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B-171729, NOV 10, 1971, 51 COMP GEN 288

B-171729 Nov 10, 1971
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BIDDERS - QUALIFICATIONS - TENACITY AND PERSEVERANCE - CERTIFICATE OF COMPETENCY EFFECT THE DETERMINATION A SMALL BUSINESS CONCERN WAS NONRESPONSIBLE ON THE BASIS OF A NEGATIVE PREAWARD SURVEY EVIDENCING PAST UNSATISFACTORY PERFORMANCE UNDER BOTH GOVERNMENT AND PRIVATE CONTRACTS ATTRIBUTABLE TO TENACITY AND PERSEVERANCE WHICH. WAS FORWARDED TO THE SMALL BUSINESS ADMINISTRATION (SBA) FOR ISSUANCE OF A CERTIFICATE OF COMPETENCY (COC) IF WARRANTED IS UPHELD WHERE SBA AGREED THE BIDDER LACKED TENACITY AND PERSEVERANCE AND. CONCLUDED THE CONCERN WAS DEFICIENT IN CAPACITY AND THE ISSUANCE OF A COC WAS NOT JUSTIFIED. WHILE THE FACTOR OF TENACITY AND PERSEVERANCE IS NOT COVERED BY THE COC PROCEDURE.

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B-171729, NOV 10, 1971, 51 COMP GEN 288

BIDDERS - QUALIFICATIONS - TENACITY AND PERSEVERANCE - CERTIFICATE OF COMPETENCY EFFECT THE DETERMINATION A SMALL BUSINESS CONCERN WAS NONRESPONSIBLE ON THE BASIS OF A NEGATIVE PREAWARD SURVEY EVIDENCING PAST UNSATISFACTORY PERFORMANCE UNDER BOTH GOVERNMENT AND PRIVATE CONTRACTS ATTRIBUTABLE TO TENACITY AND PERSEVERANCE WHICH, PURSUANT TO SECTION 1-1.708-2(A)(5) OF THE FEDERAL PROCUREMENT REGULATIONS THAT CONCERNS DEFICIENCIES OTHER THAN CAPACITY AND CREDIT, WAS FORWARDED TO THE SMALL BUSINESS ADMINISTRATION (SBA) FOR ISSUANCE OF A CERTIFICATE OF COMPETENCY (COC) IF WARRANTED IS UPHELD WHERE SBA AGREED THE BIDDER LACKED TENACITY AND PERSEVERANCE AND, IN ADDITION, CONCLUDED THE CONCERN WAS DEFICIENT IN CAPACITY AND THE ISSUANCE OF A COC WAS NOT JUSTIFIED. WHILE THE FACTOR OF TENACITY AND PERSEVERANCE IS NOT COVERED BY THE COC PROCEDURE, THE DENIAL OF A COC OPERATED AS CONCURRENCE BY SBA IN THE CONTRACTING OFFICER'S DETERMINATION AN AWARD TO THE LOW BIDDER WAS PRECLUDED.

TO THE SOUTHWEST ENGINEERING COMPANY, NOVEMBER 10, 1971:

WE REFER TO YOUR PROTEST, BY TELEGRAM OF NOVEMBER 2, AS SUPPLEMENTED BY TELEGRAM AND LETTER OF NOVEMBER 4 AND YOUR TELEGRAM OF NOVEMBER 7, 1971, AGAINST THE REJECTION BY THE NATIONAL OCEANIC ATMOSPHERIC ADMINISTRATION (NOAA), UNITED STATES DEPARTMENT OF COMMERCE, OF A LOW BID SUBMITTED BY YOU FOR CONSTRUCTION OF UPPER AIR FACILITIES FOR THE NATIONAL WEATHER SERVICE AT MONETT, MISSOURI.

THE PROCUREMENT SOLICITATION, INVITATION FOR BIDS N-16-10-72, ISSUED ON JULY 12, 1971, BY THE NATIONAL WEATHER SERVICE, NOAA, MONETT, PROVIDED FOR BID OPENING ON AUGUST 20, AND YOUR BID ON THE PROJECT WAS IN THE AMOUNT OF $48,287. THE ONLY OTHER BID RECEIVED BY THE GOVERNMENT WAS SUBMITTED BY BRANHAM BROTHERS CONSTRUCTION COMPANY (BRANHAM), AND THE AMOUNT WAS $50,804.

BY TELEGRAM DATED OCTOBER 29, THE CONTRACTING OFFICER NOTIFIED YOU THAT YOUR BID WAS REJECTED FOLLOWING RECEIPT FROM THE SMALL BUSINESS ADMINISTRATION (SBA) OF ADVICE UPHOLDING A DETERMINATION THAT YOU WERE NONRESPONSIBLE UNDER THE STANDARDS SET FORTH IN FEDERAL PROCUREMENT REGULATIONS (FPR) 1-1.310-5 FOR RESPONSIBLE PROSPECTIVE GOVERNMENT CONTRACTORS. IN ADDITION, YOU WERE NOTIFIED THAT AWARD WOULD BE MADE NO LATER THAN NOVEMBER 10 TO BRANHAM.

IN YOUR TELEGRAM OF NOVEMBER 4 YOU STATE THAT THE REJECTION OF YOUR BID WAS BASED ON (1) LACK OF TENACITY AND PERSEVERANCE IN THE PERFORMANCE OF PAST CONTRACTS; (2) SUBMISSION TO OUR OFFICE OF 9 BID PROTESTS, 7 OF WHICH HAVE BEEN DENIED; (3) PROBLEMS INVOLVING EMPLOYEE WAGE RATES WITH WHICH THE UNITED STATES DEPARTMENT OF LABOR WAS CONCERNED; (4) COMPLAINTS OF DISCREPANCIES IN YOUR FINANCIAL REPORTS; AND (5) LACK OF SKILLED OR EXPERIENCED EMPLOYEES ON YOUR CURRENT WORK FORCE. YOU TAKE EXCEPTION TO EACH OF SUCH BASES ON VARIOUS GROUNDS.

YOUR TELEGRAM OF NOVEMBER 7 SETS FORTH THE SAME ISSUES AND ARGUMENTS AS YOUR TELEGRAM OF NOVEMBER 4 TOGETHER WITH YOUR SPECIFIC CONTENTION THAT SBA'S DECISION ON YOUR CERTIFICATE OF COMPETENCY (COC) APPLICATION SHOULD RELATE ONLY TO (A) ABILITY TO FINANCE THE PROJECT, (B) EXPERIENCE AND CAPABILITY, (C) ORGANIZATION, (D) EQUIPMENT AND FACILITIES. IN ADDITION, YOU CONTEND THAT NONE OF SUCH "CONDITIONS" SHOULD ACT AS A DETERRENT TO AWARD TO YOUR FIRM.

THE RECORD BEFORE OUR OFFICE INCLUDES DOCUMENTATION FROM NOAA AND FROM THE DEFENSE CONTRACT ADMINISTRATION SERVICES OFFICE (DCASO), DEFENSE SUPPLY AGENCY, KANSAS CITY, MISSOURI, AS WELL AS THE COMPLETE FILE OF THE SBA KANSAS CITY REGIONAL OFFICE.

FOLLOWING THE OPENING OF BIDS ON AUGUST 20, AS SCHEDULED, THE CONTRACTING OFFICER, ACTING PURSUANT TO FPR 1-1.310-9, REQUESTED DCASO KANSAS CITY TO PERFORM PREAWARD SURVEYS OF YOUR FIRM AND OF BRANHAM. THE DCASO REPORT ON BRANHAM WAS FAVORABLE AND INCLUDED A RECOMMENDATION FOR COMPLETE AWARD. THE DCASO REPORT ON YOUR FIRM, HOWEVER, WAS NEGATIVE AND RECOMMENDED NO AWARD, PRIMARILY ON THE BASIS OF PAST UNSATISFACTORY PERFORMANCE OF BOTH GOVERNMENT AND COMMERCIAL CONTRACTS, WHICH FACTOR, DCASO STATED, WAS ATTRIBUTABLE TO LACK OF TENACITY AND PERSEVERANCE.

ON SEPTEMBER 15 THE CONTRACTING OFFICER ISSUED A WRITTEN DETERMINATION OF NONRESPONSIBILITY, AS REQUIRED BY FPR 1-1.310-6, WHICH PROVIDED IN PERTINENT PART AS FOLLOWS:

A. THE PROSPECTIVE CONTRACTOR WILL NOT, BASED ON PAST EXPERIENCE, COMPLY WITH PLANS AND SPECIFICATIONS UNLESS FORCED TO COMPLY BY GOVERNMENT PERSONNEL AS THE JOB PROGRESSES.

B. THE PROSPECTIVE CONTRACTOR WILL NOT MEET THE 120 DAY COMPLETION DATE REQUIRED DUE TO HIS LACK OF COMPLETE COOPERATION AND ATTITUDE TOWARD GOVERNMENT PERSONNEL AS EXHIBITED IN THE PAST.

C. THE PROSPECTIVE CONTRACTOR LACKS THE TECHNICAL CAPABILITY REQUIRED TO PERFORM IN A TIMELY MANNER AND TO PRODUCE A QUALITY BUILDING AS DEMONSTRATED IN THE PAST.

D. PAST PERFORMANCE BY THIS CONTRACTOR FOR SOUTHWESTERN BELL TELEPHONE COMPANY, FAA AND THE DEPARTMENT OF COMMERCE-NATIONAL WEATHER SERVICE BEARS OUT UNSATISFACTORY PERFORMANCE DUE TO FAILURE TO APPLY NECESSARY TENACITY OR PERSEVERANCE IN THE RIGHT DIRECTION TO DO AN ACCEPTABLE JOB.

THE BASIS OF THE PRECEDING DETERMINATIONS ARE (1) REFLECTED IN PRE AWARD SURVEY NO. S2604A18007P PERFORMED BY THE DEFENSE CONTRACT ADMINISTRATION SERVICES OFFICE, KANSAS CITY WHOSE PRE-AWARD SURVEY BOARD RECOMMENDED TO THE CONTRACTING OFFICER "NO AWARD" AND (2) THE PAST PERFORMANCE BY SOUTHWEST ENGINEERING COMPANY UNDER NATIONAL WEATHER SERVICE CONTRACT ES- 16-5-70 FOR THE CONSTRUCTION OF NATIONAL WEATHER SERVICE OFFICE BUILDING AND RADAR COMPLEX AT MONETT, MISSOURI, WHICH REFLECTED MARGINAL QUALITY OF WORK, FAILURE TO PROCEED DILIGENTLY TO COMPLETION WITHIN THE AUTHORIZED PERFORMANCE PERIOD, THE SUBSTANTIAL DEFICIENCIES REQUIRING REJECTIONS DURING PERFORMANCE AND CONSIDERABLE REMEDIAL WORK FOLLOWING OCCUPANCY AND (3) AFFIDAVITS FROM CAPABLE AND QUALIFIED SOURCES FROM OTHER GOVERNMENT AGENCIES ATTESTING TO POOR PERFORMANCE IN THE PAST BY SOUTHWEST ENGINEERING WHICH ARE INCLUDED IN THE APPEALS FILE NCAA-1 FOR THE PREVIOUSLY MENTIONED CONTRACT.

PURSUANT TO FPR 1-1.708-2(A)(5), WHICH CONCERNS DETERMINATIONS OF NONRESPONSIBILITY OF SMALL BUSINESS CONCERNS FOR REASONS OTHER THAN DEFICIENCIES IN CAPACITY OR CREDIT (INCLUDING PERSISTENT FAILURE TO APPLY NECESSARY TENACITY OR PERSEVERANCE TO DO AN ACCEPTABLE JOB - NOT WHETHER THE BIDDER CAN PERFORM BUT WHETHER HE WILL PERFORM), THE CONTRACTING OFFICER FURNISHED TO SBA A COPY OF HIS DETERMINATION AND THE SUPPORTING DOCUMENTATION TO AFFORD SBA AN OPPORTUNITY TO EXPRESS, IF DESIRED, CONTRARY VIEWS IN THE MATTER. PRESUMABLY BECAUSE PARAGRAPH (C) QUOTED ABOVE RELATED TO YOUR CAPACITY TO PERFORM THE CONTRACT, SBA SUBSEQUENTLY AFFORDED YOU AN OPPORTUNITY TO APPLY FOR A CERTIFICATE OF COMPETENCY (COC), AND THEN PROCEEDED TO CONDUCT ITS OWN INDEPENDENT INVESTIGATION AS TO YOUR RESPONSIBILITY.

SBA'S RECORDS IN THIS MATTER SHOW THAT A THOROUGH INVESTIGATION WAS MADE BY SBA REPRESENTATIVES RELATIVE TO BOTH YOUR PRESENT CAPACITY AND YOUR PAST PERFORMANCE, AND INFORMATION WAS OBTAINED WHICH INDICATES POOR PERFORMANCE BY YOU OF SEVERAL GOVERNMENT AND PRIVATE CONTRACTS, INCLUDING THE THREE CONTRACTS CITED IN THE DCASO REPORT, DUE TO LACK OF TENACITY AND PERSERVERANCE. IN ADDITION, SBA CONCLUDED, ON THE BASIS OF INFORMATION FURNISHED BY YOU RELATIVE TO YOUR PRESENT ORGANIZATION AND WORK FORCE, THAT YOU WERE DEFICIENT IN CAPACITY FOR REASONS WHICH COME WITHIN THE SCOPE OF THE COC PROCEDURE, AS SET FORTH IN FPR 1-1.708 2.

BY LETTER DATED OCTOBER 28, SBA ADVISED YOU THAT IT HAD GIVEN CAREFUL CONSIDERATION TO YOUR COC APPLICATION, THAT IT HAD ALSO CAREFULLY REVIEWED ALL OF THE INFORMATION AND DATA SUPPLIED, AND THAT IT FOUND NO SUFFICIENT REASON FOR DISAGREEING WITH THE DECISION OF THE PROCURING AGENCY. THE LETTER ALSO INDICATED SBA'S CONCLUSION WAS BASED, IN PART, ON ITS CONCLUSION THAT YOU HAD INADEQUATE EXPERIENCED OR SKILLED EMPLOYEES, AND IN PART ON THE CONCLUSION THAT BOTH GOVERNMENT AGENCIES AND COMMERCIAL CONCERNS FOR WHOM YOU HAD PERFORMED WORK IN THE RECENT PAST HAD INDICATED DISSATISFACTION WITH BOTH THE QUALITY AND TIMELINESS OF SUCH WORK, AND HAD ATTRIBUTED SUCH DEFICIENCIES TO MATTERS WHICH REFLECTED LACK OF TENACITY AND PERSERVERANCE ON YOUR PART.

THE CONCLUDING PARAGRAPH OF THE SBA LETTER INCLUDED A STATEMENT THAT "CONDITIONS PRESENT IN THIS INSTANCE DID NOT JUSTIFY OUR ISSUANCE OF A CERTIFICATE OF COMPETENCY ON YOUR BEHALF."

THE CONTRACTING OFFICER'S TELEGRAPH OF OCTOBER 29 WHICH NOTIFIED YOU OF THE REJECTION OF YOUR BID WAS ISSUED AFTER RECEIPT BY NOAA OF A LETTER DATED OCTOBER 28 FROM SBA ADVISING OF THE ACTION TAKEN ON YOUR APPLICATION FOR A CERTIFICATE OF COMPETENCY AND AFTER APPROVAL BY THE HEAD OF THE PROCURING ACTIVITY OF THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY.

UNDER 15 U.S.C. 637(B)(7), SBA IS EMPOWERED TO CERTIFY TO GOVERNMENT PROCUREMENT OFFICERS THE COMPETENCY AS TO CAPACITY AND CREDIT OF ANY SMALL BUSINESS CONCERN TO PERFORM A SPECIFIC GOVERNMENT CONTRACT, AND SUCH CERTIFICATION IS REQUIRED TO BE ACCEPTED BY PROCUREMENT AGENCIES AS CONCLUSIVE OF A PROSPECTIVE CONTRACTOR'S RESPONSIBILITY AS TO CAPACITY AND CREDIT. THE CERTIFICATE OF COMPETENCY PROCEDURES SET FORTH IN FPR 1-1.708 ACCORDINGLY REQUIRE, WITH CERTAIN EXCEPTIONS NOT PERTINENT HERE, THAT SBA BE NOTIFIED WHENEVER A CONTRACTING OFFICER HAS FOUND A SMALL BUSINESS CONCERN TO BE NONRESPONSIBLE AS TO CAPACITY OR CREDIT AND THE BID IS TO BE REJECTED FOR SUCH REASON ALONE. SBA THEREAFTER CONSIDERS THE MATTER INDEPENDENTLY AND TAKES ACTION EITHER TO ISSUE OR TO DECLINE TO ISSUE A COC.

FACTORS INDICATIVE OF NONRESPONSIBILITY WHICH DO NOT RELATE TO CAPACITY OR CREDIT OF A SMALL BUSINESS CONCERN (E.G., LACK OF INTEGRITY, BUSINESS ETHICS, OR PERSISTENT FAILURE TO APPLY NECESSARY TENACITY OR PERSERVERANCE TO DO AN ACCEPTABLE JOB - NOT WHETHER THE BIDDER CAN PERFORM BUT WHETHER HE WILL PERFORM) ARE NOT COVERED BY COC PROCEDURES. 43 COMP. GEN. 257 (1963). THE CONTRACTING OFFICER'S DETERMINATION, HOWEVER, WHERE LACK OF TENACITY AND PERSEVERANCE IS A FACTOR IN PAST UNSATISFACTORY PERFORMANCE, MUST BE SUPPORTED BY SUBSTANTIAL EVIDENCE DOCUMENTED IN THE CONTRACT FILE AND IS SUBJECT TO APPROVAL BY THE HEAD OF THE PROCURING ACTIVITY AS HIS DESIGNEE. FPR 1 1.708-2(A)(5). IN ADDITION, FPR 1-1.708-2(A)(5)(I) REQUIRES THAT SBA BE NOTIFIED OF THE ADVERSE DETERMINATION, AND FPR 1- 1.708-2(A)(5)(II) PROVIDES FOR SUBMISSION BY SBA, IF DESIRED, OF CONTRARY VIEWS TO THE PROCUREMENT AGENCY.

THE RECORD IN THE INSTANT CASE RAISES SOME QUESTION AS TO WHETHER THE CONTRACTING OFFICER'S REFERRAL TO SBA WAS NOT INTENDED SOLELY FOR THE PURPOSE OF GIVING SBA THE OPPORTUNITY TO DISAGREE WITH THE CONTRACTING OFFICER'S FINDINGS THAT MATTERS RELATING TO YOUR TENACITY AND PERSEVERANCE PRECLUDED A DETERMINATION THAT YOU WERE A RESPONSIBLE BIDDER. IN THAT EVENT, IT WOULD APPEAR THAT THE ISSUANCE OR DENIAL OF A COC WOULD NOT COME INTO ISSUE UNTIL AND UNLESS SBA DISAGREED WITH THE CONTRACTING OFFICER'S DETERMINATION THAT HIS FINDINGS RELATED TO TENACITY AND PERSEVERANCE, RATHER THAN TO CAPACITY AND CREDIT. NEVERTHELESS, THE RECORD INDICATES THAT SBA DID CONDUCT A FULL SCALE INVESTIGATION WHICH RESULTED NOT ONLY IN AGREEMENT WITH THE CONTRACTING OFFICER'S CONCLUSION THAT YOU LACKED TENACITY AND PERSERVERANCE, BUT ALSO IN ADVERSE FINDINGS RELATIVE TO YOUR CAPACITY TO PERFORM THE CONTRACT. WHILE WE QUESTION THE INCLUSION OF MATTERS RELATING TO TENACITY AND PERSERVERANCE IN A DENIAL OF A COC, IS IT APPARENT THAT THE DENIAL IN THE INSTANT CASE DID OPERATE AS CONCURRENCE BY SBA IN THE CONTRACTING OFFICER'S DETERMINATION THAT YOUR POOR PAST PERFORMANCE WAS ATTRIBUTABLE TO LACK OF TENACITY AND PERSERVERANCE.

FROM OUR REVIEW OF THE RECORDS FURNISHED THIS OFFICE BY NOAA, BY SBA, AND BY DCASO, WHICH INCLUDE SUBSTANTIAL DOCUMENTATION ON YOUR PERFORMANCE OF SEVERAL PAST CONTRACTS, BOTH GOVERNMENT AND PRIVATE, WE MUST AGREE THAT SUCH RECORDS INCLUDE SUBSTANTIAL EVIDENCE OF LACK OF TENACITY AND PERSEVERANCE ON YOUR PART IN PERFORMING THE WORK COVERED BY SUCH CONTRACTS. WHILE IT WELL MAY BE, AS YOU STATE, THAT THE MAJORITY OF YOUR CONTRACTS HAVE BEEN COMPLETED WITHOUT COMPLAINT, WE ARE UNABLE, IN VIEW OF THE DOCUMENTATION OF RECORD, TO CONCLUDE THAT THE SUBSTANTIAL EVIDENTIARY REQUIREMENT OF FPR 1-1.708-2(A)(5) AS TO LACK OF TENACITY AND PERSEVERANCE HAS NOT BEEN MET. ACCORDINGLY, AND SINCE THE CONTRACTING OFFICER COMPLIED WITH THE PROVISIONS OF FPR 1 1.708-2(A)(5)(I) RELATING TO NOTIFICATION TO SBA OF HIS ADVERSE DETERMINATION, WE FIND NO LEGAL BASIS TO QUESTION THE PROPRIETY OF THE CONTRACTING OFFICER'S DETERMINATION THAT YOU WERE NONRESPONSIBLE BY REASON OF LACK OF TENACITY AND PERSEVERANCE, OR TO QUESTION THE PROPOSED AWARD TO BRANHAM, WHO HAS BEEN DETERMINED TO BE RESPONSIBLE AS WELL AS RESPONSIVE.

THE FOREGOING EVIDENCES THAT IT IS THE CONTRACTING OFFICER'S ADVERSE DETERMINATION OF YOUR RESPONSIBILITY, BASED ON FACTORS NOT GOVERNED BY THE COC PROCEDURES, WHICH PRECLUDES AWARD TO YOU. IN THE CIRCUMSTANCES, NO DISCUSSION IS REQUIRED OF THE OTHER ISSUES SET FORTH IN YOUR TELEGRAMS OF NOVEMBER 4 AND 7, WHICH WERE APPARENTLY BASED ON INFORMATION WHICH YOU RECEIVED FROM SBA AND WHICH ARE NOT DECISIVE OF THE LACK OF TENACITY AND PERSEVERANCE ISSUE.

FOR THE REASONS STATED, YOUR PROTEST MUST BE DENIED.

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