B-179738(1), FEB 20, 1974

B-179738(1): Feb 20, 1974

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WHERE SBA DECLINED TO ISSUE COC TO OFFEROR ON BASIS OF INSUFFICIENT EVIDENCE OF FINANCIAL CAPACITY AND OFFEROR CONTENDS THAT SOME FINANCIAL INFORMATION WAS PRESENTED TO SBA AND ADVICE WAS FURNISHED BY SBA THAT OTHER INFORMATION WAS UNNECESSARY AND FURTHER CONTENDS THAT SBA SHOULD HAVE CONSIDERED FINANCIAL GUARANTEE FURNISHED TO CONTRACTING OFFICER AFTER DENIAL. NO RELIEF IS PROVIDED. SINCE GAO HAS NO AUTHORITY TO REVIEW SBA DETERMINATION OR TO REQUIRE SBA TO ISSUE COC OR TO REOPEN CASE WHEN COC IS DENIED. CONTRACTING OFFICER'S SUBSEQUENT DETERMINATION OF NONRESPONSIBILITY IS NOT WITHOUT BASIS IN FACT. N62306-73-R-0048 WAS ISSUED FOR THE PROCUREMENT OF AN ACOUSTIC POSITIONING SYSTEM. PROPOSAL ON THE GROUNDS THAT MRI WAS NOT A RESPONSIBLE PROSPECTIVE CONTRACTOR.

B-179738(1), FEB 20, 1974

1. WHERE SBA DECLINED TO ISSUE COC TO OFFEROR ON BASIS OF INSUFFICIENT EVIDENCE OF FINANCIAL CAPACITY AND OFFEROR CONTENDS THAT SOME FINANCIAL INFORMATION WAS PRESENTED TO SBA AND ADVICE WAS FURNISHED BY SBA THAT OTHER INFORMATION WAS UNNECESSARY AND FURTHER CONTENDS THAT SBA SHOULD HAVE CONSIDERED FINANCIAL GUARANTEE FURNISHED TO CONTRACTING OFFICER AFTER DENIAL, NO RELIEF IS PROVIDED, SINCE GAO HAS NO AUTHORITY TO REVIEW SBA DETERMINATION OR TO REQUIRE SBA TO ISSUE COC OR TO REOPEN CASE WHEN COC IS DENIED. SEE DECISION CITED. 2. ALTHOUGH SBA CONSIDERED OFFEROR NONRESPONSIBLE ON DIFFERENT BASIS THAN FOUND BY CONTRACTING OFFICER INITIALLY, IN VIEW OF SBA FINDING, CONTRACTING OFFICER'S SUBSEQUENT DETERMINATION OF NONRESPONSIBILITY IS NOT WITHOUT BASIS IN FACT. SEE DECISION CITED.

TO MARINE RESOURCES, INC.:

REQUEST FOR PROPOSALS NO. N62306-73-R-0048 WAS ISSUED FOR THE PROCUREMENT OF AN ACOUSTIC POSITIONING SYSTEM, ACOUSTIC TRANSPONDERS, AND RELATED ITEMS. THE SUBJECT PROTEST CONCERNS THE REJECTION THEREUNDER OF THE MARINE RESOURCES, INC. (MRI), PROPOSAL ON THE GROUNDS THAT MRI WAS NOT A RESPONSIBLE PROSPECTIVE CONTRACTOR.

PRIOR TO THE DETERMINATION OF NONRESPONSIBILITY, A PREAWARD SURVEY OF MRI WAS MADE BY THE DEFENSE CONTRACT ADMINISTRATION SERVICES DISTRICT (DCASD), ORLANDO, FLORIDA. CONCURRENTLY, A PREAWARD SURVEY WAS MADE BY DCASD, CANOGA PARK, CALIFORNIA, OF SONATECH, INC. (SONATECH), THE FIRM TO WHICH MRI PROPOSED TO SUBCONTRACT APPROXIMATELY 74 PERCENT OF THE CONTRACT WORK. THE SURVEY TEAM FOUND SONATECH TO BE UNSATISFACTORY IN PRODUCTION CAPABILITY, LABOR RESOURCES, ABILITY TO MEET THE REQUIRED SCHEDULE, PERFORMANCE RECORD, AND QUALITY ASSURANCE CAPABILITY. THIS FINDING STEMMED PRIMARILY FROM THE FACT THAT PERFORMANCE BY SONATECH DEPENDED UPON ITS USE OF SKILLED PERSONNEL AND OTHER RESOURCES OF ITS PARENT CORPORATION, CHANNEL INDUSTRIES, INC. (CHANNEL). DCASD BELIEVED THIS ARRANGEMENT WAS UNSATISFACTORY INASMUCH AS CHANNEL RECENTLY HAD RECEIVED A NEGATIVE PREAWARD SURVEY RECOMMENDATION.

SINCE MRI PLACED SUBSTANTIAL RELIANCE UPON SONATECH FOR PERFORMANCE OF THE CONTRACT AND SONATECH WAS RATED UNSATISFACTORY BY THE SURVEY TEAM, MRI WAS RATED UNSATISFACTORY IN THE PREAWARD SURVEY REPORT ON FACTORS OF PRODUCTION CAPABILITY, PURCHASING AND SUBCONTRACTING, AND ABILITY TO MEET THE REQUIRED SCHEDULE. CONSEQUENTLY, THE SURVEY REPORT RECOMMENDED THAT NO AWARD TO BE MADE TO MRI.

THE NEGATIVE SURVEY REPORTS ON MRI AND SONATECH WERE SENT BY THE CONTRACTING OFFICER TO THE SMALL BUSINESS ADMINISTRATION (SBA) ATLANTA REGIONAL OFFICE FOR REVIEW AND CONSIDERATION WHETHER MRI, A SMALL BUSINESS CONCERN, SHOULD BE ISSUED A CERTIFICATE OF COMPETENCY (COC) FOR THE PROCUREMENT. THE SBA THEREAFTER ADVISED MRI THAT "BASED ON INFORMATION THAT YOU PRESENTED WITH THE APPLICATION (FOR A COC) THERE IS INSUFFICIENT EVIDENCE THAT YOU HAVE FINANCIAL CAPACITY TO PRODUCE THE CONTRACT." THE SAME TIME, SBA INFORMED THE CONTRACTING OFFICER THAT "BASED ON A COMPREHENSIVE ANALYSIS OF ALL AVAILABLE INFORMATION, THIS AGENCY HAS DECLINED TO ISSUE A CERTIFICATE OF COMPETENCY IN THIS INSTANCE." SUBSEQUENTLY, MRI SUBMITTED TO THE CONTRACTING OFFICER AN AGREEMENT WHEREBY CHANNEL GUARANTEED TO THE GOVERNMENT MRI'S PERFORMANCE OF THE CONTRACT. THE CONTRACTING OFFICER INQUIRED OF SBA WHETHER THE DENIAL OF THE COC WOULD BE RECONSIDERED IN VIEW OF THE GUARANTEE. SBA ADVISED THAT "IT IS SBA POLICY NOT TO REOPEN A COC CASE WHEN WE FIND NO REASON TO DISPUTE THE CONTRACTING OFFICER'S DETERMINATION RELATIVE TO CAPACITY AND/OR CREDIT."

UPON RECEIPT OF THIS INFORMATION, THE CONTRACTING OFFICER ADVISED MRI THAT, BECAUSE OF THE NEGATIVE PREAWARD SURVEY AND THE SBA REFUSAL TO ISSUE A COC, MRI WAS DETERMINED TO BE NONRESPONSIBLE FOR THE PROCUREMENT. AFTER THAT DETERMINATION WAS PROTESTED TO OUR OFFICE, THE CONTRACTING OFFICER READ THE PREAWARD SURVEY REPORT ON CHANNEL, WHICH HE HAD NOT SEEN PREVIOUSLY, AND REVIEWED THE SURVEY REPORTS ON MRI AND SONATECH. IN A SUPPLEMENTAL DETERMINATION DATED JANUARY 9, 1974, THE CONTRACTING OFFICER STATED THAT HE FOUND NOTHING IN THE THREE SURVEYS, ALL OF WHICH WERE NEGATIVE, TO ALTER HIS ORIGINAL DETERMINATION OF NONRESPONSIBILITY.

MRI HAS PROTESTED FOR SEVERAL REASONS. FIRST, IT HAS CONTENDED THAT THE SURVEY OF SONATECH WAS MADE HASTILY AND WAS INCOMPLETE AND THAT A PROPER CONSIDERATION OF THE MATTER WOULD HAVE LED TO A FINDING THAT MRI WAS RESPONSIBLE. SECOND, IT HAS CONTENDED THAT THE SBA DENIAL OF THE COC WAS FAULTY, BECAUSE MRI SUBMITTED SOME FINANCIAL INFORMATION TO THE SBA LOS ANGELES OFFICE AND WAS ADVISED BY THE SBA ATLANTA OFFICE THAT SUBMISSION OF THE REMAINDER WAS UNNECESSARY. FURTHER, MRI CONTENDS THAT THE CHANNEL GUARANTEE SHOULD HAVE CURED ANY FINANCIAL SHORTCOMINGS AND THAT SBA THEREFORE SHOULD HAVE RECONSIDERED THE DENIAL OF THE COC.

UNDER 15 U.S.C. 637(B)(7), SBA HAS THE AUTHORITY TO ISSUE OR DENY A COC. OUR OFFICE HAS NO AUTHORITY TO REVIEW SBA DETERMINATIONS OR TO REQUIRE IT TO ISSUE A COC OR TO REOPEN A CASE WHEN A COC IS DENIED. 51 COMP. GEN. 448 (1972); B-178743, SEPTEMBER 4, 1973. THEREFORE, OUR OFFICE IS UNABLE TO PROVIDE ANY RELIEF FOR MRI NOTWITHSTANDING THE CONTENTIONS MADE REGARDING SBA.

MOREOVER, THE DETERMINATION OF OFFEROR RESPONSIBILITY IS A MATTER FOR ADMINISTRATIVE CONSIDERATION BY EACH CONTRACTING OFFICER AND IN THE CASE OF SMALL BUSINESSES IS FOR FURTHER CONSIDERATION BY SBA WITH RESPECT TO A PROSPECTIVE CONTRACTOR'S CAPACITY AND CREDIT WHEN THE CONTRACTING OFFICER MAKES A NEGATIVE FINDING. IN THAT CONNECTION, OUR OFFICE HAS LONG RECOGNIZED THAT WHEN AN OFFEROR'S APPLICATION FOR ISSUANCE OF A COC IS DENIED BY SBA, THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY MUST BE REGARDED AS HAVING BEEN AFFIRMED BY SBA. FURTHER, ALTHOUGH SBA CONSIDERED MRI NONRESPONSIBLE ON A DIFFERENT BASIS THAN FOUND BY THE CONTRACTING OFFICER INITIALLY, IN VIEW OF THE SBA FINDING, WE ARE UNABLE TO CONCLUDE THAT THE CONTRACTING OFFICER'S SUBSEQUENT DETERMINATION IS WITHOUT BASIS IN FACT. B-175502, JULY 26, 1972.

ACCORDINGLY, THE PROTEST IS DENIED.