B-144690, MAY 3, 1961

B-144690, MAY 3, 1961

TO IBERIA MANUFACTURING, INC.:

WE REFER TO THE LETTER OF YOUR ATTORNEY, DATED FEBRUARY 1, 1961, PROTESTING THE AWARD OF ANY CONTRACT TO A BIDDER OTHER THAN YOUR FIRM UNDER THE NEGOTIATED SET-ASIDE PORTION OF INVITATION FOR BIDS NO. 2789 9, ISSUED NOVEMBER 14, 1960, BY THE MARINE CORPS SUPPLY ACTIVITY,PHILADELPHIA, PENNSYLVANIA, AND TO YOUR SUBSEQUENT LETTERS OF FEBRUARY 22 AND 27, 1961, WHICH FURNISHED ADDITIONAL INFORMATION REGARDING YOUR PROTEST.

THE INVITATION REQUESTED BIDS TO BE OPENED ON DECEMBER 16, 1960, FOR 107,300 RAINCOATS. PROVISION WAS MADE FOR AN ADDITIONAL QUANTITY OF 107,300 TO BE AWARDED UNDER SMALL BUSINESS SET-ASIDE PROCEDURES. CONTRACT N150-3708 WAS AWARDED TO IBERIA MANUFACTURING, INC., ON JANUARY 9, 1961, ON THE NON-SET-ASIDE PORTION OF THE PROCUREMENT. YOUR PROTEST IS DIRECTED AGAINST THE AWARD OF CONTRACT 150-3710 TO THE KENNETH M. WILSON COMPANY, INC., ON JANUARY 24, 1961, FOR THE SET ASIDE PORTION.

BY LETTER DATED APRIL 7, 1961, THE QUARTERMASTER GENERAL OF THE MARINE CORPS FURNISHED A REPORT OF THE CIRCUMSTANCES UPON WHICH YOUR COMPLAINT IS BASED, INCLUDING COPIES OF CORRESPONDENCE INVOLVED IN THE NEGOTIATIONS.

BY TELEGRAM DATED JANUARY 6, 1961, YOU ADVISED THE MARINE CORPS SUPPLY ACTIVITY AS FOLLOWS: ,REFERENCE 2789-9 HAVE ADDED SPACE AVAILABLE TO HELP ON SET ASIDE PORTION OF CONTRACT.' AFTER AWARD OF THE NON-SET ASIDE PORTION OF THE INVITATION, THE CONTRACTING OFFICER COMMENCED NEGOTIATIONS WITH YOUR COMPANY FOR THE SET-ASIDE PORTION.

IFB 2789-9 CONTAINED THE FOLLOWING CONDITION: "BIDDERS' CAPACITY FOR THE SET-ASIDE PORTION OF THE PROCUREMENT WILL BE LIMITED TO THE MANUFACTURING FACILITIES IDENTIFIED FOR CONSIDERATION UNDER THE NON SET-ASIDE PORTION.' YOUR BID SPECIFIED PLACE OF MANUFACTURE AS "IBERIA AND/OR META, MO.' THE CONTRACTING OFFICER REPORTED THAT A PRE-AWARD SURVEY INDICATED THAT YOUR ABILITY TO MANUFACTURE 107,300 RAINCOATS WAS DEPENDENT UPON VARIOUS CONTINGENCIES, INCLUDING PROMPT PLACING OF ORDERS FOR NECESSARY CLOTH AND COMPONENTS. AT THE TIME OF THE NEGOTIATIONS, YOU WERE CONTRACTUALLY OBLIGATED TO MANUFACTURE APPROXIMATELY 74,000 ARMY RAINCOATS AT YOUR IBERIA, MISSOURI, PLANT FOR THE MILITARY CLOTHING AND TEXTILE SUPPLY AGENCY. ALTHOUGH YOU WERE ATTEMPTING TO GET APPROVAL TO SUBCONTRACT THE PRODUCTION OF THE ARMY RAINCOATS, THE RECORD IS NOT CLEAR WHETHER THE SUBCONTRACT, IF APPROVED BY THE ARMY, WOULD HAVE RELEASED SUFFICIENT CAPACITY FOR YOU TO PRODUCE AN ADDITIONAL QUANTITY OF 107,300 MARINE RAINCOATS, SINCE THE COAT-TYPE SLEEVE AND SHOULDER STRAPPING OF THE MARINE RAINCOAT ARE MORE DIFFICULT AND REQUIRE MORE PRODUCTION TIME THAN THE RELATED OPERATIONS ON THE ARMY RAINCOATS.

ON JANUARY 24, 1961, THE CONTRACTING OFFICER DETERMINED THAT YOU HAD NOT PROVIDED THE REQUESTED EVIDENCE OF FIRM COMMITMENTS FOR AN ADEQUATE QUANTITY OF COATED CLOTH. THE CONTRACTING OFFICER MADE THE DETERMINATION OF NONRESPONSIBILITY REQUIRED BY SECTION 1-904.1 OF THE ARMED SERVICES PROCUREMENT REGULATION AND FURTHER CERTIFIED THAT THAT AWARD MUST BE MADE WITHOUT DELAY PURSUANT TO SECTION 1-705.6 (B). IT HAD BEEN 39 DAYS SINCE THE BIDS WERE OPENED FOR THE NON-SET-ASIDE PORTION OF THE PROCUREMENT, AND IN VIEW OF THE MARINE CORPS' URGENT NEED FOR RAINCOATS THE CONTRACTING OFFICER CERTIFIED THAT DELAYS ALREADY INCURRED HAD ENDANGERED THE PROGRAM AND FURTHER DELAY IN MAKING AWARD WOULD RENDER IT IMPOSSIBLE TO MEET THE REQUIREMENT. AWARD OF CONTRACT N-150-3710 FOR THE SET-ASIDE PORTION WAS MADE ON JANUARY 24, 1961, TO KENNETH M. WILSON COMPANY, INC., THE THIRD LOW BIDDER UNDER THE ORIGINAL PROCUREMENT, AFTER THE SECOND LOW BIDDER DECLINED THE CONTRACT AT THE PRICES SPECIFIED.

BY LETTER OF JANUARY 27, 1961, TO THE MARINE CORPS SUPPLY ACTIVITY, YOUR ATTORNEY PROTESTED THE AWARD TO WILSON ON THE GROUNDS THAT (1) NEGOTIATIONS WERE STILL PENDING WITH IBERIA AT THE TIME OF THE AWARD AND THE INVITATION AND PROVISIONS OF ASPR 1-706.6 (C) REQUIRE THAT NEGOTIATIONS BE CONCLUDED WITH THE LOW BIDDER BEFORE BEING UNDERTAKEN WITH OTHER BIDDERS AND (2) WILSON DOES NOT HAVE THE PLANT CAPACITY TO PRODUCE THE MARINE RAINCOATS IN THE EVENT THAT THE ARMY APPROVES YOUR REQUEST TO SUBCONTRACT 74,300 ARMY RAINCOATS TO WILSON. A COPY OF THIS PROTEST WAS FORWARDED TO OUR OFFICE BY LETTER OF FEBRUARY 1, 1961.

THE CONTRACTING OFFICER DENIED THE PROTEST BY LETTER OF FEBRUARY 9, 1961, STATING THAT NEGOTIATIONS WERE CONDUCTED IN THE PRESCRIBED MANNER AND IN PROPER ORDER, THAT YOUR COMPANY WAS PROPERLY REJECTED FOR LACK OF CAPACITY, AND THAT SBA WAS NOT GIVEN AN OPPORTUNITY TO CONSIDER THE ISSUANCE OF A CERTIFICATE OF COMPETENCY FOR REASONS WHICH ARE JUSTIFIABLE AND ADEQUATE UNDER ASPR 1-705.6 (B).

BY LETTER OF FEBRUARY 22, 1961, YOUR ATTORNEY REPLIED TO THE CONTRACTING OFFICER'S DENIAL OF YOUR PROTEST. YOUR ATTORNEY CONTENDS THAT THE MARINE CORPS FAILED TO FOLLOW THE SMALL BUSINESS ADMINISTRATION REGULATIONS, SECTION 124.8-15 ET SEQ., WHICH SET FORTH THE PROCEDURE TO BE FOLLOWED BY CONTRACTING OFFICERS WITH REFERENCE TO CERTIFICATES OF COMPETENCY AND DO NOT MAKE ANY PROVISION FOR BY PASSING THE SBA. YOUR ATTORNEY CONTENDS THAT THE SBA REGULATIONS AND ASPR 1-705.6 (B), WHEN CONSTRUED TOGETHER, REQUIRE THE CONTRACTING OFFICER TO CERTIFY IMMEDIATELY AFTER BID OPENING THAT AN AWARD MUST BE MADE WITHOUT DELAY, IF THE CONTRACTING OFFICER DOES NOT INTEND TO SUBMIT THE MATTER OF CAPACITY TO SBA FOR DETERMINATION. YOUR ATTORNEY CITES OUR DECISION B-142905, DATED AUGUST 22, 1960, PUBLISHED AT 40 COMP. GEN. 106, FOR THE PROPOSITION THAT THE REGULATIONS CANNOT BE INTERPRETED SO AS TO RENDER THE SBA REGULATIONS MEANINGLESS.

IN REPLYING TO THE CONTRACTING OFFICER'S REJECTION OF YOUR PROTEST, YOUR ATTORNEY FURTHER CONTENDS THAT THE DETERMINATION OF NONRESPONSIBILITY DOES NOT RELATE TO LACK OF CAPACITY AND IN ANY EVENT, ASPR 1-904.1 REQUIRES THAT THE SBA CERTIFICATE OF COMPETENCY BE ATTACHED REGARDLESS OF WHETHER THE DETERMINATION IS ONE OF RESPONSIBILITY OR NONRESPONSIBILITY.

THE REMAINDER OF YOUR ATTORNEY'S REPLY TO THE CONTRACTING OFFICER'S DENIAL OF YOUR PROTEST AND THE AFFIDAVIT OF MR. C. L. CUNNINGHAM DATED FEBRUARY 22, 1961, WHICH WAS FORWARDED TO OUR OFFICE BY LETTER OF FEBRUARY 27, 1961, ARE DIRECTED TOWARD DISPUTING STATEMENTS OF FACT MADE BY THE CONTRACTING OFFICER.

IT IS A RULE OF LONG STANDING IN OUR OFFICE THAT IN A CASE INVOLVING A DISPUTE OF FACT, WE WILL ACCEPT THE ADMINISTRATIVE REPORT IN THE ABSENCE OF SUBSTANTIAL EVIDENCE TO THE CONTRARY. 16 COMP. GEN. 1105, 40 ID. 180. UNDER THIS RULE, THE ADMINISTRATIVE FINDING THAT THE WILSON COMPANY HAS THE CAPACITY TO PRODUCE THE SET-ASIDE PORTION MUST PREVAIL DESPITE YOUR ASSERTION THAT WILSON DOES NOT HAVE THE PLANT CAPACITY.

DESPITE THE STATEMENT OF YOUR ATTORNEY THAT A DETERMINATION OF NONRESPONSIBILITY DOES NOT REFER TO LACK OF CAPACITY, THAT IS PRECISELY WHAT IS REFERRED TO IN THE MINIMUM STANDARDS FOR RESPONSIBLE PROSPECTIVE CONTRACTORS IN ASPR 1-903.1 (III): "A PROSPECTIVE CONTRACTOR MUST 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.'

THE PRIMARY QUESTIONS TO BE RESOLVED ARE WHETHER THE CONTRACTING OFFICER COMPLIED WITH ASPR 1-904.1 IN MAKING A DETERMINATION OF NONRESPONSIBILITY AND WHETHER THE CERTIFICATION THAT THE AWARD MUST BE MADE WITHOUT DELAY WAS PROPER UNDER ASPR 1-705.6 (B).

THE CONTRACTING OFFICER'S DETERMINATION OF NONRESPONSIBILITY WAS MADE PURSUANT TO ASPR 1-904.1.

"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 AND 1- 903. WHERE A CERTIFICATE OF COMPETENCY HAS BEEN ISSUED THE AFFIRMATIVE DETERMINATION NEED NOT BE MADE AS TO THE FACTORS COVERED BY THE CERTIFICATE OF COMPETENCY. 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. THE DETERMINATION OF RESPONSIBILITY OR NONRESPONSIBILITY SHALL CONTAIN A STATEMENT JUSTIFYING THE DETERMINATION. ANY SUPPORTING DOCUMENTS OR REPORTS, INCLUDING ANY PRE-AWARD SURVEY REPORTS (SEE 1-905.4) AND SBA CERTIFICATES OF COMPETENCY (SEE 1-705.6), SHALL BE ATTACHED TO THE TERMINATION.'

WE CANNOT AGREE THAT THIS REGULATION REQUIRES A CERTIFICATE OF COMPETENCY REGARDLESS OF WHETHER THE DETERMINATION IS ONE OF RESPONSIBILITY OR NONRESPONSIBILITY. IF A CERTIFICATE OF COMPETENCY HAS BEEN GRANTED BY SBA, IT MERELY RELIEVES THE CONTRACTING OFFICER OF THE DUTY TO MAKE AN AFFIRMATIVE DETERMINATION REGARDING THE FACTORS COVERED BY THE CERTIFICATE. IN OUR OPINION, PARAGRAPH 1-904.1 REQUIRES ATTACHMENT OF AN SBA CERTIFICATE TO THE DETERMINATION ONLY WHEN SUCH A CERTIFICATE HAS BEEN ISSUED, BUT IT IS PARAGRAPH 1-705.6 THAT DEFINES THE CIRCUMSTANCES WHICH REQUIRE SUBMISSION TO SBA.

ASPR 1-705.6 (B) DESCRIBES THE PROCEDURE FOR SUBMISSION AS FOLLOWS:

"/B) IF A SMALL BUSINESS CONCERN HAS SUBMITTED AN OTHERWISE ACCEPTABLE BID OR PROPOSAL BUT HAS BEEN FOUND BY THE CONTRACTING OFFICER TO BE NONRESPONSIBLE AS TO CAPACITY OR CREDIT, AND IF THE BID OR PROPOSAL IS TO BE REJECTED FOR THIS REASON ALONE, (I) SBA SHALL BE NOTIFIED OF THE CIRCUMSTANCES SO AS TO PERMIT IT TO ISSUE A CERTIFICATE OF COMPETENCY, AND (II) AWARD SHALL BE WITHHELD PENDING EITHER SBA ISSUANCE OF A CERTIFICATE OF COMPETENCY OR THE EXPIRATION OF TEN WORKING DAYS AFTER SBA IS SO NOTIFIED, WHICHEVER IS EARLIER, SUBJECT TO THE FOLLOWING:

(A) THIS PROCEDURE IS NOT MANDATORY WHERE THE CONTRACTING OFFICER CERTIFIES IN WRITING THAT AWARD MUST BE MADE WITHOUT DELAY AND INCLUDES IN THE CONTRACT FILE A STATEMENT SIGNED BY HIM WHICH JUSTIFIES THE CERTIFICATE.'

THIS PARAGRAPH CONTAINS NOTHING TO SUPPORT THE CONTENTION OF YOUR ATTORNEY THAT IF A CONTRACTING OFFICER INTENDS TO CERTIFY THAT AWARD MUST BE MADE WITHOUT DELAY, HE MUST DO SO IMMEDIATELY AFTER BID OPENING. MOREOVER, THE FACTS OF RECORD HERE MAKE IT CLEAR THAT THE NECESSITY FOR MAKING THE AWARD WITHOUT DELAY AROSE ONLY AFTER 39 DAYS HAD ELAPSED AFTER BID OPENING AND IT BECAME APPARENT THAT NEGOTIATIONS HAD PRODUCED NO ASSURANCE THAT YOUR COMPANY COULD MEET THE PRODUCTION SCHEDULE FOR THE MARINE CORPS' REQUIREMENT FOR RAINCOATS.

THE SBA REGULATIONS TO WHICH YOUR ATTORNEY REFERS, SECTIONS 124.8-15 ET SEQ., DESCRIBE THE PROCEDURES TO BE FOLLOWED WITHIN SBA WHEN ISSUING CERTIFICATES OF COMPETENCY IN THOSE CASES WHERE THE QUESTION OF CAPACITY IS SUBMITTED TO SBA.

OUR DECISION B-142905, CITED WITH REFERENCE TO INTERPRETATION OF REGULATIONS, REFERRED TO THE ARMED SERVICES PROCUREMENT REGULATION AND DEALT WITH THE QUESTION WHETHER AN EXPERIENCE CLAUSE IN AN INVITATION COULD BE INTERPRETED TO NEGATE THE REQUIREMENTS OF ASPR. UNDER THAT DECISION WE HELD THAT THE PROVISIONS OF ASPR COULD NOT BE AVOIDED IN DETERMINING WHEN TO SUBMIT THE QUESTION OF CAPACITY TO SBA, SO IT IS TO ASPR THAT WE MUST TURN TO DETERMINE THE REQUIREMENTS FOR SUBMISSION OF THE QUESTION OF CAPACITY TO SBA.

THE ARMED SERVICES PROCUREMENT REGULATION WAS PROMULGATED UNDER THE ARMED SERVICES PROCUREMENT ACT, AS AMENDED, 10 U.S.C. 2301 ET SEQ. UNDER ASPR 1- 705.6 (B), SUBMISSION OF THE QUESTION OF CAPACITY TO SBA IS NOT MANDATORY WHEN A CONTRACTING OFFICER CERTIFIES IN WRITING THAT AWARD MUST BE MADE WITHOUT DELAY AND OUR OFFICE HAS UPHELD THE USE OF THIS EXCEPTION WHEN THE FACTS JUSTIFY SUCH A CERTIFICATE. 38 COMP. GEN. 248.

THE RECORD BEFORE US SHOWS THAT THE CONTRACTING OFFICER NEGOTIATED WITH YOUR FIRM FOR THE SET-ASIDE PORTION IN ACCORD WITH THE INVITATION AND WITH ASPR 1-706.6. THE AWARD OF A SET-ASIDE PORTION IS NOT AUTOMATIC AND THE REQUIREMENT THAT THE CONTRACTING OFFICER NEGOTIATE PRESUPPOSES THAT HE MUST EXERCISE DISCRETION, SO THE MERE FACT THAT YOUR COMPANY DID NOT RECEIVE THE AWARD FOR THE SET-ASIDE CANNOT BE TAKEN AS EVIDENCE OF VIOLATION OF ANY OF THE REQUIREMENTS FOR NEGOTIATION. IT WAS WITHIN THE DISCRETION OF THE CONTRACTING OFFICER TO MAKE THE DETERMINATION REGARDING YOUR NONRESPONSIBILITY, AND WHEN HE HAD DONE SO, THERE WAS NO FURTHER PURPOSE TO BE SERVED IN NEGOTIATING WITH YOUR COMPANY. THEREAFTER, HIS NEGOTIATION WITH OTHER SMALL BUSINESS FIRMS IN THE ORDER OF THEIR BIDS WAS IN ACCORDANCE WITH SPECIFIED PROCEDURES.

WE MUST CONCLUDE, THEREFORE, THAT NO LEGAL BASIS EXISTS FOR DISTURBING THE AWARD TO KENNETH M. WILSON, INC., AND YOUR PROTEST IS DENIED.