B-154956, JUN. 21, 1966

B-154956, JUN. 21, 1966

TO ZERO MANUFACTURING CO:

IN YOUR LETTER OF MARCH 14, 1966, YOU PROTEST THE AWARD ON JANUARY 27, 1966, OF CONTRACT DSA 120-3082 FOR MEDICAL CHESTS TO THE LOW OFFEROR, ROIS MANUFACTURING CO., PURSUANT TO REQUEST FOR PROPOSALS (RFP) DSA 120-66-NEG- 270, ISSUED BY DEFENSE PERSONNEL SUPPORT CENTER (DPSC), A PURCHASING ACTIVITY OF THE DEFENSE SUPPLY AGENCY (DSA). YOU ALLEGED THAT SINCE ROIS WAS OVER 9 MONTHS LATE IN THE DELIVERY OF MEDICAL CHESTS AWARDED IN JULY OF 1964, UNDER DSA CONTRACT DSA 2 10320, AWARD OF THE SUBJECT CONTRACT TO THAT FIRM IS VIOLATIVE OF "POLICIES SET DOWN BY THE SECRETARY OF DEFENSE THAT CONTRACTS (NOT) BE AWARDED TO VENDORS WHO ARE CURRENTLY LATE ON IVERY.' YOU ALSO ALLEGED IT IS UNFAIR TO LEGITIMATE CONTRACTORS AND TO TAXPAYERS FOR THE GOVERNMENT TO HAVE AGREED TO PAY A HIGHER PRICE UNDER THE SUBJECT CONTRACT FOR A QUANTITY OF ITEMS SIMILAR TO THOSE CANCELLED OUT OF ROIS' 1964 CONTRACT, ALTHOUGH THE QUANTITY UNDER THE SUBJECT CONTRACT IS GREATER THAN THAT UNDER THE PREVIOUS ONE.

THE RECORD SHOWS THAT THE 2 LOWEST OF 4 OFFERS WHICH DPSC RECEIVED BY SEPTEMBER 1, 1965, WERE AS FOLLOWS:

TABLE

ROIS ZERO

DESTINATION ORIGIN DESTINATION ONLY

$730,058.05 $705,050.10 $953,447.41

ALTHOUGH ROIS HAD OFFERED A SUBSTANTIALLY LOWER PRICE THAN YOU, A FACILITY-CAPABILITY REPORT OF SEPTEMBER 23, 1965, DISCLOSED THE FOLLOWING WEAKNESSES OF THAT FIRM:

1. THE PROPOSED CONTRACTOR'S DELINQUENT STATUS AND PAST HISTORY OF POOR PERFORMANCE.

2. ANTICIPATED DELAY IN DELIVERY OF CONTRACT DSA 2-10320 FOR AN ITEM IDENTICAL TO AN ITEM ON THE SUBJECT RFP.

3. LACK OF OPEN PRODUCTION CAPACITY.

4. LACK OF FIRM COMMITMENTS FOR NECESSARY RAW MATERIAL AND CONTRACTING.

5. LACK OF ADEQUATE LEAD TIME TO MANUFACTURE TOOLING.

6. LACK OF FIRM COMMITMENTS FOR PROPOSED SUBCONTRACTED TOOLING.

IN VIEW OF THE FOREGOING, AWARD TO ROIS WAS NOT RECOMMENDED.

A SIMILAR SURVEY OF YOUR FIRM, PERFORMED ON OCTOBER 26, WAS FAVORABLE IN ALL RESPECTS. HOWEVER, DUE TO THE WIDE DIFFERENCE IN THE PRICES BETWEEN YOUR OFFER AND ROIS-, YOU WERE REQUESTED TO SUBMIT A COST BREAKDOWN. BEFORE THE AUDIT OF THE BREAKDOWN WAS COMPLETED ON JANUARY 4, 1966, THE CONTRACTING OFFICER ORDERED A COMPLETE RESURVEY OF ROIS BECAUSE OVER 2 MONTHS HAD ELAPSED SINCE THE SEPTEMBER SURVEY. THIS SECOND FACILITY- CAPABILITY REPORT, DATED DECEMBER 16, 1965, OFFERED THE FOLLOWING INFORMATION TO UP-DATE THAT CONTAINED IN THE PREVIOUS SURVEY:

"1. THE PROPOSED CONTRACTOR'S DELINQUENT STATUS AND PAST HISTORY OF POOR PERFORMANCE. THIS SITUATION REMAINS ESSENTIALLY THE SAME AND IS THE BASIS FOR A RECOMMENDATION OF NO AWARD ON THE SUBJECT RE-SURVEY.

"2. CONTRACT DSA 2-10320 FOR 22,194 EACH CHEST NO. 3. A CONTRACT MODIFICATION EXTENDING THE DELIVERY SCHEDULE FOR A MONETARY CONSIDERATION HAS BEEN ISSUED. A TOTAL OF 2,054 UNITS HAVE BEEN DELIVERED AND THE CONTRACT IS PROCEEDING ON SCHEDULE. THE PRESENT FORECASTED COMPLETION IS 7 FEBRUARY 1966 IN ACCORDANCE WITH SCHEDULE ON THE MODIFICATION. THE ITEM ON THIS CONTRACT IS IDENTICAL TO ITEM 3 OF THE SUBJECT R.F.P. INVOLVED IN THIS RE-SURVEY.

"3. THE LACK OF OPEN PRODUCTION CAPACITY SHOULD BE ALLEVIATED. THIS DETERMINATION IS BASED UPON THE PROPOSED CONTRACTOR HAVING THE CAPABILITY OF MEETING THE DELIVERY SCHEDULE AS SET FORTH IN THE ROIS MFG. CO. PROPOSED DELIVERY SCHEDULE. THIS ROIS PROPOSED DELIVERY SCHEDULE WAS REQUESTED BY DPSC-PMH-4UB, MR. HENRY SAGANICH, IN THE REQUEST FOR SURVEY.

"4. THE PROPOSED CONTRACTOR NOW HAS SATISFACTORY FIRM COMMITMENTS FROM SUPPLIERS FOR RAW MATERIALS AND FOR SUBCONTRACTING FROM PHILMONT PRESSED STEEL INC.

"5. THE PROPOSED CONTRACTOR HAS COMPLETED ADDITIONAL TOOLING SINCE THE ORIGINAL SURVEY AND THE LEAD TIME FOR COMPLETION OF ALL TOOLING IS CONSIDERED TO BE ADEQUATE.

"6. THE PROPOSED CONTRACTOR NOW HAS SATISFACTORY FIRM COMMITMENTS FOR THAT PORTION OF TOOLING THAT WOULD BE SUBCONTRACTED TO PHILMONT PRESSED STEEL, INC.

"ALTHOUGH AS INDICATED ABOVE, THE BULK OF THE ORIGINAL CAUSES FOR A NO- AWARD RECOMMENDATION HAVE BEEN ELIMINATED, THE COMPANY'S HISTORY OF POOR PERFORMANCE AND CURRENT HIGH DELINQUENCY RATE REMAINS. AN ANALYSIS OF THE CURRENT BACK LOG OF WORK INDICATES THAT AS OF THE DATE OF THIS SURVEY OPEN CAPACITY SHOULD EXIST DURING THE PERIOD OF PERFORMANCE FOR THE PROPOSED CONTRACT. A DETERRENT TO ACCEPTING SUCH AN ANALYSIS IS THE FACTOR THAT THE COMPANY HAS RECENTLY RECEIVED WITHOUT BENEFIT OF PRE-AWARD SURVEY, SEVERAL NEW CONTRACTS OF A HIGH PRIORITY. DCASR EXPERIENCE WITH THIS COMPANY INDICATES THAT THE CONTRACTOR WILL ACCEPT VIRTUALLY ANY AND ALL CONTRACTS WITH DISREGARD TO EXISTING OR FUTURE DELIVERY REQUIREMENTS. PAST HISTORY OF PERFORMANCE PROHIBITS A RECOMMENDATION OF ANYTHING EXCEPT- NO-AWARD IN SPITE OF THE COMPANY'S TECHNICAL ABILITY TO PRODUCE THE REQUIREMENTS OF THE R.F.P.'

NEVERTHELESS, THE CONTRACTING OFFICER DETERMINED THAT SINCE ROIS HAD IMPROVED ITS POSITION TO THE POINT OF POSSESSING THE PRESENT CAPACITY AND TECHNICAL ABILITY TO DO AN ACCEPTABLE JOB, AND WAS DEMONSTRATING SUFFICIENT TENACITY AND PERSEVERANCE AWARD SHOULD BE RECOMMENDED TO THAT FIRM. ALL MEMBERS OF THE PURCHASING ACTIVITY'S CONTRACT REVIEW BOARD CONCURRED WITH THE RECOMMENDATION, BUT DISCUSSIONS WITH DSA HEADQUARTERS RESULTED IN A REQUEST BY THE CONTRACTING OFFICER FOR A PARTIAL RESURVEY OF ROIS, WHICH WAS COMPLETED ON JANUARY 20, 1966. IT DISCLOSED THE FOLLOWING INFORMATION:

"THE PROPOSED CONTRACTOR HAS RECENTLY MADE A CONCENTRATED EFFORT TO RELIEVE THE HIGH RATE OF DELINQUENCIES THAT HAS EXISTED FOR THE PAST SEVERAL MONTHS. AT THE TIME OF (THE SECOND) SURVEY DCRP-65-12-19, THE CONTRACTOR HAD NINE (9) DELINQUENCIES THAT WERE CONSIDERED TO BE THE FAULT OF THE CONTRACTOR. AT THE PRESENT TIME, THIS NUMBER IS DOWN TO FOUR (4). IT IS THE OPINION OF THE INDUSTRIAL SPECIALIST THAT THE PRESENT DELINQUENT CONTRACTS WILL BE CURED WITHIN A PERIOD OF TWO MONTHS.

"THE CONTRACTOR IS PRESENTLY PERFORMING ON CONTRACT DSA 2-10320 FOR 22,194 EACH CHEST NO. 3. THIS IS AN IDENTICAL ITEM TO ITEM 3 OF THE SUBJECT R.F.P. INVOLVED IN THIS RE-SURVEY. THE CONTRACTOR HAS FALLEN SLIGHTLY BEHIND CONTRACT SCHEDULE ON CONTRACT DSA 2-10320. HOWEVER, THE CONTRACTOR'S RATE OF PRODUCTION HAS BEEN GREATLY ACCELERATED DURING THE FIRST TWO WEEKS OF JANUARY 1966 AND NOW IS WELL IN EXCESS OF THE RATE THAT WOULD BE REQUIRED ON THE SUBJECT PROPOSED PROCUREMENT. COMPLETION OF CONTRACT DSA 2-10320 IS NOW FORECASTED FOR 18 FEBRUARY 1966. ALL OF THE OTHER INFORMATION CONTAINED IN SURVEY DCRP 65-12-19 STILL PERTAINS WITH THE FOLLOWING EXCEPTION;

SINCE ONE MONTH HAS ELAPSED SINCE THE LAST SURVEY (DCRP-65-12-19), ONE MONTH MUST BE ADDED TO THE CONTRACTOR'S PROPOSED DELIVERY SCHEDULE.

"THE PROPOSED CONTRACTOR IS CONSIDERED TO HAVE SUFFICIENT TECHNICAL ABILITY, PERSONNEL, EXPERIENCE, ADEQUATE FACILITIES, REASONABLY FIRM COMMITMENTS AND OPEN CAPACITY TO PERFORM IN ACCORDANCE WITH THE SUBJECT R.F.P. AND THEREFORE FULL AWARD IS RECOMMENDED.'

ACCORDINGLY, THE CONTRACT WAS AWARDED TO ROIS.

WITH RESPECT TO THAT PART OF YOUR FIRST ALLEGATION WHICH NOTES THATROIS IS OVER 9 MONTHS LATE ON CONTRACT DSA 2-10320, IT SHOULD BE NOTED THAT IN OUR DECISION TO YOU OF MARCH 22, 1965, WE POINTED OUT THAT AN 8-MONTH DELIVERY EXTENSION WAS ANTICIPATED DUE TO GOVERNMENT CAUSED DELAYS. ARE ADVISED THAT FURTHER DELAYS WERE EXPERIENCED IN THE CONTRACT, BUT THAT SINCE SOME WERE NOT EXCUSABLE, THE CONTRACT PRICE WAS REDUCED BY APPROXIMATELY $11,000.

CONCERNING YOUR REFERENCE TO POLICIES OF THE SECRETARY OF DEFENSE THAT CONTRACTS NOT BE AWARDED TO VENDORS WHO ARE CURRENTLY LATE ON DELIVERY, WE ARE UNABLE TO FIND ANY POLICY WHICH CATEGORICALLY PROHIBITS SUCH AWARDS. THE RELEVANT POLICIES WE HAVE FOUND ARE THE FOLLOWING SECTIONS FROM THE ARMED SERVICES PROCUREMENT REGULATION (ASPR):

"1-902 GENERAL POLICY. PURCHASES SHALL BE MADE FROM, AND CONTRACTS SHALL BE AWARDED TO, RESPONSIBLE PROSPECTIVE CONTRACTORS ONLY. A RESPONSIBLE PROSPECTIVE CONTRACTOR IS ONE WHICH MEETS THE STANDARDS SET FORTH IN 1- 903.1 AND 1-903.2 * * *. WHILE IT IS IMPORTANT THAT GOVERNMENT PURCHASES BE MADE AT THE LOWEST PRICE, THIS DOES NOT REQUIRE AN AWARD TO A MARGINAL SUPPLIER SOLELY BECAUSE HE SUBMITS THE LOWEST BID OR OFFER. * * *. RECENT UNSATISFACTORY PERFORMANCE, IN EITHER AN AWARD TO A MARGINAL SUPPLIER SOLELY BECAUSE HE SUBMITS THE LOWEST BID OR OFFER. * * *. RECENT UNSATISFACTORY PERFORMANCE, IN EITHER QUALITY OR TIMELINESS OF DELIVERY, WHETHER OR NOT DEFAULT PROCEEDINGS WERE INSTITUTED, IS AN EXAMPLE OF A PROBLEM WHICH THE CONTRACTING OFFICER MUST CONSIDER AND RESOLVE AS TO ITS IMPACT ON THE CURRENT PROCUREMENT PRIOR TO MAKING AN AFFIRMATIVE DETERMINATION OF RESPONSIBILITY. * * *

"1-903 MINIMUM STANDARDS FOR RESPONSIBLE PROSPECTIVE CONTRACTORS.

"1-903.1 GENERAL STANDARDS. EXCEPT AS OTHERWISE PROVIDED IN THIS PARAGRAPH 1-903, A PROSPECTIVE CONTRACTOR MUST:

"/II) BE ABLE TO COMPLY WITH THE REQUIRED OR PROPOSED DELIVERY OR PERFORMANCE SCHEDULE, TAKING INTO CONSIDERATION ALL EXISTING BUSINESS COMMITMENTS, COMMERCIAL AS WELL AS GOVERNMENTAL (FOR SBA CERTIFICATES OF COMPETENCY, SEE 1-705.4);

"/III) HAVE A SATISFACTORY RECORD OF PERFORMANCE (CONTRACTORS WHO ARE SERIOUSLY DEFICIENT IN CURRENT CONTRACT PERFORMANCE, WHEN THE NUMBER OF CONTRACTS AND THE EXTENT OF DEFICIENCY OF EACH ARE CONSIDERED, SHALL, IN THE ABSENCE OF EVIDENCE TO THE CONTRARY OR CIRCUMSTANCES PROPERLY BEYOND THE CONTROL OF THE CONTRACTOR, BE PRESUMED TO BE UNABLE TO MEET THIS REQUIREMENT). PAST UNSATISFACTORY PERFORMANCE, DUE TO FAILURE TO APPLY NECESSARY TENACITY OR PERSEVERANCE TO DO AN 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 SMALL BUSINESS ADMINISTRATION; SEE 1-705.4/A) (IV) AND 1-905.2;

"1-904 DETERMINATIONS OF RESPONSIBILITY AND NONRESPONSIBILITY.

"1-904.1 REQUIREMENT. EXCEPT AS OTHERWISE PROVIDED IN 1-904.2, NO PURCHASE SHALL BE MADE FROM, AND NO CONTRACT SHALL BE AWARDED TO, ANY PERSON OR FIRM UNLESS THE CONTRACTING OFFICER FIRST MAKES, SIGNS, AND PLACES IN THE CONTRACT FILE, AN AFFIRMATIVE DETERMINATION THAT THE PROSPECTIVE CONTRACTOR IS RESPONSIBLE WITHIN THE MEANING OF 1-902. * * *. WHERE A BID OR OFFER ON WHICH AN AWARD WOULD OTHERWISE BE MADE IS REJECTED BECAUSE THE PROSPECTIVE CONTRACTOR IS FOUND TO BE NONRESPONSIBLE, A DETERMINATION OF NONRESPONSIBILITY SHALL BE MADE SIGNED, AND PLACED IN THE FILE. * * *

"1-905.) GENERAL

"/B) MAXIMUM PRACTICABLE USE SHALL BE MADE OF CURRENTLY VALID INFORMATION ON FILE OR WITHIN THE KNOWLEDGE OF PERSONNEL IN THE DEPARTMENT OF DEFENSE.

"1-905.2 WHEN INFORMATION WILL BE OBTAINED. GENERALLY, INFORMATION REGARDING THE RESPONSIBILITY OF A PROSPECTIVE CONTRACTOR (INCLUDING PRE- AWARD SURVEYS (SEE 1-905.4) WHEN DEEMED NECESSARY) SHALL BE OBTAINED PROMPTLY AFTER BID OPENING OR RECEIPT OF PROPOSALS. * * *. NOTWITHSTANDING THE FOREGOING, INFORMATION REGARDING FINANCIAL RESOURCES (SEE 1-903.1 (I) ( AND PERFORMANCE CAPABILITY (SEE 1-903.1 (II) ( SHALL BE OBTAINED ON AS CURRENT A BASIS AS FEASIBLE WITH RELATION TO THE DATE OF CONTRACT AWARD.

"1-905.4 PRE-AWARD SURVEYS.

(A) GENERAL. A PRE-AWARD SURVEY IS AN EVALUATION BY A CONTRACT ADMINISTRATION OFFICE OF A PROSPECTIVE CONTRACTOR'S CAPABILITY TO PERFORM UNDER THE TERMS OF A PROPOSED CONTRACT. SUCH EVALUATION SHALL BE USED BY THE CONTRACTING OFFICER IN DETERMINING THE PROSPECTIVE CONTRACTOR'S RESPONSIBILITY. * * *"

FROM THE FACTS OF THIS CASE, IT APPEARS THAT THE CONTRACTING OFFICER USED THE PRE-AWARD SURVEY, OBTAINED ON AS CURRENT A BASIS AS FEASIBLE, TO DECIDE THAT ROIS HAD A RECORD OF PERFORMANCE WHICH, WHEN CONSIDERED WITH ITS PRESENT CAPABILITY OF COMPLYING WITH THE PROPOSED DELIVERY SCHEDULE, WAS SUFFICIENTLY SATISFACTORY TO WARRANT AN AFFIRMATIVE DETERMINATION OF RESPONSIBILITY.

THE FOLLOWING OBSERVATION, MADE IN OUR DECISION TO YOU OF SEPTEMBER 22, 1964, IS APPLICABLE HERE:

"THIS OFFICE HAS CONSISTENTLY HELD THAT THE DETERMINATION OF A BIDDER'S OVER-ALL RESPONSIBILITY IS PRIMARILY THAT OF THE CONTRACTING AGENCY AND NOT OF THE GENERAL ACCOUNTING OFFICE. 38 COMP. GEN. 131; 33 ID. 549. WHETHER A BIDDER IS, OR IS NOT, CAPABLE OF PRODUCING IN ACCORDANCE WITH CONTRACT REQUIREMENTS IS A QUESTION OF FACT, AND IN THE ABSENCE OF EVIDENCE THAT THE DETERMINATION OF A BIDDER'S CAPABILITIES WAS BASED ON ERROR, FRAUD OR FAVORITISM, THIS OFFICE WILL THEREFORE ACCEPT THE FINDINGS OF THE CONTRACTING AGENCY. 40 COMP. GEN. 294.' IN 39 COMP. GEN. 705, 711, WE FURTHER OBSERVED:

"* * * THE PROJECTION OF A BIDDER'S ABILITY TO PERFORM IF AWARDED A CONTRACT IS OF NECESSITY A MATTER OF JUDGMENT.

WHILE SUCH JUDGMENT SHOULD BE BASED ON FACT AND SHOULD BE ARRIVED AT IN GOOD FAITH, IT MUST PROPERLY BE LEFT LARGELY TO THE SOUND ADMINISTRATIVE DISCRETION OF THE CONTRACTING OFFICES INVOLVED, SINCE THEY ARE IN THE BEST POSITION TO ASSESS RESPONSIBILITY, THEY MUST BEAR THE MAJOR BRUNT OF ANY DIFFICULTIES EXPERIENCED BY REASON OF THE CONTRACTOR'S LACK OF ABILITY, AND THEY MUST MAINTAIN THE DAY TO DAY RELATIONS WITH THE CONTRACTOR ON BEHALF OF THE GOVERNMENT. FOR THESE REASONS, IT WOULD BE UNREASONABLE TO SUPERIMPOSE THE JUDGMENT OF OUR OFFICE OR ANY OTHER AGENCY OR GROUP ON THAT OF THE CONTRACTING OFFICIALS. * * *"

WHETHER ROIS' RECORD OF PAST PERFORMANCE WAS SATISFACTORY ENOUGH TO WARRANT A FINDING OF RESPONSIBILITY, OR TO PUT IT ANOTHER WAY, WAS SO UNSATISFACTORY AS TO WARRANT A FINDING OF NONRESPONSIBILITY, WAS CLEARLY A MATTER OF JUDGMENT. IN SUCH CIRCUMSTANCES, THIS OFFICE WILL NOT INTERDICT THE GOOD FAITH ATTEMPT OF THE AGENCY TO SECURE A CONTRACT FROM THAT SOURCE WHICH APPEARS TO REPRESENT THE LOWEST POSSIBLE COST FOR THE GOODS OR SERVICES BEING PROCURED.

SINCE OUR REVIEW OF THE RECORD DISCLOSES NO EVIDENCE OF FRAUD, ERROR OR FAVORITISM IN THE AGENCY'S DETERMINATION THAT ROIS IS A RESPONSIBLE BIDDER, WE FIND NO BASIS TO OBJECT TO THAT DETERMINATION.

YOU ALSO ALLEGE THAT DSA HAS ACTED UNFAIRLY IN AWARDING AN ITEM IN THE SUBJECT CONTRACT TO ROIS AT A HIGHER PRICE THAN ROIS OFFERED FOR A SMALLER QUANTITY OF THE SAME APPROXIMATELY 1 1/2 YEARS AGO. IN VIEW OF THE AMOUNT OF TIME WHICH HAS ELAPSED SINCE THE EARLIER AWARD, THE FACT THAT BIDDERS WERE NOT THEN REQUIRED TO FURNISH THEIR OWN TOOLING, AS THEY WERE IN THE SUBJECT PROCUREMENT, AND THE FACT THAT YOUR BID FOR THE RESPECTIVE CONTRACT ITEMS SHOWED A UNIT DOLLAR INCREASE OF ALMOST THE SAME MAGNITUDE AS ROIS-, WE ARE NOT DISPOSED TO ACCORD ANY SIGNIFICANCE TO YOUR ALLEGATION.