B-177376, APR 2, 1973

B-177376: Apr 2, 1973

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TO KEYSTONE CONSOLIDATED INDUSTRIES: REFERENCE IS MADE TO YOUR LETTER DATED DECEMBER 11. 000 UNITS) WAS SET ASIDE FOR LABOR SURPLUS AREA CONCERNS. SIX BIDS WERE RECEIVED AND OPENED ON AUGUST 31. IMPEX DIVISION (IMPEX) WAS THE LOW BIDDER. A PREAWARD SURVEY REPORT WAS REQUESTED ON IMPEX ON SEPTEMBER 1. THE DELINQUENCY STATUS OF THE CONTRACTS WAS REAFFIRMED BY A REPORT FROM THE DESIGN REPRESENTATIVE OF PICATINNY ARSENAL ON OCTOBER 2. A PREAWARD SURVEY WAS CONDUCTED ON THE SECOND LOW BIDDER. IT WAS REPORTED THAT THIS BIDDER HAD CONSIDERABLE EXPERIENCE IN MANY CLOSE TOLERANCE ITEMS MANUFACTURED BY SCREW MACHINES AND THAT IT HAD PREVIOUSLY MANUFACTURED THE SUBJECT ITEM AS A SUBCONTRACTOR. AN AWARD WAS MADE TO THE SECOND LOW BIDDER FOR THE NON-SET- ASIDE PORTION ON OCTOBER 12.

B-177376, APR 2, 1973

BID PROTEST - MINIMUM RESPONSIBILITY STANDARDS - PAST PERFORMANCE RECORD DECISION DENYING THE PROTEST OF KEYSTONE CONSOLIDATED INDUSTRIES, IMPEX DIVISION, AGAINST THE AWARD OF A CONTRACT TO ANY OTHER FIRM UNDER AN IFB ISSUED BY THE U.S. ARMY MUNITIONS COMMAND, JOLIET, ILL. MINIMUM STANDARDS OF RESPONSIBILITY INCLUDE A SATISFACTORY RECORD OF PRIOR PERFORMANCE WHEN APPLICABLE, AND THE ABILITY TO COMPLY WITH REQUIRED DELIVERY OR PERFORMANCE SCHEDULES. ASPR 1-903. THUS, KEYSTONE'S NEGATIVE PERFORMANCE RECORD ON TWO CURRENT CONTRACTS, INCLUDING A CONTRACT FOR THE SUBJECT ITEM IN THE INSTANT PROCUREMENT, NECESSITATED THE DETERMINATION OF NON-RESPONSIBILITY.

TO KEYSTONE CONSOLIDATED INDUSTRIES:

REFERENCE IS MADE TO YOUR LETTER DATED DECEMBER 11, 1972, WITH ENCLOSURE, AND PRIOR CORRESPONDENCE, PROTESTING AGAINST AWARD OF A CONTRACT TO ANOTHER FIRM UNDER INVITATION FOR BIDS (IFB) NO. DAAA09-73 B-0008, ISSUED AUGUST 7, 1972, BY THE UNITED STATES ARMY MUNITIONS COMMAND, JOLIET, ILLINOIS.

THE INVITATION CALLED FOR BIDS ON 1,025,000 BOOSTER CUPS FOR THE M904E BOMB NOSE FUZE AND CONTAINED A 200 PERCENT OPTION PROVISION. AN IDENTICAL QUANTITY (1,025,000 UNITS) WAS SET ASIDE FOR LABOR SURPLUS AREA CONCERNS. SIX BIDS WERE RECEIVED AND OPENED ON AUGUST 31, 1972. THE BIDS RANGED IN UNIT PRICE FROM $.264 TO $.43. IMPEX DIVISION (IMPEX) WAS THE LOW BIDDER.

A PREAWARD SURVEY REPORT WAS REQUESTED ON IMPEX ON SEPTEMBER 1, 1972. SEPTEMBER 27, 1972, THE DEFENSE CONTRACT ADMINISTRATION SERVICES REGION, INDIANAPOLIS, ADVISED THE CONTRACTING OFFICER THAT THE PREAWARD SURVEY BOARD HAD RECOMMENDED THAT A CONTRACT NOT BE AWARDED TO IMPEX DUE TO A NEGATIVE PERFORMANCE RECORD ON TWO CURRENT GOVERNMENT CONTRACTS, INCLUDING A CONTRACT FOR THE SUBJECT ITEM. THE DELINQUENCY STATUS OF THE CONTRACTS WAS REAFFIRMED BY A REPORT FROM THE DESIGN REPRESENTATIVE OF PICATINNY ARSENAL ON OCTOBER 2, 1972.

A PREAWARD SURVEY WAS CONDUCTED ON THE SECOND LOW BIDDER, R. L. POHLMAN ARMAMENT, SEPTEMBER 12, 1972, AND RESULTED IN A RECOMMENDATION FOR AWARD. IT WAS REPORTED THAT THIS BIDDER HAD CONSIDERABLE EXPERIENCE IN MANY CLOSE TOLERANCE ITEMS MANUFACTURED BY SCREW MACHINES AND THAT IT HAD PREVIOUSLY MANUFACTURED THE SUBJECT ITEM AS A SUBCONTRACTOR. DUE TO AN URGENT NEED OF THE ITEMS, AN AWARD WAS MADE TO THE SECOND LOW BIDDER FOR THE NON-SET- ASIDE PORTION ON OCTOBER 12, 1972. SUBSEQUENTLY, AMERICAN TECHNICAL INDUSTRIES WAS DETERMINED RESPONSIBLE AND WAS AWARDED THE SET-ASIDE PORTION.

YOU CONTEND THAT THE DETERMINATION OF NONRESPONSIBILITY REGARDING YOUR FIRM IS NOT SUPPORTED BY THE EVIDENCE IN THAT AT THE TIME OF THE AWARD IMPEX WAS ONLY THREE WEEKS BEHIND ON ITS CURRENT CONTRACT FOR THE ITEM; THAT THE FACT THAT IMPEX WAS BEHIND ON ANOTHER GOVERNMENT CONTRACT FOR ANOTHER ITEM HAD NO BEARING ON IMPEX'S ABILITY TO PRODUCE THIS ITEM; AND THAT IMPEX WAS PLANNING TO INCREASE ITS PRODUCTION CAPABILITY TO MEET THE IFB'S REQUIREMENTS. YOU CONTEND THAT THE NEGATIVE PREAWARD SURVEY RESULTED FROM "PERSONALITY CONFLICTS" RATHER THAN FROM PERFORMANCE SHORTCOMING. FINALLY, YOU NOTE THAT IMPEX WAS NOT COMPARED TO OTHER BIDDERS AND AWARD OF THE NON-SET-ASIDE PORTION AND THE SET-ASIDE PORTION, RESPECTIVELY, WAS MADE TO A FIRM "WHO IS PLANNING TO PRODUCE THIS PART VIA AN UNPROVEN PROCESS AND TO ANOTHER FIRM WHO IS IN A MUCH WORSE DELINQUENCY SITUATION THAN WE ARE".

WITH REGARD TO THE MATTER OF RESPONSIBILITY, ARMED SERVICES PROCUREMENT REGULATION 1-902 PROVIDES:

1-902 GENERAL POLICY. PURCHASES SHALL BE MADE FROM, AND CONTRACTS SHALL BE AWARDED TO, RESPONSIBLE PROSPECTIVE CONTRACTORS ONLY. A RESPONSIBLE PROSPECTIVE CONTRACTOR IS ONE WHICH MEETS THE STANDARDS SET FORTH IN 1- 903.1 AND 1-903.2, AND SUCH SPECIAL STANDARDS AS MAY BE PRESCRIBED IN ACCORDANCE WITH 1-903.3 AND BY OVERSEAS COMMANDERS. THE AWARD OF A CONTRACT TO A SUPPLIER BASED ON LOWEST EVALUATED PRICE ALONE CAN BE FALSE ECONOMY IF THERE IS SUBSEQUENT DEFAULT, LATE DELIVERIES, OR OTHER UNSATISFACTORY PERFORMANCE RESULTING IN ADDITIONAL PROCUREMENT OR ADMINISTRATIVE COSTS. WHILE IT IS IMPORTANT THAT GOVERNMENT PURCHASES BE MADE AT THE LOWEST PRICE, THIS DOES NOT REQUIRE AN AWARD TO A SUPPLIER SOLELY BECAUSE HE SUBMITS THE LOWEST BID OR OFFER. A PROSPECTIVE CONTRACTOR MUST DEMONSTRATE AFFIRMATIVELY HIS RESPONSIBILITY, INCLUDING, WHEN NECESSARY, THAT OF HIS PROPOSED SUBCONTRACTORS. THE CONTRACTING OFFICER SHALL MAKE A DETERMINATION OF NONRESPONSIBILITY IF, AFTER COMPLIANCE WITH 1-905 AND 1-906, THE INFORMATION THUS OBTAINED DOES NOT INDICATE CLEARLY THAT THE PROSPECTIVE CONTRACTOR IS RESPONSIBLE. RECENT UNSATISFACTORY PERFORMANCE, IN EITHER QUALITY OR TIMELINESS OF DELIVERY, WHETHER OR NOT DEFAULT PROCEEDINGS WERE INSTITUTED, IS AN EXAMPLE OF A PROBLEM WHICH THE CONTRACTING OFFICER MUST CONSIDER AND RESOLVE AS TO ITS IMPACT ON THE CURRENT PROCUREMENT PRIOR TO MAKING AN AFFIRMATIVE DETERMINATION OF RESPONSIBILITY. DOUBT AS TO PRODUCTIVE CAPACITY OR FINANCIAL STRENGTH WHICH CANNOT BE RESOLVED AFFIRMATIVELY SHALL REQUIRE A DETERMINATION OF NONRESPONSIBILITY.

IN DETERMINING WHETHER A PROSPECTIVE CONTRACTOR IS A RESPONSIBLE BIDDER, ARMED SERVICES PROCUREMENT REGULATION 1-903 SETS FORTH THE MINIMUM STANDARDS FOR RESPONSIBLE PROSPECTIVE CONTRACTORS. THESE STANDARDS INCLUDE HAVING A SATISFACTORY RECORD OF PERFORMANCE AND THE ABILITY TO COMPLY WITH REQUIRED DELIVERY OR PERFORMANCE SCHEDULE. WITH REGARD TO YOUR RECORD OF PERFORMANCE, IT WAS DISCLOSED THAT UNDER YOUR CURRENT CONTRACT FOR THE SAME ITEM, YOU WERE DELINQUENT IN DELIVERIES BY 171,000 UNITS AT THE END OF OCTOBER 1972, TEN MONTHS AFTER BEGINNING PERFORMANCE. IN THIS CONNECTION, YOU WERE REPORTEDLY ADVISED BY LETTER IN OCTOBER 1971 THAT THE STOCKS WERE EXTREMELY LOW AND THAT ANY DELINQUENCY WOULD NOT ONLY DEPRIVE THE AIR FORCE OF ITS URGENT NEEDS BUT WOULD ALSO RESULT IN THE SHUTDOWN OF LOADING PLANT OPERATIONS. EVEN THOUGH DELIVERIES WERE REQUIRED AT THE RATE OF 100,000 UNITS PER MONTH BEGINNING IN MARCH 1972, THERE WERE TWO MONTHS WHEN NO DELIVERIES WERE MADE AND ONLY FOUR MONTHS WHERE YOU ATTAINED THE 100,000 LEVEL. FURTHERMORE, IT WAS CONCLUDED BASED UPON THE SURVEY THAT THE RECORD OF PERFORMANCE ON YOUR CURRENT CONTRACT FOR THE ROTOR CAP FOR THE F/M905 BOMB FUZE WAS UNSATISFACTORY SINCE YOU WERE DELINQUENT BY 51,700 UNITS. BASED UPON THIS RECORD OF PERFORMANCE, AND IN VIEW OF THE CRITICAL NEED FOR THE ITEM TO SUPPORT OPERATIONS IN SOUTHEAST ASIA AND THE REQUIREMENT FOR DELIVERY OF 171,000 UNITS PER MONTH, THE CONTRACTING OFFICER CONCLUDED THAT THERE WAS DOUBT AS TO YOUR ABILITY TO MEET THE DELIVERY SCHEDULE AND, THEREFORE, DETERMINED PURSUANT TO ASPR 1-904.1 THAT YOU WERE NOT A RESPONSIBLE PROSPECTIVE CONTRACTOR.

SINCE THERE IS NO EVIDENCE INDICATING THAT SUCH DETERMINATION RESULTED FROM A "PERSONALITY CONFLICT", WE WOULD NOT BE JUSTIFIED IN REACHING SUCH CONCLUSION MERELY ON THE BASIS OF YOUR UNSUPPORTED STATEMENT. THE TWO CONTRACTS AWARDED FOR THIS PROCUREMENT CAME ONLY AFTER BOTH FIRMS WERE DETERMINED RESPONSIBLE AS A RESULT OF PREAWARD SURVEYS. POHLMAN HAD SATISFACTORILY PRODUCED THE ITEM AS A SUBCONTRACTOR AND ITS PAST AND CURRENT PERFORMANCE WAS TIMELY. IT IS TRUE, AS YOU STATE, THAT AMERICAN TECHNICAL INDUSTRIES WAS LATE IN DELIVERIES UNDER A CURRENT CONTRACT FOR THE SAME ITEM. HOWEVER, IT WAS NOT DELINQUENT TO THE EXTENT YOU STATE AND THE DELINQUENCY WAS CONSIDERED EXCUSABLE BECAUSE OF A LABOR STRIKE AT THE PLANT OF ITS MAJOR SUPPLIER. FURTHERMORE, IT IS REPORTED THAT DURING THE STRIKE AMERICAN TOOK POSITIVE STEPS TO ACHIEVE THE SCHEDULE AND DID DELIVER A SUBSTANTIAL AMOUNT EACH MONTH. THE STRIKE HAD ENDED BY THE TIME OF AWARD AND IT WAS DETERMINED THAT AMERICAN WOULD BE BACK ON SCHEDULE BY THE END OF NOVEMBER 1972. THIS OFFICE HAS CONSISTENTLY HELD THAT THE QUESTION AS TO THE RESPONSIBILITY OF A PROSPECTIVE CONTRACTOR IS PRIMARILY FOR DETERMINATION BY THE CONTRACTING OFFICER AND INVOLVES A FORECAST WHICH MUST, OF NECESSITY, BE A MATTER OF JUDGEMENT. 45 COMP. GEN. 4 (1965). WHERE THAT DETERMINATION IS BASED UPON SUBSTANTIAL EVIDENCE AND IS NEITHER ARBITRARY NOR CAPRICIOUS, WE WILL NOT SUBSTITUTE OUR JUDGEMENT FOR THAT OF THE CONTRACTING OFFICER. 43 COMP. GEN. 228 (1963). IN THE ABOVE-CITED DECISION, WE MADE THE FOLLOWING OBSERVATION:

WE THINK IT PROPER TO NOTE WITH RESPECT TO THE HISTORY OF PERFORMANCE UNDER THIS CONTRACT THAT INTERIM DELIVERY SCHEDULES ARE AS SIGNIFICANT AS THE FINAL DELIVERY REQUIREMENT AND WE DO NOT THINK THAT THE FAILURE TO COMPLY WITH THE INTERIM SCHEDULE IS EXCUSED OR MITIGATED BY CONFORMITY WITH THE FINAL DELIVERY DATE.

BASED ON THE RECORD PRESENTED ABOVE WE FIND THAT THE CONTRACTING OFFICER ACTED IN GOOD FAITH AND THE EVIDENCE SUPPORTS HIS DETERMINATION. THEREFORE, WE FIND NO LEGAL BASIS TO DISTURB THE AWARDS.

ACCORDINGLY, YOUR PROTEST IS DENIED.