B-128482, DEC. 6, 1956

B-128482, DEC. 6, 1956

TO AMECO ELECTRONIC CORPORATION:

CONSIDERATION HAS BEEN GIVEN YOUR LETTERS OF JULY 2, AUGUST 15 AND 22, OCTOBER 1, AND NOVEMBER 9, 1956, WITH ENCLOSURES, PROTESTING THE ACTION OF THE NAVY PURCHASING OFFICE, BROOKLYN, NEW YORK, IN REJECTING YOUR BID AND AWARDING A CONTRACT TO THE PHILCO CORPORATION, A HIGHER BIDDER, PURSUANT TO INVITATION NO. N140-1346-56, ISSUED APRIL 23, 1956, BY THAT OFFICE.

AS YOU ARE FULLY AWARE, WE FORWARDED YOUR LETTER OF JULY 2, 1956, WITH ITS ENCLOSURES, TO THE SECRETARY OF THE NAVY WITH THE REQUEST THAT A FULL REPORT BE FURNISHED. THE DEPARTMENT OF THE NAVY INVESTIGATED YOUR SEVERAL COMPLAINTS AND THEN FURNISHED A REPORT DATED AUGUST 2, 1956, WHICH WAS MADE AVAILABLE FOR YOUR CONSIDERATION AND COMMENT. YOUR RESPONSE TO THIS REPORT WAS MADE IN YOUR LETTERS OF AUGUST 15 AND 22, 1956, AND THOSE LETTERS WITH THE ENCLOSURES WITH THE LETTER OF AUGUST 15, WERE FORWARDED TO THE SECRETARY OF THE NAVY FOR A SUPPLEMENTAL REPORT, TAKING INTO CONSIDERATION THE VARIOUS COMMENTS AND PERTINENT STATEMENTS MADE BY YOU. THE DEPARTMENT OF THE NAVY AGAIN INVESTIGATED YOUR COMPLAINTS AND THEN FURNISHED A SUPPLEMENTAL REPORT DATED OCTOBER 1, 1956. THIS REPORT LIKEWISE WAS MADE AVAILABLE TO YOU FOR SUCH FURTHER RESPONSE AS YOU MIGHT CARE TO MAKE. THE RESPONSE TO THIS REPORT WAS MADE IN YOUR LETTER OF NOVEMBER 9, 1956, WHEREIN YOU POINTED OUT ADMISSIONS OF ERROR BY THE DEPARTMENT OF THE NAVY IN ITS LATEST REPORT AND STATE THAT SUCH ADMISSIONS BEAR OUT YOUR CHARGE THAT THE NAVY PURCHASING OFFICE DID NOT PROPERLY CONDUCT ITSELF WITH RESPECT TO MAKING A TRUE EVALUATION OF YOUR FIRM. YOU CLAIM THAT YOUR PREDECESSOR FIRM WAS REJECTED IN 1955 AS AN UNQUALIFIED BIDDER ON THE BASIS OF FALSE RECORDS BUT WAS ADVISED THAT IT WOULD BE DEALT WITH MORE FAIRLY IN THE FUTURE.

IN SUPPORT OF YOUR CONTENTION THAT THE EMPLOYEES OF THE NAVY PURCHASING OFFICE DID NOT DEAL WITH YOU FAIRLY, YOU STATE THAT YOUR BID WAS REJECTED IN A MOST HOSTILE AND UNFAIR MANNER. IT IS URGED THAT HAD THE CONTRACTING OFFICER PERFORMED HIS DUTIES PROPERLY HE WOULD HAVE FOUND YOU TO BE A QUALIFIED BIDDER AS DID THE AIR FORCE AND THE SIGNAL CORPS ONLY 4 WEEKS LATER WHEN THEY SURVEYED YOUR FACILITY AND FOUND YOU TO BE A QUALIFIED BIDDER. IN THIS CONNECTION YOU CALL ATTENTION TO THE FACT THAT THE SIGNAL CORPS FOLLOWED UP ITS APPROVAL OF YOUR CONCERN BY AWARDING YOU A CONTRACT FOR A GREATER AMOUNT THAN THE AMOUNT OF YOUR BID ON WHICH THE NAVY REFUSED TO AWARD YOU A CONTRACT. YOU AGAIN TAKE EXCEPTION TO WHAT YOU CLAIM WAS THE PURCHASING OFFICER'S FAILURE TO REQUEST OF YOUR FULL AND COMPLETE INFORMATION WHICH WOULD HAVE ENABLED YOU TO QUALIFY FOR THE CONTRACT. YOU QUESTION CERTAIN ACTIONS OF THE PURCHASING OFFICE AS INDICATING A DELIBERATE PURPOSE TO DENY YOU THE CONTRACT, REGARDLESS OF THE CONSEQUENCES TO YOU AND AN EXCESS COST TO THE GOVERNMENT.

THE INVITATION, AS AMENDED, REQUESTED BIDS FOR FURNISHING TO THE NAVAL ACTIVITIES SHOWN IN THE BID SCHEDULE VARIOUS ITEMS OF ELECTRIC TEST CIRCUITS FOR USE AS A TRAINING DEVICE. THE LOW BID OF RCA SERVICE CO., INC., WAS REJECTED BECAUSE THE EQUIPMENT OFFERED BY THAT BIDDER WAS NOT IN ACCORDANCE WITH THE DRAWINGS REFERRED TO IN THE SPECIFICATIONS. YOUR BID WAS THE NEXT LOWEST RECEIVED BUT IT ALSO WAS REJECTED ON THE BASIS OF A DETERMINATION BY THE PURCHASING OFFICER THAT YOU WERE NOT A RESPONSIBLE BIDDER WITHIN THE MEANING OF PARAGRAPH 1-307 OF THE ARMED SERVICES PROCUREMENT REGULATIONS. THAT PARAGRAPH PROVIDES THAT A RESPONSIBLE BIDDER IS ONE WHICH MEETS THE FOLLOWING REQUIREMENTS:

"/A) IS A MANUFACTURER, CONSTRUCTION CONTRACTOR, OR REGULAR DEALER, IF THE CONTRACT OR ORDER CALLS FOR SUPPLIES (SEE ASPR 1 201.9);

"/B) HAS ADEQUATE FINANCIAL RESOURCES, OR ABILITY TO SECURE SUCH RESOURCES;

"/C) HAS THE NECESSARY EXPERIENCE, ORGANIZATION, AND TECHNICAL QUALIFICATIONS, AND HAS OR CAN ACQUIRE THE NECESSARY FACILITIES (INCLUDING PROBABLE SUBCONTRACTOR ARRANGEMENTS) TO PERFORM THE PROPOSED CONTRACT;

"/D) IS ABLE TO COMPLY WITH THE REQUIRED DELIVERY OR PERFORMANCE SCHEDULE (TAKING INTO CONSIDERATION ALL EXISTING BUSINESS COMMITMENTS);

"/E) HAS A SATISFACTORY RECORD OF PERFORMANCE, INTEGRITY, JUDGMENT, AND SKILLS; AND

"/F) IS OTHERWISE QUALIFIED AND ELIGIBLE TO RECEIVE AN AWARD UNDER APPLICABLE LAWS AND REGULATIONS.'

IT APPEARS FROM THE RECORD THAT, FOLLOWING REJECTION OF THE LOWEST BID, THE INSPECTOR OF NAVAL MATERIAL NEW YORK WAS REQUESTED TO MAKE A PRE-AWARD SURVEY OF YOUR FACILITY FOR THE PURPOSE OF ASCERTAINING WHETHER YOU HAD THE TECHNICAL QUALIFICATIONS, NECESSARY FINANCES, PERSONNEL AND FACILITIES TO UNDERTAKE THE WORK. WHILE THIS SURVEY WAS BEING MADE THE NAVY PURCHASING OFFICE MADE INQUIRIES CONCERNING YOUR CAPABILITY FROM OTHER SOURCES AT ITS DISPOSAL. AMONG THESE SOURCES OF INFORMATION WAS THE NATIONAL CREDIT OFFICE, INC., WHICH REPORTED THAT YOUR CONCERN WAS MORE OR LESS AN OUTGROWTH OF A PREDECESSOR CONCERN AND THAT IT WAS THE UNDERSTANDING THAT THE PREDECESSOR CONCERN LEFT SEVERAL UNPAID DEBTS AND THAT A GOVERNMENT TAX LIEN OF ABOUT $28,000 WAS FILED AGAINST THAT CONCERN IN DECEMBER 1955. IT WAS ALSO ASCERTAINED THAT THE ASSETS OF THE PREDECESSOR CONCERN WERE SOLD IN MARCH 1956 AS A RESULT OF A FORECLOSURE OF A CHATTEL MORTGAGE, THAT THE SAME PHYSICAL ASSETS WERE UTILIZED BY YOU AND THAT ONE OR MORE OF THE OFFICIALS OF YOUR FIRM WERE ALSO OFFICERS OF THE OLD CONCERN. ALSO, THE OLD FIRM HAD A HISTORY OF POOR PERFORMANCE WHICH HAD BEEN FOUND TO BE DUE LARGELY TO A POOR FINANCIAL CONDITION AND TO AN INADEQUATE ENGINEERING STAFF. YOUR CONTENTION THAT THE POOR PERFORMANCE WAS DUE TO ACTS OF THE GOVERNMENT WAS FURTHER INVESTIGATED BY THE DEPARTMENT OF THE NAVY AND IS NOW REFUTED BY THAT DEPARTMENT IN THE REPORT OF OCTOBER 1, 1956.

IT WAS FOUND UPON INVESTIGATION THAT YOU HAD IN YOUR EMPLOY ONLY 6 EMPLOYEES, ONE OF WHICH WAS CLASSIFIED AS TECHNICAL, THREE OF WHICH WERE CLASSIFIED AS ADMINISTRATIVE AND TWO OF WHICH WERE CLASSIFIED AS PRODUCTION. IT APPEARS THAT FOLLOWING SUBMISSION OF YOUR BID AND EVEN AFTER ITS REJECTION YOU PRESENTED STATEMENTS FROM INDIVIDUALS WHO INDICATED AN INTEREST IN WORKING FOR YOU PROVIDED THE CONTRACT WAS AWARDED TO YOU. AS POINTED OUT BY THE DEPARTMENT IN ITS REPORT OF OCTOBER 1, 1956, THE MERE PRESENCE OF THESE INDIVIDUALS WOULD NOT NECESSARILY CREATE AN EFFECTIVE AND DEPENDABLE PRODUCING ORGANIZATION.

ALTHOUGH YOU KNEW THAT IT WOULD BE NECESSARY TO OBTAIN OUTSIDE FINANCIAL ASSISTANCE, YOU DID NOT PRESENT EVIDENCE OF AN UNQUALIFIED LOAN COMMITMENT UNTIL LONG AFTER THE SUBMISSION OF YOUR BID. AS TO YOUR CONTENTION THAT THE NAVY PURCHASING OFFICE DID NOT ADVISE YOU OF THE SPECIFIC REQUIREMENTS TO ENABLE YOU TO QUALIFY, THE DEPARTMENT REPORTS THAT IT HAS NO SPECIFIC REQUIREMENTS. IT WAS YOUR RESPONSIBILITY TO QUALIFY AND IT WAS THE TASK OF THE CONTRACTING OFFICER TO EVALUATE AVAILABLE EVIDENCE TO DETERMINE RESPONSIBILITY. IT IS NOTED THAT AT ONE POINT YOUR REPRESENTATIVE MADE A REQUEST FOR GOVERNMENT FINANCING IN THE FORM OF PARTIAL PAYMENTS UNDER THE CONTRACT TO BE AWARDED. ALTHOUGH THE SMALL BUSINESS ADMINISTRATION DECLINED TO ISSUE A CERTIFICATE OF COMPETENCY FOR YOU, IT APPEARS FROM THE RECORD THAT ITS FAILURE TO DO SO WAS DUE TO LACK OF TIME TO CONSIDER YOUR CASE AND NOT TO THE FACT THAT YOU WERE FOUND BY THAT ADMINISTRATION TO BE AN UNQUALIFIED BIDDER.

CAREFUL CONSIDERATION HAS BEEN GIVEN THE VARIOUS CONTENTIONS URGED IN SUPPORT OF YOUR PROTEST BUT WE ARE UNABLE TO CONCLUDE THAT AT THE TIME THE AWARD WAS MADE THE ACTION OF THE CONTRACTING OFFICIALS WAS WITHOUT JUSTIFICATION. EVEN IF IT NOW SHOULD BE ESTABLISHED THAT THE ACTION OF THE CONTRACTING OFFICER IN DENYING YOU THE AWARD WAS ERRONEOUS, THE ERROR WOULD HAVE BEEN ONE OF JUDGMENT, AND THE RECORD AFFORDS NO PROPER BASIS FOR CONCLUDING THAT SUCH ACTION WAS SO ARBITRARY OR CAPRICIOUS AS TO IMPAIR THE VALIDITY OF THE CONTRACT AWARDED TO THE HIGHER BIDDER.

THE QUESTION AS TO THE RESPONSIBILITY AND CAPABILITY OF A BIDDER ON A PROPOSED GOVERNMENT CONTRACT IS A MATTER FOR DETERMINATION BY THE CONTRACTING AGENCY AND SUCH DETERMINATION WHEN MADE IS NOT SUBJECT TO REVIEW BY THE COURTS OF OUR OFFICE, IN THE ABSENCE OF A SHOWING OF FRAUD OR BAD FAITH AMOUNTING TO FRAUD. SEE O-BRIEN V. CARNEY, 6 F.SUPP. 761, 762; FRIEND V. LEE, 221 F.2D 96; 20 COMP. GEN. 862. YOUR EX PARTE COMPLAINT THAT THE ACTION OF THE CONTRACTING OFFICIALS IN REJECTING YOUR BID WAS NOT TAKEN IN GOOD FAITH MAY NOT BE ACCEPTED AS A SUFFICIENT JUSTIFICATION FOR VITIATING THE AWARD OF THE CONTRACT TO ANOTHER BIDDER. ALSO, AS TO YOUR PROTEST AGAINST THE DETERMINATION OF THE DEPARTMENT OF THE NAVY THAT YOU FAILED TO ESTABLISH YOUR TECHNICAL AND FINANCIAL ABILITY TO PERFORM THE CONTEMPLATED CONTRACT, IT SHOULD BE POINTED OUT THAT SUCH DETERMINATION WAS BASED NOT ONLY UPON THE DEPARTMENT'S OWN RATHER EXHAUSTIVE INVESTIGATIONS BUT ALSO UPON THE FACT THAT THE SMALL BUSINESS ADMINISTRATION WAS NOT ABLE TO ISSUE YOU A CERTIFICATE OF COMPETENCY IN THE MATTER.

ACCORDINGLY, ON THE RECORD BEFORE US, YOUR PROTEST IS WITHOUT SUFFICIENT LEGAL MERIT TO JUSTIFY OUR OBJECTING TO THE ADMINISTRATIVE ACTION.