B-221260, APR 8, 1986, OFFICE OF GENERAL COUNSEL

B-221260: Apr 8, 1986

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WAS EQUAL TO THE PROTESTING COMPANY IN REGARD TO MATERIAL QUALITY AND EXPERIENCE. WAS SUPERIOR IN ALL OTHER RESPECTS. WHICH IS HEADQUARTERED IN TUSCON. A SEARCH WAS UNDERTAKEN FOR A FREIGHT FORWARDER LOCATED IN ARIZONA. WAS THE ONLY FIRM IN TUSCON OR PHOENIX THAT COULD SATISFY ALL OF AURA'S REQUIREMENTS. IT WAS INFORMED BY AMERFORD ON NOVEMBER 11 THAT ITS "BID WAS TOO HIGH.". IT ALSO CONTENDS THAT IT "COULD HAVE DONE THE BETTER JOB.". AMERFORD CONCLUDED THAT (1) PAK N SHIP'S STAFFING WAS INSUFFICIENT. (2) ITS EQUIPMENT WAS INADEQUATE. (3) ITS FACILITY WAS UNACCEPTABLE BECAUSE IT WAS "LOCATED IN AN UNSECURE AREA OF TOWN" AND THE ACCESS ROUTE FOR TRUCKS. WAS UNPAVED AND. (4) THE FIRM WAS UNWILLING TO DO THE ON SITE CRATING OF SHIPMENTS.

B-221260, APR 8, 1986, OFFICE OF GENERAL COUNSEL

CONTRACTS - SUBCONTRACTS - AWARD PROPRIETY DIGEST: UPON THE RECORD BEFORE GAO, IT APPEARS THAT A FIRST-TIER SUBCONTRACTOR HAD A REASONABLE BASIS FOR NOT SELECTING AS A SECOND-TIER SUBCONTRACTOR A COMPANY FROM WHICH IT REQUESTED-- PRIOR TO THE AWARD OF THE SUBCONTRACT TO THE FIRST-TIER SUBCONTRACTOR-- A PRICE QUOTATION WHERE (1) THE FIRST-TIER SUBCONTRACTOR DID NOT LIST THE COMPANY AS A SUBCONTRACTOR IN ITS PROPOSAL TO THE PRIME CONTRACTOR, AND (2) THE FIRST-TIER SUBCONTRACTOR CONCLUDED THAT ANOTHER FIRM OFFERED EXCELLENT PRICES, WAS EQUAL TO THE PROTESTING COMPANY IN REGARD TO MATERIAL QUALITY AND EXPERIENCE, AND WAS SUPERIOR IN ALL OTHER RESPECTS.

THE HONORABLE ELDON RUDD:

HOUSE OF REPRESENTATIVES

THIS RESPONDS TO YOUR LETTER OF NOVEMBER 21, 1985, REQUESTING INFORMATION IN REGARD TO AN INQUIRY YOU RECEIVED FROM PAK N SHIP, PHOENIX, ARIZONA. THAT COMPANY OBJECTS TO NOT BEING SELECTED AS A SECOND-TIER SUBCONTRACTOR UNDER THE CONTRACT-- NO. AST84-18716-- BETWEEN THE NATIONAL SCIENCE FOUNDATION (NSF) AND THE NONPROFIT ASSOCIATION OF UNIVERSITIES FOR RESEARCH IN ASTRONOMY, INC. (AURA).

NSF REPORTS THAT ON SEPTEMBER 24, 1984, THE AGENCY EXECUTED A COST PLUS- MANAGEMENT-FEE CONTRACT-- ESTIMATED TO TOTAL $146,295,000 OVER 5 YEARS-- WITH AURA FOR THE OPERATION AND MANAGEMENT OF THE NATIONAL OPTICAL ASTRONOMY OBSERVATORIES (NOAO).

NOAO, WHICH IS HEADQUARTERED IN TUSCON, ARIZONA, REGULARLY SHIPS SPECIALIZED SCIENTIFIC INSTRUMENTATION AND OTHER MATERIALS FROM THE UNITED STATES TO AN OBSERVATORY IN CHILE. DURING FISCAL YEAR 1985, A SEARCH WAS UNDERTAKEN FOR A FREIGHT FORWARDER LOCATED IN ARIZONA-- AND THUS CLOSER THAN THE FREIGHT FORWARDER THEN UTILIZED-- TO HANDLE THE SHIPMENTS TO CHILE. AURA DETERMINED THAT AMERFORD INTERNATIONAL CORPORATION (AMERFORD) IN PHOENIX, ARIZONA, WAS THE ONLY FIRM IN TUSCON OR PHOENIX THAT COULD SATISFY ALL OF AURA'S REQUIREMENTS. ACCORDINGLY, ON NOVEMBER 26, 1985, AURA ENTERED INTO A TIME AND MATERIAL SUBCONTRACT WITH AMERFORD-- FOR A COST NOT TO EXCEED $10,000, NOT INCLUDING FREIGHT COSTS-- FOR FREIGHT FORWARDING SERVICES.

PAK N SHIP STATES THAT SOMETIME EARLIER AMERFORD HAD CONTACTED IT CONCERNING ITS PRICES FOR PACKING THE SHIPMENTS FOR AURA. IT ALLEGES THAT IN AUGUST 1985, AMERFORD INFORMED PAK N SHIP THAT ITS PRICES "HAD BEEN ACCEPTED" AND THAT ITS FACILITIES WOULD BE INSPECTED BY NSF. PAK N SHIP CLAIMS, HOWEVER, THAT WHILE STILL AWAITING INSPECTION, IT WAS INFORMED BY AMERFORD ON NOVEMBER 11 THAT ITS "BID WAS TOO HIGH." PAK N SHIP OBJECTS TO THE ALLEGED USE BY AMERFORD OF PAK N SHIP'S PRICES TO OBTAIN THE CONTRACT WHEN PAK N SHIP DID NOT RECEIVE THE SUBCONTRACT. IT ALSO CONTENDS THAT IT "COULD HAVE DONE THE BETTER JOB."

AMERFORD, ON THE OTHER HAND, REPORTS THAT IT REQUESTED A BID-- FOR THE APPROXIMATELY $2,000 PACKING PORTION OF ITS CONTRACT-- NOT ONLY FROM PAK N SHIP, BUT ALSO FROM TWO OTHER FIRMS IN THE PHOENIX AREA. IT EVALUATED ALL THREE FIRMS BASED UPON MATERIAL QUALITY, STAFFING, FACILITIES AND EQUIPMENT, EXPERIENCE, WILLINGNESS TO DO ON SITE CRATING OF SHIPMENTS, REFERENCES AND PRICES ("ECONOMICS"). AMERFORD CONCLUDED THAT (1) PAK N SHIP'S STAFFING WAS INSUFFICIENT, (2) ITS EQUIPMENT WAS INADEQUATE, (3) ITS FACILITY WAS UNACCEPTABLE BECAUSE IT WAS "LOCATED IN AN UNSECURE AREA OF TOWN" AND THE ACCESS ROUTE FOR TRUCKS-- THE ALLEY BEHIND THE FACILITY-- WAS UNPAVED AND, THEREFORE, IMPASSABLE WHEN IT RAINED, (4) THE FIRM WAS UNWILLING TO DO THE ON SITE CRATING OF SHIPMENTS, (5) ITS REFERENCES REVEALED "HIGH CLAIM PERCENTAGES," AND (6) ITS PRICES WERE MERELY "ACCEPTABLE." BY CONTRAST, AMERFORD DETERMINED THAT THE AWARDEE-- EXPRESS PACKAGING AND CRATING (EXPRESS)-- OFFERED "EXCELLENT" PRICES, WAS EQUAL TO PAK N SHIP IN REGARD TO MATERIAL QUALITY AND EXPERIENCE, AND WAS SUPERIOR TO PAK N SHIP IN ALL OTHER AREAS.

INITIALLY, IT SHOULD BE NOTED THAT NEITHER AURA, AS A GOVERNMENT PRIME CONTRACTOR, NOR AMERFORD, A FIRST-TIER SUBCONTRACTOR, ARE BOUND BY FEDERAL PROCUREMENT STATUTES AND REGULATIONS. NOWHERE IN AMERFORD'S OCTOBER 7 PROPOSAL TO AURA, A COPY OF AURA'S STANDARD TIME AND MATERIAL SUBCONTRACT UPON WHICH AMERFORD HAD ENTERED PROPOSED PRICES, WAS PAK N SHIP OR ANY OTHER FIRM LISTED AS A POTENTIAL SUBCONTRACTOR. MOREOVER, ALTHOUGH AMERFORD'S CONTRACT WITH AURA REQUIRED AMERFORD, TO THE FULLEST EXTENT CONSISTENT WITH EFFICIENT PERFORMANCE TO DO THE BEST OF ITS EFFORTS, TO PLACE SUBCONTRACTS IN ACCORDANCE WITH THE FEDERAL POLICY IN SUPPORT OF SMALL BUSINESS CONCERNS AND LABOR SURPLUS CONCERNS, WE ARE UNAWARE OF ANY REQUIREMENT THAT AMERFORD UTILIZE A PARTICULAR SUBCONTRACTOR. FINALLY, UPON THE RECORD BEFORE US, IT APPEARS THAT AMERFORD HAD A RATIONAL BASIS FOR SELECTING EXPRESS RATHER THAN PAK N SHIP.