B-157997, FEB. 18, 1966

B-157997, FEB. 18, 1966

TO VICTORY ELECTRONICS, INC.:

REFERENCE IS AGAIN MADE TO YOUR TELEGRAM OF NOVEMBER 9, 1965, PROTESTING THE AWARD OF A CONTRACT TO ANY COMPANY OTHER THAN VICTORY ELECTRONICS, INC., UNDER DEPARTMENT OF THE NAVY INVITATION FOR BIDS NO. 383-14-66, AND OF YOUR LETTER DATED DECEMBER 14, 1965, TO THE AVIATION SUPPLY OFFICE, CONTAINING A SIMILAR PROTEST WITH RESPECT TO NAVY INVITATION NO. 383-15- 66. BOTH INVITATIONS WERE ISSUED BY THE BUREAU OF SUPPLIES AND ACCOUNTS, AVIATION SUPPLY OFFICE, AND THE BASIS OF YOUR PROTESTS IS THE MANNER IN WHICH YOUR FIRM WAS DETERMINED NONRESPONSIBLE.

IFB 383-14-66, SOLICITING BIDS FOR THE FURNISHING OF COMPONENTS OF THE AN/ASR-3, SUBMARINE DETECTING SET, WAS ISSUED JULY 19, 1965, AND THE FOUR BIDS RECEIVED WERE OPENED AUGUST 30, 1965, WITH AWARD DESIRED BY SEPTEMBER 30. VICTORY ELECTRONICS WAS THE LOW BIDDER; HOWEVER, THE CONTRACTING OFFICER REJECTED THE BID BECAUSE HE WAS UNABLE TO MAKE AN AFFIRMATIVE DETERMINATION OF RESPONSIBILITY AS REQUIRED BY ARMED SERVICES PROCUREMENT REGULATION 1-902.

ON SEPTEMBER 3, 1965, AFTER THE DETERMINATION OF YOUR NONRESPONSIBILITY HAD BEEN MADE, THE INSPECTOR OF NAVAL MATERIAL, NEWARK, NEW JERSEY, NOTIFIED THE SECOND LOW BIDDER, BERGEN RESEARCH ENGINEERING CORP., THAT A PRE-AWARD SURVEY WOULD BE CONDUCTED AT ITS PLANT ON SEPTEMBER 8, 1965. SEPTEMBER 7, BERGEN ADVISED THAT ITS FACILITIES WOULD NOT BE AVAILABLE UNTIL SEPTEMBER 17, AT WHICH TIME THE INSPECTION WAS MADE. THE SURVEY OFFICER HAD DIFFICULTY MAKING A CONCLUSIVE RECOMMENDATION, BUT ON OCTOBER 1, BERGEN WAS ALSO FOUND NONRESPONSIBLE. THE NAVY THEN CONDUCTED A SURVEY OF THE FACILITIES OF THE THIRD LOW BIDDER, BENDIX CORPORATION, FRIEZ INSTRUMENT DIVISION, AND AWARDED THE CONTRACT TO THAT FIRM ON OCTOBER 29, 1965. MOST OF THIS DELAY RESULTED WHEN FUNDS REQUESTED OCTOBER 9, WERE NOT RECEIVED UNTIL OCTOBER 20.

ASPR 1-705.4 (C) PROVIDES THAT WHERE A COMPANY IS DETERMINED NONRESPONSIBLE SOLELY BECAUSE OF LACK OF CAPACITY OR CREDIT, THE MATTER IS TO BE REFERRED TO THE SMALL BUSINESS ADMINISTRATION FOR REVIEW. THE AWARD IS TO BE WITHHELD UNTIL SBA ACTION CONCERNING A CERTIFICATE OF COMPETENCY OR FOR 15 WORKING DAYS, WHICHEVER IS EARLIER. SUBSECTION (IV) THEREUNDER PROVIDES AN EXCEPTION TO THAT PROCEDURE, HOWEVER, WHERE THE CONTRACTING OFFICER CERTIFIES IN WRITING THAT THE AWARD MUST BE MADE WITHOUT DELAY. SUCH A DETERMINATION WAS MADE BY THE CONTRACTING OFFICER ON OCTOBER 21, 1965, AND AWARD MADE TO BENDIX CORPORATION.

IFB NO. 383-15-66, REQUESTING BIDS FOR THE PRODUCTION OF THE AN/ALE 18, COUNTERMEASURE CHAFF DISPENSING SET, WAS ISSUED JULY 19, 1965, AND OPENED AUGUST 30, 1965, WITH A DESIRED AWARD DATE OF SEPTEMBER 30. SEVEN BIDS WERE RECEIVED, WITH VICTORY ELECTRONICS BEING THE SECOND LOW BIDDER. HERE, HOWEVER, ALL OF THE THREE LOW BIDS WERE REJECTED ON THE GROUNDS OF NONRESPONSIBILITY PURSUANT TO ASPR 1-902. UPON REJECTION OF THE LOW BIDDER, PERSPECTRON, INC., THE MATTER WAS PROCESSED TO THE SMALL BUSINESS ADMINISTRATION ON SEPTEMBER 20, 1965, FOR REVIEW AND POSSIBLE ISSUANCE OF A CERTIFICATE OF COMPETENCY; HOWEVER, ON OCTOBER 6, 1965, THE SBA ADVISED THAT THE FIRM HAD NOT APPLIED FOR A COC. ON OCTOBER 13, 1965, THE CONTRACTING OFFICER CERTIFIED THAT THE PROCUREMENT WAS URGENT AND UNDER ASPR 1-705.4 (C) (IV) COULD NOT BE REFERRED AGAIN TO THE SBA FOR A DETERMINATION AS TO YOUR FIRM'S RESPONSIBILITY, AS TO WHICH A NEGATIVE FINDING HAD BEEN MADE BY THE CONTRACTING OFFICER. THE URGENCY DETERMINATION WAS APPROVED BY A CONTRACT REVIEW BOARD ON OCTOBER 18 AND A COPY SENT TO THE SBA ON OCTOBER 21; HOWEVER, IT WAS DETERMINED THAT FUNDS WERE NOT READILY AVAILABLE AND WOULD HAVE TO BE SHIFTED FROM ANOTHER SOURCE. DURING THE INTERIM, ON NOVEMBER 4, 1965, YOUR FIRM MET WITH REPRESENTATIVES FROM THE AVIATION SUPPLY OFFICE, TO FURNISH NEW INFORMATION AS TO YOUR FINANCIAL RESPONSIBILITY. YOU STATED AT THAT TIME THAT YOU HAD COMMITMENTS FOR FINANCIAL BACKING IN OTHER CONTRACTS AND THAT SIMILAR COMMITMENTS COULD BE OBTAINED FOR ANY FUTURE CONTRACTS. IN ORDER TO BE COMPLETELY FAIR TO YOUR FIRM, AND SINCE FUNDING PROBLEMS HAD RESULTED IN A DELAY, THE CONTRACTING OFFICER, AT THIS TIME, CONTACTED THE DEFENSE CONTRACTS AUDIT AGENCY, PHILADELPHIA, PENNSYLVANIA, AND THE DEFENSE CONTRACT ADMINISTRATION SERVICES DISTRICT, GARDEN CITY, LONG ISLAND, NEW YORK (FORMERLY INSPECTOR NAVAL MATERIAL) TO REEXAMINE THE DECISION OF NONRESPONSIBILITY. THE MATTER WAS NOT PROCESSED AT THAT TIME TO THE SMALL BUSINESS ADMINISTRATION BECAUSE THE CONTRACTING OFFICER EXPECTED AN IMMEDIATE ANSWER FROM THOSE OFFICES. ON NOVEMBER 5, THE FUNDS WERE MADE AVAILABLE, SO THAT AWARD PROPERLY COULD HAVE BEEN MADE AT THAT TIME. THE CONTRACTING OFFICER, HOWEVER, IN AN EFFORT TO GIVE YOUR FIRM EVERY OPPORTUNITY FOR AWARD, WAITED FOR REPLIES FROM DCAA AND DCASD. THESE REPLIES WERE QUITE LATE IN COMING, BUT ON NOVEMBER 9, DCAA RETURNED A NEGATIVE REPORT, AND ON NOVEMBER 18, DCASD REPORTED THAT YOUR FIRM WAS THEN DELINQUENT ON ALL CURRENT GOVERNMENT CONTRACTS AND THAT THE ONLY DELIVERIES MADE HAD BEEN THOSE UNDER SMALL DOLLAR VALUE CONTRACTS INVOLVING SIMPLE COMPONENTS. AT THE SAME TIME THE U.S. ARMY ELECTRONICS COMMAND AT PHILADELPHIA ADVISED THAT VICTORY ELECTRONICS WAS INEXCUSABLY DELINQUENT ON FOUR USAEC CONTRACTS AND DELINQUENT ON OTHERS WHERE THE RESPONSIBILITY HAD NOT BEEN DEFINITELY ASCERTAINED. THE CONTRACTING OFFICER DECIDED AGAINST CHANGING HIS ORIGINAL DETERMINATION OF YOUR FIRM'S NONRESPONSIBILITY, WHICH DECISION WAS APPROVED BY THE CONTRACTS REVIEW BOARD, ON NOVEMBER 19, 1965, AND AWARD MADE ON NOVEMBER 23, TO PIQUA ENGINEERING, INC.

IN YOUR PROTESTS AND ALLIED CORRESPONDENCE, CONSISTING OF COPIES OF LETTERS TO THE AVIATION SUPPLY OFFICE, YOU ALLEGE THAT THE FINDINGS OF THE CONTRACTING OFFICER WERE NOT BASED UPON RECENT INFORMATION AND THAT YOU WERE NOT REQUESTED TO GIVE ANY ADDITIONAL INFORMATION WITH RESPECT TO YOUR CURRENT SITUATION. YOU REFER TO THE NOVEMBER 4 MEETING WITH THE AGENCY AND FURTHER ADVISE THAT YOU RECEIVED A CONTRACT FROM THE NAVY'S BUREAU OF SHIPS ON DECEMBER 3, 1965, AND SUGGEST AN INCONSISTENCY BETWEEN THE TWO NAVY BRANCHES IN DETERMINING RESPONSIBILITY OF A BIDDER. WITH RESPECT TO THE DECEMBER CONTRACT, IT IS NOTED THAT THE CONTRACTING OFFICER THERE INITIALLY FOUND YOU TO BE NONRESPONSIBLE AND THAT THE AWARD WAS MADE ONLY AFTER A NINE-WEEK REVIEW BY THE SBA WHICH RESULTED IN THE ISSUANCE OF A CERTIFICATE OF COMPETENCY.

THE CONTRACTING OFFICER'S DETERMINATION WAS BASED PARTIALLY ON THE PRE- AWARD SURVEY DATED APRIL 19, 1965, IN CONNECTION WITH IFB NO. 383 499-65, IN WHICH IT WAS DETERMINED THAT YOU LACKED THE NECESSARY CAPACITY TO PERFORM. THE MATTER WAS AT THAT TIME REFERRED TO THE SMALL BUSINESS ADMINISTRATION. ALTHOUGH YOU STATE THAT YOU WITHDREW YOUR REQUEST FOR A CERTIFICATE OF COMPETENCY, A LETTER DATED MAY 25, 1965, FROM THE SBA TO YOU ADVISED THAT A COC WAS DENIED BASED ON LACK OF CREDIT. IN ADDITION, THE CONTRACTING OFFICER HAD A DUN AND BRADSTREET REPORT DATED SEPTEMBER 1, 1965, SHOWING THAT THE U.S. INTERNAL REVENUE DEPARTMENT HAD SEIZED VICTORY'S PLANT FOR NONPAYMENT OF TAXES IN THE AMOUNT OF $24,296. ALTHOUGH A SUBSEQUENT REPORT OF SEPTEMBER 2, 1965, INDICATED THAT THESE TAXES WERE TO BE PAID IN THREE INSTALLMENTS AND THE PLANT HAD BEEN REOPENED, THE CONTRACTING OFFICER FELT THAT THE ENTIRE SITUATION INDICATED THAT THE COMPANY'S FINANCIAL SITUATION HAD NOT IMPROVED SINCE MAY 1965, AND, IN FACT, PROBABLY HAD BECOME WORSE.

ASPR 1-905.4 (A) PROVIDES THAT THE CONTRACTING OFFICER, IN DETERMINING RESPONSIBILITY OF A BIDDER MAY USE (I) DATA ON HAND; (II) DATA FROM OTHER GOVERNMENT AGENCIES OR COMMERCIAL SOURCES; (III) AN ON SITE INSPECTION; OR (IV) ANY COMBINATION OF THESE. THUS, THE CONTRACTING OFFICER PROPERLY COULD LIMIT THE INFORMATION CONSIDERED TO THE PREVIOUS PRE-AWARD SURVEY OF THE ASO AND THE CURRENT DUN AND BRADSTREET REPORT. AS A RESULT, THERE WAS NO REQUIREMENT THAT YOU BE CONTACTED FOR YOUR COMMENTS. WE HAVE CONSISTENTLY HELD THAT IT IS THE DUTY OF THE CONTRACTING OFFICER TO DETERMINE, TO HIS SATISFACTION, THE RESPONSIBILITY OF A BIDDER. 37 COMP. GEN. 430; 38 ID. 248; 39 ID. 468; 43 ID. 228. SUCH A DETERMINATION WILL NOT BE QUESTIONED BY THIS OFFICE IN THE ABSENCE OF BAD FAITH OR LACK OF SUBSTANTIAL EVIDENCE. 36 COMP. GEN. 42; 37 ID. 430; ID. 798; 38 ID. 131; ID. 778. WE FEEL THAT, UNDER THE CIRCUMSTANCES, THE CONTRACTING OFFICER'S DETERMINATION WAS SUPPORTED BY SUBSTANTIAL EVIDENCE. FURTHER, WE DOUBT THAT THE RESULT WOULD HAVE BEEN DIFFERENT HAD THE CONTRACTING OFFICER BEEN AWARE AT THAT TIME OF THE EVIDENCE SUBMITTED BY YOU ON NOVEMBER 4, IN VIEW OF THE INFORMATION SUBSEQUENTLY OBTAINED FROM DCAA, DCASD AND USAEC.

THE CERTIFICATES OF URGENCY BOTH APPEAR TO CONTAIN SUFFICIENT JUSTIFICATION FOR AVOIDING THE DELAY OF REFERRAL TO THE SMALL BUSINESS ADMINISTRATION. FURTHER, WE HAVE REPEATEDLY HELD THAT IT IS NOT WITHIN THE PROVINCE OF THIS OFFICE TO QUESTION ADMINISTRATIVE DETERMINATIONS OF URGENCY OF PROCUREMENT. B-145487, DATED OCTOBER 20, 1961; B-149293, DATED AUGUST 14, 1962; B-136754, DATED MARCH 12, 1959. WITH RESPECT TO THE AWARD UNDER IFB NO. 383-15-66, WE CAN FIND NO ERROR THERE. IN FACT, THE AGENCY APPARENTLY MADE EVERY EFFORT TO INSURE THAT YOUR FIRM HAD A FAIR OPPORTUNITY FOR THE AWARD, GOING SO FAR AS TO DELAY AN URGENT PROCUREMENT IN ORDER TO REVIEW YOUR CURRENT RESPONSIBILITY IN VIEW OF THE NEW INFORMATION PRESENTED ON NOVEMBER 4. VIEWING THE MATTER IN RETROSPECT, AND CONSIDERING THE PERIOD ELAPSING BETWEEN NOVEMBER 4 AND THE DATE OF AWARD, THE AGENCY COULD HAVE REFERRED THE MATTER TO THE SBA FOR REVIEW; HOWEVER, UNDER THE FACTS AND CIRCUMSTANCES EXISTING AT THAT TIME, WE CANNOT FIND ERROR IN ITS DECISION.

CONCERNING THE AWARD UNDER IFB NO. 383-14-66, IT IS OUR OPINION THAT, ON SEPTEMBER 3, 1965, WHEN THE CONTRACTING OFFICER DETERMINED YOUR FIRM TO BE NONRESPONSIBLE, THE MATTER COULD HAVE BEEN REFERRED TO THE SMALL BUSINESS ADMINISTRATION FOR REVIEW WITHOUT SERIOUSLY AFFECTING THE DESIRED SEPTEMBER 30 AWARD DEADLINE. WE ARE ADVISING THE SECRETARY OF THE NAVY OF OUR FEELINGS IN THE MATTER AND REQUESTING STEPS BE TAKEN TO AVOID A RECURRENCE; HOWEVER, IN VIEW OF THE DETERMINATION OF URGENCY, WE FEEL THAT IT WOULD NOT BE IN THE BEST INTERESTS OF THE UNITED STATES TO INVALIDATE A CONTRACT FOR THE PRODUCTION OF URGENTLY NEEDED SUPPLIES.