B-157055, JUN. 21, 1966

B-157055: Jun 21, 1966

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TO FREQUENCY ENGINEERING LABORATORIES: REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 22. OF THE 13 FIRMS TO WHICH COPIES OF THE IFB WERE DISTRIBUTED. WHICH WERE OPENED ON JUNE 4. THE EVALUATION RESULTS WERE AS FOLLOWS: TABLE BIDDER BID PRICE FREQUENCY ENGINEERING LABORATORIES. TECHNICAL SUPPORT COMPANY (TECHNICAL SUPPORT) PROTESTED THAT YOU WERE NOT A RESPONSIBLE BIDDER. THAT YOU WERE NOT CAPABLE OF BUILDING UP TO AN ACCEPTABLE DELIVERY RATE WITHIN A REASONABLE TIME. THAT THE POSSIBILITY OF A DEFAULT BY YOU WAS PREDICTED. OF WHICH YOU WERE LOWEST. STATING THAT THE RECORD DID NOT AFFORD A LEGAL BASIS TO QUESTION THE ADMINISTRATIVE DETERMINATION THAT YOU WERE A RESPONSIBLE BIDDER. AGAIN CONTENDING THAT YOU WERE NOT RESPONSIBLE SINCE YOU HAD YET TO DELIVER AN ACCEPTABLE FALT UNIT UNDER YOUR EXISTING CONTRACT.

B-157055, JUN. 21, 1966

TO FREQUENCY ENGINEERING LABORATORIES:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 22, 1966, AS SUPPLEMENTED BY YOUR LETTER OF APRIL 13, PROTESTING AGAINST ANY AWARD BY THE DEPARTMENT OF THE ARMY UNDER INVITATION FOR BIDS (IFB) NO. AMC/A/-36-038-65-1033 (WEI), ISSUED MAY 3, 1965, BY FRANKFORD ARSENAL, PHILADELPHIA, PENNSYLVANIA.

THE IFB SOLICITED BIDS, ON A TOTAL SMALL BUSINESS SET-ASIDE BASIS, TO FURNISH A QUANTITY OF COMPUTER LOGIC TEST SET UNITS (FALT) FOR DELIVERY TO ONE DESTINATION DURING THE PERIOD APRIL 1966 THROUGH JULY 1966, AND FOR A QUANTITY OF PULSE GENERATORS FOR DELIVERY TO FOUR DESTINATIONS DURING THE PERIOD NOVEMBER 1965 THROUGH MAY 1966. OF THE 13 FIRMS TO WHICH COPIES OF THE IFB WERE DISTRIBUTED, 5 SUBMITTED BIDS, WHICH WERE OPENED ON JUNE 4, 1965, AS SCHEDULED. BASED ON A FIRM REQUIREMENT FOR 49 FALT UNITS, THE EVALUATION RESULTS WERE AS FOLLOWS:

TABLE

BIDDER BID PRICE

FREQUENCY ENGINEERING LABORATORIES, INC. $ 677,309

TECHNICAL SUPPORT CO. 763,929

RODALE ELECTRONICS, INC. 788,562

CALIFORNIA COMPUTER PRODUCTS, INC. 1,107,748

CHRISTIAN PRECISION MFG. CO. 1,444,312

IN JUNE 1965, TECHNICAL SUPPORT COMPANY (TECHNICAL SUPPORT) PROTESTED THAT YOU WERE NOT A RESPONSIBLE BIDDER, HAVING FAILED TO DELIVER ACCEPTABLE FALT UNITS ON A CURRENT CONTRACT; THAT YOU WERE NOT CAPABLE OF BUILDING UP TO AN ACCEPTABLE DELIVERY RATE WITHIN A REASONABLE TIME; AND THAT THE POSSIBILITY OF A DEFAULT BY YOU WAS PREDICTED. IN JULY 1965, CALIFORNIA COMPUTER PRODUCTS, INC. (CALIFORNIA COMPUTER) PROTESTED AWARD TO ANY OTHER BIDDER, STATING THAT NONE OF THE THREE LOWER BIDDERS,OF WHICH YOU WERE LOWEST, HAD THE CAPABILITY OR TECHNICAL KNOWLEDGE TO FABRICATE THE FALT AND THAT YOUR DELINQUENT PERFORMANCE OF YOUR CURRENT CONTRACT DID NOT QUALIFY YOU TO RECEIVE ADDITIONAL ORDERS FOR FALT EQUIPMENT. IN THE LIGHT OF AN ADMINISTRATIVE REPORT FROM THE DEPARTMENT OF THE ARMY, WHICH INDICATED THAT ON THE BASIS OF A PRE-AWARD SURVEY YOU HAD BEEN FOUND QUALIFIED TO PERFORM THE CONTRACT, THAT YOUR DELINQUENCIES ON OTHER CONTRACTS HAD BEEN SATISFACTORILY EXPLAINED, AND THAT DELIVERIES UNDER YOUR FALT CONTRACT (AWARDED TO YOU IN JUNE 1964) WOULD BE COMPLETED PRIOR TO THE DELIVERY DATES SET FORTH IN THE IFB, WE DENIED BOTH THE TECHNICAL SUPPORT AND CALIFORNIA COMPUTER PROTESTS IN OUR DECISIONS B-157055, SEPTEMBER 2, 1965, STATING THAT THE RECORD DID NOT AFFORD A LEGAL BASIS TO QUESTION THE ADMINISTRATIVE DETERMINATION THAT YOU WERE A RESPONSIBLE BIDDER.

IN NOVEMBER 1965, TECHNICAL SUPPORT RENEWED ITS PROTEST AGAINST ANY AWARD TO YOU, AGAIN CONTENDING THAT YOU WERE NOT RESPONSIBLE SINCE YOU HAD YET TO DELIVER AN ACCEPTABLE FALT UNIT UNDER YOUR EXISTING CONTRACT, AND ALLEGING THAT THE CONTRACTING OFFICER WAS POSTPONING THE AWARD UNTIL YOU COMMENCED DELIVERY UNDER SUCH CONTRACT AND THERE WAS ASSURANCE THAT YOU WOULD PERFORM SATISFACTORILY. UPON RECEIPT OF A SUPPLEMENTAL REPORT FROM THE DEPARTMENT OF THE ARMY, WE ADVISED TECHNICAL SUPPORT IN OUR DECISION, B-157055, MAY 13, 1966, OF THE VARIOUS FACTORS WHICH ACCOUNTED FOR THE DELAY IN AWARD UNDER THE IFB. OUR DECISION READS, IN PERTINENT PART, AS FOLLOWS:

"WHILE YOUR PROTEST OF JUNE 21 WAS AWAITING OUR DECISION, POSTPONEMENT OF THE AWARD WAS PROPER IN ACCORDANCE WITH THE PROVISIONS OF ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2-407.9/B). AFTER OUR DECISION WAS RELEASED ON SEPTEMBER 2, HOWEVER, THE CONTRACTING OFFICER DELAYED AWARD ON THE BASIS OF KNOWLEDGE THAT FEL WAS ENCOUNTERING PRODUCTION DIFFICULTIES UNDER ITS EXISTING FALT CONTRACT. THE DETERMINATION TO POSTPONE AWARD RATHER THAN DECLARE FEL NONRESPONSIBLE WAS MOTIVATED BY INDICATIONS THAT SOLUTION OF FEL'S PRODUCTION DIFFICULTIES APPEARED IMMINENT; BY THE FACT THAT FEL'S BID WAS $87,087.37 AND $111,288.83 LOWER THAN THE SECOND AND THIRD LOW BIDS, RESPECTIVELY; AND BY PRELIMINARY DATA INDICATING THAT THERE WERE SERIOUS QUESTIONS AS TO THE RESPONSIBILITY OF EITHER THE SECOND LOW BIDDER (YOU) OR THE THIRD LOW BIDDER.

"WE ARE NOW ADVISED THAT ON THE BASIS OF A RESURVEY OF FEL, THE CONTRACTING OFFICER HAS MADE A DETERMINATION THAT FEL IS NOT RESPONSIBLE BECAUSE OF LACK OF TENACITY AND PERSEVERANCE IN FAILING TO ADHERE TO ITS DELIVERY SCHEDULE UNDER ITS PRIOR CONTRACT. IN ADDITION, THE SMALL BUSINESS ADMINISTRATION, UPON INQUIRY BY THE CONTRACTING OFFICER, HAS RULED THAT FEL IS NO LONGER SMALL BUSINESS FOR THE PROCUREMENT IN QUESTION. WE ARE ADVISED ALSO THAT THE CONTRACTING OFFICER DETERMINED THAT YOU WERE NOT A RESPONSIBLE BIDDER AND THAT YOUR APPLICATION FOR A CERTIFICATE OF COMPETENCY WAS DENIED BY SBA.

"SINCE BOTH YOU AND FEL HAVE BEEN ELIMINATED FROM CONSIDERATION FOR AWARD UNDER THE IFB, YOUR PROTEST HAS BECOME ACADEMIC, AND NO FURTHER DISCUSSION BY OUR OFFICE OF FEL'S RESPONSIBILITY, OR OF THE OTHER ISSUES YOU HAVE RAISED, APPEARS NECESSARY.'

IN YOUR LETTER OF FEBRUARY 22, YOU REQUESTED THAT NO AWARD BE MADE UNDER THE IFB. YOU STATED THAT THE SIZE STANDARD (500 EMPLOYEES) ADMINISTRATIVELY APPLIED TO THE PROCUREMENT WAS IN ERROR; THAT YOU WERE APPEALING THE MATTER TO THE SMALL BUSINESS ADMINISTRATION (SBA) ON THE BASIS THAT A 750-EMPLOYEE SIZE STANDARD SHOULD APPLY; AND THAT THE DELAY IN MAKING AWARD WAS PREJUDICIAL TO YOU, IN THAT YOUR STATUS HAD CHANGED FROM SMALL BUSINESS TO LARGE BUSINESS (I.E., THE NUMBER OF YOUR EMPLOYEES HAD INCREASED FROM FEWER THAN 500 TO MORE THAN 600) BETWEEN THE TIME THE IFB WAS ISSUED AND THE DATE YOUR STATUS WAS CHALLENGED, RESULTING IN AN ADVERSE SBA SIZE DETERMINATION ON FEBRUARY 1, 1966.

IN YOUR LETTER OF APRIL 13, YOU ENCLOSED A COPY OF SBA'S DECISION OF APRIL 5, WHICH DENIED YOUR APPEAL FROM ITS FEBRUARY 1 DECISION AND WHICH HELD THAT A 500-EMPLOYEE SIZE CLASSIFICATION APPLIED TO THE PROCUREMENT. YOU NOW CONTEND THAT THE SET-ASIDE SHOULD BE WITHDRAWN AND THE PROCUREMENT READVERTISED ON AN UNRESTRICTED BASIS. THE BASIS FOR SUCH CONTENTION IS THAT THE $1,071,112 BID OF CALIFORNIA COMPUTER, THE LOW ELIGIBLE BIDDER, NOW THAT YOU HAVE BEEN ELIMINATED FROM CONSIDERATION AS A LARGE BUSINESS CONCERN AND THE SECOND AND THIRD LOW BIDDERS HAVE BEEN DISQUALIFIED BY REASON OF SBA'S DENIAL OF A CERTIFICATION OF COMPETENCY TO EITHER BIDDER, IS UNREASONABLE SINCE IT EXCEEDS YOUR LOW BID OF $619,853 (EVALUATED BY THE PROCURING ACTIVITY AS $677,309) BY APPROXIMATELY 70 PERCENT. FURTHER, YOU STATE THAT WHILE AN INCREASE IN YOUR PRICE WOULD PROBABLY BE REQUIRED UPON REBIDDING, ANY NEW BID SUBMITTED BY YOU WOULD BE SUBSTANTIALLY LOWER THAN CALIFORNIA COMPUTER'S BID. YOU CITE SEVERAL DECISIONS OF OUR OFFICE UPHOLDING THE WITHDRAWAL OF JOINT SMALL BUSINESS SET-ASIDES ON THE BASIS OF UNREASONABLE PRICES.

CONCERNING YOUR PERFORMANCE UNDER YOUR CURRENT FALT CONTRACT, YOU MAKE THE FOLLOWING TATEMENTS:

"BOTH FREQUENCY ENGINEERING LABORATORIES AND CALIFORNIA COMPUTER HAVE BEEN PRIOR SUPPLIERS OF FALT UNITS, BUT AN ENGINEERING CHANGE ORDER COVERING AN ESSENTIAL PART OF THIS EQUIPMENT WAS MADE SUBSEQUENT TO THE FURNISHING OF ALL UNITS MANUFACTURED BY CALIFORNIA COMPUTER. THIS CHANGE ORDER REQUIRED A COMPREHENSIVE DEVELOPMENT PROGRAM BY FREQUENCY ENGINEERING LABORATORIES OVER THE PAST EIGHTEEN MONTHS AND HAS AFFECTED THE ORIGINAL DELIVERY SCHEDULE OF FALT UNITS NOW BEING MANUFACTURED BY FREQUENCY ENGINEERING LABORATORIES. HOWEVER A RIGHT EXISTS FOR AN EQUITABLE ADJUSTMENT EXTENDING SUCH ORIGINAL DELIVERY SCHEDULE AND FREQUENCY ENGINEERING LABORATORIES IS NOW IN FULL CONFORMANCE WITH ITS REVISED SCHEDULE, WHICH TAKES INTO ACCOUNT THE NECESSARY DELAYS CAUSED BY THE ENGINEERING CHANGE ORDER.

"IN ADDITION, IT HAS BEEN REPORTED THAT THE PERFORMANCE OF FREQUENCY ENGINEERING LABORATORIES UNDER CONTRACT DA-36-038-AMC 1030 (A) HAS BEEN MADE A SUBJECT OF PROTESTS TO THE GENERAL ACCOUNTING OFFICE WITH THE ALLEGATION THAT FREQUENCY ENGINEERING LABORATORIES IS NOT A RESPONSIVE BIDDER TO SUBJECT IFB DUE TO NON DELIVERY UNDER CONTRACT DA 36-038-AMC- 1030 (A) IT IS THE POSITION OF FREQUENCY ENGINEERING LABORATORIES THAT THE ENGINEERING CHANGES DIRECTED REPRESENT EXCUSABLE DELAY TO BE NEGOTIATED UNDER AFOREMENTIONED CONTRACT.'

A SUPPLEMENTAL REPORT DATED MAY 31, 1966, FROM THE DEPARTMENT OF THE ARMY SUBSTANTIATES THE PRIOR ADMINISTRATIVE REPORT PURSUANT TO WHICH OUR DECISION B-157055 OF MAY 13, 1966, TO TECHNICAL SUPPORT WAS ISSUED, AND SHOWS THAT OF THE 122 UNITS REQUIRED UNDER YOUR JUNE 1964 CONTRACT, AS AMENDED, ONLY 15 UNITS HAVE BEEN DELIVERED BY YOU TO DATE. FURTHER, THE PROCURING ACTIVITY STATES THAT WHILE THE DELAY IN AWARD AND IN MAKING THE ULTIMATE DETERMINATION OF YOUR RESPONSIBILITY MAY HAVE CONSTITUTED AN ERROR IN PROCUREMENT JUDGMENT, SUCH ACTION DID NOT WORK TO YOUR PREJUDICE NOR WAS IT INTENDED TO FAVOR ANY BIDDER. ON THE CONTRARY, ITIS REPORTED, YOU WERE GIVEN EVERY CONSIDERATION SINCE YOUR INTERESTS COINCIDED WITH THE INTERESTS OF THE GOVERNMENT, AND HAD A PROMPT DECISION BEEN MADE ON YOUR RESPONSIBILITY, A NEGATIVE DETERMINATION WOULD HAVE RESULTED.

CONCERNING THE EFFECT OF THE ENGINEERING CHANGE ORDER UNDER YOUR JUNE 1964 CONTRACT, THE CONTRACTING OFFICER REPORTS THAT THE CHANGES REQUIRED BY SUCH ORDER, WHICH HAS BEEN IDENTIFIED AS NO. F-43025, MODIFICATION NO. 5, DATED JUNE 19, 1964, DID NOT AFFECT THE RECEIPT OF MATERIAL, PRODUCTION AND DELIVERY. FURTHER, IT IS NOTED THAT NO REQUEST FOR A TIME EXTENSION (REVISED DELIVERY SCHEDULE) WAS INCLUDED IN YOUR CLAIM FOR EQUITABLE ADJUSTMENT BASED ON SAID ORDER, ALTHOUGH THE DEVELOPMENTAL EFFORT ALLEGEDLY STARTED IN OCTOBER 1964, EIGHT MONTHS PRIOR TO JUNE 1965, THE TIME AGREEMENT WAS REACHED ON THE EQUITABLE ADJUSTMENT FOR THE CHANGE ORDER.

AS TO YOUR STATEMENT THAT YOU ARE IN FULL CONFORMANCE ON YOUR REVISED SCHEDULE, THE CONTRACTING OFFICER REPORTS THAT REQUESTS ADDRESSED TO YOU FOR A REVISED DELIVERY SCHEDULE AND AN OFFER OF A PRICE CONCESSION FOR EXTENSION OF THE DELIVERY SCHEDULE HAVE MET WITH NO RESPONSE FROM YOU; THEREFORE, THERE IS NO MUTUALLY AGREED UPON REVISED DELIVERY SCHEDULE AT THE PRESENT TIME. FURTHER, IT IS REPORTED THAT SINCE THE ISSUANCE OF THE CONTRACTING OFFICER'S DETERMINATION OF FEBRUARY 16, 1966, THAT YOU ARE NOT RESPONSIBLE FOR LACK OF TENACITY AND PERSEVERANCE IN FAILING TO ADHERE TO THE DELIVERY SCHEDULE, YOUR PERFORMANCE HAS NOT IMPROVED SO AS TO WARRANT A DETERMINATION THAT YOU ARE PRESENTLY A RESPONSIBLE BIDDER FOR THE PROCUREMENT IN QUESTION.

REGARDING CALIFORNIA COMPUTER'S BID PRICE OF $1,107,748, THE CONTRACTING OFFICER CONCURS WITH YOUR VIEW THAT AWARD AT SUCH PRICE WOULD NOT BE IN THE BEST INTEREST OF THE GOVERNMENT. HOWEVER, IT IS REPORTED THAT BY LETTER DATED JULY 2, 1965, CALIFORNIA COMPUTER, VOLUNTARILY OFFERED TO REDUCE ITS UNIT PRICES SO THAT ITS BID PRICE FOR THE FIRM QUANTITY OF49 UNITS ANNOUNCED AT BID OPENING TO $788,078, OR ONLY 16.3 PERCENT HIGHER THAN YOUR BID OF $677,309. CALIFORNIA COMPUTER HAS SINCE EXTENDED THE PERIOD FOR ACCEPTANCE OF ITS BID AND, FOLLOWING REJECTION OF ALL LOWER BIDS HAS REPEATED ITS PREVIOUS OFFER TO REDUCE ITS ORIGINAL BID PRICES. BASED ON THE PRESENT FIRM REQUIREMENT FOR 62 FALT UNITS, ON WHICH YOUR BID WOULD BE EVALUATED AS $799,809, CALIFORNIA COMPUTER'S PRICE OF $914,278 WOULD BE ONLY 14.3 PERCENT HIGHER. FURTHER, THE CONTRACTING OFFICER ASSERTS THAT SINCE YOU HAVE BEEN INEXCUSABLY DELINQUENT UNDER YOUR CURRENT FALT CONTRACT, HAVE NEVER PRODUCED ACCEPTABLE FALTS IN PRODUCTION QUANTITIES, AND ACKNOWLEDGE THAT YOUR PRICE WOULD BE INCREASED SHOULD THE PROCUREMENT BE READVERTISED, YOUR LOW BID IS NOT A TRUE CRITERION OF WHAT A RESPONSIBLE LARGE BUSINESS CONCERN WOULD BID ON THE FALT, NOR IS IT A GAGE OR MEASURE OF WHETHER THE TOTAL SMALL BUSINESS SET-ASIDE HAS GENERATED A REASONABLE PRICE. CONVERSELY, CALIFORNIA COMPUTER'S VOLUNTARILY REDUCED PRICE ($13,951.61 PER UNIT FOR THE 62 UNITS NOW REQUIRED) COMPARES FAVORABLY WITH ITS UNIT PRICE OF$12,485 FOR 92 FALT UNITS UNDER A TOTAL SMALL BUSINESS SET-ASIDE CONTRACT (NO. DA-36-038 ORD- 22307) AWARDED TO CALIFORNIA COMPUTER ON JUNE 29, 1962, APPROXIMATELY FOUR YEARS AGO, AND WITH THE LOW UNIT PRICE OF $11,699 BID ON THE SAME PROCUREMENT BY AMELCO, NC., WHO, AS A LARGE BUSINESS CONCERN, WAS NOT ELIGIBLE FOR AWARD OF THE CONTRACT. IN THIS CONNECTION, THE CONTRACTING OFFICER POINTS OUT THAT IF THE CURRENT PROCUREMENT NEED WERE 92 UNITS, AS IN THE 1962 PROCUREMENT, CALIFORNIA COMPUTER'S UNIT PRICE WOULD DROP TO $11,968.47, REFLECTING A DECREASE INITS 1962 BID PRICE OF $516.53, OR 4 PERCENT. ACCORDINGLY, IT IS THE POSITION OF THE CONTRACTING OFFICER, AND OF HEADQUARTERS, UNITED STATES ARMY MATERIEL COMMAND, THAT THE VOLUNTARILY REDUCED PRICE OF CALIFORNIA COMPUTER IS REASONABLE; THAT SINCE CALIFORNIA COMPUTER IS NOW THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER ACCEPTANCE OF CALIFORNIA COMPUTER'S REDUCED BID PRICE IS NOT PREJUDICAL TO OTHER BIDDERS AND IS IN THE BEST INTERESTS OF THE GOVERNMENT; AND, THEREFORE, CANCELLATION OF THE SET-ASIDE AND READVERTISEMENT OF THE PROCUREMENT ON AN UNRESTRICTED BASIS ARE NOT NECESSARY IN THE PUBLIC INTEREST. IN SUPPORT OF ITS VIEW THAT THE VOLUNTARY REDUCTION IN BID OFFERED BY CALIFORNIA MAY BE CONSIDERED, THE PROCURING ACTIVITY CITES LEITMAN V. UNITED STATES, 104 CT.CL. 324, AND OUR DECISIONS B-74013, MARCH 9, 1948; B-146229, SEPTEMBER 1, 1961; 37 COMP. GEN. 251; 39 ID. 779; AND 42 ID. 170. ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2-407.1 PROVIDES FOR AWARD OF ADVERTISED PROCUREMENTS WITHIN THE ACCEPTANCE PERIOD STATED IN THE BID OR ANY EXTENSION THEREOF. ASPR 2-407.2 REQUIRES A DETERMINATION BY THE CONTRACTING OFFICER, PRIOR TO AWARD, THAT THE PROSPECTIVE CONTRACTOR IS RESPONSIBLE. ASPR 1-903.1, RELATING TO MINIMUM STANDARDS FOR RESPONSIBLE PROSPECTIVE CONTRACTORS, REQUIRES THAT SUCH CONTRACTORS HAVE A SATISFACTORY RECORD OF PERFORMANCE. UNDER ASPR 1-903.1/III), PAST UNSATISFACTORY PERFORMANCE, DUE TO FAILURE TO APPLY NECESSARY TENACITY OR PERSEVERANCE TO DO ANY ACCEPTABLE JOB, SHALL BE SUFFICIENT TO JUSTIFY A FINDING OF NONRESPONSIBILITY AND IN THE CASE OF SMALL BUSINESS CONCERNS SHALL NOT REQUIRE SUBMISSION OF THE CASE TO THE SBA.

WHEN AN ADVERTISED PROCUREMENT IS SET ASIDE FOR AWARD TO SMALL BUSINESS CONCERNS, THE SUCCESSFUL BIDDER MUST QUALIFY AS A SMALL BUSINESS CONCERN BOTH AS A CONDITION FOR BIDDING AND AS A CONDITION FOR AWARD. ACCORDINGLY, IF PRIOR TO AWARD THE APPARENTLY SUCCESSFUL BIDDER'S STATUS AS A SMALL BUSINESS CONCERN IS CHALLENGED, EITHER BY ANOTHER BIDDER WITHIN THE TIME LIMIT PRESCRIBED BY ASPR 1-703/B) (1) OR BY THE CONTRACTING OFFICER, WHO IS NOT BOUND BY ANY SUCH TIME LIMITATION, AND THE SBA DETERMINES THAT THE BIDDER IS NOT A SMALL BUSINESS CONCERN FOR THE PURPOSE OF THE PARTICULAR PROCUREMENT, AWARD TO SUCH BIDDER IS PRECLUDED.

BASED ON THE REPORTED FACTS, AND UNDER THE APPLICABLE STATUTES AND REGULATIONS, YOU DO NOT QUALIFY FOR AWARD OF THE PROCUREMENT IN QUESTION FOR TWO REASONS - YOU ARE NOT A SMALL BUSINESS CONCERN FOR THE PURPOSE OF THIS PROCUREMENT, AND, EVEN IF YOU DID QUALIFY AS A SMALL BUSINESS CONCERN, YOU HAVE BEEN DISQUALIFIED FOR AWARD ON THE BASIS OF THE NEGATIVE DETERMINATION OF YOUR RESPONSIBILITY, WHICH WAS BASED ON FACTORS NOT REQUIRING REFERRAL OF THE MATTER TO SBA UNDER THE CERTIFICATE OF COMPETENCY PROCEDURE. ACCORDINGLY, WHILE WE ARE MINDFUL THAT THE DELAY IN MAKING AWARD IN THIS INSTANCE HAS BEEN UNUSUALLY LONG, A PRACTICE WHICH IS TO BE FROWNED UPON, THE BID ACCEPTANCE PERIODS WERE EXTENDED, AND, IN ANY EVENT, THE REJECTION OF YOUR BID IS REQUIRED.

CONCERNING THE WITHDRAWAL OF THE SET-ASIDE, AS AUTHORIZED BY ASPR 1 706.3/A) IN THE EVENT THE CONTRACTING OFFICER CONSIDERS THAT AWARD THEREUNDER WOULD BE DETRIMENTAL TO THE PUBLIC INTEREST (E.G. BECAUSE OF UNREASONABLE PRICE), WE HAVE RECOGNIZED THAT SUCH ACTION IS A MATTER RESTING WITHIN ADMINISTRATIVE DISCRETION. 37 COMP. GEN. 147; B-152897, MARCH 2, 1964, AND DECISIONS THEREIN CITED.

EVEN IF SUCH ACTION WERE TAKEN, AND THE PROCUREMENT READVERTISED ON AN UNRESTRICTED BASIS, OR IF ALL BIDS WERE REJECTED ON THE BASIS OF UNREASONABLENESS OF THE PRICE OF THE ONLY RESPONSIBLE BIDDER AND THE PROCUREMENT NEGOTIATED UNDER 10 U.S.C. 2304 (A) (15), THERE APPEARS TO BE NO LIKELIHOOD THAT YOU WOULD BE CONSIDERED A RESPONSIBLE BIDDER. IN THE CIRCUMSTANCES, AND SINCE WE ARE ADVISED THAT THE PROCUREMENT HAS PRIOR CONTRACT WE WOULD BE RELUCTANT TO REQUIRE ON THE BASIS OF YOUR PROTEST ANY ACTION WHICH WOULD INVOLVE FURTHER DELAY AND WE ARE THEREFORE ADVISING THE SECRETARY OF THE ARMY THAT WE WILL INTERPOSE NO OBJECTION TO AWARD OF A CONTRACT TO CALIFORNIA COMPUTER PRODUCTS, INC., ON THE BASIS OF ITS REDUCED PRICE OFFER, IF IT BE DETERMINED BY HIS DEPARTMENT THAT SUCH ACTION IS IN THE BEST INTEREST OF THE GOVERNMENT.