B-155723, FEB. 9, 1965

B-155723, FEB. 9, 1965

TO ADVANCED MEASUREMENT INSTRUMENTS, INC.:

REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 7, 1964, AND ENCLOSURES, PROTESTING AWARD OF A CONTRACT TO NEW LONDON INSTRUMENT COMPANY, INCORPORATED, UNDER REQUEST FOR QUOTATIONS (RFQ) NO. FGH-50 6797, ISSUED ON NOVEMBER 13, 1964, BY THE SANDIA CORPORATION, A CORPORATION CREATED BY THE WESTERN ELECTRIC COMPANY, INCORPORATED, TO OPERATE THE SANDIA LABORATORY, ALBUQUERQUE, NEW MEXICO, FOR THE ATOMIC ENERGY COMMISSION (AEC) UNDER A COST-TYPE NO-FEE CONTRACT.

THE RFQ SOLICITED QUOTATIONS FROM SIX FIRMS TO FURNISH THREE FM DEVIATION METERS IN COMPLIANCE WITH CERTAIN SPECIFICATIONS. ONLY TWO QUOTATIONS WERE RECEIVED, YOURS AT A UNIT PRICE OF $1770 AND NEW LONDON'S AT A UNIT PRICE OF $1349. SINCE NEW LONDON HAD SATISFACTORILY FILLED PRIOR SANDIA PURCHASE ORDERS FOR INSTRUMENTS, AWARD WAS MADE TO NEW LONDON, AND A PURCHASE ORDER WAS ISSUED ON DECEMBER 4, 1964.

BY TELEGRAM DATED DECEMBER 3, ADDRESSED TO SANDIA, YOU PROTESTED THE AWARD TO NEW LONDON ON THE GROUND THAT IT WAS IN DEFAULT ON A DEFENSE PRODUCTION ACT LOAN AND WAS BEING SUED BY THE UNITED STATES THEREFOR. TELEGRAM DATED DECEMBER 7, SANDIA ADVISED YOU THAT THE PROCUREMENT HAD BEEN REVIEWED AND NO ACTION COULD BE TAKEN ON YOUR PROTEST, AWARD HAVING BEEN MADE TO NEW LONDON ON THE BASIS OF ITS LOW RESPONSIVE QUOTATION.

IN A LETTER ADDRESSED TO SANDIA ON DECEMBER 7, WHICH IS SUBSTANTIALLY THE SAME AS YOUR LETTER OF THE SAME DATE ADDRESSED TO OUR OFFICE, YOU ENCLOSED A NEWSPAPER CLIPPING RELATIVE TO A SUIT INSTITUTED BY THE UNITED STATES IN 1962 AGAINST NEW LONDON, ITS PRESIDENT-TREASURER, DALE POLLACK, AND ONE SAMUEL GUBIN, A PARTNER OF POLLACK, TO RECOVER ON THE DEFAULTED "V LOAN.' IN VIEW THEREOF, AND IN VIEW OF THE ALLEGED INDEBTEDNESS OF NEW LONDON AND ITS AFFILIATES TO OTHER CREDITORS, YOU CONTEND THAT NEW LONDON SHOULD NOT BE PERMITTED TO COMPETE FOR GOVERNMENT BUSINESS UNTIL ITS COMMITMENTS TO THE GOVERNMENT HAVE BEEN FULLY DISCHARGED. IN EFFECT, IT WOULD APPEAR THAT YOU ARE SUGGESTING DEBARMENT OF NEW LONDON AND ITS AFFILIATES FROM PARTICIPATION IN GOVERNMENT PROCUREMENTS WHILE THE V-LOAN INDEBTEDNESS IS OUTSTANDING.

SINCE OUR RECORDS FAILED TO DISCLOSE ANY REPORT OF AN UNCOLLECTIBLE INDEBTEDNESS IN THE NAME OF NEW LONDON, INQUIRY WAS MADE OF THE DEPARTMENT OF THE ARMY CONCERNING THE V-LOAN DEFAULT. WE HAVE BEEN INFORMALLY ADVISED BY THAT DEPARTMENT THAT THE INDEBTEDNESS WAS REPORTED DIRECTLY TO THE DEPARTMENT OF JUSTICE FOR APPROPRIATE ACTION.

CONCERNING THE STATUS OF THE LITIGATION INSTITUTED BY THE UNITED STATES ON THE LOAN INDEBTEDNESS, WE HAVE BEEN INFORMALLY ADVISED BY THAT DEPARTMENT THAT THE INDEBTEDNESS WAS REPORTED DIRECTLY TO THE DEPARTMENT OF JUSTICE FOR APPROPRIATE ACTION.

CONCERNING THE STATUS OF THE LITIGATION INSTITUTED BY THE UNITED STATES ON THE LOAN INDEBTEDNESS, WE HAVE BEEN INFORMALLY ADVISED BY THE DEPARTMENT OF JUSTICE THAT A JUDGMENT HAS BEEN OBTAINED AGAINST MR. GUBIN, WHO IS NOW MAKING PAYMENTS TO THE DEPARTMENT OF THE ARMY. IN ADDITION, SUITS AGAINST MR. POLLACK IN THE STATE OF MASSACHUSETTS AND AGAINST NEW LONDON IN THE STATE OF CONNECTICUT ARE BEING PROSECUTED.

PROCUREMENTS BY AEC COST-TYPE CONTRACTORS ARE GOVERNED BY THE PROVISIONS OF THE FEDERAL PROCUREMENT REGULATIONS (FPR) AS IMPLEMENTED BY THE AEC PROCUREMENT REGULATIONS (AECPR). UNDER FPR 1-1.310-11 THE EVALUATION OF THE QUALIFICATIONS OF SUBCONTRACTORS IS GENERALLY A FUNCTION OF THE PRIME CONTRACTOR. AECPR 9-1.104 (B) PROVIDES THAT COST-TYPE CONTRACTORS ARE TO BE GOVERNED BY APPLICABLE CONTRACT PROVISIONS AND PROCUREMENT POLICIES, PRACTICES AND PROCEDURES ESTABLISHED BY THE CONTRACTOR AND APPROVED BY AEC, AND ALSO PROVIDES THAT THE FPR AND AECPR WILL BE EMPLOYED BY AEC IN ITS REVIEW AND APPROVAL OF SUCH PROCUREMENT POLICIES, PRACTICES AND PROCEDURES.

THE CONTRACT BETWEEN THE WESTERN ELECTRIC COMPANY AND THE ATOMIC ENERGY COMMISSION GOVERNING THE FUNCTIONS OF SANDIA PROVIDES FOR THE CONDUCT OF PROCUREMENTS BY SANDIA IN ACCORDANCE WITH THE NORMAL POLICIES AND PRACTICES OF WESTERN, AS ADAPTED TO SANDIA'S POSITION AS A PRIME CONTRACTOR OF THE GOVERNMENT, AND LEAVES TO SANDIA THE RESPONSIBILITY FOR SELECTION OF, AND NEGOTIATION WITH SUPPLIERS. IN THIS CONNECTION, AEC HAS ADVISED OUR OFFICE THAT IN VIEW OF SANDIA'S PREVIOUS SATISFACTORY EXPERIENCE WITH NEW LONDON, AND FOR THE ADDITIONAL REASON THAT IN AEC'S OPINION YOU HAVE NOT ADVANCED ANY BASIS FOR REJECTION OF THE QUOTATION OF NEW LONDON (OR ANY AFFILIATE THEREOF) OR FOR FUTURE DEBARMENT OF NEW LONDON, AEC HAS TAKEN NO ACTION INCIDENT TO YOUR PROTEST.

IN THE CIRCUMSTANCES, IT APPEARS THAT IT WAS WITHIN THE AUTHORITY OF SANDIA TO AWARD THE CONTRACT TO NEW LONDON. ALSO, SINCE AEC HAS NOT DISAPPROVED THE AWARD, WE WOULD NOT BE JUSTIFIED IN QUESTIONING THE EXERCISE OF SANDIA'S AUTHORITY IN THE ABSENCE OF A CLEAR SHOWING OF FRAUD OR BAD FAITH. THEREFORE, WE SEE NO LEGAL BASIS FOR OBJECTION TO THE AWARD.

REGARDING YOUR CONTENTION THAT NEW LONDON AND ITS AFFILIATES SHOULD NOT BE PERMITTED TO COMPETE IN ANY GOVERNMENT PROCUREMENTS UNTIL ITS COMMITMENTS TO THE GOVERNMENT ARE DISCHARGED, IT IS INCUMBENT UPON THE PROCURING AGENCIES UNDER THE PROCUREMENT STATUTES AND REGULATIONS TO DETERMINE THAT BIDDERS WHO ARE AWARDED GOVERNMENT CONTRACTS ARE RESPONSIBLE. SINCE FINANCIAL RESPONSIBILITY IS A FACTOR FOR CONSIDERATION IN THE DETERMINATION OF A BIDDER'S RESPONSIBILITY, IT IS ASSUMED THAT THE PROCURING AGENCIES WILL PROPERLY EVALUATE NEW LONDON'S QUALIFICATIONS IN ANY PROCUREMENT IN WHICH NEW LONDON PARTICIPATES. SO LONG AS THE CORPORATION IS DETERMINED TO BE QUALIFIED AND CAPABLE OF SATISFACTORY PERFORMANCE, IT WOULD APPEAR TO BE QUESTIONABLE WHETHER A BLANKET REFUSAL TO ALLOW AWARD TO IT OF ANY GOVERNMENT FINANCED BUSINESS, WHICH WOULD CLEARLY DIMINISH ITS ABILITY TO DISCHARGE ITS DEBT TO THE GOVERNMENT, WOULD BE IN THE INTEREST OF THE GOVERNMENT.