B-223917, DEC 3, 1986, 66 COMP.GEN. 109

B-223917: Dec 3, 1986

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PROCUREMENT - CONTRACTOR QUALIFICATION - RESPONSIBILITY - CONTRACTING OFFICER FINDINGS - NEGATIVE DETERMINATION - GAO REVIEW PROTEST CHALLENGING NONRESPONSIBILITY DETERMINATION IS SUSTAINED WHERE CONTRACTING OFFICER RELIED SOLELY ON A NEGATIVE PREAWARD SURVEY REPORT SHOWING DELINQUENT DELIVERIES IN ARRIVING AT THE DETERMINATION. FAIRCHILD CONTENDS THAT THE ARMY'S NEGATIVE DETERMINATION OF RESPONSIBILITY WAS IMPROPER BECAUSE IT WAS BASED ON A PREAWARD SURVEY THAT EMPLOYED ERRONEOUS DATA. THE SOLICITATION IS THE SECOND STEP OF A TWO-STEP. FAIRCHILD WAS THE LOW EVALUATED BIDDER ON BOTH THE BASE AND OPTION QUANTITIES AT $3. WAS SECOND LOW AT $6. THIS WAS BASED ON DCASMA RECORDS SHOWING THAT 19 OUT OF 52 (37 PERCENT) CONTRACTS CLOSED IN THE PAST YEAR.

B-223917, DEC 3, 1986, 66 COMP.GEN. 109

PROCUREMENT - CONTRACTOR QUALIFICATION - RESPONSIBILITY - CONTRACTING OFFICER FINDINGS - NEGATIVE DETERMINATION - GAO REVIEW PROTEST CHALLENGING NONRESPONSIBILITY DETERMINATION IS SUSTAINED WHERE CONTRACTING OFFICER RELIED SOLELY ON A NEGATIVE PREAWARD SURVEY REPORT SHOWING DELINQUENT DELIVERIES IN ARRIVING AT THE DETERMINATION, BUT THE RECORD CASTS SUBSTANTIAL DOUBT ON THE VALIDITY OF THE SURVEY DATA.

FAIRCHILD COMMUNICATION ELECTRONICS COMPANY:

FAIRCHILD COMMUNICATIONS ELECTRONICS COMPANY (FAIRCHILD) PROTESTS THE REJECTION OF ITS LOW BID UNDER INVITATION FOR BIDS (IFB) NO. DAAB07 86-B- DO50, ISSUED BY THE DEPARTMENT OF THE ARMY FOR MODEM TEST SETS. THE ARMY REJECTED THE BID AFTER RECEIVING A DEFENSE CONTRACT ADMINISTRATION SERVICES MANAGEMENT AREA (DCASMA), BALTIMORE, PREAWARD SURVEY RECOMMENDING AGAINST AWARD BECAUSE OF FAIRCHILD'S LATE DELIVERIES OF EARLIER CONTRACTS. FAIRCHILD CONTENDS THAT THE ARMY'S NEGATIVE DETERMINATION OF RESPONSIBILITY WAS IMPROPER BECAUSE IT WAS BASED ON A PREAWARD SURVEY THAT EMPLOYED ERRONEOUS DATA. WE SUSTAIN THE PROTEST.

THE SOLICITATION IS THE SECOND STEP OF A TWO-STEP, SEALED BID PROCUREMENT FOR A BASE QUANTITY OF 130 MODEM TEST SETS WITH AN OPTION FOR THE SAME QUANTITY. THE ARMY USES THE TEST SETS WITH AN OPTION FOR THE SAME QUANTITY. THE ARMY USES THE TEST SETS TO REVIEW THE POWER CONSUMPTION REQUIREMENTS OF EQUIPMENT TRANSMITTING TO DEFENSE SATELLITE COMMUNICATIONS SYSTEM SATELLITES. THE ARMY FOUND FOUR OF THE FIVE STEP ONE TECHNICAL PROPOSALS ACCEPTABLE, AND AT THE MAY 28, 1986, STEP-TWO BID OPENING, FAIRCHILD WAS THE LOW EVALUATED BIDDER ON BOTH THE BASE AND OPTION QUANTITIES AT $3,845,900; QUALCOMM, INC. WAS SECOND LOW AT $6,493,593.

ON JUNE 17, DCASMA CONDUCTED AN ON-SITE PREAWARD SURVEY AT FAIRCHILD'S PLANT. THE PREAWARD SURVEY FOUND FAIRCHILD SATISFACTORY IN FOUR AREAS (TECHNICAL CAPABILITY, PLANT FACILITIES AND PRODUCTION EQUIPMENT, MATERIALS-PURCHASED PARTS-SUBCONTRACTING, AND PERSONNEL), BUT UNSATISFACTORY IN TWO AREAS (ORGANIZATION AND MANAGEMENT DATA, AND DELIVERY PERFORMANCE RECORD). THE TWO UNSATISFACTORY RATINGS RESULTED FROM LATE DELIVERIES THAT DCASMA ATTRIBUTED TO INADEQUATE PLANNING AND VENDOR/SUBCONTRACTOR CONTROL. THIS WAS BASED ON DCASMA RECORDS SHOWING THAT 19 OUT OF 52 (37 PERCENT) CONTRACTS CLOSED IN THE PAST YEAR, AND 27 OF 135 (20 PERCENT) CONTRACTS CURRENTLY OPEN WERE DELINQUENT DUE TO CONTRACTOR-CAUSED DELAYS. DCASMA RECOMMENDED AGAINST AWARD ON THE GROUND THAT FAIRCHILD WAS INCAPABLE OF ASSURING SATISFACTORY PERFORMANCE OF THE PROPOSED CONTRACT BECAUSE DCASMA WAS UNAWARE OF ANY ACTION TAKEN BY FAIRCHILD TO CORRECT THE PROBLEMS.

THE ARMY ADOPTED DCASMA'S RECOMMENDATION IN CONCLUDING THAT FAIRCHILD WAS NONRESPONSIBLE, AND REPORTS THAT FAIRCHILD WOULD HAVE RECEIVED THE AWARD BUT FOR THE PREAWARD SURVEY. ON JULY 24, THE ARMY AWARDED QUALCOMM THE BASE QUANTITY AT ITS BID PRICE OF $4,380,358. FAIRCHILD BID $2,929,070 FOR THE BASE QUANTITY.

FAIRCHILD CONTENDS THAT THE NONRESPONSIBILITY DETERMINATION WAS IMPROPER BECAUSE NO GOVERNMENT OFFICIAL, DCASMA OR ARMY, INVESTIGATED THE FACTS BEHIND THE REPORTED NUMBERS. REGARDING THE DELINQUENCY OF THE CLOSED CONTRACTS, FAIRCHILD ARGUES IT WAS INEXCUSABLY LATE ON NO MORE THAN 7 OUT OF 52 CONTRACTS (13 PERCENT), AND NOT THE 37 PERCENT REPORTED BY DCASMA. FAIRCHILD HAS OFFERED THIS EXPLANATION OF THE ACTUAL STATUS OF THE 19 DELINQUENT CLOSED CONTRACTS: ONE CONTRACT WAS HELD BY A SEPARATE DIVISION OF FAIRCHILD INDUSTRIES UNDER SEPARATE MANAGEMENT; ONE CONTRACT IN FACT WAS NOT LATE; ONE $5,228 CONTRACT WAS TERMINATED FOR CONVENIENCE AT NO COST TO THE GOVERNMENT; TWO CONTRACTS WERE LATE BECAUSE OF THE NEED TO REPLACE POTENTIALLY DEFECTIVE TEXAS INSTRUMENTS COMPUTER CHIPS; ONE CONTRACT WAS LATE ON A FEW ITEMS (2.4 PERCENT OF CONTRACT PRICE) BUT THE MAJORITY OF THE ITEMS WERE DELIVERED EARLY AT GOVERNMENT REQUEST; AND SEVEN CONTRACTS UNDER $10,000 WERE LATE SOLELY ON ACCOUNT OF FAIRCHILD. FAIRCHILD FURNISHES SIMILAR EXPLANATIONS IN CONCLUDING THAT THE DATA SHOWING 27 DELINQUENT OPEN CONTRACTS IS INACCURATE, AND THAT THE ARMY'S NONRESPONSIBILITY DETERMINATION THUS WAS UNREASONABLE.

THE ARMY TAKES THE POSITION THAT IT PROPERLY FOUND FAIRCHILD NONRESPONSIBLE BECAUSE IT RELIED ON DCASMA'S PREAWARD SURVEY WHICH STATED THE PERCENTAGES OF LATE CLOSED AND LATE OPEN CONTRACTS AND THE GENERAL REASONS FOR THEM (INADEQUATE PLANNING AND VENDOR CONTROL), AND WHICH RECOMMENDED AGAINST AWARD SINCE DCASMA COULD FIND NO EVIDENCE OF CORRECTIVE ACTION. THE ARMY MAINTAINS IT WAS NOT REQUIRED TO CONDUCT AN INDEPENDENT EVALUATION TO SUBSTANTIATE THIS INFORMATION. THE ARMY FURTHER NOTES THAT, UNDER OUR PRIOR DECISIONS, THE CONTRACTING OFFICER'S DETERMINATION PROPERLY COULD BE BASED ON THE FACTS AT HAND IMMEDIATELY PRIOR TO THE AWARD, AND WAS NOT REQUIRED TO TAKE INTO ACCOUNT STATUS CHANGES AND INFORMATION ARISING AFTER THE DATE OF AWARD. IN THIS REGARD, AS NOTED ABOVE, THE ARMY DID NOT KNOW AT THE TIME OF AWARD THAT FAIRCHILD CONTESTED THE ACCURACY OF DCASMA'S INFORMATION. FINALLY, THE ARMY LEGAL COUNSEL ARGUES THAT EVEN IF FAIRCHILD IS CORRECT AND IT WAS AT FAULT ON ONLY SEVEN CONTRACT DELINQUENCIES, THIS STILL WOULD BE SUFFICIENT TO SUSTAIN THE ARMY'S DETERMINATION SINCE THE DETERMINATION IS ONLY OBJECTIONABLE IF IT LACKS ANY REASONABLE BASIS.

THE ARMY IS CORRECT THAT WE HAVE HELD THAT A CONTRACTING OFFICER GENERALLY MAY REPLY ON THE RESULTS OF A PREAWARD SURVEY IN DETERMINING A PROSPECTIVE AWARDEE'S RESPONSIBILITY, SYSTEM DEVELOPMENT CORP., B-212624, DEC. 5, 1983, 83-2 CPD 644, AND THAT THE PROPRIETY OF SUCH A DETERMINATION WILL NOT BE AFFECTED BY INFORMATION THAT SURFACES AFTER AWARD. MARTIN ELECTRONICS, INC., B-221298, MAR. 13, 1986, 86-1 CPD 252.

WE ALSO HAVE HELD, HOWEVER, THAT A NONRESPONSIBILITY DETERMINATION WILL NOT BE DEEMED REASONABLE IF NOT BASED ON ACCURATE INFORMATION AND CONCLUSIONS FOR THE PREAWARD SURVEY TEAM. DYNETERIA, INC., B-211525, DEC. 7, 1983, 83-2 CPD 654. THUS, OUR OFFICE WILL CONSIDER THE ACCURACY OF THE PREAWARD SURVEY INFORMATION RELIED UPON IN JUDGING WHETHER A NEGATIVE DETERMINATION OF RESPONSIBILITY WAS REASONABLE. DECKER AND CO., ET AL., B-220807, ET AL., JAN. 28, 1986, 86-1 CPD 100.

WE FIND THAT FAIRCHILD HAS RAISED SUBSTANTIAL DOUBT AS TO THE ACCURACY OF SOME OF THE INFORMATION ON WHICH THE ARMY RELIED IN MAKING ITS DETERMINATION HERE. MORE SPECIFICALLY, WE THINK THE PERCENTAGES OF DELINQUENT CONTRACTS CITED IN THE PREAWARD SURVEY WITHOUT EXPLANATIONS OF THE CIRCUMSTANCES OF THE CONTRACTS CARRIED BY DCASMA AS DELINQUENT MAY HAVE PRESENTED THE CONTRACTING OFFICER WITH AN UNREALISTIC PICTURE OF FAIRCHILD'S PAST AND CURRENT PERFORMANCE.

FOR EXAMPLE, IN RESPONSE TO FAIRCHILD'S CONTENTION THAT ONE CONTRACT CITED AS DELINQUENT WAS HELD BY A FAIRCHILD DIVISION SEPARATE FROM THE FAIRCHILD COMMUNICATIONS AND ELECTRONICS COMPANY COMPETING HERE, THE ARMY STATES THAT AT THE TIME OF AWARD AND PERFORMANCE OF THE CONTRACT, THE TWO DIVISIONS WERE ONE AND THE SAME. FAIRCHILD REFUTES THE ARMY'S POSITION IN ITS COMMENT ON THE ADMINISTRATIVE REPORT, HOWEVER, ASSERTING THAT THESE DIVISIONS IN FACT WERE SPLIT IN 1982, PRIOR TO THAT CONTRACT AWARD.

AS FOR THE CONTRACT FAIRCHILD MAINTAINS WAS PERFORMED ON TIME, THE ARMY STATES THAT, NOTWITHSTANDING FAIRCHILD'S ASSERTION, DCASMA'S RECORDS INDICATE "AN APPARENT MINOR DELAY." FAIRCHILD RESPONDS, HOWEVER, THAT DCASMA'S RECORDS SIMPLY ARE INCORRECT SINCE DELIVERY WAS DUE APRIL 24, 1985 (400 DAYS AFTER THE DATE OF THE CONTRACT, WHICH WAS SIGNED MARCH 19, 1984), AND WAS MADE ON APRIL 23, 1985. OUR CALCULATIONS OF THE DELIVERY DATE SUPPORT FAIRCHILD'S POSITION.

AS A THIRD EXAMPLE, IN RESPONSE TO FAIRCHILDS ARGUMENT THAT TWO OF THE CONTRACTS WERE DELINQUENT DUE SOLELY TO GOVERNMENT FAULT-- ONE WHERE THE ARMY DELAYED ITS INSPECTION OF THE ITEMS, THE SECOND WHERE THE ARMY DELAYED ISSUING A NEED MODIFICATION-- THE ARMY STATES THAT FAIRCHILD REALLY WAS AT FAULT FOR FAILING TO REQUEST MODIFICATIONS EXTENDING THE DELIVERY DATES ONCE IT REALIZED THE ARMY'S DELAY WOULD PLACE THE CONTRACT IN DELINQUENT STATUS. FAIRCHILD MAINTAINS THAT IT HAD NO DUTY TO OBTAIN A SUPERFLUOUS CONTRACT MODIFICATION ACKNOWLEDGING A DELIVERY SCHEDULE EXTENSION THE ARMY ALREADY HAD ACCEPTED, AND THAT, IN ANY CASE, ITS FAILURE TO DO SO DOES NOT REFLECT NEGATIVELY ON ITS ABILITY TO PERFORM ON TIME.

WE AGREE WITH FAIRCHILD'S POSITION THAT, WHETHER OR NOT DEEMED DELINQUENT AS A TECHNICAL MATTER, THESE CONTRACTS HAVE QUESTIONABLE VALUE IN PREDICTING FUTURE TIMELY PERFORMANCE AND THAT, HAD THE CONTRACTING OFFICER BEEN AWARE OF THE CIRCUMSTANCES OF THESE AND OTHER FAIRCHILD CONTRACTS CARRIED BY DCASMA AS DELINQUENT, HE VERY WELL MIGHT HAVE VIEWED THE DELINQUENCY PERCENTAGES IN THE PREAWARD SURVEY DIFFERENTLY. HAD THE CONTRACTING OFFICER KNOWN, FOR INSTANCE, THAT DCASMA HAD INCLUDED IN THE DELINQUENCY PERCENTAGES CONTRACTS FOR WHICH FAIRCHILD MERELY HAD NEGLECTED TO SEEK PRO FORMA EXTENSIONS, HE PRESUMABLY WOULD HAVE ASSIGNED THESE PERCENTAGES LESS WEIGHT IN DECIDING WHETHER TO ADOPT HE DCASMA RECOMMENDATION AGAINST AWARD. IT IS SIGNIFICANT IN THIS REGARD THAT, AS ALREADY NOTED, THE CONTRACTING OFFICER'S NONRESPONSIBILITY DETERMINATION WAS BASED SOLELY ON THE DELINQUENCY PERCENTAGES AND DCASMA'S NEGATIVE RECOMMENDATION.

IN REACHING THIS CONCLUSION, WE RECOGNIZE THAT THE CONTRACTING OFFICER ALREADY HAS REVIEWED SOME INFORMATION UNDERLYING THE SURVEY IN PREPARING HIS REPORT ON THIS PROTEST. IT APPEARS FROM THE CONTRACTING OFFICER'S REPORT REGARDING CERTAIN OF THE DELINQUENCIES-- INCLUDING THOSE DETAILED ABOVE-- HOWEVER, THAT HE STILL WAS NOT FURNISHED ACCURATE INFORMATION ON THE DELINQUENCIES. FURTHER, WHILE THE ARMY MAY HAVE REVIEWED SOME INFORMATION, IT APPARENTLY HAS NOT BEEN FURNISHED INFORMATION ON THE CIRCUMSTANCES OF THE 27 OPEN CONTRACTS CARRIED BY DCASMA AS DELINQUENT; IN ITS PROTEST, FAIRCHILD EXPLAINS EACH IN CONCLUDING THAT NONE OF THESE CONTRACTS ARE DELINQUENT. WE FINALLY NOTE THAT, ALTHOUGH ARMY LEGAL COUNSEL ARGUES THAT THE SEVEN CLOSED CONTRACT DELINQUENCIES CONCEDED BY FAIRCHILD COULD, BY THEMSELVES, BE A PROPER BASIS FOR FINDING FAIRCHILD NONRESPONSIBLE, THE CONTRACTING OFFICER HAS NOT STATED THAT HE WOULD HAVE FOUND FAIRCHILD NONRESPONSIBLE WERE THAT THE CASE, AND THERE IS NOTHING IN THE RECORD THAT WOULD LEAD US TO ASSUME HE WOULD DO SO.

IN VIEW OF THE ABOVE, BY SEPARATE LETTER OF TODAY WE ARE RECOMMENDING TO THE SECRETARY OF THE ARMY THAT THE ARMY AWARD A CONTRACT TO FAIRCHILD IF OTHERWISE APPROPRIATE. IN THIS RESPECT, FAIRCHILD HAS REQUESTED BOTH ITS COSTS OF FILING AND PURSUING THIS PROTEST, INCLUDING ATTORNEYS' FEES, AND BID AND PROPOSAL PREPARATION COSTS. IN LIGHT OF OUR RECOMMENDATION, HOWEVER, REIMBURSEMENT OF THOSE COSTS IS NOT APPROPRIATE. 4 C.F.R. 21.6.

WE NOTE THAT FAIRCHILD SUBMITTED ITS PROTEST WITH ATTACHMENTS CONTAINING COMMERCIAL, FINANCIAL AND PERSONNEL INFORMATION THAT FAIRCHILD REGARDS AND PROPRIETARY, BUT INADVERTENTLY FAILED TO MARK IN ACCORDANCE WITH OUR BID PROTEST REGULATIONS, 4 C.F.R. 21.3(B) (1986). QUALCOMM HAS REQUESTED COPIES OF THAT INFORMATION FROM BOTH THE ARMY AND OUR OFFICE. FAIRCHILD HAS OBJECTED TO THE INFORMATION'S DISCLOSURE, AND THE ARMY HAS REFUSED TO DISCLOSE THE REQUESTED INFORMATION TO QUALCOMM ON THE GROUND THAT SUCH DISCLOSURE WOULD BE INAPPROPRIATE. WE AGREE WITH THE ARMY, AND THEREFORE ALSO REFUSE TO DISCLOSE IT.

THE PROTEST IS SUSTAINED.