B-181751, DEC 17, 1974

B-181751, DEC 17, 1974

1. DETERMINATION BY CONTRACTING OFFICER THAT LOW BIDDER, A SMALL BUSINESS CONCERN, WAS NONRESPONSIBLE FOR LACK OF TENACITY AND PERSEVERANCE, BASED ON UNFAVORABLE TELEPHONIC REPORTS FROM OTHER PROCURING ACTIVITIES SUMMARIZED IN MEMORANDA, WAS PROPER, WHERE REPORTS WERE SUBSEQUENTLY SUPPORTED, ELABORATED UPON AND CONFIRMED IN DOCUMENTARY FORM. 2. PROTEST BY LOW BIDDER THAT CONTRACTING OFFICER'S NONRESPONSIBILITY DETERMINATION FOR LACK OF TENACITY AND PERSEVERANCE WAS NOT BASED ON SUBSTANTIAL EVIDENCE DOCUMENTED IN CONTRACT FILE AT TIME OF DETERMINATION IS DENIED. WHILE IN THE INSTANT PROCUREMENT, THE MEMORANDA OF TELEPHONE CONVERSATIONS UPON WHICH DETERMINATION WAS BASED, DID NOT CONSTITUTE "SUBSTANTIAL EVIDENCE" REQUIRED BY ASPR 1 705(4)(C)(VI), BIDDER WAS NOT PREJUDICED WHERE SUCH CONVERSATIONS ARE SUBSEQUENTLY CONFIRMED IN DOCUMENTARY FORM AND ESTABLISH BIDDER'S NONRESPONSIBILITY. 3. FACT THAT PROTESTER WAS NOT FURNISHED PREAWARD NOTICE OF THE REJECTION OF ITS BID PROVIDES NO BASIS FOR PROTEST SINCE THERE IS NO ASPR REQUIREMENT THAT SUCH NOTICE BE GIVEN. 4. PROTEST BY BIDDER THAT SBA IN ITS APPEAL OF NONRESPONSIBILITY DETERMINATION TO HEAD OF PROCURING ACTIVITY DEPARTED FROM ASPR 1 705(4)(C)(VI) BY NOT PROVIDING BIDDER WITH OPPORTUNITY TO SUBMIT INFORMATION RELATING TO ITS TENACITY AND PERSEVERANCE OR TO STATE HOW DEFICIENCIES ALLEGED BY CONTRACTING OFFICER HAVE BEEN OR WILL BE ELIMINATED, IS UNTIMELY SINCE ISSUE WAS RAISED FOR FIRST TIME IN PROTEST TO GAO MORE THAN 3 MONTHS AFTER PROTESTER WAS NOTIFIED BY SBA THAT APPEAL WAS FILED ON ITS BEHALF. 4 C.F.R. 20.2(A).

GARY CONSTRUCTION COMPANY, INCORPORATED:

INVITATION FOR BIDS (IFB) NO. DADA15-74-B-0130, FOR THE FURNISHING OF ALL LABOR, MATERIALS AND EQUIPMENT TO ENCLOSE TWO PORCHES, WAS ISSUED BY THE WALTER REED ARMY MEDICAL CENTER (WRAMC), WASHINGTON, D.C.AT BID OPENING GARY CONSTRUCTION COMPANY, INCORPORATED (GARY), A SMALL BUSINESS CONCERN, WAS FOUND TO BE THE LOW BIDDER AT $24,700. THE SECOND LOW BID OF $24,820 WAS SUBMITTED BY THE GOLDEN CONSTRUCTION COMPANY, INCORPORATED (GOLDEN).

HOWEVER, THE CONTRACTING OFFICER, AFTER RECEIVING UNSATISFACTORY REPORTS FROM SEVERAL AGENCIES OF THE DEPARTMENT OF DEFENSE RELATING TO GARY'S LACK OF TENACITY AND PERSEVERANCE ON PRIOR CONTRACTS, DETERMINED THAT THE BIDDER WAS NOT A RESPONSIBLE PROSPECTIVE CONTRACTOR UNDER THE PROVISIONS OF ARMED SERVICES PROCUREMENT REGULATION (ASPR) SEC. 1-903 (1973 ED.). ACCORDANCE WITH ASPR SEC. 1-705.4(C)(VI)(1973 ED.) THE CONTRACTING OFFICIALS FORWARDED THE DETERMINATION OF NONRESPONSIBILITY TO THE COMMANDER, UNITED STATES ARMY HEALTH SERVICES COMMAND (AHSC) FOR APPROVAL AND CONCURRENTLY, A COPY OF THE DOCUMENTATION SUPPORTING THE DETERMINATION WAS TRANSMITTED TO THE PHILADELPHIA REGIONAL OFFICE OF THE SMALL BUSINESS ADMINISTRATION. ON JUNE 27, 1974, SBA APPEALED THE CONTRACTING OFFICER'S DETERMINATION AND REQUESTED THAT AWARD EITHER BE MADE TO GARY OR THAT THE CASE BE REFERRED TO SBA FOR THE PROCESSING OF A CERTIFICATE OF COMPETENCY. THE CONTRACT WAS AWARDED TO GOLDEN, THE SECOND LOW BIDDER, ON JUNE 29, 1974. ON JULY 15, 1974, AHSC DENIED SBA'S APPEAL AND UPHELD THE CONTRACTING OFFICER'S DETERMINATION THAT GARY WAS NONRESPONSIBLE BECAUSE OF LACK OF TENACITY AND PERSEVERANCE.

BY LETTERS DATED JULY 3 AND 5, 1974, GARY, THROUGH ITS COUNSEL, PROTESTED THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY. GARY FIRST ALLEGES THAT ITS PERFORMANCE HISTORY DEMONSTRATES CONCLUSIVELY THAT THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY WAS UNREASONABLE. SPECIFICALLY, THE PROTESTER CONTENDS THAT WHILE THE APPLICABLE REGULATIONS REQUIRE THAT "A NONRESPONSIBILITY DETERMINATION FOR LACK OF TENACITY AND PERSEVERANCE BE SUPPORTED BY SUBSTANTIAL EVIDENCE DOCUMENTED IN THE CONTRACT FILES AT THE TIME DETERMINATION IS MADE", THE EVIDENCE OF RECORD IN THE INSTANT PROCUREMENT FALLS SHORT OF THE STANDARD NECESSARY TO SUSTAIN SUCH A DETERMINATION. IN THIS REGARD, GARY STATED IN PERTINENT PART AS FOLLOWS IN ITS RESPONSE TO THE PROCURING ACTIVITY'S REPORT TO OUR OFFICE:

"*** IT IS NOT CONTEMPLATED ANYWHERE IN THESE REGULATIONS THAT THE CONTRACTING OFFICER'S DETERMINATION SHALL BE SUPPLEMENTED OR REINFORCED BY SUBSEQUENT INVESTIGATION, AND TO ALLOW WHAT WOULD OTHERWISE BE A FRIVOLOUS AND INSUBSTANTIAL BASIS FOR A NONRESPONSIBILITY DETERMINATION TO BE STRENGTHENED BY AFTER-THE-FACT INVESTIGATIONS WOULD DEFEAT THE PURPOSE OF THIS REGULATION.

"IT TAKES LITTLE IMAGINATION TO APPRECIATE THE HARM THAT COULD RESULT IF THE GROUNDS FOR THE NONRESPONSIBILITY DETERMINATION, AS THEY WERE DOCUMENTED IN THE FILES AT THE TIME THE DETERMINATION WAS MADE, WERE NOT REQUIRED TO STAND OR FALL ON THEIR OWN MERIT. A CONTRACTING OFFICER, IMPROPERLY MOTIVATED, COULD THEN MAKE AN ARBITRARY NONRESPONSIBILITY DETERMINATION IN THE ALMOST CERTAIN KNOWLEDGE THAT SUBSEQUENT SELECTED INQUIRIES AND SELECTIVE DOCUMENTATION OF RESPONSES WOULD CREATE A 'RECORD' TO SUBSTANTIATE THE DETERMINATION."

THE ADMINISTRATIVE RECORD DISCLOSES THAT BECAUSE GARY HAD NEVER PERFORMED ANY CONSTRUCTION FOR WRAMC, THE CONTRACTING OFFICER CONTACTED SEVERAL DOD AGENCIES FOR WHOM THE BIDDER HAD PERFORMED CONTRACTS IN THE PAST. RESPONSE TO THESE REQUESTS, THE CONTRACTING OFFICER RECEIVED WHAT HE CONSIDERED TO BE UNFAVORABLE REPORTS ON GARY, SPECIFICALLY RELATING TO THE BIDDER'S LACK OF TENACITY AND PERSEVERANCE IN THE PERFORMANCE OF PREVIOUS CONTRACTS WITH ANDREWS AIR FORCE BASE, UNITED STATES SOLDIERS AND AIRMAN'S HOME, NAVAL RESEARCH LABORATORY, NAVAL SHIPS AND DEVELOPMENT COMMAND, AND THE NAVAL FACILITIES ENGINEERING COMMAND. BECAUSE OF THE PRESSURE OF TIME, THESE REPORTS WERE INITIALLY RECEIVED AND RECORDED THROUGH VARIOUS TELEPHONE CONVERSATIONS WITH THE RESPECTIVE AGENCIES, BUT WERE LATER SUPPORTED, CONFIRMED AND ELABORATED UPON IN DOCUMENTARY FORM. THE CONTRACTING OFFICER REVIEWED THE RESPECTIVE REPORTS RELATING TO GARY'S PAST UNSATISFACTORY CONTRACT PERFORMANCE, AND ON THE BASIS OF WHAT HE CONSIDERED TO BE SUBSTANTIAL EVIDENCE IN THE FORM OF MEMORANDA OF TELEPHONE CONVERSATIONS, DETERMINED THAT GARY WAS NONRESPONSIBLE BECAUSE OF ITS DEMONSTRATED LACK OF TENACITY AND PERSEVERANCE.

BEFORE AWARD OF A CONTRACT, THE CONTRACTING OFFICER MUST MAKE AN AFFIRMATIVE DETERMINATION THAT THE PROSPECTIVE CONTRACTOR IS RESPONSIBLE. ASPR SEC. 1-904.1 (1974 ED.). IF THE INFORMATION AVAILABLE TO THE CONTRACTING OFFICER "DOES NOT INDICATE CLEARLY THAT THE PROSPECTIVE CONTRACTOR IS RESPONSIBLE", A DETERMINATION OF NONRESPONSIBILITY IS REQUIRED. ASPR SEC. 1-902 (1974 ED.). ASPR SEC. 1-903.1(III)(1974 ED.) REQUIRES THAT A CONTRACTOR MUST HAVE A SATISFACTORY RECORD OF PERFORMANCE. IN THIS REGARD, PAST UNSATISFACTORY PERFORMANCE, DUE TO FAILURE TO APPLY NECESSARY TENACITY AND PERSEVERANCE TO DO AN ACCEPTABLE JOB IS SUFFICIENT TO JUSTIFY A FINDING OF NONRESPONSIBILITY. HOWEVER, WHEN THE PROSPECTIVE CONTRACTOR IS A SMALL BUSINESS AND A DETERMINATION OF NONRESPONSIBILITY IS BASED ON FACTORS WHICH DO NOT RELATE TO CAPACITY OR CREDIT, THE PROVISIONS OF ASPR SEC. 1-705.4(C)(VI) (1974 ED.) ARE APPLICABLE.

ASPR SEC. 1-705.4(C)(VI)(1974 ED.) REQUIRES THAT A DETERMINATION BY A CONTRACTING OFFICER THAT A SMALL BUSINESS CONCERN IS NOT RESPONSIBLE DUE TO A LACK OF TENACITY AND PERSEVERANCE IN THE PERFORMANCE TO PREVIOUS CONTRACTS, "MUST BE SUPPORTED BY SUBSTANTIAL EVIDENCE DOCUMENTED IN THE CONTRACT FILES." RECOGNIZING THAT THE DETERMINATION OF A PROSPECTIVE CONTRACTOR'S RESPONSIBILITY IS PRIMARILY THE FUNCTION OF THE PROCURING ACTIVITY, AND IS NECESSARILY A MATTER OF JUDGMENT INVOLVING A CONSIDERABLE DEGREE OF DISCRETION, WE WILL NOT OBJECT TO A CONTRACTING OFFICER'S DETERMINATION OF LACK OF TENACITY AND PERSEVERANCE WHEN THE EVIDENCE OF RECORD REASONABLY PROVIDES A BASIS FOR SUCH DETERMINATION. MATTER OF KENNEDY VAN AND STORAGE COMPANY, INC., B-180973, JUNE 19, 1974. HOWEVER, WHERE A DETERMINATION IS MADE BASED UPON AN ALLEGED LACK OF TENACITY AND PERSEVERANCE AND THE EVIDENCE DOES NOT EITHER RELATE TO THESE FACTORS, OR DOES NOT ADEQUATELY ESTABLISH A BASIS FOR THE DETERMINATION, OUR OFFICE WILL NOT UPHOLD SUCH DETERMINATIONS. 49 COMP. GEN. 600 (1970); 39 COMP. GEN. 868 (1960).

THE EVIDENCE IN SUPPORT OF THE DETERMINATION MUST BE GERMANE TO THE INQUIRY. A MERE ASSUMPTION OR AN UNSUPPORTED STATEMENT BY A CONTRACTING OFFICER THAT A PROSPECTIVE CONTRACTOR'S PAST UNSATISFACTORY PERFORMANCE RESULTED FROM A LACK OF TENACITY AND PERSEVERANCE IS INSUFFICIENT FOR PURPOSES OF MEETING THE EVIDENTIARY TEST REQUIRED. 49 ID. 600; 43 COMP. GEN. 298 (1963). WE HAVE ALSO RECOGNIZED THAT THE CUMULATIVE EFFECT OF VARIOUS MINOR DEFICIENCIES WHICH, WHEN TAKEN TOGETHER, UNDULY INCREASE THE BURDEN OF ADMINISTRATION FROM THE GOVERNMENT'S STANDPOINT, CAN SUPPORT A FINDING OF NONRESPONSIBILITY BASED, IN APPROPRIATE CIRCUMSTANCES, ON LACK OF TENACITY AND PERSEVERANCE. 49 COMP. GEN. 139 (1969). FURTHERMORE, WE HAVE RECOGNIZED THAT POOR BUSINESS PRACTICES GO TO QUESTIONS CONCERNING TENACITY AND PERSEVERANCE RATHER THAN CONSIDERATIONS OF CAPACITY AND CREDIT. MATTER OF THE TRANSPORT TIRE COMPANY, B-179098, JANUARY 24, 1974. WHAT IS REQUIRED TO SUSTAIN A DETERMINATION OF NONRESPONSIBILITY FOR LACK OF TENACITY AND PERSEVERANCE TO DO AN ACCEPTABLE JOB IS A CLEAR SHOWING THAT A PROSPECTIVE CONTRACTOR DID NOT DILIGENTLY OR AGGRESSIVELY TAKE WHATEVER ACTION WAS REASONABLY NECESSARY TO RESOLVE ITS PROBLEMS. 170224(2), OCTOBER 8, 1970. WE ARE CONCERNED NOT WITH WHETHER A FIRM HAS OR CAN ACQUIRE THE CAPABILITY TO PERFORM, BUT WHETHER A FIRM THAT IS DEEMED TO POSSESS ADEQUATE CAPABILITY APPLIES IT IN SUFFICIENT MEASURE TO INSURE SATISFACTORY COMPLETION OF THE CONTRACT. 51 COMP. GEN. 288 (1971).

FROM OUR REVIEW OF THE RECORD, WE CANNOT SAY THAT THE DETERMINATION THAT GARY LACKED TENACITY AND PERSEVERANCE WAS ARBITRARY, CAPRICIOUS OR BASED UPON INSUBSTANTIAL EVIDENCE. WE TAKE THIS POSITION NOTWITHSTANDING THE FACT THAT THE EVIDENCE OF RECORD WHICH WAS BEFORE THE CONTRACTING OFFICER AT THE TIME OF THE NONRESPONSIBILITY DETERMINATION CONSISTED PRIMARILY OF MEMORANDA OF TELEPHONE CONVERSATIONS IN WHICH EMPLOYEES OF OTHER AGENCIES MADE GENERAL AND CONCLUSORY STATEMENTS THAT GARY'S PERFORMANCE HAD BEEN UNSATISFACTORY.

IN OUR OPINION, MEMORANDA OF THIS CHARACTER DO NOT SATISFY THE EVIDENTIARY STANDARD REQUIRED BY ARMED SERVICES PROCUREMENT REGULATION SEC. 1-705.4(C)(VI)(1974 ED.). WE BELIEVE THAT IT IS PREFERABLE FOR A CONTRACTING OFFICER TO ACTUALLY BE IN POSSESSION OF RELEVANT DOCUMENTATION FROM CONTRACT FILES AT THE TIME A DETERMINATION OF NONRESPONSIBILITY IS MADE. WHEN CONSTRAINTS OF TIME OR DISTANCE COMPEL THE CONTRACTING OFFICER TO RELY UPON TELEPHONIC ADVICE, THAT ADVICE AND THE MEMORANDA WHICH REFLECT IT SHOULD CONTAIN SPECIFIC, SUBSTANTIVE INFORMATION FROM THE CONTRACT FILES RELATING TO THE CONTRACTOR'S TENACITY AND PERSEVERANCE. VIEW OF THE FACT THAT THE CONCLUSIONS INITIALLY EXPRESSED TO THE CONTRACTING OFFICER BY TELEPHONE WERE LATER SUPPORTED BY THE PRODUCTION OF PRE-EXISTING DOCUMENTS ENUMERATING RECURRING INSTANCES IN WHICH GARY FAILED TO EFFECTIVELY CONTROL ITS WORK FORCE, WE THINK GARY'S INTERESTS IN THE INSTANT PROCUREMENT WERE NOT PREJUDICED AND WE WILL NOT OBJECT TO THE CONTRACTING OFFICER'S DETERMINATION. HOWEVER, WE ARE BRINGING THE DEFICIENT PROCEDURES USED IN THIS CASE TO THE ATTENTION OF THE SECRETARY OF THE ARMY.

SECONDLY, GARY CONTENDS THAT THERE WAS NO JUSTIFICATION FOR THE PROCURING ACTIVITY'S FAILURE TO INFORM IT PRIOR TO AWARD THAT ITS BID WAS NOT ACCEPTED BECAUSE OF THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY FOR LACK OF TENACITY AND PERSEVERANCE. IN THIS REGARD, ASPR SEC. 2-408.1 (1974 ED) REQUIRES PROMPT NOTIFICATION TO UNSUCCESSFUL BIDDERS THAT THEIR BIDS HAVE NOT BEEN ACCEPTED. THERE IS NO REQUIREMENT IN ASPR THAT BIDDERS BE NOTIFIED IN ADVANCE OF AWARD AS TO THE REJECTION OF THEIR BIDS. SEE MATTER OF SHEFFIELD BUILDING COMPANY, INC., B-181242, AUGUST 19, 1974.

FINALLY, GARY ALLEGES IN ITS SUBMISSION OF OCTOBER 7, 1974, THAT SBA, IN ITS APPEAL FROM THE CONTRACTING OFFICER'S DETERMINATION TO THE HEAD OF THE PROCURING ACTIVITY, DEPARTED FROM THE REQUIREMENTS OF ASPR SEC. 1- 705.4(C)(VI)(1974 ED.) WHICH STATES, "SUCH APPEAL SHALL *** INCLUDE STATEMENTS FROM THE SMALL BUSINESS CONCERN AS TO TENACITY, INTEGRITY AND PERSEVERANCE AND HOW DEFICIENCIES NOTED IN THE CONTRACTING OFFICER'S DETERMINATION HAVE BEEN OR WILL BE ELIMINATED." THE PROTESTER CONTENDS THAT THE SBA, IN THE FORMULATION OF ITS APPEAL, DID NOT SOLICIT ANY INFORMATION FROM THE FIRM RELATING TO ITS TENACITY AND PERSEVERANCE OR PROVIDE GARY WITH THE OPPORTUNITY TO ELABORATE ON HOW THE DEFICIENCIES INDICATED BY THE CONTRACTING OFFICER "HAVE BEEN OR WILL BE ELIMINATED." THE PROTESTER STATES THAT WHILE THE HEAD OF THE PROCURING ACTIVITY DENIED SBA'S APPEAL BY LETTER DATED JULY 15, 1974, IT WAS NOT UNTIL SEPTEMBER 23, THE DATE THE PROTESTER RECEIVED A COPY OF THE PROCURING ACTIVITY'S REPORT FURNISHED OUR OFFICE, THAT IT FIRST LEARNED OF THE DEFICIENCIES CONTAINED IN THE CONTRACTING OFFICER'S DETERMINATION, MUCH LESS AN OPPORTUNITY TO STATE HOW THESE DEFICIENCIES "HAVE BEEN OR WILL BE ELIMINATED."

IN THIS REGARD, THE RECORD INDICATES THAT BY LETTER OF JULY 17, 1974, SBA INFORMED GARY THAT AN APPEAL HAD BEEN SUBMITTED ON ITS BEHALF REQUESTING WRAMC TO CANCEL ITS DETERMINATION OF NONRESPONSIBILITY FOR TENACITY AND PERSEVERANCE. SECTION 20.2(A) OF OUR INTERIM BID PROTEST PROCEDURES AND STANDARDS, 4 C.F.R. SEC. 20.2(A)(1974) REQUIRES IN PART, THAT "*** PROTESTS SHALL BE FILED NOT LATER THAN 5 DAYS AFTER THE BASIS FOR PROTEST IS KNOWN OR SHOULD HAVE BEEN KNOWN, WHICHEVER IS EARLIER." THE AFOREMENTIONED ASPR PROVISION, PUBLISHED IN VOLUME 32 OF THE CODE OF FEDERAL REGULATIONS PLACED GARY ON CONSTRUCTIVE NOTICE THAT PRIOR TO THE FILING OF SBA'S APPEAL THAT AGENCY WAS REQUIRED TO SOLICIT STATEMENTS FROM GARY REFLECTING ON ITS TENACITY AND PERSEVERANCE AND HOW THE DEFICIENCE NOTED IN THE CONTRACTING OFFICER'S DETERMINATION HAVE BEEN OR WILL BE ELIMINATED. 53 COMP. GEN. 553 (1974). SINCE THE ABOVE ALLEGATION WAS MADE APPROXIMATELY 3 MONTHS AFTER GARY WAS INFORMED THAT AN APPEAL WAS FILED BY SBA ON ITS BEHALF, WE REGARD THAT PORTION OF GARY'S PROTEST AS UNTIMELY FILED AND THEREFORE DECLINE TO CONSIDER IT ON THE MERITS.

ACCORDINGLY, WE FIND NO LEGAL BASIS TO QUESTION THE CONTRACTING OFFICER'S NONRESPONSIBILITY DETERMINATION AND GARY'S PROTEST IS DENIED.