B-176070, DEC 7, 1972

B-176070, DEC 7, 1972

BID PROTEST - REPURCHASE CONTRACT - SBA CERTIFICATION OPPORTUNITY TO DEFEND CONCERNING THE DENIAL OF PROTEST BY GENERAL RESEARCH, INC., AGAINST THE AWARD OF A REPURCHASE CONTRACT TO BELL HELICOPTER CO. UNDER AN RFP ISSUED BY THE U.S. ARMY AVIATION SYSTEMS COMMAND, ST. LOUIS, MO. SINCE THE TWO MAIN PURPOSES OF A REPURCHASE CONTRACT ARE TO OBTAIN THE CONTRACT ITEMS FOR THE GOVERNMENT AND TO SERVE AS A METHOD TO COMPUTE DAMAGES RESULTING FROM THE PRIOR DEFAULT, THE DECISION OF THE CONTRACTING OFFICER TO SOLICIT FROM A LARGE BUSINESS CONCERN WAS CONSISTENT WITH HIS DUTY TO MITIGATE DAMAGES. SEE 42 COMP. GEN. 493 (1963). ALSO, SINCE A FINAL DETERMINATION AS TO AN OFFEROR'S RESPONSIBILITY IS NOT NECESSARY UNLESS HE IS THE LOW OFFEROR, THE CONTRACTING OFFICER'S FAILURE TO REFER GENERAL RESEARCH TO THE SBA FOR CERTIFICATION AND THE FAILURE TO GRANT AN OPPORTUNITY TO DEFEND AGAINST THE NEGATIVE FINDINGS OF THE PRE-AWARD SURVEY TEAM WERE NOT IMPROPER UNDER ASPR 1-705.4(C) AND 1- 907, RESPECTIVELY. ACCORDINGLY, THE PROTEST IS DENIED.

TO GENERAL RESEARCH LABS, INC.:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 5, 1972, AND PRIOR CORRESPONDENCE PROTESTING AGAINST ALLEGED IRREGULARITIES IN AWARDING A CONTRACT UNDER REQUEST FOR PROPOSALS DAAJ01-70-R-0276(PIG), ISSUED BY THE DEPARTMENT OF THE ARMY, AVIATION SYSTEMS COMMAND, ST. LOUIS, MISSOURI.

THE INSTANT SOLICITATION WAS THE RESULT OF A TERMINATION FOR DEFAULT OF CONTRACT DAAJ01-71-C-0244(PIG) WHICH WAS AWARDED TO UNIVERSAL BOX AND PACKAGING CORPORATION ON OCTOBER 26, 1970, FOR 326 SHIPPING AND STORAGE CONTAINERS. THIS CONTRACT WAS TERMINATED FOR DEFAULT ON MAY 11, 1971, WHEN IT WAS DETERMINED THAT THE CONTRACTOR COULD NOT MEET THE SPECIFICATIONS. AFTER THE DEFAULT AND A DETERMINATION OF URGENCY BY THE CONTRACTING OFFICER, THE REPROCUREMENT WAS DIVIDED INTO TWO SOLICITATIONS, ONE FOR 121 CONTAINERS WITH A SHORT DELIVERY TIME AND A SECOND SOLICITATION FOR THE REMAINING 205 CONTAINERS WITH A LESS URGENT DELIVERY SCHEDULE. THE PROCEDURES FOLLOWED IN THE PROCUREMENT FOR THE 121 ITEMS ARE THE BASIS FOR YOUR CLAIM FOR COSTS AND LOST PROFITS.

THE CONTRACT FOR 121 CONTAINERS WAS AWARDED TO BELL HELICOPTER COMPANY AS THE LOW BIDDER, WITH A UNIT PRICE OF $90.08, AS OPPOSED TO YOUR BID OF $114.56 PER UNIT.

YOUR CLAIM IS BASED ON THREE CONTENTIONS, WHICH ARE:

1. YOU WERE DENIED FAIR COMPETITION WHEN THE AWARD WAS MADE TO BELL, A LARGE BUSINESS CONCERN, SINCE THE ORIGINAL PROCUREMENT WAS ADVERTISED AS A SET ASIDE FOR SMALL BUSINESS.

2. YOU WERE DENIED THE RIGHT TO DEFEND YOURSELF AGAINST THE NEGATIVE FINDINGS IN THE PREAWARD SURVEY TEAM.

3. YOU WERE DENIED THE RIGHT TO APPLY FOR A CERTIFICATE OF COMPETENCY FROM THE SMALL BUSINESS ADMINISTRATION.

WITH RESPECT TO YOUR CONTENTION THAT GENERAL SHOULD HAVE BEEN AWARDED THE SUBJECT CONTRACT BECAUSE THE ORIGINAL SOLICITATION WAS A SMALL BUSINESS SET-ASIDE, AND THE REPROCUREMENT SHOULD THEREFORE HAVE BEEN MADE ON THE SAME BASIS, WE HAVE BEEN UNABLE TO FIND ANY REGULATION, RULING OR COURT DECISION WHICH REQUIRES THE REPROCUREMENT OF A DEFAULTED SMALL BUSINESS SET-ASIDE CONTRACT TO BE MADE ON A SIMILAR BASIS. THE TWO MAIN PURPOSES OF A REPURCHASE CONTRACT ARE TO OBTAIN THE CONTRACT ITEMS FOR THE GOVERNMENT, AND TO SERVE AS A METHOD TO COMPUTE DAMAGES ACCRUING TO THE GOVERNMENT AS A RESULT OF THE DEFAULT BY THE PRIOR CONTRACTOR. CONSIDERABLE LATITUDE IS GIVEN THE CONTRACTING OFFICER, SUBJECT ONLY TO THE RULE THAT THEIR ACTIONS MUST BE REASONABLE IN DECIDING WHAT FORM THE RELET CONTRACT SHOULD TAKE, AND MUST BE CONSISTENT WITH HIS DUTY TO MITIGATE DAMAGES. IN SUCH A SITUATION THE PURCHASE IS FOR THE ACCOUNT OF THE DEFAULTED CONTRACTOR, AND THE STATUTORY REQUIREMENT THAT CONTRACTS BE LET AFTER COMPETITIVE BIDDING DOES NOT APPLY. 42 COMP. GEN. 493 (1963); B -165884, MAY 28, 1969; AND B-175482, MAY 10, 1972. IN THE INSTANT CASE, WE BELIEVE THE ACTION OF THE CONTRACTING OFFICER IN SOLICITING A LARGE BUSINESS CONCERN AND IN ACCEPTING THE LOWER OFFER OF A LARGE BUSINESS CONCERN OVER THE HIGHER OFFER OF YOUR SMALL BUSINESS CONCERN WAS CONSISTENT WITH HIS DUTY TO MITIGATE DAMAGES.

WITH RESPECT TO YOUR CONTENTION THAT YOU SHOULD HAVE BEEN GIVEN THE OPPORTUNITY TO OBTAIN A CERTIFICATE OF COMPETENCY FROM THE SMALL BUSINESS ADMINISTRATION (SBA), ASPR 1-705.4(C) PROVIDES, IN PART:

"IF A BID OR PROPOSAL OF A SMALL BUSINESS CONCERN IS TO BE REJECTED SOLELY BECAUSE THE CONTRACTING OFFICER HAS DETERMINED THE CONCERN TO BE NONRESPONSIBLE AS TO CAPACITY OR CREDIT, THE MATTER SHALL BE REFERRED TO THE APPROPRIATE SBA FIELD OFFICE ***."

A FINAL DETERMINATION AS TO AN OFFEROR'S RESPONSIBILITY IS NOT NECESSARY UNLESS HE IS THE LOW OFFEROR. AS YOU WERE NOT THE LOW OFFEROR ON THE SUBJECT SOLICITATION, BUT BELL HELICOPTER WAS, YOUR OFFER WAS REJECTED FOR THAT REASON, RATHER THAN BECAUSE THE CONTRACTING OFFICER HAD DETERMINED YOUR CONCERN WAS NONRESPONSIBLE AS TO CAPACITY AND CREDIT. THERE IS NO DUTY ON THE CONTRACTING OFFICER TO REFER OTHER THAN THE LOW OFFEROR TO SBA FOR A CERTIFICATE OF COMPETENCY, SINCE A DETERMINATION AS TO RESPONSIBILITY IS NOT NECESSARY UNTIL SUCH OFFEROR IS OTHERWISE IN A POSITION FOR AWARD.

CONCERNING YOUR BELIEF THAT YOU SHOULD HAVE BEEN GIVEN THE OPPORTUNITY TO DEFEND YOURSELF AGAINST THE NEGATIVE FINDINGS OF THE PREAWARD SURVEY TEAM, THE APPLICABLE REGULATIONS ARE CONTAINED IN THE ARMED SERVICES PROCUREMENT REGULATIONS (ASPR) 1-907 WHICH READS, IN PART, AS FOLLOWS:

"*** PRIOR TO MAKING A DETERMINATION OF RESPONSIBILITY, SUCH DATA MAY BE DISCUSSED WITH THE PROSPECTIVE CONTRACTOR AS DETERMINED NECESSARY BY THE PURCHASING OFFICE. AFTER AN AWARD, THE FINDINGS OF THE PRE-AWARD SURVEY MAY BE DISCUSSED BY THE CONTRACTING OFFICER WITH THE COMPANY SURVEYED AS PROVIDED IN 2-408 AND 3-508 OR, IF APPROPRIATE, BY THE HEAD OF THE CONTRACT ADMINISTRATION OFFICE OR HIS DESIGNEE."

THE ABOVE REGULATION IS PERMISSIVE, RATHER THAN MANDATORY, AND EVEN WHERE A LOW OFFEROR HAS BEEN FOUND TO BE NONRESPONSIBLE IT LEAVES THE DETERMINATION TO THE CONTRACTING OFFICER AS TO WHETHER A PREAWARD SURVEY REPORT WILL BE DISCUSSED WITH SUCH OFFEROR. SINCE YOU WERE NOT THE LOW OFFEROR, AND IT WAS THEREFORE UNNECESSARY FOR THE CONTRACTING OFFICER TO PASS UPON WHETHER YOU QUALIFIED AS A RESPONSIBLE OFFEROR FOR THIS PROCUREMENT, WE SEE NO VALID BASIS ON WHICH IT CAN BE CONTENDED THAT HE WAS REQUIRED OR OBLIGATED TO DISCUSS WITH YOU THE NEGATIVE FINDINGS OF THE PREAWARD SURVEY TEAM.

BASED ON THE FOREGOING WE ARE UNABLE TO CONCLUDE THAT THE PROCEDURES FOLLOWED IN THIS PROCUREMENT WERE IMPROPER, AND YOUR CLAIM FOR COSTS AND PROFITS MUST THEREFORE BE DENIED.