B-157305, SEP. 27, 1965

TO AIRCRAFT EQUIPMENT TESTING COMPANY, INC.:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF JULY 21, 1965, PROTESTING AGAINST AN AWARD TO THE SPRAGUE ENGINEERING DIVISION OF TELEDYNE, INC; FOR 35 HYDRAULIC TEST UNITS UNDER INVITATION FOR BIDS NO. AMC/T/23-204-65-325 ISSUED BY THE U.S. ARMY AVIATION MATERIEL COMMAND, ST. LOUIS, MISSOURI.

THE INVITATION WAS ISSUED MAY 14, 1965, WITH SCHEDULED OPENING DATE OF JUNE 4, 1965. FOUR BIDS WERE RECEIVED IN THE RESPONSE TO THE SOLICITATION. THE LOW BID IN THE AMOUNT OF $16,597 WAS SUBMITTED BY AIRCRAFT EQUIPMENT TESTING COMPANY, INC; A SMALL BUSINESS CONCERN; THE SECOND LOW BID IN THE AMOUNT OF $18,741 WAS SUBMITTED BY SPRAGUE ENGINEERING, A DIVISION OF TELEDYNE, INC; A LARGE BUSINESS CONCERN.

ON JUNE 4, 1965, THE CONTRACTING OFFICER REQUESTED A PREAWARD SURVEY ON EACH OF THE TWO LOWEST BIDDERS. ON JUNE 23, 1965, A FAVORABLE REPORT OF SURVEY WAS RECEIVED BY THE CONTRACTING OFFICER ON SPRAGUE ENGINEERING. JULY 1, 1965, AN UNFAVORABLE REPORT OF SURVEY WAS RECEIVED BY THE CONTRACTING OFFICER ON AIRCRAFT EQUIPMENT TESTING THE SURVEYING ACTIVITY RECOMMENDED THAT NO AWARD BE MADE TO THAT FIRM BECAUSE OF ITS UNSATISFACTORY FINANCIAL CONDITION. ON JULY 7, 1965, THE REQUIRING ACTIVITY ADVISED THE CONTRACTING OFFICER THAT THE SUPPLIES WERE URGENTLY REQUIRED IN SUPPORT OF MILITARY OBJECTIVES NOT ANTICIPATED AT THE TIME OF ISSUANCE OF THE SOLICITATION AND REQUESTED THAT EXPEDITED ACTION BE TAKEN TO PROCURE THE SUPPLIES IN QUESTION. ON JULY 12, 1965, THE CONTRACTING OFFICER DETERMINED THAT AIRCRAFT EQUIPMENT TESTING WAS NONRESPONSIBLE. THE SAME DATE THE CONTRACTING OFFICER EFFECTED A DETERMINATION OF AFFIRMATIVE RESPONSIBILITY WITH REGARD TO THE SECOND LOW BIDDER, SPRAGUE ENGINEERING AND AWARDED A CONTRACT IN THE AMOUNT OF $18,321 (REDUCED FROM $18,741 ON ACCOUNT OF WAIVERS OF PREPRODUCTION SAMPLE AND TEST) TO THAT BIDDER.

THE BASIS FOR THE DETERMINATION OF NONRESPONSIBILITY BECAUSE OF UNSATISFACTORY FINANCIAL CONDITION WAS THAT THE BALANCE SHEET OF AIRCRAFT EQUIPMENT TESTING COMPANY INDICATED THAT THEY WERE TECHNICALLY INSOLVENT, AND THEY HAD FAILED TO PRODUCE EVIDENCE OF THE AVAILABILITY OF SUFFICIENT FUNDS OR BANK CREDIT WITH WHICH TO PERFORM THE CONTRACT.

ON JULY 21, 1965, BY TELEGRAMS TO THE ADMINISTRATIVE AGENCY AND THE GENERAL ACCOUNTING OFFICE, AIRCRAFT EQUIPMENT TESTING PROTESTED AGAINST THE AWARD OF THE CONTRACT TO SPRAGUE ENGINEERING ON THE GROUND THAT THE PROCEDURAL REQUIREMENTS OF ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1- 705.4 WITH REFERENCE TO CERTIFICATES OF COMPETENCY OF SMALL BUSINESS CONCERNS REQUIRED THE QUESTION OF ITS FINANCIAL CAPACITY TO PERFORM THE CONTRACT TO BE SUBMITTED TO THE SMALL BUSINESS ADMINISTRATION (SBA), AND THAT SUCH PROCEDURE WAS NOT FOLLOWED BY THE CONTRACTING OFFICER IN THE PROCESS OF EFFECTING THE PROCUREMENT. SUBSEQUENTLY, ON JULY 23, 1965, THE CONTRACTING OFFICER CERTIFIED, AS PROVIDED IN ASPR 1-705.4 (B) (I), THAT AWARD OF THE CONTRACT HAD TO BE MADE WITHOUT DELAY DUE TO THE FACT THAT THE SUPPLIES WERE URGENTLY NEEDED BY THE REQUIRING ACTIVITY. ON JULY 28, 1965, A COPY OF SUCH CERTIFICATION WAS FURNISHED THE ST. LOUIS, MISSOURI, SMALL BUSINESS ADMINISTRATION REPRESENTATIVE.

UNDER THE PROVISIONS OF SECTION 8 (B) (7) OF THE SMALL BUSINESS ACT, AS AMENDED BY PUBLIC LAW 85-836, 15 U.S.C. 637 (B) (7), THE ISSUANCE OF A CERTIFICATE OF COMPETENCY BY THE SMALL BUSINESS ADMINISTRATION IS CONCLUSIVE UPON GOVERNMENT PROCUREMENT OFFICERS WITH RESPECT TO THE COMPETENCY, AS TO CAPACITY AND CREDIT, OF ANY SMALL BUSINESS CONCERN TO PERFORM A GOVERNMENT CONTRACT. ASPR 1-705.4/B) THEREFORE REQUIRES THAT AN OTHERWISE ACCEPTABLE BID OR PROPOSAL SUBMITTED BY A SMALL BUSINESS CONCERN SHALL NOT BE REJECTED BY REASON OF LACK OF CAPACITY OR CREDIT UNTIL THE MATTER SHALL HAVE BEEN REFERRED TO THE SBA FOR THE POSSIBLE ISSUANCE OF A CERTIFICATE OF COMPETENCY. ASPR 1-705.4 (B) (I), HOWEVER, PROVIDES THAT:

"/I) THIS PROCEDURE IS NOT MANDATORY WHERE THE CONTRACTING OFFICER CERTIFIES IN WRITING THAT AWARD MUST BE MADE WITHOUT DELAY, INCLUDES THIS CERTIFICATION AND SUPPORTING INFORMATION IN THE CONTRACT FILE, AND PROMPTLY FURNISHES A COPY TO THE SBA REPRESENTATIVE.'

ON THE BASIS OF THE RECORD BEFORE US, THERE CAN BE NO DOUBT THAT THE DELIVERY OF THE SUPPLIES COVERED BY THE INVITATION WAS URGENTLY NEEDED. IN OUR VIEW, THE URGENCY IN THIS MATTER WAS OF SUCH NATURE AS TO HAVE JUSTIFIED A DETERMINATION BY THE CONTRACTING OFFICER THAT AN AWARD COULD NOT BE DELAYED FOR ANY PERIOD OF TIME, EVEN THOUGH THERE EXISTED THE POSSIBILITY THAT AIRCRAFT EQUIPMENT TESTING COMPANY MIGHT BE FOUND BY THE SMALL BUSINESS ADMINISTRATION TO HAVE THE CAPACITY AND CREDIT TO PERFORM THE CONTRACT. THEREFORE, IF THE CONTRACTING OFFICER HAD CERTIFIED AS TO THE URGENCY OF THE MATTER AND NOTIFIED SBA THEREOF PRIOR TO THE AWARD TO SPRAGUE ENGINEERING, THERE WOULD HAVE BEEN NO QUESTION AS TO THE PROPRIETY OF THE PROCEDURE. THERE CAN BE NO QUESTION OF COURSE, BUT THAT THE CONTRACTING OFFICER SHOULD HAVE FOLLOWED THE CERTIFICATE-OF-URGENCY PROCEDURE REQUIRED BY ASPR 1-705.4 (B) (I) AND ENTERED HIS FORMAL CERTIFICATION OF URGENCY IN THE FILE PRIOR TO OR AT THE TIME OF AWARD. HOWEVER, SINCE IT WOULD APPEAR THAT IN THIS INSTANCE THE TECHNICAL FAILURE TO COMPLY STRICTLY WITH THE REQUIREMENTS OF ASPR 1-705.4 (B) (I) RESULTED FROM AN INADVERTENCE RATHER THAN AN INTENT TO CIRCUMVENT THE SMALL BUSINESS ACT OR THE ARMED SERVICES PROCUREMENT REGULATION, WE DO NOT FEEL THAT WE WOULD BE JUSTIFIED IN DISTURBING THE AWARD IN QUESTION. SEE B- 156392, MAY 10, 1965. YOUR PROTEST AGAINST SUCH AWARD IS THEREFORE DENIED.