B-160576, JUNE 13, 1967, 46 COMP. GEN. 841

B-160576, JUNE 13, 1967, 46 COMP. GEN. 841

BIDDERS - QUALIFICATIONS - SECURITY CLEARANCE UNDER AN INVITATION SOLICITING BIDS ON BOTH A 1-YEAR AND A 3-YEAR PROCUREMENT BASIS TO FURNISH GUARD SERVICES BY PERSONNEL CLEARED FOR SECURITY, ALTHOUGH THE REJECTION OF THE LOW SINGLE YEAR PROCUREMENT BID FOR FAILURE TO OBTAIN SECURITY CLEARANCES WITHIN THE WEEK BETWEEN THE INITIATION OF A PREAWARD SURVEY AND CONTRACT DATE WAS UNREASONABLE IN VIEW OF THE TIME ELEMENT, THE UNCERTAINTY THAT THE CLEARANCES WERE REQUIRED BY CONTRACT DATE, AND THE NEED FOR SECURITY CLEARANCE ACTIONS TO AWAIT FACILITY CLEARANCE, THE AWARD OF A CONTRACT ON A 3-YEAR BASIS WILL NOT BE CANCELED, THE PROTEST TO THE AWARD HAVING BEEN UNTIMELY DELAYED, AND THE PREPARATION AND CLARIFICATION OF THE UNSUCCESSFUL BID HAVING CONTRIBUTED TO ITS REJECTION. HOWEVER, FUTURE PROCUREMENTS WILL CLARIFY THE SECURITY OBLIGATIONS OF PROSPECTIVE CONTRACTORS.

TO THE METROPOLITAN SECURITY SERVICES, INC., JUNE 13, 1967:

IN YOUR LETTERS OF DECEMBER 14, 1966, AND FEBRUARY 21, 1967, YOU PROTESTED THE AWARD OF AN AIR FORCE MULTI-YEAR CONTRACT FOR $2,180,430 TO INDUSTRIAL SECURITY SYSTEMS, INC. (INDUSTRIAL), UNDER INVITATION FOR BIDS (IFB) NO. 04-693-66-19. YOU MAINTAIN THE PROCURING ACTIVITY WAS IN ERROR IN CONCLUDING THAT YOU DID NOT HAVE THE CAPABILITY TO PERFORM THIS CONTRACT AND THEREFORE WERE A NONRESPONSIBLE BIDDER.

THE INVITATION WAS ISSUED BY BASE PROCUREMENT BRANCH (SSQMK), HEADQUARTERS, 6592ND SUPPORT GROUP, SPACE SYSTEMS DIVISION, AIR FORCE SYSTEMS COMMAND, FOR SECURITY GUARD AND RELATED SERVICES AT LOS ANGELES AIR FORCE STATION, LOS ANGELES, CALIFORNIA. BIDS WERE SOLICITED SOLELY FROM SMALL BUSINESS ON BOTH A 1-YEAR AND A 3-YEAR PROCUREMENT BASIS, WITH SERVICES TO BEGIN JULY 1, 1966. THE CURRENT CONTRACT WAS SCHEDULED TO EXPIRE JUNE 30, 1966, AND WAS HELD BY CALIFORNIA PLANT PROTECTION, INC., A CORPORATION OWNED AND OPERATED BY THE SAME MANAGEMENT WHICH OWNS AND OPERATES INDUSTRIAL, THE SUCCESSFUL BIDDER IN THE INSTANT PROCUREMENT.

PERTINENT CLAUSES OF THE "BIDDING INSTRUCTIONS, TERMS, AND CONDITIONS" OF THE IFB WERE:

25. MULTI-YEAR PROCUREMENT FEATURES OF THE IFB

IN THE EVENT A CONTRACT IS AWARDED UNDER THE MULTI-YEAR PROCUREMENT FEATURE, THE ATTENTION OF THE BIDDERS IS DIRECTED TO THE FOLLOWING:

(B) THE "CANCELLATION OF ITEMS" CLAUSE OF THE GENERAL PROVISIONS WHICH ALLOWS THE GOVERNMENT TO CANCEL THE REQUIREMENTS FOR THE SECOND PROGRAM YEAR OR ALL PROGRAM YEARS SUBSEQUENT TO THE FIRST PROGRAM YEAR BY WRITTEN NOTIFICATION BY THE CONTRACTING OFFICER TO THE CONTRACTOR:

NOT LATER THAN 30 DAYS PRIOR TO THE EXPIRATION OF THE FIRST PROGRAM YEAR, OR

NOT LATER THAN 30 DAYS PRIOR TO THE EXPIRATION OF THE SECOND PROGRAM YEAR. 26. EVALUATION OF BIDS

IN COMPARING PRICES FOR THE FIRST PROGRAM YEAR REQUIREMENT AGAINST PRICES FOR THE MULTI-YEAR REQUIREMENT, THE EVALUATED UNIT PRICE FOR EACH ITEM OF THE LOWEST EVALUATED BID RECEIVED OR (SIC) THE FIRST YEAR ALTERNATIVE SHALL BE MULTIPLIED BY THE TOTAL NUMBER OF UNITS OF THAT ITEM REQUIRED BY THE MULTI-YEAR ALTERNATIVE. THE SUM OF THESE PRODUCTS, PLUS THE AMOUNT OF $15,000.00 WHICH IS CONSIDERED TO BE THE ADMINISTRATIVE COSTS TO THE GOVERNMENT TO AWARD ANNUAL CONTRACTS, SHALL BE COMPARED AGAINST THE TOTAL EVALUATED PRICE OF THE LOWEST BID RECEIVED FOR ALL ITEMS UNDER THE MULTI- YEAR ALTERNATIVE. IF THE MULTI YEAR PRICE IS LOW, AWARD SHALL BE MADE ON THAT BASIS; OTHERWISE, AWARD SHALL BE MADE ON THE BASIS OF THE FIRST PROGRAM YEAR ALTERNATIVE.

* * * ** * * 35. SUBMISSION OF BIDS

(A) BIDS MUST BE SUBMITTED FOR THE FULL QUANTITIES OF SERVICE UNDERPART III (A) (ONE YEAR) AND PART III (B) (MULTI-YEAR) OR FOR PART III (A) ONLY. BIDS SUBMITTED FOR LESS THAN THE FULL QUANTITIES OF EACH ITEM SHALL BE CONSIDERED NONRESPONSIVE.

* * * * * * * 36. CONTRACTOR SECURITY CLEARANCE

A FACILITY SECURITY CLEARANCE UP TO AND INCLUDING "TOP SECRET" IS A PREREQUISITE TO BEING AWARDED A CONTRACT UNDER THIS INVITATION FOR BID. IN ADDITION ALL PERSONNEL EMPLOYED BY THE CONTRACTOR IN THE PERFORMANCE OF THIS CONTRACT SHALL POSSESS A MINIMUM SECRET ACCESS AUTHORIZATION, AND 25 PERCENT OF THE EMPLOYEES MUST POSSESS A TOP SECRET ACCESS AUTHORIZATION IN ACCORDANCE WITH EXHIBIT "A". THE PERTINENT PROVISIONS OF EXHIBIT A WITH RESPECT TO THE REQUIRED SECURITY CLEARANCES ARE AS FOLLOWS:

TECHNICAL SPECIFICATIONS

3. ALL PERSONS EMPLOYED IN THE PERFORMANCE OF THIS CONTRACT WILL HAVE A MINIMUM CLEARANCE OF SECRET. TOP SECRET CLEARANCES ARE REQUIRED FOR AT LEAST 25 PERCENT OF THE SECURITY OFFICERS ON DUTY AND FOR THOSE OTHER PERSONS SPECIFIED IN THE INDIVIDUAL JOB DESCRIPTIONS. REQUESTS FOR CLEARANCES OF CONTRACTOR EMPLOYEES FURNISHED UNDER THIS CONTRACT WHO MUST BE PROCESSED FOR CLEARANCES WILL BE SUBMITTED TO THEIR SECURITY COGNIZANT AGENCY.

GENERAL TERMS

1. THE CONTRACTOR WILL BE SOLELY RESPONSIBLE FOR INITIATING AND OBTAINING SECRET OR TOP SECRET SECURITY CLEARANCES FOR ALL OF HIS PERSONNEL PRIOR TO ASSIGNING THEM TO DUTY UNDER THIS CONTRACT. 37. QUALIFICATIONS OF BIDDERS

BIDDERS SHALL SUBMIT EVIDENCE OF AT LEAST TWO YEARS BROAD, PROGRESSIVE, AND RESPONSIBLE EXPERIENCE IN THE FIELD OF PLANT PROTECTION. THE BIDDER SHALL GIVE EVIDENCE OF PRIOR SATISFACTORY EXPERIENCE WITH THE DEPARTMENT OF DEFENSE, DEFENSE INDUSTRY, OR SIMILAR TYPE OF INDUSTRY. THE EVIDENCE SUBMITTED MUST INDICATE THAT THE BIDDER HAS A DEMONSTRATED CAPABILITY TO PERFORM UNDER THIS CONTRACT. BIDS WILL BE EVALUATED ON THE BASIS OF TWO YEARS OF THE ABOVE-MENTIONED EXPERIENCE, AND EXPERIENCE SHOULD HAVE BEEN WITHIN THE LAST TWO YEARS. IN ADDITION, BIDDERS MUST BE LICENSED IN ACCORDANCE WITH CHAPTER 11 OF THE BUSINESS AND PROFESSIONS CODE OF THE STATE OF CALIFORNIA WITH A PRIVATE PATROL LICENSE.

AFTER BID OPENING ON MAY 12, 1966, THE LOWEST BIDDER WAS DECLARED NONRESPONSIBLE, AND THE SECOND LOWEST BIDDER WAS PERMITTED TO WITHDRAW ITS BID ON THE GROUND OF MISTAKE. YOUR BID FOR A 1-YEAR CONTRACT, IN THE AGGREGATE FACE AMOUNT OF $705,354.96, WAS THE NEXT LOWEST BY APPROXIMATELY $18,700. THE LOWEST BID ON THE 3-YEAR BASIS WAS THAT OF INDUSTRIAL SECURITY SYSTEMS, IN THE AGGREGATE FACE AMOUNT OF $2,180,430.

BECAUSE OF WHAT SHE CONSIDERED TO BE AMBIGUITIES OR OBVIOUS ERRORS IN YOUR BID THE CONTRACTING OFFICER ASKED FOR CLARIFICATION, AND ON THE BASIS OF YOUR REPLY CONCLUDED THAT YOUR BID WAS NOT RESPONSIVE. IN A LETTER OF MAY 27, 1966, YOU WERE ADVISED THAT YOUR BID WAS NOT CONSIDERED RESPONSIVE TO THE IFB.

BY LETTER OF JUNE 1, 1966, YOU PROTESTED THE CONTRACTING OFFICER'S DECISION, AND YOUR PROTEST WAS FORWARDED ON JUNE 7 TO THE AIR FORCE SYSTEMS COMMAND. IN AN INTERNAL MEMORANDUM OF JUNE 21, 1966, THE COMMAND UPHELD YOUR PROTEST, ON THE GROUNDS THAT YOUR 1-YEAR BID WAS INDISPUTABLY RESPONSIVE AS SUBMITTED, AND THAT DOCUMENTS SUBMITTED THEREAFTER NEITHER PROVED NOR WERE INTENDED TO INDICATE A MISTAKE IN THE 1-YEAR BID. THE COMMAND RECOMMENDED, HOWEVER, THAT IN VIEW OF THE CARELESS MANNER IN WHICH YOUR BID HAD BEEN PREPARED, YOUR STANDING AS A RESPONSIBLE BIDDER SHOULD BE CAREFULLY REVIEWED.

ON JUNE 23, 1966, THE CONTRACTING OFFICER REQUESTED A PREAWARD SURVEY OF YOUR CAPABILITIES FROM THE DEFENSE CONTRACT ADMINISTRATION SERVICES (DCAS) OFFICE IN BALTIMORE, THE LOCATION OF YOUR EXECUTIVE OFFICE. SECTION 1- 905.4 (A) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) DEFINES A PREAWARD SURVEY AS AN EVALUATION OF A BIDDER'S CAPABILITY FOR USE BY THE CONTRACTING OFFICER IN DETERMINING THE BIDDER'S RESPONSIBILITY, AND SECTION 1-905.4 (B) OF ASPR STATES THAT SUCH SURVEYS SHALL BE REQUIRED WHEN THE INFORMATION AVAILABLE TO THE PURCHASING OFFICE IS NOT SUFFICIENT TO ENABLE THE CONTRACTING OFFICER TO MAKE A DETERMINATION REGARDING THE RESPONSIBILITY OF A PROSPECTIVE CONTRACTOR. IN ACCORDANCE WITH ASPR 1- 905.4 (B), THE CONTRACTING OFFICER INCLUDED IN HER REQUEST FOR A SURVEY VARIOUS FACTORS SHE THOUGHT SHOULD RECEIVE SPECIAL EMPHASIS, SUCH AS THE DISCREPANCIES IN YOUR WORKSHEETS AND THE FACT THAT, WHILE THE CONTRACTOR AND 25 PERCENT OF HIS EMPLOYEES MUST HAVE TOP SECRET CLEARANCE, YOU HAD INDICATED YOU HAD SECRET CLEARANCE ONLY.

THE REPORT STATES YOU WERE ADVISED OF THE PENDING SURVEY SEVERAL DAYS BEFORE IT TOOK PLACE ON JUNE 28, 1966. AT THIS TIME, TWO EMPLOYEES AT YOUR EXECUTIVE OFFICE WERE INTERVIEWED BY DCAS PERSONNEL. PRESUMABLY IT WAS DURING THE PERIOD OF 5 DAYS BETWEEN JUNE 23, WHEN THE SURVEY WAS ORDERED, AND JUNE 28, THAT YOU ALSO BECAME AWARE THAT YOU WERE NO LONGER CONSIDERED A NONRESPONSIVE BIDDER.

THE REPORT INDICATES THAT SINCE THE THEN CURRENT CONTRACT FOR GUARD SERVICES AT SSQMK WAS SCHEDULED TO EXPIRE ON JUNE 30, 1966, AND SINCE MORE TIME WOULD BE REQUIRED TO COMPLETE THE PREAWARD SURVEY, THE CONTRACTING OFFICER INITIATED NEGOTIATIONS TO EXTEND THE CONTRACT OF THE INCUMBENT CONTRACTOR. HOWEVER, THE MANAGEMENT OF CALIFORNIA (AND INDUSTRIAL) INDICATED THAT SHORT TERM EXTENSIONS OF ITS EXISTING CONTRACT WOULD WORK A HARDSHIP AND REQUIRE IT TO DEMAND AN ADDITIONAL $5,000 PER MONTH IN EXCESS OF INDUSTRIAL'S BID PRICE. THE CONTRACTING OFFICER DID NOT AGREE TO PAY THIS ADDITIONAL CHARGE AND DID NOT ISSUE AN ORDER FOR SERVICES FOR AN INTERIM PERIOD. UNDER THE TERMS OF THE CONTRACT IT COULD HAVE BEEN EXTENDED FOR 3 ONE-MONTH INCREMENTS, WITHOUT ANY INCREASE IN COST, UPON 30 DAYS' NOTICE BY THE GOVERNMENT.

THE FINDINGS OF THE PARTIALLY COMPLETED PREAWARD SURVEY, DATED JUNE 29, 1966, WERE AS FOLLOWS:

A. THE METROPOLITAN SECURITY SERVICE WAS INCORPORATED IN SEPTEMBER OF 1964. THE COMPANY IS EXPANDING AND APPEARS TO BE AGGRESSIVE AND CAPABLE IN ITS PRESENT CONTRACTS. HOWEVER, THIS COMPANY HAS NOT BEEN IN EXISTENCE FOR TWO (2) YEARS AND DOES NOT HAVE BROAD EXPERIENCE IN THE FIELD OF PLANT PROTECTION AS REQUIRED BY PARAGRAPH 37 OF THE IFB.

B. THE METROPOLITAN SECURITY SERVICE DOES NOT HAVE A TOP SECRET FACILITY CLEARANCE. THIS IS REQUIRED BY PARAGRAPH 36 OF THE IFB. THE TIME REQUIRED TO PROCESS A COMPANY FOR A TOP SECRET CLEARANCE PRECLUDES THIS COMPANY FROM HAVING SUCH A CLEARANCE BY 1 AUGUST.

C. PARAGRAPH 36 OF THE IFB REQUIRES 25 PERCENT OF THE EMPLOYEES TO HAVE A TOP SECRET CLEARANCE. SINCE AT THE PRESENT TIME NO MEMBERS OF THE METROPOLITAN SECURITY SERVICE HAVE A TOP SECRET CLEARANCE THEY PLAN TO MEET THIS REQUIREMENT WITH TOP SECRET CLEARED PERSONNEL IN THE LOS ANGELES AREA. SINCE TOP SECRET CLEARED PEOPLE ARE CRITICAL IN THE LOS ANGELES AREA I DOUBT IF THIS REQUIREMENT CAN BE FULFILLED. AS OF THIS DATE NO ATTEMPTS HAVE BEEN MADE BY THE METROPOLITAN SECURITY SERVICE TO HIRE PERSONNEL FOR THE CRITICAL TOP SECRET POSITIONS EXCEPT FOR THE POSITION OF GUARD FORCE MANAGER. THE RECOMMENDATION OF "NO AWARD" WAS BASED ON THE FOLLOWING CONCLUSIONS:

1. UNSATISFACTORY TECHNICAL CAPABILITIES (INSUFFICIENT QUALIFYING EXPERIENCE REQUIRED UNDER PARA. 37 OF IFB).

2. UNSATISFACTORY SECURITY CLEARANCE. (TOP SECRET REQUIRED. CONTRACTOR HAS SECRET).

3. INADEQUATE LABOR RESOURCES DUE TO SECURITY REQUIREMENTS.

4. INABILITY TO MEET SCHEDULE REQUIREMENTS DUE TO THE ABOVE.

THE CONTRACTING OFFICER STATES THAT ON JUNE 30, 1966, DCAS PERSONNEL TELEPHONED HER TO ADVISE THAT ON THE BASIS OF THE PREAWARD SURVEY THEY WERE GOING TO RECOMMEND "NO AWARD" TO YOUR FIRM. SHE SAYS DCAS HAD CONCLUDED THAT YOU COULD NOT MEET THE SCHEDULE REQUIREMENTS "PRIMARILY BECAUSE, IN ITS JUDGMENT, METROPOLITAN COULD NOT SUPPLY SUFFICIENT PERSONNEL OF THE PROPER LEVEL OF SECURITY CLEARANCE IN TIME TO BEGIN PERFORMANCE OF THE CONTRACT AT THE TIME REQUIRED.' THE CONTRACTING OFFICER SAYS SHE CONCURRED IN DCAS'S JUDGMENT, BUT THE ADMINISTRATIVE REPORT DOES NOT INDICATE WHETHER DCAS HAD INFORMED HER OF THE REASONS, PRIMARY OR OTHERWISE, ON WHICH THEY HAD BASED THEIR DECISION NOT TO RECOMMEND YOU FOR AWARD.

HAVING DETERMINED THAT YOU WERE NOT RESPONSIBLE, THE CONTRACTING OFFICER MADE AWARD TO INDUSTRIAL ON JUNE 30, 1966, ON THE MULTI-YEAR BASIS, WHICH, UNDER THE METHOD OF EVALUATION FIXED BY ARTICLE 26 OF THE BIDDING INSTRUCTIONS, RESULTED IN A LOWER COST TO THE GOVERNMENT THAN ITS 1-YEAR BID, ALTHOUGH ITS MULTI-YEAR BID WAS $14,761 HIGHER THAN ITS 1-YEAR BID PRICE PRORATED OVER A 3-YEAR PERIOD. BEFORE THE AWARD, ANOTHER CONTRACTING OFFICER HAD CERTIFIED IN ACCORDANCE WITH ASPR 1 705.4 (C) (IV) THAT URGENCY PRECLUDED REFERRAL OF THE MATTER TO THE SMALL BUSINESS ADMINISTRATION (SBA). THIS DECISION WAS CLEARED WITH THE ACTIVITY'S SMALL BUSINESS SPECIALIST AND THE LOS ANGELES SBA OFFICE.

ON JULY 6, 1966, THE PREAWARD SURVEY WAS COMPLETED WITH A FINDING BY THE FINANCIAL ANALYST THAT YOU HAD THE FINANCIAL CAPABILITY TO PERFORM THE CONTRACT.

IN A LETTER DATED JULY 7, 1966, YOU SUBMITTED TO THE CONTRACTING OFFICER A PROTEST AGAINST THE AWARD, WHICH PROTEST WAS DENIED ON OCTOBER 12, 1966. YOU SUBMITTED A PROTEST TO THIS OFFICE IN A LETTER DATED DECEMBER 14, 1966. THE ADMINISTRATIVE REPORT TO YOUR PROTEST WAS RECEIVED HERE ON FEBRUARY 9, 1967, AND WAS SUBMITTED TO YOU FOR COMMENT. YOUR COMMENTS WERE RECEIVED HERE ON FEBRUARY 23, 1967.

YOU CONTEND THAT YOU WERE INCORPORATED ON OCTOBER 12, 1963, AND THAT YOU THEREFORE EXCEEDED THE 2-YEAR EXPERIENCE REQUIREMENT OF PARAGRAPH 37; THAT THE REQUIREMENT FOR A TOP SECRET FACILITY CLEARANCE IS DISCRIMINATORY BECAUSE UNDER APPLICABLE REGULATIONS ONLY A "USER AGENCY" MAY INITIATE SUCH CLEARANCE AND ONLY FOR A CONTRACTOR PRESENTLY PERFORMING A "TOP SECRET" CONTRACT; AND THAT YOU ARE CAPABLE OF SUPPLYING THE REQUIRED PERSONNEL, INCLUDING THE 25 PERCENT WITH TOP SECRET CLEARANCE, FROM YOU PRESENT ORGANIZATION OUTSIDE THE LOS ANGELES AREA, AS WELL AS BY HIRING FROM AN ADEQUATE POOL OF QUALIFIED APPLICANTS WITHIN THE LOCAL AREA, INCLUDING, IN ACCORDANCE WITH NORMAL SECURITY BUSINESS PROCEDURES, EMPLOYEES OF THE INCUMBENT CONTRACTOR. YOU ALSO CONTEND THAT THE CONTRACTING OFFICER MADE HER DETERMINATION ON THE BASIS OF AN INCOMPLETE SURVEY, AND ERRED IN FAILING TO REFER YOUR CASE TO THE SBA FOR ITS DETERMINATION OF YOUR RESPONSIBILITY. YOU SEEK CANCELLATION OF THE AWARDED CONTRACT, AND A READVERTISEMENT FOR BIDS ON THE REMAINING TERM OF SUCH CONTRACT. WITH RESPECT TO YOUR FIRST CONTENTION, IT IS SIGNIFICANT THAT THE LANGUAGE OF PARAGRAPH 37 DOES NOT SAY A BID FROM A FIRM WITH LESS THAN 2 YEARS EXPERIENCE WILL BE REJECTED, BUT RATHER REQUIRES THAT A FIRM'S EVIDENCE OF EXPERIENCE "MUST" DEMONSTRATE A CAPABILITY TO PERFORM THE CONTRACT, AND SUGGESTS THAT LESS THAN 2 YEARS' EXPERIENCE WILL WEIGH HEAVILY AGAINST THE SUCCESS OF SUCH A DEMONSTRATION. THE PREAWARD SURVEY CONCLUDED THAT WHILE YOU HAD DEMONSTRATED YOUR CAPABILITY IN ONE PAST SIMILAR CONTRACT WITH THE ARMY, AND TWO CURRENT SIMILAR CONTRACTS (ONE WITH THE ARMY), YOUR EXPERIENCE WAS NOT CONSIDERED, FOR UNEXPLAINED REASONS, AS "BROAD" AS REQUIRED BY PARAGRAPH 37. THE PREAWARD SURVEY APPARENTLY HAD REFERENCE, AT LEAST IN PART, TO INFORMATION OBTAINED FROM YOUR OWN EMPLOYEES THAT YOU HAD BEEN INCORPORATED FOR LESS THAN 2 YEARS. NEVERTHELESS, THE CONTRACTING OFFICER, WHO IS THE OFFICIAL PRIMARILY RESPONSIBLE FOR DECIDING THE ISSUE OF RESPONSIBILITY SAYS YOUR FINANCIAL CAPABILITY WAS NOT QUESTIONED, AND CONCEDES THAT YOUR PAST PERFORMANCE LEAVES "NO DOUBT AS TO (YOUR) CAPABILITY TO PERFORM.' AS INDICATED, HER DETERMINATION OF NONRESPONSIBILITY WAS REACHED ON THE GROUND THAT YOUR "LACK OF PREPARATION" FOR THIS CONTRACT RESULTED IN YOUR "INABILITY TO PERFORM WHEN REQUIRED.'

WITH RESPECT TO THE "PREPARATION" FOR PERFORMANCE OF THE CONTRACT, YOU AND THE CONTRACTING OFFICER EACH MAINTAIN IT WAS THE RESPONSIBILITY OF THE OTHER TO INITIATE A REQUEST FOR A FACILITY ,TOP SECRET" SECURITY CLEARANCE. YOU GO FURTHER AND STATE THAT UNDER PROVISIONS OF THE DEPARTMENT OF DEFENSE (DOD) INDUSTRIAL SECURITY MANUAL (DOD 5220.22M) ONLY A CONTRACTOR PERFORMING "TOP SECRET" SERVICES COULD OBTAIN A TOP SECRET CLEARANCE.

THE MANUAL TO WHICH YOU REFER APPEARS TO BE A CONDENSED VERSION OF THE DOD INDUSTRIAL SECURITY REGULATION, DATED MARCH 1, 1965; AND WE ASSUME YOU HAVE IN MIND THAT EDITION OF THE MANUAL DATED MARCH 1, 1965, WHICH WAS IN EFFECT AT THE TIME PRIOR TO THE INSTANT CONTRACT, RATHER THAN TO THE ONE WHICH SUPERSEDED IT AND BECAME EFFECTIVE ON JULY 1, 1966, THE DATE OF THE CONTRACT.

BOTH EDITIONS OF THE MANUAL (AT PARAGRAPHS 25 AND 26, RESPECTIVELY) PROVIDE THAT "CONTRACTORS SHALL MAKE APPLICATION FOR DEPARTMENT OF DEFENSE SECURITY CLEARANCES * * *.' THE TERM ,CONTRACTORS" APPARENTLY WAS INTENDED TO BE USED IN A BROAD SENSE TO INCLUDE PROSPECTIVE AS WELL AS INCUMBENT CONTRACTORS, SINCE PARAGRAPH 2-102 OF THE 1965 INDUSTRIAL SECURITY REGULATION, AS WELL AS PARAGRAPH 26 (D) OF THE JULY 1966 MANUAL, SPEAK OF AUTHORIZING INTERIM CLEARANCES IN ORDER TO AVOID CRUCIAL DELAYS IN THE AWARD OF A CONTRACT. HOWEVER, THE MATTER IS NOT ENTIRELY CLEAR, BECAUSE PARAGRAPH 21 OF THE JULY 1966 MANUAL PLACES UPON THE GOVERNMENT THE RESPONSIBILITY TO ,ADVISE A PROSPECTIVE CONTRACTOR OF THE ACTIONS REQUIRED FOR THE PROCESSING * * * OF A FACILITY CLEARANCE," AND THE REGULATION FLATLY STATES AT PARAGRAPH 2 116 THAT "REQUESTS TO PROCESS A CONTRACTOR FOR A FACILITY SECURITY CLEARANCE ARE ORIGINATED BY A USER AGENCY OR BY A CLEARED CONTRACTOR.' THE GENERAL TERMS OF THE TECHNICAL SPECIFICATIONS PROVIDE IN PARAGRAPH1 THAT A CONTRACTOR IS SOLELY RESPONSIBLE FOR INITIATING SECURITY CLEARANCE FOR "ALL OF HIS PERSONNEL PRIOR TO ASSIGNING THEM TO DUTY UNDER THIS CONTRACT," BUT APPARENTLY PERSONNEL WHO ARE TO BE ASSIGNED TO DUTY WOULD NOT INCLUDE THE CORPORATE EXECUTIVES AND OFFICERS WHO MUST OBTAIN CLEARANCES PURSUANT TO A REQUEST FOR A FACILITY CLEARANCE.

IN OUR VIEW, THE ARGUMENTS CONCERNING WHO IS RESPONSIBLE FOR INITIATING THE FACILITY CLEARANCE ARE SOMEWHAT BESIDE THE POINT. NO ONE, IT WOULD APPEAR, CONTEMPLATES THIS COSTLY PROCESS BEING INITIATED PRIOR TO A PROSPECTIVE CONTRACTOR'S BEING CONSIDERED RESPONSIVE TO THE IFB AND AT LEAST TENTATIVELY ELIGIBLE FOR AWARD. WE DO NOT KNOW WHETHER THE CONTRACTING OFFICER OR OTHER RESPONSIBLE OFFICIALS WOULD HONOR A PROSPECTIVE CONTRACTOR'S REQUEST FOR THAT CLEARANCE PROCESSING PRIOR TO A DETERMINATION OF RESPONSIBILITY. HOWEVER, IN THIS CASE, APPARENTLY ONLY 5 DAYS ELAPSED BETWEEN THE DETERMINATIONS OF YOUR RESPONSIVENESS AND OF YOUR LACK OF RESPONSIBILITY, AND ONLY 2 MORE DAYS BEFORE THE AWARD. EVEN ASSUMING YOU SHOULD HAVE INITIATED A REQUEST FOR CLEARANCE PRIOR TO COMPLETION OF THE PREAWARD SURVEY, IT CANNOT BE SAID, IN VIEW OF THE TIME REQUIRED TO PROCESS SUCH A CLEARANCE, THAT YOU WERE EXPECTED TO OBTAIN IT WITHIN THE FEW DAYS REMAINING BEFORE JULY 1, 1966.

FURTHERMORE, THE RECORD SHOWS THAT THE CONTRACTING OFFICER KNEW ON JUNE 23, 1966, WHEN SHE ORDERED THE PREAWARD SURVEY TO HELP HER DETERMINE YOUR RESPONSIBILITY, THAT YOU DID NOT HAVE A TOP SECRET FACILITY CLEARANCE. THIS CONNECTION WE NOTE THE RECORD ALSO SHOWS THAT ANOTHER CONTRACTING OFFICER, ONE APPARENTLY CHARGED WITH THE DUTY OF CERTIFYING THE NEED TO AWARD THE CONTRACT WITHOUT DELAY, INDICATED IN THE CERTIFICATION THAT YOU WERE CONSIDERED NONRESPONSIBLE, AND THAT THE LACK OF TOP SECRET CLEARANCE FOR YOUR FIRM "COULD PROVE A FURTHER DETRIMENT TO AWARD A CONTRACT TO THIS COMPANY.' THEREFORE, IT APPEARS THAT AT THE TIME THE PREAWARD SURVEY WAS REQUESTED, AND APPARENTLY AFTER IT WAS COMPLETED, YOUR LACK OF A TOP SECRET FACILITY CLEARANCE ALONE WAS NOT CONSIDERED BY THE CONTRACTING OFFICERS AS AN ADEQUATE BASIS FOR CONSIDERING YOU NONRESPONSIBLE.

IT FOLLOWS THAT YOUR ALLEGED "LACK OF PREPARATION," WHICH WAS ULTIMATELY THE BASIS UPON WHICH THE DETERMINATION OF NONRESPONSIBILITY WAS JUSTIFIED, MUST REFER TO YOUR NOT HAVING HIRED OR HAVING MADE ARRANGEMENTS TO HIRE, BEFORE JULY 1, 1966, A SUFFICIENT NUMBER OF EMPLOYEES WITH A TOP SECRET CLEARANCE, OR TO YOUR HAVING FAILED TO OBTAIN TOP SECRET CLEARANCES FOR UNCLEARED EMPLOYEES WITHIN THE 1 WEEK PRIOR TO THE SCHEDULED CONTRACT DATE. THE LATTER SEEMS PATENTLY UNREASONABLE, NOT ONLY BECAUSE OF THE TIME USUALLY REQUIRED TO OBTAIN SUCH CLEARANCES, BUT ALSO BECAUSE THE APPLICABLE INDUSTRIAL SECURITY MANUAL AND REGULATION APPEAR TO IMPLY, AND THE JULY 1966 MANUAL EXPRESSLY PROVIDES AT PARAGRAPH 24, THAT THE CONTRACTOR SHALL NOT INITIATE PERSONNEL SECURITY CLEARANCE ACTIONS ON EMPLOYEES UNTIL A FACILITY SECURITY CLEARANCE HAS BEEN GRANTED TO THE CONTRACTOR.

THE CONTRACTING OFFICER, AND YOU, ALSO, APPARENTLY ASSUME THAT ARTICLE 36 OF THE BIDDING INSTRUCTIONS, WHICH IS CONCERNED WITH PERSONNEL SECURITY CLEARANCES AND IS QUOTED, SUPRA, REQUIRES A SUCCESSFUL BIDDER TO HAVE HIRED BY THE CONTRACT DATE ONLY PEOPLE WHO ALREADY HAVE THE NECESSARY CLEARANCES. HOWEVER, THE ARTICLE ITSELF DOES NOT SAY THIS, AND DOES NOT INDICATE WHEN HIRED PERSONNEL MUST OBTAIN THE NECESSARY CLEARANCES. MERELY STATES THAT ONLY CLEARED PERSONNEL ARE TO BE EMPLOYED IN THE PERFORMANCE OF THE CONTRACT, IN ACCORDANCE WITH THE TECHNICAL SPECIFICATIONS. THE REFERENCED TECHNICAL SPECIFICATIONS MAKE IT ABUNDANTLY CLEAR THAT THE GOVERNMENT CONTEMPLATED THAT SOME OF THE CONTRACTOR'S EMPLOYEES WOULD HAVE TO BE PROCESSED FOR CLEARANCE. THE FACT THAT THE GOVERNMENT WAS FULLY AWARE OF THE PROBABILITY OF PROCESSING CLEARANCES FOR CONTRACTOR EMPLOYEES IS HIGHLIGHTED BY ADVICE FROM THE ADMINISTRATIVE AGENCY THAT MOST OF THE $15,000 ESTIMATED ADMINISTRATIVE COST OF AWARDING ANNUAL CONTRACTS, REFERENCED IN PARAGRAPH 26, QUOTED SUPRA, IS ATTRIBUTED TO THE COST OF PROCESSING SECURITY CLEARANCES.

FROM THE FOREGOING, IT APPEARS THAT YOU WERE DETERMINED TO BE NONRESPONSIBLE PRIMARILY FOR FAILING TO HAVE HIRED OR ARRANGED TO HIRE CLEARED PERSONNEL BY THE CONTRACT DATE. WHETHER OR NOT THIS WAS A SUBSTANTIAL BASIS FOR THE CONTRACTING OFFICER'S DETERMINATION THAT YOU WERE NOT A RESPONSIBLE BIDDER FOR THIS PROCUREMENT--- A MATTER AS TO WHICH WE HAVE SOME DOUBT--- WE BELIEVE THE TIME WHICH HAS ELAPSED SINCE THE CONTRACT DATE OF JULY 1, 1966, THE FACT THAT YOU DID NOT SUBMIT A PROTEST TO THIS OFFICE FOR SEVERAL MONTHS THEREAFTER AND THE FACT THAT YOUR OWN CARELESSNESS IN PREPARING AND CLARIFYING YOUR BID MAY HAVE CONTRIBUTED TO THE PROBLEMS WHICH ENSUED, ALL MILITATE AGAINST THE WISDOM AND PROPRIETY OF OUR DIRECTING THE CANCELLATION OF THE CONTRACT. WE ARE, HOWEVER, RECOMMENDING TO THE SECRETARY OF THE AIR FORCE THAT IN ANY FUTURE PROCUREMENTS OF SUCH SERVICES THE OBLIGATIONS OF PROSPECTIVE CONTRACTORS WITH RESPECT TO SECURITY CLEARANCES AND EMPLOYMENT ARRANGEMENTS BE CLARIFIED.