPORT DATED APRIL 26, 1972, THE CONTRACTING OFFICER CONCLUDED ON THE BASIS OF THE DISTRICT OF COLUMBIA SURVEY THAT WASHINGTON'S BID WAS RESPONSIVE AND DETERMINED THAT WASHINGTON WAS A RESPONSIBLE BIDDER. RECOMMENDED THAT JACOBS' PROTEST BE DENIED.

SUBSEQUENTLY, NASA HEADQUARTERS RECEIVED THE NEW YORK FACILITY REPORT DATED MAY 12, 1972, WHICH CONTAINS NEGATIVE RECOMMENDATIONS FROM THE INDUSTRIAL SPECIALIST, THE TRANSPORTATION AND PACKAGING SPECIALIST, AND THE FINANCIAL ANALYST, BUT DOES NOT CONTAIN AN OVERALL RECOMMENDATION BECAUSE OF THE INABILITY OF THE GOVERNMENT INVESTIGATORS TO OBTAIN CERTAIN DOCUMENTS AND BECAUSE OF CERTAIN CONTRADICTORY AND INCONSISTENT INFORMATION.

IN ADDITION, NASA RECEIVED A LETTER DATED JUNE 9, 1972, FROM THE DEPUTY ADMINISTRATOR, EMPLOYMENT STANDARDS ADMINISTRATION, DEPARTMENT OF LABOR, SUMMARIZING THAT AGENCY'S FINDINGS REGARDING WASHINGTON'S ALLEGED FAILURE TO COMPLY WITH APPLICABLE FEDERAL LABOR LAWS WHILE PERFORMING UNDER A NASA CONTRACT. A LETTER DATED JUNE 12, 1972, WAS ALSO RECEIVED BY NASA FROM THE ACTING REGIONAL ADMINISTRATOR, EMPLOYMENT STANDARDS ADMINISTRATION, WAGE AND HOUR DIVISION, REQUESTING NASA TO WITHHOLD CERTAIN SUMS UNDER PRIOR AND EXISTING CONTRACTS WITH WASHINGTON PENDING COMPLETION OF LABOR'S CONTEMPLATED LEGAL ACTION.

IN VIEW OF THESE DEVELOPMENTS, WE ARE INFORMED BY NASA THAT THE CONTRACTING OFFICER WAS NO LONGER ABLE TO MAKE AN AFFIRMATIVE DETERMINATION OF RESPONSIBILITY AS REQUIRED BY NASA PROCUREMENT REGULATION (PR) 1.904-1 AND, SINCE WASHINGTON IS A SMALL BUSINESS, THE MATTER WAS REFERRED TO THE SMALL BUSINESS ADMINISTRATION (SBA) FOR ITS REVIEW PURSUANT TO NASA PR 1.705-4(C)(VI). BY LETTER DATED JULY 25, 1972, THE SBA DECLINED TO ISSUE A CERTIFICATE OF COMPETENCY (COC). SUBSEQUENTLY, ON AUGUST 9, 1972, THE DEPARTMENT OF LABOR INITIATED DEBARMENT PROCEEDINGS AGAINST WASHINGTON (UNITED STATES DEPARTMENT OF LABOR NO. SCA-168).

LATER, ON JANUARY 23, 1973, NASA RECEIVED A COPY OF A PROPOSED STIPULATION TO BE EXECUTED BY REPRESENTATIVES OF WASHINGTON AND THE DEPARTMENT OF LABOR. THE STIPULATION INDICATES THAT WASHINGTON FAILED TO PAY REQUIRED MINIMUM WAGES AND FRINGE BENEFITS TOTALING $9,540.77 UNDER FIVE PRIOR GOVERNMENT CONTRACTS. IT IS FURTHER PROVIDED THAT WASHINGTON'S FAILURE TO PAY THE REQUIRED WAGES WAS DUE TO A DISPUTE BETWEEN WASHINGTON AND A UNION AND BECAUSE WASHINGTON DID NOT DEDUCT CERTAIN PAYROLL TAXES FROM THE SALARIES OF A NUMBER OF WORKERS. THE PARTIES AGREED THAT WASHINGTON WOULD PAY LIQUIDATED DAMAGES TO THE DEPARTMENT OF LABOR AND WOULD MAINTAIN PROPER RECORDS. THIS STIPULATION WAS TO BE FORWARDED TO THE ADMINISTRATIVE JUDGE WITH THE RECOMMENDATION OF THE REGIONAL SOLICITOR THAT HIS EARLIER REQUEST THAT WASHINGTON BE DEBARRED BE WITHDRAWN. HAVE BEEN INFORMED THAT THE STIPULATION AND RECOMMENDATION HAVE BEEN EXECUTED BY BOTH PARTIES.

BASICALLY, IT IS YOUR POSITION THAT WASHINGTON WAS DETERMINED TO BE A RESPONSIBLE BIDDER BY THE CONTRACTING OFFICER; THAT THIS DETERMINATION WAS IMPROPERLY OVERRULED BY NASA HEADQUARTERS ON THE BASIS OF A PENDING PROCEEDINGS IN THE DEPARTMENT OF LABOR REGARDING WASHINGTON'S COMPLIANCE WITH THE SERVICE CONTRACT ACT OF 1965; AND THAT NASA HAS EFFECTIVELY DEBARRED WASHINGTON WITHOUT A HEARING ON THE QUESTION WHETHER IT HAD, IN FACT, VIOLATED THE ACT.

IN SUPPORT OF THIS POSITION YOU NOTE THAT THE APPLICABLE REGULATION STATES THAT THE CONTRACTING OFFICER IS THE OFFICIAL CHARGED WITH DETERMINING THE RESPONSIBILITY OF PROSPECTIVE CONTRACTORS. IN THIS REGARD, YOU POINT OUT THAT THE RECORD REVEALS THE CONTRACTING OFFICER NEVER ALTERED HIS INITIAL DETERMINATION THAT WASHINGTON IS A RESPONSIBLE BIDDER. YOU ALSO ASSERT THAT DESPITE THE REFERENCE TO THE PREAWARD SURVEY OF MAY 12 IN NASA'S REPORT OF JULY 14 TO THIS OFFICE, THE CONTRACTING OFFICER WAS "OVERRULED" BASED SOLELY ON THE PROPOSED DEBARMENT ACTION. THIS CONNECTION, YOU NOTE THAT NO MENTION WAS MADE OF THE PREAWARD SURVEY IN NASA'S LETTER OF JULY 19 FORWARDING ITS FILE FOR SBA REVIEW BUT THAT THERE WAS A RATHER DETAILED TREATMENT OF THE PROPOSED DEBARMENT PROCEEDINGS.

ALTHOUGH THE RECORD DOES NOT CONTAIN A DOCUMENT SIGNED BY THE CONTRACTING OFFICER REVERSING HIS DETERMINATION OF APRIL 26, NASA'S LETTER DATED JULY 14, 1972, SPECIFICALLY STATES THAT "*** OUR CONTRACTING OFFICER IS NO LONGER ABLE TO MAKE THE AFFIRMATIVE DETERMINATION OF RESPONSIBILITY REQUIRED BY NASA PROCUREMENT REGULATION 1.904-1 WITH RESPECT TO WASHINGTON." IN ADDITION, WE ARE ADVISED BY NASA THAT THE JULY 19 LETTER TO SBA, LISTING THE SUBJECT AS "DETERMINATION THAT LOW BIDDER IS NOT RESPONSIBLE BASED ON LACK OF A SATISFACTORY RECORD OF INTEGRITY," WAS PREPARED BY THOMAS J. WHELAN, THE CONTRACTING OFFICER. FURTHERMORE, NASA ALSO ADVISES THAT MR. WHELAN PREPARED "MEMORANDUM TO THE FILE" ON JULY 5, 1972, AMENDING HIS ORIGINAL DETERMINATION IN LIGHT OF THE LATER DEVELOPMENTS AND CONCLUDING THAT WASHINGTON WAS NONRESPONSIBLE. ALSO, THE RECORD SHOWS THAT BY A MEMORANDUM DATED FEBRUARY 6, 1973, THE CONTRACTING OFFICER CONCLUDED THAT THE LATEST STIPULATION BETWEEN WASHINGTON AND THE DEPARTMENT OF LABOR CONTAINS NOTHING WHICH WOULD CAUSE HIM TO ALTER HIS JULY 5 DETERMINATION THAT WASHINGTON IS NOT A RESPONSIBLE BIDDER.

CONCERNING YOUR CONTENTION THAT THE PREAWARD SURVEY REPORT WAS NOT A FACTOR UNDERLYING NASA'S DETERMINATION, WE ARE INFORMED BY NASA THAT ALTHOUGH THE LETTER TO SBA OF JULY 19 DOES NOT MENTION IT THE REPORT WAS IN FACT CONSIDERED IN REACHING THE NEGATIVE DETERMINATION AND WAS ALSO TRANSMITTED TO THE SBA.

YOU CONTEND THAT NASA BY ITS DETERMINATION OF NONRESPONSIBILITY BASED ON THE PENDING DEBARMENT ACTION HAS DISPENSED WITH SUCH PROCEDURAL SAFEGUARDS AS THE REQUIREMENTS FOR NOTICE AND HEARING WHICH ARE INCORPORATED INTO THE SERVICE CONTRACT ACT. IN ADDITION, YOU ASSERT NASA'S DETERMINATION WHICH YOU CLASSIFY AS A "DE FACTO" DEBARMENT DISPLACES THE AUTHORITY OF THE SECRETARY OF LABOR TO REGULATE DEBARMENT. FINALLY, YOU ARGUE THAT WASHINGTON'S PRIOR STIPULATION ENTERED INTO WITH THE DEPARTMENT OF LABOR ADMITTING PREVIOUS VIOLATIONS OF THE ACT AND AGREEING TO PAY BACK WAGES AND FRINGE BENEFITS SHOULD NOT AFFECT THE DETERMINATION IN THIS CASE.

A SATISFACTORY RECORD OF INTEGRITY IS A REQUIREMENT WHICH A PROSPECTIVE CONTRACTOR MUST MEET UNDER NASA PR 1.903-1(IV) IN ORDER TO QUALIFY AS A RESPONSIBLE BIDDER. FURTHERMORE, WE HAVE CONSISTENTLY HELD THAT WE WILL NOT SUBSTITUTE OUR JUDGMENT FOR THAT OF THE CONTRACTING AGENCY AS TO A BIDDER'S RESPONSIBILITY UNLESS IT IS SHOWN BY CONVINCING EVIDENCE THAT THE AGENCY'S DETERMINATION IS NOT REASONABLE UNDER THE PARTICULAR CIRCUMSTANCES. 45 COMP. GEN. 4 (1965).

IN CONNECTION WITH NASA'S CONSIDERATION OF THE PRIOR STIPULATION, YOU CITE SEVERAL DECISIONS WHEREIN THIS OFFICE UPHELD AWARDS TO CONTRACTORS DESPITE PRIOR DEBARMENTS, CRIMINAL ACTIVITIES OF KEY EMPLOYEES, OR OTHER SUCH MATTERS BEARING ON BUSINESS INTEGRITY. IT IS CLEAR THAT IN EACH OF THOSE CASES OUR SUSTAINING OF THE AGENCY DETERMINATION THAT THE CONTRACTORS POSSESSED THE REQUISITE DEGREE OF INTEGRITY WAS BASED UPON OUR RECOGNITION OF THE BROAD ADMINISTRATIVE DISCRETION IN SUCH MATTERS. HOWEVER, THOSE CASES DO NOT STAND FOR THE PROPOSITION THAT PROCUREMENT PERSONNEL MAY NOT CONSIDER SUCH FACTS AS CONTRIBUTING TO THE OPPOSITE CONCLUSION. SEE B-176466, DECEMBER 20, 1972; 52 COMP. GEN. . IT IS OUR OPINION THAT NASA DID NOT ACT IMPROPERLY IN RELYING ON THE PRIOR STIPULATION AS A FACTOR UNDERLYING ITS DETERMINATION.

IN REGARD TO THE LATER STIPULATION AND THE REGIONAL SOLICITOR'S WITHDRAWAL OF HIS RECOMMENDATION FOR DEBARMENT, WE ARE INFORMED THAT THE ADMINISTRATIVE JUDGE IS NOT REQUIRED TO FOLLOW THE REGIONAL SOLICITOR'S RECOMMENDATION. HOWEVER, EVEN IF THE ADMINISTRATIVE JUDGE SHOULD DECIDE TO FOLLOW THE RECOMMENDATION OF THE REGIONAL SOLICITOR, FOR THE REASONS STATED ABOVE WE CANNOT SAY THAT THE CONTRACTING OFFICER ACTED ARBITRARILY IN AFFIRMING HIS PRIOR DETERMINATION.

CIRCUMSTANCES WHICH WOULD BE CAUSE FOR DEBARMENT OR SUSPENSION MAY IN A GIVEN CASE SUPPORT A DETERMINATION OF NONRESPONSIBILITY. SEE 39 COMP. GEN. 868, 872 (1960). ACCORDINGLY, AND RECOGNIZING THE CONSIDERABLE DISCRETION VESTED IN THE CONTRACTING OFFICER IN DETERMINING A PROSPECTIVE CONTRACTOR'S RESPONSIBILITY, WE FIND THAT NASA PROPERLY COULD CONSIDER THE PENDING ACTION AGAINST WASHINGTON AS WELL AS THE PRIOR STIPULATION INVOLVING AN OFFENSE OF THE SAME GENERAL NATURE IN DETERMINING WHETHER WASHINGTON WAS A RESPONSIBLE BIDDER FOR THIS PARTICULAR PROCUREMENT.

IN REACHING THIS CONCLUSION, WE HAVE CONSIDERED YOUR ARGUMENT THAT NASA'S ACTION CONSTITUTES A DEBARMENT WITHOUT THE NECESSARY PROCEDURAL SAFEGUARDS. WE CANNOT AGREE. IT MUST BE EMPHASIZED THAT NASA'S DETERMINATION OF NONRESPONSIBILITY RELATES SOLELY TO THE SUBJECT PROCUREMENT AND DOES NOT EXTEND, AS A DEBARMENT WOULD, BEYOND THIS PARTICULAR PROCUREMENT. FURTHERMORE, CONTINUED REFUSAL TO AWARD CONTRACTS TO WASHINGTON AS THE RESULT OF A NONRESPONSIBILITY DETERMINATION BASED UPON THE SAME ALLEGED LABOR VIOLATIONS AS INVOLVED HERE WITHOUT INVOKING AND FOLLOWING THE APPLICABLE DEBARMENT PROCEDURES WOULD BE OF DOUBTFUL VALIDITY. SEE 43 COMP. GEN. 140 (1963).

ACCORDINGLY, THERE IS NO LEGAL BASIS FOR US TO OBJECT TO THE REJECTION OF WASHINGTON'S BID AS A RESULT OF THE DETERMINATION OF NONRESPONSIBILITY.