B-178573, B-179099, MAY 17, 1974

B-178573,B-179099: May 17, 1974

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WERE PROPERLY FOR CONSIDERATION UNDER ASPR 1-902 BY CONTRACTING OFFICER IN DETERMINING PROTESTER'S RESPONSIBILITY FOR LATER PROCUREMENTS. CONTRACTING OFFICER'S FINDINGS OF NONRESPONSIBILITY WERE NOT ARBITRARY. BECAUSE WARRANTY ACTIONS ARE STILL SUBJECT OF DISPUTE BETWEEN PROTESTER AND CONTRACTING ACTIVITY AND BECAUSE ALL ADMINISTRATIVE REMEDIES TO RESOLVE DISPUTE HAVE NOT YET BEEN EXHAUSTED BY PROTESTER. COMPLAINTS WERE ALSO FORTHCOMING UNDER CONTRACT NO. -0177. RATHER TO THE CORNING S 10 LENS WHICH IS SMALLER IN CIRCUMFERENCE AND HAS A DIFFERENT SHAPE. WAS ALSO ALLEGEDLY FOUND THAT THE PLASTIC WAS HARD AND BRITTLE. EVEN WHEN LENSES WERE CUT UNDERSIZE TO MINIMIZE THE STRETCH FACTOR. IT WAS ALSO ALLEGEDLY DISCOVERED THAT THE 46-MM EYESIZE MEASURED ONLY 45.5 MM AND THAT THIS SHRANK TO 45 MM WHEN HEAT WAS APPLIED TO THE FRAME.

B-178573, B-179099, MAY 17, 1974

1. ALLEGED DEFICIENCIES, ALTHOUGH NOT DEFINITIVELY PROVEN AND STILL OBJECT OF DISPUTE BETWEEN AGENCY AND PROTESTER, ENCOUNTERED IN ITEMS SUBMITTED BY PROTESTER UNDER TWO CONTRACTS, WERE PROPERLY FOR CONSIDERATION UNDER ASPR 1-902 BY CONTRACTING OFFICER IN DETERMINING PROTESTER'S RESPONSIBILITY FOR LATER PROCUREMENTS, AND CONTRACTING OFFICER'S FINDINGS OF NONRESPONSIBILITY WERE NOT ARBITRARY, CAPRICIOUS OR LACKING A SUBSTANTIAL BASIS. 2. BECAUSE WARRANTY ACTIONS ARE STILL SUBJECT OF DISPUTE BETWEEN PROTESTER AND CONTRACTING ACTIVITY AND BECAUSE ALL ADMINISTRATIVE REMEDIES TO RESOLVE DISPUTE HAVE NOT YET BEEN EXHAUSTED BY PROTESTER, GAO BELIEVES THAT COMMENT BY GAO ON MERITS WOULD BE INAPPROPRIATE AT THIS TIME.

TO HALO OPTICAL PRODUCTS, INC.:

THE PROBLEMS OCCASIONING THE IMMEDIATE PROTEST ORIGINATED UNDER HALO OPTICAL PRODUCTS, INC. (HALO), CONTRACTS NOS. DSA120-72-C-1546 AND DSA120- 73-C-0177 WITH THE DEFENSE SUPPLY AGENCY (DSA) FOR CELLULOSE ACETATE EYEGLASS FRAMES. IT APPEARS THAT IN OCTOBER 1972 VARIOUS MILITARY LABORATORIES COMPLAINED THAT THE FRAMES FURNISHED BY HALO UNDER CONTRACT NO. -1546 EVIDENCED CERTAIN DEFICIENCIES. COMPLAINTS WERE ALSO FORTHCOMING UNDER CONTRACT NO. -0177. THE COMPLAINTS ASSERTED THAT EYEWIRE SHAPE OF THE HALO FRAME FRONTS DID NOT COMPLY WITH THE DRAWING FOR THE LENS LAYOUT IN THAT THE HALO SHAPE CORRESPONDED NOT TO THE MILITARY S- 10 LENS, BUT RATHER TO THE CORNING S 10 LENS WHICH IS SMALLER IN CIRCUMFERENCE AND HAS A DIFFERENT SHAPE. THIS CAUSED EXCESSIVE TIME TO BE REQUIRED FOR GLAZING AND CAUSED FRACTURE OF THE FRAMES DURING GLAZING. WAS ALSO ALLEGEDLY FOUND THAT THE PLASTIC WAS HARD AND BRITTLE, AND THAT THIS CAUSED THE EYEWIRE TO CRACK AND BREAK AT THE JUNCTION OF THE EYEWIRE AND THE RIGHT SIDE OF THE NOSEPAD, EVEN WHEN LENSES WERE CUT UNDERSIZE TO MINIMIZE THE STRETCH FACTOR.

RETESTING OF HALO FRAMES BY THE LABORATORIES USING CORNING S-10 LENSES RESULTED IN ESSENTIALLY THE SAME DEFICIENCIES OCCURRING. IN THIS REGARD, IT WAS ALSO ALLEGEDLY DISCOVERED THAT THE 46-MM EYESIZE MEASURED ONLY 45.5 MM AND THAT THIS SHRANK TO 45 MM WHEN HEAT WAS APPLIED TO THE FRAME.

IT ALSO WAS ALLEGEDLY FOUND THAT HALO FRONTS AND TEMPLES HAD AN IMPROPERLY HAZY AND CLOUDY APPEARANCE WHICH DETERIORATED TO A DULL FINISH WHEN HEATED IN GLAZING, AND THAT WHEN THE EYEWIRES WERE TESTED ACCORDING TO THE COMPRESSION TESTING REQUIREMENTS, 60 TO 100 PERCENT OF ALL SAMPLES FAILED DUE TO CRACKING AND FRACTURE. HALO FRAMES WERE APPARENTLY ALSO UNABLE TO MEET THE REQUIREMENT THAT THE "COMPLETED FRAMES SHALL BE HEATED AND REGLAZED AT LEAST THREE TIMES UNDER NORMAL OPHTHALMIC LABORATORY CONDITIONS." HALO FRONTS EXPERIENCED A FAILURE RATE OF 65 TO 96 PERCENT IN INITIAL GLAZING BY THREE MAJOR OPHTHALMIC LABORATORIES. ADDITIONAL TESTING CONDUCTED ON 20 SAMPLES REPRESENTING FOUR LOTS OF MATERIAL RESULTED IN A 100-PERCENT FAILURE RATE DUE TO CRACKING AND, IN ADDITION, ROLLING OF THE EYEWIRES OCCURRED IN 60 TO 70 PERCENT OF THE FRAMES. FINALLY, IT WAS FOUND THAT WHEN THE FRAMES WERE HEATED IN GLAZING, WELD LINES, SCRATCHES, SINK MARKS AND SURFACE CRACKS BECAME SO PRONOUNCED AS TO DETRACT FROM APPEARANCE. THIS ALSO MADE THE FRAMES SUSPECT BOTH AS TO THEIR STRENGTH AND SERVICEABILITY.

DCASD, HARTFORD, WAS REQUESTED BY THE DEFENSE PERSONNEL SUPPORT CENTER (DPSC) TO INVESTIGATE AND REPORT ON THESE COMPLAINTS. THE REPORT, SUBMITTED ON DECEMBER 8, 1972, STATED THAT THE MATERIALS, MANUFACTURING PROCEDURES, AND INSPECTIONS AND TESTS PERFORMED BY THE CONTRACTOR AND DCASD WERE IN CONFORMANCE WITH CONTRACT REQUIREMENTS AND THAT THE PROBLEM ENCOUNTERED IN THE GLAZING OF THE SERVICE FRAMES RETURNED BY DPSC WAS DUE TO IMPROPER SIZE, CONTOUR, AND BEVEL OF THE LENSES UTILIZED. THE ANGLE OF BEVEL ON DPSC-SUPPLIED LENSES WAS NOT UNIFORM AND MEASURED FROM APPROXIMATELY 130 TO 140 DEGREES, WHEREAS THE GROOVE ANGLE REQUIRED BY THE SPECIFICATION DRAWING WAS APPROXIMATELY 110 DEGREES. IT WAS STATED THAT THE NONMILITARY S-10 LENSES USED FOR TEST PURPOSES BY HALO HAD THE PROPER BEVEL AND WERE ON THE PLUS SIDE OF THE SIZE TOLERANCE.

A FURTHER MEETING WAS HELD WITH HALO ON FEBRUARY 21, 1973, WITH DPSC AND DCASD MEMBERS IN ATTENDANCE. AT THIS MEETING DPSC REPRESENTATIVES ADMITTED THAT ALL DIMENSIONS WITH TOLERANCES THAT WERE CHECKED MET THE DRAWING REQUIREMENTS. HALO POINTED OUT THAT THE ACTUAL SHAPE OF THE LENSES BEING USED IN SOME OF ITS FRAMES WAS NOT IN CONFORMANCE WITH THE LENS OPENING DRAWING IN THE SPECIFICATION. THE DPSC REPRESENTATIVES ADMITTED THIS, BUT STATED THAT THESE LENSES WORKED IN COMPETITOR'S FRAMES. ALTHOUGH NO EVIDENCE, EXCEPT THE FACT THAT THE LENS OPENING CONFIGURATION WAS UNACCEPTABLE, WAS PRODUCED AT THE MEETING TO SUBSTANTIATE HALO'S ALLEGED NONCONFORMANCE WITH THE SPECIFICATION, THE DPSC REPRESENTATIVES STATED THAT NO RESOLUTION OF THE PROBLEM WAS POSSIBLE AT THAT TIME. THEY TOOK SAMPLES OF THE PLASTIC GRANULES USED BY HALO, TOGETHER WITH A NUMBER OF FINISHED FRAME FRONTS, FOR TESTING PURPOSES. RESULTS OF LABORATORY TESTING OF THE PLASTIC GRANULES WERE SATISFACTORY. WHEN THE GOVERNMENT QUALITY ASSURANCE REPRESENTATIVE (QAR) INQUIRED REGARDING FUTURE SHIPMENTS BY HALO, THE CONTRACTING OFFICER REPLIED THAT IF THE QAR WAS SATISFIED THE SHIPMENTS MET THE SPECIFICATION THEN THERE WOULD BE NO BASIS FOR NONACCEPTANCE.

DCASD WAS ADVISED BY DPSC, APPARENTLY IN MARCH OF 1973, THAT A WARRANTY ACTION WAS BEING PROCESSED AGAINST HALO. DCASD ASKED TO BE NOTIFIED OF THE SPECIFIC NONCONFORMING AREA WHICH WOULD PRECLUDE ACCEPTANCE OF HALO PRODUCTIONS. DPSC, INSTEAD, ADVISED THAT THE INVESTIGATION INTO THE MATTER WAS STILL IN PROGRESS. BY LETTER OF APRIL 6, 1973, THE CONTRACTING OFFICER ADVISED HALO THAT THE FIRM WAS BEING THEREBY NOTIFIED OF A BREACH OF WARRANTY UNDER CONTRACT NO. 0177. AT THIS TIME HALO ADVISED THAT IT HAD RECEIVED TWO OTHER MANUFACTURERS' FRAMES PROCURED BY DSA AND THAT THE LENS OPENINGS WERE OVERSIZED AND MISPROPORTIONED. DPSC STATED THAT ALL FRAMES RECEIVED FROM OTHER SUPPLIERS MET SPECIFICATION REQUIREMENTS. THEREAFTER, ALL MANUFACTURING WAS COMPLETED UNDER BOTH CONTRACTS AND THE FINAL SHIPMENT WAS PRESENTED FOR INSPECTION ON JUNE 11, 1973.

A FURTHER REVIEW WAS MADE INTO THE MATTER BY THE DEFENSE CONTRACTS REVIEW BOARD AS EVIDENCED BY ITS TRIP REPORT, DATED JUNE 18, 1973. IT WAS FOUND THAT AT NO TIME DURING THE LIFE OF THE TWO CONTRACTS HAD IT BEEN PROVEN THAT HALO HAD NOT COMPLIED WITH THE REQUIREMENTS OF THE CONTRACTS. REGARDS THIS STATEMENT, DPSC NOTES THAT DCASD HAD BEEN ADVISED OF THE FAILURES OF THE COMPRESSION TEST AND THE IMPROPER LENS SHAPE ON SEVERAL OCCASIONS. IT WAS FURTHER NOTED THAT ALL CORRESPONDENCE AND TESTS INDICATED THAT THE WRONG SIZE LENSES WERE BEING USED IN THE HALO FRAMES. FINALLY IT WAS NOTED THAT REGARDLESS OF WHAT TOOK PLACE, THE GOVERNMENT HAD THOUSANDS OF FRONTS AND FRAMES THAT APPARENTLY COULD NOT BE USED AND THAT A CONCERTED EFFORT BY DPSC AND DCASD SHOULD BE TAKEN IMMEDIATELY TO SOLVE THE PROBLEM.

DURING THE LIFESPAN OF THESE TWO CONTRACTS VARIOUS OTHER SOLICITATIONS WERE ISSUED FOR FRAMES. INVITATION FOR BIDS NO. DSA120 73-B-1817 WAS ISSUED ON JANUARY 18, 1973. HALO WAS LOW BIDDER ON TWO ITEMS, BUT WAS DETERMINED TO BE NONRESPONSIBLE BY THE CONTRACTING OFFICER IN VIEW OF THE NO-AWARD RECOMMENDATION MADE BY THE ACTIVITY'S TECHNICAL AND QUALITY ASSURANCE DIVISION. THE NO-AWARD RECOMMENDATION WAS MADE BECAUSE OF THE DIFFICULTIES ENCOUNTERED UNDER THE TWO ABOVE MENTIONED HALO CONTRACTS. REFERRAL OF THE ISSUE OF HALO'S NONRESPONSIBILITY WAS MADE TO THE SMALL BUSINESS ADMINISTRATION (SBA) DUE TO THE FACT THAT THE AWARD WAS PROCESSED UNDER A CERTIFICATE OF URGENCY. REQUEST FOR PROPOSALS NO. DSA120-73-R- 2299 WAS ISSUED FEBRUARY 12, 1973. HALO, AGAIN HAVING SUBMITTED THE LOW BID, WAS AGAIN FOUND TO BE A NONRESPONSIBLE BIDDER, AND THE ISSUE OF NONRESPONSIBILITY WAS FORWARDED TO SBA. BY LETTER OF APRIL 10, 1973, SBA NOTIFIED THE CONTRACTING OFFICER THAT HALO HAD FAILED TO FILE AN APPLICATION FOR A CERTIFICATE OF COMPETENCY AND THAT, THEREFORE, SBA WAS CLOSING ITS FILE IN THE MATTER. CONSEQUENTLY, AN AWARD UNDER THE SOLICITATION WAS MADE TO ANOTHER FIRM. INVITATION FOR BIDS NO. DSA120-73- B-2413 WAS ISSUED ON FEBRUARY 16, 1973. ALTHOUGH HALO WAS SOLICITED FOR THE PROCUREMENT, IT SUBMITTED NO BID. HALO WAS NOT SOLICITED FOR REQUEST FOR QUOTATIONS NO. DSA120-73-Q-3024-017, ISSUED APRIL 4, 1973, FOR AN UNPROCURED QUANTITY OF FRAMES NOT COVERED BY INVITATION NO. -2413. RATHER, BECAUSE THE ITEMS IN QUESTION WERE URGENTLY NEEDED, ISSUANCE OF THE SOLICITATION WAS LIMITED TO KNOWN RELIABLE SUPPLIERS. IN ADDITION TO HALO, ONE SUCCESSFUL CONTRACTOR UNDER INVITATION NO. -2413 WAS NOT SOLICITED BECAUSE ITS CONTRACT REQUIRED FIRST ARTICLE APPROVAL AND ANY FURTHER CONTRACT WOULD OF NECESSITY ALSO REQUIRE FIRST ARTICLE APPROVAL. WE ARE NOW ADVISED THAT THIS SOLICITATION WAS CANCELED BECAUSE OF A LACK OF ANY FURTHER REQUIREMENT FOR THE ITEMS.

REQUEST FOR PROPOSALS DSA120-73-R-3596 WAS ISSUED ON JUNE 5, 1973. HALO WAS NOT SOLICITED IN VIEW OF A DETERMINATION MADE ABOUT MAY 15 NOT TO SOLICIT HALO ON FRAME PROCUREMENTS DUE TO THE SERIOUS BACK ORDER SITUATION CREATED BY HALO'S DELIVERY OF ALLEGEDLY UNACCEPTABLE ITEMS UNDER ITS TWO CONTRACTS. THE PROCUREMENT WAS, HOWEVER, SYNOPSIZED, AND WHEN HALO ON JUNE 19 QUESTIONED WHY IT WAS NOT SOLICITED, A COPY OF THE SOLICITATION WAS GIVEN HALO. AT THIS TIME THE DECISION NOT TO SOLICIT HALO WAS REVERSED. AS REGARDS THE REQUEST FOR PROPOSALS, HALO NEITHER REQUESTED AN EXTENSION OF THE SUBMISSION DATE, NOR DID IT SUBMIT A PROPOSAL. CONSONANT WITH THIS DECISION TO CONTINUE SOLICITING HALO FOR FRAME PROCUREMENTS, HALO WAS SUBSEQUENTLY SENT A COPY OF REQUEST FOR PROPOSALS NO. DSA120-73-R -3679. THIS SOLICITATION WAS, WE ARE ADVISED, SUBSEQUENTLY CANCELED.

IT IS CONTENDED THAT HALO'S PERFORMANCE UNDER THESE TWO CONTRACTS CONFORMED IN EVERY RESPECT TO THE SPECIFICATION REQUIREMENTS AND DRAWINGS AND, CONSEQUENTLY, THAT THE DETERMINATIONS OF NONRESPONSIBILITY ON SUBSEQUENT PROCUREMENTS WERE ARBITRARY AND CAPRICIOUS. FINALLY, THE FACT THAT HALO WAS PLACED ON DSA'S CONTRACTOR EXPERIENCE LIST (A LIST OF THOSE CONTRACTORS WHOSE CONTRACT PERFORMANCE HAS BEEN FOUND TO BE UNSATISFACTORY) IS DEEMED HIGHLY OBJECTIONABLE.

ALTHOUGH, FOR THE REASONS THAT FOLLOW, WE MUST DENY THE PROTEST, WE WISH TO EMPHASIZE THAT OUR DECISION IN NO WAY ATTEMPTS, OR IS MEANT, TO ADJUDICATE THE DISPUTE, WHICH HAS NOT YET BEEN RESOLVED, BETWEEN HALO AND DSA REGARDING COMPLIANCE WITH CONTRACT SPECIFICATIONS. NOTWITHSTANDING THE FACT THAT THE POSITION OF DPSC WAS DISPUTED ON MOST POINTS BY THE TRIP REPORT OF JUNE, 1973 (WHICH IT MIGHT BE NOTED WAS NOT CONSIDERED BY DSA TO BE DISPOSITIVE OF THE ISSUES IN DISPUTE), THE FACT IS THAT NUMEROUS SHORTCOMINGS WERE FOUND WITH THE HALO FRAMES BY VARIOUS MILITARY AND OPHTHALMIC LABORATORIES. THE CONTRACTING OFFICER WAS ADVISED BY HIS TECHNICAL ADVISORS NOT TO MAKE AWARD TO HALO UNDER THE ABOVE-MENTIONED SOLICITATIONS BECAUSE OF THE REPORTED SHORTCOMINGS. IN REACHING A DECISION UNDER THESE FACTS THE CONTRACTING OFFICER WAS CONSEQUENTLY FACED WITH TWO OPTIONS. HE COULD ACCEPT HALO'S POSITION AND IF IT WAS ULTIMATELY PROVED TO BE INCORRECT, THE STOCK OF UNUSEABLE FRAMES HELD BY DSA WOULD BE ALL THE GREATER. OR HE COULD CONTINUE TO MAKE AWARDS TO MANUFACTURERS WHO WERE BEYOND DOUBT FURNISHING FRAMES WHICH MET THE NEEDS OF DSA. HE OPTED FOR THE LATER OPTION. FOR HIM TO HAVE TAKEN THIS LATTER COURSE OF ACTION WAS NOT UNREASONABLE UNDER THE CIRCUMSTANCES.

ALTHOUGH IT IS TRUE THAT THE ALLEGATIONS BY THE ACTIVITY REGARDING HALO PERFORMANCES UNDER THOSE TWO CONTRACTS WERE NOT DISPOSITIVELY PROVEN AT THE TIMES THE DETERMINATIONS OF NONRESPONSIBILITY WERE MADE, THESE SHORTCOMINGS IN PERFORMANCE WERE STILL PROPERLY FOR CONSIDERATION PURSUANT TO PARAGRAPH 1-902 OF THE ARMED SERVICES PROCUREMENT REGULATION IN DETERMINING WHETHER HALO WAS RESPONSIBLE FOR THE PURPOSES OF THE PROCUREMENTS IN QUESTION. 43 COMP. GEN. 323 (1963); B-157055, MAY 4, 1967; B-178135, AUGUST 28, 1973. FURTHER, QUESTIONS CONCERNING THE RESPONSIBILITY OF A PROSPECTIVE CONTRACTOR ARE PRIMARILY FOR RESOLUTION BY THE CONTRACTING OFFICER. B-178135, SUPRA. FOR THESE REASONS, AND THE OTHERS NOTED ABOVE, WE ARE UNABLE TO DETERMINE FROM THE EVIDENCE OF RECORD THAT THE CONTRACTING OFFICER EXERCISED HIS DISCRETION IN A MANNER INCONSISTENT WITH THE INFORMATION BEFORE HIM.

FINALLY, REGARDING THE FACT THAT HALO HAS BEEN PLACED ON THE DSA CONTRACTOR EXPERIENCE LIST, WE NOTE THAT THIS MERELY SIGNIFIES THAT THE CONTRACTOR HAS PERFORMED LESS THAN SATISFACTORILY ON ITS RECENT CONTRACT WORK. IT DOES NOT PRECLUDE THE CONTRACTOR FROM BIDDING OR QUOTING ON A PROPOSED PROCUREMENT OR PRECLUDE AWARD BEING MADE TO THAT CONTRACTOR. INASMUCH AS DSA FOUND THE HALO PERFORMANCE LESS THAN SATISFACTORY AND INASMUCH AS ALL ADMINISTRATIVE REMEDIES HAVE NOT YET BEEN EXHAUSTED BY HALO IN ITS DISPUTE OF THIS FINDING, WE DO NOT BELIEVE THAT COMMENT BY OUR OFFICE WOULD BE APPROPRIATE AT THIS TIME.