B-152716, JAN. 27, 1964

B-152716, JAN. 27, 1964

TO REIMBERS MISSILE COMPONENTS, INC.:

YOUR LETTER OF DECEMBER 17, 1963, QUESTIONS THE ADMINISTRATIVE DETERMINATION OF URGENCY MADE IN CONNECTION WITH THE AWARD TO INTERCONTINENTAL MANUFACTURING COMPANY, INC., UNDER INVITATION FOR BIDS NO. ANC/Z/-01-021-64-518, WHICH WAS THE SUBJECT OF OUR DECISION OF DECEMBER 5, 1963, TO YOU.

ON AUGUST 22, 1963, OR SHORTLY AFTER BIDS WERE OPENED ON AUGUST 19, 1963, HEADQUARTERS, U.S. ARMY MISSILE COMMAND REQUESTED THE BIRMINGHAM PROCUREMENT DISTRICT TO CONDUCT A PREAWARD SURVEY OF YOUR FACILITIES AS OUTLINED IN ASPR 1-905.4. THAT DISTRICT MADE ITS INITIAL CONTACT WITH YOUR ORGANIZATION ON AUGUST 28, 1963, TO INITIATE THE SURVEY AND ON SEPTEMBER 10, 1963, MADE AN ADDITIONAL VISIT TO GATHER FURTHER DATA. ALSO, OTHER CONTACTS WERE MADE DURING THE COURSE OF THE SURVEY BY TELEPHONE OR IN MEETINGS WITH YOU AT THE DISTRICT. THE FINAL RECOMMENDATIONS OF THE DISTRICT ON THE RESULTS OF ITS SURVEY WERE COMPLETED ON SEPTEMBER 29, 1963, AND WERE RECEIVED BY THE MISSILE COMMAND ON SEPTEMBER 23, 1963. THE DISTRICT'S SURVEY RECOMMENDED AGAINST AWARD TO YOU SINCE YOU LACKED THE FACILITIES, PERSONNEL AND PLANS OR COMMITMENTS FOR THE FUTURE. THEREFORE, THE PROCUREMENT OFFICE DETERMINED THAT YOU WERE NOT A "MANUFACTURER" FOR THE PURPOSES OF THIS PROCUREMENT. SECTION 1/A) OF THE WALSH-HEALEY PUBLIC CONTRACTS ACT OF JUNE 30, 1936, AS AMENDED, 41 U.S.C. 35/A) PROVIDES THAT EVERY CONTRACT (WITH CERTAIN EXCEPTIONS NOT PERTINENT HERE) CONTAIN THE FOLLOWING STIPULATION:

"/A) THAT THE CONTRACTOR IS THE MANUFACTURER OF * * * EQUIPMENT TO BE MANUFACTURED OR USED IN THE PERFORMANCE OF THE CONTRACT.'

THE ACT, AS AMENDED, FURTHER PROVIDES AT 41 U.S.C. 38, THAT THE SECRETARY OF LABOR SHALL HAVE AUTHORITY TO ADMINISTER THE PROVISIONS OF THE ACT, AND TO MAKE SUCH RULES AND REGULATIONS AS MAY BE NECESSARY TO THAT END.

UNDER THAT AUTHORITY, THE SECRETARY OF LABOR HAS ISSUED REGULATIONS APPEARING AT 41 C.F.R. 50-201.101 WHICH PROVIDE:

"/A) A MANUFACTURER IS A PERSON WHO OWNS, OPERATES, OR MAINTAINS A FACTORY OR ESTABLISHMENT THAT PRODUCES ON THE PREMISES THE MATERIALS, SUPPLIES, ARTICLES, OR EQUIPMENT REQUIRED UNDER THE CONTRACT AND OF THE GENERAL CHARACTER DESCRIBED BY THE SPECIFICATIONS.

"/A) (1) EXCEPT AS HEREINAFTER PROVIDED, EVERY BID RECEIVED FROM ANY BIDDER WHO DOES NOT FALL WITHIN ONE OF THE FOREGOING CATEGORIES SHALL BE REJECTED BY THE CONTRACTING OFFICER.'

UNDER CIRCULAR LETTER NO. 8-61, ISSUED BY THE DEPARTMENT OF LABOR ON JULY 6, 1961, A BIDDER DESIRING TO QUALIFY AS A MANUFACTURER WAS REQUIRED TO MEET THE FOLLOWING CRITERIA:

"A BIDDER WHO DESIRES TO QUALIFY FOR AN AWARD AS A MANUFACTURER MUST SHOW BEFORE THE AWARD THAT HE IS (1) AN ESTABLISHED MANUFACTURER OF THE PARTICULAR GOODS OR GOODS OF THE GENERAL CHARACTER SOUGHT BY THE GOVERNMENT OR (2) IF HE IS NEWLY ENTERING INTO SUCH MANUFACTURING ACTIVITY THAT HE HAS MADE ALL NECESSARY PRIOR ARRANGEMENTS FOR (A) MANUFACTURING SPACE, (B) EQUIPMENT, AND (C) PERSONNEL TO PERFORM THE MANUFACTURING OPERATIONS REQUIRED FOR THE FULFILLMENT OF THE CONTRACT. A NEW FIRM WHICH, PRIOR TO THE AWARD OF A CONTRACT, HAS MADE SUCH DEFINITE COMMITMENTS IN ORDER TO ENTER A MANUFACTURING BUSINESS WHICH WILL LATER QUALIFY IT SHOULD NOT BE BARRED FROM RECEIVING THE AWARD BECAUSE IT HAS NOT YET DONE ANY MANUFACTURING. THIS INTERPRETATION IS NOT INTENDED, HOWEVER, TO QUALIFY A FIRM WHOSE ARRANGEMENTS TO USE SPACE, EQUIPMENT OR PERSONNEL ARE CONTINGENT UPON THE AWARD OF A GOVERNMENT CONTRACT.'

IN VIEW OF THESE PROVISIONS AND THE PREAWARD SURVEY RESULTS, NO AUTHORITY EXISTED FOR MAKING AWARD TO YOU AS A PROSPECTIVE RESPONSIBLE GOVERNMENT CONTRACTOR. SEE ASPR 1-900 ET SEQ. THE AUTHORITY OF THE SMALL BUSINESS ADMINISTRATION (SBA) TO ISSUE CERTIFICATES OF COMPETENCY AS TO THE CREDIT AND CAPACITY OF A SMALL BUSINESS BIDDER DOES NOT EXTEND TO DETERMINATIONS OF REGULAR DEALER OR MANUFACTURER UNDER 41 U.S.C. 35. SEE 37 COMP. GEN. 676.

WE NOTE THAT THE INVITATION ADVISED BIDDERS THAT THE DELIVERY REQUIREMENTS WERE BASED ON THE ASSUMPTION THAT AWARD WOULD BE MADE BY SEPTEMBER 30, 1963, AND THAT THE BOARD OF AWARDS WAS PRESENTED WITH A RECOMMENDATION TO MAKE AN AWARD TO INTERCONTINENTAL MANUFACTURING COMPANY, INC., ON SEPTEMBER 30, 1963, WITH THE EXPECTATION OF MAKING SUCH AN AWARD ON OCTOBER 1, 1963. HOWEVER, SINCE AN INDICATION WAS RECEIVED THAT YOU COULD SUPPLY ADDITIONAL INFORMATION THAT MIGHT HAVE A BEARING ON THE AWARD, ACTION TO EFFECT AN AWARD ON OCTOBER 1, WAS SUSPENDED. AT THIS SAME TIME, THE HERCULES MISSILE SYSTEM'S PROJECT MANAGER ADVISED THAT SUCH A DELAY COULD NOT BE TOLERATED TO THE DETRIMENT OF THE PROGRAM. IT WAS UNDER THIS CIRCUMSTANCE OF EXTREME URGENCY, AS DETAILED IN THE CONTRACTING OFFICER'S DETERMINATION AND FINDING OF OCTOBER 16, 1963, QUOTED IN OUR DECEMBER 5 DECISION, THAT THE CONTRACTING OFFICER USED 16 WORKING DAYS OR UNTIL OCTOBER 16, TO COMPLETE HIS FURTHER INVESTIGATION OF YOUR RESPONSIBILITIES. BASED UPON ALL AVAILABLE DATA, TOGETHER WITH A VISIT TO THE SITE OF YOUR FUTURE FACILITY, THE CONTRACTING OFFICER DETERMINED THAT AN IMMEDIATE AWARD MUST BE MADE TO INTERCONTINENTAL MANUFACTURING COMPANY, INC., FOR THE REASONS OUTLINED IN OUR DECEMBER 5, DECISION.

WE BELIEVE THE RECORD ESTABLISHES THAT THE URGENCY OF THE PROCUREMENT WAS CLEARLY EVIDENT ON SEPTEMBER 30, 1963; THAT A DELAY BEYOND OCTOBER 15 IN MAKING AN AWARD WOULD SERIOUSLY DISLOCATE THE HERCULES MISSILE PROGRAM; AND THAT TIME DID NOT PERMIT A FURTHER DELAY AFTER YOUR NONRESPONSIBILITY WAS FINALLY DETERMINED TO SUBMIT THE MATTER OF YOUR COMPETENCY TO SBA FOR CONSIDERATION. WE HAVE CONSISTENTLY HELD THAT A DETERMINATION OF A BIDDER'S RESPONSIBILITY IS PRIMARILY A FUNCTION OF THE CONTRACTING AGENCY AND, IN THE ABSENCE OF BAD FAITH OR LACK OF A REASONABLE BASIS FOR SUCH DETERMINATION, THERE IS NO BASIS FOR LEGAL OBJECTION BY OUR OFFICE. COMP. GEN. 430.

CONCERNING YOUR INQUIRY RESPECTING THE PRIOR PROCUREMENT OF THIS END ITEM FROM INTERCONTINENTAL MANUFACTURING COMPANY, INC., THERE IS QUOTED BELOW FOR YOUR INFORMATION A STATEMENT BY THE CONTRACTING AGENCY OF THE PRODUCTION PROBLEMS INVOLVED:

"EXAMPLES OF PRODUCTION PROBLEMS EXPERIENCED BY INTERCONTINENTAL MANUFACTURING COMPANY ON THE M30 ROCKET MOTOR, BLAST TUBE AND NOZZLE ASSEMBLY

"1. ON 23 JUNE 1958, A CONTRACT WAS SIGNED WITH IMCO FOR PROCUREMENT OF 1,385 M30 BLAST TUBES AND NOZZLE ASSEMBLIES UNDER CONTRACT DA-23-072-ORD- 1321. DELIVERY OF THE PRE-PRODUCTION SAMPLE WAS DUE IN NOVEMBER 1958, WITH PRODUCTION TO COMMENCE IN DECEMBER 1958, WITH 186. THE PRE- PRODUCTION SAMPLE WAS NOT DELIVERED UNTIL DECEMBER 1958, AND AS FEBRUARY 1959 WHEN 440 SHOULD HAVE BEEN DELIVERED, ONLY 68 WERE ACTUALLY DELIVERED. DIFFICULTIES WERE ENCOUNTERED BY THE CONTRACTOR AS FOLLOWS:

"A. THE FINAL MACHINING OPERATION WAS FOUND TO BE INADEQUATE AND HAD TO BE SUPPLEMENTED WITH ADDITIONAL EQUIPMENT AND TOOLING.

"B. DIFFICULTY IN THE BLAST TUBE WELDING OPERATIONS.

"C. FOUR DIFFERENT TECHNIQUES FOR STRAIGHTENING THE BLAST TUBE WERE TRIED BEFORE THE FOURTH METHOD, A FULL LENGTH HYDRAULICALLY OPERATED EXPANDING MANDREL, WAS FOUND TO BE SATISFACTORY.

"D. THE HONING OPERATION REQUIRED THE PURCHASE OF A NEW PIECE OF EQUIPMENT.

"E. RECEIPT FROM SUBCONTRACTOR OF BAD CASTINGS AND MISALIGNMENT OF THE GRAPHITE INSERT.

"2. INFORMATION IN PARAGRAPH NR. 1 CAN BE SUPPORTED BY FACTUAL EVIDENCE.'

UPON A FURTHER REVIEW OF THE RECORD, WE CONCLUDE THAT THE URGENCY OF THE PROCUREMENT HAS BEEN SATISFACTORILY ESTABLISHED AND THAT THE ADMINISTRATIVE DETERMINATION OF YOUR NONRESPONSIBILITY IS NOT SUBJECT TO QUESTION EITHER BY THE SBA OR OUR OFFICE. ACCORDINGLY, OUR DECISION OF DECEMBER 5, 1963, IS AFFIRMED.