B-179670, FEB 20, 1974

B-179670: Feb 20, 1974

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ALTHOUGH IT IS ALLEGED THAT IN PERFORMING PRIOR CONTRACT FOR SERVICING OFFICE EQUIPMENT OFFEROR USED CANNIBALIZED AND UNAUTHORIZED PARTS IN VIOLATION OF CONTRACT. CONTRACTING OFFICER'S DETERMINATION THAT OFFEROR IS RESPONSIBLE WILL NOT BE QUESTIONED BY GAO. SINCE PREAWARD SURVEY FOUND OFFEROR HAD ADEQUATE SUPPLY OF REPLACEMENT PARTS TO PERFORM SERVICE ON EQUIPMENT AND GAO JUDGMENT WILL NOT BE SUBSTITUTED FOR CONTRACTING OFFICER'S DETERMINATION OF RESPONSIBILITY WHEN THERE IS SUFFICIENT AFFIRMATIVE INFORMATION IN PREAWARD SURVEY REPORT FROM WHICH CONTRACTING OFFICER IS ABLE TO CONCLUDE THAT OFFEROR IS RESPONSIBLE. FACT THAT OFFEROR HAS QUOTED PRICES AT WHICH IT MIGHT INCUR LOSS OR THAT IT MAY NOT HAVE PERFORMED ADEQUATELY IN PAST DOES NOT NECESSARILY ESTABLISH THAT IT WILL PERFORM UNSATISFACTORILY IN FUTURE.

B-179670, FEB 20, 1974

1. ALTHOUGH IT IS ALLEGED THAT IN PERFORMING PRIOR CONTRACT FOR SERVICING OFFICE EQUIPMENT OFFEROR USED CANNIBALIZED AND UNAUTHORIZED PARTS IN VIOLATION OF CONTRACT, CONTRACTING OFFICER'S DETERMINATION THAT OFFEROR IS RESPONSIBLE WILL NOT BE QUESTIONED BY GAO, SINCE PREAWARD SURVEY FOUND OFFEROR HAD ADEQUATE SUPPLY OF REPLACEMENT PARTS TO PERFORM SERVICE ON EQUIPMENT AND GAO JUDGMENT WILL NOT BE SUBSTITUTED FOR CONTRACTING OFFICER'S DETERMINATION OF RESPONSIBILITY WHEN THERE IS SUFFICIENT AFFIRMATIVE INFORMATION IN PREAWARD SURVEY REPORT FROM WHICH CONTRACTING OFFICER IS ABLE TO CONCLUDE THAT OFFEROR IS RESPONSIBLE. SEE DECISION CITED. 2. WHERE OFFEROR HAS AGREED TO PERFORM CONTRACT IN ACCORDANCE WITH SPECIFICATIONS AND PREAWARD SURVEY, REPORT FOUND OFFEROR RESPONSIBLE TO PERFORM CONTRACT, FACT THAT OFFEROR HAS QUOTED PRICES AT WHICH IT MIGHT INCUR LOSS OR THAT IT MAY NOT HAVE PERFORMED ADEQUATELY IN PAST DOES NOT NECESSARILY ESTABLISH THAT IT WILL PERFORM UNSATISFACTORILY IN FUTURE. SEE DECISION CITED. 3. CONCERN THAT POSSIBLE IMPROPER SERVICING OF MANUFACTURER'S EQUIPMENT BY ANOTHER SOURCE MIGHT REFLECT UNFAVORABLY UPON EQUIPMENT IN THAT USERS MAY ATTRIBUTE POOR PERFORMANCE OF EQUIPMENT TO QUALITY OF EQUIPMENT RATHER THAN TO QUALITY OF SERVICES AFFORDS NO BASIS TO OBJECT TO AWARD, ESPECIALLY SINCE CLOSE MONITORING AND RIGID INSPECTION OF SERVICE CONTRACTOR SHOULD INSURE PROPER PERFORMANCE IN AND PROTECTION OF REPUTATION OF EQUIPMENT.

TO MINNESOTA (3M) GRAPHIC SERVICE, INC.:

SOLICITATION DAJB04-73-R-0081, AS AMENDED, ISSUED ON JUNE 25, 1973, BY THE DEFENSE ATTACHE OFFICE (DAO) - ARMY DIVISION, CONTRACT ADMINISTRATION BRANCH, SAIGON, VIETNAM, WAS A NEGOTIATED PROCUREMENT FOR PREVENTIVE MAINTENANCE AND OVERHAUL SERVICES ON NINE (9) LINE ITEMS OF OFFICE MACHINES. OFFERORS COULD SUBMIT PROPOSALS ON ANY OR ALL LINE ITEMS. AWARD OF LINE ITEM 0009, CONTRACT DAJB04-74-D-0008, FOR THE REPAIR AND MAINTENANCE OF 3M COPIER MACHINES WAS MADE ON AUGUST 30, 1973, TO T & D ENTERPRISE (T & D). BY LETTER DATED SEPTEMBER 4, 1973, MINNESOTA (3M) GRAPHIC SERVICE, INC. (MINNESOTA GRAPHIC), PROTESTED THE AWARD TO T & D FOR THIS ITEM PRIMARILY ON THE GROUNDS THAT T & D WAS NOT A RESPONSIBLE AND/OR RESPONSIVE OFFEROR.

REGARDING THE ISSUE OF RESPONSIBILITY, IT IS ALLEGED THAT UNDER A PRIOR SIMILAR CONTRACT, T & D USED FOR PERFORMANCE CANNIBALIZED PARTS AND/OR PARTS UNAPPROVED BY THE MANUFACTURER IN VIOLATION OF A REQUIREMENT IN THE CONTRACT THAT THE CONTRACTOR USE ONLY MANUFACTURER'S OR MANUFACTURER APPROVED PARTS IN MAKING REPAIRS. THIS SITUATION WAS DISCOVERED AND BROUGHT TO THE GOVERNMENT'S ATTENTION BY MINNESOTA GRAPHIC WHEN INTERIM SERVICE WORK BETWEEN CONTRACTS WAS SECURED THROUGH PURCHASE ORDERS PLACED WITH THAT FIRM. MINNESOTA GRAPHIC IS THE DIRECT REPRESENTATIVE OF THE 3M COMPANY, THE MANUFACTURER OF THE EQUIPMENT. IT IS ALLEGED THAT MINNESOTA GRAPHIC WAS ENGAGED TO OBTAIN THE "SUPERIOR" SERVICE NECESSARY TO PUT THE EQUIPMENT IN EXCELLENT CONDITION IN ORDER TO PERMIT A SUBSEQUENT AWARD OF THE CONTRACT FOR CONTINUED MAINTENANCE TO BE PLACED AT A LOWER PRICE WITH T & D.

IT IS MAINTAINED THAT T & D WAS NOT A RESPONSIVE BIDDER BECAUSE, FOR THE PRICE QUOTED, IT COULD NOT PERFORM IN ACCORDANCE WITH THE REQUIREMENT THAT THE CONTRACTOR USE MANUFACTURER'S PARTS OR PARTS APPROVED BY THE MANUFACTURER. THIS CONTENTION IS BASED ON THE MANUFACTURER'S PRICE FOR AUTHORIZED REPLACEMENT PARTS AND THE AVERAGE USE OF SUCH "CONSUMABLE PARTS" IN THE NORMAL OPERATION OF THE EQUIPMENT. IT IS STATED THAT IN VIEW OF THE MANUFACTURER'S RECOMMENDED SCHEDULE FOR PERIODIC REPLACEMENT OF "CONSUMABLE PARTS," T & D COULD NOT HAVE INTENDED TO USE 3M PARTS TO PERFORM SINCE THE COST OF SUCH PARTS TO T & D WOULD BE PROHIBITIVE AND IN EXCESS OF THE BID PRICES.

FINALLY, CANCELLATION OF THE AWARD WAS REQUESTED BY MINNESOTA GRAPHIC IN ITS DUAL CAPACITY AS BIDDER AND MANUFACTURER'S REPRESENTATIVE ON THE GROUNDS THAT T & D'S PRIOR POOR SERVICE AND THE PROBABLE SERVICE UNDER THIS CONTRACT WOULD REFLECT ADVERSELY ON THE QUALITY AND REPUTATION OF 3M BRAND COPYING AND MICROFILM EQUIPMENT. IT IS STATED THAT THE PROBLEMS CREATED BY BAD PARTS AND POOR SERVICE TENDED TO CONVINCE USERS THAT THE EQUIPMENT WAS BAD RATHER THAN THE SERVICE.

THE RECORD INDICATES THAT THE FISCAL YEAR (FY) 74 REQUIREMENTS WERE RECEIVED TOO LATE TO PROVIDE FOR UNINTERRUPTED SERVICE. THEREFORE, DURING THE PERIOD FROM JULY 1 TO AUGUST 30, 1973, REPAIR SERVICES WERE REQUIRED AND EFFECTED THROUGH PURCHASE ORDERS. THE CONTRACTING OFFICER STATED THAT DUE TO THE VARIOUS FINDINGS OF NONRESPONSIBILITY AND SUBSEQUENT CHANGES IN THE RANKING OF OFFERORS RESPONDING TO THE SOLICITATION, T & D WAS NOT IDENTIFIED AS THE LOW, RESPONSIVE, RESPONSIBLE OFFEROR UNTIL SHORTLY BEFORE AWARD. DUE TO THE ALLEGATIONS CONCERNING THE USE OF IMPROPER PARTS UNDER THE PREVIOUS CONTRACT (DESPITE SATISFACTORY PERFORMANCE RATINGS), AN INTENSIVE PREAWARD SURVEY WAS STATED TO HAVE BEEN CONDUCTED ON T & D. IN THIS REGARD, THE PREAWARD SURVEY INDICATED THAT T & D HAD AN ADEQUATE SUPPLY OF REPLACEMENT PARTS AND SKILLED PERSONNEL TO PERFORM SERVICE AND REPAIR FUNCTIONS ON 3M COPYING EQUIPMENT UNDER THE CURRENT CONTRACT. MOREOVER, THE SURVEY REPORT, AFTER TAKING INTO CONSIDERATION ALL THE RELATED RESPONSIBILITY FACTORS, RECOMMENDED AWARD TO T & D.

THIS OFFICE HAS LONG RECOGNIZED THAT A CONTRACTING OFFICER IS VESTED WITH A CONSIDERABLE DEGREE OF DISCRETION IN DETERMINING AN OFFEROR'S RESPONSIBILITY TO PERFORM A GOVERNMENT CONTRACT. WE WILL NOT QUESTION THAT DETERMINATION IN THE ABSENCE OF CONVINCING EVIDENCE THAT SUCH DISCRETION HAS BEEN ABUSED. SEE 51 COMP. GEN. 233 (1971); 43 ID. 228 (1963). THUS, EVEN THOUGH AN OFFEROR'S PAST PERFORMANCE HAS BEEN LESS THAN SATISFACTORY, OUR OFFICE HAS REFUSED TO SUBSTITUTE OUR JUDGMENT FOR THE CONTRACTING OFFICER'S DETERMINATION OF RESPONSIBILITY WHEN THERE IS SUFFICIENT CURRENT AFFIRMATIVE INFORMATION CONTAINED IN THE PREAWARD SURVEY REPORT FROM WHICH THE CONTRACTING OFFICER IS ABLE TO CONCLUDE THAT THE OFFEROR IS A RESPONSIBLE, PROSPECTIVE CONTRACTOR. B 173562, JUNE 1, 1972. ACCORDINGLY, IN VIEW OF THE AFFIRMATIVE INFORMATION IN THE PREAWARD SURVEY REPORT, THE AWARD TO T & D WILL NOT BE QUESTIONED BY OUR OFFICE.

MOREOVER, THE FACT THAT AN OFFEROR QUOTES PRICES AT WHICH IT MIGHT INCUR A LOSS IS NO INDICATION BY ITSELF THAT THE OFFEROR DOES NOT INTEND TO PERFORM THE CONTRACT PROPERLY. FURTHER, THE FACT THAT AN OFFEROR HAS NOT PERFORMED ADEQUATELY IN THE PAST DOES NOT NECESSARILY ESTABLISH THAT IT WILL PERFORM UNSATISFACTORILY IN THE FUTURE. BY THE TERMS OF ITS OFFER, T & D AGREED TO PERFORM THE CONTRACT IN ACCORDANCE WITH THE SPECIFICATIONS AND THE PREAWARD SURVEY REPORT FOUND THAT T & D HAS AN ADEQUATE SUPPLY OF PARTS AND THE CAPABILITY TO PERFORM THE SERVICES REQUIRED BY THE SOLICITATION. THEREFORE, WE ARE UNABLE TO CONCLUDE THAT T & D DID NOT INTEND TO COMPLY WITH ITS OFFER. IN THIS REGARD, WE HAVE HELD THAT AN ANTICIPATED LOSS IN THE PERFORMANCE OF A CONTRACT DOES NOT IN ITSELF JUSTIFY REJECTION OF AN OTHERWISE ACCEPTABLE OFFER. 49 COMP. GEN. 311, 315 (1969).

OUR OFFICE CAN APPRECIATE THE CONCERN OF MINNESOTA GRAPHIC THAT IMPROPER SERVICING OF 3M EQUIPMENT MAY REFLECT UNFAVORABLY UPON THE EQUIPMENT IN THAT USERS OF THE EQUIPMENT MAY ATTRIBUTE POOR PERFORMANCE OF THE EQUIPMENT TO THE QUALITY OF THE EQUIPMENT INSTEAD OF THE QUALITY OF THE SERVICE. HOWEVER, THE CONTRACTING OFFICER HAS REPORTED THAT THE CONTRACTING OFFICER'S REPRESENTATIVES HAVE BEEN ADVISED TO CLOSELY MONITOR AND RIGIDLY INSPECT THE PERFORMANCE OF T & D. SUCH ACTION SHOULD INSURE THAT THE GOVERNMENT RECEIVES THE PERFORMANCE REQUIRED BY THE CONTRACT AND THAT THE REPUTATION OF 3M EQUIPMENT IS PROTECTED.

HOWEVER, IN VIEW OF THE FOREGOING, WE ARE UNABLE TO CONCLUDE THAT THE AWARD TO T & D WAS IMPROPER AND THEREFORE THE PROTEST IS DENIED.